THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1998
to
EQUI-VEST(R) PROSPECTUS
DATED MAY 1, 1998
FOR EMPLOYEES OF EMPLOYERS ASSOCIATED WITH REALTY ONE
This Supplement modifies certain information contained in the
prospectus dated May 1, 1998 ("Prospectus") as it relates to certain series 200
Trusteed Contracts offered by The Equitable Life Assurance Society of the United
States ("Equitable Life"). The Series 200 Trusteed Contracts, modified as
described below (the "Modified Trusteed Contracts"), are offered to employees of
employers associated with Realty One, a real estate brokerage firm, on the basis
described in the Prospectus, except that the Contingent Withdrawal Charge
applicable to the Modified Trusteed Contracts will be waived for all plan assets
invested under such Contracts, except for any withdrawal of plan assets which
were invested in the Guaranteed Interest Account less than 120 days prior to
such withdrawal. Except as modified above, the discussion under "Contingent
Withdrawal Charge" with respect to Trusteed Contracts beginning at page 60 of
the Prospectus is applicable to the Modified Trusteed Contracts.
The Annual Administrative Charge is waived. The discussion under
"Annual Administrative Charge" on page 60 of the Prospectus is, therefore,
inapplicable.
888-1145
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1998
TO
EQUI-VEST(R) PROSPECTUS
DATED MAY 1, 1998
For Employees of Allegheny County, Pennsylvania
This Supplement modifies certain information contained in the prospectus dated
May 1, 1998 ("Prospectus") as it relates to the Series 200 EDC Contracts offered
by The Equitable Life Assurance Society of the United States ("Equitable Life").
The Series 200 EDC Contracts, modified as described below (the "Modified EDC
Contracts"), are offered to employees of Allegheny County, Pennsylvania, on the
basis described in the Prospectus, except that the Contingent Withdrawal Charge
and Annual Administrative Charge applicable to the Modified EDC Contracts will
be as follows:
o Contingent Withdrawal Charge. The Contingent Withdrawal Charge ("CWC")
schedule for the Modified EDC Contract is as follows:
Contract Year(s) CWC
---------------- ---
1 6%
2 5
3 4
4 3
5 2
6+ 0
This table replaces the table on page 61 of the Prospectus.
No CWC will apply in the event of the:
-- Death
-- Disability
-- Separation from service from Allegheny County
-- Retirement
of the participant.
The Annual Administrative Charge is waived. The discussion under "Annual
Administrative Charge," beginning at page 60 of the Prospectus is, therefore,
not applicable.
888-1146
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1998
TO
EQUI-VEST(R) PROSPECTUS
DATED MAY 1, 1998
This Supplement modifies certain information in the prospectus dated May 1,
1998 for EQUI-VEST group and individual deferred variable annuity contracts
offered by Equitable Life. Capitalized terms in this Supplement have the same
meanings as in the prospectus.
In addition to other options described in "Distribution Options" under Part
6 of the prospectus, the following distribution options may be available to
participants in certain public employee deferred compensation plans in the State
of Iowa. If such plans permit the use of such options, your Employer may select
one of the following options upon receipt of your irrevocable election to
receive payments in such form:
1. MINIMUM DISTRIBUTION OPTION
Beginning in the year that you are required to begin minimum distribution
payments under the Code and applicable U.S. Treasury regulations and each year
thereafter, we will make annual payments to you subject to the rules of the Code
and to our administrative rules then in effect. The amount of each payment will
be calculated as described in this item 1.
Each year, we will calculate an annual amount equal to the minimum
distribution required under Section 401(a)(9) of the Code and applicable
Treasury regulations. The minimum distribution for each such year will be
determined by dividing (a) your Annuity Account Value as of December 31 of the
previous year, by (b) a life expectancy factor described below.
As you may elect under the terms of your Employer's plan, the life
expectancy factor is either a single life expectancy factor (based on your life
expectancy) or a joint life expectancy factor (based on the joint lives of you
and your spouse). Either such factor will be determined based on tables
contained in Section 401(a)(9) of the Code or applicable Treasury regulations.
If the joint life expectancy factor is elected, your designated beneficiary
for minimum distribution purposes must be your spouse, unless the naming of a
non-spouse beneficiary is permitted pursuant to our rules in effect at the time
a beneficiary is named (such naming is not permitted at this date).
Life expectancy factors will be recalculated each year, unless (a) you elect
not to recalculate or (b) the beneficiary is not your spouse. If life expectancy
is not recalculated, then each life expectancy factor is based on the
calculation for the calendar year in which you (and the beneficiary, if joint
life expectancy applies) begin receiving minimum distributions reduced by one
for each subsequent calendar year.
The election of the life expectancy factor to be used and whether
recalculation is to apply will be irrevocable.
The calculation procedure may be changed as necessary in our sole discretion
to comply with the minimum distribution rules under Section 401(a)(9) of the
Code and applicable Treasury regulations.
2. COMBINATION OF SYSTEMATIC WITHDRAWAL AND MINIMUM DISTRIBUTION OPTION
Beginning on the date of the first payment of your plan benefits, if we are
directed by your Employer under the terms of the Employer's plan, we will make
systematic withdrawal payments to you as follows at the frequency you have
elected (annually, quarterly or monthly), subject to our administrative rules
then in effect. The systematic withdrawal option described in "Distribution
Options" under Part 6 of the prospectus will be in combination with the Minimum
Distribution Option as described below.
Prior to the year that minimum distributions are required to start, we will
pay the amount of each systematic withdrawal payment of the type you have
selected. Based on your elections regarding your beneficiary and recalculations
of life expectancy as described in item 1 above, we will calculate annually the
required imputed minimum distribution amount and determine whether an additional
payment to you is required. The calculation of such imputed minimum distribution
amount will be made on a basis consistent with the required minimum distribution
rules described in item 1 above, using the tables contained in Section 401(a)(9)
of the Code and applicable Treasury
1
888-1147
<PAGE>
regulations. Beginning with the year that minimum distributions are required to
start, we will calculate annually the required minimum distribution and
determine whether an additional payment to you is required. If required, an
imputed minimum distribution payment or a required minimum distribution payment,
as applicable, will be made in addition to the systematic withdrawal payments.
If at any time after you have made the irrevocable election under your
Employer's plan as described above, the Internal Revenue Service disallows the
basis for calculating the payments as described in this item 2, we will have the
right, in our sole discretion, to change the basis for calculating the payments
as we deem necessary in order to meet the requirements of the Code and
applicable Treasury regulations.
FOR USE ONLY WITH PEDC CONTRACTS
IN THE STATE OF IOWA
2
888-1147
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1998
TO
EQUI-VEST (R) PROSPECTUS
DATED MAY 1, 1998
This supplement modifies certain information in the prospectus dated May 1, 1998
(the "Prospectus") for EQUI-VEST group and individual deferred variable annuity
contracts offered by Equitable Life. Equitable Life will offer its EQUI-VEST
Series 200 TSA contracts modified with Rider 95MDHOSP (the "Modified TSA
Contract") only to employees (age 75 and below) of hospitals and non-profit
healthcare organizations doing business in Maryland. This Supplement describes
the material differences between the Modified TSA Contract and the EQUI-VEST
Series 200 TSA contract described in the Prospectus.
Capitalized terms in this Supplement have the same meaning as in the Prospectus.
Material differences between the Modified TSA Contract and the TSA provisions
described in the EQUI-VEST Prospectus include the following:
o CONTINGENT WITHDRAWAL CHARGE. The Contingent Withdrawal Charge schedule
for the Modified TSA Contract is as follows:
CONTINGENT WITHDRAWAL CHARGES
CONTRACT YEAR(S) CHARGE
---------------- ------
1 6%
2 5
3 4
4 3
5 2
6+ 0
This table replaces the EQUI-VEST Series 200 Contingent Withdrawal
Charge table "Deductions and Charges" in Part 7 of the Prospectus.
o No contingent withdrawal charge will apply to funds transferred on or
after January 18, 1996 into the Modified TSA Contract from another tax
sheltered annuity contract qualified under Section 403(b) of the Code
and issued by an insurance company other than Equitable Life.
o LOANS. Loans will be available under the Modified TSA Contract when the
TSA plan is subject to the Employee Retirement Income Security Act of
1974 (ERISA). Only one outstanding loan will be permitted at any time.
There is a minimum loan amount of $1,000 and a maximum loan amount
which varies depending on the participant's Annuity Account Value but
may never exceed $50,000. For more complete details and rules on Loans
see "Loans (for TSA and Corporate Trusteed Only)" in Part 6 of the
Prospectus, "Certain Rules Applicable to Plan Loans" in Part 9 and
"Part 1: Additional Loan Provisions" in the Statement of Additional
Information.
o EXCEPTIONS TO THE CONTINGENT WITHDRAWAL CHARGE. For the modified TSA
Contract, the "How the Contingent Withdrawal Charge is Applied for
Series 100 and 200 IRA, SEP, SIMPLE IRA, TSA, EDC and Annuitant-Owned
HR-10 Contracts" Section in "Part 7: Deductions and Charges" has been
revised as follows:
No charge will be applied to any amount withdrawn from the TSA Contract
if:
-- the Annuitant has separated from service, or
-- the Annuitant makes a withdrawal that qualifies as a hardship
withdrawal under the Plan and the Code, or
-- the Annuitant makes a withdrawal at any time if he qualifies to
receive Social Security disability benefits as certified by the
Social Security Administration or any successor agency.
o ANNUAL ADMINISTRATIVE CHARGE. No annual administrative charge will be
charged to participants in the Modified TSA Contract.
FOR USE ONLY IN THE STATE OF MARYLAND
888-1148
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
EQUI-VEST(R) SUPPLEMENT
DATED MAY 1, 1998
TO
EQUI-VEST(R) PROSPECTUS
DATED MAY 1, 1998
This Supplement (SUPPLEMENT) adds and modifies certain information in the
EQUI-VEST PERSONAL RETIREMENT PROGRAMS AND EMPLOYER-SPONSORED RETIREMENT
PROGRAMS prospectus dated May 1, 1998 (PROSPECTUS) for EQUI-VEST annuities,
group and individual deferred variable annuity contracts (CONTRACTS) offered by
The Equitable Life Assurance Society of the United States (EQUITABLE LIFE). You
may obtain an additional copy of the Prospectus, free of charge by writing us at
P.O. Box 2996, New York, NY 10116-2996, or by calling us toll-free at
1-800-628-6673.
This Supplement provides information about EQUI-VEST that prospective investors
should know before investing. You should read it carefully and retain it for
future reference. Capitalized terms in this Supplement have the same meanings as
in the Prospectus, unless the content indicates otherwise.
LIMITED OPPORTUNITY FOR EQUI-VEST TO TRANSFER FROM THE GUARANTEED INTEREST
ACCOUNT. If you elect to make all Investment Options available (Maximum Fund
Choice), your EQUI-VEST Contract permits you to transfer a limited amount of
your Annuity Account Value out of the Guaranteed Interest Account to any other
Investment Option. See TRANSFERS in your prospectus. From March 16, 1998 through
JULY 10, 1998, we are relaxing our Contract rules to permit you to transfer
amounts of Annuity Account Value out of the Guaranteed Interest Account to any
other Investment Option, without limitation. However, any amount transferred
must be at least $300 or, if less, the entire amount in the Guaranteed Interest
Account. In order to take advantage of this transfer opportunity, your written
transfer request must be received in our Administrative Office by JULY 10, 1998.
Your transfer request may also be received through the EQUI-VEST Telephone
Operated Support (TOPS) System. TOPS is generally available on a 24-hour basis,
7 days a week. The TOPS toll-free number is 1-800-755-7777. Your transfer
request through TOPS must be received by 4:00 P.M. Eastern Time on JULY 10,
1998. We reserve the right to extend this offer beyond this date without notice.
THIS SUPPLEMENT SHOULD BE RETAINED FOR FUTURE REFERENCE.
Copyright 1998 The Equitable Life Assurance Society
of the United States. All rights reserved.
888-1060
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SUPPLEMENT DATED MAY 1, 1998
TO
EQUI-VEST(R) PROSPECTUS
DATED MAY 1, 1998
This supplement modifies certain information in the prospectus dated May 1, 1998
(the "Prospectus") for EQUI-VEST group and individual deferred variable annuity
contracts offered by Equitable Life. Equitable Life will offer a modified
version of its EQUI-VEST Series 200 TSA contracts (the "Modified TSA Agreement")
only to participants in qualifying retirement programs of certain nonprofit
healthcare organizations. This Supplement describes the material differences
between the Modified TSA Agreement and the EQUI-VEST Series 200 TSA contract
described in the Prospectus. Capitalized terms in this Supplement have the same
meaning as in the Prospectus.
Material differences between the Modified TSA Agreement and the TSA provisions
described in the EQUI-VEST Prospectus include the following:
o CONTINGENT WITHDRAWAL CHARGE. The Contingent Withdrawal Charge schedule
for the Modified TSA Agreement is as follows:
CONTINGENT WITHDRAWAL CHARGES
-----------------------------
CONTRACT YEAR(S) CHARGE
---------------- ------
1 6%
2 5
3 4
4 3
5 2
6+ 0
This table replaces the EQUI-VEST Series 200 Contingent Withdrawal
Charge table in "Deductions and Charges" (Part 7 of the Prospectus).
o EXCEPTIONS TO THE CONTINGENT WITHDRAWAL CHARGE. For the modified TSA
Agreement, the section entitled "How the Contingent Withdrawal Charge
is Applied for Series 100 and 200 IRA, SEP, SIMPLE IRA, TSA, EDC and
Annuitant-Owned HR-10 Contracts" in "Part 7: Deductions and Charges"
has been revised to add the following waivers:
No charge will be applied to any amount withdrawn from the Modified TSA
Agreement if:
-- the Annuitant has separated from service, or
-- the Annuitant makes a withdrawal at any time if he qualifies to
receive Social Security disability benefits as certified by the
Social Security Administration or any successor agency, or
-- the Annuitant makes a withdrawal that qualifies as a hardship with-
drawal under the Plan and the Code.
o ANNUAL ADMINISTRATIVE CHARGE. The annual administrative charge to
participants under the Modified TSA Agreement is at maximum the charge
described in the Prospectus -- that is, it is equal to the lesser of
$30 or 2% of the Annuity Account Value on the last Business Day of each
year (adjusted to include any withdrawals made during the year), to be
prorated for a fractional year. This charge may be reduced or waived
when a Modified TSA Agreement is used by the employer and the required
participant services are performed at a modified or minimum level.
FOR USE ONLY IN THE STATE OF ILLINOIS.
888-1161
<PAGE>
EQUI-VEST(R)
PERSONAL RETIREMENT PROGRAMS
AND
EMPLOYER-SPONSORED RETIREMENT PROGRAMS
PROSPECTUS, DATED MAY 1, 1998
- --------------------------------------------------------------------------------
VARIABLE ANNUITY CONTRACTS FUNDED THROUGH THE INVESTMENT FUNDS OF
SEPARATE ACCOUNT A
Issued By:
The Equitable Life Assurance Society of the United States
- --------------------------------------------------------------------------------
This prospectus describes group and individual deferred variable annuity
contracts (CONTRACTS) offered by The Equitable Life Assurance Society of the
United States (EQUITABLE LIFE). The EQUI-VEST Contracts are designed for
retirement savings and long-range financial planning as part of a retirement
savings plan. Contributions in EQUI-VEST Contracts accumulate on a Federal
income tax-deferred basis, and at a future date you can receive a stream of
periodic payments, including a fixed or variable annuity.
EQUI-VEST Personal Retirement Programs include individual retirement annuities
(IRAS) and those established through rollovers from tax-favored retirement plans
(QP IRAS) as well as non-qualified annuities (NQS).
EQUI-VEST Employer-Sponsored Retirement Programs include SEPs, SIMPLE IRAs,
TSAs, EDCs, Trusteed and Annuitant-Owned HR-10 Plans, as described in this
prospectus.
EQUI-VEST offers the investment options (INVESTMENT OPTIONS) listed below. These
Investment Options include the Guaranteed Interest Account, which is part of
Equitable Life's general account and pays interest at guaranteed fixed rates,
twenty-four variable investment funds (INVESTMENT FUNDS) of Separate Account A
(SEPARATE ACCOUNT), and ten Fixed Maturity Periods (FIXED MATURITY PERIODS) in
the Fixed Maturity Account (in states where approved).
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT FUNDS OTHER INVESTMENT OPTIONS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
o Alliance Money Market o Alliance Small Cap Growth o EQ/ Putnam Balanced o Guaranteed Interest Account
o Alliance Intermediate o Alliance Conservative o MFS Research o Fixed Maturity Account:
Government Securities Investors o MFS Emerging Growth Companies A choice of ten Fixed
o Alliance High Yield o Alliance Balanced o Morgan Stanley Emerging Maturity Periods with
o Alliance Quality Bond o Alliance Growth Investors Markets Equity expiration dates 1999
o Alliance Growth & Income o T. Rowe Price International o Warburg Pincus Small Company through 2008
o Alliance Equity Index Stock Value
o Alliance Common Stock o T. Rowe Price Equity Income o Merrill Lynch World Strategy
o Alliance Global o EQ/Putnam Growth & Income o Merrill Lynch Basic Value
o Alliance International Value Equity
o Alliance Aggressive Stock
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
We invest each Investment Fund in shares of a corresponding portfolio
(PORTFOLIO) of either Class IA shares of The Hudson River Trust (HRT) or in
Class IB shares of the EQ Advisors Trust (EQAT), two mutual funds whose shares
are purchased by the separate accounts of insurance companies. The prospectuses
for HRT (in which the "Alliance" Investment Funds invest) and EQAT (in which the
other Investment Funds invest), directly follow this prospectus and describe the
investment objectives, policies and risks of the Portfolios.
Amounts allocated to a Fixed Maturity Period within the Fixed Maturity Account
accumulate on a fixed basis and are credited with interest at a rate we set
(RATE TO MATURITY) for the entire period. On each business day (BUSINESS DAY) we
will determine the Rate to Maturity available for amounts newly allocated to
Fixed Maturity Periods. A market value adjustment (positive or negative) will be
made for withdrawals, transfers, terminations and certain other transactions
from a Fixed Maturity Period before its expiration date (EXPIRATION DATE). Each
Fixed Maturity Period has its own Rate to Maturity.
Participants may choose from a variety of payout options. If an annuity is
selected as the retirement payout option, variable and fixed annuities are
available. Fixed annuities are funded through Equitable Life's general account.
Variable payments will be funded through your choice of Investment Funds
investing in HRT.
This prospectus provides information about EQUI-VEST that prospective investors
should know before investing. You should read it carefully and retain it for
future reference. The prospectus is not valid unless it is attached to current
prospectuses for HRT and EQAT, which you should also read carefully. The HRT and
EQAT prospectuses are attached to this prospectus.
Registration statements relating to the Separate Account and to interests under
the Fixed Maturity Periods have been filed with the Securities and Exchange
Commission (SEC). The Statement of Additional Information (SAI), dated May 1,
1998, which is part of the registration statement for the Separate Account, is
available free of charge upon request by writing to the Processing Office or
calling 1-800-628-6673, our toll-free number. The SAI has been incorporated by
reference into this prospectus. The Table of Contents for the SAI appears at the
back of this prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE CONTRACTS 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 INVESTED.
- --------------------------------------------------------------------------------
May 1, 1998 888-1144 Cat. No. 127653
Copyright 1998 The Equitable Life Assurance Society of the United States, New
York, New York, 10104. All rights reserved.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Equitable Life's Annual Report on Form 10-K for the year ended December
31, 1997 and a current report on Form 8-K dated April 7, 1998, are incorporated
herein by reference.
All documents or reports filed by Equitable Life pursuant to Section
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 (EXCHANGE ACT)
after the date hereof and prior to the termination of the offering of the
securities offered hereby shall be deemed to be incorporated by reference in
this prospectus and to be a part hereof from the date of filing of such
documents. Any statement contained in a document incorporated or deemed to be
incorporated herein by reference shall be deemed to be modified or superseded
for purposes of this prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
and superseded, to constitute a part of this prospectus. Equitable Life files
its Exchange Act documents and reports, including its annual and quarterly
reports on Form 10-K and Form 10-Q, electronically pursuant to EDGAR under CIK
No. 0000727920. The SEC maintains a web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the SEC. The address of the site is http://www.sec.gov.
Equitable Life will provide without charge to each person to whom this
prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the foregoing documents incorporated herein by reference (other
than exhibits not specifically incorporated by reference into the text of such
documents). Requests for such documents should be directed to The Equitable Life
Assurance Society of the United States, 1290 Avenue of the Americas, New York,
New York 10104. Attention: Corporate Secretary (telephone: (212) 554-1234).
2
<PAGE>
- --------------------------------------------------------------------------------
PROSPECTUS TABLE OF CONTENTS
- --------------------------------------------------------------------------------
GENERAL TERMS PAGE 5
PART 1: SUMMARY PAGE 7
Equitable Life 7
Deferred Variable Annuities 7
Types of Retirement Programs 7
Investment Options 9
Selecting Investment Options 9
Contributions 9
Transfers 9
Services We Provide 9
Distribution Options and Death
Benefits 11
SPDA Variable Distribution Option 11
Withdrawals and Termination 11
Loans 11
Taxes 12
Deductions and Charges 12
10-Day Free Look for EQUI-VEST 12
Fee Tables and Examples 13
PART 2: SEPARATE ACCOUNT A AND
ITS INVESTMENT FUNDS PAGE 24
Separate Account A 24
Trusts 24
HRT's Manager and Investment Adviser 25
EQAT's Manager 26
EQAT's Investment Advisers 26
Investment Policies and Objectives of
the Trusts' Portfolios 28
PART 3: INVESTMENT PERFORMANCE PAGE 30
Investment Fund Performance 30
Communicating Performance Data 40
PART 4: THE GUARANTEED INTEREST
ACCOUNT PAGE 41
PART 5: THE FIXED
MATURITY ACCOUNT PAGE 42
Allocations to Fixed Maturity Periods 42
Availability of Fixed Maturity Periods 42
Rates to Maturity and Present Value
Per $100 of Maturity Amount 42
Options at Expiration Date 42
Market Value Adjustment for Transfers,
Withdrawals or Termination Prior
to the Expiration Date 43
PART 6: PROVISIONS OF THE EQUI-VEST
CONTRACTS PAGE 45
The EQUI-VEST Contract Series 45
Selecting Investment Options 45
Contributions under the Contracts 45
Annuity Account Value 47
Transfers 47
Automatic Transfer Options
Investment Simplifier 48
Asset Rebalancing Service 49
Automatic NQ Deposit Service 49
Loans (for TSA and Corporate Trusteed
Only) 49
Assignment and Funding Changes 49
Partial Withdrawals and Termination 49
Third Party Transfers or Exchanges 50
Requirements for Distributions 50
Distribution Options 51
Guaranteed Death Benefit 53
Your Beneficiary 53
Proceeds 54
PART 7: DEDUCTIONS AND CHARGES PAGE 55
All Contracts 55
EQUI-VEST Traditional IRA, QP IRA, Roth
IRA, SEP, SIMPLE IRA and
NQ Contracts (Series 300 and 400 Only) 56
All EQUI-VEST EDC, TSA and
Trusteed Contracts plus Traditional IRA,
QP IRA, Roth IRA, SEP, SIMPLE IRA
and NQ (Series 100 and 200 Only) 59
PART 8: VOTING RIGHTS PAGE 63
HRT and EQAT Voting Rights 63
Voting Rights of Others 63
Separate Account Voting Rights 63
Changes in Applicable Law 63
PART 9: FEDERAL TAX AND
ERISA MATTERS PAGE 64
Annuities 64
Tax Changes 64
Taxation of Non-Qualified Annuities 64
General Rules of Federal and State
Income Tax Withholding;
Information Reporting 65
Other Withholding 66
Special Rules for NQ and
Trusteed Contracts Issued
in Puerto Rico 66
Special Rules for Tax-Favored
Retirement Programs 66
Qualified Plans 66
Tax-Sheltered Annuity
Arrangements (TSAs) 67
General Discussion of IRAs 72
Cancellation 73
Traditional Individual Retirement Annuities
("Traditional IRAs") 73
3
<PAGE>
Illustration of Guaranteed Rates 78
Annuity Account Values and Cash
Values (Tables) 79
Roth IRAs
(Roth Individual Retirement Annuities) 80
Simplified Employee Pensions (SEPs) 83
SIMPLE IRAs (Savings Incentive
Match Plans) 84
Public and Tax-Exempt Organization
Employee Deferred Compensation Plans
(EDC Plans) 85
PART 10: INDEPENDENT ACCOUNTANTS PAGE 86
PART 11: LEGAL PROCEEDINGS PAGE 86
APPENDIX I: AN EXAMPLE OF
FIXED MATURITY PERIOD MARKET
VALUE ADJUSTMENT PAGE 87
STATEMENT OF ADDITIONAL
INFORMATION TABLE OF CONTENTS PAGE 88
HOW TO OBTAIN THE EQUI-VEST
STATEMENT OF ADDITIONAL
INFORMATION PAGE 88
4
<PAGE>
- --------------------------------------------------------------------------------
GENERAL TERMS
- --------------------------------------------------------------------------------
In this prospectus, the terms "we," "our" and "us" mean The Equitable Life
Assurance Society of the United States (EQUITABLE LIFE). The terms "you" and
"your" refer to the Contract Owner.
ACCUMULATION UNIT -- Contributions that are invested in an Investment Fund
purchase Accumulation Units in that Investment Fund. The "Accumulation Unit
Value" is the dollar value of each Accumulation Unit in an Investment Fund on a
given date.
ANNUITANT/PARTICIPANT -- We use the term Annuitant in our Contracts and in our
Certificates we use the term Participant. In either case, these terms mean the
individual who is the measuring life for determining annuity benefits and
generally the person who is entitled to receive those benefits. This person may,
in certain cases, not be the Contract or Certificate Owner. The Annuitant or
Participant will have the right to exercise rights under a Contract or
Certificate only if that person is also the Contract or Certificate Owner.
Throughout this prospectus, we will use the term "Annuitant" to refer to both
Annuitants and Participants.
ANNUITY ACCOUNT VALUE -- The sum of the amounts in the Investment Options under
your Contract, plus the amount of any loan reserve account. The sum of the
amounts in the Investment Options on any Business Day equals (1) the value of
your Investment Funds on that date, (2) the value in the Guaranteed Interest
Account on that date plus (3) the sum of your Market Adjusted Amounts in the
Fixed Maturity Periods on that date. See "Annuity Account Value" in Part 6.
BUSINESS DAY -- Generally, our 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 including Martin Luther King, Jr. Day and the Friday
after Thanksgiving. Additionally, we may choose to close on the day immediately
preceding or following a national business holiday or due to emergency
conditions. For the purpose of determining the Transaction Date, our Business
Day ends at 4:00 p.m. Eastern Time.
CASH VALUE -- The Annuity Account Value minus any applicable withdrawal charges
and minus any outstanding loan.
CODE -- The Internal Revenue Code of 1986, as amended.
CONTRACT/CERTIFICATE -- When EQUI-VEST is offered under a group Contract, the
document provided to participating individuals is called a Certificate rather
than a Contract. When EQUI-VEST is offered on an individual basis, the document
provided is a Contract. Throughout this prospectus, we will use the term
"Contract" to refer to both Contracts and Certificates.
CONTRACT DATE/PARTICIPATION DATE -- We use the term Contract Date in our
Contracts and in our Certificates we use the term Participation Date. In either
case, this is the Business Day we receive at our Processing Office, the properly
completed and signed application form for your Contract, any other required
documentation and a contribution (unless payment is being made through your
employer). Throughout this prospectus, we will use the term "Contract Date" to
refer to both the Contract Date and Participation Date.
CONTRACT OWNER/CERTIFICATE OWNER -- The Annuitant, employer, trustee or other
party, whichever owns the Contract or Certificate. References to "Contracts" and
"Contract Owners" in this prospectus include the Certificates and their
Certificate Owners. Throughout this prospectus, we will use the term "Contract
Owner" to refer to both the Contract Owner and Certificate Owner.
CONTRACT YEAR/PARTICIPATION YEAR -- We use the term Contract Year in our
Contracts and in our Certificates we use the term Participation Year. In either
case, this is the 12-month period beginning on either your Contract Date or each
anniversary of that date. Throughout this prospectus, we will use the term
"Contract Year" to refer to both Contract Year and Participation Year.
CURRENT TOTAL ACCOUNT BALANCE -- The sum of the amounts in your Investment Funds
and your Guaranteed Interest Account, plus the total Book Value of all of your
Fixed Maturity Periods. See "Market Value Adjustment for Transfers, Withdrawals
or Termination Prior to the Expiration Date" in Part 5.
ERISA -- The Employee Retirement Income Security Act of 1974, as amended.
EQAT -- The EQ Advisors Trust, a mutual fund in which some of the assets of
Separate Account A are invested.
EXPIRATION DATE -- The date on which a Fixed Maturity Period ends.
FIXED MATURITY ACCOUNT -- The Account that contains the Fixed Maturity Periods.
The Fixed Maturity Account is referred to as the "Guaranteed Period Account" in
the Contracts.
5
<PAGE>
FIXED MATURITY PERIOD (PERIODS) -- Any of the periods of time ending on an
Expiration Date that are available for investment under certain Series 400
Contracts. Fixed Maturity Periods are referred to as "Guarantee Periods" in the
Contracts.
GUARANTEED INTEREST ACCOUNT -- The Investment Option that pays interest at
guaranteed fixed rates and is part of our general account. The Guaranteed
Interest Account is referred to as "Guaranteed Interest Division" in some
EQUI-VEST Certificates.
HRT -- The Hudson River Trust, a mutual fund in which some of the assets of
Separate Account A are invested.
INVESTMENT FUNDS -- In some EQUI-VEST Contracts, the Investment Funds are
referred to as Investment Divisions. These are the twenty-four variable
investment funds of Separate Account A. Throughout this prospectus, we will use
the term "Investment Funds" to refer to both Investment Funds and Investment
Divisions.
INVESTMENT OPTIONS -- The choices for investment of contributions: the
twenty-four Investment Funds, the Guaranteed Interest Account, each available
Fixed Maturity Period within the Fixed Maturity Account.
IRA -- The term "IRA" may generally refer to all individual retirement
arrangements, including individual retirement accounts and individual retirement
annuities. Depending on the context, this term may cover Traditional IRAs and it
may also include SEP IRAs, SIMPLE IRAs, or QP IRAs. In addition, it may cover
Roth IRAs.
MATURITY AMOUNT -- The amount in a Fixed Maturity Period on its Expiration Date.
The Maturity Amount is referred to as the "Maturity Value" in the Contracts.
MAXIMUM FUND CHOICE -- One of two methods for selecting Investment Options --
This election will result in restrictions on the amount transferable out of the
Guaranteed Interest Account, but will allow the Contract Owner to allocate
contributions to any Investment Fund, the Guaranteed Interest Account and (for
Owners of Series 400 IRA, QP IRA and NQ Contracts only, subject to state
approval) the Fixed Maturity Account. See "Selecting Investment Options" in Part
1.
MAXIMUM TRANSFER FLEXIBILITY -- One of two methods for selecting Investment
Options--this election allows the Contract Owner to allocate contributions to
certain HRT and EQAT Investment Options and to the Guaranteed Interest Account,
with no transfer restrictions on the amount transferable out of the Guaranteed
Interest Account.
ORIGINAL CONTRACTS/CERTIFICATES -- EQUI-VEST Contracts under which the EQUI-VEST
Contract Owner has not elected to add Investment Options other than the
Guaranteed Interest Account and the Alliance Money Market, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock Funds. These Contracts
prohibit transfers into the Money Market Fund.
PARTICIPANT -- An individual who participates in an Employer's plan funded by an
EQUI-VEST Contract.
PORTFOLIOS -- The portfolios of EQAT or HRT that correspond to the Investment
Funds of the Separate Account.
PROCESSING OFFICE -- The office to which all contributions, written requests or
other written communications must be sent. See "Services We Provide" in Part 1.
RATE TO MATURITY -- The interest rate established for each Business Day for each
Fixed Maturity Period. Rates to Maturity are referred to as "Guaranteed Rates"
in the Contracts.
SAI -- The EQUI-VEST Statement of Additional Information.
SEPARATE ACCOUNT -- Our Separate Account A.
SUCCESSOR ANNUITANT AND OWNER -- The individual who upon the death of the
Annuitant and Owner succeeds as the Annuitant and Owner of the Contract. You can
designate a Successor Annuitant and Owner under Series 300 and 400 Contracts if
the following conditions are met: (1) you are both Annuitant and Owner and (2)
you name your spouse as the sole beneficiary.
SUCCESSOR OWNER -- The individual who upon your death will succeed you as Owner
of your Contract. A Successor Owner can be designated under Series 300 and 400
Contracts.
TRANSACTION DATE -- The Business Day we receive a contribution or acceptable
written or TOPS transaction request providing the information we need at our
Processing Office. If your contribution or request is not accompanied by
complete information or is mailed to the wrong address, the Transaction Date
will be the date we receive such complete information at our Processing Office.
If your contribution or request reaches our Processing Office on a non-Business
Day, or after the close of the Business Day, the Transaction Date will be the
next following Business Day -- unless under certain circumstances, a future date
certain is specified in the request.
TRUSTS -- The Hudson River Trust (HRT) and EQ Advisors Trust (EQAT),
collectively.
VALUATION PERIOD -- Each Business Day together with any consecutive preceding
non-Business Day(s).
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PART 1: SUMMARY
- --------------------------------------------------------------------------------
The following Summary is qualified in its entirety by more detailed information
appearing elsewhere in the prospectus (see "Prospectus Table of Contents" on
page 3) and the terms of applicable Contracts. Please be sure to read the
prospectus in its entirety.
EQUITABLE LIFE
EQUITABLE LIFE is a New York stock life insurance company that has been in
business since 1859. For more than 100 years we have been among the largest life
insurance companies in the United States. Equitable Life has been selling
annuities since the turn of the century. Our Home Office is located at 1290
Avenue of the Americas, New York, New York 10104. We are authorized to sell life
insurance and annuities in all fifty states, the District of Columbia, Puerto
Rico and the Virgin Islands. We maintain local offices throughout the United
States.
Equitable Life is a wholly owned subsidiary of The Equitable Companies
Incorporated (the "Holding Company"). The largest shareholder of the Holding
Company is AXA-UAP (AXA), a French company. As of December 31, 1997, AXA
beneficially owned 58.7% of the outstanding common stock of the Holding Company.
Under its investment arrangements with Equitable Life and the Holding Company,
AXA is able to exercise significant influence over the operations and capital
structure of the Holding Company and its subsidiaries, including Equitable Life.
AXA is the holding company for an international group of insurance and related
financial service companies.
Equitable Life, the Holding Company and their subsidiaries managed approximately
$274.1 billion of assets as of December 31, 1997, including third party assets
of approximately $216.9 billion. We are one of the nation's leading pension fund
managers. These assets are primarily managed for retirement and annuity programs
for businesses, tax-exempt organizations and individuals. This broad customer
base includes nearly half of the Fortune 100 companies, more than 42,000 small
businesses, state and local retirement funds in more than half of the 50 states,
approximately 250,000 employees of educational and nonprofit institutions, as
well as nearly 500,000 other individuals. Millions of Americans are covered by
Equitable Life's annuity, life and pension contracts.
DEFERRED VARIABLE ANNUITIES
EQUI-VEST is a series of deferred variable annuity contracts. Deferred variable
annuities are designed for retirement savings and long-range financial planning.
There are a variety of payout options at retirement, including a lump sum and a
variety of investment choices while your contributions are accumulating.
Contributions are generally allowed to accumulate on a Federal income
tax-deferred basis, and at a future date you can receive a stream of periodic
payments. Tax deferral is one of the advantages of an annuity over many other
kinds of investments. In addition, annuities offer individuals the opportunity
to receive an assured stream of payments for life.
Under Federal tax law, an individual, employer or trustee may, subject to
various limits, purchase an annuity to fund a tax-favored retirement program,
such as an IRA or qualified retirement plan. In many cases, the individual or
employer makes contributions to the tax-favored retirement program with pre-tax
dollars. Alternatively, annuities may be purchased with after-tax dollars by
individuals who wish to create additional retirement savings. Payments or
withdrawals may be taxable and early withdrawals may be subject to a tax penalty
and/or a contingent withdrawal charge.
TYPES OF RETIREMENT PROGRAMS
EQUI-VEST is designed to meet the retirement savings needs of individuals and
those working for businesses and other organizations.
EQUI-VEST PERSONAL RETIREMENT PROGRAMS:
o TRADITIONAL IRA
An individual retirement annuity (IRA), which is not a Roth IRA, for regular,
rollover or direct transfer IRA contributions made by an individual. The
Contract Owner must also be the Annuitant.
o QP IRA
A Traditional IRA which is a conduit to hold rollover distributions (QP IRA)
from either a qualified plan or a tax-sheltered annuity (TSA). Such
distributions are held in a QP IRA in order to avoid commingling with
Traditional IRA contributions, thereby preserving the owner's right to roll
the distributions back to a qualified plan or TSA in the future. The Contract
Owner must also be the Annuitant. Unless otherwise indicated, Traditional IRA
rules apply to QP IRA.
o ROTH IRA
A Roth individual retirement annuity (ROTH IRA) for after-tax contributions
made by an individual, the distributions from which may be tax free under
specified circumstances. The Contract Owner must also be the Annuitant.
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o NQ
A non-qualified (NQ) annuity is an annuity which is generally not used to
fund any type of qualified retirement plan and may be purchased only with
funds contributed by or on behalf of an individual. The Annuitant and
Contract Owner need not be the same.
EQUI-VEST EMPLOYER-SPONSORED RETIREMENT PROGRAMS:
o SEP AND SARSEP
A Traditional IRA Contract used to fund a simplified employee pension plan
(SEP) sponsored by sole proprietorships, partnerships or corporations. Each
individual employee covered by the SEP is the Contract Owner of the IRA set
up on his or her behalf and must also be the Annuitant. Contributions are
made directly by the employer.
SEPs funded by salary reduction are called SARSEPs (SARSEP). SARSEPS permit
an employer to reduce an employee's compensation for the purpose of making
contributions. Unless otherwise noted, all references to SEP Contracts
include SARSEP arrangements. Although as of December 31, 1996, new employers
may not establish a SARSEP, contributions may be made to existing Contracts
and new employees of existing units may be offered Contracts. Unless
otherwise indicated, Traditional IRA rules apply to SEP IRAs, including
SARSEP IRAs.
o SIMPLE IRA
A Traditional IRA Contract used to fund a savings incentive match plan
(SIMPLE IRA) sponsored by any type of employer. Contributions are made under
a salary reduction program which permits an employer to reduce an employee's
compensation for the purpose of the employee's making contributions to the
plan. The employer must also make either matching or nonelective
contributions to the plan with respect to the employee's account. Each
individual employee covered by the SIMPLE IRA is the Contract Owner of the
IRA set up on his or her behalf and must also be the Annuitant. Unless
otherwise indicated, Traditional IRA rules apply to SIMPLE IRAs.
o UNINCORPORATED AND CORPORATE TRUSTEED
Unincorporated Trustee-Owned Contracts used to fund qualified defined
contribution plans of employers who are sole proprietorships, partnerships,
or business trusts. These plans are known as "HR-10" or "Keogh" plans.
Corporate Trusteed Contracts fund retirement plans of incorporated employers.
Such Corporate Trusteed Contracts are no longer offered for sale by Equitable
to new employers. However, for existing business units we still issue
Contracts to new employees and accept contributions. In addition,
contributions are made by the employer for the benefit of employees who
become Annuitants under the Contract. We do not act as trustee for these
plans, so the employer must select a trustee.
In the past, EQUI-VEST was available to fund HR-10 (Keogh) plans where the
Contracts were owned by the Annuitants themselves (Annuitant-Owned HR-10),
rather than by a trustee. Although we still issue such Annuitant-Owned HR-10
Contracts to employees whose employer's plans enrolled on this basis, plans
of this type are no longer available under EQUI-VEST to new employer groups.
o TSA
A Code Section 403(b) tax-sheltered annuity (TSA) for public schools and
nonprofit entities organized under Code Section 501(c)(3). Contributions are
made by the employer either directly or through a salary reduction agreement
entered into with the employee. Each employee is the Contract Owner and must
also be the Annuitant.
o UNIVERSITY TSA
A TSA, originally designed to meet the needs of restricted plans of some
universities, may be used for any TSA plan that prohibits loans and has
additional restrictions not found in the basic TSA. Contributions are made by
the employer either directly or through a salary reduction agreement entered
into with the employee. Each employee is the Contract Owner and must also be
the Annuitant. Unless otherwise noted, references to TSA Contracts include
University TSAs.
o EDC
Contracts used to fund Code Section 457 Employee Deferred Compensation (EDC)
plans of state and municipal governments and other tax-exempt organizations.
Contributions are made by the employer on behalf of the employee generally
pursuant to a salary reduction agreement. The employer or a trust is the
Contract Owner but the employee is the Annuitant. The EDC program currently
is not available for state or municipal government plans in Texas.
o PAYROLL DEDUCTION IRA AND NQ
The employer establishes a payroll deduction program which assists in
remitting the employees' own contributions to the Contract. The employer does
not sponsor any plan.
Later in this prospectus we refer to program features which are specific to
particular types of retirement programs. Under some employer-sponsored plans,
the availability of certain features may be limited. Employers can provide more
detail about such plans.
Only NQ and Trusteed Contracts may be sold in Puerto Rico, and the tax aspects
described in this prospectus may differ. Please consult your tax adviser.
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INVESTMENT OPTIONS
The following Investment Options are offered: The Guaranteed Interest Account,
and 24 variable Investment Funds listed earlier and described in greater detail
in Parts 2 and 3. Each Investment Fund invests in shares of a corresponding
Portfolio of either the HRT (Class IA) or the EQAT (Class IB), respectively. The
attached HRT and EQAT prospectuses describe the investment objectives and
policies of the Portfolios available to Contract Owners. Also subject to state
regulatory approval, our Fixed Maturity Account with its choice of ten Fixed
Maturity Periods is available under Series 400 IRA, QP IRA, and NQ Contracts.
If an employer's 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's (DOL) regulation under ERISA
Section 404(c). See "Certain Rules Applicable to Plans Designed to Comply with
Section 404(c) of ERISA" in Part 9.
Educational information about investing which may be useful for Participants is
contained in "Part 10: Key Factors in Retirement Planning" in the SAI. The SAI
is available free of charge by calling 1-800-628-6673.
SELECTING INVESTMENT OPTIONS
Under EQUI-VEST Trusteed Contracts, the Employer or Plan Trustee will choose the
Investment Options available to the Participant. Under all other Contracts, the
Contract Owner makes that choice. If any of the Options listed below are
selected, there will be restrictions on the amount you can transfer out of the
Guaranteed Interest Account. Additionally, if you are participating through your
Employer's plan and your Employer makes any of these Options available to you,
whether or not you select them, you will be subject to such restrictions. The
Options that result in restrictions are: Alliance Conservative Investors,
Alliance Money Market, Alliance Intermediate Government Securities, Alliance
Quality Bond, Alliance High Yield and the Fixed Maturity Periods.
EQUI-VEST Original Contracts and Certificates limit you to only the Guaranteed
Interest Account and the Alliance Money Market, Alliance Balanced, Alliance
Common Stock and Alliance Aggressive Stock Funds.
CONTRIBUTIONS
Generally, contributions may be made at any time: in single sum amounts, on a
regular basis or as your financial situation permits. For some types of
retirement plans, contributions must be made by the Employer. Different minimum
contribution limits apply to different EQUI-VEST Contracts.
Contributions are credited as of the Transaction Date, if they are accompanied
by properly completed forms. Failure to use the proper form, or to complete the
form properly, may result in a delay in crediting contributions. Contributions
not made by wire transfer, the Automatic Investment Program or payroll deduction
must be made by check, drawn on a bank in the U.S. clearing through the Federal
Reserve System, and payable in U.S. dollars to Equitable Life. Third party
checks endorsed to Equitable Life are not acceptable forms of payment except in
cases of a rollover from a qualified plan, a tax-free exchange under the Code or
a trustee check that involves no refund. All checks are accepted subject to
collection. Equitable Life reserves the right to reject a payment if an
unacceptable form of payment is received. Under EQUI-VEST Trusteed Contracts,
either you or the Plan Trustee, or both, as applicable, must instruct us to
allocate contributions to one or several Investment Options that are available
under your Employer's plan.
Under all other EQUI-VEST Contracts, you, as Owner, may instruct us to allocate
your contributions to one or several Investment Options.
Allocation percentages must be in whole numbers and the sum must equal 100%.
Contributions made to an Investment Fund purchase Accumulation Units in that
Investment Fund.
TRANSFERS
Under the EQUI-VEST Trusteed and EDC Contracts, either the Participant or Owner,
or the Plan Trustee, or both as applicable, may direct us to transfer among the
investment options. Under other EQUI-VEST Contracts, you may make such
transfers. There is no charge for these transfers. If you have an Original
Contract, restrictions will apply to transfers into the Alliance Money Market
Fund from any of the other Investment Options. Minimum transfer amounts may
apply.
SERVICES WE PROVIDE
Your Equitable Representative can help you with any questions you have. In
addition, there are a number of services designed to keep you informed.
REGULAR REPORTS
We currently provide written confirmation of every financial transaction, and:
o Annual statement as of the close of the Calendar Year;
o Statement as of the last day of the Contract Year.
We reserve the right to change the frequency of these reports.
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ADDITIONAL SERVICES
Materials and seminars of an educational nature to assist retirement planning
needs of Participants can be arranged through your Equitable Representative.
Your Equitable Representative can also schedule retirement planning workshops to
facilitate plan enrollment periods.
TELEPHONE OPERATED PROGRAM SUPPORT
(TOPS) SYSTEM
TOPS is designed to provide up-to-date information via touch-tone telephone.
TOPS is available under all EQUI-VEST Contracts, but in certain plans, the use
of TOPS may be limited by the plan provisions. Use TOPS:
o for current Annuity Account Value;
o for current allocation percentages;
o for the number of units held in the Investment Funds under your account;
o to change your allocation percentages and/or transfer money among the
Investment Funds and the Guaranteed Interest Account; or
o to elect Investment Simplifier.
A personal identification number is required to use certain TOPS features. We
have established procedures that are considered to be reasonable and are
designed to confirm that instructions communicated by telephone are genuine.
Such procedures include requiring certain personal identification information
prior to acting on telephone instructions and providing written confirmation of
instructions communicated by telephone. If we do not employ reasonable
procedures to confirm that instructions communicated by telephone are genuine,
we may be liable for any losses arising out of any action on our part or any
failure or omission to act as a result of our own negligence, lack of good
faith, or willful misconduct. In light of the procedures established, we will
not be liable for following telephone instructions that we reasonably believe to
be genuine. We reserve the right to terminate or modify any telephone or
automated transfer/withdrawal service we provide upon 90 days written notice.
TOPS is normally available daily, 24 hours a day, by calling toll-free,
800-755-7777. However, Equitable will not be responsible for the unavailability
of the system for any reason. Transfers made after the close of our Business Day
or on a non-Business Day are not effective until the following Business Day.
TOLL-FREE TELEPHONE SERVICES
We maintain toll-free numbers for your convenience. See the chart below.
WRITTEN COMMUNICATION
All items received at the proper address prior to 4:00 p.m. Eastern Time on a
Business Day will be effective on the same Business Day. Written requests will
be processed as of the date a properly completed request is received at our
Processing Office.
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 believes it has identified those of its systems critical to
business operations that are not Year 2000 compliant. By year end 1998,
Equitable Life expects that the work of modifying or replacing non-compliant
systems will substantially be completed and expects a comprehensive test of its
Year 2000 compliance will be performed in the first half of 1999. Equitable Life
is in the process of seeking assurances from third party service providers 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. Any significant unresolved difficulty
related to the Year 2000 compliance initiatives could have a material adverse
effect on the ability to administer your Contract and operate the Investment
Options. Assuming the timely completion of computer modifications by Equitable
Life and third party service providers, there should be no material adverse
effect on the ability to perform these functions.
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<TABLE>
<CAPTION>
WHERE TO REACH US
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CONTRIBUTIONS:
FOR EDC, TSA, TRUSTEED,
FOR ALL WRITTEN REQUESTS ANNUITANT-OWNED HR-10, SEP,
AND COMMUNICATIONS CONTRIBUTIONS: SIMPLE IRA, AND IRA AND NQ LOAN REPAYMENTS:
(OTHER THAN CONTRIBUTIONS FOR IRA & NQ OWNERS WHO WHEN CONTRIBUTIONS ARE FOR TSA AND CORPORATE
AND LOAN REPAYMENTS) CONTRIBUTE INDIVIDUALLY REMITTED BY THE EMPLOYER TRUSTEED LOAN REPAYMENTS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REGULAR EQUI-VEST Equitable Life Equitable Life Equitable Life
MAIL Administration Office EQUI-VEST Administration EQUI-VEST Administration Loan Repayment
Equitable Life Office -- Individual Office -- Unit Collections EQUI-VEST Lockbox
P.O. Box 2996 Collections P.O. Box 13463 P.O. Box 13496
New York NY 10116-2996 P.O. Box 13459 Newark, NJ 07188-0463 Newark, NJ 07188-0496
Newark, NJ 07188-0459
- -------------------------------------------------------------------------------------------------------------------------------
EXPRESS EQUI-VEST Equitable Life Equitable Life N/A
MAIL Administration Office c/o First Chicago c/o First Chicago
Equitable Life National Processing Center National Processing Center
200 Plaza Drive, 300 Harmon Meadow 300 Harmon Meadow
2nd Floor Boulevard, 3rd Floor Boulevard, 3rd Floor
Secaucus, NJ 07094 Secaucus, NJ 07094 Secaucus, NJ 07094
Attn: Box 13459 Attn: Box 13463
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TOPS 1-800-755-7777
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DAILY 1-800-841-0801
UNIT VALUE
- -------------------------------------------------------------------------------------------------------------------------------
CUSTOMER SERVICE REPRESENTATIVES
(AVAILABLE 8:00 A.M.-7:00 P.M., 1-800-628-6673
EASTERN
TIME, ON EACH BUSINESS DAY MONDAY
THROUGH THURSDAY AND UNTIL 5:00 P.M.
ON FRIDAY)
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
DISTRIBUTION OPTIONS AND DEATH BENEFITS
EQUI-VEST Contracts provide several different types of distribution options,
including:
o fixed and variable annuities;
o lump sum payments;
o partial withdrawals;
o required minimum distributions;
o payments for a specific period of time;
o our Systematic Withdrawal option under EQUI- VEST (not available for amounts
allocated to the Fixed Maturity Account).
There is a death benefit if the Annuitant dies before an annuity payout begins.
The beneficiary will be paid the greater of the Annuity Account Value minus any
outstanding loan balance (including accrued interest) or the minimum death
benefit. The minimum death benefit will not be less than the total contributions
adjusted for total withdrawals and any applicable taxes, less any outstanding
loan balance (including accrued interest).
SPDA VARIABLE DISTRIBUTION OPTION
In addition to offering a variable annuity distribution option to participants
in EQUI-VEST, we also make the variable annuity distribution option described in
Part 6 under "Distribution Options: Fixed and Variable Annuity Forms" available
to owners of Equitable Life's single premium deferred annuity (SPDA) contracts.
SPDA contractholders who are considering purchasing a variable distribution
option should review the section on Distribution Options in Part 6, "Part 2:
Separate Account A and Its Investment Funds," "Part 3: Investment Performance,"
and the sections of the Statement of Additional Information which discuss the
variable annuity distribution option. Also see "Part 9: Federal Tax and ERISA
Matters" and the HRT prospectus attached.
WITHDRAWALS AND TERMINATION
Subject to Federal Regulations and the provisions of any applicable employer
plan, you may withdraw funds at any time by completing and submitting the proper
form(s). These forms are available from your Equitable Representative or from
our Processing Office. Withdrawals may be subject to a minimum amount or to a
contingent withdrawal charge. Withdrawals from Fixed Maturity Periods prior to
their Expiration Dates will result in a market value adjustment.
Premature withdrawals or contract terminations (generally prior to age 59 1/2)
may be restricted and subject to an early withdrawal Federal income tax penalty.
See "Part 9: Federal Tax and ERISA Matters."
LOANS
Certain EQUI-VEST Contracts permit loans without incurring a contingent
withdrawal charge (except in the event of a default). Such loans are
administered in accordance with current or proposed regulations, as we deem
appropriate. See "Loans (for TSA and Corporate Trusteed Only)" in Part 6 for
more information.
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TAXES
Generally, any earnings attributable to your Annuity Account Value will not be
included in your taxable income until distributions are made. See "Part 9:
Federal Tax and ERISA Matters."
DEDUCTIONS AND CHARGES
Keep in mind that these programs are designed for retirement savings and
long-range financial planning; certain charges will not apply unless you make
early withdrawals from your Contract.
Following is a summary of the different types of deductions and charges which
may be applicable.
o CHARGE TO INVESTMENT FUNDS -- We make a daily charge for certain expenses of
the Contract. It covers death benefits, mortality risks, expenses and expense
risks. The daily Accumulation Unit Value is quoted net of these charges.
These charges will vary by Contract, and are at a maximum effective annual
rate of 1.35% for all Funds other than the Alliance Money Market, Alliance
Common Stock and Alliance Balanced Funds which are at a maximum effective
annual rate of 1.49%. Further, EQUI-VEST Series 100 and 200 Contracts impose
an overall limit of 1.75% on total Separate Account and Trust expenses for
the Alliance Money Market, Alliance Common Stock, Alliance Aggressive Stock
and Alliance Balanced Funds.
o TRUST CHARGES TO PORTFOLIOS -- Investment advisory fees and other fees and
expenses of the HRT and the EQAT are charged daily against the Trust's
assets. These charges are reflected in the Portfolio's daily share price and
in the daily Accumulation Unit Value for the Investment Funds.
o ADMINISTRATIVE CHARGES -- The administrative charge is currently at a maximum
of $30 a year but may be less under certain Contracts.
The charge is deducted each Contract Year from your Annuity Account Value in
the Guaranteed Interest Account and Investment Funds and, in certain cases,
from the Fixed Maturity Periods.
o CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES -- Generally, charges
for state premium taxes and other applicable taxes, if any, are deducted when
an annuity payment option is elected. The current tax charge that might be
imposed varies by state and ranges from 0% to 3.50%; however, the rate is 1%
in Puerto Rico and 5% in the Virgin Islands.
o CONTINGENT WITHDRAWAL CHARGE -- If you terminate your participation under a
Contract or make a partial withdrawal, your Annuity Account Value, as
applicable, may be subject to a contingent withdrawal charge that will be
used to cover sales and promotional expenses. This charge will not exceed 6%
of the amount withdrawn. The amount withdrawn includes the amount you request
and the withdrawal charge. Important exceptions and limitations eliminate or
reduce the contingent withdrawal charge. See "Part 7: Deductions and
Charges."
o CHARGE ON THIRD PARTY TRANSFER OR EXCHANGE -- You may instruct us to make a
direct transfer to a third party of amounts under your Contract, or request
that your Contract be exchanged for another contract or certificate issued by
another carrier. Certain Contracts permit us to deduct a charge of $25 per
occurrence for such transfers or exchanges.
10-DAY FREE LOOK FOR EQUI-VEST
You have the right to examine your EQUI-VEST Contract for a period of 10 days
after you receive it, and to return it to us for a refund. You cancel it by
sending it to our Processing Office. The free look is extended if your state
requires a refund period of longer than 10 days. This right applies only to the
initial owner of a Contract.
For contributions allocated to Investment Funds, your refund will equal those
contributions plus or minus any investment gain or loss through the date we
receive your Contract at our Processing Office. Certain daily charges will also
be automatically deducted. For contributions allocated to the Guaranteed
Interest Account, the refund will equal the amount allocated to the Guaranteed
Interest Account without interest. For contributions allocated to the Fixed
Maturity Account, the refund will equal the amount of your contributions plus
any crediting of interest, and plus or minus any market value adjustment. Some
states or Federal income tax regulations may require that we calculate the
refund differently. We follow these same procedures if you change your mind
before a Contract has been issued, but after a contribution has been made.
In certain cases, there may be tax implications to cancelling your Contract
during the 10-day free look period.
12
<PAGE>
FEE TABLES AND EXAMPLES
The EQUI-VEST Contracts may differ in terms of the fees that are charged. One of
the following Tables will apply to you. To determine which Table applies you
need to know which EQUI-VEST Series you own or are considering purchasing. For a
description of the different EQUI-VEST Series, see "Part 6: The EQUI-VEST
Contract Series." These Tables, and the related Examples, will assist you in
understanding the various costs and expenses under your EQUI-VEST Contract so
that you may compare them with other products. Except as described in Notes 5
and 7 below, the Tables reflect expenses of both the Separate Account and the
applicable Trust for the year ended December 31, 1997.
Certain expenses and fees shown in the relevant table for your Contract may not
apply to you. To determine whether a particular item in a Table applies (and the
actual amount, if any) consult the section of the prospectus for your EQUI-VEST
Contract series indicated in the notes to the Table. A charge for applicable
state or local taxes may be deducted from contributions in some states. See
"Charges for State Premium and Other Applicable Taxes" in Part 7.
As explained in Parts 4 and 5, the Guaranteed Interest Account and the Fixed
Maturity Account are not a part of the Separate Account and are not covered by
the following Tables and Examples. The only expenses shown in the Tables which
apply to the Guaranteed Interest Account and the Fixed Maturity Account are the
Contingent Withdrawal Charge, the Annual Administrative Charge and the Third
Party Transfer or Exchange Fee, if applicable. Also see "Income Annuity
Distribution Options" in Part 6 for the description of an administrative charge
which may apply when you annuitize.
TABLE 1: EQUI-VEST SERIES 100
Description of Expenses
- -----------------------
CONTRACT OWNER TRANS0ACTION EXPENSES
SALES LOAD ON PURCHASES ..................................... NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) .................... 6%
MAXIMUM ANNUAL ADMINISTRATIVE CHARGE (2) .................... $30
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE
MONEY GOVERNMENT QUALITY ALLIANCE GROWTH EQUITY
MARKET SECURITIES BOND HIGH YIELD & INCOME INDEX
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND HRT ANNUAL
EXPENSES (3) 1.75% N/A N/A N/A N/A N/A
Separate Account Annual Expenses (4)
Mortality and Expense Risk Fees .65% .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84% .84%
- -------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.49% (3) 1.34% 1.34% 1.34% 1.34% 1.34%
HRT Annual Expenses (4)
Investment Advisory Fees .35% .50% .53% .60% .55% .32%
Other Expenses .04% .06% .05% .04% .04% .04%
- -------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (5)(6) .39%(3) .56% .58% .64% .59% .36%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE SMALL ALLIANCE ALLIANCE
COMMON ALLIANCE INTER- AGGRESSIVE CAP CONSERVATIVE ALLIANCE GROWTH
STOCK GLOBAL NATIONAL STOCK GROWTH INVESTORS BALANCED INVESTORS
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND HRT ANNUAL
EXPENSES (3) 1.75% N/A N/A 1.75% N/A N/A 1.75% N/A
Separate Account Annual Expenses (4)
Mortality and Expense Risk Fees .65% .50% .50% .50% .50% .50% .65% .50%
Other Expenses .84% .84% .84% .84% .84% .84% .84% .84%
- -----------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.49% (3) 1.34% 1.34% 1.34% (3) 1.34% 1.34% 1.49% (3) 1.34%
HRT Annual Expenses (4)
Investment Advisory Fees .37% .65% .90% .54% .90% .48% .42% .52%
Other Expenses .03% .08% .18% .03% .05% .07% .05% .05%
- -----------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (5)(6) .40%(3) .73% 1.08% .57%(3) .95% .55% .47%(3) .57%
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
TABLE 1: EQUI-VEST SERIES 100 (CONTINUED)
- -------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH
T. ROWE PRICE T. ROWE PRICE & EQ/ PUTNAM
INTERNATIONAL EQUITY INCOME INCOME VALUE BALANCED MFS RESEARCH
STOCK PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND EQAT ANNUAL
EXPENSES N/A N/A N/A N/A N/A
Separate Account Annual Expenses
Mortality and Expense Risk Fees .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84%
- -------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.34% 1.34% 1.34% 1.34% 1.34%
EQAT Annual Expenses
Investment Management and
Advisory Fee .75% .55% .55% .55% .55%
Rule 12b-1 Fee (7) .25% .25% .25% .25% .25%
Other Expenses .20% .05% .05% .10% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (8) 1.20% .85% .85% .90% .85%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING MORGAN STANLEY WARBURG PINCUS MERRILL LYNCH MERRILL LYNCH
GROWTH COM- EMERGING MARKETS SMALL COMPANY WORLD STRATEGY BASIC VALUE
PANIES PORTFOLIO EQUITY PORTFOLIO VALUE PORTFOLIO PORTFOLIO EQUITY PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND EQAT ANNUAL
EXPENSES N/A N/A N/A N/A N/A
Separate Account Annual Expenses
Mortality and Expense Risk Fees .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84%
- -------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.34% 1.34% 1.34% 1.34% 1.34%
EQAT Annual Expenses
Investment Management and
Advisory Fee .55% 1.15% .65% .70% .55%
Rule 12b-1 Fee (7) .25% .25% .25% .25% .25%
Other Expenses .05% .35% .10% .25% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (8) .85% 1.75% 1.00% 1.20% .85%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
TABLE 2: EQUI-VEST SERIES 200
Description of Expenses
- -----------------------
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES .............................................. NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) ............................. 6%
MAXIMUM ANNUAL ADMINISTRATIVE CHARGE (2) ............................. $30
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE
MONEY GOVERNMENT QUALITY ALLIANCE GROWTH EQUITY
MARKET SECURITIES BOND HIGH YIELD & INCOME INDEX
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND HRT ANNUAL
EXPENSES (3) 1.75% N/A N/A N/A N/A N/A
Separate Account Annual Expenses (4)
Mortality and Expense Risk Fees 1.15% 1.09% 1.09% 1.09% 1.09% 1.09%
Other Expenses .25% .25% .25% .25% .25% .25%
- -------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.40% (3) 1.34% 1.34% 1.34% 1.34% 1.34%
HRT Annual Expenses (4)
Investment Advisory Fees .35% .50% .53% .60% .55% .32%
Other Expenses .04% .06% .05% .04% .04% .04%
- -------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (5)(6) .39%(3) .56% .58% .64% .59% .36%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
TABLE 2: EQUI-VEST SERIES 200 (CONTINUED)
- ------------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE ALLIANCE ALLIANCE SMALL ALLIANCE ALLIANCE
COMMON ALLIANCE INTER- AGGRESSIVE CAP CONSERVATIVE ALLIANCE GROWTH
STOCK GLOBAL NATIONAL STOCK GROWTH INVESTORS BALANCED INVESTORS
-------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
HRT ANNUAL EXPENSES (3) 1.75% N/A N/A 1.75% N/A N/A 1.75% N/A
Separate Account Annual Expenses (4)
Mortality and Expense Risk Fees 1.15% 1.09% 1.09% 1.09% 1.09% 1.09% 1.15% 1.09%
Other Expenses .25% .25% .25% .25% .25% .25% .25% .25%
- ----------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.40% (3) 1.34% 1.34% 1.34%(3) 1.34% 1.34% 1.40%(3) 1.34%
HRT Annual Expenses (4)
Investment Advisory Fees .37% .65% .90% .54% .90% .48% .42% .52
Other Expenses .03% .08% .18% .03% .05% .07% .05% .05
- ----------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (5)(6) .40%(3) .73% 1.08% .57%(3) .95% .55% .47%(3) .57
- ----------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM
T. ROWE PRICE T. ROWE PRICE GROWTH & EQ/ PUTNAM
INTERNATIONAL EQUITY INCOME INCOME VALUE BALANCED MFS RESEARCH
STOCK PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
EQAT ANNUAL EXPENSES N/A N/A N/A N/A N/A
Separate Account Annual Expenses
Mortality and Expense Risk Fees .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84%
- -------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.34% 1.34% 1.34% 1.34% 1.34%
EQAT Annual Expenses
Investment Management and .75% .55% .55% .55% .55%
Advisory Fee
Rule 12b-1 Fee (7) .25% .25% .25% .25% .25%
Other Expenses .20% .05% .05% .10% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (8) 1.20% .85% .85% .90% .85%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING MORGAN STANLEY WARBURG PINCUS MERRILL LYNCH MERRILL LYNCH
GROWTH COM- EMERGING MARKETS SMALL COMPANY WORLD STRATEGY BASIC VALUE
PANIES PORTFOLIO EQUITY PORTFOLIO VALUE PORTFOLIO PORTFOLIO EQUITY PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MAXIMUM SEPARATE ACCOUNT AND
EQAT ANNUAL EXPENSES N/A N/A N/A N/A N/A
Separate Account Annual Expenses
Mortality and Expense Risk Fees .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84%
- -------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual
Expenses 1.34% 1.34% 1.34% 1.34% 1.34%
EQAT Annual Expenses
Investment Management and
Advisory Fee .55% 1.15% .65% .70% .55%
Rule 12b-1 Fee (7) .25% .25% .25% .25% .25%
Other Expenses .05% .35% .10% .25% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (8) .85% 1.75% 1.00% 1.20% .85%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
15
<PAGE>
- -------------------
Notes:
(1) The contingent withdrawal charge is a percentage of specified contributions
or amounts withdrawn, depending on the Contract. Important exceptions and
limitations may eliminate or reduce the contingent withdrawal charge. See
"Contingent Withdrawal Charge" in Part 7.
(2) Many Contracts are exempt from this charge. The Annual Administrative Charge
is the lesser of $30 or 2% of the Annuity Account Value. See "Annual
Administrative Charge" in Part 7.
(3) The amounts shown in the Table under "Maximum Separate Account and HRT
Annual Expenses," when added together, are not permitted to exceed a total
annual rate of 1.75% of the value of the assets held in the Alliance Money
Market, Alliance Common Stock, Alliance Aggressive Stock and Alliance
Balanced Funds. For Series 100 Contracts, without this expense limitation,
total Separate Account Annual Expenses plus HRT Annual Expenses for 1997
would have been 1.88%, 1.89%, 1.91%, and 1.96% for the Alliance Money
Market, Alliance Common Stock, Alliance Aggressive Stock and Alliance
Balanced Funds, respectively. For Series 200 Contracts, without this expense
limitation, total Separate Account Annual Expenses plus HRT Annual Expenses
for 1997 would have been 1.79%, 1.80%, 1.91%, and 1.87% for the Alliance
Money Market, Alliance Common Stock, Alliance Aggressive Stock and Alliance
Balanced Funds, respectively. For Series 100 Contracts, Separate Account
Annual Expenses are guaranteed not to exceed a total annual rate of 1.49%
for the Alliance Money Market, Alliance Balanced and Alliance Common Stock
Funds and an annual rate of 1.34% for all other Investment Funds. See
"Limitation on Charges" in Part 7.
(4) Separate Account and HRT expenses are shown as a percentage of each
Investment Fund's or Portfolio's average value. "Mortality and Expense Risk
Fees" includes death benefit charges. "Other Expenses" under "Separate
Account Annual Expenses" includes financial accounting expenses. See
"Limitation on Charges," "Charges to Investment Funds" and "Charges to
Portfolios" in Part 7.
(5) Effective May 1, 1997, a new Investment Advisory Agreement was entered into
between HRT and Alliance Capital Management L.P., HRT's Investment Adviser,
which effected changes in HRT's management fee and expense structure. See
HRT's prospectus for more information.
The tables above reflecting HRT's expenses are based on average portfolio
net assets for the year ended December 31, 1997 and have been restated to
reflect (i) the fees that would have been paid to Alliance if the current
advisory agreement had been in effect as of January 1, 1997 and (ii)
estimated accounting expenses for the year ending December 31, 1997.
(6) The investment advisory fee for each Portfolio may vary from year to year
depending upon the average daily net assets of the respective Portfolio of
the HRT. The maximum investment advisory fees, however, cannot be increased
without a vote of that Portfolio's shareholders. The other direct operating
expenses will also fluctuate from year to year depending on actual expenses.
HRT's expenses are shown as a percentage of each Portfolio's average
portfolio net assets. See "Charges to Portfolios" in Part 7.
(7) The Class IB shares of EQAT are subject to fees imposed under distribution
plans (herein, the "Rule 12b-1 Plans" ) adopted by EQAT pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended. The Rule 12b-1
Plans provide that EQAT, on behalf of each Portfolio, may charge annually up
to 0.25% of the average daily net assets of a Portfolio attributable to its
Class IB shares in respect of activities primarily intended to result in the
sale of the Class IB shares. The 12b-1 fee will not be increased for the
life of the Contracts.
(8) All EQAT Portfolios commenced operations on May 1, 1997 except the Morgan
Stanley Emerging Markets Equity Portfolio, which commenced operations on
August 20, 1997.
The maximum investment management and advisory fees for each EQAT Portfolio
cannot be increased without a vote of that Portfolio's shareholders. The
amounts shown as "Other Expenses" will fluctuate from year to year depending
on actual expenses; however, EQ Financial Consultants, Inc. ("EQ
Financial"), EQAT's manager, has entered into an expense limitation
agreement with respect to each Portfolio ("Expense Limitation Agreement"),
pursuant to which EQ Financial 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 respective average daily net assets of each
Portfolio as follows: 0.60% for Merrill Lynch Basic Value Equity, MFS
Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value 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 1997 on an annualized
basis for each of the Portfolios would have been as follows: 0.80% for
Warburg Pincus Small Company Value; 0.94% for T. Rowe Price Equity Income;
0.95% for EQ/Putnam Growth & Income Value; 0.98% for MFS Research; 1.02% for
MFS Emerging Growth Companies; 1.09% for Merrill Lynch Basic Value Equity;
1.21% for Morgan Stanley Emerging Markets Equity; 1.56% for T. Rowe Price
International Stock; 1.75% for EQ/Putnam Balanced; and 2.10% for Merrill
Lynch World Strategy.
Each Portfolio may at a later date make a reimbursement to EQ Financial for
any of the management fees waived or limited and other expenses assumed and
paid by EQ Financial 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. See the EQAT prospectus for more information.
