MOMENTUM
RETIREMENT PLANNING FROM EQUITABLE LIFE
PROSPECTUS, DATED MAY 1, 1998
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Group Variable Annuity Contract Funded through the
Investment Funds of Separate Account A
Issued By:
The Equitable Life Assurance Society of the United States
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This prospectus describes a group deferred variable annuity contract (Contract)
offered by The Equitable Life Assurance Society of the United States (Equitable
Life). The MOMENTUM Contract (MOMENTUM) is designed to fund defined contribution
plans. Contributions in the MOMENTUM Contract 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.
MOMENTUM Employer-Sponsored Retirement Program includes 401(a) and 401(k) plans
as described in this prospectus. Employers sponsoring such plans and trustees of
such plans (Plan Trustees) can participate in MOMENTUM through the MOMENTUM
Program. The MOMENTUM Program consists of a defined contribution master plan and
trust sponsored by Equitable Life (Master Plan and Trust) or, for Employers who
prefer to use their own individually designed or a prototype defined
contribution plan, a pooled trust (Pooled Trust).
Employers and Plan Trustees may choose from investment options (Investment
Options) available under the Contract. These Investment Options include the
Guaranteed Interest Account, which is part of Equitable Life's general account
and pays interest at a guaranteed fixed rate, and twenty-four variable
investment funds (Investment Funds) of Separate Account A (Separate Account):
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Investment Funds
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<S> <C> <C>
o Alliance Money Market o Alliance International o EQ/Putnam Growth & Income Value
o Alliance Intermediate Government o Alliance Aggressive Stock o EQ/ Putnam Balanced
Securities o Alliance Small Cap Growth o MFS Research
o Alliance High Yield o Alliance Conservative Investors o MFS Emerging Growth Companies
o Alliance Quality Bond o Alliance Balanced o Morgan Stanley Emerging Markets Equity
o Alliance Growth & Income o Alliance Growth Investors o Warburg Pincus Small Company Value
o Alliance Equity Index o T. Rowe Price International Stock o Merrill Lynch World Strategy
o Alliance Common Stock o T. Rowe Price Equity Income o Merrill Lynch Basic Value Equity
o Alliance Global
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We invest each Investment Fund in shares of a corresponding portfolio
(Portfolio) of either Class IA shares of the Hudson River Trust (HRT) or
beginning in early July 1998 in Class IB shares of the EQ Advisors Trust
(EQAT). HRT and EQAT (Trusts) are 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 following this prospectus, describe the investment
objectives, policies and risks of the Portfolios.
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.
We provide Employers' Plan Trustees and Participants with a variety of services
and reports relating to the Contract. We also offer a variety of plan
recordkeeping services to plan administrators at an additional cost.
This prospectus provides information about MOMENTUM that prospective
participants 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 a current prospectus for the Trusts, which you should also read
carefully and maintain for future reference.
A registration statement relating to the Separate Account has 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 1-800-528-0204, 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.
888-1150
May 1, 1998 Cat. No. 127655
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Copyright 1998
The Equitable Life Assurance Society of the United States,
New York, New York, 10104.
All rights reserved.
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PROSPECTUS TABLE OF CONTENTS
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General Terms Page 3
Part 1: Summary Page 5
Equitable Life 5
The MOMENTUM Program 5
Investment Options 5
Selecting Investment Options 5
Contributions 6
Transfers 6
Services We Provide 6
Year 2000 Progress 7
Distribution Options and Death Benefit 7
Withdrawals and Termination 8
Plan Loans 8
Taxes 8
Deductions and Charges 8
Fee Tables and Examples 9
Part 2: Separate Account A and
Its Investment Funds Page 14
Separate Account A 14
Trusts 14
HRT's Manager and Investment Adviser 15
EQAT's Manager 16
EQAT's Investment Advisers 16
Investment Policies and Objectives of
the Trusts' Portfolios 18
Part 3: Investment Performance Page 20
Investment Fund Performance 20
Part 4: The Guaranteed Interest
Account Page 31
Part 5: Provisions of the Contract
and Services We Provide Page 32
Understanding the MOMENTUM Program
(Employers and Plan Trustees) 32
Employer's Responsibilities 32
Adopting the MOMENTUM Program
(Employers and Plan Trustees) 33
The MOMENTUM Contract 33
Selecting Investment Options
(Employers and Plan Trustees Only) 33
Contributions 33
Retirement Account Value 34
Transfers 35
Investment Simplifier: Automatic
Transfer Options 35
Plan Loans 36
Withdrawals and Termination 36
Forfeitures 37
Distribution Options 37
Annuity Distribution Options 37
Electing an Annuity Distribution
Option 38
Minimum Distributions (Automatic
Minimum Withdrawal Option) --
Over Age 70 1/2 38
Death Benefit 38
Payment of Proceeds 39
Plan Recordkeeping Services 39
Part 6: Deductions and Charges Page 41
Charges to Portfolios 41
Charges for State Premium and
Other Applicable Taxes 41
Limitation on Charges 42
Charges to Investment Funds 42
Quarterly Administrative Charge 42
Charge for Plan Recordkeeping Services 42
Contingent Withdrawal Charge 43
Plan Loan Charges 44
Special Circumstances 44
Part 7: Voting Rights Page 45
HRT and EQAT Voting Rights 45
Separate Account Voting Rights 45
Voting Rights of Others 45
Changes in Applicable Law 45
Part 8: Federal Tax and
ERISA Matters Page 46
Tax Aspects of Contributions to a Plan 46
Tax Aspects of Distributions from a Plan 47
Certain Rules Applicable to Plan Loans 49
Impact of Taxes to Equitable Life 50
Certain Rules Applicable to Plans
Designed to Comply with Section
404(c) of ERISA 50
Part 9: Legal Proceedings Page 51
Statement of Additional
Information Table of Contents Page 52
How to Obtain the MOMENTUM
Statement of Additional
Information Page 52
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GENERAL TERMS
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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 either the Employer, Trustee or the Participant.
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.
Active Loan -- The principal amount of any Participant plan loan that has
neither been repaid nor deemed distributed under Section 72(p) of the Code.
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 and also on 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 Retirement Account Value minus any applicable withdrawal
charges.
Code -- The Internal Revenue Code of 1986, as amended.
Default Option -- The Alliance Money Market Fund, if that Fund is selected by
the Employer or Plan Trustee as a funding option under the plan. Otherwise, the
Guaranteed Interest Account. For Original Certificates, the Guaranteed Interest
Account is the Default Option.
Employer -- An employer who has sponsored a defined contribution plan that
participates in the MOMENTUM Program through either the Master Plan and Trust or
the Pooled Trust.
ERISA -- The Employee Retirement Income Securities Act of 1974, as amended.
Guaranteed Interest Account -- The Investment Option that pays interest at
guaranteed fixed rates and is part of our general account.
Investment Funds -- In the MOMENTUM Contract, the Investment Funds are referred
to as Investment Divisions. These are the twenty-four variable investment funds
of the Separate Account. 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 and the Guaranteed Interest Account.
Master Plan and Trust -- A defined contribution master plan and trust sponsored
by Equitable Life.
Original Contracts/Certificates -- MOMENTUM Certificates under which the
MOMENTUM Employer has not elected to add 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, Alliance Growth Investors
Investment Funds and any of the EQAT Investment Funds as Investment Options.
These Contracts/Certificates:
o permit investment in only the Guaranteed Interest Account and the Alliance
Money Market, Alliance Balanced, Alliance Common Stock and Alliance
Aggressive Stock Funds; and
o prohibit transfers into the Alliance Money Market Fund.
Participant -- An individual who participates in an Employer's plan funded by
the MOMENTUM Contract.
Participation Date -- The business day we receive your properly completed and
signed enrollment form at our Processing Office or the date we receive the first
contribution made on your behalf, if earlier. For Participants in plans that
converted to MOMENTUM from our EQUI-VEST(R) Corporate Trusteed Contract, the
Participation Date is the same Participation Date as in the EQUI-VEST Corporate
Trusteed Certificate relating to that Participant. If more than one EQUI-VEST
Corporate Trusteed Certificate is in force with respect to a Participant, then
the Participation Date will be the earliest Participation Date.
Participation Year -- The 12-month period beginning on either your Participation
Date or each anniversary of that date.
Plan Trustee -- A trustee or trustees for an Employer's individually designed or
prototype defined contribution plan.
Pooled Trust -- The Pooled Trust for Members Retirement Plans of The Equitable
Life Assurance Society of the United States.
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Portfolios -- The portfolios of the Hudson River Trust and the EQ Advisors Trust
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.
Retirement Account Value -- The sum of the amounts that a Participant has in the
Investment Options.
SAI -- The MOMENTUM Statement of Additional Information.
Separate Account -- Our Separate Account A.
Source -- The source of a contribution. There are six potential sources: (i)
employer, (ii) post-tax, (iii) prior plan, (iv) qualified non-elective and
qualified matching, (v) salary deferral, and (vi) matching contributions. A
detailed description of these Sources is contained in the SAI.
Transaction Date -- The Business Day we receive a contribution or acceptable
written or telephone 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 the 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
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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 (Holding Company). The largest shareholder of the Holding Company
is AXA-UAP S.A. (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 the Fortune 100, more than 42,000 small businesses,
state and local retirement funds in more than half the 50 states, approximately
250,000 employees of educational and nonprofit institutions, as well as nearly
500,000 individuals. Millions of Americans are covered by Equitable Life's
annuity, life and pension contracts.
The MOMENTUM Program
MOMENTUM is designed to meet the retirement savings needs of those working for
businesses and other organizations.
The MOMENTUM Program:
o Pooled Trust
A funding vehicle used in connection with an Employer's qualified defined
contribution plan and trust.
o Master Trust
A funding vehicle used in connection only with the Master Plan, an
IRS-approved master defined contribution plan, in which case the Master
Trust will be the sole funding vehicle for the Employer's plan.
The Employer or Plan Trustee, as applicable, is responsible for determining
whether the MOMENTUM Contract is a suitable funding vehicle for its defined
contribution plan and should, therefore, carefully read this prospectus and the
MOMENTUM Contract before entering into the contract.
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 HRT (Class IA) or EQAT (Class IB), respectively. The
attached HRT and EQAT prospectuses describe the investment objectives and
policies of the Portfolios available to Contract Owners.
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 8.
Educational information about investing which may be useful for Participants is
contained in "Part 12: Long-Term Market Trends" in the SAI. The SAI is available
free of charge by calling 1-800-528-0204.
Selecting Investment Options
Under the MOMENTUM Program, the Employer or Plan Trustee will choose the
investment options available to the Participant. 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 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 and Alliance High Yield.
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MOMENTUM 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
MOMENTUM contributions may be made at any time and may be made only by the
Employer or Plan Trustee by either wire transfer or check. Participants should
not send contributions directly to Equitable Life. There is no minimum
contribution.
MOMENTUM 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.
All contributions made by check must be drawn on a bank in the U.S. clearing
through the Federal Reserve System, and payable in U.S. dollars to Equitable
Life. All checks are accepted subject to collection. Third party checks endorsed
to Equitable Life are not acceptable forms of payment except in cases of a
rollover from a qualified plan, or a trustee check that involves no refund.
Equitable Life reserves the right to reject a payment if an unacceptable form of
payment is received. Under the MOMENTUM Program 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.
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 MOMENTUM Program, either the Participant or the Plan Trustee may
direct us to transfer among the investment options. There is no charge for these
transfers. Depending upon the Investment Funds selected to fund your Employer's
plan, certain restrictions may apply to transfers out of the Guaranteed Interest
Account. 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. See "Transfers" in Part 5.
Services We Provide
Your Equitable Life 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 of retirement account; and
o Semiannual statement of retirement account.
We reserve the right to change the frequency of these reports.
Additional Services
Materials and seminars of an educational nature to assist retirement planning
needs of Participants can be arranged through your Equitable Life
Representative. Your Equitable Life 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 only if your Employer has elected this service. A Personal
Identification Number (PIN) will automatically be assigned to you upon
enrollment in your plan. Use TOPS:
o for current Retirement Account Value;
o for current allocation percentages;
o for the number of units held in the Investment Funds under your account; or
o to change your allocation percentages and transfer money among the
Investment Funds and the Guaranteed Interest Account.
A special code number is required to use TOPS. 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.
A toll-free number is available, and local TOPS telephone numbers will be
provided. TOPS is normally available 24 hours, 7 days a week. However, Equitable
Life 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 processed until the following Business Day.
Hearing or speech-impaired clients may obtain information regarding MOMENTUM
Series contracts
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by dialing, toll-free, the SPRINT National Relay Number (800-877-8973). This
service enables clients with a Telecommunications Device for the Deaf (TDD) to
have their message or questions relayed to our Customer Service Department
between the hours of 8:30 a.m. - 7:00 p.m. EST Monday through Thursday and 8:30
a.m. - 5 p.m. EST on Fridays (800-528-0204) by SPRINT personnel, who will
communicate our reply back to them via the TDD.
Toll-Free Telephone Services
We maintain toll-free numbers for your convenience. See the charts below.
Written Communication
All items received at the proper address prior to the close of our 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 the
MOMENTUM 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 our ability to perform these functions.
Where to Reach Us
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For payments For all other communications
(e.g., contributions, loan payments, etc.) (e.g., requests for transfers, withdrawals)
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Regular Equitable Life MOMENTUM Administrative Services
Mail MOMENTUM Administrative Services P.O. Box 2919
P.O. Box 13629 New York, NY 10116
Newark, NJ 07188-0629
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Express First Chicago National Processing Center MOMENTUM Administrative Services
Mail 300 Harmon Meadow Boulevard, 3rd Floor 200 Plaza Drive
Secaucus, NJ 07094 Harmon Meadow
Attention: MOMENTUM 13629 Secaucus, NJ 07094
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TOPS [----------------------------------------------- 1-800-821-7777 ------------------------------------------------]
Note: Your subscriber number is 867766.
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Daily Unit [------------------------------------- Call TOPS or Telephone Consultants --------------------------------------]
Value
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Telephone Consultants
(available 8:30 a.m. - 7:00 p.m.,
Monday through Thursday [----------------------- 1-800-528-0204 ------------------------------------------------]
and 8:30 - 5:00 on Fridays,
Eastern Time, on Business Days)
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Distribution Options and Death Benefit
Not all of the options described below may be available to MOMENTUM
Participants. The selection of options depends on the terms of each Employer
plan. The MOMENTUM Program provides several different types of distribution
options, including:
o fixed and variable annuities;
o lump sum payments;
o partial withdrawals;
o annual payments designed to meet the Code's required minimum distribution
rules;
o payments for a specific period of time.
If a participant dies before distributions begin, the MOMENTUM Contract provides
a death benefit. The beneficiary will be paid the greater of the Participant's
Retirement Account Value 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.
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Withdrawals and Termination
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 8: Federal Tax and ERISA Matters."
Subject to income tax rules and the provisions of any applicable employer plan,
you may withdraw funds at any time by completing and submitting a proper form.
This form is available from your Equitable Life Representative or from our
Processing Office. Equitable Life withdrawals may be subject to a minimum amount
or to a contingent withdrawal charge.
The MOMENTUM Contract also permits the Employer or Plan Trustee to terminate
plan participation under the Contract at any time. Equitable Life has also
reserved the right to terminate the Contract if we learn that the Employer's
plan fails to qualify under the Code or if the Employer fails to provide the
Participant information necessary to administer the Contract. Withdrawals due to
plan termination may also result in a contingent withdrawal charge.
Plan Loans
The MOMENTUM Contract permits an Employer to withdraw funds from the Retirement
Account Value, without incurring a contingent withdrawal charge, in order to
make a loan to a Participant under the Employer's plan. See "Plan Loans" in Part
5 for a description of loan procedures and rules and "Part 6: Deductions and
Charges" for a description of charges associated with plan loans.
