Retirement Investment
Account
PROSPECTUS DATED MAY 4, 1999
Please read this prospectus and keep it for future reference. It contains
important information you should know before participating or taking any other
action under RIA.
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ABOUT THE RETIREMENT INVESTMENT ACCOUNT
The Retirement Investment Account ("RIA") is an investment program that allows
employer plan assets to accumulate on a tax-deferred basis. Twenty-five
investment funds ("Funds") and a guaranteed interest account are available
under RIA. The Funds and guaranteed interest account comprise the "investment
options" covered by this prospectus. RIA is offered under a group annuity
contract issued by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES.
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FUNDS
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POOLED SEPARATE ACCOUNTS
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o Alliance Bond -- Separate o Alliance Common Stock --
Account No. 13 Separate Account No. 4
o Alliance Balanced -- Separate o Alliance Aggressive Stock --
Account No. 10 Separate Account No. 3
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SEPARATE ACCOUNT NO. 51
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o Alliance Money Market o Alliance Equity Index
o Alliance Intermediate o Alliance Global
Government Securities o Alliance International
o Alliance Quality Bond o Alliance Small Cap Growth
o Alliance High Yield o Alliance Conservative Investors
o Alliance Growth & Income o Alliance Growth Investors
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SEPARATE ACCOUNT NO. 66
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o T. Rowe Price Equity Income o Morgan Stanley Emerging
o EQ/Putnam Growth & Income Markets Equity
Value o Warburg Pincus Small Company
o Merrill Lynch Basic Value Equity Value
o MFS Research o MFS Emerging Growth
o T. Rowe Price International Companies
Stock o Merrill Lynch World Strategy
o EQ/Putnam Balanced
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The Alliance Bond, Alliance Balanced, Alliance Common Stock, and Alliance
Aggressive Stock Funds are managed by Equitable Life. The Alliance Bond Fund is
available only to employer plans that signed an agreement to invest monies in
the Alliance Bond Fund before June 1, 1994.
Each of the Separate Account No. 51 Funds invest in shares of a corresponding
portfolio ("Portfolio") of The Hudson River Trust. Each of the Separate Account
No. 66 Funds invest in shares of a corresponding portfolio ("Portfolio") of EQ
Advisors Trust. In each case, the Funds and the corresponding Portfolios have
the same name. You should also read the attached prospectuses for The Hudson
River Trust and EQ Advisors Trust and keep them for future reference.
GUARANTEED INTEREST ACCOUNT. The guaranteed interest account credits interest
daily and we guarantee principal.
Registration statements relating to this offering have been filed with the
Securities and Exchange Commission ("SEC"). The Statement of Additional
Information ("SAI") dated May 4, 1999, is a part of the registration statement.
The SAI is available free of charge. You may request one by writing to our RIA
Service Office or calling 1-800-967-4560. The SAI has been incorporated by
reference into this prospectus. This prospectus and the SAI can also be
obtained from the SEC's Web site at http://www.sec.gov. The table of contents
for the SAI appears at the back of this prospectus.
THE SEC HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE. THE SECURITIES ARE NOT INSURED BY THE FDIC OR ANY OTHER
AGENCY. THEY ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF ANY BANK AND ARE NOT
BANK GUARANTEED. THEY ARE SUBJECT TO INVESTMENT RISKS AND POSSIBLE LOSS OF
PRINCIPAL.
<PAGE>
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2 CONTENTS OF THIS PROSPECTUS
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Contents of this prospectus
- --------------------------------------------------------------------------------
RETIREMENT INVESTMENT ACCOUNT
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Index of key words and phrases 4
RIA at a glance -- key features 5
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FEE TABLE 7
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Examples 11
Condensed financial information 12
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1
RIA FEATURES AND BENEFITS 13
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Investment options 13
The Alliance Bond Fund 13
The Alliance Balanced Fund 14
The Alliance Common Stock Fund 15
The Alliance Aggressive Stock Fund 15
Investment manager of the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds 16
Funds investing in The Hudson River Trust and
EQ Advisors Trust 16
Risks of investing in the Funds 19
Risk factors -- Alliance Bond, Alliance Common Stock,
Alliance Aggressive Stock and Alliance Balanced Funds 19
Change of investment objectives 21
Guaranteed interest account 21
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2
HOW WE VALUE YOUR PLAN BALANCES 23
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When we use the words "we," "us" and "our," we mean Equitable Life.
When we address the reader of this prospectus with words such as "you" and
"your", we generally mean the employer or plan sponsor of the plans considering
RIA as and investment vehicle, unless otherwise explained.
Further, the terms and conditions of the employer's plan govern the aspects of
RIA available to plan participants. Accordingly, participants also should
carefully consider the features of their employer's plan, which may be different
from the features of RIA described in the prospectus.
<PAGE>
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CONTENTS OF THIS PROSPECTUS 3
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3
TRANSFERS 24
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Transfers among investment options 24
Special rules applicable to the Alliance Bond Fund 24
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4
ACCESS TO YOUR PLAN BALANCES 26
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Participant loans 26
Choosing benefit payment options 26
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5
RIA 27
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Summary of plan choices 27
Getting started 27
How to make contributions 28
Selecting investment options 28
Allocating program contributions 28
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6
DISTRIBUTIONS 30
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7
OPTIONAL PARTICIPANT RECORDKEEPING
SERVICES 32
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8
RATES OF RETURN 33
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Comparative benchmarks 33
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9
CHARGES AND EXPENSES 42
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Charges reflected in reductions in the unit value 42
Indirect expenses borne by the Funds 42
Charges which reduce the number of units 42
Other billing arrangements 44
Individual annuity charges 44
General information on fees and charges 44
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10
TAX INFORMATION 45
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11
MORE INFORMATION 52
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About changes or terminations 52
IRS disqualification 52
About the separate accounts 52
About the general account 54
When we pay proceeds 54
When transaction requests are effective 54
Voting rights 54
About our year 2000 progress 55
About legal proceedings 55
About our independent accountants 56
About the trustee 56
Reports we provide and available information 56
Acceptance and responsibilities 56
About registered units 56
Assignment and creditors' claims 57
Commissions and service fees we pay 57
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12
WHO IS EQUITABLE LIFE? 58
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- -----------------------------------------------------------
APPENDIX: CONDENSED FINANCIAL
INFORMATION A-1
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- -----------------------------------------------------------
TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION
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<PAGE>
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4 INDEX OF KEY WORDS AND PHRASES
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Index of key words and phrases
- --------------------------------------------------------------------------------
Below is an index of key words and phrases used in this prospectus. The index
will refer you to the page where particular terms are defined or explained.
This index should help you locate more information on the terms used in this
prospectus.
PAGE
business day 23
benefit payment options 26
contracts 27
contributions 28
CWC 42
current rate 21
DOL 28
ERISA 5
EQ Advisors Trust 17
Equitable Life 58
exclusive funding employer plan 27
Funds cover
guaranteed interest account 21
IRS 42
investment options 13
minimum rate 21
PRS 32
partial funding employer plan 27
participant-directed plans 24
Portfolios cover
RIA 27
SAI cover
separate accounts 52
The Hudson River Trust 18
trustee-directed plans 24
unit 23
unit value 23
<PAGE>
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RIA AT A GLANCE -- KEY FEATURES 5
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RIA at a glance -- key features
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- --------------------------------------------------------------------------------
EMPLOYER RIA is an investment program designed for employer plans
CHOICE OF that qualify for tax-favored treatment under Section 401(a)
PLAN of the Internal Revenue Code of 1986, as amended ("Code").
ARRANGEMENTS Eligible employer plans include defined benefit plans,
defined contribution plans or profit-sharing plans,
including 401(k) plans. These employer plans generally also
must meet the requirements of the Employee Retirement Income
Security Act of 1974, as amended ("ERISA").
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Employers have a choice of two retirement plan arrangements
under RIA:
o You may choose RIA as the exclusive funding vehicle for an
employer plan. If you choose this option, the annual
amount of plan contributions must be at least $10,000.
o You may choose RIA as a partial investment funding vehicle
for an employer plan. Under this option, the aggregate
amount of contributions in the initial participation year
must be at least $50,000, and the annual aggregate amount
of contributions thereafter must be at least $25,000. The
guaranteed interest account is not available. Also, a
partial funding agreement must be completed.
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RIA o Twenty-six investment options. The maximum number of
FEATURES active investment options that may be selected at any time
is 25.
o Benefit distribution payments.
o Optional Participant Recordkeeping Services ("PRS"), which
includes participant-level recordkeeping and making
benefit payments.
o Available for trustee-directed or participant-directed
plans.
------------------------------------------------------------
A participant-directed employer plan, is an employer plan
that permits investment direction by plan participants for
contribution allocations or transfers among investment
options. A trustee-directed employer plan, is an employer
plan that permits those same types of investment decisions
only by the employer, a trustee or any named fiduciary or an
authorized delegate of the plan.
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CONTRIBUTIONS o Can be allocated to any one option or divided among them.
o May be made by check or wire transfer.
o Are credited on the day of receipt if accompanied by
properly completed forms.
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TRANSFERS AMONG o Generally, amounts may be transferred among the investment
INVESTMENT OPTIONS options at any time.
o There is no charge for transfers and no tax liability.
o Transfers to the Alliance Bond Fund and from the
guaranteed interest account may be subject to limitations.
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<PAGE>
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6 RIA AT A GLANCE - KEY FEATURES
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PROFESSIONAL The Funds are managed by professional investment advisers.
INVESTMENT
MANAGEMENT
GUARANTEED
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GUARANTEED The guaranteed interest account pays interest at guaranteed
OPTIONS rates and provides guarantees of principal.
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TAX CONSIDERATIONS o On earnings No tax on investment earnings
until withdrawn.
o On transfers No tax on internal transfers
among the investment options.
------------------------------------------------------------
Because you are buying a contract to fund a retirement plan
that already provides tax deferral, you should do so for the
contract's features and benefits other than tax deferral.
The tax deferral of the contract does not provide additional
benefits.
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CHARGES AND o Ongoing operations fee assessed against combined assets
EXPENSES invested in investment options including any outstanding
loan balance.
o Investment management and financial accounting fees and
other expenses charged on an investment Fund-by-Fund
basis, as applicable.
o No sales charges deducted from contributions, but
contingent withdrawal charges may apply for non-benefit
distributions.
o Charges of The Hudson River Trust and EQ Advisors Trust
Portfolios for investment advisory fees and other
expenses, and 12b-1 fees (EQ Advisors Trust only).
o Administrative fee if you purchase an annuity payout
option.
o Participant recordkeeping (optional) charge per
participant annual fee of $25.00.
o Loan fee of 1% of loan principal amount at the time the
plan loan is made.
o Administrative charge for Funds of Separate Account No.
51.
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BENEFIT o Lump sum.
PAYMENT
OPTIONS o Installments on a time certain or dollar certain basis.
o Variety of fixed annuity benefit payout options as
available under an employer's plan.
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ADDITIONAL o Participant loans (if elected by your employer; some
FEATURES restrictions apply).
o Quarterly reports showing:
o transactions in the investment options during the
quarter for the employer plan;
o the number of units in the Funds credited to the
employer plan; and
o the unit values and the balances in all of the
investment options as of the end of the quarter.
o Automatic confirmation notice to employer/trustee
following the processing of a financial investment option
transfer.
o Annual and semiannual report of the Funds.
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<PAGE>
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FEE TABLE 7
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Fee table
- --------------------------------------------------------------------------------
The fee table below will help you understand the various charges and expenses
that apply under RIA. The table reflects transaction expenses that affect plan
balances participating in the Funds as well as Fund annual expenses you will
directly incur under your contract. The table also shows charges and expenses
of the Portfolios of The Hudson River Trust and EQ Advisors Trust you will
incur indirectly. The only expenses shown in the table that apply to the
guaranteed interest account are the contingent withdrawal charge and the
ongoing operations fee. If an annuity payout benefit is elected, we will impose
a $175 charge. We may also impose a charge for applicable taxes such as state
premium taxes.
WE DEDUCT NO SALES LOADS FROM PLAN CONTRIBUTIONS, AND THERE ARE NO TRANSFER OR
EXCHANGE FEES WHEN MOVING ASSETS AMONG THE FUNDS.
The tables do not include other charges which are specific to the various
plans, such as optional participant recordkeeping and loan fees. Also, certain
expenses and fees shown in the tables may not apply to your plan. See "Charges
and expenses," for more details.
THE FUND CHARGES AND FEES ARE EXPRESSED AS AN ANNUAL PERCENTAGE OF AVERAGE NET
ASSETS. THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST FEES AND EXPENSES ARE
SHOWN AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO.
<TABLE>
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POOLED SEPARATE ACCOUNT FUNDS
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
BOND BALANCED COMMON AGGRESSIVE
FUND FUND STOCK FUND STOCK FUND
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION EXPENSES:
Maximum contingent withdrawal charge (as a
percentage of plan balances)(1) ------------------------ 6% Maximum -------------------
Maximum annual ongoing operations fee (as a
percentage of plan balances)(2) --------------------- 1.25% Maximum -------------------
SEPARATE ACCOUNT ANNUAL EXPENSES:
Annual investment management fee including financial
accounting fees (as a percentage of plan balances in
each Fund)(3) 0.50% 0.50% 0.50% 0.50%
TRUST ANNUAL EXPENSES: --------------------- not applicable -------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA.
(2) The annual ongoing operations fee is deducted monthly and applied on a
decremental scale, declining to 0.50% on the portion of plan balances over
$1,000,000, except for plans that adopted RIA before February 9, 1986.
(3) The Fund annual expenses are reflected in the unit value.
<PAGE>
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8 FEE TABLE
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- --------------------------------------------------------------------------------
FUNDS OF SEPARATE ACCOUNT NO. 51
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
INTERMEDIATE ALLIANCE
ALLIANCE GOVERNMENT ALLIANCE ALLIANCE GROWTH & ALLIANCE
MONEY MARKET SECURITIES QUALITY BOND HIGH YIELD INCOME EQUITY INDEX
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION EXPENSES:
Maximum contingent withdrawal charge (as a
percentage of plan balances)(1) ----------------------------------- 6% Maximum ----------------------------------
Maximum annual ongoing operations fee (as a
percentage of plan balances)(2) ---------------------------------- 1.25% Maximum --------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES:
Administrative Charge(3)(4) ------------------------------------- 0.05% -------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES:
Investment advisory fee 0.35% 0.50% 0.53% 0.60% 0.55% 0.31%
Other Expenses 0.02% 0.05% 0.04% 0.03% 0.03% 0.03%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Annual Expenses for The Hudson River
Trust(4)(5) 0.37% 0.55% 0.57% 0.63% 0.58% 0.34%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE
ALLIANCE ALLIANCE SMALL CAP CONSERVATIVE GROWTH
GLOBAL INTERNATIONAL GROWTH INVESTORS INVESTORS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION EXPENSES:
Maximum contingent withdrawal charge (as a
percentage of plan balances)(1) --------------------------- 6% Maximum ----------------------------------
Maximum annual ongoing operations fee (as a
percentage of plan balances)(2) -------------------------- 1.25% Maximum ---------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSES:
Administrative Charge(3)(4) ----------------------------- 0.05% -------------------------------------
THE HUDSON RIVER TRUST ANNUAL EXPENSES:
Investment advisory fee 0.64% 0.90% 0.90% 0.48% 0.51%
Other expenses 0.07% 0.16% 0.06% 0.05% 0.04%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Annual Expenses for The Hudson
River Trust(4)(5) 0.71% 1.06% 0.96% 0.53% 0.55%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See Notes following tables.
<PAGE>
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FEE TABLE 9
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- --------------------------------------------------------------------------------
FUNDS OF SEPARATE ACCOUNT NO. 66
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQ/PUTNAM
INTERNATIONAL T. ROWE PRICE GROWTH & EQ/PUTNAM
STOCK EQUITY INCOME INCOME VALUE BALANCED MFS RESEARCH
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION EXPENSES:
Maximum contingent withdrawal charge (as a
percentage of plan balances)(1) -------------------------------- 6% Maximum -----------------------------------
Maximum annual ongoing operations fee (as a
percentage of plan balances)(2) ------------------------------- 1.25% Maximum ---------------------------------
SEPARATE ACCOUNT ANNUAL EXPENSE:
Administrative charge ----------------------------------- None --------------------------------------
EQ ADVISORS TRUST ANNUAL EXPENSES:
Investment advisory fee 0.75% 0.55% 0.55% 0.55% 0.55%
Rule 12b-1 Fee (6) 0.25% 0.25% 0.25% 0.25% 0.25%
Other expenses 0.20% 0.05% 0.05% 0.10% 0.05%
- ---------------------------------------------------------------------------------------------------------------------------------
Total EQ Advisors Trust Annual Expenses (After
Expense Limitation)(4)(7) 1.20% 0.85% 0.85% 0.90% 0.85%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
MFS EMERGING MORGAN STANLEY
GROWTH EMERGING
COMPANIES MARKETS EQUITY
--------------- -----------------
<S> <C> <C>
PARTICIPATING PLAN TRANSACTION EXPENSES:
Maximum contingent withdrawal charge (as a
percentage of plan balances)(1) --------- 6% Maximum ---------
Maximum annual ongoing operations fee (as a
percentage of plan balances)(2) -------- 1.25% Maximum -------
SEPARATE ACCOUNT ANNUAL EXPENSE:
Administrative Charge ------------ None -------------
EQ ADVISORS TRUST ANNUAL EXPENSES:
Investment advisory fee 0.55% 1.15%
Rule 12b-1 fee(6) 0.25% 0.25%
Other expenses 0.05% 0.35%
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Total EQ Advisors Trust Annual Expenses (After
Expense Limitation)(4)(7) 0.85% 1.75%
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<CAPTION>
- ---------------------------------------------------------------------------------------------------
WARBURG PINCUS MERRILL LYNCH MERRILL LYNCH
SMALL COMPANY WORLD BASIC VALUE
VALUE STRATEGY EQUITY
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
PARTICIPATING PLAN TRANSACTION EXPENSES:
Maximum contingent withdrawal charge (as a
percentage of plan balances)(1) ------------------ 6% Maximum -----------------
Maximum annual ongoing operations fee (as a
percentage of plan balances)(2) ---------------- 1.25% Maximum ----------------
SEPARATE ACCOUNT ANNUAL EXPENSE:
Administrative Charge --------------------- None ---------------------
EQ ADVISORS TRUST ANNUAL EXPENSES:
Investment advisory fee 0.65% 0.70% 0.55%
Rule 12b-1 fee(6) 0.25% 0.25% 0.25%
Other expenses 0.10% 0.25% 0.05%
- ---------------------------------------------------------------------------------------------------
Total EQ Advisors Trust Annual Expenses (After
Expense Limitation)(4)(7) 1.00% 1.20% 0.85%
- ---------------------------------------------------------------------------------------------------
</TABLE>
Notes:
(1) The contingent withdrawal charge is waived in certain circumstances. The
charge reduces to 2% of the amount withdrawn in the ninth participation
year and cannot be imposed after the ninth anniversary of a plan's
participation in RIA.
(2) The annual ongoing operations fee is deducted monthly and applied on a
decremental scale, declining to 0.50% on the portion of plan balances over
$1,000,000, except for plans that adopted RIA before February 9, 1986.
(3) We reserve the right to increase the separate account administrative
charge upon 90 days written notice to the employer.
(4) The Fund annual expenses and The Hudson River Trust or EQ Advisors Trust
annual expenses are reflected in the unit value.
<PAGE>
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10 FEE TABLE
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(5) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment advisory fee for each Portfolio of The
Hudson River Trust may vary from year to year depending upon the average
daily net assets of the respective Portfolio of The Hudson River Trust. The
maximum investment advisory fees, however, cannot be increased without a
vote of that Portfolio's shareholders. See the prospectus for The Hudson
River Trust. The other direct operating expenses will also fluctuate from
year to year depending on actual expenses. Expenses of The Hudson River
Trust are shown as a percentage of each Portfolio's average daily net
assets.
(6) The Class IB shares of EQ Advisors Trust are subject to fees imposed under
a distribution plan adopted by EQ Advisors Trust pursuant to Rule 12b-1
under the Investment Company Act of 1940, as amended. The 12b-1 fee will
not be increased for the life of the Contracts.
(7) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF has agreed to waive or
limit its fees and assume other expenses. Under the expense limitation
agreement, total annual operating expenses of each Portfolio (other than
interest, taxes, brokerage commissions, capitalized expenditures,
extraordinary expenses and 12b-1 fees) are limited for the average daily
net assets of each Portfolio as follows: 0.60% for EQ/Putnam Growth &
Income Value, MFS Emerging Growth Companies, MFS Research, Merrill Lynch
Basic Value Equity, and T. Rowe Price Equity Income; 0.65% for EQ/Putnam
Balanced; 0.75% for Warburg Pincus Small Company Value; 0.95% for Merrill
Lynch World Strategy and T. Rowe Price International Stock; and 1.50% for
Morgan Stanley Emerging Markets Equity.
Absent the expense limitation, "Other Expenses" for 1998 on an annualized
basis for each of the Portfolios would have been as follows: 0.24% for MFS
Emerging Growth Companies, EQ/Putnam Growth and Income Value, and T. Rowe
Price Equity Income; 0.25% for MFS Research; 0.26% for Merrill Lynch Basic
Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan
Stanley Emerging Markets Equity, 0.45% for EQ/Putnam Balanced; 0.40% for T.
Rowe Price International Stock; and 0.27% for Warburg Pincus Small Company
Value.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF pursuant to the expense limitation agreement provided, that among
other things, such Portfolio has reached sufficient size to permit such
reimbursement to be made and provided that the Portfolio's current annual
operating expenses do not exceed the operating expense limit determined for
such Portfolio.
<PAGE>
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FEE TABLE 11
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXAMPLES
The examples below show the expenses that a plan would pay in the situations
illustrated. We assume a single contribution of $1,000 invested in one of the
Funds listed and a 5% annual return is earned on assets in that Fund. For
purposes of these examples, the ongoing operations fee is computed by reference
to the actual aggregate annual ongoing operations fee as a percentage of total
assets by employer plans other than corporate plans. See "About registered
units" under "More information." These examples assume that no loan has been
taken and do not reflect PRS or a charge for premium taxes, none of which may
apply to any particular participant.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
IF THE ENTIRE EMPLOYER PLAN BALANCE IS
WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE:
-----------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE HUDSON RIVER TRUST
- ---------------------------------------------------------------------------------------------
Alliance Money Market $74.74 $ 94.74 $115.41 $148.26
Alliance Intermediate Government Securities $76.51 $100.19 $124.80 $169.04
Alliance Bond $75.53 $ 97.17 $119.59 $157.54
Alliance Quality Bond $76.70 $100.80 $125.83 $171.33
Alliance High Yield $77.29 $102.61 $128.94 $178.16
Alliance Growth & Income $76.80 $101.10 $126.35 $172.47
Alliance Equity Index $74.45 $ 93.83 $113.84 $144.76
Alliance Common Stock $75.53 $ 97.17 $119.59 $157.54
Alliance Global $78.07 $105.03 $133.08 $187.21
Alliance International $81.50 $115.54 $151.00 $225.95
Alliance Aggressive Stock $75.53 $ 97.17 $119.59 $157.54
Alliance Small Cap Growth $80.52 $112.54 $145.91 $215.02
Alliance Conservative Investors $76.31 $ 99.59 $123.76 $166.75
Alliance Balanced $75.53 $ 97.17 $119.59 $157.54
Alliance Growth Investors $76.51 $100.19 $124.80 $169.04
- ---------------------------------------------------------------------------------------------
EQ ADVISORS TRUST
- ---------------------------------------------------------------------------------------------
T. Rowe Price International Stock $82.38 $118.23 -- --
T. Rowe Price Equity Income $78.95 $107.74 -- --
EQ/Putnam Growth & Income Value $78.95 $107.74 -- --
EQ/Putnam Balanced $79.44 $109.24 -- --
MFS Research $78.95 $107.74 -- --
MFS Emerging Growth Companies $78.95 $107.74 -- --
- ---------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------
IF THE ENTIRE EMPLOYER PLAN BALANCE IS NOT
WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE:
- ---------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
THE HUDSON RIVER TRUST
- ---------------------------------------------------------------------------------------------
Alliance Money Market $12.49 $38.90 $ 67.33 $148.26
Alliance Intermediate Government Securities $14.37 $44.66 $ 77.14 $169.04
Alliance Bond $13.33 $41.46 $ 71.70 $157.54
Alliance Quality Bond $14.58 $45.29 $ 78.23 $171.33
Alliance High Yield $15.20 $47.21 $ 81.48 $178.16
Alliance Growth & Income $14.68 $45.61 $ 78.77 $172.47
Alliance Equity Index $12.18 $37.94 $ 65.68 $144.76
Alliance Common Stock $13.33 $41.46 $ 71.70 $157.54
Alliance Global $16.03 $49.76 $ 85.81 $187.21
Alliance International $19.68 $60.85 $104.56 $225.95
Alliance Aggressive Stock $13.33 $41.46 $ 71.70 $157.54
Alliance Small Cap Growth $18.64 $57.69 $ 99.23 $215.02
Alliance Conservative Investors $14.16 $44.02 $ 76.06 $166.75
Alliance Balanced $13.33 $41.46 $ 71.70 $157.54
Alliance Growth Investors $14.37 $44.66 $ 77.14 $169.04
- ---------------------------------------------------------------------------------------------
EQ ADVISORS TRUST
- ---------------------------------------------------------------------------------------------
T. Rowe Price International Stock $20.62 $63.69 -- --
T. Rowe Price Equity Income $ 6.97 $52.62 -- --
EQ/Putnam Growth & Income Value $16.97 $52.62 -- --
EQ/Putnam Balanced $17.49 $54.20 -- --
MFS Research $16.97 $52.62 -- --
MFS Emerging Growth Companies $16.97 $52.62 -- --
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
12 FEE TABLE
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
IF THE ENTIRE EMPLOYER PLAN BALANCE IS
WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE:
- ---------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ ADVISORS TRUST (CONTINUED)
- ---------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $87.77 $134.56 -- --
Warburg Pincus Small Company Value $80.42 $112.24 -- --
Merrill Lynch World Strategy $82.38 $118.23 -- --
Merrill Lynch Basic Value Equity $78.95 $107.74 -- --
- ---------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------
IF THE ENTIRE EMPLOYER PLAN BALANCE IS NOT
WITHDRAWN AT THE END OF EACH PERIOD
SHOWN, THE EXPENSE WOULD BE:
- ---------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
EQ ADVISORS TRUST (CONTINUED)
- ---------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $26.35 $80.93 -- --
Warburg Pincus Small Company Value $18.54 $57.37 -- --
Merrill Lynch World Strategy $20.62 $63.69 -- --
Merrill Lynch Basic Value Equity $16.97 $52.62 -- --
- ---------------------------------------------------------------------------------------------
</TABLE>
The examples above should not be considered a representation of past or future
expenses for each Fund. Actual expenses may be greater or less than those shown
above. Similarly, the annual rate of return assumed in the examples is not an
estimate or guarantee of future investment performance.
ANNUITY ADMINISTRATIVE FEE. We generally deduct a $175 annuity administrative
fee from amounts applied to purchase certain life annuity payout options.
Assuming an annuity payout option could be issued and you elect a life annuity
payout option, the expenses shown in the example for "If the entire employer
plan balance is not withdrawn" would, in each case, be increased by $2.22 based
on the average amount applied to annuity payout options in 1998.
CONDENSED FINANCIAL INFORMATION
Please see the Appendix at the end of this prospectus for condensed financial
information concerning (i) the Alliance Bond Fund (Separate Account No. 13
(Pooled)), the Alliance Common Stock Fund (Separate Account No. 4 (Pooled)),
the Alliance Aggressive Stock Fund (Separate Account No. 3 (Pooled)), and the
Alliance Balanced Fund (Separate Account No. 10 (Pooled)); (ii) unit value and
units outstanding information for the Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High Yield,
Alliance Growth & Income, Alliance Equity Index, Alliance Global, Alliance
International, Alliance Small Cap Growth, Alliance Conservative Investors, and
Alliance Growth Investors Funds (Separate Account No. 51 (Pooled)); and (iii)
unit value and units outstanding information for the T. Rowe Price Equity
Income, EQ/Putnam Growth & Income Value, Merrill Lynch Basic Value Equity, MFS
Research, T. Rowe Price International Stock, Morgan Stanley Emerging Markets
Equity, Warburg Pincus Small Company Value, MFS Emerging Growth Companies,
EQ/Putnam Balanced, and Merrill Lynch World Strategy Funds (Separate Account
No. 66 (Pooled)).
FINANCIAL STATEMENTS OF THE FUNDS
Each of the Funds is, or is part of, one of our separate accounts as described
in "About the separate accounts" under "More information." The financial
statements of the Funds are contained in the SAI. The financial statements for
the Portfolios of The Hudson River Trust and EQ Advisors Trust are included in
the respective SAI for each Trust.
<PAGE>
- --------------------------------------------------------------------------------
RIA FEATURES AND BENEFITS 13
- --------------------------------------------------------------------------------
1
RIA features and benefits
- --------------------------------------------------------------------------------
INVESTMENT OPTIONS
We offer 26 investment options under RIA, including the Funds and the
guaranteed interest account. Each Fund has a different investment objective.
The Funds try to meet their investment objectives by investing either in a
portfolio of securities or by holding mutual fund shares. The maximum number of
active investment options that can be available under an employer plan at any
time is 25. We cannot assure you that any of the Funds will meet their
investment objectives.
THE ALLIANCE BOND FUND
OBJECTIVE
The Alliance Bond Fund is available only to employer plans that signed an
agreement to invest monies in the Alliance Bond Fund before June 1, 1994. The
Alliance Bond Fund seeks to achieve maximum total return, consistent with
investment quality, with less volatility than a long-term bond account, by
investing primarily in publicly traded fixed-income securities, such as bonds,
debentures and notes. The Fund maintains its own portfolio of securities. The
Alliance Bond Fund is designed for participants who seek a greater rate of
return than that normally provided by money market investments and less
volatility than that experienced by long-term bond investments.
INVESTMENT STRATEGIES
The Alliance Bond Fund invests primarily in investment grade fixed-income
securities including, but not limited to, the following: obligations issued or
guaranteed by the U.S. Government (such as U.S. Treasury securities), its
agencies (such as the Government National Mortgage Association), or
instrumentalities (such as the Federal National Mortgage Association);
corporate debt securities; mortgage pass-through securities; collateralized
mortgage obligations; asset-backed securities; zero coupon bonds; and equipment
trust certificates. Investment grade securities are those rated within the four
highest credit categories (AAA, AA, A or BBB) by Standard & Poor's Corp.
("S&P") or (Aaa, Aa, A or Baa) by Moody's Investors Service, Inc. ("Moody's"),
or, if unrated, are of comparable investment quality as determined by our
credit analysis. Bonds rated below A by S&P or Moody's are more susceptible to
adverse economic conditions or changing circumstances than those rated A or
higher, but we regard these lower-rated bonds as having an adequate capacity to
pay principal and interest.
The Alliance Bond Fund invests in fixed-income securities that have maturities
of ten years or less. The weighted average duration of the Fund's total
portfolio is expected to be between one and five years. Duration is a principle
used in selecting portfolio securities that indicates a particular fixed-income
security's price volatility. Duration is measured by taking into account (1)
all of the expected payments relating to that security and (2) the time in the
future when each payment will be made, and then weighting all such times by the
present value of the corresponding payments. The duration of a fixed-income
security with interest payments occurring prior to its maturity is always
shorter than its term to maturity. In addition, given identical maturities, the
lower the stated rate of interest of a fixed-income security, the longer its
duration, and, conversely, the higher the stated rate of interest of a
fixed-income security, the shorter its duration. We believe that the Alliance
Bond Fund's policy of purchasing intermediate duration bonds significantly
reduces the volatility of the Fund's unit price over that of a long-term bond
account.
Additionally, the Alliance Bond Fund may also invest in high-quality money
market securities, including, but not limited to, obligations of the U.S.
Government, its agencies and instrumentalities; negotiable certificates of
deposit; banker's acceptances or bank time deposits; repurchase agreements;
master demand notes; and other money market instruments, either directly or
through our Separate Account 2A. For temporary or defensive purposes, the
Alliance Bond Fund also may invest directly or indirectly in money market
securities without limitation.
Finally, the Alliance Bond Fund may purchase fixed-income securities and money
market securities having adjustable
<PAGE>
- --------------------------------------------------------------------------------
14 RIA FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
rates of interest with periodic demand features. The Alliance Bond Fund may
also purchase fixed-income securities and certain money market securities on a
when-issued or delayed delivery basis.
RISKS OF INVESTMENT STRATEGIES
See "Risks of investing in the Funds," below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance Bond
Fund specifically.
THE ALLIANCE BALANCED FUND
OBJECTIVES
The Alliance Balanced Fund seeks both appreciation of capital and current
income by investing in a diversified portfolio of common stocks, other
equity-type securities and longer-term fixed income securities. The Fund also
seeks current income by investing in publicly traded debt securities and
short-term money market instruments. The Fund maintains its own portfolio of
securities.
INVESTMENT STRATEGIES
The Alliance Balanced Fund varies the portion of its assets invested in each
type of security in accordance with our evaluation of economic conditions, the
general level of common stock prices, anticipated interest rates and other
relevant considerations, including our assessment of the risks associated with
each investment medium.
In general, the Fund invests the greatest portion of its assets in equity
securities. During each of the past ten years, the Fund invested between 43%
and 86% of its assets in equity securities, including equity-type securities
such as convertible preferred stocks or convertible debt instruments.
The Fund's investment in non-money market debt securities consists primarily of
(a) publicly-traded securities issued or guaranteed by the United States
Government or its agencies or instrumentalities and (b) corporate fixed income
securities, including, but not limited to, bank obligations, notes,
asset-backed securities, mortgage pass-through obligations, collateralized
mortgage obligations, zero coupon bonds, and preferred stock. The Fund may also
buy debt securities with equity features such as conversion or exchange rights,
warrants for the acquisition of stock, or participations based on revenues,
sales or profits. The Fund only invests in investment grade non-money market
debt securities, i.e., those rated, at the time of acquisition, BBB or higher
by Standard & Poor's Corporation (S&P) or Baa or higher by Moody's Investors
Services, Inc. (Moody's) or, if unrated, are of comparable investment quality.
The average maturity of the debt securities held by the Fund varies according
to market conditions and the stage of interest rate cycles. The Fund may
realize gains on debt securities when such actions are considered advantageous
in light of existing market conditions.
The Fund also may invest (a) up to 10% of its total assets in restricted
securities; (b) 20% in foreign securities without substantial business in the
United States; (c) in repurchase agreements; and (d) in money market
securities, either directly or through our Separate Account No. 2A. The Fund
may also purchase and sell securities on a when-issued or delayed delivery
basis.
Finally, the Fund may (a) invest in put and call options and (b) trade in stock
index or interest rate futures, and foreign currency forward contracts, for
hedging purposes only. In option transactions, the economic benefit will be
offset by the cost of the option, while any loss would be limited to such cost.
The Fund also enters into hedging transactions. These transactions are
undertaken only when any required regulatory procedures have been completed and
when economic and market conditions indicate that such transactions would serve
the best interests of the Fund.
RISKS OF INVESTMENT STRATEGIES
See "Risks of investing in the Funds," below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance
Balanced Fund specifically.
<PAGE>
- --------------------------------------------------------------------------------
RIA FEATURES AND BENEFITS 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
THE ALLIANCE COMMON STOCK FUND
OBJECTIVE
The Alliance Common Stock Fund seeks to achieve long-term growth of capital by
investing in the securities of companies that we believe will share in the
growth of our nation's economy - and those of other leading industrialized
countries - over a long period. The Fund maintains its own portfolio of
securities.
INVESTMENT STRATEGIES
The Alliance Common Stock Fund invests primarily in common stocks. The Fund
generally invests in securities of intermediate and large sized companies, but
may invest in stocks of companies of any size. At times the Fund may invest its
equity holdings in a relatively small number of issuers, provided that no
investment causes: (1) more than 10% of the Fund's book value to be invested in
the securities of one issuer; or (2) more than 40% of the Fund's book value to
be invested in the securities of four or fewer issuers.
The Alliance Common Stock Fund also may invest smaller amounts in other
equity-type securities, such as convertible preferred stocks or convertible
debt instruments. The Fund also may invest in non-equity investments, including
non-participating and non-convertible preferred stocks, bonds and debentures.
The Fund's non-equity investments could be substantial if we believe that the
Fund will not meet its investment objectives by buying common stock and other
equity-type securities. The Fund also may invest up to 10% of its total assets
in restricted securities (securities not freely traded) and up to 15% of its
total assets in foreign securities (securities of established foreign companies
without substantial business in the United States.)
As a defensive strategy, the Alliance Common Stock Fund may make temporary
investments in government obligations, short-term commercial paper and other
money market instruments, either directly or through our Separate Account No.
2A, which invests in such securities. The Fund would not be pursuing its
investment objective when using this temporary defensive strategy.
RISKS OF INVESTMENT STRATEGIES
See "Risks of investing in the Funds," below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance
Common Stock Fund specifically.
THE ALLIANCE AGGRESSIVE STOCK FUND
OBJECTIVES
The Alliance Aggressive Stock Fund seeks to achieve long-term capital growth,
consistent with investment quality, by investing primarily in securities of
medium and smaller sized companies (with capitalization generally between $100
million and $5 billion) that we believe have greater growth potential than
larger companies. The Fund maintains its own portfolio of securities.
INVESTMENT STRATEGIES
The Alliance Aggressive Stock Fund invests primarily in common stocks of medium
and smaller sized companies. The Fund may also invest in securities not
generally defined as growth stocks, but with unusual value or earnings
potential. For example, the Fund may seek opportunities for capital growth by
investing in companies (a) believed to be in cyclical industries; (b) whose
securities are temporarily undervalued; (c) in special situations; (d) that are
younger but not widely known; or (e) doing business in countries whose
economies are expanding. The Fund may also invest in foreign companies without
substantial business in the United States. The Fund may invest in other
equity-type investments, and may at times be less diversified than a
traditional equity portfolio.
The Fund may also invest in short-term debt securities such as corporate notes,
and temporarily invest in money market
<PAGE>
- --------------------------------------------------------------------------------
16 RIA FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
investments, including our Separate Account No. 2A. Additionally, the Fund may
invest up to 10% of its total assets in restricted securities.
RISKS OF INVESTMENT STRATEGIES
See "Risks of investing in the Funds," below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance
Aggressive Stock Fund specifically. Note, however, that due to the Alliance
Aggressive Stock Fund's aggressive investment policies and less diversified
investments, this Fund provides greater growth potential and greater risk than
the Alliance Bond, Alliance Common Stock and Alliance Balanced Funds. As a
result, you should consider limiting the amount allocated to this Fund,
particularly as you near retirement.
INVESTMENT MANAGER OF THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE COMMON
STOCK AND ALLIANCE AGGRESSIVE STOCK FUNDS
We manage the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds. We currently use the personnel and facilities
of Alliance Capital Management L.P. ("Alliance") for portfolio management,
securities selection and transaction services. We are the indirect
majority-owners of Alliance, a publicly-traded limited partnership. We and
Alliance are each registered investment advisers under the Investment Advisers
Act of 1940.
Alliance acts as investment adviser to various separate accounts and general
accounts of Equitable Life and other affiliated insurance companies. Alliance
also provides investment management and advisory services to mutual funds,
endowment Funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate Funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations. As of December 31, 1998, Alliance had
total assets under management of $286.7 billion. Alliance's main office is
located at 1345 Avenue of the Americas, New York, New York 10105.
The Investment Committee of our Board of Directors must authorize or approve
the securities held in the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds. Subject to the Investment
Committee's broad supervisory authority, our investment officers and managers
have complete discretion over the assets of these Funds and have been given
discretion as to sales and, within specified limits, purchases of stocks, other
equity securities and certain debt securities. When an investment opportunity
arises that is consistent with the objectives of more than one account, we
allocate investment opportunities among accounts in an impartial manner based
on certain factors such as investment objective and current investment and cash
positions.
We, together with Equitable Life's parent company, own 72.2% of the outstanding
common stock of Donaldson, Lufkin & Jenrette, Inc. ("DLJ"). A DLJ subsidiary,
Donaldson, Lufkin & Jenrette Securities Corporation, is one of the nation's
largest investment banking and securities firms. Another DLJ subsidiary,
Autranet, Inc., is a securities broker that markets independently originated
research to institutions. Through the Pershing Division of Donaldson, Lufkin &
Jenrette Securities Corporation, DLJ supplies correspondent services, including
order execution, securities clearance and other centralized financial services,
to numerous independent regional securities firms and banks.
To the extent permitted by law and consistent with the Fund transaction
practices discussed in the prospectus, and subject to the consent of Fund
contractholders, the Funds may engage in securities and other transactions with
the above entities or may invest in shares of the investment companies with
which those entities have affiliations. In 1998, there were no such
transactions through DLJ subsidiaries.
FUNDS INVESTING IN THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Alliance Money Market, Alliance Intermediate Government Securities,
Alliance Quality Bond, Alliance High Yield, Alliance Growth & Income, Alliance
Equity Index,
<PAGE>
- --------------------------------------------------------------------------------
RIA FEATURES AND BENEFITS 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Alliance Global, Alliance International, Alliance Small Cap Growth, Alliance
Conservative Investors, and Alliance Growth Investors Funds invest in
corresponding Portfolios of The Hudson River Trust.
Alliance is also the investment adviser of The Hudson River Trust, including
each of its Portfolios.
The T. Rowe Price International Stock, T. Rowe Price Equity Income, EQ/Putnam
Growth & Income Value, EQ/Putnam Balanced, MFS Research, MFS Emerging Growth
Companies, Morgan Stanley Emerging Markets Equity, Warburg Pincus Small Company
Value, Merrill Lynch Basic Value Equity, and Merrill Lynch World Strategy Funds
invest in corresponding Portfolios of EQ Advisors Trust. The investment results
you will experience in any one of those Funds will depend on the investment
performance of the corresponding Portfolios. The table below shows the names of
the corresponding Portfolios, their investment objectives, and for the EQ
Advisors Trust Portfolios, their advisers.
<TABLE>
THE HUDSON RIVER TRUST PORTFOLIOS
- ----------------------------------------------------------------------------------------------------------------------
NAME OBJECTIVE
- ----------------------------------------------------------------------------------------------------------------------
<S> <C>
Alliance Money Market High level of current income while preserving assets and maintaining liquidity.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Intermediate
Government Securities High current income consistent with relative stability of principal.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond High current income consistent with preservation of capital.
- ----------------------------------------------------------------------------------------------------------------------
Alliance High Yield High return by maximizing current income and, to the extent consistent with
that objective, capital appreciation.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income High total return through a combination of current income and capital
appreciation.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Equity Index Total return performance (before expenses) that approximates the investment
performance of the Index at risk level consistent with that of the Index.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Global Long-term growth of capital.
- ----------------------------------------------------------------------------------------------------------------------
Alliance International Long-term growth of capital.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth Long-term growth of capital.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors High total return without, in the adviser's opinion, undue risk to principal.
- ----------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors High total return consistent with the adviser's determination of reasonable risk.
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
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18 RIA FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
EQ ADVISORS TRUST PORTFOLIOS
- -------------------------------------------------------------------------------------------------------------
NAME OBJECTIVE ADVISER
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
T. Rowe Price International Stock Long-term growth of capital. Rowe Price - Fleming
International, Inc.
- -------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income Substantial dividend income and T. Rowe Price Associates, Inc.
also capital appreciation.
- -------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value Capital growth and, secondarily, Putnam Investment Management,
current income. Inc.
- -------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced Balanced investment. Putnam Investment Management,
Inc.
- -------------------------------------------------------------------------------------------------------------
MFS Research Long-term growth of capital and Massachusetts Financial Services
future income. Company
- -------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies Long-term growth of capital. Massachusetts Financial Services
Company
- -------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Long-term capital appreciation. Morgan Stanley Asset
Equity Management, Inc.
- -------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value Long-term capital appreciation. Warburg Pincus Asset
Management, Inc.
- -------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy High total investment return. Merrill Lynch Asset Management.
L.P.
- -------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity Capital appreciation and, Merrill Lynch Asset Management.
secondarily, income. L.P.
- -------------------------------------------------------------------------------------------------------------
</TABLE>
Please see "More information" for further information regarding The Hudson River
Trust and EQ Advisors Trust.
PLEASE REFER TO THE PROSPECTUSES AND SAIS OF THE HUDSON RIVER TRUST AND EQ
ADVISORS TRUST FOR A DETAILED DISCUSSION OF THE INVESTMENT OBJECTIVES AND
STRATEGIES, ADVISERS, RISK FACTORS AND OTHER INFORMATION CONCERNING THE TRUSTS
AND THE PORTFOLIOS.
See "Proposed substitution of Portfolios" under "More information" for
information regarding the proposed substitution of newly created Portfolios of
EQ Advisors Trust for the Portfolios of The Hudson River Trust currently
available under the Funds.
<PAGE>
- --------------------------------------------------------------------------------
RIA FEATURES AND BENEFITS 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RISKS OF INVESTING IN THE FUNDS
All of the Funds invest in securities of one type or another. You should be
aware that any investment in securities carries with it a risk of loss, and you
could lose money investing in the Funds. The different investment objectives
and policies of each Fund may affect the return of each Fund and the risks
associated with an investment in that Fund.
Additionally, market and financial risks are inherent in any securities
investment. By market risks, we mean factors which do not necessarily relate to
a particular issuer, but affect the way markets, and securities within those
markets, perform. Market risks can be described in terms of volatility, that
is, the range and frequency of market value changes. Market risks include such
things as changes in interest rates, general economic conditions and investor
perceptions regarding the value of debt and equity securities. By financial
risks we mean factors associated with a particular issuer which may affect the
price of its securities, such as its competitive posture, its earnings and its
ability to meet its debt obligations. Both the financial and market risks of an
investment in the Alliance Bond Fund are expected to be less than those for the
Alliance Common Stock, Alliance Balanced and Alliance Aggressive Stock Funds.
The risk factors associated with an investment in the Alliance Bond, Alliance
Common Stock, Alliance Aggressive Stock and Alliance Balanced Funds are
described below. See the SAI for additional information regarding certain
investment techniques used by these Funds. See The Hudson River Trust and EQ
Advisors Trust prospectuses for risk factors and investment techniques
associated with the Portfolios in which the other Funds invest.
RISK FACTORS -- ALLIANCE BOND, ALLIANCE COMMON STOCK, ALLIANCE AGGRESSIVE STOCK
AND ALLIANCE BALANCED FUNDS
COMMON STOCK. Investing in common stocks and related securities involves the
risk that the value of the stocks or related securities purchased will
fluctuate. These fluctuations could occur for a single company, an industry, a
sector of the economy, or the stock market as a whole. These fluctuations could
cause the value of the Fund's investments -- and, therefore, the value of the
Fund's units -- to fluctuate.
SECURITIES OF MEDIUM AND SMALLER SIZED COMPANIES. The Alliance Aggressive Stock
Fund invests primarily in the securities of medium and smaller sized companies,
although the Alliance Common Stock and Alliance Balanced Funds may also make
these investments. The securities of small and medium sized, less mature,
lesser known companies involve greater risks than those normally associated
with larger, more mature, well-known companies. Therefore, consistent earnings
may not be as likely in small companies as in large companies.
The Funds also run a risk of increased and more rapid fluctuations in the value
of its investments in securities of small or medium sized companies. This is
due to the greater business risks of small size and limited product lines,
markets, distribution channels, and financial and managerial resources.
Historically, the price of small and medium capitalization stocks (those with
capitalizations of between $100 million to $5 billion) and stocks of recently
organized companies have fluctuated more than the larger capitalization stocks
and the overall stock market. One reason is that small- and medium-sized
companies have less certain prospects for growth, a lower degree of liquidity
in the markets for their stocks, and greater sensitivity to changing economic
conditions.
NON-EQUITY SECURITIES. Investing in non-equity securities, such as bonds and
debentures, involves the risk that the value of these securities held by the
Alliance Bond and Alliance Common Stock Funds -- and, therefore, the value of
each of the Fund's units -- will fluctuate with changes in interest rates
(interest rate risk) and the perceived ability of the issuer to make interest
or principal payments on time (credit risk). A decline in prevailing interest
rates generally will increase the value of the securities held by the Alliance
Bond Fund, while an increase in prevailing interest rates usually reduces the
value of the Alliance Bond Fund's holdings. As a result, interest rate
fluctuations will affect the value of Alliance Bond Fund units, but will not
affect the
<PAGE>
- --------------------------------------------------------------------------------
20 RIA FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
income received from the Fund's current portfolio holdings. Moreover,
convertible securities, such as convertible preferred stocks or convertible
debt instruments, contain both debt and equity features, and may lose
significant value in periods of extreme market volatility.
FOREIGN INVESTING. Investing in securities of foreign companies that may not do
substantial business in the United States involves additional risks, including
risk of loss from changes in the political or economic climate of the countries
in which these companies do business. Foreign currency fluctuations, exchange
controls or financial instability could cause the value of the Alliance Common
Stock and Balanced Fund's foreign investments to fluctuate. Additionally,
foreign accounting, auditing and disclosure standards may differ from domestic
standards, and there may be less regulation in foreign countries of stock
exchanges, brokers, banks, and listed companies than in the United States. As a
result, the Fund's foreign investments may be less liquid and their prices may
be subject to greater fluctuations than comparable investments in securities of
U.S. issuers.
RESTRICTED SECURITIES. Investing in restricted securities involves additional
risks because these securities generally (1) are less liquid than
non-restricted securities and (2) lack readily available market quotations.
Accordingly, the Alliance Common Stock Fund may be unable to quickly sell its
restricted security holdings at fair market value.
The following discussion describes investment risks unique to either the
Alliance Common Stock Fund, Alliance Aggressive Stock Fund or the Alliance
Balanced Fund.
INVESTMENT CONCENTRATION. Concentrating the Alliance Common Stock Fund's equity
holdings in the stocks of a few companies increases the risk of loss, because a
decline in the value of one of these stocks would have a greater impact on the
Fund. As of December 31, 1998, the Fund held 27.4% of its net assets in the
stocks of four issuers. See Separate Account No. 4 (Pooled) Statement of
Investments and Net Assets in the SAI.
AGGRESSIVE INVESTMENT POLICIES. Due to the Alliance Aggressive Stock Fund's
aggressive investment policies and less diversified investments, this Fund
provides greater growth potential and greater risk than the Alliance Common
Stock and Alliance Balanced Funds. As a result, you should consider limiting
the amount allocated to this Fund, particularly as you near retirement.
ASSET ALLOCATION POLICIES. The Alliance Balanced Fund varies the portion of
it's assets invested in equity and non-equity securities with our evaluation of
various factors. The Fund is subject to the risk that we may incorrectly
predict changes in the relative values of the stock and bond markets.
DEBT INSTRUMENTS ISSUED BY SCHEDULE B BANKS. The Alliance Balanced Fund may
invest in debt instruments issued by Schedule B Banks, which are foreign
branches of United States banks. Schedule B Banks are not required to maintain
the same financial reserves which are required of United States banks, but
Schedule B Bank certificates of deposit are fully guaranteed by the U.S. parent
of the issuing bank. Debt instruments issued by Schedule B Banks may include
certificates of deposit and time deposits of London branches of United States
banks ("Eurodollars"). Eurodollar investments are subject to the types of risks
associated with foreign securities. London branches of the United States banks
have extensive government regulation which may limit both the amount and the
type of loans and interest rates. In addition, the banking industry's
profitability is closely linked to prevailing money market conditions for
financing lending operations. Both general economic conditions and credit risks
play an important part in the operations of the banking industry. United States
banks are required to maintain reserves, are limited in how much they can loan
to a single borrower and are subject to other regulations to promote financial
soundness. Not all of these laws and regulations apply to foreign branches of
United States banks.
<PAGE>
- --------------------------------------------------------------------------------
RIA FEATURES AND BENEFITS 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CHANGE OF INVESTMENT OBJECTIVES
We can change the investment objectives of the Alliance Bond, Alliance Common
Stock, Alliance Aggressive Stock and Alliance Balanced Funds if the New York
State Insurance Department approves the change.