16
<PAGE>
EXAMPLES: EQUI-VEST SERIES 100 AND 200
For each type of Series 100 and 200 Contract, the examples which follow show the
expenses that a hypothetical Contract Owner would pay in the surrender and
nonsurrender situations noted below, assuming a single contribution of $1,000 on
the Contract Date invested in one of the Investment Funds listed and a 5% annual
return on assets and no waiver of the contingent withdrawal charge.(1) For
purposes of these examples, the annual administrative charge is computed by
reference to the actual aggregate annual administrative charges as a percentage
of the total assets held under all EQUI-VEST Contracts.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSE
WOULD BE:
FOR IRA (TRADITIONAL, ROTH AND CERTAIN QP IRA(2)), SEP, EDC AND
PARTICIPANT-OWNED HR-10 CONTRACTS:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $80.93 $124.74 $164.32 $256.17
Alliance Intermediate Government Securities 82.41 129.21 171.87 272.02
Alliance Quality Bond 82.60 129.80 172.87 274.12
Alliance High Yield 83.19 131.59 175.87 280.38
Alliance Growth & Income 82.70 130.10 173.37 275.16
Alliance Equity Index 80.43 123.25 161.79 250.84
Alliance Common Stock 80.93 124.74 164.32 256.17
Alliance Global 84.08 134.26 180.36 289.70
Alliance International 87.53 144.59 197.66 325.14
Alliance Aggressive Stock 80.93 124.74 164.32 256.17
Alliance Small Cap Growth 86.25 140.76 -- --
Alliance Conservative Investors 82.31 128.91 171.37 270.97
Alliance Balanced 80.93 124.74 164.32 256.17
Alliance Growth Investors 82.50 129.51 172.37 273.07
T. Rowe Price International Stock Portfolio 88.72 148.12 -- --
T. Rowe Price Equity Income Portfolio 85.27 137.81 -- --
EQ/Putnam Growth & Income Value Portfolio 85.27 137.81 -- --
EQ/Putnam Balanced Portfolio 85.76 139.29 -- --
MFS Research Portfolio 85.27 137.81 -- --
MFS Emerging Growth Companies Portfolio 85.27 137.81 -- --
Morgan Stanley Emerging Markets Equity Portfolio 94.14 164.17 -- --
Warburg Pincus Small Company Value Portfolio 86.75 142.24 -- --
Merrill Lynch World Strategy Portfolio 88.72 148.12 -- --
Merrill Lynch Basic Value Equity Portfolio 85.27 137.81 -- --
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
FOR TSA AND QP IRA CONTRACTS:(3)
- ---------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $74.74 $118.17 $164.32 $256.17
Alliance Intermediate Government Securities 76.23 122.67 171.87 272.02
Alliance Quality Bond 76.43 123.26 172.87 274.12
Alliance High Yield 77.02 125.06 175.87 280.38
Alliance Growth & Income 76.53 123.56 173.37 275.16
Alliance Equity Index 74.24 116.66 161.79 250.84
Alliance Common Stock 74.74 118.17 164.32 256.17
Alliance Global 77.92 127.75 180.36 289.70
Alliance International 81.39 138.15 197.66 325.14
Alliance Aggressive Stock 74.74 118.17 164.32 256.17
Alliance Small Cap Growth 80.10 134.30 -- --
Alliance Conservative Investors 76.33 122.96 172.37 273.07
Alliance Balanced 74.74 118.17 164.32 256.17
Alliance Growth Investors 76.33 122.96 172.37 273.07
T. Rowe Price International Stock Portfolio 82.58 141.70 -- --
T. Rowe Price Equity Income Portfolio 79.11 131.32 -- --
EQ/Putnam Growth & Income Value Portfolio 79.11 131.32 -- --
EQ/Putnam Balanced Portfolio 79.60 132.81 -- --
MFS Research Portfolio 79.11 131.32 -- --
MFS Emerging Growth Companies Portfolio 79.11 131.32 -- --
Morgan Stanley Emerging Markets Equity Portfolio 88.04 157.86 -- --
Warburg Pincus Small Company Value Portfolio 80.60 135.78 -- --
Merrill Lynch World Strategy Portfolio 82.58 141.70 -- --
Merrill Lynch Basic Value Equity Portfolio 79.11 131.32 -- --
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
FOR TRUSTEED AND NQ CONTRACTS:
- ---------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $74.74 $118.17 $161.44 $219.56
Alliance Intermediate Government Securities 76.23 122.67 169.46 235.96
Alliance Quality Bond 76.43 123.26 170.53 238.13
Alliance High Yield 77.02 125.06 173.72 244.61
Alliance Growth & Income 76.53 123.56 171.06 239.21
Alliance Equity Index 74.24 116.66 158.75 214.03
Alliance Common Stock 74.74 118.17 161.44 219.56
Alliance Global 77.92 127.75 178.50 254.26
Alliance International 81.39 138.15 196.89 290.94
Alliance Aggressive Stock 74.74 118.17 161.44 219.56
Alliance Small Cap Growth 80.10 134.30 -- --
Alliance Conservative Investors 76.13 122.37 168.93 234.88
Alliance Balanced 74.74 118.17 161.44 219.56
Alliance Growth Investors 76.33 122.96 170.00 237.05
T. Rowe Price International Stock Portfolio 82.58 141.70 -- --
T. Rowe Price Equity Income Portfolio 79.11 131.32 -- --
EQ/Putnam Growth & Income Value Portfolio 79.11 131.32 -- --
EQ/Putnam Balanced Portfolio 79.60 132.81 -- --
MFS Research Portfolio 79.11 131.32 -- --
MFS Emerging Growth Companies Portfolio 79.11 131.32 -- --
Morgan Stanley Emerging Markets Equity Portfolio 88.04 157.86 -- --
Warburg Pincus Small Company Value Portfolio 80.60 135.78 -- --
Merrill Lynch World Strategy Portfolio 82.58 141.70 -- --
Merrill Lynch Basic Value Equity Portfolio 79.11 131.32 -- --
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE
EXPENSE WOULD BE:
FOR ALL SERIES 100 AND 200 CONTRACTS:
- -------------------------------------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $19.07 $59.00 $101.44 $219.56
Alliance Intermediate Government Securities 20.64 63.77 109.46 235.96
Alliance Quality Bond 20.85 64.40 110.53 238.13
Alliance High Yield 21.48 66.31 113.72 244.61
Alliance Growth & Income 20.96 64.72 111.06 239.21
Alliance Equity Index 18.55 57.41 98.75 214.03
Alliance Common Stock 19.07 59.00 101.44 219.56
Alliance Global 22.43 69.16 118.50 254.26
Alliance International 26.10 80.19 136.89 290.94
Alliance Aggressive Stock 19.07 59.00 -- --
Alliance Small Cap Growth 24.74 76.10 130.09 277.47
Alliance Conservative Investors 20.54 63.45 108.93 234.88
Alliance Balanced 19.07 59.00 101.44 219.56
Alliance Growth Investors 20.75 64.09 110.00 237.05
T. Rowe Price International Stock Portfolio 27.36 83.95 -- --
T. Rowe Price Equity Income Portfolio 23.69 72.95 -- --
EQ/Putnam Growth & Income Value Portfolio 23.69 72.95 -- --
EQ/Putnam Balanced Portfolio 24.21 74.52 -- --
MFS Research Portfolio 23.69 72.95 -- --
MFS Emerging Growth Companies Portfolio 23.69 72.95 -- --
Morgan Stanley Emerging Markets Equity Portfolio 33.13 101.08 -- --
Warburg Pincus Small Company Value Portfolio 25.26 77.67 -- --
Merrill Lynch World Strategy Portfolio 27.36 83.95 -- --
Merrill Lynch Basic Value Equity Portfolio 23.69 72.95 -- --
</TABLE>
- -------------------
(1) The amount accumulated could not be paid in the form of an annuity at the
end of any of the periods shown in the examples. If the amount applied to
purchase an annuity is less than $2,000, or the initial annuity payment is
less than $20, we may pay the amount to the payee in a single sum instead
of as payments under an annuity form. See "Distribution Options" in Part 6.
In some cases, charges for state premium or other taxes will be deducted
from the amount applied, if applicable.
(2) These expenses also apply to a Series 100 QP IRA purchased in a state where
group Contracts are issued.
(3) These expenses apply only to a Series 100 QP IRA purchased in a state where
individual Contracts are issued.
- --------------------------------------------------------------------------------
18
<PAGE>
Accumulation Unit Values
The following tables show the Accumulation Unit Values, as of the last Business
Day for the periods shown, commencing with the initial offering of each Fund
under the Contracts indicated below.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
EQUI-VEST: Series 100 and 200
LAST BUSINESS DAY OF
-----------------------------------------------------------------------------------------------------
DECEMBER MARCH
------------------------------------------------------------------------------------------ ---------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Alliance Money Market $20.32 $21.89 $23.38 $ 24.48 $ 25.01 $ 25.41 $ 26.08 $ 27.22 $ 28.28 $ 29.41 $ 29.69
Alliance Intermediate
Government Securities -- -- -- -- -- -- 98.19 109.80 112.40 118.98 120.46
Alliance Quality Bond -- -- -- -- -- -- 93.87 108.38 112.65 121.30 122.92
Alliance High Yield -- -- -- -- -- -- 95.88 113.44 137.53 160.74 168.88
Alliance Growth & Income -- -- -- -- -- -- 98.86 121.02 143.37 179.30 199.90
Alliance Equity Index -- -- -- -- -- -- 100.95 135.94 164.12 214.66 243.54
Alliance Common Stock 67.22 83.40 75.67 102.76 104.63 128.80 124.32 162.42 199.05 253.68 287.10
Alliance Global -- -- -- -- -- -- 104.12 122.06 138.00 151.87 173.58
Alliance International -- -- -- -- -- -- -- 104.15 112.83 107.92 123.10
Alliance Aggressive Stock 18.09 25.86 27.36 50.51 48.30 55.68 52.88 68.73 82.91 90.75 103.24
Alliance Small Cap Growth -- -- -- -- -- -- -- -- -- 125.55 142.82
Alliance Conservative
Investors -- -- -- -- -- -- 95.10 112.97 117.25 130.98 137.66
Alliance Balanced 15.80 19.69 19.40 27.17 26.04 28.85 26.18 30.92 34.06 38.66 41.71
Alliance Growth Investors -- -- -- -- -- -- 96.31 120.08 133.40 153.69 167.83
T. Rowe Price International
Stock Portfolio -- -- -- -- -- -- -- -- -- 97.61 109.56
T. Rowe Price Equity Income
Portfolio -- -- -- -- -- -- -- -- -- 121.04 131.52
EQ/Putnam Growth & Income
Value Portfolio -- -- -- -- -- -- -- -- -- 115.17 127.24
EQ/Putnam Balanced Portfolio -- -- -- -- -- -- -- -- -- 113.46 121.90
MFS Research Portfolio -- -- -- -- -- -- -- -- -- 115.01 133.18
MFS Emerging Growth
Companies Portfolio -- -- -- -- -- -- -- -- -- 121.34 145.66
Morgan Stanley Emerging
Markets Equity Portfolio -- -- -- -- -- -- -- -- -- 79.41 82.66
Warburg Pincus Small
Company Value Portfolio -- -- -- -- -- -- -- -- -- 118.06 126.52
Merrill Lynch World
Strategy Portfolio -- -- -- -- -- -- -- -- -- 103.77 111.74
Merrill Lynch Basic Value
Equity Portfolio -- -- -- -- -- -- -- -- -- 115.97 133.54
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
TABLE 3: EQUI-VEST SERIES 300 AND 400
Description of Expenses
- -----------------------
CONTRACT OWNER TRANSACTION EXPENSES
SALES LOAD ON PURCHASES ............................................ NONE
MAXIMUM CONTINGENT WITHDRAWAL CHARGE (1) ........................... 6%
MAXIMUM/CURRENT ANNUAL ADMINISTRATIVE CHARGE (2) ................... $65/30
MAXIMUM/CURRENT THIRD PARTY TRANSFER OR EXCHANGE FEE (3) ........... $65/25
per occurrence
SEPARATE ACCOUNT ANNUAL EXPENSES
Mortality and Expense Risk Fees (including Death Benefit Charges)... 1.10%
Other Expenses (4).................................................. .25%
======
Total Separate Account Annual Expenses (5)........................ 1.35%
======
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
MONEY GOVERNMENT QUALITY ALLIANCE GROWTH EQUITY COMMON
MARKET SECURITIES BOND HIGH YIELD & INCOME INDEX STOCK
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HRT ANNUAL EXPENSES
Investment Advisory Fees .35% .50% .53% .60% .55% .32% .37%
Other Expenses .04% .06% .05% .04% .04% .04% .03%
- -------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (6)(7) .39% .56% .58% .64% .59% .36% .40%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
ALLIANCE ALLIANCE AGGRESSIVE SMALL CAP CONSERVATIVE ALLIANCE GROWTH
GLOBAL INTERNATIONAL STOCK GROWTH INVESTORS BALANCED INVESTORS
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
HRT ANNUAL EXPENSES
Investment Advisory Fees .65% .90% .54% .90% .48% .42% .52%
Other Expenses .08% .18% .03% .05% .07% .05% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (6)(7) .73% 1.08% .57% .95% .55% .47% .57%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH
T. ROWE PRICE T. ROWE PRICE & EQ/ PUTNAM
INTERNATIONAL EQUITY INCOME INCOME VALUE BALANCED MFS RESEARCH
STOCK PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQAT Annual Expenses
Investment Management and
Advisory Fee .75% .55% .55% .55% .55%
Rule 12b-1 Fee(8) .25% .25% .25% .25% .25%
Other Expenses .20% .05% .05% .10% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (9) 1.20% .85% .85% .90% .85%
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING MORGAN STANLEY WARBURG PINCUS MERRILL LYNCH MERRILL LYNCH
GROWTH COM- EMERGING MARKETS SMALL COMPANY WORLD STRATEGY BASIC VALUE
PANIES PORTFOLIO EQUITY PORTFOLIO VALUE PORTFOLIO PORTFOLIO EQUITY PORTFOLIO
--------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQAT Annual Expenses
Investment Management and
Advisory Fee .55% 1.15% .65% .70% .55%
Rule 12b-1 Fee(8) .25% .25% .25% .25% .25%
Other Expenses .05% .35% .10% .25% .05%
- -------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (9) .85% 1.75% 1.00% 1.20% .85%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
20
<PAGE>
- -------------------
Notes:
(1) The contingent withdrawal charge is a percentage of specified contributions.
See "Contingent Withdrawal Charge" in Part 7. Important exceptions and
limitations may eliminate or reduce the contingent withdrawal charge.
(2) The Annual Administrative Charge is the lesser of $30 or 2% of the Annuity
Account Value (adjusted to include any withdrawals made during that year)
during the first two Contract Years; and $30 for each Contract Year
thereafter. See "Annual Administrative Charge" in Part 7. We reserve the
right to increase this fee in the future if our administrative costs
increase, but such fee may not exceed an annual maximum of $65, subject to
applicable law.
(3) There is a Third Party Transfer or Exchange Fee of $25 per occurrence. We
reserve the right to increase this fee in the future, but such fee may not
exceed a maximum of $65 per occurrence, subject to applicable law.
(4) The current charge is .24% against the assets of all EQAT Funds, the
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 for expenses. We
reserve the right to increase the charge back to the maximum at our
discretion.
(5) The amounts shown in the table under "Total Separate Account Annual
Expenses" are not permitted to exceed a total annual rate of 1.35% of the
value of the assets held in the Investment Funds. Separate Account expenses
are shown as a percentage of each Investment Fund's average value. See
"Limitation on Charges" in Part 7.
(6) Effective May 1, 1997, a new Investment Advisory Agreement was entered into
between HRT and Alliance Capital Management L.P., HRT's Investment Adviser,
which effected changes in HRT's management fee and expense structure. See
HRT's prospectus for more information.
The tables above reflecting HRT's expenses are based on average portfolio
net assets for the year ended December 31, 1997 and have been restated to
reflect (i) the fees that would have been paid to Alliance if the current
advisory agreement had been in effect as of January 1, 1997 and (ii)
estimated accounting expenses for the year ending December 31, 1997.
(7) The investment advisory fee for each Portfolio may vary from year to year
depending upon the average daily net assets of the respective Portfolio of
the HRT. The maximum investment advisory fees, however, cannot be increased
without a vote of that Portfolio's shareholders. The other direct operating
expenses will also fluctuate from year to year depending on actual expenses.
The HRT's expenses are shown as a percentage of each Portfolio's average
portfolio net assets. See "Charges to Portfolios" in Part 7.
(8) The Class IB shares of EQAT are subject to fees imposed under distribution
plans (herein, the "Rule 12b-1 Plans" ) adopted by EQAT pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended. The Rule 12b-1
Plans provide that EQAT, on behalf of each Portfolio, may charge annually up
to 0.25% of the average daily net assets of a Portfolio attributable to its
Class IB shares in respect of activities primarily intended to result in the
sale of the Class IB shares. The 12b-1 fee will not be increased for the
life of the Contracts.
(9) All EQAT Portfolios commenced operations on May 1, 1997 except the Morgan
Stanley Emerging Markets Equity Portfolio, which commenced operations on
August 20, 1997.
The maximum investment management and advisory fees for each EQAT Portfolio
cannot be increased without a vote of that Portfolio's shareholders. The
amounts shown as "Other Expenses" will fluctuate from year to year depending
on actual expenses; however, EQ Financial Consultants, Inc. ("EQ
Financial"), EQAT's manager, has entered into an expense limitation
agreement with respect to each Portfolio ("Expense Limitation Agreement"),
pursuant to which EQ Financial 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 respective average daily net assets of each
Portfolio as follows: 0.60% for Merrill Lynch Basic Value Equity, MFS
Research, MFS Emerging Growth Companies, EQ/Putnam Growth & Income Value 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 1997 on an annualized
basis for each of the Portfolios would have been as follows: 0.80% for
Warburg Pincus Small Company Value; 0.94% for T. Rowe Price Equity Income;
0.95% for EQ/Putnam Growth & Income Value; 0.98% for MFS Research; 1.02% for
MFS Emerging Growth Companies; 1.09% for Merrill Lynch Basic Value Equity;
1.21% for Morgan Stanley Emerging Markets Equity; 1.56% for T. Rowe Price
International Stock; 1.75% for EQ/Putnam Balanced; and 2.10% for Merrill
Lynch World Strategy.
Each Portfolio may at a later date make a reimbursement to EQ Financial for
any of the management fees waived or limited and other expenses assumed and
paid by EQ Financial 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. See the EQAT prospectus for more information.
21
<PAGE>
EXAMPLES: EQUI-VEST SERIES 300 AND 400
For each type of Series 300 and 400 Contract, the examples which follow show the
expenses that a hypothetical Contract Owner would pay in the surrender and
nonsurrender situations noted below, assuming a single contribution of $1,000 on
the Contract Date invested in one of the Investment Funds listed, a 5% annual
return on assets and no waiver of the contingent withdrawal charge.(1) For
purposes of these examples, the annual administrative charge is computed by
reference to the actual aggregate annual administrative charges as a percentage
of the total assets held under all EQUI-VEST Contracts.
These examples should not be considered a representation of past or future
expenses for each Investment Fund or Portfolio. Actual expenses may be greater
or less than those shown. Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
IF YOU SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE EXPENSE
WOULD BE:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $74.64 $117.87 $160.90 $218.46
Alliance Intermediate Government Securities 76.23 122.67 169.46 235.96
Alliance Quality Bond 76.43 123.26 170.53 238.13
Alliance High Yield 77.02 125.06 173.72 244.61
Alliance Growth & Income 76.53 123.56 171.06 239.21
Alliance Equity Index 74.24 116.66 158.75 214.03
Alliance Common Stock 74.74 118.17 161.44 219.56
Alliance Global 77.92 127.75 178.50 254.26
Alliance International 81.39 138.15 196.89 290.94
Alliance Aggressive Stock 76.43 123.26 170.53 238.13
Alliance Small Cap Growth 80.10 134.30 -- --
Alliance Conservative Investors 76.13 122.37 168.93 234.88
Alliance Balanced 75.44 120.27 165.19 227.24
Alliance Growth Investors 76.33 122.96 170.00 237.05
T. Rowe Price International Stock Portfolio 82.58 141.70 -- --
T. Rowe Price Equity Income Portfolio 79.11 131.32 -- --
EQ/Putnam Growth & Income Value Portfolio 79.11 131.32 -- --
EQ/Putnam Balanced Portfolio 79.60 132.81 -- --
MFS Research Portfolio 79.11 131.32 -- --
MFS Emerging Growth Companies Portfolio 79.11 131.32 -- --
Morgan Stanley Emerging Markets Equity Portfolio 88.04 157.86 -- --
Warburg Pincus Small Company Value Portfolio 80.60 135.78 -- --
Merrill Lynch World Strategy Portfolio 82.58 141.70 -- --
Merrill Lynch Basic Value Equity Portfolio 79.11 131.32 -- --
- ---------------------------------------------------------------------------------------------------
</TABLE>
IF YOU DO NOT SURRENDER YOUR CONTRACT AT THE END OF EACH PERIOD SHOWN, THE
EXPENSE WOULD BE:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
1 YEAR 3 YEARS 5 YEARS 10 YEARS
---------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Money Market $18.97 $ 58.68 $100.90 $218.46
Alliance Intermediate Government Securities 20.64 63.77 109.46 235.96
Alliance Quality Bond 20.85 64.40 110.53 238.13
Alliance High Yield 21.48 66.31 113.72 244.61
Alliance Growth & Income 20.96 64.72 111.06 239.21
Alliance Equity Index 18.55 57.41 98.75 214.03
Alliance Common Stock 19.07 59.00 101.44 219.56
Alliance Global 22.43 69.16 118.50 254.26
Alliance International 26.10 80.19 136.89 290.94
Alliance Aggressive Stock 20.85 64.40 110.53 238.13
Alliance Small Cap Growth 24.74 76.10 -- --
Alliance Conservative Investors 20.54 63.45 108.93 234.88
Alliance Balanced 19.80 61.23 105.19 227.24
Alliance Growth Investors 20.75 64.09 110.00 237.05
T. Rowe Price International Stock Portfolio 27.36 83.95 -- --
T. Rowe Price Equity Income Portfolio 23.69 72.95 -- --
EQ/Putnam Growth & Income Value Portfolio 23.69 72.95 -- --
EQ/Putnam Balanced Portfolio 24.21 74.52 -- --
MFS Research Portfolio 23.69 72.95 -- --
MFS Emerging Growth Companies Portfolio 23.69 72.95 -- --
Morgan Stanley Emerging Markets Equity Portfolio 33.13 101.08 -- --
Warburg Pincus Small Company Value Portfolio 25.26 77.67 -- --
Merrill Lynch World Strategy Portfolio 27.36 83.95 -- --
Merrill Lynch Basic Value Equity Portfolio 23.69 72.95 -- --
</TABLE>
- -------------------
(1) The amount accumulated could not be paid in the form of an annuity at the
end of any of the periods shown in the examples. If the amount applied to
purchase an annuity is less than $2,000, or the initial annuity payment is
less than $20, we may pay the amount to the payee in a single sum instead of
as payments under an annuity form. See "Distribution Options" in Part 6. In
some cases, charges for state premium or other taxes will be deducted from
the amount applied, if applicable.
- --------------------------------------------------------------------------------
22
<PAGE>
Accumulation Unit Values
The following tables show the Accumulation Unit Values, as of the last Business
Day for the periods shown, commencing with the initial offering of each Fund
under the Contracts indicated below.
EQUI-VEST: SERIES 300 AND 400
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
LAST BUSINESS DAY OF
-------------------------------------------------------------------------------
DECEMBER MARCH
---------------------------------------------------------------- -------------
1994 1995 1996 1997 1998
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $102.61 $107.04 $111.21 $115.66 $116.78
Alliance Intermediate Government Securities 98.19 109.80 112.40 118.98 120.46
Alliance Quality Bond 93.87 108.38 112.65 121.30 122.92
Alliance High Yield 95.88 113.44 137.53 160.74 168.88
Alliance Growth & Income 98.96 121.02 143.37 179.30 199.90
Alliance Equity Index 100.95 135.94 164.12 214.66 243.54
Alliance Common Stock 97.03 126.78 155.42 198.12 224.23
Alliance Global 104.12 122.06 138.00 151.87 173.58
Alliance International -- 104.15 112.83 107.92 123.10
Alliance Aggressive Stock 95.45 123.95 149.41 163.33 185.74
Alliance Small Cap Growth -- -- -- 125.55 142.82
Alliance Conservative Investors 95.10 112.97 117.25 130.98 137.66
Alliance Balanced 91.64 108.26 119.26 135.29 145.93
Alliance Growth Investors 96.31 120.08 133.40 153.69 167.83
T. Rowe Price International Stock Portfolio -- -- -- 97.61 109.56
T. Rowe Price Equity Income Portfolio -- -- -- 121.04 131.52
EQ/Putnam Growth & Income Value Portfolio -- -- -- 115.17 127.24
EQ/Putnam Balanced Portfolio -- -- -- 113.46 121.90
MFS Research Portfolio -- -- -- 115.01 133.18
MFS Emerging Growth Companies Portfolio -- -- -- 121.34 145.66
Morgan Stanley Emerging Markets Equity
Portfolio -- -- -- 79.41 82.66
Warburg Pincus Small Company Value Portfolio -- -- -- 118.06 126.52
Merrill Lynch World Strategy Portfolio -- -- -- 103.77 111.74
Merrill Lynch Basic Value Equity Portfolio -- -- -- 115.97 133.54
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
23
<PAGE>
- --------------------------------------------------------------------------------
PART 2: SEPARATE ACCOUNT A AND ITS INVESTMENT FUNDS
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT A
Separate Account A is organized as a unit investment trust, a type of investment
company, and is registered with the SEC under the Investment Company Act of 1940
(1940 ACT). This registration does not involve any supervision by the SEC of the
management or investment policies of the Separate Account. The Separate Account
has many Investment Funds, each of which invests in Class IA or Class IB shares
of a corresponding Portfolio of either HRT or EQAT, respectively. You may
allocate some or all contributions among the Investment Funds.
The assets of the Separate Account are our property. As a separate account under
the New York Insurance Law, the portion of the Separate Account's assets equal
to the reserves and other liabilities relating to the Contracts will not be
chargeable with liabilities arising out of any other business we may conduct.
Accordingly, income, gains or losses, whether or not realized, from assets of
the Separate Account are credited to or charged against the Separate Account
without regard to our other income, gains or losses. This means that assets
supporting Annuity Account Value in the Separate Account are not subject to
claims of Equitable Life's creditors. We are the issuer of the Contracts, and
the obligations set forth in the Contracts (other than those of Annuitants or
Contract Owners) are our obligations.
In addition to contributions made under your Contract, we may allocate to the
Separate Account monies received under other annuity contracts, certificates or
agreements. Owners of all such contracts, certificates or agreements will
participate in the Separate Account in proportion to the amounts they have in
the Investment Funds that relate to their contracts, certificates or agreements.
We may retain in the Separate Account assets that are in excess of the reserves
and other liabilities relating to the Contracts or to other contracts,
certificates or agreements, or we may transfer them to our general account.
We reserve the right, subject to compliance with applicable law, including
approval of Contract Owners, Participants and Plan Trustees if required, (1) to
add new Investment Funds (or subdivisions of Investment Funds) to, or remove
Investment Funds (or subdivisions of Investment Funds) from, the Separate
Account, (2) to combine any two or more Investment Funds or subdivisions
thereof, (3) to transfer assets determined by us to be the proportionate share
of the class to which the Contracts belong from any of the Investment Funds to
another Investment Fund by withdrawing the same percentage of each investment in
that Investment Fund with appropriate adjustments to avoid odd lots and
fractions, (4) to operate the Separate Account or any Investment Fund as a
management investment company under the 1940 Act (which may be directed by a
committee which may be composed of a majority of persons who are "interested
persons" of Equitable Life under the 1940 Act, which committee may be discharged
by us at any time) or in any other form permitted by law, including a form that
allows us to make direct investments, (5) to deregister the Separate Account
under the 1940 Act, (6) to cause one or more Investment Funds to invest in a
mutual fund other than or in addition to HRT and EQAT, (7) to discontinue the
sale of Contracts, (8) to terminate any employer or plan trustee agreement
pursuant to its terms and (9) to restrict or eliminate any voting rights of
Contract Owners or other people who have voting rights that affect the Separate
Account.
If any changes are made that result in a material change in the underlying
investments of an Investment Fund, Contract Owners will be notified. We may make
other changes in the Contracts that do not reduce any Cash Value, annuity
benefit, Annuity Account Value, or other accrued rights or benefits.
TRUSTS
The Hudson River Trust (HRT) and the EQ Advisors Trust (EQAT) consist of the
investment Portfolios listed below. The Funds of the Separate Account invest in
these Portfolios according to your contribution allocations and transfers.
24
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
HRT PORTFOLIOS EQAT PORTFOLIOS
- ---------------------------------------------------------- ----------------------------------------------------
Fixed Income Series: Equity Series:
<S> <C> <C> <C>
o Alliance Money Market o Alliance Quality Bond o T. Rowe Price Equity o Morgan Stanley
o Alliance Intermediate o Alliance High Yield Income Emerging Markets
Government Securities o EQ/Putnam Growth & Equity
Income Value
Equity Series: o Warburg Pincus
o Alliance Growth & Income o Alliance International o Merrill Lynch Small Company Value
o Alliance Equity Index o Alliance Aggressive Stock Basic Value Equity o MFS Emerging
o Alliance Common Stock o Alliance Small Cap Growth o MFS Research Growth Companies
o Alliance Global o T. Rowe Price
International Stock
Asset Allocation Series:
o Alliance Conservative o Alliance Growth Asset Allocation Series:
Investors Investors o EQ/Putnam Balanced o Merrill Lynch World
o Alliance Balanced Strategy
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
The Trusts are open-end, management investment companies registered under the
1940 Act, more commonly called mutual funds. As a "series" type of mutual fund,
each Trust issues several different series of stock, each of which relates to a
different Portfolio of that Trust. HRT commenced operations in January 1976 with
a predecessor of its Alliance Common Stock Portfolio. EQAT commenced operations
on May 1, 1997. The Trusts do not impose sales charges or "loads" for buying and
selling their shares. All dividends and other distributions on a Portfolio's
shares are reinvested in full and fractional shares of the Portfolio to which
they relate. Each Fund invests in either Class IA or Class IB shares of a
corresponding Portfolio. HRT Portfolios sell Class IA shares to the Funds and
EQAT Portfolios sell Class IB shares to the Funds. (Class IA shares of the EQAT
Portfolios are not offered at this time.)
HRT and EQAT sell shares to Equitable Life separate accounts in connection with
Equitable Life's variable life insurance and annuity products. HRT also sells
its shares to separate accounts of insurance companies not affiliated with
Equitable Life. We currently do not foresee any disadvantages to our
policy/contract owners arising out of this. However, HRT's Board of Trustees
intends to monitor events in order to identify any material irreconcilable
conflicts that possibly may arise and to determine what action, if any, should
be taken in response. If we believe that HRT's response to any of those events
insufficiently protects our policy/contract owners, we will see to it that
appropriate action is taken to do so. Also, if we ever believe that any of the
Trusts' Portfolios is so large as to materially impair the investment
performance of the Portfolio or the Trust involved, we will examine other
investment options.
All of the Portfolios, except for the Morgan Stanley Emerging Markets Equity
Portfolio and Merrill Lynch World Strategy Portfolio, are diversified for 1940
Act purposes. More detailed information about the Trusts, their investment
objectives, policies, restrictions, risks, expenses, multiple class distribution
systems, the Rule 12b-1 distribution plan relating to Class IB shares and all
other aspects of their operations, appears in the HRT prospectus (beginning
after this prospectus), the EQAT prospectus (beginning after the HRT
prospectus), or in their respective Statements of Additional Information, which
are available upon request.
HRT'S MANAGER AND INVESTMENT ADVISER
HRT is managed and its Portfolios are advised by Alliance Capital Management
L.P. ("Alliance"), which is registered with the SEC as an investment adviser
under the Investment Advisers Act of 1940.
In its role as manager of the HRT, Alliance has overall responsibility for the
general management and administration of the HRT, including selecting the
portfolio managers for HRT's Portfolios, monitoring their investment programs
and results, reviewing brokerage matters, performing fund accounting, overseeing
compliance by HRT with various Federal and state statutes, and carrying out the
directives of its Board of Trustees. With the approval of the HRT's Trustees,
Alliance may enter into agreements with other companies to assist with its
administrative and management responsibilities to the HRT.
As investment adviser for all of the HRT Portfolios advised by Alliance,
Alliance is responsible for developing the Portfolios' investment programs,
making investment decisions for the Portfolios, placing all orders for the
purchase and sale of those investments and performing certain limited related
administrative functions.
25
<PAGE>
ALLIANCE CAPITAL MANAGEMENT L.P.
Alliance, a leading international investment adviser, provides investment
management and consulting 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.
Alliance is a publicly traded limited partnership incorporated in Delaware. On
December 31, 1997, Alliance was managing approximately $218.7 billion in assets.
Alliance employs 223 investment professionals, including 83 research analysts.
Portfolio managers have average investment experience of more than 14 years.
Alliance is an indirect, majority-owned subsidiary of Equitable Life, and its
main office is located at 1345 Avenue of the Americas, New York, New York 10105.
Additional information regarding Alliance is located in the HRT prospectus (page
numbers are preceded by "HRT") which directly follows this prospectus.
EQAT'S MANAGER
EQ Financial Consultants, Inc. (EQF), subject to the supervision and direction
of the Trustees of EQAT, has overall responsibility for the general management
and administration of EQAT. EQF is an investment adviser registered under the
Investment Advisers Act of 1940, as amended, and a broker-dealer registered
under the Securities Exchange Act of 1934, as amended ("1934 Act"). EQF
currently furnishes specialized investment advice to other clients, including
individuals, pension and profit-sharing plans, trusts, charitable organizations,
corporations, and other business entities. EQF is a Delaware corporation and an
indirect, wholly owned subsidiary of Equitable Life.
EQF is responsible for providing management and administrative services to EQAT
and selects the investment advisers for EQAT's Portfolios, monitors the EQAT
Advisers' investment programs and results, reviews brokerage matters, oversees
compliance by EQAT with various Federal and state statutes, and carries out the
directives of its Board of Trustees. EQ Financial Consultants, Inc.'s main
office is located at 1290 Avenue of the Americas, New York, New York 10104.
Pursuant to a service agreement, Chase Global Funds Services Company assists EQF
in the performance of its administrative responsibilities to EQAT with other
necessary administrative, fund accounting and compliance services.
EQAT'S INVESTMENT ADVISERS
Rowe Price-Fleming International, Inc.; T. Rowe Price Associates, Inc.; Putnam
Investment Management, Inc.; Massachusetts Financial Services Company; Morgan
Stanley Asset Management Inc.; Warburg Pincus Asset Management, Inc.; and
Merrill Lynch Asset Management, L.P. serve as EQAT Advisers only for their
respective EQAT Portfolios.
Each EQAT Adviser furnishes EQAT's manager, EQF, with an investment program
(updated periodically) for each of its Portfolios, makes investment decisions on
behalf of its EQAT Portfolios, places all orders for the purchase and sale of
investments for the Portfolio's account with brokers or dealers selected by such
Adviser and may perform certain limited related administrative functions.
The assets of each Portfolio are allocated currently among the EQAT Advisers. If
an EQAT Portfolio shall at any time have more than one EQAT Adviser, the
allocation of an EQAT Portfolio's assets among EQAT Advisers may be changed at
any time by EQF.
MASSACHUSETTS FINANCIAL SERVICES COMPANY
Massachusetts Financial Services Company (MFS) is America's oldest mutual fund
organization, whose assets under management as of December 31, 1997 were
approximately $70.2 billion on behalf of more than 2.7 million investors. MFS
advises MFS Research, a domestic equity portfolio, and MFS Emerging Growth
Companies, an aggressive equity portfolio. MFS is an indirect subsidiary of Sun
Life Assurance Company of Canada and is located at 500 Boylston Street, Boston,
MA 02116.
MERRILL LYNCH ASSET MANAGEMENT, L.P
Founded in 1976, Merrill Lynch Asset Management, L.P. (MLAM) is a dedicated
asset management affiliate of Merrill Lynch & Co., Inc., a financial management
and advisory company with more than a century of experience. As of December 31,
1997, MLAM along with its advisory affiliates held approximately $278 billion in
investment company and other portfolio assets under management. MLAM advises
Merrill Lynch Basic Value Equity, a domestic equity portfolio with a value
approach to investing, and Merrill Lynch World Strategy, a global flexible asset
allocation portfolio that invests in equities and fixed income securities
worldwide. The company is located at 800 Scudders Mill Road, Plainsboro, NJ
08543.
MORGAN STANLEY ASSET MANAGEMENT INC.
Morgan Stanley Asset Management Inc. (MSAM) provides a broad range of portfolio
management services to customers in the United States and abroad and serves as
an investment adviser to numerous open-end and closed-end investment companies.
MSAM, together with its affiliated institutional investment management
companies, had approximately $146 billion in assets under management and
fiduciary care as of December 31, 1997. MSAM advises Morgan
26
<PAGE>
Stanley Emerging Markets Equity, an international equity portfolio. MSAM is a
subsidiary of Morgan Stanley, Dean Witter & Co. and is located at 1221 Avenue of
the Americas, New York, New York 10020.
PUTNAM INVESTMENT MANAGEMENT, INC.
Putnam Investment Management, Inc. (PUTNAM) has been managing mutual funds since
1937. As of December 31, 1997, Putnam and its affiliates managed more than $235
billion in assets. Putnam advises EQ/Putnam Growth & Income Value, a domestic
equity portfolio, and EQ/Putnam Balanced, a balanced stock and bond portfolio.
Putnam is an indirect subsidiary of Marsh & McLennan Companies, Inc. and is
located at One Post Office Square, Boston, MA 02109.
T. ROWE PRICE ASSOCIATES, INC. AND ROWE PRICE-FLEMING INTERNATIONAL, INC.
Founded in 1937, T. Rowe Price provides investment management to both
individuals and institutions. With its affiliates, assets under management were
over $126 billion as of December 31, 1997. T. Rowe Price advises T. Rowe Price
Equity Income, a domestic equity portfolio. The company is located at 100 East
Pratt Street, Baltimore, MD 21202.
Rowe Price-Fleming International, Inc., ("PRICE-FLEMING") was founded as a joint
venture between T. Rowe Price and Robert Fleming Holdings, Ltd., a diversified
British investment organization. Price-Fleming's predominately non-U.S. assets
under management were the equivalent of approximately $30 billion as of December
31, 1997. Price-Fleming advises T. Rowe Price International Stock, an
international equity portfolio and is located at 100 East Pratt Street,
Baltimore, MD 21202.
WARBURG PINCUS ASSET MANAGEMENT, INC.
Warburg Pincus Asset Management, Inc. (WPAM) is a professional investment
advisory firm which provides services to investment companies, employee benefit
plans, endowment funds, foundations and other institutions and individuals.
Assets under management were approximately $19.7 billion as of December 31,
1997. WPAM is indirectly controlled by Warburg, Pincus & Co., a New York
partnership, which serves as a holding company of WPAM. Warburg Pincus advises
Warburg Pincus Small Company Value, an aggressive equity portfolio. The company
is located at 466 Lexington Avenue, New York, NY 10017.
Additional information regarding each of the companies which serve as an EQAT
Adviser appears in the EQAT prospectus (page numbers are preceded by "EQAT"),
attached at the end of this prospectus.
27
<PAGE>
INVESTMENT POLICIES AND OBJECTIVES OF THE TRUSTS' PORTFOLIOS
Each Portfolio has a different investment objective which it tries to achieve by
following separate investment policies. The objectives and policies of each
Portfolio will affect its expected return and its risks. There is no guarantee
that these objectives will be achieved.
Contributions allocated to these Portfolios will fluctuate, and may be worth
more or less than its original value when you surrender your Contract or make
withdrawals. The policies and objectives of the Portfolios are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TRUST INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Money Market HRT Primarily high-quality short-term money market High level of current income
instruments. while preserving assets and
maintaining liquidity
- -------------------------------------------------------------------------------------------------------------------------------
Alliance HRT Primarily debt securities issued or guaranteed High current income consistent
Intermediate by the U.S. Government, its agencies and with relative stability of
Government instrumentalities. Each investment will have a principal
Securities final maturity of not more than 10 years or a
duration not exceeding that of a 10-year
Treasury note.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond HRT Primarily investment grade fixed-income High current income consistent
securities. with preservation of capital
- -------------------------------------------------------------------------------------------------------------------------------
Alliance High Yield HRT Primarily a diversified mix of high-yield, High return by maximizing current
fixed-income securities involving greater income and, to the extent
volatility of price and risk of principal and consistent with that objective,
income than high-quality fixed-income capital appreciation
securities. The medium- and lower-quality debt
securities in which the Portfolio may invest
are known as "junk bonds."
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income HRT Primarily income producing common stocks and High total return through a
securities convertible into common stocks. combination of current income and
capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Equity Index HRT Selected securities in the S&P 500 Index (the Total return performance (before
"Index") which the adviser believes will, in trust expenses and Separate
the aggregate, approximate the performance Account annual expenses) that
results of the Index. approximates the investment
performance of the Index
(including reinvestment of
dividends) at risk level
consistent with that of the Index
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Common Stock HRT Primarily common stock and other equity-type Long-term growth of capital and
instruments. increasing income
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Global HRT Primarily equity securities of non-United Long-term growth of capital
States as well as United States companies.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance HRT Primarily equity securities selected Long-term growth of capital
International principally to permit participation in
non-United States companies with prospects for
growth.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Aggressive HRT Primarily common stocks and other equity-type Long-term growth of capital
Stock securities issued by medium- and other
smaller-sized companies with strong growth
potential.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Small Cap HRT Primarily common stocks and other equity-type Long-term growth of capital
Growth securities issued by smaller-sized companies
with strong growth potential.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
28
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO TRUST INVESTMENT POLICY OBJECTIVE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance HRT Diversified mix of publicly traded, High total return without, in the
Conservative fixed-income and equity securities; asset mix adviser's opinion, undue risk to
Investors and security selection are primarily based upon principal
factors expected to reduce risk. The
Portfolio is generally expected to hold
approximately 70% of its assets in
fixed-income securities and 30% in equity
securities.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Balanced HRT Primarily common stocks, publicly traded debt High return through a combination
securities and high-quality money market of current income and capital
instruments. The Portfolio is generally appreciation
expected to hold 50% of its assets in equity
securities and 50% in fixed-income securities.
- -------------------------------------------------------------------------------------------------------------------------------
Alliance Growth HRT Diversified mix of publicly traded, High total return consistent with
Investors fixed-income and equity securities; asset mix the adviser's determination of
and security selection based upon factors reasonable risk
expected to increase possibility of high
long-term return. The Portfolio is
generally expected to hold approximately
70% of its assets in equity securities and
30% in fixed-income securities.
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price EQAT Primarily common stocks of established Long-term growth of capital
International Stock non-United States companies.
- -------------------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity EQAT Primarily dividend paying common stocks of Substantial dividend income and
Income established companies. also capital appreciation
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Growth & EQAT Primarily common stocks that offer potential Capital growth and, secondarily,
Income Value for capital growth and may, consistent with the current income
Portfolio Portfolio's investment objective, invest in
common stocks that offer potential for current
income.
- -------------------------------------------------------------------------------------------------------------------------------
EQ/Putnam Balanced EQAT A well-diversified portfolio of stocks and Balanced investment
bonds that will produce both capital growth and
current income.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Research EQAT A substantial portion of assets invested in Long-term growth of capital and
common stock or securities convertible into future income
common stock of companies believed by the
Adviser to possess better than average
prospects for long-term growth.
- -------------------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth EQAT Primarily (i.e., at least 80% of its assets Long-term growth of capital
Companies under normal circumstances) in common stocks of
emerging growth companies that the Adviser
believes are early in their life cycle but
which have the potential to become major
enterprises.
- -------------------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging EQAT Primarily equity securities of emerging market Long-term capital appreciation
Markets Equity country issuers with a focus on those in which
the Adviser believes the economies are
developing strongly and in which the
markets are becoming more sophisticated.
- -------------------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small EQAT Primarily in a portfolio of equity securities Long-term capital appreciation
Company Value of small capitalization companies (i.e.,
companies having market capitalizations of
$1 billion or less at the time of initial
purchase) that the Adviser considers to be
relatively undervalued.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch World EQAT Primarily equity and fixed-income securities, High total investment return
Strategy including convertible securities, of U.S. and
foreign issuers.
- -------------------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic EQAT Primarily equity securities, that the Portfolio Capital appreciation and,
Value Equity Adviser believes are undervalued and therefore secondarily, income
represent basic investment value.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
29
<PAGE>
- --------------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
INVESTMENT FUND PERFORMANCE
In order to help show how the performance of Investment Funds has affected the
Annuity Account Values, the following tables provide a historical view of
investment performance for each of the Funds included. The performance shown has
been calculated under two methods, as explained under "How Performance Data Are
Presented" below. The information presented includes performance results along
with data representing unmanaged market indices and similarly managed funds.
Except as noted below, performance data for the Investment Funds reflect (i) the
actual historical investment results of the corresponding Portfolios from the
date of inception of those Portfolios or the predecessor Portfolios or accounts,
(ii) the actual investment advisory fee, Rule 12b-1 fee, if any, and direct
operating expenses of the relevant Portfolios and (iii) for all periods, the
Separate Account asset charges assessed under the EQUI-VEST Contract.
Performance for the Alliance Money Market, Alliance Balanced, Alliance Common
Stock and Alliance Aggressive Stock Funds for the period before those Funds were
operated as a unit investment trust has been adjusted to reflect the investment
advisory fee and expense structure that became applicable to the unit investment
trust. See "The Reorganization" in the SAI for additional information.
Because amounts allocated to the Investment Funds are invested in a mutual fund,
investment return and principal will fluctuate and Accumulation Units may be
worth more or less than the original cost when redeemed. The results shown are
not an estimate or guarantee of future investment performance, and do not
reflect the actual experience of amounts invested under a particular Contract.
HOW PERFORMANCE DATA ARE PRESENTED
Tables 1 and 2 compare annualized rates of return for each Investment Fund along
with appropriate benchmarks. Table 3 shows the year-by-year rates of return for
each Investment Fund. These performance results are based on the change in the
Accumulation Unit value for each Investment Fund for the periods shown.
Investment results in Tables 1, 2, and 3 are net of all charges and expenses
assessed against the Investment Funds (including fees and expenses of the
Trusts) but exclude the annual administrative charge and any withdrawal charges
which would also reduce the actual return. Tables 4 and 5 show performance
results after giving effect to all charges and expenses including the annual
administrative charge and the contingent withdrawal charge. Since charges under
the Contracts may vary, we have assumed, for each charge, the highest that might
apply.
Certain of the Investment Funds began operations on a date after the inception
date of the corresponding Portfolio. When we advertise the performance of an
Investment Fund we will separately set forth the performance of that Fund since
its inception date, to the extent required by regulatory authorities.
BENCHMARKS
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 Portfolio manager is likely to make selections.
INCEPTION DATES AND COMPARATIVE BENCHMARKS
ALLIANCE MONEY MARKET: May 11, 1982; Salomon Brothers Three-Month T-Bill Index
(3-Month T-Bill).
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: April 1, 1991; Lehman Intermediate
Government Bond Index (Lehman Intermediate Government).
ALLIANCE QUALITY BOND: October 1, 1993; Lehman Aggregate Bond Index (Lehman
Aggregate).
ALLIANCE HIGH YIELD: January 2, 1987; Merrill Lynch High Yield Master Index
(Master High Yield).
ALLIANCE GROWTH & INCOME: October 1, 1993; 75% Standard & Poor's 500 Index (S&P
500) and 25% Value Line Convertibles Index (75% S&P 500/25% Value Line Conv.).
ALLIANCE EQUITY INDEX: March 1, 1994; Standard & Poor's 500 Index (S&P 500).
ALLIANCE COMMON STOCK: August 1, 1968; Standard & Poor's 500 Index (S&P 500).
ALLIANCE GLOBAL: August 27, 1987; Morgan Stanley Capital International World
Index (MSCI World).
ALLIANCE INTERNATIONAL: April 3, 1995; Morgan Stanley Capital International
Europe, Australia, Far East Index (MSCI EAFE).
ALLIANCE AGGRESSIVE STOCK: May 1, 1984; 50% Russell 2000 Small Stock Index and
50% S&P MidCap Total Return (50% Russell 2000/50% S&P MidCap).
30
<PAGE>
ALLIANCE SMALL CAP GROWTH: May 1, 1997; Russell 2000 Growth Index (Russell 2000
Gr).
ALLIANCE CONSERVATIVE INVESTORS: October 2, 1989; 70% Lehman Treasury Bond
Composite Index and 30% S&P 500 Index (70% Lehman Treas./30% S&P 500).
ALLIANCE BALANCED: May 1, 1984; 50% S&P 500 and 50% Lehman Government/Corporate
Bond Index (50% S&P 500/50% Lehman Corp.).
ALLIANCE GROWTH INVESTORS: October 2, 1989; 30% Lehman Government/Corporate Bond
Index and 70% S&P 500 Index (30% Lehman Treas./70% S&P 500).
T. ROWE PRICE INTERNATIONAL STOCK: May 1, 1997; Morgan Stanley Capital
International Europe, Australia, Far East Index (MSCI EAFE).
T. ROWE PRICE EQUITY INCOME: May 1, 1997; Standard & Poor's 500 Index (S&P 500).
EQ/PUTNAM GROWTH & INCOME VALUE: May 1, 1997; Standard & Poor's 500 Index (S&P
500).
EQ/PUTNAM BALANCED: May 1, 1997; 60% Standard & Poor's 500 Index and 40% Lehman
Government/Corporate Bond Index (60% S&P500/40% Lehman Corp.)
MFS RESEARCH: May 1, 1997; Standard & Poor's 500 Index (S&P 500).
MFS EMERGING GROWTH COMPANIES: May 1, 1997; Russell 2000 Index (Russell 2000).
MORGAN STANLEY EMERGING MARKETS EQUITY: August 20, 1997; Morgan Stanley Capital
International Emerging Markets Free Price Return Index (MSCI Emerging Markets).
WARBURG PINCUS SMALL COMPANY VALUE: May 1, 1997; Russell 2000 Index (Russell
2000).
MERRILL LYNCH WORLD STRATEGY: May 1, 1997; 36% S&P 500/24% MSCI EAFE/21% Salomon
Brothers US Treasury Bond 1 Year+/14% Salomon Brothers World Government Bond Ex
US/5% 3-Month U.S. T-bill-(Market Composite).
MERRILL LYNCH BASIC VALUE EQUITY: May 1, 1997; Standard & Poor's 500 Index (S&P
500).
The Lipper Variable Insurance Products Performance Analysis Survey (Lipper)
records the performance of a large group of variable annuity and variable life
products, including managed separate accounts of insurance companies. According
to Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating and asset-based charges applicable under
variable insurance policies or variable annuity contracts. Lipper data provide a
more accurate picture than market indices of EQUI-VEST performance relative to
other annuity products.
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.
31
<PAGE>
<TABLE>
<CAPTION>
TABLE 1:
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:
- ----------------------------------------------------------------------------------------------------------------------------------
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 3.98% 4.07% 3.28% 4.37% -- 5.42% 5/11/82
Lipper Money Market 3.95 4.05 3.29 4.41 -- 5.77
3-Month T-Bill 5.23 5.41 4.71 5.61 -- 6.49
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 5.85 6.61 4.52 -- -- 5.56 4/1/91
Lipper U.S. Government 7.60 8.03 5.65 -- -- 6.95
Lehman Intermediate Government 7.72 8.65 6.39 -- -- 7.47
ALLIANCE QUALITY BOND 7.68 8.92 -- -- -- 4.38 10/1/93
Lipper Corporate Bond A-Rated 8.04 8.77 -- -- -- 4.60
Lehman Aggregate 9.65 10.42 -- -- -- 6.51
Aggressive Fixed Income
ALLIANCE HIGH YIELD 16.88 18.79 14.33 11.28 -- 10.53 1/2/87
Lipper High Yield 12.87 14.23 10.68 10.33 -- 9.46
Master High Yield 12.83 14.54 11.72 12.09 -- 11.39
EQUITY SERIES:
Domestic Equity
T. ROWE PRICE EQUITY INCOME -- -- -- -- -- 21.04+ 5/1/97
Lipper Equity Income -- -- -- -- -- 20.91+
S&P 500 -- -- -- -- -- 22.55+
EQ/PUTNAM
GROWTH & INCOME VALUE -- -- -- -- -- 15.17+ 5/1/97
Lipper Growth & Income -- -- -- -- -- 20.28+
S&P 500 -- -- -- -- -- 22.55+
ALLIANCE GROWTH & INCOME 25.06 21.95 -- -- -- 14.36 10/1/93
Lipper Growth 25.47 25.18 -- -- -- 17.47
25% Value Line Conv./75% S&P 500 29.54 28.62 -- -- -- 20.14
ALLIANCE EQUITY INDEX 30.79 28.59 -- -- -- 21.72 3/1/94
Lipper S&P 500 Index Funds 31.06 29.07 -- -- -- 21.96
S&P 500 33.36 31.15 -- -- -- 23.84
MERRILL LYNCH
BASIC VALUE EQUITY -- -- -- -- -- 15.97+ 5/1/97
Lipper Growth & Income -- -- -- -- -- 20.28+
S&P 500 -- -- -- -- -- 22.55+
ALLIANCE COMMON STOCK 27.45 26.84 19.38 16.45 16.17 11.58 8/1/68
Lipper Growth 24.35 24.72 16.01 15.40 15.20 N/A
S&P 500 33.36 31.15 20.27 18.05 16.66 12.25
MFS RESEARCH -- -- -- -- -- 15.01+ 5/1/97
Lipper Growth -- -- -- -- -- 21.89+
S&P 500 -- -- -- -- -- 22.55+
International Equity
ALLIANCE GLOBAL 10.05 13.41 14.57 12.20 -- 10.19 8/27/87
Lipper Global 12.99 14.18 13.94 7.21 -- 3.84
MSCI World 15.76 16.62 15.34 10.57 -- 8.22
ALLIANCE INTERNATIONAL -4.35 -- -- -- -- 4.74 4/3/95
Lipper International 5.47 -- -- -- -- 11.42
MSCI EAFE 1.78 -- -- -- -- 6.15
T. ROWE PRICE
INTERNATIONAL STOCK -- -- -- -- -- -2.39+ 5/1/97
Lipper International -- -- -- -- -- 3.41+
MSCI EAFE -- -- -- -- -- 2.85+
MORGAN STANLEY EMERGING MARKETS EQUITY -- -- -- -- -- -20.59* 8/20/97
Lipper Emerging Markets -- -- -- -- -- N/A
MSCI Emerging Markets -- -- -- -- -- -21.43*
- ----------------------------------------------------------------------------------------------------------------------------------
This table continues on next page
+ Return for this Fund is unannualized and represents 8 months of performance.
* Return for this Fund is unannualized and represents 5 months of performance.
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
TABLE 1:
ANNUALIZED RATES OF RETURN (CONTINUED):
- --------------------------------------------------------------------------------------------------------------------------------
PORTFOLIO
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY SERIES (CONTINUED):
Aggressive Equity
ALLIANCE AGGRESSIVE STOCK 9.31% 19.61% 13.34% 17.37% -- 17.40% 5/1/84
Lipper Mid-Cap Growth 12.11 15.54 9.27 14.32 -- 15.87
50% Russell 2000/50% S&P Mid-Cap 27.31 24.88 17.11 17.74 -- 16.11
WARBURG PINCUS
SMALL COMPANY VALUE -- -- -- -- -- 18.06+ 5/1/97
Lipper Small-Cap -- -- -- -- -- 26.66+
Russell 2000 Growth -- -- -- -- -- 28.68+
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- 25.55+ 5/1/97
Lipper Small-Cap -- -- -- -- -- 26.66+
Russell 2000 Growth -- -- -- -- -- 27.66+
MFS EMERGING GROWTH
COMPANIES -- -- -- -- -- 21.34+ 5/1/97
Lipper Mid-Cap -- -- -- -- -- 20.88+
Russell 2000 -- -- -- -- -- 28.68+
ASSET ALLOCATION SERIES:
ALLIANCE CONSERVATIVE INVESTORS 11.71 11.26 7.33 -- -- 8.06 10/2/89
Lipper Income 15.51 15.54 11.61 -- -- 10.57
70% Lehman Treas./30% S&P 500 16.71 17.18 11.87 -- -- 11.39
EQ/PUTNAM BALANCED -- -- -- -- -- 13.46+ 5/1/97
Lipper Balanced -- -- -- -- -- 14.79+
40% Lehman Gov't./Corp./60% S&P 500 -- -- -- -- -- 17.17+
ALLIANCE BALANCED 13.44 13.87 8.22 10.73 -- 10.40 5/1/84
Lipper Flexible Portfolio 18.23 17.09 11.52 11.93 -- 10.94
50% Lehman Gov't./Corp./70% S&P 500 21.56 21.68 14.63 21.19 -- 14.84
ALLIANCE GROWTH INVESTORS 15.21 16.86 11.64 -- -- 14.17 10/2/89
Lipper Flexible Portfolio 18.23 17.09 11.52 -- -- 11.10
30% Lehman Gov't./Corp./70% S&P 500 26.28 25.64 17.02 -- -- 14.48
MERRILL LYNCH WORLD STRATEGY -- -- -- -- -- 3.77+ 5/1/97
Lipper Global Flexible Portfolio -- -- -- -- -- 8.52+
Market Composite -- -- -- -- -- 10.81+
- --------------------------------------------------------------------------------------------------------------------------------
+ Return for this Fund is unannualized and represents 8 months of performance.
* Return for this Fund is unannualized and represents 5 months of performance.
</TABLE>
33
<PAGE>
<TABLE>
<CAPTION>
TABLE 2:
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1997:
- ------------------------------------------------------------------------------------------------------------------------------------
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 3.98% 12.72% 17.50% 53.33% -- 128.35% 5/11/82
Lipper Money Market 3.95 12.64 17.61 54.00 -- 151.25
3-Month T-Bill 5.23 17.13 25.87 72.64 -- 199.34
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 5.85 21.17 24.71 -- -- 44.12 4/1/91
Lipper U.S. Government 7.60 26.12 31.70 -- -- 57.40
Lehman Intermediate Government 7.72 28.25 36.31 -- -- 62.74
ALLIANCE QUALITY BOND 7.68 29.23 -- -- -- 19.98 10/1/93
Lipper Corporate Bond A-Rated 8.04 28.70 34.61 108.58 -- 21.09
Lehman Aggregate 9.65 34.63 -- -- -- 30.78
Aggressive Fixed Income
ALLIANCE HIGH YIELD 16.88 67.64 95.34 191.09 -- 200.61 1/2/87
Lipper High Yield 12.87 49.17 66.26 169.15 -- 173.12
Master High Yield 12.83 50.26 74.04 213.08 -- 227.68
EQUITY SERIES:
Domestic Equity
T. ROWE PRICE EQUITY INCOME -- -- -- -- -- 21.04 5/1/97
Lipper Equity Income -- -- -- -- -- 20.91
S&P 500 -- -- -- -- -- 22.55
EQ/PUTNAM
GROWTH & INCOME VALUE -- -- -- -- -- 15.17 5/1/97
Lipper Growth & Income -- -- -- -- -- 28.28
S&P 500 -- -- -- -- -- 22.55
ALLIANCE GROWTH & INCOME 25.06 81.36 -- -- -- 76.86 10/1/93
Lipper Growth & Income 25.47 96.46 -- -- -- 98.58
25% Value Line Conv./75% S&P 500 29.54 112.80 -- -- -- 118.17
ALLIANCE EQUITY INDEX 30.79 112.64 -- -- -- 112.55 3/1/94
Lipper S&P 500 Index Funds 31.06 115.03 -- -- -- 114.07
S&P 500 33.36 125.60 -- -- -- 127.24
MERRILL LYNCH BASIC VALUE EQUITY -- -- -- -- -- 15.97 5/1/97
Lipper Growth & Income -- -- -- -- -- 20.28
S&P 500 -- -- -- -- -- 22.55
ALLIANCE COMMON STOCK 27.45 104.05 142.46 358.71 1,902.88 2,407.79 8/1/68
Lipper Growth 24.35 94.70 111.15 321.71 1,602.96 1,659.17
S&P 500 33.36 125.60 151.62 425.67 2,080.13 2,248.74
MFS RESEARCH -- -- -- -- -- 15.01 5/1/97
Lipper Growth -- -- -- -- -- 21.89
S&P 500 -- -- -- -- -- 22.55
International Equity
ALLIANCE GLOBAL 10.05 45.86 97.38 216.20 -- 172.97 8/27/87
Lipper Global 12.99 49.53 93.26 100.58 -- 47.66
MSCI World 15.76 58.59 104.13 173.03 -- 126.45
ALLIANCE INTERNATIONAL -4.35 -- -- -- -- 13.56 4/3/95
Lipper International 5.47 -- -- -- -- 35.07
MSCI EAFE 1.78 -- -- -- -- 17.83
T. ROWE PRICE
INTERNATIONAL STOCK -- -- -- -- -- -2.39 5/1/97
Lipper International -- -- -- -- -- 3.41
MSCI EAFE -- -- -- -- -- 2.85
MORGAN STANLEY EMERGING MARKETS EQUITY -- -- -- -- -- -20.59* 8/20/97
Lipper Emerging Markets -- -- -- -- -- N/A
MSCI Emerging Market -- -- -- -- -- -21.43
- ------------------------------------------------------------------------------------------------------------------------------------
This table continues on next page
</TABLE>
34
<PAGE>
<TABLE>
<CAPTION>
TABLE 2: CUMULATIVE RATES OF RETURN (CONTINUED):
- ----------------------------------------------------------------------------------------------------------------------------
PORTFOLIO
SINCE INCEPTION
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION DATE
EQUITY SERIES (CONTINUED): ----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Aggressive Equity
ALLIANCE AGGRESSIVE STOCK 9.31% 71.12% 87.02% 396.16% -- 795.31% 5/1/84
Lipper Mid-Cap Growth 12.11 56.12 59.26 311.80 -- 478.26
50% Russell 2000/50% S&P Mid-Cap 27.31 94.76 120.25 412.08 -- 436.52
WARBURG PINCUS
SMALL COMPANY VALUE -- -- -- -- -- 18.06 5/1/97
Lipper Small-Cap -- -- -- -- -- 26.66
Russell 2000 -- -- -- -- -- 28.68
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- 25.55 5/1/97
Lipper Small-Cap -- -- -- -- -- 26.66
Russell 2000 Growth -- -- -- -- -- 27.66
MFS EMERGING GROWTH COMPANIES -- -- -- -- -- 21.34 5/1/97
Lipper Mid-Cap -- -- -- -- -- 20.88
Russell 2000 -- -- -- -- -- 28.68
ASSET ALLOCATION SERIES:
ALLIANCE CONSERVATIVE INVESTORS 11.71 37.74 42.41 -- -- 89.50 10/2/89
Lipper Income 15.51 54.60 73.34 -- -- 129.83
70% Lehman Treas./30% S&P 500 16.71 60.91 75.18 -- -- 143.55
EQ/PUTNAM BALANCED -- -- -- -- -- 13.46 5/1/97
Lipper Balanced -- -- -- -- -- 14.79
40% Lehman Gov't./Corp./60% S&P 500 -- -- -- -- -- 17.17
ALLIANCE BALANCED 13.44 47.63 48.43 177.12 -- 286.60 5/1/84
Lipper Flexible Portfolio 18.23 61.05 73.02 209.82 -- 246.50
50% Lehman Gov't./Corp./70% S&P 500 21.56 80.14 97.96 583.14 -- 376.27
ALLIANCE GROWTH INVESTORS 15.21 59.58 73.39 -- -- 198.23 10/2/89
Lipper Flexible Portfolio 18.23 61.05 73.02 -- -- 140.59
30% Lehman Gov't./Corp./70% S&P 500 26.28 98.32 119.42 -- -- 205.24
MERRILL LYNCH WORLD STRATEGY -- -- -- -- -- 3.77 5/1/97
Lipper Global Flexible Portfolio -- -- -- -- -- 8.52
Market Composite -- -- -- -- -- 10.81
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
35
<PAGE>
<TABLE>
<CAPTION>
TABLE 3:
YEAR-BY-YEAR RATES OF RETURN
- --------------------------------------------------------------------------------------------------------------------------------
1988 1989 1990 1991 1992 1993 1994 1995 1996 1997
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 5.94% 7.72% 6.82% 4.69% 2.16% 1.58% 2.62% 4.32% 3.90% 3.98%
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES -- -- -- 10.94* 4.17 9.09 -5.65 11.81 2.38 5.85
ALLIANCE QUALITY BOND -- -- -- -- -- -0.84* -6.37 15.46 3.94 7.68
ALLIANCE HIGH YIELD 8.25 3.71 -2.43 22.78 10.80 21.48 -4.09 18.32 21.23 16.88
ALLIANCE GROWTH & INCOME -- -- -- -- -- -0.59* -1.90 22.42 18.47 25.06
ALLIANCE EQUITY INDEX -- -- -- -- -- -- -0.04* 34.66 20.73 30.79
ALLIANCE COMMON STOCK 21.55 24.07 -9.27 35.81 1.82 23.11 -3.48 30.64 22.55 27.45
ALLIANCE GLOBAL 9.38 25.02 -7.33 28.79 -1.86 30.34 3.82 17.23 13.06 10.05
ALLIANCE INTERNATIONAL -- -- -- -- -- -- -- 9.60* 8.33 -4.35
ALLIANCE AGGRESSIVE STOCK -0.39 42.87 5.73 84.57 -4.47 15.17 -5.11 29.87 20.54 9.31
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- -- -- -- -- 25.55*
ALLIANCE CONSERVATIVE INVESTORS -- 2.75* 4.97 18.23 4.36 9.27 -5.38 18.79 3.79 11.71
ALLIANCE BALANCED 13.27 24.60 -1.46 40.02 -4.15 10.80 -9.27 18.13 10.16 13.44
ALLIANCE GROWTH INVESTORS -- 3.65* 9.12 46.90 3.52 13.71 -4.44 24.68 11.09 15.21
T. ROWE PRICE INTERNATIONAL STOCK
PORTFOLIO -- -- -- -- -- -- -- -- -2.39*
T. ROWE PRICE EQUITY INCOME
PORTFOLIO -- -- -- -- -- -- -- -- -- 21.04*
EQ/PUTNAM GROWTH & INCOME VALUE
PORTFOLIO -- -- -- -- -- -- -- -- -- 15.17*
EQ/PUTNAM BALANCED PORTFOLIO -- -- -- -- -- -- -- -- -- 13.46*
MFS RESEARCH PORTFOLIO -- -- -- -- -- -- -- -- -- 15.01*
MFS EMERGING GROWTH COMPANIES
PORTFOLIO -- -- -- -- -- -- -- -- -- 21.34*
MORGAN STANLEY EMERGING MARKETS
EQUITY PORTFOLIO -- -- -- -- -- -- -- -- -20.59*
WARBURG PINCUS SMALL COMPANY VALUE
PORTFOLIO -- -- -- -- -- -- -- -- -- 18.06*
MERRILL LYNCH WORLD STRATEGY
PORTFOLIO -- -- -- -- -- -- -- -- -- 3.77*
MERRILL LYNCH BASIC VALUE EQUITY
PORTFOLIO -- -- -- -- -- -- -- -- -- 15.97*
- -------------------
* Unannualized
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The performance data in Tables 4 and 5, illustrate the growth of an investment,
and the average annual total return of the Investment Funds, respectively, over
the periods shown assuming a single initial contribution of $1,000 and
termination of the EQUI-VEST Contract at the end of each period on December 31,
1997, under circumstances in which the contingent withdrawal charge applies. The
values shown are also net of all other charges and expenses assessed against the
Investment Funds. An Investment Fund's average annual total return is the annual
rate of growth of the Investment Fund that would be necessary to achieve the
ending value of a contribution kept in the Investment Fund for the period
specified.
36
<PAGE>
Each calculation further assumes that the $1,000 contribution was allocated to
only one Investment Fund, no transfers or additional contributions were made, no
loans, and no amounts were allocated to any other Investment Fund under the
Contract.
In order to calculate the performance information, we divide the termination
value (defined below) of a Contract which is terminated on December 31, 1997 by
the $1,000 investment made at the beginning of each period illustrated. The
result of that calculation is the total growth rate for the period. Then we
annualize that growth rate to obtain the average annual percentage increase
(decrease) during the period shown. When we "annualize," we assume that a single
rate of return applied each year during the period will produce the ending
value, taking into account the effect of compounding. "Termination value" means
the Annuity Account Value less the contingent withdrawal charge, the annual
administrative charge and all other charges and expenses which are applied
against an Investment Fund. See "Part 7: Deductions and Charges."
37
<PAGE>
<TABLE>
<CAPTION>
TABLE 4:
GROWTH OF $1,000 FOR CONTRACTS TERMINATED ON DECEMBER 31, 1997:
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------------------------------------------
INVESTMENT ONE THREE FIVE TEN SINCE PORTFOLIO
FUND YEAR YEARS YEARS YEARS INCEPTION*
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 963.99 $ 995.72 $ 978.94 $1,203.22 --
Alliance Intermediate Government
Securities 981.35 1,073.73 1,043.88 -- $1,201.20
Alliance Quality Bond 998.27 1,150.58 -- -- 1,022.45
Alliance High Yield 1,083.57 1,500.04 1,693.62 2,361.21 --
Alliance Growth & Income 1,159.39 1,631.83 -- -- 1,547.45
Alliance Equity Index 1,212.56 1,934.65 -- -- 1,899.48
Alliance Common Stock 1,181.55 1,851.45 2,133.79 3,855.20 --
Alliance Global 1,020.26 1,298.65 1,715.53 2,599.65 1,080.53
Alliance International 886.73 -- -- -- 1,010.64
Alliance Aggressive Stock 1,013.42 1,538.88 1,625.43 4,313.55 --
Alliance Small Cap Growth -- -- -- -- 1,171.84
Alliance Conservative Investors 1,035.66 1,226.36 1,209.36 -- 1,550.34
Alliance Balanced 1,051.71 1,314.94 1,264.04 2,271.86 --
Alliance Growth Investors 1,068.09 1,422.57 1,489.48 -- 2,525.24
T. Rowe Price International Stock
Portfolio -- -- -- -- 911.06
T. Rowe Price Equity Income Portfolio -- -- -- -- 1,129.70
E/Q Putnam Growth & Income Value Portfolio -- -- -- -- 1,074.99
E/Q Putnam Balanced Portfolio -- -- -- -- 1,058.95
MFS Research Portfolio -- -- -- -- 1,073.50
MFS Emerging Growth Companies Portfolio -- -- -- -- 1,132.53
Morgan Stanley Emerging Markets Equity
Portfolio -- -- -- -- 745.74
Warburg Pincus Small Company Value
Portfolio -- -- -- -- 1,101.91
Merrill Lynch World Strategy Portfolio -- -- -- -- 968.59
Merrill Lynch Basic Value Equity
Portfolio -- -- -- -- 1,082.45
- -------------------------------------------------------------------------------------------------------------------------------
* Portfolio inception dates are shown in Tables 1 and 2.
