EQUI-VEST(Reg. TM)
Employer-Sponsored Retirement Programs
TSA ADVANTAGE(SM)
SUPPLEMENT DATED MAY 3, 1999
TO THE PROSPECTUS DATED MAY 3, 1999
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This supplement adds and modifies certain information contained in the
prospectus dated May 3, 1999 for the EQUI-VEST deferred annuity contract issued
by THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES.
We offer the series 600 TSA Advantage contract to fund all Section 403(b) plans
sponsored by Section 501(c)(3) non-profit or government entities, except those
sponsored by a primary or secondary school whether or not a tax exempt entity or
a public education institution described in Section 403(b)(1)(A)(i) or (ii) of
the Internal Revenue Code, or by a post-secondary public education institution
described in Section 403(b)(1)(A)(ii) of the Internal Revenue Code with more
than 500 employees eligible to participate. For plans sponsored by a hospital or
other health care organization qualified under Section 501(c)(3) of the Internal
Revenue Code, the TSA Advantage contract will be available only when the
employer makes contributions to the plan (whether on a matching or non-elective
contribution basis). Under the TSA Advantage contract, contributions including
rollover contributions and direct transfer contributions from existing Section
403(b) plans (programs or arrangements) may be accepted only if the
contributions are fully vested under the existing TSA plan. The TSA Advantage
contract may not currently be available in your state. Your Equitable associate
can provide information about state availability.
For Section 403(b) plans offered for hospital and health care facility
employees, non-salary reduction (employer contributions) must be made. TSA
Advantage is available only to employees of employers that currently have, or
within the first contract year are expected to have, at least 50 participants.
Employees in Section 403(b) plans that do not meet these requirements are only
eligible for TSA series 100 and 200 contracts. Subject to a written agreement
between Equitable Life and an employer sponsoring a 403(b) plan that uses an
EQUI-VEST TSA Advantage contract as a funding vehicle for plan assets, Equitable
Life may reimburse that employer for certain expenses associated with that
employer's plan, for example recordkeeping or other administrative services. Any
such reimbursement will not exceed ten dollars for each EQUI-VEST TSA Advantage
contract issued to a participant of that employer's 403(b) plan.
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A participant is an individual who participates in an employer's plan funded by
an EQUI-VEST contract. The participant is also the annuitant who is the
measuring life for determining annuity benefits.
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We may at some future time, under certain circumstances and subject to
applicable law, allow a current owner of a series 100 or series 200 TSA contract
to exchange it for a TSA Advantage contract. An exchange for a TSA Advantage
contract may or may not be advantageous to you, based on all the circumstances,
including a comparison of contractual terms and conditions, and charges and
deductions. We will provide additional information upon request at such time as
exchanges may be permitted.
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See "Tax information" in the prospectus for a more detailed discussion of
sources of contributions, certain contribution limitations and other tax
information for TSA contracts.
We offer the EQUI-VEST TSA Advantage contract to purchasers on the same basis
and under the same terms and conditions described in the prospectus as those
that apply to the EQUI-VEST series 100 and 200 TSA contracts, except for certain
material differences. Terms we use in this supplement have the same meaning as
in the prospectus, unless we indicate otherwise.
Material differences between TSA Advantage and the provisions of the EQUI-VEST
TSA series 100 and 200 contracts described in the prospectus include the
information above as well as the following:
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2
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THE FOLLOWING IS ADDED TO "EQUI-VEST EMPLOYER-SPONSORED RETIREMENT PROGRAMS AT A
GLANCE - KEY FEATURES" AT THE END OF THE INFORMATION ON PAGE 11 OF THE
PROSPECTUS UNDER "FEES AND CHARGES UNDER SERIES 300 AND 400":
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Fees and charges under series 600 o Daily charge on amounts invested in variable investment
options for mortality and expense risks and other expenses
at annual rate of 1.20%.
o Annual administrative charge: $30 currently or 2% of the
account value if less ($65 maximum).
o Third party transfer or exchange: none currently ($65
maximum).
o No sales charge deducted when you make contributions.
o Withdrawal charge: 6% of the amount withdrawn or the
defaulted loan amount in the first six contract years. The
total of all withdrawal charges may not exceed 8% of all
contributions made in the first six contract years. There are
many circumstances under which the withdrawal charge
will not apply. They are discussed under "Charges and
expenses" later in this supplement.
o We also deduct a charge for taxes such as premium taxes
that may be imposed in your state. The charge is generally
deducted from the amount applied to an annuity payout
option.
o We generally deduct a $350 annuity administrative fee
from amounts applied to purchase certain life annuity
payout options.
o Annual expenses of The Hudson River Trust and EQ
Advisors Trust Portfolios are calculated as a percentage of
the average daily net assets invested in each Portfolio.