The investment objectives of the Portfolios of The Hudson River Trust can only
be changed by a majority vote of shareholders of those Portfolios. The
investment objectives of the Portfolios of EQ Advisors Trust may be changed by
the Board of Trustees of EQ Advisors Trust without the approval of
shareholders. See "Voting rights" under "More information."
GUARANTEED INTEREST ACCOUNT
The guaranteed interest account is part of our general account and pays
interest at guaranteed rates. We discuss our general account under "More
information."
The amount allocated to the guaranteed interest account earns interest at the
current guaranteed interest rate which is an annual effective rate. After we
credit the interest, we deduct certain charges and fees.
We credit interest through and allocate interest on the date of any transfer or
withdrawal transaction. We credit interest each day of the month on the amount
maintained for the employer plan at the beginning of the day at a daily rate
equivalent to the guaranteed interest rate that applies to the employer plan.
CURRENT AND MINIMUM INTEREST RATES
Except as described below, the "current rate" is the rate of interest that we
actually credit to amounts in the guaranteed interest account for any given
calendar year. We declare current rates for each class of employer plan before
the beginning of each calendar year. In addition to the current rate, we
declare "minimum rates" for the next two calendar years. The minimum interest
rates will never be lower than 4%. In general, we expect to declare current
rates, in any year, greater than the previously declared minimum rates for that
year. If the employer plan is permitted to invest in the Alliance Bond Fund, we
may at times have the right to declare a lower current rate of interest
("revised rate") which will remain in effect for the remainder of the calendar
year only for new amounts contributed or transferred by the employer plan to
the guaranteed interest account. See "Special rules applicable to the Alliance
Bond Fund" for the circumstances under which a revised rate might be declared.
Such revised rate will reflect market interest rates for money market
instruments and other short-term investments existing at the time any such
amount is contributed or transferred to the guaranteed interest account without
regard to any previously declared minimum rate.
The current interest rate for 1999 and 2000 and year 2001 minimum interest
guaranteed for each class, are stated in the proposal documents submitted to
sponsors of prospective RIA employer plans. The establishment of new classes
will not decrease the rates that apply to employer plans already assigned to a
previous class. The effective current rate for 2000 and the minimum rates
effective for calendar years 2001 and 2002 will be declared in December 1999.
CLASSES OF EMPLOYER PLANS
We assign an employer plan to a "class" of employer plans upon its
participation in the Master Retirement Trust in order to help us determine the
current and minimum guaranteed rates of interest that apply for the employer
plan participating in our guaranteed interest account. The initial class of
employer plans to which an employer plan is assigned will depend on the date
the plan is adopted.
REVISED INTEREST RATES
All of the following conditions must exist for us to declare a revised rate:
o on the date of the allocation, the aggregate amount held in the Alliance
Bond Fund with respect to all employer plans comprising Equitable Life's
Small Pension book of business is at least 10% of the aggregate amount then
held under all the contracts which Fund those plans;
o on the date of the allocation, the otherwise applicable
<PAGE>
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22 RIA FEATURES AND BENEFITS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
"current" guaranteed interest rate with respect to the employer plan's
guaranteed interest account exceeds the benchmark treasury rate by at least
0.75%; and
o prior allocations to the guaranteed interest account for the employer plan
during that calendar year equal or exceed 110% of the average annual
allocations to the guaranteed interest account for the employer plan during
the three immediately preceding calendar years.
If we declare a revised rate for plans permitted to invest in the Alliance Bond
Fund the employer or plan trustee may, by written notice, withdraw all or part
of the amount that would be credited with such lower revised rate, without
deduction of the contingent withdrawal charge. The investment, for the
remainder of the calendar year, of such withdrawn or returned amounts in a
funding vehicle other than RIA shall not be considered a violation of an
employer plan's exclusive funding obligation provided such amount is
contributed to RIA at the beginning of the following calendar year.
<PAGE>
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HOW WE VALUE YOUR PLAN BALANCES 23
- --------------------------------------------------------------------------------
2
How we value your plan balances
- --------------------------------------------------------------------------------
FOR THE FUNDS. When you invest in a Fund, your contribution or transfer
purchases "units" of that Fund. The unit value on any day reflects the value of
the Fund's investments for the day and the charges and expenses we deduct from
the Fund. We calculate the number of units you purchase by dividing the amount
you invest by the unit value of the Fund as of the close of business on the day
we receive your contribution or transfer instruction.
- --------------------------------------------------------------------------------
A business day is any day on which Equitable Life is open and the New York Stock
Exchange is open for trading. We are closed on national business holidays,
Martin Luther King, Jr. Day and the Friday after Thanksgiving. We may also
choose to close on the day immediately preceding or following a national
business holiday or due to emergency conditions. Our business day ends at 4:00
p.m. Eastern Time.
- --------------------------------------------------------------------------------
On any given day, your account value in any Fund equals the number of the Fund's
units credited to your account, multiplied by that day's value for one Fund
unit. In order to take deductions from any Fund, we cancel units having a value
equal to the amount we need to deduct. Otherwise, the number of your Fund units
of any Fund does not change unless you make additional contributions, make a
withdrawal, make a transfer, or request some other transaction that involves
moving assets into or out of that Fund.
For a description of how Fund unit values are computed, see "How We Determine
the Unit Value" in the SAI.
FOR THE GUARANTEED INTEREST ACCOUNT. The value of an employer plan's investment
in the guaranteed interest account is, at any time, the total contributions
allocated to the guaranteed interest account, plus the interest earned, less (i)
employer plan benefit payments, (ii) other employer plan withdrawals (including
loans) and (iii) charges and fees provided for under the contracts.
<PAGE>
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24 TRANSFERS
- --------------------------------------------------------------------------------
3
Transfers
- --------------------------------------------------------------------------------
TRANSFERS AMONG INVESTMENT OPTIONS
You may transfer accumulated amounts among the investment options at any time
and in any amount, subject to the transfer limitations described below. In
addition to our rules, transfers among the investment options may be subject to
employer plan provisions which may limit or disallow such movements. We do not
impose a charge for transfers among the investment options.
The following section describes transfer limitations applicable, under certain
situations, to amounts transferred out of the guaranteed interest account
during the calendar quarter in which the request is made and the three
preceding calendar quarters ("transfer period").
PARTICIPANT-DIRECTED PLANS. If the employer elects to fund the employer plan
with the guaranteed interest account and the Alliance Money Market, Alliance
Bond, Alliance Intermediate Government Securities, Alliance Quality Bond,
Alliance High Yield or Alliance Conservative Investors Funds, during any
transfer period, the following limitations apply:
For plans electing the PRS, the maximum amount that may be transferred by a
participant from the guaranteed interest account is equal to the greater of:
(i) 25% of the amount the participant had in the guaranteed interest account as
of the last calendar day of the prior calendar year, and (ii) the total of all
amounts the participant transferred out of the guaranteed interest account
during the prior calendar year. Generally, this means that new participants
will not be able to transfer amounts out of the guaranteed interest account
during the first calendar year of their participation under the contract.
If assets have been transferred from another funding vehicle by the employer,
then the participant, for the remainder of that calendar year, may transfer to
the Funds up to 25% of such transferred amount that the participant initially
allocated to the guaranteed interest account.
For plans not electing the PRS, the maximum amount that may be transferred from
the guaranteed interest account is equal to the greater of: (i) 25% of the
amount the employer plan had in the guaranteed interest account as of the last
calendar day of the prior calendar year, or (ii) the total of all amounts the
employer plan transferred out of the guaranteed interest account during the
prior calendar year. The employer plan is responsible for monitoring this
transfer limitation.
If assets have been transferred from another funding vehicle by the employer,
then the trustee on behalf of the participant, for the remainder of that
calendar year, may transfer to the Funds up to 25% of such transferred amount
that was initially allocated to the guaranteed interest account.
TRUSTEE-DIRECTED PLANS. Transfers of accumulated amounts among the investment
options will be permitted as determined by us in our sole discretion only.
If assets have been transferred from another funding vehicle by the employer,
then the plan trustee, for the remainder of that calendar year, may transfer to
an investment option up to 25% of such transferred amount that was initially
allocated to the guaranteed interest account.
SPECIAL RULES APPLICABLE TO THE ALLIANCE BOND FUND
The Alliance Bond Fund is available only to participant-directed employer plans
that signed an agreement to participate in that Fund prior to June 1, 1994
("old employer plans"). If the employer has not made any of the Funds of
Separate Account No. 51 available under a participant-directed employer plan,
special transfer rules which provide transfer restrictions, described below
will apply. If an old employer plan adds any of the Funds of Separate Account
No. 51, the Alliance Bond Fund will no longer be subject to any transfer
restrictions. However, transfers out the guaranteed interest account will be
subject to certain restrictions described above.
TRANSFERS TO THE ALLIANCE BOND FUND. Except as described below, a plan
participant in an old employer plan may elect to transfer to the Alliance Bond
Fund any amount (in whole percentages) arising from participant-directed
<PAGE>
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TRANSFERS 25
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
contributions. We will process requests to transfer amounts to the Alliance
Bond Fund only if, at the time of the transfer request, the current guaranteed
interest rate for the plan's guaranteed interest account is higher than the
then-current "benchmark treasury rate." The benchmark treasury rate, as
determined in accordance with our procedures, can be obtained via a daily tape
recording by calling the RIA Service Office at 1-800-967-4560.
If we will not process a transfer request, we will notify the employer within
four business days. We will not redirect the transfer to another investment
option and will not maintain any record of such request for future processing.
TRANSFERS FROM THE ALLIANCE BOND FUND. A plan participant in an old employer
plan may elect to transfer any amount (in whole percentages) held in the
Alliance Bond Fund to one or more investment options.
<PAGE>
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26 ACCESS TO YOUR PLAN BALANCES
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4
Access to your plan balances
- --------------------------------------------------------------------------------
PARTICIPANT LOANS
Participant loans are available under RIA, if the employer plan permits them.
Participants must apply for a plan loan through the employer plan. The plan
administrator is responsible for administering the loan program. Loans are
subject to restrictions under federal tax rules and ERISA. See "Tax
information."
Below we briefly summarize some of the important terms of the loan provisions
under RIA. A more detailed discussion is provided in the SAI under "Loan
Provision."
Generally, all loan amounts must be taken from the guaranteed interest account.
The participant must pay the interest as required by federal income tax rules.
All repayments are made back into the guaranteed interest account. If the
participant fails to repay the loan when due, the amount of the unpaid balance
may be subject to a contingent withdrawal charge, taxes, and additional penalty
taxes. Interest paid on a retirement plan loan is not deductible.
The minimum amount of a loan for a participant is $1,000, and the maximum
amount is 90% of the plan participant's balances in all the investment options.
An employer plan may impose additional conditions or restrictions on loan
transactions. We also charge a loan fee in an amount equal to 1% of the loan
principal amount on the date a loan is made.
CHOOSING BENEFIT PAYMENT OPTIONS
RIA offers a variety of benefit payment options, subject to the provisions of
an employer's plan. Plan participants should consult their employer for
details. An employer's plan may allow a choice of one or more of the following
forms of distribution:
o purchase of one of our annuities;
o lump sum distribution;
o use of part of the proceeds to purchase one of our annuities with the
balance to be paid as a lump sum; or
o permitted cash withdrawals.
Subject to the provisions of your plan, RIA makes available the following forms
of fixed annuities:
o life annuity;
o life annuity - period certain;
o life annuity - refund certain;
o period certain annuity; and
o qualified joint and survivor life annuity.
All of the forms outlined above (with the exception of the qualified joint and
survivor life annuity) are available as either single or joint life annuities.
We also offer other annuity forms not outlined here.
The various fixed annuities we offer under RIA are described in greater detail
in the SAI under "Annuity Benefits." As a general matter, the minimum amount
that can be used to purchase any type of annuity, net of all applicable charges
and fees, is $3,500. An annuity administrative charge of $175 will be deducted
from the amount used to purchase an annuity.
We require that the amount of any benefit distribution from an employer plan
that uses RIA as a partial investment funding vehicle be in proportion to the
amount of plan assets held in RIA, unless we and the plan trustees specifically
agree in writing to some other method.
Requests for cash distributions must be made to us on an aggregate as opposed
to a participant-by-participant basis, except for employer plans using the
PRS. Cash withdrawals by a plan participant prior to retirement may give rise
to contingent withdrawal charges, and tax penalties or other adverse tax
consequences. See "Tax information."
We make distribution checks payable to the trustees of the plan. The plan
trustees are responsible for distribution of Funds to the participant or other
payee and for any applicable federal and state income tax withholding and
reporting. See "Tax information."
RIA does not have separate disability or death benefit provisions. All
disability and death benefits are provided in accordance with the employer
plan.
<PAGE>
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RIA 27
- --------------------------------------------------------------------------------
5
RIA
- --------------------------------------------------------------------------------
This section explains RIA in further detail. It is intended for employers who
wish to use RIA, but contains information of interest to plan participants as
well. Plan participants should, of course, understand the provisions of their
plan that describes their rights in more specific terms.
RIA is an investment program designed for employer plans that qualify for
tax-favored treatment under Section 401(a) of the Code. Eligible employer plans
include defined benefit plans, defined contribution plans or profit-sharing
plans, including 401(k) plans. These employer plans generally must also meet
the requirements of ERISA.
RIA consists of two group annuity contracts ("contracts") issued by Equitable
Life, a Master Retirement Trust agreement, a participation or installation
agreement, and an optional participant recordkeeping services ("PRS")
agreement. RIA had $1.4 billion in assets at December 31, 1998.
Our Service Consultants are available to answer your questions about RIA.
Please contact us by using the telephone number or addresses listed under "How
to reach us - Information on joining RIA" in the back of this prospectus.
SUMMARY OF PLAN CHOICES
You have a choice of two retirement plan arrangements under RIA. You can:
o Choose RIA as the exclusive funding vehicle for the assets of an employer
plan. If you choose this option, the annual amount of plan contributions
must be at least $10,000. We call this type of plan an "exclusive funding
employer plan"; or
o Choose RIA as a partial investment funding vehicle for an employer plan. If
you choose this option, the aggregate amount of contributions in the
initial participation year must be at least $50,000, and the annual
aggregate amount of contributions thereafter must be at least $25,000. We
determine at our sole discretion if this option will be available to you.
We call this type of plan a "partial funding employer plan." We do not
offer the guaranteed interest account with a partial funding employer
plan. You must enter into a partial funding agreement with us to use this
partial funding employer plan.
An exclusive funding employer plan may not change its participation basis to
that of a partial funding employer plan, or vice versa, unless the underwriting
and other requirements referred to above are satisfied and approved by us.
We reserve:
o the right to change these amounts in the future for new sales only; and
o the right to impose higher annual minimums for certain plans.
We will give you advance notice of any such changes.
You also have the choice of using RIA with two types of plans. You may use RIA
for:
o participant-directed employer plans, which permit participants to allocate
contributions and transfer account accumulations among the investment
options; or
o trustee-directed employer plans, which permit these types of investment
decisions to be made only by the employer, a trustee or any named fiduciary
or an authorized delegate of the plan.
At our sole discretion, a trustee-directed plan may change its participation
basis to a participant-directed plan.
CHOOSING THE RIGHT PLAN DEPENDS ON YOUR OWN SET OF CIRCUMSTANCES. WE RECOMMEND
THAT YOU REVIEW ALL CONTRACTS, TRUST, PARTICIPATION AND RELATED AGREEMENTS
WITH YOUR LEGAL AND TAX COUNSEL.
GETTING STARTED
To enroll in RIA, a partnership, sole proprietor or corporation must adopt the
Master Retirement Trust as part of its employer plan. You also must execute the
participation or installation agreement, and provide us with certain plan
information. We will not accept contributions until we accept the enrollment of
the employer plan.
<PAGE>
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28 RIA
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- --------------------------------------------------------------------------------
HOW TO MAKE CONTRIBUTIONS
REGULAR CONTRIBUTIONS. Contributions may be made by check or by wire transfer.
All contributions under an employer plan should be sent to the address under
"For contributions checks only" in "Information once you join RIA" in the back
of this prospectus. All contributions made by check must be drawn on a bank in
the U.S. clearing through the Federal Reserve System, in U.S. dollars, and made
payable to Equitable Life. Third party checks are not acceptable, except for
rollover contributions, tax-free exchanges or trustee checks that involve no
refund. All checks are subject to our ability to collect the funds. We reserve
the right to reject a payment if it is received in an unacceptable form.
Contributions are normally credited on the business day that we receive them.
Contributions are only accepted from the employer or plan trustee.
There is no minimum amount for each contribution where employer plan
contributions are made on a basis more frequent than annually. The total
amount of contributions under an employer plan is limited by law. See "Tax
information."
ROLLOVER OR TRANSFERS FROM ANOTHER PLAN. You can change the funding of an
existing plan to use RIA. Before making a change, however, you should carefully
consider the following:
o The comparative costs and benefits under existing funding arrangements and
under RIA; and
o The amendments or changes that may have to be made in the plan if Funds are
transferred.
To make a rollover or transfer to RIA, Funds must be in cash. Therefore, any
assets accumulated under an existing plan will have to be liquidated for cash.
SELECTING INVESTMENT OPTIONS
You can select from the investment options available under the contracts. The
maximum number of active options you may select at any time is 25. Plan
participant choices will be limited to the investment options selected. If the
Plan is intended to comply with the requirements of ERISA Section 404(c), the
Employer or the Plan Trustee is responsible for making sure that the investment
options chosen constitute a broad range of investment choices as required by
the Department of Labor ("DOL") Section 404(c) regulations.
Generally, for participant-directed plans, if you intend for your plan to
comply with ERISA Section 404(c), you should, among other things:
o select the Alliance Money Market Fund if you select any of the Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High
Yield or Alliance Conservative Investors Funds; or
o select the guaranteed interest account if you do not select any of the
Alliance Money Market, Alliance Intermediate Government Securities, Alliance
Quality Bond, Alliance High Yield, Alliance Small Cap Growth or Alliance
Conservative Investors Funds.
If you select any of the Alliance Money Market, Alliance Bond, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High Yield
or Alliance Conservative Investors Funds and the guaranteed interest account,
certain restrictions will apply to transfers out of the guaranteed interest
account. The Alliance Bond Fund is available only to employer plans that signed
an Agreement to participate in that Fund prior to June 1, 1994, and, as
described below, special transfer rules apply for these employer plans. If you
add any of the Funds of Separate Account Nos. 51 or 66, the Alliance Bond Fund
will no longer be subject to any transfer restrictions. However, transfers out
of the guaranteed interest account will be subject to certain restrictions.
ALLOCATING PROGRAM CONTRIBUTIONS
We allocate contributions to the investment options in accordance with the
allocation instructions provided to us by the plan trustee or the individual
who the plan trustee has previously authorized in writing. Allocations may be
made by dollar amounts or in any whole number percentages that total 100%.
<PAGE>
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RIA 29
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Allocation changes may be made without charge, but may be subject to employer
plan provisions that may limit or disallow such movements.
<PAGE>
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30 DISTRIBUTIONS
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6
Distributions
- --------------------------------------------------------------------------------
Keep in mind two sets of rules when considering distributions or withdrawals
from RIA. The first are rules and procedures that apply to the investment
options, exclusive of the provisions of your plan. We discuss those in this
section. The second are rules specific to your plan, which are not described
here.
Moreover, distribution and benefit payment options under a tax qualified
retirement plan are subject to complicated legal requirements. A general
explanation of the federal income tax treatment of distributions and benefit
payment options is provided in "Tax information" in this prospectus and the
SAI. You should discuss your options with a qualified financial advisor. Our
Service Consultants also can be of assistance. Certain plan distributions may
be subject to a contingent withdrawal charge, federal income tax, and penalty
taxes. See "Charges and expenses" and "Tax information."
AMOUNTS IN THE FUNDS. These are generally available for distribution at any
time, subject to the provisions of your plan. Distributions from the Alliance
Bond, Alliance Common Stock, Alliance Aggressive Stock and Alliance Balanced
Funds are permitted at any time. Distributions from remaining Funds are
permitted at any time except if there is any delay in redemptions from the
corresponding Portfolio of The Hudson River Trust or EQ Advisors Trust, as
applicable. See "When we pay proceeds."
AMOUNTS IN THE GUARANTEED INTEREST ACCOUNT. These are generally available for
distribution at any time, subject to the provisions of your plan. A deferred
payout provision, however, applies to trustee-directed employer plans which are
terminating their RIA Contract. Under that provision, we can defer payment of
the employer plan balance held in the guaranteed interest account, less the
contingent withdrawal charge, by paying out the balance in six installments
over five years. During the deferred payout period, we credit the balances upon
which we defer payment with the current interest rate declared for each year.
We also continue to deduct the ongoing operations fee monthly from the balance
during the deferred payout period.
When we impose the deferred payout provision, any trustee-directed employer
plan benefits becoming due during the deferred payout period will not be paid
from the employer plan balance in the guaranteed interest account. If, however,
sufficient funds are available, the benefits would be paid from the new funding
vehicle for the trustee-directed employer plan.
Participant-directed employer plans are not subject to the deferred payout
provision.
<PAGE>
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DISTRIBUTIONS 31
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- --------------------------------------------------------------------------------
ILLUSTRATION OF DEFERRED PAYOUT PROVISION
<TABLE>
<CAPTION>
Transaction Date End of Year 1 End of Year 2
- --------------------------------------------------------------------------------
<S> <C> <C>
guaranteed interest account
Plan Assets
- - Withdrawal Charge
- ------------------------------
Distribution Amount 1
Dist. Amt. 1 = 1st Payment
- ---------------
6
Dist. Amount 1
- - 1st Payment
- ---------------
Balance 1 |ad
Balance 1
+ Interest
- Operations Fee
----------------------------
Distribution Amount 2
Dist. Amt. 2 = 2nd Payment
---------------
5
Dist. Amount 2
- 2nd Payment
---------------
Balance |ad
Balance 2
+ Interest
- Operations Fee
-------------------
Distribution Amount 3
Dist. Amt. 3 = 3rd Payment
---------------
4
Dist. Amount 3
- 3rd Payment
---------------
Balance |ad
<CAPTION>
Transaction Date End of Year 3 End of Year 4 End of Year 5
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
guaranteed interest account
Plan Assets
- - Withdrawal Charge
- ------------------------------
Distribution Amount 1
Dist. Amt. 1 = 1st Payment
- --------------- 6
Dist. Amount 1
- - 1st Payment
- ---------------
Balance 1 |ad
Balance 3
+ Interest
- Operations Fee
------------------
Distribution Amount 4
Dist. Amt. 4 = 4th Payment
---------------
3
Dist. Amount 4
- 4th Payment
---------------
Balance |ad Balance 4
+ Interest
- Operations Fee
----------------------------
Distribution Amount 5
Dist. Amt. 5 = 5th Payment
---------------
2
Dist. Amount 5
- 5th Payment
---------------
Balance |ad Balance 5
+ Interest
- Operations Fee
-------------------
Final Distribution
</TABLE>
<PAGE>
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32 OPTIONAL PARTICIPANT RECORDKEEPING SERVICES
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7
Optional participant recordkeeping services
- --------------------------------------------------------------------------------
SERVICES PROVIDED. If you elect the optional participant recordkeeping services
(PRS) program, we:
o establish an individual participant account for each participant covered by
your plan based on data you provide;
o receive and deposit contributions on behalf of participants to individual
participant accounts;
o maintain records reflecting, for each participant, contributions, transfers,
loan transactions, withdrawals and investment experience and interest
accrued, as applicable, on an individual participant's proportionate values
in the plan;
o provide to you individual participants' reports reflecting the activity in
the individual participant's proportionate interest in the plan; and
o process transfers and distributions of the participant's portion of his or
her share of the employer plan assets among the investment options as you
instruct.
You are responsible for providing Equitable Life with required information and
for complying with our procedures relating to the PRS program. We will not be
liable for errors in recordkeeping if the information you provide is not
provided on a timely basis or is incorrect. The plan administrator retains full
responsibility for the income tax withholding and reporting requirements
including required notices to the plan participants, as set forth in the
federal income tax rules and applicable Treasury Regulations.
INVESTMENT OPTIONs. You must include the guaranteed interest account in the
investment options if you select PRS.
FEES. We charge an annual fee of $25 per active participant paid in twelve
equal monthly installments of $2.08. We deduct the fee from the individual
participant's account at the end of each month by means of a reduction of units
or a cash withdrawal from the guaranteed interest account. We retain the right
to change the fee upon 30 days notice to the employer. See "Charges and
expenses."
ENROLLMENT. You may enroll for PRS at the time your plan is established with us
under RIA, or at any time thereafter. Enrollment is subject to our approval, at
our sole discretion. We have summarized the main features of PRS here, and
participation in this aspect of the RIA program is subject to the terms set
forth in the participation agreement (including any separate supplementary
agreement) entered into between you and us.
<PAGE>
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RATES OF RETURN 33
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8
Rates of return
- --------------------------------------------------------------------------------
In order to show how the performance of the Funds may affect employer balances,
the following tables provide a historical view of investment performance. The
information presented includes performance results for each Fund including, for
the Funds of Separate Account Nos. 51 and 66, performance results since
inception of the corresponding Portfolios, along with the appropriate
benchmarks. These performance results are based on the change in the unit value
for the periods shown. Note that year-to-date figures are not annualized.
Performance data for the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds reflect (i) the investment results of
the Fund since inception and (ii) the investment management and financial
accounting fee. We have recalculated performance prior to June 1, 1994 to
reflect the deduction of this fee even though it did not apply as an
asset-based charge.
Performance data for the Funds of Separate Account Nos. 51 and 66 reflect (i)
the investment results of the corresponding Portfolios of The Hudson River
Trust and EQ Advisors Trust respectively, from the date of inception of those
Portfolios, (ii) the actual investment advisory fee and direct operating
expenses of the relevant Portfolio and (iii) for Separate Account No. 51, the
separate account administrative charge (although this latter charge was not an
asset-based charge before the Portfolios were available under RIA).
None of the data reflects the ongoing operations fee or the loan fee, annuity
administrative fee or charge for premium taxes, which may not be applicable to
any particular participant. Because rates of return do not reflect the ongoing
operations fee or other charges and fees applicable to employer plans under
RIA, the rate of return for an employer plan would be lower if such charges and
fees were reflected.
For amounts allocated or transferred to a Fund, investment return and principal
will fluctuate and unit values may be worth more or less than the original cost
when redeemed.
Market indices are not subject to any charges for investment advisory fees
typically associated with a managed portfolio. Comparisons with these
benchmarks, therefore, are of limited use. We include them because they are
widely known and may help you to understand the universe of securities from
which each Fund is likely to select its holdings.
COMPARATIVE BENCHMARKS
ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: Lehman Intermediate Government
Bond Index.
ALLIANCE BOND: Lehman Intermediate Government/ Corporate Bond Index.
ALLIANCE QUALITY BOND: Lehman Aggregate Bond Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE GROWTH & INCOME: 75% Standard & Poor's 500 Index, and 25% Value Line
Convertible Index.
ALLIANCE EQUITY INDEX: Standard & Poor's 500 which includes reinvested
dividends.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index which includes reinvested
dividends.
ALLIANCE GLOBAL: Morgan Stanley Capital International World Index.
ALLIANCE INTERNATIONAL: Morgan Stanley Capital International Europe, Australia,
Far East Index.
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index and 50% Standard
& Poor's Mid-Cap Total Return.
ALLIANCE SMALL CAP GROWTH: 100% Russell 2000 Growth.
ALLIANCE CONSERVATIVE INVESTORS: 70% Lehman Treasury Bond Composite Index and
30% Standard & Poor's 500.
ALLIANCE BALANCED: 50% Standard & Poor's 500 and 50% Lehman
Government/Corporate Bond Index.
<PAGE>
- --------------------------------------------------------------------------------
34 RATES OF RETURN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS: 30% Lehman Government/Corporate Bond Index and 70%
Standard & Poor's 500.
T. ROWE PRICE INTERNATIONAL STOCK: Morgan Stanley Capital International Europe,
Australia, Far East Index.
T. ROWE PRICE EQUITY INCOME: Standard & Poor's 500 Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500 Index.
EQ/PUTNAM BALANCED: 60% Standard & Poor's 500 Index and 40% Lehman
Government/Corporate Bond Index
MFS RESEARCH: Standard & Poor's 500 Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley Capital International
Emerging Markets Free Price Return Index.
WARBURG PINCUS SMALL COMPANY VALUE: Russell 2000 Index.
MERRILL LYNCH WORLD STRATEGY: 36% Standard & Poor's 500/24% Morgan Stanley
Capital International Europe, Australia, Far East/21% Salomon Brothers U.S.
Treasury Bond 1 Year+/14% Salomon Brothers World Government Bond Ex U.S./5%
3-Month T-Bill.
MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index.
The Lipper Mutual Funds Survey (Lipper) records the performance of over 7,000
mutual funds. According to Lipper Analytical Services, Inc., the data are
presented net of investment management fees, direct operating expenses, and,
for Funds with Rule 12b-1 plans, asset-based sales charges. Lipper data provide
a more accurate picture of RIA performance relative to that of other mutual
funds underlying retirement plan products than the market indices.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends. Cumulative rates of return
reflect performance over a stated period of time. Annualized rates of return
represent the annual rate of growth that would have produced the same
cumulative return, if performance had been constant over the entire period.
The performance of the Funds does not represent the actual experience of a
particular participating employer plan; the amount and timing of contributions
affects individual performance, as do Fund expenses. For a discussion of
charges and fees and how they are deducted from a RIA plan, see "Charges and
expenses."
PAST PERFORMANCE IS NOT A GUARANTEE OR INDICATION OF FUTURE RESULTS. NO
PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON
DISTRIBUTION.
<PAGE>
- --------------------------------------------------------------------------------
RATES OF RETURN 35
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
PORTFOLIO
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED-INCOME SERIES:
- --------------------------------------------------------------------------------------------------------------------------
Domestic Fixed Income
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 5.29% 5.31% 5.12% 5.53% -- 7.01% 7/13/81
- --------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.77%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.76%
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 7.69% 6.20% 5.34% -- -- 7.04% 4/28/81
- --------------------------------------------------------------------------------------------------------------------------
Lipper U.S. Government 7.68% 6.21% 5.91% -- -- 7.25%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 6.74% 6.45% -- -- 7.60%
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE BOND 7.98% 6.10% 6.20% 8.14% -- 10.09% 4/28/81
- --------------------------------------------------------------------------------------------------------------------------
Lipper Gen. U.S. Govt. 8.07% 6.16% 6.15% 8.19% 10.05% 10.48%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 8.44% 6.77% 6.60% 8.52% 9.84% 10.45%
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE QUALITY BOND 8.63% 7.66% 6.72% -- -- 6.29% 10/1/93
- --------------------------------------------------------------------------------------------------------------------------
Lipper Corporate Bond A-Rated 7.47% 6.38% 6.54% -- -- 6.21%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 8.69% 7.29% 7.27% -- -- 6.92%
- --------------------------------------------------------------------------------------------------------------------------
Aggressive Fixed Income
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (5.20)% 11.30% 9.93% 11.11% -- 10.44% 1/2/87
- --------------------------------------------------------------------------------------------------------------------------
Lipper High Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72%
- --------------------------------------------------------------------------------------------------------------------------
EQUITY SERIES:
- --------------------------------------------------------------------------------------------------------------------------
Domestic Equity
- --------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY
INCOME+ 9.11% -- -- -- -- 18.73% 5/1/97
- --------------------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.90% -- -- -- -- 19.65%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.31%
- --------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH &
INCOME VALUE+ 12.75% -- -- -- -- 17.56% 5/1/97
- --------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% -- -- -- -- 21.89%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.31%
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 20.80% 22.47% 17.75% -- -- 16.79% 10/1/93
- --------------------------------------------------------------------------------------------------------------------------
Lipper Growth 15.61% 21.25% 18.35% -- -- 17.89%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 20.10% 23.99% 21.07% -- -- 20.48%
- --------------------------------------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 28.01% 27.54% -- -- -- 24.27% 3/1/94
- --------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 28.05% 27.67% -- -- -- 24.31%
- --------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% -- -- -- 24.79%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Return for this Fund is unannualized and represents less than 5 months of
performance.
+ Return for this Fund is unannualized and represents 8 months of performance.
<PAGE>
- --------------------------------------------------------------------------------
36 RATES OF RETURN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE
EQUITY+ 11.59% -- -- -- -- 17.29% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% -- -- -- -- 21.89%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.31%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK (2.68)% 13.30% 13.46% 16.09% 17.02% 13.04% 7/1/69
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 11.82%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 13.06%
- ------------------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH+ 24.11% -- -- -- -- 24.41% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% -- -- -- -- 26.70%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.31%
- ------------------------------------------------------------------------------------------------------------------------------------
International Equity
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 21.74% 15.85% 14.19% 14.75% -- 12.50% 8/27/87
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 14.67% 11.98% 11.21% -- 9.64%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 17.77% 15.68% 10.66% -- 9.55%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 10.51% 5.53% -- -- -- 7.27% 4/3/95
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 9.94% -- -- -- 10.74%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 9.00% -- -- -- 9.68%
- ------------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL
STOCK+ 13.68% -- -- -- -- 7.01% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% -- -- -- -- 10.13%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 13.43%
- ------------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS EQUITY* (27.10)% -- -- -- -- (32.69)% 8/20/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (26.85)% -- -- -- -- (29.33)%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (32.20)%
- ------------------------------------------------------------------------------------------------------------------------------------
Aggressive Equity
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (13.35)% 5.96% 8.39% 17.48% 16.45% 10.21% 5/1/69
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% 16.04% 10.21%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% -- N/A
- ------------------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL
COMPANY VALUE+ (10.02)% -- -- -- -- 4.25% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Small-Cap (0.30)% -- -- -- -- 16.70%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark (2.55)% -- -- -- -- 14.51%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP
GROWTH+ (4.32)% -- -- -- -- 12.21% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Small-Cap (0.33)% -- -- -- -- 16.72%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 16.58%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Return for this Fund is unannualized and represents less than 5 months of
performance.
+ Return for this Fund is unannualized and represents 8 months of performance.
<PAGE>
- --------------------------------------------------------------------------------
RATES OF RETURN 37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH
COMPANIES+ 34.57% -- -- -- -- 34.81% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 12.16% -- -- -- -- 22.81%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark (2.55)% -- -- -- -- 14.51%
- ------------------------------------------------------------------------------------------------------------------------------------
THE ASSET ALLOCATION SERIES:
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE
INVESTORS 13.82% 10.65% 9.34% -- -- 9.94% 10/2/89
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Income 14.20% 15.62% 14.31% -- -- 12.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 14.45% 13.37% -- -- 12.08%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED+ 11.92% -- -- -- -- 15.93% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Balanced 13.48% -- -- -- -- 17.95%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 21.35% -- -- -- -- 23.48%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE BALANCED 19.37% 14.66% 10.70% 12.43% -- 14.16% 6/25/79
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Balanced 13.48% 15.79% 13.84% 12.97% 13.81% 13.60%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 19.02% 18.70% 16.88% 15.21% 15.09% 14.96%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 19.07% 16.08% 13.85% -- -- 16.03% 10/2/89
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% -- -- 15.55%
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD
STRATEGY+ 6.81% -- -- -- -- 6.91% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 10.61% -- -- -- -- 12.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- 20.00%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Return for this Fund is unannualized and represents less than 5 months of
performance.
+ Return for this Fund is unannualized and represents 8 months of performance.
<PAGE>
- --------------------------------------------------------------------------------
38 RATES OF RETURN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
FIXED-INCOME SERIES:
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic Fixed Income
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 5.29% 16.79% 28.33% 71.29% -- 226.62% 7/13/81
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 214.68%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% -- 214.45%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 7.69% 19.79% 29.69% -- -- 69.48% 4/1/91
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper U.S. Government 7.68% 19.84% 33.36% -- -- 72.35%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 21.61% 36.71% -- -- 76.55%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE BOND 7.98% 19.43% 35.11% 118.73% -- 447.04% 4/28/81
- ------------------------------------------------------------------------------------------------------------------------------------
Lehman Intermediate 8.44% 21.70% 37.66% 126.44% 552.99% 430.38%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.07% 19.66% 34.86% 120.31% 578.48% 481.97%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE QUALITY BOND 8.63% 24.80% 38.46% -- -- 37.74% 10/1/93
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Corporate Bond A-Rated 7.47% 20.42% 37.37% -- -- 37.26%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.69% 23.51% 42.06% -- -- 42.14%
- ------------------------------------------------------------------------------------------------------------------------------------
Aggressive Fixed Income
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (5.20)% 37.87% 60.57% 186.68% -- 228.97% 1/2/87
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper High Yield (0.44)% 26.80% 43.00% 145.62% -- 182.21%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69%
- ------------------------------------------------------------------------------------------------------------------------------------
EQUITY SERIES:
- ------------------------------------------------------------------------------------------------------------------------------------
Domestic Equity
- ------------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME 9.11% -- -- -- -- 33.23% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.90% -- -- -- -- 35.54%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 12.75% -- -- -- -- 31.05% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% -- -- -- -- 39.65%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 20.80% 83.70% 126.39% -- -- 125.78% 10/1/93
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth 15.61% 79.05% 133.95% -- -- 139.10%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.10% 90.62% 160.09% -- -- 166.00%
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 28.01% 107.47% -- -- -- 185.97% 3/1/94
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index 28.05% 108.12% -- -- -- 186.34%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% -- -- -- 192.17%
- ------------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 11.59% -- -- -- -- 30.55% 5/1/97
- ------------------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% -- -- -- -- 39.65%
- ------------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
RATES OF RETURN 39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK (2.68)% 45.43% 88.02%
- --------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97%
- --------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91%
- --------------------------------------------------------------------------------
MFS RESEARCH 24.11% -- --
- --------------------------------------------------------------------------------
Lipper Growth 22.86% -- --
- --------------------------------------------------------------------------------
Benchmark 28.58% -- --
- --------------------------------------------------------------------------------
International Equity
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL 21.74% 55.47% 94.19%
- --------------------------------------------------------------------------------
Lipper Global 14.34% 51.58% 77.94%
- --------------------------------------------------------------------------------
Benchmark 24.34% 63.34% 107.19%
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 10.51% 17.53% --
- --------------------------------------------------------------------------------
Lipper International 13.02% 33.62% --
- --------------------------------------------------------------------------------
Benchmark 20.00% 29.52% --
- --------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK 13.68% -- --
- --------------------------------------------------------------------------------
Lipper International 13.52% -- --
- --------------------------------------------------------------------------------
Benchmark 20.00% -- --
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS (27.10)% -- --
EQUITY
- --------------------------------------------------------------------------------
Lipper Emerging Markets (26.85)% -- --
- --------------------------------------------------------------------------------
Benchmark (25.34)% -- --
- --------------------------------------------------------------------------------
Aggressive Equity
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (13.35)% 18.98% 49.63%
- --------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 58.64% 102.73%
- --------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12%
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE (10.02)% -- --
- --------------------------------------------------------------------------------
Lipper Small-Cap (0.03)% -- --
- --------------------------------------------------------------------------------
Benchmark (2.55)% -- --
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (4.32)% -- --
- --------------------------------------------------------------------------------
Lipper Small-Cap (0.33)% -- --
- --------------------------------------------------------------------------------
Benchmark 1.23% -- --
- --------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 34.57% -- --
- --------------------------------------------------------------------------------
Lipper Mid-Cap 12.16% -- --
- --------------------------------------------------------------------------------
Benchmark (2.55)% -- --
- --------------------------------------------------------------------------------
THE ASSET ALLOCATION SERIES:
- --------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 13.82% 35.46% 56.25%
- --------------------------------------------------------------------------------
Lipper Income 14.20% 55.28% 97.15%
- --------------------------------------------------------------------------------
Benchmark 15.59% 49.92% 87.28%
- --------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 11.92% -- --
- --------------------------------------------------------------------------------
Lipper Balanced 13.48% -- --
- --------------------------------------------------------------------------------
Benchmark 21.35% -- --
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
SINCE PORTFOLIO
10 YEARS 20 YEARS INCEPTION INCEPTION
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALLIANCE COMMON STOCK 344.60% 2,217.51% 3,616.29% 7/1/69
- -------------------------------------------------------------------------------------------------
Lipper Growth 388.00% 2,185.68% 3,109.19%
- -------------------------------------------------------------------------------------------------
Benchmark 479.62% 2,530.43% 3,646.83%
- -------------------------------------------------------------------------------------------------
MFS RESEARCH -- -- 44.06% 5/1/97
- -------------------------------------------------------------------------------------------------
Lipper Growth -- -- 49.32%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 57.60%
- -------------------------------------------------------------------------------------------------
International Equity
- -------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 295.76% -- 280.36% 8/27/87
- -------------------------------------------------------------------------------------------------
Lipper Global 194.96% -- 188.08%
- -------------------------------------------------------------------------------------------------
Benchmark 175.31% -- 181.57%
- -------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL -- -- 30.06% 4/3/95
- -------------------------------------------------------------------------------------------------
Lipper International -- -- 47.74%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 41.40%
- -------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK -- -- 11.99% 5/1/97
- -------------------------------------------------------------------------------------------------
Lipper International -- -- 17.69%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 23.42%
- -------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS -- -- (41.80)% 8/20/97
EQUITY
- -------------------------------------------------------------------------------------------------
Lipper Emerging Markets -- -- (36.88)%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- (36.71)%
- -------------------------------------------------------------------------------------------------
Aggressive Equity
- -------------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 400.61% 2,000.98% 1,690.64% 5/1/69
- -------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 334.88% 2,084.92% 2,062.33%
- -------------------------------------------------------------------------------------------------
Benchmark 360.30% -- N/A
- -------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE -- -- 7.21% 5/1/97
- -------------------------------------------------------------------------------------------------
Lipper Small-Cap -- -- 29.92%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 25.40%
- -------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH -- -- 21.17% 5/1/97
- -------------------------------------------------------------------------------------------------
Lipper Small-Cap -- -- 28.98%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 29.23%
- -------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES -- -- 64.73% 5/1/97
- -------------------------------------------------------------------------------------------------
Lipper Mid-Cap -- -- 41.12%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 25.40%
- -------------------------------------------------------------------------------------------------
THE ASSET ALLOCATION SERIES:
- -------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS -- -- -- 10/2/89
- -------------------------------------------------------------------------------------------------
Lipper Income -- -- 202.48%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 187.40%
- -------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED -- -- 28.02% 5/1/97
- -------------------------------------------------------------------------------------------------
Lipper Balanced -- -- 31.90%
- -------------------------------------------------------------------------------------------------
Benchmark -- -- 28.18%
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
40 RATES OF RETURN
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
- --------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS
- --------------------------------------------------------------------------------
ALLIANCE BALANCED 19.37% 50.75% 66.24%
- --------------------------------------------------------------------------------
Lipper Flexible Portfolio 13.48% 55.60% 91.92%
- --------------------------------------------------------------------------------
Benchmark 19.02% 67.24% 118.08%
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 19.07% 56.42% 91.26%
- --------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 55.28% 97.15%
- --------------------------------------------------------------------------------
Benchmark 22.85% 84.68% 148.41%
- --------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 6.81% -- --
- --------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 10.61% -- --
- --------------------------------------------------------------------------------
Benchmark 19.55% -- --
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------
SINCE PORTFOLIO
10 YEARS 20 YEARS INCEPTION INCEPTION
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ALLIANCE BALANCED 222.62% -- 1,227.16% 6/25/79
- --------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 240.69% 1,258.64% 1,127.30%
- --------------------------------------------------------------------------------------------
Benchmark 311.86% 1,562.06% 1,421.71%
- --------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS -- -- 295.42% 10/2/89
- --------------------------------------------------------------------------------------------
Lipper Flexible Portfolio -- -- 202.48%
- --------------------------------------------------------------------------------------------
Benchmark -- -- 280.88%
- --------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY -- -- 11.82% 5/1/97
- --------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio -- -- 21.07%
- --------------------------------------------------------------------------------------------
Benchmark -- -- 35.80%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
RATES OF RETURN 41
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RIA YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 9.13% 8.19% 6.13% 3.48% 2.94%
- ----------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES -- -- 12.03 5.54 10.52
- ----------------------------------------------------------------------------------------
ALLIANCE BOND 13.29 7.82 14.45 6.03 9.21
- ----------------------------------------------------------------------------------------
ALLIANCE QUALITY BOND -- -- -- -- (0.52)
- ----------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD 5.08 (1.15) 24.40 12.26 23.08
- ----------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME -- -- -- -- (0.27)
- ----------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX -- -- -- -- --
- ----------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 44.68 (11.35) 52.03 1.22 19.81
- ----------------------------------------------------------------------------------------
ALLIANCE GLOBAL 26.67 (6.11) 30.49 (0.56) 32.06
- ----------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL -- -- -- -- --
- ----------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK 46.97 8.85 87.18 (3.01) 15.19
- ----------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH -- -- -- -- --
- ----------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 3.08 6.35 19.79 5.74 10.71
- ----------------------------------------------------------------------------------------
ALLIANCE BALANCED 26.48 (0.65) 41.23 (2.83) 12.54
- ----------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 3.98 10.56 48.84 4.88 15.20
- ----------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.96% 5.69% 5.28% 5.37% 5.29%
- ------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES (4.42) 13.27 3.72 7.24 7.69%
- ------------------------------------------------------------------------------------------
ALLIANCE BOND (2.03) 15.48 2.77 7.62 7.98%
- ------------------------------------------------------------------------------------------
ALLIANCE QUALITY BOND (5.15) 16.97 5.31 9.09 8.63%
- ------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (2.83) 19.86 22.82 18.41 (5.20)%
- ------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME (0.62) 24.01 20.03 26.69 20.80%
- ------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 1.04 36.41 22.32 32.50 28.01%
- ------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK (1.94) 31.85 17.74 26.93 (2.68)%
- ------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 5.18 18.78 14.55 11.49 21.74%
- ------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL -- 10.66 9.76 (3.10) 10.51%
- ------------------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK (4.24) 31.33 22.50 12.10 13.35%
- ------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH -- -- -- 26.64* 4.32%
- ------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS (4.15) 20.34 5.16 13.17 13.82%
- ------------------------------------------------------------------------------------------
ALLIANCE BALANCED (8.43) 20.43 11.34 13.42 19.37%
- ------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS (3.19) 26.31 12.55 16.72 19.07%
- ------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Unannualized
<PAGE>
- --------------------------------------------------------------------------------
42 CHARGES AND EXPENSES
- --------------------------------------------------------------------------------
9
Charges and expenses
- --------------------------------------------------------------------------------
You will incur two general types of charges under RIA:
(1) Charges reflected as reductions in the unit values of the Funds which are
recorded as expenses of the Fund. These charges apply to all amounts
invested in RIA, including installment payout option payments.
(2) Charges stated as a defined percentage or fixed dollar amount and
deducted by reducing the number of units in the appropriate Funds and the
dollars in the guaranteed interest account.
We make no deduction from your contributions for sales expenses.
CHARGES REFLECTED IN THE UNIT VALUES
INVESTMENT MANAGEMENT AND ACCOUNTING FEES
The computation of unit values for the Alliance Bond, Alliance Common Stock,
Alliance Aggressive Stock and Alliance Balanced Funds reflects fees we charge
for investment management and accounting. We receive fees for investment
management and financial accounting services we provide for these Funds, as
well as a portion of our related administrative costs. This fee is charged
daily at an effective annual rate of .50% of the net assets of the Alliance
Bond, Alliance Common Stock, Alliance Aggressive Stock and Alliance Balanced
Funds.
ADMINISTRATIVE CHARGE FOR THE FUNDS OF SEPARATE ACCOUNT NO. 51
We make a daily charge at an annual rate of 0.05% of the assets invested in the
Funds of Separate Account No. 51. The charge is designed to reimburse us for
our costs in providing administrative services in connection with the
contracts.
INDIRECT EXPENSES BORNE BY THE FUNDS
ANNUAL EXPENSES OF THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST. The Funds that
invest in Portfolios of The Hudson River Trust and EQ Advisors Trust are
indirectly subject to investment advisory and other expenses charged against
assets of their corresponding Portfolios. These expenses are described in the
prospectuses of The Hudson River Trust and EQ Advisors Trust accompanying this
prospectus.
OTHER EXPENSES. Certain costs and expenses are charged directly to the Funds.
These may include transfer taxes, SEC filing fees and certain related expenses
including printing of SEC filings, prospectuses and reports, proxy mailings,
other mailing costs, legal expenses.
CHARGES WHICH REDUCE THE NUMBER OF UNITS
CONTINGENT WITHDRAWAL CHARGE
We may impose a contingent withdrawal charge ("CWC") against withdrawals made
from any of the Funds or the guaranteed interest account at any time up to and
including the ninth anniversary of the date on which the employer plan began
its participation in RIA. The CWC is designed to recover the unamortized sales
and promotion expenses and initial enrollment expenses incurred by us.
We will not apply a CWC against amounts withdrawn for the purpose of making
benefit distribution payments unless such withdrawals are made (i) on or after
the date of discontinuance of an employer plan's participation in RIA or (ii)
as a result of a full or partial termination, within the meaning of applicable
Internal Revenue Service ("IRS") or court interpretations.
We will apply a CWC against amounts withdrawn for purposes of making benefit
payments to participants who terminated employment either voluntarily or
involuntarily, but only when such terminations are attributable to (i) the
employer's merger with another company, (ii) the sale of the employer or (iii)
the bankruptcy of the employer which leads to the full or partial termination
of the plan or the discontinuance of the employer plan's participation in RIA.
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43 CHARGES AND EXPENSES
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We do not apply a CWC on transfers between the investment options. However, we
do apply a CWC to withdrawals from RIA for the purpose of transferring to
another funding vehicle under the employer plan, unless an officer of Equitable
Life agrees, in writing, to waive this charge. We do not consider withdrawals
from RIA for the purpose of paying plan expenses or the premium on a life
insurance policy, including one held under the employer plan, to be in-service
withdrawals or any other type of benefit distribution. These withdrawals are
subject to the CWC.
The amount of any CWC is determined in accordance with the rate schedule set
forth below. We include outstanding loan balances in the plan's assets for
purposes of assessing the CWC.
WITHDRAWAL IN
PARTICIPATION YEARS CONTINGENT WITHDRAWAL CHARGE
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1 or 2 6% of Amount Withdrawn
3 or 4 5%
5 or 6 4%
7 or 8 3%
9 2%
10 and later 0%
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Benefit distribution payments are those payments that become payable with
respect to participants under the terms of the employer plan as follows:
1. as the result of the retirement, death or disability of a participant;
2. as the result of a participant's separation from service as defined under
Section 402(d)(4)(A) of the Code;
3. in connection with a loan transaction, if the loan is repaid in accordance
with its terms;
4. as a minimum distribution pursuant to Section 401(a)(9) of the Code;
5. as a hardship withdrawal pursuant to Section 401(k) of the Code;
6. pursuant to a qualified domestic relations order ("QDRO") under Section
414(p) of the Code, but only if the QDRO specifically requires that the
plan administrator withdraw amounts for payment to an alternate payee;
7. as a result of an in-service withdrawal attributable to the after-tax
contributions of a participant; or
8. as a result of an in-service withdrawal from a profit-sharing plan after
meeting a minimum number of years of service and/or participation in the
plan, and the attainment of a minimum age specified in the plan.
Prior to any withdrawal from RIA for benefit distribution purposes, Equitable
Life reserves the right to receive from the employer and/or trustees of the
plan, evidence satisfactory to it that such benefit distribution conforms to at
least one of the types mentioned above.
ONGOING OPERATIONS FEE
The ongoing operations fee is based on the combined net balances (including any
outstanding loan balance) of an employer plan in the investment options at the
close of business on the last business day of each month. The amount of the
ongoing operations fee is determined under the rate schedule that applies to
the employer plan. Unless you make other arrangements, we deduct the charge
from employer plan balances at the close of business on the last business day
of the following month.
Set forth below is the rate schedule for employer plans which adopted RIA after
February 9, 1986. Information concerning the rate schedule for employer plans
that adopted RIA on or before February 9, 1986 is included in the SAI under
"Fund Information."
COMBINED BALANCE MONTHLY
OF INVESTMENT OPTIONS RATE
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First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Over $1,000,000 1/12 of 0.50%
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44 CHARGES AND EXPENSES
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The ongoing operations fee is designed to cover such expenses as contract
underwriting and issuance for employer plans, employer plan-level
recordkeeping, processing transactions and benefit distributions,
administratively maintaining the investment options, commissions, promotion of
RIA, administrative costs (including certain enrollment and other servicing
costs), systems development, legal and technical support, product and financial
planning and part of our general overhead expenses. Administrative costs and
overhead expenses include such items as salaries, rent, postage, telephone,
travel, office equipment and stationery, and legal, actuarial and accounting
fees.