</TABLE>
38
<PAGE>
<TABLE>
<CAPTION>
TABLE 5:
AVERAGE ANNUAL TOTAL RETURN UNDER CONTRACTS TERMINATED ON DECEMBER 31, 1997:
- -------------------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------------------------------------------
INVESTMENT SINCE
FUND ONE THREE FIVE TEN SINCE FUND PORTFOLIO
YEAR YEARS YEARS YEARS INCEPTION* INCEPTION**
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Money Market -3.60% -0.14% -0.42% 1.87% -- --
Alliance Intermediate Government
Securities -1.86 2.40 0.86 -- 0.97% 2.75%
Alliance Quality Bond -0.17 4.79 -- -- 0.85 0.52
Alliance High Yield 8.36 14.47 11.11 8.97 8.80 --
Alliance Growth & Income 15.94 17.73 -- -- 11.98 10.82
Alliance Equity Index 21.26 24.60 -- -- 20.14 18.21
Alliance Common Stock 18.15 22.79 16.37 14.45 -- --
Alliance Global 2.03 9.10 11.40 10.03 7.12 --
Alliance International -11.33 -- -- -- -1.47 0.39
Alliance Aggressive Stock 1.34 15.45 10.20 15.74 -- --
Alliance Small Cap Growth -- -- -- -- 5.96 17.18
Alliance Conservative Investors 3.57 7.04 3.88 -- 2.99 5.46
Alliance Balanced 5.17 9.56 4.80 8.55 -- --
Alliance Growth Investors 6.81 12.47 8.29 -- 7.61 11.89
T. Rowe Price International Stock
Portfolio -- -- -- -- -11.98 -8.89
T. Rowe Price Equity Income Portfolio -- -- -- -- 7.97 12.97
E/Q Putnam Growth & Income Value Portfolio -- -- -- -- 2.48 7.50
E/Q Putnam Balanced Portfolio -- -- -- -- 2.29 5.90
MFS Research Portfolio -- -- -- -- 1.02 7.35
MFS Emerging Growth Companies Portfolio -- -- -- -- 4.40 13.25
Morgan Stanley Emerging Markets Equity
Portfolio -- -- -- -- -25.42 -25.43
Warburg Pincus Small Company Value
Portfolio -- -- -- -- 3.51 10.19
Merrill Lynch World Strategy Portfolio -- -- -- -- -7.67 -3.14
Merrill Lynch Basic Value Equity
Portfolio -- -- -- -- 1.10 8.24
- -------------------
</TABLE>
* Fund inception dates are: Alliance Money Market (5/11/82), Alliance
Intermediate Government Securities (6/1/94), Alliance Quality Bond (1/4/94),
Alliance High Yield (1/4/94), Alliance Growth & Income (1/4/94), Alliance
Equity Index (6/1/94), Alliance Common Stock (8/27/81), Alliance Global
(1/4/94), Alliance International (9/1/95), Alliance Growth Investors
(1/4/94), Alliance Aggressive Stock (5/1/84), Alliance Small Cap Growth
(6/2/97), Alliance Conservative Investors (1/4/94), Alliance Balanced
(5/1/84), T. Rowe Price International Stock (6/2/97), T. Rowe Price Equity
Income (6/2/97), EQ/Putnam Growth & Income Value (6/2/97), EQ/Putnam Balanced
(6/2/97), MFS Research (6/2/97), MFS Emerging Growth Companies (6/2/97),
Morgan Stanley Emerging Markets Equity (8/20/97), Warburg Pincus Small
Company Value (6/2/97), Merrill Lynch World Strategy (6/2/97), Merrill Lynch
Basic Value Equity (6/2/97).
** Portfolio inception dates are shown in Tables 1 and 2.
39
<PAGE>
COMMUNICATING PERFORMANCE DATA
In reports or other communications or in advertising material, we may describe
general economic and market conditions affecting the Separate Account and HRT or
EQAT and may present the performance of the Investment Funds or compare it with
(1) that of other insurance company separate accounts or mutual funds included
in the rankings prepared by Lipper Analytical Services, Inc., Morningstar Inc.,
VARDS or similar investment services that monitor the performance of insurance
company separate accounts or mutual funds, (2) other appropriate indices of
investment securities and averages for peer universes of funds which are
described elsewhere in this prospectus, or (3) data developed by us derived from
such indices or averages. The Morningstar Variable Annuity/Life Report consists
of over 700 variable life and annuity funds, all of which report their data net
of investment management fees, direct operating expenses and separate account
charges. VARDS is a monthly reporting service that monitors over 2,500 variable
life and variable annuity funds on performance and account information.
Advertisements or other communications furnished to present or prospective
Contract Owners may also include evaluations of an Investment Fund or Portfolio
by financial publications that are nationally recognized such as Barron's,
Morningstar's Variable Annuity Sourcebook, Business Week, Chicago Tribune,
Forbes, Fortune, Institutional Investor, Investment Adviser, Investment Dealer's
Digest, Investment Management Weekly, Los Angeles Times, Money, Money Management
Letter, Kiplinger's Personal Finance, Financial Planning, National Underwriter,
Pension & Investments, USA Today, Investor's Daily, The New York Times and The
Wall Street Journal.
40
<PAGE>
- --------------------------------------------------------------------------------
PART 4: THE GUARANTEED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
The Guaranteed Interest Account is part of our general account and pays interest
at guaranteed rates. The general account supports all of our policy and contract
guarantees, 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 applicable exemptive and exclusionary
provisions, interests in the general account have not been registered under the
Securities Act of 1933 (1933 ACT), nor is the general account an investment
company under the 1940 Act. Accordingly, the general account is not subject to
regulation under the 1933 Act or the 1940 Act. We have been advised that the
staff of the SEC has not made a review of the disclosures that are included in
the prospectus for your information and that relate to the general account and
the Guaranteed Interest Account. These disclosures, however, may be subject to
certain generally applicable provisions of the Federal securities laws relating
to the accuracy and completeness of statements made in prospectuses.
The amount that you as a Contract Owner have in the Guaranteed Interest Account
at any time is equal to the sum of all contributions and transfers that have
been allocated to that Account on your behalf, less the sum of all amounts that
have been withdrawn, transferred or deducted, plus all interest that has been
credited on your behalf.
Interest is credited to the Account every day. There are three levels of
interest rates simultaneously in effect in the Guaranteed Interest Account: the
minimum interest rate guaranteed over the life of the Contract, the yearly
guaranteed interest rate for the calendar year, and the current interest rate.
Current interest rates are set periodically by Equitable Life, at its
discretion, according to procedures that Equitable Life reserves the right to
change. All interest rates are effective annual rates, but before deduction of
applicable administrative or contingent withdrawal charges.
An interest rate is assigned to each allocation to the Guaranteed Interest
Account and the rate is guaranteed for a certain period of time, depending on
when the allocation is made. Therefore, for these Contracts, different interest
rates may apply to different amounts in this Account. (An exception to this
approach is made for Corporate Trusteed and EDC Contracts issued to governmental
employers in New York whose EQUI-VEST funding arrangements became effective on
or after July 1, 1989.)
The yearly guaranteed interest rate for 1998 is 4% and for 1999 is 4%. The
yearly guaranteed interest rate will never be less than the minimum Contract
guarantee of 3% (4% for EQUI-VEST Corporate Trusteed Contracts, Series 100 and
200 NQ group certificates).
41
<PAGE>
- --------------------------------------------------------------------------------
PART 5: THE FIXED MATURITY ACCOUNT
- --------------------------------------------------------------------------------
ALLOCATIONS TO FIXED MATURITY PERIODS
The Fixed Maturity Account is only available under the EQUI-VEST Series 400
Traditional IRA, QP IRA, Roth IRA, and NQ Contracts.
Your Fixed Maturity Account contains the Fixed Maturity Periods to which you
have made a contribution or transfer. Each amount contributed (including amounts
transferred) to a Fixed Maturity Period and held to that Period's Expiration
Date accumulates interest at the Rate to Maturity in effect on the date of your
contribution to that Period. Thus, your Rate to Maturity is the interest rate
your contribution will earn if your money remains in that Fixed Maturity Period
until its Expiration Date.
Your Maturity Amount in a Fixed Maturity Period on its Expiration Date is your
original contribution plus interest, using the Rate to Maturity in effect on the
date of your contribution (or transfer) for the Fixed Maturity Period (less
appropriate adjustments for any charges or premature withdrawals).
Before maturity, you have a Market Adjusted Amount in each Fixed Maturity Period
to which you have made a contribution. The Market Adjusted Amount is the present
value of your Maturity Amount, discounted at the Rate to Maturity in effect for
new contributions on the date of the calculation. It thus reflects whatever
market value adjustment (see details below) would apply on that day were you to
withdraw the entire amount in your Fixed Maturity Period. (On the Expiration
Date, your Market Adjusted Amount equals your Maturity Amount.)
Contributions may be made to one or more Fixed Maturity Periods; however, you
may not make more than one contribution to any one Fixed Maturity Period. You
may not make a contribution to a Fixed Maturity Period which has an Expiration
Date beyond the date on which annuity payments are to commence under your
Contract. If you have contributed funds to one or more Fixed Maturity Periods
you must select Maximum Fund Choice; transfers out of the Guaranteed Interest
Account will be restricted. See "Transfers" in Part 6.
AVAILABILITY OF FIXED MATURITY PERIODS
Fixed Maturity Periods are available as Investment Options only to Owners of
Series 400 Traditional IRA, QP IRA, Roth IRA, and NQ Contracts. This option is
not available for Contracts issued in Maryland.
We offer Fixed Maturity Periods ending on June 15 (or the preceding Business
Day) for each of the maturity years 1998 through 2008. Not all Fixed Maturity
Periods will be available in all states. As Fixed Maturity Periods expire, we
expect to add maturity years so that generally ten are available in most states
at any time.
RATES TO MATURITY AND PRESENT VALUE PER $100 OF MATURITY AMOUNT
Because the Maturity Amount of a contribution to a Fixed Maturity Period can be
determined at the time it is made, you can determine the amount required to be
contributed to a Fixed Maturity Period in order to produce a target Maturity
Amount (assuming no transfers or withdrawals are made and no charges are
allocated to the Fixed Maturity Period). The required contribution is the
present value of that Maturity Amount discounted at the Rate to Maturity on the
Transaction Date for the contribution.
The same approach as described above may also be used to determine the amount
which you would need to allocate to each Fixed Maturity Period in order to
create a series of constant Maturity Amounts for two or more years.
The Rates to Maturity that are available for new contributions can be obtained
from your Equitable Representative or by calling our Customer Service line at
(800) 628-6673.
OPTIONS AT EXPIRATION DATE
We will notify you at least 45 days before the Expiration Date of each Fixed
Maturity Period in which you have any money. You may elect one of the following
options to be effective at the Expiration Date:
(a) to transfer the Maturity Amount into any Fixed Maturity Period we are
then offering, or into any of our other Investment Options.
(b) to withdraw the Maturity Amount (subject to any contingent withdrawal
charge which may apply under your Contract).
If we have not received your election as of the Expiration Date, the Maturity
Amount in the expired Fixed Maturity Period will be transferred into the Money
Market Fund (or another Investment Option if required by state regulation). As
to contracts issued in New York, see New York Contracts -- Fixed Maturity
Account in "Part 7: Deductions and Charges."
42
<PAGE>
MARKET VALUE ADJUSTMENT FOR TRANSFERS, WITHDRAWALS OR TERMINATION PRIOR TO THE
EXPIRATION DATE
Any withdrawal (including transfers, terminations and deductions) from a Fixed
Maturity Period prior to its Expiration Date will result in a positive or
negative market value adjustment, which is reflected in your Market Adjusted
Amount. The amount of the adjustment will depend on two factors: (a) the
difference between the Rate to Maturity on the date of your contribution or
transfer and the Rate to Maturity for the same Fixed Maturity Period on the date
of the calculation, and (b) the length of time remaining until the Expiration
Date. In general, if interest rates have risen between the time when an amount
was originally contributed to a Fixed Maturity Period and the time it is
withdrawn, the market value adjustment will be negative, and vice versa; and the
longer the period of time remaining until the Expiration Date, the greater the
impact of the interest rate difference. Therefore, it is possible that a
significant rise in interest rates could result in a substantial reduction in
your Market Adjusted Amount should you withdraw before the Expiration Date.
The market value adjustment (positive or negative) resulting from a withdrawal
of all funds from a Fixed Maturity Period will be determined for each
contribution allocated to that Fixed Maturity Period as follows:
(1) We determine the Market Adjusted Amount on the Transaction Date as follows:
(a) We determine the Book Value that would be payable on the Expiration
Date, using the applicable Rate to Maturity. The Book Value equals your
contribution to the Fixed Maturity Period, reduced by any prior
withdrawals, transfers and charges and reflecting any prior market
value adjustments, accumulated at the Rate to Maturity on the date of
the contribution.
(b) We determine the time remaining in your Fixed Maturity Period (based on
the Transaction Date) and convert it to fractional years based on a
365-day year (or on 366-day year in a leap year). For example, three
years and 12 days becomes 3.0329.
(c) We determine the current Rate to Maturity which applies on the
Transaction Date to new contributions to the same Fixed Maturity
Period.
(d) We determine the present value of the Book Value payable at the
Expiration Date, using the period determined in (b) and the rate
determined in (c).
(2) We determine the Book Value as of the current date.
(3) We subtract (2) from the result in (1)(d). The result is the market value
adjustment applicable to such Fixed Maturity Period, which may be positive
or negative.
The market value adjustment (positive or negative) resulting from a withdrawal
of a portion of the amount in a Fixed Maturity Period will be a percentage of
the market value adjustment that would be applicable upon a withdrawal of all
funds from a Fixed Maturity Period. This percentage is determined by (i)
dividing the amount of the withdrawal or transfer from the Fixed Maturity Period
by (ii) the Market Adjusted Amount in such Fixed Maturity Period prior to the
withdrawal or transfer. See Appendix I for an example.
The Rate to Maturity for new contributions to a Fixed Maturity Period is the
rate we have in effect for this purpose even if new allocations to that Fixed
Maturity Period would not be accepted at the time. If we do not have a Rate to
Maturity in effect for a Fixed Maturity Period to which the "current Rate to
Maturity" in (1)(c) would apply, we will use the rate at the next closest
Expiration Date. If we are no longer offering new Fixed Maturity Periods, the
"current Rate to Maturity" will be determined in accordance with our procedures
then in effect. For purposes of calculating the market value adjustment only, we
reserve the right to add up to 0.50% to the current rate in (1)(c) above.
INVESTMENTS
Contributions received under the Contracts and allocated to Fixed Maturity
Periods will be held in a "nonunitized" separate account established by
Equitable Life under the laws of New York. The separate account provides an
additional measure of assurance that full payment of amounts due under the Fixed
Maturity Periods will be made. Under the New York Insurance Law, the portion of
the separate account's assets equal to the reserves and other liabilities
relating to the Contracts are not chargeable with liabilities arising out of any
other business we may conduct. Investments purchased with amounts contributed to
the Fixed Maturity Account (and any earnings on those amounts) are our property.
Any favorable investment performance on the assets held in the separate account
accrues solely to our benefit. Contract Owners do not participate in the
performance of the assets held in the separate account. We may, subject to
applicable state law, transfer all assets allocated to the separate account to
our general account. Regardless of whether assets supporting Fixed Maturity
Accounts are held in a separate account or our general account, all benefits
relating to the value in the Fixed Maturity Account are guaranteed by us.
We have no specific formula for establishing the Rates to Maturity for the Fixed
Maturity Periods. We expect
43
<PAGE>
the rates to be influenced by, but not necessarily correspond to, among other
things, the yields on the fixed-income securities to be acquired with amounts
that are allocated to the Fixed Maturity Periods at the time that the Rates to
Maturity are established. Our current plans are to invest such amounts in
fixed-income obligations, including corporate bonds, mortgage-backed and
asset-backed securities and government and agency issues having durations in the
aggregate consistent with those of the Fixed Maturity Periods.
Although the foregoing generally describes our plans for investing the assets
supporting our obligations under the fixed portion of the Contracts, we are not
obligated to invest those assets according to any particular plan except as may
be required by state insurance laws, nor will the Rates to Maturity we establish
be determined by the performance of the nonunitized separate account. Interests
held in the nonunitized separate account are registered under the 1933 Act. See
"Part 4: The Guaranteed Interest Account" for a discussion of our general
account.
44
<PAGE>
- --------------------------------------------------------------------------------
PART 6: PROVISIONS OF THE EQUI-VEST CONTRACTS
- --------------------------------------------------------------------------------
THE EQUI-VEST CONTRACT SERIES
EQUI-VEST is designed as a funding vehicle for either personal or
employer-sponsored retirement programs. EQUI-VEST may be offered either as an
individual Contract or as a group Contract with individual Certificates. The
difference is primarily one of state requirements; the basic provisions are the
same regardless of group or individual Contract form. Your Contract or
Certificate will indicate what form you have. Certain provisions of your
Contract may differ depending on the type of program purchased and the state or
date of issue. (See "Part 1: Summary" for a description of the types of programs
offered.) In this prospectus, we use a "series" number when necessary to
differentiate among Contracts. Currently, there are four series of EQUI-VEST
Contracts. You can identify the EQUI-VEST series you have by referring to your
confirmation notice, or you may contact your Equitable Representative or call
our toll-free number. In general, the series designations are:
- -------------------------------------------------------------
TSA, SEP, EDC, Annuitant-Owned HR-10 and Series 100
Trusteed Contracts issued before August
17, 1995. NQ, Traditional IRA, and QP
IRA Contracts issued before January 3,
1994 and Roth IRA Contracts Converted
from such IRA and QP IRA Contracts.
- -------------------------------------------------------------
TSA, EDC, Annuitant-Owned HR-10 and Series 200
Trusteed Contracts issued on or after
August 17, 1995. SEP Contracts issued
on or after August 17, 1995 and before
November 1, 1995 and currently in a
state where the Series 300 Contract has
not been approved.
- -------------------------------------------------------------
NQ, Traditional IRA, QP IRA and Roth IRA Series 300
Contracts issued on or after January 3,
1994 and before the date Series 400
Contracts became available in a state
and Roth IRA Contracts Converted from
such IRA and QP IRA Contracts; and SEP
Contracts issued on or after November
1, 1995 in states which have approved the
Series 300 Contract.
- -------------------------------------------------------------
NQ, Traditional IRA, QP IRA, and Roth Series 400
IRA Contracts issued on or after
July 10, 1995 in states where
approved and Roth IRA Contracts
Converted from such IRA and QP
IRA Contracts. SIMPLE IRA Contracts in
all approved states. (We reserve the
right to issue a Series 200 or 300
SIMPLE IRA Contract, as necessary, for
states not approving the Series 400 version.)
- ------------------------------------------------
The provisions of your Contract may be restricted by any plan or agreement
relating to it or by applicable laws or regulations.
SELECTING INVESTMENT OPTIONS
You can choose one of the following two methods for selecting Investment
Options:
o Maximum Fund Choice, allowing you to allocate contributions to any Investment
Fund, the Guaranteed Interest Account and the Fixed Maturity Periods;
however, this election will result in restrictions in the amount you can
transfer out of the Guaranteed Interest Account; or
o Maximum Transfer Flexibility, allowing you to allocate contributions to the
Guaranteed Interest Account and any Investment Funds except the Alliance
Conservative Investors, Alliance Money Market, Alliance Intermediate
Government Securities, Alliance Quality Bond, or Alliance High Yield Funds;
no transfer restrictions apply.
Once this selection is made, you may allocate contributions to, or transfer
among, only the Investment Options that you have chosen. After your Contract is
issued, you may request in writing to add any remaining Funds or eliminate Funds
that result in transfer restrictions, but we have the right to deny the request.
See "Transfers" elsewhere in this section.
The Guaranteed Interest Account is always available as an Investment Option.
Subject to state regulatory approval, the Fixed Maturity Periods are available
to Owners of Series 400 Traditional IRA, QP IRA, Roth IRA, and NQ Contracts. If
you want to invest in the Fixed Maturity Periods, you must select Maximum Fund
Choice.
For Original Contracts, only the Guaranteed Interest Account and the Alliance
Money Market, Alliance Balanced, Alliance Common Stock and Alliance Aggressive
Stock Funds are available. In most cases, you may request to add additional
Funds to your Original Contract, although we have the right to deny such
requests. See "Transfers" elsewhere in this section for the transfer
restrictions applicable to Original Contracts.
CONTRIBUTIONS UNDER THE CONTRACTS
Generally, contributions may be made at any time: in single sum amounts, on a
regular basis or as your financial situation permits. For some types of
retirement plans, contributions must be made by the
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employer. Contributions are credited as of the Transaction Date, provided they
are accompanied with complete information. Contributions not made by wire
transfer, our Automatic Investment Program or payroll deduction must be made by
check drawn on a bank in the U.S. clearing through the Federal Reserve System,
and payable in U.S. dollars to Equitable Life. Third party checks endorsed to
Equitable Life are not acceptable forms of payment except in cases of a rollover
from a qualified plan, a tax-free exchange under the Code or a trustee check
that involves no refund. All checks are accepted subject to collection.
Equitable Life reserves the right to reject a payment if an unacceptable form of
payment is received.
You may be able to move amounts you have invested with another carrier to your
EQUI-VEST Contract. To make such a change, funds must be remitted via wire or
check. Therefore, any assets accumulated under an existing program will have to
be liquidated. For example, existing insurance policies and annuity contracts
funding a qualified plan must be converted into cash.
Minimum amounts that may be contributed are as follows:
o TRADITIONAL IRA AND ROTH IRA
-- Series 100 -- $20
-- Series 300 and 400 -- $50
o QP IRA
-- Series 100 -- $1,000
-- Series 300 and 400 -- $2,500
o NQ
-- $1,000 (initial); $50 (initial for payroll deduction)
-- $50 (ongoing)
o ALL OTHERS -- $20
We reserve the right to change minimum and maximum contribution amounts upon 90
days prior written notice and to waive them in certain cases.
Special Limits
NQ: Subsequent contributions to Series 100 NQ Contracts will be restricted for
Annuitants age 59 and older in states where individual Contracts are issued.
TSA: In certain cases, provided the total annual contribution to the TSA will be
at least $200 annually, we may accept contributions of less than $20. Currently
we do not accept contributions via direct TSA to TSA transfers under Rev. Rul.
90-24 where any such funds were invested in a custodial account under Code
Section 403(b)(7) and are still subject to its restrictions.
IRA: Contributions to IRA Contracts may be subject to maximums, as discussed
below and in "Part 9: Federal Tax & ERISA Matters." Contributions may be
"regular" IRA contributions, "rollover" contributions or "direct transfers." A
$2,000 annual limit applies to regular contributions, but not to rollovers or
direct transfers.
"Regular" contributions to Traditional IRAs (but not to Roth IRAs) may no longer
be made for the taxable year in which you attain age 70 1/2 and thereafter.
Rollover and direct transfer contributions may be made to IRAs after you attain
age 70 1/2. However, any amount contributed must be net of your required minimum
distribution for the year in which the rollover or direct transfer contribution
is made.
Contributions to the Investment Funds and the Guaranteed Interest Account
We allocate contributions to the Investment Funds and the Guaranteed Interest
Account on the Transaction Date according to your allocation percentages.
Allocation percentages can be changed at any time by writing to our Processing
Office or by using TOPS. The change will be effective on the Transaction Date
and will remain in effect for future contributions unless another change is
requested.
A contribution allocated to an Investment Fund purchases Accumulation Units in
that Investment Fund. The number of Accumulation Units purchased equals the
dollar amount of the contribution divided by the Accumulation Unit Value for
that Investment Fund computed for the Transaction Date on which we receive the
contribution at our Processing Office. The number of Accumulation Units
purchased will not vary because of any later change in the Accumulation Unit
Value. A description of the computation of the Accumulation Unit Value is found
in the SAI.
Contributions allocated to the Guaranteed Interest Account become part of our
general account on the Transaction Date and begin to accrue interest at the
guaranteed interest rate then in effect.
Contributions to the Fixed Maturity Account (Series 400 IRA, QP IRA, Roth IRA
and NQ Contracts Only)
You must provide specific instructions for contributions to the Fixed Maturity
Account. Contributions (or transfers) to a Fixed Maturity Period will have the
Rate to Maturity for the specified Period offered on the Transaction Date.
Contributions may be made to one or more Fixed Maturity Periods; however, you
may not make more than one contribution (or transfer) to any one Fixed Maturity
Period. In no event may contributions be made to Fixed Maturity Periods with
maturities beyond the date on which annuity payments are to commence under your
Contract. See "Distribution Options" elsewhere in this section.
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Automatic Investment Program
Our Automatic Investment Program (AIP) provides for a specified amount to be
automatically deducted from a bank checking account, bank money market account
or credit union checking account and to be contributed into an IRA or NQ
Contract on a monthly basis. AIP is also available for Single Life SEP and Keogh
Units provided that the single life is the Employer who sponsors the Plan. AIP
contributions may be made to any Investment Option available under your Contract
except the Fixed Maturity Periods. You may elect AIP by properly completing the
appropriate form, which is available from your Equitable Representative, and
returning it to our Processing Office. You elect which day of the month (other
than the 29th, 30th or 31st) you wish to have your bank account debited. That
date, or the next Business Day if that day is a non-Business Day, will be the
Transaction Date. AIP is not available to QP IRA Contract Owners.
You may cancel AIP at any time by notifying our Processing Office in writing at
least two business days prior to the next scheduled transaction. Equitable Life
is not responsible for any debits made to your account prior to the time written
notice of revocation is received at our Processing Office.
ANNUITY ACCOUNT VALUE
Your Annuity Account Value for an EQUI-VEST Contract is the sum of your amounts
in the Investment Options, plus the amount in any Loan Reserve Account,
including accrued interest. These amounts are defined below and include your
value in the Investment Funds, your value in the Guaranteed Interest Account and
your value in the Fixed Maturity Account. The loan reserve account, applicable
only to certain TSA and Corporate Trusteed Contracts, is described in the SAI.
Value in the Investment Funds
Your value in an Investment Fund on any Business Day under your Contract is
equal to the number of your Accumulation Units in that Investment Fund times the
Accumulation Unit Value for that Fund for that date. Your number of Accumulation
Units in an Investment Fund at any time is equal to the sum of Accumulation
Units purchased by your contributions and transfers (including transfers to the
Loan Reserve Account) less any Accumulation Units redeemed for withdrawals,
transfers or deductions for applicable charges.
The number of Accumulation Units you purchase or sell in any Investment Fund is
equal to the dollar amount of your transaction divided by the Accumulation Unit
Value for the Investment Fund on the Transaction Date. The number of
Accumulation Units you own will not vary because of any later change in the
Accumulation Unit Value. However, the Accumulation Unit Value varies with the
investment performance of the Fund, which in turn reflects the investment income
and realized and unrealized capital gains and losses of the corresponding
Portfolio, as well as Trust fees and expenses. The Accumulation Unit Value is
also stated after deduction of the Separate Account asset charges relating to
the Contracts. A description of the computation of the Accumulation Unit Values
is found in the SAI.
Value in the Guaranteed Interest Account
Your value in the Guaranteed Interest Account on any Business Day is equal to
contributions and transfers made to the Guaranteed Interest Account plus
interest, less withdrawals, transfers and deductions for applicable charges.
Value in the Fixed Maturity Account
Your value in each Fixed Maturity Period on any Business Day is your Market
Adjusted Amount in that Period. See "Part 5: The Fixed Maturity Account."
TRANSFERS
You may transfer all or portions of your Annuity Account Value among the
Investment Options you have chosen at any time, subject to the restrictions
stated below. The amount transferred must be at least $300 or, if less, the
entire amount in the Investment Option. We reserve the right to waive the $300
minimum transfer requirement.
o If you have not selected the Alliance Conservative Investors, Alliance Money
Market, Alliance Intermediate Government Securities, Alliance Quality Bond or
Alliance High Yield Fund, no transfer restrictions will apply under your
Contract.
o If you have selected to make all Investment Options available (Maximum Fund
Choice), then the maximum amount which you may transfer in any Contract Year
from the Guaranteed Interest Account to any other Investment Option is the
greater of (a) 25% of the amount you had in the Guaranteed Interest Account
on the last day of the prior Contract Year or (b) the total of all amounts
you transferred from the Guaranteed Interest Account to any other Investment
Option in the prior Contract Year.
o Transfers out of a Fixed Maturity Period other than at the Expiration Date
will result in a market value adjustment. See "Part 5: The Fixed Maturity
Account."
o Transfers may not be made to Fixed Maturity Periods to which you have already
made a contribution or transfer.
If you transfer money to the Guaranteed Interest Account from another financial
institution during your first Contract Year, and if you have selected Maximum
Fund Choice, you will be permitted, during the balance
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of that Contract Year, to transfer up to 25% of such initial Guaranteed Interest
Account balance to any other Investment Option.
However, for Original Contract Owners, including Original Contract Owners who
elect to amend their Contract by selecting Maximum Transfer Flexibility, the
Alliance Money Market Fund is always available but we do not permit transfers
into that Fund from any other Investment Option. No other transfer limitations
apply to Original Contracts.
Upon 90 days advance notice, we have the right to change or establish additional
restrictions on transfers among the Investment Options.
A transfer request will be effective on the Transaction Date. Transfers in or
out of the Investment Funds will be at the Accumulation Unit Value for that
Transaction Date. Transfers out of the Fixed Maturity Periods will be at the
Market Adjusted Amount on that Transaction Date. Transfers into the Fixed
Maturity Periods will be at the Rate to Maturity on that Transaction Date. A
transfer request does not change your percentages for allocating current or
future contributions among the Investment Options. All transfers among the
Investment Options will be confirmed in writing.
Written transfer requests should be sent directly to the Processing Office. Your
signed request for a transfer should specify your Contract number, the amounts
to be transferred and the Investment Options to and from which the amounts are
to be transferred. You can use our TOPS service to make transfers among any
Investment Options other than the Fixed Maturity Periods. Please contact your
Equitable Representative or the Processing Office to receive the form necessary
to obtain a special code number required for TOPS.
AUTOMATIC TRANSFER OPTIONS INVESTMENT SIMPLIFIER
We offer two automatic options for transferring amounts from the Guaranteed
Interest Account to the Investment Funds: the Fixed-Dollar and the Interest
Sweep. You may select either, but not both, of these options.
o Fixed-Dollar Option
Under the Fixed-Dollar Option you may elect to have a fixed-dollar amount
transferred out of the Guaranteed Interest Account and into the Investment
Funds of your choosing (unless transfers to the Alliance Money Market Fund
are prohibited) on a monthly basis. You can either specify the number of
monthly transfers or instruct us to continue to make monthly transfers until
available amounts in the Guaranteed Interest Account are depleted. In order
to elect this option you must have a minimum amount of $5,000 in the
Guaranteed Interest Account on the date we receive your election form at our
Processing Office and you must elect to transfer at least $50 per month. The
Fixed-Dollar Option is subject to the Guaranteed Interest Account transfer
limitation described in "Transfers" in this section.
The Fixed-Dollar Option relies upon the principles of dollar-cost averaging.
Dollar-cost averaging is an investment strategy whereby equal dollar amounts
are invested at regular intervals. By allocating fixed amounts on a regularly
scheduled basis -- as opposed to allocating the total amount at one
particular time -- an investor may be less susceptible to the impact of
market fluctuations. Although dollar-cost averaging is designed to lessen the
impact of market fluctuations, it does not assure a profit nor protect
against loss in a declining market.
o Interest Sweep
Under the Interest Sweep Option, the amount transferred each month will equal
the amount of interest that has been credited to amounts you have in the
Guaranteed Interest Account from the last Business Day of the prior month to
the last Business Day of the current month. To be eligible for this option
you must have at least $7,500 in the Guaranteed Interest Account on the date
we receive your election and on the last Business Day of each month
thereafter.
You may elect either option by completing an election form and sending it to
our Processing Office. You can obtain a form from your Equitable
Representative. For the Fixed-Dollar Option, the first monthly transfer will
occur on the last Business Day of the month in which we receive your election
form at our Processing Office. For the Interest Sweep, the first monthly
transfer will occur on the last Business Day of the month following the month
in which we receive your election form at our Processing Office.
Termination of Automatic Options
Automatic transfer options will terminate:
-- Under the Fixed-Dollar Option, when either the number of designated
monthly transfers have been completed or the amount you have available
in the Guaranteed Interest Account has been depleted, as applicable; or
-- Under the Interest Sweep, when the amount you have in the Guaranteed
Interest Account falls below $7,500 (determined on the last Business
Day of the month) for two consecutive months; or
-- Under either option, on the date we receive your written request to
terminate automatic transfers at our Processing Office or on the date
your Contract terminates.
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ASSET REBALANCING SERVICE
The Asset Rebalancing Feature will allow a Contract Owner to have amounts in the
Investment Funds rebalanced on an ongoing basis. The feature enables a Contract
Owner to maintain a desired asset allocation and keep their investment strategy
on track. Funds are reallocated among the different Investment Funds to keep
them in line with selected target percentages. There is no fee for this service.
This feature is not available for balances in the Guaranteed Interest Account
(GIA) or the Fixed Maturity Account (FMA). To be eligible, the Annuity Account
Value must be at least $5,000, exclusive of the GIA and FMA. The Contract Owner
may elect to have assets rebalanced either quarterly (calendar), semi-annually
or annually. Asset Rebalancing will be processed on the first business day of
the month. Rebalancing transactions cannot be made for the current month or
retroactively. Asset Rebalancing will be done only on the total Annuity Account
Value in the Investment Funds as of the transaction date the Contract Owner
selected. Asset Rebalancing does not allow the Contract Owner to rebalance only
a portion of the Annuity Account Value.
AUTOMATIC NQ DEPOSIT SERVICE
The Automatic NQ Deposit Service (ADS) is available to EQUI-VEST Contract Owners
who are receiving an Automatic Minimum Distribution payment from an EQUI-VEST
TSA, Traditional IRA, QP IRA, SIMPLE IRA, SEP or SARSEP. It is not available for
EQUI-VEST EDC or Trusteed Contracts.
The ADS will deposit the required automatic minimum distribution payment from
the Contract Owner's EQUI-VEST TSA, IRA, QP IRA, SIMPLE IRA, SEP or SARSEP
Contract directly into an existing EQUI-VEST NQ Contract in accordance with your
allocation instructions for that Contract.
LOANS (FOR TSA AND CORPORATE
TRUSTEED ONLY)
Unless restricted by the employer's plan, loans are permitted against the
Annuity Account Value of certain TSA and Corporate Trusteed Contracts only.
Loans under a Corporate Trusteed Contract, however, may not be available in all
states. Loans under TSA and Corporate Trusteed Contracts are restricted by the
rules of the Code. In addition, ERISA rules apply to loans under Corporate
Trusteed Contracts and under individual TSA Contracts where the TSA plan is
subject to Title I of ERISA.
Loans are not available under University TSA Contracts and under any TSA when
the Required Minimum Distributions Option (described later in this section) has
been elected.
The EQUI-VEST program permits only one loan at any one time. Before a loan can
be made under either a Corporate Trusteed or TSA Contract, a properly completed
loan request form must be signed. Participants should read the terms and
conditions contained in this document carefully and consult with a tax adviser
before taking out a loan. A loan request form can be obtained from your
Equitable Representative, by writing to our Processing Office or by calling our
toll-free number. In the case of Corporate Trusteed and certain TSA Contracts,
the written consent of the Participant's spouse will be required before a loan
can be made. More details of the loan provisions are stated in the Contract and
on the loan request form.
A loan will not be treated as a taxable distribution when made to the extent
that it conforms to Code limits. If the loan fails to qualify under Code limits,
or if interest and principal is not repaid when due, or, in some instances, if
service with the employer terminates, the amount borrowed and not yet repaid may
be treated as a taxable distribution.
The amount and terms of loans under TSA and Corporate Trusteed Contracts are
discussed in "Part 1: Additional Loan Provisions" in the SAI. The tax
consequences of failure to repay a loan are substantial and are discussed in
"Part 9: Federal Tax and ERISA Matters" and in Part 1 of the SAI.
ASSIGNMENT AND FUNDING CHANGES
Generally, the Contract Owner may not assign a Contract for any purpose other
than to effect a tax-free exchange; however, a trustee owner of a Trusteed
Contract can transfer ownership to the Annuitant. We will not be bound by an
assignment unless it is in writing and we have received it at the Processing
Office. In some cases, an assignment may have adverse tax consequences. See
"Part 9: Federal Tax and ERISA Matters."
An employer or trustee can change the funding vehicle for an EDC or Trusteed
Contract, respectively. You can change the funding vehicle for an NQ, TSA,
Traditional IRA, Roth IRA, SIMPLE IRA or SEP Contract.
PARTIAL WITHDRAWALS AND TERMINATION
You may withdraw funds from or terminate your Contract at any time before the
Contract annuitizes and while the Annuitant is alive. Subject to Code
restrictions, you may withdraw funds from your Contract in any amount of at
least $300 but the Annuity Account Value should be at least $500 after the
withdrawal is made. Unless you specify otherwise, withdrawals will be taken on a
pro rata basis from the Investment Funds and the Guaranteed Interest Account. We
will make withdrawals from the Fixed
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Maturity Periods as you direct. Partial withdrawals or terminations may result
in a contingent withdrawal charge, explained fully in "Part 7: Deductions and
Charges." Withdrawals are generally taxable and may be subject to tax penalty
when the withdrawal is taken prior to age 59 1/2. In some cases, withdrawals or
termination may be prohibited or limited by the terms of your retirement plan.
We may be required to withhold income taxes from the amount withdrawn. See "Part
9: Federal Tax and ERISA Matters." Partial withdrawals or terminations of
amounts held in the Fixed Maturity Periods prior to an Expiration Date will
result in a market value adjustment. See "Market Value Adjustment for Transfers,
Withdrawals or Termination Prior to the Expiration Date" in Part 5.
To make a withdrawal or termination, you should complete a Request for
Disbursement form which leads you through the withdrawal process, step by step.
This form is available from your Equitable Representative or from our Processing
Office. In order to process your request, we may require additional information
or signatures, depending on the provisions of your Contract or retirement plan.
If we have received the information we require, the requested partial withdrawal
or termination will become effective on the Transaction Date and proceeds will
be mailed within seven days thereafter. If we receive only partially completed
information, we will return the request to you for completion prior to
processing.
We may terminate your Contract and pay your Annuity Account Value, less any
outstanding loan (and accrued interest) (1) if no contributions are made for
three Contract Years and the Annuity Account Value is less than $500, or (2) if
you request a partial withdrawal that would result in the Annuity Account Value
falling below $500. We may also terminate your Contract if no contributions are
made within 120 days from the Contract Date. For group certificates, we may
terminate your certificate if no contributions are made within 120 days from the
issue date.
The amount of any outstanding loan balance plus any applicable contingent
withdrawal charge on the loan balance will be deducted from the proceeds paid
upon termination.
For participants in a Texas Optional Retirement Program, Texas law permits
withdrawals only after one of the following distributable events occur:
attainment of age 70 1/2, death, retirement, or termination of employment in all
Texas public institutions of higher education. To make a withdrawal, a properly
completed written acknowledgment must be received from the employer. If a
distributable event occurs prior to your being vested, any amounts provided by
an employer's first-year matching contribution will be refunded to the employer.
We reserve the right to change these provisions without your consent, but only
to the extent necessary to maintain compliance with applicable law.
THIRD PARTY TRANSFERS OR EXCHANGES
You may request that your Contract be exchanged for another contract or
certificate issued by another carrier at any time by completing the
Transfer/Rollover of Assets or 1035 Exchange to Another Carrier form. This form
contains specific delivery instructions and is available from your Equitable
Representative.
A contingent withdrawal charge and third party transfer charge, if applicable,
may be imposed on your Annuity Account Value prior to the transfer or exchange.
Any higher investment return which you anticipate as a result of this transfer
or exchange may be outweighed by the cost of these charges, if applicable. See
"Part 7: Deductions and Charges." Consult your tax or legal adviser before
making any such transfers or exchanges.
REQUIREMENTS FOR DISTRIBUTIONS
Payouts may be subject to applicable withdrawal charges. See "Part 7: Deductions
and Charges." Distributions may also be taxable and subject to tax penalties.
See "Part 9: Federal Tax and ERISA Matters." Amounts in the Fixed Maturity
Periods that are applied to a distribution option prior to an Expiration Date
will result in a market value adjustment. See "Market Value Adjustment for
Transfers, Withdrawals or Termination Prior to the Expiration Date" in Part 5.
Traditional IRA, EDC, Annuitant-Owned HR-10, SEP, SIMPLE IRA, TSA and Trusteed
Contracts are subject to the Code's minimum distribution requirements for
qualified plans. Generally, distributions from these Contracts, except for all
types of Traditional IRAs and any contract where the annuitant is a 5% business
owner, must commence by the later of April 1st of the calendar year following
the calendar year in which the annuitant attains age 70 1/2, or retires from
service with the employer sponsoring the plan. Subsequent distributions must be
made by December 31st of each calendar year. If the required minimum
distribution is not made, a penalty tax in an amount equal to 50% of the
difference between the amount required to be withdrawn and the amount actually
withdrawn may apply. See "Part 9: Federal Tax and ERISA Matters" for a
discussion of various special rules concerning the minimum distribution
requirements.
In addition, distributions from a qualified plan, including our prototype plans
through which Annuitant-Owned HR-10 Contracts are issued, are subject to the
provisions of the plan document. For Traditional IRA and SIMPLE IRA retirement
benefits subject to minimum distribution requirements, we will send a form
listing the distribution options
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available during the year you attain age 70 1/2 (if you have not annuitized
before that time).
DISTRIBUTION OPTIONS
The Contract is an annuity contract, even though you may elect to receive your
benefits in a non-annuity form. In addition to a lump sum distribution option,
two other types of distribution options are available: income annuity and
flexible payment distribution options.
An annuity form of distribution option or "annuitization" pays out contributions
and earnings under the Contract in installments over a specified period or over
the Annuitant's life. Annuitization payments, if selected, are calculated as of
the annuitization date chosen, which is on file with our Processing Office. You
can change this date by writing to our Processing Office anytime before the
date, subject to certain restrictions as described in the Contract.
Except for EDC, Trusteed and NQ Contracts, the Contract Owner is always the
Annuitant. In an EDC or Trusteed Contract, the Annuitant is generally the
covered employee. For EDC Contracts, the employer is the Contract Owner and, for
Trusteed Contracts, the Owner is the plan trustee. For NQ Contracts, Contract
Owners may name an Annuitant other than themselves if they wish.
INCOME ANNUITY DISTRIBUTION OPTIONS:
o LIFE ANNUITY: An annuity which guarantees payments for the rest of the
Annuitant's life. Payments end with the last monthly payment before the
Annuitant's death. Because there is no death benefit associated with this
annuity form, it provides the highest monthly payment of any of the life
annuity distribution options.
o LIFE ANNUITY -- PERIOD CERTAIN: This annuity form guarantees payments for the
rest of the Annuitant's life. In addition, if the Annuitant dies before the
end of a selected period of time (the "certain period"), payments will
continue to the beneficiary for the balance of the certain period. The
certain period cannot exceed life expectancy of the Annuitant (or joint life
expectancy of the Annuitant and the Annuitant's spouse for qualified
retirement plans). A life annuity with a certain period of 10 years is the
normal form of annuity under NQ Contracts.
o LIFE ANNUITY -- REFUND CERTAIN: This annuity form guarantees payments for the
rest of the Annuitant's life. In addition, if the Annuitant dies before the
amount applied to purchase this annuity option has been recovered, payments
will continue to the beneficiary until that amount has been recovered. This
annuity option is available only as a fixed annuity.
o PERIOD CERTAIN ANNUITY: This annuity form guarantees payments for a specific
period of time, usually 5, 10, 15 or 20 years, and does not involve life
contingencies. It does not permit any repayment of the unpaid principal, so
you could not elect to receive part of the payments as a single-sum payment
with the rest paid in monthly annuity payments. This is the normal form of
annuity for Annuitants in governmental EDC plans in New York. Currently, this
annuity option is available only as a fixed annuity.
o JOINT AND SURVIVOR LIFE ANNUITY: This annuity form guarantees payments for
the rest of the Annuitant's life and, after his or her death, continuation of
payments to the survivor. Generally, unless the Annuitant elects otherwise
with the written consent of the spouse, this will be the normal form of
annuity payment for married Annuitants under qualified plans and certain
TSAs.
All of the life annuity distribution options outlined above (with the exception
of Joint and Survivor Life Annuity) are available as either Single or Joint life
annuities. Life annuity distribution options are not available for Annuitants in
governmental EDC plans in New York.
FIXED AND VARIABLE ANNUITY FORMS:
We offer the annuity distribution options outlined above in fixed form. In
variable form, only the following options are available: Life Annuity (except in
New York), Life Annuity -- Period Certain, Joint and Survivor Life (100% to
Survivor) and Joint and Survivor Life Period Certain Annuity (100% to Survivor).
Life annuity distribution options are not available for Annuitants in
governmental EDC plans in New York. Fixed annuity payments, funded through our
general account, do not change and will be based on the tables of guaranteed
annuity payments in your Contract or on our then current annuity rates,
whichever is more favorable for the Annuitant. For all Annuitants, the normal
form of annuity provides for fixed payments. Variable payments will be funded
through your choice of Investment Funds of the HRT through the purchase of
annuity units. The amount of each variable annuity payment may fluctuate,
depending upon the performance of the Investment Fund. Variable benefits are not
allowed for governmental EDC plans in New York. See "Annuity Unit Values" in the
SAI.
We also make the variable annuity distribution option available to owners of our
single premium deferred annuity (SPDA) contracts. SPDA contractholders who are
considering purchasing a variable distribution option should also review "Part
2: Separate Account A and Its Investment Funds," "Part 3: Investment
Performance," the Hudson River Trust prospectus (directly following this
prospectus) and the sections of
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the Statement of Additional Information which discuss the variable annuity
distribution option.
We may offer other forms not outlined here. Your Equitable Representative can
provide details.
For each annuity distribution option, we will issue a separate written agreement
putting the option into effect. Before we pay any annuity benefit, we require
the return of the Contract. If your Contract is lost, you must provide us with a
written statement to this effect.
If, at the time you elect an annuity distribution option, the Annuity Account
Value is less than $2,000 or the initial payment under the option elected is
less than $20, we reserve the right to pay the Annuity Account Value in a single
sum rather than as payments under the annuity form chosen.
The size of the payments will depend on the form of annuity (fixed or variable),
the amount applied to purchase the annuity, the type of annuity chosen and, in
the case of a life annuity distribution option, the Annuitant's age (or the
Annuitant's and joint annuitant's ages) and in certain instances, the sex of the
Annuitant(s). Once an annuity distribution option is chosen and payments have
commenced, no change can be made, other than transfers (if permitted in the
future) among the investment funds if a variable annuity is selected.
A $350 administrative charge will generally apply upon the election of a life
contingent annuity distribution option. In no event will a Contract Owner ever
receive less than the minimum amounts guaranteed by the Contract.
FLEXIBLE PAYMENT DISTRIBUTION OPTIONS:
o PARTIAL WITHDRAWALS: See "Partial Withdrawals and Termination" in this
section.
o SYSTEMATIC WITHDRAWAL: You may elect either at the time of Contract issue or
anytime thereafter to have an amount periodically withdrawn from your
Contract. (Currently not available for EDC, Trusteed, HR-10 Annuitant-Owned
Contracts, or a TSA Contract if it has an outstanding loan.) A check for the
amount withdrawn will be made payable to you and mailed to your address or,
if you prefer, we will electronically transfer the money to your checking
account. You determine on which day of the month (1st through 28th) you wish
to have the Systematic Withdrawal occur. A minimum Annuity Account Value in
the Investment Funds and the Guaranteed Interest Account of $20,000 is
required at the time this feature is elected and you may terminate it at any
time.
The amount withdrawn may be either the amount of interest earned under the
Guaranteed Interest Account or a fixed-dollar amount of the Annuity Account
Value in the Investment Funds or in the Guaranteed Interest Account. When the
interest option is elected, a minimum of $20,000 must be maintained in the
Guaranteed Interest Account. No minimum Annuity Account Value is required to
be maintained when the fixed-dollar option is elected. Withdrawals may be
scheduled monthly or quarterly, subject to minimum amount of $300. Amounts
withdrawn which are in excess of the 10% free corridor amount are subject to
the contingent withdrawal charge. See "Contingent Withdrawal Charge" in Part
7.
o REQUIRED MINIMUM DISTRIBUTIONS OPTION: We offer a payment option, which we
call "Required Minimum Distributions Option," which is intended to meet the
general minimum distribution requirements applicable to qualified plans,
Traditional IRAs, SEPs, SIMPLE IRAs, TSAs, and EDC Contracts. See "Part 9:
Federal Tax and ERISA Matters." You may elect the Required Minimum Distributions
Option if the Annuitant is at least age 70 1/2 and your Contract has an Annuity
Account Value in the Investment Funds and the Guaranteed Interest Account of at
least $2,000. You can elect the Required Minimum Distributions Option by filing
the proper election form with us. If you elect the Required Minimum
Distributions Option, we will pay out of the Annuity Account Value in the
Investment Funds and the Guaranteed Interest Account an amount which the Code
requires to be distributed from your Contract. If such amounts are insufficient
and you hold amounts in the Fixed Maturity Account, we will then pay out
required amounts from the Fixed Maturity Account. In performing this
calculation, we assume that the only funds subject to the Code's minimum
distribution requirements are those held under your Contract. We calculate the
Required Minimum Distributions Option amount based on the information you give
us, the various choices you make and certain assumptions, including the
assumption that you are required by law to receive a minimum distribution.
Currently, the Required Minimum Distributions Option payments will be made
annually. We are not responsible for errors that result from inaccuracies in the
information you provide. The choices you can make are described in Part 3 of the
SAI.
You may elect the Required Minimum Distributions Option for each Contract you
own, subject to our rules then in effect. This election is revocable except
for EDC Contracts. The Required Minimum Distributions Option is not available
under Contracts that have an outstanding loan. Generally electing this option
does not restrict making partial withdrawals, or subsequently electing an
annuity distribution option.
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The minimum check that will be sent is $300, or, if less, your Annuity
Account Value. If, after the deduction of the amount of the minimum
distribution, the total Annuity Account Value is less than $500, we may
terminate the Contract and pay the Cash Value. See "Partial Withdrawals and
Termination" above.
Any applicable withdrawal charges will be deducted in addition to the amount
distributed under the Required Minimum Distributions Option. Withdrawal
charges will be deducted on a pro rata basis from the Investment Funds and
the Guaranteed Interest Account or, if there is an insufficient amount in
these Options, on a pro rata basis from the Fixed Maturity Periods. See
"Contingent Withdrawal Charge" in Part 7.
If you have an EQUI-VEST TSA that was purchased before December 31, 1986 or a
TSA purchased from another carrier before December 31, 1986 and subsequently
transferred to an EQUI-VEST TSA, the amount of your pre-1987 account balance
is not subject to the minimum distribution rules at age 70 1/2. However,
post-1986 salary reduction contributions and all earnings since that date are
subject to minimum distribution requirements of Code Section 401(a)(9).
o DEPOSIT OPTION: This distribution option is for NQ Contracts only. Proceeds
from your NQ Contract can be deposited for a period selected (including one
for as long as the Annuitant lives), and will be credited with a guaranteed
rate of interest for that period.
GUARANTEED DEATH BENEFIT
When the Annuitant Dies
Generally, upon receipt of acceptable proof of the Annuitant's death, we will
pay a death benefit to the beneficiary named in your Contract. You designate the
beneficiary on the application. You may change your beneficiary by writing to
our Processing Office. The change is effective on the date the written
submission was signed. A beneficiary change request must be received by the
Processing Office before the submission of a death claim.
In general, the death benefit is equal to the greater of: (i) the Annuity
Account Value (less any outstanding loan and accrued interest, if any) and (ii)
the "minimum death benefit." The minimum death benefit will not be less than all
contributions made (less any applicable taxes and any outstanding loan and
accrued interest, if any) adjusted for total withdrawals. We will pay the death
benefit to the beneficiary in the form of an annuity distribution option if you
have chosen such form under your Contract. If no annuity option is in effect at
the Annuitant's death, the beneficiary will receive the death benefit in a lump
sum. However, subject to certain exceptions in the Contract, our rules then in
effect and any other applicable legal requirements, the beneficiary may elect
to: (a) apply the death benefit to an annuity distribution option we offer, (b)
apply the death benefit to provide any other form of distribution option we
offer, (c) elect any combination of forms of distribution option, or (d) in
certain circumstances, continue the Contract.
For Series 300 and 400 Contracts only, if the Annuitant is also the Contract
Owner and the Owner/Annuitant elects his or her spouse to be the sole primary
beneficiary and to be the Successor Annuitant and Contract Owner, then the
surviving spouse automatically becomes both the successor Contract Owner and
Annuitant, and no death benefit is payable until the surviving spouse's death.
When the Contract Owner Dies before the Annuitant (NQ Contracts Only)
For all NQ Contracts, when the Contract Owner is not the Annuitant and the
Contract Owner dies before any annuity distribution payments have begun, the
beneficiary named to receive the death benefit upon the Annuitant's death will
automatically succeed as Contract Owner. For Series 300 and 400 Contracts only,
you have the right to designate a Successor Owner either on the application form
or in a written request sent to our Processing Office. The Code requires that
the original Contract Owner's entire interest in the Contract be completely
distributed to the named beneficiary by the December 31st following the fifth
anniversary of such Owner's death (unless an annuity distribution option is
elected and payments begin within one year after the Contract Owner's death and
are made over the beneficiary's life or over a period not exceeding the
beneficiary's life expectancy). If an annuity distribution option has not been
elected, as described above, we will pay any remaining Annuity Account Value
(less any applicable contingent withdrawal charge) on the fifth anniversary of
the Contract Owner's death. If the named beneficiary is the Contract Owner's
surviving spouse and has been designated as the successor owner, no
distributions are required as long as both the surviving spouse and the
Annuitant are living.
YOUR BENEFICIARY
You designate the beneficiary for the death benefit under the Contract on the
application. You may change your beneficiary by writing to our Processing
Office. The change is effective on the Transaction Date. The Owner must be the
beneficiary under EDC plans and the trustee must be the beneficiary under most
Trusteed plans. The death benefit available to the beneficiary is determined as
of the Business Day due proof of death is received at our Processing Office. On
that Business Day, the Annuity Account Value is deducted from the Investment
Options and is credited
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with interest at an interest rate not less than the rate required by law. If you
have transferred the value of another Equitable Life annuity contract to your
EQUI-VEST Contract, the value of that contract's minimum death benefit
calculated as of the time of transfer will be included in total contributions
for purposes of calculating the minimum death benefit.
If no benefit option is in effect at the Annuitant's death, the beneficiary can
select a lump sum option or one of the forms of annuity benefit. Under an
EQUI-VEST NQ Contract, where the Annuitant and Owner are not the same, the
beneficiary at the death of the Owner may elect to continue the Contract by
deferring payment of the entire amount in the Investment Options for a period of
five years from the death of the Original owner; the beneficiary may also elect
to receive payments within one year of the original owner's death in the form of
a life annuity or installment option for a period of not longer than the life
expectancy of the beneficiary.
At the time of payment, subject to our rules in effect, the beneficiary may
elect to apply the single sum payment to a new EQUI-VEST NQ Contract which will
be owned by the beneficiary.
If a beneficiary selects a lump sum option or applies some or all of the
benefits to an EQUI-VEST NQ Contract, we will issue a Form 1099-R for the year
of payment advising the Internal Revenue Service of the distribution from the
original EQUI-VEST NQ Contract.
Under all Contracts, any option selected must provide for distribution of the
Annuity Account Value within the period of time permitted by the Code. For EDC
Contracts, benefits must be distributed within a period not to exceed 15 years
(or within the period of the life expectancy of the surviving spouse if the
spouse is the designated beneficiary). See "Part 9: Federal Tax and ERISA
Matters."
If a lump sum is selected, it is generally paid through the Equitable Life
Access Account,(TM) an interest bearing checking account. A beneficiary has
immediate access to the proceeds by writing a check on the account. We pay
interest from the date the lump sum is deposited into the Access Account until
the date the Access Account is closed.
PROCEEDS
Application of proceeds from the Investment Funds to a variable annuity, payment
of a death benefit from the Investment Funds and payment of any portion of the
Annuity Account Value in the Investment Funds (less any applicable withdrawal
charge) will be made within seven days after the Transaction Date. Payments or
applications of proceeds from the Investment Funds can be deferred for any
period during which (1) the New York Stock Exchange is closed or trading on it
is restricted, (2) sales of securities or determination of the fair value of an
Investment Fund's assets is not reasonably practicable because of an emergency,
or (3) the SEC, by order, permits us to defer payment in order to protect
persons with interests in the Investment Funds. We can defer payment of any
portion of the Annuity Account Value in the Guaranteed Interest Account and in
the Fixed Maturity Account for up to six months while you are living.
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PART 7: DEDUCTIONS AND CHARGES
- --------------------------------------------------------------------------------
ALL CONTRACTS
Most charges applied to your Contract apply to all Investment Options. However,
HRT and EQAT Charges to Portfolios and Charges to Investment Funds do not apply
to the Guaranteed Interest Account or to the Fixed Maturity Account. See
"Allocation of Certain Charges to the Fixed Maturity Account" in this section.
CHARGES TO PORTFOLIOS
Investment advisory fees charged daily against the Trusts' assets, direct
operating expenses of the Trusts (such as trustees' fees, expenses of
independent auditors and legal counsel, bank and custodian charges and liability
insurance), and certain investment-related expenses of the Trusts (such as
brokerage commissions and other expenses related to the purchase and sale of
securities) are reflected in each Portfolio's daily share price. The maximum
investment advisory fees paid annually by the Portfolios cannot be increased
without a vote of that Portfolio's shareholders.
Investment advisory fees are established under investment advisory agreements
between HRT and its investment manager, Alliance, and between EQAT, EQ
Financial, as Manager and the EQAT Advisers. All of these fees and expenses are
described more fully in the prospectuses of HRT and EQAT. Since shares are
purchased at their net asset value, these fees and expenses are, in effect,
passed on to the Separate Account and are reflected in the Accumulation Unit
Values for the Investment Funds. The maximum fees are as follows:
- -------------------------------------------------------------
MAXIMUM
INVESTMENT ADVISORY
HRT PORTFOLIO FEE (ANNUAL RATE)
- -------------------------------------------------------------
Alliance Money Market 0.350%
Alliance Intermediate Government
Securities 0.500%
Alliance High Yield 0.600%
Alliance Quality Bond 0.525%
Alliance Growth and Income 0.550%
Alliance Equity Index 0.325%
Alliance Common Stock 0.475%
Alliance Global 0.675%
Alliance International 0.900%
Alliance Aggressive Stock 0.625%
Alliance Small Cap Growth 0.900%
Alliance Conservative Investors 0.475%
Alliance Balanced 0.450%
Alliance Growth Investors 0.550%
- -------------------------------------------------------------
- -------------------------------------------------------------
MAXIMUM
INVESTMENT
MANAGEMENT AND
EQAT PORTFOLIO ADVISORY FEE
(ANNUAL RATE)
- -------------------------------------------------------------
T. Rowe Price International Stock 0.75%
T. Rowe Price Equity Income 0.55%
EQ/Putnam Growth & Income Value 0.55%
EQ/Putnam Balanced 0.55%
MFS Research 0.55%
MFS Emerging Growth Companies 0.55%
Morgan Stanley Emerging Markets
Equity 1.15%
Warburg Pincus Small Company Value 0.65%
Merrill Lynch World Strategy 0.70%
Merrill Lynch Basic Value Equity 0.55%
- -------------------------------------------------------------
EQ Financial has entered into expense limitation agreements with EQAT, with
respect to each Portfolio, pursuant to which EQ Financial has agreed to waive or
limit its fees and to assume other expenses so that the total annual operating
expenses of each Portfolio other than interest, taxes, brokerage commissions,
other expenditures which are capitalized in accordance with generally accepted
accounting principles, other extraordinary expenses not incurred in the ordinary
course of each Portfolio's business and amounts pursuant to a plan adopted in
accordance with Rule 12b-1 under the 1940 Act are limited to certain amounts.
See the EQAT prospectus for details.
The Rule 12b-1 Plan provides that EQ Trust, on behalf of each Portfolio, may
charge annually up to 0.25% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily intended
to result in the sale of the Class IB shares. This fee will not be increased for
the life of the Certificates. Fees and expenses are described more fully in the
EQ Trust prospectus.
CHARGES FOR STATE PREMIUM AND OTHER
APPLICABLE TAXES
Currently, we deduct a charge for applicable taxes, such as state or local
premium taxes, from the amount applied to provide an annuity distribution option
if elected. The current tax charge that might be imposed varies by state and
ranges from 0% to 3.50%; however, the rate is 1% in Puerto Rico and 5% in the
Virgin Islands.
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We reserve the right to deduct any such charge from each contribution or from
distributions or upon termination. If we have deducted any applicable tax
charges from contributions, we will not deduct a charge for the same taxes at a
later time. If, however, an additional tax is later imposed upon us when you
withdraw, terminate or annuitize, we reserve the right to deduct a charge at
such time.
- --------------------------------------------------------------------------------
EQUI-VEST TRADITIONAL IRA, QP IRA, ROTH IRA,
SEP, SIMPLE IRA AND NQ CONTRACTS
(SERIES 300 AND 400 ONLY)
- --------------------------------------------------------------------------------
CHARGES TO INVESTMENT FUNDS
We make a daily charge at a guaranteed maximum effective annual rate of 1.35%
against the assets held in each of the Investment Funds. This charge is
reflected in the Accumulation Unit Values for the particular Investment Fund and
covers mortality and expense risk charges of 1.10% and expenses of 0.25%. The
current charge is .24% against the assets of the HRT and EQAT Funds for
expenses, except as noted. We reserve the right to increase the charge back to
the maximum at our discretion. This period will remain in effect until further
notice. We charge 0.25% against the assets of the Alliance Money Market,
Alliance Common Stock, Alliance Aggressive Stock, and Alliance Balanced Funds.
The mortality and expense risk charge is comprised of 0.60% for mortality risk
and 0.50% for expense risk, although the allocation of these risk charges may
vary. We assume a mortality risk by (a) our obligation to pay a death benefit
that will not be less than the total value of all contributions made (less any
applicable taxes) adjusted for total withdrawals, (b) our obligation to make
annuity payments for the life of the Annuitant under guaranteed fixed annuity
options, regardless of the Annuitant's longevity, (c) our guarantees relating to
annuity purchase rates, the actuarial basis for which can be changed only for
new contributions and only on the fifth anniversary of the Contract Date and
every five years thereafter, and (d) our obligation to waive the contingent
withdrawal charge upon the payment of a death benefit.
The expense risk we assume is the risk that, over time, our actual expense of
administering the Contracts may exceed the amounts realized from the expense
charge and the annual administrative expense charge. Part of the mortality and
expense risk charge may be considered to be an indirect reimbursement for
certain sales and promotional expenses relating to the Contracts to the extent
that the charge is not needed to meet the actual expenses incurred.
The charge for expenses, together with the annual administrative charge
described below, is designed to reimburse us for our costs in providing
administrative services in connection with the Contracts.
ANNUAL ADMINISTRATIVE CHARGE
On the last Business Day of each Contract Year, we deduct from the Annuity
Account Value an annual administrative charge equal to the lesser of $30 or 2%
of the Annuity Account Value on such Business Day for the first two Contract
Years, and $30 for each Contract Year thereafter. This charge is deducted on a
pro rata basis from the Investment Funds and the Guaranteed Interest Account,
and from the Fixed Maturity Account should collection from the other Options be
insufficient and we have not been otherwise reimbursed. This charge will be
prorated for a fractional year if, before the end of the Contract Year, you
surrender your Contract, the Annuitant dies or you elect an annuity distribution
option. Accumulation Units will be redeemed in order to pay any portion of the
charge deducted from an Investment Fund. Any portion of the charge deducted from
the Guaranteed Interest Account or Fixed Maturity Account is withdrawn in
dollars.
We reserve the right to increase this charge if our administrative costs
increase, but the charge is guaranteed never to exceed $65 annually, subject to
applicable law. We also reserve the right to eliminate the administrative charge
for Traditional IRA, Roth IRA, SEP, SARSEP, SIMPLE IRA and NQ Contracts having a
minimum Annuity Account Value of a specified amount currently set at $25,000 for
NQ, and $20,000 for the other markets, on the last Business Day of each Contract
Year. We also reserve the right to deduct this charge on a quarterly, rather
than annual, basis.
CONTINGENT WITHDRAWAL CHARGE
No sales charges are deducted from contributions. However, to assist us in
defraying the various sales and promotional expenses incurred in connection with
selling the Contracts, we assess a charge on amounts withdrawn when you make a
partial withdrawal or terminate your Contract if the amount withdrawn is in
excess of the free corridor amount (defined in this section) or if no exception
applies. The amount of the
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EQUI-VEST TRADITIONAL IRA, QP, IRA, ROTH IRA, SEP, SIMPLE IRA, AND NQ CONTRACTS
(SERIES 300 AND 400 ONLY) (CONTINUED)
withdrawal and the applicable withdrawal charge are deducted pro rata from the
Investment Funds and the Guaranteed Interest Account and from the Fixed Maturity
Account should collection from the other Options be insufficient. The amount
deducted to pay the withdrawal charge is also subject to the withdrawal charge.
The contingent withdrawal charge is equal to 6% of the amount attributable to
withdrawn contributions which have been made in the current and five prior
Contract Years. In the case of a termination, we will pay the greater of (i) the
Annuity Account Value after the withdrawal charge has been imposed, as described
above, or (ii) the free corridor amount plus 94% of the remaining Annuity
Account Value. For purposes of calculating the withdrawal charge (1) we treat
contributions as being withdrawn before earnings on a first-in, first-out basis,
and (2) amounts withdrawn up to the free corridor amount are not considered a
withdrawal of contributions. Although we treat contributions as withdrawn before
earnings for purposes of calculating the withdrawal charge, the Federal income
tax law treats earnings on most NQ Contracts as withdrawn first. See "Part 9:
Federal Tax and ERISA Matters."
We reserve the right to change the amount of the contingent withdrawal charge,
provided that it will not exceed 6% of the amount deemed attributable to
withdrawn contributions. Applicable regulations would not permit such a change
where it would be unfairly discriminatory to any person. Moreover, the
withdrawal charge will be reduced if needed in order to comply with any state
law that applies. See New York Contracts -- Fixed Maturity Account in this
section. The tax consequences of withdrawals are discussed under "Part 9:
Federal Tax and ERISA Matters."
Free Withdrawal Amount (Free Corridor)
No withdrawal charge will be applied during any Contract Year in which the
amount withdrawn is less than or equal to 10% of the Annuity Account Value at
the time the withdrawal is requested minus any amount previously withdrawn
during that Contract Year. This 10% portion is called the FREE CORRIDOR AMOUNT.
Any withdrawal requested that exceeds the free corridor amount will be subject
to the contingent withdrawal charge, unless one of the following exceptions
applies.
Exceptions to the Contingent Withdrawal Charge
A contingent withdrawal charge will not apply upon any of the events listed
below:
o the Annuitant dies and a death benefit is payable to the beneficiary; or
o we receive a properly completed election form providing for the Annuity
Account Value to be used to buy a life contingent annuity.
A contingent withdrawal charge will not apply in the following events. However,
we reserve the right to impose a contingent withdrawal charge, in accordance
with your Contract and applicable state law, for preexisting conditions or
conditions which began within 12 months of your Contract Date for these events:
o the Annuitant has qualified to receive Social Security disability benefits as
certified by the Social Security Administration; or
o we receive proof satisfactory to us that the Annuitant's life expectancy is
six months or less (such proof must include, but is not limited to,
certification by a licensed physician); or
o the Annuitant has been confined to a nursing home for more than a 90-day
period (or such other period, if required in your state) as verified by a
licensed physician. A nursing home for this purpose means one which is (a)
approved by Medicare as a provider of skilled nursing care service, or (b)
licensed as a skilled nursing home by the state or territory in which it is
located (it must be within the United States, Puerto Rico, U.S. Virgin
Islands, or Guam) and meets all of the following:
-- its main function is to provide skilled, intermediate, or custodial
nursing care;
-- it provides continuous room and board to three or more persons;
-- it is supervised by a registered nurse or licensed practical nurse;
-- it keeps daily medical records of each patient;
-- it controls and records all medications dispensed; and
-- its primary service is other than to provide housing for residents.
Additionally, a withdrawal charge will not apply to a Traditional IRA, QP IRA,
Roth IRA, SIMPLE IRA, or SEP Contract upon the following events:
o the Annuitant has completed at least six Contract Years and has attained age
59 1/2; or
o a request is made for a refund of a contribution in excess of amounts allowed
to be contributed under the Code within one month of the date on which the
contribution is made.
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EQUI-VEST TRADITIONAL IRA, QP IRA, ROTH IRA, SEP, SIMPLE IRA AND NQ CONTRACTS
(SERIES 300 AND 400 ONLY) (CONTINUED)
New York Contracts -- Fixed Maturity Account
For Contracts issued in New York, the contingent withdrawal charge applicable to
contributions to the Fixed Maturity Account (including amounts transferred to
that Account from the other Investment Options) and which are withdrawn from the
Fixed Maturity Account, will never exceed 6%; however, the contingent withdrawal
charge could be lower.
For the Fixed Maturity Account, the contingent withdrawal charge will be the
greater of that determined by applying the New York Declining Scale ("Declining
Scale") and the New York Alternative Scale ("Alternative Scale"), not to exceed
6%. As to the withdrawal of amounts that have been transferred within the Fixed
Maturity Account from one Maturity Period to another, the Alternative Scale is
applied if it produces a higher charge than the Declining Scale.
- -------------------------------------------------------------
DECLINING SCALE ALTERNATIVE SCALE
- -------------------------------------------------------------
Year of Investment in Year of Transfer within
Fixed Maturity Account* Fixed Maturity Acount*
Within Year 1 6% Within Year 1 5%
2 6% 2 4%
3 5% 3 3%
4 4% 4 2%
5 3% 5 1%
6 2% After Year 5 0%
After Year 6 0%
Not to exceed 1% times
the number of years
remaining in Maturity
Period, rounded to the
higher number of years.
In other words, if 4.3
years remain, it would
be a 5% charge.
- -------------------
* Measured from the Contract Anniversary Date prior to the date of the
contribution or transfer.
- --------------------------------------------------------------------------------
For example, compare the withdrawal charge that would be applicable to a
withdrawal from a Series 400 Traditional IRA, QP IRA or NQ Contract that has an
Annuity Account Value of $10,000-$8,000 from contributions made three years ago
and $2,000 from positive investment performance.
o If the total amount of contributions are withdrawn within the first six years
after they were made, the normal Series 400 withdrawal charge would be $480
(6% of $8,000). However, if the contributions were made to the Fixed Maturity
Account, the withdrawal charge would be lower. According to the New York
Declining Scale described above, in the third year, the withdrawal charge
would be limited to 5% of the $8,000, or $400.
o Now assume that, although the contributions had been made to the Fixed
Maturity Account three years ago, they were transferred to a new Maturity
Period within the Fixed Maturity Account in the third year, and further
assume that there is exactly one year remaining in the Maturity Period to
which the amounts were transferred. Because there was a transfer within the
Fixed Maturity Account, the New York Alternative Scale may now apply. Based
on this Scale, a contribution that was so transferred will be subject to a 5%
withdrawal charge, if withdrawn in the year of the transfer, such charge not
to exceed 1% for each year remaining in the Maturity Period. Since, in this
example, the time remaining is exactly one year, the Alternative Scale would
limit the withdrawal charge to 1%. However, New York regulations allow that
the greater of the Declining Scale or the Alternative Scale is used.
Therefore, the withdrawal charge would be 5%, or $400, based on the Declining
Scale.
o In no event would the contingent withdrawal charge exceed that otherwise
applicable under the Contract; application of the New York Scale can only
result in a lower charge. Thus, if a contribution had been in the Contract
for more than six years and was thus exempt from a withdrawal charge, no such
charge would be applicable.
o For withdrawals from an Investment Option other than the Fixed Maturity
Account, the amount available for withdrawal without a contingent withdrawal
charge is reduced by the amount of contributions in the Fixed Maturity
Account to which no withdrawal charge applies.
o As of any date on which 50% or more of your Annuity Account Value is held in
the Fixed Maturity Account, the free corridor amount is zero.
o If you have not made a prior election for the reinvestment of your Maturity
Amount when it reaches the Expiration Date, such Amount will be reinvested in
whichever Fixed Maturity Period then offered has the nearest Expiration Date;
if no Fixed Maturity Periods are being offered, it will be reinvested in the
Money Market Fund.