These expenses include management and advisory fees
ranging from 0.31% to 1.15% annually, other expenses,
12b-1 fees of 0.25% annually for The Hudson River Trust
and EQ Advisors Trust.
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Fee table 3
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THE FOLLOWING TABLE AND EXAMPLES ARE ADDED AFTER "IF YOU ELECT AN ANNUITY
PAYOUT OPTIONS:" ON PAGE 18 OF THE PROSPECTUS:
Fee table
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The fee table below will help you understand the various charges and expenses
that apply to the series 600 TSA Advantage contract. The table reflects charges
you will directly incur under the contract, as well as charges and expenses of
the Portfolios that you will bear indirectly. Charges for taxes, such as premium
taxes, may also apply. Also, an administrative fee may apply when your annuity
payments are to begin. Each of the charges and expenses is more fully described
under "Charges and expenses" later in this supplement. For a complete
description of Portfolio charges and expenses, please see the prospectus for The
Hudson River Trust attached at the end of this supplement and the prospectus for
EQ Advisors Trust attached at the end of the prospectus.
The guaranteed interest option discussed in the prospectus is not covered by the
fee table and examples. The only charges shown in the table that apply to the
guaranteed interest option are the withdrawal charge and the annual
administrative charge. Also, an administrative fee may apply when your annuity
payments are to begin.
EQUI-VEST SERIES 600 CONTRACTS
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CHARGES WE DEDUCT FROM YOUR VARIABLE INVESTMENT OPTIONS (SEPARATE ACCOUNT A) EXPRESSED
AS AN ANNUAL PERCENTAGE OF DAILY NET ASSETS
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Mortality and expense risk(1) 0.95%
Other expenses 0.25%
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Total Separate Account A annual expenses(2) 1.20%
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE ON EACH CONTRACT DATE ANNIVERSARY
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Annual administrative charge(3) $30
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CHARGES WE DEDUCT FROM YOUR ACCOUNT VALUE AT THE TIME YOU REQUEST CERTAIN TRANSACTIONS
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Maximum withdrawal charge(4) 6%
Third party transfer or exchange fee(5) None
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4 Fee table
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THE HUDSON RIVER TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
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INVESTMENT TOTAL
MANAGEMENT & OTHER ANNUAL
ADVISORY FEES 12B-1 FEE(6) EXPENSES EXPENSES(7)
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<S> <C> <C> <C> <C>
Alliance Aggressive Stock 0.54% 0.25% 0.03% 0.82%
Alliance Balanced 0.41% 0.25% 0.04% 0.70%
Alliance Common Stock 0.36% 0.25% 0.03% 0.64%
Alliance Conservative Investors 0.48% 0.25% 0.05% 0.78%
Alliance Equity Index 0.31% 0.25% 0.03% 0.59%
Alliance Global 0.64% 0.25% 0.07% 0.96%
Alliance Growth & Income 0.55% 0.25% 0.03% 0.83%
Alliance Growth Investors 0.51% 0.25% 0.04% 0.80%
Alliance High Yield 0.60% 0.25% 0.03% 0.88%
Alliance Intermediate
Government Securities 0.50% 0.25% 0.05% 0.80%
Alliance International 0.90% 0.25% 0.16% 1.31%
Alliance Money Market 0.35% 0.25% 0.02% 0.62%
Alliance Quality Bond 0.53% 0.25% 0.04% 0.82%
Alliance Small Cap Growth 0.90% 0.24% 0.06% 1.20%
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EQ ADVISORS TRUST ANNUAL EXPENSES
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS IN EACH PORTFOLIO)
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TOTAL
OTHER ANNUAL
INVESTMENT EXPENSES EXPENSES
MANAGEMENT & (AFTER EXPENSE (AFTER EXPENSE
ADVISORY FEES 12B-1 FEE(6) LIMITATION) LIMITATION)(8)
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<S> <C> <C> <C> <C>
MFS Emerging Growth Companies 0.55% 0.25% 0.05% 0.85%
MFS Research 0.55% 0.25% 0.05% 0.85%
Merrill Lynch Basic Value Equity 0.55% 0.25% 0.05% 0.85%
Merrill Lynch World Strategy 0.70% 0.25% 0.25% 1.20%
Morgan Stanley Emerging Markets Equity 1.15% 0.25% 0.35% 1.75%
EQ/Putnam Balanced 0.55% 0.25% 0.10% 0.90%
EQ/Putnam Growth & Income Value 0.55% 0.25% 0.05% 0.85%
T. Rowe Price Equity Income 0.55% 0.25% 0.05% 0.85%
T. Rowe Price International Stock 0.75% 0.25% 0.20% 1.20%
Warburg Pincus Small Company Value 0.65% 0.25% 0.10% 1.00%
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Fee table 5
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Notes:
(1) A portion of this charge is for providing the death benefit.