A plan loan under the MOMENTUM Program will be in default if the amount of any
scheduled repayment is not received by us within 90 days of its due date, or if
the Participant dies or participation under the MOMENTUM Contract is terminated.
We will then treat the outstanding loan principal as a withdrawal subject to the
contingent withdrawal charge.
Taxes
Generally, any earnings attributable to your Retirement Account Value will not
be included in your taxable income until distributions are made. See "Part 8:
Federal Tax and ERISA Matters."
Deductions and Charges
Keep in mind that the MOMENTUM Program is 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 are 1.34% (effective annual rate) for the Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High
Yield, Alliance Growth & Income, Alliance Equity Index, Alliance Global,
Alliance International, Alliance Aggressive Stock, Alliance Small Cap
Growth, Alliance Conservative Investors and Alliance Growth Investors Funds
and all the EQAT Investment Funds and 1.49% (effective annual rate) for the
Alliance Money Market, Alliance Common Stock and Alliance Balanced Funds.
Further, the MOMENTUM Contract imposes 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 HRT and EQAT are charged daily against the Trusts' 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 different contracts.
The charge is deducted pro rata from your Retirement Account Value on the
last Business Day of each calendar quarter. Under most contracts, we
reserve the right to increase this charge if our administrative costs
increase. Employers under the MOMENTUM Contract have the option of being
billed directly for this charge.
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 2.25%; 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 Retirement Account Value 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 lesser of
amount withdrawn and the amount of contributions made in the current and
five prior Participation Years. The amount withdrawn includes the amount
you request and the withdrawal charge.
o Plan Loan Charges -- A $25 set-up fee will be deducted from your Retirement
Account Value at the time a plan loan is made. Also, we will deduct a loan
recordkeeping fee of $6 from your Retirement Account Value on the last
Business Day of each
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calendar quarter if there is an Active Loan on that date. We reserve the
right to increase these recordkeeping charges if our costs increase. Your
Employer may elect to pay these fees. See "Plan Loan Charges" in Part 6.
o Charge for Plan Recordkeeping Services -- Equitable Life offers two plan
recordkeeping options, one of which must be elected for each plan. The
annual charge for basic recordkeeping is $300 per plan and is billed
directly to the Employer. The full-service recordkeeping option is
available only for plans that satisfy Equitable Life's underwriting
requirements. Fees for the full-service recordkeeping option are defined in
the plan recordkeeping services agreement which is required for all plans
that elect this option. We reserve the right to increase these charges. See
"Charge for Plan Recordkeeping Services" in Part 6.
Fee Tables and Examples
The following Tables, and the related Examples, will assist you in understanding
the various costs and expenses under the MOMENTUM Program so that you may
compare the MOMENTUM Contract with other products. The Table reflects expenses
of both the Separate Account and the Hudson River Trust or EQ Advisors Trust, as
applicable, for the year ended December 31, 1997.
As explained in Part 4, the Guaranteed Interest Account is not a part of the
Separate Account and is not covered by the Tables and Examples. The only
expenses shown in the Table which apply to the Guaranteed Interest Account are
the Contingent Withdrawal Charge and the Administrative Charge. Also see
"Distribution Options" and "Annuity Distribution Options" in Part 5 for a
description of annuity options under the MOMENTUM Program and Part 6 for charges
associated with some of those options.
Certain expenses and fees shown in the Table may not apply to you. To determine
whether a particular item in the Table applies (and the actual amount, if any)
consult the section of the prospectus 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
6.
Description of Expenses
- -----------------------
Contract Transaction Expenses
Sales Load on Purchases .............................. None
Transfer Fees ........................................ None
Maximum Contingent Withdrawal Charge (1) ............. 6%
Plan Loan Charges (2) ................................ $25 when loan is made
+ $6 per quarter
Annual Administrative Charge (3) ..................... $30 Per Participant
Annual Basic Recordkeeping Charge (4) ................ $300 Per Plan
<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 (5) 1.75% n/a n/a n/a n/a n/a
Separate Account Annual Expenses (6)
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% 1.34% 1.34% 1.34% 1.34% 1.34%
HRT Annual Expenses (7)
Investment Advisory Fees 0.35% 0.50% 0.53% 0.60% 0.55% 0.32%
Other Expenses 0.04% 0.06% 0.05% 0.04% 0.04% 0.04%
- --------------------------------------------------------------------------------------------------------------------
Total HRT Annual Expenses (7)(8) 0.39% 0.56% 0.58% 0.64% 0.59% 0.36%
- --------------------------------------------------------------------------------------------------------------------
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
Alliance Alliance
Alliance Alliance Alliance Small Conser- Alliance
Common Alliance Inter- Aggressive Cap vative 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 (5) 1.75% n/a n/a 1.75% n/a n/a 1.75% n/a
Separate Account
Annual Expenses (6)
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% 1.34% 1.34% 1.34%(3) 1.34% 1.34% 1.49%(3) 1.34%
HRT Annual
Expenses (7)
Investment Advisory
Fees 0.37% 0.65% 0.90% 0.54% 0.90% 0.48% 0.42% 0.52%
Other Expenses 0.03% 0.08% 0.18% 0.03% 0.05% 0.07% 0.05% 0.05%
- --------------------------------------------------------------------------------------------------------------------------------
Total HRT Annual
Expenses (7)(8) 0.40% 0.73% 1.08% 0.57% 0.95% 0.55% 0.47% 0.57%
================================================================================================================================
</TABLE>
<TABLE>
<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>
Maximum Separate Account and EQAT Annual
Expenses n/a n/a n/a n/a n/a
Separate Account Annual Expenses (6)
Mortality and Expense Risk Fees .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual 1.34% 1.34% 1.34% 1.34% 1.34%
Expenses
EQAT Annual Expenses
Investment Management and
Advisory Fee .75% .55% .55% .55% .55%
Rule 12b-1 Fee (9) .25% .25% .25% .25% .25%
Other Expenses .20% .05% .05% .10% .05%
- ---------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (10) 1.20% .85% .85% .90% .85%
================================================================================================================================
<CAPTION>
Morgan Stanley
MFS Emerging Emerging Warburg Pincus Merrill Lynch Merrill Lynch
Growth Com- Markets Equity Small Company World Strategy Basic Value Equity
panies Portfolio Portfolio Value 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 (6)
Mortality and Expense Risk Fees .50% .50% .50% .50% .50%
Other Expenses .84% .84% .84% .84% .84%
- ---------------------------------------------------------------------------------------------------------------------------------
Total Separate Account Annual 1.34% 1.34% 1.34% 1.34% 1.34%
Expenses
EQAT Annual Expenses
Investment Management and .55% 1.15% .65% .70% .55%
Advisory Fee
Rule 12b-1 Fee (9) .25% .25% .25% .25% .25%
Other Expenses .05% .35% .10% .25% .05%
- ---------------------------------------------------------------------------------------------------------------------------------
Total EQAT Annual Expenses (10) .85% 1.75% 1.00% 1.20% .85%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
10
<PAGE>
Notes:
(1) The maximum contingent withdrawal charge is 6% of the lesser of the amount
withdrawn and the contributions made in the current and five prior
Participation Years. Important exceptions and limitations eliminate or
reduce the contingent withdrawal charge. See "Contingent Withdrawal Charge"
in Part 6.
(2) Your Employer may elect to pay these charges and we have reserved the right
to increase them.
(3) The administrative charge is deducted quarterly and is currently $7.50 or,
if less, .50% of your Retirement Account Value plus the amount of any
Active Loan. Your Employer may elect to pay this charge. This charge is not
currently assessed for any calendar quarter in which the Retirement Account
Value plus any Active Loan is $25,000 or more on the last Business Day of
that calendar quarter. We have reserved the right to increase this charge.
See "Quarterly Administrative Charge" in Part 6.
(4) This charge will be billed directly to the Employer if the basic plan
recordkeeping option has been elected. We charge a fee of $25 per check
drawn if the Employer elects to have Equitable Life directly distribute
plan benefits and withdrawals. We reserve the right to increase these
charges upon 90 days written notice to the Employer or Plan Trustee.
See "Charge for Plan Recordkeeping Services" in Part 6.
(5) The amounts shown in the Table under "Separate Account Annual Expenses" and
"Hudson River Trust 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 Balanced, Alliance Common Stock
and Alliance Aggressive Stock Funds. Without this expense limitation, total
Separate Account Annual Expenses plus Trust Annual Expenses for 1997 would
have been 1.88%, 1.96%, 1.89%, and 1.91% for the Alliance Money Market,
Alliance Balanced, Alliance Common Stock and Alliance Aggressive Stock
Funds, respectively. See "Limitation on Charges" and "Charges to Investment
Funds" in Part 6.
(6) Separate Account and the Hudson River Trust expenses are shown as a
percentage of each Investment Fund's or Portfolio's average value. 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.
"Mortality and Expense Risk Fees" includes death benefit charges. "Other
Expenses" under "Separate Account Annual Expenses" includes financial
accounting expenses. See "Limitations on Charges," "Charges to Investment
Funds" and "Charges to Portfolios" in Part 6.
(7) 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 portion of the table reflecting HRT's expenses is based on average
portfolio net assets for the year ended December 31, 1997 and has 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.
(8) 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
HRT. The maximum investment advisory fees, however, cannot be increased
without a vote from 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 net assets. See "Charges to Portfolios" in Part 6.
(9) 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
participants enrolled under the Momentum Contract.
(10) EQAT Portfolios had no operations prior to May 1, 1997. EQAT Portfolios
will be available for investment through the MOMENTUM Contract in early
July 1998. 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.
11
<PAGE>
Examples:
The examples below show the expenses that a hypothetical Participant would pay
in the surrender and non-surrender situations noted below, assuming a single
contribution of $1,000 on the Participation 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 the
contracts. These examples do not reflect the $300 annual charge for basic
recordkeeping services, which is billed directly to the Employer.
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.(2) Similarly, the annual rate of return assumed in the
examples is not an estimate or guarantee of future investment performance.
If your participation under the MOMENTUM Contract terminates at the end of each
period shown, the maximum expense would be:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
HRT
Alliance Money Market $75.21 $119.57 $163.95 $224.71
Alliance Intermediate Government Securities 76.69 124.07 171.96 241.03
Alliance Quality Bond 76.89 124.66 173.02 243.19
Alliance High Yield 77.49 126.46 176.21 249.63
Alliance Growth & Income 76.99 124.96 173.55 244.27
Alliance Equity Index 74.71 118.07 161.27 219.22
Alliance Common Stock 75.21 119.57 163.95 224.71
Alliance Global 78.38 129.14 180.97 259.23
Alliance International 81.85 139.53 199.32 295.73
Alliance Aggressive Stock 75.21 119.57 163.95 224.71
Alliance Small Cap Growth 80.56 135.68 192.54 282.32
Alliance Conservative Investors 76.59 123.77 171.42 239.95
Alliance Balanced 75.21 119.57 163.95 224.71
Alliance Growth Investors 76.79 124.37 172.49 242.11
EQAT
T. Rowe Price International Stock Portfolio 83.04 143.08
T. Rowe Price Equity Income Portfolio 79.57 132.71
EQ/Putnam Growth & Income Value Portfolio 79.57 132.71
EQ/Putnam Balanced Portfolio 80.07 134.20
MFS Research Portfolio 79.57 132.71
MFS Emerging Growth Companies Portfolio 79.57 132.71
Morgan Stanley Emerging Markets Equity Portfolio 88.50 159.21
Warburg Pincus Small Company Value Portfolio 81.06 137.16
Merrill Lynch World Strategy Portfolio 83.04 143.08
Merrill Lynch Basic Value Equity Portfolio 79.57 132.71
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
12
<PAGE>
If your participation under the MOMENTUM Contract does not terminate at the end
of each period shown, the maximum expense would be:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
1 Year 3 Years 5 Years 10 Years
-----------------------------------------------------------------
<S> <C> <C> <C> <C>
HRT
Alliance Money Market $19.56 $60.49 $103.95 $224.71
Alliance Intermediate Government Securities 21.14 65.25 111.96 241.03
Alliance Quality Bond 21.35 65.89 113.02 243.19
Alliance High Yield 21.97 67.79 116.21 249.63
Alliance Growth & Income 21.45 66.21 113.55 244.27
Alliance Equity Index 19.04 58.90 101.27 219.22
Alliance Common Stock 19.56 60.49 103.95 224.71
Alliance Global 22.92 70.63 120.97 259.23
Alliance International 26.59 81.65 139.32 295.73
Alliance Aggressive Stock 19.56 60.49 103.95 224.71
Alliance Small Cap Growth 25.23 77.57 132.54 282.32
Alliance Conservative Investors 21.03 64.94 111.42 239.95
Alliance Balanced 19.56 60.49 103.95 224.71
Alliance Growth Investors 21.24 65.57 112.49 242.11
EQAT
T. Rowe Price International Stock Portfolio 27.85 85.41
T. Rowe Price Equity Income Portfolio 24.18 74.42
EQ/Putnam Growth & Income Value Portfolio 24.18 74.42
EQ/Putnam Balanced Portfolio 24.70 75.99
MFS Research Portfolio 24.18 74.42
MFS Emerging Growth Companies Portfolio 24.18 74.42
Morgan Stanley Emerging Markets Equity Portfolio 33.62 102.51
Warburg Pincus Small Company Value Portfolio 25.75 79.14
Merrill Lynch World Strategy Portfolio 27.85 85.41
Merrill Lynch Basic Value Equity Portfolio 24.18 74.42
</TABLE>
- -------------------
(1) The amount accumulated could not be paid to you in the form of an annuity
at the end of any of the periods shown in the examples. The minimum amount
applied to purchase an annuity must be $3,500. See "Electing an Annuity
Distribution Option" in Part 7. In some cases, charges for state premium or
other applicable state or local taxes will be deducted from the amount
applied, if applicable.
(2) Actual administrative charges may be less if you, as Employer, are billed
directly for the quarterly administrative charge or if the charge does not
apply to a Participant because the Retirement Account Value plus the amount
of any Active Loan is at least $25,000 on the last Business Day of a
calendar quarter.
- --------------------------------------------------------------------------------
Accumulation Unit Values
The following table shows the Accumulation Unit Values, as of the last Business
Day for the periods shown, commencing with the initial offering of each Fund
under the MOMENTUM Contract.
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
Last Business Day of
-------------------------------------------------------------------------
December
-----------------------------------------------------------------------
1993 1994 1995 1996 1997
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Money Market $ 25.41 $ 26.08 $ 27.22 $ 28.28 $ 29.41
Alliance Intermediate Government
Securities -- 98.19 109.80 112.40 118.98
Alliance Quality Bond -- 93.87 108.38 112.65 121.30
Alliance High Yield -- 95.88 113.44 137.53 160.74
Alliance Growth & Income -- 98.86 121.02 143.37 179.30
Alliance Equity Index -- 100.95 135.94 164.12 214.66
Alliance Common Stock 128.80 124.32 162.42 199.05 253.68
Alliance Global -- 104.12 122.06 138.00 151.87
Alliance International -- -- 104.15 112.83 107.92
Alliance Aggressive Stock 55.68 52.88 68.73 -- 90.75
Alliance Small Cap Growth -- -- -- 82.91 125.55
Alliance Conservative Investors -- 95.10 112.97 117.25 130.98
Alliance Balanced 28.85 26.18 30.92 34.06 38.66
Alliance Growth Investors -- 96.31 120.08 133.40 153.69
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
13
<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 several 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 Retirement Account Values in the Separate Account are not subject to
the 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 Employers or
Plan Trustees) are our obligations.
In addition to contributions made under your contracts, 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 Invesment 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
Participants, Plan Trustees 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, MOMENTUM Employers will be notified. We may
make other changes in the contracts that do not reduce any Cash Value, annuity
benefit, Retirement 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 instructions.