The potential for the contingent withdrawal charge applicable to withdrawals
from the Fixed Maturity Account to be lower than the otherwise applicable charge
and the potential for the free corridor amount to also be lower than that which
would otherwise apply should be considered in making allocations to, or
transfers to or from, the Fixed Maturity Account.
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EQUI-VEST TRADITIONAL IRA, QP IRA, ROTH IRA, SEP, SIMPLE IRA AND NQ CONTRACTS
(SERIES 300 AND 400 ONLY) (CONCLUDED)
ALLOCATION OF CERTAIN CHARGES TO THE FIXED MATURITY ACCOUNT
The annual administrative charge and the contingent withdrawal charge will be
deducted from the Guaranteed Interest Account and the Investment Funds, as
discussed above. In the event that amounts in those Options are insufficient to
cover these charges, we reserve the right to deduct those charges from the Fixed
Maturity Periods. Charges applied to the Fixed Maturity Periods are considered
withdrawals and, as such, will result in a market value adjustment. See "Part 5:
The Fixed Maturity Account."
CHARGE ON THIRD PARTY TRANSFER OR EXCHANGE
If you ask us to make a direct transfer to a third party of amounts under your
Contract, or request that your Contract be exchanged for another contract or
certificate issued by another carrier, we deduct from the Annuity Account Value
both a contingent withdrawal charge as described above (if any) and (except for
Series 300 Contracts in Florida) a charge of $25 per occurrence. We reserve the
right to increase this $25 fee to a maximum of $65 for each direct transfer or
exchange.
- --------------------------------------------------------------------------------
ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS TRADITIONAL IRA, QP IRA, ROTH
IRA, SEP, SIMPLE IRA AND NQ (SERIES 100 AND 200 ONLY)
- --------------------------------------------------------------------------------
LIMITATION ON CHARGES
Under the terms of these Contracts, for the Alliance Money Market, Alliance
Balanced, Alliance Common Stock and Alliance Aggressive Stock Funds, the
aggregate amount of the Separate Account charge made to those Funds, the HRT
charges for investment advisory fees and the direct operating expenses of the
HRT may not exceed a total effective annual rate of 1.75% of the value of the
assets held in those Investment Funds.
CHARGES TO INVESTMENT FUNDS
We make a daily charge against the assets held in each of the Investment Funds.
This charge is reflected in the Accumulation Unit Values for the particular
Investment Fund and covers expenses, expense risks, mortality risks (for the
annuity rate guarantee), death benefits (for the minimum death benefit) and
financial accounting. For the Alliance Money Market, Alliance Balanced and
Alliance Common Stock Funds, the charge is made at an annual rate guaranteed not
to exceed 1.49%. For all other Investment Funds of the HRT and EQAT, the charge
is made at an annual rate guaranteed not to exceed 1.34%.
Specific charges for each series are set forth below:
- -------------------------------------------------------------
SERIES 100
- -------------------------------------------------------------
ALLIANCE
MONEY MARKET,
ALLIANCE BALANCED,
ALLIANCE COMMON OTHER
STOCK FUNDS FUNDS
- -------------------------------------------------------------
Expenses .60% .60%
Expense Risks .30 .15
Mortality Risks .30 .30
Death Benefits .05 .05
Financial Accounting .24 .24
- -------------------------------------------------------------
- -------------------------------------------------------------
SERIES 200
- -------------------------------------------------------------
ALLIANCE
MONEY MARKET,
ALLIANCE BALANCED,
ALLIANCE COMMON OTHER
STOCK FUNDS FUNDS
- -------------------------------------------------------------
Expenses and Financial
Accounting .25% .25%
Expense Risks .55 .49
Mortality Risks and Death
Benefits .60 .60
- -------------------------------------------------------------
The charge for expenses is designed to reimburse us for various research and
development costs and for administrative expenses that exceed the annual
administrative charge described below. The expense risk we assume is the risk
that, over time, our actual administrative expense may exceed the amounts
realized from the expense and the annual administrative expense charges, which
may not be increased. We assume a mortality risk by (a) our obligation to pay a
death benefit that will not be less than the total value of all contributions
made (less any applicable taxes) adjusted for total withdrawals, (b) our
obligation to make annuity payments for the life of the Annuitant, regardless of
the Annuitant's longevity, (c) our guarantees relating to annuity purchase
rates, and (d) our obligation to waive the contingent withdrawal charge upon the
payment of a death benefit. The charge for financial accounting services is
designed to reimburse us for our costs in providing those services in connection
with the Contracts, and, like the charge for expenses, is not designed to
include an element of profit. The total of these charges may be reallocated
among the categories of charges shown above; however, we intend to limit any
possible reallocation to include only the charges for expense risks, mortality
risks and death benefits.
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ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS TRADITIONAL IRA, QP IRA, ROTH
IRA, SEP, SIMPLE IRA AND NQ (SERIES 100 AND 200 ONLY) (CONTINUED)
Part of the respective charges for expense risks, mortality risks and death
benefits may be considered to be an indirect reimbursement for certain sales and
promotional expenses relating to the Contracts to the extent that the charges
are not needed to meet the actual expenses incurred.
ANNUAL ADMINISTRATIVE CHARGE
Except as discussed below, on the last Business Day of each Contract Year we
deduct from the Annuity Account Value an annual administrative charge equal to
the lesser of $30 or 2% of the Annuity Account Value on such Business Day
(adjusted to include any withdrawals made during the year). This charge is
deducted from each Investment Option on a pro rata basis. This charge will be
prorated for a fractional year if, before the end of the Contract Year, you
surrender your Contract, the Annuitant dies or you elect an annuity distribution
option. Accumulation Units will be redeemed in order to pay any portion of the
charge deducted from an Investment Fund.
Any portion of the charge deducted from the Guaranteed Interest Account is
withdrawn in dollars.
Exceptions to Annual Administrative Charge
For IRA, QP IRA, Roth IRA, NQ, SEP, SIMPLE IRA, Unincorporated Trusteed, and
Annuitant-Owned HR-10 Contracts, the charge is zero if the Annuity Account Value
is at least $10,000 at the end of the Contract Year.
For TSA, EDC and Corporate Trusteed Contracts, the charge is zero if the Annuity
Account Value is at least $25,000 at the end of the Contract Year.
CONTINGENT WITHDRAWAL CHARGE
No sales charges are deducted from contributions. However, to assist us in
defraying the various costs and promotional expenses incurred in connection with
selling the Contracts, we assess a charge on amounts withdrawn when you make a
partial withdrawal or terminate your Contract if the amount withdrawn is in
excess of the free corridor amount (defined below) or if no exception applies.
The withdrawal charge is deducted pro rata from the Annuity Account Value in
addition to the amount of the requested withdrawal; the amount deducted which is
applied to pay the withdrawal charge is also subject to the withdrawal charge.
Free Withdrawal Amount (Free Corridor)
For NQ, Trusteed, TSA and QP IRA Contracts (but not IRA, Roth IRA or QP IRA
group Contracts), no withdrawal charge will be applied during any Contract Year
in which the amount withdrawn is less than or equal to 10% of the Annuity
Account Value at the time the withdrawal is requested minus any amount
previously withdrawn during that Contract Year. This 10% portion is called the
FREE CORRIDOR AMOUNT. For EDC, SEP, SIMPLE IRA and QP IRA Series 100 and 200
group Contracts, the free corridor amount is available only after three Contract
Years have been completed or the Annuitant has reached age 59 1/2.
HOW THE CONTINGENT WITHDRAWAL CHARGE IS APPLIED FOR SERIES 100 AND 200 NQ AND
TRUSTEED CONTRACTS
Partial withdrawals in excess of the free corridor amount will be subject to a
withdrawal charge of 6% of the amount of the contributions made during the
current and five prior Contract Years. In the case of a termination, we will pay
the greater of (i) the Annuity Account Value after the withdrawal charge has
been imposed, as described above, and after giving effect to any outstanding
loan balance (including accrued interest), or (ii) the free corridor amount plus
94% of the remaining Annuity Account Value. For NQ Contracts issued to
Annuitants age 59 or older, this percentage will be 95% in the fifth Contract
Year and 96% in the sixth Contract Year. For Trusteed Contracts issued to
Annuitants age 60 or older, this percentage is 95% in the fifth Contract Year.
For NQ and Trusteed group Contracts, there is no reduction in the contingent
withdrawal charge for older Annuitants (referred to above) in the fifth and
sixth Contract Year.
For purposes of calculating the withdrawal charge, (1) we treat contributions as
being withdrawn before earnings, on a first-in, first-out basis, and (2) amounts
withdrawn up to the free corridor amount are not considered a withdrawal of any
contributions. Although we treat contributions as withdrawn before earnings for
purposes of calculating the withdrawal charge, Federal income tax law treats
earnings on most NQ Contracts as withdrawn first. See "Part 9: Federal Tax and
ERISA Matters."
No charge will be applied to any amount withdrawn from an NQ or Trusteed
Contract if:
o the amount withdrawn is applied to the election of a life annuity
distribution option; or
o the Annuitant dies and the death benefit is made available to the
beneficiary.
No charge will be applied to any amount withdrawn from a Trusteed Contract if:
o the Owner has completed at least five Contract Years and the Annuitant has
reached age 59 1/2; or
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ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS TRADITIONAL IRA, QP IRA, ROTH
IRA, SEP, SIMPLE IRA AND NQ (SERIES 100 AND 200 ONLY) (CONTINUED)
o a request is made for a refund of an excess contribution within one month of
the date on which the contribution is made.
No charge will be applied to any amount withdrawn from a Corporate Trusteed
Contract if the Annuitant has reached age 59 1/2 and has either retired or
terminated employment, regardless of the number of completed Contract Years.
HOW THE CONTINGENT WITHDRAWAL CHARGE IS APPLIED FOR SERIES 100 AND 200
TRADITIONAL IRA, ROTH IRA, SEP, SIMPLE IRA, TSA, EDC AND ANNUITANT-OWNED HR-10
CONTRACTS
Withdrawals under these Contracts and defaulted loan amounts under TSA Contracts
(in excess of the free corridor amount, if applicable) may be subject to a
charge of up to 6% of the amount withdrawn or the defaulted loan amount, as the
case may be. The percentage charged will be based on the Contract Year in which
the withdrawal is made, as shown below:
- -------------------------------------------------------------
CONTRACT
YEAR(S) CHARGE
- -------------------------------------------------------------
1 through 5 6%*
6 through 8 5
9 4
10 3
11 2
12 1
13 and later 0
- -------------------
* This percentage will be reduced to 5% for Contracts issued
to Annuitants under individual Contracts only, in year 5,
if age 60 or older.
- -------------------------------------------------------------
The total of all withdrawal charges assessed will not exceed 8% of all
contributions made during the current Contract Year and the nine prior Contract
Years before the withdrawal is made.
No charge will be applied to any amount withdrawn from an IRA, Roth IRA, QP IRA,
SEP, SIMPLE IRA, TSA, EDC or Annuitant-Owned HR-10 (except for NQ and Trusteed
Contracts) Contract if:
o the Contract Owner has completed at least five Contract Years and the
Annuitant has reached age 59 1/2;
o a request is made for a refund of an excess contribution within one month of
the date on which the contribution is made;
o the Annuitant dies and the death benefit is made available to the
beneficiary;
o the Contract Owner has completed at least five Contract Years, the Annuitant
has reached age 55 and the amount withdrawn is used to purchase from us a
period certain annuity that extends beyond the Annuitant's age 59 1/2 and
allows no prepayment;
o the Contract Owner has completed at least three Contract Years and the amount
withdrawn is used to purchase from us a period certain annuity for a term of
at least 10 years that allows no prepayment;
o the amount withdrawn is applied to the election of a life contingent annuity
distribution option (this form of payment is not available for Annuitants in
governmental EDC plans in New York);
o the amount withdrawn is applied to the election of a period certain annuity
of at least 15 years, but not in excess of the Annuitant's life expectancy,
that allows no prepayment (this provision is available only for Annuitants in
governmental EDC plans in New York).
No charge will be applied to any amount withdrawn from a TSA Contract if:
o the Contract Owner has completed at least five Contract Years, has reached
age 55 and has separated from service.
No charge will be applied to any amount withdrawn from a SEP Contract funding
SARSEP arrangements if:
o the amount withdrawn is a distribution of deferrals disallowed (plus or minus
any gain or loss) by reason of the employer's failure to meet the Code's
requirement that 50% of eligible employees elect SARSEP within the plan year
and the request for withdrawal is made by the April 15th of the calendar year
following the calendar year in which you were notified of such disallowance;
or
o the amount withdrawn is an "excess contribution" (as such term is defined in
Section 408(k)(6)(C)(ii) of the Code), plus or minus any gain or loss, and
the request for withdrawal is made by the April 15th of the calendar year
following the calendar year in which the excess contributions were made; or
o the amount withdrawn is an "excess deferral" (as such term is defined in
Section 402(g)(2) of the Code), plus or minus any gain or loss, and the
request for withdrawal is made by the April 15th of the calendar year
following the calendar year in which such excess deferrals were made.
We reserve the right to reduce or eliminate the withdrawal charge in certain
cases, including transfers to a Traditional IRA, QP IRA or Roth IRA from another
EQUI-VEST Contract. In no event would such reduc-
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ALL EQUI-VEST EDC, TSA AND TRUSTEED CONTRACTS PLUS TRADITIONAL IRA, QP IRA, ROTH
IRA, SEP, SIMPLE IRA AND NQ (SERIES 100 AND 200 ONLY) (CONCLUDED)
tion or elimination be permitted where it would be unfairly discriminatory to
any person.
The tax consequences of withdrawals are discussed under "Part 9: Federal Tax and
ERISA Matters."
As a result of regulations which apply to EDC plans of governmental employers in
New York (NY EDC PLANS), EQUI-VEST Contracts which fund New York EDC Plans
contain special provisions which apply to all NY EDC Plans whose EQUI-VEST
funding arrangements became effective or were renewed on or after July 1, 1989.
These provisions permit the automatic termination of all Contracts issued in
connection with a NY EDC Plan five years after the effective date (or any
renewal date) of its EQUI-VEST funding arrangement without the deduction of any
contingent withdrawal charges. If agreed to by the employer and us, the period
may be shorter than five years. A decision to permit the automatic termination
of all Contracts would result in the transfer of each Contract's Annuity Account
Value to a successor funding vehicle designated by the employer.
The employer sponsoring a NY EDC Plan can renew the EQUI-VEST funding
arrangement in a written notice to us which includes a certification of
compliance with procedures under the applicable regulations. We are not
responsible for the validity of any certification by the employer. A written
notice to transfer must be received at our Processing Office and accepted by us
not later than seven days before the date on which a transfer is to occur. If an
employer fails to notify us in writing as to a transfer of the NY EDC
arrangement, or as to its intention not to renew, we will continue the
arrangement and associated contracts will not be automatically terminated.
No further investment experience, whether positive or negative, will be credited
under a NY EDC Plan Contract once the Contract terminates. As with other
tax-favored retirement programs in which the funding is affected by actions of a
sponsoring employer, we are not required to provide Annuitants with information
relating to an employer's decision to exercise any termination right.
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- --------------------------------------------------------------------------------
PART 8: VOTING RIGHTS
- --------------------------------------------------------------------------------
HRT AND EQAT VOTING RIGHTS
As explained previously, contributions allocated to the Investment Funds are
invested in shares of the corresponding Portfolios of HRT or EQAT. Since we own
the assets of the Separate Account, we are the legal owner of the shares and, as
such, have the right to vote on certain matters. Among other things, we may
vote:
o to elect each Trust's Board of Trustees,
o to ratify the selection of independent auditors for each Trust, and
o on any other matters described in each Trust's current prospectus or
requiring a vote by shareholders under the 1940 Act.
Because HRT is a Massachusetts business trust, and EQAT is a Delaware business
trust, annual meetings are not required. Whenever a shareholder vote is taken,
we will give Contract Owners and Employers, if appropriate, the opportunity to
instruct us how to vote the number of shares attributable to their Contracts. If
we do not receive instructions in time from all Contract Owners and Employers,
if appropriate, we will vote the shares of a Portfolio for which no instructions
have been received in the same proportion as we vote shares of that Portfolio
for which we have received instructions. We will also vote any shares that we
are entitled to vote directly because of amounts we have in an Investment Fund
in the same proportions that Contract Owners vote.
Each share of each Trust is entitled to one vote. Fractional shares will be
counted. Voting generally is on a Portfolio-by-Portfolio basis except that
shares will be voted on an aggregate basis when universal matters, such as
election of Trustees and ratification of independent auditors, are voted upon.
However, if the Trustees determine that shareholders in a Portfolio are not
affected by a particular matter, then such shareholders generally would not be
entitled to vote on that matter.
VOTING RIGHTS OF OTHERS
Currently, we control each Trust. EQAT shares currently are sold only to our
separate accounts. HRT shares are held by other separate accounts of ours and by
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 Contract Owners, we currently do
not foresee any disadvantages arising out of this. HRT's Board of Trustees
intends to monitor events in order to identify any material irreconcilable
conflicts that possibly may arise and to determine what action, if any, should
be taken in response. If we believe that HRT's response to any of those events
insufficiently protects our Contract Owners, we will see to it that appropriate
action is taken to protect our Contract Owners.
SEPARATE ACCOUNT VOTING RIGHTS
If actions relating to the Separate Account require Contract Owner approval,
Contract Owners will be entitled to one vote for each Accumulation Unit they
have in the Investment Funds. We will cast votes attributable to any amounts we
have in the Investment Funds in the same proportion as votes cast by Contract
Owners.
CHANGES IN APPLICABLE LAW
The voting rights we describe in this prospectus are created under applicable
Federal securities laws. To the extent that those laws or the regulations
promulgated under those laws eliminate the necessity to submit matters for
approval by persons having voting rights in separate accounts of insurance
companies, we reserve the right to proceed in accordance with those laws or
regulations.
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- --------------------------------------------------------------------------------
PART 9: FEDERAL TAX AND ERISA MATTERS
- --------------------------------------------------------------------------------
ANNUITIES
This prospectus briefly describes our understanding of the current Federal
income tax rules that apply to annuities. First we discuss non-qualified
annuities, and then discuss some of the special tax rules that apply to an
annuity contract purchased to fund a tax-favored retirement program. These
annuity contracts include Trusteed and Annuitant-owned HR-10 Contracts purchased
for a "qualified plan" (a plan qualified under Section 401 (a) of the Code), and
TSA, Traditional IRA, QP IRA, SEP IRA, SIMPLE IRA, Roth IRA or EDC Contracts.
Under an annuity purchased to fund a tax-favored retirement program, in order to
qualify for its special treatment under Federal tax law, rights and benefits of
the Annuitant or the Annuitant's beneficiary may be restricted.
Additional tax information appears in the SAI. This prospectus and the SAI do
not provide detailed tax information and do not address state and local income
and other taxes, or Federal gift and estate taxes. The U.S. income tax and
withholding rules that apply to foreign persons and entities are also outside
the scope of this prospectus. Not every Contract has every feature discussed in
this section. Please consult a tax adviser when considering the tax aspects of
your Contract.
TAX CHANGES
The United States Congress has in the past considered and may in the future
consider, legislative proposals that, if enacted, could change the tax treatment
of annuities and retirement plans. In addition, the Treasury Department may
amend existing regulations, issue new regulations, or adopt new interpretations
of existing laws. State tax laws or, if you are not a United States resident,
foreign tax laws, may affect the tax consequences to you or the beneficiary.
These laws may change from time to time without notice and, as a result, the tax
consequences may be altered. There is no way of predicting whether, when or in
what form any such change would be adopted. Any such change could have
retroactive effects regardless of the date of enactment. We suggest you consult
your legal or tax adviser.
TRANSFERS AMONG INVESTMENT OPTIONS
Under current law, there will not be any tax liability if you transfer the
Annuity Account Value among the Investment Funds, the Guaranteed Interest
Account and the Fixed Maturity Account.
IMPACT OF TAXES TO EQUITABLE LIFE
The Contracts provide that we may charge the Separate Account for taxes. We can
also set up reserves for taxes.
TAXATION OF NON-QUALIFIED ANNUITIES
A non-qualified annuity (NQ) contract is funded only with after-tax funds, and
generally is not subject to any special retirement plan rules. There are no tax
law limits on the amount of contributions that can be made to an NQ contract. In
contrast, Roth IRAs (discussed under this Part) are also funded on an after-tax
basis, but tax law limits contributions based on compensation and annual income.
Equitable has designed the EQUI-VEST NQ Contract to qualify as an "annuity" for
purposes of Federal income tax law. As such, gains in the Annuity Account Value
of the Contract generally will not be taxable to an individual until a
distribution from the Contract occurs, either by a pre-annuitization withdrawal
of part or all of its value, or when payments are received periodically after
annuitization. The taxable portion of distributions and payments from annuity
contracts is ordinary income and is subject to income tax withholding. See
"Federal and State Income Tax Withholding" below.
Taxation prior to Annuitization
Prior to the date that annuity payments begin, any partial withdrawals are
taxable to the Contract Owner to the extent that there has been a gain in the
Annuity Account Value. The balance of the distribution is treated as a return of
the "investment" or "basis" in the Contract and is not taxable. Generally, the
investment or basis in the Contract equals the contributions made less any
amounts previously withdrawn which were not taxable.
If the Contract is surrendered, the distribution is taxable to the extent it
exceeds the investment in the Contract.
Under the following circumstances, gains in the Annuity Account Value of a
Contract may be taxable, even in the absence of a cash payment from the
Contract: (1) if a Contract fails investment diversification requirements, gains
may be taxable; (2) if an individual transfers a Contract as a gift to someone
other than a spouse (or divorced spouse), gains will be taxable at the time of
transfer; (3) the assignment or pledge of any portion of the value of a Contract
will be treated as a distribution of that portion of the Contract;
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and (4) when an insurance company (or its affiliate) issues more than one
non-qualified deferred annuity contract during any calendar year to the same
taxpayer, the contracts are required to be aggregated in computing the taxable
amount of any distribution.
Aggregation is required only for the purpose of figuring out the taxable amount
on any distribution including surrenders, from one or more linked contracts. For
this reason, your tax report on Form 1099-R may indicate a different taxable
amount than you may have originally anticipated.
Corporations, partnerships, trusts and other non-natural persons generally
cannot defer the taxation of current income credited to the Contract unless an
exception under the Code applies.
Taxation after Annuitization
Once periodic payments in the form of an annuity begin, a portion of each
payment is considered to be a tax-free return of investment based on the ratio
of the investment to the expected return under the Contract. The remainder of
each payment will be taxable. In the case of a variable annuity, special rules
apply if the payments received in a year are less than the amount permitted to
be recovered tax free. After the total investment has been recovered, future
payments are fully taxable. If payments cease as a result of death, a deduction
for any unrecovered investment will be allowed.
Payments because of Death
If, as a result of the Annuitant's death, the beneficiary is entitled to receive
the death benefit described in Part 6, the beneficiary is generally subject to
the same tax treatment as would have applied to the Contract Owner, had the
Contract Owner surrendered the Contract. If before any benefit is actually paid,
the beneficiary elects to apply the death benefit to a life income or
installment option, the beneficiary is generally subject to the same tax
treatment as would have applied to the Contract Owner, had the Contract Owner
annuitized the Contract. The taxable amount will reflect the Contract Owner's
investment in the Contract.
Special distribution requirements apply upon the death of the owner of a
non-qualified annuity. That is, in the case of a Contract where the owner and
annuitant are different, even though the annuity contract could continue because
the annuitant is alive, Federal tax law requires that the person who succeeds as
owner of such a Contract take distribution of the amounts in the Contract within
a specified period of time, unless such owner is the spouse.
Penalty Tax
In addition to income tax, a penalty tax of 10% applies to the taxable portion
of a distribution unless the distribution is (1) made on or after the date the
taxpayer attains age 59 1/2, (2) made on or after the death of the Contract
Owner, (3) attributable to the disability of the taxpayer, (4) part of a series
of substantially equal periodic payments for the life (or life expectancy
period) of the taxpayer or the joint lives (or joint life expectancy period) of
the taxpayer and a beneficiary, or (5) with respect to income allocable to
amounts contributed to an annuity contract prior to August 14, 1982 which are
transferred to the Contract in a tax-free exchange.
GENERAL RULES OF FEDERAL AND STATE INCOME TAX WITHHOLDING; INFORMATION REPORTING
Equitable Life is required to withhold Federal income tax on the taxable portion
of payments from annuity contracts. Withholding may also apply to any taxable
amounts paid under a 10-day free look cancellation. The rate of withholding will
depend on the type of distribution and, in certain cases, the amount of the
distribution. Recipients in the United States generally may elect under certain
conditions not to be subject to income tax withholding. Special withholding
rules apply to foreign recipients and United States citizens residing outside
the United States. See your tax adviser if you may be affected by such rules.
Certain states have indicated that state income tax withholding will apply to
payments from annuity contracts made to residents. Generally, an election out of
Federal withholding will also be considered an election out of state
withholding. In some states, a recipient may elect out of state withholding,
even if Federal withholding applies. Contact your tax adviser to see how state
income tax withholding may apply to your payment.
Requests not to withhold Federal income tax must be made in writing prior to
receiving benefits under the Contract. The Processing Office will provide forms
for this purpose. No election out of withholding is valid unless the recipient
provides us with the correct Taxpayer Identification Number and a United States
residence address.
Any income tax withheld is a credit against income tax liability. 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.
Periodic annuity payments are generally subject to wage-bracket type withholding
(as if such payments were wages by an employer to an employee) unless the
recipient elects no withholding. If a recipient does not elect out of
withholding or does not specify the number of withholding exemptions,
withholding will generally
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be made as if the recipient is married and claiming three withholding
exemptions. There is an annual threshold of taxable income from periodic
payments which is exempt from withholding based on this assumption. For 1998, a
recipient of periodic payments (e.g., monthly or annual payments) which total
less than $14,400 taxable amount will generally be exempt from Federal income
tax withholding, unless the recipient specifies a different choice of
withholding exemption. If a recipient fails to provide a correct Taxpayer
Identification Number, withholding is made as if the recipient is single with no
exemptions.
A recipient of a partial or total non-periodic distribution will generally be
subject to withholding at a flat 10% rate. A recipient who provides a United
States residence address and a correct Taxpayer Identification Number will
generally be permitted to elect not to have tax withheld.
All recipients receiving periodic and non-periodic payments will be further
notified of the withholding requirements and of their right, if any, to make
withholding elections.
All distributions or taxable transactions with respect to the Contract are
reported to the appropriate taxpayer and the Internal Revenue Service on Form
1099-R in the calendar year following the year of the transaction. In certain
cases, IRS rules also require us to report nontaxable transactions, such as
tax-deferred exchanges of one annuity contract to another.
OTHER WITHHOLDING
In certain cases, Equitable may be required to withhold, or temporarily hold
back, an amount of death benefit due to potential application of state
inheritance or estate tax rules or Federal "generation skipping tax," which is a
form of estate tax. The potential application of these rules varies depending on
the amount of the death benefit, the relationship of the beneficiaries to the
deceased, and the residence of the parties. You should consult with your tax or
legal adviser concerning potential application of these rules to your own
personal situation.
SPECIAL RULES FOR NQ AND TRUSTEED CONTRACTS ISSUED IN PUERTO RICO
Only NQ and Trusteed Contracts are available in Puerto Rico.
EQUI-VEST TRUSTEED -- The tax treatment of qualified plans by the United States
and by Puerto Rico is similar in many respects, but may not be identical. Please
consult your tax adviser to determine any differences which may affect your own
situation.
NQ -- Under current law, Equitable Life treats income from such Contracts as
U.S.-source. A Puerto Rico resident is subject to U.S. taxation on such
U.S.-source income. Only Puerto Rico-source income of Puerto Rico residents is
excludable from U.S. taxation. Income from these Contracts is also subject to
Puerto Rico tax. The computation of the taxable portion of amounts distributed
from a Contract may differ in the two jurisdictions. Therefore, an individual
might have to file both U.S. and Puerto Rico tax returns, showing different
amounts of income for each. Puerto Rico generally provides a credit against
Puerto Rico tax for U.S. tax paid. Depending on an individual's personal
situation and the timing of the different tax liabilities, an individual may not
be able to take full advantage of this credit.
Please consult your tax adviser to determine the applicability of these rules to
your own tax situation.
SPECIAL RULES FOR TAX-FAVORED RETIREMENT PROGRAMS
An annuity contract may be used to fund certain employer-sponsored retirement
programs.
The Code describes how a retirement program can qualify for tax-favored status
and sets requirements for various features including: participation,
nondiscrimination, vesting and funding; limits on contributions, distributions
and benefits; penalties; and withholding, reporting and disclosure. Certain tax
advantages of a tax-favored retirement program may not be available under state
and local tax laws.
This section of the prospectus briefly describes our understanding of some of
the current Federal income tax rules that pertain to an annuity contract
purchased to fund a tax-favored retirement program for these special markets:
qualified plan and TSA. Other markets are discussed elsewhere in this Part.
QUALIFIED PLANS
General; Contributions
Any type of employer -- corporation, partnership, self-employed individual -- is
eligible to establish a plan qualified under Section 401(a) of the Code (a
"qualified plan") for participating employees, provided that the qualified plan
meets the requirements of Section 401. A discussion of the rules governing
establishment and operation of a qualified plan is beyond the scope of this
prospectus. Employers should consult their tax advisers for information.
Both employer and employee contributions to qualified plans are subject to a
variety of limitations, some of which are discussed here briefly. Violation of
contribution limits may result in plan disqualification and/or imposition of
monetary penalties.
The annual limit of employer and employee contributions (as defined in Section
415(c) of the Code) which may be made on behalf of an employee to all of the
defined contribution plans of an employer is the lesser of $30,000 or 25% of
compensation or earned income.
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Any reallocated forfeitures and voluntary nondeductible employee contributions
will generally be included for purposes of the contribution limit. In
calculating contributions to the plan, the law requires that compensation or
earned income of more than $150,000, as adjusted from time to time for
cost-of-living changes, cannot be considered. In 1998, this compensation limit
is $160,000. Effective for plan years beginning after December 31, 1997, the
formula for determining the overall limits on contributions includes
compensation from the employer in the form of elective deferrals (defined below)
and excludable contributions under Code Section 457 or "EDC" plans and
"cafeteria" plans (plans giving employees a choice between cash or specified
excludable health and welfare benefits).
Special limits on contributions apply to anyone who participates in more than
one qualified plan or who controls another trade or business. There is also an
overall limit on the total amount of contributions and benefits under all
tax-favored retirement programs in which a person participates. The annual
limits on contributions referred to here do not apply to rollover contributions
which may be permitted under the plan, or trustee-to-trustee transfer
contributions.
Salary reduction contributions made under a cash or deferred arrangement (401(K)
PLAN) are limited to $7,000, as adjusted from time to time for cost-of-living
changes. In 1998, the annual dollar limit on these "elective deferrals" is
$10,000. This limit applies to the aggregate of all elective deferrals under all
tax-favored plans with all employers in which the individual participates, for
example, also including salary reduction contributions under TSAs. Effective for
years beginning after December 31, 1997, employer matching contributions to a
401(k) plan for self-employed individuals are treated the same as employer
matching contributions for employees. That is, they are not subject to elective
deferral limits.
Qualified plans must not discriminate in favor of highly compensated employees.
In addition, special "top heavy" rules apply to plans where more than 60% of the
contributions or benefits are allocated to certain highly compensated employees
known as "key employees." Determination of compliance with both
nondiscrimination and top heavy rules requires various tests. 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 401(k) plan to meet specified contribution, vesting, and exclusive
plan requirements, similar to those discussed in this Part under "SIMPLE IRAS
(SAVINGS INCENTIVE MATCH PLANS)."
TAX-SHELTERED ANNUITY ARRANGEMENTS (TSAS)
General
An employer eligible to maintain a TSA plan (also referred to as a "403(b)"
plan, program, or arrangement) for its employees may make contributions to an
annuity contract purchased for the benefit of the employee. These annuity
contributions, if properly made, will not be treated as currently taxable
compensation to the employee. Moreover, the employee will not be taxed on the
earnings in the annuity contract until distributions are taken.
Two different types of employers are eligible to maintain 403(b) plans: public
schools and specified tax-exempt organizations under Section 501(c)(3) of the
Code.
Contributions to TSAs
ANNUAL CONTRIBUTIONS. Annual contributions to TSAs made through the employer's
payroll are limited. (Tax-free transfer or tax-deferred rollover contributions
from another 403(b) arrangement are not subject to these annual contribution
limits.) Commonly, some or all of the contributions made to the TSA are made
under a salary reduction agreement between the employee and the employer. These
contributions are called "salary reduction" or "elective deferral"
contributions. However, a TSA can also be wholly or partially funded through
nonelective employer contributions or after-tax employee contributions. To
determine the permissible annual contribution to the participant's TSA, a TSA
plan participant and tax adviser along with your Equitable Representative
generally must calculate tentative annual contributions under several formulas.
Generally, the contribution limit is the lowest of the following: (1) the annual
"maximum exclusion allowance" for the employee in Section 403(b)(2) of the Code,
(2) the annual limit on employer contributions to defined contribution plans,
and (3) the annual limit on all elective deferrals.
The annual exclusion allowance for the employee under Section 403(b)(2) of the
Code is 20% of includable compensation times years of service less previous
contributions to all qualified plans, TSAs and EDC plans the participant
participates with this employer. The annual limit on employer contributions to
defined contribution plans (as discussed above under "Qualified Plans --
General; Contributions") is the lesser of $30,000 or 25% of compensation,
disregarding compensation over $160,000 (in 1998). The annual limit on all
elective deferrals under all plans of any employer this individual participates
in (also discussed above under "Qualified Plans -- General; Contributions") is
generally limited to $10,000 in 1998. Note, however, that the maximum salary
reduction contribution that may be made by a participant who participates both
in a 403(b)
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arrangement and an EDC plan will be limited to the lower maximum allowed under
Code Section 457 (in 1998, this is $8,000).
Note that excess deferrals which are not withdrawn by April 15 following the
year of the deferral may cause the contract to fail to be treated as a TSA.
Special provisions may allow "catch-up" contributions to compensate for smaller
contributions made in previous years.
ROLLOVER OR DIRECT TRANSFER CONTRIBUTIONS. Rollover contributions may be made to
your EQUI-VEST TSA Contract from TSAs under Section 403(b) of the Code
(including custodial accounts under Section 403(b)(7) of the Code). See
"Distributions from Qualified Plans and TSAs -- Tax-Deferred Rollover" for a
description of rollovers. With appropriate written documentation that is
satisfactory to us, we will accept rollover contributions from "conduit IRAs"
for TSA funds. See "Traditional Individual Retirement Annuities ("Traditional
IRAs") -- Contributions to Traditional IRAs -- Conduit IRAs" below.
We will also accept direct transfers of TSA funds pursuant to Revenue Ruling
90-24 provided you provide us with acceptable written documentation as to the
source of the funds. We do not currently accept direct transfer of funds which
were ever held in custodial accounts under Section 403(b)(7) of the Code).
DISTRIBUTIONS FROM QUALIFIED PLANS AND TSAS
WITHDRAWAL RESTRICTIONS. Restrictions apply to the salary reduction (elective
deferral) portion of a TSA or 401(k) program, including both contributions and
earnings. Distributions of restricted salary reduction amounts generally may be
made only if the Annuitant attains age 59 1/2, dies, is disabled, separates from
service or on account of financial hardship. Hardship withdrawals are limited to
the amount actually contributed under a salary reduction agreement, without
earnings. These restrictions do not apply to the amount of your TSA Contract as
of December 31, 1988 attributable to salary reduction contributions and earnings
(or to the extent such amount is properly carried over from an existing TSA to
an EQUI-VEST TSA Contract). To take advantage of this grandfathering you must
properly notify us in writing at our Processing Office of your December 31, 1988
account balance if you have qualifying amounts transferred to your TSA Contract.
TAX TREATMENT OF DISTRIBUTIONS. Amounts held under qualified plans and TSAs are
generally not subject to Federal income tax until benefits are distributed.
Distributions include withdrawals from the Contract, surrenders of the Contract
and annuity payments from the Contract. Death benefits paid to a beneficiary are
also taxable distributions. Unless an exception applies, amounts distributed
from qualified plans or TSAs are includable in gross income as ordinary income.
Distributions from qualified plans or TSAs may be subject to 20% Federal income
tax withholding. See "General Rules of Federal and State Income Tax Withholding;
Information Reporting" above and "Special Withholding Rules Applicable to
Qualified Plans and TSAs" below. In addition, qualified plan and TSA
distributions may be subject to additional tax penalties. For information
regarding tax penalties which may apply, see "Penalty Tax on Premature
Distributions" and "Tax Penalties for Insufficient Distributions" later in this
section.
If a plan participant or TSA Owner has made after-tax contributions, for
example, the individual will have a tax basis in the Contract which may be
recovered. On a total surrender, the amount received in excess of the basis is
taxable. Equitable will report the total amount of the distribution. It is the
Contract Owners responsibility to determine how much of the distribution is
taxable. The amount of any partial distribution from a qualified plan or a TSA
prior to the annuity starting date is generally taxable, except to the extent
that the distribution is treated as a withdrawal of after-tax contributions.
Distributions are normally treated as pro rata withdrawals of after-tax
contributions and earnings on those contributions.
If an annuity distribution option is elected, any basis will be recovered as
each payment is received by dividing the investment in the contract by an
expected return determined under an IRS table prescribed for qualified
annuities. The amount of each payment not excluded from income under this
exclusion ratio is fully taxable. The full amount of the payments received after
the cost basis of the annuity is recovered is fully taxable. If the participant
dies before recovering basis and 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.
Distributions from qualified plans (but not TSAs) may be eligible for the
special tax treatment accorded lump sum distributions (favorable five-year
averaging, and in certain cases, favorable ten-year averaging and long-term
capital gain treatment). This treatment is not available unless the balance to
the credit of a plan participant who has participated in the plan for at least
five years is paid to the recipient within one taxable year, and is payable (i)
after the participant attains age 59 1/2 or (ii) on account of the participant's
(a) death, (b) separation from service (not applicable to self-employed
individuals), or (c) disability (applicable only to self-employed individuals).
Five-year averaging will be eliminated effective January 1, 2000.
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DEATH BENEFIT. Distributions made on account of the death of the Annuitant in a
qualified plan or TSA are generally given the same tax treatment the Annuitant
would have received had distributions been made to the Annuitant. In some
instances, distributions from a qualified plan or TSA made to a surviving spouse
may be rolled over to a Traditional individual retirement arrangement on a
tax-deferred basis. See "Tax-Deferred Rollover," and "Traditional Individual
Retirement Annuities (Traditional IRAs) -- Contributions to Traditional IRAs"
below.
LOANS. If the plan permits, loans may be made from a qualified plan or TSA plan.
Loans are generally not treated as taxable distributions, except under the
following circumstances. If the amount of the loan exceeds permissible limits
under the Code when made, the amount of the excess is treated (solely for tax
purposes) as a taxable distribution. Additionally, if the loan is not repaid at
least quarterly, amortizing interest and principal, the amount not repaid when
due may be treated as a taxable distribution. Under Proposed Treasury
Regulations which are not yet effective, the IRS would require the entire unpaid
balance of the loan to be includable in income in the year of the default. See
the discussion in Part 6 under "Loans (for TSA and Corporate Trusteed Only),"
the discussion below and in Part 4 of the SAI for certain additional Equitable
Life, Code and ERISA rules covering loans from qualified plans or TSAs.
TAX-DEFERRED ROLLOVERS AND DIRECT TRANSFERS. Any distribution from a qualified
plan or a TSA which is an "eligible rollover distribution" may be rolled over
into another eligible retirement plan, either as a direct rollover or a rollover
within 60 days of receiving the distribution. To the extent a distribution is
rolled over, it remains tax deferred.
A distribution from a qualified plan may be rolled over to another qualified
plan which will accept rollover contributions or a Traditional individual
retirement arrangement; a TSA distribution may be rolled over to another TSA or
Traditional individual retirement arrangement. Death benefits received by a
spousal beneficiary may only be rolled over to a Traditional IRA.
The taxable portion of most distributions will be eligible for rollover, except
as specifically excluded under the Code. Distributions which cannot be rolled
over generally include periodic payments for life or for a period of 10 years or
more, and minimum distributions required under Section 401(a)(9) of the Code
(discussed below). Eligible rollover distributions are discussed in greater
detail under "Special Withholding Rules Applicable to Qualified Plans and TSAs"
below.
Direct transfers of qualified plan funds to another qualified plan investment
and direct transfers of TSA funds from one TSA to another pursuant to Revenue
Ruling 90-24 are not distributions.
MINIMUM DISTRIBUTIONS. The minimum distribution rules mandate qualified
retirement plan and TSA participants to start taking annual distributions from
their retirement plans by a required date. When minimum distributions must begin
depends on, among other things, the individual's age and retirement status. The
distribution requirements are designed to use up the participant's interest in
the plan over the individual's life expectancy. Whether the correct amount has
been distributed is calculated on a year-by-year basis; there are no provisions
to allow amounts taken in excess of the required amount to be carried over or
carried back and credited to other years.
Generally, an individual must take the first required minimum distribution with
respect to the calendar year in which the individual turns age 70 1/2.
Exceptions which may permit an individual to delay commencement of required
minimum distributions are noted in the next paragraphs. The individual has the
choice to take the first required minimum distribution during the calendar year
he or she turns age 70 1/2, or to delay taking it until the three-month (January
1-April 1) period in the next calendar year. (Distributions must commence no
later than the "Required Beginning Date," which is the April 1st of the calendar
year following the calendar year in which the individual turns age 70 1/2 unless
an exception applies.) If the individual chooses to delay taking the first
annual minimum distribution, then the individual will have to take two minimum
distributions in that year -- the delayed one for the first year and the one
actually for that year. Once minimum distributions begin, they must be made at
some time every year.
Some individuals may be entitled to delay commencement of required minimum
distributions for all or part of their account balance until after age 70 1/2.
Consult your tax adviser to determine whether you may qualify for these
exceptions. These individuals are as follows:
o For qualified plan and TSA participants who have not retired from service
with the employer sponsoring the plan or TSA arrangement in question by the
calendar year the participant turns age 70 1/2, the Required Beginning Date
for minimum distributions is extended to April 1 following the calendar year
of such retirement. (This delay does not apply to 5% owners of qualified
plans; the regular rules apply even if the 5% owner still works.)
TSA plan participants may also delay commencement to age 75 of the portion of
their Annuity Account Value attributable to their December 31, 1986 TSA
account balance, even if retired at age 70 1/2. (If you have directly
transferred amounts from another insurer's TSA to your EQUI-VEST TSA, you
must
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tell us at the time of the transfer the amount of your December 31, 1986
account balance to take advantage of this exception.)
There are two general ways to take minimum distributions -- "account based" or
"annuity based" -- and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal of
flexibility to provide for themselves and their families.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one tax-favored retirement plan may be able to choose different
distribution options for each plan.
Generally, the minimum distribution must be calculated annually for, and taken
from, each tax-qualified retirement plan and TSA. Distributions in excess of the
amount required in any year from a qualified plan, for example, will not satisfy
the required amount for a TSA the individual also participates in. In Notice
88-38, the IRS indicated that an individual maintaining more than one Code
Section 403(b) arrangement may choose to take the annual required minimum
distribution for all TSAs from any one or more TSAs the individual maintains, as
long as the required distribution is calculated separately for each TSA and all
the minimum distribution amounts are added together.
An account-based minimum distribution method may be a lump sum payment, or a
periodic withdrawal made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. In the alternative, an individual could meet the
minimum distribution requirements by applying the Annuity Account Value to an
annuity over the individual's life or the joint lives of the individual and a
designated beneficiary, or over a period certain not extending beyond applicable
life expectancies.
If an individual dies before the Required Beginning Date or before distributions
in the form of an annuity begin, distributions of the entire interest under the
contract must be completed within five years after death, unless payments to a
designated beneficiary begin within one year of the Annuitant'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 individual would have attained age 70 1/2. In the alternative, such
spouse can roll over the death benefit to a Traditional IRA. See "Tax-Deferred
Rollover" above. If an individual dies after the Required Beginning Date or
after distributions in the form of an annuity have begun, payments after death
must continue to be made at least as rapidly as the payments made before the
death of the Annuitant.
SPOUSAL CONSENT RULES
In the case of many qualified plans and certain TSAs, if an Annuitant is married
at the time a loan, withdrawal, or other distribution is requested under the
Contract, spousal consent is required. In addition, unless the Annuitant elects
otherwise with the written consent of the spouse, the retirement benefits
payable under the plan or arrangement 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 Annuitant 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 Annuitant during
his or her lifetime. In addition, a married Annuitant's beneficiary must be the
spouse, unless the spouse consents in writing to the designation of a different
beneficiary.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
The taxable portion of distributions from a qualified plan or TSA will be
subject to a 10% penalty tax unless the distribution is made on or after the
Annuitant's death, attributable to the Annuitant becoming disabled, or when the
Annuitant reaches age 59 1/2. The penalty tax will also not apply if the
Annuitant (i) separates from service and elects a payout over his or her life or
life expectancy (or joint and survivor lives or life expectancies), (ii) has
attained age 55 and separates from service, or (iii) uses the distribution to
pay certain extraordinary medical expenses.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS
Failure to make Minimum Distributions discussed above may cause the
disqualification of the qualified plan or TSA. Disqualification may result in
current taxation of the Annuitant's entire benefit. In addition, a 50% penalty
tax is imposed on the difference between the required distribution amount and
the amount actually distributed, if any.
It is the plan administrator's responsibility to see that minimum distributions
from a qualified plan are made. It is the Owner's responsibility in a TSA to see
that the minimum distributions are made with respect to a Contract. We do not
automatically make distributions from a Contract before the maturity date unless
a request has been made. We will notify you when our records show that your age
70 1/2 is approaching. In the case of TSA Contracts, if you do not select a
method, we will assume you are taking your minimum distribution from another TSA
that you maintain. You should consult with your tax adviser concerning these
rules and their proper application to your situation. See "Minimum
Distributions" above.
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SPECIAL WITHHOLDING RULES APPLICABLE TO QUALIFIED PLANS AND TSAS
The general rules discussed above in this Part under "General Rules of Federal
and State Income Tax Withholding; Information Reporting" apply, with the
following addendum.
If the payment is an "eligible rollover distribution" from a qualified plan or a
TSA, the recipient generally may not elect out of income tax withholding. All
"eligible rollover distributions" are subject to mandatory Federal income tax
withholding of 20% unless the employee elects to have the distribution directly
rolled over to a qualified plan or Traditional individual retirement
arrangement. The following are not eligible rollover distributions subject to
mandatory 20% withholding:
o any distribution to the extent that the distribution is a "required minimum
distribution" under Section 401(a)(9) of the Code;
o any distribution which is one of a series of substantially equal periodic
payments made not less frequently than annually (1) for the life (or life
expectancy) of the employee or the joint lives (or joint life expectancies)
of the employee and his or her designated beneficiary, or (2) for a specified
period of 10 years or more;
o certain corrective distributions under Code Sections 401(k), 401(m) and
402(g);
o loans that are treated as deemed distributions;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants); and
o a distribution to a beneficiary other than to a surviving spouse or a current
or former spouse under a qualified domestic relations order.
If a distribution is made to a plan 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 a distribution is not an "eligible rollover distribution," the rules on
elective withholding described above in "General Rules of Federal and State
Income Tax Withholding; Information Reporting" apply.
In the case of Trusteed Contracts which continue to be owned by the trustee, any
required Federal income tax withholding is the responsibility of the plan
administrator.
ERISA MATTERS
ERISA rules are designed to save and protect qualified retirement plan assets to
be paid to plan participants when they retire.
Qualified plans under Section 401 of the Code are generally subject to ERISA.
Some TSAs may be subject to Title I of ERISA, generally dependent on the level
of employer involvement, for example, if the employer makes matching
contributions.
CERTAIN RULES APPLICABLE TO PLAN LOANS
Qualified plans and TSA loans are subject to Code limits and may also be subject
to the limits of the applicable plan. Code requirements apply even if the plan
is not subject to ERISA. For example, loans offered by certain qualified plans
and TSAs are subject to the following conditions:
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 nonforefeitable 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 In general, the term of the loan cannot exceed five years unless the loan is
used to acquire the participant's primary residence. EQUI-VEST Contracts have
a term limit of 10 years for loans 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 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 and not 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 premature distributions may apply. The amount of the unpaid
loan balance is reported to the IRS on Form 1099-R as a distribution.
In addition, certain loan rules apply only to loans under ERISA plans:
o For contracts which are subject to ERISA, the trustee or sponsoring employer
is responsible for insuring that any loan meets applicable Department of
Labor (DOL) requirements. It is the responsibility of the plan administrator,
the trustee of the qualified plan and/or the employer, and not Equitable
Life, to properly administer any loan made to plan participants.
o With respect to specific loans made by the plan to a plan participant, the
plan administrator determines the interest rate, the maximum term consistent
with
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EQUI-VEST Processing and all other terms and conditions of the loan.
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 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 Loans must be available to all plan participants, former participants (or
death beneficiaries of participants) who still have account balances under
the plan, and alternate payees on a reasonably equivalent basis.
o Plans subject to ERISA 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.
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 EQUI-VEST Trusteed, HR-10 Annuitant-Owned, SIMPLE IRA and TSA programs
provide 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).
GENERAL DISCUSSION OF IRAS
The term "IRA" may generally refer to all individual retirement arrangements,
including individual retirement accounts and individual retirement annuities. In
addition to being available in both trusteed or custodial account form or
individual annuity form, there are many varieties of IRAs. There are
"Traditional IRAs" which are generally funded on a pre-tax basis. There are Roth
IRAs, newly available in 1998, which must be funded on an after-tax basis.
SEP-IRAs (including SARSEP-IRAs) and SIMPLE-IRAs are issued and funded in
connection with employer-sponsored retirement plans. Regardless of the type of
IRA, your interest in the IRA cannot be forfeited. You or your beneficiaries who
survive you are the only ones who can receive the benefits or payments.
EQUI-VEST offers several different types of Contracts or Certificates designed
to qualify as an "individual retirement annuity" under Section 408(b) of the
Code. This prospectus contains the information which the IRS requires to be
disclosed to you before you purchase an individual retirement arrangement. This
section of Part 9 covers some of the special tax rules that apply to individual
retirement arrangements, including (in this order) Traditional IRAs, Roth IRAs,
SEP-IRAs and SARSEP-IRAs, and SIMPLE IRAs. Education IRAs are not discussed in
this prospectus because they are not available in individual retirement annuity
form.
Further information regarding individual retirement arrangements generally can
be found in Internal Revenue Service Publication 590, entitled "Individual
Retirement Arrangements (IRAs)," which is generally updated annually, and can be
obtained from any IRS district office.
There is no limit to the number of IRAs (including Roth IRAs) you may establish
or maintain as long as you meet the requirements for establishing and funding
the IRA. However, if you maintain multiple IRAs, you may be required to
aggregate IRA values or contributions for tax purposes. You should be aware that
all types of IRAs are subject to certain restrictions in order to qualify for
special treatment under the Federal tax law.
We have received favorable opinion letters from the IRS approving the forms of
the individual Contract and group certificates for EQUI-VEST as a Traditional
IRA. Such IRS approval is a determination only that the form of the contract or
certificate meets the requirements for an individual retirement annuity and does
not represent a determination of the merits of the contract or certificate as an
investment. Certain state regulatory requirements may apply to vary this form of
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the Contract or Certificate. We have applied for an IRS opinion letter to
approve the form of the EQUI-VEST SIMPLE IRA. The IRS does not yet have a
procedure in place for approving the form of Roth IRAs.
CANCELLATION
You can cancel any version of EQUI-VEST IRA Contract issued (Traditional IRA,
SEP-IRA, SARSEP-IRA, SIMPLE-IRA, Roth IRA) by following the directions in Part 1
under "10 Day Free Look." For conversions of existing EQUI-VEST Traditional IRA
Contracts to EQUI-VEST Roth IRA Contracts, you can cancel the ROTH IRA
ENDORSEMENT by following the instructions in the "Request for Full Conversion to
an EQUI-VEST Roth IRA" form or the "Request for Partial Conversion to an
EQUI-VEST Roth IRA" form. Since there may be adverse tax consequences if a
Contract is cancelled (and because we are required to report to the IRS certain
distributions from cancelled IRAs), you should consult with a tax adviser before
making a decision to cancel your IRA.
TRADITIONAL INDIVIDUAL RETIREMENT ANNUITIES ("TRADITIONAL IRAS")
The following discussion relates to Traditional IRAs. Roth IRAs, SEP-IRAs,
SARSEP-IRAs and SIMPLE-IRAs are discussed later in this section.
CONTRIBUTIONS TO TRADITIONAL IRAS
Individuals may make three different types of contributions to establish a
Traditional IRA, or as later additions to an existing Traditional IRA: "regular"
contributions out of earnings, tax-deferred "rollover" contributions from
specified tax-qualified plans, or direct custodian-to-custodian transfers from
other Traditional individual retirement arrangements ("direct transfers"). See
"Contributions under the Contracts" in Part 6. The immediately following
discussion relates to "regular" contributions to Traditional IRAs. Direct
transfer and rollover contributions are discussed below under "Transfer and
Rollover Contributions to Traditional IRAs."
Regular Contributions to Traditional IRAs
Generally, the sum of an individual's contributions to all of his/her
Traditional IRAs and Roth IRAs for a taxable year may not exceed $2,000. This
$2,000 annual limit does not apply to rollover or direct transfer contributions
into an IRA, nor does it apply to employer contributions to a SIMPLE-IRA,
SEP-IRA or SARSEP-IRA. In addition, where an individual earns less than $2,000
in a taxable year, such individual's contributions will be limited to the amount
of his/her earnings (rather than $2,000), with the following exception.
Where married individuals file joint income tax returns, their compensation
effectively can be aggregated for purposes of determining the permissible amount
of regular contributions to Traditional IRAs (and Roth IRAs). Even if one spouse
has no compensation or compensation under $2,000, married individuals filing
jointly may be able to contribute up to $4,000 for any taxable year to any
combination of Traditional IRAs and Roth IRAs. (Any contributions to Roth IRAs
reduce the ability to contribute to Traditional IRAs and vice-versa.) No more
than $2,000 can be contributed annually to either spouse's Traditional IRAs or
Roth IRAs. Each spouse owns his or her individual retirement arrangements
(Traditional IRA and Roth IRA) even if contributions were fully funded by the
other spouse.
As long as an individual has earnings as described above of at least the amount
of the contribution, there is no maximum income limit which would prevent him or
her from making regular contributions of up to $2,000 to a Traditional IRA. (The
individual's income may affect the deductibility of the Traditional IRA
contribution.)
The amount of Traditional IRA contribution for a tax year that you can deduct
depends on whether you are covered by an employer-sponsored, tax-favored
retirement plan (including a qualified plan, TSA, SEP-IRA or SIMPLE IRA, but not
an EDC plan).
In certain cases, individuals covered by a tax-favored retirement plan include
persons eligible to participate in the plan although not actually participating.
Whether or not a person is covered by a retirement plan will be reported on an
employee's Form W-2.
Regardless of adjusted gross income (AGI), if you are not covered by a
retirement plan you may make a deductible contribution to a Traditional IRA for
each tax year (MAXIMUM PERMISSIBLE DOLLAR DEDUCTION) up to the lesser of $2,000
or 100% of compensation.
If you are single and covered by a retirement plan during any part of the
taxable year, the deduction for Traditional IRA contributions phases out with
AGI between $30,000 and $40,000 in 1998. This amount will be indexed every year
until 2005. If you are married and file a joint return, and you are covered by a
retirement plan during any part of the taxable year, the deduction for
Traditional IRA contributions phases out with AGI between $50,000 and $60,000 in
1998. This amount will be indexed every year until 2007. Married individuals
filing separately and living apart at all times are not treated as being married
for purposes of this deductible contribution calculation. Generally, the active
participation in an employer-sponsored retirement plan of an individual is
determined independently for each spouse. Where spouses have "married filing
jointly" status, however, the maximum deductible Traditional IRA contribution
for an individual who is not an active participant (but whose spouse is an
active
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participant) is phased out for taxpayers with AGI of between $150,000 and
$160,000.
To determine the deductible amount of a Traditional IRA contribution with the
phase-out, you determine AGI and subtract $30,000 if you are single, or $50,000
if you are married and file a joint return with your spouse. The resulting
amount is your Excess AGI. You then determine the limit on the deduction for
Traditional IRA contributions using the following formula:
Maximum Adjusted
$10,000 - Excess AGI x Permissible = Dollar
-------------------- Dollar Deduction
$10,000 Deduction Limit
Nondeductible Traditional IRA Contributions
An individual not eligible to deduct part or all of the Traditional IRA
contribution may still make nondeductible contributions to Traditional IRAs on
which earnings will accumulate on a tax-deferred basis. The deductible and
nondeductible contributions to the individual's Traditional IRAs and Roth IRAs
(or the nonworking spouse's Traditional IRAs and Roth IRAs) may not, however,
together exceed the maximum $2,000 per person limit. See "Excess Contributions."
INDIVIDUALS MUST KEEP THEIR OWN RECORDS OF DEDUCTIBLE AND NONDEDUCTIBLE
CONTRIBUTIONS TO TRADITIONAL IRAS IN ORDER TO PREVENT DOUBLE TAXATION ON THE
DISTRIBUTION OF PREVIOUSLY TAXED AMOUNTS. SEE "WITHDRAWALS, PAYMENTS AND
TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS -- NONDEDUCTIBLE CONTRIBUTIONS."
An individual making nondeductible contributions in any taxable year, or
receiving amounts from any Traditional IRA to which he or she has made
nondeductible contributions, must file the required information with the IRS.
Moreover, individuals making nondeductible Traditional IRA contributions must
retain all income tax returns and records pertaining to such contributions until
interests in such IRAs are fully distributed.
Contributions may be made for a tax year until the deadline for filing a Federal
income tax return for that tax year (without extensions). Thus, for calendar
year taxpayers, contributions to a Traditional IRA for a tax year may be made
through April 15 of the next tax year.
No contributions to a Traditional IRA are allowed for the tax year in which an
individual attains age 70 1/2 or any tax year after that. A working spouse age
70 1/2 or over, however, can contribute up to the lesser of $2,000 or 100% of
"earned income" to a spousal Traditional IRA for a nonworking spouse until the
year in which the nonworking spouse reaches age 70 1/2.
Transfer and Rollover Contributions to
Traditional IRAs
Rollover contributions may be made to a Traditional IRA from these sources: (i)
qualified plans under Section 401 of the Code, (ii) TSAs under Section 403(b) of
the Code (including 403(b)(7) custodial accounts) and (iii) other Traditional
individual retirement arrangements. In 1998, we do not accept rollover
contributions from SIMPLE-IRAs. Direct transfer contributions may be made to a
Traditional IRA only from another Traditional IRA (including for this purpose a
SEP-IRA or SARSEP-IRA, but not a SIMPLE IRA or Roth IRA).
The difference between a rollover and a direct transfer is that in a rollover
the individual actually receives the funds rolled over, or is treated as
receiving them in the case of a change from one type of plan to another. In a
direct transfer, the individual never takes possession of the funds, but directs
the first IRA custodian, trustee or issuer to transfer funds directly to
Equitable, as the IRA issuer. Direct transfers can only be made between
identical plan types (for example, Traditional IRA to Traditional IRA or Roth
IRA to Roth IRA). Rollovers may also be made between identical plan types.
Although the economic effect of a Traditional IRA to Traditional IRA rollover
and a Traditional IRA to Traditional IRA direct transfer are the same -- both
can be accomplished on a completely tax-free basis -- Traditional IRA to
Traditional IRA rollovers are limited to once every 12-month period for the same
funds. Trustee-to-trustee or custodian-to-custodian direct transfers are not
rollovers and can be made more frequently than once a year.
A rollover contribution is made to the Contract either as a "direct rollover" of
an "eligible rollover distribution" (described below) or as a rollover by the
individual plan participant or owner of the Traditional individual retirement
arrangement. In the latter cases, the rollover must be made within 60 days of
the date the proceeds from another Traditional individual retirement arrangement
or an eligible rollover distribution from a qualified plan or TSA were received.
Generally, the taxable portion of any distribution from a qualified plan or TSA
is an eligible rollover distribution and may be rolled over tax free to a
Traditional IRA unless the distribution is (i) a required minimum distribution
under Section 401(a)(9) of the Code; or (ii) one of a series of substantially
equal periodic payments made (not less frequently than annually) (a) for the
life (or life expectancy) of the plan participant or the joint lives (or joint
life expectancies) of the plan participant and his or her designated
beneficiary, or (b) for a specified period of ten years or more. The
distribution from a qualified plan or TSA generally will be all taxable unless
you have made nondeductible employee contributions to the plan or TSA. After-tax
contributions to plans cannot be rolled over. Your plan fiduciary should give
you information as to what amounts are eligible to be rolled over.
Tax-free direct rollovers are also available to the surviving spouse beneficiary
of a deceased individual, or
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a spousal alternate payee of a qualified domestic relations order applicable to
a qualified plan or TSA. A nonspouse beneficiary cannot roll over qualified plan
or TSA benefits. In some cases, IRAs can be transferred on a tax-free basis
between spouses or former spouses incidental to a judicial decree of divorce or
separation.
CONDUIT IRAS. In certain limited circumstances, a Traditional IRA can serve as a
"conduit IRA." To get this "conduit" IRA treatment, the source of funds used to
establish the Traditional IRA must be a rollover contribution from the qualified
plan and the entire amount received from the Traditional IRA (including any
earnings on the rollover contribution) must be rolled over into another
qualified plan within 60 days of the date received. Similar rules apply in the
case of a TSA. If the source of the funds originally rolled over into a
Traditional IRA is from a qualified plan or TSA and no other funds are
commingled with this IRA, amounts can be rolled out of the IRA in the future to
another qualified plan or TSA that accepts such contributions. The conduit IRA
will no longer qualify as such if you mix regular Traditional IRA contributions
or contribute funds from other sources with the rollover distribution from the
qualified plan or TSA. You cannot roll over amounts that were originally in a
qualified plan through a conduit IRA to a TSA and vice-versa. We offer a
separate Traditional IRA contract subject to separate charges, designed to serve
as a "conduit" IRA for this purpose (QP IRA Contract).
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF TRADITIONAL IRAS
NO LIMITATIONS ON WITHDRAWALS. You can withdraw any or all of your funds from a
Traditional IRA at any time; you do not need to wait for a special event like
retirement. However, for the tax consequences of withdrawals from Traditional
IRAs, see the discussion on "Taxable Distributions from Traditional IRAs," and
"Penalty Tax on Premature Distributions" below.
TAXABLE DISTRIBUTIONS FROM TRADITIONAL IRAS. Amounts paid from Traditional IRAs
are not subject to Federal income tax until benefits are distributed to the
individual owner or beneficiary. Distributions include withdrawals from your
Contract, surrender of your Contract and annuity payments from your Contract.
Death benefits paid to a beneficiary are also taxable distributions. Unless an
exception applies, payments from Traditional IRAs are includable in gross income
as ordinary income. Distributions made before age 59 1/2 may be subject to an
additional 10% Federal income tax penalty. (See "Penalty Tax on Premature
Distributions" below.)
Distributions from a Traditional IRA are not entitled to the special favorable
five-year averaging method (or, in certain cases, favorable ten-year averaging
and long-term capital gain treatment) available in certain cases to
distributions from qualified plans.
TAXATION OF DEATH BENEFIT. Distributions received by a beneficiary are generally
given the same tax treatment the individual would have received if distribution
had been made to the individual.
NONDEDUCTIBLE CONTRIBUTIONS. If you have ever made nondeductible IRA
contributions to any Traditional individual retirement arrangement (whether or
not this particular Traditional IRA), you may be able to recover a portion of
any Traditional IRA distribution tax free. You must keep records of all such
nondeductible contributions. At the end of any tax year in which you receive a
distribution from any Traditional IRA, you determine the ratio of the total
nondeductible Traditional IRA contributions (less any amounts previously
withdrawn tax free) to the total account balances of all Traditional IRAs held
by you at the end of the tax year plus all Traditional IRA distributions made
during such tax year. The resulting ratio is then multiplied by all
distributions from Traditional IRAs during that tax year to determine the
nontaxable portion of each distribution.
NONTAXABLE TRANSACTIONS -- TRADITIONAL IRAS. A distribution from a Traditional
IRA (other than a required minimum distribution discussed below) is not taxable
if (1) the amount received is a return of excess contributions which are
withdrawn, as described under "Excess Contributions"; (2) the entire amount
received is rolled over to another individual retirement arrangement; (3) if an
amount is directly transferred at the Owner's direction to another Traditional
IRA; (see "Contributions to Traditional IRAs -- Transfer and Rollover
Contributions to Traditional IRAs") or (4) in certain limited circumstances,
where the Traditional IRA acts as a "conduit IRA" the entire amount is paid into
a qualified plan or TSA that accepts such contributions. See "Conduit IRAs"
above.
REQUIRED MINIMUM DISTRIBUTIONS AFTER AGE 70 1/2
Distributions during Life
The minimum distribution rules require Traditional IRA owners to start taking
annual distributions with respect to their IRAs beginning at age 70 1/2. The
distribution requirements are designed to provide for distribution of
Traditional IRAs over the owner's life expectancy. Whether the correct amount
has been distributed is calculated on a year-by-year basis; there are no
provisions to allow amounts taken in excess of the required amount to be carried
over or carried back and credited to other years.
Generally, an individual must take the first required minimum distribution with
respect to the calendar year in which the individual turns age 70 1/2. The
individual has the choice to take the first required minimum
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distribution during the calendar year he or she turns age 70 1/2, or to delay
taking it until the three-month (January 1-April 1) period in the next calendar
year. (Distributions must commence no later than the "Required Beginning Date,"
which is the April 1st of the calendar year following the calendar year in which
the individual turns age 70 1/2.) If the individual chooses to delay taking the
first annual minimum distribution, then the individual will have to take two
minimum distributions in that year -- the delayed one for the first year and the
one actually for that year (which may be combined and distributed
simultaneously). Once minimum distributions begin, they must be made at some
time every year.
There are two general ways to take minimum distributions -- "account based" or
"annuity based" -- and there are a number of distribution options in both of
these categories. These choices are intended to give individuals a great deal of
flexibility to provide for themselves and their families.
An account-based minimum distribution method may be a lump sum payment, or
periodic withdrawals made over a period which does not extend beyond the
individual's life expectancy or the joint life expectancies of the individual
and a designated beneficiary. Generally, the required minimum distribution for
each year for an account-based method is computed by dividing the Traditional
IRA account balance as of the close of business on December 31 of the preceding
year by the applicable life expectancy, determined using IRS tables and IRS
rules. An annuity-based method involves application of the Annuity Account Value
to an annuity over the individual's life or the joint lives of the individual
and a designated beneficiary, or over a period certain not extending beyond
applicable life expectancies.
You should discuss with your tax adviser which minimum distribution options are
best for your own personal situation. Individuals who are participants in more
than one Traditional individual retirement arrangement or other tax-favored
retirement plan may be able to choose different distribution options for each
arrangement. Your Required Minimum Distribution for any taxable year is
calculated by adding together the separate Required Minimum Distribution amounts
from each of your Traditional individual retirement arrangements. The IRS,
however, does not require that you take out the Required Minimum Distribution
from each Traditional individual retirement arrangement that you maintain. As
long as the total amount distributed annually for all Traditional IRAs satisfies
your overall required minimum distribution requirement for all of your
Traditional IRAs, you may choose to take annual required distributions for
Traditional IRAs from any one or more Traditional individual retirement
arrangements that you maintain.
Distributions after Death
If the individual dies after distribution in the form of an annuity has begun,
or after the Required Beginning Date, payment of the remaining interest must be
made at least as rapidly as under the method used prior to the individual's
death. The IRS has indicated that an exception to this rule may apply if the
beneficiary of the Traditional IRA is the surviving spouse. In some
circumstances, the surviving spouse may elect to "make the Traditional IRA his
or her own" and halt distributions until he or she reaches age 70 1/2.
If an individual dies before the Required Beginning Date and before
distributions in the form of an annuity begin, distributions of the individual's
entire interest under the Traditional IRA must be completed by December 31 of
the fifth year after the owner's death, unless payments to a designated
beneficiary begin by December 31 of the year after the individual'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 individual would have attained age
70 1/2. In the alternative, a surviving spouse may elect to treat the
Traditional IRA as his or her own, or roll over the inherited IRA into the
surviving spouse's own Traditional IRA, in which case the spouse can delay
taking distributions until the spouse attains age 70 1/2. Under Series 300 and
400 Contracts, if you elect to have your spouse be the sole primary beneficiary
and to be the Successor Annuitant and Contract Owner, then your surviving spouse
automatically becomes both the successor Contract Owner and Annuitant, and no
death benefit is payable until the surviving spouse's death.
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. The penalty tax may be waived by the Secretary of the
Treasury in certain limited circumstances. Failure to have distributions made as
the Code and Treasury regulations require may result in disqualification of your
Traditional IRA. See "Tax Penalty for Insufficient Distributions" below.
It is the Owner's responsibility to see that the minimum distributions are made
with respect to a Traditional IRA Contract. We do not make distributions from a
Contract before the maturity date unless a request has been made. We will notify
you when our records show that your age 70 1/2 is approaching. If you do not
select a method, we will assume you are taking your minimum distribution from
another Traditional IRA that you
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maintain. You should consult with your tax adviser concerning these rules and
their proper application to your situation.
PROHIBITED TRANSACTIONS. An IRA may not be borrowed against or used as
collateral for a loan or other obligation. If the IRA is borrowed against or
used as collateral, its tax-favored status will be lost as of the first day of
the tax year in which the event occurred. If this happens, the individual must
include in Federal gross income for that year an amount equal to the fair market
value of the IRA Contract as of the first day of that tax year. Also, the early
distribution penalty tax of 10% will apply if the individual has not reached age
59 1/2 before the first day of that tax year. See "Penalty Tax on Premature
Distributions" below.
EXCESS CONTRIBUTIONS. Excess contributions to an IRA are subject to a 6% excise
tax for the year in which made and for each year thereafter until withdrawn. In
the case of "regular" IRA contributions, contributions to all Traditional IRAs
and Roth IRAs in excess of the lesser of $2,000 or 100% of compensation or
earned income is an "excess contribution" (without regard to the deductibility
or nondeductibility of Traditional IRA contributions under this limit). Also,
any "regular" contributions to a Traditional IRA made after you reach age 70 1/2
are excess contributions.
In the case of rollover Traditional IRA contributions, excess contributions are
amounts which are not eligible to be rolled over (for example, after-tax
contributions to a qualified plan or minimum distributions required to be made
after age 70 1/2).
An excess contribution (rollover or "regular") which is withdrawn before the
time for filing the individual's Federal income tax return for the tax year
(including extensions) is not includable in income and is not subject to the 10%
penalty tax on early distributions (discussed below under "Penalty Tax on
Premature Distributions"), provided any earnings attributable to the excess
contribution are also withdrawn and no tax deduction is taken for the excess
contribution. The withdrawn earnings on the excess contribution, however, would
be includable in the individual's gross income for the tax year in which the
excess contribution from which they arose was made and would be subject to the
10% penalty tax. If excess contributions are not withdrawn before the time for
filing the individual's Federal income tax return for the tax year (including
extensions), the "regular" contributions may still be withdrawn after that time
if the Traditional IRA and Roth IRA contributions for the tax year did not
exceed $2,000 and no tax deduction was taken for the excess contribution; in
that event, the excess contribution would not be includable in gross income and
would not be subject to the 10% penalty tax. Lastly, excess "regular"
contributions may also be reduced by recharacterizing them as contributions for
later years.