(2) The total annual expenses of the Separate Account A variable investment
options are subject to change, but are not permitted to exceed a total
annual rate of 2.00%.
(3) The charge is the lesser of $30 or 2% of account value. We reserve the
right to increase this charge to an annual maximum of $65.
(4) Deducted upon a withdrawal of amounts, or defaulted loan amounts, in
excess of the 10% free withdrawal amount. Important exceptions and
limitations may eliminate or reduce this charge.
(5) We do not currently impose a third party transfer or exchange fee.
However, we reserve the right to impose a fee in the future, but the fee
may not exceed a maximum of $65 for each occurrence.
(6) The Class 1B shares of The Hudson River Trust and EQ Advisors Trust are
subject to fees imposed under distribution plans (the "Rule 12b-1 Plans")
adopted by The Hudson River Trust and EQ Advisors Trust pursuant to Rule
12b-1 under the Investment Company Act of 1940, as amended. The 12b-1 fee
will not be increased for the life of the contracts. The Rule 12b-1 Plan
for the Alliance Small Cap Growth Portfolio provides that Equitable
Distributors, Inc. ("EDI") will receive an annual fee not to exceed the
lesser of (a) 0.25% of the average daily net assets of the Portfolio
attributable to Class 1B shares and (b) an amount that, when added to
certain other expenses of the Class 1B shares, would result in the ratio
of expenses to average daily net assets attributable to Class 1B shares
equaling 1.20%. Absent the expense limitation, the total annual expenses
for 1998 for the Alliance Small Cap Growth Portfolio would have been
1.21%.
(7) The fees and expenses shown for all Portfolios are for the year ended
December 31, 1998. The investment management and advisory fee for each
Portfolio of The Hudson River Trust may vary from year to year depending
upon the average daily net assets of the respective Portfolio. The maximum
investment management and advisory fees, however, cannot be increased
without a vote of that Portfolio's shareholders. See the prospectus for
The Hudson River Trust. The other direct operating expenses will also
fluctuate from year to year depending on actual expenses.
(8) The maximum investment management and advisory fees for each Portfolio of
EQ Advisors Trust cannot be increased without a vote of that Portfolio's
shareholders. See the prospectus for EQ Advisors Trust. The amounts shown
as "Other Expenses" will fluctuate from year to year depending on actual
expenses. However, EQ Financial Consultants, Inc. ("EQF"), EQ Advisors
Trust's manager, has entered into an expense limitation agreement with
respect to each Portfolio. Under this agreement EQF has agreed to waive or
limit its fees and assume other expenses. Under the expense limitation
agreement, total annual operating expenses of each Portfolio (other than
interest, taxes, brokerage commissions, capitalized expenditures,
extraordinary expenses and 12b-1 fees) are limited for the average daily
net assets of each Portfolio as follows: 0.60% for EQ/Putnam Growth &
Income Value, MFS Emerging Growth Companies, MFS Research, Merrill Lynch
Basic Value Equity, and T. Rowe Price Equity Income; 0.65% for EQ/Putnam
Balanced; 0.75% for Warburg Pincus Small Company Value; 0.95% for Merrill
Lynch World Strategy and T. Rowe Price International Stock; and 1.50% for
Morgan Stanley Emerging Markets Equity.
Absent the expense limitation, "Other Expenses" for 1998 on an annualized
basis for each of the Portfolios would have been as follows: 0.24% for MFS
Emerging Growth Companies, EQ/Putnam Growth and Income Value, and T. Rowe
Price Equity Income; 0.25% for MFS Research; 0.26% for Merrill Lynch Basic
Value Equity; 0.66% for Merrill Lynch World Strategy; 1.23% for Morgan
Stanley Emerging Markets Equity, 0.45% for EQ/Putnam Balanced; 0.40% for
T. Rowe Price International Stock; and 0.27% for Warburg Pincus Small
Company Value.