PARTICIPANT RECORDKEEPING SERVICES CHARGE
The PRS is an optional service. If you elect this service, we charge a per
participant annual fee of $25. We deduct this fee on a monthly basis at the
rate of $2.08 per participant. We determine the amount of the fee for an
employer plan at the close of business on the last business day of each month
based on the number of participants enrolled with us at that time. Unless you
make other arrangements, we deduct this fee from the combined balances of each
participant in the investment options at the close of business on the last
business day of the following month. The PRS fee covers expenses incurred for
establishing and maintaining individual records, issuing statements and reports
for individual employees and employer plans, and processing individual
transactions and benefit distributions. We are not responsible for reconciling
participants' individual account balances with the entire amount of the
employer plan where we do not maintain individual account balances.
LOAN FEE
We charge a loan fee in an amount equal to 1% of the loan principal amount on
the date the plan loan is made.
OTHER BILLING ARRANGEMENTS
The ongoing operations and participant recordkeeping services fees can be paid
by a direct billing arrangement we have with the employer subject to a written
agreement between Equitable Life and the employer.
INDIVIDUAL ANNUITY CHARGES
Annuity administrative charge. If a participant elects an annuity payout
option, we deduct a $175 charge from the amount used to purchase the annuity.
This charge reimburses us for administrative expenses associated with
processing the application for the annuity and issuing each month's annuity
payment.
Charge for applicable taxes. In certain jurisdictions, amounts used to purchase
an annuity are subject to charges for premium or other applicable taxes. The
rates currently range from 0% to 2% (1% in Puerto Rico and 5% in the U.S.
Virgin Islands). Taxes depend, among other things, on the participant's place
of residence, applicable laws and the form of annuity benefit selected. We
currently deduct a charge based on any applicable state taxes imposed on the
transaction. We reserve the right to deduct any such charge from each
contribution or from withdrawals.
GENERAL INFORMATION ON FEES AND CHARGES
We reserve the right (1) to change from time to time the charges and fees
described in this prospectus upon prior notice to the employer and (2) to
establish separate fee schedules for requested non-routine administrative
services and for newly scheduled services not presently contemplated under the
contracts.
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TAX INFORMATION 45
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10
Tax information
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Employer retirement plans that may qualify for tax-favored treatment are
governed by the provisions of the Internal Revenue Code ("Code") and ERISA. The
Code is administered by the IRS. ERISA is administered primarily by DOL.
Provisions of the Code and ERISA include requirements for various features
including:
o participation, vesting and funding;
o nondiscrimination;
o limits on contributions and benefits;
o distributions;
o penalties;
o duties of fiduciaries;
o prohibited transactions; and
o withholding, reporting and disclosure.
IT IS THE RESPONSIBILITY OF THE EMPLOYER, PLAN TRUSTEE AND PLAN ADMINISTRATOR
TO SATISFY THE REQUIREMENTS OF THE CODE AND ERISA.
This prospectus does not provide detailed tax or ERISA information. The
following discussion briefly outlines the Code provisions relating to
contributions to and distributions from certain tax-qualified retirement plans,
although some information on other provisions is also provided. Various tax
disadvantages, including penalties, may result from actions that conflict with
requirements of the Code or ERISA, and regulations or other interpretations
thereof. In addition, federal tax laws and ERISA are continually under review
by the Congress, and any changes in those laws, or in the regulations
pertaining to those laws, may affect the tax treatment of amounts contributed
to tax-qualified retirement plans or the legality of fiduciary actions under
ERISA.
Certain tax advantages of tax-qualified retirement plans may not be available
under certain state and local tax laws. This outline does not discuss the
effect of any state or local tax laws. It also does not discuss the effect of
federal estate and gift tax laws (or state and local estate, inheritance and
other similar tax laws). This outline assumes that the participant does not
participate in any other qualified retirement plan. Finally, it should be noted
that many tax consequences depend on the particular jurisdiction or
circumstances of a participant or beneficiary.
Because you are buying a contract to fund a retirement plan that already
provides tax deferral, you should do so for the contract's features and
benefits other than tax deferral. The tax deferral of the contract does not
provide additional benefits.
The provisions of the Code and ERISA are highly complex. For complete
information on these provisions, as well as all other federal, state, local and
other tax considerations, qualified legal and tax advisers should be consulted.
TAX ASPECTS OF CONTRIBUTIONS TO A PLAN
Corporations, partnerships and self-employed individuals can establish
qualified plans for the working owners and their employees who participate in
the plan. Qualified plans established by partnerships and sole proprietorships
are frequently referred to as "Keogh" plans. Both employer and employee
contributions to these plans are subject to a variety of limitations, some of
which are discussed here briefly. See your tax adviser for more information.
Violation of contribution limits may result in disqualification and/or
imposition of monetary penalties. The trustee or plan administrator may make
contributions on behalf of the plan participants which are deductible from the
employer's federal gross income. Employer contributions which exceed the amount
currently deductible are subject to a 10% penalty tax. There are special rules
for corporate plans and Keogh plans which are top heavy plans (i.e., more than
60% of the contributions or benefits are allocated to certain highly
compensated employees otherwise known as key employees).
The limits on the amount of contributions that can be made and/or forfeitures
that can be allocated to each participant in defined contribution plans is the
lesser of $30,000 or 25% of the compensation or earned income for each
participant. In 1999, the employer may not consider compensation in
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46 TAX INFORMATION
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excess of $160,000 in calculating contributions or benefits to the plan. This
amount may be adjusted for cost-of-living changes in future years. For
self-employed individuals, earned income is defined so as to exclude deductible
contributions made to all tax-qualified retirement plans, including Keogh
plans, and takes into account the deduction for one-half the individual's
self-employment tax. Deductions for aggregate contributions to profit-sharing
plans may not exceed 15% of all participants' compensation.
Special limits on deductions for contributions to one or more defined
contribution plans and one or more defined benefit plans are in effect through
1999, but will be eliminated thereafter. Special limits on contributions apply
to anyone who participates in more than one qualified plan or who controls
another trade or business. In addition, there is an overall limit on the total
amount of contributions and benefits under all tax-qualified retirement plans
in which an individual participates.
The deductible limits for corporate plans and Keogh plans which are defined
benefit plans are based on the minimum funding standard determined by the plan
actuary each year. No participant can receive a benefit which exceeds the
lesser of (i) $90,000 ($130,000 as indexed for inflation for the 1999 plan
year) or (ii) 100% of the participant's average compensation for the
consecutive three-year period which results in the highest such average. The
$90,000 limit is actuarially reduced for participants retiring prior to the
social security retirement age and actuarially increased for participants
retiring after the social security retirement age. Special grandfathering rules
apply to certain participants whose benefits exceed the $90,000 limit.
A qualified plan may allow the participant to direct the employer to make
contributions which will not be included in the employee's income (elective
deferrals) by entering into a salary reduction agreement with the employer
under Section 401(k) of the Code. The 401(k) plan, otherwise known as a cash or
deferred arrangement, must not allow withdrawals of elective deferrals and the
earnings thereon prior to the earliest of the following events: (i) attainment
of age 59 1/2, (ii) death, (iii) disability, (iv) certain business
dispositions and plan terminations or (v) termination of employment. In
addition, in-service withdrawals of elective deferrals (but not earnings after
1988) may be made in the case of financial hardship.
A participant cannot elect to defer annually more than $7,000 ($10,000 as
indexed for inflation in 1999) under all salary reduction arrangements with all
employers in which the individual participates.
Employer matching contributions to a 401(k) plan for self-employed individuals
are no longer treated as elective deferrals, and are treated the same as
employer matching contributions for other employees.
A qualified plan must not discriminate in favor of highly compensated
employees. Two special nondiscrimination rules limit contributions and benefits
for highly compensated employees in the case of (1) a 401(k) plan and (2) any
defined contribution plan, whether or not a 401(k) plan, which provides for
employer matching contributions to employee after-tax contributions or elective
deferrals. Generally, these nondiscrimination tests require an employer to
compare the deferrals or the aggregate contributions, as the case may be, made
by the eligible highly compensated employees with those made by the non-highly
compensated employees, although alternative simplified tests are available.
Highly compensated participants include five percent owners and employees
earning more than $80,000 for the prior year. (If desired the latter group can
be limited to employees who are in the top 20% of all employees based on
compensation.)
Certain 401(k) plans can adopt a "SIMPLE 401(k)" feature which will enable the
plan to meet nondiscrimination requirements without testing. The SIMPLE 401(k)
feature requires the plan to meet specified contribution, vesting and exclusive
plan requirements.
Effective January 1, 1999 employers may adopt a safe harbor 401(k) arrangement.
Under this arrangement, an employer agrees to offer a matching contribution
equal to (a) 100% of salary deferral contributions up to 3% of compensation and
(b) 50% of salary deferral contributions
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TAX INFORMATION 47
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that exceed 3% but are less than 5% of compensation. These contributions must
be nonforfeitable. If the employer makes these contributions and gives proper
notification, the plan is not subject to non-discrimination testing on salary
deferral and above contributions.
TAX ASPECTS OF DISTRIBUTIONS FROM A PLAN
Amounts held under qualified plans are generally not subject to federal income
tax until benefits are distributed to the participant or other recipient. In
addition, there will not be any tax liability for transfers of any part of the
value of an employer plan among the Funds.
The various types of benefit payments include withdrawals, annuity payments and
lump sum distributions. Each benefit payment made to the participant or other
recipient is generally fully taxable as ordinary income. An exception to this
general rule is made, however, to the extent a distribution is treated as a
recovery of after-tax contributions made by the participant.
In addition to income tax, the taxable portion of any distribution may be
subject to a 10% penalty tax. See "Penalty tax on premature distributions" in
this section.
Income taxation of withdrawals
The amount of any partial distribution prior to the annuity starting date is
treated as ordinary income except to the extent the distribution is treated as
a withdrawal of after-tax contributions. Withdrawals from a qualified plan are
normally treated as pro rata withdrawals of after-tax contributions and
earnings on those contributions. If the plan allowed withdrawals prior to
separation from service as of May 5, 1986, however, all after-tax contributions
made prior to January 1, 1987 may be withdrawn tax free prior to withdrawing
any taxable amounts.
As discussed in this section in "Certain rules applicable to plan loans,"
taking a loan or failing to repay an outstanding loan as required may, in
certain situations, be treated as a taxable distribution.
Income taxation of annuity payments
In the case of a distribution in the form of an annuity, the amount of each
annuity payment is treated as ordinary income except where the participant has
a cost basis in the annuity.
The cost basis is equal to the amount of after-tax contributions, plus any
employer contributions that had to be included in gross income in prior years.
If the participant has a cost basis in the annuity, a portion of each payment
received will be excluded from gross income to reflect the return of the cost
basis. The remainder of each payment will be includable in gross income as
ordinary income. The excludable portion is based on the ratio of the
participant's cost basis in the annuity on the annuity starting date to the
expected return, generally determined in accordance with a statutory table,
under the annuity as of such date. The full amount of the payments received
after the cost basis of the annuity is recovered is fully taxable. If there is
a refund feature under the annuity, the beneficiary of the refund may recover
the remaining cost basis as payments are made. If the participant (and
beneficiary under a joint and survivor annuity) die prior to recovering the
full cost basis of the annuity, a deduction is allowed on the participant's (or
beneficiary's) final tax return.
Income taxation of lump sum distributions
If benefits are paid in a lump sum, the payment may be eligible for the special
tax treatment accorded lump sum distributions. Under the five-year averaging
method (and in certain cases, favorable ten-year averaging and long-term
capital gain treatment), the tax on the distribution is calculated separately
from taxes on other income for that year. To qualify, the participant must have
participated in the plan for at least five years and the distribution must
consist of the entire balance to the credit of the participant. The
distribution must be made in one taxable year of the recipient and must be
made:
o after the participant has attained age 59 1/2, or
o on account of the participant's
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48 TAX INFORMATION
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(a) death,
(b) separation from service (not applicable to self-employed individuals),
or
(c) disability (applicable only to self-employed individuals).
This provision will be eliminated after December 31, 1999.
Eligible rollover distributions
Many types of distributions from qualified plans are "eligible rollover
distributions" that can be rolled over directly to another qualified plan or a
traditional individual retirement arrangement ("IRA"), or rolled over to
another plan or IRA within 60 days of receipt by the individual. Death benefits
received by a spouse' beneficiary may only be rolled over into an IRA. To the
extent a distribution is rolled over, it remains tax deferred. Distributions
not rolled over directly, however, are subject to 20% mandatory withholding.
See "Federal income tax withholding" in this section.
The taxable portion of most distributions will generally be an "eligible
rollover distribution" unless the distribution falls within the following list
of exceptions:
o one of a series of substantially equal periodic payments made (not less
frequently than annually);
(a) for the life (or life expectancy) of the participant or the joint
lives (or joint life expectancies) of the participant and his or her
designated beneficiary, or
(b) for a specified period of ten years or more.
o nondeductible voluntary contributions;
o hardship withdrawals;
o any distribution to the extent it is a required distribution under Section
401(a)(9) of the Code (see "Distribution requirements and limits" below);
o certain corrective distributions in plans subject to Sections 401(k), 401(m)
or 402(g) of the Code;
o loans that are treated as deemed distributions under Section 72(p) of the
Code;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants);
o dividends paid on employer securities as described in Section 404(k) of the
Code; and
o a distribution to a non-spousal beneficiary.
If a distribution is made to a participant's surviving spouse, or to a current
or former spouse under a qualified domestic relations order, the distribution
may be an eligible rollover distribution, subject to mandatory 20% withholding,
unless one of the exceptions described above applies.
If distributions eligible for rollover are in fact rolled over, the favorable
averaging rules discussed above in "Income taxation of lump sum distributions"
will not be available for any future distributions made before 2000.
Penalty tax on premature distributions
An additional 10% penalty tax is imposed on all taxable amounts distributed to
a participant who has not reached age 59 1/2 unless the distribution falls
within a specified exception or is rolled over into an IRA or other qualified
plan. The specified exceptions are for:
(a) distributions made on account of the participant's death or disability,
(b) distributions (which begin after separation from service) in the form of a
life annuity or substantially equal periodic installments over the
participant's life expectancy (or the joint life expectancy of the
participant and the beneficiary),
(c) distributions due to separation from active service after age 55 and (d)
distributions used to pay certain extraordinary medical expenses.
Federal income tax withholding
Mandatory federal income tax withholding at a 20% rate will apply to all
"eligible rollover distributions" unless the participant elects to have the
distribution directly rolled over to another qualified plan or traditional IRA.
See the description above of "Eligible rollover distributions."
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TAX INFORMATION 49
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With respect to distributions that are not eligible rollover distributions,
federal income tax must be withheld on the taxable portion of pension and
annuity payments, unless the recipient elects otherwise. The rate of
withholding will depend on the type of distribution and, in certain cases, the
amount of the distribution. Special rules may apply to foreign recipients, or
United States citizens residing outside the United States. If a recipient does
not have sufficient income tax withheld, or does not make sufficient estimated
income tax payments, the recipient may incur penalties under the estimated
income tax rules. Recipients should consult their tax advisers to determine
whether they should elect out of withholding.
Requests not to withhold federal income tax must be made in writing prior to
receiving payments and submitted in accordance with the terms of the employer
plan. No election out of withholding is valid unless the recipient provides the
recipient's correct Taxpayer Identification Number and a U.S. residence
address.
State income tax withholding
Certain states have indicated that pension and annuity withholding will apply
to payments made to residents of such states. In some states a recipient may
elect out of state income tax withholding, even if federal withholding applies.
It is not clear whether such states may require mandatory withholding with
respect to eligible rollover distributions that are not rolled over (as
described in this section under "Eligible rollover distributions"). Contact
your tax adviser to see how state withholding may apply to your payment.
Distribution requirements and limits
Distributions from qualified plans generally must commence no later than April
1st of the calendar year following the calendar year in which the participant
reaches age 70 1/2 (or retires from the employer sponsoring the Plan if
later). Five percent owners of qualified plans must commence distribution after
age 70 1/2 even if they are still working.
Distributions can generally be made:
(1) in a lump sum payment,
(2) over the life of the participant,
(3) over the joint lives of the participant and his or her designated
beneficiary,
(4) over a period not extending beyond the life expectancy of the
participant, or
(5) over a period not extending beyond the joint life expectancies of the
participant and his or her designated beneficiary.
The minimum amount required to be distributed in each year after minimum
distributions are required to begin is described in the Code, Treasury
Regulations and IRS guidelines.
If the participant dies after required distribution has begun, payment of the
remaining interest under the plan must be made at least as rapidly as under the
method used prior to the participant's death. If a participant dies before
required distribution has begun, payment of the entire interest under the plan
must be completed within five years after death, unless payments to a
designated beneficiary begin within one year of the participant's death and are
made over the beneficiary's life or over a period certain which does not extend
beyond the beneficiary's life expectancy. If the surviving spouse is the
designated beneficiary, the spouse may delay the commencement of such payments
up until the date that the participant would have attained age 70 1/2.
Distributions received by a beneficiary are generally given the same tax
treatment the participant would have received if distribution had been made to
the participant.
If there is an insufficient distribution in any year, a 50% tax may be imposed
on the amount by which the minimum required to be distributed exceeds the
amount actually distributed. Failure to have distributions made as the Code and
Treasury Regulations require may result in plan disqualification.
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50 TAX INFORMATION
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Spousal requirements
In the case of many corporate and Keogh plans, if a participant is married at
the time benefit payments become payable, unless the participant elects
otherwise with written consent of the spouse, the benefit must be paid in the
form of a qualified joint and survivor annuity ("QJSA"). A QJSA is an annuity
payable for the life of the participant with a survivor annuity for the life of
the spouse in an amount which is not less than one-half of the amount payable
to the participant during his or her lifetime. In addition, a married
participant's beneficiary must be the spouse, unless the spouse consents in
writing to the designation of a different beneficiary.
CERTAIN RULES APPLICABLE TO PLAN LOANS
The following are federal tax and ERISA rules that apply to loan provisions of
all employer plans. Employer plans may have additional restrictions. Employers
and participants should review these matters with their own tax advisers before
requesting a loan. There will not generally be any tax liability with respect
to properly made loans in accordance with an employer plan. A loan may be in
violation of applicable provisions unless it complies with the following
conditions:
o With respect to specific loans made by the plan to a plan participant, the
loan administrator determines the interest rate, the maximum term and all
other terms and conditions of the loan.
o In general, the term of the loan cannot exceed five years unless the loan is
used to acquire the participant's primary residence.
o All principal and interest must be amortized in substantially level payments
over the term of the loan, with payments being made at least quarterly.
o The amount of a loan to a participant, when aggregated with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the greater of $10,000 or 50% of the participant's nonforfeitable accrued
benefits, and cannot exceed $50,000 in any event. This $50,000 limit is
reduced by the excess (if any) of the highest outstanding loan balance over
the previous twelve months over the outstanding balance of plan loans on the
date the loan was made.
o For loans made prior to January 1, 1987 and not renewed, modified,
renegotiated or extended after December 31, 1986 the $50,000 maximum
aggregate loan balance is not required to be reduced, the quarterly
amortization requirement does not apply, and the term of a loan may exceed
five years if used to purchase the principal residence of the participant or
a member of his or her family, as defined in the Code.
o Only 50% of the participant's vested account balance may serve as security
for a loan. To the extent that a participant borrows an amount which should
be secured by more than 50% of the participant's vested account balance, it
is the responsibility of the trustee or plan administrator to obtain the
additional security.
o Loans must be available to all plan participants, former participants who
still have account balances under the plan, beneficiaries and alternate
payees on a reasonably equivalent basis.
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances.
o Many plans provide that the participant's spouse must consent in writing to
the loan.
o Except to the extent permitted in accordance with the terms of a prohibited
transaction exemption issued by DOL, loans are not available (i) in a Keogh
(non-corporate plan to an owner-employee or a partner who owns more than 10%
of a partnership or (ii) to 5% shareholders in an S corporation.
If the loan does not qualify under the conditions above, the participant fails
to repay the interest or principal when due, or in some instances, if the
participant separates from service or the plan is terminated, the amount
borrowed or not
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TAX INFORMATION 51
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repaid may be treated as a distribution. The participant may be required to
include as ordinary income the unpaid amount due and a 10% penalty tax on early
distributions may apply. The plan should report the amount of the unpaid loan
balance to the IRS as a distribution. See "Tax aspects of distributions from a
plan" in this section.
The loan requirements and provisions of RIA shall apply regardless of the plan
administrator's guidelines.
IMPACT OF TAXES TO EQUITABLE LIFE
Under existing federal income tax law, no taxes are payable on investment
income and capital gains of the Funds that are applied to increase the reserves
under the contracts. Accordingly, Equitable Life does not anticipate that it
will incur any federal income tax liability attributable to income allocated to
the variable annuity contracts participating in the Funds and it does not
currently impose a charge for federal income tax on this income when it
computes unit values for the Funds. If changes in federal tax laws or
interpretations thereof would result in Equitable Life being taxed, then
Equitable Life may impose a charge against the Funds (on some or all contracts)
to provide for payment of such taxes.
CERTAIN RULES APPLICABLE TO PLANS DESIGNED TO COMPLY WITH SECTION 404(C) OF
ERISA
Section 404(c) of ERISA, and the related DOL regulation, provide that if a plan
participant or beneficiary exercises control over the assets in his or her plan
account, plan fiduciaries will not be liable for any loss that is the direct
and necessary result of the plan participant's or beneficiary's exercise of
control. As a result, if the plan complies with Section 404(c) and the DOL
regulation thereunder, the plan participant can make and is responsible for the
results of his or her own investment decisions.
Section 404(c) plans must provide, among other things, that a broad range of
investment choices are available to plan participants and beneficiaries and
must provide such plan participants and beneficiaries with enough information
to make informed investment decisions. Compliance with the Section 404(c)
regulation is completely voluntary by the plan sponsor, and the plan sponsor
may choose not to comply with Section 404(c).
The RIA Program provides employer plans with the broad range of investment
choices and information needed in order to meet the requirements of the Section
404(c) regulation. If the plan is intended to be a Section 404(c) plan, it is,
however, the plan sponsor's responsibility to see that the requirements of the
DOL regulation are met. Equitable Life and its agents shall not be responsible
if a plan fails to meet the requirements of Section 404(c).
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52 MORE INFORMATION
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11
More information
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ABOUT CHANGES OR TERMINATIONS
Amendments. The contracts have been amended in the past and we and the Trustee
under the Master Trust Agreement may agree to amendments in the future. No
future change can affect annuity benefits in the course of payment. If certain
conditions are met, we may: (1) terminate the offer of any of the investment
options and (2) offer new investment options with different terms.
We may unilaterally amend or modify the contracts or the Master Retirement
Trust without the consent of the employer or plan sponsor, as the case may be,
in order to keep the contracts or the Master Retirement Trust in compliance
with law.
Termination. We can discontinue offering RIA at any time. Discontinuance of RIA
would not affect annuities in the course of payment, but we would not accept
further contributions. The employer may elect to maintain investment options
balances with us to provide annuity benefits in accordance with the terms of
the contracts. The employer may elect to discontinue the participation of the
employer plan in RIA at any time upon advance written notice to us.
We may elect, upon written notice to the employer, to discontinue the
participation of the employer plan in RIA if (1) the employer fails to comply
with any terms of the Master Retirement Trust, (2) the employer fails to make
the required minimum contributions, (3) as may be agreed upon in writing
between Equitable Life and the employer if the plan fails to maintain minimum
amounts of Funds invested in RIA, or (4) the employer fails to comply with any
representations and warranties made by the employer, trustees or employer plan
to Equitable Life in connection with the employer plan's participation in RIA.
At any time on or after the participation of the employer in RIA has been
discontinued, we may withdraw the entire amount of the employer plan assets
held in the investment options, and pay them to the trustee of the employer
plan, subject to our right to defer payout of amounts held in the guaranteed
interest account, less any applicable charges and fees and outstanding loan
balances.
IRS DISQUALIFICATION
If your plan is found not to qualify under the Internal Revenue Code, we can
terminate your participation under RIA. In this event, we will withdraw the
employer plan balances from the investment options, less applicable charges and
fees and any outstanding loan balances, and pay the amounts to the trustees of
the plan.
ABOUT THE SEPARATE ACCOUNTS
Each Fund is one, or part of one, of our separate accounts. We established the
separate accounts under special provisions of the New York Insurance Law. These
provisions prevent creditors from any other business we conduct from reaching
the assets we hold in our Funds for owners of our variable annuity contracts,
including our group annuity contracts. The results of each separate account's
operations are accounted for without regard to Equitable Life's, or any other
separate account's, operating results. We are the legal owner of all of the
assets in the separate accounts and may withdraw any amounts we have in the
separate accounts that exceed our reserves and other liabilities under variable
annuity contracts. We reserve the right to take certain actions in connection
with our operations and the operations of the Funds as permitted by applicable
law. If necessary, we will seek approval by participants in RIA.
We established the Alliance Bond, Alliance Common Stock, Alliance Aggressive
Stock and Alliance Balanced Funds pursuant to the Insurance Law of the State of
New York in 1981, 1969, 1969 and 1979, respectively. The separate account which
holds the Alliance Global, Alliance Conservative Investors, and the Alliance
Growth Investors Funds was established in 1993. The Alliance Money Market,
Alliance Intermediate Government Securities, Alliance Quality Bond, Alliance
High Yield, Alliance Growth & Income and Alliance Equity Index Funds were
established in 1994. The Alliance International Fund was established in 1995.
The Alliance Small Cap Growth Fund was established in 1997.
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MORE INFORMATION 53
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The T. Rowe Price Equity Income, EQ/Putnam Growth & Income Value, Merrill Lynch
Basic Value Equity, MFS Research, T. Rowe Price International Stock, Morgan
Stanley Emerging Markets Equity, Warburg Pincus Small Company Value, MFS
Emerging Growth Companies, EQ/Putnam Balanced, and Merrill Lynch World Strategy
Funds were established in 1998. Because of exclusionary provisions, none of the
Funds are subject to regulation under the Investment Company Act of 1940 ("1940
Act"). The Hudson River Trust and EQ Advisors Trust, shares are purchased by
Separate Accounts Nos. 51 and 66.
ABOUT THE HUDSON RIVER TRUST AND EQ ADVISORS TRUST
The Hudson River Trust and EQ Advisors Trust are registered under the
Investment Company Act of 1940. They are classified as "open-end management
investment companies," more commonly called mutual funds. Each trust issues
different shares relating to each Portfolio.
The Hudson River Trust and EQ Advisors Trust do not impose sales charges or
"loads" for buying and selling their shares. All dividends and other
distributions on a trust's shares are reinvested in full. The Boards of Trustee
of The Hudson River Trust and EQ Advisors Trust each may establish additional
Portfolios or eliminate existing Portfolios at any time. More detailed
information about The Hudson River Trust and EQ Advisors Trust, their
investment objectives, policies, restrictions, risks, expenses, multiple class
distribution systems, the Rule 12b-1 plan relating to the Class 1B shares of EQ
Advisors Trust, and other aspects of their operations, appears in their
prospectuses which follows this prospectus, or in their SAIs, which are
available upon request.
Proposed substitution of Portfolios. We propose to substitute 14 newly created
Portfolios of EQ Advisors Trust for corresponding Portfolios of The Hudson
River Trust currently available under certain of our separate accounts,
including Separate Account No. 51 (the "Substitution"). To do so, we are asking
the SEC for certain regulatory relief. The EQ Advisors Trust Portfolios will
have substantially identical investment objectives, strategies, and policies as
those of The Hudson River Trust Portfolios they would replace. The assets of
any Portfolio of The Hudson River Trust underlying your contract would be
transferred to the substituted EQ Advisors Trust Portfolio.
We believe that this Substitution will be in your best interest because you
would have a single set of underlying Portfolios with similar advisory
structures. EQ Financial Consultants ("EQF"), Inc. will be the manager of the
new EQ Advisors Trust Portfolios, and Alliance Capital Management L.P. will
continue to provide the day-to-day advisory services to each of the new
Portfolios. During 1999, EQF plans to change its name to AXA Advisors, Inc.
You should note that:
o No action is required on your part. You will not need to vote a proxy, file
a new election, or take any other action if the SEC approves the
Substitution.
o The elections you have on file for allocating your retirement account value
(i.e., the units you own) in the Funds will be the same as before the
transaction.
o We will bear all expenses directly relating to the Substitution transaction.
o The management fees for the new Portfolios will be the same as those for the
corresponding Portfolios of The Hudson River Trust. Certain of the new EQ
Advisors Trust Portfolios may have slightly higher expense ratios.
o On the effective date of the Substitution transaction, your value in the
Separate Account No. 51 Fund Portfolio as substituted will be the same as
before the transaction.
o The Substitution will have no tax consequences for you.
Please review the EQ Advisors Trust prospectus for more information about EQ
Advisors Trust that accompanies this prospectus. It contains more information
about EQ Advisors Trust, including its management structure, advisory
arrangements, and general fees and expenses that will be of interest to you.
Subject to SEC approval, we expect the Substitution to be completed in the
fall of 1999. It will affect everyone who has
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54 MORE INFORMATION
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a balance in The Hudson River Trust Portfolios at that time. Of course, you may
transfer your retirement account value among the Funds, as usual.
We will notify you when we receive SEC approval, and again when the
Substitution is complete.
ABOUT THE GENERAL ACCOUNT
Our general account supports all of our policy and contract guarantees,
including those that apply to the guaranteed interest account, as well as our
general obligations.
The general account is subject to regulation and supervision by the Insurance
Department of the State of New York and to the insurance laws and regulations
of all jurisdictions where we are authorized to do business. Because of
exemptions and exclusionary provisions that apply, interests in the general
account have not been registered under the Securities Act of 1933, nor is the
general account an investment company under the Investment Company Act of 1940.
We have been advised that the staff of the SEC has not reviewed the portions of
this prospectus that relate to the general account. The disclosure, however,
may be subject to certain provisions of the federal securities laws relating to
the accuracy and completeness of statements made in prospectuses.
WHEN WE PAY PROCEEDS
Ordinarily we will apply proceeds to an annuity and make payments or
withdrawals out of the investment options promptly after the date of the
transaction. However, we can defer payments, apply proceeds to an annuity and
process withdrawals from the Funds for any period during which the New York
Stock Exchange is closed for trading, sales of securities are restricted or
determination of the fair market value of assets of the Funds is not reasonably
practicable because of an emergency. We may also defer withdrawals from the
plan in installments in order to protect the interests of the other contract
holder in a Fund.
WHEN TRANSACTION REQUESTS ARE EFFECTIVE
Transaction requests may be made by the authorized person for the employer plan
as shown on our records, in written or facsimile form acceptable to us and
signed by the employer. All requests will be effective on the business day we
receive a properly completed and signed written or facsimile request for a
financial transaction at the RIA Service Office. Transaction requests received
after the end of a business day will be processed the next business day.
We will honor your properly completed transaction requests received via
facsimile only if we receive a properly completed transaction form. The request
form must be signed by an individual who the plan trustees have previously
authorized in writing. We are not responsible for determining the accuracy of a
transmission and are not liable for any consequences, including but not limited
to, investment losses and lost investment gains, resulting from a faulty or
incomplete transmission. If your request form is not properly completed, we
will contact you within 24 hours of our receipt of your facsimile.
We will use our best efforts to acknowledge receipt of a facsimile
transmission, but our failure to acknowledge or a failure in your receipt of
such acknowledgment will not invalidate your transaction request. If you do not
receive acknowledgment of your facsimile within 24 hours, contact the RIA
Service Office at the toll free 800 number.
VOTING RIGHTS
No voting rights apply to any of the separate accounts or to the guaranteed
interest account. We do, however, have the right to vote shares of The Hudson
River Trust and EQ Advisors Trust held by the Funds.
If The Hudson River Trust or EQ Advisors Trust holds a meeting of shareholders,
we will vote shares of the Portfolios of The Hudson River Trust or EQ Advisors
Trust allocated to the corresponding Funds in accordance with instructions
received from employers, participants or trustees, as the case may be. Shares
will be voted in proportion to the voter's interest in the Funds holding the
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MORE INFORMATION 55
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shares as of the record date for the shareholders meeting. We will vote the
shares for which no instructions have been received in the same proportion as
we vote shares for which we have received instructions. Employers, participants
or trustees will receive: (1) periodic reports relating to The Hudson River
Trust and EQ Advisors Trust and (2) proxy materials, together with a voting
instruction form, in connection with shareholder meetings.
Currently, we control each Trust. EQ Advisors Trust shares are sold only to our
separate accounts and an affiliated qualified plan trust. The Hudson River
Trust shares are held by other separate accounts of ours and by separate
accounts of insurance companies unaffiliated with us. Shares held by these
separate accounts will probably be voted according to the instructions of the
owners of insurance policies and contracts issued by those insurance companies.
While this will dilute the effect of the voting instructions of the contract
owners, we currently do not foresee any disadvantages because of this. The
Hudson River Trust Board of Trustees intends to monitor events in order to
identify any material irreconcilable conflicts that may arise and to determine
what action, if any, should be taken in response. If we believe that a response
to any of those events insufficiently protects our contract owners, we will see
to it that appropriate action is taken.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
contract and operate the investment options. Some of these systems belong to
service providers who are not affiliated with Equitable Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the year 2000 before, on or after January 1, 2000, and
Equitable Life has identified those of its systems critical to business
operations that were not year 2000 compliant. By year end 1998, the work of
modifying or replacing non-compliant systems was substantially completed.
Equitable Life has begun comprehensive testing of its year 2000 compliance and
expects that the testing will be substantially completed by June 30, 1999.
Equitable Life has contacted third-party service providers to seek confirmation
that they are acting to address the year 2000 issue with the goal of avoiding
any material adverse effect on services provided to contract owners and on
operations of the investment options. Most third-party service providers have
provided Equitable Life confirmation of their year 2000 compliance. Equitable
Life believes it is on schedule for substantially all such systems and
services, including those considered to be mission-critical, to be confirmed as
year 2000 compliant, renovated, replaced or the subject of contingency plans,
by June 30, 1999, except for one investment accounting system that is scheduled
to be replaced by August 31, 1999 and confirmed as year 2000 compliant by
September 30, 1999. Additionally, Equitable Life will be supplementing its
existing business continuity and disaster recovery plans to cover certain
categories of contingencies that could arise as a result of year 2000 related
failures. Year 2000 specific contingency plans are anticipated to be in place
by June 30, 1999.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the systems of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is
a "Year 2000 Readiness Disclosure" within the meaning of The Year 2000
Information and Readiness Disclosure Act, 15 U.S.C. Sec. 1 (1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon the separate
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56 MORE INFORMATION
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accounts, our ability to meet our obligations under RIA, or the distribution of
group annuity contract interests under RIA.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The following financial statements included in the SAI as well as the following
condensed financial information included in the prospectus have been so
included in reliance on the report of PricewaterhouseCooper LLP independent
accountants given on the authority of said firm as experts in auditing and
accounting.
o The financial statements for Separate Account Nos. 13,10, 4, 3, and 51 as of
December 31, 1998 and for each of the two years in the period then ended.
o The financial statements for Separate Account No. 66 as of December 31, 1998
and for the periods then ended.
o The financial statements for Equitable Life as of December 31, 1998 and 1997
and for each of the three years in the period ended December 31, 1998.
o The condensed financial information for Separate Accounts Nos. 13, 10, 4 and
3 for each of the six years, and for each of the five years for Separate
Account No. 51, in the period ended December 31, 1998.
o The condensed financial information for Separate Account No. 66 for each of
the periods ended December 31, 1998.
ABOUT THE TRUSTEE
As trustee, Chase Manhattan Bank serves as a party to the group annuity
contracts. It has no responsibility for the administration of RIA or for any
distributions or duties under the group annuity contracts.
REPORTS WE PROVIDE AND AVAILABLE INFORMATION
We send the employer a report each quarter that shows transactions in the
investment options during the quarter for the employer plan, the number of
units in the Funds credited to the employer plan, the unit values and the
balances in all of the investment options as of the end of the quarter. The
employer automatically receives a confirmation notice following the processing
of a financial investment option transaction.
The employer will also receive an annual report and a semiannual report
containing financial statements of the Funds and a list of the Funds' or
Trust's portfolio securities. As permitted by the SEC's rules, we omitted
certain portions of the registration statement filed with the SEC from this
prospectus and the SAI. You may obtain the omitted information by: (1)
requesting a copy of the registration statement from the SEC's principal office
in Washington, D.C., and paying prescribed fees, or (2) by accessing the EDGAR
Database at the SEC's web site at www.sec.gov.
ACCEPTANCE AND RESPONSIBILITIES
The employer or plan sponsor, as the case may be: (1) is solely responsible for
determining whether RIA is a suitable funding vehicle and (2) should carefully
read the prospectus and other materials before entering into a participation or
installation agreement.
Our duties and responsibilities are limited to those described in this
prospectus. Except as explicitly set forth in the PRS program, we do not
provide administrative services in connection with an employer plan. In
addition, no Equitable associate or firm operated by an Equitable associate is
authorized to solicit or agree to perform plan administrative services in his
capacity as an Equitable associate. If an employer or trustee engages an
Equitable associate to provide administrative support services to an employer
plan, the employer or trustee engages that Equitable associate as its
representative rather than Equitable Life's. WE ARE NOT LIABLE TO ANY EMPLOYER,
TRUSTEE OR EMPLOYER PLAN FOR ANY DAMAGES ARISING FROM OR IN CONNECTION WITH ANY
PLAN ADMINISTRATION SERVICES PERFORMED OR AGREED TO BE PERFORMED BY AN
EQUITABLE ASSOCIATE.
ABOUT REGISTERED UNITS
This prospectus relates to our offering of units of interest in the Funds that
are registered under the 1933 Act. Financial
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MORE INFORMATION 57
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data and other information contained in this prospectus may refer to such
"registered units," as offered in the RIA program. We also offer units under
RIA to retirement plans maintained by corporations or governmental entities
(collectively, "corporate plans"). However, because of an exemption under the
1933 Act, these corporate plan units are not registered under the 1933 Act or
covered by this prospectus.
ASSIGNMENT AND CREDITORS' CLAIMS
Employers and plan participants cannot assign, sell, alienate, discount or
pledge as collateral for a loan or other obligation to any party the employer
plan balances and rights under RIA, except to the extent allowed by law for a
Qualified Domestic Relations Order ("QDRO"), as that term is defined in the
Code. (This reference to a loan does not apply to a loan under RIA.) Proceeds
we pay under our contracts cannot be assigned or encumbered by the payee. We
will pay all proceeds under our contracts free from the claims of creditors to
the extent allowed by law.
COMMISSIONS AND SERVICE FEES WE PAY
Equitable associates who assist in establishing an employer plan in RIA and
providing necessary services (not including recordkeeping services) are
entitled to receive commissions and service fees from us. We pay these
commissions and fees, and they are not in addition to the fees and charges we
describe under "Charges and expenses." Any service fees we pay to Equitable
associates are contingent upon their providing service satisfactory to us.
While the charges and expenses that we receive from a RIA employer plan
initially may be less than the commissions and service fees we pay to Equitable
associates, we expect that over time those charges and expenses we collect will
be adequate to cover all of our expenses.
CERTAIN RETIREMENT PLANS THAT USE RIA MAY ALLOW EMPLOYER PLAN ASSETS TO BE USED
IN PART TO BUY LIFE INSURANCE POLICIES RATHER THAN APPLYING ALL OF THE
CONTRIBUTIONS TO RIA. Equitable associates will receive commissions on any such
Equitable Life insurance policies at standard rates. These commissions are
subject to regulation by state law and are at rates higher than those
applicable to commissions payable for placing an employer plan under RIA.
<PAGE>
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58 WHO IS EQUITABLE LIFE?
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Who is Equitable Life?
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We are The Equitable Life Assurance Society of the United States ("Equitable
Life"), a New York stock life insurance corporation. We have been doing
business since 1859. Equitable Life is a wholly owned subsidiary of The
Equitable Companies Incorporated ("Equitable Companies"), whose majority
shareholder is AXA, a French holding company for an international group of
insurance and related financial services companies. As a majority shareholder,
and under its other arrangements with Equitable Life and Equitable Life's
parent, AXA exercises significant influence over the operations and capital
structure of Equitable Life and its parent. No company other than Equitable
Life, however, has any legal responsibility to pay amounts that Equitable Life
owes under the contracts. During 1999, Equitable Companies plans to change its
name to AXA Financial, Inc.
Equitable Companies and its consolidated subsidiaries managed approximately
$347.5 billion in assets as of December 31, 1998. For over 100 years we have
been among the largest insurance companies in the United States. We are
licensed to sell life insurance and annuities in all fifty states, the District
of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is
located at 1290 Avenue of the Americas, New York, N.Y. 10104.
Equitable Life is registered with the SEC as a broker-dealer under the
Securities Exchange Act of 1934. We are also a member of the National
Association of Securities Dealers, Inc. ("NASD"). We offer RIA through
Equitable associates who are licensed by state insurance officials and, where
necessary, qualified by the NASD.
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WHO IS EQUITABLE LIFE? 59
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HOW TO REACH US
You can reach us as indicated below to obtain:
o Participation agreements, or enrollment or other forms used in RIA.
o Unit values and other values under your plan.
o Any other information or materials that we provide in connection with RIA.
Information on joining RIA \
- ----------------------------------------
BY PHONE:
- ----------------------------------------
1-800-967-4560
or
(201) 583-2302
(9 AM to 5 PM
Eastern Time)
Fax: (201) 583-2304, 2305, or 2306
- ----------------------------------------
BY REGULAR MAIL:
- ----------------------------------------
RIA Service Office
c/o Equitable Life
200 Plaza Drive, lst floor
Secaucus, NJ 07094
- ----------------------------------------
BY REGISTERED, CERTIFIED, OR OVERNIGHT
DELIVERY:
- ----------------------------------------
RIA Service Office
c/o Equitable Life
200 Plaza Drive, 1st floor
Secaucus, NJ 07094
Information once you join RIA
- ----------------------------------------
BY REGULAR MAIL:
(CORRESPONDENCE):
- ----------------------------------------
Equitable Life
200 Plaza Drive, 1st floor
Secaucus, NJ 07094
- ----------------------------------------
FOR CONTRIBUTION CHECKS ONLY:
- ----------------------------------------
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
- ----------------------------------------
FOR OVERNIGHT DELIVERY FOR
CONTRIBUTION CHECKS ONLY:
- ----------------------------------------
First Chicago National
Processing Center (FCNPC)
300 Harmon Meadow Boulevard
Secaucus, NJ 07094
By Phone: 1-800-967-4560 (Service Consultants available weekdays 9AM to 5PM
Eastern Time).
To obtain pre-recorded Fund unit values, call 1-800-967-4560.
NO PERSON IS AUTHORIZED BY THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND THE SAI, OR IN OTHER PRINTED OR WRITTEN
MATERIAL ISSUED BY EQUITABLE LIFE. YOU SHOULD NOT RELY ON ANY OTHER INFORMATION
OR REPRESENTATION.
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APPENDIX: CONDENSED FINANCIAL INFORMATION A-1
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Appendix: Condensed financial information
- --------------------------------------------------------------------------------
These selected per unit data and ratios for the years ended December 31, 1998
through 1993 have been audited by PricewaterhouseCoopers LLP, independent
accountants, as stated in their reports included in the SAI. For years prior to
1993, the condensed financial information was audited by other independent
accountants. The financial statements of each of the Funds as well as the
consolidated financial statements of Equitable Life are contained in the SAI.
Information is provided for the period that each Fund has been available under
RIA, but not longer than ten years.
SEPARATE ACCOUNT NO. 13 - POOLED (ALLIANCE BOND FUND) OF THE EQUITABLE LIFE
ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIOD INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1995 1994 1993
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income $53.25 $53.29 $53.09 $43.07 $42.32 $42.18
Expenses (Note B) (0.28) (0.25) (0.25) (0.23) (0.12) -
- -------------------------------------------------------------------------------------------------------------------
Net investment income 2.97 3.04 2.84 2.84 2.20 2.18
Net realized and unrealized gain (loss) on
investments (Note C) 1.35 0.79 (1.49) 3.72 (2.99) 1.65
- -------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in unit value 4.32 3.83 1.35 6.56 (0.79) 3.83
Alliance Bond Fund unit value (Note A):
Beginning of Period 54.09 50.26 48.91 42.35 43.14 39.31
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End of Period $58.41 $54.09 $50.26 $48.91 $42.35 $43.14
===================================================================================================================
Ratio of expenses to average net assets
(Note B) 0.50% 0.50% 0.50% 0.50% 0.36% N/A
Ratio of net investment income to average
net assets 5.26% 5.89% 5.81% 6.17% 5.12% 5.17%
Number of units outstanding at end of
period 3,003 2,021 2,698 2,392 1,632 545
Portfolio turnover rate
(Note E) 133% 188% 137% 288% 264% 254%
===================================================================================================================
<CAPTION>
- ----------------------------------------------------------
MAY 1, 1992-
DECEMBER 31,
1992
- ----------------------------------------------------------
<S> <C>
Income $40.59
Expenses (Note B) -
- ----------------------------------------------------------
Net investment income 0.59
Net realized and unrealized gain (loss) on
investments (Note C) 2.37
- ----------------------------------------------------------
Net increase (decrease) in unit value 2.96
Alliance Bond Fund unit value (Note A):
Beginning of Period 36.35
- ----------------------------------------------------------
End of Period $39.31
==========================================================
Ratio of expenses to average net assets
(Note B) N/A
Ratio of net investment income to average
net assets 6.00%
Number of units outstanding at end of (Note D)
period 288
Portfolio turnover rate
(Note E) 151%
==========================================================
</TABLE>
See Notes following tables.
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A-2 APPENDIX: CONDENSED FINANCIAL INFORMATION
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SEPARATE ACCOUNT NO. 10 - POOLED (ALLIANCE BALANCED FUND) OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
<TABLE>
<CAPTION>
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YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
1998 1997 1996 1995
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income $ 4.80 $ 4.41 $ 3.60 $ 3.18
Expenses (Note B) (0.66) (0.56) (0.50) (0.43)
- --------------------------------------------------------------------------------
Net investment income 4.14 3.85 3.10 2.75
Net realized and
unrealized gain (loss)
on investments
(Note C) 19.07 10.33 7.66 13.34
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Net increase (decrease) in
unit value 23.21 14.18 10.76 16.09
Alliance Balanced Fund
unit value (Note A):
Beginning of Period 119.80 105.62 94.86 78.77
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End of Period $143.01 $119.80 $105.62 $94.86
================================================================================
Ratio of expenses to
average net assets
(Note B) 0.50% 0.50% 0.50% 0.50%
Ratio of net investment
income to average net
assets 3.19% 3.42% 3.13% 3.19%
Number of units
outstanding at end of
period 29,340 38,304 52,080 73,979
Portfolio turnover rate
(Note E) 89% 165% 177% 170%
================================================================================
<CAPTION>
- ---------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income $ 2.63 $ 2.67 $ 2.69 $ 2.63 $ 3.08 $ 3.04
Expenses (Note B) (0.23) - - - - -
- ---------------------------------------------------------------------------------------------
Net investment income 2.40 2.67 2.69 2.63 3.08 3.04
Net realized and
unrealized gain (loss)
on investments
(Note C) (9.48) 7.28 (4.51) 20.34 (3.17) 8.66
- ---------------------------------------------------------------------------------------------
Net increase (decrease) in
unit value (7.08) 9.95 (1.82) 22.97 (0.09) 11.70
Alliance Balanced Fund
unit value (Note A):
Beginning of Period 85.85 75.90 77.72 54.75 54.84 43.14
- ---------------------------------------------------------------------------------------------
End of Period $78.77 $85.85 $75.90 $77.72 $54.75 $54.84
=============================================================================================
Ratio of expenses to
average net assets
(Note B) 0.30% N/A N/A N/A N/A N/A
Ratio of net investment
income to average net
assets 2.94% 3.31% 3.68% 4.15% 5.78% 6.12%
Number of units
outstanding at end of
period 86,914 87,242 81,860 80,964 86,377 86,942
Portfolio turnover rate
(Note E) 107% 102% 90% 114% 199% 175%
============================================================================================
</TABLE>
See Notes following tables.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX: CONDENSED FINANCIAL INFORMATION A-3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 - POOLED (ALLIANCE COMMON STOCK FUND) OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- ------------------------------------------------------------------------------------
1998 1997 1996 1995 1994
- ------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income $ 3.57 $ 3.39 $ 2.99 $ 3.98 $ 3.83
Expenses (Note B) (3.38) (3.11) (2.51) (2.03) (1.00)
- ------------------------------------------------------------------------------------
Net investment income 0.19 0.28 0.48 1.95 2.83
Net realized and
unrealized gain
(loss) on
investments
(Note C) (18.53) 144.74 80.65 108.54 (8.98)
- ------------------------------------------------------------------------------------
Net increase
(decrease) in unit
value (18.34) 145.02 81.13 110.49 (6.15)
Alliance Common
Stock Fund unit value
(Note A):
Beginning of Period 683.56 538.54 457.41 346.92 353.07
- ------------------------------------------------------------------------------------
End of Period $665.22 $683.56 $538.54 $457.41 $346.92
====================================================================================
Ratio of expenses to
average net assets
(Note B) 0.50% 0.50% 0.50% 0.50% 0.30%
Ratio of net
investment income
to average net
assets 0.03% 0.05% 0.10% 0.49% 0.81%
Number of units
outstanding at end
of period 17,216 21,142 24,332 25,937 27,438
Portfolio turnover rate
(Note E) 71% 62% 105% 108% 91%
====================================================================================
<CAPTION>
- -----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- -----------------------------------------------------------------------------------------
1993 1992 1991 1990 1989
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income $ 3.69 $ 3.13 $ 2.74 $ 3.82 $ 3.42
Expenses (Note B) - - - - -
- -----------------------------------------------------------------------------------------
Net investment income 3.69 3.13 2.74 3.82 3.42
Net realized and
unrealized gain
(loss) on
investments
(Note C) 56.16 1.86 96.86 (26.92) 62.70
- -----------------------------------------------------------------------------------------
Net increase
(decrease) in unit
value 59.85 4.99 99.60 (23.10) 66.12
Alliance Common
Stock Fund unit value
(Note A):
Beginning of Period 293.22 288.23 188.63 211.73 145.61
- -----------------------------------------------------------------------------------------
End of Period $353.07 $293.22 $288.23 $188.63 $211.73
=========================================================================================
Ratio of expenses to
average net assets
(Note B) N/A N/A N/A N/A N/A
Ratio of net
investment income
to average net
assets 1.17% 1.13% 1.14% 2.02% 1.85%
Number of units
outstanding at end
of period 24,924 23,331 20,799 18,286 14,129
Portfolio turnover rate
(Note E) 82% 68% 66% 93% 113%
=========================================================================================
</TABLE>
See Notes following tables.