If excess rollover contributions are not withdrawn before the time for filing
your Federal tax return for the year (including extensions) and the excess
contribution occurred as a result of incorrect information provided by the plan,
any such excess amount can be withdrawn if no tax deduction was taken for the
excess contribution. Excess rollover contributions withdrawn under those
circumstances would not be includable in gross income and would not be subject
to the 10% penalty tax for premature distributions.
PENALTY TAX ON PREMATURE DISTRIBUTIONS. The taxable portion of distributions
from a Traditional IRA made before you reach age 59 1/2 will be subject to an
additional 10% Federal income tax penalty unless one of the following exceptions
applies. There are exceptions for:
o Your death,
o Your disability,
o Distributions used to pay certain extraordinary medical expenses,
o Distributions used to pay medical insurance premiums for certain unemployed
individuals,
o Substantially equal payments made at least annually over your life (or your
life expectancy), or over the lives of you and your beneficiary (or your
joint life expectancies) using an IRS-approved distribution method,
o Distributions used to pay specified higher education expenses as defined in
the Code, and
o "Qualified first-time homebuyer distributions" as defined in the Code.
TAX PENALTY FOR INSUFFICIENT DISTRIBUTIONS. As indicated above in the discussion
on "Required Minimum Distributions after Age 70 1/2," failure to make required
distributions may cause the disqualification of the Traditional IRA.
Disqualification may result in current taxation of the entire benefit. In
addition, a 50% penalty tax may be imposed on the difference between the
required distribution amount and the amount actually distributed, if any.
It is the owner's responsibility in a Traditional IRA to see that the minimum
distributions are made with respect to a Contract. We do not automatically make
distributions from a Contract before the maturity date unless a request has been
made. We will notify you when our records show that your age 70 1/2 is
approaching. In the case of a Traditional IRA Contract, if you do not select a
method, we will assume you are taking your minimum distribution from another
Traditional IRA that you maintain. You should consult with your tax
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adviser concerning these rules and their proper application to your situation.
ILLUSTRATION OF GUARANTEED RATES
The following two tables which the IRS requires us to furnish to prospective IRA
Contract Owners illustrate guaranteed rates for contributions assumed to be
allocated entirely to the Guaranteed Interest Account under Series 300 and 400
Contracts. Table I illustrates a $1,000 contribution made annually on the
Contract Date and on each subsequent anniversary, assuming no withdrawals or
transfers were made from the Contract. Table II assumes a single initial
contribution of $1,000, with no further contributions, withdrawals or transfers.
The 3% guaranteed rate is the minimum guaranteed interest rate in the Contract.
As explained in "Part 8: Deductions and Charges," the values shown assume the
contingent withdrawal charge applies. These values reflect the effect of the
annual administrative charge deducted at the end of each Contract Year in which
the Annuity Account Value is less than $20,000.
To find the appropriate value for the end of the Contract Year at any attained
age, subtract the issue age (age nearest birthday) from the attained age and
enter the table at the corresponding year. Years that correspond to an attained
age in excess of 70 should be ignored, unless the Contract is a Roth IRA.
The information shown in the tables should be considered in light of your
present age and (with respect to Table I) your ability to contribute $1,000
annually. Any change in the amounts contributed annually, or in the amount of
the single contribution, would, of course, change the results shown.
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TABLE I
ANNUITY ACCOUNT VALUES AND
CASH VALUES
(Assuming $1,000 Contributions Made Annually
at the Beginning of the Contract Year)
- -------------------------------------------------------------
3% MINIMUM GUARANTEE
- -------------------------------------------------------------
ANNUITY
CONTRACT ACCOUNT CASH
YEAR END VALUE VALUE
- -------------------------------------------------------------
1 $ 1,009.40 $ 954.89
2 2,039.68 1,929.54
3 3,100.87 2,933.43
4 4,193.90 3,967.43
5 5,319.72 5,032.45
6 6,479.31 6,129.42
7 7,673.69 7,313.69
8 8,903.90 8,543.90
9 10,171.01 9,811.01
10 11,476.14 11,116.14
11 12,820.43 12,460.43
12 14,205.04 13,845.04
13 15,631.19 15,271.19
14 17,100.13 16,740.13
15 18,613.13 18,253.13
16 20,201.53 19,841.53
17 21,837.57 21,477.57
18 23,522.70 23,162.70
19 25,258.38 24,898.38
20 27,046.13 26,686.13
21 28,887.52 28,527.52
22 30,784.14 30,424.14
23 32,737.67 32,377.67
24 34,749.80 34,389.80
25 36,822.29 36,462.29
26 38,956.96 38,596.96
27 41,155.67 40,795.67
28 43,420.34 43,060.34
29 45,752.95 45,392.95
30 48,155.53 47,795.53
31 50,630.20 50,270.20
32 53,179.11 52,819.11
33 55,804.48 55,444.48
34 58,508.61 58,148.61
35 61,293.87 60,933.87
36 64,162.69 63,802.69
37 67,117.57 66,757.57
38 70,161.10 69,801.10
39 73,295.93 72,935.93
40 76,524.81 76,164.81
41 79,850.55 79,490.55
42 83,276.07 82,916.07
43 86,804.35 86,444.35
44 90,438.48 90,078.48
45 94,181.64 93,821.64
46 98,037.08 97,677.08
47 102,008.20 101,648.20
48 106,098.44 105,738.44
49 110,311.40 109,951.40
50 114,650.74 114,290.74
- -------------------------------------------------------------
TABLE II
ANNUITY ACCOUNT VALUES AND
CASH VALUES
(Assuming a Single Contribution of $1,000 and
No Further Contribution)
- -------------------------------------------------------------
3% MINIMUM GUARANTEE
- -------------------------------------------------------------
ANNUITY
CONTRACT ACCOUNT CASH
YEAR END VALUE VALUE
- -------------------------------------------------------------
1 $1,009.40 $ 954.89
2 1,018.89 963.87
3 1,019.46 964.40
4 1,020.04 964.96
5 1,020.64 965.53
6 1,021.26 966.11
7 1,021.90 1,021.90
8 1,022.55 1,022.55
9 1,023.23 1,023.23
10 1,023.93 1,023.93
11 1,024.65 1,024.65
12 1,025.38 1,025.38
13 1,026.15 1,026.15
14 1,026.93 1,026.93
15 1,027.74 1,027.74
16 1,028.57 1,028.57
17 1,029.43 1,029.43
18 1,030.31 1,030.31
19 1,031.22 1,031.22
20 1,032.16 1,032.16
21 1,033.12 1,033.12
22 1,034.11 1,034.11
23 1,035.14 1,035.14
24 1,036.19 1,036.19
25 1,037.28 1,037.28
26 1,038.40 1,038.40
27 1,039.55 1,039.55
28 1,040.73 1,040.73
29 1,041.96 1,041.96
30 1,043.22 1,043.22
31 1,044.51 1,044.51
32 1,045.85 1,045.85
33 1,047.22 1,047.22
34 1,048.64 1,048.64
35 1,050.10 1,050.10
36 1,051.60 1,051.60
37 1,053.15 1,053.15
38 1,054.74 1,054.74
39 1,056.39 1,056.39
40 1,058.08 1,058.08
41 1,059.82 1,059.82
42 1,061.61 1,061.61
43 1,063.46 1,063.46
44 1,065.37 1,065.37
45 1,067.33 1,067.33
46 1,069.35 1,069.35
47 1,071.43 1,071.43
48 1,073.57 1,073.57
49 1,075.78 1,075.78
50 1,078.05 1,078.05
- -------------------------------------------------------------
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ROTH IRAS
(ROTH INDIVIDUAL RETIREMENT ANNUITIES)
The EQUI-VEST Roth IRA is designed to qualify as a Roth individual retirement
annuity under Sections 408A and 408(b) of the Code. As with the Traditional IRA,
your interest in the Roth IRA cannot be forfeited. You or your beneficiaries who
survive you are the only ones who can receive the benefits or payments.
This section of the prospectus contains our understanding of the special tax
rules that apply to Roth IRAs. Some of the rules are the same as those that
apply to Traditional IRAs and some are different.
Roth IRAs must be funded on an after-tax basis. There is no limit to the number
of IRAs (including Roth IRAs) you may establish or maintain as long as you meet
the requirements for establishing and funding the IRA. However, if you maintain
multiple IRAs you may be required to aggregate IRA values or contributions for
tax purposes. You should be aware that all types of IRAs are subject to certain
restrictions in order to qualify for special treatment under the Federal tax
law.
CONTRIBUTIONS TO ROTH IRAS
Individuals may make four different types of contributions to purchase a Roth
IRA, or as later additions to an existing Roth IRA: "regular" after-tax
contributions out of earnings, taxable "rollover" contributions from Traditional
IRAs ("conversion" contributions), tax-free rollover contributions from other
Roth IRAs, or tax-free direct custodian-to-custodian transfers from other Roth
IRAs ("direct transfers"). The immediately following discussion relates to
"regular" Roth IRA contributions. Direct transfer and rollover contributions are
discussed below under "Rollovers and Direct Transfers."
Regular Contributions to Roth IRAs
Generally, the sum of an individual's contributions to all of his/her
Traditional IRAs and Roth IRAs for a taxable year may not exceed $2,000. This
$2,000 annual limit does not apply to rollover or direct transfer contributions
into a Traditional or Roth IRA, nor does it apply to employer contributions to a
SIMPLE-IRA, SEP-IRA or SARSEP-IRA. In addition, where an individual earns less
than $2,000 in a taxable year, such individual's contributions will be limited
to the amount of his/her earnings (rather than $2,000), with the following
exception.
Where married individuals file joint income tax returns, their compensation
effectively can be aggregated for purposes of determining the permissible amount
of regular contributions to Traditional IRAs (and Roth IRAs). Even if one spouse
has no compensation or compensation under $2,000, married individuals filing
jointly may be able to contribute up to $4,000 for any taxable year to any
combination of Traditional IRAs and Roth IRAs. (Any contributions to Roth IRAs
reduce the ability to contribute to Traditional IRAs and vice versa.) No more
than $2,000 can be contributed annually to either spouse's Traditional IRAs or
Roth IRAs. Each spouse owns his or her individual retirement arrangements
(Traditional IRA and Roth IRA) even if contributions were fully funded by the
other spouse.
ROTH IRA CONTRIBUTIONS CANNOT BE MADE AT ALL FOR ANY YEAR WHERE AN INDIVIDUAL'S
FEDERAL INCOME TAX FILING STATUS IS "MARRIED FILING JOINTLY" AND ADJUSTED GROSS
INCOME IS OVER $160,000, OR FILING STATUS IS SINGLE WITH ADJUSTED GROSS INCOME
OVER $110,000.
Roth IRA contributions may be made in reduced amounts for married individuals
filing jointly with adjusted gross income between $150,000 and $160,000 and
single taxpayers with adjusted gross income between $95,000 and $110,000. A
married individual filing separately with adjusted gross income of more than
$10,000 cannot make a regular Roth IRA contribution; and the amount of the
permissible contribution is phased out for married individuals filing separately
with adjusted gross income of between $0 and $10,000. For the potential effects
of violating these rules, see discussion of "Excess Contributions" below.
Contributions may be made for a tax year until the deadline for filing a Federal
income tax return for that tax year (without extensions). In contrast to
Traditional IRAs, regular contributions to Roth IRAs are allowed for the tax
year in which an individual attains age 70 1/2 or any tax year after that.
Roth IRA contributions are not tax deductible.
Rollovers and Direct Transfers
Rollover contributions may be made to a Roth IRA from only two sources: (i)
another Roth IRA, or (ii) a Traditional IRA in a "conversion" rollover. No
contribution may be made to a Roth IRA from a qualified plan under Section
401(a) of the Code, or a tax-sheltered arrangement under Section 403(b) of the
Code. Currently, we also do not accept rollover contributions, from SIMPLE-IRAs.
The rollover must be made within 60 days of the date the proceeds from the other
Roth IRA or the Traditional IRA were received.
Direct transfer contributions may be made to a Roth IRA only from another Roth
IRA. The difference between a rollover and a direct transfer is that in a
rollover the individual actually receives the funds rolled over, or
constructively receives them in the case of a change from one type of plan to
another. In a direct transfer, the individual never takes possession of the
funds, but directs the first Roth IRA custodian, trustee or issuer to transfer
funds directly to Equitable, as the Roth IRA issuer. Direct transfers can only
be made between identical plan types (for example, Roth IRA to
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Roth IRA); rollovers may be made between identical plan types but must be made
between different plan types (for example, Traditional IRA to Roth IRA).
Although the economic effect of a Roth IRA to Roth IRA rollover and a Roth IRA
to Roth IRA direct transfer are the same -- both can be accomplished on a
completely tax-free basis -- Roth IRA to Roth IRA rollovers are limited to once
every 12-month period for the same funds. Trustee-to-trustee or
custodian-to-custodian direct transfers are not rollovers and can be made more
frequently than once a year.
The surviving spouse beneficiary of a deceased individual can roll over or
directly transfer an inherited Roth IRA to one or more other Roth IRAs. Also, in
some cases, Roth IRAs can be transferred on a tax-free basis between spouses or
former spouses incidental to a judicial decree of divorce or separation.
Conversion Rollover Contributions to Roth IRAs
In a conversion rollover transaction, you withdraw (or are deemed to withdraw)
all or a portion of funds from a Traditional IRA you maintain and roll it over
to a Roth IRA within 60 days after you receive (or are deemed to receive) the
Traditional IRA proceeds. Unlike a rollover from a Traditional IRA to another
Traditional IRA, the conversion rollover transaction involving a Roth IRA is not
tax exempt; the distribution from the Traditional IRA is generally fully
taxable. (If you have ever made nondeductible regular contributions to any
Traditional IRA -- whether or not it is the Traditional IRA you are converting
- -- a pro rata portion of the distribution is tax exempt.) For this reason,
Equitable is required to withhold 10% Federal income tax from the amount
converted unless you elect out of such withholding. See "Roth IRA Federal and
State Income Tax Withholding and Information Reporting" below.
However, even if you are under age 59 1/2, there is no premature distribution
penalty on the Traditional IRA withdrawal. Also, a special rule applies to
Traditional IRA funds converted to a Roth IRA in calendar year 1998 only. For
1998 Roth IRA conversion transactions, you include the gross income from the
Traditional IRA conversion ratably over the four-year period 1998-2001. See
discussion of pre-age 59 1/2 withdrawal penalty and the special penalties that
could apply to premature withdrawals of converted funds under "Penalty Tax on
Premature Distributions" below.
YOU CANNOT MAKE CONVERSION ROLLOVER CONTRIBUTIONS TO A ROTH IRA FOR ANY TAXABLE
YEAR IN WHICH YOUR ADJUSTED GROSS INCOME EXCEEDS $100,000 REGARDLESS OF YOUR
FEDERAL INCOME TAX FILING STATUS. (For this purpose, adjusted gross income is
computed without the gross income stemming from the Traditional IRA conversion.)
Even if your adjusted gross income is $100,000 or less, you also cannot make
conversion rollover contributions to a Roth IRA for any taxable year in which
your Federal income tax filing status is "married filing separately."
Finally, you cannot make conversion rollover contributions to a Roth IRA to the
extent that the funds in the Traditional IRA are subject to the annual required
minimum distribution rule applicable to Traditional IRAs beginning at age
70 1/2. For the potential effects of violating these rules, see discussion of
"Excess Contributions" below.
WITHDRAWALS, PAYMENTS AND TRANSFERS OF FUNDS OUT OF ROTH IRAS
NO RESTRICTIONS ON WITHDRAWALS. You can withdraw any or all of your funds from a
Roth IRA at any time; you do not need to wait for a special event like
retirement. However, these withdrawals may be subject to a contingent withdrawal
(surrender) charge as stated in your Contract. Also, the withdrawal may be
taxable to an extent and, even if not taxable, may be subject to penalty in
certain circumstances. See the discussion below under "Distributions from Roth
IRAs" and "Penalty Tax on Premature Distributions."
DISTRIBUTIONS FROM ROTH IRAS
Distributions include withdrawals from your Contract, surrender of your Contract
and annuity payments from your Contract. Death benefits are also distributions.
The following distributions from Roth IRAs are free of income tax:
(1) Rollovers from a Roth IRA to another Roth IRA.
(2) Direct transfers from a Roth IRA to another Roth IRA (see "Rollovers and
Direct Transfers" under "Contributions to Roth IRAs" above).
(3) "Qualified Distributions" from Roth IRAs. (See "Qualified Distributions from
Roth IRAs" below).
(4) Return of excess contributions (see "Excess Contributions" below).
Qualified Distributions from Roth IRAs
Distributions from Roth IRAs made because of one of four qualifying events or
reasons are not includable in income, provided a specified five-year holding or
aging period is met. The qualifying events or reasons are the owner's attainment
of age 59 1/2, the owner's death, the owner's disability, or a "qualified
first-time homebuyer distribution" (as defined in the Code). Qualified
first-time homebuyer distributions are limited to $10,000 lifetime in the
aggregate from all Roth and Traditional IRAs of the taxpayer.
Five-Year Holding or Aging Period
The applicable five-year holding or aging period depends on the type of
contribution made to the Roth IRA. For Roth IRAs funded by regular
contributions, or rollover or direct transfer contributions which are not
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directly or indirectly attributable to converted Traditional IRAs, any
distribution made after the five-taxable-year period beginning with the first
taxable year for which the individual made a regular contribution to any Roth
IRA (whether or not the one from which the distribution is being made) meets the
five-year holding or aging period.
For Roth IRAs funded directly or indirectly by converted Traditional IRAs, the
applicable five-year holding period begins with the year of the conversion
transaction.
Although there is currently no statutory prohibition against commingling regular
contributions and conversion rollover contributions in any Roth IRA, or against
commingling conversion rollover contributions made in more than one taxable year
to Roth IRAs, the IRS strongly encourages individuals to maintain separate Roth
IRAs for regular contributions and conversion rollover contributions. It also
strongly encourages individuals to differentiate Roth conversion IRAs by
conversion year. Under pending legislation which could be enacted with a
retroactive effective date, aggregation of Roth IRAs by conversion year may be
required. In the case of a Roth IRA which contains conversion rollover
contributions and regular contributions, or conversion rollover contributions
from more than one year, the five-year holding period would be reset to begin
with the most recent taxable year for which a conversion contribution is made.
Non-Qualified Distributions from Roth IRAs
Non-qualified distributions from Roth IRAs are any distributions which do not
meet the qualifying event and five-year holding or aging period tests described
above and are potentially taxable as ordinary income. Traditional IRA
distributions are fully taxable unless the individual has made nondeductible
contributions to any of his/her Traditional IRAs. In contrast, non-qualified
distributions from Roth IRAs receive return-of-investment-first treatment. That
is, there is tax only on the difference between the amount of the distribution
and the amount of Roth IRA contributions. In this calculation, Roth IRA
contributions are reduced by the amount of any Roth IRA distributions previously
recovered tax free. Also, if you maintain multiple Roth IRAs, you may be
required to aggregate Roth IRA distributions and contributions for tax
calculations.
Like Traditional IRAs, taxable distributions from a Roth IRA are not entitled to
the special favorable five-year averaging method (or, in certain cases,
favorable ten-year averaging and long-term capital gain treatment) available in
certain cases to distributions from qualified plans.
Although the IRS has not yet issued complete guidance on all aspects of Roth
IRAs, it appears that individuals will be required to keep their own records of
regular and conversion rollover contributions to all Roth IRAs in order to
assure appropriate taxation. An individual making contributions to a Roth IRA in
any taxable year, or receiving amounts from any Roth IRA, may be required to
file the information with the IRS and retain all income tax returns and records
pertaining to such contributions until interests in Roth IRAs are fully
distributed.
Required Minimum Distributions at Death
If you die before annuitization or before the entire amount of the Roth IRA has
been distributed to you, distributions of your entire interest under the Roth
IRA must be completed by December 31 of the fifth year after your death, unless
payments to a designated beneficiary begin by December 31 of the year after your
death and are made over the beneficiary's life or over a period which does not
extend beyond the beneficiary's life expectancy. If your surviving spouse is the
designated beneficiary, no distributions are required until after the surviving
spouse's death.
Taxation of Death Benefit
Distributions received by a beneficiary are generally given the same tax
treatment the individual would have received if distribution had been made to
the individual.
Federal and State Income Tax Withholding from Roth IRA; Information Reporting
The general rules discussed above in this Part under "General Rules of Federal
and State Income Tax Withholding; Information Reporting" apply, with the
following addendum applicable to Roth IRAs.
Equitable Life is required to withhold Federal income tax on payments from
annuity contracts which may be included in gross income. For this reason we are
generally required to withhold on conversion rollovers of Traditional IRAs to
Roth IRAs, as the deemed withdrawal from the Traditional IRA is taxable.
Generally, no withholding is required on distributions which are not taxable
(for example, a direct transfer from one Roth IRA to another Roth IRA you own).
In the case of distributions from a Roth IRA, we may not be able to calculate
the portion of the distribution (if any) subject to tax. We may be required to
withhold on the gross amount of the distribution unless you elect out of
withholding as described in "General Rules of Federal and State Income Tax
Withholding; Information Reporting." This may result in tax being withheld even
though the Roth IRA distribution is not taxable in whole or in part. If we
withhold income tax, any income tax withheld is a credit against your income tax
liability. Distributions from Roth IRAs are reported to the IRS on Form 1099-R.
We also make annual reports to the IRS on Form 5498 as to any regular or
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rollover contributions received. You will get a copy of any of the information
furnished to the IRS.
PROHIBITED TRANSACTIONS
The general rules discussed above in this Part of the prospectus under
"Traditional IRAs -- Prohibited Transactions" apply.
EXCESS CONTRIBUTIONS
Excess contributions to a Roth IRA are subject to a 6% excise tax for the year
in which made and for each year thereafter until withdrawn. In the case of
"regular" Roth IRA contributions, any contributions in excess of the amount
permitted is an "excess contribution." (As discussed above under "Contributions
to Roth IRAs -- Regular Contributions to Roth IRAs," the amount permitted may be
zero for persons over adjusted gross income limits, and is generally $2,000 --
or earnings if less -- reduced by regular contributions made to Traditional
IRAs.) In the case of rollover Roth IRA contributions, "excess contributions"
are amounts which are not eligible to be rolled over (for example, conversion
rollovers from a Traditional IRA for individuals with adjusted gross income in
excess of $100,000 in the conversion year).
There is some uncertainty under current law regarding the adjustment of excess
contributions to Roth IRAs. The rules applicable to Traditional IRAs, which may
apply, provide that an excess contribution ("regular" or rollover) which is
withdrawn before the time for filing the individual's Federal income tax return
for the tax year (including extensions) is not includable in income and is not
subject to the 10% penalty tax on early distributions (discussed below under
"Penalty Tax on Premature Distributions"), provided any earnings attributable to
the excess contribution are also withdrawn. The withdrawn earnings on the excess
contribution, however, could be includable in the individual's gross income for
the tax year in which the excess contribution from which they arose was made and
could be subject to the 10% penalty tax. If excess contributions are not
withdrawn before the time for filing the individual's Federal income tax return
for the tax year (including extensions), the "regular" contributions may still
be withdrawn after that time if the Roth IRA contribution for the tax year did
not exceed $2,000 and no tax deduction was taken for the excess contribution; in
that event, the excess contribution would not be includable in gross income and
would not be subject to the 10% penalty tax.
Pending legislation, if enacted, would provide that a taxpayer has up until the
due date of the Federal income tax return for a tax year (including extensions)
to correct an excess contribution to a Roth IRA by doing a trustee-to-trustee
transfer to a Traditional IRA of the excess contribution and the applicable
earnings, as long as no deduction is taken for the contribution.
PENALTY TAX ON PREMATURE DISTRIBUTIONS
The general rules discussed above in this Part of the prospectus under
"Traditional IRAs -- Penalty Tax on Premature Distributions" generally also
apply to Roth IRAs. That is, the taxable portion of distributions from a Roth
IRA made before you reach age 59 1/2 will be subject to an additional 10%
Federal income tax penalty unless one of the listed exceptions applies. For Roth
IRA distributions, the penalty exception for "qualified first-time homebuyer
distributions" as defined in the Code could apply, for example, if you have not
met the five-year holding or aging period for the distribution to be completely
tax free.
Under pending legislation, if amounts converted from a Traditional IRA to a Roth
IRA are withdrawn in the five-year period beginning with the year of conversion,
to the extent attributable to amounts that were includable in income due to the
conversion transaction, the amount withdrawn from the Roth IRA would be subject
to the 10% early withdrawal penalty, even if the amount withdrawn from the Roth
IRA is not includable in income because of the recovery-of-investment first
rule. However, if the recipient is eligible for one of the penalty exceptions
listed above (e.g., being age 59 1/2 or older) no penalty will apply.
Such pending legislation also provides that an additional 10% penalty applies,
apparently without exception, to withdrawals allocable to 1998 conversion
transactions before the five-year exclusion date, in order to recapture the
benefit of the prorated inclusion of Traditional IRA conversion income over the
four-year period. See "Contributions to Roth IRAs -- Conversion Rollover
Contributions to Roth IRAs." It is not known whether this legislation will be
enacted in its current form, but it could be retroactive to January 1, 1998.
SIMPLIFIED EMPLOYEE PENSIONS (SEPS)
An employer can establish a SEP plan for its employees and can make
contributions to a Contract for each eligible employee. A SEP IRA Contract is a
form of Traditional IRA Contract, owned by the employee-Annuitant and most of
the rules applicable to Traditional IRAs discussed above apply. A major
difference is the amount of permissible contributions. Rules similar to those
discussed above under "Qualified Plans General; Contributions" apply. Due to
statutory limits, in 1998 an employer can annually contribute an amount for an
employee up to the lesser of $24,000 or 15% of the employee's compensation,
determined without taking into account the employer's contribution to the SEP.
This $24,000 maximum, based on the 1998 statutory compensation limit of
$160,000, may be adjusted for cost-of-living changes in future years. Under our
current practice, regular Traditional IRA contributions by the employee may not
be made under
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a SEP IRA Contract and are put into a separate Traditional IRA Contract.
Salary reduction SEP (SARSEP) plans may no longer be established for years
beginning after December 31, 1996. However, employers who had established SARSEP
plans prior to 1997 can continue to make contributions on behalf of
participating employees for 1997 and later years. SARSEP plans are subject to a
number of special rules, some of which are discussed in the SAI.
SEP plans are available under EQUI-VEST Series 300 in most states. EQUI-VEST SEP
Series 200 are available in states where the 300 Series is not available.
SIMPLE IRAS (SAVINGS INCENTIVE
MATCH PLANS)
An eligible employer may establish a "SIMPLE IRA" plan to make contributions to
special individual retirement accounts or individual retirement annuities for
its employees ("SIMPLE IRAs"). The IRS has issued various forms which may be
used by employers to set up a SIMPLE IRA plan. Currently, we are accepting only
those SIMPLE IRA plans using IRS Form 5304-SIMPLE. Use of Form 5304-SIMPLE
requires that the employer permit the employee to select a SIMPLE IRA provider.
The employer cannot maintain any other qualified plan, SEP plan or TSA
arrangement if it makes contributions under a SIMPLE IRA plan. (Eligible
employers may maintain EDC plans.)
Any type of employer -- corporation, partnership, self-employed person,
government or tax-exempt entity -- is eligible to establish a SIMPLE IRA plan if
it meets the requirements about number of employees and compensation of those
employees. It is the responsibility of the employer to determine whether it is
eligible to establish a SIMPLE IRA plan and whether such plan is appropriate.
The employer must have no more than 100 employees who earned at least $5,000 in
compensation from the employer in the prior calendar year.
An employer establishing a SIMPLE IRA plan should consult its tax adviser
concerning the various technical rules applicable to establishing and
maintaining SIMPLE IRA plans. For example, the definition of employee's
"compensation" may vary depending on whether it is used in the context of
employer eligibility, employee participation, and employee or employer
contributions.
Participation must be open to all employees who received at least $5,000 in
compensation from the employer in any two preceding years (they do not have to
be consecutive years) and who are reasonably expected to receive at least $5,000
in compensation during the year. (Certain collective bargaining unit and alien
employees may be excluded.)
The only kinds of contributions which may be made to a SIMPLE IRA are (i)
contributions under a salary reduction agreement entered into between the
employer and the participating employee and (ii) required employer contributions
(employer matching contributions or employer nonelective contributions). (Direct
transfer and rollover contributions from other SIMPLE IRAs, but not Traditional
IRAs or Roth IRAs, may also be made.) Salary reduction contributions can be any
percentage of compensation (or a specific dollar amount, if the employer's plan
permits) but are limited to $6,000 in 1998. The $6,000 elective deferral limit
may be indexed for cost-of-living adjustments in future years.
Generally, the employer is required to make matching contributions on behalf of
each eligible employee in an amount equal to the salary reduction contributions,
up to 3% of the employee's compensation. In certain circumstances, an employer
may elect to make required employer contributions on an alternate basis.
Effective for taxable years beginning in 1997, employer matching contributions
to a SIMPLE IRA for self-employed individuals are treated the same as matching
contributions for employees. (They are not subject to the elective deferral
limits.)
Tax Treatment of SIMPLE IRAs
Unless specifically otherwise mentioned, for example, regarding differences in
funding and potential penalty tax on distributions, the rules discussed above
under "Traditional IRAs" also apply to SIMPLE IRAs.
Amounts contributed to SIMPLE IRAs are not currently taxable to employees. Only
the employer can deduct SIMPLE IRA contributions, not the employee. An employee
eligible to participate in a SIMPLE IRA is treated as an active participant in
an employer plan and thus may not be able to deduct (fully) regular
contributions to his/her own Traditional IRA.
As with Traditional IRAs in general, contributions and earnings accumulate tax
deferred until withdrawn and are then fully taxable. There are no withdrawal
restrictions applicable to SIMPLE IRAs. However, because of the level of
employer involvement, SIMPLE IRA plans are subject to some rules under ERISA.
See the rules under "ERISA Matters" above.
Amounts withdrawn from a SIMPLE IRA can be rolled over to another SIMPLE IRA, or
to a Traditional IRA. In 1998, no rollovers are permitted from a SIMPLE IRA to a
Roth IRA. No rollovers from a SIMPLE IRA to a Traditional IRA are permitted for
individuals under age 59 1/2 who have not participated in the employer's SIMPLE
IRA plan for two full years. Also, for such individuals, any amounts withdrawn
from a SIMPLE IRA are not only fully taxable but are subject to a 25% (not 10%)
additional Federal income tax penalty. (The
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exceptions for death, disability, etc. discussed in this Part under "Traditional
IRAs -- Penalty Tax on Premature Distributions" apply.)
SIMPLE IRA plans are available under EQUI-VEST Series 400 in most states.
EQUI-VEST SIMPLE IRA Series 300 and Series 200 are available in states where
Series 400 is not available.
PUBLIC AND TAX-EXEMPT ORGANIZATION EMPLOYEE DEFERRED COMPENSATION PLANS (EDC
PLANS)
Employees and independent contractors who perform services for an eligible
employer which maintains a plan satisfying the requirements of Section 457 of
the Code (EDC Plan) may exclude from Federal gross income certain salary
reduction amounts. Employers eligible to maintain EDC Plans are governmental
entities such as states, municipalities, and state agencies (GOVERNMENTAL
EMPLOYER) or tax-exempt entities (TAX-EXEMPT EMPLOYER). Tax-exempt employers are
generally subject to ERISA, and may be required by the provisions of that Act to
limit participation in an EDC plan to a select group of management or highly
compensated employees.
The EDC plan funds are subject to the claims of the employer's general creditors
in an EDC plan maintained by a tax-exempt employer. In an EDC plan maintained by
a governmental employer, the plan's assets must be held in trust for the
exclusive benefit of employees. (Under the Internal Revenue Code, an annuity
contract is afforded the same status as a trust, and the contract places the
assets out of reach of the employer's creditors.) This requirement currently
applies to EDC plans newly established by a governmental employer and must be
met by 1999 for governmental employer EDC plans established before August 1996.
Regardless of Contract ownership, the EDC plan may permit the employee to choose
among various investment options.
Generally, the maximum contribution amount that can be excluded from gross
income in any tax year under an EDC plan is 33 1/3% of the employee's
"includable compensation," up to $7,500. This amount may be adjusted for
cost-of-living increases in accordance with Section 457 of the Code. In 1998,
this amount is $8,000. Special rules may permit "catch-up" contributions during
the three years preceding normal retirement age under the EDC plan.
In general, no amounts may be withdrawn from an EDC plan prior to the calendar
year in which the employee attains age 70 1/2, separates from service or in the
event of an unforeseen emergency. Income or gains on contributions under an EDC
plan are subject to Federal income tax when amounts are distributed or made
available to the employee or beneficiary. Amounts are not deemed to be "made
available" (currently taxable) just because the participant is permitted under
the plan to make a onetime election to defer commencement of distributions
between the time amounts are allowed to be made available and before
distributions actually start. Also, de minimis amounts (up to $5,000) may be
taken out by the employee or forced out by the plan under certain circumstances,
even though the employee may still be working and amounts would not otherwise be
made available.
EDC plans are subject to minimum distribution rules similar to those that apply
to qualified plans. See "Distributions from Qualified Plans and TSAs -- Minimum
Distributions" above. That is, distributions from EDC plans generally must
commence no later than April 1st of the calendar year following the calendar
year in which the employee attains 70 1/2 or retires from service with the
employer maintaining the EDC plan, whichever is later. Failure to make required
distributions may cause the disqualification of the EDC plan. Disqualification
may result in current taxation of EDC plan benefits. In addition, a 50% penalty
tax is imposed on the difference between the required distribution amount and
the amount actually distributed, if any. It is the plan administrator's
responsibility to see that minimum distributions from an EDC plan are made.
If the EDC plan so provides, a deceased employee's beneficiary may be able to
elect to receive death benefits in installments instead of a lump sum, and will
be taxed as the payments are received. However, the death benefits must be
received within 15 years of the date of the deceased employee's death (or within
the period of the life expectancy of the surviving spouse if the spouse is the
designated beneficiary).
Distributions from an EDC plan may not be rolled over or transferred to an IRA.
Distributions to an EDC plan participant are characterized as "wages" for income
tax reporting and withholding purposes. No election out of withholding is
possible. See "General Rules of Federal and State Income Tax Withholding;
Information Reporting" above. Withholding on wages is the employer's
responsibility. Distributions from an EDC plan are not subject to FICA tax, if
FICA tax was withheld by the employer when wages were deferred. In certain
circumstances, receipt of payments from an EDC plan may result in a reduction of
an employee's Social Security benefits.
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PART 10: INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
The consolidated financial statements and consolidated Financial Statement
schedules of Equitable Life at December 31, 1997 and 1996 and for each of the
years in the three-year period ended December 31, 1997 included in Equitable
Life's Annual Report on Form 10-K for the year ended December 31, 1997
incorporated by reference in this prospectus, have been audited by Price
Waterhouse LLP, independent accountants, whose report thereon is incorporated
herein by reference. Such consolidated financial statements have been
incorporated herein by reference in reliance upon the report of Price Waterhouse
LLP given upon their authority as experts in accounting and auditing.
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PART 11: LEGAL PROCEEDINGS
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Equitable Life and its affiliates are parties to various legal proceedings, none
of which, in our view, are likely to have a material adverse effect upon the
Separate Account, our ability to meet our obligations under the Contracts or the
Contracts' distribution.
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APPENDIX I: AN EXAMPLE OF FIXED MATURITY PERIOD
MARKET VALUE ADJUSTMENT
- --------------------------------------------------------------------------------
The example below shows how the market value adjustment would be determined and
how it would be applied to a withdrawal, assuming that $100,000 had been
invested on June 14, 1996 to a Fixed Maturity Period with an Expiration Date of
June 15, 2005 (i.e., 9 years later) at a Rate to Maturity of 7.00% resulting in
a Maturity Amount at the Expiration Date of $183,846. We further assume that a
withdrawal of $50,000 is made four years later, on June 15, 2000. See "Part 5:
The Fixed Maturity Account" for a description of the market value adjustment.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
ASSUMED
GUARANTEED RATE ON JUNE 15, 2000
5.00% 9.00%
-----------------------------------------------------------
As of June 15, 2000 (Before Withdrawal)
- --------------------------------------
<S> <C> <C>
(1) Market Adjusted Amount...................................... $144,048 $119,487
(2) Book Value.................................................. 131,080 131,080
(3) Market Value Adjustment: (1)-(2)............................ 12,968 (11,593)
On June 15, 2000 (After Withdrawal)
- ----------------------------------
(4) Portion of Market Value Adjustment Associated
with Withdrawal: (3) x [$50,000/(1)]........................ $ 4,501 $ (4,851)
(5) Reduction in Book Value: [$50,000 -(4)]...................... 45,499 54,851
(6) Book Value: (2)-(5)......................................... 85,581 76,229
(7) Maturity Amount............................................. 120,032 106,915
(8) Revised Market Adjusted Amount.............................. 94,048 69,487
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
You should note that under this example if a withdrawal is made when rates have
increased from 7.00% to 9.00% (right column), a negative market value adjustment
is realized. On the other hand, if a withdrawal is made when rates have
decreased from 7.00% to 5.00% (left column), a positive market value adjustment
is realized.
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STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
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PAGE
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Part 1: Additional Loan Provisions 2
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Part 2: Tax Rules: Special Aspects 3
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Part 3: Required Minimum Distributions Option 4
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Part 4: Accumulation Unit Values 5
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Part 5: Calculation of Annuity Payments 5
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Part 6: The Reorganization 6
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Part 7: Alliance Money Market Fund Yield Information 7
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Part 8: Other Yield Information 7
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Part 9: Distribution 8
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Part 10: Key Factors in Retirement Planning 8
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Part 11: Long-Term Market Trends 12
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Part 12: Custodian and Independent Accountants 14
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Part 13: Financial Statements 14
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HOW TO OBTAIN THE EQUI-VEST STATEMENT OF ADDITIONAL INFORMATION
Call 1-800-628-6673 or send this request form to:
- -------------------------------------------------------------
EQUI-VEST
Administration Office
The Equitable
P.O. Box 2996
New York, NY 10116-2996
- -------------------------------------------------------------
Please send me a Statement of Additional Information dated May 1, 1998
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
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88
<PAGE>
EQUI-VEST(R)
PERSONAL RETIREMENT PROGRAMS
AND
EMPLOYER-SPONSORED RETIREMENT PROGRAMS
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1998
-----------------
VARIABLE ANNUITY CONTRACTS FUNDED THROUGH THE
INVESTMENT FUNDS OF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT OPTIONS
- -------------------------------------------------------------------------------------------------------------------------------
INVESTMENT FUNDS OTHER INVESTMENT OPTIONS
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
o Alliance Money Market o Alliance Small Cap Growth o EQ/ Putnam Balanced o Guaranteed Interest Account
o Alliance Intermediate o Alliance Conservative o MFS Research o Fixed Maturity Account:
Government Securities Investors o MFS Emerging Growth Companies A choice of ten Fixed
o Alliance High Yield o Alliance Balanced o Morgan Stanley Emerging Maturity Periods with
o Alliance Quality Bond o Alliance Growth Investors Markets Equity expiration dates 1999
o Alliance Growth & Income o T. Rowe Price International o Warburg Pincus Small Company through 2008
o Alliance Equity Index Stock Value
o Alliance Common Stock o T. Rowe Price Equity Income o Merrill Lynch World Strategy
o Alliance Global o EQ/Putnam Growth & Income o Merrill Lynch Basic Value
o Alliance International Value Equity
o Alliance Aggressive Stock
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</TABLE>
ISSUED BY:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- --------------------------------------------------------------------------------
Home Office: 1290 Avenue of the Americas, New York, NY 10104
Processing Office: The addresses for our Processing Offices are in
Part 1 of the prospectus under the heading
"Services We Provide."
- --------------------------------------------------------------------------------
This statement of additional information (SAI) is not a prospectus. It should be
read in conjunction with the Separate Account A prospectus for EQUI-VEST, dated
May 1, 1998. Definitions of special terms used in the SAI are found in the
prospectus.
A copy of the prospectus is available free of charge by writing the Processing
Office, by calling toll-free, 1-800-628-6673, or by contacting your Equitable
Representative.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Part 1 Additional Loan Provisions 2
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Part 2 Tax Rules: Special Aspects 3
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Part 3 Required Minimum Distributions Option 4
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Part 4 Accumulation Unit Values 5
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Part 5 Calculation of Annuity Payments 5
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Part 6 The Reorganization 6
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Part 7 Alliance Money Market Fund Yield Information 7
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Part 8 Other Yield Information 7
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Part 9 Distribution 8
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Part 10 Key Factors in Retirement Planning 8
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Part 11 Long-Term Market Trends 12
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Part 12 Custodian and Independent Accountants 14
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Part 13 Financial Statements 14
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Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104
All rights reserved.
____________________ Cat. No. 127654
888-1149
<PAGE>
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PART 1 -- ADDITIONAL LOAN PROVISIONS
The EQUI-VEST Corporate Trusteed, non-ERISA, and ERISA TSA Loans have the
following features in common:
The term of a TSA or Corporate Trusteed loan is five years unless the loan is
used to acquire the Participant's primary residence. Our contract limit for
loans used to purchase the Participant's primary residence is 10 years.
The loan term under Corporate Trusteed and TSA Contracts may not extend beyond
the earliest of: (1) election and commencement of annuity benefits, (2) the date
of termination of the Contract and (3) the date a death benefit is paid.
Payment to us to cover loan interest and to amortize a loan will be due
beginning the first day of the third month following the effective date of the
loan and quarterly thereafter. All loan payments must be made by check and must
be drawn on a bank in the U.S., in U.S. dollars and made payable to Equitable
Life. Loan payments received prior to the due date will be credited only on the
next payment due date. Any payments we receive will first be applied to
interest, with the balance applied to repayment of the loan.
Only one loan is permitted at any one time. At any time after the loan has been
issued, a loan may be repaid in full and terminated earlier than scheduled.
Plans subject to ERISA provide that the Participant's spouse must consent in
writing to the loan.
On the loan effective date, we will transfer to a loan reserve account an amount
equal to the loan plus 10% of the loaned amount for TSA loans and 25% for
Corporate Trusteed loans. The additional amount is intended as a reserve to
cover the contingencies including unpaid interest and applicable withdrawal
charges. Initially, an amount equal to the loan amount will be held in our
general account and will earn interest at an effective annual rate of 4% during
the loan term (for TSA loans, the interest is at the Loan Reserve Account Rate
- -- the Loan Interest Rate minus 2% during the loan term), whereas the additional
loan reserve, as stated above, will be held in the general account but will earn
interest at the Guaranteed Interest Account's current guaranteed interest rate
applicable to the contract.
You may specify from which Investment Options the loan and loan reserve are to
be deducted when you request the loan. If not specified, we will prorate the
amounts withdrawn from the Investment Options based on the amounts in each
Investment Option. No partial withdrawals or transfers from the loan reserve
account are permitted.
On the first day of the third month following the effective date of the loan and
quarterly thereafter (or on the first Business Day thereafter, if such day is
not a Business Day), the amount of interest earned at 4% annually (Loan Reserve
Account Rate for TSA loans) during the prior quarter will be transferred to the
Guaranteed Interest Account. Any loan payment will result in a transfer of the
amount of principal repaid from the portion of the loan reserve account that
earns 4% interest (Loan Reserve Account Rate for TSA loans) to the Guaranteed
Interest Account, and then may be withdrawn (if otherwise permitted) or
transferred to one or more Investment Funds.
Upon full repayment of the loan, any amounts remaining in the loan reserve
account will be transferred to the Guaranteed Interest Account and may then be
withdrawn (if otherwise permitted) or transferred among the Investment Funds.
EQUI-VEST Corporate Trusteed Loans
The EQUI-VEST Corporate Trusteed loan request form is entered into between the
Participant and the trustee. Equitable performs services specified in the
Agreement on behalf of the trustee. The trustee (or employer, or other plan
administrator and not Equitable) is responsible for monitoring compliance with
Code and ERISA requirements and the requirements of the particular plan. The
trustee will make payments to Equitable.
The trustee of a qualified plan purchasing an EQUI-VEST Corporate Trusteed
Contract may set any interest rate for a loan so long as it is not less than 6%
nor more than the maximum rate permitted by applicable law. The trustee
(Contract Owner) must bill the plan participant (Annuitant) for the difference,
if any, between 6% and the rate the trustee charges. Under the terms of the Code
and ERISA, if an unreasonably high or low rate of interest is charged for loans,
the plan may be disqualified and the amount of the loan may be treated as a
taxable distribution. In that case, the trustee would be required to report the
"deemed" distribution to the Internal Revenue Service (IRS).
For Corporate Trusteed Contracts, the "loan effective date" means either (1) the
first day of the month following the date the loan agreement, properly completed
and signed by the plan participant (Annuitant), is approved by the trustee
(Contract Owner) and received and accepted by us at our Processing Office, if
the loan agreement is received on or before the 15th day of the month, or (2)
the first day of the second month following the date the loan agreement,
properly completed and signed by the plan participant (Annuitant), is approved
by the trustee (Contract Owner) and received and accepted by us at our
Processing Office, if the loan agreement is received after the 15th day of the
month.
2
<PAGE>
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The loan amount is based on the Participant's vested interest in the Plan and
the Annuity Account Value of the EQUI-VEST Contract on the loan effective date.
If loan interest (except interest due at the end of the loan term) or required
principal repayments are not received at our Processing Office within fifteen
days after the due date, or if any loan principal and accrued interest are due
at the end of the loan term, the loan is in default. We will make a partial
withdrawal from the additional loan reserve account in an amount sufficient to
pay the amount due plus any applicable withdrawal charges and any required
income tax withholding. Such a withdrawal could result in a penalty tax or the
disqualification of your EQUI-VEST Corporate Trusteed Contract or the qualified
plan.
The trustee is required to report to the IRS the amount of the default as a
deemed taxable distribution which may also be subject to penalty tax.
Non-ERISA TSA Loans
The minimum loan amount is $3,000 and the maximum is $50,000 (less the highest
outstanding loan balance in the preceding twelve calendar months less the
outstanding balance of all loans from the employer's qualified plan on the date
the loan is made). The maximum amount of the loan is 80% of the Annuity Account
Value, if the amount of the Annuity Account Value is at least $3,750 but less
than $12,500; $10,000 if the amount of the Annuity Account Value is at least
$12,500 but less than $20,000; or 50% of the Annuity Account Value if the amount
of the Annuity Account Value is $20,000 or more.
ERISA TSA Loans
The minimum loan amount is $1,000; the maximum is 50% of the Annuity Account
value, but not more than $50,000. The $50,000 maximum is reduced by the excess
of the highest outstanding loan balance in the preceding twelve calendar months,
less the outstanding balance of any loans under all the employer's qualified
plans on the date the loan is effective.
Equitable will set a reasonable interest rate for plan loans as defined below,
unless the plan administrators notify us of their intent to set their own rate.
If we set the rate, it will be equal to the Moody's Corporate Bond Yield
Averages. With Moody's, we will use the average for Baa bonds for the calendar
month ending two months before the date on which the rate is determined.
Non-ERISA and ERISA TSA Loans
The Annuity Account Value is measured on the "Loan Effective Date" which is the
first day of the month following the date we approve a properly completed loan
request form.
There are a number of rules governing the minimum and maximum that can be
requested for a loan. These rules are described on the loan request form. This
form should be reviewed carefully prior to requesting a loan.
If a required loan repayment on a TSA Contract is not made, we will treat the
amount equal to the interest and principal payment due as a default. We will
also deduct a default charge (as described below). We will treat such amount
(plus any required income tax withholding) as a "deemed distribution." Such
amount will be taxable and also may be subject to a penalty tax.
The default charge on the amount of deemed distribution is equal to the
applicable withdrawal charge which would have applied if such amount had been
withdrawn from the Contract.
Amounts in default will be in the loan reserve account in suspense until Federal
tax rules permit such amounts to be deducted from the TSA Contract to repay your
obligation to us.
Currently we default your loan on a missed-payment-by-missed-payment basis, but
under proposed Federal regulations, we may be required to default the entire
unpaid loan balance and unpaid interest at the time of the default. Under these
proposed regulations, we would be required to treat the entire remaining
outstanding balance of the loan (including any unpaid interest) as a deemed
taxable distribution in the year of the default, which is subject to income tax
reporting and early distribution tax penalty. See Part 9 of the prospectus. If
your contract is subject to Federal income tax withdrawal restrictions at the
time you default, because of the interplay between Federal income tax rules and
state insurance law requisites, we may be required to continue to charge
interest and credit interest on the unpaid loan balance until such defaulted
payment liability can be satisfied by an actual distribution. This may result in
additional taxable income to you. Interest credited on amounts in default could
result in additional taxable income in the amount of the interest credited and
could be subject to a penalty tax. See "Penalty Tax on Early Distributions" and
"Distributions from Qualified Plans and TSAs" in Part 9 of the prospectus.
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PART 2 -- TAX RULES: SPECIAL ASPECTS
CERTAIN DISTRIBUTIONS FROM TRUSTEED CONTRACTS
In the case of an EQUI-VEST Trusteed Contract, the trustee, as Contract Owner,
may transfer ownership of the Contract to the Annuitant in certain
circumstances. This transfer constitutes a distribution from a qualified plan.
Although the Annuitant will receive a tax information report on the distribution
from the plan administrator, this transaction is not a taxable event to the
Annuitant until any payments are made under the transferred Contract. The
transfer of ownership from
3
<PAGE>
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the Trustee to the Annuitant is not an IRA rollover. If they otherwise qualify
as "eligible rollover distributions," amounts distributed from the Contract,
however, may subsequently be directly rolled over into an individual retirement
arrangement or another qualified retirement plan.
SIMPLIFIED EMPLOYEE PENSION PLAN (SEPS)
When an employer establishes a SEP for its employees, contributions for each
eligible employee can be made under a Contract issued as a Traditional IRA.
Contributions. Due to statutory limits, in 1998 an employer's contribution to a
SEP for an employee, including any salary reduction contributions, cannot exceed
the lesser of $24,000 or 15% of the employee's compensation. The employee's
compensation is determined without taking into account the employer's
contribution to the SEP, and is statutorily limited to $150,000 as adjusted for
cost-of-living changes ($160,000 in 1998).
The employer must make a contribution for each employee who has reached age 21
and has worked for the employer during at least three of the preceding five
years. Contributions are not required for employees who (1) earn less than $300
as indexed for inflation ($400 in 1998) in a year, (2) are covered by a
collective bargaining agreement or (3) are non-resident aliens who receive no
earned income from the employer from sources within the United States.
Generally, SEP plans are maintained on a calendar year basis.
Employer contributions must be made under a written program which provides that
(i) withdrawals are permitted, (ii) contributions are made under an allocation
formula and (iii) bear a uniform relationship to compensation. Contributions
cannot discriminate in favor of highly compensated employees. Contributions to
the SEP may take employer-paid Social Security benefits into account, provided
the level of integration satisfies the limits contained in the Code.
Except as otherwise indicated in this section, all of the IRA rules discussed in
Part 9 of the prospectus, including those relating to revocation, distributions
and penalties for early, minimum and excess distributions, apply to SEPs.
Provided that the plan was established prior to January 1, 1997, employers with
25 or fewer eligible employees for the prior taxable year may allow such
employees to make salary reduction contributions to a SEP (SARSEP). SARSEP plans
may not be established after 12/31/96. New participants may be added after that
date as long as the plan was in effect prior to 1/1/97. SARSEP arrangements can
be offered only if at least 50% of the eligible employees elect to participate
in the SARSEP. Special nondiscrimination rules apply to highly compensated
employees in a SARSEP. The percentage of compensation deferred by any eligible
highly compensated employee cannot exceed 125% of the average deferred
compensation percentage for all eligible non-highly compensated employees. In
addition, rules similar to those applicable to 401(k) programs and salary
reduction TSAs apply to require distributions of excess elective deferrals and
excess contributions.
PENALTIES FOR EXCESS DEFERRALS
If an individual's aggregate elective deferrals under 401(k) plans, SIMPLE IRAs,
SARSEPs and TSAs exceed the permitted elective deferral limit in any taxable
year (generally $7,000 as indexed; $10,000 in 1998), the individual will be
taxed twice on the excess deferral -- once in the year of the deferral and again
when a distribution occurs. If the individual notifies the affected plan or
plans and, by April 15 of the following year, receives a distribution of the
excess deferral and related income, the excess deferral will only be taxed in
the year of deferral. Any related income will be taxed in the year of the
distribution. The distribution of the excess deferral plus income is not treated
as a withdrawal of restricted funds, is not subject to the 10% penalty tax on
early retirement distributions and is not an eligible rollover distribution
subject to 20% mandatory Federal income tax withholding. If excess deferrals
remain in the plan, the plan may be disqualified.
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PART 3 -- REQUIRED MINIMUM DISTRIBUTIONS OPTION
If you elect this feature designed for Annuitants age 70 1/2 or older, described
in the prospectus, each year we calculate your minimum distribution based on the
Annuity Account Value as of December 31 of the prior calendar year and then
calculate the minimum distribution amount based on the various choices you make.
This does not apply to Roth IRA or NQ Contracts.
You may choose whether the Required Minimum Distribution will be calculated
based on your life expectancy alone, or based on the joint life expectancies of
you and your spouse. You may also choose (1) to have us recalculate your life
expectancy (or joint life expectancy) each year, or (2) not recalculate your
life expectancy. If you have chosen a joint life expectancy method of
calculation with your spouse, you may choose to either have both lives
recalculated or not recalculated.
When we recalculate life expectancy, that means that each calendar year we see
what each individual's life expectancy is under Treasury Regulations. If life
expectancy is not recalculated, it means that it is determined once, for the
initial year, and in every subsequent year that number is reduced by one more
year.
If you do not specify a method, IRS regulations require us to base a calculation
on your life expectancy alone, recalculating it each year. If you do not specify
that we should recalculate life expectancy, you cannot later apply your Annuity
Account Value to an annuity payout.
The minimum distribution calculation takes into account partial withdrawals made
during the current calendar year but prior to the date we determine your minimum
distribution amount, except that when the
4
<PAGE>
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Required Minimum Distribution is elected in the year in which the Annuitant
attains age 71 1/2, no adjustment for partial withdrawals will be made for any
withdrawals made between January 1 and April 1 of the year in which the election
is made.
Our Required Minimum Distribution Option should not be elected if the Annuitant
continues to work beyond age 70 1/2 and contributions continue to be made into
the Contract. To do so could result in an insufficient distribution. You must
request the amount to be separately calculated each year to ensure that you
withdraw the correct amount.
Note that our Required Minimum Distribution Option does not provide for all the
flexibility provided by Federal law. For example, Federal law permits you to
recalculate your life expectancy and not your spouse's and to choose the joint
life expectancy method with a beneficiary other than your spouse. See your tax
adviser.
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PART 4 -- ACCUMULATION UNIT VALUES
Accumulation Unit Values are determined at the end of each Valuation Period for
each of the Investment Funds. The Accumulation Unit Values for EQUI-VEST may
vary. The method of calculating Accumulation Unit Values is set forth below.
The Accumulation Unit Value for an Investment Fund for any Valuation Period is
equal to the Accumulation 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 is:
(a/b) - c
where:
(a) is the value of the Investment 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
Hudson River Trust. This share value is after deduction for investment
advisory fees and direct expenses of The Hudson River Trust.
(b) is the value of the Investment Fund's shares of the corresponding Portfolio
at the end of the preceding Valuation Period (after any amounts allocated
or withdrawn for that Valuation Period).
(c) is the daily Separate Account asset charge for the expenses of the
contracts times the number of calendar days in the Valuation Period, plus
any charge for taxes or amounts set aside as a reserve for taxes.
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PART 5 -- CALCULATION OF ANNUITY PAYMENTS
The calculation of monthly annuity payments under a Contract takes into account
the number of annuity units of each Investment Fund credited under a Contract,
their respective annuity unit values, and a Net Investment Factor. The annuity
unit values used for EQUI-VEST may vary, although the method of calculating
annuity unit values set forth below applies to all Contracts. Annuity unit
values will also vary by Investment Fund.
For each Valuation Period, the adjusted Net Investment Factor is equal to the
Net Investment Factor for the Fund reduced for each day in the Valuation Period
by:
o .00013366 of the Net Investment Factor for a Contract with an assumed base
rate of net investment return of 5% a year; or
o .00009425 of the Net Investment Factor for a Contract with an assumed base
rate of net investment return of 3 1/2%.
Because of this adjustment, the annuity unit value rises and falls depending on
whether the actual rate of net investment return (after charges) is higher or
lower than the assumed base rate.
The assumed base rate will be 5%, except in states where that rate is not
permitted. Annuity payments based upon an assumed base rate of 3 1/2% will at
first be smaller than those based upon a 5% assumed base rate. Payments based
upon a 3 1/2% rate, however, will rise more rapidly when unit values are rising,
and payments will fall more slowly when unit values are falling than those based
upon a 5% rate.
The amounts of variable annuity payments are determined as follows:
Payments normally start on the Business Day specified on your election form, or
on such other future date as specified therein. The first three monthly payments
are the same. The initial payment will be calculated using the basis guaranteed
in the applicable EQUI-VEST Contract or our current basis, whichever would
provide the higher initial benefit.
The first three payments depend on the assumed base rate of net investment
return and the form of annuity chosen (and any fixed period). If the annuity
involves a life contingency, the risk class and the age of the Annuitants will
affect payments.
Payments after the first three will vary according to the investment performance
of the Investment Fund(s) selected to fund the variable payments. After that,
each monthly payment will be calculated by multiplying the number of annuity
units credited by the average annuity unit value for the selected fund for the
second calendar month immediately preceding the due date of the payment. The
number of units is calculated by dividing the first monthly payment by the
annuity unit value for the Valuation Period which includes the due
5
<PAGE>
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date of the first monthly payment. The average annuity unit value is the average
of the annuity unit values for the Valuation Periods ending in that month.
Illustration of Calculation of Annuity Payments
To show how we determine variable annuity payments, assume that the Annuity
Account Value for an EQUI-VEST Series 100 Contract on a retirement date is
enough to fund an annuity with a monthly payment of $100 and that the annuity
unit value of the selected Investment Fund for the Valuation Period that
includes the due date of the first annuity payment is $3.74. The number of
annuity units credited under the Contract would be 26.74 (100 divided by 3.74 =
26.74). Based on a hypothetical average annuity unit value of $3.56 in October
1995, the annuity payment due in December 1995 would be $95.19 (the number of
units (26.74) times $3.56).
The examples below show what the annuity payment would have been for December
31, 1997 for each base rate of net investment return, assuming that $100,000 was
applied at the beginning of each period shown, for a female age 75, to purchase
a variable Life Annuity with 10 Years Period Certain, with initial payment of
$714.56 and $793.28, using assumed base rates of 3.50% and 5.00% respectively:
<TABLE>
<CAPTION>
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ONE THREE FIVE TEN SINCE
BASE RATE YEAR YEARS YEARS YEARS INCEPTION
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance 3.50% $717.16 $ 725.67 $ 706.23 $ 775.03 --
Money Market 5.00% $787.16 $ 773.69 $ 731.23 $ 747.74 --
Alliance Intermediate 3.50% $728.38 $ 778.12 $ 747.57 -- $ 813.37
Government Securities 5.00% $799.48 $ 829.71 $ 774.22 -- $ 821.10
Alliance 3.50% $737.31 $ 825.77 -- -- $ 734.38
Quality Bond 5.00% $809.28 $ 880.52 -- -- $ 768.93
Alliance 3.50% $798.22 $1,068.47 $1,162.15 $1,458.07 --
High Yield 5.00% $876.13 $1,139.31 $1,203.58 $1,403.77 --
Alliance 3.50% $857.86 $1,161.06 -- -- $1,084.51
Growth & Income 5.00% $941.61 $1,238.05 -- -- $1,135.56
Alliance 3.50% $873.06 $1,324.64 -- -- $1,286.44
Equity Index 5.00% $958.29 $1,412.48 -- -- $1,355.14
Alliance 3.50% $853.22 $1,275.03 $1,414.10 $2,251.30 --
Common Stock 5.00% $936.51 $1,359.81 $1,465.79 $2,179.16 --
Alliance 3.50% $777.03 $ 961.08 $1,214.09 $1,637.45 $1,396.90
Global 5.00% $852.89 $1,024.81 $1,257.38 $1,576.48 $1,338.13
Alliance 3.50% $712.64 -- -- -- $ 796.61
International 5.00% $782.22 -- -- -- $ 852.61
Alliance 3.50% $814.16 $1,190.22 $1,216.25 $2,724.19 --
Aggressive Stock 5.00% $893.65 $1,268.54 $1,257.07 $2,610.16 --
Alliance 3.50% -- -- -- -- $ 780.00
Small Cap Growth 5.00% -- -- -- -- $ 862.28
Alliance 3.50% $767.80 $ 883.47 $ 852.64 -- $1,014.73
Conservative Investors 5.00% $842.75 $ 942.04 $ 883.04 -- $1,002.28
Alliance 3.50% $787.51 $ 956.52 $ 897.55 $1,409.69 --
Balanced 5.00% $864.38 $1,020.08 $ 929.93 $1,363.90 --
Alliance 3.50% $803.39 $1,038.49 $1,053.33 -- $1,620.21
Growth Investors 5.00% $881.82 $1,107.35 $1,090.89 -- $1,600.34
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</TABLE>
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PART 6 -- THE REORGANIZATION
Equitable Life established Separate Account A as a stock account on August 1,
1968. It was one of four separate investment accounts used to fund retirement
benefits under variable annuity certificates issued by us. Each of these
separate accounts, which included the predecessors to the Alliance Money Market
Fund, the Alliance Balanced Fund, the Alliance Common Stock Fund and the
Alliance Aggressive Stock Fund, was organized as an open-end management
investment company, with its own investment objectives and policies.
Collectively these separate accounts, as well as two other separate accounts
which had been used to fund retirement benefits under certain other annuity
contracts, are called the Predecessor Separate Accounts.
On December 18, 1987, the Predecessor Separate Accounts were combined in part
and reorganized into the Alliance Money Market, Alliance Balanced, Alliance
Common Stock and Alliance Aggressive Stock Funds of the Separate Account. In
connection with the Reorganization, all of the assets and investment-related
liabilities of the Predecessor Separate Accounts were transferred to a
corresponding portfolio of The Equitable Trust in exchange for shares of the
6
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portfolios of The Equitable Trust, which were issued to these corresponding
Investment Funds of the Separate Account. As described in "Part 3: Investment
Performance" in the prospectus, on September 6, 1991, all of the shares of The
Equitable Trust held by these Investment Funds were replaced by shares of
Portfolios of The Hudson River Trust corresponding to these Investment Funds of
the Separate Account.
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PART 7 -- ALLIANCE MONEY MARKET FUND YIELD INFORMATION
The Alliance Money Market Fund calculates yield information for seven-day
periods. To determine the seven-day rate of return, the net change in an
Accumulation Unit Value is computed by subtracting the Accumulation Unit Value
at the beginning of the period from an Accumulation Unit Value, exclusive of
capital changes, at the end of the period.
The net change is then reduced by the average administrative charge factor for
your contract. This reduction is made to recognize the deduction of the annual
administrative charge, which is not reflected in the unit value. See the
applicable "Administrative Charge" section in Part 7 of the prospectus.
Accumulation Unit Values reflect all other accrued expenses of the Alliance
Money Market Fund.
The adjusted net change is divided by the Accumulation 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 annual administrative charge for EQUI-VEST that
is deducted from the Alliance Money Market Fund will vary for each contract and
the percentage of the aggregate Annuity Account Value allocated to the Alliance
Money Market Fund. To determine the effect of the annual administrative charge
on the yield, we start with the actual aggregate annual administrative charges,
as a percentage of total assets held under EQUI-VEST. This amount is multiplied
by 7/365 to produce an average administrative charge factor which is used in
weekly yield computations for the ensuing year. The average administrative
charge is then divided by the number of Alliance Money Market Fund Accumulation
Units for the EQUI-VEST Series Contract as of the end of the prior calendar
year, and the resulting quotient is deducted from the net change in Accumulation
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
yields will fluctuate daily. Accordingly, yields for any given period are not
necessarily representative of future results. In addition, the value of
Accumulation Units of the Alliance Money Market Fund will fluctuate and not
remain constant.
The Alliance Money Market Fund yields reflect 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 out
earnings in dividends which accrue on a daily basis.
While the Alliance Money Market Fund yields will vary among the different
EQUI-VEST Contracts, the same method of calculating Alliance Money Market Fund
yields applies. The seven-day current yield and effective yield figures set
forth below reflect the highest charges that are currently being assessed under
any EQUI-VEST Contract and are for illustrative purposes only.
The seven-day current yield for the Alliance Money Market Fund was 3.93% for the
period ended December 31, 1997. The effective yield for the Alliance Money
Market Fund for that period was 4.01%. Because these yields reflect the
deduction of Separate Account expenses, including the annual or quarterly
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.
- --------------------------------------------------------------------------------
PART 8 -- OTHER YIELD INFORMATION
Thirty-day yields may vary according to the series of your EQUI-VEST Contract,
although the same method of calculating Fund yields applies. The yield figures
set forth below reflect the highest charges that are currently being assessed
under any series of EQUI-VEST Contract.
The effective yield is obtained by giving effect to the compounding nature of
the Fund's investments, as follows: the sum of the 30-day adjusted return, plus
one, is raised to a power equal to 365 divided by 30, and subtracting one from
the result.
The 30-day yields for the period ended December 31, 1997 were 4.07% for the
Alliance Intermediate Government Securities Fund, 4.48% for the Alliance
7
<PAGE>
- --------------------------------------------------------------------------------
Quality Bond Fund and 8.78% for the Alliance High Yield Fund. Because these
yields reflect the deduction of Separate Account expenses, including the annual
administrative charge, they are lower than the yield figures for the
corresponding Portfolios which reflect only the deduction of Trust-level
expenses.
- --------------------------------------------------------------------------------
PART 9 -- DISTRIBUTION
EQ Financial Consultants, Inc. (EQF), a wholly owned subsidiary of Equitable
Life, performs all sales functions for the Separate Account and may be deemed to
be its principal underwriter under the 1940 Act. EQF is also an underwriter of
HRT and EQAT and serves as the distributor of Equitable's variable life
insurance policies and other variable annuity contracts. EQF is registered with
the SEC as a broker-dealer under the Securities Exchange Act of 1934 (EXCHANGE
ACT) and is a member of the National Association of Securities Dealers, Inc.
EQF's principal business address is 1755 Broadway, New York, New York 10019.
EQUI-VEST Contracts are sold by Equitable Agents who are registered
representatives of EQF. In 1996 and 1997, EQF was paid a fee of $325,380,
annually, for its services as distributor of Equitable's variable contracts. The
offering of the EQUI-VEST Contracts is intended to be continuous.
- --------------------------------------------------------------------------------
PART 10 -- KEY FACTORS IN RETIREMENT PLANNING
INTRODUCTION
Equitable offers retirement programs that are available to help meet the
retirement needs of individuals and of employers, businesses, and certain
tax-exempt organizations. In assessing these retirement needs, some key factors
need to be addressed: (1) the impact of inflation on fixed retirement incomes;
(2) the importance of starting to plan early for retirement; (3) the benefits of
tax deferral; and (4) the selection of an appropriate investment strategy. Each
of these factors is addressed below.
Unless otherwise noted, all of the following presentations use an assumed annual
rate of return of 7.5% compounded annually. This rate of return is for
illustrative purposes only and is not intended to represent an expected or
guaranteed rate of return for any investment vehicle. In addition, unless
otherwise noted, none of the illustrations reflect any charges that may be
applied under a particular investment vehicle. Such charges would effectively
reduce the actual return under any investment vehicle.
All earnings in these presentations are assumed to accumulate tax deferred
unless otherwise noted. Most programs designed for retirement savings offer tax
deferral. Amounts withdrawn generally are taxable and a 10% penalty tax may
apply to premature withdrawals. Certain retirement programs prohibit early
withdrawals. See "Part 9: Federal Tax and ERISA Matters" in the prospectus.
Where taxes are taken into consideration in these presentations, a 28% tax rate
is assumed.
The source of the data used by us to compile the charts which appear in this
section (other than charts 1, 2, 3 and 4) is Ibbotson Associates, Inc., Chicago,
Stocks, Bonds, Bills and Inflation 1998 Yearbook.(TM)All rights reserved.
In reports or other communications or in advertising material, we may make use
of these or other graphic or numerical illustrations that we prepare showing the
impact of inflation, planning early for retirements, tax deferral,
diversification and other concepts important to retirement planning.
INFLATION
Inflation erodes purchasing power. This means that, in an inflationary period,
the dollar is worth less as time passes. Because many people live on a fixed
income during retirement, inflation is of particular concern to them. The charts
on the next page illustrate the detrimental impact of inflation over an extended
period of time. Between 1967 and 1997, the average annual inflation rate was
5.34%. As demonstrated in Chart 1, this 5.34% average annual rate of inflation
would cause the purchasing power of $35,000 to decrease to only $7,350 after 30
years.
In Chart 2, the impact of inflation is examined from another perspective.
Specifically, the chart illustrates the additional income needed to maintain the
purchasing power of $35,000 over a thirty-year period. Again, the 1967-1997
historical inflation rate of 5.34% is used. In this case, an additional $131,675
would be required to maintain the purchasing power of $35,000 after 30 years.
CHART 1
[THE FOLLOWING DATA WAS REPRESENTED AS A
SHADED VERTICAL BAR GRAPH IN THE TYPESET
DOCUMENT:]
(Income)
Today $35,000
10 Years $20,803
20 Years $12,365
30 Years $7,350
[END OF GRAPHICALLY REPRESENTED DATA]
8
<PAGE>
- --------------------------------------------------------------------------------
CHART 2
[THE FOLLOWING DATA WAS REPRESENTED AS A SHADED
VERTICAL BAR GRAPH IN THE TYPESET DOCUMENT:]
Annual
Income Increase
Needed Needed
Today $35,000
10 Years $58,885 $23,885
20 Years $99,069 $64,069
30 Years $166,675 $131,675
[END OF GRAPHICALLY REPRESENTED DATA]
STARTING EARLY
The impact of inflation accentuates the need to begin a retirement program
early. The value of starting early is illustrated in the following charts. As
shown in Chart 3, if an individual makes annual contributions of $2,500 to his
retirement program beginning at age 30, he would accumulate $414,551 by age 65
under the assumptions described earlier. If that individual waited until age 50,
he would only accumulate $70,193 by age 65 under the same assumptions.
CHART 3
[THE FOLLOWING DATA WAS REPRESENTED AS A SHADED
AREA GRAPH IN THE TYPESET DOCUMENT:]
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
[BLACK:] Age 50 $0 $0 $0 $0 $0 $15,610 $38,020 $70,193
[WHITE:] Age 40 $0 $0 $0 $15,610 $38,020 $70,193 $116,381 $182,691
[GRAY:] Age 30 $0 $15,610 $38,020 $70,193 $116,381 $182,691 $277,886 $414,551
</TABLE>
[END OF GRAPHICALLY REPRESENTED DATA]
In Table 1, the impact of starting early is demonstrated in another format. For
example, if an individual invests $300 monthly, he would accumulate $387,193 in
thirty years under our assumptions. In contrast, if that individual invested the
same $300 per month for 15 years, he would accumulate only $97,804 under our
assumptions.