Each Portfolio may at a later date make a reimbursement to EQF for any of
the management fees waived or limited and other expenses assumed and paid
by EQF pursuant to the expense limitation agreement provided that, among
other things, such Portfolio has reached sufficient size to permit such
reimbursement to be made and provided that the Portfolio's current annual
operating expenses do not exceed the operating expense limit determined
for such Portfolio.
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6 Fee table
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EXAMPLES: EQUI-VEST SERIES 600 CONTRACTS
For the series 600 TSA Advantage contract, the examples show the expenses that a
hypothetical contract owner would pay in the situations illustrated. We assume a
single contribution of $1,000 is invested in one of the variable investment
options listed and a 5% annual return is earned on assets in that option. We
also assume there is no waiver of the withdrawal charge.(1) We calculate the
annual administrative charge by using the total actual annual administrative
charges from the prior year under all EQUI-VEST contracts as a percentage of the
total assets held under all EQUI-VEST contracts. The series 600 contracts were
first offered in July 1998.
These examples should not be considered a representation of past or future
expense for each option. Actual expenses may be greater or less than those
shown. Similarly, the annual rate of return assumed in the examples is not an
estimate or guarantee of future investment performance.
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IF YOU SURRENDER YOUR IF YOU DO NOT SURRENDER
CONTRACT AT YOUR CONTRACT AT
THE END OF EACH PERIOD THE END OF EACH PERIOD
SHOWN, THE SHOWN, THE
EXPENSES WOULD BE: EXPENSES WOULD BE:
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1 YEAR 3 YEARS 1 YEAR 3 YEARS
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<S> <C> <C> <C> <C>
The Hudson River Trust Options
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Alliance Aggressive Stock $77.22 $125.66 $21.69 $66.94
Alliance Balanced $76.13 $122.37 $20.54 $63.45
Alliance Common Stock $76.53 $123.56 $20.96 $64.72
Alliance Conservative Investors $76.92 $124.76 $21.38 $65.99
Alliance Equity Index $75.04 $119.07 $19.38 $59.95
Alliance Global $78.71 $130.13 $23.27 $71.69
Alliance Growth & Income $77.42 $126.25 $21.90 $67.57
Alliance Growth Investors $77.12 $125.36 $21.59 $66.62
Alliance High Yield $77.92 $127.75 $22.43 $69.16
Alliance Intermediate Government Securities $77.12 $125.36 $21.59 $66.62
Alliance International $82.19 $140.52 $26.94 $82.70
Alliance Money Market $75.34 $119.97 $19.70 $60.91
Alliance Quality Bond $77.32 $125.96 $21.80 $67.26
Alliance Small Cap Growth $81.19 $137.56 $25.89 $79.56
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EQ Advisors Trust Options
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MFS Emerging Growth Companies $77.62 $126.85 $22.11 $68.21
MFS Research $77.62 $126.85 $22.11 $68.21
Merrill Lynch Basic Value Equity $77.62 $126.85 $22.11 $68.21
Merrill Lynch World Strategy $81.09 $137.27 $25.79 $79.25
Morgan Stanley Emerging Markets Equity $86.55 $153.47 $31.56 $96.43
EQ/Putnam Balanced $78.12 $128.34 $22.64 $69.79
EQ/Putnam Growth & Income Value $77.62 $126.85 $22.11 $68.21
T. Rowe Price Equity Income $77.62 $126.85 $22.11 $68.21
T. Rowe Price International Stock $81.09 $137.27 $25.79 $79.25
Warburg Pincus Small Company Value $79.11 $131.32 $23.69 $72.95
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(1) The amount accumulated from the $1,000 contribution could not be paid in
the form of an annuity at the end of any of the periods shown in the
examples. This is because if the amount applied to purchase an annuity
payout option is less than $2,000, or the initial payment is less than
$20, we may pay the amount to you in a single sum instead of as payments
under an annuity payout option. See "Accessing your money."
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Fee table 7
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IF YOU ELECT AN ANNUITY PAYOUT OPTION:
Assuming an annuity payout option could be issued (see note (1) above), and you
elect a life annuity payout option, the expenses shown in the above example of
"if you do not surrender your contract" would, in each case, be increased by
$4.43 based on the average amount applied to annuity payout options in 1998. See
"Annuity administrative fee" under "Charges and expenses."