14
<PAGE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
HRT Portfolios EQAT Portfolios
- ------------------------------------------------------------- ----------------------------------------------------
<S> <C> <C> <C>
Fixed Income Series: Equity Series:
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
Equity Series: Income Value 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. The Trustees of the HRT or the EQAT may establish additional
Portfolios or eliminate existing Portfolios at any time. 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 of EQAT 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 HRT, Alliance has overall responsibility for the
general management and administration of 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 HRT's Trustees, Alliance may
enter into agreements with other companies to assist with its administrative and
management responsibilities to the HRT.
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.
15
<PAGE>
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.
All of the HRT Portfolios are advised by Alliance. As adviser, 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.
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 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, NY 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 management
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 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.
16
<PAGE>
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. WPAM 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.
17
<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 their original value when amounts held under the MOMENTUM
Contract on your behalf are distributed to you or your beneficiary. 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 and Separate Account annual
the aggregate, approximate the performance expenses) that approximates the
results of the Index. 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>
18
<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 Capital appreciation and,
Value Equity Portfolio adviser believes are undervalued and secondarily, income
therefore represent basic investment value.
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
- --------------------------------------------------------------------------------
PART 3: INVESTMENT PERFORMANCE
- --------------------------------------------------------------------------------
Investment Fund Performance
In order to help show how the performance of the Investment Funds has affected
Retirement Account Values, the following tables provide a historical view of
investment performance. The performance shown has been calculated under two
methods, as explained under "How Performance Data Are Presented" below. The
information presented includes performance results for each Investment Fund
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 MOMENTUM 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.
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).
Alliance Small Cap Growth: May 1, 1997; 100% Russell 2000 Growth (Russell 2000
Gr.).
20
<PAGE>
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&P 500/40% Lehman Corp.).
MFS Research: May 1, 1997; Standard & Poor's 500 Index (S&P 500) Index.
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 U.S. Treasury Bond 1 Year+/14% Salomon Brothers World Government Bond
Ex U.S./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
insurance policies or annuity contracts. Lipper data provide a more accurate
picture than market indices of MOMENTUM 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.
21
<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% 4.08% 3.29% 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 -- 6.87
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES 5.85 6.61 4.52 -- -- 5.57 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 -- -- -- 4.37 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 13.44 11.27 -- 10.52 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 & Income 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 16.18% 11.61 8/1/68
Lipper Growth 24.35 24.72 16.01 15.40 15.20 13.97
S&P 500 33.36 31.15 20.27 18.05 16.66 15.44
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 12.21 -- 10.20 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 Free -- -- -- -- -- -21.43
- -------------------------------------------------------------------------------------------------------------------------------
See footnotes on next page. This table continues on next page.
</TABLE>
22
<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 9.45% 19.72% 13.44% 17.46% -- 17.51% 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 -- -- -- -- -- 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
THE ASSET ALLOCATION SERIES:
ALLIANCE CONSERVATIVE INVESTORS 11.71 11.26 7.33 -- -- 8.07 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 13.49 13.88 8.23 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./50% 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
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Return for this Fund is unannualized and represents less than 5 months of
performance.
+ Return for this Fund is unannualized and represents 8 months of
performance.
23
<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% 12.76% 17.57% 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 24.72 -- -- 44.16 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 -- -- -- 21.09
Lehman Aggregate 9.65 34.63 -- -- -- 30.78
Aggressive Fixed Income
ALLIANCE HIGH YIELD 16.88 67.64 95.36 191.27 -- 200.82 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 -- -- -- -- -- 20.28
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 1,906.96% 2,429.22 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 97.46 216.39 -- 173.14 8/27/87
Lipper Global 12.99 49.53 93.26 100.58 -- 47.66
MSCI World 15.76 58.59 104.13 173.01 -- 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 Markets Free -- -- -- -- -- 21.43
- -------------------------------------------------------------------------------------------------------------------------------
This table continues on next page.
</TABLE>
24
<PAGE>
TABLE 2: Cumulative Rates of Return (continued):
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
Portfolio
Since Inception
1 Year 3 Years 5 Years 10 Years 20 Years Inception Date
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
EQUITY SERIES (Continued):
Aggressive Equity
ALLIANCE AGGRESSIVE STOCK 9.45% 71.60% 87.88% 400.07% -- 807.47% 5/1/84
Lipper Mid-Cap Growth 12.11 56.12 59.26 311.08 -- 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 -- -- -- -- -- 28.68
MFS EMERGING GROWTH COMPANIES -- -- -- -- -- 21.34 5/1/97
Lipper Mid-Cap -- -- -- -- -- 20.88
Russell 2000 -- -- -- -- -- 28.68
THE ASSET ALLOCATION SERIES:
ALLIANCE CONSERVATIVE INVESTORS 11.71 37.74 42.42 -- -- 89.59 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 13.49 47.69 48.47 177.12 -- 286.60 5/1/84
Lipper Flexible Portfolio 18.23 61.05 73.02 209.82 -- 246.50
50% Lehman Gov't/Corp./50% S&P 500 21.56 80.14 97.96 583.14 -- 376.27
ALLIANCE GROWTH INVESTORS 15.21 59.58 73.41 -- -- 198.36 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>
25
<PAGE>
TABLE 3: Year-by-Year Rates of Return
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
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% 2.19% 1.59% 2.63% 4.35% 3.92% 3.98%
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES -- -- -- 10.94% 4.18% 9.10% -5.65% 11.81% 2.38% 5.85%
ALLIANCE QUALITY BOND -- -- -- -- -- -0.84% -6.37% 15.46% 3.94% 7.68%
ALLIANCE HIGH YIELD 8.26% 3.72% -2.42% 22.79% 10.81% 21.50% -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 9.39% 25.04% -7.32% 28.81% -1.85% 30.36% 3.82% 17.23% 13.06% 10.05%
ALLIANCE INTERNATIONAL -- -- -- -- -- -- -- 9.60% 8.33% -4.35%
ALLIANCE AGGRESSIVE STOCK -0.30% 42.95% 5.76% 84.65% -4.37% 15.28% -5.03% 29.97% 20.63% 9.45%
ALLIANCE SMALL CAP GROWTH -- -- -- -- -- -- -- -- -- 25.55%*
ALLIANCE CONSERVATIVE INVESTORS -- 2.75% 4.98% 18.24% 4.37% 9.28% -5.38% 18.79% 3.79% 11.71%
ALLIANCE BALANCED 13.27% 24.60% -1.46% 40.02% -4.15% 10.81% -9.27% 18.13% 10.16% 13.49%
ALLIANCE GROWTH INVESTORS -- 3.65% 9.13% 46.92% 3.53% 13.72% -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%*
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
* Unannualized
26
<PAGE>
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 participation under the MOMENTUM 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.
For purposes of the tables below, deduction of a quarterly administrative charge
equal to $7.50 is assumed, even though this charge does not currently apply if
the Retirement Account Value plus the amount of any Active Loan is at least
$25,000 as of the end of the quarter. 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 and the Participant has not taken any loans.
In order to calculate the performance information, we divide the termination
value (defined below) as of December 31, 1997 by the $1,000 contribution 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 Retirement Account Value less the
contingent withdrawal charge, the quarterly administrative charge and all other
charges and expenses which are applied against Separate Account assets. The
contingent withdrawal charge will never be greater than 6%, and applies only to
contributions made in the current and five prior Participation Years. See "Part
6: Deductions and Charges."
27
<PAGE>
<TABLE>
<CAPTION>
TABLE 4: Growth of $1,000 for Participant Terminated on December 31, 1997:
- -----------------------------------------------------------------------------------------------------------------
Length of Investment Period
------------------------------------------------------------------------
Since
One Three Five Ten Portfolio
Investment Fund Year Years Years Years Inception**
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
HRT
Alliance Money Market $ 964.13 $1,004.43 $1,006.14 $1,254.73 --
Alliance Intermediate Government
Securities 981.50 1,080.98 1,068.27 -- $1,259.20
Alliance Quality Bond 998.42 1,156.82 -- -- 1,042.32
Alliance High Yield 1,085.59 1,529.35 1,711.39 2,419.46 --
Alliance Growth & Income 1,165.75 1,650.44 -- -- 1,565.64
Alliance Equity Index 1,221.98 1,950.30 -- -- 1,915.43
Alliance Common Stock 1,189.18 1,867.08 2,147.39 3,913.16 --
Alliance Global 1,020.42 1,313.41 1,733.31 2,664.24 --
Alliance International 886.87 -- -- -- 1,016.87
Alliance Aggressive Stock 1,014.88 1,558.12 1,644.43 4,369.93 --
Alliance Small Cap Growth -- -- -- -- 1,178.85
Alliance Conservative Investors 1,035.82 1,236.95 1,228.34 -- 1,608.28
Alliance Balanced 1,052.40 1,330.64 1,283.12 2,321.59 --
Alliance Growth Investors 1,069.23 1,442.87 1,509.65 -- 2,594.14
EQAT
T. Rowe Price International Stock
Portfolio -- -- -- -- 911.15
T. Rowe Price Equity Income Portfolio -- -- -- -- 1,134.30
E/Q Putnam Growth & Income Value
Portfolio -- -- -- -- 1,076.46
E/Q Putnam Balanced Portfolio -- -- -- -- 1,059.51
MFS Research Portfolio -- -- -- -- 1,074.88
MFS Emerging Growth Companies Portfolio -- -- -- -- 1,137.29
Morgan Stanley Emerging Markets Equity
Portfolio -- -- -- -- 745.83
Warburg Pincus Small Company Value
Portfolio -- -- -- -- 1,104.93
Merrill Lynch World Strategy Portfolio -- -- -- -- 968.68
Merrill Lynch Basic Value Equity
Portfolio -- -- -- -- 1,084.35
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
* Portfolio inception dates are shown in Tables 1 and 2.
28
<PAGE>
<TABLE>
<CAPTION>
TABLE 5:
Average Annual Total Return for Participant Termination on December 31, 1997
- -------------------------------------------------------------------------------------------------------------------------------
Length of Investment Period
--------------------------------------------------------------------------------------
Since Since
Investment Fund One Three Five Ten Fund Portfolio
Year Years Years Years Inception* Inception**
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
HRT
Alliance Money Market -3.59% 0.15% 0.12% 2.30% -- --
Alliance Intermediate Government
Securities -1.85% 2.63% 1.33% -- 1.31% 3.47%
Alliance Quality Bond -0.16% 4.98% -- -- 1.32% 0.98%
Alliance High Yield 8.56% 14.96% 11.34% 9.24% 9.20% --
Alliance Growth & Income 16.58% 18.18% -- -- 12.33% 11.13%
Alliance Equity Index 22.20% 24.94% -- -- 20.41% 18.46%
Alliance Common Stock 18.92% 23.14% 16.52% 14.62% -- --
Alliance Global 2.04% 9.51% 11.63% 10.30% 7.44% --
Alliance International -11.31% -- -- -- -1.53% 0.61%
Alliance Aggressive Stock 1.49% 15.93% 10.46% 15.89% -- --
Alliance Small Cap Growth -- -- -- -- 6.02% 17.89%
Alliance Conservative Investors 3.58% 7.35% 4.20% -- 3.51% 5.93%
Alliance Balanced 5.24% 9.99% 5.11% 8.79% -- --
Alliance Growth Investors 6.92% 13.00% 8.59% -- 5.85% 12.25%
EQAT
T. Rowe Price International Stock
Portfolio -- -- -- -- -11.97% -8.88%
T. Rowe Price Equity Income Portfolio -- -- -- -- 8.14% 13.43%
E/Q Putnam Growth & Income Value Porfolio -- -- -- -- 2.49% 7.65%
E/Q Putnam Balanced Portfolio -- -- -- -- 2.30% 5.95%
MFS Research Portfolio -- -- -- -- 1.03% 7.49%
MFS Emerging Growth Companies Portfolio -- -- -- -- 4.41% 13.73%
Morgan Stanley Emerging Markets Equity
Portfolio -- -- -- -- -25.42% -25.42%
Warburg Pincus Small Company Value
Portfolio -- -- -- -- 3.53% 10.49%
Merrill Lynch World Strategy Portfolio -- -- -- -- -7.66% -3.13%
Merrill Lynch Basic Value Equity
Portfolio -- -- -- -- 1.11% 8.43%
- -------------------------------------------------------------------------------------------------------------------------------
</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). Fund inception dates may be
earlier than the date on which these Investment Funds were made available
under MOMENTUM.
** Portfolio inception dates are shown in Tables 1 and 2.
29
<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 the
HRT and EQAT Trusts and may compare the performance of the Investment Funds 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 in the SAI 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.
30
<PAGE>
- --------------------------------------------------------------------------------
PART 4: THE GUARANTEED INTEREST ACCOUNT
- --------------------------------------------------------------------------------
The Guaranteed Interest Account is part of our general account and pays interest
at a guaranteed rate. 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 a Participant has 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 plus interest, less the sum of all amounts that
have been withdrawn, transferred or deducted.
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.
For the MOMENTUM Program, quarterly "current" rates are established. The current
rate applies to the entire amount you have in the Guaranteed Interest Account
during the calendar quarter for which it is declared. We may change the duration
of future interest guarantee periods, but no interest guarantee period will
exceed one year. We also reserve the right to assign different current rates by
Transaction Date and different current and yearly guaranteed rates to different
plans based upon when the plan became enrolled in the MOMENTUM Program.
Generally, all plans that become enrolled in the MOMENTUM Program in the same
calendar year will be in the same class. A plan will be considered enrolled in
the MOMENTUM Program as of the earliest Participation Date applicable to a
Participant in that plan. All Participants within the same plan will be subject
to the same interest rates. Plans that converted from EQUI-VEST Corporate
Trusteed to MOMENTUM will be considered in the same class, regardless of the
date of the plan's enrollment under EQUI-VEST.
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 4% for Participants in plans that converted to MOMENTUM from our
EQUI-VEST Corporate Trusteed Contract. At least 15 days before the beginning of
a calendar year, we will notify you in writing of the guaranteed interest rate
for the next year.
31
<PAGE>
- --------------------------------------------------------------------------------
PART 5: PROVISIONS OF THE CONTRACT
AND SERVICES WE PROVIDE
- --------------------------------------------------------------------------------
Understanding the MOMENTUM Program (Employers and Plan Trustees)
The MOMENTUM Program offers, pursuant to the terms of either the Master Trust or
the Pooled Trust, a group variable annuity contract as a funding vehicle for
Employers who sponsor qualified defined contribution plans. A defined
contribution plan is a retirement plan which provides for an individual account
for each plan participant and for benefits based solely on the amounts
contributed to such account and any income, expenses, gains and losses. A
qualified defined contribution plan is a defined contribution plan that meets
the requirements of Section 401(a) of the Code and applicable Treasury
regulations.
The Employer or Plan Trustee, as applicable, is responsible for determining
whether the MOMENTUM Contract is a suitable funding vehicle for its defined
contribution plan and should, therefore, carefully read this prospectus and the
MOMENTUM Contract before entering into the Contract.
As an Employer, subject to Equitable Life's underwriting requirements, you can
use the MOMENTUM Program to adopt the Master Plan and Trust, in which case the
Master Trust will be the sole funding vehicle for your plan. The Master Trust is
funded solely by the MOMENTUM Contract.
The Master Plan and Trust consists of Internal Revenue Service-approved master
defined contribution plans, all of which use the same basic plan document. They
include:
o a standardized and nonstandardized profit-sharing plan (both with an
optional qualified cash or deferred arrangement pursuant to Section 401(k)
of the Code); and
o a standardized and a nonstandardized defined contribution pension plan.
An Employer may adopt one or more of these plans. The plans are all
participant-directed, that is, the plan participants choose which Investment
Options to use for the investment of their plan accounts. The plans are designed
to meet the requirements of ERISA Section 404(c). See "Certain Rules Applicable
to Plans Designed to Comply with Section 404(c) of ERISA" in Part 8.
If you, as an Employer, elect our full-service plan recordkeeping option, then
you must adopt our Master Plan and Trust. A description of such services may be
found under "Plan Recordkeeping Services" in this section. More information
about the Master Plan and Trust may be found in the SAI.