<PAGE>
- --------------------------------------------------------------------------------
A-4 APPENDIX: CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 - POOLED (ALLIANCE AGGRESSIVE STOCK FUND) OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE
PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE F)
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------------
1998 1997 1996 1995
- --------------------------------------------------------------------------------
Income $ 1.42 $ 1.08 $ 1.33 $ 0.98
Expenses (Note B) (1.13) (1.13) (0.98) (0.75)
- --------------------------------------------------------------------------------
Net investment income
(loss) 0.29 (0.05) 0.35 0.23
Net realized and
unrealized gain (loss)
on investments
(Note C) (31.58) 25.34 38.04 40.49
- --------------------------------------------------------------------------------
Net increase (decrease) in
unit value (31.29) 25.29 38.39 40.72
Alliance Aggressive Stock
Fund unit value
(Note A):
Beginning of Period 234.35 209.06 170.67 129.95
- --------------------------------------------------------------------------------
End of Period $203.06 $234.35 $209.06 $170.67
================================================================================
Ratio of expenses to
average net assets
(Note B) 0.50% 0.50% 0.50% 0.50%
Ratio of net investment
income (loss) to
average net assets 0.13% (0.02)% 0.18% 0.15%
Number of units
outstanding at end of
period 21,322 27,762 26,777 26,043
Portfolio turnover rate
(Note E) 195% 176% 118% 137%
================================================================================
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- -------------------------------------------------------------------------------------------------
1994 1993 1992 1991 1990 1989
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Income $ 0.71 $ 1.01 $ 1.21 $ 1.06 $ 1.03 $ 1.06
Expenses (Note B) (0.37) - - - - -
- -------------------------------------------------------------------------------------------------
Net investment income
(loss) 0.34 1.01 1.21 1.06 1.03 1.06
Net realized and
unrealized gain (loss)
on investments
(Note C) (5.81) 17.43 (4.23) 55.15 4.45 17.77
- -------------------------------------------------------------------------------------------------
Net increase (decrease) in
unit value (5.47) 18.44 (3.02) 56.21 5.48 18.83
Alliance Aggressive Stock
Fund unit value
(Note A):
Beginning of Period 135.42 116.98 120.00 63.79 58.31 39.48
- -------------------------------------------------------------------------------------------------
End of Period $129.95 $135.42 $116.98 $120.00 $63.79 $58.31
=================================================================================================
Ratio of expenses to
average net assets
(Note B) 0.30% N/A N/A N/A N/A N/A
Ratio of net investment
income (loss) to
average net assets 0.25% 0.82% 1.09% 1.11% 1.72% 2.09%
Number of units
outstanding at end of
period 26,964 23,440 21,917 14,830 8,882 5,519
Portfolio turnover rate
(Note E) 94% 83% 71% 63% 48% 92%
================================================================================================
</TABLE>
See Notes following tables.
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX: CONDENSED FINANCIAL INFORMATION A-5
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Notes:
A. The values for a registered Alliance Bond Fund, Alliance Balanced Fund,
Alliance Common Stock Fund and Alliance Aggressive Stock Fund unit on May 1,
1992, January 23, 1985, April 8, 1985 and July 7, 1986, the first date on
which payments were allocated to purchase registered units in each Fund, were
$36.35, $28.07, $84.15 and $44.82, respectively.
B. Certain expenses under RIA are borne directly by employer plans participating
in RIA. Accordingly, those charges and fees discussed under "Charges and
expenses" are not included above and did not affect the Fund unit values.
Those charges and fees are recovered by Equitable Life through an appropriate
reduction in the number of units credited to each employer plan participating
in the Fund unless the charges and fees are billed directly to and paid by
the employer. The dollar amount recovered is included in the expenses in the
Statements of Operations and Changes in Net Assets for each Fund, which
appear in the Financial Statements in the SAI.
As of June 1, 1994, the annual investment management and financial accounting
fee is deducted from the assets of the Alliance Bond, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock Funds and is reflected in
the computation of their unit values. If all charges and fees had been made
directly against employer plan assets in the Funds and had been reflected in
the computation of Fund unit value, RIA registered unit expenses would have
amounted to $0.67, $1.99, $10.24 and $ 3.42 for the year ended December 31,
1998 on a per unit basis for the Alliance Bond, Alliance Balanced, Alliance
Common Stock and Alliance Aggressive Stock Funds, respectively. For the same
reporting periods, the ratio of expenses to average net assets attributable
to registered units would have been (on an annualized basis) 1.19%, 1.53%,
1.53% and 1.54% for the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds, respectively.
C. See Note 2 to Financial Statements of Separate Account Nos. 13 (Pooled), 10
(Pooled), 4 (Pooled), 3 (Pooled) and 51 which appear in the SAI.
D. Annualized basis.
E. The portfolio turnover rate excludes all short-term U.S. Government
securities and all other securities whose maturities at the time of
acquisition were one year or less. The rate stated is the annual turnover
rate for the entire Separate Account Nos. 13 - Pooled, 10 - Pooled, 4 Pooled
and 3 - Pooled.
F. Income, expenses, gains and losses shown above pertain only to employer
plans' accumulations attributable to RIA registered units. Other plans and
trusts also participate in Separate Account Nos. 13 - Pooled, 10 - Pooled, 4
- Pooled and 3 - Pooled and may have operating results and other
supplementary data different from those shown above.
<PAGE>
- --------------------------------------------------------------------------------
A-6 APPENDIX: CONDENSED FINANCIAL INFORMATION
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED) UNIT VALUES AND NUMBER OF REGISTERED UNITS
OUTSTANDING
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
MONEY INTER. GOVT. QUALITY HIGH GROWTH
MARKET SECURITIES BOND YIELD & INCOME
FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Unit value as of:
December 31, 1994 $102.65 $ 98.94 $ 99.83 $ 98.99 $ 99.81
Number of units
outstanding at
December 31, 1994 28 0 0 0 192
Unit value as
of December 31, 1995 $108.49 $112.07 $116.76 $118.64 $123.78
Number of units
outstanding at
December 31, 1995 1,374 248 52 40 1,323
Unit value as
of December 31, 1996 $114.22 $116.24 $122.96 $145.72 $148.57
Number of units
outstanding at
December 31, 1996 1,397 593 0 69 2,078
Unit value as
of December 31, 1997 $120.35 $124.66 $134.14 $172.55 $188.22
Number of units
outstanding at
December 31, 1997 1,351 783 270 1,414 6,083
Unit value as of
December 31, 1998 $126.71 $134.24 $145.72 $163.58 $227.38
Number of units
outstanding at
December 31, 1998 1,249 1,110 1,038 259 6,500
- ----------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE ALLIANCE CONSER- ALLIANCE
EQUITY ALLIANCE SMALL CAP VATIVE GROWTH
INDEX GLOBAL ALLIANCE GROWTH INVESTORS INVESTORS
FUND FUND INT'L FUND FUND FUND FUND
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unit value as of:
December 31, 1994 $101.71 $ 99.84 -- -- $ 99.83 $ 99.52
Number of units
outstanding at
December 31, 1994 10 2,468 -- -- 0 981
Unit value as
of December 31, 1995 $138.75 $118.56 $104.60 -- $120.14 $125.70
Number of units
outstanding at
December 31, 1995 641 6,314 0 -- 236 4,502
Unit value as
of December 31, 1996 $169.72 $135.81 $114.80 -- $126.33 $141.48
Number of units
outstanding at
December 31, 1996 3,856 9,383 853 -- 368 7,135
Unit value as
of December 31, 1997 $224.89 $151.41 $111.24 $114.18 $142.97 $165.12
Number of units
outstanding at
December 31, 1997 7,176 9,726 1,531 2,235 689 8,419
Unit value as of
December 31, 1998 $287.87 $184.33 $122.93 $109.25 $162.74 $196.61
Number of units
outstanding at
December 31, 1998 11,983 7,382 1,659 1,625 759 7,458
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
APPENDIX: CONDENSED FINANCIAL INFORMATION A-7
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED) UNIT VALUES AND NUMBER OF REGISTIERED UNITS
OUTSTANDING
- --------------------------------------------------------------------------------
MERRILL
EQ/PUTNAM LYNCH
T. ROWE GROWTH & BASIC
PRICE EQUITY INCOME VALUE MFS
INCOME VALUE EQUITY RESEARCH
FUND FUND FUND FUND
- --------------------------------------------------------------------------------
Unit value as of:
December 31, 1998 $108.89 $113.78 $107.43 $117.92
Number of units
outstanding at
December 31,
1998 48 0 0 0
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------
MORGAN WARBURG
STANLEY PINCUS MFS MERRILL
T. ROWE EMERGING SMALL EMERGING LYNCH
PRICE MARKETS COMPANY GROWTH EQ/PUTNAM WORLD
INT'L STOCK EQUITY VALUE COMPANIES BALANCED STRATEGY
FUND FUND FUND FUND FUND FUND
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Unit value as of:
December 31, 1998 $114.42 $111.23 $105.06 $123.19 $107.77 $109.65
Number of units
outstanding at
December 31,
1998 0 0 0 30 0 0
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of additional information
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
PAGE
Fund Information 2
General 2
Restrictions and Requirements of the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds 2
Certain Investments of the Alliance Bond and Alliance Balanced Funds 2
How We Determine the Unit Value 4
Alliance Money Market Yield Information 6
Brokerage Fees and Charges for Securities Transactions 6
Additional Information about RIA 7
Loan Provisions 7
Annuity Benefits 8
Ongoing Operations Fee 9
Management for the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds and Equitable Life 10
Funds 10
Distribution 10
Equitable Life 10
Directors 10
Officer-Directors 11
Other Officers 11
Financial Statements 12
Index 12
Financial Statements FSA-1
</TABLE>
SEND OR FAX THIS REQUEST FORM TO RECEIVE A STATEMENT OF ADDITIONAL INFORMATION
To: The Equitable Life Assurance Society of the United States- RIA Service
Office
200 Plaza Drive-1st Floor
Secaucus, NJ 07094-3689
Fax: (201) 583-2304, 2305, or 2306
Please send me a copy of the Statement of Additional Information for the RIA
Prospectus dated May 4, 1999.
- ------------------------------------------------------------------------------
Name:
- ------------------------------------------------------------------------------
Address:
- ------------------------------------------------------------------------------
City State Zip
Client number:
----------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
MAY 4, 1999
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RETIREMENT INVESTMENT ACCOUNT(R)
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
- --------------------------------------------------------------------------------
FUND INFORMATION...................................................... 2
General............................................................ 2
Restrictions and Requirements of the Alliance Bond, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock Funds........ 2
Certain Investments of the Alliance Bond and
Alliance Balanced Fund........................................... 2
How We Determine the Unit Value.................................... 4
Alliance Money Market Yield Information............................ 6
Brokerage Fees and Charges for Securities Transactions............. 6
ADDITIONAL INFORMATION ABOUT RIA...................................... 7
Loan Provisions.................................................... 7
Annuity Benefits................................................... 8
Amount of Fixed-Annuity Payments................................... 8
Ongoing Operations Fee............................................. 9
MANAGEMENT FOR THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE COMMON STOCK
AND ALLIANCE AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE............. 10
Funds.............................................................. 10
Distribution....................................................... 10
Equitable Life..................................................... 10
Directors........................................................ 10
Officer-Directors................................................ 11
Other Officers................................................... 11
FINANCIAL STATEMENTS.................................................. 12
Index.............................................................. 12
Financial Statements............................................... FSA-1
- --------------------------------------------------------------------------------
This Statement of Additional Information (SAI) is not a prospectus. It should be
read in conjunction with the prospectus for our Retirement Investment Account
(RIA), dated May 4, 1999 (PROSPECTUS), and any supplements.
Terms defined in the prospectus have the same meaning in the SAI unless the
context otherwise requires.
You can obtain a copy of the prospectus, and any supplements to the prospectus,
from us free of charge by writing or calling the RIA Service Office listed on
the back of this SAI, or by contacting your Equitable associate. Our Home Office
is located at 1290 Avenue of the Americas, New York, N.Y. 10104 (212) 554-1234.
- --------------------------------------------------------------------------------
Copyright 1999 The Equitable Life Assurance Society 888-1182 (5/99)
of the United States.
All rights reserved. Cat. No. 127987
-------------------
<PAGE>
- --------------------------------------------------------------------------------
FUND INFORMATION
- --------------------------------------------------------------------------------
GENERAL
In our prospectus we discuss in more detail, among other things, the structure
of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds, their investment objectives and policies, including
types of portfolio securities they may hold and levels of investment risks that
may be involved and investment management. We also summarize certain of these
matters with respect to the Investment Funds and their corresponding Portfolios.
See "Investment Options."
Here we will discuss special restrictions, requirements and transaction expenses
that apply to the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds, certain investments of the Alliance Bond Fund
and determination of the value of units for all Funds, including some historical
information. You can find information about the investment objectives and
policies, as well as restrictions, requirements and risks pertaining to the
corresponding The Hudson River Trust and EQ Advisors Trust Portfolios in which
the Investment Funds invest are found in their respective prospectuses and SAIs.
RESTRICTIONS AND REQUIREMENTS OF THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE
COMMON STOCK AND ALLIANCE AGGRESSIVE STOCK FUNDS
Neither the Alliance Common Stock Fund nor the Alliance Balanced Fund will make
an investment in an industry if that investment would cause the Fund's holding
in that industry to exceed 25% of the Fund's assets.
The Alliance Bond Fund, Alliance Common Stock Fund and Alliance Aggressive Stock
Funds will not purchase or write puts or calls (options). The Alliance Balanced
Fund's investment policies do not prohibit hedging transactions such as through
the use of put and call options and stock index or interest rate futures.
However, the Alliance Balanced Fund currently has no plans to enter into such
transactions.
The following investment restrictions apply to the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds. None of
those Funds will:
o trade in foreign exchange (except transactions incidental to the settlement
of purchases or sales of securities for a Fund and contracts for the purchase
or sale of a specific foreign currency at a future date at a price set at the
time of the contract);
o make an investment in order to exercise control or management over a company;
o underwrite the securities of other companies, including purchasing securities
that are restricted under the 1933 Act or rules or regulations thereunder
(restricted securities cannot be sold publicly until they are registered
under the 1933 Act), except as stated below;
o make short sales, except when the Fund has, by reason of ownership of other
securities, the right to obtain securities of equivalent kind and amount that
will be held so long as they are in a short position;
o trade in commodities or commodity contracts (except the Alliance Balanced
Fund is not prohibited from entering into hedging transactions through the
use of stock index or interest rate futures);
o purchase real estate or mortgages, except as stated below. The Funds may buy
shares of real estate investment trusts listed on stock exchanges or reported
on NASDAQ;
o have more than 5% of its assets invested in the securities of any one
registered investment company. A Fund may not own more than 3% of a
registered investment company's outstanding voting securities. The Fund's
total holdings of registered investment company securities may not exceed 10%
of the value of the Fund's assets;
o purchase any security on margin or borrow money except for short-term credits
necessary for clearance of securities transactions;
o make loans, except loans through the purchase of debt obligations or through
entry into repurchase agreements; or
o invest more than 10% of its total assets in restricted securities, real
estate investments, or portfolio securities not readily marketable.
CERTAIN INVESTMENTS OF THE ALLIANCE BOND AND ALLIANCE BALANCED FUNDS
The following are brief descriptions of certain types of investments which may
be made by the Alliance Bond and Alliance Balanced Funds and certain risks and
investment techniques.
MORTGAGE PASS-THROUGH SECURITIES. The Alliance Bond and Alliance Balanced Funds
may invest in mortgage pass-through securities, which are securities
representing interests in pools of mortgages. Principal and interest payments
made on the mortgages in the pools are passed through to the holder of such
securities. Payment of principal and interest on some mortgage pass-through
securities (but not the market value of the securities themselves) may be
guaranteed by the full faith and credit
2
<PAGE>
of the U.S. Government (in the case of securities guaranteed by the Government
National Mortgage Association, or "GNMA"), or guaranteed by agencies or
instrumentalities of the U.S. Government (in the case of securities guaranteed
by the Federal National Mortgage Association ("FNMA") or the Federal Home Loan
Mortgage Corporation ("FHLMC") which are supported only by discretionary
authority of the U.S. Government to purchase the agency's obligations). Mortgage
pass-through securities created by non-governmental issuers (such as commercial
banks, savings and loan institutions, private mortgage insurance companies,
mortgage bankers, and other secondary market issuers) may be supported by
various forms of insurance or guarantees, including individual loan, title,
pool, and hazard insurance, and letters of credit, which may be issued by
governmental entities, private insurers or the mortgage poolers.
COLLATERALIZED MORTGAGE OBLIGATIONS. The Alliance Bond and Alliance Balanced
Funds may invest in collateralized mortgage obligations ("CMOs"). CMOs are debt
securities collateralized by underlying mortgage loans or pools of mortgage
pass-through securities guaranteed by GNMA, FHLMC or FNMA and are generally
issued by limited purpose finance subsidiaries of U.S. Government
instrumentalities. CMOs are not, however, mortgage pass-through securities.
Rather, they are pay-through securities, i.e., securities backed by the cash
flow from the underlying mortgages. Investors in CMOs are not owners of the
underlying mortgages, which serve as collateral for such debt securities, but
are simply owners of a debt security backed by such pledged assets. CMOs are
typically structured into multiple classes, with each class bearing a different
stated maturity and having different payment streams. Monthly payments of
principal, including prepayments, are first returned to investors holding the
shortest maturity class; investors holding longer maturity classes receive
principal payments only after the shorter class or classes have been retired.
ASSET-BACKED SECURITIES. The Alliance Bond and Alliance Balanced Funds may
purchase asset-backed securities that represent either fractional interests or
participation in pools of leases, retail installment loans or revolving credit
receivables held by a trust or limited purpose finance subsidiary. Such
asset-backed securities may be secured by the underlying assets (such as
Certificates for Automobile Receivables) or may be unsecured (such as Credit
Card Receivable Securities). Depending on the structure of the asset-backed
security, monthly or quarterly payments of principal and interest or interest
only are passed through like mortgage pass-through securities or paid through
(like CMOs) to certificate holders. Asset-backed securities may be guaranteed up
to certain amounts by guarantees, insurance or letters of credit issued by a
financial institution affiliated or unaffiliated with the originator of the
pool.
Underlying automobile sales contracts and credit card receivables are, of
course, subject to prepayment (although to a lesser degree than mortgage
pass-through securities), which may shorten the securities' weighted average
life and reduce their overall return to certificate holders. Certificate holders
may also experience delays in payment if the full amounts due on underlying
loans, leases or receivables are not realized because of unanticipated legal or
administrative costs of enforcing the contracts or because of depreciation or
damage to the collateral (usually automobiles) securing certain contracts, or
other factors. The value of these securities also may change because of changes
in the market's perception of the creditworthiness of the servicing agent for
the pool, the originator of the pool, or the financial institution providing
credit support enhancement for the pool. If consistent with its investment
objective and policies, the Alliance Bond and Alliance Balanced Funds may invest
in other asset-backed securities that may be developed in the future.
ZERO COUPON BONDS. The Alliance Bond and Alliance Balanced Funds may invest in
zero coupon bonds. Such bonds may be issued directly by agencies and
instrumentalities of the U.S. Government or by private corporations. Zero coupon
bonds may originate as such or may be created by stripping an outstanding bond.
Zero coupon bonds do not make regular interest payments. Instead, they are sold
at a deep discount from their face value. Because a zero coupon bond does not
pay current income, its price can be very volatile when interest rates change.
REPURCHASE AGREEMENTS. In repurchase agreements, the Alliance Bond or Alliance
Balanced Fund buys securities from a seller, usually a bank or brokerage firm,
with the understanding that the seller will repurchase the securities at a
higher price at a future date. During the term of the repurchase agreement the
Fund retains the securities subject to the repurchase agreement as collateral
securing the seller's repurchase obligation, continually monitors on a daily
basis the market value of the securities subject to the agreement and requires
the seller to deposit with the Fund collateral equal to any amount by which the
market value of the securities subject to the repurchase agreement falls below
the resale amount provided under the repurchase agreement. We evaluate the
creditworthiness of sellers with whom we enter into repurchase agreements. Such
transactions afford an opportunity for the Fund to earn a fixed rate of return
on available cash at minimal market risk, although the Fund may be subject to
various delays and risks of loss if the seller is unable to meet its obligation
to repurchase. The Funds currently treat repurchase agreements maturing in more
than seven days as illiquid securities.
DEBT SECURITIES SUBJECT TO PREPAYMENT RISKS. Mortgage pass-through securities
and certain collateralized mortgage obligations, asset-backed securities and
other debt instruments in which the Alliance Balanced Fund may
3
<PAGE>
invest are subject to prepayments prior to their stated maturity. The Fund
usually is unable to accurately predict the rate at which prepayments will be
made, which rate may be affected, among other things, by changes in generally
prevailing market interest rates. If prepayments occur, the Fund suffers the
risk that it will not be able to reinvest the proceeds at as high a rate of
interest as it had previously been receiving. Also, the Fund will incur a loss
to the extent that prepayments are made for an amount that is less than the
value at which the security was then being carried by the Fund. Moreover,
securities that may be prepaid tend to increase in value less during times of
declining interest rates, and to decrease in value more during times of
increasing interest rates, than do securities that are not subject to
prepayment.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Alliance Bond and Alliance
Balanced Funds may purchase and sell securities on a when-issued or delayed
delivery basis. In these transactions, securities are purchased or sold by a
Fund with payment and delivery taking place in the future in order to secure
what is considered to be an advantageous price or yield to the Fund at the time
of entering into the transaction. However, the market value of such securities
at the time of settlement may be more or less than the purchase price then
payable. When a Fund engages in when-issued or delayed delivery transactions,
the Fund relies on the other party to consummate the transaction. Failure to
consummate the transaction may result in the Fund missing the opportunity of
obtaining a price or yield considered to be advantageous. When-issued and
delayed delivery transactions are generally expected to settle within three
months from the date the transactions are entered into, although the Fund may
close out its position prior to the settlement date. A Fund will sell on a
forward settlement basis only securities it owns or has the right to acquire.
FOREIGN CURRENCY FORWARD CONTRACTS. The Alliance Balanced Fund may enter into
contracts for the purchase or sale of a specific foreign currency at a future
date at a price set at the time of the contract. Generally, such forward
contracts will be for a period of less than three months. The Fund will enter
into such forward contracts for hedging purposes only. These transactions will
include forward purchases or sales of foreign currencies for the purpose of
protecting the dollar value of securities denominated in a foreign currency or
protecting the dollar equivalent of interest or dividends to be paid on such
securities. Forward contracts are traded in the inter-bank market, and not on
organized commodities or securities exchanges. Accordingly, the Fund is
dependent upon the good faith and creditworthiness of the other party to the
transaction, as evaluated by the Fund's Manager. To the extent inconsistent with
any restrictions in the SAI concerning the Fund's trading in foreign exchange,
this paragraph will control.
HEDGING TRANSACTIONS. The Alliance Balanced Fund may engage in hedging
transactions which are designed to protect against anticipated adverse price
movements in securities owned or intended to be purchased by the Fund. When
interest rates go up, the market value of outstanding debt securities declines
and vice versa. In recent years the volatility of the market for debt securities
has increased significantly, and market prices of longer-term obligations have
been subject to wide fluctuations, particularly as contrasted with those of
short-term instruments. The Fund will take certain risks into consideration when
determining which, if any, options or financial futures contracts it will use.
If the price movements of hedged portfolio securities are in fact favorable to
the Fund, the hedging transactions will tend to reduce and may eliminate the
economic benefit to the Fund which otherwise would result. Also, the price
movements of options and futures used for hedging purposes may not correlate as
anticipated with price movements of the securities being hedged. This can make a
hedge transaction less effective than anticipated and could result in a loss.
The options and futures markets can sometimes become illiquid and the exchanges
on which such instruments are traded may impose trading halts or delays on the
exercise of options and liquidation of futures positions in certain
circumstances. This could in some cases operate to the Fund's detriment.
HOW WE DETERMINE THE UNIT VALUE
In our prospectus, we discuss how employer plan assets are put into and taken
out of the Funds by the purchase and redemption of units under the contracts,
respectively. See "How we value your plan balances" in the prospectus. Here we
will discuss how we determine the value of units.
When contributions are invested in the Funds, the number of units outstanding
attributable to each Fund is correspondingly increased; and when amounts are
withdrawn from one of these Funds, the number of units outstanding attributable
to that Fund is correspondingly decreased.
For the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds, the unit values reflect investment performance and
investment management and financial accounting fees. We determine the respective
unit values for these Funds by multiplying the unit value for the preceding
business day by the net investment factor for that subsequent day.
We determine the net investment factor as follows:
o First, we take the value of the Fund's assets at the close of business on the
preceding business day.
o Next, we add the investment income and capital gains, realized and
unrealized, that are credited to the assets of the Fund during the business
day for which the net investment factor is being determined.
4
<PAGE>
o Then, we subtract the capital losses, realized and unrealized, and investment
management and financial accounting fees charged to the Fund during that
business day.
o Finally, we divide this amount by the value of the Fund's assets at the close
of the preceding business day.
Prior to June 1, 1994, for the Alliance Bond, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds, the investment management and
financial accounting fees were deducted monthly from employer plan balances in
these Funds.
Assets of the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds are valued as follows:
o Common stocks and other equity-type securities listed on national securities
exchanges and certain over-the-counter issues traded on the NASDAQ system
are valued at the last sale price or, if no sale, at the latest available bid
price. Other unlisted securities reported on the NASDAQ system are valued at
inside (highest) quoted bid prices.
o Foreign securities not traded directly, or in ADR form in the United States
are valued at the last sale price in the local currency on an exchange in the
country of origin. Foreign currency is converted into dollars at current
exchange rates.
o United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
o Long-term (i.e., maturing in more than a year) publicly traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where it is deemed appropriate to do so, an over-the-counter or exchange
quotation may be used.
o Short-term debt securities maturing in 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt securities
maturing in more than 60 days are valued at representative quoted prices. The
Funds can acquire short-term debt securities directly or through the
acquisition of units in our Separate Account No. 2A. See "Investment options"
in the prospectus.
o Convertible preferred stocks listed on national securities exchanges are
valued as of their last sale price or, if there is no last sale, at the
latest available bid price.
o Convertible bonds and unlisted convertible preferred stocks are valued at bid
prices obtained from one or more major dealers in such securities; where
there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stock.
o The unit value of Separate Account No. 2A is calculated each day the New York
Stock Exchange is open for trading by dividing (i) the value of the portfolio
securities and other assets of Separate Account No. 2A at the close of the
business on that day (before giving effect to amounts contributed or
withdrawn during that day), by (ii) the total number of units outstanding at
the close of business on the preceding day. Separate Account No. 2A invests
in short-term securities which mature in 60 days or less from the date of
purchase or are subject to a repurchase agreement requiring repurchase in 60
days or less. The assets of Separate Account No. 2A are valued as described
with respect to the Separate Accounts.
The unit value for a Fund of Separate Account Nos. 51 and 66 for any business
day together with any preceding non-business days (VALUATION PERIOD) is equal to
the unit value for the preceding valuation period multiplied by the net
investment factor for that Investment Fund for that valuation period. The net
investment factor for a valuation period is:
a/b - c
where:
(a) is the value of the Fund's shares of the corresponding Portfolio at the end
of the valuation period before giving effect to any amounts allocated to or
withdrawn from the Investment Fund for the valuation period. For this
purpose, we use the share value reported to us by the relevant Trust. This
share value is after deduction for investment advisory fees and other
expenses of the Trust.
(b) is the value of the Fund's shares of the corresponding Portfolio at the end
of the preceding valuation period (after any amounts are allocated or
withdrawn for that valuation period).
(c) is the daily factor for the separate account administrative charge
multiplied by the number of calendar days in the valuation period.
Our investment officers and the Trust's investment adviser determine in good
faith the fair value of securities and other assets that do not have a readily
available market price in accordance with accepted accounting practices and
applicable laws and regulations.
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<PAGE>
ALLIANCE MONEY MARKET YIELD INFORMATION
The Alliance Money Market Fund calculates yield information for seven-day
periods. The seven-day current yield calculation is based on a hypothetical
employer plan with one unit at the beginning of the period. To determine the
seven-day rate of return, the net change in the unit value is computed by
subtracting the unit value at the beginning of the period from a unit value,
exclusive of capital changes, at the end of the period.
The net change is then reduced by the average ongoing operations fee factor
(explained below). This reduction is made to recognize the deduction of the
ongoing operations fee which is not reflected in the unit value. See "Charges
and expenses" in the prospectus. Accumulation unit values reflect all other
accrued expenses of the Alliance Money Market Fund.
The adjusted net change is divided by the unit value at the beginning of the
period to obtain the adjusted base period rate of return. This seven-day
adjusted base period return is then multiplied by 365/7 to produce an annualized
seven-day current yield figure carried to the nearest one-hundredth of one
percent.
The actual dollar amount of the ongoing operations fee that is deducted from the
Alliance Money Market Fund will vary for each employer plan depending upon how
the plan's balance is allocated among the investment options. To determine the
effect of the ongoing operations fee on the yield, we start with the total
dollar amount of the fees deducted from the Fund on the last business day of the
prior month. This amount is multiplied by 7/30.417 to produce an average ongoing
operations fee factor which is used in all weekly yield computations for the
ensuing quarter. The average ongoing operations fee factor and the separate
account administrative charge is then divided by the number of Alliance Money
Market Fund units as of the end of the prior month, and the resulting quotient
is deducted from the net change in unit value for the seven-day period.
The effective yield is obtained by modifying the current yield to give effect to
the compounding nature of the Alliance Money Market Fund's investments, as
follows: the unannualized adjusted base period return is compounded by adding
one to the adjusted base period return, raising the sum to a power equal to 365
divided by 7, and subtracting one from the result, i.e., effective yield = (base
period return + 1)[Superscript: 365/7]-1.
The Alliance Money Market Fund yield will fluctuate daily. Accordingly, yields
for any given period are not necessarily representative of future results. In
addition, the value of units of the Alliance Money Market Fund will fluctuate
and not remain constant.
The Alliance Money Market Fund yield reflects charges that are not normally
reflected in the yields of other investments and therefore may be lower when
compared with yields of other investments. Alliance Money Market Fund yields
should not be compared to the return on fixed-rate investments which guarantee
rates of interest for specified periods, such as the guaranteed interest account
or bank deposits. The yield should not be compared to the yield of money market
funds made available to the general public because their yields usually are
calculated on the basis of a constant $1 price per share and they pay earnings
in dividends which accrue on a daily basis.
The Alliance Money Market Fund's seven-day current yield for the RIA contracts
was 3.94% for the period ended December 31, 1998. The effective yield for that
period was 4.02%. Because these yields reflect the deduction of the ongoing
operations fee and the separate account administrative charge, they are lower
than the corresponding yield figures for the Alliance Money Market Portfolio
which reflect only the deduction of Trust-level expenses.
BROKERAGE FEES AND CHARGES FOR SECURITIES TRANSACTIONS
We discuss in the prospectus that we are the investment manager of the Alliance
Bond, Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock
Funds. As the investment manager of these Funds, we invest and reinvest the
assets of these Funds in a manner consistent with the policies described in the
prospectus. In providing these services we currently use the personnel and
facilities of our majority-owned subsidiary, Alliance, for portfolio selection
and transaction services, including arranging the execution of portfolio
transactions. Alliance is also the investment manager for The Hudson River
Trust. Information on brokerage fees and charges for securities transactions for
the Trust's Portfolios of The Hudson River Trust and EQ Advisors Trust is
provided in their respective prospectuses.
The Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds are charged for securities brokers commissions, transfer
taxes and other fees and expenses relating to their operation. Transactions in
equity securities for a Fund are executed primarily through brokers which
receive a commission paid by the Fund. Brokers are selected by Alliance.
Alliance seeks to obtain the best price and execution of all orders placed for
the portfolio of the Funds, considering all the circumstances. If transactions
are executed in the over-the-counter market Alliance will deal with the
principal market makers, unless more favorable prices or better execution is
otherwise obtainable. There are occasions on which portfolio transactions for
the Funds may be executed as part of concurrent authorizations to purchase or
sell the same security for certain other accounts or clients advised by
Alliance. Although these concurrent authorizations potentially can be either
advantageous or disadvantageous to the Funds, they are effected only when it is
believed that to do so is in the best interest of the Funds. When these
concurrent authorizations occur, the
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<PAGE>
objective is to allocate the executions among the accounts or clients in a fair
manner.
We try to choose only brokers which we believe will obtain the best prices and
executions on securities transactions. Subject to this general requirement, we
also consider the amount and quality of securities research services provided by
a broker. Typical research services include general economic information and
analyses and specific information on and analyses of companies, industries and
markets. Factors we use in evaluating research services include the diversity of
sources used by the broker and the broker's experience, analytical ability and
professional stature.
The receipt of research services from brokers tends to reduce our expenses in
managing the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds. We take this into account when setting the
expense charges. Brokers who provide research services may charge somewhat
higher commissions than those who do not. However, we will select only brokers
whose commissions we believe are reasonable in all the circumstances.
We periodically evaluate the services provided by brokers and prepare internal
proposals for allocating among those various brokers business for all the
accounts we manage or advise. That evaluation involves consideration of the
overall capacity of the broker to execute transactions, its financial condition,
its past performance and the value of research services provided by the broker
in servicing the various accounts advised or managed by us. Generally, we do not
tell brokers that we will try to allocate a particular amount of business to
them. We do occasionally let brokers know how their performance has been
evaluated.
Research information that we obtain may be used in servicing all clients or
accounts under our management, including our general account. Similarly, we will
not necessarily use all research provided by a broker or dealer with which the
Funds transact business in connection with those Funds.
Transactions for the Alliance Bond, Alliance Balanced, Alliance Common Stock and
Alliance Aggressive Stock Funds in the over-the-counter market are normally
executed as principal transactions with a dealer that is a principal market
maker in the security, unless a better price or better execution can be obtained
from another source. Under these circumstances, the Funds pay no commission.
Similarly, portfolio transactions in money market and debt securities will
normally be executed through dealers or underwriters under circumstances where
the Fund pays no commission.
When making securities transactions for the Alliance Bond, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock Funds that do not involve
paying a brokerage commission (such as the purchase of short-term debt
securities), we seek to obtain prompt execution in an effective manner at the
best price. Subject to this general objective, we may give orders to dealers or
underwriters who provide investment research. None of the Funds will pay a
higher price, however, and the fact that we may benefit from such research is
not considered in setting the expense charges.
In addition to using brokers and dealers to execute portfolio securities
transactions for clients or accounts we manage, we may enter into other types of
business transactions with brokers or dealers. These other transactions will be
unrelated to allocation of the Funds' portfolio transactions.
Our parent, the Holding Company, owns Donaldson, Lufkin & Jenrette Inc. (DLJ). A
DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities Corporation (DLJ
Securities Corp.), is one of the nation's largest investment banking and
securities firms. Another DLJ subsidiary, Autranet, Inc., is a securities broker
that markets independently originated research to institutions. Through the
Pershing Division of DLJ Securities Corp., DLJ supplies correspondent services,
including order execution, securities clearance and other centralized financial
services to numerous independent regional securities firms and banks.
To the extent permitted by law, and consistent with the Fund transaction
practices discussed in this SAI and the prospectus, the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds may engage
in securities and other transactions with the above entities or may invest in
shares of the investment companies with which those entities have affiliations.
During 1998, there were no transactions effected through DLJ subsidiaries and
therefore no commissions were paid.
For the years ended December 31, 1998, 1997, and 1996 total brokerage
commissions for Separate Account No. 10 -- Pooled were $172,883, $424,352, and
$931,317, respectively; for Separate Account 4 -- Pooled were $4,288,187,
$3,698,148, and $5,682,578, respectively; and for Separate Account No. 3 --
Pooled were $2,020,464, $1,876,011, and $1,268,209, respectively. For 1996,
total brokerage commissions for Separate Account No. 13 -- Pooled were $0. For
the fiscal year ended December 31, 1998, commissions of $56,428, $1,484,034, and
$807,098 were paid to brokers providing research services to Separate Account
No. 10 -- Pooled, Separate Account No. 4 -- Pooled and Separate Account No. 3 --
Pooled, respectively, on portfolio transactions of $154,126,661, $2,542,807,630,
and $906,530,372, respectively.
ADDITIONAL INFORMATION ABOUT RIA
LOAN PROVISIONS
Loans to plan trustees on behalf of participants are permitted in our RIA
program. It is the plan administrator's responsibility to administer the loan
program.
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The following are important features of the RIA loan provision:
o We will only permit loans from the guaranteed interest account. If the amount
requested to be borrowed plus the loan fee and loan reserve we discuss below
is more than the amount available in the guaranteed interest account for the
loan transaction, the employer can move the additional amounts necessary from
one or more Funds to the guaranteed interest account.
o The plan administrator determines the interest rate, the maximum term and all
other terms and conditions of the loan.
o Repayment of loan principal and interest can be made only to the guaranteed
interest account. The employer must identify the portion of the repayment
amount which is principal and which is interest.
o Upon repayment of a loan amount, any repayment of loan principal and loan
reserve (see below) taken from one or more Funds for loan purposes may be
moved back to a Fund.
o We charge a loan fee in an amount equal to 1% of the loan principal amount on
the date a loan is made. The contingent withdrawal charge will be applied to
any unpaid principal, as if the amount had been withdrawn on the day the
principal payment was due. See "Charges and expenses" in the prospectus.
o The minimum amount of a loan for a participant is $1,000, and the maximum
amount is 90% of the balances in all the investment options for a
participant. An employer plan, the Code and the Department of Labor (DOL) (as
described in "Tax information" in the prospectus) may impose additional
conditions or restrictions on loan transactions.
o On the date a loan is made, we create a loan reserve account in the
guaranteed interest account in an amount equal to 10% of the loan amount. The
10% loan reserve is intended to cover (1) the ongoing operations fee
applicable to amounts borrowed, (2) the possibility of our having to deduct
applicable contingent withdrawal charges (see "Charges and expenses" in the
prospectus) and (3) the deduction of any other withholdings, if required. The
loan amount will not earn any interest under the contracts while the loan is
outstanding. The amount of the loan reserve will continue to earn interest at
the guaranteed interest account rate applicable for the employer plan.
o The ongoing operations fee will apply to the sum of the investment option
balances (including the loan reserve) plus any unpaid loan principal. If the
employer plan is terminated or any amount is withdrawn, or if any withdrawal
from RIA results in the reduction of the 10% loan reserve amount in the
guaranteed interest account, during the time a loan is outstanding, the
contingent withdrawal charge will be applied to any principal loan balances
outstanding as well as to any employer plan balances (including the loan
reserve) in the investment options. See "Charges and expenses" in the
prospectus.
ANNUITY BENEFITS
Subject to the provisions of an employer plan, we have available under RIA the
following forms of fixed annuities.
o LIFE ANNUITY: An annuity which guarantees a lifetime income to the retired
employee-participant (annuitant) and ends with the last monthly payment
before the annuitant's death. There is no death benefit associated with this
annuity form and it provides the highest monthly amount of any of the
guaranteed life annuity forms. If this form of annuity is selected, it is
possible that only one payment will be made if the annuitant dies after that
payment.
o LIFE ANNUITY -- PERIOD CERTAIN: This annuity form guarantees a lifetime
income to the annuitant and, if the annuitant dies during a previously
selected minimum payment period, continuation of payments to a designated
beneficiary for the balance of the period. The minimum period is usually 5,
10, 15 or 20 years.
o LIFE ANNUITY -- REFUND CERTAIN: This annuity form guarantees a lifetime
income to the annuitant and, if the annuitant dies before the initial single
premium has been recovered, payments will continue to a designated
beneficiary until the single premium has been recovered. If no beneficiary
survives the annuitant, the refund will be paid in one lump sum to the
estate.
o PERIOD CERTAIN ANNUITY: Instead of guaranteed lifetime income, this annuity
form provides for payments to the annuitant over a specified period, usually
5, 10, 15 or 20 years, with payments continuing to the designated beneficiary
for the balance of the period if the annuitant dies before the period
expires.
o QUALIFIED JOINT AND SURVIVOR LIFE ANNUITY: This annuity form guarantees
lifetime income to the annuitant, and, after the annuitant's death, the
continuation of income to the surviving spouse. Generally, unless a married
annuitant elects otherwise with the written consent of his spouse, this will
be the form of annuity payment. If this form of annuity is selected, it is
possible that only one payment will be made if both the annuitant and the
spouse die after that payment.
All of the forms outlined above (with the exception of Qualified Joint and
Survivor Life Annuity) are available as either Single or Joint life annuities.
We offer other forms not outlined here. Your Equitable associate can provide
details.
AMOUNT OF FIXED-ANNUITY PAYMENTS
Our forms of a fixed annuity provide monthly payments of specified amounts.
Fixed-annuity payments, once begun,
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will not change. The size of payments will depend on the form of annuity that is
chosen, our annuity rate tables in ef-fect when the first payment is made, and,
in the case of a life income annuity, on the annuitant's age. The tables in our
Contracts show monthly payments for each $1,000 of proceeds applied under an
annuity. If our annuity rates in effect on the annuitant's retirement date would
yield a larger payment, those current rates will apply instead of the tables.
Our annuity rate tables are designed to determine the amounts required for the
annuity benefits elected and for administrative and investment expenses and
mortality and expense risks. Under our Contracts we can change the annuity rate
tables every five years. Such changes would not affect annuity payments being
made.
ONGOING OPERATIONS FEE
We determine the ongoing operations fee based on the combined net balances of an
employer plan in all the investment options (including any outstanding loan
balances) at the close of business on the last business day of each month. For
employer plans that adopted RIA on or before February 9, 1986, we use the rate
schedule set forth below, and apply it to the employer plan balances at the
close of business on the last business day of the following month. For employer
plans that adopted RIA after February 9, 1986 we use the rate schedule set forth
in the prospectus. See "Charges and expenses" in the prospectus.
- -------------------------------------------------------------
COMBINED BALANCE MONTHLY
OF INVESTMENT OPTIONS RATE
- -------------------------------------------------------------
First $ 150,000 1/12 of 1.25%
Next $ 350,000 1/12 of 1.00%
Next $ 500,000 1/12 of 0.75%
Next $1,500,000 1/12 of 0.50%
Over $2,500,000 1/12 of 0.25%
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MANAGEMENT FOR THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE
COMMON STOCK AND ALLIANCE AGGRESSIVE STOCK FUNDS AND EQUITABLE LIFE
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FUNDS
In the prospectus we give information about us, the Alliance Bond, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds and how we,
together with Alliance, provide investment management for the investments and
operations of these Funds. See "More information" in the prospectus. The amounts
of the investment management and financial accounting fees we received from
employer plans participating through registered Contracts in the Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds in 1998 were
$22,847, $67,923 and $30,444 respectively; in 1997 were $24,226, $75,951, and
$32,585, respectively; and 1996 were $33,735, $64,279 and $26,432, respectively.
The amount of such fees received under the Alliance Bond Fund in 1998, 1997 and
1996 were $747, $559 and $640, respectively.
DISTRIBUTION
Equitable Financial Consultants, Inc. ("EQF"), an indirect, wholly owned
subsidiary of Equitable Life, is the distributor of the contracts and has
responsibility for sales and marketing functions. During 1999, EQF plans to
change its name to AXA Advisors, Inc. EQF serves as the principal underwriter of
the Trust. EQF is registered with the SEC as a broker-dealer and is a member of
the National Association of Securities Dealers, Inc. EQF's principal business
address is 1290 Avenue of the Americas, New York, NY 10104. The contracts will
be sold by registered representatives of EQF and its affiliates, who are also
our licensed insurance agents. EQF may also receive compensation and
reimbursement for its marketing services under the terms of its distribution
agreement with Equitable Life. The offering of the contracts is intended to be
continuous.
EQUITABLE LIFE
We are managed by a Board of Directors. Our Directors, certain of our executive
officers and their principal occupations are set forth below.
<TABLE>
<CAPTION>
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DIRECTORS
NAME PRINCIPAL OCCUPATION
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<S> <C>
Francoise Colloc'h Senior Executive Vice President, Human Resources and Communications, AXA
Henri de Castries Senior Executive Vice President, Financial Services and Life Insurance Activities, AXA
Joseph L. Dionne Chairman and former Chief Executive Officer, The McGraw-Hill Companies
Denis Duverne Senior Vice President, International (US-UK-Benelux)
Jean-Rene Fourtou Chairman and Chief Executive Officer, Rhone-Poulenc, S.A.
Norman C. Francis President, Xavier University of Louisiana
Donald J. Greene Counselor-at-Law, Partner, LeBoeuf, Lamb, Greene & MacRae, L.L.P.
John T. Hartley Director and retired Chairman and Chief Executive Officer, Harris Corporation
John H. F. Haskell, Jr. Director and Managing Director, Warburg Dillon Read, L.L.C.
Mary R. (Nina) Henderson President, Bestfoods Grocery; Vice President, BESTFOODS
W. Edwin Jarmain President, Jarmain Group Inc.
George T. Lowy Counselor-at-Law, Partner, Cravath, Swaine & Moore
Didier Pineau-Valencienne Vice Chairman, Credit Suisse First Boston
George J. Sella, Jr. Retired Chairman of the Board and Chief Executive Officer, American Cyanamid Company
Peter J. Tobin Dean of the College of Business Administration, St. John's University
Dave H. Williams Chairman and former Chief Executive Officer, Alliance Capital Management, L.P.
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</TABLE>
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Unless otherwise indicated, the following persons have been involved in the
management of Equitable Life in various executive positions during the last five
years.
<TABLE>
<CAPTION>
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OFFICER-DIRECTORS
NAME PRINCIPAL OCCUPATION
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Edward D. Miller Chairman of the Board and Chief Executive Officer; formerly, Senior Vice Chairman, Chase
Manhattan Corporation, and prior thereto, President and Vice Chairman, Chemical Bank
Stanley B. Tulin Vice Chairman of the Board and Chief Financial Officer; formerly, Chairman, Insurance
Consulting and Actuarial Practice, Coopers & Lybrand
Michael Hegarty President and Chief Operating Officer; formerly, Vice Chairman, Chase Manhattan Corporation,
and prior thereto, Vice Chairman and Senior Executive Vice President, Chemical Bank
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OTHER OFFICERS
NAME PRINCIPAL OCCUPATION*
- ------------------------------------------------------------------------------------------------------------------------------------
Leon B. Billis Executive Vice President and Chief Information Officer
Jose Suquet Senior Executive Vice President and Chief Distribution Officer
Robert E. Garber Executive Vice President and General Counsel
Jerome S. Golden Executive Vice President
Peter D. Noris Executive Vice President and Chief Investment Officer; formerly, Vice President/Manager,
Insurance Company Investment Strategies Group, Salomon Brothers, Inc.
Harvey Blitz Senior Vice President
Kevin R. Byrne Senior Vice President and Treasurer
Alvin H. Fenichel Senior Vice President and Controller
Paul J. Flora Senior Vice President and Auditor
Mark A. Hug Senior Vice President; formerly, Vice President, Aetna
Michael S. Martin Senior Vice President and Chief Marketing Officer
Douglas Menkes Senior Vice President and Coroporate Actuary; formerly with Milliman & Robertson, Inc.
Anthony C. Pasquale Senior Vice President
Donald R. Kaplan Vice President, Chief Compliance Officer and Associate General Counsel
Pauline Sherman Senior Vice President, Secretary and Associate General Counsel
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</TABLE>
- -------------------
*Current positions listed are with Equitable Life unless otherwise specified.
11
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<TABLE>
<CAPTION>
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FINANCIAL STATEMENTS INDEX
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PAGE
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<S> <C> <C>
SEPARATE ACCOUNT NOS. 13 (POOLED), Report of Independent Accountants--....................................... FSA-1
10 (POOLED), 4 (POOLED), AND 3 (POOLED)
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SEPARATE ACCOUNT NO. 13 (POOLED) Statement of Assets and Liabilities, December 31, 1998.................... FSA-2
-------------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997.......................................... FSA-3
-------------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1998............................... FSA-4
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED) Statement of Assets and Liabilities, December 31, 1998.................... FSA-6
-------------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997.......................................... FSA-7
-------------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1998............................... FSA-8
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED) Statement of Assets and Liabilities, December 31, 1998.................... FSA-24
-------------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997.......................................... FSA-25
-------------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1998............................... FSA-26
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED) Statement of Assets and Liabilities, December 31, 1998.................... FSA-31
-------------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997.......................................... FSA-32
-------------------------------------------------------------------------------------------
Portfolio of Investments, December 31, 1998............................... FSA-33
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED) Report of Independent Accountants--....................................... FSA-38
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED) Statements of Assets and Liabilities, December 31, 1998................... FSA-39
-------------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997.......................................... FSA-40
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED) Report of Independent Accountants--....................................... FSA-48
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED) Statements of Assets and Liabilities, December 31, 1998................... FSA-49
-------------------------------------------------------------------------------------------
Statements of Operations and Changes in Net Assets for the Years
Ended December 31, 1998 and 1997.......................................... FSA-51
- ------------------------------------------------------------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 (POOLED), Notes to Financial Statements............................................. FSA-55
10 (POOLED), 4 (POOLED), 3 (POOLED),
51 (POOLED), AND 66 (POOLED)
- ------------------------------------------------------------------------------------------------------------------------------------
THE EQUITABLE LIFE ASSURANCE Report of Independent Accountants-- ...................................... F-1
SOCIETY OF THE UNITED STATES -------------------------------------------------------------------------------------------
Consolidated Balance Sheets as of December 31, 1998 and 1997 ............. F-2
-------------------------------------------------------------------------------------------
Consolidated Statements of Earnings for the Years Ended
December 31, 1998, 1997 and 1996 ......................................... F-3
-------------------------------------------------------------------------------------------
Consolidated Statements of Shareholder's Equity for the Years
Ended December 31, 1998, 1997 and 1996 ................................... F-4
-------------------------------------------------------------------------------------------
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1998, 1997 and 1996 ......................................... F-5
-------------------------------------------------------------------------------------------
Notes to Consolidated Financial Statements ............................... F-6
- ------------------------------------------------------------------------------------------------------------------------------------
The financial statements of the Funds reflect fees, charges and other
expenses of the Separate Accounts applicable to Contracts under RIA as in
effect during the periods covered, as well as the expense charges made in
accordance with the terms of all other contracts participating in the
respective Funds.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
================================================================================
RETIREMENT INVESTMENT ACCOUNT(R)
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT UNITS OF INTEREST
UNDER GROUP ANNUITY CONTRACTS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
FUNDS
-----
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
POOLED SEPARATE ACCOUNTS SEPARATE ACCOUNT NO. 51 SEPARATE ACCOUNT NO. 66
o Alliance Bond, Separate Account No. 13 o Alliance Money Market o T. Rowe Price Equity Income
-- Pooled o Alliance Intermediate Government o EQ/Putnam Growth & Income Value
o Alliance Balanced, Separate Account Securities o Merrill Lynch Basic Value Equity
No. 10 -- Pooled o Alliance Quality Bond o MFS Research
o Alliance Common Stock, Separate Account o Alliance High Yield o T. Rowe Price International Stock
No. 4 -- Pooled o Alliance Growth & Income o Morgan Stanley Emerging Markets Equity
o Alliance Aggressive Stock, Separate o Alliance Equity Index o Warburg Pincus Small Company Value
Account No. 3 -- Pooled o Alliance Global o MFS Emerging Growth Companies
o Alliance International o EQ/Putnam Balanced
o Alliance Small Cap Growth o Merrill Lynch World Strategy
o Alliance Conservative Investors
o Alliance Growth Investors
</TABLE>
OF
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
---------------------------------------------------------
RIA SERVICE OFFICE:
Equitable Life
RIA Service Office
200 Plaza Drive
Secaucus, NJ 07094-3689
Tel.: (800) 967-4560
(201) 583-2302
(9 A.M. to 5 P.M. Eastern time)
Fax: (201) 583-2304, 2305, or 2306
(To obtain pre-recorded Fund unit values, use our toll-free number listed above)
ADDRESS FOR CONTRIBUTIONS ONLY:
Equitable Life
RIA/EPP
P.O. Box 13503
Newark, NJ 07188
EXPRESS MAIL ADDRESS FOR CONTRIBUTIONS ONLY:
First Chicago National Processing Center (FCNPC)
300 Harmon Meadow Boulevard
Attn: Box 13503
Secaucus, NJ 07094
68654
================================================================================
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account Nos. 13, 10, 4 and 3
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities, including
the portfolio of investments, and the related statements of operations and
changes in net assets and the selected per unit data (included under Condensed
Financial Information in the prospectus of the Retirement Investment Account)
present fairly, in all material respects, the financial position of Separate
Account Nos. 13 (Pooled)(Alliance Bond Fund), 10 (Pooled)(Alliance Balanced
Fund), 4 (Pooled)(Alliance Common Stock Fund) and 3 (Pooled) (Alliance
Aggressive Stock Fund) of The Equitable Life Assurance Society of the United
States ("Equitable Life") at December 31, 1998 and each of their results of
operations, the changes in net assets for each of the two years in the period
then ended and the selected per unit data for the periods presented, in
conformity with generally accepted accounting principles. These financial
statements and the selected per unit data (hereafter referred to as "financial
statements") are the responsibility of Equitable Life's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1998 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ASSETS:
<S> <C>
Investments (Notes 2 and 3):
Long-term debt securities - at value (amortized cost: $92,783,957)..................... $94,348,559
Participation in Separate Account No. 2A - at amortized cost, which approximates
market value, equivalent to 7,575 units at $285.54.................................... 2,162,910
Cash 1,864
Receivables:
Interest................................................................................ 1,523,435
Other................................................................................... 32,334
- ---------------------------------------------------------------------------------------------------------------
Total assets.......................................................................... 98,069,102
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Due to Equitable Life's General Account................................................. 20,951
Investment management fees payable...................................................... 60
Accrued expenses........................................................................... 9,007
- ---------------------------------------------------------------------------------------------------------------
Total liabilities..................................................................... 30,018
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................. $98,039,084
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-2
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)-- Interest.................................. $ 6,223,555 $ 8,163,837
EXPENSES (NOTE 4)...................................................... (586,752) (690,004)
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 5,636,803 7,473,833
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN ON INVESTMENTS (NOTE 2):
Realized gain from security transactions .............................. 2,544,641 1,189,685
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation of investments:
Beginning of year................................................... 1,444,411 694,679
End of year......................................................... 1,564,602 1,444,411
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation ........................ 120,191 749,732
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................ 2,664,832 1,939,417
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations...................... 8,301,635 9,413,250
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 23,074,114 30,905,572
Withdrawals............................................................ (45,688,691) (62,636,625)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (22,614,577) (31,731,053)
- ---------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS ................................................ (14,312,942) (22,317,803)
NET ASSETS -- BEGINNING OF YEAR ....................................... 112,352,026 134,669,829
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR.............................................. $ 98,039,084 $112,352,026
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-3
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
CONSUMER CYCLICALS
AUTO-RELATED (4.1%)
Enterprise Rent-A-Car Co.