CONDENSED FINANCIAL INFORMATION
Please see the Appendix at the end of this supplement for unit values and number
of units outstanding as of the period shown for each of the variable investment
options.
THE FOLLOWING IS ADDED AFTER THE LAST PARAGRAPH UNDER "GUARANTEED INTEREST
OPTION" ON PAGE 36 OF THE PROSPECTUS:
We reserve the right to declare yearly guaranteed interest rates and current
interest rates for series 600 contracts that are different than the rates
declared for the other series of contracts.
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8 Charges and expenses
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THE FOLLOWING IS ADDED AFTER THE INFORMATION UNDER "ANNUITY ADMINISTRATIVE FEE"
ON PAGE 49 OF THE PROSPECTUS:
Charges and expenses
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CHARGES UNDER SERIES 600 CONTRACTS
MORTALITY AND EXPENSE RISKS CHARGE
We deduct a daily charge from the net assets in each variable investment option
to compensate us for mortality and expense risks, including the death benefit.
The daily charge is equivalent to an annual rate of 0.95% of the net assets in
each variable investment option for series 600 contracts.
The mortality risk we assume is the risk that annuitants as a group will live
for a longer time than our actuarial tables predict. If that happens, we would
be paying more in annuity benefits than we planned. We also assume a risk that
the mortality assumptions reflected in our guaranteed annuity payment tables,
shown in each contract, will differ from actual mortality experience. We may
change the actuarial basis for our guaranteed annuity payment tables, but only
for new contributions and only at five year intervals from the contract date.
Lastly, we assume a mortality risk to the extent that at the time of death, the
guaranteed death benefit exceeds the cash value of the contract. In addition, we
waive any withdrawal charge upon payment of a death benefit.
The expense risk we assume is the risk that it will cost us more to issue and
administer the contracts than we expect.
To the extent that the mortality and expense risk charges are not needed to
cover the actual expenses incurred, they may be considered an indirect
reimbursement for certain sales and promotional expenses relating to the
contracts.
CHARGE FOR OTHER EXPENSES
We deduct this daily charge from the net assets in each variable investment
option. This charge, together with the annual administrative charge described
below, is for providing administrative and financial accounting services under
the contracts. The daily charge is equivalent to a maximum annual rate of 0.25%
of net assets in each variable investment option.
MAXIMUM TOTAL CHARGES. The total annual rate for the above charges is 1.20%. We
may increase or decrease this total annual rate, but we may not increase it
above a maximum rate of 2.00%. We will only make any increase after we have sent
you advance notice. Any increase or decrease will apply only to contributions
you may make after the date of the change. Any changes we make will reflect
differences in costs and anticipated expenses, and will not be unfairly
discriminatory.
ANNUAL ADMINISTRATIVE CHARGE
We deduct an administrative charge from your account value on the last business
day of each contract year. We will deduct a pro rata portion of the charge if
you surrender your contract, elect an annuity payout option, or the annuitant
dies during the contract year. The charge is equal to $30 or, if less, 2% of
your current account value.
The charge is deducted pro rata from the variable investment options and the
guaranteed interest option, unless you tell us otherwise.
We may increase this charge if our administrative costs rise, but the charge
will never exceed $65 annually. We also may waive the administrative charge for
contracts having an account value of a specified amount on the last business day
of each contract year--currently $25,000 for TSA Advantage contracts. We reserve
the right to deduct this charge on a quarterly, rather than annual basis.
Also, we may reduce or eliminate the administrative charge when a TSA Advantage
contract is used by an employer and administrative services are performed by us
at a modified or minimum level. Any reduction or waiver we make will not be
unfairly discriminatory.
CHARGE FOR THIRD PARTY TRANSFER OR EXCHANGE
There currently is no third party transfer or exchange fee for series 600
contracts. However, we reserve the right to impose this fee in the future, but
it may not exceed a maximum of $65 per occurrence, subject to any law that
applies.
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Charges and expenses 9
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WITHDRAWAL CHARGE FOR SERIES 600 CONTRACTS
A withdrawal charge may apply in three circumstances: (1) you make one or more
withdrawals during a contract year; (2) you terminate your contract; or (3) we
terminate your contract. The amount of the charge will depend on whether the
free withdrawal amount applies, and the availability of one or more exceptions.