If you, as an Employer, want to use your own individually designed or a
prototype qualified defined contribution plan, you may adopt the Pooled Trust as
a funding vehicle. The Pooled Trust is for investment only and may be used as
your plan's only funding vehicle or in addition to other funding vehicles. The
same group variable annuity contract (i.e., the MOMENTUM Contract) is used under
the Pooled Trust and the Master Plan and Trust. The Pooled Trust is available
for qualified defined contribution plans with either participant-directed or
trustee-directed investments. If you adopt the Pooled Trust you will have
elected our basic plan recordkeeping option. We may offer to perform additional
plan recordkeeping services for an additional charge. Such services will be
provided pursuant to the terms of a written service agreement between us and the
Plan Trustee.
Chase Manhattan Bank N.A. currently acts as the trustee under both the Pooled
Trust and the Master Plan and Trust. The sole responsibility of Chase Manhattan
Bank N.A. is to serve as a party to the MOMENTUM Contract. It has no
responsibility for the administration of the MOMENTUM Program or for any
distributions or duties under the MOMENTUM Contract. In certain states the
MOMENTUM Contract will only be issued directly to the Employer or Plan Trustee
and, accordingly, the Master Plan and Trust and the Pooled Trust will not be
available. As a consequence, Employers in those states will not be able to use
our full-service plan recordkeeping option.
Employer's Responsibilities
If you elect the full-service recordkeeping option, generally you must adopt the
Master Plan and Trust. Pursuant to a written service agreement, you, as the
Employer and plan administrator, will have certain responsibilities relating to
the administration and qualification of your plan, including:
o Sending us contributions at the proper time;
o Determining the amount of all contributions for each Participant;
o Maintaining all personnel records necessary for administering your plan;
o Determining who is eligible to receive benefits;
32
<PAGE>
o Forwarding to us all the forms that employees are required to submit;
o Arranging to have all reports distributed to employees and former employees
if you elect to have them sent to you;
o Arranging to have our prospectuses distributed;
o Filing an annual information return for your plan with the Internal Revenue
Service, if required;
o Providing us with the information needed for running special
nondiscrimination tests, if you have a 401(k) plan or if your plan accepts
post-tax employee or employer matching contributions and making any
corrections if you do not pass the test;
o Selecting interest rates and monitoring default procedures, if you elect to
offer Participant loans in your plan; and
o Meeting the requirements of ERISA Section 404(c) if you, as Employer,
intend for your plan to comply with that section.
Other responsibilities of the Employer relating to the administration and
qualification of your plan are indicated in the plan recordkeeping services
agreement which is required for all plans that elect the full-service plan
recordkeeping options.
We will give you guidance and assistance in the performance of your
responsibilities. The ultimate responsibility, however, rests with you.
If you, as an Employer, use an individually designed or a prototype plan, you
already have most of these responsibilities, which generally will not be
increased in any way by your adoption of the Pooled Trust.
Adopting the MOMENTUM Program (Employers and Plan Trustees)
In addition to other installation forms and agreements, to adopt the Master Plan
and Trust, you, as the Employer, must complete a participation agreement and
have it executed on behalf of your company. To adopt the Pooled Trust, a Plan
Trustee must execute a Pooled Trust participation agreement. Return your
completed participation agreement to the address specified on the form. You
should keep copies of all completed forms for your own records. In addition,
either you, as Employer, or the Plan Trustee, as applicable, must complete a
contract application in order to participate in the MOMENTUM Contract.
Your Equitable Life Representative can help you complete the participation
agreement and the application for the MOMENTUM Contract. We recommend that the
participation agreement be reviewed by your tax or benefits adviser.
The MOMENTUM Contract
The MOMENTUM Program is funded through the MOMENTUM Contract, a combination
fixed and variable group annuity contract issued by Equitable Life. The MOMENTUM
Contract governs the Investment Options that are offered under the MOMENTUM
Program.
Bear in mind that the provisions of your plan or applicable laws or regulations
may be more restrictive than the MOMENTUM Contract. We reserve the right to
amend the MOMENTUM Contract without the consent of any other person in order to
comply with applicable laws and regulations. Such right includes, but is not
limited to, the right to conform the MOMENTUM Contract to the Code, ERISA and
applicable regulations.
Selecting Investment Options (Employers and Plan Trustees Only)
Subject to state regulatory approval, you, as Employer or Plan Trustee, can
elect to fund your plan with any number of the Investment Options available
under the Contract. This selection is made on the application. You may request
to change this selection subject to our rules then in effect. If you elect to
fund your plan with any one of the Alliance Intermediate Government Securities,
Alliance Quality Bond, Alliance High Yield or Alliance Conservative Investors
Funds, you must also select the Alliance Money Market Fund. If you select the
above-listed Funds and the Guaranteed Interest Account, certain restrictions
will apply to transfers out of the Guaranteed Interest Account. See "Transfers"
in this section. Lastly, you, as Employer, must elect the Guaranteed Interest
Account as a funding option if you select only from among the Investment Funds
not listed above.
For Original Certificates, only the Guaranteed Interest Account and the Alliance
Money Market, Alliance Balanced, Alliance Common Stock and Alliance Aggressive
Stock Funds are available and we do not permit transfers into the Alliance Money
Market Fund from any of the other Investment Options.
Contributions
Contributions may be made at any time and may be made only by the Employer or
Plan Trustee by either wire transfer or check. Participants should not send
contributions directly to Equitable Life. There is no minimum contribution.
All contributions made by check must be drawn on a bank in the U.S. clearing
through the Federal Reserve System, and payable in U.S. dollars to Equitable
Life. All checks are accepted subject to collection. Third party checks endorsed
to Equitable Life are not acceptable forms of payment except in cases of a
rollover from a qualified plan, or a trustee check that involves no refund.
Equitable Life reserves the right to reject a
33
<PAGE>
payment if an unacceptable form of payment is received. 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. Employers should
send all contributions to Equitable Life at the Processing Office. (See "Part 1:
Summary.")
We allocate contributions to the Investment Options according to the allocation
percentages on the Participant's enrollment form or as later changed. Under
participant-directed plans, you, as Participant, will provide those allocation
percentages. In trustee-directed plans, the Plan Trustee will provide those
percentages. Employee and Employer contributions may be allocated in different
percentages.
By signing the enrollment form you are providing us with instructions to
allocate your contributions to the Alliance Money Market Fund (if that Fund has
been selected as an available Investment Option under your Employer's plan) if
your allocation instructions on the form are incomplete (e.g., do not add up to
100%). If your instructions add up to less than 100%, only the portion of the
contribution for which we do not have instructions will be allocated to the
Alliance Money Market Fund. If your instructions add up to more than 100%, the
entire amount of the contribution will be allocated to the Alliance Money Market
Fund. We will then notify your Employer or Plan Trustee and request that
corrected instructions be forwarded to us. If we do not receive corrected
instructions after three notices have been sent, but in no event later than 105
days from the date a contribution is first credited to the Alliance Money Market
Fund, we will return to the Employer or Plan Trustee, as applicable, all
contributions for which notices had been sent, plus earnings.
If, however, the Alliance Money Market Fund is not an available Investment
Option under your Employer's plan, we will return the contribution to the
Employer or Plan Trustee in five Business Days, if we have not received the
signed form or corrected allocation instructions, unless we have obtained your
permission to continue to hold the contribution.
If we receive your initial contribution before we receive your signed enrollment
form, we will allocate the initial contribution to the Guaranteed Interest
Account for five Business Days. If we do not receive either the signed
enrollment form or your consent to hold the initial contribution pending receipt
of the form by the fifth Business Day, we will return the amount of the initial
contribution to your Employer or Plan Trustee, as applicable.
You, as a Participant, should review your confirmation notices carefully to
determine whether your contributions have been allocated correctly. A
certificate evidencing your participation under the MOMENTUM Contract will also
be sent to you.
Unless restricted by your Employer's plan, allocation percentages can be changed
at any time. To change your allocation instruction, you can file a change of
investment allocation form with your Employer or Plan Trustee. In addition, your
Employer may have opted to use our Telephone Operated Program Support (TOPS)
system to enable you to change your allocation percentages over the phone. 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 based on the Accumulation Unit Value for that Investment
Fund computed for the Transaction Date on which we receive the contribution at
our Processing Office. Contributions allocated to the Guaranteed Interest
Account become part of our general account and begin to accrue interest on the
Transaction Date.
Retirement Account Value
The Retirement Account Value is the sum of the amounts that a Participant has in
the Guaranteed Interest Account and the Investment Funds. See "Part 4:
Guaranteed Interest Account."
The amount you have in an Investment Fund at any time is equal to the number of
Accumulation Units you have in that Investment Fund times the Accumulation Unit
Value for the Investment Fund for that Transaction Date. The number of
Accumulation Units in an Investment Fund at any time is equal to the sum of
Accumulation Units purchased by contributions, transfers and loan repayments
(including principal and interest) less the sum of Accumulation Units redeemed
for withdrawals, transfers, loans or deductions for charges.
The number of Accumulation Units purchased or sold in any Investment Fund is
equal to the dollar amount of the transaction divided by the Accumulation Unit
Value for the Investment Fund for the applicable Transaction Date. The number of
Accumulation Units will not vary because of any later change in the Accumulation
Unit Value. The Accumulation Unit Value varies with the investment performance
of the Investment Fund which in turn reflects the investment income and realized
and unrealized capital gains and losses of the corresponding Portfolios, as well
as the Trusts' fees and expenses. The Accumulation Unit Value is also stated
after deduction of the Separate Account asset charges relating to Momentum. A
description of the computation of the Accumulation Unit Value is found in the
SAI.
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Transfers
Subject to certain restrictions, the MOMENTUM Contract permits transfers of all
or a portion of your Retirement Account Value among the Investment Options at
any time. Your Employer's plan may, however, impose restrictions on transfers.
We also offer an automatic transfer service described under "Investment
Simplifier: Automatic Transfer Options" in this section. There is no charge for
transfers.
Participant transfer requests can be made by filing a written request to
transfer with your Employer or Plan Trustee. Transfers may also be arranged
through the TOPS service. Please contact your Equitable Life Representative or
the Processing Office to receive the form necessary to obtain a special code
number required for TOPS transfers.
A transfer request will be effective on the Transaction Date and the transfer
will be made at the Accumulation Unit Value for 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.
If your Employer elects to fund your plan with the Guaranteed Interest Account
and any of the Alliance Money Market, Alliance Intermediate Government
Securities, Alliance Quality Bond, Alliance High Yield, or Alliance Conservative
Investors Funds, the following limitations will apply to funds transferred out
of the Guaranteed Interest Account. During a Transfer Period, the maximum amount
that may be transferred from the Guaranteed Interest Account to any other Fund
is the greater of: (i) 25% of the amount you had in the Guaranteed Interest
Account as of the last Business Day of the calendar year immediately preceding
the current calendar quarter or (ii) the total of all amounts you transferred
out of the Guaranteed Interest Account during the same calendar year. A Transfer
Period is the calendar quarter in which the transfer request is made and the
preceding three calendar quarters. Generally, this means that new Participants
will not be able to transfer funds out of the Guaranteed Interest Account during
the first calendar year of their participation under the Contract.
Transfers out of the Guaranteed Interest Account that were made at a time when
no transfer limitation is in effect will not be counted for purposes of
determining the maximum transfer amount if the transfer limitation subsequently
goes into effect.
If assets have been transferred to the MOMENTUM Contract from another funding
vehicle by the Employer or Plan Trustee, you may for the remainder of the
calendar year in which the assets have been transferred, transfer up to 25% of
the amount that is initially allocated to the Guaranteed Interest Account on
your behalf.
However, for Original Certificates, we do not permit transfers into the Alliance
Money Market Fund from any of the other Investment Options. No other transfer
limitations apply to Original Certificates.
INVESTMENT SIMPLIFIER: AUTOMATIC TRANSFER OPTIONS
Your Employer can elect to provide two automatic transfer options out of the
Guaranteed Interest Account: the Fixed-Dollar Option and the Interest Sweep.
Except for Original Certificates, the Fixed-Dollar Option is subject to the
Guaranteed Interest Account transfer limitation described in "Transfers" in this
section.
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 (except Alliance Money Market for Original Certificates) on a
monthly basis. You can either specify the number of monthly transfers or
instruct us to continue to make monthly transfers until 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 and you must elect to transfer at least $50 per
month.
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 filing an election form with your Employer or
Plan Trustee. 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. Automatic transfers will
terminate:
o Under the Fixed-Dollar Option, when either the number of designated monthly
transfers have been completed or the amount you have in the Guaranteed
Interest Account has been depleted, as applicable; or
o Under the Interest Sweep Option, 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
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o Under either option, on the date we receive your written request to
terminate automatic transfers or on the date your participation under the
MOMENTUM Contract terminates.
Plan Loans
The MOMENTUM Contract permits your Employer, or Plan Trustee, to withdraw funds
from your Retirement Account Value, without incurring a contingent withdrawal
charge, in order to make a loan to you under your Employer's plan. Your Employer
can tell you whether loans are available under your plan.
Employers who adopt the Master Plan and Trust may choose to offer its loan
feature. The availability of loans under an individually designed or prototype
plan depends on the terms of the plan.
If you are a partner who owns more than 10% of the business or a
shareholder-employee of an S Corporation who owns more than 5% of the business,
you presently may not borrow from your vested Retirement Account Value without
first obtaining a prohibited transaction exemption from the Department of Labor
(DOL). Consult with your attorney or tax adviser regarding the advisability and
procedures for obtaining such an exemption.
Participants should apply for a plan loan through their Employer or the Plan
Trustee, as applicable. Prior to the making of any plan loan, the Employer or
Plan Trustee, as applicable, and the Participant must first properly complete
and sign a loan agreement and application. Employers and Plan Trustees can
obtain loan application forms from their Equitable Life Representative, by
writing to our Processing Office or calling our toll-free number. Before taking
a plan loan, married Participants must generally obtain written spousal consent.
In addition, Participants should always consult their tax adviser before taking
out a plan loan.
Only one outstanding plan loan will be permitted at any time; any number of
takeover loans will be permitted at any time. Takeover loans must be repaid
under MOMENTUM before a new plan loan can be taken out under MOMENTUM. The
minimum loan is $1,000 and the maximum is a percentage of your vested Retirement
Account Value. See "Part 4: Additional Loan Provisions" in the SAI and "Part 8:
Federal Tax and ERISA Matters" of the prospectus. However, you may not have both
takeover loans and plan loans outstanding simultaneously.
While you have a plan loan outstanding, an amount equal to 10% of your loan
balance will be restricted, and may not be withdrawn from your Retirement
Account Value. Also, you should refer to "Plan Loan Charges" in Part 6 for a
description of charges associated with plan loans.
The interest rate applicable to your plan loan will be set by your Employer or
the Plan Trustee under the terms of your Employer's plan. It is the
responsibility of each Employer or Plan Trustee to determine the interest rate
applicable to each loan. All interest (as well as principal) that you pay will
be added to your Retirement Account Value. The interest paid in repaying a loan
may not be deductible, but amounts paid as interest on your loan will be taxable
on distribution.
Plan loan repayments covering interest and principal will be due in accordance
with the repayment schedule determined in accordance with the terms of the
Employer's plan. Participants should send plan loan repayments to the plan
administrator and not to Equitable Life. All plan loan payments made by the plan
administrator to us must be made by check or wire transfer. Checks must be drawn
on a bank in the U.S., clearing through the Federal Reserve System, and payable
in U.S. dollars to Equitable Life. All checks are accepted subject to
collection. Third party checks endorsed to Equitable Life are not acceptable
forms of payment. Equitable Life reserves the right to reject a payment if an
unacceptable form of payment is received.
A plan loan may be prepaid in whole or in part at any time. Any payments we
receive will first be applied to interest, with the balance applied to repayment
of the loan. Plan loan repayments will be allocated to the Investment Options in
accordance with the same allocation instructions used in making the loan.