6.95%, 2004......................................................... $ 4,000,000 $ 3,984,160
------------
TOTAL CONSUMER CYCLICALS (4.1%)........................................ 3,984,160
------------
CREDIT-SENSITIVE
ASSET-BACKED (6.1%)
Chase Credit Card Master Trust
6.3%, 2003.......................................................... 4,000,000 4,058,720
Discover Card Master Trust
5.85%, 2006......................................................... 1,900,000 1,922,781
------------
5,981,501
------------
BANKS (2.0%)
Long Island Savings Bank
7.0%, 2002.......................................................... 1,850,000 1,916,665
------------
FINANCIAL SERVICES (4.5%)
Associates Corp. of North America
6.5%, 2002.......................................................... 4,300,000 4,436,396
------------
MORTGAGE-RELATED (4.6%)
Federal National Mortgage Association
5.25%, 2003......................................................... 4,500,000 4,530,915
------------
UTILITY -- ELECTRIC (4.3%)
Consolidated Edison, Inc.
6.25%, 2008......................................................... 4,000,000 4,199,040
------------
U.S. GOVERNMENT (64.7%)
U.S. Treasury Notes:
6.375%, 1999........................................................ 1,865,000 1,876,074
6.0%, 2000.......................................................... 14,000,000 14,288,750
6.25%, 2001......................................................... 5,820,000 6,025,522
6.5%, 2001.......................................................... 10,415,000 10,886,935
6.5%, 2002.......................................................... 6,675,000 7,048,386
4.25%, 2003......................................................... 2,535,000 2,501,728
5.75%, 2003......................................................... 3,615,000 3,773,156
6.875%, 2006........................................................ 11,530,000 13,032,509
6.625%, 2007........................................................ 1,500,000 1,687,032
5.625%, 2008........................................................ 2,185,000 2,331,122
------------
63,451,214
------------
TOTAL CREDIT-SENSITIVE (86.2%)......................................... 84,515,731
------------
</TABLE>
FSA-4
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 13 (POOLED)
(THE ALLIANCE BOND FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY
COAL & GAS PIPELINES (3.5%)
Williams Companies, Inc.
6.13%, 2001............................................................. $ 3,400,000 $ 3,404,556
------------
TOTAL ENERGY (3.5%)........................................................ 3,404,556
------------
TECHNOLOGY
TELECOMMUNICATIONS (2.4%)
Comcast Cable Communications, Inc.
6.2%, 2008............................................................. 2,400,000 2,444,112
------------
TOTAL TECHNOLOGY (2.4%)................................................... 2,444,112
------------
TOTAL LONG-TERM DEBT SECURITIES (96.2%)
(Amortized Cost $92,783,957)........................................... 94,348,559
------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 7,575
units at $285.54 each (2.2%)............................................ 2,162,910
------------
TOTAL INVESTMENTS (98.4%)
(Amortized Cost $94,946,867) ........................................... 96,511,469
OTHER ASSETS LESS LIABILITIES (1.6%)....................................... 1,527,615
------------
NET ASSETS (100.0%)........................................................ $98,039,084
============
See Notes to Financial Statements.
</TABLE>
FSA-5
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks - at market value (cost: $80,844,071)..................................... $107,359,442
Preferred stocks - at market value (cost: $1,785,352)................................... 1,935,623
Long-term debt securities - at value (amortized cost: $82,022,026)..................... 84,941,069
Participation in Separate Account No. 2A - at amortized cost, which approximates
market value, equivalent to 17,084 units at $285.54................................... 4,878,062
Cash 472,482
Receivables:
Securities sold......................................................................... 888,963
Interest................................................................................ 1,086,917
Dividends............................................................................... 156,829
Other................................................................................... 49,527
Unrealized appreciation of forward currency contracts...................................... 9,001
- -----------------------------------------------------------------------------------------------------------------
Total assets.......................................................................... 201,777,915
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased.................................................................... 2,398,400
Due to Equitable Life's General Account................................................. 1,936,063
Investment management fees payable...................................................... 2,142
Accrued expenses........................................................................... 129,628
- -----------------------------------------------------------------------------------------------------------------
Total liabilities..................................................................... 4,466,233
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................. $197,311,682
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Interest............................................................... $ 6,569,338 $ 9,248,201
Dividends (net of foreign taxes withheld --
1998: $65,626 and 1997: $109,690)................................... 1,602,361 1,765,490
- ---------------------------------------------------------------------------------------------------------------
Total.................................................................. 8,171,699 11,013,691
EXPENSES (NOTE 4)...................................................... (3,177,863) (3,985,252)
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.................................................. 4,993,836 7,028,439
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions.......... 23,827,974 30,478,147
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments and foreign currency
transactions:
Beginning of year................................................... 20,366,672 24,115,275
End of year......................................................... 29,598,154 20,366,672
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation......................... 9,231,482 (3,748,603)
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS........................ 33,059,456 26,729,544
- ---------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations...................... 38,053,292 33,757,983
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 41,418,954 50,198,862
Withdrawals............................................................ (125,416,483) (153,851,256)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (83,997,529) (103,652,394)
- ---------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS................................................. (45,944,237) (69,894,411)
NET ASSETS -- BEGINNING OF YEAR........................................ 243,255,919 313,150,330
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR.............................................. $197,311,682 $243,255,919
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-7
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (0.9%)
Akzo Nobel N.V. ....................................................... 2,800 $ 127,434
Bayer AG............................................................... 3,000 125,866
Ciba Specialty Chemicals AG............................................ 500 41,900
Dow Chemical Co. ...................................................... 2,800 254,625
Dupont (E. I.) de Nemours & Co. ....................................... 10,800 573,075
Hitachi Chemical Co. Ltd. ............................................. 31,000 233,330
Monsanto Co............................................................ 7,000 332,500
Nippon Chemi-Con Corp. ................................................ 12,000 39,104
Toagosei Co. Ltd. ..................................................... 29,000 54,441
------------
1,782,275
------------
CHEMICALS -- SPECIALTY (0.1%)
NGK Insulators......................................................... 10,000 129,018
Praxair, Inc........................................................... 3,900 137,475
------------
266,493
------------
METALS & MINING (0.2%)
Aluminum Co. of America................................................ 1,500 111,844
Freeport-McMoran Copper & Gold, Inc. (Class B)......................... 8,500 88,719
Newmont Mining Corp. .................................................. 2,900 52,381
Phelps Dodge Corp. .................................................... 1,200 61,050
Toho Titanium.......................................................... 1,000 5,499
------------
319,493
------------
PAPER (0.1%)
Buhrmann N.V. ......................................................... 3,200 57,234
Georgia Pacific (Georgia-Pacific Group)................................ 800 46,850
UPM-Kymmene Oy......................................................... 5,010 140,363
------------
244,447
------------
STEEL (0.1%)
Koninklijke Hoogovens N.V. ............................................ 1,000 27,680
NatSteel Ltd. ......................................................... 41,000 44,976
Pohang Iron & Steel Co. Ltd. (ADR)*.................................... 4,000 67,500
USX-U.S. Steel Group, Inc. ............................................ 4,600 105,800
------------
245,956
------------
TOTAL BASIC MATERIALS (1.4%)........................................... 2,858,664
------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.3%)
Waste Management, Inc. ................................................ 10,620 495,158
------------
</TABLE>
FSA-8
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES (CONTINUED)
PRINTING, PUBLISHING & BROADCASTING (1.6%)
CBS Corp. ............................................................. 14,200 $ 465,050
Donnelley (R. R.) & Sons Co. .......................................... 9,200 403,075
Gannett Co............................................................. 7,700 509,644
Grupo Televisa SA (ADR)*............................................... 2,400 59,250
Liberty Media Group (Class A)*......................................... 12,375 570,023
New Straits Times Press BHD............................................ 13,000 6,392
Reed International PLC................................................. 5,000 39,774
Scripps (E. W.) Co. (Class A).......................................... 4,300 213,925
Seat-Pagine Gialle Spa*................................................ 220,000 207,923
Tele-Communications, Inc. (Class A)*................................... 12,500 691,406
Tokyo Broadcasting System, Inc. ....................................... 2,000 22,368
United News & Media PLC................................................ 7,000 60,571
------------
3,249,401
------------
PROFESSIONAL SERVICES (0.1%)
Cordiant Communications Group PLC*..................................... 20,000 35,576
Marlborough International PLC*......................................... 5,700 16,980
Meitec................................................................. 900 22,474
Vedior N.V. CVA........................................................ 888 17,489
WPP Group PLC.......................................................... 6,000 36,308
------------
128,827
------------
TRUCKING, SHIPPING (0.2%)
Bergesen Dy As (A Shares).............................................. 5,000 60,177
CNF Transportation, Inc. .............................................. 9,400 353,088
Frontline Ltd.*........................................................ 9,790 18,775
Frontline Ltd.-- Warrants*............................................. 5,706 0
------------
432,040
------------
TOTAL BUSINESS SERVICES (2.2%)......................................... 4,305,426
------------
CAPITAL GOODS
AEROSPACE (0.3%)
British Aerospace...................................................... 11,000 93,355
Gulfstream Aerospace Corp.* ........................................... 8,500 452,625
Senior Engineering Group PLC........................................... 16,000 30,589
------------
576,569
------------
BUILDING & CONSTRUCTION (0.3%)
ABB AG................................................................. 40 46,929
Beazer Group PLC....................................................... 36,000 90,969
Bouygues............................................................... 1,000 206,045
Daito Trust Construction Co. Ltd. ..................................... 300 2,601
Groupe GTM............................................................. 1,000 103,738
National House Industrial Co. ......................................... 10,000 85,097
Societe Technip........................................................ 600 56,448
Toda Corp. ............................................................ 1,000 4,844
------------
596,671
------------
</TABLE>
FSA-9
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CAPITAL GOODS (CONTINUED)
BUILDING MATERIALS & FOREST PRODUCTS (0.4%)
BPB Industries PLC..................................................... 20,500 $ 73,272
Fujikura Ltd. ......................................................... 4,000 21,465
Holderbank Financiere Glarus AG........................................ 150 177,731
Matsushita Electric Works Ltd. ........................................ 22,000 225,007
Nichiha Corp. ......................................................... 700 6,391
PPG Industries, Inc. .................................................. 2,300 133,975
Rugby Group PLC........................................................ 45,000 70,322
Unidare PLC............................................................ 26,000 67,772
------------
775,935
------------
ELECTRICAL EQUIPMENT (1.9%)
Daikin Industries Ltd. ................................................ 10,000 99,176
General Electric Co. .................................................. 33,600 3,429,300
Schneider SA........................................................... 1,000 60,633
Sumitomo Electric Industries........................................... 11,000 123,802
------------
3,712,911
------------
MACHINERY (1.0%)
Allied Signal, Inc. ................................................... 11,800 522,888
FKI Babcock PLC........................................................ 10,000 22,360
Fujitec Co. Ltd. ...................................................... 18,000 116,036
IHC Caland............................................................. 1,400 58,128
Keyence Corp. ......................................................... 100 12,309
KSB AG................................................................. 300 50,922
Nitta Corp. ........................................................... 1,000 5,703
Schindler Holding AG Participating Certificate......................... 35 56,110
Schindler Holding AG Registered........................................ 100 170,517
Siebe PLC.............................................................. 20,000 78,468
SMC Corp. ............................................................. 700 55,911
Stork N.V. ............................................................ 3,600 82,209
TI Group PLC........................................................... 10,000 53,905
United Technologies Corp. ............................................. 5,200 565,500
Valmet Oy.............................................................. 6,200 83,181
Vestas Wind Systems A/S*............................................... 350 18,796
------------
1,952,943
------------
TOTAL CAPITAL GOODS (3.9%)............................................. 7,615,029
------------
CONSUMER CYCLICALS
AIRLINES (0.3%)
Continental Airlines, Inc. (Class B)*.................................. 3,800 127,300
Delta Air Lines, Inc. ................................................. 4,300 223,600
KLM .................................................................. 1,600 48,376
Northwest Airlines Corp. (Class A)*.................................... 5,300 135,481
Virgin Express Holdings PLC (ADR)*..................................... 18,000 144,000
------------
678,757
------------
</TABLE>
FSA-10
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
APPAREL, TEXTILE (0.2%)
Nautica Enterprises, Inc.*............................................. 8,800 $ 132,000
Onward Kashiyama Co. Ltd. ............................................. 15,000 201,629
------------
333,629
------------
AUTO-RELATED (0.1%)
Continental AG......................................................... 3,000 83,311
Minebea Co. Ltd. ...................................................... 3,000 34,375
NGK Spark Plug Co. Ltd. ............................................... 2,000 20,384
Sumitomo Rubber, Inc. ................................................. 33,000 157,505
------------
295,575
------------
AUTOS & TRUCKS (0.5%)
Bajaj Auto Ltd. (GDR).................................................. 1,500 22,688
Ford Motor Co. ........................................................ 9,600 563,400
General Motors Corp. .................................................. 4,900 350,656
Honda Motor Co. Ltd. .................................................. 2,000 65,704
Volkswagen AG.......................................................... 1,000 80,852
------------
1,083,300
------------
FOOD SERVICES, LODGING (0.1%)
Accor SA............................................................... 200 43,284
Choice Hotels Scandinavia ASA.......................................... 20,000 28,303
Compass Group PLC...................................................... 10,000 114,377
Sanyo Pax Co. Ltd. .................................................... 1,000 6,907
------------
192,871
------------
HOUSEHOLD FURNITURE, APPLIANCES (0.3%)
AIWA Co. Ltd. ......................................................... 1,000 26,388
Hunter Douglas N.V. ................................................... 2,500 82,774
Industrie Natuzzi Spa (ADR)............................................ 600 14,925
Philips Electronics.................................................... 100 6,707
Rubbermaid, Inc. ...................................................... 13,000 408,688
Sony Corp. ............................................................ 900 65,589
------------
605,071
------------
LEISURE-RELATED (1.0%)
Amer Group Ltd.*....................................................... 2,000 20,795
Berjaya Sports Toto BHD................................................ 27,000 23,569
Canal Plus............................................................. 200 54,552
Carnival Corp. ........................................................ 9,400 451,200
Disney (Walt) Co. ..................................................... 12,299 368,970
Granada Group PLC ..................................................... 8,000 141,840
Harley Davidson, Inc. ................................................. 9,100 431,113
Ladbroke Group PLC..................................................... 30,000 119,696
Mirage Resorts, Inc. *................................................. 9,400 140,413
Nintendo Co. Ltd. ..................................................... 1,100 106,659
Nippon Broadcasting System............................................. 1,000 40,025
Shimano, Inc. ......................................................... 1,000 25,812
Thomson Travel Group PLC............................................... 20,000 54,861
VTech Holdings Ltd.*................................................... 10,000 43,626
------------
2,023,131
------------
</TABLE>
FSA-11
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
PHOTO & OPTICAL (0.1%)
Fuji Photo Film Co. ................................................... 2,000 $ 74,382
Gretag Imaging Group*.................................................. 1,000 85,987
------------
160,369
------------
RETAIL -- GENERAL (3.0%)
Ahold N.V. ............................................................ 1,000 36,942
Aldeasa SA............................................................. 3,000 118,026
Best Buy Co., Inc.*.................................................... 6,000 368,250
Boots Co. PLC.......................................................... 10,000 169,819
British Airport Author PLC............................................. 13,300 154,332
Carrefour SA........................................................... 50 37,730
Circuit City Stores-- Circuit City Group............................... 9,200 459,425
Costco Companies, Inc.*................................................ 7,200 519,750
Dixons Group PLC....................................................... 1,000 13,990
Home Depot, Inc. ...................................................... 20,700 1,266,581
Japan Airport Terminal Co. Ltd. ....................................... 6,000 36,926
Kingfisher PLC......................................................... 8,000 86,447
Paris Miki, Inc. ...................................................... 800 18,418
Sato Corp. ............................................................ 2,000 35,420
Smith (W. H.) Group PLC................................................ 2,700 21,545
Staples, Inc.*......................................................... 8,300 362,606
Wal-Mart Stores, Inc. ................................................. 25,200 2,052,225
------------
5,758,432
------------
TOTAL CONSUMER CYCLICALS (5.6%)........................................ 11,131,135
------------
CONSUMER NONCYCLICALS
BEVERAGES (1.4%)
Anheuser Busch, Inc. .................................................. 2,600 170,625
Coca-Cola Co. ......................................................... 27,200 1,819,000
Coca-Cola Enterprises, Inc. ........................................... 8,900 318,175
Diageo PLC............................................................. 9,000 101,069
Mercian Corp.*......................................................... 4,000 16,329
Pepsico, Inc. ......................................................... 6,000 245,625
Scottish & Newcastle PLC............................................... 5,000 56,648
Whitbread PLC.......................................................... 5,000 63,672
------------
2,791,143
------------
CONTAINERS (0.3%)
Sealed Air Corp.*...................................................... 10,800 551,475
-----------
DRUGS (5.0%)
American Home Products Corp. .......................................... 12,400 698,275
Amgen, Inc.*........................................................... 4,400 460,075
Bristol-Myers Squibb Co. .............................................. 12,600 1,686,038
Daiichi Pharmaceutical Co. ............................................ 10,000 169,043
Genzyme Corporation*................................................... 8,400 417,900
Genzyme-Molecular Oncology*............................................ 929 3,019
Lilly (Eli) & Co. ..................................................... 5,900 524,363
MedImmune, Inc.*....................................................... 6,500 646,344
Merck & Co., Inc. ..................................................... 8,200 1,211,038
Novartis AG............................................................ 40 78,700
</TABLE>
FSA-12
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS (CONTINUED)
DRUGS (5.0%) (CONTINUED)
Orion-Yhtyma Oy (B Shares)............................................. 7,800 $ 188,366
Pfizer, Inc. .......................................................... 16,240 2,037,105
Sankyo Co. Ltd. ....................................................... 1,000 21,872
Sanofi SA.............................................................. 800 131,640
Santen Pharmaceutical Co. Ltd. ........................................ 4,000 76,862
Schering Plough Corp. ................................................. 20,400 1,127,100
Warner Lambert Co. .................................................... 3,200 240,600
Yamanouchi Pharmaceutical Co. Ltd. .................................... 2,000 64,465
------------
9,782,805
------------
FOODS (0.9%)
Barry Callebaut AG..................................................... 200 45,471
Campbell Soup Co. ..................................................... 11,600 638,000
Huhtamaki Oy Series I.................................................. 1,000 38,276
Orkla ASA `A'.......................................................... 4,000 60,045
Parmalat Finanziaria Spa............................................... 10,000 19,144
Rite Aid Corp. ........................................................ 9,800 485,713
Sara Lee Corp. ........................................................ 5,200 146,575
Tysons Foods, Inc. .................................................... 18,200 386,750
Yakult Honsha Co. ..................................................... 1,000 6,243
------------
1,826,217
------------
HOSPITAL SUPPLIES & SERVICES (1.0%)
Abbott Laboratories.................................................... 5,000 245,000
Boston Scientific Corp.*............................................... 4,800 128,700
Johnson & Johnson...................................................... 4,200 352,275
Medtronic, Inc. ....................................................... 10,700 794,475
PT Tempo Scan Pacific*................................................. 40,000 2,125
Tenet Healthcare Corp.*................................................ 17,600 462,000
------------
1,984,575
------------
RETAIL -- FOOD (0.4%)
Delhaize-Le Lion SA.................................................... 1,000 88,402
Familymart Co. ........................................................ 1,400 69,919
Kroger Co.*............................................................ 9,200 556,600
------------
714,921
------------
SOAPS & TOILETRIES (1.9%)
Avon Products, Inc. ................................................... 10,900 482,325
Colgate Palmolive Co. ................................................. 6,500 603,688
Estee Lauder Cos. (Class A)............................................ 4,500 384,750
Gillette Corp. ........................................................ 15,800 763,338
KAO Corp. ............................................................. 5,000 112,902
Procter & Gamble Co. .................................................. 15,600 1,424,475
------------
3,771,478
------------
</TABLE>
FSA-13
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS (CONTINUED)
TOBACCO (1.0%)
Austria Tabakwerke AG.................................................. 1,600 $ 122,631
Japan Tobacco, Inc. ................................................... 17 170,105
Philip Morris Cos., Inc. .............................................. 29,030 1,553,105
Seita.................................................................. 2,000 125,201
Swedish Match AB....................................................... 4,200 15,318
Tabacalera SA (A Shares)............................................... 6,400 161,542
-------------
2,147,902
-------------
TOTAL CONSUMER NONCYCLICALS (11.9%).................................... 23,570,516
-------------
CREDIT-SENSITIVE
BANKS (4.0%)
Allied Irish Bank...................................................... 18,000 322,534
Argentaria SA.......................................................... 1,000 25,911
Banca Nazionale del Lavoro*............................................ 11,100 31,069
Banco Central Hispanoamericano SA...................................... 5,000 59,401
Banco Santander SA..................................................... 4,000 79,530
Bangkok Bank*.......................................................... 1,000 2,063
Bank Austria AG........................................................ 1,050 53,370
Bank Dagang Nasional Indonesia Tbk*.................................... 234,000 2,194
Bank of Ireland *...................................................... 10,000 222,678
Bank of Tokyo-Mitsubishi Ltd. ......................................... 2,000 20,721
Bank One Corp. ........................................................ 18,232 930,972
BankAmerica Corp. ..................................................... 22,142 1,331,288
Banque National de Paris............................................... 1,000 82,311
BCO Bilbao Vizcaya..................................................... 6,000 94,125
Chase Manhattan Corp. ................................................. 15,514 1,055,922
Citigroup, Inc. ....................................................... 29,550 1,462,725
Dao Heng Bank Group Ltd. .............................................. 5,000 15,456
Den Norske Bank ASA.................................................... 3,000 10,435
Erste Bank Oesterreichischen Sparkassen AG............................. 1,090 58,312
Forenings Sparbanken (A Shares)........................................ 1,200 31,155
National Bank of Canada................................................ 3,000 48,564
San Paolo-IMI Spa...................................................... 10,450 184,865
Seventy-Seven Bank Ltd. ............................................... 23,000 230,143
Shizuoka Bank.......................................................... 3,000 37,058
Skandinaviska Enskilda Banken (Series A)............................... 4,400 46,510
Societe Generale....................................................... 200 32,373
State Bank of India (GDR).............................................. 4,800 40,200
Suncorp - Metway Ltd. ................................................. 6,571 14,295
Thai Farmers Bank -- Warrants*......................................... 750 101
Toho Bank.............................................................. 1,000 4,144
Unicredito Italiano Spa................................................ 9,500 56,375
Wells Fargo Co. ....................................................... 26,100 1,042,369
Wing Hang Bank Ltd. ................................................... 31,000 77,224
Yamaguchi Bank......................................................... 14,000 132,153
-------------
7,838,546
-------------
</TABLE>
FSA-14
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE (CONTINUED)
FINANCIAL SERVICES (2.7%)
Aiful Co. ............................................................. 2,000 $ 121,491
Associates First Capital Corp. (Class A)............................... 16,642 705,205
Credit Saison Co. ..................................................... 2,000 49,323
Daiwa Securities Co. Ltd. ............................................. 2,000 6,836
Fleet Financial Group, Inc. ........................................... 14,500 647,969
Garban PLC*............................................................ 666 2,558
Household International, Inc. ......................................... 12,800 507,200
Legg Mason, Inc. ...................................................... 10,700 337,719
MBNA Corp. ............................................................ 24,412 608,774
Merrill Lynch & Co., Inc. ............................................. 9,800 654,150
Morgan Stanley Dean Witter & Co. ...................................... 11,800 837,800
Nichiei Co. Ltd. ...................................................... 420 33,472
Peregrine Investment Holdings*......................................... 90,000 0
Sanyo Shinpan Finance.................................................. 400 14,522
Schwab Charles Corp. .................................................. 7,500 421,406
PMI Group, Inc. ....................................................... 5,700 281,438
Worms Et Compagnie..................................................... 300 17,439
------------
5,247,302
------------
INSURANCE (2.0%)
Allstate Corp. ........................................................ 3,400 131,325
American International Group, Inc. .................................... 13,500 1,304,438
AMEV N.V. ............................................................. 1,200 99,392
ASR Verzekeringsgroep N.V. ............................................ 1,500 135,738
Catalana Occidente SA.................................................. 3,000 78,261
CGU PLC................................................................ 9,864 154,063
Cia de Seguros Imperio SA*............................................. 9,000 73,253
Corporacion Mapfre..................................................... 2,200 59,718
Hartford Financial Services Group, Inc. ............................... 9,700 532,288
Hartford Life, Inc. ................................................... 7,000 407,750
ING Groep N.V. ........................................................ 2,000 121,898
Irish Life PLC......................................................... 12,000 113,254
Kingsway Financial Services*........................................... 2,000 15,666
Royal & Sun Alliance Insurance Group PLC............................... 4,000 32,351
SunAmerica, Inc. ...................................................... 2,800 227,150
Travelers Property & Casualty Corp. (Class A).......................... 9,200 285,200
Trygg Hansa AB (B Shares)*............................................. 6,800 205,127
United Assurance Group PLC............................................. 5,000 45,510
------------
4,022,382
------------
MORTGAGE-RELATED (0.4%)
Fannie Mae............................................................. 8,400 621,600
Freddie Mac............................................................ 3,500 225,531
------------
847,131
------------
REAL ESTATE (0.0%)
Daibiru Corp. ......................................................... 1,000 6,376
Green Property PLC*.................................................... 10,000 56,601
Sumitomo Realty & Development Co. Ltd. ................................ 2,000 6,500
------------
69,477
------------
</TABLE>
FSA-15
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE (CONTINUED)
UTILITY -- ELECTRIC (1.1%)
AES Corp.*............................................................. 10,800 $ 511,650
Central & South West Corp. ............................................ 5,400 148,163
Cia Paranaense de Energia-Copel (ADR).................................. 10,000 71,250
CMS Energy Corp. ...................................................... 9,600 465,000
Consolidated Edison, Inc. ............................................. 9,300 491,738
Duke Power Co. ........................................................ 2,900 185,781
Electricidade de Portugal SA........................................... 500 10,998
Fortum Oyj*............................................................ 4,964 30,361
FPL Group, Inc. ....................................................... 3,300 203,363
Hong Kong Electric Holdings Ltd. ...................................... 34,000 103,129
------------
2,221,433
------------
UTILITY -- GAS (0.2%)
Anglian Water PLC...................................................... 5,599 77,629
ENRON Corp. ........................................................... 2,600 148,363
Scottish Power PLC..................................................... 10,000 102,324
------------
328,316
------------
UTILITY -- TELEPHONE (3.2%)
Ameritech Corp. ....................................................... 18,400 1,166,100
AT&T Corp. ............................................................ 14,423 1,085,331
Bell Atlantic Corp. ................................................... 6,200 328,616
BellSouth Corp. ....................................................... 28,400 1,416,450
British Telecommunications PLC......................................... 4,000 60,147
Cable & Wireless PLC................................................... 4,000 49,175
Frontier Corp. ........................................................ 1,400 47,600
Nippon Telegraph & Telephone Corp. .................................... 10 77,216
SBC Communications, Inc. .............................................. 22,400 1,201,200
Sprint Corp. .......................................................... 3,600 302,850
Swisscom AG*........................................................... 400 167,602
Telecom Italia Spa..................................................... 7,000 59,796
Telecom Italia Spa*.................................................... 10,600 66,787
Telefonica de Espana................................................... 3,060 136,136
Telekom Malaysia BHD................................................... 7,000 12,891
Telekomunikacja Polska SA (GDR)*....................................... 12,900 65,790
------------
6,243,687
------------
TOTAL CREDIT-SENSITIVE (13.6%)......................................... 26,818,274
------------
ENERGY
COAL & GAS PIPELINES (0.0%)
OMV AG................................................................. 300 28,262
------------
OIL -- DOMESTIC (0.5%)
Amoco Corp. ........................................................... 6,000 362,250
Atlantic Richfield Co. ................................................ 2,200 143,550
USX-Marathon Group..................................................... 14,400 433,800
------------
939,600
------------
</TABLE>
FSA-16
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY (CONTINUED)
OIL -- INTERNATIONAL (1.9%)
British Petroleum Co. PLC.............................................. 5,000 $ 74,561
Chevron Corp. ......................................................... 3,300 273,694
Exxon Corp. ........................................................... 21,400 1,564,875
Gulf Indonesia Resources Ltd.*......................................... 800 5,200
Mobil Corp. ........................................................... 6,500 566,313
Oil Search Ltd. ....................................................... 550 556
Repsol SA.............................................................. 1,000 53,373
Royal Dutch Petroleum Co. ............................................. 18,000 861,750
Shell Transport & Trading Co. PLC...................................... 10,000 61,178
Texaco, Inc. .......................................................... 4,500 237,938
Total SA-B............................................................. 1,000 101,234
------------
3,800,672
------------
OIL -- SUPPLIES & CONSTRUCTION (0.5%)
BJ Services Co.*....................................................... 8,600 134,375
Fracmaster Ltd.*....................................................... 14,300 41,113
Fugro N.V.............................................................. 3,000 70,264
Halliburton Co. ....................................................... 4,000 118,500
Noble Drilling Corp.*.................................................. 44,100 570,544
------------
934,796
------------
TOTAL ENERGY (2.9%).................................................... 5,703,330
------------
TECHNOLOGY
ELECTRONICS (4.0%)
Altera Corp.*.......................................................... 7,409 451,023
AMP, Inc. ............................................................. 10,300 536,244
Cisco Systems, Inc.*................................................... 19,975 1,853,930
Disco Corp. ........................................................... 400 11,689
Fujimi, Inc. .......................................................... 620 21,521
Intel Corp. ........................................................... 19,286 2,286,596
Micronics Japan Co. Ltd. .............................................. 2,000 29,222
Motorola, Inc. ........................................................ 10,300 628,944
Nikon Corp. ........................................................... 5,000 48,703
Rohm Co. Ltd. ......................................................... 1,000 91,118
Sanmina Corp.*......................................................... 16,622 1,038,875
Solectron Corp.*....................................................... 4,100 381,044
The Swatch Group AG.................................................... 800 119,945
TOWA Corp. ............................................................ 20 505
Uniphase Corp.*........................................................ 5,000 346,875
------------
7,846,234
------------
OFFICE EQUIPMENT (2.2%)
Barco N.V. ............................................................ 300 84,622
Canon, Inc. ........................................................... 1,000 21,385
Compaq Computer Corp. ................................................. 25,750 1,079,891
Dell Computer Corp.* .................................................. 17,200 1,258,825
International Business Machines Corp. ................................. 10,800 1,995,300
------------
4,440,023
------------
</TABLE>
FSA-17
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
OFFICE EQUIPMENT SERVICES (2.5%)
Computer Sciences Corp. ............................................... 3,900 $ 251,306
Data Communication System Co. ......................................... 1,080 22,044
First Data Corp. ...................................................... 6,000 190,125
Frontec AB (B Shares)*................................................. 10,000 42,900
Fuji Soft ABC, Inc. ................................................... 800 40,733
HBO & Co. ............................................................. 10,400 298,350
Intuit, Inc.*.......................................................... 6,300 456,750
Microsoft Corp.*....................................................... 25,750 3,571,187
Nippon System Development.............................................. 2,200 68,184
------------
4,941,579
------------
TELECOMMUNICATIONS (3.0%)
AirTouch Communications, Inc.*......................................... 11,000 793,375
America Online, Inc. .................................................. 3,900 624,000
Asia Satellite Telecommunications Holdings Ltd. ....................... 34,000 60,561
DDI Corp. ............................................................. 18 66,944
Energis PLC*........................................................... 4,000 89,440
FORE Systems, Inc.*.................................................... 11,900 217,919
Helsinki Telephone Corp.* ............................................. 1,500 89,673
Keppel Telecommunications & Transportation Ltd. ....................... 15,000 9,909
Lucent Technologies, Inc. ............................................. 16,900 1,859,000
MCI WorldCom, Inc.* ................................................... 23,224 1,666,322
Mobistar SA*........................................................... 800 40,363
Orange PLC*............................................................ 6,600 76,531
PT Indosat............................................................. 73,000 95,128
PT Telekomunikasi Indonesia............................................ 60,000 20,250
Sprint Corp. (PCS Group)*.............................................. 1,850 42,781
Videsh Sanchar Nigam Ltd. (ADR)*....................................... 4,800 58,800
Vodafone Group PLC..................................................... 6,500 105,250
Winstar Communications, Inc.*.......................................... 295 11,505
------------
5,927,751
------------
TOTAL TECHNOLOGY (11.7%)............................................... 23,155,587
------------
DIVERSIFIED
MISCELLANEOUS (1.2%)
BTR PLC (B Shares)..................................................... 32,000 18,353
Citic Pacific Ltd. .................................................... 11,000 23,711
First Pacific Co. ..................................................... 75,289 35,956
Hagemeyer N.V. ........................................................ 2,000 73,032
Honeywell, Inc. ....................................................... 5,500 414,219
Smith (Howard) Ltd. ................................................... 8,000 52,926
Suez Lyonnaise des Eaux................................................ 300 61,599
Montedison Spa......................................................... 60,000 79,789
Tyco International Ltd. ............................................... 5,300 399,819
U.S. Industries, Inc. ................................................. 24,400 454,450
Viad Corp. ............................................................ 9,100 276,413
Vivendi................................................................ 1,200 311,214
------------
TOTAL DIVERSIFIED (1.2%)............................................... 2,201,481
------------
</TABLE>
FSA-18
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCKS (54.4%)
(Cost $80,844,071).................................................. $107,359,442
------------
PREFERRED STOCKS:
BUSINESS SERVICES
PRINTING, PUBLISHING & BROADCASTING (0.0%)
ProSieben Media AG..................................................... 1,500 71,795
-------------
TRUCKING, SHIPPING (0.1%)
CNF Trust I
5.0% Conv. Series A................................................. 2,700 153,563
-------------
TOTAL BUSINESS SERVICES (0.1%)......................................... 225,358
-------------
CONSUMER CYCLICALS
LEISURE-RELATED (0.1%)
Royal Caribbean Cruises Ltd.
7.25% Conv. Series A................................................ 2,000 236,375
-------------
RETAIL -- GENERAL (0.0%)
Hornbach Holding AG.................................................... 600 35,807
-------------
TOTAL CONSUMER CYCLICALS (0.1%)........................................ 272,182
-------------
CREDIT-SENSITIVE
UTILITY -- ELECTRIC (0.1%)
AES Trust
$2.6875 Conv. Series A.............................................. 3,500 243,250
-------------
TOTAL CREDIT-SENSITIVE (0.1%).......................................... 243,250
-------------
TECHNOLOGY
ELECTRONICS (0.1%)
Learnout & Hauspie Capital Trust I
4.75% Conv. ........................................................ 2,900 92,800
Times Mirror Co.
4.25% Conv. ........................................................ 800 44,600
-------------
137,400
-------------
TELECOMMUNICATIONS (0.6%)
AirTouch Communications, Inc.
4.25% Conv. Series C............................................... 500 51,500
ICG Communications, Inc.
6.75% Conv. ........................................................ 1,400 74,550
IXC Communications, Inc.
$3.375 Conv. ....................................................... 3,100 102,688
Intermedia Communications, Inc.
7.0% Conv. ......................................................... 900 23,006
7.0% Conv. Series D................................................. 2,600 66,462
Nokia Oyi (A Shares)................................................... 3,000 366,977
Nextel Strypes Trust
7.25% Conv. ........................................................ 7,500 153,750
</TABLE>
FSA-19
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS (0.6%) (CONTINUED)
Winstar Communications, Inc.
7.0% Conv. ......................................................... 4,600 $ 218,500
------------
1,057,433
------------
TOTAL TECHNOLOGY (0.7%)................................................ 1,194,833
------------
TOTAL PREFERRED STOCKS (1.0%)
(Cost $1,785,352)................................................... 1,935,623
------------
PRINCIPAL
AMOUNT
----------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PRINTING, PUBLISHING & BROADCASTING (0.1%)
Mail-Well, Inc.
5.0% Conv., 2002.................................................... $ 55,000 49,500
P-Com, Inc.
4.25% Conv., 2002................................................... 155,000 72,850
Tele Communications International, Inc.
4.5% Conv., 2006.................................................... 155,000 166,625
------------
288,975
------------
PROFESSIONAL SERVICES (0.1%)
Personnel Group of America
5.75% Conv., 2004................................................... 75,000 86,813
------------
TOTAL BUSINESS SERVICES (0.2%)......................................... 375,788
------------
CAPITAL GOODS
AEROSPACE (0.1%)
Orbital Sciences Corp.
5.0% Conv., 2002.................................................... 75,000 126,750
------------
TOTAL CAPITAL GOODS (0.1%)............................................. 126,750
------------
CONSUMER CYCLICALS
RETAIL -- GENERAL (0.1%)
Office Depot, Inc.
Zero Coupon Conv., 2008............................................. 175,000 151,375
------------
TOTAL CONSUMER CYCLICALS (0.1%)........................................ 151,375
------------
</TABLE>
FSA-20
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS
DRUGS (0.4%)
MedImmune, Inc.
7.0% Conv., 2003.................................................... $ 100,000 $ 505,500
Quintiles Transnational Corp.
4.25% Conv., 2000................................................... 150,000 205,125
-----------
710,625
-----------
HOSPITAL SUPPLIES & SERVICES (0.1%)
Alternative Living Services, Inc.
5.25% Conv., 2002................................................... 85,000 108,375
Res-Care, Inc.
6.0% Conv., 2004.................................................... 115,000 159,491
Sunrise Assisted Living, Inc.
5.5% Conv., 2002.................................................... 55,000 82,088
-----------
349,954
-----------
MEDIA & CABLE (1.8%)
Turner Broadcasting System, Inc.
8.375%, 2013........................................................ 3,000,000 3,585,840
-----------
TOTAL CONSUMER NONCYCLICALS (2.3%)..................................... 4,646,419
-----------
CREDIT-SENSITIVE
ASSET-BACKED (0.8%)
Chase Credit Card Master Trust
6.0%, 2005.......................................................... 1,625,000 1,661,969
-----------
BANKS (2.8%)
Chase Manhattan Corp.
6.375%, 2008........................................................ 2,470,000 2,562,378
St. George Bank Ltd.
7.15%, 2005......................................................... 2,850,000 2,961,635
-----------
5,524,013
-----------
MORTGAGE-RELATED (14.5%)
Federal Home Loan Mortgage Corp.:
7.5%, 2028.......................................................... 1,075,687 1,104,261
7.0%, 2011.......................................................... 3,230,601 3,301,271
Federal National Mortgage Association:
6.5%, 2011.......................................................... 6,906,356 6,999,164
7.0%, 2026.......................................................... 1,032,596 1,052,603
6.5%, 2028.......................................................... 2,466,847 2,480,725
7.0%, 2028.......................................................... 1,217,813 1,241,409
8.0%, 2028.......................................................... 1,700,000 1,760,032
Government National Mortgage Association:
7.0%, 2027.......................................................... 883,050 903,193
6.5%, 2028.......................................................... 1,576,313 1,591,588
7.0%, 2028.......................................................... 7,949,054 8,130,375
-----------
28,564,621
-----------
</TABLE>
FSA-21
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITY -- ELECTRIC (1.8%)
Texas Utilities
6.375%, 2008........................................................ $3,525,000 $ 3,605,892
------------
U.S. GOVERNMENT (18.1%)
U.S. Treasury Notes:
6.0%, 2000.......................................................... 3,180,000 3,245,588
6.75%, 2000......................................................... 340,000 348,925
6.5%, 2001.......................................................... 7,700,000 8,048,910
6.5%, 2002.......................................................... 5,650,000 5,966,050
4.25%, 2003......................................................... 5,015,000 4,949,171
5.75%, 2003......................................................... 3,915,000 4,086,281
5.625%, 2008........................................................ 1,320,000 1,408,275
U.S. Treasury Bonds:
6.125%, 2027........................................................ 5,070,000 5,678,400
5.25%, 2028......................................................... 1,865,000 1,911,625
------------
35,643,225
------------
TOTAL CREDIT-SENSITIVE (38.0%)......................................... 74,999,720
------------
TECHNOLOGY
ELECTRONICS (2.1%)
America Online, Inc.
4.0% Conv., 2002.................................................... 75,000 461,344
Amkor Technologies, Inc.
5.75% Conv., 2003................................................... 245,000 242,550
EMC Corp.
3.25% Conv., 2002................................................... 45,000 169,538
HNC Software, Inc.
4.75% Conv., 2003................................................... 100,000 110,000
Hutchinson Technology, Inc.
6.0% Conv., 2005.................................................... 125,000 174,219
Level One Communications, Inc.
4.0% Conv., 2004.................................................... 135,000 196,763
Micron Technology, Inc.
7.0% Conv., 2004.................................................... 60,000 64,200
Motorola, Inc.
6.5%, 2028.......................................................... 1,500,000 1,515,345
Network Associates, Inc.
Zero Coupon Conv., 2018............................................. 260,000 159,575
Photronics, Inc.
6.0% Conv., 2004.................................................... 195,000 207,188
SCI Systems, Inc.
5.0% Conv., 2006.................................................... 160,000 380,600
Solectron Corp.
6.0% Conv., 2006.................................................... 155,000 426,638
------------
4,107,960
------------
</TABLE>
FSA-22
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
(THE ALLIANCE BALANCED FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL MARKET
AMOUNT VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS (0.2%)
Comverse Technology, Inc.:
5.75% Conv. Sub, 2006............................................... $155,000 $ 251,294
5.75% Conv., 2006................................................... 10,000 16,213
Global TeleSystems Group, Inc.