In order to give you the exact dollar amount of the withdrawal you request, we
deduct the amount of the withdrawal and the amount of the withdrawal charges
from your account value. Any amount deducted to pay a withdrawal charge is also
subject to a withdrawal charge.
We deduct the amount of the withdrawal and the withdrawal charge pro rata from
the variable investment options and from the guaranteed interest option. The
withdrawal charge is equal to 6% of the amount withdrawn or the defaulted loan
amount during the first six contract years. In the case of a termination, we
will pay the greater of (i) the account value after the withdrawal charge has
been imposed, or (ii) the free withdrawal amount plus 94% of the remaining
account value.
We reserve the right to change the amount of the withdrawal charge, but it will
not exceed 6% of the amount withdrawn or the defaulted loan amount. Any change
will not be unfairly discriminatory. Also, the total of all withdrawal charges
assessed will not exceed 8% of all contributions made in the first six contract
years.
10% FREE WITHDRAWAL AMOUNT. Each contract year, you can withdraw up to 10% of
your account value without paying a withdrawal charge. The 10% free withdrawal
amount is determined using your account value at the time you request a
withdrawal, minus any other withdrawals made during the contract year.
EXCEPTIONS TO THE WITHDRAWAL CHARGE. A withdrawal charge will not apply upon any
of the events listed below:
o the annuitant retires under the terms of the TSA plan, or separates from
service;
o the annuitant reaches age 59 1/2 and completes at least five contract
years;
o the annuitant dies and a death benefit is payable to the beneficiary;
o we receive a properly completed election form providing for the account
value to be used to buy a life annuity;
o the annuitant reaches age 55 and completes at least five contract years and
we receive a properly completed election form providing for the account
value to be used to buy a period certain annuity. The period certain annuity
must extend beyond the annuitant's age 59 1/2 and must not permit any
prepayment of the unpaid principal before the annuitant reaches age 59 1/2;
o the annuitant completes at least three contract years and we receive a
properly completed election form providing for the account value to be used
to buy a period certain annuity of at least 10 years which does not permit
any prepayment of the unpaid principal;
o a request is made for a refund of an excess contribution within one month of
the date on which the contribution is made;
o the annuitant has qualified to receive social security disability benefits
as certified by the Social Security Administration;
o we receive proof satisfactory to us that the annuitant's life expectancy is
six months or less (such proof must include, but is not limited to,
certification by a licensed physician);
o the annuitant has been confined to a nursing home for more than 90 days (or
such other period, if required in your state) as verified by a licensed
physician. A nursing home for this purpose means one which is (a) approved
by Medicare as a provider of skilled nursing care service, or (b) licensed
as a skilled nursing home by the state or territory in which it is located
(it must be within the United States, Puerto Rico, U.S. Virgin Islands, or
Guam) and meets all of the following:
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10 Charges and expenses
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- its main function is to provide skilled, intermediate, or custodial
nursing care;
- it provides continuous room and board to three or more persons;
- it is supervised by a registered nurse or licensed practical nurse;
- it keeps daily medical records of each patient;
- it controls and records all medications dispensed; and
- its primary service is other than to provide housing for residents.
o the annuitant elects a withdrawal that qualifies as a hardship withdrawal
under the federal income tax rules.
CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES
We deduct a charge for applicable taxes such as premium taxes that may be
imposed in your state. Generally, we deduct the charge from the amount applied
to provide an annuity payout option. The current tax charge that might be
imposed varies by state and ranges from 0% to 2.35% (1% in Puerto Rico and 5% in
the U.S. Virgin Islands).
We reserve the right to deduct any applicable charges for taxes such as premium
taxes from each contribution, or from withdrawals, or for termination of your
contract. If we have deducted any applicable charges from contributions, we will
not deduct a charge for the same taxes later. If, however, an additional tax
charge is later imposed upon us when you make a withdrawal, or your contract is
terminated, or you elect to begin receiving annuity payments, we reserve the
right to deduct a charge at that time.
ANNUITY ADMINISTRATIVE FEE
We generally deduct a fee of up to $350 from the amount to be applied to
purchase a life annuity payout option.