However, a Participant may elect, in writing, to override these instructions and
allocate all plan loan repayments to the Guaranteed Interest Account.
A plan loan will be in default if the amount of any scheduled repayment is not
received by us within 90 days of its due date, or if the Participant dies or
participation under the MOMENTUM Contract is terminated. We will then treat the
loan principal as a withdrawal subject to the contingent withdrawal charge. See
"Contingent Withdrawal Charge" in Part 6. See "Part 8: Federal Tax and ERISA
Matters" for the consequences of defaulting a plan loan and other applicable tax
matters.
Withdrawals and Termination
Subject to any restrictions in your Employer's plan, the MOMENTUM Contract
allows your Employer or Plan Trustee, as applicable, to make a withdrawal from a
Retirement Account Value on behalf of a Participant by writing to our Processing
Office. Your request for withdrawal must be on the proper form which is
available from your Employer. If we have received the information we require,
the requested withdrawal will become effective on the Transaction Date and
proceeds will be mailed within seven days. Withdrawal proceeds will be sent to
your Employer or Plan Trustee, unless
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your Employer has elected our full-service plan record-keeping option which
provides for direct distribution to Participants. If we receive only partially
completed information, we will return the request to the Employer or Plan
Trustee for completion prior to processing.
As a deterrent to premature withdrawal (generally prior to age 59 1/2) the Code
provides certain restrictions on and penalties for early withdrawals. In
addition, for payments made directly to Participants, we withhold income taxes
from the amount withdrawn unless an exception applies. See "Part 8: Federal Tax
and ERISA Matters."
The Employer or Plan Trustee may also terminate its entire participation under
the MOMENTUM Contract by writing to our Processing Office. In addition, if your
plan is found not to qualify under the Code, or, if you fail to provide us with
the Participant data necessary to administer the MOMENTUM Contract, we may
return the plan assets to the Employer or Plan Trustee.
Withdrawals or terminations may result in a contingent withdrawal charge,
explained fully in "Part 6: Deductions and Charges."
While you have a loan outstanding, an amount equal to 10% of your loan balance
will be restricted, and may not be withdrawn from your Retirement Account Value.
Forfeitures
Forfeitures can arise when a Participant who is not fully vested under a plan
terminates employment. Under the terms of the Master Plan and Trust and the
Pooled Trust, Equitable Life is directed under these circumstances to withdraw
the unvested portion of the Retirement Account Value and deposit such amount in
a Forfeiture Account, which is to be allocated to the Default Option.
We will reallocate amounts in the Forfeiture Account as contributions in
accordance with instructions received by the Employer or Plan Trustee, as
applicable. Special rules apply to the application of the contingent withdrawal
charge when forfeitures have occurred. See "MOMENTUM Contract -- Contingent
Withdrawal Charge" in Part 6.
Distribution Options
The MOMENTUM Contract is an annuity contract, even though you may elect to
receive your benefits in another form.
Subject to the terms of your Employer's plan, payout options under the MOMENTUM
Contract include:
o Lump sum or partial withdrawals;
o Payments for as long as you live;
o Payments for as long as both you and your joint annuitant live; or
o Payments for a specific length of time (not longer than your life
expectancy or that of the joint life expectancy of you and your designated
beneficiary).
You may also be eligible for our "Automatic Minimum Withdrawal Option" option,
discussed later in this section, which is designed to help you satisfy the
Code's "minimum distribution" requirements. For more information about the
minimum distribution requirements, see "Part 8: Federal Tax and ERISA Matters."
Your choice may be subject to applicable withdrawal charges. See "Part 6:
Deductions and Charges."
Annuity Distribution Options
The annuity distribution options available under the MOMENTUM Contract include:
o Life Annuity: An annuity which guarantees payments to you for the rest of
your life. Payments end with the last monthly payment before your 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 also guarantees payments
to you for the rest of your life. In addition, if you die before a
previously selected minimum payment period (the "certain period") has
ended, payments will continue to your beneficiary for the balance of the
period certain. The minimum period is usually 5, 10, 15 or 20 years.
o Life Annuity -- Refund Certain: This annuity form guarantees payments to
you for the rest of your life. In addition, if you die before the amount
applied to purchase this annuity option has been recovered, payments will
continue to your beneficiary until that amount has been recovered. This
option is available only as a fixed annuity.
o Period Certain Annuity: This annuity form guarantees payments to you for a
specific period of time, usually 5, 10, 15 or 20 years. If you die before
the period certain has ended, payments will continue to your beneficiary
for the balance of the period certain.
o Qualified Joint and Survivor Life Annuity: This annuity form guarantees
life income to you and, after your death, continuation of income to your
surviving spouse. Generally, unless married Participants elect otherwise
with the written consent of their spouse, this will be the normal form of
annuity payment for plans such as the Master Plan and Trust. See "Part 8:
Federal Tax and ERISA Matters."
All of the life annuity distribution options outlined above (with the exception
of Qualified Joint and Survivor Life Annuity) are available as either Single or
Joint life annuities.
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The MOMENTUM Contract also offers both fixed and variable annuity distribution
options. Fixed annuity payments, funded through our general account, do not
change and will be based on the tables of guaranteed annuity values in the
MOMENTUM Contract or on our current annuity rates, whichever is more favorable
for the Participant. For all Participants, our normal form of annuity provides
for fixed payments. Variable payments will be funded through your choice of the
14 Investment Funds of the Hudson River Trust through the purchase of annuity
units.
We offer other forms not outlined here. Your Equitable Life Representative can
provide details.
Electing an Annuity Distribution Option
In order to elect an annuity distribution option, a Retirement Account Value
must be at least $3,500.
The size of the payments will depend on the amount applied to purchase the
annuity, the type of annuity chosen and, in the case of a life contingency
annuity distribution option, the Participant's age (or the Participant's and
joint annuitant's ages).
Once you choose an annuity distribution option and payments have commenced, no
change can be made, other than transfers among the available Investment Funds if
permitted in the future and if a variable annuity is selected. Remember, as a
deterrent to premature withdrawal (generally prior to age 59 1/2) the Code
provides certain restrictions on and penalties for early withdrawals. See "Part
6: Deductions and Charges: Charges for State Premium and Other Applicable
Taxes."
Minimum Distributions (Automatic Minimum Withdrawal Option) --
Over Age 70 1/2
Under the Code, distributions from qualified plans must generally begin no later
than April 1st of the calendar year following the calendar year in which the
plan participant either attains age 70 1/2 or retires from service with the
employer sponsoring the plan, whichever comes later (the "required beginning
date"). Subsequent distributions must be made by December 31st of each calendar
year (including the calendar year of your required beginning date). If the
minimum distribution is not made, the plan participant may be required to pay a
penalty tax in an amount equal to 50% of the difference between the amount
required to be distributed and the amount actually distributed. See "Part 8:
Federal Tax and ERISA Matters" for a discussion of various special rules
concerning the minimum distribution requirements.
We offer a payment option which we call "Automatic Minimum Withdrawal Option,"
which is intended to meet minimum distribution requirements. You may elect
Automatic Minimum Withdrawal Option if you, the Participant, are at least age 70
1/2 and have a Retirement Account Value of at least $3,500. You can elect
Automatic Minimum Withdrawal Option by filing the proper election form with your
Employer. If you elect Automatic Minimum Withdrawal Option, we will withdraw the
amount which the Code requires you to withdraw from your Retirement Account
Value. We calculate the Automatic Minimum Withdrawal Option amount based on the
information you give us, the various choices you make, and certain assumptions.
In performing this calculation, we assume that the only funds subject to the
Code's minimum distribution requirements are those held under the MOMENTUM
Contract. In addition, we rely on the information you provide to us, and we will
not be responsible for errors that result from inaccuracies in this information.
The choices you can make are described in Part 5 of the SAI.
Your Automatic Minimum Withdrawal Option election is revocable. Automatic
Minimum Withdrawal Option is not available to Participants who have an
outstanding loan. Generally, electing this option does not restrict you from
taking additional partial withdrawals or subsequently electing an annuity
distribution option.
The minimum check that will be sent is $300, or, if less, your Retirement
Account Value.
Any applicable withdrawal charges will be deducted from your Retirement Account
Value in addition to the amount of the Automatic Minimum Withdrawal. See
"Contingent Withdrawal Charge" in Part 6.
Death Benefit
In general, the death benefit is equal to the greater of: (i) the Retirement
Account Value and (ii) the "minimum death benefit."
The Master Plan and Trust and the Pooled Trust direct the automatic transfer of
a Retirement Account Value to the Default Option on the date Equitable Life
receives due proof of a Participant's death, unless the beneficiary provides
contrary instructions. All amounts are held in the default option until your
beneficiary requests a distribution or transfer.
The minimum death benefit equals all contributions made less withdrawals of
contributions (including loans that default upon death). For example, assume
that a $1,000 contribution is made, and that the contribution earns $1,000 (for
a balance of $2,000). A $1,500 withdrawal is then made, leaving a balance of
$500. Assume that a new $500 contribution is subsequently made. If the
participant subsequently dies, the minimum death benefit will be $500 because
there was a $500 contribution that had not been withdrawn, borrowed or
forfeited.
The law requires the distribution of benefits to be completed no more than five
years after the date of your
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death, unless payments of your benefit to a designated beneficiary commence
within one year after your death and are made over the beneficiary's life or
over a period not exceeding the beneficiary's life expectancy. If the
beneficiary is your surviving spouse, the spouse can elect to begin
distributions over the spouse's life or over a period not exceeding the spouse's
life expectancy at any time up to when you would have attained age 70 1/2. If
you had already begun to receive benefits, your beneficiary can continue to
receive benefits based on the payment option you selected. To designate a
beneficiary or to change an earlier designation, you should file a beneficiary
designation with your plan administrator. Your spouse must consent in writing to
a designation of any non-spouse beneficiary, as explained in "Part 8: Federal
Tax and ERISA Matters: Spousal Requirements."
If the Participant dies while a loan is outstanding, the loan will automatically
default and be subject to Federal income tax as a plan distribution. This
defaulted loan will also be treated as a withdrawal for purposes of calculating
the minimum death benefit. Defaulted takeover loans will not, however, be
considered withdrawals for this purpose.
The beneficiary may elect, subject to certain exceptions explained below,
Equitable Life's rules then in effect and any other applicable requirements
under the Code to: (a) receive the death benefit in a single sum, (b) apply the
death benefit to an annuity distribution option offered by Equitable Life, (c)
apply the death benefit to provide any other form of benefit payment offered by
Equitable Life, or (d) have the death benefit credited to an account under the
MOMENTUM Contract maintained on behalf of the beneficiary in accordance with the
beneficiary's investment allocation instructions. If the beneficiary elects (d)
then (1) the beneficiary will be entitled to delay distribution of his or her
account as permitted under the terms of the Employer's plan and the minimum
distribution rules under the Code; (2) the value of the beneficiary's account
will be determined at the time of distribution to the beneficiary and, depending
upon investment gains or losses, may be worth more or less than the value of the
beneficiary's initial account and (3) if the beneficiary dies prior to taking a
distribution of his or her entire account, the beneficiary of the deceased
beneficiary will be entitled to a death benefit as though the deceased
beneficiary were a Participant, based on the deceased beneficiary's initial
account.
If you die before your entire vested benefit has been distributed to you, any
remaining benefits will be payable to your beneficiary.
Our consultants can explain these and other requirements affecting death
benefits if you call them at 1-800-528-0204.
Payment of Proceeds
Payment of proceeds from the Investment Funds will be made within seven days of
the Transaction Date. Payment or application of proceeds from the Investment
Funds can be deferred for any period during which (1) the New York Stock
Exchange has been closed or trading on it is restricted, (2) sales of securities
or determination of the fair market 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 your Retirement Account Value in the
Guaranteed Interest Account for up to six months while you are living.
Plan Recordkeeping Services
Equitable Life offers two plan recordkeeping options, one of which must be
elected for each plan. There is a choice of either Basic Recordkeeping or
Full-Service Recordkeeping.
Employers can elect our basic plan recordkeeping service option, which includes:
o Accounting by Participant;
o Accounting by Source;
o Provision of annual 5500 series Schedule A report information for use in
making the plan's annual report to the Internal Revenue Service (IRS) and
DOL; and
o Plan loan processing, if applicable.
As an added service under our Basic Recordkeeping Service, Employers may enter
into a written agreement with Equitable Life whereby Equitable Life, based on
information submitted by Employers, directs distribution of plan benefits and
withdrawals to participants, including tax withholding and reporting to the IRS.
The written agreement specifies the fees for such service.
MOMENTUM also offers a full-service plan recordkeeping option. This option is
only available to Employers who have adopted the Master Plan and Trust. If this
option is chosen, Equitable Life will provide the following plan recordkeeping
services in addition to the services described above:
o Master Plan and Trust documents approved by the IRS;
o Assistance in interpreting the Master Plan and Trust, including plan
installation and ongoing administrative support;
o Assistance in annual reporting with the IRS and DOL;
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o Plan administration manual and forms (including withdrawal, transfer, loan
processing, and account allocation forms);
o Performance of vesting calculations;
o Performance of special nondiscrimination tests applicable to Code Section
401(k) plans;
o Tracking of hardship withdrawal amounts in Code Section 401(k) plans; and
o Direct distribution of plan benefits and withdrawals to Participants,
including tax withholding and reporting to the IRS.
Any additional services that Equitable Life will provide are indicated in the
plan recordkeeping services agreement. This agreement is required for Employers
or Plan Trustees who elect the full-service recordkeeping option and specify the
fees for the services to be provided. See "Charge for Plan Recordkeeping
Services" in Part 6.
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- --------------------------------------------------------------------------------
PART 6: DEDUCTIONS AND CHARGES
- --------------------------------------------------------------------------------
Charges to Portfolios
Investment advisory fees and Rule 12b-1 fees (EQAT only) 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
Advisory Fee
EQAT Portfolio (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 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 participants enrolled under the MOMENTUM
Contract.
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 2.25%; however, the rate is 1% in Puerto Rico and 5% in the
Virgin Islands.
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
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when you withdraw from, terminate or annuitize, we reserve the right to deduct a
charge at such time.
Limitation on Charges
Under the terms of the MOMENTUM Contract 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 Trust
charges for investment advisory fees and the direct operating expenses of the
Trust may not exceed a total effective annual rate of 1.75% of the value of the
assets held in those Funds for the MOMENTUM Contract.
Charges to Investment Funds
We make a daily charge against the assets held in each of the Investment Funds
for expenses of the MOMENTUM Contract. This charge is reflected in the
Accumulation Unit Values for the particular Investment Fund and covers expenses,
expense risks, mortality (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 not to exceed 1.49% which consists of .60% for expenses, .30% for
expense risks, .30% for mortality risks, .05% for death benefits and .24% for
financial accounting. For all other Investment Funds, the charge is made at an
annual rate not to exceed 1.34% which consists of .60% for expenses, .15% for
expense risks, .30% for mortality risk, .05% for death benefits and .24% for
financial accounting.
The charge for expenses is designed to reimburse us for various research and
development costs and for administrative expenses that exceed the quarterly
administrative charge described below. The expense risk we assume is the risk
that, over time, our actual expense of administering the MOMENTUM Contract may
exceed the amounts realized from the expense and the quarterly administrative
expense charges. 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 charge for
financial accounting services is designed to reimburse us for our costs in
providing those services in connection with the MOMENTUM Contract.
Under the MOMENTUM Contract, the total of these charges may be reallocated among
the categories of charges discussed above. However, notwithstanding provisions
of the MOMENTUM Contract, we intend to limit any possible reallocation to
include only the charges for expense risks, mortality risks and death benefits.
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 MOMENTUM Contract to the extent that the
charges are not needed to meet the actual expenses incurred.