5.75% Conv., 2010................................................... 235,000 265,550
-------------
533,057
-------------
TOTAL TECHNOLOGY (2.3%)................................................ 4,641,017
-------------
TOTAL LONG-TERM DEBT SECURITIES (43.0%)
(Amortized Cost $82,022,026)........................................ 84,941,069
-------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 17,084 units
At $285.54 each (2.5%).............................................. 4,878,062
-------------
TOTAL INVESTMENTS (100.9%)
(Cost/Amortized Cost $169,529,511).................................. 199,114,196
OTHER ASSETS LESS LIABILITIES (-0.9%).................................. (1,802,514)
-------------
NET ASSETS (100.0%).................................................... $197,311,682
============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-23
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks - at market value (cost: $1,914,414,699).................................. $2,098,464,735
Preferred stocks - at market value (cost: $841,125)..................................... 934,875
Participation in Separate Account No. 2A - at amortized cost, which approximates
market value, equivalent to 8,358 units at $285.54.................................... 2,386,642
Receivables:
Securities sold......................................................................... 22,404,246
Dividends............................................................................... 1,027,478
- ---------------------------------------------------------------------------------------------------------------
Total assets.......................................................................... 2,125,217,976
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased.................................................................... 3,784,147
Due to Equitable Life's General Account................................................. 7,913,160
Custodian fee payable................................................................... 27,461
Investment management fees payable...................................................... 5,210
Accrued expenses........................................................................... 440,812
Amount retained by Equitable Life in Separate Account No. 4 (Note 1)....................... 1,271,958
- ---------------------------------------------------------------------------------------------------------------
Total liabilities..................................................................... 13,442,748
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS (NOTE 1):
Net assets attributable to participants' accumulations.................................. 2,072,991,897
Reserves and other liabilities attributable to annuity benefits......................... 38,783,331
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS:................................................................................ $2,111,775,228
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-24
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends (net of foreign taxes withheld--
1998: $199,170 and 1997: $2,138).................................. $ 12,224,979 $ 13,385,197
Interest............................................................. 477,732 845,517
- ---------------------------------------------------------------------------------------------------------------
Total.................................................................. 12,702,711 14,230,714
EXPENSES (NOTE 4).................................................... (18,036,108) (19,783,932)
- ---------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS.................................................. (5,333,397) (5,553,218)
- ---------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain from security and foreign currency transactions........ 424,897,105 372,430,956
- ---------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments
and foreign currency transactions:
Beginning of year................................................. 690,125,231 448,580,808
End of year....................................................... 184,143,786 690,125,231
- ---------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....................... (505,981,445) 241,544,423
- ---------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS............... (81,084,340) 613,975,379
- ---------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations......... (86,417,737) 608,422,161
- ---------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................................ 451,738,195 546,890,479
Withdrawals.......................................................... (897,373,357) (969,496,108)
- ---------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals. (445,635,162) (422,605,629)
- ---------------------------------------------------------------------------------------------------------------
(Increase) in accumulated amount retained by Equitable Life in
Separate Account No. 4 (Note 1)................................... (153,300) (360,863)
- ---------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS.................................... (532,206,199) 185,455,669
NET ASSETS-- BEGINNING OF YEAR....................................... 2,643,981,427 2,458,525,758
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS-- END OF YEAR............................................. $2,111,775,228 $2,643,981,427
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-25
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS-SPECIALTY (0.1%)
Crompton & Knowles Corp................................................ 97,800 $ 2,023,238
-------------
TOTAL BASIC MATERIALS (0.1%)........................................... 2,023,238
-------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (3.2%)
United States Filter Corp.*............................................ 3,000,000 68,625,000
-------------
PRINTING, PUBLISHING & BROADCASTING (1.6%)
CBS Corp. ............................................................. 1,000,000 32,750,000
-------------
PROFESSIONAL SERVICES (0.1%)
Nielsen Media Research, Inc. .......................................... 163,100 2,935,800
-------------
TRUCKING, SHIPPING (0.2%)
Knightsbridge Tankers Ltd. ............................................ 150,000 3,121,875
Marine Transport Corp.*................................................ 50,000 112,500
OMI Corp.*............................................................. 500,000 1,625,000
-------------
4,859,375
-------------
TOTAL BUSINESS SERVICES (5.1%)......................................... 109,170,175
-------------
CAPITAL GOODS
AEROSPACE (0.2%)
Loral Space & Communications Ltd.*..................................... 250,000 4,453,125
-------------
TOTAL CAPITAL GOODS (0.2%)............................................. 4,453,125
-------------
CONSUMER CYCLICALS
AIRLINES (8.6%)
Alaska Air Group, Inc.*................................................ 200,000 8,850,000
America West Holdings Corp. (Class B)*................................. 350,000 5,950,000
Continental Airlines, Inc. (Class B)*.................................. 3,399,997 113,899,900
Northwest Airlines Corp. (Class A)*.................................... 2,100,000 53,681,250
-------------
182,381,150
-------------
APPAREL, TEXTILE (2.2%)
Nautica Enterprises, Inc.*............................................. 114,200 1,713,000
Tommy Hilfiger Corp.*.................................................. 650,000 39,000,000
Unifi, Inc. ........................................................... 200,000 3,912,500
Wolverine World Wide, Inc. ............................................ 154,600 2,048,450
-------------
46,673,950
-------------
</TABLE>
FSA-26
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS (CONTINUED)
AUTO-RELATED (7.7%)
Budget Group, Inc.*.................................................... 250,000 $ 3,968,750
Circuit City Stores, Inc.-CarMax Group*................................ 490,200 2,665,462
Dana Corp. ............................................................ 300,000 12,262,500
Dollar Thrifty Automotive Group, Inc.*................................. 841,700 10,836,887
Republic Industries, Inc.*............................................. 9,000,000 132,750,000
-------------
162,483,599
-------------
FOOD SERVICES, LODGING (0.9%)
Extended Stay America, Inc.*........................................... 1,660,000 17,430,000
Suburban Lodges of America, Inc.*...................................... 35,000 286,563
-------------
17,716,563
-------------
HOUSEHOLD FURNITURE, APPLIANCES (1.6%)
Industrie Natuzzi Spa (ADR)............................................ 1,011,000 25,148,625
Newell Co.............................................................. 200,000 8,250,000
-------------
33,398,625
-------------
LEISURE-RELATED (9.0%)
Carnival Corp. ........................................................ 2,000,000 96,000,000
Cendant Corporation*................................................... 506,000 9,645,625
Mirage Resorts, Inc.*.................................................. 707,600 10,569,771
Royal Caribbean Cruises Ltd. .......................................... 2,000,000 74,000,000
-------------
190,215,396
-------------
RETAIL -- GENERAL (1.0%)
Circuit City Stores-- Circuit City Group............................... 76,500 3,820,219
Dickson Concepts International, Inc. .................................. 357,000 276,473
Genesis Direct, Inc.*.................................................. 215,000 1,679,688
Limited, Inc. ......................................................... 100,000 2,912,500
Tandy Corp. ........................................................... 50,000 2,059,375
Tiffany & Co. ......................................................... 200,000 10,375,000
-------------
21,123,255
-------------
TOTAL CONSUMER CYCLICALS (31.0%)....................................... 653,992,538
-------------
CONSUMER NONCYCLICALS
DRUGS (2.5%)
Geltex Pharmaceuticals, Inc.*.......................................... 700,000 15,837,500
MedImmune, Inc.*....................................................... 361,600 35,956,600
-------------
51,794,100
-------------
FOODS (0.3%)
Tysons Foods, Inc. .................................................... 350,000 7,437,500
-------------
HOSPITAL SUPPLIES & SERVICES (1.3%)
HEALTHSOUTH Corp.* .................................................... 1,800,000 27,787,500
-------------
TOTAL CONSUMER NONCYCLICALS (4.1%)..................................... 87,019,100
-------------
</TABLE>
FSA-27
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE
BANKS (0.8%)
Citigroup, Inc......................................................... 300,000 $ 14,850,000
Washington Mutual, Inc. ............................................... 84,000 3,207,750
-------------
18,057,750
-------------
FINANCIAL SERVICES (13.8%)
Edwards (A.G.), Inc. .................................................. 760,000 28,310,000
Legg Mason, Inc. ...................................................... 2,500,000 78,906,250
MBNA Corp. ............................................................ 6,900,000 172,068,750
Newcourt Credit Group, Inc. ........................................... 100,000 3,493,750
PMI Group, Inc. ....................................................... 200,000 9,875,000
-------------
292,653,750
-------------
INSURANCE (8.9%)
Ace Ltd. .............................................................. 100,000 3,443,750
CNA Financial Corp.*................................................... 3,530,100 142,086,525
IPC Holdings Ltd. ..................................................... 207,400 4,809,088
NAC Re Corp. .......................................................... 600,000 28,162,500
Travelers Property Casualty (Class A).................................. 300,000 9,300,000
-------------
187,801,863
-------------
REAL ESTATE (0.1%)
Excel Legacy Corp.*.................................................... 140,000 560,000
Prime Retail, Inc...................................................... 60,000 588,750
-------------
1,148,750
-------------
UTILITY -- ELECTRIC (0.1%)
AES Corp.*............................................................. 30,000 1,421,250
-------------
UTILITY -- TELEPHONE (7.0%)
Embratel Participacoes (ADR)*.......................................... 220,000 3,066,250
Tele Celular Sul Participacoes (ADR)*.................................. 22,000 383,625
Tele Centro Oeste Celular Participacoes (ADR)*......................... 73,333 215,416
Tele Centro Sul Participacoes (ADR)*................................... 44,000 1,839,750
Tele Leste Celular Participacoes (ADR)*................................ 4,400 124,850
Telemig Celular Participacoes (ADR)*................................... 11,000 233,750
Tele Nordeste Celular Participacoes (ADR)*............................. 11,000 203,500
Tele Norte Celular Participacoes (ADR)*................................ 4,400 99,275
Tele Norte Leste Participacoes (ADR)*.................................. 220,000 2,736,250
Telephone & Data Systems, Inc. ........................................ 2,930,000 131,666,875
Telesp Celular Participacoes (ADR)*.................................... 88,000 1,540,000
Telesp Participacoes S.A. (ADR)*....................................... 220,000 4,867,500
Tele Sudeste Celular Participacoes (ADR)*.............................. 44,000 910,250
-------------
147,887,291
-------------
TOTAL CREDIT-SENSITIVE (30.7%)......................................... 648,970,654
-------------
</TABLE>
FSA-28
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENERGY
OIL -- DOMESTIC (0.4%)
Kerr McGee Corp. ...................................................... 220,000 $ 8,415,000
OIL -- INTERNATIONAL (0.1%)
IRI International Corporation*......................................... 305,000 1,220,000
- --------------------------------------------------------------------------- -------------
OIL -- SUPPLIES & CONSTRUCTION (4.9%)
BJ Services Co.*....................................................... 440,000 6,875,000
Halliburton Co. ....................................................... 1,000,000 29,625,000
Lukoil Holdings-- Spons (ADR).......................................... 15,000 232,520
Lukoil Holdings-- Spons (ADR) (Preferred Shares)....................... 40,000 134,684
Noble Drilling Corp.*.................................................. 2,200,000 28,462,500
Oceaneering International, Inc.* ...................................... 300,000 4,500,000
Parker Drilling Corp.*................................................. 3,756,100 11,972,569
Rowan Cos., Inc.*...................................................... 1,684,800 16,848,000
Stolt Comex Seaway S.A.*............................................... 14,000 94,500
Stolt Comex Seaway S.A. (ADR) (Class A)*............................... 880,000 4,950,000
-------------
103,694,773
-------------
TOTAL ENERGY (5.4%).................................................... 113,329,773
-------------
TECHNOLOGY
ELECTRONICS (8.8%)
Altera Corp.*.......................................................... 460,000 28,002,500
Cisco Systems, Inc.*................................................... 400,000 37,125,000
DBT Online, Inc.*...................................................... 160,000 3,990,000
Micron Technology, Inc.*............................................... 300,000 15,168,750
Motorola, Inc. ........................................................ 50,000 3,053,125
Network Associates, Inc.*.............................................. 550,000 36,437,500
Sanmina Corp.*......................................................... 305,600 19,100,000
Sterling Commerce, Inc.*............................................... 250,000 11,250,000
Xilinx, Inc.*.......................................................... 479,300 31,214,413
-------------
185,341,288
-------------
OFFICE EQUIPMENT SERVICES (3.4%)
First Data Corp........................................................ 600,000 19,012,500
HBO & Co. ............................................................. 1,752,500 50,274,844
Novell, Inc.*.......................................................... 100,000 1,812,500
-------------
71,099,844
-------------
TELECOMMUNICATIONS (10.6%)
American Satellite Network-- Rights*................................... 70,000 0
Esprit Telecom Group PLC (ADR)*........................................ 50,000 2,337,500
Global TeleSystems Group, Inc.*........................................ 1,290,000 71,917,500
Millicom International Cellular S.A.*.................................. 1,550,000 54,056,250
NTL Incorporated*...................................................... 100,000 5,643,750
United States Cellular Corp.*.......................................... 2,345,000 89,110,000
-------------
223,065,000
-------------
TOTAL TECHNOLOGY (22.8%)............................................... 479,506,132
-------------
</TABLE>
FSA-29
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 4 (POOLED)
(THE ALLIANCE COMMON STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C>
TOTAL COMMON STOCKS (99.4%)
(Cost $1,914,414,699)............................................... $2,098,464,735
---------------
PREFERRED STOCKS:
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines Financial Trust
8.5% Conv. ......................................................... 13,500 934,875
---------------
TOTAL CONSUMER CYCLICALS (0.0%)........................................ 934,875
---------------
TOTAL PREFERRED STOCKS (0.0%)
(Cost $841,125)..................................................... 934,875
---------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 8,358
units at $285.54 each (0.1%)........................................ 2,386,642
---------------
TOTAL INVESTMENTS (99.5%)
(Cost/Amortized Cost $1,917,642,466)................................ 2,101,786,252
OTHER ASSETS LESS LIABILITIES (0.5%).................................. 11,260,934
AMOUNTS RETAINED BY EQUITABLE LIFE IN
SEPARATE ACCOUNT NO. 4 (0.0%) (NOTE 1).............................. (1,271,958)
---------------
NET ASSETS (100.0%).................................................... $2,111,775,228
===============
Reserves attributable to participants' accumulations................... $2,072,991,897
Reserves and other contract liabilities attributable to annuity benefits 38,783,331
---------------
NET ASSETS............................................................. $2,111,775,228
===============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-30
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statement of Assets and Liabilities --December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS:
Investments (Notes 2 and 3):
Common stocks - at market value (cost: $227,495,826).................................... $268,307,075
Participation in Separate Account No. 2A - at amortized cost, which approximates
market value, equivalent to 67,331 units at $285.54 .................................. 19,225,442
Cash 21,240
Receivables:
Securities sold......................................................................... 1,245,685
Dividends............................................................................... 146,626
- -----------------------------------------------------------------------------------------------------------------
Total assets.......................................................................... 288,946,068
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payables:
Securities purchased.................................................................... 3,872,390
Due to Equitable Life's General Account................................................. 8,601,995
Investment Management fees payable...................................................... 2,036
Accrued expenses........................................................................... 107,821
- -----------------------------------------------------------------------------------------------------------------
Total liabilities..................................................................... 12,584,242
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS................................................................................. $276,361,826
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-31
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
- --------------------------------------------------------------------------------------------------------------
1998 1997
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends.............................................................. $ 1,872,213 $ 1,728,486
Interest............................................................... 380,443 456,291
- --------------------------------------------------------------------------------------------------------------
Total.................................................................. 2,252,656 2,184,777
EXPENSES (NOTE 4)...................................................... (4,477,510) (5,757,007)
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS.................................................... (2,224,854) (3,572,230)
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (NOTE 2):
Realized gain (loss) from security and foreign currency transactions... (70,824,652) 93,937,473
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................................... 15,093,634 56,470,533
End of year......................................................... 40,811,249 15,093,634
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation......................... 25,717,615 (41,376,899)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS................. (45,107,037) 52,560,574
- --------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to operations........... (47,331,891) 48,988,344
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.......................................................... 227,181,913 229,831,666
Withdrawals............................................................ (321,651,183) (304,183,883)
- --------------------------------------------------------------------------------------------------------------
Decrease in net assets attributable to contributions and withdrawals... (94,469,270) (74,352,217)
- --------------------------------------------------------------------------------------------------------------
DECREASE IN NET ASSETS................................................. (141,801,161) (25,363,873)
NET ASSETS -- BEGINNING OF YEAR........................................ 418,162,987 443,526,860
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR.............................................. $276,361,826 $418,162,987
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-32
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (0.4%)
Georgia Gulf Corp. .................................................... 60,000 $ 963,750
-----------
CHEMICALS -- SPECIALTY (0.6%)
Great Lakes Chemical Corp. ............................................ 25,000 1,000,000
Solutia, Inc. ......................................................... 30,000 671,250
-----------
1,671,250
-----------
TOTAL BASIC MATERIALS (1.0%)........................................... 2,635,000
-----------
BUSINESS SERVICES
PRINTING, PUBLISHING & BROADCASTING (8.9%)
CBS Corp. ............................................................. 91,900 3,009,725
Cablevision System Corp.*.............................................. 42,500 2,132,968
Comcast Corp. (Class A)................................................ 165,800 9,730,387
Infinity Broadcasting Corp. (Class A)*................................. 103,200 2,825,100
King World Productions, Inc.*.......................................... 50,400 1,483,650
R. H. Donnelley Corp. ................................................. 40,000 582,500
USA Networks, Inc.*.................................................... 146,500 4,852,813
-----------
24,617,143
-----------
PROFESSIONAL SERVICES (1.3%)
Century Business Services, Inc.*....................................... 79,000 1,135,625
Nielsen Media Research, Inc. .......................................... 40,200 723,600
Young & Rubicam, Inc.*................................................. 54,300 1,757,963
-----------
3,617,188
-----------
TRUCKING, SHIPPING (1.1%)
OMI Corp.*............................................................. 154,900 503,425
Teekay Shipping Corp. ................................................. 129,100 2,428,694
-----------
2,932,119
-----------
TOTAL BUSINESS SERVICES (11.3%)........................................ 31,166,450
-----------
CAPITAL GOODS
AEROSPACE (0.2%)
Loral Space & Communications Ltd.*..................................... 30,000 534,375
-----------
BUILDING MATERIALS & FOREST PRODUCTS (1.3%)
Louisiana Pacific Corp. ............................................... 60,000 1,098,750
Martin Marietta Materials, Inc. ....................................... 40,000 2,487,500
-----------
3,586,250
-----------
MACHINERY (1.4%)
United Rentals, Inc.*.................................................. 120,800 4,001,500
-----------
TOTAL CAPITAL GOODS (2.9%)............................................. 8,122,125
-----------
</TABLE>
FSA-33
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER CYCLICALS
AIRLINES (3.4%)
Continental Airlines, Inc. (Class B)*.................................. 206,200 $ 6,907,700
Northwest Airlines Corp. (Class A)*.................................... 100,800 2,576,700
------------
9,484,400
------------
APPAREL, TEXTILE (5.5%)
Mohawk Industries, Inc.*............................................... 177,500 7,466,093
Tommy Hilfiger Corp.*.................................................. 78,000 4,680,000
Unifi, Inc. ........................................................... 161,100 3,151,519
------------
15,297,612
------------
AUTO-RELATED (4.8%)
Circuit City Stores, Inc.-- CarMax Group*.............................. 302,300 1,643,756
Federal Mogul Corp. ................................................... 25,000 1,487,500
Hertz Corp. (Class A).................................................. 80,100 3,654,562
Republic Industries, Inc.*............................................. 427,700 6,308,575
------------
13,094,393
------------
FOOD SERVICES, LODGING (2.1%)
Extended Stay America, Inc.*........................................... 99,900 1,048,950
Florida Panthers Holdings, Inc.*....................................... 125,200 1,165,925
Meristar Hospitality Corp. ............................................ 94,700 1,757,869
Starbucks Corp.*....................................................... 32,800 1,840,900
------------
5,813,644
------------
HOUSEHOLD FURNITURE, APPLIANCES (1.4%)
Industrie Natuzzi Spa (ADR)............................................ 150,900 3,753,637
------------
LEISURE-RELATED (5.3%)
Brass Eagle, Inc.*..................................................... 1,500 23,063
Callaway Golf Company.................................................. 63,400 649,850
Mattel, Inc. .......................................................... 27,700 631,906
MGM Grand, Inc.*....................................................... 16,700 452,988
Premier Parks, Inc.*................................................... 246,400 7,453,600
Royal Caribbean Cruises Ltd. .......................................... 142,600 5,276,200
------------
14,487,607
------------
RETAIL -- GENERAL (8.7%)
Bed Bath & Beyond, Inc.*............................................... 46,900 1,600,463
Genesis Direct, Inc.*.................................................. 150,000 1,171,875
Gucci Group NV-NY ..................................................... 30,900 1,502,512
Limited, Inc. ......................................................... 35,000 1,019,375
Ross Stores, Inc. ..................................................... 47,200 1,858,500
Saks Incorporated*..................................................... 110,400 3,484,500
Tandy Corp. ........................................................... 32,500 1,338,594
Tiffany & Co. ......................................................... 132,600 6,878,625
TJX Cos., Inc. ........................................................ 77,600 2,250,400
Venator Group, Inc.*................................................... 472,200 3,039,787
------------
24,144,631
------------
TOTAL CONSUMER CYCLICALS (31.2%)....................................... 86,075,924
------------
</TABLE>
FSA-34
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS
DRUGS (2.1%)
Algos Pharmaceuticals Corp.*........................................... 45,000 $ 1,170,000
Barr Laboratories, Inc.*............................................... 10,500 504,000
Forest Laboratories, Inc.*............................................. 17,000 904,188
MedImmune, Inc.*....................................................... 23,500 2,336,781
Mylan Laboratories, Inc. .............................................. 25,000 787,500
------------
5,702,469
------------
HOSPITAL SUPPLIES & SERVICES (8.1%)
Biomet, Inc. .......................................................... 17,250 694,313
Columbia/HCA Healthcare Corp. ......................................... 239,200 5,920,200
Guidant Corp. ......................................................... 15,400 1,697,850
Health Management Associates, Inc. (Class A)*.......................... 66,500 1,438,063
HEALTHSOUTH Corp.*..................................................... 536,600 8,283,763
Hooper Holmes, Inc. ................................................... 14,300 414,700
Saint Jude Medical, Inc.*.............................................. 43,100 1,193,331
Steris Corp.*.......................................................... 55,000 1,564,063
Sun International Hotels Ltd.*......................................... 27,200 1,235,900
------------
22,442,183
------------
RETAIL -- FOOD (1.4%)
Food Lion, Inc. (Class A).............................................. 140,000 1,487,500
Kroger Co.*............................................................ 10,000 605,000
Whole Foods Market, Inc.*.............................................. 37,100 1,794,713
------------
3,887,213
------------
TOTAL CONSUMER NONCYCLICALS (11.6%).................................... 32,031,865
------------
CREDIT-SENSITIVE
BANKS (1.6%)
Greenpoint Financial Corp. ............................................ 82,700 2,904,838
Sovereign Bancorp, Inc. ............................................... 110,000 1,567,500
------------
4,472,338
------------
FINANCIAL SERVICES (4.7%)
CMAC Investment Corp. ................................................. 36,600 1,681,313
Capital One Financial Corp. ........................................... 16,600 1,909,000
Edwards (A.G.), Inc. .................................................. 59,700 2,223,825
Merrill Lynch & Co., Inc. ............................................. 36,500 2,436,375
Newcourt Credit Group, Inc. ........................................... 48,100 1,680,494
Newhall Land & Farming Co. ............................................ 35,000 910,000
Paine Webber, Inc. .................................................... 55,300 2,135,963
------------
12,976,970
------------
INSURANCE (7.2%)
Ace Ltd. .............................................................. 43,800 1,508,360
AFLAC, Inc. ........................................................... 60,300 2,653,200
CNA Financial Corp.*................................................... 263,500 10,605,875
Everest Reinsurance Holdings, Inc. .................................... 50,000 1,946,875
Gallagher (Arthur J.) & Co. ........................................... 20,000 882,500
Providian Financial Corp. ............................................. 18,750 1,406,250
Reliastar Financial Corp. ............................................. 22,500 1,037,810
------------
20,040,870
------------
</TABLE>
FSA-35
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CREDIT-SENSITIVE (CONTINUED)
REAL ESTATE (3.7%)
Boston Properties, Inc. ............................................... 83,200 $ 2,537,600
Crescent Real Estate Equities Co. ..................................... 96,000 2,208,000
Equity Office Properties Trust......................................... 87,700 2,104,800
Vornado Realty Trust................................................... 97,300 3,283,875
------------
10,134,275
------------
UTILITY -- TELEPHONE (0.7%)
Frontier Corp. ........................................................ 55,000 1,870,000
------------
TOTAL CREDIT-SENSITIVE (17.9%)......................................... 49,494,453
------------
ENERGY
OIL -- DOMESTIC (0.8%)
Atlantic Richfield Co. ................................................ 14,100 920,025
Louis Dreyfus Natural Gas Corp.*....................................... 90,000 1,282,500
------------
2,202,525
------------
OIL -- INTERNATIONAL (0.4%)
Vastar Resources, Inc. ................................................ 25,000 1,079,688
------------
OIL -- SUPPLIES & CONSTRUCTION (0.7%)
Diamond Offshore Drilling, Inc. ....................................... 85,700 2,030,019
------------
RAILROADS (0.8%)
Kansas City Southern Industries, Inc. ................................. 46,000 2,262,625
------------
TOTAL ENERGY (2.7%).................................................... 7,574,857
------------
TECHNOLOGY
ELECTRONICS (7.3%)
Altera Corp.*.......................................................... 31,800 1,935,825
Citrix Systems, Inc.*.................................................. 15,200 1,475,350
Hearst-Argyle Television, Inc.*........................................ 35,000 1,155,000
Keane, Inc.*........................................................... 29,100 1,162,181
Micron Technology, Inc.*............................................... 23,600 1,193,275
Network Associates, Inc.*.............................................. 51,850 3,435,062
Parametric Technology Corp.*........................................... 81,700 1,337,837
Sanmina Corp.*......................................................... 41,000 2,562,500
Seagate Technology Inc.*............................................... 28,400 859,100
Sterling Commerce, Inc.*............................................... 69,500 3,127,500
Synopsys, Inc.*........................................................ 34,900 1,893,325
------------
20,136,955
------------
OFFICE EQUIPMENT (1.9%)
Ceridian Corp.*........................................................ 38,500 2,687,781
Policy Management Systems Corp.*....................................... 40,000 2,020,000
Sterling Software, Inc.*............................................... 25,000 676,563
------------
5,384,344
------------
</TABLE>
FSA-36
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
(THE ALLIANCE AGGRESSIVE STOCK FUND)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Portfolio of Investments -- December 31, 1998 (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
NUMBER OF MARKET
SHARES VALUE
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (CONTINUED)
OFFICE EQUIPMENT SERVICES (2.8%)
Cadence Design Systems, Inc.*.......................................... 35,600 $ 1,059,100
Comverse Technology, Inc.*............................................. 42,700 3,031,700
Intuit, Inc.*.......................................................... 10,000 725,000
Novell, Inc.*.......................................................... 165,000 2,990,625
-------------
7,806,425
-------------
TELECOMMUNICATIONS (6.5%)
Amdocs Ltd.*........................................................... 42,700 731,238
America Online, Inc. .................................................. 7,000 1,120,000
American Satellite Network -- Rights*.................................. 9,550 0
FORE Systems, Inc.*.................................................... 15,000 274,688
Global TeleSystems Group, Inc.*........................................ 59,000 3,289,250
Hyperion Telecommunications, Inc. (Class A)*........................... 105,000 1,588,125
Millicom International Cellular S.A.*.................................. 117,200 4,087,350
Nextel Communications, Inc. (Class A)*................................. 167,300 3,952,463
NTL Incorporated*...................................................... 15,000 846,563
Winstar Communications, Inc.*.......................................... 51,000 1,989,000
-------------
17,878,677
-------------
TOTAL TECHNOLOGY (18.5%)............................................... 51,206,401
-------------
TOTAL COMMON STOCKS (97.1%)
(Cost $227,495,826) ................................................ 268,307,075
-------------
PARTICIPATION IN SEPARATE ACCOUNT NO. 2A,
at amortized cost, which approximates
market value, equivalent to 67,331 units
At $285.54 each (6.9%).............................................. 19,225,442
-------------
TOTAL INVESTMENTS (104.0%)
(Cost/Amortized Cost $246,721,268).................................. 287,532,517
OTHER ASSETS LESS LIABILITIES (-4.0%).................................. (11,170,691)
-------------
NET ASSETS (100.0%).................................................... $276,361,826
=============
</TABLE>
*Non-income producing.
See Notes to Financial Statements.
FSA-37
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account No. 51
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets and the selected per
unit data (included under Condensed Financial Information in the Prospectus of
the Retirement Investment Account) present fairly, in all material respects, the
financial position of the Alliance Money Market Fund, Alliance Intermediate
Government Securities Fund, Alliance Quality Bond Fund, Alliance High Yield
Fund, Alliance Growth & Income Fund, Alliance Equity Index Fund, Alliance Global
Fund, Alliance International Fund, Alliance Small Cap Growth Fund, Alliance
Conservative Investors Fund and Alliance Growth Investors Fund ("Hudson River
Trust funds"), separate investment funds of The Equitable Life Assurance Society
of the United States ("Equitable Life") Separate Account No. 51 at December 31,
1998 and the results of each of their operations, the changes in each of their
net assets for the periods indicated and the per unit data for the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and selected per unit data (hereafter referred to as
"financial statements") are the responsibility of Equitable Life's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of shares owned in The
Hudson River Trust at December 31, 1998 with the transfer agent, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
FSA-38
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities --December 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE
MONEY GOVERNMENT ALLIANCE ALLIANCE
MARKET SECURITIES QUALIFTY BOND HIGH YIELD
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust,
at value (Cost:
Alliance Money Market Portfolio - $7,276,525;
Alliance Intermediate Government Securities
Portfolio - $2,934,377;
Alliance Quality Bond Portfolio - $6,290,564;
Alliance High Yield Portfolio - $6,952,516)
(Note 3).....................................$7,256,346 $2,964,262 $6,312,459 $5,839,495
Receivable for The Hudson River Trust shares sold.... -- 1,119 3,045 3,150
Due from Equitable Life's General Account............ 196,484 312 158 491
- -----------------------------------------------------------------------------------------------------------
Total assets................................. 7,452,830 2,965,693 6,315,662 5,843,136
- -----------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for The Hudson River Trust shares purchased.. 192,925 -- -- --
Accrued expenses..................................... 3,559 1,431 3,203 3,641
- -----------------------------------------------------------------------------------------------------------
Total liabilities............................ 196,484 1,431 3,203 3,641
- -----------------------------------------------------------------------------------------------------------
NET ASSETS...........................................$7,256,346 $2,964,262 $6,312,459 $5,839,495
===========================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-39
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities -- December 31, 1998 (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
GROWTH & ALLIANCE ALLIANCE
INCOME EQUITY GLOBAL INTERNATIONAL
FUND INDEX FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust,
at value (Cost:
Alliance Growth & Income Portfolio -
$26,142,862;
Alliance Equity Index Portfolio - $37,440,391;
Alliance Global Portfolio - $41,373,705;
Alliance International Portfolio - $4,063,139)
(Note 3).....................................$29,007,122 $49,188,424 $46,687,138 $3,955,293
Receivable for The Hudson River Trust shares sold.... 367,989 678,655 484,216 65,449
- ---------------------------------------------------------------------------------------------------------------
Total assets................................. 29,375,111 49,867,079 47,171,354 4,020,742
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Due to Equitable Life's General Account.............. 353,757 657,191 470,330 62,792
Accrued expenses..................................... 14,232 21,464 18,506 2,657
- ---------------------------------------------------------------------------------------------------------------
Total liabilities............................ 367,989 678,655 488,836 65,449
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS...........................................$29,007,122 $49,188,424 $46,682,518 $3,955,293
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-40
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities --December 31, 1998 (Concluded)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE
SMALL CAP CONSERVATIVE GROWTH
GROWTH INVESTORS INVESTORS
FUND FUND FUND
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of The Hudson River Trust,
at value (Cost:
Alliance Small Cap Growth Portfolio - $3,151,096;
Alliance Conservative Investors Portfolio -
$6,718,429;
Alliance Growth Investors Portfolio - $58,947,215)
(Note 3)..................................... $2,952,855 $7,000,207 $64,460,581
Receivable for The Hudson River Trust shares sold.... 21,401 14,505 40,259
- -----------------------------------------------------------------------------------------------------------------
Total assets................................. 2,974,256 7,014,712 64,500,840
- -----------------------------------------------------------------------------------------------------------------
LIABILITIES:
Due to Equitable Life's General Account.............. 19,399 14,129 19,116
Accrued expenses..................................... 2,002 6,051 23,362
- -----------------------------------------------------------------------------------------------------------------
Total liabilities............................ 21,401 20,180 42,478
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS........................................... $2,952,855 $6,994,532 $64,458,362
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-41
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
ALLIANCE
INTERMEDIATE
ALLIANCE GOVERNMENT
MONEY MARKET FUND SECURITIES FUND
---------------------------- -------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)-- Dividends from The
Hudson River Trust ..................................$ 304,470 $ 372,708 $ 142,845 $ 161,727
EXPENSES (NOTE 4).................................... (75,733) (39,743) (21,813) (25,703)
- ------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................ 228,737 332,965 121,032 136,024
- ------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions......... (32,764) 13,278 55,794 13,927
Realized gain distribution from The Hudson River
Trust................................................ 214 964 -- --
- ------------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss)............................. (32,550) 14,242 55,794 13,927
- ------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................. (111,106) (17,360) 11,912 (20,279)
End of year ...................................... (20,179) (111,106) 29,885 11,912
- ------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....... 90,927 (93,746) 17,973 32,191
- ------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................... 58,377 (79,504) 73,767 46,118
- ------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations..... 287,114 253,461 194,799 182,142
- ------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................ 5,830,172 19,472,948 3,214,385 2,503,359
Withdrawals..........................................(13,393,539) (8,813,256) (3,469,017) (1,924,964)
- ------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
contributions and withdrawals..................... (7,563,367) 10,659,692 (254,632) 578,395
- ------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS.................... (7,276,253) 10,913,153 (59,833) 760,537
NET ASSETS -- BEGINNING OF YEAR...................... 14,532,599 3,619,446 3,024,095 2,263,558
- ------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR............................ $7,256,346 $14,532,599 $2,964,262 $3,024,095
============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-42
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
QUALITY BOND FUND HIGH YIELD FUND
-------------------------- --------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)-- Dividends from
The Hudson River Trust............................ $ 313,345 $ 180,536 $ 790,044 $ 562,742
EXPENSES (NOTE 4).................................... (44,482) (22,848) (66,649) (50,152)
- ----------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME................................ 268,863 157,688 723,395 512,590
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions......... 66,884 7,522 (52,650) 125,744
Realized gain distribution from The Hudson River Trust 126,543 -- 119,498 272,611
- ----------------------------------------------------------------------------------------------------------------
Net Realized Gain.................................... 193,427 7,522 66,848 398,355
- ----------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................. 61,901 (2,628) 47,226 (14,759)
End of year....................................... 21,895 61,901 (1,113,021) 47,226
- ----------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation....... (40,006) 64,529 (1,160,247) 61,985
- ----------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................... 153,421 72,051 (1,093,399) 460,340
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
operations......................................... 422,284 229,739 (370,004) 972,930
- ----------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions........................................ 3,798,761 1,383,212 3,817,614 2,995,942
Withdrawals.......................................... (1,484,703) (392,114) (4,579,269) (1,643,900)
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
contributions and withdrawals...................... 2,314,058 991,098 (761,655) 1,352,042
- ----------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS.................... 2,736,342 1,220,837 (1,131,659) 2,324,972
NET ASSETS -- BEGINNING OF YEAR...................... 3,576,117 2,355,280 6,971,154 4,646,182
================================================================================================================
NET ASSETS -- END OF YEAR............................ $6,312,459 $3,576,117 $5,839,495 $6,971,154
================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-43
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
GROWTH & INCOME FUND EQUITY INDEX FUND
---------------------------- ----------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)-- Dividends from
The Hudson River Trust........................... $ 83,311 $ 157,368 $ 482,784 $ 364,650
EXPENSES (NOTE 4)................................... (225,166) (128,440) (362,096) (203,806)
- -----------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)........................ (141,855) 28,928 120,688 160,844
- -----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share transactions............... 1,554,915 1,257,520 3,491,205 1,837,842
Realized gain distribution from The Hudson
River Trust...................................... 2,359,151 1,199,212 15,038 113,882
- -----------------------------------------------------------------------------------------------------------------
Net Realized Gain................................... 3,914,066 2,456,732 3,506,243 1,951,724
- -----------------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year................................ 2,014,303 1,106,273 5,420,710 1,325,120
End of year ..................................... 2,864,260 2,014,303 11,748,033 5,420,710
- -----------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation................... 849,957 908,030 6,327,323 4,095,590
- -----------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS..... 4,764,023 3,364,762 9,833,566 6,047,314
- -----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to operations... 4,622,168 3,393,690 9,954,254 6,208,158
- -----------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions....................................... 12,995,575 13,579,067 23,328,669 22,551,970
Withdrawals......................................... (9,400,026) (7,440,674) (16,252,767) (13,004,853)
- -----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to contributions
and withdrawals.................................. 3,595,549 6,138,393 7,075,902 9,547,117
- -----------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS.............................. 8,217,717 9,532,083 17,030,156 15,755,275
NET ASSETS -- BEGINNING OF YEAR..................... 20,789,405 11,257,322 32,158,268 16,402,993
- -----------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR........................... $29,007,122 $20,789,405 $49,188,424 $32,158,268
=================================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-44
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE
GLOBAL FUND INTERNATIONAL FUND
--------------------------- -------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)-- Dividends from The
Hudson River Trust............................... $ 565,825 $ 928,674 $ 77,749 $ 142,909
EXPENSES (NOTE 4)................................... (466,158) (450,382) (43,796) (48,357)
- ----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME............................... 99,667 478,292 33,953 94,552
- ----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions........ 2,863,179 2,804,530 (107,940) 7,681
Realized gain distribution from The Hudson
River Trust...................................... 3,009,797 2,994,309 804 237,295
- ----------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss)............................ 5,872,976 5,798,839 (107,136) 244,976
- ----------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period.............................. 2,818,773 4,189,776 (536,772) 56,580
End of period ................................... 5,313,433 2,818,773 (107,846) (536,772)
- ----------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/
depreciation..................................... 2,494,660 (1,371,003) 428,926 (593,352)
- ----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN
(LOSS) ON INVESTMENTS............................ 8,367,636 4,427,836 321,790 (348,376)
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
attributable to operations....................... 8,467,303 4,906,128 355,743 (253,824)
- ----------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions....................................... 12,922,064 17,302,173 1,013,182 3,591,241
Withdrawals......................................... (20,514,776) (20,267,132) (1,924,662) (2,494,955)
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable
to contributions and withdrawals................. (7,592,712) (2,964,959) (911,480) 1,096,286
- ----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS................... 874,591 1,941,169 (555,737) 842,462
NET ASSETS -- BEGINNING OF PERIOD................... 45,807,927 43,866,758 4,511,030 3,668,568
- ----------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD......................... $46,682,518 $45,807,927 $3,955,293 $4,511,030
==========================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-45
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE SMALL CAP CONSERVATIVE INVESTORS
GROWTH FUND FUND
----------------------------- -------------------------
MAY 1, 1997*
YEAR ENDED TO YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2)-- Dividends from
The Hudson River Trust....................... $ 318 $ 380 $ 302,637 $ 480,979
EXPENSES (NOTE 4)............................... (40,539) (5,893) (106,749) (156,313)
- ----------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS).................... (40,221) (5,513) 195,888 324,666
- ----------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share transactions.... (139,664) 25,974 600,961 55,228
Realized gain distribution from The Hudson
River Trust.................................. -- 53,703 374,377 346,019
- ----------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss)........................ (139,664) 79,677 975,338 401,247
- ----------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year............................ (89,613) -- 445,991 (138,527)
End of year ................................. (198,241) (89,613) 281,778 445,991
- ----------------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation.. (108,628) (89,613) (164,213) 584,518
- ----------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS.................................. (248,292) (9,936) 811,125 985,765
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable
to operations................................ (288,513) (15,449) 1,007,013 1,310,431
- ----------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions................................... 2,739,194 2,741,544 2,732,417 2,492,189
Withdrawals..................................... (1,780,689) (443,232) (8,197,701) (5,233,231)
- ----------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
contributions and withdrawals................. 958,505 2,298,312 (5,465,284) (2,741,042)
- ----------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS............... 669,992 2,282,863 (4,458,271) (1,430,611)
NET ASSETS -- BEGINNING OF YEAR................. 2,282,863 -- 11,452,803 12,883,414
- ----------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR....................... $2,952,855 $2,282,863 $6,994,532 $11,452,803
==========================================================================================================
</TABLE>
*Commencement of operations.
See Notes to Financial Statements.
FSA-46
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------
ALLIANCE
GROWTH INVESTORS FUND
----------------------------------
YEAR ENDED
DECEMBER 31,
1998 1997
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2) -- Dividends from
The Hudson River Trust...................................... $ 1,251,845 $ 1,344,234
EXPENSES (NOTE 4).............................................. (450,621) (391,031)
- ----------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME.......................................... 801,224 953,203
- ----------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share transactions.......................... 1,848,022 1,579,084
Realized gain distribution from The Hudson
River Trust................................................. 5,216,022 3,055,814
- ----------------------------------------------------------------------------------------------------
Net Realized Gain.............................................. 7,064,044 4,634,898
- ----------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of year........................................... 3,359,461 1,130,615
End of year ................................................ 5,513,366 3,359,461
- ----------------------------------------------------------------------------------------------------
Change in unrealized appreciation/depreciation................. 2,153,905 2,228,846
- ----------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS................ 9,217,949 6,863,744
- ----------------------------------------------------------------------------------------------------
Increase in net assets attributable
to operations............................................... 10,019,173 7,816,947
- ----------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions.................................................. 12,894,395 16,373,146
Withdrawals.................................................... (16,348,446) (12,914,616)
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in net assets attributable to
contributions and withdrawals................................ (3,454,051) 3,458,530
- ----------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS......................................... 6,565,122 11,275,477
NET ASSETS -- BEGINNING OF YEAR................................ 57,893,240 46,617,763
- ----------------------------------------------------------------------------------------------------
NET ASSETS -- END OF YEAR...................................... $64,458,362 $57,893,240
====================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-47
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and the Contractowners of Separate Account No. 66
of The Equitable Life Assurance Society of the United States
In our opinion, the accompanying statements of assets and liabilities and the
related statements of operations and changes in net assets and the selected per
unit data (included under Condensed Financial Information in the Prospectus of
the Retirement Investment Account) present fairly, in all material respects, the
financial position of the T. Rowe Price Equity Income Fund, EQ/Putnam Growth &
Income Fund, Merrill Lynch Basic Value Equity Fund, MFS Research Fund, T. Rowe
Price International Fund, Morgan Stanley Emerging Markets Equity Fund, Warburg
Pincus Small Company Value Fund, MFS Emerging Growth Companies Fund, EQ/Putnam
Balanced Fund and the Merrill Lynch World Strategy Fund ("EQ Advisors Trust
funds"), separate investment funds of The Equitable Life Assurance Society of
the United States ("Equitable Life") Separate Account No. 66 at December 31,
1998 and the results of each of their operations, the changes in each of their
net assets for the periods indicated and the per unit data for the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and the selected per unit data (hereafter referred to as
"financial statements") are the responsibility of Equitable Life's management;
our responsibility is to express an opinion on these financial statements based
on our audits. We conducted our audits of these financial statements in
accordance with generally accepted auditing standards which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of shares owned in The
EQ Advisors Trust at December 31, 1998 with the transfer agent, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
FSA-48
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities
December 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQ/PUTNAM MERRILL LYNCH
EQUITY GROWTH & BASIC VALUE MFS T. ROWE PRICE
INCOME INCOME EQUITY RESEARCH INTERNATIONAL
FUND FUND FUND FUND FUND
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of the EQ
Advisor Trust - at value (Note 1)
Cost:
$3,655,667................ $3,792,564
75,458................ $79,682
152,983................ $151,843
2,582,397................ $2,898,853
226,105................ $235,093
Receivable for Trust
shares purchased................... -- -- 97 400 --
Due from Equitable Life's General
Account............................ 6,772 1,572 -- -- 6,485
- ---------------------------------------------------------------------------------------------------------------
Total assets.................... 3,799,336 81,254 151,940 2,899,253 241,578
- ---------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for Trust
shares purchased................... 8,421 1,572 -- -- 6,485
Due to Equitable Life's General
Account............................ -- -- 97 1,149 --
Amount retained by Equitable Life
in Separate Account No. 66......... 1,500 1,500 1,500 1,500 1,500
- ---------------------------------------------------------------------------------------------------------------
Total liabilities............... 9,921 3,072 1,597 2,649 7,985
- ---------------------------------------------------------------------------------------------------------------
NET ASSETS........................... $3,789,415 $78,182 $150,343 $2,896,604 $233,593
===============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-49
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Assets and Liabilities (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
MORGAN
STANLEY MFS
EMERGING WARBURG EMERGING
MARKET PINCUS SMALL GROWTH EQ/PUTNAM MERRILL LYNCH
EQUITY COMPANY VALUE COMPANIES BALANCED WORLD STRATEGY
FUND FUND FUND FUND FUND
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of the EQ
Advisor Trust - at value (Note 1)
Cost:
$2,184................ $2,391
2,508,107................ $2,292,578
706,615................ $830,425
498,224................ $502,150
643,556................ $652,743
Receivable for Trust
shares purchased................... -- 328 305 179 27
Due from Equitable Life's General
Account............................ -- -- -- -- --
- --------------------------------------------------------------------------------------------------------------
Total assets.................... 2,391 2,292,906 830,730 502,329 652,770
- --------------------------------------------------------------------------------------------------------------
LIABILITIES:
Payable for Trust
shares purchased................... -- -- -- -- --
Due to Equitable Life's General
Account............................ -- 1,848 305 179 1,027
Amount retained by Equitable Life
in Separate Account No. 66......... 1,500 1,500 1,500 1,500 1,500
- --------------------------------------------------------------------------------------------------------------
Total liabilities............... 1,500 3,348 1,805 1,679 2,527
- --------------------------------------------------------------------------------------------------------------
NET ASSETS........................... $ 891 $2,289,558 $828,925 $500,650 $650,243
==============================================================================================================
</TABLE>
See Notes to Financial Statements.
FSA-50
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------
MERRILL LYNCH
T. ROWE PRICE EQ/PUTNAM BASIC VALUE
EQUITY INCOME GROWTH & INCOME EQUITY
FUND FUND FUND
------------------------------ ---------------------------------
AUGUST 1, AUGUST 20, AUGUST 20,
YEAR ENDED 1997* 1998* 1998*
DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1998 1997 1998 1998
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends from The EQ Advisors Trust..... $ 60,980 $ 22,858 $ 389 $ 1,440
Expenses (Note 4) ....................... (40,369) (4,613) -- --
- --------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME....................... 20,611 18,245 389 1,440
- --------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share
transactions............................. 77,584 1,154 -- (95)
Realized gain distribution from
The EQ Advisors Trust.................... 78,496 -- 350 5,025
- --------------------------------------------------------------------------------------------------------------
Net Realized Gain........................... 156,080 1,154 350 4,930
- --------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments:
Beginning of period.................... 81,747 -- -- --
End of period.......................... 136,897 81,747 4,224 (1,140)
- --------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation)........................... 55,150 81,747 4,224 (1,140)
- --------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN ON
INVESTMENTS.............................. 211,230 82,901 4,574 3,790
- --------------------------------------------------------------------------------------------------------------
Increase in net assets
attributable to operations............... 231,841 101,146 4,963 5,230
- --------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions............................ 2,818,502 2,203,292 85,306 192,745
Withdrawals.............................. (1,448,711) (116,655) (12,087) (47,632)
- --------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to
contributions and withdrawals............ 1,369,791 2,086,637 73,219 145,113
- --------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS...................... 1,601,632 2,187,783 78,182 150,343
NET ASSETS -- BEGINNING OF PERIOD........... 2,187,783 -- -- --
- --------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD................. $3,789,415 $2,187,783 $ 78,182 $150,343
==============================================================================================================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements.
FSA-51
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
MORGAN
STANLEY
MFS T. ROWE PRICE EMERGING
RESEARCH INTERNATIONAL MARKETS EQUITY
FUND FUND FUND
-----------------------------------------------------------------
AUGUST AUSUST 20,
1, 1997* 1998*
YEAR ENDED TO TO AUGUST 20, 1998*
DECEMBER 31, DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1998 1997 1998 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FROM OPERATIONS:
INVESTMENT INCOME (NOTE 2):
Dividends from The EQ Advisors Trust..... $ 7,211 $ 8,097 $ 1,770 $ 7
Expenses (Note 4) ....................... (19,528) (2,181) -- 7
- ----------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)................ (12,317) 5,916 1,770 7
- ----------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain from share 24,718
transactions............................. 2,181 -- --
- ----------------------------------------------------------------------------------------------------------------
Unrealized appreciation
(depreciation) of investments:
Beginning of period.................... (12,691) -- -- --
End of period.......................... 316,456 (12,691) 8,988 207
- ----------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation)........................... 329,147 (12,691) 8,988 207
- ----------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS.............................. 353,865 (10,510) 8,988 207
- ----------------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
attributable to operations............... 341,548 (4,594) 10,758 214
- ----------------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions............................ 2,488,519 946,609 223,524 677
Withdrawals.............................. (704,182) (171,296) (689) --
- ----------------------------------------------------------------------------------------------------------------
Increase in net assets attributable to 1,784,337
contributions and withdrawals............ 1,784,337 775,313 222,835 677
- ----------------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS...................... 2,125,885 770,719 233,593 891
NET ASSETS -- BEGINNING OF PERIOD........... 770,719 -- -- --
- ----------------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD................. $2,896,604 $ 770,719 $233,593 $891
================================================================================================================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements.
FSA-52
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
WARBURG
PINCUS MFS EMERGING
SMALL COMPANY GROWTH
VALUE COMPANIES
FUND FUND
--------------------------------------------
AUGUST 20,
YEAR ENDED AUGUST 1, 1997* 1998*
DECEMBER 31, TO DECEMBER 31, TO DECEMBER 31,
1998 1997 1998
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM OPERATIONS
INVESTMENT INCOME (NOTE 2):
Dividends from The EQ Advisors Trust.......... $ 10,601 $ 10,134 $ --
Expenses (Note 4) ............................ (27,022) (4,266) --
- ------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)..................... (16,421) 5,868 --
- ------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) from share
transactions.................................. (45,570) (579) 163
- ------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period......................... (67,503) -- --
End of period............................... (215,529) (67,503) 123,810
- ------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation)................................ (148,026) (67,503) 123,810
- ------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS................................... (193,596) (68,082) 123,973
- ------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
attributable to operations.................... (210,017) (62,214) 123,973
- ------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions................................. 2,015,611 2,097,710 724,459
Withdrawals................................... (1,379,775) (171,757) (19,507)
- ------------------------------------------------------------------------------------------------
Increase in net assets attributable to
contributions and withdrawals................. 635,836 1,925,953 704,952
- ------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS........................... 425,819 1,863,739 828,925
NET ASSETS -- BEGINNING OF PERIOD................ 1,863,739 -- --
- ------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD...................... $2,289,558 $1,863,739 $828,925
================================================================================================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements.
FSA-53
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Statements of Operations and Changes in Net Assets (Concluded)
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM MERRILL LYNCH
BALANCED WORLD STRATEGY
FUND FUND
------------------- --------------------------------
AUGUST 20, 1998* YEAR ENDED AUGUST 1, 1997*
TO DECEMBER 31, DECEMBER 31, TO DECEMBER 31,
1998 1998 1997
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
FROM OPERATIONS
INVESTMENT INCOME (NOTE 2):
Dividends from The EQ Advisors Trust............ $ 9,281 $ 4,633 $ 5,419
Expenses (Note 4) .............................. -- (6,716) (846)
- -------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME (LOSS)....................... 9,281 (2,083) 4,573
- -------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized loss from share
transactions.................................... (558) (2,611) (53)
Realized gain distribution from
The EQ Advisors Trust........................... 4,899 -- --
- -------------------------------------------------------------------------------------------------------
Net Realized Gain (Loss)........................... 4,341 (2,611) (53)
- -------------------------------------------------------------------------------------------------------
Unrealized appreciation (depreciation) of investments:
Beginning of period........................... -- (22,184) --
End of period................................. 3,926 9,187 (22,184)
- -------------------------------------------------------------------------------------------------------
Change in unrealized appreciation
(depreciation).................................. 3,926 31,371 (22,184)
- -------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS..................................... 8,267 28,760 (22,237)
- -------------------------------------------------------------------------------------------------------
Increase (decrease) in net assets
attributable to operations...................... 17,548 26,677 (17,664)
- -------------------------------------------------------------------------------------------------------
FROM CONTRIBUTIONS AND WITHDRAWALS:
Contributions................................... 531,797 444,857 391,483
Withdrawals .................................... (48,695) (182,473) (12,637)
- -------------------------------------------------------------------------------------------------------
Increase in net assets attributable to
contributions and withdrawals................... 483,102 262,384 378,846
- -------------------------------------------------------------------------------------------------------
INCREASE IN NET ASSETS............................. 500,650 289,061 361,182
NET ASSETS -- BEGINNING OF PERIOD.................. -- 361,182 --
- -------------------------------------------------------------------------------------------------------
NET ASSETS -- END OF PERIOD........................ $500,650 $650,243 $361,182
=======================================================================================================
</TABLE>
* Commencement of operations.
See Notes to Financial Statements.
FSA-54
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED), 51 (POOLED) AND 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements
- --------------------------------------------------------------------------------
1. Separate Account Nos. 13 (Pooled) (the Alliance Bond Fund), 10 (Pooled)
(the Alliance Balanced Fund), 4 (Pooled) (the Alliance Common Stock Fund),
3 (Pooled) (the Alliance Aggressive Stock Fund), 51 (Pooled) (the Alliance
Money Market, Alliance Intermediate Government Securities, Alliance Quality
Bond, Alliance High Yield, Alliance Growth & Income, Alliance Equity Index,
Alliance Global, Alliance International, Alliance Small Cap Growth,
Alliance Conservative Investors and Alliance Growth Investors Funds) and 66
(Pooled) (the T. Rowe Price Equity Income, EQ/Putnam Growth & Income,
Merrill Lynch Basic Value Equity, MFS Research, T. Rowe Price
International, Morgan Stanley Emerging Market Equity, Warburg Pincus Small
Company Value, MFS Emerging Growth Companies, EQ/Putnam Balanced and
Merrill Lynch World Strategy Funds) (the Funds) of The Equitable Life
Assurance Society of the United States (Equitable Life), a wholly owned
subsidiary of The Equitable Companies Incorporated, were established in
conformity with the New York State Insurance Law. Pursuant to such law, to
the extent provided in the applicable contracts, the net assets in the
Funds are not chargeable with liabilities arising out of any other business
of Equitable Life. The excess of assets over reserves and other contract
liabilities, if any, in Separate Account Nos. 4 and 66 may be transferred
to Equitable Life's General Account. These financial statements reflect the
total net assets and results of operations for the Separate Account Nos.
13, 10, 4, 3, 51 and 66. The Retirement Investment Account Program is one
of the many contract owners participating in these funds.
Interests of retirement and investment plans for employees, managers and
agents of Equitable Life in Separate Account Nos. 10, 4 and 3 aggregated $
- 0 - (0.0%), $323,953,589 (15.3%) and $88,549,620 (32.1%), respectively,
at December 31, 1998 and $26,718,437 (11.0%), $384,471,790 (14.5%) and
$124,230,736 (29.7%), respectively, at December 31, 1997, of the net assets
in these Funds.
Equitable Life is the investment manager for the Funds. Alliance Capital
Management L.P. (Alliance) serves as the investment adviser to Equitable
Life with respect to the management of Separate Account Nos. 13, 10, 4 and
3 (the Equitable Funds). Alliance is a publicly traded limited partnership
which is indirectly majority-owned by Equitable Life.
Separate Account No. 51 has eleven investment funds which invest in Class
IA shares of corresponding portfolios of The Hudson River Trust (HR Trust).
Alliance is the investment adviser of the HR Trust. The Retirement
Investment Account (RIA) through Separate Account No. 51's eleven
investment funds invest in the following portfolios of the Trust: Alliance
Money Market, Alliance Intermediate Government Securities, Alliance Quality
Bond, Alliance High Yield, Alliance Growth & Income, Alliance Equity Index,
Alliance Global, Alliance International, Alliance Small Cap Growth,
Alliance Conservative Investors and Alliance Growth Investors.
Separate Account No. 66 has ten investment funds which invest in Class IB
shares of corresponding portfolios of EQ Advisors Trust (EQ Trust). EQ
Financial Consultants, Inc. is the investment manager of each portfolio.
The Retirement Investment Account through Separate Account No. 66's ten
investment funds invest in the following portfolios of the Trust: T. Rowe
Price Equity Income, EQ/Putnam Growth & Income, Merrill Lynch Basic Value
Equity, MFS Research, T. Rowe Price International, Morgan Stanley Emerging
Markets Equity, Warburg Pincus Small Company Value, MFS Emerging Growth
Companies, EQ/Putnam Balanced and Merrill Lynch World Strategy. Class IB
shares are offered at net asset values and are subject to distribution fees
imposed under a distribution plan adopted pursuant to Rule 12b-1 under the
1940 Act. HR Trust and EQ Advisors Trust (Trusts) are open-end, diversified
investment management companies used as funding vehicles for separate
accounts assets of insurance companies.
Equitable Life, Alliance and EQ Financial Consultants seek to obtain the
best price and execution of all orders placed for the Portfolios of the
Equitable Funds considering all circumstances. In addition to using brokers
and dealers to execute portfolio security transactions for accounts under
their management, Equitable Life, Alliance and EQ Financial Consultants may
also enter into other types of business and securities transactions with
brokers and dealers, which will be unrelated to allocation of the Equitable
Funds' portfolio transactions.
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in accordance with GAAP requires management to make
estimates and assumptions that affect the reported amounts and disclosures.
Actual results could differ from those estimates.
FSA-55
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED), 51 (POOLED) AND 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
- --------------------------------------------------------------------------------
2. Security transactions are recorded on the trade date. Amortized cost of debt
securities consists of cost adjusted, where applicable, for amortization of
premium or accretion of discount. Dividend income is recorded on the
ex-dividend date; interest income (including amortization of premium and
discount on securities using the effective yield method) is accrued daily.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold. Separate
Account No. 51 invests in shares of HR Trust and are valued at the net asset
value per share of the respective funds. Separate Account No. 66 invests in
the shares of EQ Trust and are valued at the net asset value per share of the
respective funds. The net asset value is determined by the Trust using the
market or fair value of the underlying assets of the Portfolios. For Separate
Account Nos. 51 and 66, realized gains and losses on investments include
gains and losses on redemptions of the Trust's share (determined on the
identified cost basis) and capital gain distributions from the Trust.
Dividends are recorded by HR Trust at the end of each quarter and by EQ Trust
in the fourth quarter on the ex-dividend date. Capital gains are distributed
by the Trusts at the end of each year.
Transactions denominated in foreign currencies are recorded at the rate
prevailing at the date of such transactions. Asset and liability accounts
that are denominated in a foreign currency are adjusted to reflect the
current exchange rate at the end of the period. Transaction gains or losses
resulting from changes in the exchange rate during the reporting period or
upon settlement of the foreign currency transactions are reflected under
"Realized and Unrealized Gain (Loss) on Investments" in the Statements of
Operations and Changes in Net Assets.
Forward contracts are agreements to buy or sell a foreign currency for a set
price in the future. During the period the forward contracts are open,
changes in the value of the contract are recognized as unrealized gains or
losses by "marking-to-market" on a daily basis to reflect the market value of
the contract at the end of each trading day. The use of forward transactions
involves the risk of imperfect correlation in movements in the price of
forward contracts, interest rates and the underlying hedged assets.
Forward contracts involve elements of both market and credit risk in excess
of the amounts reflected in the Statement of Net Assets. The contract amounts
of these forward contracts reflect the extent of the Accounts' exposure to
off-balance sheet risk. The Accounts bear the market risk which arises from
any changes in security values. Forward contracts are entered into directly
with the counterparty and not through an exchange and can be terminated only
by agreement of both parties to the contract. There is no daily margin
settlement and the fund is exposed to the risk of default by the
counterparty.
Separate Account No. 10 may enter into forward currency contracts in order to
hedge its exposure to changes in foreign currency exchange rates on its
foreign security holdings. A forward contract is a commitment to purchase or
sell a foreign currency at a future date at a negotiated forward rate. The
gain or loss arising from the difference between the original contracts and
the closing of such contracts is included in realized gains or losses from
foreign currency transactions. At December 31, 1998, Separate Account No. 10
had outstanding forward currency contracts to buy/sell foreign currencies as
follows:
<TABLE>
<CAPTION>
Contract Cost on U.S. $ Unrealized
Amount Origination Current Appreciation
(000's) Date Value (Depreciation)
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
Separate Account No. 10
------------------------
Foreign Currency Buy
Contracts:
------------------------------
Japanese Yen, settling
01/04/99 180,000 $1,332,840 $1,593,908 $ 261,068
Foreign Currency Sale
Contracts:
-------------------------------
Japanese Yen, settling
01/04/99 180,329 1,344,754 1,596,821 (252,067)
===========
$ 9,001
===========
</TABLE>
FSA-56
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED), 51 (POOLED) AND 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Continued)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Equitable Life's internal short-term investment account, Separate Account No.