TABLE 1
- -------------------------------------------------------------
MONTHLY
CONTRI- YEAR YEAR YEAR YEAR YEAR
BUTION 10 15 20 25 30
$ 20 $ 3,532 $ 6,520 $ 10,811 $ 16,970 $ 25,813
50 8,829 16,301 27,027 42,425 64,532
100 17,659 32,601 54,053 84,851 129,064
200 35,317 65,202 108,107 169,701 258,129
300 52,976 97,804 162,160 254,552 387,193
- -------------------------------------------------------------
Chart 4 presents an additional way to demonstrate the significant impact of
starting to make contributions to a retirement program earlier rather than
later. It assumes that an individual had a goal to accumulate $250,000 (pre-tax)
by age 65. If he starts at age 30, under our assumptions he could reach the goal
by making a monthly pre-tax contribution of $130 (equivalent to $93 after
taxes). The total net cost for the 30-year-old in this hypothetical example
would be $39,265. If the individual in this hypothetical example waited until
age 50, he would have to make a monthly pre-tax contribution of $747 (equivalent
to $552 after taxes) to attain the goal, illustrating the importance of starting
early.
CHART 4
[THE FOLLOWING DATA WAS REPRESENTED AS A BLACK & WHITE
VERTICAL BAR GRAPH IN THE TYPESET DOCUMENT:]
GOAL: $250,000 BY AGE 65
Tax Savings
and Tax-deferred
Start at: Net Cost Earnings at 7.5%
$93 a month Age 30 $39,265 $210,735
$212 a month Age 40 $63,641 $186,359
$552 a month Age 50 $99,383 $150,617
[BLACK BARS = NET COST]
[WHITE BARS = TAX SAVINGS AND TAX-DEFERRED EARNINGS AT 7.5%
[END OF GRAPHICALLY REPRESENTED DATA]
TAX DEFERRAL
Contributing to a retirement plan early is part of an effective strategy for
addressing the impact of inflation. Another part of such a strategy is to
carefully select the types of retirement programs in which to invest. In
deciding where to invest retirement contributions, there are three basic types
of programs.
The first type offers the most tax benefits and, therefore, is potentially the
most beneficial for
9
<PAGE>
- --------------------------------------------------------------------------------
accumulating funds for retirement. Contributions are made with pre-tax dollars
or are tax deductible and earnings grow income tax deferred. Examples of this
type of program that permit individuals to make contributions through personal
savings or indirectly through employer-offered salary deferrals are deductible
Individual Retirement Annuities (IRAs); Tax-Sheltered Annuities (TSAs); Employee
Deferred Compensation plans (EDCs); 401(k) plans; Salary Reduction Simplified
Employee Pensions (SARSEPs); and SIMPLE IRAs.
Of course, not every individual is eligible to take advantage of these programs.
Examples of this type of program which are employer funded are qualified defined
contribution plans, SEPs and HR-10 (Keogh) Plans.
The second type of program also provides for tax-deferred earnings growth;
however, contributions are made with after-tax dollars. Examples of this type of
program are non-deductible Traditional IRAs and non-qualified annuities.
The third approach to retirement savings is fully taxable. Contributions are
made with after-tax dollars and earnings are taxed each year. Examples of this
type of program include certificates of deposit, savings accounts and taxable
stock, bond or mutual fund investments.
Consider an example. For the type of retirement program that offers both pre-tax
contributions and tax deferral, assume that a $2,500 annual pre-tax contribution
is made for thirty years. In this example, the retirement funds would be
$199,607 after thirty years (assuming a 7.5% rate of return, no withdrawals and
assuming the deduction of a 1.75% Separate Account daily asset and Trust annual
expense charges and a $30 administrative charge -- but no contingent withdrawal
charge) and such funds would be $277,886 without the effect of any charges.
Assuming a lump sum withdrawal was made in year thirty and a 28% tax bracket,
these amounts would be $143,717 and $200,078, respectively.
For the type of program that offers only tax deferral, assume an after-tax
annual contribution of $1,800 for thirty years and the same rate of return. This
after-tax contribution is derived by taxing the $2,500 pre-tax contribution,
again assuming a 28% tax bracket. In this example, the retirement funds would be
$143,468 after thirty years assuming the deduction of charges and no
withdrawals, and $200,078 without the effect of charges. Assuming a lump sum
withdrawal in year thirty, the total after-tax amount would be $118,417 with
charges deducted and $159,176 without charges.
For the fully taxable investment, assume an after-tax contribution of $1,800 for
thirty years. Earnings are taxed annually. After thirty years, the amount of
this fully taxable investment is $135,058. Keep in mind that taxable investments
have fees and charges, too (investment advisory fees, administrative charges,
12b-1 fees, sales loads, brokerage commissions, etc). We have not attempted to
apply these fees and charges to the fully taxable amounts since this is intended
merely as an example of tax deferral. Were such charges applied, the amounts in
the fully taxable example would be lower. Again, it must be emphasized that the
assumed rate of return of 7.5% compounded annually used in these examples is for
illustrative purposes only and is not intended to represent a guaranteed or
expected rate of return on any investment vehicle. Moreover, early withdrawals
of tax-deferred investments are generally subject to a 10% penalty tax.
INVESTMENT OPTIONS
Selecting an appropriate retirement program is clearly an important part of an
effective retirement planning strategy. Carefully choosing among investment
options is another essential component.
As demonstrated in Chart 5, during the 1967-1997 period, common stock average
annual returns outperformed the average annual returns of fixed investments,
such as long-term government bonds and Treasury Bills (T-bills). See "Notes" at
the end of this section. Common stocks earned an average annual return of 12.12%
over this period, in contrast to 8.63% and 6.77% for the other two investment
categories, respectively. Significantly, common stock returns also outpaced
inflation, which grew at 5.34% over this period.
10
<PAGE>
- --------------------------------------------------------------------------------
CHART 5
[THE FOLLOWING DATA WAS REPRESENTED AS A SHADED
VERTICAL BAR GRAPH IN THE TYPESET DOCUMENT:]
Average Annual Returns
1967-1997
Inflation 5.34%
T-bills 6.77%
Long-Term Government Bonds 8.63%
Common Stock (S&P 500) 12.12%
[END OF GRAPHICALLY REPRESENTED DATA]
While Chart 5 illustrates that investments in common stocks outperformed
fixed-income investments for the 1967-1997 period, many people prefer to
diversify their investments by selecting a mix of fixed-income and growth
investments. In Chart 6, the growth of a $1,000 investment is shown given
various mixes of fixed-income and growth investments. See "Notes" at the end of
this section.
CHART 6
[THE FOLLOWING DATA WAS REPRESENTED AS A SHADED
VERTICAL BAR GRAPH IN THE TYPESET DOCUMENT:]
Growth of $1,000
1967-1997
100% T-bills $7,437
70% Long-Term Government Bonds/30% Common Stock $17,068
50% Long-Term Government Bonds/50% Common Stock $22,266
100% Common Stock $38,351
[END OF GRAPHICALLY REPRESENTED DATA]
Although common stock returns have historically outpaced returns of fixed
investments, people often allocate a significant percentage of their retirement
funds to fixed-return investments. Their primary concern is the preservation of
principal. Given this concern, Chart 7 illustrates the impact of exposing only
the interest generated by a fixed investment to the stock market. In this
illustration, the fixed investment is represented by a Treasury Bill return and
the stock investment is represented by the Standard & Poor's 500 ("S&P 500").
The chart assumes that a $20,000 fixed investment was made on January 1, 1980.
If the interest on that investment were to accumulate based upon the return of
the S&P 500, the total investment would have been worth $204,911 in 1997. Had
the interest been reinvested in the fixed investment, the fixed investment would
have grown to $69,070. As illustrated in Chart 7, significant opportunities for
growth exist while preserving principal. See "Notes" at the end of this section.
11
<PAGE>
- --------------------------------------------------------------------------------
CHART 7
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE GRAPH
IN THE TYPESET DOCUMENT:]
$204,911 With Interest $69,070 Without Interest
Exposed to Stock Exposed to Stock Market
Market (S&P 500) (S&P 500)
(Value as of Last Day of Year)
1/1/80 20,000 20,000
20,160 20,160
20,338 20,339
20,547 20,586
20,823 20,845
21,031 21,014
21,183 21,142
21,369 21,254
21,515 21,390
21,708 21,550
21,930 21,755
22,333 21,964
80 22,522 22,252
22,619 22,483
22,888 22,724
23,239 22,999
23,386 23,247
23,637 23,514
23,878 23,832
24,129 24,127
24,156 24,436
24,196 24,739
24,659 25,039
25,079 25,306
81 25,118 25,527
25,195 25,731
25,113 25,968
25,278 26,222
25,722 26,518
25,770 26,799
25,861 27,057
25,945 27,341
26,850 27,549
27,028 27,689
27,937 27,852
28,411 28,028
82 28,690 28,216
29,131 28,410
29,492 28,587
29,965 28,767
30,862 28,971
30,943 29,171
31,495 29,366
31,284 29,584
31,627 29,808
31,938 30,035
31,930 30,263
32,348 30,475
83 32,418 30,698
32,490 30,931
32,222 31,150
32,577 31,378
32,826 31,632
32,297 31,879
32,719 32,118
32,701 32,381
34,295 32,650
34,470 32,931
34,708 33,260
34,705 33,503
84 35,205 33,717
36,503 33,936
36,845 34,133
37,000 34,345
37,089 34,592
38,272 34,820
38,673 35,012
38,748 35,229
38,744 35,423
38,262 35,635
39,208 35,867
40,706 36,086
85 41,803 36,320
42,011 36,524
43,792 36,717
45,230 36,938
45,021 37,130
46,493 37,312
47,036 37,506
45,602 37,701
47,609 37,874
45,430 38,045
46,935 38,220
47,703 38,369
86 47,070 38,557
50,789 38,719
52,147 38,885
53,115 39,068
52,912 39,240
53,327 39,389
55,086 39,578
56,925 39,760
58,441 39,947
57,685 40,127
49,695 40,367
47,333 40,509
87 49,428 40,667
50,743 40,785
52,280 40,972
51,393 41,152
51,824 41,342
52,174 41,553
53,765 41,756
53,732 41,969
52,733 42,217
54,245 42,478
55,302 42,738
54,915 42,981
88 55,673 43,252
58,362 43,490
57,529 43,755
58,548 44,048
60,672 44,343
62,465 44,694
62,377 45,011
66,323 45,326
67,365 45,662
67,310 45,958
66,344 46,271
67,446 46,590
89 68,687 46,874
65,533 47,142
66,234 47,410
67,578 47,714
66,541 48,043
71,214 48,370
70,982 48,674
70,955 49,005
66,481 49,329
64,314 49,625
64,286 49,962
67,252 50,247
90 68,667 50,548
70,922 50,811
74,664 51,055
76,053 51,280
76,316 51,552
78,820 51,794
76,216 52,011
78,945 52,266
80,422 52,507
79,523 52,748
80,405 52,970
78,042 53,176
91 84,752 53,378
83,616 53,560
84,486 53,710
83,290 53,892
85,196 54,065
85,604 54,216
84,717 54,390
87,387 54,558
86,078 54,700
86,890 54,842
87,176 54,969
89,486 55,095
92 90,453 55,249
91,013 55,376
92,016 55,498
93,614 55,637
91,858 55,770
93,843 55,893
94,136 56,033
93,836 56,167
96,699 56,308
96,183 56,454
97,774 56,578
97,093 56,720
93 98,087 56,850
100,753 56,992
98,615 57,112
95,249 57,266
96,281 57,421
97,589 57,605
95,734 57,783
98,297 57,945
101,558 58,159
99,666 58,375
101,566 58,596
98,647 58,813
94 99,883 59,072
102,044 59,320
105,307 59,557
107,925 59,831
110,571 60,095
114,257 60,419
116,566 60,703
119,871 60,976
120,235 61,263
124,521 61,526
124,249 61,816
128,920 62,075
95 131,033 62,379
134,939 62,648
136,120 62,892
137,313 63,137
139,129 63,428
142,287 63,694
142,868 63,949
137,490 64,237
140,063 64,500
146,899 64,784
150,460 65,056
160,444 65,322
96 157,783 65,623
166,429 65,918
167,693 66,175
161,635 66,460
170,177 66,746
179,496 67,073
186,683 67,321
200,004 67,610
190,078 67,888
199,486 68,186
193,575 68,473
201,690 68,740
97 204,911 69,070
[END OF GRAPHICALLY REPRESENTED DATA]
Another variation of the example in Chart 7 is to gradually transfer principal
from a fixed investment into the stock market. Chart 8 assumes that a $20,000
fixed investment was made on January 1, 1980. For the next two years, $540 is
transferred monthly into the stock market (represented by the S&P 500). The
total investment, given this strategy, would have grown to $215,258 in 1997. In
contrast, had the principal not been transferred, the fixed investment would
have grown to $69,070. See "Notes" below.
CHART 8
[THE FOLLOWING DATA WAS REPRESENTED AS A LINE GRAPH
IN THE TYPESET DOCUMENT:]
$215,258 With $69,070 Without
Principal Transfer Principal Transfer
(Value as of Last Day of Year)
1/1/80 20,000 20,000
20,540 20,160
20,702 20,339
20,770 20,586
21,068 20,845
21,425 21,014
21,659 21,142
22,000 21,254
22,149 21,390
22,394 21,550
22,623 21,755
23,446 21,964
80 23,372 22,252
23,246 22,483
23,569 22,724
24,053 22,999
24,031 23,247
24,246 23,514
24,324 23,832
24,514 24,127
24,051 24,436
23,651 24,739
24,397 25,039
25,087 25,306
81 24,857 25,527
24,193 25,731
23,594 25,968
23,618 26,222
24,248 26,518
23,995 26,799
23,892 27,057
23,731 27,341
25,407 27,549
25,647 27,689
27,281 27,852
28,031 28,028
82 28,386 28,216
29,041 28,410
29,568 28,587
30,282 28,767
31,737 28,971
31,721 29,171
32,549 29,366
32,000 29,584
32,424 29,808
32,790 30,035
32,616 30,263
33,176 30,475
83 33,142 30,698
33,104 30,931
32,544 31,150
32,969 31,378
33,202 31,632
32,246 31,879
32,767 32,118
32,593 32,381
34,841 32,650
34,959 32,931
35,133 33,260
35,058 33,503
84 35,692 33,717
37,434 33,936
37,844 34,133
37,970 34,345
37,984 34,592
39,531 34,820
40,023 35,012
40,038 35,229
39,976 35,423
39,254 35,635
40,428 35,867
42,341 36,086
85 43,701 36,320
43,926 36,524
46,184 36,717
47,968 36,938
47,659 37,130
49,498 37,312
50,136 37,506
48,265 37,701
50,769 37,874
47,982 38,045
49,830 38,220
50,767 38,369
86 49,918 38,557
54,519 38,719
56,165 38,885
57,317 39,068
57,035 39,240
57,525 39,389
59,630 39,578
61,849 39,760
63,662 39,947
62,711 40,127
52,932 40,367
50,090 40,509
87 52,585 40,667
54,165 40,785
55,951 40,972
54,862 41,152
55,344 41,342
55,720 41,553
57,582 41,756
57,509 41,969
56,280 42,217
58,018 42,478
59,225 42,738
58,749 42,981
88 59,588 43,252
62,695 43,490
61,691 43,755
62,824 44,048
65,234 44,343
67,232 44,694
67,118 45,011
71,581 45,326
72,728 45,662
72,661 45,958
71,544 46,271
72,760 46,590
89 74,150 46,874
70,617 47,142
71,385 47,410
72,851 47,714
71,676 48,043
76,833 48,370
76,576 48,674
76,526 49,005
71,611 49,329
69,246 49,625
69,192 49,962
72,438 50,247
90 73,964 50,548
76,420 50,811
80,470 51,055
81,977 51,280
82,241 51,552
84,947 51,794
82,165 52,011
85,076 52,266
86,666 52,507
85,709 52,748
86,662 52,970
84,157 53,176
91 91,300 53,378
90,106 53,560
91,047 53,710
89,770 53,892
91,798 54,065
92,244 54,216
91,302 54,390
94,130 54,558
92,765 54,700
93,626 54,842
93,940 54,969
96,377 55,095
92 97,388 55,249
97,994 55,376
99,055 55,498
100,732 55,637
98,899 55,770
100,989 55,893
101,297 56,033
100,991 56,167
103,992 56,308
103,458 56,454
105,136 56,578
104,425 56,720
93 105,474 56,850
108,259 56,992
106,046 57,112
102,533 57,266
103,617 57,421
104,976 57,605
103,062 57,783
105,741 57,945
109,118 58,159
107,170 58,375
109,151 58,596
106,146 58,813
94 107,426 59,072
109,681 59,320
113,071 59,557
115,775 59,831
118,526 60,095
122,319 60,419
124,733 60,703
128,155 60,976
128,547 61,263
132,973 61,526
132,710 61,816
137,525 62,075
95 139,695 62,379
143,725 62,648
144,965 62,892
146,205 63,137
148,067 63,428
151,320 63,694
151,943 63,949
146,490 64,237
149,143 64,500
156,108 64,784
159,757 65,056
169,916 65,322
96 167,238 65,623
176,034 65,918
177,359 66,175
171,251 66,460
179,923 66,746
189,363 67,073
196,687 67,321
210,154 67,610
200,177 67,888
209,695 68,186
203,778 68,473
211,997 68,740
97 215,258 69,070
[END OF GRAPHICALLY REPRESENTED DATA]
NOTES
1. Common Stocks: Standard & Poor's (S&P) Composite Index is an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies. Results shown assume reinvestment of
dividends. Both market value and return on common stock will vary.
2. U.S. Government Securities: Long-term Government Bonds are measured using a
one-bond portfolio constructed each year containing a bond with
approximately a 20-year maturity and a reasonably current coupon. U.S.
Treasury Bills are measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month. U.S. Government securities are guaranteed
as to principal and interest and, if held to maturity, offer a fixed rate
of return.
However, market value and return on such securities will fluctuate prior to
maturity.
EQUI-VEST(R) can be effective for diversifying ongoing investments between
various asset categories. In addition, for individuals investing a lump sum,
special features are offered which help address the risk associated with timing
the equity markets. Specifically, an interest sweep function is offered whereby
an individual can initially contribute a lump sum in the Guaranteed Interest
Account and then sweep the interest generated by the investment into any of the
growth-oriented options over a specified period of time. In addition, a
fixed-dollar transfer function is offered whereby an individual can contribute a
lump sum in the Guaranteed Interest Account and then transfer a fixed-dollar
amount into the growth-oriented options over a specified period of time. Neither
of these features can guarantee a profit or assure against loss in a declining
market.
- --------------------------------------------------------------------------------
PART 11 -- LONG-TERM MARKET TRENDS
As a tool for understanding how different investment strategies may affect
long-term results, it may be useful to consider the historical returns on
different types of assets. The following charts present historical return trends
for various types of securities. The information presented, while not directly
related to the performance of the Investment Funds, helps to provide a
perspective on the potential returns of different asset classes over different
periods of time. By combining this information with your knowledge of your own
financial needs (e.g., the length of time until you retire, your financial
requirements at retirement), you may be able to better determine how you wish to
allocate plan contributions among the Investment Options available under your
plan.
Historically, the long-term investment performance of common stocks has
generally been superior to that of long- or short-term debt securities. For
those investors who have many years until retirement, or whose primary focus is
on long-term growth potential and protection against inflation, there may be
advantages to
12
<PAGE>
- --------------------------------------------------------------------------------
allocating some or all of their Annuity Account Value to those Investment Funds
that invest in stocks.
Growth of $1 Invested on January 1, 1957
(Values are as of last business day)
[THE FOLLOWING DATA WAS REPRESENTED AS A
SHADED AREA GRAPH IN THE TYPESET DOCUMENT:]
Common Stock Inflation
1957 0.89 1.03
1958 1.28 1.05
1959 1.43 1.06
1960 1.44 1.08
1961 1.83 1.09
1962 1.67 1.10
1963 2.05 1.12
1964 2.38 1.13
1965 2.68 1.15
1966 2.41 1.19
1967 2.99 1.23
1968 3.32 1.29
1969 3.04 1.36
1970 3.16 1.44
1971 3.61 1.49
1972 4.30 1.54
1973 3.67 1.67
1974 2.70 1.88
1975 3.70 2.01
1976 4.58 2.11
1977 4.25 2.25
1978 4.53 2.45
1979 5.37 2.78
1980 7.11 3.12
1981 6.76 3.40
1982 8.20 3.54
1983 10.05 3.67
1984 10.68 3.81
1985 14.11 3.96
1986 16.72 4.00
1987 17.60 4.18
1988 20.55 4.36
1989 27.03 4.57
1990 26.17 4.85
1991 34.16 4.99
1992 36.78 5.14
1993 40.46 5.28
1994 40.99 5.42
1995 56.33 5.56
1996 69.33 5.74
1997 92.44 5.85
[WHITE AREA = COMMON STOCK]
[BLACK AREA = INFLATION]
[END OF GRAPHICALLY REPRESENTED DATA]
Over shorter periods of time, however, common stocks tend to be subject to more
dramatic changes in value than fixed-income (debt) securities. Investors who are
nearing retirement age, or who have a need to limit short-term risk, may find it
preferable to allocate a smaller percentage of their Annuity Account Value to
those Investment Funds that invest in common stocks. The following graph
illustrates the monthly fluctuations in value of $1 based on monthly returns of
the Standard & Poor's 500 during 1990, a year that reflects the volatility
inherent in the investment of common stocks.
Growth of $1 invested on January 1, 1990
(Values are as of last business day)
[THE FOLLOWING DATA WAS REPRESENTED AS A BLACK & WHITE LINE GRAPH
IN THE TYPESET DOCUMENT:]
Intermediate-Term
Govt. Bonds Common Stocks
1/1/90 1.00 1.00
Jan. 0.99 0.93
Feb. 0.99 0.94
Mar. 0.99 0.97
Apr. 0.98 0.95
May 1.01 1.04
June 1.02 1.03
July 1.04 1.03
Aug. 1.03 0.93
Sep. 1.04 0.89
Oct. 1.06 0.89
Nov. 1.08 0.94
Dec. 1.10 0.97
[BLACK DOTS = INTERMEDIATE-TERM GOVT. BONDS]
[WHITE DOTS = COMMON STOCKS]
[END OF GRAPHICALLY REPRESENTED DATA]
The following chart illustrates average annual rates of return over selected
time periods between December 31, 1926 and December 31, 1997 for different types
of securities: common stocks, long-term government bonds, long-term corporate
bonds, intermediate-term government bonds and U.S. Treasury Bills. For
comparison purposes, the Consumer Price Index is shown as a measure of
inflation. The average annual returns shown in the chart reflect capital
appreciation and assume the reinvestment of dividends and interest. No
investment management fees or expenses, and no charges typically associated with
deferred annuity products, are reflected. The information presented is merely a
summary of past experience for unmanaged groups of securities and is neither an
estimate nor guarantee of future performance. Any investment in securities,
whether equity or debt, involves varying degrees of potential risk, in addition
to offering varying degrees of potential reward.
The rates of return illustrated do not represent returns of the Separate
Account. In addition, there is no assurance that the performance of the
Investment Funds will correspond to rates of return such as those illustrated in
the chart.
For a comparative illustration of performance results of the Investment Funds
(which reflect The Hudson River Trust and Separate Account charges), see
"Investment Fund Performance" in Part 3 of the prospectus or the Trust
prospectuses for EQAT and HRT (which do not reflect Separate Account charges).
13
<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
MARKET TRENDS:
ILLUSTRATIVE ANNUAL RATES OF RETURN
- -------------------------------------------------------------------------------------------------------------------------------
LONG-TERM INTERMEDIATE- U.S.
FOR THE FOLLOWING PERIODS COMMON LONG-TERM CORPORATE TERM TREASURY CONSUMER
ENDING 12/31/97: STOCKS GOVT. BONDS BONDS GOVT. BONDS BILLS PRICE INDEX
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1 Year 33.36% 15.85% 12.95% 8.38% 5.26% 1.92%
3 Years 31.15% 14.76% 13.36% 8.93% 5.35% 2.59%
5 Years 20.24% 10.51% 9.22% 6.40% 4.57% 2.64%
10 Years 18.05% 11.32% 10.85% 8.33% 5.44% 3.43%
20 Years 16.65% 10.39% 10.29% 9.51% 7.29% 4.90%
30 Years 12.12% 8.63% 8.86% 8.52% 6.77% 5.34%
40 Years 12.30% 6.71% 7.09% 7.10% 5.85% 4.44%
50 Years 13.12% 5.70% 6.07% 6.04% 4.99% 3.94%
60 Years 12.53% 5.31% 5.54% 5.44% 4.18% 4.11%
Since 12/31/26 10.99% 5.19% 5.71% 5.25% 3.77% 3.17%
Inflation adjusted since 1926 7.58% 1.96% 2.46% 2.02% 0.58% --
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
SOURCE: Ibbotson, Roger G., and Rex A. Sinquefield, Stocks, Bonds, Bills, and
Inflation (SBBI), 1982, updated in Stocks, Bonds, Bills and Inflation 1998
Yearbook,(TM) Ibbotson Associates, Inc., Chicago. All rights reserved.
COMMON STOCKS (S&P 500) -- Standard and Poor's Composite Index, an unmanaged
weighted index of the stock performance of 500 industrial, transportation,
utility and financial companies.
LONG-TERM GOVERNMENT BONDS -- Measured using a one-bond portfolio constructed
each year containing a bond with approximately a twenty-year maturity and a
reasonably current coupon.
LONG-TERM CORPORATE BONDS -- For the period 1969-1997, represented by the
Salomon Brothers Long-Term, High-Grade Corporate Bond Index; for the period
1946-1968, the Salomon Brothers Index was backdated using Salomon Brothers
monthly yield data and a methodology similar to that used by Salomon Brothers
for 1969-1997; for the period 1927-1945, the Standard and Poor's monthly
High-Grade Corporate Composite yield data were used, assuming a 4 percent coupon
and a twenty-year maturity.
INTERMEDIATE-TERM GOVERNMENT BONDS -- Measured by a one-bond portfolio
constructed each year containing a bond with approximately a five-year maturity.
U.S. TREASURY BILLS -- Measured by rolling over each month a one-bill portfolio
containing, at the beginning of each month, the bill having the shortest
maturity not less than one month.
INFLATION -- Measured by the Consumer Price Index for all Urban Consumers
(CPI-U), not seasonally adjusted.
- --------------------------------------------------------------------------------
PART 12 -- CUSTODIAN AND INDEPENDENT ACCOUNTANTS
Equitable Life is the custodian for the shares of HRT and EQAT owned by the
Separate Account.
The financial statements as of December 31, 1997 and for each of the two years
in the period then ended for the Separate Account and the financial statements
as of December 31, 1997 and December 31, 1996 and for each of the three years
ended December 31, 1997 for Equitable Life have been audited by Price Waterhouse
LLP, as stated in its reports. These financial statements included in this SAI
have been so included in reliance on the reports of Price Waterhouse LLP,
independent accountants, given the authority of such firm as experts in
accounting and auditing.
- --------------------------------------------------------------------------------
PART 13 -- FINANCIAL STATEMENTS
The consolidated financial statements of The Equitable Life Assurance Society of
the United States included herein should be considered only as bearing upon the
ability of Equitable Life to meet its obligations under the Contracts.
14
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Report of Independent Accountants.......................................................................... FSA-1
Financial Statements:
Statements of Assets and Liabilities, December 31, 1997............................................ FSA-2
Statements of Operations for the Year Ended December 31, 1997...................................... FSA-8
Statements of Changes in Net Assets for the Years Ended December 31, 1997 and 1996................. FSA-11
Notes to Financial Statements...................................................................... FSA-16
</TABLE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
Index to Consolidated Financial Statements
<TABLE>
<CAPTION>
<S> <C>
Report if Independent Accountants.......................................................................... F-1
Consolidated Financial Statements:
Consolidated Balance Sheets, December 31, 1997 and 1996............................................ F-2
Consolidated Statements of Earnings, Years Ended December 31, 1997, 1996 and 1995 ................. F-3
Consolidated Statements of Shareholder's Equity, Years Ended December 31, 1f997, 1996 and 1995 .... F-4
Consolidated Statements of Cash Flows, Years Ended December 31, 1997, 1996, and 1995............... F-5
Notes to Consolidated Financial Statements......................................................... F-6
FSA-1
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors of
The Equitable Life Assurance Society of the United States
and Contractowners of Separate Account A
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 of changes in net assets 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, T. Rowe Price Equity Income Fund, EQ/Putnam Growth &
Income Value Fund, Alliance Growth & Income Fund, Alliance Equity Index Fund,
Merrill Lynch Basic Value Equity Fund, Alliance Common Stock Fund, MFS Research
Fund, Alliance Global Fund, Alliance International Fund, T. Rowe Price
International Stock Fund, Morgan Stanley Emerging Markets Equity Fund, Alliance
Aggressive Stock Fund, Warburg Pincus Small Company Value Fund, Alliance Small
Cap Growth Fund, MFS Emerging Growth Companies Fund, Alliance Conservative
Investors Fund, EQ/Putnam Balanced Fund, Alliance Growth Investors Fund,
Alliance Balanced Fund and Merrill Lynch World Strategy Fund, separate
investment funds of The Equitable Life Assurance Society of the United States
("Equitable Life") Separate Account A at December 31, 1997 and the results of
each of their operations and changes in each of their net assets for the periods
indicated, 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 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 and in the EQ Advisors Trust at December 31, 1997 with the
transfer agent, provide a reasonable basis for the opinion expressed above. The
unit value information presented in Note 6 for the year ended December 31, 1992
and for each of the periods indicated prior thereto, were audited by other
independent accountants whose report dated February 16, 1993 expressed an
unqualified opinion on the financial statements containing such information.
Price Waterhouse LLP
New York, New York
February 10, 1998
FSA-2
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
--------------------------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE
MONEY GOVERNMENT QUALITY HIGH
MARKET SECURITIES BOND YIELD
FUND FUND FUND FUND
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Trusts,
at market value (Note 2):
Cost: $ 99,808,882..................... $99,377,297
37,476,251..................... $37,934,807
40,601,722..................... $41,416,948
159,273,234..................... $160,330,252
Receivable for Trust shares sold................... 511,452 -- -- --
Due from Equitable Life's General Account
(Note 3)........................................ -- 110,929 196,499 2,414,213
----------- ----------- ----------- ------------
Total assets................................ 99,888,749 38,045,736 41,613,447 162,744,465
----------- ----------- ----------- ------------
LIABILITIES:
Payable for Trust shares purchased................ -- 110,398 196,512 2,414,326
Due to Equitable Life's General Account
(Note 3)........................................ 509,160 -- -- --
Net accumulated amount of (i) mortality risk,
death benefit, expense and expense risk charges
and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)............. 1,508,071 921,349 767,775 2,116,607
----------- ----------- ----------- ------------
Total liabilities........................... 2,017,231 1,031,747 964,287 4,530,933
----------- ----------- ----------- ------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS
(NOTE 5)........................................ $97,871,518 $37,013,989 $40,649,160 $158,213,532
=========== =========== =========== ============
<CAPTION>
EQUITY SERIES:
------------------------------------------------------------
EQ/
PUTNAM
T. ROWE GROWTH & ALLIANCE ALLIANCE
PRICE INCOME GROWTH & EQUITY
EQUITY INCOME VALUE INCOME INDEX
FUND FUND FUND FUND
-------------- ------------ --------------- --------------
<S> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Trusts,
at market value (Note 2):
Cost: $ 56,297,094..................... $59,716,685
30,126,429..................... $30,870,233
320,920,151..................... $374,003,572
533,233,070..................... $655,445,138
Receivable for Trust shares sold................... -- -- -- --
Due from Equitable Life's General Account
(Note 3)........................................ 732,059 637,703 3,340,846 3,976,585
----------- ----------- ------------ ------------
Total assets................................ 60,448,744 31,507,936 377,344,418 659,421,723
----------- ----------- ------------ ------------
LIABILITIES:
Payable for Trust shares purchased................ 743,416 643,508 3,340,876 3,976,820
Due to Equitable Life's General Account
(Note 3)........................................ -- -- -- --
Net accumulated amount of (i) mortality risk,
death benefit, expense and expense risk charges
and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)............. 2,220,436 2,109,700 4,119,275 6,558,008
----------- ----------- ------------ ------------
Total liabilities........................... 2,963,852 2,753,208 7,460,151 10,534,828
----------- ----------- ------------ ------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS
(NOTE 5)........................................ $57,484,892 $28,754,728 $369,884,267 $648,886,895
=========== =========== ============ ============
</TABLE>
See Notes to Financial Statements.
FSA-3
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
----------------------------------------------------------
ALLIANCE
ALLIANCE INTERMEDIATE ALLIANCE ALLIANCE
MONEY GOVERNMENT QUALITY HIGH
MARKET SECURITIES BOND YIELD
FUND FUND FUND FUND
------------ ------------- ------------ ------------
<S> <C> <C> <C> <C>
EQUI-VEST Series 100 and 200 Contracts:
Unit Value...................................... $ 29.41
============
Units Outstanding............................... 973,494
============
Old Contracts:
Unit Value...................................... $ 35.12
============
Units Outstanding............................... 119,295
============
EQUIPLAN Contracts:
Unit Value...................................... $ 54.83
=============
Units Outstanding............................... 49,547
=============
Momentum Contracts:
Unit Value...................................... $ 29.41 $ 118.98 $ 121.30 $ 160.74
============ ============= ============ ============
Units Outstanding............................... 307,657 10,333 9,994 28,727
============ ============= ============ ============
Momentum Plus Contracts:
Unit Value 135 B.P. ............................ $ 116.21 $ 114.78 $ 127.99 $ 171.56
============ ============= ============ ============
Units Outstanding............................... 324,836 76,800 37,376 109,928
============ ============= ============ ============
Momentum Plus Contract
Unit Value 100 B.P. ............................ $ 110.26 $ 112.32 $ 117.60 $ 149.49
============ ============= ============ ============
Units Outstanding............................... 12,808 2,448 1,159 5,414
============ ============= ============ ============
Momentum Plus Contracts:
Unit Value 90 B.P ..............................
Units Outstanding...............................
EQUI-VEST Contracts:
Unit Value All Series........................... $ 115.66 $ 118.98 $ 121.30 $ 160.74
============ ============= ============ ============
Units Outstanding............................... 145,622 201,501 283,096 831,373
============ ============= ============ ============
<CAPTION>
EQUITY SERIES:
-----------------------------------------------------------
EQ/
PUTNAM
T. ROWE GROWTH & ALLIANCE ALLIANCE
PRICE INCOME GROWTH & EQUITY
EQUITY INCOME VALUE INCOME INDEX
FUND FUND FUND FUND
-------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
EQUI-VEST Series 100 and 200 Contracts:
Unit Value......................................
Units Outstanding...............................
Old Contracts:
Unit Value......................................
Units Outstanding...............................
EQUIPLAN Contracts:
Unit Value......................................
Units Outstanding...............................
Momentum Contracts:
Unit Value...................................... $ 179.30 $ 214.66
============== =============
Units Outstanding............................... 69,005 93,639
============== =============
Momentum Plus Contracts:
Unit Value 135 B.P. ............................ $ 179.60 $ 214.58
============== =============
Units Outstanding............................... 183,028 230,739
============== =============
Momentum Plus Contracts:
Unit Value 100 B.P. ............................ $ 155.11 $ 170.23
============== =============
Units Outstanding............................... 3,495 5,349
============== =============
Momentum Plus Contracts:
Unit Value 90 B.P. ............................. $ 145.48 $ 150.05
============== =============
Units Outstanding............................... 1,104 3,298
============== =============
EQUI-VEST Contracts:
Unit Value All Series........................... $ 121.04 $ 115.17 $ 179.30 $ 214.66
=========== ============ ============== =============
Units Outstanding............................... 474,941 249,663 1,799,603 2,685,539
=========== ============ ============== =============
</TABLE>
See Notes to Financial Statements.
FSA-4
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
-----------------------------------------------------------------------------
MERRILL ALLIANCE
LYNCH BASIC COMMON MFS ALLIANCE ALLIANCE
VALUE EQUITY STOCK RESEARCH GLOBAL INTERNATIONAL
FUND FUND FUND FUND FUND
-------------- ---------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Trusts,
at market value (Note 2):
Cost: $ 18,666,532..................... $18,893,428
4,421,334,464..................... $5,972,107,521
30,189,929..................... $30,667,805
559,352,701..................... $616,196,373
134,600,521..................... $120,037,626
Receivable for Trust shares sold.................. -- -- -- -- --
Due from Equitable Life's General Account
(Note 3)........................................ 381,442 14,027,000 456,885 1,621,066 134,576
----------- -------------- ----------- ------------ ------------
Total assets................................ 19,274,870 5,986,134,521 31,124,690 617,817,439 120,172,202
----------- -------------- ----------- ------------ ------------
LIABILITIES:
Payable for Trust shares purchased................ 384,841 13,622,025 462,419 1,620,982 134,543
Due to Equitable Life's General Account
(Note 3)........................................ -- -- -- -- --
Net accumulated amount of (i) mortality risk,
death benefit, expense and expense risk charges
and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)............. 2,114,485 48,536,522 3,487,741 7,684,826 1,948,370
----------- -------------- ----------- ------------ ------------
Total liabilities........................... 2,499,326 62,158,547 3,950,160 9,305,808 2,082,913
----------- -------------- ----------- ------------ ------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS
(NOTE 5)........................................ $16,775,544 $5,923,975,974 $27,174,530 $608,511,631 $118,089,289
=========== ============== =========== ============ ============
<CAPTION>
EQUITY SERIES (CONTINUED):
-----------------------------------------------
MORGAN
T. ROWE STANLEY
PRICE EMERGING ALLIANCE
INTERNATIONAL MARKETS AGGRESSIVE
STOCK EQUITY STOCK
FUND FUND FUND
--------------- ------------ ----------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of The Trusts,
at market value (Note 2):
Cost: $ 44,816,223..................... $43,898,710
14,541,443..................... $13,443,459
3,425,215,535..................... $3,449,389,637
Receivable for Trust shares sold.................. 2,038,669 -- --
Due from Equitable Life's General Account
(Note 3)........................................ -- 490,394 6,153,804
----------- ----------- --------------
Total assets................................ 45,937,379 13,933,853 3,455,543,441
----------- ----------- --------------
LIABILITIES:
Payable for Trust shares purchased................ -- 491,842 5,879,261
Due to Equitable Life's General Account
(Note 3)........................................ 2,046,677 -- --
Net accumulated amount of (i) mortality risk,
death benefit, expense and expense risk charges
and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)............. 5,962,235 4,796,244 24,442,936
----------- ----------- --------------
Total liabilities........................... 8,008,912 5,288,086 30,322,197
----------- ----------- --------------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS
(NOTE 5)........................................ $37,928,467 $ 8,645,767 $3,425,221,244
=========== =========== ==============
</TABLE>
See Notes to Financial Statements.
FSA-5
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
---------------------------------------------------------------
MERRILL ALLIANCE
LYNCH BASIC COMMON MFS ALLIANCE
VALUE STOCK RESEARCH GLOBAL
EQUITY FUND FUND FUND FUND
------------- ----------------- ------------ ---------------
<S> <C> <C> <C> <C>
EQUI-VEST Series 100 and 200 Contracts:
Unit Value...................................... $ 253.68
================
Units Outstanding............................... 17,386,160
================
Old Contracts:
Unit Value...................................... $ 316.64
================
Units Outstanding............................... 306,654
================
EQUIPLAN Contracts:
Unit Value...................................... $ 342.99
================
Units Outstanding............................... 85,013
================
Momentum Contracts:
Unit Value...................................... $ 253.68 $ 151.87
================ ==============
Units Outstanding............................... 588,761 146,584
================ ==============
Momentum Plus Contracts:
Unit Value 135 B.P. ............................ $ 207.00 $ 154.62
================ ==============
Units Outstanding............................... 1,192,138 464,023
================ ==============
Momentum Plus Contracts:
Unit Value 100 B.P. ............................ $ 161.04 $ 128.51
================ ==============
Units Outstanding............................... 37,267 12,006
================ ==============
Momentum Plus Contracts:
Unit Value 90 B.P. ............................. $ 148.44 $ 122.12
================ ==============
Units Outstanding............................... 4,878 2,404
================ ==============
EQUI-VEST Contracts:
Unit Value All Series........................... $ 115.97 $ 198.12 $ 115.01 $ 151.87
============ ================ =========== ==============
Units Outstanding............................... 144,651 4,765,267 236,272 3,369,340
============ ================ =========== ==============
<CAPTION>
EQUITY SERIES (CONTINUED):
--------------------------------------------------------------
T. ROWE MORGAN
PRICE STANLEY ALLIANCE
ALLIANCE INTERNATIONAL EMERGING AGGRESSIVE
INTERNATIONAL STOCK MARKETS STOCK
FUND FUND EQUITY FUND FUND
------------- ------------- ------------- ----------------
<S> <C> <C> <C> <C>
EQUI-VEST Series 100 and 200 Contracts:
Unit Value...................................... $ 90.75
===============
Units Outstanding............................... 28,030,046
===============
Old Contracts:
Unit Value......................................
Units Outstanding...............................
EQUIPLAN Contracts:
Unit Value......................................
Units Outstanding...............................
Momentum Contracts:
Unit Value...................................... $ 107.92 $ 90.75
============ ===============
Units Outstanding............................... 32,229 1,437,474
============ ===============
Momentum Plus Contracts:
Unit Value 135 B.P. ............................ $ 107.89 $ 171.96
============ ===============
Units Outstanding............................... 85,223 1,220,343
============ ===============
Momentum Plus Contracts:
Unit Value 100 B.P. ............................ $ 108.42 $ 137.72
============ ===============
Units Outstanding............................... 3,225 35,404
============ ===============
Momentum Plus Contracts:
Unit Value 90 B.P. ............................. $ 104.70 $ 119.41
============ ===============
Units Outstanding............................... 788 6,913
============ ===============
EQUI-VEST Contracts:
Unit Value All Series........................... $ 107.92 $ 97.61 $ 79.41 $ 163.33
============ ============ ============ ===============
Units Outstanding............................... 968,042 388,566 108,869 3,226,462
============ ============ ============ ===============
</TABLE>
See Notes to Financial Statements.
FSA-6
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONTINUED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
--------------------------------------------
WARBURG MFS EMERGING
PINCUS SMALL ALLIANCE GROWTH
COMPANY VALUE SMALL CAP COMPANIES
FUND GROWTH FUND FUND
-------------- -------------- --------------
<S> <C> <C> <C>
ASSETS:
Investments in shares of The Trusts,
at market value (Note 2):
Cost: $ 69,173,531..................... $69,195,794
67,121,984..................... $65,557,335
34,360,930..................... $34,766,133
Receivable for Trust shares sold.................. -- 3,097,257 --
Due from Equitable Life's General Account
(Note 3)........................................ 914,658 -- 636,822
----------- ----------- -----------
Total assets................................ 70,110,452 68,654,592 35,402,955
----------- ----------- -----------
LIABILITIES:
Payable for Trust shares purchased................ 928,477 -- 643,099
Due to Equitable Life's General Account
(Note 3)........................................ -- 3,097,339 --
Net accumulated amount of (i) mortality risk,
death benefit, expense and expense risk charges
and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)............. 1,116,417 2,494,021 3,688,505
----------- ----------- -----------
Total liabilities........................... 2,044,894 5,591,360 4,331,604
----------- ----------- -----------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS
(NOTE 5)........................................ $68,065,558 $63,063,232 $31,071,351
=========== =========== ===========
<CAPTION>
ASSET ALLOCATION SERIES:
----------------------------------------------------------------------------
ALLIANCE ALLIANCE MERRILL
CONSERVATIVE EQ/ GROWTH ALLIANCE LYNCH WORLD
INVESTORS PUTNAM INVESTORS BALANCED STRATEGY
FUND BALANCED FUND FUND FUND FUND
-------------- -------------- --------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments in shares of The Trusts,
at market value (Note 2):
Cost: $ 87,775,009..................... $94,401,613
15,266,095..................... $15,868,886
627,594,515..................... $690,127,541
1,135,324,973..................... $1,207,894,355
8,724,756..................... $8,571,144
Receivable for Trust shares sold.................. -- 6,326 -- -- --
Due from Equitable Life's General Account
(Note 3)........................................ 133,777 -- 2,498,667 633,174 68,569
----------- ----------- ------------ -------------- ----------
Total assets................................ 94,535,390 15,875,212 692,626,208 1,208,527,529 8,639,713
----------- ----------- ------------ -------------- ----------
LIABILITIES:
Payable for Trust shares purchased................ 133,792 -- 2,498,682 496,807 69,680
Due to Equitable Life's General Account
(Note 3)........................................ -- 8,792 -- -- --
Net accumulated amount of (i) mortality risk,
death benefit, expense and expense risk charges
and (ii) mortality and other gains and losses
retained by Equitable Life (Note 3)............. 1,738,387 3,445,396 8,417,048 10,074,705 3,144,734
----------- ----------- ------------ -------------- ----------
Total liabilities........................... 1,872,179 3,454,188 10,915,730 10,571,512 3,214,414
----------- ----------- ------------ -------------- ----------
NET ASSETS ATTRIBUTABLE TO CONTRACT OWNERS
(NOTE 5)........................................ $92,663,211 $12,421,024 $681,710,478 $1,197,956,017 $5,425,299
=========== =========== ============ ============== ==========
</TABLE>
See Notes to Financial Statements.
FSA-7
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF ASSETS AND LIABILITIES (CONCLUDED)
DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
------------------------------------------
WARBURG MFS
PINCUS EMERGING
SMALL ALLIANCE GROWTH
COMPANY SMALL CAP COMPANIES
VALUE FUND GROWTH FUND FUND
------------- ------------- -------------
<S> <C> <C> <C>
EQUI-VEST Series 100 and 200 Contracts:
Unit Value......................................
Units Outstanding...............................
Old Contracts:
Unit Value......................................
Units Outstanding...............................
EQUIPLAN Contracts:
Unit Value......................................
Units Outstanding...............................
Momentum Contracts:
Unit Value...................................... $ 125.55
============
Units Outstanding............................... 6,136
============
Momentum Plus Contracts:
Unit Value 135 B.P. ............................ $ 125.54
============
Units Outstanding............................... 7,852
============
Momentum Plus Contracts:
Unit Value 100 B.P. ............................
Units Outstanding...............................
Momentum Plus Contracts:
Unit Value 90 B.P. ............................. $ 125.92
============
Units Outstanding............................... 466
============
EQUI-VEST Contracts:
Unit Value All Series........................... $ 118.06 $ 125.55 $ 121.34
============ ============ ============
Units Outstanding............................... 576,540 487,742 256,071
============ ============ ============
<CAPTION>
ASSET ALLOCATION SERIES:
------------------------------------------------------------------------------
ALLIANCE EQ/ ALLIANCE MERRILL
CONSERVATIVE PUTNAM GROWTH ALLIANCE LYNCH WORLD
INVESTORS BALANCED INVESTORS BALANCED STRATEGY
FUND FUND FUND FUND FUND
-------------- ------------ --------------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
EQUI-VEST Series 100 and 200 Contracts:
Unit Value...................................... $ 38.66
===============
Units Outstanding............................... 26,036,131
===============
Old Contracts:
Unit Value......................................
Units Outstanding...............................
EQUIPLAN Contracts:
Unit Value......................................
Units Outstanding...............................
Momentum Contracts:
Unit Value...................................... $ 130.98 $ 153.69 $ 38.66
============= ============== ===============
Units Outstanding............................... 22,384 147,114 1,052,060
============= ============== ===============
Momentum Plus Contracts:
Unit Value 135 B.P. ............................ $ 128.45 $ 155.46 $ 136.14
============= ============== ===============
Units Outstanding............................... 124,945 552,622 438,958
============= ============== ===============
Momentum Plus Contracts:
Unit Value 100 B.P. ............................ $ 122.71 $ 135.20 $ 129.97
============= ============== ===============
Units Outstanding............................... 5,306 13,624 10,413
============= ============== ===============
Momentum Plus Contracts:
Unit Value 90 B.P. ............................. $ 126.72 $ 122.68
============== ===============
Units Outstanding............................... 1,489 732
============== ===============
EQUI-VEST Contracts:
Unit Value All Series........................... $ 130.98 $ 113.46 $ 153.69 $ 135.29 $ 103.77
============= =========== ============== =============== ============
Units Outstanding............................... 553,088 109,479 3,704,411 655,078 52,280
============= =========== ============== =============== ============
</TABLE>
See Notes to Financial Statements.
FSA-8
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
--------------------------------------------------------
ALLIANCE
INTERMEDIATE ALLIANCE ALLIANCE
ALLIANCE GOVERNMENT QUALITY HIGH
MONEY SECURITIES BOND YIELD
MARKET FUND FUND FUND FUND
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from The Trusts..................... $4,839,897 $1,826,730 $2,041,253 $11,592,196
------------- ------------- ------------ -------------
Expenses (Note 3):
Asset-based charges........................... 1,287,340 413,101 418,433 1,570,483
Less: Reduction for expense limitation............. 54,412 7,677 -- --
------------- ------------- ------------ -------------
Net expenses.................................. 1,232,928 405,424 418,433 1,570,483
------------- ------------- ------------ -------------
NET INVESTMENT INCOME (LOSS)....................... 3,606,969 1,421,306 1,622,820 10,021,713
------------- ------------- ------------ -------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) on investments............. 230,228 63,438 249,479 2,536,702
Realized gain distribution from
The Trusts.................................... 6,723 -- -- 6,214,579
------------- ------------- ------------ -------------
Net realized gain (loss)........................ 236,951 63,438 249,479 8,751,281
Change in unrealized appreciation /
(depreciation) of investments................. (78,466) 431,540 547,099 (187,263)
------------- ------------- ------------ -------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. 158,485 494,978 796,578 8,564,018
------------- ------------- ------------ -------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (NOTE 2).............. $3,765,454 $1,916,284 $2,419,398 $18,585,731
============= ============= ============ =============
<CAPTION>
EQUITY SERIES:
---------------------------------------------------------
T. ROWE EQ/PUTNAM
PRICE GROWTH ALLIANCE ALLIANCE
EQUITY & INCOME GROWTH & EQUITY
INCOME VALUE INCOME INDEX
FUND FUND(a) FUND(a) FUND
------------ ----------- -------------- --------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from The Trusts..................... $ 438,863 $ 142,038 $ 2,696,998 $ 6,970,304
---------- --------- ----------- ------------
Expenses (Note 3):
Asset-based charges........................... 225,256 114,445 3,578,668 6,184,473
Less: Reduction for expense limitation............. -- -- -- --
---------- --------- ----------- ------------
Net expenses.................................. 225,256 114,445 3,578,668 6,184,473
---------- --------- ----------- ------------
NET INVESTMENT INCOME (LOSS)....................... 213,607 27,593 (881,670) 785,831
---------- --------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) on investments............. (78,048) (67,660) 1,591,673 12,944,769
Realized gain distribution from
The Trusts.................................... 162,267 116,222 21,045,762 2,306,391
---------- --------- ----------- ------------
Net realized gain (loss)........................ 84,219 48,562 22,637,435 15,251,160
Change in unrealized appreciation /
(depreciation) of investments................. 3,419,591 743,804 34,617,976 98,430,290
---------- --------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. 3,503,810 792,366 57,255,411 113,681,450
---------- --------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (NOTE 2).............. $3,717,417 $ 819,959 $56,373,741 $114,467,281
========== ========= =========== ============
</TABLE>
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FSA-9
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS (CONTINUED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
------------------------------------------------------------------------
MERRILL
LYNCH
BASIC ALLIANCE
VALUE COMMON MFS ALLIANCE ALLIANCE
EQUITY STOCK RESEARCH GLOBAL INTERNATIONAL
FUND(A) FUND FUND(A) FUND FUND
----------- ----------------- ----------- ------------- ---------------
<S> <C> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from The Trusts..................... $ 94,301 $ 28,062,216 $ 64,096 $11,681,807 $ 3,449,567
-------- -------------- -------- ----------- ------------
Expenses (Note 3):
Asset-based charges........................... 66,262 73,360,152 108,418 7,628,464 1,608,336
Less: Reduction for expense limitation............. -- 5,103,502 -- -- --
-------- -------------- -------- ----------- ------------
Net expenses.................................. 66,262 68,256,650 108,418 7,628,464 1,608,336
-------- -------------- -------- ----------- ------------
NET INVESTMENT INCOME (LOSS)....................... 28,039 (40,194,434) (44,322) 4,053,343 1,841,231
-------- -------------- -------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) on investments............. (55,907) 71,768,217 (98,011) 5,065,778 2,993,293
Realized gain distribution from
The Trusts.................................... 88,843 448,646,414 254,461 39,040,804 5,991,553
-------- -------------- -------- ----------- ------------
Net realized gain (loss)........................ 32,936 520,414,631 156,450 44,106,582 8,984,846
Change in unrealized appreciation /
(depreciation) of investments................. 226,896 776,898,715 477,876 7,345,361 (15,797,804)
-------- -------------- -------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. 259,832 1,297,313,346 634,326 51,451,943 (6,812,958)
-------- -------------- -------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (NOTE 2).............. $287,871 $1,257,118,912 $590,004 $55,505,286 $ (4,971,727)
======== ============== ========= =========== ============
<CAPTION>
EQUITY SERIES (CONTINUED):
-------------------------------------------
MORGAN
T. ROWE STANLEY
PRICE EMERGING ALLIANCE
INTERNATIONAL MARKETS AGGRESSIVE
STOCK EQUITY STOCK
FUND(A) FUND(b) FUND
------------- ------------- ---------------
<S> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from The Trusts..................... $ 5,743 $ 36,217 $ 4,814,252
----------- ----------- ------------
Expenses (Note 3):
Asset-based charges........................... 173,085 21,069 43,986,211
Less: Reduction for expense limitation............. -- -- 3,148,227
----------- ----------- ------------
Net expenses.................................. 173,085 21,069 40,837,984
----------- ----------- ------------
NET INVESTMENT INCOME (LOSS)....................... (167,342) 15,148 (36,023,732)
----------- ----------- ------------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) on investments............. (1,454,589) (875,317) 128,458,759
Realized gain distribution from
The Trusts.................................... -- -- 286,431,791
----------- ----------- ------------
Net realized gain (loss)........................ (1,454,589) (875,317) 414,890,550
Change in unrealized appreciation /
(depreciation) of investments................. (917,513) (1,097,984) (79,262,405)
----------- ----------- ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. (2,372,102) (1,973,301) 335,628,145
----------- ----------- ------------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (NOTE 2).............. $(2,539,444) $(1,958,153) $299,604,413
=========== =========== ============
</TABLE>
(a) Commenced operations on May 1, 1997.
(b) Commenced operations on August 20, 1997.
See Notes to Financial Statements.
FSA-10
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF OPERATIONS (CONCLUDED)
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
-----------------------------------------------------
WARBURG
PINCUS MFS
SMALL ALLIANCE EMERGING ALLIANCE
COMPANY SMALL CAP GROWTH CONSERVATIVE
VALUE GROWTH COMPANIES INVESTORS
FUND(A) FUND(A) FUND(A) FUND
---------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from The Trusts..................... $ 59,034 $ 11,202 $ 64,947 $3,599,823
--------- ---------- --------- ----------
Expenses (Note 3):
Asset-based charges........................... 292,506 237,355 124,265 1,151,097
Less: Reduction for expense limitation............. -- -- -- --
--------- ---------- --------- ----------
Net expenses.................................. 292,506 237,355 124,265 1,151,097
--------- ---------- --------- ----------
NET INVESTMENT INCOME (LOSS)....................... (233,472) (226,153) (59,318) 2,448,726
--------- ---------- --------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) on investments............. (699,272) 1,432,969 (381,340) 884,331
Realized gain distribution from
The Trusts.................................... 300,990 1,495,228 791,922 2,846,292
--------- ---------- --------- ----------
Net realized gain (loss)........................ (398,282) 2,928,197 410,582 3,730,623
Change in unrealized appreciation /
(depreciation) of investments................. 22,263 (1,564,649) 405,203 3,477,016
--------- ---------- --------- ----------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. (376,019) 1,363,548 815,785 7,207,639
--------- ---------- --------- ----------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (NOTE 2).............. $(609,491) $1,137,395 $ 756,467 $9,656,365
========= ========== ========= ==========
<CAPTION>
ASSET ALLOCATION SERIES:
-------------------------------------------------------
MERRILL
EQ/ ALLIANCE LYNCH
PUTNAM GROWTH ALLIANCE WORLD
BALANCED INVESTORS BALANCED STRATEGY
FUND(A) FUND FUND FUND(A)
----------- ------------- -------------- -----------
<S> <C> <C> <C> <C>
INCOME AND EXPENSES:
Investment Income (Note 2):
Dividends from The Trusts..................... $176,490 $15,563,176 $ 38,538,483 $ 38,392
-------- ----------- ------------ ---------
Expenses (Note 3):
Asset-based charges........................... 46,780 8,188,817 17,086,252 22,358
Less: Reduction for expense limitation............. -- -- 1,849,482 --
-------- ----------- ------------ ---------
Net expenses.................................. 46,780 8,188,817 15,236,770 22,358
-------- ----------- ------------ ---------
NET INVESTMENT INCOME (LOSS)....................... 129,710 7,374,359 23,301,713 16,034
-------- ----------- ------------ ---------
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS (NOTE 2):
Realized gain (loss) on investments............. (2,762) 2,871,160 20,098,513 (53,694)
Realized gain distribution from
The Trusts.................................... 118,192 35,753,101 59,000,879 87,431
-------- ----------- ------------ ---------
Net realized gain (loss)........................ 115,430 38,624,261 79,099,392 33,737
Change in unrealized appreciation /
(depreciation) of investments................. 602,835 40,925,116 45,961,244 (153,612)
-------- ----------- ------------ ---------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS.................................. 718,265 79,549,377 125,060,636 (119,875)
-------- ----------- ------------ ---------
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS (NOTE 2).............. $847,975 $86,923,736 $148,362,349 $(103,841)
======== =========== ============ =========
</TABLE>
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FSA-11
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
FIXED INCOME SERIES:
-------------------------------------------------------------
ALLIANCE ALLIANCE INTERMEDIATE
MONEY MARKET GOVERNMENT SECURITIES
FUND FUND
------------------------------ ----------------------------
1997 1996 1997 1996
-------------- --------------- ------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 3,606,969 $ 3,123,305 $ 1,421,306 $ 1,192,426
Net realized gain (loss) on investments......... 236,951 137,830 63,438 (84,183)
Change in unrealized appreciation /
(depreciation) of investments................. (78,466) 15,587 431,540 (386,046)
------------ ------------ ----------- -----------
Net increase in net assets from operations...... 3,765,454 3,276,722 1,916,284 722,197
------------ ------------ ----------- -----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 86,657,302 119,080,405 7,536,973 9,100,062
Transfers from other Funds and
Guaranteed Interest Account................. 47,922,157 28,258,231 8,017,226 7,049,068
------------ ------------ ----------- -----------
Total..................................... 134,579,459 147,338,636 15,554,199 16,149,130
------------ ------------ ----------- -----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 16,145,603 15,180,565 3,204,151 3,753,602
Transfers to other Funds and
Guaranteed Interest Account................. 117,776,744 119,609,249 6,576,233 5,943,525
Withdrawal and administrative charges......... 297,412 206,649 54,007 45,485
------------ ------------ ----------- -----------
Total................................... 134,219,759 134,996,463 9,834,391 9,742,612
------------ ------------ ----------- -----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 359,700 12,342,173 5,719,808 6,406,518
------------ ------------ ----------- -----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (68,437) (61,391) (50,296) (24,318)
------------ ------------ ----------- -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 4,056,717 15,557,504 7,585,796 7,104,397
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 93,814,801 78,257,297 29,428,193 22,323,796
------------ ------------ ----------- -----------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $ 97,871,518 $ 93,814,801 $37,013,989 $29,428,193
============ =============== ============= =============
<CAPTION>
FIXED INCOME SERIES:
-------------------------------------------------------------
ALLIANCE ALLIANCE
QUALITY BOND HIGH YIELD
FUND FUND
--------------------------- -----------------------------
1997 1996 1997 1996
-------------- ------------- ------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 1,622,820 $ 1,226,243 $ 10,021,713 $ 4,979,724
Net realized gain (loss) on investments......... 249,479 280,060 8,751,281 4,297,646
Change in unrealized appreciation /
(depreciation) of investments................. 547,099 (469,209) (187,263) 721,266
----------- ----------- ------------ -----------
Net increase in net assets from operations...... 2,419,398 1,037,094 18,585,731 9,998,636
----------- ----------- ------------ -----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 8,725,632 7,201,618 39,249,294 23,155,861
Transfers from other Funds and
Guaranteed Interest Account................. 14,735,972 11,609,924 81,831,743 30,143,138
----------- ----------- ------------ -----------
Total..................................... 23,461,604 18,811,542 121,081,037 53,298,999
----------- ----------- ------------ -----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 2,471,399 1,789,909 9,034,492 4,361,957
Transfers to other Funds and
Guaranteed Interest Account................. 9,009,004 8,691,630 50,004,724 13,868,715
Withdrawal and administrative charges......... 49,238 30,562 180,111 78,426
----------- ----------- ------------ -----------
Total................................... 11,529,641 10,512,101 59,219,327 18,309,098
----------- ----------- ------------ -----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 11,931,963 8,299,441 61,861,710 34,989,902
----------- ----------- ------------ -----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (51,466) (33,143) (195,148) (78,617)
----------- ----------- ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 14,299,895 9,303,392 80,252,293 44,909,921
----------- ----------- ------------ -----------
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 26,349,265 17,045,873 77,961,239 33,051,318
----------- ----------- ------------ -----------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $40,649,160 $26,349,265 $158,213,532 $77,961,239
=========== =========== ============ ===========
</TABLE>
See Notes to Financial Statements.
FSA-12
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES:
--------------------------------------------------------------------
T. ROWE EQ/PUTNAM
PRICE GROWTH &
EQUITY INCOME ALLIANCE
INCOME VALUE GROWTH & INCOME
FUND(A) FUND(A) FUND
------------- ------------- --------------------------------
1997 1997 1997 1996
------------- ------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 213,607 $ 27,593 $ (881,670) $ 674,662
Net realized gain (loss) on investments......... 84,219 48,562 22,637,435 9,675,338
Change in unrealized appreciation /
(depreciation) of investments................. 3,419,591 743,804 34,617,976 10,940,166
----------- ----------- ------------ ------------
Net increase in net assets from operations...... 3,717,417 819,959 56,373,741 21,290,166
----------- ----------- ------------ ------------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 14,253,368 9,287,300 77,902,559 44,131,391
Transfers from other Funds and
Guaranteed Interest Account................. 49,127,513 21,624,425 159,040,741 70,653,911
----------- ----------- ------------ ------------
Total..................................... 63,380,881 30,911,725 236,943,300 114,785,302
----------- ----------- ------------ ------------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 461,902 221,732 15,991,738 6,415,518
Transfers to other Funds and
Guaranteed Interest Account................. 8,775,894 2,466,969 70,222,768 36,251,785
Withdrawal and administrative charges......... 7,224 5,138 387,138 177,183
----------- ----------- ------------ ------------
Total................................... 9,245,020 2,693,839 86,601,644 42,844,486
----------- ----------- ------------ ------------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 54,135,861 28,217,886 150,341,656 71,940,816
----------- ----------- ------------ ------------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (368,386) (283,117) (337,427) (144,964)
----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 57,484,892 28,754,728 206,377,970 93,086,018
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. -- -- 163,506,297 70,420,279
----------- ----------- ------------ ------------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $57,484,892 $28,754,728 $369,884,267 $163,506,297
=========== =========== ============ ============
<CAPTION>
EQUITY SERIES:
----------------------------------------------------
MERRILL
ALLIANCE LYNCH BASIC
EQUITY INDEX VALUE EQUITY
FUND FUND(A)
-------------------------------- --------------
1997 1996 1997
-------------- --------------- -------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 785,831 $ 1,004,328 $ 28,039
Net realized gain (loss) on investments......... 15,251,160 14,191,113 32,936
Change in unrealized appreciation /
(depreciation) of investments................. 98,430,290 19,487,539 226,896
------------ ------------ -----------
Net increase in net assets from operations...... 114,467,281 34,682,980 287,871
------------ ------------ -----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 123,805,230 78,060,051 5,085,307
Transfers from other Funds and
Guaranteed Interest Account................. 497,060,564 224,346,052 15,531,026
------------ ------------ -----------
Total..................................... 620,865,794 302,406,103 20,616,333
------------ ------------ -----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 26,845,795 8,358,084 146,225
Transfers to other Funds and
Guaranteed Interest Account................. 332,805,482 142,130,534 3,680,513
Withdrawal and administrative charges......... 650,256 217,821 3,018
------------ ------------ -----------
Total................................... 360,301,533 150,706,439 3,829,756
------------ ------------ -----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 260,564,261 151,699,664 16,786,577
------------ ------------ -----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (491,351) (138,050) (298,904)
------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 374,540,191 186,244,594 16,775,544
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 274,346,704 88,102,110 --
------------ ------------ -----------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $648,886,895 $274,346,704 $16,775,544
============ ============ ===========
</TABLE>
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FSA-13
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
------------------------------------------------------
ALLIANCE MFS
COMMON STOCK RESEARCH
FUND FUND(A)
----------------------------------- --------------
1997 1996 1997
----------------- ----------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ (40,194,434) $ (18,656,106) $ (44,322)
Net realized gain (loss) on investments......... 520,414,631 467,121,717 156,450
Change in unrealized appreciation /
(depreciation) of investments................. 776,898,715 326,272,321 477,876
------------- -------------- ----------
Net increase in net assets from operations...... 1,257,118,912 774,737,932 590,004
------------- -------------- ----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 485,617,488 453,359,975 9,395,788
Transfers from other Funds and
Guaranteed Interest Account................. 981,404,674 762,624,599 21,884,490
------------- -------------- ----------
Total..................................... 1,467,022,162 1,215,984,574 31,280,278
------------- -------------- ----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 326,957,672 220,362,060 315,298
Transfers to other Funds and
Guaranteed Interest Account................. 793,882,977 607,476,726 3,913,603
Withdrawal and administrative charges......... 6,730,878 5,572,073 4,474
------------- -------------- ----------
Total................................... 1,127,571,527 833,410,859 4,233,375
------------- -------------- ----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 339,450,635 382,573,715 27,046,903
------------- -------------- ----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (5,291,673) (2,598,917) (462,377)
------------- -------------- -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 1,591,277,874 1,154,712,730 27,174,530
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 4,332,698,100 3,177,985,370 --
-------------- -------------- -----------
NET ASSETS -- END OF PERIOD (NOTE 1) $5,923,975,974 $4,332,698,100 $27,174,530
ATTRIBUTABLE TO CONTRACT OWNERS................. =============== ============== ===========
<CAPTION>
EQUITY SERIES (CONTINUED):
-------------------------------------------------------------------
ALLIANCE ALLIANCE
GLOBAL INTERNATIONAL
FUND FUND
-------------------------------- -------------------------------
1997 1996 1997 1996
---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 4,053,343 $ 2,150,106 $ 1,841,231 $ 485,233
Net realized gain (loss) on investments......... 44,106,582 22,308,566 8,984,846 2,972,966
Change in unrealized appreciation /
(depreciation) of investments................. 7,345,361 26,407,595 (15,797,804) 1,086,851
------------ ------------ ------------ -----------
Net increase in net assets from operations...... 55,505,286 50,866,267 (4,971,727) 4,545,050
------------ ------------ ------------ -----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 89,835,392 104,951,106 27,672,360 32,148,619
Transfers from other Funds and
Guaranteed Interest Account................. 100,167,043 115,437,667 151,532,780 132,166,698
------------ ------------ ------------ -----------
Total..................................... 190,002,435 220,388,773 179,205,140 164,315,317
------------ ------------ ------------ -----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 38,003,491 28,738,527 9,154,376 3,342,378
Transfers to other Funds and
Guaranteed Interest Account................. 93,151,966 61,058,782 143,958,994 83,376,653
Withdrawal and administrative charges......... 1,013,918 724,468 226,612 60,421
------------ ------------ ------------ -----------
Total................................... 132,169,375 90,521,777 153,339,982 86,779,452
------------ ------------ ------------ -----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 57,833,060 129,866,996 25,865,158 77,535,865
------------ ------------ ------------ -----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (280,980) (286,484) 8,298 5,549
------------ ------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 113,057,366 180,446,779 20,901,729 82,086,464
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 495,454,265 315,007,486 97,187,560 15,101,096
------------ ------------ ------------ -----------
NET ASSETS -- END OF PERIOD (NOTE 1) $608,511,631 $495,454,265 $118,089,289 $ 97,187,560
ATTRIBUTABLE TO CONTRACT OWNERS................. ============ ============ ============ ============
</TABLE>
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FSA-14
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONTINUED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED):
-----------------------------------------------------------------------
MORGAN
T. ROWE STANLEY
PRICE EMERGING
INTERNATIONAL MARKETS ALLIANCE
STOCK EQUITY AGGRESSIVE STOCK
FUND(A) FUND(b) FUND
-------------- ------------- ------------------------------------
1997 1997 1997 1996
-------------- ------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ (167,342) $ 15,148 $ (36,023,732) $ (27,686,560)
Net realized gain (loss) on investments......... (1,454,589) (875,317) 414,890,550 578,406,046
Change in unrealized appreciation /
(depreciation) of investments................. (917,513) (1,097,984) (79,262,405) (87,392,419)
----------- ----------- -------------- --------------
Net increase in net assets from operations...... (2,539,444) (1,958,153) 299,604,413 463,327,067
----------- ----------- -------------- --------------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 11,943,016 2,087,150 378,453,001 390,313,679
Transfers from other Funds and
Guaranteed Interest Account................. 48,742,022 17,543,713 1,226,614,217 1,303,527,875
----------- ----------- -------------- --------------
Total..................................... 60,685,038 19,630,863 1,605,067,218 1,693,841,554
----------- ----------- -------------- --------------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 551,644 38,081 223,777,455 154,410,598
Transfers to other Funds and
Guaranteed Interest Account................. 19,727,736 10,197,807 1,226,219,275 1,118,235,181
Withdrawal and administrative charges......... 12,207 1,449 5,581,896 4,762,116
----------- ----------- -------------- --------------
Total................................... 20,291,587 10,237,337 1,455,578,626 1,277,407,895
----------- ----------- -------------- --------------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 40,393,451 9,393,526 149,488,592 416,433,659
----------- ----------- -------------- --------------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). 74,460 1,210,394 (445,491) (596,353)
----------- ----------- -------------- --------------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 37,928,467 8,645,767 448,647,514 879,164,373
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. -- -- 2,976,573,730 2,097,409,357
----------- ----------- -------------- --------------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $37,928,467 $ 8,645,767 $3,425,221,244 $2,976,573,730
=========== =========== ============== ==============
<CAPTION>
EQUITY SERIES (CONTINUED):
----------------------------------------------------
WARBURG
PINCUS ALLIANCE MFS EMERGING
SMALL COMPANY SMALL CAP GROWTH
VALUE GROWTH COMPANIES
FUND(A) FUND(A) FUND(A)
--------------- --------------- --------------
1997 1997 1997
-------------- --------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ (233,472) $ (226,153) $ (59,318)
Net realized gain (loss) on investments......... (398,282) 2,928,197 410,582
Change in unrealized appreciation /
(depreciation) of investments................. 22,263 (1,564,649) 405,203
------------ ------------ -----------
Net increase in net assets from operations...... (609,491) 1,137,395 756,467
------------ ------------ -----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 17,932,084 15,686,202 10,348,726
Transfers from other Funds and
Guaranteed Interest Account................. 95,994,086 134,506,874 41,158,325
------------ ------------ -----------
Total..................................... 113,926,170 150,193,076 51,507,051
------------ ------------ -----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 710,649 644,310 272,079
Transfers to other Funds and
Guaranteed Interest Account................. 44,374,048 87,128,302 20,257,025
Withdrawal and administrative charges......... 13,343 7,383 3,323
------------ ------------ -----------
Total................................... 45,098,040 87,779,995 20,532,427
------------ ------------ -----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. 68,828,130 62,413,081 30,974,624
------------ ------------ -----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (153,081) (487,244) (659,740)
------------ ------------ -----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 68,065,558 63,063,232 31,071,351
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. -- -- --
------------ ------------ -----------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $ 68,065,558 $ 63,063,232 $31,071,351
============ ============ ===========
</TABLE>
(a) Commenced operations on May 1, 1997.