Quarterly Administrative Charge
Except as discussed below, on the last Business Day of each calendar quarter we
deduct from each Retirement Account Value an administrative charge which is
currently equal to $7.50 or, if less, .50% of the total of the Retirement
Account Value plus the amount of any Active Loan. This charge is deducted by
Source from each Investment Option in a specified order described under "How We
Deduct the Quarterly Administrative Charge" in the SAI.
Any portion of the charge deducted from an Investment Fund will reduce the
number of Accumulation Units you have in that Investment Fund. Any portion of
the charge deducted from the Guaranteed Interest Account is withdrawn in
dollars.
There is currently no charge for any calendar quarter in which the Retirement
Account Value plus any Active Loan is at least $25,000 as of the last Business
Day of that quarter. We reserve the right to increase this charge if our
administrative costs increase. We will give Employers or Plan Trustees 90 days
written notice of any increase. We may also reduce this charge under certain
circumstances. See "Special Circumstances" in this section.
You, as Employer, may choose to have this quarterly administrative charge billed
to you directly.
Charge for Plan Recordkeeping Services
The annual charge for the basic plan recordkeeping option is $300 (prorated in
the first year) and will be billed directly to the Employer. The $300 charge is
not imposed on plans that converted to the MOMENTUM Contract from our EQUI-VEST
Corporate Trusteed Contract. Employers may enter into a written agreement with
Equitable Life for direct distribution of plan benefits and withdrawals to
Participants, including tax withholding and reporting to the IRS. For this
service, a $25 checkwriting fee shall be charged by Equitable Life for each
check drawn. We reserve the right to increase these charges if our plan
recordkeeping costs increase. We will give Employers or Plan Trustees 90 days
written notice of any increase.
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There are additional charges if the Employer or Plan Trustee elects to use our
full-service plan recordkeeping option; these additional charges will depend
upon the service used. Employers will be required to execute an agreement
governing additional recordkeeping services and related charges.
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 MOMENTUM Contract, we assess a sales charge on amounts withdrawn
from Retirement Account Values. Under certain conditions, the contingent
withdrawal charge will not apply to some or all of the amount withdrawn.
Free Withdrawal Amount (Free Corridor)
Subject to certain restrictions, no withdrawal charge will be applied during any
Participation Year in which the amount withdrawn does not exceed 10% of the sum
of the Retirement Account Value and any Active Loan at the time the withdrawal
is requested, minus any amount previously withdrawn during that Participation
Year (including any defaulted loan amounts and forfeited amounts). This 10%
portion is called the free corridor amount.
If you, as the Employer, have transferred your plan assets to the MOMENTUM
Program from another qualified plan and we have not yet received from you the
allocation of values among Participants, we will treat the total amount we hold
as one Retirement Account Value. Withdrawals from this Retirement Account Value
will not have the benefit of a free corridor amount. However, once the amount we
hold is allocated among the various Participants, withdrawals will have the
benefit of the free corridor amount.
How the Contingent Withdrawal Charge Is Applied
Partial withdrawals in excess of the free corridor amount will be subject to a
withdrawal charge of 6% of the lesser of (i) such excess or (ii) the amount of
the withdrawal attributable to contributions made by or on behalf of the
Participant during the current and five prior Participation Years.
In the case of a full withdrawal of a Retirement Account Value, the plan will
receive from us the greater of your Retirement Account Value after the
withdrawal charge of 6% has been imposed upon the amount of the contributions
made by or on behalf of a Participant during the current and five prior
Participation Years, or the free corridor amount plus 94% of the sum of the
remaining Retirement Account Value and any Active Loan, less the Active Loan.
This charge will also apply in the case of a termination of participation under
the MOMENTUM Contract by the Employer or Plan Trustee.
The withdrawal charge described above is deducted from the Retirement Account
Value in addition to the amount of the requested withdrawal; the portion of the
amount withdrawn that is applied to pay the withdrawal charge is also subject to
the withdrawal charge.
For purposes of calculating the withdrawal charge, (1) the oldest contributions
will be treated as the first withdrawn and more recent contributions next, (2)
amounts withdrawn up to the free corridor amount will not be considered a
withdrawal of any contributions and (3) Active Loans do not include takeover
loans for this purpose.
If a portion of your Retirement Account Value is forfeited under the terms of
your plan, we will assess a withdrawal charge only against vested contribution
amounts. Under Basic Service, the Plan Trustee must tell us the vested balance.
The balance of the withdrawal charge will be waived at that time. However, if
you, as the Employer or Plan Trustee, withdraw the forfeited amount from the
MOMENTUM Contract before it is reallocated to other Participants, you will incur
the balance of the withdrawal charge at that time.
No charge will be applied to any amount withdrawn, if:
o the amount withdrawn is applied to the election of a life annuity
distribution option;
o you die;
o you have been a Participant for at least five Participation Years and have
reached age 59 1/2;
o you have reached age 59 1/2 and have separated from service (regardless of
the number of Participation Years);
o the amount withdrawn is the result of a request for a refund of "excess
contributions" or "excess aggregate contributions" as such terms are
defined in Section 401(k)(8)(B) and 401(m)(6)(B), respectively, of the
Code, including any gains or losses, and the withdrawal is made no later
than the end of the plan year following the plan year for which such
contributions were made;
o the amount withdrawn is a request for a refund of "excess deferrals" as
such term is defined in Section 402(g)(2) of the Code, including any gains
or losses, provided the withdrawal is made no later than April 15,
following the calendar year in which such excess deferrals were made;
o the amount withdrawn is a request for a refund of contributions made due to
mistake of fact made in good faith, provided the withdrawal is made within
12 months of the date such mistake of fact contributions were made and any
earnings attributable to such contributions are not included in such
withdrawal;
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o the amount withdrawn is a request for a refund of contributions disallowed
as a deduction by the Employer for Federal income tax purposes, provided
such withdrawal is made within 12 months after the disallowance of the
deduction has occurred and no earnings attributable to such contributions
are included in such withdrawal; or
o the amount withdrawn is a withdrawal for disability as defined in Section
72(m) of the Code.
In addition, there will be no contingent withdrawal charge imposed on any
Annuity Account Value under an EQUI-VEST Corporate Trusteed Certificate when it
is converted to a MOMENTUM Contract. For purposes of calculating any contingent
withdrawal charge under the MOMENTUM Contract, we will carry over the history of
the contributions made under a converted EQUI-VEST Certificate. For example, if
an EQUI-VEST Corporate Trusteed Certificate was purchased on behalf of a
Participant on June 1, 1987 with a single $5,000 contribution, we will continue
to treat the $5,000 contribution as made on June 1, 1987 under the MOMENTUM
Contract. This means that you will not lose the benefit of "aging" contributions
by converting EQUI-VEST Certificates to the MOMENTUM Contract.
Plan Loan Charges
A $25 loan set-up charge will be deducted from your Retirement Account Value at
the time a plan loan is made. Also, we will deduct a recordkeeping charge of $6
from your Retirement Account Value on the last Business Day of each calendar
quarter if there is an Active Loan on that date. The $6 per quarter
recordkeeping charge, but not the $25 set-up charge, will be applicable to
takeover loans and to loans converted from EQUI-VEST Corporate Trusteed to
MOMENTUM.
Your employer may elect to pay these charges. These charges are intended to
reimburse us for the added administrative costs associated with processing
loans. We reserve the right to increase these administrative charges if our
costs increase. We will give Employers or Plan Trustees 90 days written notice
of any increase.
Any defaulted loan amount will incur a contingent withdrawal charge as described
above under "Contingent Withdrawal Charge."
Special Circumstances
Subject to any necessary governmental or regulatory approvals, the contingent
withdrawal charge, quarterly administrative charge, loan charges and basic plan
recordkeeping fee for a particular plan participating under the Contract may be
reduced or eliminated when sales are made in a manner that results in savings of
sales or administrative expenses. The entitlement to such a reduction or
elimination will be determined by us based on factors such as the number of
Participants, performance of sales or administrative functions by the Employer
or plan administrator, frequency of contributions or the use of automated
techniques in transmitting data.
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PART 7: VOTING RIGHTS
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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 Participants or Plan Trustees, as applicable, the opportunity to
instruct us how to vote the number of shares attributable to their Retirement
Account Values. If we do not receive instructions in time from all Participants
or Plan Trustees, as applicable, 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 Participants or Plan
Trustees, as applicable, 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.
Separate Account Voting Rights
If actions relating to the Separate Account require Participant approval,
Participants 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 all persons who
participate in the Separate Account.
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 Participants and Plan Trustees,
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 Participants, we will see to it that
appropriate action is taken to protect our Participants.
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 8: FEDERAL TAX AND ERISA MATTERS
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Employer retirement plans that may qualify for tax-favored treatment are
governed by the provisions of the Code and ERISA. The Code is administered by
the IRS. ERISA is administered primarily by the Department of Labor (DOL).
Provisions of the Code and ERISA include requirements for various features
including:
o participation, vesting and funding;
o nondiscrimination;
o limits on contributions and benefits;
o distributions;
o penalties;
o duties of fiduciaries;
o prohibited transactions; and
o withholding, reporting and disclosure.
It is the responsibility of the employer, plan trustee and plan administrator to
satisfy the requirements of the Code and ERISA.
This prospectus does not provide detailed tax or ERISA information. The
following discussion briefly outlines the Code provisions relating to
contributions to and distributions from certain tax-qualified retirement plans,
although some information on other provisions is also provided. Various tax
disadvantages, including penalties, may result from actions that conflict with
requirements of the Code or ERISA, and regulations or other interpretations
thereof. In addition, Federal tax laws and ERISA are continually under review by
the Congress, and any changes in those laws, or in the regulations pertaining to
those laws, may affect the tax treatment of amounts contributed to tax-qualified
retirement plans or the legality of fiduciary actions under ERISA. Any such
change could have retroactive effects regardless of the date of enactment.
Certain tax advantages of a tax-qualified retirement plan may not be available
under certain state and local tax laws. This outline does not discuss the effect
of any state or local tax laws. It also does not discuss the effect of Federal
estate and gift tax laws (or state and local estate, inheritance and other
similar tax laws). This outline assumes that the participant does not
participate in any other qualified retirement plan. Finally, it should be noted
that many tax consequences depend on the particular jurisdiction or
circumstances of a participant or beneficiary.
The provisions of the Code and ERISA are highly complex. For complete
information on these provisions, as well as all other Federal, state, local and
other tax considerations, qualified legal and tax advisers should be consulted.
Tax Aspects of Contributions to a Plan
Corporations, partnerships and self-employed individuals can establish qualified
plans for the working owners and their employees who participate in the plan.
Both employer and employee contributions to these plans are subject to a variety
of limitations, some of which are discussed here briefly. See your tax adviser
for more information. Violation of contribution limits may result in plan
disqualification and/or imposition of monetary penalties. The trustee or plan
administrator may make contributions on behalf of the plan participants which
are deductible from the employer's Federal gross income. Employer contributions
which exceed the amount currently deductible are subject to a 10% penalty tax.
The limits on the amount of contributions that can be made and/or forfeitures
that can be allocated to each participant in defined contribution plans is the
lesser of $30,000 or 25% of the compensation or earned income for each
participant. In 1998, the employer may not consider compensation in excess of
$160,000 in calculating contributions to the plan. This amount may be adjusted
for cost-of-living changes in future years. For self-employed individuals,
earned income is defined so as to exclude deductible contributions made to all
tax-qualified retirement plans, including Keogh plans, and takes into account
the deduction for one-half the individual's self-employment tax. Deductions for
aggregate contributions to profit-sharing plans may not exceed 15% of all
participants' compensation.
Special limits on contributions apply to anyone who participates in more than
one qualified plan or who controls another trade or business. In addition, there
is an overall limit on the total amount of contributions and benefits under all
tax-qualified retirement plans in which an individual participates. Special
limits on deductions for contributions to one or more defined contribution plans
and one or more defined benefit plans are in effect through 1999, but will be
eliminated thereafter.
A qualified plan may allow the participant to direct the employer to make
contributions which will not be included in the employee's income (elective
deferrals) by
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entering into a salary reduction agreement with the employer under Section
401(k) of the Code. The 401(k) plan, otherwise known as a cash or deferred
arrangement, must not allow withdrawals of elective deferrals and the earnings
thereon prior to the earliest of the following events: (i) attainment of age 59
1/2 , (ii) death, (iii) disability, (iv) certain business dispositions and plan
terminations or (v) termination of employment. In addition, in-service
withdrawals of elective deferrals (but not earnings after 1988) may be made in
the case of financial hardship.
A participant cannot elect to defer annually more than $7,000 ($10,000 as
indexed for inflation in 1998) under all salary reduction arrangements with all
employers in which the individual participates.
Effective for plan years beginning after December 31, 1997, the formula for
determining the overall limits on contributions and benefits includes
compensation from the employer in the form of elective deferrals and excludable
contributions under Code Section 457 plans and "cafeteria" plans giving
employees a choice between cash or specified excludable health and welfare
benefits.
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.
A qualified plan must not discriminate in favor of highly compensated employees.
Two special nondiscrimination rules limit contributions and benefits for highly
compensated employees in the case of (1) a 401(k) plan and (2) any defined
contribution plan, whether or not a 401(k) plan, which provides for employer
matching contributions to employee post-tax contributions or elective deferrals.
Generally, these nondiscrimination tests require an employer to compare the
deferrals or the aggregate contributions, as the case may be, made by the
eligible highly compensated employees with those made by the non-highly
compensated employees, although alternative simplified tests will be available
in 1999. Highly compensated participants include five percent owners and
employees earning more than $80,000 for the prior year. (If desired, the latter
group can be limited to employees who are in the top 20% of all employees based
on compensation.) 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."
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.
If a 401(k) plan or defined contribution plan with an employer match makes
contributions to highly compensated employees exceeding applicable
nondiscrimination limits for any plan year, the plan may be disqualified unless
the excess amounts including earnings are distributed before the close of the
next plan year. In addition, the employer is subject to a 10% penalty on any
such excess contributions or excess aggregate contributions. The employer may
avoid the penalty by distributing the excess contributions or excess aggregate
contributions, plus income, within two and one-half months after the close of
the plan year. Except where the distribution is de minimis (under $100), the
participant receiving any such distribution is taxed on the distribution and the
related income for the year of the excess contribution or excess aggregate
contribution. Such a distribution is not treated as an impermissible withdrawal
by the employee or an eligible rollover distribution and will not be subject to
the 10% penalty tax on premature distributions.
Contributions to a 401(k) plan or a defined contribution plan as matching
contributions, within the meaning of section 401(m) of the Code, may not be
deductible by the employer for a particular taxable year if the plan
contributions are attributable to compensation earned by a participant after the
end of the taxable year.
Tax Aspects of Distributions from a Plan
Amounts held under qualified plans are generally not subject to Federal income
tax until benefits are distributed to the participant or other recipient. In
addition, there will not be any tax liability for transfers of any part of the
Retirement Account Value among the Investment Options.
The various types of benefit payments include withdrawals, annuity payments and
lump sum distributions. Each benefit payment made to the participant or other
recipient is generally fully taxable as ordinary income. An exception to this
general rule is made, however, to the extent a distribution is treated as a
recovery of post-tax contributions made by the participant.
In addition to income tax, the taxable portion of any distribution may be
subject to a 10% penalty tax. See "Penalty Tax on Premature Distributions" in
this section.
Income Taxation of Withdrawals
The amount of any distribution prior to the annuity starting date is treated as
ordinary income except to the extent the distribution is treated as a withdrawal
of post-tax contributions. Withdrawals from a qualified plan are normally
treated as pro rata withdrawals of post-tax contributions and earnings on those
contributions. If the plan allowed withdrawals prior to separation from service
as of May 5, 1986, however, all
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post-tax contributions made prior to January 1, 1987 may be withdrawn tax free
prior to withdrawing any taxable amounts.
As discussed in this section in "Certain Rules Applicable to Plan Loans," taking
a loan or failing to repay an outstanding loan as required may, in certain
situations, be treated as a taxable withdrawal.