2A, was established to provide a more flexible and efficient vehicle to
combine and invest temporary cash positions of certain eligible accounts
(Participating Funds) under Equitable Life's management. Separate Account No.
2A invests in debt securities maturing in sixty days or less from the date of
the acquisition. At December 31, 1998, the investments held in Separate
Account No. 2A consist of the following:
- ------------------------------------------------------------------------------------------------------------
Amortized
Cost %
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial Paper, 5.10% - 5.35% due 01/04/99 through 02/18/99.......... $230,335,099 97.7%
U.S. Government Agency, 4.28% due 01/04/99............................. 5,198,145 2.2
- ------------------------------------------------------------------------------------------------------------
Total Investments...................................................... 235,533,244 99.9
Other Assets Less Liabilities.......................................... 215,649 0.1
============================================================================================================
Net Assets of Separate Account No. 2A ................................. $235,748,893 100.0%
============================================================================================================
Units Outstanding...................................................... 825,639
Unit Value............................................................. $285.54
</TABLE>
Participating Funds purchase or redeem units depending on each participating
account's excess cash availability or cash needs to meet its liabilities.
Separate Account No. 2A is not subject to investment management fees.
Short-term debt securities may also be purchased directly by the Equitable
Funds.
For 1998 and 1997, investment security transactions, excluding short-term
debt securities, were as follows:
<TABLE>
<CAPTION>
Purchases Sales
----------------------------------- -------------------------------------
U.S.
Stocks and Government Stocks and U.S. Government
Debt Securities and Agencies Debt Securities and Agencies
----------------- ---------------- ----------------- ------------------
<S> <C> <C> <C> <C>
Fund
Alliance Bond:
1998..................... $23,825,694 $112,172,627 $21,275,286 $134,056,066
1997..................... 37,104,183 191,640,256 63,408,606 182,061,320
Alliance Balanced:
1998..................... 87,857,736 98,200,986 144,791,496 122,149,180
1997..................... 224,848,109 215,172,356 290,379,457 228,848,176
Alliance Common Stock:
1998..................... 1,692,067,102 -- 2,151,023,546 --
1997..................... 1,569,991,103 -- 1,988,739,298 --
Alliance Aggressive Stock:
1998..................... 681,887,865 -- 780,385,761 --
1997..................... 780,418,511 -- 850,626,915 --
</TABLE>
3. Investment securities for the Equitable Funds are valued as follows:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the National Association of Securities Dealers, Inc.
Automated Quotation (NASDAQ) national market system are valued at the last
sale price, or, if there is no sale, at the latest available bid price.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) form in the United States, are valued at the last sale price in the
local currency on an exchange in the country of origin. Foreign currency is
converted into its U.S. dollar equivalent at current exchange rates.
Futures and forward contracts are valued at their last sale price or, if
there is no sale, at the latest available bid price.
United States Treasury securities and other obligations issued or guaranteed
by the United States Government, its agencies or instrumentalities are valued
at representative quoted prices.
Long-term (i.e., maturing in more than a year) publicly-traded corporate
bonds are valued at prices obtained from a bond pricing service of a major
dealer in bonds when such prices are available; however, in circumstances
where Equitable Life and Alliance deem it appropriate to do so, an
over-the-counter or exchange quotation may be used.
Convertible preferred stocks listed on national securities exchanges are
valued at their last sale price or, if there is no sale, at the latest
available bid price.
FSA-57
<PAGE>
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NOS. 13 (POOLED), 10 (POOLED), 4 (POOLED),
3 (POOLED), 51 (POOLED) AND 66 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Notes to Financial Statements (Concluded)
- --------------------------------------------------------------------------------
Convertible bonds and unlisted convertible preferred stocks are valued at
bid prices obtained from one or more major dealers in such securities;
where there is a discrepancy between dealers, values may be adjusted based
on recent premium spreads to the underlying common stock.
Other assets that do not have a readily available market price, such as
guarantee investment contracts are valued at fair value as determined in
good faith by Equitable Life's investment officers.
Separate Account No. 2A is valued daily at amortized cost, which
approximates market value. Short-term debt securities purchased directly by
the Equitable Funds which mature in 60 days or less are valued at amortized
cost. Short-term debt securities which mature in more than 60 days are
valued at representative quoted prices.
Investment valuations for HR Trust and EQ Trust are as follows:
The value of the investments in Separate Account Nos. 51 and 66 held in the
corresponding HR Trust and EQ Trust Portfolios is calculated by multiplying
the number of shares held in each Portfolio by the net asset value per
share of that Portfolio determined as of the close of business each day.
4. Charges and fees relating to the Funds are deducted in accordance with the
terms of the various contracts which participate in the Funds. These
expenses consist of asset management fees, administrative and sales-related
fees, and operating expenses, as specified in each contract. Depending upon
the terms of a contract, sales-related fees and operating expenses are paid
(i) by a reduction of an appropriate number of Fund Units or (ii) by a
direct payment. Asset management fee is deducted in the daily unit values
for the Equitable Funds. Administrative charge for the investment funds of
Separate Account No. 51 is deducted in the daily unit value for each
investment fund.
The RIA contract is the sole investor in the following investment funds of
Separate Account No. 66: EQ/Putnam Growth & Income Fund; Merrill Lynch
Basic Value Equity Fund; T. Rowe Price International Fund; Morgan Stanley
Emerging Markets Equity Fund; MFS Emerging Growth Companies Fund and
EQ/Putnam Balanced Fund. There are no expenses shown in the Statement of
Operations and Changes in Net Assets for these funds as the only fees
assessed are paid directly by the participant via liquidation of units.
Investments in Separate Account Nos. 51 and 66 are also subject to the
expenses incurred in the underlying Portfolios of the Trusts, which are
reflected through the Portfolios' net asset values.
5. No Federal income tax based on net income or realized and unrealized
capital gains was applicable to contracts participating in the Funds by
reason of applicable provisions of the Internal Revenue Code and no Federal
income tax payable by Equitable Life will affect such contracts.
Accordingly, no provision for Federal income taxes is required.
FSA-58
<PAGE>
Report of Independent Accountants
To the Board of Directors and Shareholder of
The Equitable Life Assurance Society of the United States
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of earnings, of shareholder's equity and comprehensive
income and of cash flows present fairly, in all material respects, the financial
position of The Equitable Life Assurance Society of the United States and its
subsidiaries ("Equitable Life") at December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the three years in the
period ended December 31, 1998, in conformity with generally accepted accounting
principles. These financial statements are the responsibility of Equitable
Life's management; our responsibility is to express an opinion on these
financial statements based on our audits. We conducted our audits of these
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management and evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for the opinion expressed above.
As discussed in Note 2 to the consolidated financial statements, Equitable Life
changed its method of accounting for long-lived assets in 1996.
/s/PricewaterhouseCoopers LLP
- -----------------------------
PricewaterhouseCoopers LLP
New York, New York
February 8, 1999
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 18,993.7 $ 19,630.9
Held to maturity, at amortized cost..................................... 125.0 -
Mortgage loans on real estate............................................. 2,809.9 2,611.4
Equity real estate........................................................ 1,676.9 2,495.1
Policy loans.............................................................. 2,086.7 2,422.9
Other equity investments.................................................. 713.3 951.5
Investment in and loans to affiliates..................................... 928.5 731.1
Other invested assets..................................................... 808.2 612.2
----------------- -----------------
Total investments..................................................... 28,142.2 29,455.1
Cash and cash equivalents................................................... 1,245.5 300.5
Deferred policy acquisition costs........................................... 3,563.8 3,236.6
Amounts due from discontinued operations.................................... 2.7 572.8
Other assets................................................................ 3,051.9 2,687.4
Closed Block assets......................................................... 8,632.4 8,566.6
Separate Accounts assets.................................................... 43,302.3 36,538.7
----------------- -----------------
Total Assets................................................................ $ 87,940.8 $ 81,357.7
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 20,889.7 $ 21,579.5
Future policy benefits and other policyholders' liabilities................. 4,694.2 4,553.8
Short-term and long-term debt............................................... 1,181.7 1,716.7
Other liabilities........................................................... 3,474.3 3,267.2
Closed Block liabilities.................................................... 9,077.0 9,073.7
Separate Accounts liabilities............................................... 43,211.3 36,306.3
----------------- -----------------
Total liabilities..................................................... 82,528.2 76,497.2
----------------- -----------------
Commitments and contingencies (Notes 11, 13, 14, 15 and 16)
SHAREHOLDER'S EQUITY
Common stock, $1.25 par value 2.0 million shares authorized, issued
and outstanding........................................................... 2.5 2.5
Capital in excess of par value.............................................. 3,110.2 3,105.8
Retained earnings........................................................... 1,944.1 1,235.9
Accumulated other comprehensive income...................................... 355.8 516.3
----------------- -----------------
Total shareholder's equity............................................ 5,412.6 4,860.5
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 87,940.8 $ 81,357.7
================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF EARNINGS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 1,056.2 $ 950.6 $ 874.0
Premiums...................................................... 588.1 601.5 597.6
Net investment income......................................... 2,228.1 2,282.8 2,203.6
Investment gains (losses), net................................ 100.2 (45.2) (9.8)
Commissions, fees and other income............................ 1,503.0 1,227.2 1,081.8
Contribution from the Closed Block............................ 87.1 102.5 125.0
----------------- ----------------- -----------------
Total revenues.......................................... 5,562.7 5,119.4 4,872.2
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,153.0 1,266.2 1,270.2
Policyholders' benefits....................................... 1,024.7 978.6 1,317.7
Other operating costs and expenses............................ 2,201.2 2,203.9 2,075.7
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,378.9 4,448.7 4,663.6
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change................................. 1,183.8 670.7 208.6
Federal income taxes.......................................... 353.1 91.5 9.7
Minority interest in net income of consolidated subsidiaries.. 125.2 54.8 81.7
----------------- ----------------- -----------------
Earnings from continuing operations before cumulative
effect of accounting change................................. 705.5 524.4 117.2
Discontinued operations, net of Federal income taxes.......... 2.7 (87.2) (83.8)
Cumulative effect of accounting change, net of Federal
income taxes................................................ - - (23.1)
----------------- ----------------- -----------------
Net Earnings.................................................. $ 708.2 $ 437.2 $ 10.3
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5
----------------- ----------------- -----------------
Capital in excess of par value, beginning of year............. 3,105.8 3,105.8 3,105.8
Additional capital in excess of par value..................... 4.4 - -
----------------- ----------------- -----------------
Capital in excess of par value, end of year................... 3,110.2 3,105.8 3,105.8
Retained earnings, beginning of year.......................... 1,235.9 798.7 788.4
Net earnings.................................................. 708.2 437.2 10.3
----------------- ----------------- -----------------
Retained earnings, end of year................................ 1,944.1 1,235.9 798.7
----------------- ----------------- -----------------
Accumulated other comprehensive income,
beginning of year........................................... 516.3 177.0 361.4
Other comprehensive income.................................... (160.5) 339.3 (184.4)
----------------- ----------------- -----------------
Accumulated other comprehensive income, end of year........... 355.8 516.3 177.0
----------------- ----------------- -----------------
Total Shareholder's Equity, End of Year....................... $ 5,412.6 $ 4,860.5 $ 4,084.0
================= ================= =================
COMPREHENSIVE INCOME
Net earnings.................................................. $ 708.2 $ 437.2 $ 10.3
----------------- ----------------- -----------------
Change in unrealized gains (losses), net of reclassification
adjustment.................................................. (149.5) 343.7 (206.6)
Minimum pension liability adjustment.......................... (11.0) (4.4) 22.2
----------------- ----------------- -----------------
Other comprehensive income.................................... (160.5) 339.3 (184.4)
----------------- ----------------- -----------------
Comprehensive Income.......................................... $ 547.7 $ 776.5 $ (174.1)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net earnings.................................................. $ 708.2 $ 437.2 $ 10.3
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Interest credited to policyholders' account balances........ 1,153.0 1,266.2 1,270.2
Universal life and investment-type product
policy fee income......................................... (1,056.2) (950.6) (874.0)
Investment (gains) losses................................... (100.2) 45.2 9.8
Change in Federal income tax payable........................ 123.1 (74.4) (197.1)
Other, net.................................................. (324.9) 169.4 330.2
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 503.0 893.0 549.4
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,289.0 2,702.9 2,275.1
Sales....................................................... 16,972.1 10,385.9 8,964.3
Purchases................................................... (18,578.5) (13,205.4) (12,559.6)
Decrease (increase) in short-term investments............... 102.4 (555.0) 450.3
Decrease in loans to discontinued operations................ 660.0 420.1 1,017.0
Sale of subsidiaries........................................ - 261.0 -
Other, net.................................................. (341.8) (612.6) (281.0)
----------------- ----------------- -----------------
Net cash provided (used) by investing activities.............. 1,103.2 (603.1) (133.9)
----------------- ----------------- -----------------
Cash flows from financing activities:
Policyholders' account balances:
Deposits.................................................. 1,508.1 1,281.7 1,925.4
Withdrawals............................................... (1,724.6) (1,886.8) (2,385.2)
Net (decrease) increase in short-term financings............ (243.5) 419.9 (.3)
Repayments of long-term debt................................ (24.5) (196.4) (124.8)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... (87.2) (83.9) -
Other, net.................................................. (89.5) (62.7) (66.5)
----------------- ----------------- -----------------
Net cash used by financing activities......................... (661.2) (528.2) (651.4)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... 945.0 (238.3) (235.9)
Cash and cash equivalents, beginning of year.................. 300.5 538.8 774.7
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 1,245.5 $ 300.5 $ 538.8
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 130.7 $ 217.1 $ 109.9
================= ================= =================
Income Taxes Paid (Refunded)................................ $ 254.3 $ 170.0 $ (10.0)
================= ================= =================
</TABLE>
See Notes to Consolidated Financial Statements.
F-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1) ORGANIZATION
The Equitable Life Assurance Society of the United States ("Equitable
Life") is a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). Equitable Life's insurance
business is conducted principally by Equitable Life and its wholly owned
life insurance subsidiaries, Equitable of Colorado ("EOC"), and, prior
to December 31, 1996, Equitable Variable Life Insurance Company
("EVLICO"). Effective January 1, 1997, EVLICO was merged into Equitable
Life, which continues to conduct the Company's insurance business.
Equitable Life's investment management business, which comprises the
Investment Services segment, is conducted principally by Alliance
Capital Management L.P. ("Alliance"), in which Equitable Life has a
57.7% ownership interest, and Donaldson, Lufkin & Jenrette, Inc.
("DLJ"), an investment banking and brokerage affiliate in which
Equitable Life has a 32.5% ownership interest. AXA ("AXA"), a French
holding company for an international group of insurance and related
financial services companies, is the Holding Company's largest
shareholder, owning approximately 58.5% at December 31, 1998 (53.4% if
all securities convertible into, and options on, common stock were to be
converted or exercised).
The Insurance segment offers a variety of traditional, variable and
interest-sensitive life insurance products, disability income, annuity
products, mutual fund and other investment products to individuals and
small groups. It also administers traditional participating group
annuity contracts with conversion features, generally for corporate
qualified pension plans, and association plans which provide full
service retirement programs for individuals affiliated with professional
and trade associations. This segment includes Separate Accounts for
individual insurance and annuity products.
The Investment Services segment includes Alliance, the results of DLJ
which are accounted for on an equity basis, and, through June 10, 1997,
Equitable Real Estate Investment Management, Inc. ("EREIM"), a real
estate investment management subsidiary which was sold. Alliance
provides diversified investment fund management services to a variety of
institutional clients, including pension funds, endowments, and foreign
financial institutions, as well as to individual investors, principally
through a broad line of mutual funds. This segment includes
institutional Separate Accounts which provide various investment options
for large group pension clients, primarily deferred benefit contribution
plans, through pooled or single group accounts. DLJ's businesses include
securities underwriting, sales and trading, merchant banking, financial
advisory services, investment research, venture capital, correspondent
brokerage services, online interactive brokerage services and asset
management. DLJ serves institutional, corporate, governmental and
individual clients both domestically and internationally. EREIM provided
real estate investment management services, property management
services, mortgage servicing and loan asset management, and agricultural
investment management.
2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation and Principles of Consolidation
The accompanying consolidated financial statements are prepared in
conformity with generally accepted accounting principles ("GAAP") which
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The accompanying consolidated financial statements include the accounts
of Equitable Life and its wholly owned life insurance subsidiary
(collectively, the "Insurance Group"); non-insurance subsidiaries,
principally Alliance and EREIM (see Note 5); and those partnerships and
joint ventures in which Equitable Life or its subsidiaries has control
F-6
<PAGE>
and a majority economic interest (collectively, including its
consolidated subsidiaries, the "Company"). The Company's investment in
DLJ is reported on the equity basis of accounting. Closed Block assets,
liabilities and results of operations are presented in the consolidated
financial statements as single line items (see Note 7). Unless
specifically stated, all other footnote disclosures contained herein
exclude the Closed Block related amounts.
All significant intercompany transactions and balances except those with
the Closed Block and discontinued operations (see Note 8) have been
eliminated in consolidation. The years "1998," "1997" and "1996" refer
to the years ended December 31, 1998, 1997 and 1996, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1998 presentation.
Closed Block
On July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain individual participating policies which were in force
on that date. The assets allocated to the Closed Block, together with
anticipated revenues from policies included in the Closed Block, were
reasonably expected to be sufficient to support such business, including
provision for payment of claims, certain expenses and taxes, and for
continuation of dividend scales payable in 1991, assuming the experience
underlying such scales continues.
Assets allocated to the Closed Block inure solely to the benefit of the
Closed Block policyholders and will not revert to the benefit of the
Holding Company. No reallocation, transfer, borrowing or lending of
assets can be made between the Closed Block and other portions of
Equitable Life's General Account, any of its Separate Accounts or any
affiliate of Equitable Life without the approval of the New York
Superintendent of Insurance (the "Superintendent"). Closed Block assets
and liabilities are carried on the same basis as similar assets and
liabilities held in the General Account. The excess of Closed Block
liabilities over Closed Block assets represents the expected future
post-tax contribution from the Closed Block which would be recognized in
income over the period the policies and contracts in the Closed Block
remain in force.
Discontinued Operations
Discontinued operations include the Group Non-Participating Wind-Up
Annuities ("Wind-Up Annuities") and the Guaranteed Interest Contract
("GIC") lines of business. An allowance was established for the premium
deficiency reserve for Wind-Up Annuities and estimated future losses of
the GIC line of business. Management reviews the adequacy of the
allowance each quarter and believes the allowance for future losses at
December 31, 1998 is adequate to provide for all future losses; however,
the quarterly allowance review continues to involve numerous estimates
and subjective judgments regarding the expected performance of
Discontinued Operations Investment Assets. There can be no assurance the
losses provided for will not differ from the losses ultimately realized.
To the extent actual results or future projections of the discontinued
operations differ from management's current best estimates and
assumptions underlying the allowance for future losses, the difference
would be reflected in the consolidated statements of earnings in
discontinued operations. In particular, to the extent income, sales
proceeds and holding periods for equity real estate differ from
management's previous assumptions, periodic adjustments to the allowance
are likely to result (see Note 8).
Accounting Changes
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 131,
"Disclosures about Segments of an Enterprise and Related Information".
SFAS No. 131 establishes standards for public companies to report
information about operating segments in annual and interim financial
statements issued to shareholders. It also specifies related disclosure
requirements for products and services, geographic areas and major
customers. Generally, financial information must be reported using the
basis management uses to make operating decisions and to evaluate
business performance. The Company implemented SFAS No. 131 effective
December 31, 1998 and continues to identify two operating segments to
reflect its major businesses: Insurance and Investment Services. While
the segment descriptions are the same as those previously reported,
certain amounts have been reattributed between the two reportable
segments. Prior period comparative segment information has been
restated.
F-7
<PAGE>
In March 1998, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("SOP") 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal Use,"
which requires capitalization of external and certain internal costs
incurred to obtain or develop internal-use computer software during the
application development stage. The Company applied the provisions of SOP
98-1 prospectively effective January 1, 1998. The adoption of SOP 98-1
did not have a material impact on the Company's consolidated financial
statements. Capitalized internal-use software is amortized on a
straight-line basis over the estimated useful life of the software.
The Company implemented SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," as of
January 1, 1996. SFAS No. 121 requires long-lived assets and certain
identifiable intangibles be reviewed for impairment whenever events or
changes in circumstances indicate the carrying value of such assets may
not be recoverable. Effective with SFAS No. 121's adoption, impaired
real estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Before implementing SFAS No.
121, valuation allowances on real estate held for the production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to the Company's cost of funds.
Adoption of the statement resulted in the release of valuation
allowances of $152.4 million and recognition of impairment losses of
$144.0 million on real estate held for production of income. Real estate
which management intends to sell or abandon is classified as real estate
held for sale. Valuation allowances on real estate held for sale
continue to be computed using the lower of depreciated cost or estimated
fair value, net of disposition costs. Initial adoption of the impairment
requirements of SFAS No. 121 to other assets to be disposed of resulted
in a charge for the cumulative effect of an accounting change of $23.1
million, net of a Federal income tax benefit of $12.4 million, due to
the writedown to fair value of building improvements relating to
facilities vacated in 1996.
New Accounting Pronouncements
In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by a Mortgage Banking Enterprise," which amends
existing accounting and reporting standards for certain activities of
mortgage banking enterprises and other enterprises that conduct
operations that are substantially similar to the primary operations of a
mortgage banking enterprise. This statement is effective for the first
fiscal quarter beginning after December 15, 1998. This statement is not
expected to have a material impact on the Company's consolidated
financial statements.
In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which establishes accounting and
reporting standards for derivative instruments, including certain
derivatives embedded in other contracts, and for hedging activities. It
requires all derivatives to be recognized on the balance sheet at fair
value. The accounting for changes in the fair value of a derivative
depends on its intended use. Derivatives not used in hedging activities
must be adjusted to fair value through earnings. Changes in the fair
value of derivatives used in hedging activities will, depending on the
nature of the hedge, either be offset in earnings against the change in
fair value of the hedged item attributable to the risk being hedged or
recognized in other comprehensive income until the hedged item affects
earnings. For all hedging activities, the ineffective portion of a
derivative's change in fair value will be immediately recognized in
earnings.
SFAS No. 133 requires adoption in fiscal years beginning after June 15,
1999 and permits early adoption as of the beginning of any fiscal
quarter following issuance of the statement. Retroactive application to
financial statements of prior periods is prohibited. The Company expects
to adopt SFAS No. 133 effective January 1, 2000. Adjustments resulting
from initial adoption of the new requirements will be reported in a
manner similar to the cumulative effect of a change in accounting
principle and will be reflected in net income or accumulated other
comprehensive income based upon existing hedging relationships, if any.
Management currently is assessing the impact of adoption. However,
Alliance's adoption is not expected to have a significant impact on the
Company's consolidated balance sheet or statement of earnings. Also,
since most of DLJ's derivatives are carried at fair values, the
Company's consolidated earnings and financial position are not expected
to be significantly affected by DLJ's adoption of the new requirements.
F-8
<PAGE>
In late 1998, the AICPA issued SOP 98-7, "Deposit Accounting: Accounting
for Insurance and Reinsurance Contracts that Do Not Transfer Insurance
Risk". This SOP, effective for fiscal years beginning after June 15,
1999, provides guidance to both the insured and insurer on how to apply
the deposit method of accounting when it is required for insurance and
reinsurance contracts that do not transfer insurance risk. The SOP does
not address or change the requirements as to when deposit accounting
should be applied. SOP 98-7 applies to all entities and all insurance
and reinsurance contracts that do not transfer insurance risk except for
long-duration life and health insurance contracts. This SOP is not
expected to have a material impact on the Company's consolidated
financial statements.
In December 1997, the AICPA issued SOP 97-3, "Accounting by Insurance
and Other Enterprises for Insurance-Related Assessments". SOP 97-3
provides guidance for assessments related to insurance activities and
requirements for disclosure of certain information. SOP 97-3 is
effective for financial statements issued for periods beginning after
December 31, 1998. Restatement of previously issued financial statements
is not required. SOP 97-3 is not expected to have a material impact on
the Company's consolidated financial statements.
Valuation of Investments
Fixed maturities identified as available for sale are reported at
estimated fair value. Fixed maturities, which the Company has both the
ability and the intent to hold to maturity, are stated principally at
amortized cost. The amortized cost of fixed maturities is adjusted for
impairments in value deemed to be other than temporary.
Valuation allowances are netted against the asset categories to which
they apply.
Mortgage loans on real estate are stated at unpaid principal balances,
net of unamortized discounts and valuation allowances. Valuation
allowances are based on the present value of expected future cash flows
discounted at the loan's original effective interest rate or the
collateral value if the loan is collateral dependent. However, if
foreclosure is or becomes probable, the measurement method used is
collateral value.
Real estate, including real estate acquired in satisfaction of debt, is
stated at depreciated cost less valuation allowances. At the date of
foreclosure (including in-substance foreclosure), real estate acquired
in satisfaction of debt is valued at estimated fair value. Impaired real
estate is written down to fair value with the impairment loss being
included in investment gains (losses), net. Valuation allowances on real
estate held for sale are computed using the lower of depreciated cost or
current estimated fair value, net of disposition costs. Depreciation is
discontinued on real estate held for sale. Prior to the adoption of SFAS
No. 121, valuation allowances on real estate held for production of
income were computed using the forecasted cash flows of the respective
properties discounted at a rate equal to the Company's cost of funds.
Policy loans are stated at unpaid principal balances.
Partnerships and joint venture interests in which the Company does not
have control or a majority economic interest are reported on the equity
basis of accounting and are included either with equity real estate or
other equity investments, as appropriate.
Common stocks are carried at estimated fair value and are included in
other equity investments.
Short-term investments are stated at amortized cost which approximates
fair value and are included with other invested assets.
F-9
<PAGE>
Cash and cash equivalents includes cash on hand, amounts due from banks
and highly liquid debt instruments purchased with an original maturity
of three months or less.
All securities are recorded in the consolidated financial statements on
a trade date basis.
Net Investment Income, Investment Gains, Net and Unrealized Investment
Gains (Losses)
Net investment income and realized investment gains (losses)
(collectively, "investment results") related to certain participating
group annuity contracts which are passed through to the contractholders
are reflected as interest credited to policyholders' account balances.
Realized investment gains (losses) are determined by specific
identification and are presented as a component of revenue. Changes in
valuation allowances are included in investment gains (losses).
Unrealized investment gains and losses on equity securities and fixed
maturities available for sale held by the Company are accounted for as a
separate component of accumulated comprehensive income, net of related
deferred Federal income taxes, amounts attributable to discontinued
operations, participating group annuity contracts and deferred policy
acquisition costs ("DAC") related to universal life and investment-type
products and participating traditional life contracts.
Recognition of Insurance Income and Related Expenses
Premiums from universal life and investment-type contracts are reported
as deposits to policyholders' account balances. Revenues from these
contracts consist of amounts assessed during the period against
policyholders' account balances for mortality charges, policy
administration charges and surrender charges. Policy benefits and claims
that are charged to expense include benefit claims incurred in the
period in excess of related policyholders' account balances.
Premiums from participating and non-participating traditional life and
annuity policies with life contingencies generally are recognized as
income when due. Benefits and expenses are matched with such income so
as to result in the recognition of profits over the life of the
contracts. This match is accomplished by means of the provision for
liabilities for future policy benefits and the deferral and subsequent
amortization of policy acquisition costs.
For contracts with a single premium or a limited number of premium
payments due over a significantly shorter period than the total period
over which benefits are provided, premiums are recorded as income when
due with any excess profit deferred and recognized in income in a
constant relationship to insurance in force or, for annuities, the
amount of expected future benefit payments.
Premiums from individual health contracts are recognized as income over
the period to which the premiums relate in proportion to the amount of
insurance protection provided.
Deferred Policy Acquisition Costs
The costs of acquiring new business, principally commissions,
underwriting, agency and policy issue expenses, all of which vary with
and are primarily related to the production of new business, are
deferred. DAC is subject to recoverability testing at the time of policy
issue and loss recognition testing at the end of each accounting period.
For universal life products and investment-type products, DAC is
amortized over the expected total life of the contract group (periods
ranging from 25 to 35 years and 5 to 17 years, respectively) as a
constant percentage of estimated gross profits arising principally from
investment results, mortality and expense margins and surrender charges
based on historical and anticipated future experience, updated at the
end of each accounting period. The effect on the amortization of DAC of
revisions to estimated gross profits is reflected in earnings in the
period such estimated gross profits are revised. The effect on the DAC
asset that would result from realization of unrealized gains (losses) is
recognized with an offset to accumulated other comprehensive income in
consolidated shareholder's equity as of the balance sheet date.
F-10
<PAGE>
For participating traditional life policies (substantially all of which
are in the Closed Block), DAC is amortized over the expected total life
of the contract group (40 years) as a constant percentage based on the
present value of the estimated gross margin amounts expected to be
realized over the life of the contracts using the expected investment
yield. At December 31, 1998, the expected investment yield, excluding
policy loans, generally ranged from 7.29% grading to 6.5% over a 20 year
period. Estimated gross margin includes anticipated premiums and
investment results less claims and administrative expenses, changes in
the net level premium reserve and expected annual policyholder
dividends. The effect on the amortization of DAC of revisions to
estimated gross margins is reflected in earnings in the period such
estimated gross margins are revised. The effect on the DAC asset that
would result from realization of unrealized gains (losses) is recognized
with an offset to accumulated comprehensive income in consolidated
shareholder's equity as of the balance sheet date.
For non-participating traditional life and annuity policies with life
contingencies, DAC is amortized in proportion to anticipated premiums.
Assumptions as to anticipated premiums are estimated at the date of
policy issue and are consistently applied during the life of the
contracts. Deviations from estimated experience are reflected in
earnings in the period such deviations occur. For these contracts, the
amortization periods generally are for the total life of the policy.
For individual health benefit insurance, DAC is amortized over the
expected average life of the contracts (10 years for major medical
policies and 20 years for disability income ("DI") products) in
proportion to anticipated premium revenue at time of issue.
Policyholders' Account Balances and Future Policy Benefits
Policyholders' account balances for universal life and investment-type
contracts are equal to the policy account values. The policy account
values represents an accumulation of gross premium payments plus
credited interest less expense and mortality charges and withdrawals.
For participating traditional life policies, future policy benefit
liabilities are calculated using a net level premium method on the basis
of actuarial assumptions equal to guaranteed mortality and dividend fund
interest rates. The liability for annual dividends represents the
accrual of annual dividends earned. Terminal dividends are accrued in
proportion to gross margins over the life of the contract.
For non-participating traditional life insurance policies, future policy
benefit liabilities are estimated using a net level premium method on
the basis of actuarial assumptions as to mortality, persistency and
interest established at policy issue. Assumptions established at policy
issue as to mortality and persistency are based on the Insurance Group's
experience which, together with interest and expense assumptions,
includes a margin for adverse deviation. When the liabilities for future
policy benefits plus the present value of expected future gross premiums
for a product are insufficient to provide for expected future policy
benefits and expenses for that product, DAC is written off and
thereafter, if required, a premium deficiency reserve is established by
a charge to earnings. Benefit liabilities for traditional annuities
during the accumulation period are equal to accumulated contractholders'
fund balances and after annuitization are equal to the present value of
expected future payments. Interest rates used in establishing such
liabilities range from 2.25% to 11.5% for life insurance liabilities and
from 2.25% to 13.5% for annuity liabilities.
During the fourth quarter of 1996 a loss recognition study of
participating group annuity contracts and conversion annuities ("Pension
Par") was completed which included management's revised estimate of
assumptions, such as expected mortality and future investment returns.
The study's results prompted management to establish a premium
deficiency reserve which decreased earnings from continuing operations
and net earnings by $47.5 million ($73.0 million pre-tax).
Individual health benefit liabilities for active lives are estimated
using the net level premium method and assumptions as to future
morbidity, withdrawals and interest. Benefit liabilities for disabled
lives are estimated using the present value of benefits method and
experience assumptions as to claim terminations, expenses and interest.
F-11
<PAGE>
During the fourth quarter of 1996, the Company completed a loss
recognition study of the DI business which incorporated management's
revised estimates of future experience with regard to morbidity,
investment returns, claims and administration expenses and other
factors. The study indicated DAC was not recoverable and the reserves
were not sufficient. Earnings from continuing operations and net
earnings decreased by $208.0 million ($320.0 million pre-tax) as a
result of strengthening DI reserves by $175.0 million and writing off
unamortized DAC of $145.0 million related to DI products issued prior to
July 1993. The determination of DI reserves requires making assumptions
and estimates relating to a variety of factors, including morbidity and
interest rates, claims experience and lapse rates based on then known
facts and circumstances. Such factors as claim incidence and termination
rates can be affected by changes in the economic, legal and regulatory
environments and work ethic. While management believes its Pension Par
and DI reserves have been calculated on a reasonable basis and are
adequate, there can be no assurance reserves will be sufficient to
provide for future liabilities.
Claim reserves and associated liabilities for individual DI and major
medical policies were $938.6 million and $886.7 million at December 31,
1998 and 1997, respectively. Incurred benefits (benefits paid plus
changes in claim reserves) and benefits paid for individual DI and major
medical policies (excluding reserve strengthening in 1996) are
summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 202.1 $ 190.2 $ 189.0
Incurred benefits related to prior years........... 22.2 2.1 69.1
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 224.3 $ 192.3 $ 258.1
================= ================ =================
Benefits paid related to current year.............. $ 17.0 $ 28.8 $ 32.6
Benefits paid related to prior years............... 155.4 146.2 153.3
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 172.4 $ 175.0 $ 185.9
================= ================ =================
</TABLE>
Policyholders' Dividends
The amount of policyholders' dividends to be paid (including those on
policies included in the Closed Block) is determined annually by
Equitable Life's board of directors. The aggregate amount of
policyholders' dividends is related to actual interest, mortality,
morbidity and expense experience for the year and judgment as to the
appropriate level of statutory surplus to be retained by Equitable Life.
At December 31, 1998, participating policies, including those in the
Closed Block, represent approximately 19.9% ($49.3 billion) of directly
written life insurance in force, net of amounts ceded.
Federal Income Taxes
The Company files a consolidated Federal income tax return with the
Holding Company and its consolidated subsidiaries. Current Federal
income taxes are charged or credited to operations based upon amounts
estimated to be payable or recoverable as a result of taxable operations
for the current year. Deferred income tax assets and liabilities are
recognized based on the difference between financial statement carrying
amounts and income tax bases of assets and liabilities using enacted
income tax rates and laws.
Separate Accounts
Separate Accounts are established in conformity with the New York State
Insurance Law and generally are not chargeable with liabilities that
arise from any other business of the Insurance Group. Separate Accounts
assets are subject to General Account claims only to the extent the
value of such assets exceeds Separate Accounts liabilities.
F-12
<PAGE>
Assets and liabilities of the Separate Accounts, representing net
deposits and accumulated net investment earnings less fees, held
primarily for the benefit of contractholders, and for which the
Insurance Group does not bear the investment risk, are shown as separate
captions in the consolidated balance sheets. The Insurance Group bears
the investment risk on assets held in one Separate Account; therefore,
such assets are carried on the same basis as similar assets held in the
General Account portfolio. Assets held in the other Separate Accounts
are carried at quoted market values or, where quoted values are not
available, at estimated fair values as determined by the Insurance
Group.
The investment results of Separate Accounts on which the Insurance Group
does not bear the investment risk are reflected directly in Separate
Accounts liabilities. For 1998, 1997 and 1996, investment results of
such Separate Accounts were $4,591.0 million, $3,411.1 million and
$2,970.6 million, respectively.
Deposits to Separate Accounts are reported as increases in Separate
Accounts liabilities and are not reported in revenues. Mortality, policy
administration and surrender charges on all Separate Accounts are
included in revenues.
Employee Stock Option Plan
The Company accounts for stock option plans sponsored by the Holding
Company, DLJ and Alliance in accordance with the provisions of
Accounting Principles Board Opinion ("APB") No. 25, "Accounting for
Stock Issued to Employees," and related interpretations. In accordance
with the Statement, compensation expense is recorded on the date of
grant only if the current market price of the underlying stock exceeds
the option price. See Note 22 for the pro forma disclosures for the
Holding Company, DLJ and Alliance required by SFAS No. 123, "Accounting
for Stock-Based Compensation".
F-13
<PAGE>
3) INVESTMENTS
The following tables provide additional information relating to fixed
maturities and equity securities:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Fair Value
----------------- ----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C> <C>
December 31, 1998
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,520.8 $ 793.6 $ 379.6 $ 14,934.8
Mortgage-backed.................... 1,807.9 23.3 .9 1,830.3
U.S. Treasury securities and
U.S. government and
agency securities................ 1,464.1 107.6 .7 1,571.0
States and political subdivisions.. 55.0 9.9 - 64.9
Foreign governments................ 363.3 20.9 30.0 354.2
Redeemable preferred stock......... 242.7 7.0 11.2 238.5
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,453.8 $ 962.3 $ 422.4 $ 18,993.7
================= ================= ================ =================
Held to Maturity: Corporate......... $ 125.0 $ - $ - $ 125.0
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 58.3 $ 114.9 $ 22.5 $ 150.7
================= ================= ================ =================
December 31, 1997
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,850.5 $ 785.0 $ 74.5 $ 15,561.0
Mortgage-backed.................... 1,702.8 23.5 1.3 1,725.0
U.S. Treasury securities and
U.S. government and
agency securities................ 1,583.2 83.9 .6 1,666.5
States and political subdivisions.. 52.8 6.8 .1 59.5
Foreign governments................ 442.4 44.8 2.0 485.2
Redeemable preferred stock......... 128.0 6.7 1.0 133.7
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 18,759.7 $ 950.7 $ 79.5 $ 19,630.9
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 408.4 $ 48.7 $ 15.0 $ 442.1
================= ================= ================ =================
</TABLE>
For publicly traded fixed maturities and equity securities, estimated
fair value is determined using quoted market prices. For fixed
maturities without a readily ascertainable market value, the Company
determines an estimated fair value using a discounted cash flow
approach, including provisions for credit risk, generally based on the
assumption such securities will be held to maturity. Estimated fair
values for equity securities, substantially all of which do not have a
readily ascertainable market value, have been determined by the Company.
Such estimated fair values do not necessarily represent the values for
which these securities could have been sold at the dates of the
consolidated balance sheets. At December 31, 1998 and 1997, securities
without a readily ascertainable market value having an amortized cost of
$3,539.9 million and $3,759.2 million, respectively, had estimated fair
values of $3,748.5 million and $3,903.9 million, respectively.
F-14
<PAGE>
The contractual maturity of bonds at December 31, 1998 is shown below:
<TABLE>
<CAPTION>
Available for Sale
------------------------------------
Amortized Estimated
Cost Fair Value
---------------- -----------------
(In Millions)
<S> <C> <C>
Due in one year or less................................................ $ 324.8 $ 323.4
Due in years two through five.......................................... 3,778.2 3,787.9
Due in years six through ten........................................... 6,543.4 6,594.1
Due after ten years.................................................... 5,756.8 6,219.5
Mortgage-backed securities............................................. 1,807.9 1,830.3
---------------- -----------------
Total.................................................................. $ 18,211.1 $ 18,755.2
================ =================
</TABLE>
Corporate bonds held to maturity with an amortized cost and estimated
fair value of $125.0 million are due in one year or less.
Bonds not due at a single maturity date have been included in the above
table in the year of final maturity. Actual maturities will differ from
contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
The Insurance Group's fixed maturity investment portfolio includes
corporate high yield securities consisting of public high yield bonds,
redeemable preferred stocks and directly negotiated debt in leveraged
buyout transactions. The Insurance Group seeks to minimize the higher
than normal credit risks associated with such securities by monitoring
concentrations in any single issuer or a particular industry group.
Certain of these corporate high yield securities are classified as other
than investment grade by the various rating agencies, i.e., a rating
below Baa or National Association of Insurance Commissioners ("NAIC")
designation of 3 (medium grade), 4 or 5 (below investment grade) or 6
(in or near default). At December 31, 1998, approximately 15.1% of the
$18,336.1 million aggregate amortized cost of bonds held by the Company
was considered to be other than investment grade.
In addition, the Insurance Group is an equity investor in limited
partnership interests which primarily invest in securities considered to
be other than investment grade.
Fixed maturity investments with restructured or modified terms are not
material.
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 384.5 $ 137.1 $ 325.3
SFAS No. 121 release............................... - - (152.4)
Additions charged to income........................ 86.2 334.6 125.0
Deductions for writedowns and
asset dispositions............................... (240.1) (87.2) (160.8)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 230.6 $ 384.5 $ 137.1
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 34.3 $ 55.8 $ 50.4
Equity real estate............................... 196.3 328.7 86.7
----------------- ---------------- -----------------
Total.............................................. $ 230.6 $ 384.5 $ 137.1
================= ================ =================
</TABLE>
F-15
<PAGE>
At December 31, 1998, the carrying value of fixed maturities which are
non-income producing for the twelve months preceding the consolidated
balance sheet date was $60.8 million.
At December 31, 1998 and 1997, mortgage loans on real estate with
scheduled payments 60 days (90 days for agricultural mortgages) or more
past due or in foreclosure (collectively, "problem mortgage loans on
real estate") had an amortized cost of $7.0 million (0.2% of total
mortgage loans on real estate) and $23.4 million (0.9% of total mortgage
loans on real estate), respectively.
The payment terms of mortgage loans on real estate may from time to time
be restructured or modified. The investment in restructured mortgage
loans on real estate, based on amortized cost, amounted to $115.1
million and $183.4 million at December 31, 1998 and 1997, respectively.
Gross interest income on restructured mortgage loans on real estate that
would have been recorded in accordance with the original terms of such
loans amounted to $10.3 million, $17.2 million and $35.5 million in
1998, 1997 and 1996, respectively. Gross interest income on these loans
included in net investment income aggregated $8.3 million, $12.7 million
and $28.2 million in 1998, 1997 and 1996, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1998 1997
------------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 125.4 $ 196.7
Impaired mortgage loans without provision for losses............... 8.6 3.6
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 134.0 200.3
Provision for losses............................................... (29.0) (51.8)
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 105.0 $ 148.5
=================== ===================
</TABLE>
Impaired mortgage loans without provision for losses are loans where the
fair value of the collateral or the net present value of the expected
future cash flows related to the loan equals or exceeds the recorded
investment. Interest income earned on loans where the collateral value
is used to measure impairment is recorded on a cash basis. Interest
income on loans where the present value method is used to measure
impairment is accrued on the net carrying value amount of the loan at
the interest rate used to discount the cash flows. Changes in the
present value attributable to changes in the amount or timing of
expected cash flows are reported as investment gains or losses.
During 1998, 1997 and 1996, respectively, the Company's average recorded
investment in impaired mortgage loans was $161.3 million, $246.9 million
and $552.1 million. Interest income recognized on these impaired
mortgage loans totaled $12.3 million, $15.2 million and $38.8 million
($.9 million, $2.3 million and $17.9 million recognized on a cash basis)
for 1998, 1997 and 1996, respectively.
The Insurance Group's investment in equity real estate is through direct
ownership and through investments in real estate joint ventures. At
December 31, 1998 and 1997, the carrying value of equity real estate
held for sale amounted to $836.2 million and $1,023.5 million,
respectively. For 1998, 1997 and 1996, respectively, real estate of $7.1
million, $152.0 million and $58.7 million was acquired in satisfaction
of debt. At December 31, 1998 and 1997, the Company owned $552.3 million
and $693.3 million, respectively, of real estate acquired in
satisfaction of debt.
Depreciation of real estate held for production of income is computed
using the straight-line method over the estimated useful lives of the
properties, which generally range from 40 to 50 years. Accumulated
depreciation on real estate was $374.8 million and $541.1 million at
December 31, 1998 and 1997, respectively. Depreciation expense on real
estate totaled $30.5 million, $74.9 million and $91.8 million for 1998,
1997 and 1996, respectively.
F-16
<PAGE>
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(25 and 29 individual ventures as of December 31, 1998 and 1997,
respectively) and for limited partnership interests accounted for under
the equity method, in which the Company has an investment of $10.0
million or greater and an equity interest of 10% or greater, is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 913.7 $ 1,700.9
Investments in securities, generally at estimated fair value........... 636.9 1,374.8
Cash and cash equivalents.............................................. 85.9 105.4
Other assets........................................................... 279.8 584.9
---------------- -----------------
Total Assets........................................................... $ 1,916.3 $ 3,766.0
================ =================
Borrowed funds - third party........................................... $ 367.1 $ 493.4
Borrowed funds - the Company........................................... 30.1 31.2
Other liabilities...................................................... 197.2 284.0
---------------- -----------------
Total liabilities...................................................... 594.4 808.6
---------------- -----------------
Partners' capital...................................................... 1,321.9 2,957.4
---------------- -----------------
Total Liabilities and Partners' Capital................................ $ 1,916.3 $ 3,766.0
================ =================
Equity in partners' capital included above............................. $ 312.9 $ 568.5
Equity in limited partnership interests not included above............. 442.1 331.8
Other.................................................................. .7 4.3
---------------- -----------------
Carrying Value......................................................... $ 755.7 $ 904.6
================ =================
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 246.1 $ 310.5 $ 348.9
Revenues of other limited partnership interests.... 128.9 506.3 386.1
Interest expense - third party..................... (33.3) (91.8) (111.0)
Interest expense - the Company..................... (2.6) (7.2) (30.0)
Other expenses..................................... (197.0) (263.6) (282.5)
----------------- ---------------- -----------------
Net Earnings....................................... $ 142.1 $ 454.2 $ 311.5
================= ================ =================
Equity in net earnings included above.............. $ 59.6 $ 76.7 $ 73.9
Equity in net earnings of limited partnership
interests not included above..................... 22.7 69.5 35.8
Other.............................................. - (.9) .9
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 82.3 $ 145.3 $ 110.6
================= ================ =================
</TABLE>
F-17
<PAGE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,489.0 $ 1,459.4 $ 1,307.4
Mortgage loans on real estate...................... 235.4 260.8 303.0
Equity real estate................................. 356.1 390.4 442.4
Other equity investments........................... 83.8 156.9 122.0
Policy loans....................................... 144.9 177.0 160.3
Other investment income............................ 185.7 181.7 217.4
----------------- ---------------- -----------------
Gross investment income.......................... 2,494.9 2,626.2 2,552.5
Investment expenses.............................. (266.8) (343.4) (348.9)
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,228.1 $ 2,282.8 $ 2,203.6
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ (24.3) $ 88.1 $ 60.5
Mortgage loans on real estate...................... (10.9) (11.2) (27.3)
Equity real estate................................. 74.5 (391.3) (79.7)
Other equity investments........................... 29.9 14.1 18.9
Sale of subsidiaries............................... (2.6) 252.1 -
Issuance and sales of Alliance Units............... 19.8 - 20.6
Issuance and sale of DLJ common stock.............. 18.2 3.0 -
Other.............................................. (4.4) - (2.8)
----------------- ---------------- -----------------
Investment Gains (Losses), Net..................... $ 100.2 $ (45.2) $ (9.8)
================= ================ =================
</TABLE>
Writedowns of fixed maturities amounted to $101.6 million, $11.7 million
and $29.9 million for 1998, 1997 and 1996, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $136.4 million for 1997. In the fourth quarter of 1997, the
Company reclassified $1,095.4 million depreciated cost of equity real
estate from real estate held for the production of income to real estate
held for sale. Additions to valuation allowances of $227.6 million were
recorded upon these transfers. Additionally, in fourth quarter 1997,
$132.3 million of writedowns on real estate held for production of
income were recorded.
For 1998, 1997 and 1996, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $15,961.0
million, $9,789.7 million and $8,353.5 million. Gross gains of $149.3
million, $166.0 million and $154.2 million and gross losses of $95.1
million, $108.8 million and $92.7 million, respectively, were realized
on these sales. The change in unrealized investment gains (losses)
related to fixed maturities classified as available for sale for 1998,
1997 and 1996 amounted to $(331.7) million, $513.4 million and $(258.0)
million, respectively.
For 1998, 1997 and 1996, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $136.9 million, $137.5
million and $136.7 million, respectively.
F-18
<PAGE>
On June 10, 1997, Equitable Life sold EREIM (other than its interest in
Column Financial, Inc.) ("ERE") to Lend Lease Corporation Limited ("Lend
Lease"), a publicly traded, international property and financial
services company based in Sydney, Australia. The total purchase price
was $400.0 million and consisted of $300.0 million in cash and a $100.0
million note which was paid in 1998. The Company recognized an
investment gain of $162.4 million, net of Federal income tax of $87.4
million as a result of this transaction. Equitable Life entered into
long-term advisory agreements whereby ERE continues to provide
substantially the same services to Equitable Life's General Account and
Separate Accounts, for substantially the same fees, as provided prior to
the sale.
Through June 10, 1997 and for the year ended December 31, 1996,
respectively, the businesses sold reported combined revenues of $91.6
million and $226.1 million and combined net earnings of $10.7 million
and $30.7 million.
In 1996, Alliance acquired the business of Cursitor Holdings L.P. and
Cursitor Holdings Limited (collectively, "Cursitor") for approximately
$159.0 million. The purchase price consisted of $94.3 million in cash,
1.8 million of Alliance's publicly traded units ("Alliance Units"), 6%
notes aggregating $21.5 million payable ratably over four years, and
additional consideration to be determined at a later date but currently
estimated to not exceed $10.0 million. The excess of the purchase price,
including acquisition costs and minority interest, over the fair value
of Cursitor's net assets acquired resulted in the recognition of
intangible assets consisting of costs assigned to contracts acquired and
goodwill of approximately $122.8 million and $38.3 million,
respectively. The Company recognized an investment gain of $20.6 million
as a result of the issuance of Alliance Units in this transaction. On
June 30, 1997, Alliance reduced the recorded value of goodwill and
contracts associated with Alliance's acquisition of Cursitor by $120.9
million. This charge reflected Alliance's view that Cursitor's
continuing decline in assets under management and its reduced
profitability, resulting from relative investment underperformance, no
longer supported the carrying value of its investment. As a result, the
Company's earnings from continuing operations before cumulative effect
of accounting change for 1997 included a charge of $59.5 million, net of
a Federal income tax benefit of $10.0 million and minority interest of
$51.4 million. The remaining balance of intangible assets is being
amortized over its estimated useful life of 20 years. At December 31,
1998, the Company's ownership of Alliance Units was approximately 56.7%.