(b) Commenced operations on August 20, 1997.
See Notes to Financial Statements.
FSA-15
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
STATEMENTS OF CHANGES IN NET ASSETS (CONCLUDED)
FOR THE YEARS ENDED DECEMBER 31,
<TABLE>
<CAPTION>
ASSET ALLOCATION SERIES:
----------------------------------------------------------------------------
ALLIANCE ALLIANCE
CONSERVATIVE EQ/PUTNAM GROWTH
INVESTORS BALANCED INVESTORS
FUND FUND(A) FUND
---------------------------- -------------- ------------------------------
1997 1996 1997 1997 1996
---------------------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 2,448,726 $ 2,631,006 $ 129,710 $ 7,374,359 $ 5,106,790
Net realized gain (loss) on investments......... 3,730,623 2,242,475 115,430 38,624,261 52,452,931
Change in unrealized appreciation /
(depreciation) of investments................. 3,477,016 (1,503,698) 602,835 40,925,116 (9,867,072)
----------- ----------- ----------- ------------ ------------
Net increase in net assets from operations...... 9,656,365 3,369,783 847,975 86,923,736 47,692,649
----------- ----------- ----------- ------------ ------------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 11,365,584 22,119,111 3,699,337 96,835,654 130,147,052
Transfers from other Funds and
Guaranteed Interest Account................. 8,530,415 8,707,223 15,752,330 86,565,969 121,414,460
----------- ----------- ----------- ------------ ------------
Total..................................... 19,895,999 30,826,334 19,451,667 183,401,623 251,561,512
----------- ----------- ----------- ------------ ------------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 7,295,059 5,546,973 192,650 39,593,409 25,722,728
Transfers to other Funds and
Guaranteed Interest Account................. 14,511,104 14,201,772 7,250,221 76,718,000 49,453,027
Withdrawal and administrative charges......... 162,391 149,752 1,654 1,162,210 776,045
----------- ----------- ----------- ------------ ------------
Total................................... 21,968,554 19,898,497 7,444,525 117,473,619 75,951,800
----------- ----------- ----------- ------------ ------------
Net increase (decrease) in net assets from
Contract Owners transactions.................. (2,072,555) 10,927,837 12,007,142 65,928,004 175,609,712
----------- ----------- ----------- ------------ ------------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (172,151) (72,280) (434,093) (551,891) (212,924)
----------- ----------- ----------- ------------ ------------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 7,411,659 14,225,340 12,421,024 152,299,849 223,089,437
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 85,251,552 71,026,212 -- 529,410,629 306,321,192
----------- ----------- ----------- ------------ ------------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $92,663,211 $85,251,552 $12,421,024 $681,710,478 $529,410,629
=========== =========== =========== ============ ============
<CAPTION>
ASSET ALLOCATION SERIES:
-------------------------------------------------
ALLIANCE MERRILL LYNCH
BALANCED WORLD STRATEGY
FUND FUND(A)
--------------------------------- --------------
1997 1996 1997
---------------- ---------------- --------------
<S> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
FROM OPERATIONS:
Net investment income (loss).................... $ 23,301,713 $ 19,667,360 $ 16,034
Net realized gain (loss) on investments......... 79,099,392 100,889,344 33,737
Change in unrealized appreciation /
(depreciation) of investments................. 45,961,244 (15,177,682) (153,612)
-------------- -------------- ----------
Net increase in net assets from operations...... 148,362,349 105,379,022 (103,841)
-------------- -------------- ----------
FROM CONTRACT OWNERS TRANSACTIONS (NOTE 4):
Contributions and Transfers:
Contributions................................. 84,629,925 102,324,455 1,913,915
Transfers from other Funds and
Guaranteed Interest Account................. 112,630,041 107,478,067 8,826,145
-------------- -------------- ----------
Total..................................... 197,259,966 209,802,522 10,740,060
-------------- -------------- ----------
Payments, Transfers and Charges:
Annuity payments, withdrawals
and death benefits.......................... 96,288,584 78,989,041 156,911
Transfers to other Funds and
Guaranteed Interest Account................. 170,604,239 154,003,205 4,913,746
Withdrawal and administrative charges......... 1,889,094 2,085,995 622
-------------- -------------- ----------
Total................................... 268,781,917 235,078,241 5,071,279
-------------- -------------- ----------
Net increase (decrease) in net assets from
Contract Owners transactions.................. (71,521,951) (25,275,719) 5,668,781
-------------- -------------- ----------
Net (increase) decrease in amount retained by
Equitable Life in Separate Account A (Note 3). (620,223) (481,189) (139,641)
-------------- -------------- ----------
INCREASE (DECREASE) IN NET ASSETS
ATTRIBUTABLE TO CONTRACT OWNERS................. 76,220,175 79,622,114 5,425,299
NET ASSETS -- BEGINNING OF PERIOD
ATTRIBUTABLE TO CONTRACT OWNERS................. 1,121,735,842 1,042,113,728 --
-------------- -------------- ----------
NET ASSETS -- END OF PERIOD (NOTE 1)
ATTRIBUTABLE TO CONTRACT OWNERS................. $1,197,956,017 $1,121,735,842 $5,425,299
============== ============== ==========
</TABLE>
(a) Commenced operations on May 1, 1997.
See Notes to Financial Statements.
FSA-16
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997
1. General
The Equitable Life Assurance Society of the United States (Equitable Life)
Separate Account A (The Account) is organized as a unit investment trust, a
type of investment company, and is registered with the Securities and
Exchange Commission under the Investment Company Act of 1940. The Account
consists of twenty-four investment funds (Funds): Alliance Money Market
Fund, Alliance Intermediate Government Securities Fund, Alliance Quality
Bond Fund, Alliance High Yield Fund, T. Rowe Price Equity Income Fund,
EQ/Putnam Growth & Income Value Fund, Alliance Growth & Income Fund,
Alliance Equity Index Fund, Merrill Lynch Basic Value Equity Fund, Alliance
Common Stock Fund, MFS Research Fund, Alliance Global Fund, Alliance
International Fund, T. Rowe Price International Stock Fund, Morgan Stanley
Emerging Markets Equity Fund, Alliance Aggressive Stock Fund, Warburg Pincus
Small Company Value Fund, Alliance Small Cap Growth Fund, MFS Emerging
Growth Companies Fund, Alliance Conservative Investors Fund, EQ/Putnam
Balanced Fund, Alliance Growth Investors Fund, Alliance Balanced Fund and
Merrill Lynch World Strategy Fund. The assets in each fund are invested in
shares of a corresponding portfolio (Portfolio) of a mutual fund, Class IA
shares of The Hudson River Trust (HR Trust) or Class IB shares of EQ
Advisors Trust (EQ Trust) (Collectively known as the Trusts). Class IA
shares are offered by the Funds at net asset value and are not subject to
distribution fees imposed pursuant to a distribution plan. Class IB shares
are offered by the Fund at net asset value and are subject to distribution
fees imposed under a distribution plan adopted pursuant to Rule 12b-1 under
the 1940 Act. The Trusts are open-end, diversified investment management
companies that invest separate account assets of insurance companies.
The Account is used to fund benefits under certain individual tax-favored
variable annuity contracts (Old Contracts), individual non-qualified
variable annuity contracts (EQUIPLAN Contracts), tax-favored and
non-qualified certificates issued under group deferred variable annuity
contracts and certain related individual contracts (EQUI-VEST Contracts),
group deferred variable annuity contracts used to fund tax-qualified defined
contribution plans (Momentum Contracts) and group variable annuity contracts
used as a funding vehicle for employers who sponsor qualified defined
contribution plans (Momentum Plus). All of these contracts and certificates
are collectively referred to as the Contracts.
The net assets of the Account are not chargeable with liabilities arising
out of any other business Equitable Life may conduct. The excess of assets
over reserves and other contract liabilities, if any, in the Account may be
transferred to Equitable Life's General Account.
2. Significant Accounting Policies
The accompanying financial statements are prepared in conformity with
generally accepted accounting principles (GAAP). The preparation of
financial statements in conformity with GAAP requires 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.
Investments are made in shares of the Trust and are valued at the net asset
values per share of the respective Portfolios. The net asset value is
determined by the Trust using the market or fair value of the underlying
assets of the Portfolio less liabilities.
Investment transactions are recorded on the trade date. Realized gains and
losses include (1) gains and losses on redemptions of the Trust's shares
(determined on the identified cost basis) and (2) Trust distributions
representing the net realized gains on Trust investment transactions which
are distributed by the Trusts at the end of each year and automatically
reinvested in additional shares. 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 Trust at the end of year.
No Federal income tax based on net income or realized and unrealized capital
gains is currently applicable to Contracts participating in the Account by
reason of applicable provisions of the Internal Revenue Code and no Federal
income tax payable by Equitable Life is expected to affect the unit value of
Contracts participating in the Account. Accordingly, no provision for income
taxes is required.
FSA-17
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
3. Asset Charges
The following charges are made directly against the daily net assets of the
Account and are reflected daily in the computation of the accumulation unit
values of the Contracts:
<TABLE>
<CAPTION>
EQUI-VEST
MOMENTUM SERIES 300
EQUI-VEST/MOMENTUM PLUS OLD EQUIPLAN & 400
CONTRACTS CONTRACTS CONTRACTS CONTRACTS CONTRACTS
------------------------------------ --------------- ---------------- -------------------- ------------
Common Stock and
Alliance Money Market, Common Stock Intermediate
Alliance Balanced, All and Government
Alliance Common Stock Other Money Market Securities
Funds Funds All Funds Funds Funds All Funds
------------------------ ------------ ----------- ---------------- -------------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Death Benefits........ 0.05% 0.05% -- 0.05% 0.05% --
Mortality Risks....... 0.30% 0.30% 0.50% 0.45% 0.45% 0.60%
Expenses.............. 0.60% 0.60% 0.25% 0.16% 0.16% 0.24/0.25%
Expense Risks......... 0.30% 0.15% 0.60% 0.08% 0.08% 0.50%
Financial Accounting.. 0.24% 0.24% -- -- -- --
</TABLE>
During 1997, Equitable Life charged EQUI-VEST Series 300 and 400 Contracts
0.24% against the assets of the HR and EQ Funds for expenses, except as
noted. This voluntary expense limitation discounted from 0.25% to 0.24% may
be discontinued by Equitable Life at its discretion. Equitable Life charged
EQUI-VEST Series 300 and 400 0.25% against the assets of the Alliance Money
Market Fund, the Alliance Common Stock Fund, the Alliance Aggressive Stock
Fund, and the Alliance Balanced Funds.
The above charges may be retained in the Account by Equitable Life and, to
the extent retained, participate in the net investment results of the Trust
ratably with assets attributable to the Contracts.
Since the Trust shares are valued at their net asset value, investment
advisory fees and direct operating expenses of the Trust are, in effect,
passed on to the Account and are reflected in the computation of the
accumulation unit values of the Contracts.
Under the terms of the Contracts, the aggregate of these asset charges and
the charges of the Trust for advisory fees and for direct operating expenses
may not exceed a total effective annual rate of 1.75% for EQUI-VEST and
Momentum Contracts for the Alliance Money Market Fund, the Alliance Common
Stock Fund, the Alliance Aggressive Stock Fund, the Alliance Balanced Funds
and 1% for the Old Contracts and EQUIPLAN Contracts.
Under the Contracts, the total charges may be reallocated among the various
expense categories. Equitable Life, however, intends to limit any possible
reallocation to include only the expense risks, mortality risks and death
benefit charges.
4. Contributions, Payments, Transfers and Charges
Contributions represent participant contributions under EQUI-VEST, Momentum,
Momentum Plus and EQUI-VEST Series 300 and 400 Contracts (but excludes
amounts allocated to the Guaranteed Interest Account, which are reflected in
the General Account) and participant contributions under other Contracts
(Old Contracts, EQUIPLAN) reduced by applicable deductions, charges and
state premium taxes. Contributions also include amounts applied to purchase
variable annuities. Transfers are amounts that participants have directed to
be moved among the Funds, including permitted transfers to and from the
Guaranteed Interest Account, which is part of Equitable Life's General
Account.
Variable annuity payments and death benefits are payments to participants
and beneficiaries made under the terms of the Contracts. Withdrawals are
amounts that participants have requested to be withdrawn and paid to them or
applied to purchase annuities. Withdrawal charges, if applicable, are the
deferred contingent withdrawal charges that apply to certain withdrawals
under EQUI-VEST, Momentum, Momentum Plus and EQUI-VEST Series 300 and 400
Contracts. Administrative charges, if applicable, are deducted annually
under EQUI-VEST, EQUIPLAN and Old Contracts and quarterly under Momentum,
Momentum Plus and EQUI-VEST Series 300 and 400 Contracts.
FSA-18
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Continued):
Accumulation units issued and redeemed during the periods indicated were:
<TABLE>
<CAPTION>
Years Ended
December 31,
------------------------------------------
1997 1996
<S> <C> <C>
Fixed Income Series:
ALLIANCE MONEY MARKET FUND
- --------------------------
Issued -- EQUI-VEST Contracts............................................... 837,383 471,698
Momentum Contracts................................................ 483,055 508,189
Momentum Plus Contracts 135 BP.................................... 588,908 812,388
Momentum Plus Contracts 100 BP.................................... 10,050 40,920
Old Contracts..................................................... 120,867 4,948
EQUI-VEST Series 300 and 400 Contracts............................ 258,260 245,758
Redeemed -- EQUI-VEST Contracts............................................... 877,393 479,069
Momentum Contracts................................................ 415,858 456,078
Momentum Plus Contracts 135 BP.................................... 564,110 804,620
Momentum Plus Contracts 100 BP.................................... 10,333 27,829
Old Contracts..................................................... 1,572 15,490
EQUI-VEST Series 300 and 400 Contracts............................ 277,148 162,153
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND
- ------------------------------------------------
Issued -- Momentum Contracts................................................ 5,215 5,037
Momentum Plus Contracts 135 BP.................................... 29,724 30,826
Momentum Plus Contracts 100 BP.................................... 804 2,792
EQUIPLAN Contracts................................................ 49,549 13,023
EQUI-VEST Series 300 and 400 Contracts............................ 105,144 103,536
Redeemed -- Momentum Contracts................................................ 4,851 2,248
Momentum Plus Contracts 135 BP.................................... 31,521 37,473
Momentum Plus Contracts 100 BP.................................... 813 336
EQUIPLAN Contracts................................................ 2 8,091
EQUI-VEST Series 300 and 400 Contracts............................ 50,075 46,208
ALLIANCE QUALITY BOND FUND
- --------------------------
Issued -- Momentum Contracts................................................ 7,848 4,794
Momentum Plus Contracts 135 BP.................................... 22,668 21,227
Momentum Plus Contracts 100 BP.................................... 449 1,393
EQUI-VEST Series 300 and 400 Contracts............................ 167,788 145,134
Redeemed -- Momentum Contracts................................................ 5,005 1,778
Momentum Plus Contracts 135 BP.................................... 12,495 10,306
Momentum Plus Contracts 100 BP.................................... 636 47
EQUI-VEST Series 300 and 400 Contracts............................ 80,367 84,488
</TABLE>
FSA-19
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Continued):
<TABLE>
<CAPTION>
Years Ended
December 31,
---------------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
ALLIANCE HIGH YIELD FUND
- ------------------------
Issued -- Momentum Contracts................................................ 17,805 12,054
Momentum Plus Contracts 135 BP.................................... 62,992 50,342
Momentum Plus Contracts 100 BP.................................... 1,622 5,597
EQUI-VEST Series 300 and 400 Contracts............................ 726,147 347,167
Redeemed -- Momentum Contracts................................................ 6,772 1,584
Momentum Plus Contracts 135 BP.................................... 42,608 26,154
Momentum Plus Contracts 100 BP.................................... 1,327 478
EQUI-VEST Series 300 and 400 Contracts............................ 338,338 112,750
Equity Series:
T. ROWE PRICE EQUITY INCOME FUND
- --------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 554,196 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 79,255 --
EQ/PUTNAM GROWTH & INCOME VALUE FUND
- ------------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 273,498 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 23,834 --
ALLIANCE GROWTH & INCOME FUND
- -----------------------------
Issued -- Momentum Contracts................................................ 45,474 32,378
-- Momentum Plus Contracts 135 BP.................................... 116,065 80,062
Momentum Plus Contracts 100 BP.................................... 3,889 3,154
Momentum Plus Contracts 90 BP..................................... 1,441 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,286,205 769,435
Redeemed -- Momentum Contracts................................................ 17,193 8,397
Momentum Plus Contracts 135 BP.................................... 46,155 26,343
Momentum Plus Contracts 100 BP.................................... 2,901 126
Momentum Plus Contracts 90 BP..................................... 337 --
EQUI-VEST Series 300 and 400 Contracts............................ 462,065 291,623
</TABLE>
FSA-20
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Continued):
<TABLE>
<CAPTION>
Years Ended
December 31,
-----------------------------------------
1997 1996
-------------- --------------
<S> <C> <C>
ALLIANCE EQUITY INDEX FUND
- --------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 2,967,392 1,866,091
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 1,768,139 971,325
MERRILL LYNCH BASIC VALUE EQUITY FUND
- -------------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 177,242 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 32,592 --
ALLIANCE COMMON STOCK FUND
- --------------------------
Issued -- EQUI-VEST Contracts............................................... 4,383,156 4,329,571
Momentum Contracts................................................ 204,382 243,637
Momentum Plus Contracts 135 BP.................................... 545,202 597,453
Momentum Plus Contracts 100 BP.................................... 41,653 157,605
Momentum Plus Contracts 90 BP..................................... 6,431 --
Old Contracts..................................................... 301,258 728
EQUIPLAN Contracts................................................ 86,999 303
EQUI-VEST Series 300 and 400 Contracts............................ 1,968,780 2,233,005
Redeemed -- EQUI-VEST Contracts............................................... 3,930,073 3,688,353
Momentum Contracts................................................ 134,959 127,310
Momentum Plus Contracts 135 BP.................................... 354,590 264,968
Momentum Plus Contracts 100 BP.................................... 142,434 17,583
Momentum Plus Contracts 90 BP..................................... 1,552 --
Old Contracts..................................................... 3,085 42,438
EQUIPLAN Contracts................................................ 1,986 12,375
EQUI-VEST Series 300 and 400 Contracts............................ 660,995 764,368
</TABLE>
FSA-21
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Continued):
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
MFS RESEARCH FUND
- -----------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 273,002 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 36,730 --
ALLIANCE GLOBAL FUND
- --------------------
Issued -- Momentum Contracts................................................ 67,282 69,785
Momentum Plus Contracts 135 BP.................................... 173,371 226,890
Momentum Plus Contracts 100 BP.................................... 3,421 14,214
Momentum Plus Contracts 90 BP..................................... 2,872 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,087,193 1,395,485
Redeemed -- Momentum Contracts................................................ 36,989 15,804
Momentum Plus Contracts 135 BP.................................... 151,688 158,197
Momentum Plus Contracts 100 BP.................................... 3,187 1,356
Momentum Plus Contracts 90 BP..................................... 468 --
EQUI-VEST Series 300 and 400 Contracts............................ 712,463 521,429
ALLIANCE INTERNATIONAL FUND
- ---------------------------
Issued -- Momentum Contracts................................................ 23,465 21,296
Momentum Plus Contracts 135 BP.................................... 61,102 61,499
Momentum Plus Contracts 100 BP.................................... 8,513 26,479
Momentum Plus Contracts 90 BP..................................... 1,175 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,473,483 1,395,292
Redeemed -- Momentum Contracts................................................ 10,479 2,534
Momentum Plus Contracts 135 BP.................................... 25,904 10,691
Momentum Plus Contracts 100 BP.................................... 25,384 5,744
Momentum Plus Contracts 90 BP..................................... 387 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,268,707 772,701
T. ROWE PRICE INTERNATIONAL STOCK FUND
- --------------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 590,328 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 201,762 --
</TABLE>
FSA-22
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Continued):
<TABLE>
<CAPTION>
Years Ended
December 31,
-----------------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
MORGAN STANLEY EMERGING MARKETS EQUITY FUND
- ------------------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 228,577 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 119,707 --
ALLIANCE AGGRESSIVE STOCK FUND
- ------------------------------
Issued -- EQUI-VEST Contracts............................................... 12,306,387 15,729,861
Momentum Contracts................................................ 663,082 640,809
Momentum Plus Contracts 135 BP.................................... 574,827 611,656
Momentum Plus Contracts 100 BP.................................... 36,380 124,790
Momentum Plus Contracts 90 BP..................................... 9,299 --
EQUI-VEST Series 300 and 400 Contracts............................ 2,341,814 2,252,325
Redeemed -- EQUI-VEST Contracts............................................... 12,221,170 13,605,973
Momentum Contracts................................................ 506,394 329,415
Momentum Plus Contracts 135 BP.................................... 369,618 259,855
Momentum Plus Contracts 100 BP.................................... 107,896 15,823
Momentum Plus Contracts 90 BP..................................... 2,386 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,583,469 1,094,154
WARBURG PINCUS SMALL COMPANY VALUE FUND
- ---------------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 944,293 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 367,754 --
ALLIANCE SMALL CAP GROWTH FUND
- ------------------------------
Issued -- Momentum Contracts................................................ 6,275 --
Momentum Plus Contracts 135 BP.................................... 8,595 --
Momentum Plus Contracts 90 BP..................................... 466 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,187,782 --
Redeemed -- Momentum Contracts................................................ 139 --
Momentum Plus Contracts 135 BP.................................... 743 --
EQUI-VEST Series 300 and 400 Contracts............................ 700,040 --
</TABLE>
FSA-23
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Continued):
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
MFS EMERGING GROWTH COMPANIES FUND
- ----------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 424,497 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 168,426 --
ALLIANCE CONSERVATIVE INVESTORS FUND
- ------------------------------------
Issued -- Momentum Contracts................................................ 8,745 10,705
Momentum Plus Contracts 135 BP.................................... 45,283 55,120
Momentum Plus Contracts 100 BP.................................... 1,777 5,947
EQUI-VEST Series 300 and 400 Contracts............................ 114,868 200,840
Redeemed -- Momentum Contracts................................................ 4,397 3,249
Momentum Plus Contracts 135 BP.................................... 52,105 47,599
Momentum Plus Contracts 100 BP.................................... 1,102 1,318
EQUI-VEST Series 300 and 400 Contracts............................ 128,454 125,486
EQ/PUTNAM BALANCED FUND
- -----------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 175,775 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 66,296 --
ALLIANCE GROWTH INVESTORS FUND
- ------------------------------
Issued -- Momentum Contracts................................................ 70,069 69,706
Momentum Plus Contracts 135 BP.................................... 206,206 277,255
Momentum Plus Contracts 100 BP.................................... 3,369 15,724
Momentum Plus Contracts 90 BP..................................... 2,935 --
EQUI-VEST Series 300 and 400 Contracts............................ 1,019,421 1,654,096
Redeemed -- Momentum Contracts................................................ 33,111 16,841
Momentum Plus Contracts 135 BP.................................... 138,201 143,744
Momentum Plus Contracts 100 BP.................................... 3,482 1,072
Momentum Plus Contracts 90 BP..................................... 1,446 --
EQUI-VEST Series 300 and 400 Contracts............................ 640,400 441,519
</TABLE>
FSA-24
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
4. Contributions, Payments, Transfers and Charges (Concluded):
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------------------------
1997 1996
-------------- -------------
<S> <C> <C>
ALLIANCE BALANCED FUND
- ----------------------
Issued -- EQUI-VEST Contracts............................................... 3,643,409 4,328,191
Momentum Contracts................................................ 272,369 344,030
Momentum Plus Contracts 135 BP.................................... 168,722 200,165
Momentum Plus Contracts 100 BP.................................... 15,895 55,952
Momentum Plus Contracts 90 BP..................................... 2,030 --
EQUI-VEST Series 300 and 400 Contracts............................ 263,741 274,681
Redeemed -- EQUI-VEST Contracts............................................... 5,926,775 6,220,763
Momentum Contracts................................................ 277,292 243,591
Momentum Plus Contracts 135 BP.................................... 131,565 118,387
Momentum Plus Contracts 100 BP.................................... 52,839 7,610
Momentum Plus Contracts 90 BP..................................... 1,298 --
EQUI-VEST Series 300 and 400 Contracts............................ 156,561 112,296
MERRILL LYNCH WORLD STRATEGY FUND
- ---------------------------------
Issued -- EQUI-VEST Series 300 and 400 Contracts............................ 98,231 --
Redeemed -- EQUI-VEST Series 300 and 400 Contracts............................ 45,952 --
</TABLE>
FSA-25
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
5. Net Assets
Net assets consist of: (i) net assets attributable to Contracts in the
accumulation period, which are represented by Contract accumulation units
outstanding multiplied by net unit values and (ii) actuarial reserves and
other liabilities attributable to Contracts in the payout period which are
not represented by accumulation units or unit values.
Listed below are components of net assets:
<TABLE>
<CAPTION>
FIXED INCOME SERIES EQUITY SERIES
----------------------------------------------------------------- ------------------------------
ALLIANCE EQ/PUTNAM
INTERMEDIATE T. ROWE GROWTH &
ALLIANCE GOVERNMENT ALLIANCE ALLIANCE HIGH PRICE INCOME
MONEY SECURITIES QUALITY BOND YIELD EQUITY VALUE
MARKET FUND FUND FUND FUND INCOME FUND FUND
------------- ------------- -------------- --------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net assets attributable
to EQUI-VEST
Contracts in
accumulation period........ 28,630,592 -- -- -- -- --
Net assets attributable
to Old Contracts in
accumulation period........ 4,189,205 -- -- -- -- --
Net assets attributable
to EQUIPLAN
Contracts in
accumulation period........ -- 2,716,528 -- -- -- --
Net assets attributable
to Momentum
Contracts in
accumulation period........ 9,048,240 1,229,416 1,212,237 4,617,656 -- --
Net assets attributable
to Momentum Plus
Contracts 135 BP in
accumulation period........ 37,749,123 8,815,249 4,783,603 18,859,053 -- --
Net assets attributable
to Momentum Plus
Contracts 100 BP in
accumulation period........ -- 274,922 136,288 809,324 -- --
Net assets attributable
to Momentum Plus
Contracts 90 BP in
accumulation period........ 1,412,220 -- -- -- -- --
Net assets attributable
to EQUI-VEST Series 300
& 400 Contracts in
accumulation period........ 16,842,138 23,975,250 34,339,271 133,635,037 57,484,892 28,754,728
Actuarial reserves,
financial reserves, and
other contract
liabilities
attributable to
Contracts in payout........ -- 2,624 177,761 292,462 -- --
----------- ----------- ----------- ------------ ----------- -----------
$97,871,518 $37,013,989 $40,649,160 $158,213,532 $57,484,892 $28,754,728
=========== =========== =========== ============ =========== ===========
</TABLE>
FSA-26
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
5. Net Assets (Continued):
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED)
----------------------------------------------------------------------------------------------------
ALLIANCE ALLIANCE MERRILL
GROWTH & EQUITY LYNCH BASIC ALLIANCE ALLIANCE
INCOME INDEX VALUE COMMON STOCK MFS RESEARCH GLOBAL
FUND FUND EQUITY FUND FUND FUND FUND
-------------- -------------- ------------- ---------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Net assets attributable
to EQUI-VEST
Contracts in
accumulation period........ -- -- -- 4,410,526,160 -- --
Net assets attributable
to Old Contracts in
accumulation period........ -- -- -- 97,099,845 -- --
Net assets attributable
to EQUIPLAN
Contracts in
accumulation period........ -- -- -- 29,158,614 -- --
Net assets attributable
to Momentum
Contracts in
accumulation period........ 12,372,665 20,100,426 -- 149,357,161 -- 22,261,752
Net assets attributable
to Momentum Plus
Contracts 135 BP in
accumulation period........ 32,871,014 49,512,169 -- 246,774,664 -- 71,745,486
Net assets attributable
to Momentum Plus
Contracts 100 BP in
accumulation period........ 542,065 910,494 -- 6,002,465 -- 1,542,816
Net assets attributable
to Momentum Plus
Contracts 90 BP in
accumulation period........ 160,600 494,802 -- 724,146 -- 293,574
Net assets attributable
to EQUI-VEST Series 300
& 400 Contracts in
accumulation period........ 322,669,974 576,476,443 16,775,544 944,084,494 27,174,530 511,706,502
Actuarial reserves,
financial reserves and
other contract
liabilities
attributable to
Contracts in payout........ 1,267,949 1,392,561 -- 40,248,425 -- 961,501
------------ ------------ ----------- -------------- ----------- ------------
$369,884,267 $648,886,895 $16,775,544 $5,923,975,974 $27,174,530 $608,511,631
============ ============ =========== ============== =========== ============
</TABLE>
FSA-27
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
5. Net Assets (Continued):
<TABLE>
<CAPTION>
EQUITY SERIES (CONTINUED)
---------------------------------------------------------------------------------------------------
T. ROWE MORGAN WARBURG
PRICE STANLEY ALLIANCE PINCUS SMALL ALLIANCE
ALLIANCE INTERNATIONAL EMERGING AGGRESSIVE COMPANY SMALL
INTERNATIONAL STOCK MARKETS STOCK VALUE CAP
FUND FUND EQUITY FUND FUND FUND GROWTH FUND
-------------- ------------- ------------- ----------------- -------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net assets attributable
to EQUI-VEST
Contracts in
accumulation period........ -- -- -- 2,543,630,247 -- --
Net assets attributable
to Old Contracts in --
accumulation period........ -- -- -- -- --
Net assets attributable
to EQUIPLAN
Contracts in
accumulation period........ -- -- -- -- -- --
Net assets attributable
to Momentum
Contracts in
accumulation period........ 3,478,117 -- -- 130,445,811 -- 770,364
Net assets attributable
to Momentum Plus
Contracts 135 BP in
accumulation period........ 9,194,987 -- -- 209,848,220 -- 985,779
Net assets attributable
to Momentum Plus
Contracts 100 BP in
accumulation period........ 349,606 -- -- 4,875,759 -- --
Net assets attributable
to Momentum Plus
Contracts 90 BP in
accumulation period........ 82,473 -- -- 825,522 -- 58,653
Net assets attributable
to EQUI-VEST Series 300
& 400 Contracts in
accumulation period........ 104,469,920 37,928,467 8,645,767 526,973,693 68,065,558 61,236,251
Actuarial reserves,
financial reserves and
other contract
liabilities
attributable to
Contracts in payout........ 514,186 -- -- 8,621,992 -- 12,185
------------ ----------- ---------- -------------- ----------- -----------
$118,089,289 $37,928,467 $8,645,767 $3,425,221,244 $68,065,558 $63,063,232
============ =========== ========== ============== =========== ===========
</TABLE>
FSA-28
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
5. Net Assets (Continued):
<TABLE>
<CAPTION>
EQUITY SERIES (CONCLUDED) ASSETS ALLOCATION SERIES
------------------------------ --------------------------------------------------------------------
MFS
EMERGING ALLIANCE MERRILL
GROWTH CONSERVATIVE ALLIANCE LYNCH WORLD
COMPANIES INVESTORS EQ/PUTNAM GROWTH ALLIANCE STRATEGY
FUND FUND BALANCED FUND INVESTORS FUND BALANCED FUND FUND
------------- ------------- -------------- --------------- ----------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net assets attributable
to EQUI-VEST
Contracts in
accumulation period........ -- -- -- -- 1,006,566,451 --
Net assets attributable
to Old Contracts in
accumulation period........ -- -- -- -- -- --
Net assets attributable
to EQUIPLAN
Contracts in
accumulation period........ -- -- -- -- -- --
Net assets attributable
to Momentum
Contracts in
accumulation period........ -- 2,932,016 -- 22,609,452 40,673,022 --
Net assets attributable
to Momentum Plus
Contracts 135 BP in
accumulation period........ -- 16,048,869 -- 85,908,116 59,761,156 --
Net assets attributable
to Momentum Plus
Contracts 100 BP in
accumulation period........ -- 651,178 -- 1,842,069 1,353,282 --
Net assets attributable
to Momentum Plus
Contracts 90 BP in
accumulation period........ -- -- -- 188,657 89,772 --
Net assets attributable
to EQUI-VEST Series 300
& 400 Contracts in
accumulation period........ 31,071,351 72,446,188 12,421,024 569,316,879 88,622,534 5,425,299
Actuarial reserves,
financial reserves and
other contract
liabilities
attributable to
Contracts in payout........ -- 584,960 -- 1,845,305 889,800 --
----------- ----------- ----------- ------------ -------------- ----------
$31,071,351 $92,663,211 $12,421,024 $681,710,478 $1,197,956,017 $5,425,299
=========== =========== =========== ============ ============== ==========
</TABLE>
FSA-29
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values
Shown below is accumulation unit value information for units outstanding.
ALLIANCE MONEY MARKET FUND -- OLD CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $33.52 $32.00 $30.44 $29.43 $28.75 $27.92 $26.47 $24.59 $22.66 $21.23
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $35.12 $33.52 $32.00 $30.44 $29.43 $28.75 $27.92 $26.47 $24.59 $22.66
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of units outstanding,
end of period (000's)........ 119 129 140 147 168 204 246 289 310 339
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
ALLIANCE MONEY MARKET FUND -- EQUI-VEST / MOMENTUM** CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $28.28 $27.22 $26.08 $25.41 $25.01 $24.48 $23.38 $21.89 $20.32 $19.18
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $29.41 $28.28 $27.22 $26.08 $25.41 $25.01 $24.48 $23.38 $21.89 $20.32
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of EQUI-VEST units
outstanding, end of period
(000's)..................... 973 1,013 1,021 1,000 1,065 1,201 1,325 1,307 1,045 656
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)............... 308 240 188 166 56
====== ====== ====== ====== ======
</TABLE>
ALLIANCE MONEY MARKET FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, SEPTEMBER 9, 1993*
---------------------------------------
TO DECEMBER 31, 1993
1997 1996 1995 1994
------- ------- -------- ------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $111.75 $107.55 $103.10 $100.47 $100.00
======= ======= ======== ======= =======
Unit value, end of period........................ $116.21 $111.75 $107.55 $103.10 $100.47
======= ======= ======== ======= =======
Number of units outstanding, end of period (000's) 325 307 299 474 62
======= ======= ======== ======= =======
</TABLE>
ALLIANCE MONEY MARKET FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $105.65 $100.00
======= =======
Unit value, end of period........................ $110.26 $105.65
======= =======
Number of units outstanding, end of period (000's) 13 13
======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-30
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE MONEY MARKET FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
------- ------- ------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $111.21 $107.04 $102.61 $100.00
======= ======= ======= =======
Unit value, end of period........................ $115.66 $111.21 $107.04 $102.61
======= ======= ======= =======
Number of units outstanding, end of period (000's) 146 165 81 63
======= ======= ======= =======
</TABLE>
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND -- EQUIPLAN CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $51.34 $49.69 $44.04 $46.25 $42.04 $40.00 $35.17 $33.12 $28.89 $27.31
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $54.83 $51.34 $49.69 $44.04 $46.25 $42.04 $40.00 $35.17 $33.12 $28.89
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of units outstanding,
end of period (000's)........ 50 55 50 54 58 66 74 82 91 98
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
------- ------- ------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $112.40 $109.80 $ 98.19 $100.00
======= ======= ======= =======
Unit value, end of period........................ $118.98 $112.40 $109.80 $ 98.19
======= ======= ======= =======
Number of units outstanding, end of period (000's) 10 10 7 1
======= ======= ======= =======
</TABLE>
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND --
MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
------- ------- -------- ------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $108.45 $105.94 $ 94.76 $100.44 $100.00
======= ======= ======== ======= =======
Unit value, end of period........................ $114.78 $108.45 $105.94 $ 94.76 $100.44
======= ======= ======== ======= =======
Number of units outstanding, end of period (000's) 77 81 88 64 1
======= ======= ======== ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-31
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND --
MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ----------------------
<S> <C> <C>
Unit value, beginning of period.................. $105.75 $100.00
======= =======
Unit value, end of period........................ $112.32 $105.75
======= =======
Number of units outstanding, end of period (000's) 2 2
======= =======
</TABLE>
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES FUND --
EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- ----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $112.40 $109.80 $ 98.19 $100.00
======= ======= ======= =======
Unit value, end of period........................ $118.98 $112.40 $109.80 $ 98.19
======= ======= ======= =======
Number of units outstanding, end of period (000's) 202 146 89 32
======= ======= ======= =======
</TABLE>
ALLIANCE QUALITY BOND FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- ----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $112.65 $108.38 $ 93.87 $100.00
======= ======= ======= =======
Unit value, end of period........................ $121.30 $112.65 $108.38 $ 93.87
======= ======= ======= =======
Number of units outstanding, end of period (000's) 10 7 4 1
======= ======= ======= =======
</TABLE>
ALLIANCE QUALITY BOND FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $118.87 $114.38 $ 99.07 $100.00
======= ======= ======= =======
Unit value, end of period........................ $127.99 $118.87 $114.38 $ 99.07
======= ======= ======= =======
Number of units outstanding, end of period (000's) 37 28 17 3
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-32
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE QUALITY BOND FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $108.84 $100.00
======= =======
Unit value, end of period........................ $117.60 $108.84
======= =======
Number of units outstanding, end of period (000's) 1 1
======= =======
</TABLE>
ALLIANCE QUALITY BOND FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $112.65 $108.38 $ 93.87 $100.00
======= ======= ======= =======
Unit value, end of period........................ $121.30 $112.65 $108.38 $ 93.87
======= ======= ======= =======
Number of units outstanding, end of period (000's) 283 196 135 53
======= ======= ======= =======
</TABLE>
ALLIANCE HIGH YIELD FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994* TO
1997 1996 1995 DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $137.53 $113.44 $ 95.88 $100.00
======= ======= ======= =======
Unit value, end of period........................ $160.74 $137.53 $113.44 $ 95.88
======= ======= ======= =======
Number of units outstanding, end of period (000's) 29 18 7 1
======= ======= ======= =======
</TABLE>
ALLIANCE HIGH YIELD FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $146.80 $121.10 $102.37 $106.74 $100.00
======= ======= ======= ======= =======
Unit value, end of period........................ $171.56 $146.80 $121.10 $102.37 $106.74
======= ======= ======= ======= =======
Number of units outstanding, end of period (000's) 110 94 70 38 1
======= ======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-33
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE HIGH YIELD FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996
1997 TO DECEMBER 31, 1996*
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $127.46 $100.00
======= =======
Unit value, end of period........................ $149.49 $127.46
======= =======
Number of units outstanding, end of period (000's) 5 5
======= =======
</TABLE>
ALLIANCE HIGH YIELD FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $137.53 $113.44 $ 95.88 $100.00
======= ======= ======= =======
Unit value, end of period........................ $160.74 $137.53 $113.44 $ 95.88
======= ======= ======= =======
Number of units outstanding, end of period (000's) 831 444 209 99
======= ======= ======= =======
</TABLE>
T. ROWE PRICE EQUITY INCOME FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $121.04
=======
Number of units outstanding, end of period (000's) 475
=======
EQ/PUTNAM GROWTH & INCOME VALUE FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $115.17
=======
Number of units outstanding, end of period (000's) 250
=======
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-34
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE GROWTH & INCOME FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $143.37 $121.02 $ 98.86 $100.00
======= ======= ======= =======
Unit value, end of period........................ $179.30 $143.37 $121.02 $ 98.86
======= ======= ======= =======
Number of units outstanding, end of period (000's) 69 41 17 4
======= ======= ======= =======
</TABLE>
ALLIANCE GROWTH & INCOME FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $143.63 $121.25 $ 99.06 $100.00
======= ======= ======= =======
Unit value, end of period........................ $179.60 $143.63 $121.25 $ 99.06
======= ======= ======= =======
Number of units outstanding, end of period (000's) 183 121 67 9
======= ======= ======= =======
</TABLE>
ALLIANCE GROWTH & INCOME FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $123.61 $100.00
======= =======
Unit value, end of period........................ $155.11 $123.61
======= =======
Number of units outstanding, end of period (000's) 3 3
======= =======
</TABLE>
ALLIANCE GROWTH & INCOME FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $115.81
=======
Unit value, end of period........................ $145.48
=======
Number of units outstanding, end of period (000's) 1
=======
ALLIANCE GROWTH & INCOME FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $143.37 $121.02 $ 98.86 $100.00
======= ======= ======= =======
Unit value, end of period........................ $179.30 $143.37 $121.02 $ 98.86
======= ======= ======= =======
Number of units outstanding, end of period (000's) 1,800 975 498 210
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-35
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE EQUITY INDEX FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $164.12 $135.94 $100.95 $100.00
======= ======= ======= =======
Unit value, end of period........................ $214.66 $164.12 $135.94 $100.95
======= ======= ======= =======
Number of units outstanding, end of period (000's) 94 51 12 1
======= ======= ======= =======
</TABLE>
ALLIANCE EQUITY INDEX FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $164.08 $135.92 $100.94 $100.00
======= ======= ======= =======
Unit value, end of period........................ $214.58 $164.08 $135.92 $100.94
======= ======= ======= =======
Number of units outstanding, end of period (000's) 231 128 44 3
======= ======= ======= =======
</TABLE>
ALLIANCE EQUITY INDEX FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $139.70 $100.00
======= =======
Unit value, end of period........................ $170.23 $139.70
======= =======
Number of units outstanding, end of period (000's) 5 4
======= =======
</TABLE>
ALLIANCE EQUITY INDEX FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $114.21
=======
Unit value, end of period........................ $150.05
=======
Number of units outstanding, end of period (000's) 3
=======
ALLIANCE EQUITY INDEX FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $164.12 $135.94 $100.95 $100.00
======= ======= ======= =======
Unit value, end of period........................ $214.66 $164.12 $135.94 $100.95
======= ======= ======= =======
Number of units outstanding, end of period (000's) 2,686 1,486 592 47
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-36
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
MERRILL LYNCH BASIC VALUE EQUITY FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $115.97
=======
Number of units outstanding, end of period (000's) 145
=======
ALLIANCE COMMON STOCK FUND -- OLD CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- --------- -------- -------- -------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $246.57 $199.66 $151.67 $155.96 $125.72 $122.56 $ 89.56 $97.97 $78.37 $63.99
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Unit value, end of period....... $316.64 $246.57 $199.66 $151.67 $155.96 $125.72 $122.56 $89.56 $97.97 $78.37
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Number of units outstanding,
end of period (000's)........ 307 345 387 438 467 525 598 694 780 895
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
</TABLE>
ALLIANCE COMMON STOCK FUND -- EQUI-VEST/MOMENTUM** CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- --------- -------- -------- -------- --------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $199.05 $162.42 $124.32 $128.81 $104.63 $102.76 $ 75.67 $83.40 $67.22 $55.30
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Unit value, end of period....... $253.68 $199.05 $162.42 $124.32 $128.81 $104.63 $102.76 $75.67 $83.40 $67.22
======= ======= ======= ======= ======= ======= ======= ====== ====== ======
Number of EQUI-VEST units
outstanding, end of
period (000's)............... 17,386 16,933 16,292 15,749 13,917 11,841 10,292 9,670 8,645 7,252
======= ======= ======= ======= ====== ======= ======= ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)............... 589 519 403 270 120
======= ======= ======= ====== ======
</TABLE>
ALLIANCE COMMON STOCK FUND -- EQUIPLAN CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
-------- -------- --------- -------- -------- -------- --------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $267.08 $216.27 $164.29 $168.93 $136.10 $132.67 $ 96.95 $106.05 $ 84.83 $69.26
======= ======= ======= ======= ======= ======= ======= ======= ======= ======
Unit value, end of period....... $342.99 $267.08 $216.27 $164.29 $168.93 $136.10 $132.67 $ 96.95 $106.05 $84.83
======= ======= ======= ======= ======= ======= ======= ======= ======= ======
Number of units outstanding,
end of period (000's)........ 85 96 108 119 124 135 144 157 177 196
======= ======= ======= ======= ======= ======= ======= ======= ======= ======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-37
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE COMMON STOCK FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $162.39 $132.47 $101.38 $105.01 $100.00
======= ======= ======= ======= =======
Unit value, end of period........................ $207.00 $162.39 $132.47 $101.38 $105.01
======= ======= ======= ======= =======
Number of units outstanding, end of period (000's) 1,192 1,039 706 330 12
======= ======= ======= ======= =======
</TABLE>
ALLIANCE COMMON STOCK FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $125.89 $100.00
======= =======
Unit value, end of period........................ $161.04 $125.89
======= =======
Number of units outstanding, end of period (000's) 37 140
======= =======
</TABLE>
ALLIANCE COMMON STOCK FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $115.92
=======
Unit value, end of period........................ $148.44
=======
Number of units outstanding, end of period (000's) 5
=======
ALLIANCE COMMON STOCK FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $155.42 $126.78 $ 97.03 $100.00
======= ======= ======= =======
Unit value, end of period........................ $198.12 $155.42 $126.78 $ 97.03
======= ======= ======= =======
Number of units outstanding, end of period (000's) 4,765 3,457 1,989 948
======= ======= ======= =======
</TABLE>
MFS RESEARCH FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $115.01
=======
Number of units outstanding, end of period (000's) 236
=======
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-38
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE GLOBAL FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $138.00 $122.06 $104.12 $100.00
======= ======= ======= =======
Unit value, end of period........................ $151.87 $138.00 $122.06 $104.12
======= ======= ======= =======
Number of units outstanding, end of period (000's) 147 116 62 16
======= ======= ======= =======
</TABLE>
ALLIANCE GLOBAL FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $140.51 $124.30 $106.04 $102.14 $100.00
======= ======= ======= ======= =======
Unit value, end of period........................ $154.12 $140.51 $124.30 $106.04 $102.14
======= ======= ======= ======= =======
Number of units outstanding, end of period (000's) 464 459 391 223 8
======= ======= ======= ======= =======
</TABLE>
ALLIANCE GLOBAL FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $116.37 $100.00
======= =======
Unit value, end of period........................ $128.51 $116.37
======= =======
Number of units outstanding, end of period (000's) 12 13
======= =======
</TABLE>
ALLIANCE GLOBAL FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $110.47
=======
Unit value, end of period........................ $122.12
=======
Number of units outstanding, end of period (000's) 2
=======
ALLIANCE GLOBAL FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $138.00 $122.06 $104.12 $100.00
======= ======= ======= =======
Unit value, end of period........................ $151.87 $138.00 $122.06 $104.12
======= ======= ======= =======
Number of units outstanding, end of period (000's) 3,369 2,995 2,121 1,305
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-39
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE INTERNATIONAL FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, SEPTEMBER 1, 1994*
1997 1996 TO DECEMBER 31, 1995
-------- -------- -----------------------
<S> <C> <C> <C>
Unit value, beginning of period.................. $112.82 $104.15 $100.00
======= ======= =======
Unit value, end of period........................ $107.92 $112.82 $104.15
======= ======= =======
Number of units outstanding, end of period (000's) 32 19 0
======= ======= =======
</TABLE>
ALLIANCE INTERNATIONAL FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, SEPTEMBER 1, 1994* TO
1997 1996 DECEMBER 31, 1995
-------- -------- -----------------------
<S> <C> <C> <C>
Unit value, beginning of period.................. $112.81 $104.15 $100.00
======= ======= =======
Unit value, end of period........................ $107.89 $112.81 $104.15
======= ======= =======
Number of units outstanding, end of period (000's) 85 54 3
======= ======= =======
</TABLE>
ALLIANCE INTERNATIONAL FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $112.96 $100.00
======= =======
Unit value, end of period........................ $108.42 $112.96
======= =======
Number of units outstanding, end of period (000's) 3 21
======= =======
</TABLE>
ALLIANCE INTERNATIONAL FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $108.98
=======
Unit value, end of period........................ $104.70
=======
Number of units outstanding, end of period (000's) 788
=======
ALLIANCE INTERNATIONAL FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, SEPTEMBER 1, 1994*
1997 1996 TO DECEMBER 31, 1995
-------- -------- -----------------------
<S> <C> <C> <C>
Unit value, beginning of period.................. $112.83 $104.15 $100.00
======= ======= =======
Unit value, end of period........................ $107.92 $112.83 $104.15
======= ======= =======
Number of units outstanding, end of period (000's) 968 763 141
======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-40
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
T. ROWE PRICE INTERNATIONAL STOCK FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $ 97.61
=======
Number of units outstanding, end of period (000's) 387
=======
MORGAN STANLEY EMERGING MARKETS EQUITY FUND -- EQUI-VEST CONTRACTS
August 20, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $ 79.41
=======
Number of units outstanding, end of period (000's) 109
=======
ALLIANCE AGGRESSIVE STOCK FUND -- EQUI-VEST / MOMENTUM** CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $82.91 $68.73 $52.88 $55.68 $48.30 $50.51 $27.36 $25.86 $18.09 $18.15
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $90.75 $82.91 $68.73 $52.88 $55.68 $48.30 $50.51 $27.36 $25.86 $18.09
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of EQUI-VEST units
outstanding, end of
period (000's)............... 28,030 27,945 25,821 24,787 21,496 17,986 12,962 9,545 8,134 8,972
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)............... 1,437 1,281 969 620 258
====== ====== ====== ====== ======
</TABLE>
ALLIANCE AGGRESSIVE STOCK FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $157.31 $130.50 $100.49 $105.90 $100.00
======= ======= ======= ======= =======
Unit value, end of period........................ $171.96 $157.31 $130.50 $100.49 $105.90
======= ======= ======= ======= =======
Number of units outstanding, end of period (000's) 1,220 1,070 718 350 12
======= ======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-41
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE AGGRESSIVE STOCK FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $125.54 $100.00
======= =======
Unit value, end of period........................ $137.72 $125.54
======= =======
Number of units outstanding, end of period (000's) 35 109
======= =======
</TABLE>
ALLIANCE AGGRESSIVE STOCK FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $108.74
=======
Unit value, end of period........................ $119.41
=======
Number of units outstanding, end of period (000's) 7
=======
ALLIANCE AGGRESSIVE STOCK FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $149.41 $123.95 $ 95.45 $100.00
======= ======= ======== =======
Unit value, end of period........................ $163.33 $149.41 $123.95 $ 95.45
======= ======= ======== =======
Number of units outstanding, end of period (000's) 3,226 2,468 1,310 664
======= ======= ======== =======
</TABLE>
WARBURG PINCUS SMALL COMPANY VALUE FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $118.06
=======
Number of units outstanding, end of period (000's) 577
=======
ALLIANCE SMALL CAP GROWTH FUND -- MOMENTUM CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $125.55
=======
Number of units outstanding, end of period (000's) 6
=======
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-42
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE SMALL CAP GROWTH FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $125.54
=======
Number of units outstanding, end of period (000's) 8
=======
ALLIANCE SMALL CAP GROWTH FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $125.55
=======
Number of units outstanding, end of period (000's) 488
=======
MFS EMERGING GROWTH COMPANIES FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $121.34
=======
Number of units outstanding, end of period (000's) 256
=======
ALLIANCE CONSERVATIVE INVESTORS FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $117.25 $112.97 $ 95.10 $100.00
======= ======= ======= =======
Unit value, end of period........................ $130.98 $117.25 $112.97 $ 95.10
======= ======= ======= =======
Number of units outstanding, end of period (000's) 22 18 11 3
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-43
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE CONSERVATIVE INVESTORS FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $114.99 $110.81 $ 93.29 $98.60 $100.00
======= ======= ======= ====== =======
Unit value, end of period........................ $128.45 $114.99 $110.81 $93.29 $ 98.60
======= ======= ======= ====== =======
Number of units outstanding, end of period (000's) 125 136 129 92 10
======= ======= ======= ====== =======
</TABLE>
ALLIANCE CONSERVATIVE INVESTORS FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $109.47 $100.00
======= =======
Unit value, end of period........................ $122.71 $109.47
======= =======
Number of units outstanding, end of period (000's) 5 5
======= =======
</TABLE>
ALLIANCE CONSERVATIVE INVESTORS FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
---------------------------------------
1997 1996 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $117.25 $112.97 $ 95.10 $100.00
======= ======= ======= =======
Unit value, end of period........................ $130.98 $117.25 $112.97 $ 95.10
======= ======= ======= =======
Number of units outstanding, end of period (000's) 553 567 491 325
======= ======= ======= =======
</TABLE>
EQ/PUTNAM BALANCED FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $113.46
=======
Number of units outstanding, end of period (000's) 109
=======
ALLIANCE GROWTH INVESTORS FUND -- MOMENTUM CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JUNE 1, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $133.40 $120.08 $ 96.31 $100.00
======= ======= ======= =======
Unit value, end of period........................ $153.69 $133.40 $120.08 $ 96.31
======= ======= ======= =======
Number of units outstanding, end of period (000's) 147 110 57 10
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-44
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE GROWTH INVESTORS FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $134.95 $121.49 $ 97.45 $101.99 $100.00
======= ======= ======= ======= =======
Unit value, end of period........................ 155.46 $134.95 $121.49 $ 97.45 $101.99
======= ======= ======= ======= =======
Number of units outstanding, end of period (000's) 553 508 375 188 13
======= ======= ======= ======= =======
</TABLE>
ALLIANCE GROWTH INVESTORS FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $116.95 $100.00
======= =======
Unit value, end of period........................ $135.20 $116.95
======= =======
Number of units outstanding, end of period (000's) 14 15
======= =======
</TABLE>
ALLIANCE GROWTH INVESTORS FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $109.51
=======
Unit value, end of period........................ $126.72
=======
Number of units outstanding, end of period (000's) 1
=======
ALLIANCE GROWTH INVESTORS FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $133.40 $120.08 $ 96.31 $100.00
======= ======= ======= =======
Unit value, end of period........................ $153.69 $133.40 $120.08 $ 96.31
======= ======= ======= =======
Number of units outstanding, end of period (000's) 3,704 3,325 2,113 1,023
======= ======= ======= =======
</TABLE>
- -------------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-45
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 1997
6. Accumulation Unit Values (Continued):
ALLIANCE BALANCED FUND -- EQUI-VEST / MOMENTUM** CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991 1990 1989 1988
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Unit value, beginning of period. $34.06 $30.92 $26.18 $28.85 $26.04 $27.17 $19.40 $19.69 $15.80 $13.95
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Unit value, end of period....... $38.66 $34.06 $30.92 $26.18 $28.85 $26.04 $27.17 $19.40 $19.69 $15.80
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of EQUI-VEST units
outstanding, end of
period (000's)............... 26,036 28,319 30,212 32,664 31,259 25,975 21,100 19,423 16,810 15,335
====== ====== ====== ====== ====== ====== ====== ====== ====== ======
Number of Momentum units
outstanding, end of
period (000's)............... 1,052 1,057 957 776 348
====== ====== ====== ====== ======
</TABLE>
ALLIANCE BALANCED FUND -- MOMENTUM PLUS CONTRACTS: 135 B.P.
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
--------------------------------------- SEPTEMBER 9, 1993*
1997 1996 1995 1994 TO DECEMBER 31, 1993
-------- -------- --------- -------- -----------------------
<S> <C> <C> <C> <C> <C>
Unit value, beginning of period.................. $120.01 $108.95 $ 92.22 $101.63 $100.00
======= ======= ======== ======= =======
Unit value, end of period........................ $136.14 $120.01 $108.95 $ 92.22 $101.63
======= ======= ======== ======= =======
Number of units outstanding, end of period (000's) 439 417 336 188 9
======= ======= ======== ======= =======
</TABLE>
ALLIANCE BALANCED FUND -- MOMENTUM PLUS CONTRACTS: 100 B.P.
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
---------------- SEPTEMBER 1, 1996*
1997 TO DECEMBER 31, 1996
-------- ------------------------
<S> <C> <C>
Unit value, beginning of period.................. $114.16 $100.00
======= =======
Unit value, end of period........................ $129.97 $114.16
======= =======
Number of units outstanding, end of period (000's) 10 48
======= =======
</TABLE>
ALLIANCE BALANCED FUND -- MOMENTUM PLUS CONTRACTS: 90 B.P.
YEAR ENDED
DECEMBER 31,
----------------
1997
--------
Unit value, beginning of period.................. $100.00
=======
Unit value, end of period........................ $122.68
=======
Number of units outstanding, end of period (000's) 1
=======
- -----------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-46
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
SEPARATE ACCOUNT A
NOTES TO FINANCIAL STATEMENTS (CONCLUDED)
DECEMBER 31, 1997
6. Accumulation Unit Values (CONCLUDED):
ALLIANCE BALANCED FUND -- EQUI-VEST SERIES 300 AND 400 CONTRACTS
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------- JANUARY 3, 1994*
1997 1996 1995 TO DECEMBER 31, 1994
-------- -------- --------- -----------------------
<S> <C> <C> <C> <C>
Unit value, beginning of period.................. $119.26 $108.26 $ 91.64 $100.00
======= ======= ======== =======
Unit value, end of period........................ $135.29 $119.26 $ 108.26 $ 91.64
======= ======= ======== =======
Number of units outstanding, end of period (000's) 655 548 386 289
======= ======= ======== =======
</TABLE>
MERRILL LYNCH WORLD STRATEGY FUND -- EQUI-VEST CONTRACTS
MAY 1, 1997* TO
DECEMBER 31, 1997
-----------------------
Unit value, beginning of period.................. $100.00
========
Unit value, end of period........................ $103.77
========
Number of units outstanding, end of period (000's) 52
========
- -----------------
*Date on which units were made available for sale.
**The Momentum Contracts were first introduced for sale on February 15, 1993.
FSA-47
<PAGE>
February 10, 1998
Report of Independent Accountants
To the Board of Directors and Shareholders 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 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, 1997 and 1996, and the results of their
operations and their cash flows for each of the three years in the period ended
December 31, 1997, 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 methods of accounting for long-duration participating life insurance
contracts and long-lived assets in 1996 and for loan impairments in 1995.
/s/ Price Waterhouse, LLP
- ---------------------------
Price Waterhouse LLP
New York, New York
February 10, 1998
F-1
<PAGE>
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1996
<TABLE>
<CAPTION>
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
ASSETS
Investments:
Fixed maturities:
Available for sale, at estimated fair value............................. $ 19,630.9 $ 18,077.0
Mortgage loans on real estate............................................. 2,611.4 3,133.0
Equity real estate........................................................ 2,749.2 3,297.5
Policy loans.............................................................. 2,422.9 2,196.1
Other equity investments.................................................. 951.5 860.6
Investment in and loans to affiliates..................................... 731.1 685.0
Other invested assets..................................................... 624.7 25.4
----------------- -----------------
Total investments..................................................... 29,721.7 28,274.6
Cash and cash equivalents................................................... 300.5 538.8
Deferred policy acquisition costs........................................... 3,236.6 3,104.9
Amounts due from discontinued operations.................................... 572.8 996.2
Other assets................................................................ 2,685.2 2,552.2
Closed Block assets......................................................... 8,566.6 8,495.0
Separate Accounts assets.................................................... 36,538.7 29,646.1
----------------- -----------------
Total Assets................................................................ $ 81,622.1 $ 73,607.8
================= =================
LIABILITIES
Policyholders' account balances............................................. $ 21,579.5 $ 21,865.6
Future policy benefits and other policyholder's liabilities................. 4,553.8 4,416.6
Short-term and long-term debt............................................... 1,991.2 1,766.9
Other liabilities........................................................... 3,257.1 2,785.1
Closed Block liabilities.................................................... 9,073.7 9,091.3
Separate Accounts liabilities............................................... 36,306.3 29,598.3
----------------- -----------------
Total liabilities..................................................... 76,761.6 69,523.8
----------------- -----------------
Commitments and contingencies (Notes 10, 12, 13, 14 and 15)
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.............................................. 3,105.8 3,105.8
Retained earnings........................................................... 1,235.9 798.7
Net unrealized investment gains............................................. 533.6 189.9
Minimum pension liability................................................... (17.3) (12.9)
----------------- -----------------
Total shareholder's equity............................................ 4,860.5 4,084.0
----------------- -----------------
Total Liabilities and Shareholder's Equity.................................. $ 81,622.1 $ 73,607.8
================= =================
</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, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
REVENUES
Universal life and investment-type product policy fee
income...................................................... $ 950.6 $ 874.0 $ 788.2
Premiums...................................................... 601.5 597.6 606.8
Net investment income......................................... 2,282.8 2,203.6 2,088.2
Investment (losses) gains, net................................ (45.2) (9.8) 5.3
Commissions, fees and other income............................ 1,227.2 1,081.8 897.1
Contribution from the Closed Block............................ 102.5 125.0 143.2
----------------- ----------------- -----------------
Total revenues.......................................... 5,119.4 4,872.2 4,528.8
----------------- ----------------- -----------------
BENEFITS AND OTHER DEDUCTIONS
Interest credited to policyholders' account balances.......... 1,266.2 1,270.2 1,248.3
Policyholders' benefits....................................... 978.6 1,317.7 1,008.6
Other operating costs and expenses............................ 2,203.9 2,075.7 1,775.8
----------------- ----------------- -----------------
Total benefits and other deductions..................... 4,448.7 4,663.6 4,032.7
----------------- ----------------- -----------------
Earnings from continuing operations before Federal
income taxes, minority interest and cumulative
effect of accounting change................................. 670.7 208.6 496.1
Federal income taxes.......................................... 91.5 9.7 120.5
Minority interest in net income of consolidated subsidiaries.. 54.8 81.7 62.8
----------------- ----------------- -----------------
Earnings from continuing operations before cumulative
effect of accounting change................................. 524.4 117.2 312.8
Discontinued operations, net of Federal income taxes.......... (87.2) (83.8) -
Cumulative effect of accounting change, net of Federal
income taxes................................................ - (23.1) -
----------------- ----------------- -----------------
Net Earnings.................................................. $ 437.2 $ 10.3 $ 312.8
================= ================= =================
</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
YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(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 and end of year..... 3,105.8 3,105.8 3,105.8
----------------- ----------------- -----------------
Retained earnings, beginning of year.......................... 798.7 788.4 475.6
Net earnings.................................................. 437.2 10.3 312.8
----------------- ----------------- -----------------
Retained earnings, end of year................................ 1,235.9 798.7 788.4
----------------- ----------------- -----------------
Net unrealized investment gains (losses), beginning of year... 189.9 396.5 (220.5)
Change in unrealized investment gains (losses)................ 343.7 (206.6) 617.0
----------------- ----------------- -----------------
Net unrealized investment gains, end of year.................. 533.6 189.9 396.5
----------------- ----------------- -----------------
Minimum pension liability, beginning of year.................. (12.9) (35.1) (2.7)
Change in minimum pension liability........................... (4.4) 22.2 (32.4)
-----------------
----------------- -----------------
Minimum pension liability, end of year........................ (17.3) (12.9) (35.1)
----------------- ----------------- -----------------
Total Shareholder's Equity, End of Year....................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================= =================
</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, 1997, 1996 AND 1995
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ----------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net earnings.................................................. $ 437.2 $ 10.3 $ 312.8
Adjustments to reconcile net earnings to net cash provided by operating
activities:
Interest credited to policyholders' account balances........ 1,266.2 1,270.2 1,248.3
Universal life and investment-type product
policy fee income......................................... (950.6) (874.0) (788.2)
Investment losses (gains)................................... 45.2 9.8 (5.3)
Change in Federal income tax payable........................ (74.4) (197.1) 221.6
Other, net.................................................. 169.4 330.2 80.5
----------------- ----------------- -----------------
Net cash provided by operating activities..................... 893.0 549.4 1,069.7
----------------- ----------------- -----------------
Cash flows from investing activities:
Maturities and repayments................................... 2,702.9 2,275.1 1,897.4
Sales....................................................... 10,385.9 8,964.3 8,867.1
Purchases................................................... (13,205.4) (12,559.6) (11,675.5)
(Increase) decrease in short-term investments............... (555.0) 450.3 (99.3)
Decrease in loans to discontinued operations................ 420.1 1,017.0 1,226.9
Sale of subsidiaries........................................ 261.0 - -
Other, net.................................................. (612.6) (281.0) (413.4)
----------------- ----------------- -----------------
Net cash used by investing activities......................... (603.1) (133.9) (196.8)
----------------- ----------------- -----------------
Cash flows from financing activities: Policyholders' account balances:
Deposits.................................................. 1,281.7 1,925.4 2,586.5
Withdrawals............................................... (1,886.8) (2,385.2) (2,657.1)
Net increase (decrease) in short-term financings............ 419.9 (.3) (16.4)
Additions to long-term debt................................. 32.0 - 599.7
Repayments of long-term debt................................ (196.4) (124.8) (40.7)
Payment of obligation to fund accumulated deficit of
discontinued operations................................... (83.9) - (1,215.4)
Other, net.................................................. (94.7) (66.5) (48.4)
----------------- ----------------- -----------------
Net cash used by financing activities......................... (528.2) (651.4) (791.8)
----------------- ----------------- -----------------
Change in cash and cash equivalents........................... (238.3) (235.9) 81.1
Cash and cash equivalents, beginning of year.................. 538.8 774.7 693.6
----------------- ----------------- -----------------
Cash and Cash Equivalents, End of Year........................ $ 300.5 $ 538.8 $ 774.7
================= ================= =================
Supplemental cash flow information
Interest Paid............................................... $ 217.1 $ 109.9 $ 89.6
================= ================= =================
Income Taxes Paid (Refunded)................................ $ 170.0 $ (10.0) $ (82.7)
================= ================= =================
</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, prior to
December 31, 1996, its wholly owned life insurance subsidiary, 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") and
Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), an investment banking and
brokerage affiliate. AXA-UAP ("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 58.7% at December 31, 1997 (54.3% if all securities
convertible into, and options on, common stock were to be converted or
exercised).
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, an investment advisory subsidiary, and, through
June 10, 1997, Equitable Real Estate Investment Management, Inc.
("EREIM"), a real estate investment management subsidiary which was sold
(see Note 5); and those partnerships and joint ventures in which
Equitable Life or its subsidiaries has control 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 and liabilities and results of
operations are presented in the consolidated financial statements as
single line items (see Note 6). Unless specifically stated, all
disclosures contained herein supporting the consolidated financial
statements exclude the Closed Block related amounts.
All significant intercompany transactions and balances have been
eliminated in consolidation other than intercompany transactions and
balances with the Closed Block and the discontinued operations (see Note
7).
The years "1997," "1996" and "1995" refer to the years ended December
31, 1997, 1996 and 1995, respectively.
Certain reclassifications have been made in the amounts presented for
prior periods to conform these periods with the 1997 presentation.
Closed Block
As of July 22, 1992, Equitable Life established the Closed Block for the
benefit of certain classes of individual participating policies for
which Equitable Life had a dividend scale payable in 1991 and which were
in force on that date. Assets were allocated to the Closed Block in an
amount which, together with anticipated revenues from policies included
in the Closed Block, was 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.
F-6
<PAGE>
Assets allocated to the Closed Block inure solely to the benefit of the
holders of policies included in the Closed Block 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 consist of the business of the former Guaranteed
Interest Contract ("GIC") segment which includes the Group
Non-Participating Wind-Up Annuities ("Wind-Up Annuities") and the 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, during the 1997 and 1996 fourth quarter
reviews, the allowance for future losses was increased. Management
believes the allowance for future losses at December 31, 1997 is
adequate to provide for all future losses; however, the determination of
the allowance 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 7).
Accounting Changes
In 1996, the Company changed its method of accounting for long-duration
participating life insurance contracts, primarily within the Closed
Block, in accordance with the provisions prescribed by SFAS No. 120,
"Accounting and Reporting by Mutual Life Insurance Enterprises and by
Insurance Enterprises for Certain Long-Duration Participating
Contracts". (See "Deferred Policy Acquisition Costs," "Policyholders'
Account Balances and Future Policy Benefits" and Note 6.)
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 Equitable's cost of funds.
The 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 has committed to disposing of by sale or abandonment 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.
Implementation of the SFAS No. 121 impairment requirements relative 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.
In the first quarter of 1995, the Company adopted SFAS No. 114,
"Accounting by Creditors for Impairment of a Loan". Impaired loans
within SFAS No. 114's scope are to be measured based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, at the loan's observable market price or the fair value
of the collateral if the loan is collateral dependent. The adoption of
this statement did not have a material effect on the level of the
allowances for possible losses or on the Company's consolidated
statements of earnings and shareholder's equity.
F-7
<PAGE>
New Accounting Pronouncements
In January 1998, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 132, "Employers' Disclosures about Pension and Other
Postretirement Benefits," which revises current note disclosure
requirements for employers' pension and other retiree benefits. SFAS No.
132 is effective for fiscal years beginning after December 15, 1997. The
Company will adopt the provisions of SFAS No. 132 in the 1998
consolidated financial statements.
In December 1997, the American Institute of Certified Public Accountants
("AICPA") issued Statement of Position ("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.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information". SFAS No. 131 establishes
standards for the way public business enterprises report information
about operating segments in annual and interim financial statements
issued to shareholders. It also establishes standards for related
disclosures about products and services, geographic areas and major
customers. Generally, financial information will be required to be
reported on the basis used by management for evaluating segment
performance and for deciding how to allocate resources to segments. This
statement is effective for fiscal years beginning after December 15,
1997 and need not be applied to interim reporting in the initial year of
adoption. Restatement of comparative information for earlier periods is
required. Management is currently reviewing its definition of business
segments in light of the requirements of SFAS No. 131.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income". SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in a full set of general purpose
financial statements. SFAS No. 130 requires an enterprise to classify
items of other comprehensive income by their nature in a financial
statement and display the accumulated balance of other comprehensive
income separately from retained earnings and additional paid-in capital
in the equity section of a statement of financial position. This
statement is effective for fiscal years beginning after December 15,
1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required. The Company will adopt
the provisions of SFAS No. 130 in its 1998 consolidated financial
statements.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities".
SFAS No. 125 specifies the accounting and reporting requirements for
transfers of financial assets, the recognition and measurement of
servicing assets and liabilities and extinguishments of liabilities.