Income Taxation of Annuity Payments
In the case of a distribution in the form of an annuity, the amount of each
annuity payment is treated as ordinary income except where the participant has a
cost basis in the annuity.
The cost basis is equal to the amount of after-tax contributions, plus any
employer contributions that had to be included in gross income in prior years.
If the participant has a cost basis in the annuity, a portion of each payment
received will be excluded from gross income to reflect the return of the cost
basis. The remainder of each payment will be includable in gross income as
ordinary income. The excludable portion is based on the ratio of the
participant's cost basis in the annuity on the annuity starting date to the
expected return, generally determined in accordance with a statutory table,
under the annuity as of such date. The full amount of the payments received
after the cost basis of the annuity is recovered is fully taxable. If there is a
refund feature under the annuity, the beneficiary of the refund may recover the
remaining cost basis as payments are made. If the participant (and beneficiary
under a joint and survivor annuity) die prior to recovering the full cost basis
of the annuity, a deduction is allowed on the participant's (or beneficiary's)
final tax return.
Income Taxation of Lump Sum Distributions
If benefits are paid in a lump sum, the payment may be eligible for the special
tax treatment accorded lump sum distributions. Under the five-year averaging
method (and in certain cases, favorable ten-year averaging and long-term capital
gain treatment), the tax on the distribution is calculated separately from taxes
on other income for that year. To qualify, the participant must have
participated in the plan for at least five years and the distribution must
consist of the entire balance to the credit of the participant. The distribution
must be made in one taxable year of the recipient and must be made (i) after the
participant has attained 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).
This provision will be eliminated after December 31, 1999.
Eligible Rollover Distributions
Many types of distributions from qualified plans are "eligible rollover
distributions" that can be rolled over directly to another qualified plan or a
traditional individual retirement arrangement (IRA), or rolled over by the
individual to another plan or IRA within 60 days of receipt. Death benefits
received by a spousal beneficiary may only be rolled over into an IRA. To the
extent a distribution is rolled over, it remains tax deferred. Distributions not
rolled over directly are subject to 20% mandatory withholding. See "Federal
Income Tax Withholding" in this section.
The taxable portion of most distributions will generally be an "eligible
rollover distribution" unless the distribution 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 participant or the joint lives (or
joint life expectancies) of the participant and his or her designated
beneficiary, or (2) for a specified period of ten years or more. Nondeductible
voluntary contributions may not be rolled over.
In addition, none of the following is treated as an eligible rollover
distribution:
o any distribution to the extent that it is a required distribution under
Section 401(a)(9) of the Code (see "Distribution Requirements and Limits"
below);
o certain corrective distributions in plans subject to Sections 401(k),
401(m) or 402(g) of the Code;
o loans that are treated as deemed distributions under Section 72(p) of the
Code;
o P.S. 58 costs (incurred if the plan provides life insurance protection for
participants);
o dividends paid on employer securities as described in Section 404(k) of the
Code; and
o a distribution to a non-spousal beneficiary.
If a distribution is made to a participant's surviving spouse, or to a current
or former spouse under a qualified domestic relations order, the distribution
may be an eligible rollover distribution, subject to mandatory 20% withholding,
unless one of the exceptions described above applies.
If distributions eligible for rollover are in fact rolled over, the favorable
averaging rules discussed above in "Income Taxation of Lump Sum Distributions"
will not be available for any future distributions made before 2000.
Penalty Tax on Premature Distributions
An additional 10% penalty tax is imposed on all taxable amounts distributed to a
participant who has not reached age 59 1/2 unless the distribution falls within
a specified exception or is rolled over into an IRA or other qualified plan. The
specified exceptions are for (a) distributions made on account of the
participant's death or disability, (b) distributions (which begin after
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separation from service) in the form of a life annuity or substantially equal
periodic installments over the participant's life expectancy (or the joint life
expectancy of the participant and the beneficiary), (c) distributions due to
separation from active service after age 55 and (d) distributions used to pay
certain extraordinary medical expenses.
Federal Income Tax Withholding
Mandatory Federal income tax withholding at a 20% rate will apply to all
"eligible rollover distributions" unless the participant elects to have the
distribution directly rolled over to another qualified plan or IRA. See the
description in this section of "Eligible Rollover Distributions."
With respect to distributions that are not eligible rollover distributions,
Federal income tax must be withheld on the taxable portion of pension and
annuity payments, unless the recipient elects otherwise. The rate of withholding
will depend on the type of distribution and, in certain cases, the amount of the
distribution. Special rules may apply to foreign recipients, or United States
citizens residing outside the United States. If a recipient does not have
sufficient income tax withheld, or make sufficient estimated income tax
payments, the recipient may incur penalties under the estimated income tax
rules. Recipients should consult their tax advisers to determine whether they
should elect out of withholding.
Requests not to withhold Federal income tax must be made in writing prior to
receiving payments and submitted in accordance with the terms of the employer
plan. No election out of withholding is valid unless the recipient provides the
recipient's correct Taxpayer Identification Number and a U.S. residence address.
State Income Tax Withholding
Certain states have indicated that pension and annuity withholding will apply to
payments made to residents of such states. In some states a recipient may elect
out-of-state income tax withholding, even if Federal withholding applies. It is
not clear whether such states may require mandatory withholding with respect to
eligible rollover distributions that are not rolled over (as described in this
section under "Eligible Rollover Distributions"). Contact your tax adviser to
see how state withholding may apply to your payment.
Distribution Requirements
Distributions from qualified plans generally must commence no later than April 1
of the calendar year following the calendar year in which the participant
attains age 70 1/2 (or retires from the employer sponsoring the plan, if later).
5% owners of qualified plans must commence minimum distributions after age 70
1/2 even if they are still working. Distributions can generally be made (1) in a
lump sum payment, (2) over the life of the participant, (3) over the joint lives
of the participant and his or her designated beneficiary, (4) over a period not
extending beyond the life expectancy of the participant or (5) over a period not
extending beyond the joint life expectancies of the participant and his or her
designated beneficiary. The minimum amount required to be distributed in each
year after minimum distributions are required to begin is described in the Code,
Treasury Regulations and IRS guidelines. If a designated beneficiary is other
than a participant's spouse, certain minimum incidental benefit requirements
also apply.
If the participant dies after required distribution has begun, payment of the
remaining interest under the plan must be made at least as rapidly as under the
method used prior to the participant's death. If a participant dies before
required distribution has begun, payment of the entire interest year under the
plan must be completed within five years after death, unless payments to a
designated beneficiary begin within one year of the participant's death and are
made over the beneficiary's life or over a period certain which does not extend
beyond the beneficiary's life expectancy. If the surviving spouse is the
designated beneficiary, the spouse may delay the commencement of such payments
up until the date that the participant would have attained age 70 1/2.
Distributions received by a beneficiary are generally given the same tax
treatment the participant would have received if distribution had been made to
the participant.
If there is an insufficient distribution in any year, a 50% tax may be imposed
on the amount by which the minimum required to be distributed exceeds the amount
actually distributed. Failure to have distributions made as the Code and
Treasury Regulations require may result in plan disqualification.
Spousal Requirements
In the case of many corporate and Keogh plans, if a participant is married at
the time benefit payments become payable, unless the participant elects
otherwise with written consent of the spouse, the benefit must be paid in the
form of a qualified joint and survivor annuity (QJSA). A QJSA is an annuity
payable for the life of the participant with a survivor annuity for the life of
the spouse in an amount which is not less than one-half of the amount payable to
the participant during his or her lifetime. In addition, most plans require that
a married participant's beneficiary must be the spouse, unless the spouse
consents in writing to the designation of a different beneficiary.
Certain Rules Applicable to Plan Loans
The following are Federal tax and ERISA rules that apply to loan provisions of
all employer plans. Employer plans may have additional restrictions. Employers
and participants should review these matters with their
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own tax advisers before requesting a loan. There will not generally be any tax
liability with respect to properly made loans in accordance with an employer
plan. A loan may be in violation of applicable provisions unless it complies
with the following conditions:
o With respect to specific loans made by the plan to a plan participant, the
plan administrator determines the interest rate, the maximum term and all
other terms and conditions of the loan;
o In general, the term of the loan cannot exceed five years unless the loan
is used to acquire the participant's primary residence;
o All principal and interest must be amortized in substantially level
payments over the term of the loan, with payments being made at least
quarterly;
o The amount of a loan to a participant, when aggregated with all other loans
to the participant from all qualified plans of the employer, cannot exceed
the greater of $10,000 or 50% of the participant's non-forfeitable accrued
benefits, and cannot exceed $50,000 in any event. This $50,000 limit is
reduced by the excess (if any) of the highest outstanding loan balance over
the previous twelve months over the outstanding balance of plan loans on
the date the loan was made;
o For loans made prior to January 1, 1987 and not renewed, modified,
renegotiated or extended after December 31, 1986, the $50,000 maximum
aggregate loan balance is not required to be reduced, the quarterly
amortization requirement does not apply, and the term of a loan may exceed
five years if used to purchase the principal residence of the participant
or a member of his or her family, as defined in the Code;
o Only 50% of the participant's vested account balance may serve as security
for a loan. To the extent that a participant borrows an amount which should
be secured by more than 50% of the participant's vested account balance, it
is the responsibility of the trustee or plan administrator to obtain the
additional security;
o Loans must be available to all plan participants, former participants who
still have account balances under the plan, beneficiaries and alternate
payees on a reasonably equivalent basis;
o Each new or renewed loan must bear a reasonable rate of interest
commensurate with the interest rates charged by persons in the business of
lending money for loans that would be made under similar circumstances;
o Many plans provide that the participant's spouse must consent in writing to
the loan;
o Except to the extent permitted in accordance with the terms of a prohibited
transaction exemption issued by DOL, loans are not available (i) in a Keogh
(non-corporate) plan to an owner-employee or a partner who owns more than
10% of a partnership or (ii) to 5% shareholders in an S corporation;
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 or 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 early distributions may apply. The plan should
report the amount of the unpaid loan balance to the IRS as a distribution.
See "Tax Aspects of Distributions from a Plan" in this section; and
o The loan requirements and provisions of MOMENTUM shall apply regardless of
the plan administrator's guidelines.
Impact of Taxes to Equitable Life
Under existing Federal income tax law, no taxes are payable on investment income
and capital gains of the Investment Funds that are applied to increase the
reserves under the Contracts. Accordingly, Equitable Life does not anticipate
that it will incur any Federal income tax liability attributable to income
allocated to the variable annuity contracts participating in the Investment
Funds and it does not currently impose a charge for Federal income tax on this
income when it computes Unit values for the Investment Funds. If changes in
Federal tax laws or interpretations thereof would result in us being taxed, then
we may impose a charge against the Investment Funds (on some or all Contracts)
to provide for payment of such taxes.
Certain Rules Applicable to Plans Designed to Comply with Section 404(c) of
ERISA
Section 404(c) of ERISA, and the related DOL regulation, provide that if a plan
participant or beneficiary exercises control over the assets in his or her plan
account, plan fiduciaries will not be liable for any loss that is the direct and
necessary result of the plan participant's or beneficiary's exercise of control.
As a result, if the plan complies with Section 404(c) and the DOL regulation
thereunder, the plan participant can make and is responsible for the results of
his or her own investment decisions.
Section 404(c) plans must provide, among other things, that a broad range of
investment choices are available to plan participants and beneficiaries and must
provide such plan participants and beneficiaries with enough information to make
informed investment decisions. Compliance with the Section 404(c) regulation is
50
<PAGE>
completely voluntary by the plan sponsor, and the plan sponsor may choose not to
comply with Section 404(c).
The Momentum Program provides employer plans with the broad range of investment
choices and information needed in order to meet the requirements of the Section
404(c) regulation. If the plan is intended to be a Section 404(c) plan, it is,
however, the plan sponsor's responsibility to see that the requirements of the
DOL regulation are met. Equitable Life and its Representatives shall not be
responsible if a plan fails to meet the requirements of Section 404(c).
- --------------------------------------------------------------------------------
PART 9: LEGAL PROCEEDINGS
- --------------------------------------------------------------------------------
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.
51
<PAGE>
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
- --------------------------------------------------------------------------------
Part 1: Additional Information about the MOMENTUM Program 2
- --------------------------------------------------------------------------------
Part 2: How We Deduct the MOMENTUM Quarterly Administrative Charge 2
- --------------------------------------------------------------------------------
Part 3: Description of Contribution Sources for the MOMENTUM Program 3
- --------------------------------------------------------------------------------
Part 4: Additional Loan Provisions 3
- --------------------------------------------------------------------------------
Part 5: Automatic Minimum Withdrawal Option 4
- --------------------------------------------------------------------------------
Part 6: Accumulation Unit Values 4
- --------------------------------------------------------------------------------
Part 7: Calculation of Annuity Payments 4
- --------------------------------------------------------------------------------
Part 8: The Reorganization 6
- --------------------------------------------------------------------------------
Part 9: Alliance Money Market Fund Yield Information 6
- --------------------------------------------------------------------------------
Part 10: Other Alliance Yield Information 7
- --------------------------------------------------------------------------------
Part 11: Distribution 7
- --------------------------------------------------------------------------------
Part 12: Long-Term Market Trends 7
- --------------------------------------------------------------------------------
Part 13: Custodian and Independent Accounts 9
- --------------------------------------------------------------------------------
Part 14: Financial Statements 9
- --------------------------------------------------------------------------------
How to Obtain the MOMENTUM Statement of Additional Information
Call 1-800-528-0204 or send this request form to:
-------------------------------------------------------------
MOMENTUM Administration Services
P.O. Box 2919
New York, NY 10116
-------------------------------------------------------------
Please send me a Statement of Additional Information dated May 1, 1998
- --------------------------------------------------------------------------------
Name
- --------------------------------------------------------------------------------
Address
- --------------------------------------------------------------------------------
City State Zip
- --------------------------------------------------------------------------------
52
<PAGE>
MOMENTUM
RETIREMENT PLANNING FROM EQUITABLE LIFE
STATEMENT OF ADDITIONAL INFORMATION
DATED MAY 1, 1998
------------
VARIABLE ANNUITY CONTRACTS FUNDED THROUGH THE
INVESTMENT FUNDS OF SEPARATE ACCOUNT A
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
INVESTMENT FUNDS
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
o Alliance Money Market o Alliance International o EQ/Putnam Growth & Income Value
o Alliance Intermediate Government o Alliance Aggressive Stock o EQ/ Putnam Balanced
Securities o Alliance Small Cap Growth o MFS Research
o Alliance High Yield o Alliance Conservative Investors o MFS Emerging Growth Companies
o Alliance Quality Bond o Alliance Balanced o Morgan Stanley Emerging Markets Equity
o Alliance Growth & Income o Alliance Growth Investors o Warburg Pincus Small Company Value
o Alliance Equity Index o T. Rowe Price International Stock o Merrill Lynch World Strategy
o Alliance Common Stock o T. Rowe Price Equity Income o Merrill Lynch Basic Value Equity
o Alliance Global
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
ISSUED BY:
THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
- --------------------------------------------------------------------------------
Home Office: 1290 Avenue of the Americas, New York, NY 10104
Processing Offices: MOMENTUM Administrative Services
P.O. Box 2919
New York, NY 10116
- --------------------------------------------------------------------------------
This statement of additional information (SAI) is not a prospectus. It should be
read in conjunction with the Separate Account A prospectus for MOMENTUM, 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, 1-800-528-0204, or by contacting your Equitable
Life Representative.