F-19
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of accumulated comprehensive income and
the changes for the corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 533.6 $ 189.9 $ 396.5
Changes in unrealized investment gains (losses).... (242.4) 543.3 (297.6)
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... (5.7) 53.2 -
DAC............................................ 13.2 (89.0) 42.3
Deferred Federal income taxes.................. 85.4 (163.8) 48.7
----------------- ---------------- -----------------
Balance, End of Year............................... $ 384.1 $ 533.6 $ 189.9
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 539.9 $ 871.2 $ 357.8
Other equity investments....................... 92.4 33.7 31.6
Other, principally Closed Block................ 111.1 80.9 53.1
----------------- ---------------- -----------------
Total........................................ 743.4 985.8 442.5
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ (24.7) (19.0) (72.2)
DAC.......................................... (127.8) (141.0) (52.0)
Deferred Federal income taxes................ (206.8) (292.2) (128.4)
----------------- ---------------- -----------------
Total.............................................. $ 384.1 $ 533.6 $ 189.9
================= ================ =================
</TABLE>
6) ACCUMULATED OTHER COMPREHENSIVE INCOME
Accumulated other comprehensive income represents cumulative gains and
losses on items that are not reflected in earnings. The balances for the
years 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Unrealized gains on investments.................... $ 384.1 $ 533.6 $ 189.9
Minimum pension liability.......................... (28.3) (17.3) (12.9)
----------------- ---------------- -----------------
Total Accumulated Other
Comprehensive Income............................. $ 355.8 $ 516.3 $ 177.0
================= ================ =================
</TABLE>
F-20
<PAGE>
The components of other comprehensive income for the years 1998, 1997
and 1996 are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net unrealized gains (losses) on investment
securities:
Net unrealized gains (losses) arising during
the period..................................... $ (186.1) $ 564.0 $ (249.8)
Reclassification adjustment for (gains) losses
included in net earnings....................... (56.3) (20.7) (47.8)
----------------- ---------------- -----------------
Net unrealized gains (losses) on investment
securities....................................... (242.4) 543.3 (297.6)
Adjustments for policyholder liabilities,
DAC and deferred
Federal income taxes............................. 92.9 (199.6) 91.0
----------------- ---------------- -----------------
Change in unrealized gains (losses), net of
reclassification and adjustments................. (149.5) 343.7 (206.6)
Change in minimum pension liability................ (11.0) (4.4) 22.2
----------------- ---------------- -----------------
Total Other Comprehensive Income................... $ (160.5) $ 339.3 $ (184.4)
================= ================ =================
</TABLE>
7) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,149.0 and $4,059.4)........................................... $ 4,373.2 $ 4,231.0
Mortgage loans on real estate........................................ 1,633.4 1,341.6
Policy loans......................................................... 1,641.2 1,700.2
Cash and other invested assets....................................... 86.5 282.0
DAC.................................................................. 676.5 775.2
Other assets......................................................... 221.6 236.6
----------------- -----------------
Total Assets......................................................... $ 8,632.4 $ 8,566.6
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 9,013.1 $ 8,993.2
Other liabilities.................................................... 63.9 80.5
----------------- -----------------
Total Liabilities.................................................... $ 9,077.0 $ 9,073.7
================= =================
</TABLE>
F-21
<PAGE>
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 661.7 $ 687.1 $ 724.8
Investment income (net of investment
expenses of $15.5, $27.0 and $27.3).............. 569.7 574.9 546.6
Investment losses, net............................. .5 (42.4) (5.5)
----------------- ---------------- -----------------
Total revenues............................... 1,231.9 1,219.6 1,265.9
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,082.0 1,066.7 1,106.3
Other operating costs and expenses................. 62.8 50.4 34.6
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,144.8 1,117.1 1,140.9
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 87.1 $ 102.5 $ 125.0
================= ================ =================
</TABLE>
At December 31, 1998 and 1997, problem mortgage loans on real estate had
an amortized cost of $5.1 million and $8.1 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $26.0 million and $70.5 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 55.5 $ 109.1
Impaired mortgage loans without provision for losses................... 7.6 .6
---------------- -----------------
Recorded investment in impaired mortgages.............................. 63.1 109.7
Provision for losses................................................... (10.1) (17.4)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 53.0 $ 92.3
================ =================
</TABLE>
During 1998, 1997 and 1996, the Closed Block's average recorded
investment in impaired mortgage loans was $85.5 million, $110.2 million
and $153.8 million, respectively. Interest income recognized on these
impaired mortgage loans totaled $4.7 million, $9.4 million and $10.9
million ($1.5 million, $4.1 million and $4.7 million recognized on a
cash basis) for 1998, 1997 and 1996, respectively.
Valuation allowances amounted to $11.1 million and $18.5 million on
mortgage loans on real estate and $15.4 million and $16.8 million on
equity real estate at December 31, 1998 and 1997, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in the
recognition of impairment losses of $5.6 million on real estate held for
production of income. Writedowns of fixed maturities amounted to $3.5
million and $12.8 million for 1997 and 1996, respectively. Writedowns of
equity real estate subsequent to the adoption of SFAS No. 121 amounted
to $28.8 million for 1997.
In the fourth quarter of 1997, $72.9 million depreciated cost of equity
real estate held for production of income was reclassified to equity
real estate held for sale. Additions to valuation allowances of $15.4
million were recorded upon these transfers. Additionally, in fourth
quarter 1997, $28.8 million of writedowns on real estate held for
production of income were recorded.
Many expenses related to Closed Block operations are charged to
operations outside of the Closed Block; accordingly, the contribution
from the Closed Block does not represent the actual profitability of the
Closed Block operations. Operating costs and expenses outside of the
Closed Block are, therefore, disproportionate to the business outside of
the Closed Block.
F-22
<PAGE>
8) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 553.9 $ 635.2
Equity real estate................................................... 611.0 874.5
Other equity investments............................................. 115.1 209.3
Other invested assets................................................ 24.9 152.4
----------------- -----------------
Total investments.................................................. 1,304.9 1,871.4
Cash and cash equivalents............................................ 34.7 106.8
Other assets......................................................... 219.0 243.8
----------------- -----------------
Total Assets......................................................... $ 1,558.6 $ 2,222.0
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,021.7 $ 1,048.3
Allowance for future losses.......................................... 305.1 259.2
Amounts due to continuing operations................................. 2.7 572.8
Other liabilities.................................................... 229.1 341.7
----------------- -----------------
Total Liabilities.................................................... $ 1,558.6 $ 2,222.0
================= =================
</TABLE>
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Investment income (net of investment
expenses of $63.3, $97.3 and $127.5)............. $ 160.4 $ 188.6 $ 245.4
Investment gains (losses), net..................... 35.7 (173.7) (18.9)
Policy fees, premiums and other income............. (4.3) .2 .2
----------------- ---------------- -----------------
Total revenues..................................... 191.8 15.1 226.7
Benefits and other deductions...................... 141.5 169.5 250.4
Earnings added (losses charged) to allowance
for future losses................................ 50.3 (154.4) (23.7)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax earnings from releasing (loss from
strengthening) of the allowance for future
losses........................................... 4.2 (134.1) (129.0)
Federal income tax (expense) benefit............... (1.5) 46.9 45.2
----------------- ---------------- -----------------
Earnings (Loss) from Discontinued Operations....... $ 2.7 $ (87.2) $ (83.8)
================= ================ =================
</TABLE>
The Company's quarterly process for evaluating the allowance for future
losses applies the current period's results of the discontinued
operations against the allowance, re-estimates future losses and adjusts
the allowance, if appropriate. Additionally, as part of the Company's
annual planning process which takes place in the fourth quarter of each
year, investment and benefit cash flow projections are prepared. These
updated assumptions and estimates resulted in a release of allowance in
1998 and strengthening of allowance in 1997 and 1996.
F-23
<PAGE>
In the fourth quarter of 1997, $329.9 million depreciated cost of equity
real estate was reclassified from equity real estate held for production
of income to real estate held for sale. Additions to valuation
allowances of $79.8 million were recognized upon these transfers.
Additionally, in fourth quarter 1997, $92.5 million of writedowns on
real estate held for production of income were recognized.
Benefits and other deductions includes $26.6 million, $53.3 million and
$114.3 million of interest expense related to amounts borrowed from
continuing operations in 1998, 1997 and 1996, respectively.
Valuation allowances amounted to $3.0 million and $28.4 million on
mortgage loans on real estate and $34.8 million and $88.4 million on
equity real estate at December 31, 1998 and 1997, respectively. As of
January 1, 1996, the adoption of SFAS No. 121 resulted in a release of
existing valuation allowances of $71.9 million on equity real estate and
recognition of impairment losses of $69.8 million on real estate held
for production of income. Writedowns of equity real estate subsequent to
the adoption of SFAS No. 121 amounted to $95.7 million and $12.3 million
for 1997 and 1996, respectively.
At December 31, 1998 and 1997, problem mortgage loans on real estate had
amortized costs of $1.1 million and $11.0 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $3.5 million and $109.4 million,
respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 6.7 $ 101.8
Impaired mortgage loans without provision for losses................... 8.5 .2
---------------- -----------------
Recorded investment in impaired mortgages.............................. 15.2 102.0
Provision for losses................................................... (2.1) (27.3)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 13.1 $ 74.7
================ =================
</TABLE>
During 1998, 1997 and 1996, the discontinued operations' average
recorded investment in impaired mortgage loans was $73.3 million, $89.2
million and $134.8 million, respectively. Interest income recognized on
these impaired mortgage loans totaled $4.7 million, $6.6 million and
$10.1 million ($3.4 million, $5.3 million and $7.5 million recognized on
a cash basis) for 1998, 1997 and 1996, respectively.
At December 31, 1998 and 1997, discontinued operations had carrying
values of $50.0 million and $156.2 million, respectively, of real estate
acquired in satisfaction of debt.
F-24
<PAGE>
9) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1998 1997
----------------- -----------------
(In Millions)
<S> <C> <C>
Short-term debt...................................................... $ 179.3 $ 422.2
----------------- -----------------
Long-term debt:
Equitable Life:
6.95% surplus notes scheduled to mature 2005....................... 399.4 399.4
7.70% surplus notes scheduled to mature 2015....................... 199.7 199.7
Other.............................................................. .3 .3
----------------- -----------------
Total Equitable Life........................................... 599.4 599.4
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.91% - 12.00%, due through 2017................... 392.2 676.6
----------------- -----------------
Alliance:
Other.............................................................. 10.8 18.5
----------------- -----------------
Total long-term debt................................................. 1,002.4 1,294.5
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,181.7 $ 1,716.7
================= =================
</TABLE>
Short-term Debt
Equitable Life has a $350.0 million bank credit facility available to
fund short-term working capital needs and to facilitate the securities
settlement process. The credit facility consists of two types of
borrowing options with varying interest rates and expires in September
2000. The interest rates are based on external indices dependent on the
type of borrowing and at December 31, 1998 range from 5.23% to 7.75%.
There were no borrowings outstanding under this bank credit facility at
December 31, 1998.
Equitable Life has a commercial paper program with an issue limit of
$500.0 million. This program is available for general corporate purposes
used to support Equitable Life's liquidity needs and is supported by
Equitable Life's existing $350.0 million bank credit facility. At
December 31, 1998, there were no borrowings outstanding under this
program.
During July 1998, Alliance entered into a $425.0 million five-year
revolving credit facility with a group of commercial banks which
replaced a $250.0 million revolving credit facility. Under the facility,
the interest rate, at the option of Alliance, is a floating rate
generally based upon a defined prime rate, a rate related to the London
Interbank Offered Rate ("LIBOR") or the Federal Funds Rate. A facility
fee is payable on the total facility. During September 1998, Alliance
increased the size of its commercial paper program from $250.0 million
to $425.0 million. Borrowings from these two sources may not exceed
$425.0 million in the aggregate. The revolving credit facility provides
backup liquidity for commercial paper issued under Alliance's commercial
paper program and can be used as a direct source of borrowing. The
revolving credit facility contains covenants which require Alliance to,
among other things, meet certain financial ratios. As of December 31,
1998, Alliance had commercial paper outstanding totaling $179.5 million
at an effective interest rate of 5.5% and there were no borrowings
outstanding under Alliance's revolving credit facility.
Long-term Debt
Several of the long-term debt agreements have restrictive covenants
related to the total amount of debt, net tangible assets and other
matters. The Company is in compliance with all debt covenants.
F-25
<PAGE>
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $640.2 million and $1,164.0 million at December 31, 1998
and 1997, respectively, as collateral for certain short-term and
long-term debt.
At December 31, 1998, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1999 and the succeeding
four years are $322.8 million, $6.9 million, $1.7 million, $1.8 million
and $2.0 million, respectively, and $668.0 million thereafter.
10) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated
statements of earnings is shown below:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 283.3 $ 186.5 $ 97.9
Deferred......................................... 69.8 (95.0) (88.2)
----------------- ---------------- -----------------
Total.............................................. $ 353.1 $ 91.5 $ 9.7
================= ================ =================
</TABLE>
The Federal income taxes attributable to consolidated operations are
different from the amounts determined by multiplying the earnings before
Federal income taxes and minority interest by the expected Federal
income tax rate of 35%. The sources of the difference and the tax
effects of each are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 414.3 $ 234.7 $ 73.0
Non-taxable minority interest...................... (33.2) (38.0) (28.6)
Adjustment of tax audit reserves................... 16.0 (81.7) 6.9
Equity in unconsolidated subsidiaries.............. (39.3) (45.1) (32.3)
Other.............................................. (4.7) 21.6 (9.3)
----------------- ---------------- -----------------
Federal Income Tax Expense......................... $ 353.1 $ 91.5 $ 9.7
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1998 December 31, 1997
--------------------------------- ---------------------------------
Assets Liabilities Assets Liabilities
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ 235.3 $ - $ 257.9 $ -
Other.................................. 27.8 - 30.7 -
DAC, reserves and reinsurance.......... - 231.4 - 222.8
Investments............................ - 364.4 - 405.7
--------------- ---------------- --------------- ---------------
Total.................................. $ 263.1 $ 595.8 $ 288.6 $ 628.5
=============== ================ =============== ===============
</TABLE>
F-26
<PAGE>
The deferred Federal income taxes impacting operations reflect the net
tax effects of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts
used for income tax purposes. The sources of these temporary differences
and the tax effects of each are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ (7.7) $ 46.2 $ (156.2)
Investments........................................ 46.8 (113.8) 78.6
Compensation and related benefits.................. 28.6 3.7 22.3
Other.............................................. 2.1 (31.1) (32.9)
----------------- ---------------- -----------------
Deferred Federal Income Tax
Expense (Benefit)................................ $ 69.8 $ (95.0) $ (88.2)
================= ================ =================
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Holding Company's consolidated Federal income tax returns for the
years 1992 through 1996. Management believes these audits will have no
material adverse effect on the Company's results of operations.
11) REINSURANCE AGREEMENTS
The Insurance Group assumes and cedes reinsurance with other insurance
companies. The Insurance Group evaluates the financial condition of its
reinsurers to minimize its exposure to significant losses from reinsurer
insolvencies. Ceded reinsurance does not relieve the originating insurer
of liability. The effect of reinsurance (excluding group life and
health) is summarized as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Direct premiums.................................... $ 438.8 $ 448.6 $ 461.4
Reinsurance assumed................................ 203.6 198.3 177.5
Reinsurance ceded.................................. (54.3) (45.4) (41.3)
----------------- ---------------- -----------------
Premiums........................................... $ 588.1 $ 601.5 $ 597.6
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 75.7 $ 61.0 $ 48.2
================= ================ =================
Policyholders' Benefits Ceded...................... $ 85.9 $ 70.6 $ 54.1
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 39.5 $ 36.4 $ 32.3
================= ================ =================
</TABLE>
Beginning in May 1997, the Company began reinsuring on a yearly renewal
term basis 90% of the mortality risk on new issues of certain term,
universal and variable life products. During 1996, the Company's
retention limit on joint survivorship policies was increased to $15.0
million. Effective January 1, 1994, all in force business above $5.0
million was reinsured. The Insurance Group also reinsures the entire
risk on certain substandard underwriting risks as well as in certain
other cases.
The Insurance Group cedes 100% of its group life and health business to
a third party insurance company. Premiums ceded totaled $1.3 million,
$1.6 million and $2.4 million for 1998, 1997 and 1996, respectively.
Ceded death and disability benefits totaled $15.6 million, $4.3 million
and $21.2 million for 1998, 1997 and 1996, respectively. Insurance
liabilities ceded totaled $560.3 million and $593.8 million at December
31, 1998 and 1997, respectively.
F-27
<PAGE>
12) EMPLOYEE BENEFIT PLANS
The Company sponsors qualified and non-qualified defined benefit plans
covering substantially all employees (including certain qualified
part-time employees), managers and certain agents. The pension plans are
non-contributory. Equitable Life's benefits are based on a cash balance
formula or years of service and final average earnings, if greater,
under certain grandfathering rules in the plans. Alliance's benefits are
based on years of credited service, average final base salary and
primary social security benefits. The Company's funding policy is to
make the minimum contribution required by the Employee Retirement Income
Security Act of 1974 ("ERISA").
Components of net periodic pension cost (credit) for the qualified and
non-qualified plans are as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 33.2 $ 32.5 $ 33.8
Interest cost on projected benefit obligations..... 129.2 128.2 120.8
Actual return on assets............................ (175.6) (307.6) (181.4)
Net amortization and deferrals..................... 6.1 166.6 43.4
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ (7.1) $ 19.7 $ 16.6
================= ================ =================
</TABLE>
The plan's projected benefit obligation under the qualified and
non-qualified plans was comprised of:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Benefit obligation, beginning of year.................................. $ 1,801.3 $ 1,765.5
Service cost........................................................... 33.2 32.5
Interest cost.......................................................... 129.2 128.2
Actuarial (gains) losses............................................... 108.4 (15.5)
Benefits paid.......................................................... (138.7) (109.4)
---------------- -----------------
Benefit Obligation, End of Year........................................ $ 1,933.4 $ 1,801.3
================ =================
</TABLE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Plan assets at fair value, beginning of year........................... $ 1,867.4 $ 1,626.0
Actual return on plan assets........................................... 338.9 307.5
Contributions.......................................................... - 30.0
Benefits paid and fees................................................. (123.2) (96.1)
---------------- -----------------
Plan assets at fair value, end of year................................. 2,083.1 1,867.4
Projected benefit obligations.......................................... 1,933.4 1,801.3
---------------- -----------------
Projected benefit obligations less than plan assets.................... 149.7 66.1
Unrecognized prior service cost........................................ (7.5) (9.9)
Unrecognized net loss from past experience different
from that assumed.................................................... 38.7 95.0
Unrecognized net asset at transition................................... 1.5 3.1
---------------- -----------------
Prepaid Pension Cost.................................................. $ 182.4 $ 154.3
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.0% and 3.83%, respectively, at December 31, 1998 and
7.25% and 4.07%, respectively, at December 31, 1997. As of January 1,
1998 and 1997, the expected long-term rate of return on assets for the
retirement plan was 10.25%.
F-28
<PAGE>
The Company recorded, as a reduction of shareholders' equity an
additional minimum pension liability of $28.3 million and $17.3 million,
net of Federal income taxes, at December 31, 1998 and 1997,
respectively, primarily representing the excess of the accumulated
benefit obligation of the qualified pension plan over the accrued
liability.
The pension plan's assets include corporate and government debt
securities, equity securities, equity real estate and shares of group
trusts managed by Alliance.
Prior to 1987, the qualified plan funded participants' benefits through
the purchase of non-participating annuity contracts from Equitable Life.
Benefit payments under these contracts were approximately $31.8 million,
$33.2 million and $34.7 million for 1998, 1997 and 1996, respectively.
The Company provides certain medical and life insurance benefits
(collectively, "postretirement benefits") for qualifying employees,
managers and agents retiring from the Company (i) on or after attaining
age 55 who have at least 10 years of service or (ii) on or after
attaining age 65 or (iii) whose jobs have been abolished and who have
attained age 50 with 20 years of service. The life insurance benefits
are related to age and salary at retirement. The costs of postretirement
benefits are recognized in accordance with the provisions of SFAS No.
106. The Company continues to fund postretirement benefits costs on a
pay-as-you-go basis and, for 1998, 1997 and 1996, the Company made
estimated postretirement benefits payments of $28.4 million, $18.7
million and $18.9 million, respectively.
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 4.6 $ 4.5 $ 5.3
Interest cost on accumulated postretirement
benefits obligation.............................. 33.6 34.7 34.6
Net amortization and deferrals..................... .5 1.9 2.4
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 38.7 $ 41.1 $ 42.3
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Accumulated postretirement benefits obligation, beginning
of year.............................................................. $ 490.8 $ 388.5
Service cost........................................................... 4.6 4.5
Interest cost.......................................................... 33.6 34.7
Contributions and benefits paid........................................ (28.4) 72.1
Actuarial (gains) losses............................................... (10.2) (9.0)
---------------- -----------------
Accumulated postretirement benefits obligation, end of year............ 490.4 490.8
Unrecognized prior service cost........................................ 31.8 40.3
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (121.2) (140.6)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 401.0 $ 390.5
================ =================
</TABLE>
Since January 1, 1994, costs to the Company for providing these medical
benefits available to retirees under age 65 are the same as those
offered to active employees and medical benefits will be limited to 200%
of 1993 costs for all participants.
F-29
<PAGE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 8.0% in 1998,
gradually declining to 2.5% in the year 2009, and in 1997 was 8.75%,
gradually declining to 2.75% in the year 2009. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.0%
and 7.25% at December 31, 1998 and 1997, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1998
would be increased 4.83%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 4.57%. If the
health care cost trend rate assumptions were decreased by 1% the
accumulated postretirement benefits obligation as of December 31, 1998
would be decreased by 5.6%. The effect of this change on the sum of the
service cost and interest cost would be a decrease of 5.4%.
13) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS
Derivatives
The Insurance Group primarily uses derivatives for asset/liability risk
management and for hedging individual securities. Derivatives mainly are
utilized to reduce the Insurance Group's exposure to interest rate
fluctuations. Accounting for interest rate swap transactions is on an
accrual basis. Gains and losses related to interest rate swap
transactions are amortized as yield adjustments over the remaining life
of the underlying hedged security. Income and expense resulting from
interest rate swap activities are reflected in net investment income.
The notional amount of matched interest rate swaps outstanding at
December 31, 1998 and 1997, respectively, was $880.9 million and
$1,353.4 million. The average unexpired terms at December 31, 1998
ranged from 1 month to 4.3 years. At December 31, 1998, the cost of
terminating swaps in a loss position was $8.0 million. Equitable Life
has implemented an interest rate cap program designed to hedge crediting
rates on interest-sensitive individual annuities contracts. The
outstanding notional amounts at December 31, 1998 of contracts purchased
and sold were $8,450.0 million and $875.0 million, respectively. The net
premium paid by Equitable Life on these contracts was $54.8 million and
is being amortized ratably over the contract periods ranging from 1 to 5
years. Income and expense resulting from this program are reflected as
an adjustment to interest credited to policyholders' account balances.
Substantially all of DLJ's activities related to derivatives are, by
their nature trading activities which are primarily for the purpose of
customer accommodations. DLJ enters into certain contractual agreements
referred to as derivatives or off-balance-sheet financial instruments
involving futures, forwards and options. DLJ's derivative activities
consist of writing over-the-counter ("OTC") options to accommodate its
customer needs, trading in forward contracts in U.S. government and
agency issued or guaranteed securities and in futures contracts on
equity-based indices, interest rate instruments and currencies and
issuing structured products based on emerging market financial
instruments and indices. DLJ's involvement in swap contracts and
commodity derivative instruments is not significant.
Fair Value of Financial Instruments
The Company defines fair value as the quoted market prices for those
instruments that are actively traded in financial markets. In cases
where quoted market prices are not available, fair values are estimated
using present value or other valuation techniques. The fair value
estimates are made at a specific point in time, based on available
market information and judgments about the financial instrument,
including estimates of the timing and amount of expected future cash
flows and the credit standing of counterparties. Such estimates do not
reflect any premium or discount that could result from offering for sale
at one time the Company's entire holdings of a particular financial
instrument, nor do they consider the tax impact of the realization of
unrealized gains or losses. In many cases, the fair value estimates
cannot be substantiated by comparison to independent markets, nor can
the disclosed value be realized in immediate settlement of the
instrument.
Certain financial instruments are excluded, particularly insurance
liabilities other than financial guarantees and investment contracts.
Fair market value of off-balance-sheet financial instruments of the
Insurance Group was not material at December 31, 1998 and 1997.
F-30
<PAGE>
Fair values for mortgage loans on real estate are estimated by
discounting future contractual cash flows using interest rates at which
loans with similar characteristics and credit quality would be made.
Fair values for foreclosed mortgage loans and problem mortgage loans are
limited to the estimated fair value of the underlying collateral if
lower.
Fair values of policy loans are estimated by discounting the face value
of the loans from the time of the next interest rate review to the
present, at a rate equal to the excess of the current estimated market
rates over the current interest rate charged on the loan.
The estimated fair values for the Company's association plan contracts,
supplementary contracts not involving life contingencies ("SCNILC") and
annuities certain, which are included in policyholders' account
balances, and guaranteed interest contracts are estimated using
projected cash flows discounted at rates reflecting expected current
offering rates.
The estimated fair values for variable deferred annuities and single
premium deferred annuities ("SPDA"), which are included in
policyholders' account balances, are estimated by discounting the
account value back from the time of the next crediting rate review to
the present, at a rate equal to the excess of current estimated market
rates offered on new policies over the current crediting rates.
Fair values for long-term debt are determined using published market
values, where available, or contractual cash flows discounted at market
interest rates. The estimated fair values for non-recourse mortgage debt
are determined by discounting contractual cash flows at a rate which
takes into account the level of current market interest rates and
collateral risk. The estimated fair values for recourse mortgage debt
are determined by discounting contractual cash flows at a rate based
upon current interest rates of other companies with credit ratings
similar to the Company. The Company's carrying value of short-term
borrowings approximates their estimated fair value.
The following table discloses carrying value and estimated fair value
for financial instruments not otherwise disclosed in Notes 3, 7 and 8:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1998 1997
--------------------------------- ---------------------------------
Carrying Estimated Carrying Estimated
Value Fair Value Value Fair Value
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Consolidated Financial Instruments:
Mortgage loans on real estate.......... $ 2,809.9 $ 2,961.8 $ 2,611.4 $ 2,822.8
Other limited partnership interests.... 562.6 562.6 509.4 509.4
Policy loans........................... 2,086.7 2,370.7 2,422.9 2,493.9
Policyholders' account balances -
investment contracts................. 12,892.0 13,396.0 12,611.0 12,714.0
Long-term debt......................... 1,002.4 1,025.2 1,294.5 1,257.0
Closed Block Financial Instruments:
Mortgage loans on real estate.......... 1,633.4 1,703.5 1,341.6 1,420.7
Other equity investments............... 56.4 56.4 86.3 86.3
Policy loans........................... 1,641.2 1,929.7 1,700.2 1,784.2
SCNILC liability....................... 25.0 25.0 27.6 30.3
Discontinued Operations Financial
Instruments:
Mortgage loans on real estate.......... 553.9 599.9 655.5 779.9
Fixed maturities....................... 24.9 24.9 38.7 38.7
Other equity investments............... 115.1 115.1 209.3 209.3
Guaranteed interest contracts.......... 37.0 34.0 37.0 34.0
Long-term debt......................... 147.1 139.8 296.4 297.6
</TABLE>
F-31
<PAGE>
14) COMMITMENTS AND CONTINGENT LIABILITIES
The Company has provided, from time to time, certain guarantees or
commitments to affiliates, investors and others. These arrangements
include commitments by the Company, under certain conditions: to make
capital contributions of up to $142.9 million to affiliated real estate
joint ventures; and to provide equity financing to certain limited
partnerships of $287.3 million at December 31, 1998, under existing loan
or loan commitment agreements.
Equitable Life is the obligor under certain structured settlement
agreements which it had entered into with unaffiliated insurance
companies and beneficiaries. To satisfy its obligations under these
agreements, Equitable Life owns single premium annuities issued by
previously wholly owned life insurance subsidiaries. Equitable Life has
directed payment under these annuities to be made directly to the
beneficiaries under the structured settlement agreements. A contingent
liability exists with respect to these agreements should the previously
wholly owned subsidiaries be unable to meet their obligations.
Management believes the satisfaction of those obligations by Equitable
Life is remote.
The Insurance Group had $24.7 million of letters of credit outstanding
at December 31, 1998.
15) LITIGATION
Major Medical Insurance Cases
Equitable Life agreed to settle, subject to court approval, previously
disclosed cases involving lifetime guaranteed renewable major medical
insurance policies issued by Equitable Life in five states. Plaintiffs
in these cases claimed that Equitable Life's method for determining
premium increases breached the terms of certain forms of the policies
and was misrepresented. In certain cases plaintiffs also claimed that
Equitable Life misrepresented to policyholders that premium increases
had been approved by insurance departments, and that it determined
annual rate increases in a manner that discriminated against the
policyholders.
In December 1997, Equitable Life entered into a settlement agreement,
subject to court approval, which would result in creation of a
nationwide class consisting of all persons holding, and paying premiums
on, the policies at any time since January 1, 1988 and the dismissal
with prejudice of the pending actions and the resolution of all similar
claims on a nationwide basis. Under the terms of the settlement, which
involves approximately 127,000 former and current policyholders,
Equitable Life would pay $14.2 million in exchange for release of all
claims and will provide future relief to certain current policyholders
by restricting future premium increases, estimated to have a present
value of $23.3 million. This estimate is based upon assumptions about
future events that cannot be predicted with certainty and accordingly
the actual value of the future relief may vary. In October 1998, the
court entered a judgment approving the settlement agreement and, in
November, a member of the national class filed a notice of appeal of the
judgment. In January 1999, the Court of Appeals granted Equitable Life's
motion to dismiss the appeal.
Life Insurance and Annuity Sales Cases
A number of lawsuits are pending as individual claims and purported
class actions against Equitable Life and its subsidiary insurance
companies Equitable Variable Life Insurance Company ("EVLICO," which was
merged into Equitable Life effective January 1, 1997) and The Equitable
of Colorado, Inc. ("EOC"). These actions involve, among other things,
sales of life and annuity products for varying periods from 1980 to the
present, and allege, among other things, sales practice
misrepresentation primarily involving: the number of premium payments
required; the propriety of a product as an investment vehicle; the
propriety of a product as a replacement of an existing policy; and
failure to disclose a product as life insurance. Some actions are in
state courts and others are in U.S. District Courts in varying
jurisdictions, and are in varying stages of discovery and motions for
class certification.
F-32
<PAGE>
In general, the plaintiffs request an unspecified amount of damages,
punitive damages, enjoinment from the described practices, prohibition
against cancellation of policies for non-payment of premium or other
remedies, as well as attorneys' fees and expenses. Similar actions have
been filed against other life and health insurers and have resulted in
the award of substantial judgments, including material amounts of
punitive damages, or in substantial settlements. Although the outcome of
litigation cannot be predicted with certainty, particularly in the early
stages of an action, The Equitable's management believes that the
ultimate resolution of these cases should not have a material adverse
effect on the financial position of The Equitable. The Equitable's
management cannot make an estimate of loss, if any, or predict whether
or not any such litigation will have a material adverse effect on The
Equitable's results of operations in any particular period.
Discrimination Case
Equitable Life is a defendant in an action, certified as a class action
in September 1997, in the United States District Court for the Northern
District of Alabama, Southern Division, involving alleged discrimination
on the basis of race against African-American applicants and potential
applicants in hiring individuals as sales agents. Plaintiffs seek a
declaratory judgment and affirmative and negative injunctive relief,
including the payment of back-pay, pension and other compensation.
Although the outcome of litigation cannot be predicted with certainty,
The Equitable's management believes that the ultimate resolution of this
matter should not have a material adverse effect on the financial
position of The Equitable. The Equitable's management cannot make an
estimate of loss, if any, or predict whether or not such matter will
have a material adverse effect on The Equitable's results of operations
in any particular period.
Alliance Capital
In July 1995, a class action complaint was filed against Alliance North
American Government Income Trust, Inc. (the "Fund"), Alliance and
certain other defendants affiliated with Alliance, including the Holding
Company, alleging violations of Federal securities laws, fraud and
breach of fiduciary duty in connection with the Fund's investments in
Mexican and Argentine securities. The original complaint was dismissed
in 1996; on appeal, the dismissal was affirmed. In October 1996,
plaintiffs filed a motion for leave to file an amended complaint,
alleging the Fund failed to hedge against currency risk despite
representations that it would do so, the Fund did not properly disclose
that it planned to invest in mortgage-backed derivative securities and
two Fund advertisements misrepresented the risks of investing in the
Fund. In October 1998, the U.S. Court of Appeals for the Second Circuit
issued an order granting plaintiffs' motion to file an amended complaint
alleging that the Fund misrepresented its ability to hedge against
currency risk and denying plaintiffs' motion to file an amended
complaint containing the other allegations. Alliance believes that the
allegations in the amended complaint, which was filed in February 1999,
are without merit and intends to defend itself vigorously against these
claims. While the ultimate outcome of this matter cannot be determined
at this time, Alliance's management does not expect that it will have a
material adverse effect on Alliance's results of operations or financial
condition.
DLJSC
DLJSC is a defendant along with certain other parties in a class action
complaint involving the underwriting of units, consisting of notes and
warrants to purchase common shares, of Rickel Home Centers, Inc.
("Rickel"), which filed a voluntary petition for reorganization pursuant
to Chapter 11 of the Bankruptcy Code. The complaint seeks unspecified
compensatory and punitive damages from DLJSC, as an underwriter and as
an owner of 7.3% of the common stock, for alleged violation of Federal
securities laws and common law fraud for alleged misstatements and
omissions contained in the prospectus and registration statement used in
the offering of the units. DLJSC is defending itself vigorously against
all the allegations contained in the complaint. Although there can be no
assurance, DLJ's management does not believe that the ultimate outcome
of this litigation will have a material adverse effect on DLJ's
consolidated financial condition. Due to the early stage of this
litigation, based on the information currently available to it, DLJ's
management cannot predict whether or not such litigation will have a
material adverse effect on DLJ's results of operations in any particular
period.
F-33
<PAGE>
DLJSC is a defendant in a purported class action filed in a Texas State
Court on behalf of the holders of $550 million principal amount of
subordinated redeemable discount debentures of National Gypsum
Corporation ("NGC"). The debentures were canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
litigation seeks compensatory and punitive damages for DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter 11
proceedings. Trial is expected in early May 1999. DLJSC intends to
defend itself vigorously against all the allegations contained in the
complaint. Although there can be no assurance, DLJ's management does not
believe that the ultimate outcome of this litigation will have a
material adverse effect on DLJ's consolidated financial condition. Based
upon the information currently available to it, DLJ's management cannot
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
DLJSC is a defendant in a complaint which alleges that DLJSC and a
number of other financial institutions and several individual defendants
violated civil provisions of RICO by inducing plaintiffs to invest over
$40 million in The Securities Groups, a number of tax shelter limited
partnerships, during the years 1978 through 1982. The plaintiffs seek
recovery of the loss of their entire investment and an approximately
equivalent amount of tax-related damages. Judgment for damages under
RICO are subject to trebling. Discovery is complete. Trial has been
scheduled for May 17, 1999. DLJSC believes that it has meritorious
defenses to the complaints and will continue to contest the suits
vigorously. Although there can be no assurance, DLJ's management does
not believe that the ultimate outcome of this litigation will have a
material adverse effect on DLJ's consolidated financial condition. Based
upon the information currently available to it, DLJ's management cannot
predict whether or not such litigation will have a material adverse
effect on DLJ's results of operations in any particular period.
DLJSC is a defendant along with certain other parties in four actions
involving Mid-American Waste Systems, Inc. ("Mid-American"), which filed
a voluntary petition for reorganization pursuant to Chapter 11 of the
Bankruptcy Code in January 1997. Three actions seek rescission,
compensatory and punitive damages for DLJSC's role in underwriting notes
of Mid-American. The other action, filed by the Plan Administrator for
the bankruptcy estate of Mid-American, alleges that DLJSC is liable as
an underwriter for alleged misrepresentations and omissions in the
prospectus for the notes, and liable as financial advisor to
Mid-American for allegedly failing to advise Mid-American about its
financial condition. DLJSC believes that it has meritorious defenses to
the complaints and will continue to contest the suits vigorously.
Although there can be no assurance, DLJ's management does not believe
that the ultimate outcome of this litigation will have a material
adverse effect on DLJ's consolidated financial condition. Based upon
information currently available to it, DLJ's management cannot predict
whether or not such litigation will have a material adverse effect on
DLJ's results of operations in any particular period.
Other Matters
In addition to the matters described above, the Holding Company and its
subsidiaries are involved in various legal actions and proceedings in
connection with their businesses. Some of the actions and proceedings
have been brought on behalf of various alleged classes of claimants and
certain of these claimants seek damages of unspecified amounts. While
the ultimate outcome of such matters cannot be predicted with certainty,
in the opinion of management no such matter is likely to have a material
adverse effect on the Company's consolidated financial position or
results of operations.
16) LEASES
The Company has entered into operating leases for office space and
certain other assets, principally data processing equipment and office
furniture and equipment. Future minimum payments under noncancelable
leases for 1999 and the succeeding four years are $98.7 million, $92.7
million, $73.4 million, $59.9 million, $55.8 million and $550.1 million
thereafter. Minimum future sublease rental income on these noncancelable
leases for 1999 and the succeeding four years is $7.6 million, $5.6
million, $4.6 million, $2.3 million, $2.3 million and $25.4 million
thereafter.
F-34
<PAGE>
At December 31, 1998, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1999
and the succeeding four years is $189.2 million, $177.0 million, $165.5
million, $145.4 million, $122.8 million and $644.7 million thereafter.
17) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1998 1997 1996
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Compensation costs................................. $ 772.0 $ 721.5 $ 704.8
Commissions........................................ 478.1 409.6 329.5
Short-term debt interest expense................... 26.1 31.7 8.0
Long-term debt interest expense.................... 84.6 121.2 137.3
Amortization of policy acquisition costs........... 292.7 287.3 405.2
Capitalization of policy acquisition costs......... (609.1) (508.0) (391.9)
Rent expense, net of sublease income............... 100.0 101.8 113.7
Cursitor intangible assets writedown............... - 120.9 -
Other.............................................. 1,056.8 917.9 769.1
----------------- ---------------- -----------------
Total.............................................. $ 2,201.2 $ 2,203.9 $ 2,075.7
================= ================ =================
</TABLE>
During 1997 and 1996, the Company restructured certain operations in
connection with cost reduction programs and recorded pre-tax provisions
of $42.4 million and $24.4 million, respectively. The amounts paid
during 1998, associated with cost reduction programs, totaled $22.6
million. At December 31, 1998, the liabilities associated with cost
reduction programs amounted to $39.4 million. The 1997 cost reduction
program included costs related to employee termination and exit costs.
The 1996 cost reduction program included restructuring costs related to
the consolidation of insurance operations' service centers. Amortization
of DAC in 1996 included a $145.0 million writeoff of DAC related to DI
contracts.
18) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION
Equitable Life is restricted as to the amounts it may pay as dividends
to the Holding Company. Under the New York Insurance Law, the
Superintendent has broad discretion to determine whether the financial
condition of a stock life insurance company would support the payment of
dividends to its shareholders. For 1998, 1997 and 1996, statutory net
income (loss) totaled $384.4 million, $(351.7) million and $(351.1)
million, respectively. Statutory surplus, capital stock and Asset
Valuation Reserve ("AVR") totaled $4,728.0 million and $3,907.1 million
at December 31, 1998 and 1997, respectively. No dividends have been paid
by Equitable Life to the Holding Company to date.
At December 31, 1998, the Insurance Group, in accordance with various
government and state regulations, had $25.6 million of securities
deposited with such government or state agencies.
The differences between statutory surplus and capital stock determined
in accordance with Statutory Accounting Principles ("SAP") and total
shareholders' equity on a GAAP basis are primarily attributable to: (a)
inclusion in SAP of an AVR intended to stabilize surplus from
fluctuations in the value of the investment portfolio; (b) future policy
benefits and policyholders' account balances under SAP differ from GAAP
due to differences between actuarial assumptions and reserving
methodologies; (c) certain policy acquisition costs are expensed under
SAP but deferred under GAAP and amortized over future periods to achieve
a matching of revenues and expenses; (d) Federal income taxes are
generally accrued under SAP based upon revenues and expenses in the
Federal income tax return while under GAAP deferred taxes are provided
for timing differences between recognition of revenues and expenses for
financial reporting and income tax purposes; (e) valuation of assets
under SAP and GAAP differ due to different investment valuation and
depreciation methodologies, as well as the deferral of interest-related
realized capital gains and losses on fixed income investments; and (f)
differences in the accrual methodologies for post-employment and
retirement benefit plans.
F-35
<PAGE>
19) BUSINESS SEGMENT INFORMATION
The Company's operations consist of Insurance and Investment Services.
The Company's management evaluates the performance of each of these
segments independently and allocates resources based on current and
future requirements of each segment. Management evaluates the
performance of each segment based upon operating results adjusted to
exclude the effect of unusual or non-recurring events and transactions
and certain revenue and expense categories not related to the base
operations of the particular business net of minority interest.
Information for all periods is presented on a comparable basis.
Intersegment investment advisory and other fees of approximately $61.8
million, $84.1 million and $129.2 million for 1998, 1997 and 1996,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to discontinued
operations of $.5 million, $4.2 million and $13.3 million for 1998, 1997
and 1996, respectively, are eliminated in consolidation.
The following tables reconcile each segment's revenues and operating
earnings to total revenues and earnings from continuing operations
before Federal income taxes and cumulative effect of accounting change
as reported on the consolidated statements of earnings and the segments'
assets to total assets on the consolidated balance sheets, respectively.
<TABLE>
<CAPTION>
Investment
Insurance Services Elimination Total
--------------- ----------------- --------------- ----------------
(In Millions)
<S> <C> <C> <C> <C>
1998
Segment revenues..................... $ 4,029.8 $ 1,438.4 $ (5.7) $ 5,462.5
Investment gains..................... 64.8 35.4 - 100.2
--------------- ----------------- --------------- ----------------
Total Revenues....................... $ 4,094.6 $ 1,473.8 $ (5.7) $ 5,562.7
=============== ================= =============== ================
Pre-tax operating earnings........... $ 688.6 $ 284.3 $ - $ 972.9
Investment gains , net of
DAC and other charges.............. 41.7 27.7 - 69.4
Pre-tax minority interest............ - 141.5 - 141.5
--------------- ----------------- --------------- ----------------
Earnings from Continuing
Operations......................... $ 730.3 $ 453.5 $ - $ 1,183.8
=============== ================= =============== ================
Total Assets......................... $ 75,626.0 $ 12,379.2 $ (64.4) $ 87,940.8
=============== ================= =============== ================
1997
Segment revenues..................... $ 3,990.8 $ 1,200.0 $ (7.7) $ 5,183.1
Investment gains (losses)............ (318.8) 255.1 - (63.7)
--------------- ----------------- --------------- ----------------
Total Revenues....................... $ 3,672.0 $ 1,455.1 $ (7.7) $ 5,119.4
=============== ================= =============== ================
Pre-tax operating earnings........... $ 507.0 $ 258.3 $ - $ 765.3
Investment gains (losses), net of
DAC and other charges.............. (292.5) 252.7 - (39.8)
Non-recurring costs and expenses..... (41.7) (121.6) - (163.3)
Pre-tax minority interest............ - 108.5 - 108.5
--------------- ----------------- --------------- ----------------
Earnings from Continuing
Operations......................... $ 172.8 $ 497.9 $ - $ 670.7
=============== ================= =============== ================
Total Assets......................... $ 67,762.4 $ 13,691.4 $ (96.1) $ 81,357.7
=============== ================= =============== ================
</TABLE>
F-36
<PAGE>
<TABLE>
<CAPTION>
Investment
Insurance Services Elimination Total
--------------- ----------------- --------------- ----------------
(In Millions)
<S> <C> <C> <C> <C>
1996
Segment revenues..................... $ 3,789.1 $ 1,105.5 $ (12.6) $ 4,882.0
Investment gains (losses)............ (30.3) 20.5 - (9.8)
--------------- ----------------- --------------- ----------------
Total Revenues....................... $ 3,758.8 $ 1,126.0 $ (12.6) $ 4,872.2
=============== ================= =============== ================
Pre-tax operating earnings........... $ 337.1 $ 224.6 $ - $ 561.7
Investment gains (losses), net of
DAC and other charges.............. (37.2) 16.9 - (20.3)
Reserve strengthening and DAC
writeoff........................... (393.0) - - (393.0)
Non-recurring costs and
expenses........................... (22.3) (1.1) - (23.4)
Pre-tax minority interest............ - 83.6 - 83.6
--------------- ----------------- --------------- ----------------
Earnings (Loss) from
Continuing Operations.............. $ (115.4) $ 324.0 $ - $ 208.6
=============== ================= =============== ================
</TABLE>
20) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1998 and 1997 are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
----------------- ----------------- ------------------ ------------------
(In Millions)
<S> <C> <C> <C> <C>
1998
Total Revenues................ $ 1,470.2 $ 1,422.9 $ 1,297.6 $ 1,372.0
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 212.8 $ 197.0 $ 136.8 $ 158.9
================= ================= ================== ==================
Net Earnings.................. $ 213.3 $ 198.3 $ 137.5 $ 159.1
================= ================= ================== ==================
1997
Total Revenues................ $ 1,266.0 $ 1,552.8 $ 1,279.0 $ 1,021.6
================= ================= ================== ==================
Earnings from Continuing
Operations before
Cumulative Effect
of Accounting Change........ $ 117.4 $ 222.5 $ 145.1 $ 39.4
================= ================= ================== ==================
Net Earnings (Loss)........... $ 114.1 $ 223.1 $ 144.9 $ (44.9)
================= ================= ================== ==================
</TABLE>
Net earnings for the three months ended December 31, 1997 includes a
charge of $212.0 million related to additions to valuation allowances on
and writeoffs of real estate of $225.2 million, and reserve
strengthening on discontinued operations of $84.3 million offset by a
reversal of prior years tax reserves of $97.5 million.
F-37
<PAGE>
21) INVESTMENT IN DLJ
At December 31, 1998, the Company's ownership of DLJ interest was
approximately 32.5%. The Company's ownership interest will be further
reduced upon the issuance of common stock after the vesting of
forfeitable restricted stock units acquired by and/or the exercise of
options granted to certain DLJ employees. DLJ restricted stock units
represents forfeitable rights to receive approximately 5.2 million
shares of DLJ common stock through February 2000.
The results of operations of DLJ are accounted for on the equity basis
and are included in commissions, fees and other income in the
consolidated statements of earnings. The Company's carrying value of DLJ
is included in investment in and loans to affiliates in the consolidated
balance sheets.
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 13,195.1 $ 16,535.7
Securities purchased under resale agreements........................... 20,063.3 22,628.8
Broker-dealer related receivables...................................... 34,264.5 28,159.3
Other assets........................................................... 4,759.3 3,182.0
---------------- -----------------
Total Assets........................................................... $ 72,282.2 $ 70,505.8
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 35,775.6 $ 36,006.7
Broker-dealer related payables......................................... 26,161.5 26,127.2
Short-term and long-term debt.......................................... 3,997.6 3,249.5
Other liabilities...................................................... 3,219.8 2,860.9
---------------- -----------------
Total liabilities...................................................... 69,154.5 68,244.3
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 2,927.7 2,061.5
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 72,282.2 $ 70,505.8
================ =================
DLJ's equity as reported............................................... $ 2,927.7 $ 2,061.5
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.7 23.5
The Holding Company's equity ownership in DLJ.......................... (1,002.4) (740.2)
Minority interest in DLJ............................................... (1,118.2) (729.3)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 830.8 $ 615.5
================ =================
</TABLE>
F-38
<PAGE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1998 1997
---------------- -----------------
(In Millions)
<S> <C> <C>
Commission, fees and other income...................................... $ 3,184.7 $ 2,430.7
Net investment income.................................................. 2,189.1 1,652.1
Dealer, trading and investment gains, net.............................. 33.2 557.7
---------------- -----------------
Total revenues......................................................... 5,407.0 4,640.5
Total expenses including income taxes.................................. 5,036.2 4,232.2
---------------- -----------------
Net earnings........................................................... 370.8 408.3
Dividends on preferred stock........................................... 21.3 12.2
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 349.5 $ 396.1
================ =================
DLJ's earnings applicable to common shares as reported................. $ 349.5 $ 396.1
Amortization of cost in excess of net assets acquired in 1985.......... (.8) (1.3)
The Holding Company's equity in DLJ's earnings......................... (136.8) (156.8)
Minority interest in DLJ............................................... (99.5) (109.1)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 112.4 $ 128.9
================ =================
</TABLE>
22) ACCOUNTING FOR STOCK-BASED COMPENSATION
The Holding Company sponsors a stock option plan for employees of
Equitable Life. DLJ and Alliance each sponsor their own stock option
plans for certain employees. The Company has elected to continue to
account for stock-based compensation using the intrinsic value method
prescribed in APB No. 25. Had compensation expense for the Holding
Company, DLJ and Alliance Stock Option Incentive Plan options been
determined based on SFAS No. 123's fair value based method, the
Company's pro forma net earnings for 1998, 1997 and 1996 would have
been:
<TABLE>
<CAPTION>
1998 1997 1996
--------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C>
Net Earnings:
As reported............................................. $ 708.2 $ 437.2 $ 10.3
Pro forma............................................... 678.4 426.3 3.3
</TABLE>
The fair values of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, were estimated as of the
dates of grant using the Black-Scholes option pricing model. The option
pricing assumptions for 1998, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
------------------------------ ------------------------------- ----------------------------------
1998 1997 1996 1998 1997 1996 1998 1997 1996
--------- ---------- --------- ---------- -------------------- ---------------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield...... 0.32% 0.48% 0.80% 0.69% 0.86% 1.54% 6.50% 8.00% 8.00%
Expected volatility. 28% 20% 20% 40% 33% 25% 29% 26% 23%
Risk-free interest
rate.............. 5.48% 5.99% 5.92% 5.53% 5.96% 6.07% 4.40% 5.70% 5.80%
Expected life
in years.......... 5 5 5 5 5 5 7.2 7.2 7.4
Weighted average
fair value per
option at
grant-date........ $22.64 $12.25 $6.94 $16.27 $10.81 $4.03 $3.86 $2.18 $1.35
</TABLE>
F-39
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
----------------------------- ----------------------------- -----------------------------
Weighted Weighted Weighted
Average Average Average
Exercise Exercise Exercise
Price of Price of Price of
Shares Options Shares Options Units Options
(In Millions) Outstanding (In Millions) Outstanding (In Millions) Outstanding
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1996........ 6.7 $20.27 18.4 $13.50 9.6 $ 8.86
Granted................ .7 $24.94 4.2 $16.27 1.4 $12.56
Exercised.............. (.1) $19.91 - (.8) $ 6.82
Expired................ - - -
Forfeited.............. (.6) $20.21 (.4) $13.50 (.2) $ 9.66
--------------- ------------- ---------------
Balance as of
December 31, 1996...... 6.7 $20.79 22.2 $14.03 10.0 $ 9.54
Granted................ 3.2 $41.85 6.4 $30.54 2.2 $18.28
Exercised.............. (1.6) $20.26 (.2) $16.01 (1.2) $ 8.06
Forfeited.............. (.4) $23.43 (.2) $13.79 (.4) $10.64
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 7.9 $29.05 28.2 $17.78 10.6 $11.41
Granted................ 4.3 $66.26 1.5 $38.59 2.8 $26.28
Exercised.............. (1.1) $21.18 (1.4) $14.91 (.9) $ 8.91
Forfeited.............. (.4) $47.01 (.1) $17.31 (.2) $13.14
--------------- ------------- ---------------
Balance as of
December 31, 1998...... 10.7 $44.00 28.2 $19.04 12.3 $14.94
=============== ============= ===============
</TABLE>
F-40
<PAGE>
Information about options outstanding and exercisable at December 31,
1998 is as follows:
<TABLE>
<CAPTION>
Options Outstanding Options Exercisable
---------------------------------------------------- -----------------------------------
Weighted
Average Weighted Weighted
Range of Number Remaining Average Number Average
Exercise Outstanding Contractual Exercise Exercisable Exercise
Prices (In Millions) Life (Years) Price (In Millions) Price
--------------------------------------- ----------------- ---------------- ------------------- ---------------
Holding
Company
----------------------
<S> <C> <C> <C> <C> <C>
$18.125 -$27.75 3.7 5.19 $20.97 3.0 $20.33
$28.50 -$45.25 3.0 8.68 $41.79 -
$50.63 -$66.75 2.1 9.21 $52.73 -
$81.94 -$82.56 1.9 9.62 $82.56 -
----------------- -------------------
$18.125 -$82.56 10.7 7.75 $44.00 3.0 $20.33
================= ================= ================ ==================== ==============
DLJ
----------------------
$13.50 -$25.99 22.3 7.1 $14.59 21.4 $15.05
$26.00 -$38.99 5.0 8.8 $33.94 -
$39.00 -$52.875 .9 9.4 $44.65 -
----------------- -------------------
$13.50 -$52.875 28.2 7.5 $19.04 21.4 $15.05
================= ================== ============== ===================== =============
Alliance
----------------------
$ 3.03 -$ 9.69 3.1 4.5 $ 8.03 2.4 $ 7.57
$ 9.81 -$10.69 2.0 5.3 $10.05 1.6 $10.07
$11.13 -$13.75 2.4 7.5 $11.92 1.0 $11.77
$18.47 -$18.78 2.0 9.0 $18.48 .4 $18.48
$22.50 -$26.31 2.8 9.9 $26.28 - -
----------------- -------------------
$ 3.03 -$26.31 12.3 7.2 $14.94 5.4 $ 9.88
================= =================== ============= ===================== =============
</TABLE>
F-41