SFAS No. 125 is effective for transactions occurring after December 31,
1996 and is to be applied prospectively. In December 1996, the FASB
issued SFAS No. 127, "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125," which defers for one year the
effective date of provisions relating to secured borrowings and
collateral and transfers of financial assets that are part of repurchase
agreements, dollar-roll, securities lending and similar transactions.
Implementation of SFAS No. 125 did not have nor is SFAS No. 127 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. 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.
F-8
<PAGE>
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.
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 or losses.
Unrealized investment gains and losses on fixed maturities available for
sale and equity securities held by the Company are accounted for as a
separate component of shareholder's equity, 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.
F-9
<PAGE>
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 15 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 unrealized gains (losses) in consolidated
shareholder's equity as of the balance sheet date.
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, 1997, the expected investment yield, excluding
policy loans, generally ranged from 7.53% grading to 7.92% 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 unrealized gains (losses) 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.
F-10
<PAGE>
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,
include 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.
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 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.
F-11
<PAGE>
Claim reserves and associated liabilities for individual DI and major
medical policies were $886.7 million and $869.4 million at December 31,
1997 and 1996, 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>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Incurred benefits related to current year.......... $ 190.2 $ 189.0 $ 176.0
Incurred benefits related to prior years........... 2.1 69.1 67.8
----------------- ---------------- -----------------
Total Incurred Benefits............................ $ 192.3 $ 258.1 $ 243.8
================= ================ =================
Benefits paid related to current year.............. $ 28.8 $ 32.6 $ 37.0
Benefits paid related to prior years............... 146.2 153.3 137.8
----------------- ---------------- -----------------
Total Benefits Paid................................ $ 175.0 $ 185.9 $ 174.8
================= ================ =================
</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, 1997, participating policies, including those in the
Closed Block, represent approximately 21.2% ($50.2 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.
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 1997, 1996 and 1995, investment results of
such Separate Accounts were $3,411.1 million, $2,970.6 million and
$1,963.2 million, respectively.
F-12
<PAGE>
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 opinion, compensation expense is recorded on the date of grant
only if the current market price of the underlying stock exceeds the
exercise price. See Note 21 for the pro forma disclosures for the
Holding Company, DLJ and Alliance required by SFAS No. 123, "Accounting
for Stock-Based Compensation".
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, 1997
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 14,230.3 $ 785.0 $ 74.5 $ 14,940.8
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.. 673.0 6.8 .1 679.7
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
================= ================= ================ =================
December 31, 1996
Fixed Maturities:
Available for Sale:
Corporate.......................... $ 13,645.2 $ 451.5 $ 121.0 $ 13,975.7
Mortgage-backed.................... 2,015.9 11.2 20.3 2,006.8
U.S. Treasury securities and
U.S. government and
agency securities................ 1,539.4 39.2 19.3 1,559.3
States and political subdivisions.. 77.0 4.5 - 81.5
Foreign governments................ 302.6 18.0 2.2 318.4
Redeemable preferred stock......... 139.1 3.3 7.1 135.3
----------------- ----------------- ---------------- -----------------
Total Available for Sale............... $ 17,719.2 $ 527.7 $ 169.9 $ 18,077.0
================= ================= ================ =================
Equity Securities:
Common stock......................... $ 362.0 $ 49.3 $ 17.7 $ 393.6
================= ================= ================ =================
</TABLE>
F-13
<PAGE>
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 has
determined 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, 1997 and 1996, securities
without a readily ascertainable market value having an amortized cost of
$3,759.2 million and $3,915.7 million, respectively, had estimated fair
values of $3,903.9 million and $4,024.6 million, respectively.
The contractual maturity of bonds at December 31, 1997 is shown below:
<TABLE>
<CAPTION>
Available for Sale
------------------------------------
Amortized Estimated
Cost Fair Value
---------------- -----------------
(In Millions)
<S> <C> <C>
Due in one year or less................................................ $ 149.9 $ 151.3
Due in years two through five.......................................... 2,962.8 3,025.2
Due in years six through ten........................................... 6,863.9 7,093.0
Due after ten years.................................................... 6,952.3 7,502.7
Mortgage-backed securities............................................. 1,702.8 1,725.0
---------------- -----------------
Total.................................................................. $ 18,631.7 $ 19,497.2
================ =================
</TABLE>
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
the total investments in any single issuer or total investment in 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,
1997, approximately 17.85% of the $18,610.6 million aggregate amortized
cost of bonds held by the Insurance Group were considered to be other
than investment grade.
In addition to its holdings of corporate high yield securities, 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.
F-14
<PAGE>
Investment valuation allowances and changes thereto are shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balances, beginning of year........................ $ 137.1 $ 325.3 $ 284.9
SFAS No. 121 release............................... - (152.4) -
Additions charged to income........................ 334.6 125.0 136.0
Deductions for writedowns and
asset dispositions............................... (87.2) (160.8) (95.6)
----------------- ---------------- -----------------
Balances, End of Year.............................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
Balances, end of year comprise:
Mortgage loans on real estate.................... $ 55.8 $ 50.4 $ 65.5
Equity real estate............................... 328.7 86.7 259.8
----------------- ---------------- -----------------
Total.............................................. $ 384.5 $ 137.1 $ 325.3
================= ================ =================
</TABLE>
At December 31, 1997, the carrying values of investments held for the
production of income which were non-income producing for the twelve
months preceding the consolidated balance sheet date were $12.6 million
of fixed maturities and $.9 million of mortgage loans on real estate.
At December 31, 1997 and 1996, 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 $23.4 million (0.9% of total
mortgage loans on real estate) and $12.4 million (0.4% 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 $183.4
million and $388.3 million at December 31, 1997 and 1996, 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 $17.2 million, $35.5 million and $52.1 million in
1997, 1996 and 1995, respectively. Gross interest income on these loans
included in net investment income aggregated $12.7 million, $28.2
million and $37.4 million in 1997, 1996 and 1995, respectively.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
----------------------------------------
1997 1996
------------------- -------------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses.................. $ 196.7 $ 340.0
Impaired mortgage loans without provision for losses............... 3.6 122.3
------------------- -------------------
Recorded investment in impaired mortgage loans..................... 200.3 462.3
Provision for losses............................................... (51.8) (46.4)
------------------- -------------------
Net Impaired Mortgage Loans........................................ $ 148.5 $ 415.9
=================== ===================
</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.
F-15
<PAGE>
During 1997, 1996 and 1995, respectively, the Company's average recorded
investment in impaired mortgage loans was $246.9 million, $552.1 million
and $429.0 million. Interest income recognized on these impaired
mortgage loans totaled $15.2 million, $38.8 million and $27.9 million
($2.3 million, $17.9 million and $13.4 million recognized on a cash
basis) for 1997, 1996 and 1995, 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, 1997 and 1996, the carrying value of equity real estate
held for sale amounted to $1,023.5 million and $345.6 million,
respectively. For 1997, 1996 and 1995, respectively, real estate of
$152.0 million, $58.7 million and $35.3 million was acquired in
satisfaction of debt. At December 31, 1997 and 1996, the Company owned
$693.3 million and $771.7 million, respectively, of real estate acquired
in satisfaction of debt.
Depreciation of real estate 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 $541.1
million and $587.5 million at December 31, 1997 and 1996, respectively.
Depreciation expense on real estate totaled $74.9 million, $91.8 million
and $121.7 million for 1997, 1996 and 1995, respectively.
4) JOINT VENTURES AND PARTNERSHIPS
Summarized combined financial information for real estate joint ventures
(29 and 34 individual ventures as of December 31, 1997 and 1996,
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,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
BALANCE SHEETS
Investments in real estate, at depreciated cost........................ $ 1,700.9 $ 1,883.7
Investments in securities, generally at estimated fair value........... 1,374.8 2,430.6
Cash and cash equivalents.............................................. 105.4 98.0
Other assets........................................................... 584.9 427.0
---------------- -----------------
Total Assets........................................................... $ 3,766.0 $ 4,839.3
================ =================
Borrowed funds - third party........................................... $ 493.4 $ 1,574.3
Borrowed funds - the Company........................................... 31.2 137.9
Other liabilities...................................................... 284.0 415.8
---------------- -----------------
Total liabilities...................................................... 808.6 2,128.0
---------------- -----------------
Partners' capital...................................................... 2,957.4 2,711.3
---------------- -----------------
Total Liabilities and Partners' Capital................................ $ 3,766.0 $ 4,839.3
================ =================
Equity in partners' capital included above............................. $ 568.5 $ 806.8
Equity in limited partnership interests not included above............. 331.8 201.8
Other.................................................................. 4.3 9.8
---------------- -----------------
Carrying Value......................................................... $ 904.6 $ 1,018.4
================ =================
</TABLE>
F-16
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
STATEMENTS OF EARNINGS
Revenues of real estate joint ventures............. $ 310.5 $ 348.9 $ 463.5
Revenues of other limited partnership interests.... 506.3 386.1 242.3
Interest expense - third party..................... (91.8) (111.0) (135.3)
Interest expense - the Company..................... (7.2) (30.0) (41.0)
Other expenses..................................... (263.6) (282.5) (397.7)
----------------- ---------------- -----------------
Net Earnings....................................... $ 454.2 $ 311.5 $ 131.8
================= ================ =================
Equity in net earnings included above.............. $ 76.7 $ 73.9 $ 49.1
Equity in net earnings of limited partnerships
interests not included above..................... 69.5 35.8 44.8
Other.............................................. (.9) .9 1.0
-----------------
----------------- ---------------- -----------------
Total Equity in Net Earnings....................... $ 145.3 $ 110.6 $ 94.9
================= ================ =================
</TABLE>
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)
The sources of net investment income are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 1,459.4 $ 1,307.4 $ 1,151.1
Mortgage loans on real estate...................... 260.8 303.0 329.0
Equity real estate................................. 390.4 442.4 560.4
Other equity investments........................... 156.9 122.0 76.9
Policy loans....................................... 177.0 160.3 144.4
Other investment income............................ 181.7 217.4 273.0
----------------- ---------------- -----------------
Gross investment income.......................... 2,626.2 2,552.5 2,534.8
----------------- ---------------- -----------------
Investment expenses.............................. 343.4 348.9 446.6
----------------- ---------------- -----------------
Net Investment Income.............................. $ 2,282.8 $ 2,203.6 $ 2,088.2
================= ================ =================
</TABLE>
Investment gains (losses), net, including changes in the valuation
allowances, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Fixed maturities................................... $ 88.1 $ 60.5 $ 119.9
Mortgage loans on real estate...................... (11.2) (27.3) (40.2)
Equity real estate................................. (391.3) (79.7) (86.6)
Other equity investments........................... 14.1 18.9 12.8
Sale of subsidiaries............................... 252.1 - -
Issuance and sales of Alliance Units............... - 20.6 -
Other.............................................. 3.0 (2.8) (.6)
----------------- ---------------- -----------------
Investment (Losses) Gains, Net..................... $ (45.2) $ (9.8) $ 5.3
================= ================ =================
</TABLE>
F-17
<PAGE>
Writedowns of fixed maturities amounted to $11.7 million, $29.9 million
and $46.7 million for 1997, 1996 and 1995, respectively, and writedowns
of equity real estate subsequent to the adoption of SFAS No. 121
amounted to $136.4 million and $23.7 million for 1997 and 1996,
respectively. 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 the fourth quarter, $132.3 million of
writedowns on real estate held for production of income were recorded.
For 1997, 1996 and 1995, respectively, proceeds received on sales of
fixed maturities classified as available for sale amounted to $9,789.7
million, $8,353.5 million and $8,206.0 million. Gross gains of $166.0
million, $154.2 million and $211.4 million and gross losses of $108.8
million, $92.7 million and $64.2 million, respectively, were realized on
these sales. The change in unrealized investment gains (losses) related
to fixed maturities classified as available for sale for 1997, 1996 and
1995 amounted to $513.4 million, $(258.0) million and $1,077.2 million,
respectively.
For 1997, 1996 and 1995, investment results passed through to certain
participating group annuity contracts as interest credited to
policyholders' account balances amounted to $137.5 million, $136.7
million and $131.2 million, respectively.
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 maturing in eight years and bearing interest at the rate of
7.4%, subject to certain adjustments. Equitable Life 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 will continue 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 the years ended December 31, 1996 and 1995,
respectively, the businesses sold reported combined revenues of $91.6
million, $226.1 million and $245.6 million and combined net earnings of
$10.7 million, $30.7 million and $27.9 million. Total combined assets
and liabilities as reported at December 31, 1996 were $171.8 million and
$130.1 million, respectively.
In 1996, Alliance acquired the business of Cursitor-Eaton Asset
Management Company 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 substantial additional
consideration to be determined at a later date. 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,
1997, the Company's ownership of Alliance Units was approximately 56.9%.
F-18
<PAGE>
Net unrealized investment gains (losses), included in the consolidated
balance sheets as a component of equity and the changes for the
corresponding years, are summarized as follows:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Balance, beginning of year......................... $ 189.9 $ 396.5 $ (220.5)
Changes in unrealized investment gains (losses).... 543.3 (297.6) 1,198.9
Changes in unrealized investment losses
(gains) attributable to:
Participating group annuity contracts.......... 53.2 - (78.1)
DAC............................................ (89.0) 42.3 (216.8)
Deferred Federal income taxes.................. (163.8) 48.7 (287.0)
----------------- ---------------- -----------------
Balance, End of Year............................... $ 533.6 $ 189.9 $ 396.5
================= ================ =================
Balance, end of year comprises:
Unrealized investment gains on:
Fixed maturities............................... $ 871.2 $ 357.8 $ 615.9
Other equity investments....................... 33.7 31.6 31.1
Other, principally Closed Block................ 80.9 53.1 93.1
----------------- ---------------- -----------------
Total........................................ 985.8 442.5 740.1
Amounts of unrealized investment gains
attributable to:
Participating group annuity contracts........ (19.0) (72.2) (72.2)
DAC.......................................... (141.0) (52.0) (94.3)
Deferred Federal income taxes................ (292.2) (128.4) (177.1)
----------------- ---------------- -----------------
Total.............................................. $ 533.6 $ 189.9 $ 396.5
================= ================ =================
</TABLE>
6) CLOSED BLOCK
Summarized financial information for the Closed Block follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Fixed Maturities:
Available for sale, at estimated fair value (amortized cost,
$4,059.4 and $3,820.7)........................................... $ 4,231.0 $ 3,889.5
Mortgage loans on real estate........................................ 1,341.6 1,380.7
Policy loans......................................................... 1,700.2 1,765.9
Cash and other invested assets....................................... 282.7 336.1
DAC.................................................................. 775.2 876.5
Other assets......................................................... 235.9 246.3
----------------- -----------------
Total Assets......................................................... $ 8,566.6 $ 8,495.0
================= =================
Liabilities
Future policy benefits and policyholders' account balances........... $ 8,993.2 $ 8,999.7
Other liabilities.................................................... 80.5 91.6
----------------- -----------------
Total Liabilities.................................................... $ 9,073.7 $ 9,091.3
================= =================
</TABLE>
F-19
<PAGE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Premiums and other revenue......................... $ 687.1 $ 724.8 $ 753.4
Investment income (net of investment
expenses of $27.0, $27.3 and $26.7).............. 574.9 546.6 538.9
Investment losses, net............................. (42.4) (5.5) (20.2)
----------------- ---------------- -----------------
Total revenues............................... 1,219.6 1,265.9 1,272.1
----------------- ---------------- -----------------
Benefits and Other Deductions
Policyholders' benefits and dividends.............. 1,066.7 1,106.3 1,077.6
Other operating costs and expenses................. 50.4 34.6 51.3
----------------- ---------------- -----------------
Total benefits and other deductions.......... 1,117.1 1,140.9 1,128.9
----------------- ---------------- -----------------
Contribution from the Closed Block................. $ 102.5 $ 125.0 $ 143.2
================= ================ =================
</TABLE>
At December 31, 1997 and 1996, problem mortgage loans on real estate had
an amortized cost of $8.1 million and $4.3 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had an amortized cost of $70.5 million and $114.2 million,
respectively. At December 31, 1996, the restructured mortgage loans on
real estate amount included $.7 million of problem mortgage loans on
real estate.
Impaired mortgage loans (as defined under SFAS No. 114) along with the
related provision for losses were as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 109.1 $ 128.1
Impaired mortgage loans without provision for losses................... .6 .6
---------------- -----------------
Recorded investment in impaired mortgages.............................. 109.7 128.7
Provision for losses................................................... (17.4) (12.9)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 92.3 $ 115.8
================ =================
</TABLE>
During 1997, 1996 and 1995, the Closed Block's average recorded
investment in impaired mortgage loans was $110.2 million, $153.8 million
and $146.9 million, respectively. Interest income recognized on these
impaired mortgage loans totaled $9.4 million, $10.9 million and $5.9
million ($4.1 million, $4.7 million and $1.3 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
Valuation allowances amounted to $18.5 million and $13.8 million on
mortgage loans on real estate and $16.8 million and $3.7 million on
equity real estate at December 31, 1997 and 1996, 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, $12.8 million and $16.8 million for 1997, 1996 and 1995,
respectively and 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 the fourth
quarter, $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-20
<PAGE>
7) DISCONTINUED OPERATIONS
Summarized financial information for discontinued operations follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Mortgage loans on real estate........................................ $ 655.5 $ 1,111.1
Equity real estate................................................... 655.6 925.6
Other equity investments............................................. 209.3 300.5
Short-term investments............................................... 102.0 63.2
Other invested assets................................................ 41.9 50.9
----------------- -----------------
Total investments.................................................. 1,664.3 2,451.3
Cash and cash equivalents............................................ 106.8 42.6
Other assets......................................................... 253.9 242.9
----------------- -----------------
Total Assets......................................................... $ 2,025.0 $ 2,736.8
================= =================
Liabilities
Policyholders' liabilities........................................... $ 1,048.3 $ 1,335.9
Allowance for future losses.......................................... 259.2 262.0
Amounts due to continuing operations................................. 572.8 996.2
Other liabilities.................................................... 144.7 142.7
----------------- -----------------
Total Liabilities.................................................... $ 2,025.0 $ 2,736.8
================= =================
</TABLE>
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Investment income (net of investment
expenses of $97.3, $127.5 and $153.1)............ $ 188.6 $ 245.4 $ 323.6
Investment losses, net............................. (173.7) (18.9) (22.9)
Policy fees, premiums and other income............. .2 .2 .7
----------------- ---------------- -----------------
Total revenues..................................... 15.1 226.7 301.4
Benefits and other deductions...................... 169.5 250.4 326.5
Losses charged to allowance for future losses...... (154.4) (23.7) (25.1)
----------------- ---------------- -----------------
Pre-tax loss from operations....................... - - -
Pre-tax loss from strengthening of the
allowance for future losses...................... (134.1) (129.0) -
Federal income tax benefit......................... 46.9 45.2 -
----------------- ---------------- -----------------
Loss from Discontinued Operations.................. $ (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 the need
to strengthen the allowance in 1997 and 1996, respectively.
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 the fourth quarter, $92.5 million of writedown on real
estate held for production of income were recognized.
Benefits and other deductions includes $53.3 million, $114.3 million and
$154.6 million of interest expense related to amounts borrowed from
continuing operations in 1997, 1996 and 1995, respectively.
F-21
<PAGE>
Valuation allowances amounted to $28.4 million and $9.0 million on
mortgage loans on real estate and $88.4 million and $20.4 million on
equity real estate at December 31, 1997 and 1996, 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, 1997 and 1996, problem mortgage loans on real estate had
amortized costs of $11.0 million and $7.9 million, respectively, and
mortgage loans on real estate for which the payment terms have been
restructured had amortized costs of $109.4 million and $208.1 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,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Impaired mortgage loans with provision for losses...................... $ 101.8 $ 83.5
Impaired mortgage loans without provision for losses................... .2 15.0
---------------- -----------------
Recorded investment in impaired mortgages.............................. 102.0 98.5
Provision for losses................................................... (27.3) (8.8)
---------------- -----------------
Net Impaired Mortgage Loans............................................ $ 74.7 $ 89.7
================ =================
</TABLE>
During 1997, 1996 and 1995, the discontinued operations' average
recorded investment in impaired mortgage loans was $89.2 million, $134.8
million and $177.4 million, respectively. Interest income recognized on
these impaired mortgage loans totaled $6.6 million, $10.1 million and
$4.5 million ($5.3 million, $7.5 million and $.4 million recognized on a
cash basis) for 1997, 1996 and 1995, respectively.
At December 31, 1997 and 1996, discontinued operations had carrying
values of $156.2 million and $263.0 million, respectively, of real
estate acquired in satisfaction of debt.
8) SHORT-TERM AND LONG-TERM DEBT
Short-term and long-term debt consists of the following:
<TABLE>
<CAPTION>
December 31,
--------------------------------------
1997 1996
----------------- -----------------
(In Millions)
<S> <C> <C>
Short-term debt...................................................... $ 422.2 $ 174.1
----------------- -----------------
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....................... 199.7 199.6
Other.............................................................. .3 .5
----------------- -----------------
Total Equitable Life........................................... 599.4 599.5
----------------- -----------------
Wholly Owned and Joint Venture Real Estate:
Mortgage notes, 5.87% - 12.00% due through 2006.................... 951.1 968.6
----------------- -----------------
Alliance:
Other.............................................................. 18.5 24.7
----------------- -----------------
Total long-term debt................................................. 1,569.0 1,592.8
----------------- -----------------
Total Short-term and Long-term Debt.................................. $ 1,991.2 $ 1,766.9
================= =================
</TABLE>
F-22
<PAGE>
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 June 2000.
The interest rates are based on external indices dependent on the type
of borrowing and at December 31, 1997 range from 5.88% to 8.50%. There
were no borrowings outstanding under this bank credit facility at
December 31, 1997.
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, 1997, $50.0 million was outstanding under this program.
During 1996, Alliance entered into a $250.0 million five-year revolving
credit facility with a group of banks. 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. The revolving credit facility will be used to
provide back-up liquidity for Alliance's $250.0 million commercial paper
program, to fund commission payments to financial intermediaries for the
sale of Class B and C shares under Alliance's mutual fund distribution
system, and for general working capital purposes. At December 31, 1997,
Alliance had $72.0 million in commercial paper outstanding and there
were no borrowings under the 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.
On December 18, 1995, Equitable Life issued, in accordance with Section
1307 of the New York Insurance Law, $400.0 million of surplus notes
having an interest rate of 6.95% scheduled to mature in 2005 and $200.0
million of surplus notes having an interest rate of 7.70% scheduled to
mature in 2015 (together, the "Surplus Notes"). Proceeds from the
issuance of the Surplus Notes were $596.6 million, net of related
issuance costs. Payments of interest on, or principal of, the Surplus
Notes are subject to prior approval by the Superintendent.
The Company has pledged real estate, mortgage loans, cash and securities
amounting to $1,164.0 million and $1,406.4 million at December 31, 1997
and 1996, respectively, as collateral for certain long-term debt.
At December 31, 1997, aggregate maturities of the long-term debt based
on required principal payments at maturity for 1998 and the succeeding
four years are $565.8 million, $201.4 million, $8.6 million, $1.7
million and $1.8 million, respectively, and $790.6 million thereafter.
9) FEDERAL INCOME TAXES
A summary of the Federal income tax expense in the consolidated
statements of earnings is shown below:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Federal income tax expense (benefit):
Current.......................................... $ 186.5 $ 97.9 $ (11.7)
Deferred......................................... (95.0) (88.2) 132.2
----------------- ---------------- -----------------
Total.............................................. $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
F-23
<PAGE>
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>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Expected Federal income tax expense................ $ 234.7 $ 73.0 $ 173.7
Non-taxable minority interest...................... (38.0) (28.6) (22.0)
Adjustment of tax audit reserves................... (81.7) 6.9 4.1
Equity in unconsolidated subsidiaries.............. (45.1) (32.3) (19.4)
Other.............................................. 21.6 (9.3) (15.9)
----------------- ---------------- -----------------
Federal Income Tax Expense......................... $ 91.5 $ 9.7 $ 120.5
================= ================ =================
</TABLE>
The components of the net deferred Federal income taxes are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
--------------------------------- ---------------------------------
Assets Liabilities Assets Liabilities
--------------- ---------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C> <C>
Compensation and related benefits...... $ 257.9 $ - $ 259.2 $ -
Other.................................. 30.7 - - 1.8
DAC, reserves and reinsurance.......... - 222.8 - 166.0
Investments............................ - 405.7 - 328.6
--------------- ---------------- --------------- ---------------
Total.................................. $ 288.6 $ 628.5 $ 259.2 $ 496.4
=============== ================ =============== ===============
</TABLE>
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>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
DAC, reserves and reinsurance...................... $ 46.2 $ (156.2) $ 63.3
Investments........................................ (113.8) 78.6 13.0
Compensation and related benefits.................. 3.7 22.3 30.8
Other.............................................. (31.1) (32.9) 25.1
----------------- ---------------- -----------------
Deferred Federal Income Tax
(Benefit) Expense................................ $ (95.0) $ (88.2) $ 132.2
================= ================ =================
</TABLE>
The Internal Revenue Service (the "IRS") is in the process of examining
the Company's consolidated Federal income tax returns for the years 1989
through 1991. Management believes these audits will have no material
adverse effect on the Company's results of operations.
F-24
<PAGE>
10) 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>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Direct premiums.................................... $ 448.6 $ 461.4 $ 474.2
Reinsurance assumed................................ 198.3 177.5 171.3
Reinsurance ceded.................................. (45.4) (41.3) (38.7)
----------------- ---------------- -----------------
Premiums........................................... $ 601.5 $ 597.6 $ 606.8
================= ================ =================
Universal Life and Investment-type Product
Policy Fee Income Ceded.......................... $ 61.0 $ 48.2 $ 44.0
================= ================ =================
Policyholders' Benefits Ceded...................... $ 70.6 $ 54.1 $ 48.9
================= ================ =================
Interest Credited to Policyholders' Account
Balances Ceded................................... $ 36.4 $ 32.3 $ 28.5
================= ================ =================
</TABLE>
Effective January 1, 1994, all in force business above $5.0 million was
reinsured. During 1996, the Company's retention limit on joint
survivorship policies was increased to $15.0 million. 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 $1.6 million,
$2.4 million and $260.6 million for 1997, 1996 and 1995, respectively.
Ceded death and disability benefits totaled $4.3 million, $21.2 million
and $188.1 million for 1997, 1996 and 1995, respectively. Insurance
liabilities ceded totaled $593.8 million and $652.4 million at December
31, 1997 and 1996, respectively.
11) 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>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 32.5 $ 33.8 $ 30.0
Interest cost on projected benefit obligations..... 128.2 120.8 122.0
Actual return on assets............................ (307.6) (181.4) (309.2)
Net amortization and deferrals..................... 166.6 43.4 155.6
----------------- ---------------- -----------------
Net Periodic Pension Cost (Credit)................. $ 19.7 $ 16.6 $ (1.6)
================= ================ =================
</TABLE>
F-25
<PAGE>
The funded status of the qualified and non-qualified pension plans is as
follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Actuarial present value of obligations:
Vested............................................................... $ 1,702.6 $ 1,672.2
Non-vested........................................................... 3.9 10.1
---------------- -----------------
Accumulated Benefit Obligation......................................... $ 1,706.5 $ 1,682.3
================ =================
Plan assets at fair value.............................................. $ 1,867.4 $ 1,626.0
Projected benefit obligations.......................................... 1,801.3 1,765.5
---------------- -----------------
Projected benefit obligations (in excess of) or less than plan assets.. 66.1 (139.5)
Unrecognized prior service cost........................................ (9.9) (17.9)
Unrecognized net loss from past experience different
from that assumed.................................................... 95.0 280.0
Unrecognized net asset at transition................................... 3.1 4.7
Additional minimum liability........................................... - (19.3)
---------------- -----------------
Prepaid Pension Cost.................................................. $ 154.3 $ 108.0
================ =================
</TABLE>
The discount rate and rate of increase in future compensation levels
used in determining the actuarial present value of projected benefit
obligations were 7.25% and 4.07%, respectively, at December 31, 1997 and
7.5% and 4.25%, respectively, at December 31, 1996. As of January 1,
1997 and 1996, the expected long-term rate of return on assets for the
retirement plan was 10.25%.
The Company recorded, as a reduction of shareholders' equity, an
additional minimum pension liability of $17.3 million and $12.9 million,
net of Federal income taxes, at December 31, 1997 and 1996,
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 $33.2 million,
$34.7 million and $36.4 million for 1997, 1996 and 1995, 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 1997, 1996 and 1995, the Company made
estimated postretirement benefits payments of $18.7 million, $18.9
million and $31.1 million, respectively.
F-26
<PAGE>
The following table sets forth the postretirement benefits plan's
status, reconciled to amounts recognized in the Company's consolidated
financial statements:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Service cost....................................... $ 4.5 $ 5.3 $ 4.0
Interest cost on accumulated postretirement
benefits obligation.............................. 34.7 34.6 34.7
Net amortization and deferrals..................... 1.9 2.4 (2.3)
----------------- ---------------- -----------------
Net Periodic Postretirement Benefits Costs......... $ 41.1 $ 42.3 $ 36.4
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Accumulated postretirement benefits obligation:
Retirees............................................................. $ 388.5 $ 381.8
Fully eligible active plan participants.............................. 45.7 50.7
Other active plan participants....................................... 56.6 60.7
---------------- -----------------
490.8 493.2
Unrecognized prior service cost........................................ 40.3 50.5
Unrecognized net loss from past experience different
from that assumed and from changes in assumptions.................... (140.6) (150.5)
---------------- -----------------
Accrued Postretirement Benefits Cost................................... $ 390.5 $ 393.2
================ =================
</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 costs to the Company of providing these
medical benefits will be limited to 200% of 1993 costs for all
participants.
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefits obligation was 8.75% in 1997,
gradually declining to 2.75% in the year 2009 and in 1996 was 9.5%,
gradually declining to 3.5% in the year 2009. The discount rate used in
determining the accumulated postretirement benefits obligation was 7.25%
and 7.50% at December 31, 1997 and 1996, respectively.
If the health care cost trend rate assumptions were increased by 1%, the
accumulated postretirement benefits obligation as of December 31, 1997
would be increased 7%. The effect of this change on the sum of the
service cost and interest cost would be an increase of 8%.
12) 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, 1997 and 1996, respectively, was $1,353.4 million and
$649.9 million. The average unexpired terms at December 31, 1997 ranged
from 1.5 to 3.8 years. At December 31, 1997, the cost of terminating
outstanding matched swaps in a loss position was $10.9 million and the
unrealized gain on outstanding matched swaps in a gain position was
$38.9 million. The Company has no intention of terminating these
contracts prior to maturity. During 1996 and 1995, net gains of $.2
million and $1.4 million, respectively, were recorded in connection with
interest rate swap activity. 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
F-27
<PAGE>
December 31, 1997 of contracts purchased and sold were $7,250.0 million
and $875.0 million, respectively. The net premium paid by Equitable Life
on these contracts was $48.5 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, 1997 and 1996.
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.
F-28
<PAGE>
Fair values for long-term debt is 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, 6 and 7:
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------------------
1997 1996
--------------------------------- ---------------------------------
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.......... $ 2,611.4 $ 2,822.8 $ 3,133.0 $ 3,394.6
Other limited partnership interests.... 509.4 509.4 467.0 467.0
Policy loans........................... 2,422.9 2,493.9 2,196.1 2,221.6
Policyholders' account balances -
investment contracts................. 12,611.0 12,714.0 12,908.7 12,992.2
Long-term debt......................... 1,569.0 1,531.5 1,592.8 1,557.7
Closed Block Financial Instruments:
Mortgage loans on real estate.......... 1,341.6 1,420.7 1,380.7 1,425.6
Other equity investments............... 86.3 86.3 105.0 105.0
Policy loans........................... 1,700.2 1,784.2 1,765.9 1,798.0
SCNILC liability....................... 27.6 30.3 30.6 34.9
Discontinued Operations Financial
Instruments:
Mortgage loans on real estate.......... 655.5 779.9 1,111.1 1,220.3
Fixed maturities....................... 38.7 38.7 42.5 42.5
Other equity investments............... 209.3 209.3 300.5 300.5
Guaranteed interest contracts.......... 37.0 34.0 290.7 300.5
Long-term debt......................... 102.0 102.1 102.1 102.2
</TABLE>
13) 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 $202.6 million to affiliated real estate
joint ventures; and to provide equity financing to certain limited
partnerships of $362.1 million at December 31, 1997, 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 $47.4 million of letters of credit outstanding
at December 31, 1997.
F-29
<PAGE>
14) LITIGATION
Equitable Life recently agreed to settle, subject to court approval,
previously disclosed cases brought by persons insured under Lifetime
Guaranteed Renewable Major Medical Insurance Policies issued by
Equitable Life (the "Policies") in New York (Golomb et al. v. The
Equitable Life Assurance Society of the United States), Pennsylvania
(Malvin et al. v. The Equitable Life Assurance Society of the United
States), Texas (Bowler et al. v. The Equitable Life Assurance Society of
the United States), Florida (Bachman v. The Equitable Life Assurance
Society of the United States) and California (Fletcher v. The Equitable
Life Assurance Society of the United 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. Plaintiffs in Bowler and Fletcher also claimed that
Equitable Life misrepresented to policyholders in Texas and California,
respectively, that premium increases had been approved by insurance
departments in those states and determined annual rate increases in a
manner that discriminated against policyholders in those states in
violation of the terms of the Policies, representations to policyholders
and/or state law. The New York trial court dismissed the Golomb action
with prejudice and plaintiffs appealed. In Bowler and Fletcher,
Equitable Life denied the material allegations of the complaints and
filed motions for summary judgment which have been fully briefed. The
Malvin action was stayed indefinitely pending the outcome of proceedings
in Golomb and in Fletcher the magistrate concluded that the case should
be remanded to California state court and Equitable Life appealed that
determination to the district judge. On December 23, 1997, Equitable
Life entered into a settlement agreement, subject to court approval,
which would result in the dismissal with prejudice of each of the five
pending actions and the resolution of all similar claims on a nationwide
basis.
The settlement agreement provides for the creation of a nationwide class
consisting of all persons holding, and paying premiums on, the Policies
at any time since January 1, 1988. An amended complaint will be filed in
the federal district court in Tampa, Florida (where the Florida action
is pending), that would assert claims of the kind previously made in the
cases described above on a nationwide basis, on behalf of policyholders
in the nationwide class, which consists of approximately 127,000 former
and current policyholders. If the settlement is approved, Equitable Life
would pay $14,166,000 in exchange for release of all claims for past
damages on claims of the type described in the five pending actions and
the amended complaint. Costs of administering the settlement and any
attorneys' fees awarded by the court to plaintiffs' counsel would be
deducted from this fund before distribution of the balance to the class.
In addition to this payment, Equitable Life will provide future relief
to current holders of certain forms of the Policies in the form of an
agreement to be embodied in the court's judgment, restricting the
premium increases Equitable Life can seek on these Policies in the
future. The parties estimate the present value of these restrictions at
$23,333,000, before deduction of any attorneys' fees that may be awarded
by the court. The estimate is based on assumptions about future events
that cannot be predicted with certainty and accordingly the actual value
of the future relief may differ. The parties to the settlement shortly
will be asking the court to approve preliminarily the settlement and
settlement class and to permit distribution of notice of the settlement
to policyholders, establish procedures for objections, an opportunity to
opt out of the settlements as it affects past damages, and a court
hearing on whether the settlement should be finally approved. Equitable
Life cannot predict whether the settlement will be approved or, if it is
not approved, the outcome of the pending litigations. As noted,
proceedings in Malvin were stayed indefinitely; proceedings in the other
actions have been stayed or deferred to accommodate the settlement
approval process.
A number of lawsuits have been filed against life and health insurers in
the jurisdictions in which Equitable Life and its subsidiaries do
business involving insurers' sales practices, alleged agent misconduct,
alleged failure to properly supervise agents, and other matters. Some of
the lawsuits have resulted in the award of substantial judgments against
other insurers, including material amounts of punitive damages, or in
substantial settlements. In some states, juries have substantial
discretion in awarding punitive damages. Equitable Life, Equitable
Variable Life Insurance Company ("EVLICO," which was merged into
Equitable Life effective January 1, 1997, but whose existence continues
for certain limited purposes, including the defense of litigation) and
The Equitable of Colorado, Inc. ("EOC"), like other life and health
insurers, from time to time are involved in such litigation. Among
litigations pending against Equitable Life, EVLICO and EOC of the type
referred to in this paragraph are the litigations described in the
following seven paragraphs.
F-30
<PAGE>
An action was instituted on April 6, 1995 against Equitable Life and its
wholly owned subsidiary, EOC, in New York state court, entitled Sidney
C. Cole, et al. v. The Equitable Life Assurance Society of the United
States and The Equitable of Colorado, Inc. The action is brought by the
holders of a joint survivorship whole life policy issued by EOC. The
action purports to be on behalf of a class consisting of all persons who
from January 1, 1984 purchased life insurance policies sold by Equitable
Life and EOC based upon allegedly uniform sales presentations and policy
illustrations. The complaint puts in issue various alleged sales
practices that plaintiffs assert, among other things, misrepresented the
stated number of years that the annual premium would need to be paid.
Plaintiffs seek damages in an unspecified amount, imposition of a
constructive trust, and seek to enjoin Equitable Life and EOC from
engaging in the challenged sales practices. In June 1996, the Court
issued a decision and order dismissing with prejudice plaintiffs' causes
of action for fraud, constructive fraud, breach of fiduciary duty,
negligence, and unjust enrichment, and dismissing without prejudice
plaintiffs' cause of action under the New York State consumer protection
statute. The only remaining causes of action are for breach of contract
and negligent misrepresentation. In April 1997, plaintiffs noticed an
appeal from the court's June 1996 order. Subsequently, Equitable Life
and EOC noticed a cross-appeal from so much of the June 1996 order that
denied their motion to dismiss. Briefing on the appeals is scheduled to
begin on February 23, 1998. In June 1997, plaintiffs filed their
memorandum of law and affidavits in support of their motion for class
certification. That memorandum states that plaintiffs seek to certify a
class solely on their breach of contract claims, and not on their
negligent misrepresentation claim. Plaintiffs' class certification
motion has been fully briefed by the parties and is sub judice. In
August 1997, Equitable Life and EOC moved for summary judgment
dismissing plaintiffs' remaining claims of breach of contract and
negligent misrepresentation. Defendants' summary judgment motion has
been fully briefed by the parties. On January 5, 1998, plaintiffs filed
a note of issue (placing the case on the trial calendar).
On May 21, 1996, an action entitled Elton F. Duncan, III v. The
Equitable Life Assurance Society of the United States was commenced
against Equitable Life in the Civil District Court for the Parish of
Orleans, State of Louisiana. The action originally was brought by an
individual who purchased a whole life policy from Equitable Life in
1989. In September 1997, with leave of the court, plaintiff filed a
second amended petition naming six additional policyholder plaintiffs
and three new sales agent defendants. The sole named individual
defendant in the original petition is also named as a defendant in the
second amended petition. Plaintiffs purport to represent a class
consisting of all persons who purchased whole life or universal life
insurance policies from Equitable Life from January 1, 1981 through July
22, 1992. Plaintiffs allege improper sales practices based on
allegations of misrepresentations concerning one or more of the
following: the number of years that premiums would need to be paid; a
policy's suitability as an investment vehicle; and the extent to which a
policy was a proper replacement policy. Plaintiffs seek damages,
including punitive damages, in an unspecified amount. In October 1997,
Equitable Life filed (i) exceptions to the second amended petition,
asserting deficiencies in pleading of venue and vagueness; and (ii) a
motion to strike certain allegations. On January 23, 1998, the court
heard argument on Equitable Life's exceptions and motion to strike.
Those motions are sub judice. Motion practice regarding discovery
continues.
On July 26, 1996, an action entitled Michael Bradley v. Equitable
Variable Life Insurance Company was commenced in New York state court,
Kings County. The action is brought by the holder of a variable life
insurance policy issued by EVLICO. The plaintiff purports to represent a
class consisting of all persons or entities who purchased one or more
life insurance policies issued by EVLICO from January 1, 1980. The
complaint puts at issue various alleged sales practices and alleges
misrepresentations concerning the extent to which the policy was a
proper replacement policy and the number of years that the annual
premium would need to be paid. Plaintiff seeks damages, including
punitive damages, in an unspecified amount and also seeks injunctive
relief prohibiting EVLICO from canceling policies for failure to make
premium payments beyond the alleged stated number of years that the
annual premium would need to be paid. EVLICO answered the complaint,
denying the material allegations. In September 1996, Equitable Life,
EVLICO and EOC made a motion to have this proceeding moved from Kings
County Supreme Court to New York County for joint trial or consolidation
with the Cole action. The motion was denied by the Court in Cole in
January 1997. Plaintiff then moved for certification of a nationwide
class consisting of all persons or entities who, since January 1, 1980,
were sold one or more life insurance products based on
misrepresentations as to the number of years that the annual premium
would need to be paid, and/or who were allegedly induced to purchase
additional policies from EVLICO using the cash value accumulated in
existing policies. Defendants have opposed this motion. Discovery and
briefing regarding plaintiff's motion for class certification are
ongoing.
F-31
<PAGE>
On December 12, 1996, an action entitled Robert E. Dillon v. The
Equitable Life Assurance Society of the United States and The Equitable
of Colorado, was commenced in the United States District Court for the
Southern District of Florida. The action is brought by an individual who
purchased a joint whole life policy from EOC in 1988. The complaint puts
in issue various alleged sales practices and alleges misrepresentations
concerning the alleged impropriety of replacement policies issued by
Equitable Life and EOC and alleged misrepresentations regarding the
number of years premiums would have to be paid on the defendants'
policies. Plaintiff alleges claims for breach of contract, fraud,
negligent misrepresentation, money had and received, unjust enrichment
and imposition of a constructive trust. Plaintiff purports to represent
two classes of persons. The first is a "contract class," consisting of
all persons who purchased whole or universal life insurance policies
from Equitable Life and EOC and from whom Equitable Life and EOC have
sought additional payments beyond the number of years allegedly promised
by Equitable Life and EOC. The second is a "fraud class," consisting of
all persons with an interest in policies issued by Equitable Life and
EOC at any time since October 1, 1986. Plaintiff seeks damages in an
unspecified amount, and also seeks injunctive relief attaching Equitable
Life's and EOC's profits from their alleged sales practices. In May
1997, plaintiff served a motion for class certification. In July 1997,
the parties submitted to the Court a joint scheduling report, joint
scheduling order and a confidentiality stipulation and order. The Court
signed the latter stipulation, and the others remain sub judice. Further
briefing on plaintiff's class certification motion will await entry of a
scheduling order and further class certification discovery, which has
commenced and is on-going. In January 1998, the judge assigned to the
case recused himself, and the case was reassigned. Defendants are to
serve their answer in February 1998.
On January 3, 1996, an amended complaint was filed in an action entitled
Frank Franze Jr. and George Busher, individually and on behalf of all
others similarly situated v. The Equitable Life Assurance Society of the
United States, and Equitable Variable Life Insurance Company, No.
94-2036 in the United States District Court for the Southern District of
Florida. The action was brought by two individuals who purchased
variable life insurance policies. The plaintiffs purport to represent a
nationwide class consisting of all persons who purchased variable life
insurance policies from Equitable Life and EVLICO since September 30,
1991. The amended complaint alleges that Equitable Life's and EVLICO's
agents were trained not to disclose fully that the product being sold
was life insurance. Plaintiffs allege violations of the Federal
securities laws and seek rescission of the contracts or compensatory
damages and attorneys' fees and expenses. Equitable Life and EVLICO have
answered the amended complaint, denying the material allegations and
asserting certain affirmative defenses. Motion practice regarding
discovery continues.
On January 9, 1997, an action entitled Rosemarie Chaviano, individually
and on behalf of all others similarly situated v. The Equitable Life
Assurance Society of the United States, and Equitable Variable Life
Insurance Company, was filed in Massachusetts state court making claims
similar to those in the Franze action and alleging violations of the
Massachusetts securities laws. The plaintiff purports to represent all
persons in Massachusetts who purchased variable life insurance contracts
from Equitable Life and EVLICO from January 9, 1993 to the present. The
Massachusetts action seeks rescission of the contracts or compensatory
damages, attorneys' fees, expenses and injunctive relief. Plaintiff
filed an amended complaint in April 1997. In July 1997, Equitable Life
served a motion to dismiss the amended complaint or, in the alternative,
for summary judgment. On September 12, 1997, plaintiff moved for class
certification. This motion is scheduled for hearing on February 18,
1998.
On September 11, 1997, an action entitled Pamela L. and James A. Luther,
individually and as representatives of all people similarly situated v.
The Equitable Life Assurance Society of the United States, The Equitable
Companies Incorporated, and Casey Cammack, individually and as agent for
The Equitable Life Assurance Society of the United States and The
Equitable Companies Incorporated, was filed in Texas state court. The
action was brought by holders of a whole life policy and the beneficiary
under that policy. Plaintiffs purport to represent a nationwide class of
persons having an ownership or beneficial interest in whole and
universal life policies issued by Equitable Life from January 1, 1982
through December 31, 1996. Also included in the purported class are
persons having an ownership interest in variable annuities purchased
from Equitable Life from January 1, 1992 to the present. The complaint
puts in issue the allegations that uniform sales presentations,
illustrations, and materials that Equitable Life agents used
misrepresented the stated number of years that premiums would need to be
paid and misrepresented the extent to which the policies at issue were
F-32
<PAGE>
proper replacement policies. Plaintiffs seek compensatory damages,
attorneys' fees and expenses. In October 1997, Equitable Life served a
general denial of the allegations against it. The same day, the Holding
Company entered a special appearance contesting the court's jurisdiction
over it. In November 1997, Equitable Life filed a plea in abatement,
which, under Texas law, stayed further proceedings in the case because
plaintiffs had not served a demand letter. Plaintiffs served a demand
letter upon Equitable Life and the Holding Company, the response to
which is due 60 days thereafter. Although the outcome of litigation
cannot be predicted with certainty, particularly in the early stages of
an action, the Company's management believes that the ultimate
resolution of the Cole, Duncan, Bradley, Dillon, Franze, Chaviano and
Luther litigations should not have a material adverse effect on the
financial position of the Company. The Company'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 Company's results
of operations in any particular period.
On September 12, 1997, the United States District Court for the Northern
District of Alabama, Southern Division, entered an order certifying
James Brown as the representative of a class consisting of "[a]ll
African-Americans who applied but were not hired for, were discouraged
from applying for, or would have applied for the position of Sales Agent
in the absence of the discriminatory practices, and/or procedures in the
[former] Southern Region of The Equitable from May 16, 1987 to the
present." The second amended complaint in James W. Brown, on behalf of
others similarly situated v. The Equitable Life Assurance Society of the
United States, alleges, among other things, that Equitable Life
discriminated 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 any litigation cannot be predicted
with certainty, the Company's management believes that the ultimate
resolution of this matter should not have a material adverse effect on
the financial position of the Company. The Company'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 Company's results of
operations in any particular period.
The U.S. Department of Labor ("DOL") is conducting an investigation of
Equitable Life's management of the Prime Property Fund ("PPF"). PPF is
an open-end, commingled real estate separate account of Equitable Life
for pension clients. Equitable Life serves as investment manager in PPF
and retains EREIM as advisor. Equitable Life agreed to indemnify the
purchaser of EREIM (which Equitable Life sold in June 1997) with respect
to any fines, penalties and rebates to clients in connection with this
investigation. In early 1995, the DOL commenced a national investigation
of commingled real estate funds with pension investors, including PPF.
The investigation appears to be focused principally on appraisal and
valuation procedures in respect of fund properties. The most recent
request from the DOL seems to reflect, at least in part, an interest in
the relationship between the valuations for those properties reflected
in appraisals prepared for local property tax proceedings and the
valuations used by PPF for other purposes. At no time has the DOL made
any specific allegation that Equitable Life or EREIM has acted
improperly and Equitable Life and EREIM believe that any such allegation
would be without foundation. While the outcome of this investigation
cannot be predicted with certainty, the Company's management believes
that the ultimate resolution of this matter should not have a material
adverse effect on the financial position of the Company. The Company's
management cannot make an estimate of loss, if any, or predict whether
or not this investigation will have a material adverse effect on the
Company's results of operations in any particular period.
On July 25, 1995, a Consolidated and Supplemental Class Action Complaint
("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 Complaint, which sought certification of a plaintiff
class of persons who purchased or owned Class A, B or C shares of the
Fund from March 27, 1992 through December 23, 1994, sought an
unspecified amount of damages, costs, attorneys' fees and punitive
damages. The principal allegations are that the Fund purchased debt
securities issued by the Mexican and Argentine governments in amounts
that were not permitted by the Fund's investment objective, and that
there was no shareholder vote to change the investment objective to
permit purchases in such amounts. The Complaint further alleged that the
decline in the value of the Mexican and Argentine securities held by the
Fund caused the Fund's net asset value to decline to the detriment of
the Fund's shareholders. On September 26, 1996, the United States
District Court for the Southern District of
F-33
<PAGE>
New York granted the defendants' motion to dismiss all counts of the
Complaint ("First Decision"). On October 11, 1996, plaintiffs filed a
motion for reconsideration of the First Decision. On November 25, 1996,
the court denied plaintiffs' motion for reconsideration of the First
Decision. On October 29, 1997, the United States Court of Appeals for
the Second Circuit issued an order granting defendants' motion to strike
and dismissing plaintiffs' appeal of the First Decision. On October 29,
1996, plaintiffs filed a motion for leave to file an amended complaint.
The principal allegations of the proposed amended complaint are that (i)
the Fund failed to hedge against the risks of investing in foreign
securities despite representations that it would do so, (ii) the Fund
did not properly disclose that it planned to invest in mortgage-backed
derivative securities and (iii) two advertisements used by the Fund
misrepresented the risks of investing in the Fund. On July 15, 1997, the
District Court denied plaintiffs' motion for leave to file an amended
complaint and ordered that the case be dismissed ("Second Decision").
The plaintiffs have appealed the Second Decision to the United States
Court of Appeals for the Second Circuit. While the ultimate outcome of
this matter cannot be determined at this time, management of Alliance
does not expect that it will have a material adverse effect on
Alliance's results of operations or financial condition.
On January 26, 1996, a purported purchaser of certain notes and warrants
to purchase shares of common stock of Rickel Home Centers, Inc.
("Rickel") filed a class action complaint against Donaldson, Lufkin &
Jenrette Securities Corporation ("DLJSC") and certain other defendants
for unspecified compensatory and punitive damages in the U. S. District
Court for the Southern District of New York. The suit was brought on
behalf of the purchasers of 126,457 units consisting of $126,457,000
aggregate principal amount of 13 1/2% senior notes due 2001 and 126,457
warrants to purchase shares of common stock of Rickel issued by Rickel
in October 1994. The complaint alleges violations of federal securities
laws and common law fraud against DLJSC, as the underwriter of the units
and as an owner of 7.3% of the common stock of Rickel, Eos Partners,
L.P., and General Electric Capital Corporation, each as owners of 44.2%
of the common stock of Rickel, and members of the board of directors of
Rickel, including a DLJSC managing director. The complaint seeks to hold
DLJSC liable for alleged misstatements and omissions contained in the
prospectus and registration statement filed in connection with the
offering of the units, alleging that the defendants knew of financial
losses and a decline in value of Rickel in the months prior to the
offering and did not disclose such information. The complaint also
alleges that Rickel failed to pay its semi-annual interest payment due
on the units on December 15, 1995, and that Rickel filed a voluntary
petition for reorganization pursuant to Chapter 11 of the Bankruptcy
Code on January 10, 1996. DLJSC intends to defend itself vigorously
against all of the allegations contained in the complaint. Although
there can be no assurance, DLJ does not believe that the outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of this litigation, based on the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation will
have a material adverse effect on DLJ's results of operations in any
particular period.
In October 1995, DLJSC was named as a defendant in a purported class
action filed in a Texas State Court on behalf of the holders of $550.0
million principal amount of subordinated redeemable discount debentures
of National Gypsum Corporation ("NGC") canceled in connection with a
Chapter 11 plan of reorganization for NGC consummated in July 1993. The
named plaintiff in the State Court action also filed an adversary
proceeding in the U.S. Bankruptcy Court for the Northern District of
Texas seeking a declaratory judgment that the confirmed NGC plan of
reorganization does not bar the class action claims. Subsequent to the
consummation of NGC's plan of reorganization, NGC's shares traded for
values substantially in excess of, and in 1995 NGC was acquired for a
value substantially in excess of, the values upon which NGC's plan of
reorganization was based. The two actions arise out of DLJSC's
activities as financial advisor to NGC in the course of NGC's Chapter 11
reorganization proceedings. The class action complaint alleges that the
plan of reorganization submitted by NGC was based upon projections by
NGC and DLJSC which intentionally understated forecasts, and provided
misleading and incorrect information in order to hide NGC's true value
and that defendants breached their fiduciary duties by, among other
things, providing false, misleading or incomplete information to
deliberately understate the value of NGC. The class action complaint
seeks compensatory and punitive damages purportedly sustained by the
class. On October 10, 1997, DLJSC and
F-34
<PAGE>
others were named as defendants in a new adversary proceeding in the
Bankruptcy Court brought by the NGC Settlement Trust, an entity created
by the NGC plan of reorganization to deal with asbestos-related claims.
The Trust's allegations are substantially similar to the claims in the
State Court action. In court papers dated October 16, 1997, the State
Court plaintiff indicated that he would intervene in the Trust's
adversary proceeding. On January 21, 1998, the Bankruptcy Court ruled
that the State Court plaintiff's claims were not barred by the NGC plan
of reorganization insofar as they alleged nondisclosure of certain cost
reductions announced by NGC in October 1993. The Texas State Court
action, which had been removed to the Bankruptcy Court, has been
remanded back to the state court, which remand is being opposed by
DLJSC. DLJSC intends to defend itself vigorously against all of the
allegations contained in the complaints. Although there can be no
assurance, DLJ does not believe that the ultimate outcome of this
litigation will have a material adverse effect on its financial
condition. Due to the early stage of such litigation, based upon the
information currently available to it, DLJ's management cannot make an
estimate of loss, if any, or predict whether or not such litigation will
have a material adverse effect on DLJ's results of operations in any
particular period.
In November and December 1995, DLJSC, along with various other parties,
was named as a defendant in a number of purported class actions filed in
the U.S. District Court for the Eastern District of Louisiana. The
complaints allege violations of the federal securities laws arising out
of a public offering in 1994 of $435.0 million of first mortgage notes
of Harrah's Jazz Company and Harrah's Jazz Finance Corp. The complaints
seek to hold DLJSC liable for various alleged misstatements and
omissions contained in the prospectus dated November 9, 1994. On
February 26, 1997, the parties agreed to a settlement of these actions,
subject to the District Court's approval, which was granted on July 31,
1997. The settlement is also subject to approval by the U.S. Bankruptcy
Court for the Eastern District of Louisiana of proposed modifications to
a confirmed plan of reorganization for Harrah's Jazz Company and
Harrah's Jazz Finance Corp., and the satisfaction or waiver of all
conditions to the effectiveness of the plan, as provided in the plan.
There can be no assurance of the Bankruptcy Court's approval of the
modifications to the plan of reorganization, or that the conditions to
the effectiveness of the plan will be satisfied or waived. In the
opinion of DLJ's management, the settlement, if approved, will not have
a material adverse effect on DLJ's results of operations or on its
consolidated financial condition.
In addition to the matters described above, Equitable Life and its
subsidiaries and DLJ 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.
15) 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 1998 and the succeeding four years are $93.5 million, $84.4
million, $70.2 million, $56.4 million, $47.0 million and $489.3 million
thereafter. Minimum future sub-lease rental income on these
noncancelable leases for 1998 and the succeeding four years are $7.3
million, $5.9 million, $3.8 million, $2.4 million, $.8 million and $2.9
million thereafter.
At December 31, 1997, the minimum future rental income on noncancelable
operating leases for wholly owned investments in real estate for 1997
and the succeeding four years are $247.0 million, $238.1 million, $218.7
million, $197.9 million, $169.1 million and $813.0 million thereafter.
F-35
<PAGE>
16) OTHER OPERATING COSTS AND EXPENSES
Other operating costs and expenses consisted of the following:
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Compensation costs................................. $ 721.5 $ 704.8 $ 628.4
Commissions........................................ 409.6 329.5 314.3
Short-term debt interest expense................... 31.7 8.0 11.4
Long-term debt interest expense.................... 121.2 137.3 108.1
Amortization of policy acquisition costs........... 287.3 405.2 317.8
Capitalization of policy acquisition costs......... (508.0) (391.9) (391.0)
Rent expense, net of sub-lease income.............. 101.8 113.7 109.3
Cursitor intangible assets writedown............... 120.9 - -
Other.............................................. 917.9 769.1 677.5
----------------- ---------------- -----------------
Total.............................................. $ 2,203.9 $ 2,075.7 $ 1,775.8
================= ================ =================
</TABLE>
During 1997, 1996 and 1995, the Company restructured certain operations
in connection with cost reduction programs and recorded pre-tax
provisions of $42.4 million, $24.4 million and $32.0 million,
respectively. The amounts paid during 1997, associated with cost
reduction programs, totaled $22.8 million. At December 31, 1997, the
liabilities associated with cost reduction programs amounted to $62.0
million. The 1997 cost reduction program include 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. The 1995 cost reduction program included
relocation expenses, including the accelerated amortization of building
improvements associated with the relocation of the home office.
Amortization of DAC in 1996 included a $145.0 million writeoff of DAC
related to DI contracts.
17) 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 1997, 1996 and 1995, statutory net
loss totaled $351.7 million, $351.1 million and $352.4 million,
respectively. No amounts are expected to be available for dividends from
Equitable Life to the Holding Company in 1998.
At December 31, 1997, the Insurance Group, in accordance with various
government and state regulations, had $19.7 million of securities
deposited with such government or state agencies.
F-36
<PAGE>
Accounting practices used to prepare statutory financial statements for
regulatory filings of stock life insurance companies differ in certain
instances from GAAP. The following reconciles the Insurance Group's
statutory change in surplus and capital stock and statutory surplus and
capital stock determined in accordance with accounting practices
prescribed by the New York Insurance Department with net earnings and
equity on a GAAP basis.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Net change in statutory surplus and
capital stock.................................... $ 203.6 $ 56.0 $ 78.1
Change in asset valuation reserves................. 147.1 (48.4) 365.7
----------------- ---------------- -----------------
Net change in statutory surplus, capital stock
and asset valuation reserves..................... 350.7 7.6 443.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (31.1) (298.5) (66.0)
DAC.............................................. 220.7 (13.3) 73.2
Deferred Federal income taxes.................... 103.1 108.0 (158.1)
Valuation of investments......................... 46.8 289.8 189.1
Valuation of investment subsidiary............... (555.8) (117.7) (188.6)
Limited risk reinsurance......................... 82.3 92.5 416.9
Issuance of surplus notes........................ - - (538.9)
Postretirement benefits.......................... (3.1) 28.9 (26.7)
Other, net....................................... 30.3 12.4 115.1
GAAP adjustments of Closed Block................. 3.6 (9.8) 15.7
GAAP adjustments of discontinued operations...... 189.7 (89.6) 37.3
----------------- ---------------- -----------------
Net Earnings of the Insurance Group................ $ 437.2 $ 10.3 $ 312.8
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
--------------------------------------------------------
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Statutory surplus and capital stock................ $ 2,462.5 $ 2,258.9 $ 2,202.9
Asset valuation reserves........................... 1,444.6 1,297.5 1,345.9
----------------- ---------------- -----------------
Statutory surplus, capital stock and asset
valuation reserves............................... 3,907.1 3,556.4 3,548.8
Adjustments:
Future policy benefits and policyholders'
account balances............................... (1,336.1) (1,305.0) (1,006.5)
DAC.............................................. 3,236.6 3,104.9 3,075.8
Deferred Federal income taxes.................... (370.8) (306.1) (452.0)
Valuation of investments......................... 783.5 286.8 417.7
Valuation of investment subsidiary............... (1,338.6) (782.8) (665.1)
Limited risk reinsurance......................... (254.2) (336.5) (429.0)
Issuance of surplus notes........................ (539.0) (539.0) (538.9)
Postretirement benefits.......................... (317.5) (314.4) (343.3)
Other, net....................................... 203.7 126.3 4.4
GAAP adjustments of Closed Block................. 814.3 783.7 830.8
GAAP adjustments of discontinued operations...... 71.5 (190.3) (184.6)
----------------- ---------------- -----------------
Equity of the Insurance Group...................... $ 4,860.5 $ 4,084.0 $ 4,258.1
================= ================ =================
</TABLE>
F-37
<PAGE>
18) BUSINESS SEGMENT INFORMATION
The Company has two major business segments: Insurance Operations and
Investment Services. Interest expense related to debt not specific to
either business segment is presented as Corporate interest expense.
Information for all periods is presented on a comparable basis.
Insurance Operations 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 and 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.
Investment Services provides investment fund management, primarily to
institutional clients. This segment includes the Company's equity
interest in DLJ and Separate Accounts which provide various investment
options for group clients through pooled or single group accounts.
Intersegment investment advisory and other fees of approximately $81.9
million, $127.5 million and $124.1 million for 1997, 1996 and 1995,
respectively, are included in total revenues of the Investment Services
segment. These fees, excluding amounts related to the GIC Segment of
$5.1 million, $15.7 million and $14.7 million for 1997, 1996 and 1995,
respectively, are eliminated in consolidation.
<TABLE>
<CAPTION>
1997 1996 1995
----------------- ---------------- -----------------
(In Millions)
<S> <C> <C> <C>
Revenues
Insurance operations............................... $ 3,684.2 $ 3,770.6 $ 3,614.6
Investment services................................ 1,455.1 1,126.1 949.1
Consolidation/elimination.......................... (19.9) (24.5) (34.9)
----------------- ---------------- -----------------
Total.............................................. $ 5,119.4 $ 4,872.2 $ 4,528.8
================= ================ =================
Earnings (loss) from continuing operations before Federal income taxes,
minority interest and cumulative effect of accounting change
Insurance operations............................... $ 250.3 $ (36.6) $ 303.1
Investment services................................ 485.7 311.9 224.0
Consolidation/elimination.......................... - .2 (3.1)
----------------- ---------------- -----------------
Subtotal..................................... 736.0 275.5 524.0
Corporate interest expense......................... (65.3) (66.9) (27.9)
----------------- ---------------- -----------------
Total.............................................. $ 670.7 $ 208.6 $ 496.1
================= ================ =================
</TABLE>
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets
Insurance operations................................................... $ 68,305.9 $ 60,464.9
Investment services.................................................... 13,719.8 13,542.5
Consolidation/elimination.............................................. (403.6) (399.6)
---------------- -----------------
Total.................................................................. $ 81,622.1 $ 73,607.8
================ =================
</TABLE>
F-38
<PAGE>
19) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED)
The quarterly results of operations for 1997 and 1996, are summarized
below:
<TABLE>
<CAPTION>
Three Months Ended
------------------------------------------------------------------------------
March 31 June 30 September 30 December 31
----------------- ----------------- ------------------ ------------------
(In Millions)
<S> <C> <C> <C> <C>
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)
================= ================= ================== ==================
1996
Total Revenues................ $ 1,176.5 $ 1,199.4 $ 1,198.4 $ 1,297.9
================= ================= ================== ==================
Earnings (Loss) from
Continuing Operations
before Cumulative Effect
of Accounting Change........ $ 94.8 $ 87.1 $ 93.2 $ (157.9)
================= ================= ================== ==================
Net Earnings (Loss)........... $ 71.7 $ 87.1 $ 93.2 $ (241.7)
================= ================= ================== ==================
</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. Net earnings for
the three months ended December 31, 1996 includes a charge of $339.3
million related to writeoffs of DAC on DI contracts of $94.3 million and
reserve strengthenings on DI business of $113.7 million, Pension Par of
$47.5 million and Discontinued Operations of $83.8 million.
20) INVESTMENT IN DLJ
At December 31, 1997, the Company's ownership of DLJ interest was
approximately 34.4%. 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.
F-39
<PAGE>
Summarized balance sheets information for DLJ, reconciled to the
Company's carrying value of DLJ, are as follows:
<TABLE>
<CAPTION>
December 31,
------------------------------------
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Assets:
Trading account securities, at market value............................ $ 16,535.7 $ 15,728.1
Securities purchased under resale agreements........................... 22,628.8 20,598.7
Broker-dealer related receivables...................................... 28,159.3 16,858.8
Other assets........................................................... 3,182.0 2,318.1
---------------- -----------------
Total Assets........................................................... $ 70,505.8 $ 55,503.7
================ =================
Liabilities:
Securities sold under repurchase agreements............................ $ 36,006.7 $ 29,378.3
Broker-dealer related payables......................................... 25,706.1 19,409.7
Short-term and long-term debt.......................................... 3,670.6 2,704.5
Other liabilities...................................................... 2,860.9 2,164.0
---------------- -----------------
Total liabilities...................................................... 68,244.3 53,656.5
DLJ's company-obligated mandatorily redeemed preferred
securities of subsidiary trust holding solely debentures of DLJ...... 200.0 200.0
Total shareholders' equity............................................. 2,061.5 1,647.2
---------------- -----------------
Total Liabilities, Cumulative Exchangeable Preferred Stock and
Shareholders' Equity................................................. $ 70,505.8 $ 55,503.7
================ =================
DLJ's equity as reported............................................... $ 2,061.5 $ 1,647.2
Unamortized cost in excess of net assets acquired in 1985
and other adjustments................................................ 23.5 23.9
The Holding Company's equity ownership in DLJ.......................... (740.2) (590.2)
Minority interest in DLJ............................................... (729.3) (588.6)
---------------- -----------------
The Company's Carrying Value of DLJ.................................... $ 615.5 $ 492.3
================ =================
</TABLE>
Summarized statements of earnings information for DLJ reconciled to the
Company's equity in earnings of DLJ is as follows:
<TABLE>
<CAPTION>
1997 1996
---------------- -----------------
(In Millions)
<S> <C> <C>
Commission, fees and other income...................................... $ 2,356.8 $ 1,818.2
Net investment income.................................................. 1,652.1 1,074.2
Dealer, trading and investment gains, net.............................. 631.6 598.4
---------------- -----------------
Total revenues......................................................... 4,640.5 3,490.8
Total expenses including income taxes.................................. 4,232.3 3,199.5
---------------- -----------------
Net earnings........................................................... 408.2 291.3
Dividends on preferred stock........................................... 12.1 18.7
---------------- -----------------
Earnings Applicable to Common Shares................................... $ 396.1 $ 272.6
================ =================
DLJ's earnings applicable to common shares as reported................. $ 396.1 $ 272.6
Amortization of cost in excess of net assets acquired in 1985.......... (1.3) (3.1)
The Holding Company's equity in DLJ's earnings......................... (156.8) (107.8)
Minority interest in DLJ............................................... (109.1) (73.4)
---------------- -----------------
The Company's Equity in DLJ's Earnings................................. $ 128.9 $ 88.3
================ =================
</TABLE>
F-40
<PAGE>
21) 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 1997, 1996 and 1995 would have
been:
<TABLE>
<CAPTION>
1997 1996 1995
--------------- --------------- ---------------
(In Millions)
<S> <C> <C> <C>
Net Earnings:
As Reported............................................. $ 437.2 $ 10.3 $ 312.8
Pro Forma............................................... $ 426.3 $ 3.3 $ 311.3
</TABLE>
The fair value of options granted after December 31, 1994, used as a
basis for the above pro forma disclosures, was estimated as of the date
of grants using the Black-Scholes option pricing model. The option
pricing assumptions for 1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
------------------------------ ------------------------------- ----------------------------------
1997 1996 1995 1997 1996 1995 1997 1996 1995
-------------------- --------- ---------- ---------- --------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Dividend yield.... 0.48% 0.80% 0.96% 0.86% 1.54% 1.85% 8.00% 8.00% 8.00%
Expected volatility 20.00% 20.00% 20.00% 33.00% 25.00% 25.00% 26.00% 23.00% 23.00%
Risk-free interest
rate............ 5.99% 5.92% 6.83% 5.96% 6.07% 5.86% 5.70% 5.80% 6.00%
Expected life..... 5 years 5 years 5 years 5 years 5 years 5 years 7.6 years 7.43 years 7.43 years
Weighted average
grant-date fair
value per option $12.25 $6.94 $5.90 $22.45 $9.35 $7.36 $4.36 $2.69 $2.24
</TABLE>
F-41
<PAGE>
A summary of the Holding Company, DLJ and Alliance's option plans is as
follows:
<TABLE>
<CAPTION>
Holding Company DLJ Alliance
----------------------------- ----------------------------- -----------------------------
Options Options Options
Outstanding Outstanding Outstanding
Weighted Weighted Weighted
Average Average Average
Shares Exercise Shares Exercise Units Exercise
(In Millions) Price (In Millions) Price (In Millions) Price
--------------- ------------- --------------- ------------- -----------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance as of
January 1, 1995........ 6.8 $20.31 - 3.8 $15.46
Granted................ .4 $20.27 9.2 $27.00 1.8 $20.54
Exercised.............. (.1) $20.00 - (.5) $11.20
Expired................ (.1) $20.00 - -
Forfeited.............. (.3) $22.24 - (.3) $16.64
--------------- ------------- ---------------
Balance as of
December 31, 1995...... 6.7 $20.27 9.2 $27.00 4.8 $17.72
Granted................ .7 $24.94 2.1 $32.54 .7 $25.12
Exercised.............. (.1) $19.91 - (.4) $13.64
Expired................ - - -
Forfeited.............. (.6) $20.21 (.2) $27.00 (.1) $19.32
--------------- ------------- ---------------
Balance as of
December 31, 1996...... 6.7 $20.79 11.1 $28.06 5.0 $19.07
Granted................ 3.2 $41.85 3.2 $61.07 1.1 $36.56
Exercised.............. (1.6) $20.26 (.1) $32.03 (.6) $16.11
Forfeited.............. (.4) $23.43 (.1) $27.51 (.2) $21.28
--------------- ------------- ---------------
Balance as of
December 31, 1997...... 7.9 $29.05 14.1 $35.56 5.3 $22.82
=============== ============= ===============
</TABLE>
F-42
<PAGE>
Information about options outstanding and exercisable at December 31,
1997 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 4.8 5.84 $20.94 3.0 $20.41
$28.50 -$45.25 3.1 9.57 $41.84 - -
----------------- -------------------
$18.125 -$45.25 7.9 7.29 $29.05 3.0 $20.41
================= ================= =============== =================== ================
DLJ
----------------------
$27.00 -$35.99 10.9 8.0 $28.05 4.9 $27.58
$36.00 -$50.99 .8 9.3 $40.04 - -
$51.00 -$76.00 2.4 9.8 $67.77 - -
----------------- -------------------
$27.00 -$76.00 14.1 8.4 $35.56 4.9 $27.58
================= ================= ================ =================== =================
Alliance
----------------------
$ 6.0625 -$17.75 1.1 3.86 $13.20 1.0 $13.04
$19.375 -$19.75 .8 7.34 $19.39 .3 $19.39
$19.875 -$21.375 1.1 8.28 $20.13 .6 $20.19
$22.25 -$27.50 1.3 9.81 $23.81 .4 $23.29
$36.9375 -$37.5625 1.0 9.95 $36.95 - -
----------------- -------------------
$ 6.0625 -$37.5625 5.3 7.58 $22.82 2.3 $17.43
================= ================== ============== ====================== =============
</TABLE>
F-43