- --------------------------------------------------------------------------------
STATEMENT OF ADDITIONAL INFORMATION
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
PAGE
- --------------------------------------------------------------------------------
Part 1 Additional Information about the MOMENTUM Program 2
- --------------------------------------------------------------------------------
Part 2 How We Deduct the MOMENTUM Quarterly Administrative Charge 2
- --------------------------------------------------------------------------------
Part 3 Description of Contribution Sources for the MOMENTUM Program 3
- --------------------------------------------------------------------------------
Part 4 Additional Loan Provisions 3
- --------------------------------------------------------------------------------
Part 5 Automatic Minimum Withdrawal Option 4
- --------------------------------------------------------------------------------
Part 6 Accumulation Unit Values 4
- --------------------------------------------------------------------------------
Part 7 Calculation of Annuity Payments 4
- --------------------------------------------------------------------------------
Part 8 The Reorganization 6
- --------------------------------------------------------------------------------
Part 9 Alliance Money Market Fund Yield Information 6
- --------------------------------------------------------------------------------
Part 10 Other Alliance Yield Information 7
- --------------------------------------------------------------------------------
Part 11 Distribution 7
- --------------------------------------------------------------------------------
Part 12 Long-Term Market Trends 7
- --------------------------------------------------------------------------------
Part 13 Custodian and Independent Accountants 9
- --------------------------------------------------------------------------------
Part 14 Financial Statements 9
- --------------------------------------------------------------------------------
Copyright 1998 The Equitable Life Assurance Society of the United States,
New York, New York 10104
All rights reserved.
____________________ Cat. No. 127656
888-1151
<PAGE>
- --------------------------------------------------------------------------------
PART 1 -- ADDITIONAL INFORMATION ABOUT THE MOMENTUM PROGRAM
MASTER PLAN ELIGIBILITY REQUIREMENTS
Under the Master Plan, the Employer specifies the eligibility requirements for
its plan in the participation agreement. The Employer may exclude any employee
who has not attained a specified age (not to exceed 21) and completed a
specified number of years (not to exceed two) in each of which he completed
1,000 hours of service. No more than one year of eligibility service may be
required for a 401(k) plan.
The Master Plan provides that a sole proprietor, partner or shareholder may
elect not to participate in the plan. However, due to provisions of the Code,
all employees may have to be covered under the plan even if they previously
elected not to participate.
VESTING UNDER THE MASTER PLAN
Vesting refers to the nonforfeitable portion of a Participant's Retirement
Account Value and loans attributable to Employer and matching contributions
under the Master Plan. The Participant's Retirement Account Value attributable
to salary-deferral contributions, post-tax employee contributions, prior plan
contributions, qualified non-elective and qualified matching contributions is
nonforfeitable at all times.
A Participant will become fully vested in all benefits if still employed at
death, disability, attainment of normal retirement age or upon termination of
the plan. If the Participant terminates employment before that time, any
benefits that have not yet become vested under the plan's vesting schedule will
be forfeited.
Except as described below in the case of certain non-top heavy plans, benefits
must vest in accordance with any of the schedules below or one at least as
favorable to Participants as Schedule B or C:
- ------------------------------------------------------------
YEARS OF SCHEDULE A SCHEDULE B SCHEDULE C
SERVICE VESTED VESTED VESTED
PERCENTAGE PERCENTAGE PERCENTAGE
- -------------------------------------------------------------
1 0% 0% 0%
2 100 20 0
3 100 40 100
4 100 60 100
5 100 80 100
6 100 100 100
- -------------------------------------------------------------
If the plan requires more than one year of service for participation, it must
use Schedule A or one at least as favorable to Participants.
Provided the Employer plan is not "top heavy" and does not require more than one
year of service for participation, an Employer may, in accordance with
provisions of the Master Plan, instead elect one of the following vesting
schedules or one at least as favorable to Participants:
- -------------------------------------------------------------
SCHEDULE F SCHEDULE G
YEARS OF VESTED VESTED
SERVICE PERCENTAGE PERCENTAGE
- -------------------------------------------------------------
less than 3 0% 0%
3 20 0
4 40 0
5 60 100
6 80 100
7 100 100
- -------------------------------------------------------------
BENEFIT DISTRIBUTIONS
If we receive your properly completed forms, you will be eligible to receive a
distribution as follows:
- ---------------------------------------------------------------
FORM RECEIVED AT WHEN ELIGIBLE TO
THE PROCESSING RECEIVE
TYPE OF DISTRIBUTION OFFICE DISTRIBUTION
- ---------------------------------------------------------------
o Single Sum N/A The 1st Business
Payments Day that is 7
calendar days
o Annuities after the form is
received.
- ---------------------------------------------------------------
o In-Service N/A The Business Day
Withdrawals in which the form
o Hardship is received.
Withdrawals
o Withdrawals of
Post-Tax
Employee
Contributions
- ---------------------------------------------------------------
o Installment 1st through 25th The 1st Business
Payments Business Day of Day of the
month, inclusive following calendar
month.
26th throught 31st The 1st Business
Business Day of Day of the second
month inclusive following calendar
month.
- ---------------------------------------------------------------
In order for you to begin receiving benefits (including annuity payments) under
an individually designed or prototype defined contribution plan, your Employer
must send us a properly completed request for disbursement form. We will send
single sum payments to your Plan Trustee as of the close of business on the
Business Day we receive a properly completed form. If you wish to receive
annuity payments, your Plan Trustee may purchase an annuity contract from us.
The annuity contract will be purchased on the Business Day we receive a properly
completed form, and payments will commence on that Business Day.
- --------------------------------------------------------------------------------
PART 2 -- HOW WE DEDUCT THE MOMENTUM QUARTERLY ADMINISTRATIVE CHARGE
Each calendar quarter we currently deduct an administrative charge of $7.50 or,
if less, .50% of the total of your Retirement Account Value plus the amount of
any Active Loan from your Retirement Account Value. No
2
<PAGE>
- --------------------------------------------------------------------------------
deduction is made, however, if your Retirement Account Value equals or exceeds
$25,000. We will deduct this charge in a specified order of Sources and
Investment Options. The order of Sources is: employer contributions, matching
contributions, qualified non-elective and qualified matching contributions,
prior plan contributions, elective contributions and post-tax contributions. The
order of Investment Options is: Guaranteed Interest Account, Alliance Common
Stock, Alliance Balanced, Alliance Aggressive Stock, Alliance Money Market,
Alliance Intermediate Government Securities, Alliance Growth Investors, Alliance
Conservative Investors, Alliance High Yield, Alliance Global, Alliance Growth &
Income, Alliance Equity Index, Alliance Quality Bond, Alliance International and
Alliance Small Cap Growth Funds. The EQAT Investment Funds then follow and the
administrative charge will be deducted on a pro rata basis from these Investment
Funds.
For example, on the last Business Day of a calendar quarter we will first
attempt to deduct the administrative charge from employer contributions within
the Guaranteed Interest Account. If there is no money in the Guaranteed Interest
Account, we will attempt to deduct the charge from the Alliance Common Stock
Fund, then Alliance Balanced, etc. If there are no employer contributions in any
of the Investment Options, we will go to the next Source, employer matching
contributions, and attempt to deduct the charge from the Investment Options in
the same order described above.
- --------------------------------------------------------------------------------
PART 3 -- DESCRIPTION OF CONTRIBUTION SOURCES FOR
THE MOMENTUM PROGRAM
There are six types of sources of contributions under qualified plans:
EMPLOYER CONTRIBUTIONS
These are contributions made to a plan for the benefit of Participants and
beneficiaries by the Employer not covered by the remaining sources.
MATCHING CONTRIBUTIONS
These are Employer Contributions which are allocated to a Participant's account
under a plan by reason of the Participant's post-tax contributions or elective
contributions to the plan.
POST-TAX CONTRIBUTIONS
These are after-tax contributions made by a Participant in accordance with the
terms of a plan.
SALARY-DEFERRAL CONTRIBUTIONS
These are contributions to a plan that are made pursuant to a cash or deferred
election (normally in accordance with the terms of a qualified cash or deferred
arrangement under Section 401(k) of the Code).
PRIOR PLAN CONTRIBUTIONS
These are contributions that are transferred or rolled over from another
qualified plan or a conduit IRA (as described in Section 408(d)(3)(A)(ii) of the
Code).
QUALIFIED NON-ELECTIVE AND QUALIFIED MATCHING CONTRIBUTIONS
These are employer contributions made pursuant to the terms of a plan subject to
either or both of the special nondiscrimination tests applicable to plans that
are subject to Section 401(k) (qualified cash or deferred arrangements) or
Section 401(m) (applicable to plans that accept matching contributions and/or
post-tax contributions) of the Code. Such qualified non-elective and qualified
matching contributions are made by an Employer in order to meet the requirements
of either or both of the nondiscrimination tests set forth in Section 401(k) and
401(m) of the Code. This Source is called the Employer 401(k) Account in the
Master Plan.
- --------------------------------------------------------------------------------
PART 4 -- ADDITIONAL LOAN PROVISIONS
Under the MOMENTUM Contract, (1) the minimum amount of the loan is $1,000 and
(2) the maximum amount of the loan is 50% of the Participant's vested Retirement
Account Value. In no event may any plan loan be greater than $50,000 less the
highest outstanding loan balance in the preceding twelve calendar months. You
may specify from which Investment Options the plan loan is to be deducted when
you request the loan. The loan term must comply with applicable law. See the
prospectus "Part 8: Federal Tax and ERISA Matters."
If there is a loan outstanding under an EQUI-VEST Corporate Trusteed Contract
and you convert it to the MOMENTUM Contract, the retirement Account Value
established for the Participant under the MOMENTUM Contract will be equal to the
Annuity Account Value under the EQUI-VEST Contract, less the principal amount of
the loan outstanding on the effective date of conversion. That is, the annuity
Account Value under the EQUI-VEST Contract will be reduced by the principal
amount of the loan. Amounts that were in the EQUI-VEST loan reserve account in
excess of the principal balance of the loan may be withdrawn or transferred,
subject to any restrictions in the MOMENTUM Contract.
If you, as the employer, are transferring plan assets to the MOMENTUM Program,
outstanding plan loans may also be transferred to the MOMENTUM Contract. We
refer to these loans as "takeover loans." There will be no contingent withdrawal
charge imposed if a takeover loan defaults. Nor will such loans, if defaulted,
be deemed withdrawals for purposes of calculating the minimum death benefits.
Repayments of takeover loans
3
<PAGE>
will be allocated to the Guaranteed Interest Account. Loans converted from
EQUI-VEST Corporate Trusteed to MOMENTUM are not takeover loans.
- --------------------------------------------------------------------------------
PART 5 -- AUTOMATIC MINIMUM WITHDRAWAL OPTION
If you elect this feature designed for Participants age 70 1/2 or older,
described in the prospectus, each year we calculate your minimum distribution
amount by using the Retirement Account Value as of December 31 of the prior
calendar year and then calculating the minimum distribution amount based on the
various choices you make.
You may choose whether the Automatic Minimum Withdrawal Option 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, we will 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 Retirement
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 Automatic Minimum Withdrawal Option is
elected in the year in which the Participant 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.
Automatic Minimum Withdrawal Option should not be elected if the Participant
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 Automatic Minimum Withdrawal 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.
- --------------------------------------------------------------------------------
PART 6 -- 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 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
Trusts. This share value is after deduction for investment advisory fees
and other fees and direct expenses of the Trusts.
(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.
- --------------------------------------------------------------------------------
PART 7 -- CALCULATION OF ANNUITY PAYMENTS
The calculation of monthly annuity payment 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. 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
4
<PAGE>
- --------------------------------------------------------------------------------
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 guarantee
in the 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. The EQAT
Investment Funds are not available under the variable annuity distribution
option. 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 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 Retirement
Account Value 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 1997, the annuity payment due in December 1997 would
be $95.19 (the number of units (26.74) times $3.56).
The examples on the next page 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 3.5% and 5.0%,
respectively:
5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
ONE THREE FIVE TEN SINCE
BASE RATE YEAR YEARS YEARS YEARS INCEPTION
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Alliance Money Market 3.50% $717.16 $ 725.87 $ 706.23 $ 775.03 $ --
5.00% 787.16 773.69 731.23 747.74 --
Alliance Intermediate Government Securities 3.50% 728.38 778.12 747.57 -- 813.37
5.00% 799.48 829.71 774.22 -- 821.10
Alliance Quality Bond 3.50% 737.31 825.77 -- -- 734.38
5.00% 809.28 880.52 -- -- 768.93
Alliance High Yield 3.50% 798.22 1,068.47 1,162.15 1,458.07 --
5.00% 876.13 1,139.31 1,203.58 1,403.77 --
Alliance Growth & Income 3.50% 857.86 1,161.06 -- -- 1,084.51
5.00% 941.61 1,238.05 -- -- 1,135.56
Alliance Equity Index 3.50% 873.06 1,324.64 -- -- 1,286.44
5.00% 958.29 1,412.48 -- -- 1,355.14
Alliance Common Stock 3.50% 853.22 1,275.03 1,414.10 2,251.30 --
5.00% 936.51 1,359.81 1,465.79 2,179.16 --
Alliance Global 3.50% 777.03 961.08 1,214.09 1,637.45 1,396.90
5.00% 852.89 1,024.81 1,257.38 1,576.48 1,338.13
Alliance International 3.50% 712.64 -- -- -- 796.61
5.00% 782.22 -- -- -- 852.61
Alliance Aggressive Stock 3.50% 814.16 1,190.22 1,216.25 2,724.19 --
5.00% 893.65 1,268.54 1,257.07 2,610.16 --
Alliance Small Cap Growth 3.50% -- -- -- -- 780.00
5.00% -- -- -- -- 862.28
The Alliance Asset Allocation Series:
Alliance Conservative Investors 3.50% 767.80 883.47 852.64 -- 1,014.73
5.00% 842.75 942.04 883.04 -- 1,002.28
Alliance Balanced 3.50% 787.51 956.52 897.55 1,409.69 --
5.00% 864.38 1,020.08 929.93 1,363.90 --
Alliance Growth Investors 3.50% 803.39 1,038.49 1,053.33 -- 1,620.21
5.00% 881.82 1,107.35 1,090.89 -- 1,600.34
</TABLE>
- --------------------------------------------------------------------------------
PART 8 -- 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
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.
- --------------------------------------------------------------------------------
PART 9 -- 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
6
<PAGE>
- --------------------------------------------------------------------------------
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 8 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 quarterly administrative charge that is deducted
from the Alliance Money Market Fund will vary for each Participant depending
upon how the Retirement Account Value is allocated among the Investment Options.
To determine the effect of the quarterly administrative charge on the yield, we
start with the total dollar amount of the charges deducted from the Fund during
the twelve-month period ending on the last day of the prior year divided by 4.
This amount is multiplied by 7/91.25 to produce an average administrative charge
factor which is used in all weekly yield computations for the ensuing quarter.
The average administrative charge is then divided by the number of MOMENTUM
Alliance Money Market Fund Accumulation Units 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. The 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.
The seven-day current yield for the Alliance Money Market Fund was 3.88% for the
period ended December 31, 1997. The effective yield for the Alliance Money
Market Fund for that period was 3.96%. Because these yields reflect the
deduction of Separate Account expenses, including the 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 10 -- OTHER ALLIANCE YIELD INFORMATION
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 4.02% for the
Alliance Intermediate Government Securities Fund, 4.44% for the Alliance Quality
Bond Fund and 8.73% 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 11 -- 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
the Trusts 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 1290 Avenue of Americas, New York, New York 10101. MOMENTUM
is sold by Equitable Life Representatives 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
Momemtum Contract is intended to be continuous.
- --------------------------------------------------------------------------------
PART 12 -- 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
7
<PAGE>
- --------------------------------------------------------------------------------
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 allocating some or all of their Annuity or Retirement Account
Value to those Investment Funds that invest in stocks.
Growth of $1 Invested on January 1, 1957
(Values as of the 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]
Source: Ibbotson Associates, Inc. See discussion and information preceding and
following chart on next page.
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 or Retirement
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]
Source: Ibbotson Associates, Inc. See discussion and information preceding and
following chart on next page.
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 charges for HRT or EQAT, as applicable and Separate Account
charges), see "Investment Fund Performance" in Part 3 of the prospectus.
8
<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 13 -- 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 14 -- 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.
9
<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.
/s/ Price Waterhouse LLP
- ----------------------------
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