CHARGES THAT THE TRUSTS DEDUCT
The Hudson River Trust and EQ Advisors Trust each deduct charges for the
following types of fees and expenses:
o Investment advisory fees ranging from 0.31% to 1.15%.
o 12b-1 fees of 0.25% applicable to Class 1B shares of The Hudson River Trust
and EQ Advisors Trust.
o Operating expenses, such as trustees' fees, independent auditors' fees,
legal counsel fees, administrative service fees, custodian fees, and
liability insurance.
o Investment-related expenses, such as brokerage commissions.
These charges are reflected in the daily share price of each Portfolio. Since
shares of each trust are purchased at their net asset value, these fees and
expenses are, in effect, passed on to the variable investment options and are
reflected in their unit values. For more information about these charges, please
refer to the prospectuses for The Hudson River Trust attached at the end of this
supplement and EQ Advisors Trust following the prospectus.
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Investment performance 11
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THE FOLLOWING "INVESTMENT PERFORMANCE" INFORMATION REPLACES THE "INVESTMENT
PERFORMANCE" BEGINNING ON PAGE 81 OF THE PROSPECTUS:
Investment performance
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We provide the following tables to show five different measurements of the
investment performance of the variable investment options and/or the Portfolios
in which they invest. We include these tables because they may be of general
interest to you. THE RESULTS SHOWN REFLECT PAST PERFORMANCE. THEY DO NOT
INDICATE HOW THE VARIABLE INVESTMENT OPTIONS MAY PERFORM IN THE FUTURE. THEY
ALSO DO NOT REPRESENT THE RESULTS EARNED BY ANY PARTICULAR INVESTOR. YOUR
RESULTS WILL DIFFER.
Table 1 shows the average annual total return of the variable investment
options. Average annual total return is the annual rate of growth that would be
necessary to achieve the ending value of a contribution invested in the variable
investment options for the periods shown.
Table 2 shows the growth of a hypothetical $1,000 investment in the variable
investment options over the periods shown. Both Tables 1and 2 take into account
all fees and charges under the contract, but do not reflect the charges for any
applicable taxes such as premium taxes, or any applicable annuity administrative
fee.
Tables 3, 4 and 5 show the rates of return of the variable investment options on
an annualized, cumulative, and year-by-year basis. These tables take into
account all fees and charges under the contract, but do not reflect the annual
administrative charge and any withdrawal charge, or charges for any applicable
taxes such as premium taxes or any applicable annuity administrative fee. If the
charges were reflected they would effectively reduce the rates of return shown.
In all cases the results shown are based on the actual historical investment
experience of the Portfolios in which the variable investment options invest. In
some cases, the results shown relate to periods when the variable investment
options and/or the contracts were not available. In those cases, we adjusted the
results of the Portfolios to reflect the charges under the contracts that would
have applied had the investment options and/or contracts been available. TSA
Advantage contracts were first offered on July 30, 1998.
Finally, the results shown for the Alliance Money Market, Alliance Balanced,
Alliance Common Stock and Alliance Aggressive Stock options for periods before
those options were operated as a unit investment trust reflect the results of
the separate accounts that preceded them. The "Since Inception" figures for
these options are based on the date of inception of the preceding separate
accounts. We have adjusted these results to reflect the fee and expense
structure in effect for unit investment trust. See "The Reorganization" in the
SAI for additional information.
All rates of return presented are time-weighted and include reinvestment of
investment income, including interest and dividends.
BENCHMARKS
Tables 3 and 4 compare the performance of variable investment options to market
indices that serve as benchmarks.
Market indices are not subject to any charges for investment advisory fees,
brokerage commission or other operating expenses typically associated with a
managed portfolio. Also, they do not reflect other charges such as the mortality
and expense risks charge, administration charge, or any withdrawal charge under
the contracts. Comparisons with these benchmarks, therefore, may be 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 is likely to
select its holdings. Benchmark data reflect the reinvestment of dividend income.
The benchmarks include:
<PAGE>
- --------------------------------------------------------------------------------
12 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK: 50% Russell 2000 Small Stock Index
and 50% Standard & Poor's Mid-Cap Total Return Index.
ALLIANCE BALANCED: 50% Standard & Poor's 500 and 50% Lehman
Government/Corporate Bond Index.
ALLIANCE COMMON STOCK: Standard & Poor's 500 Index.
ALLIANCE CONSERVATIVE INVESTORS: 70% Lehman Treasury Bond
Composite Index and 30% Standard & Poor's 500 Index.
ALLIANCE EQUITY INDEX: Standard & Poor's 500 Index.
ALLIANCE GLOBAL: Morgan Stanley Capital International World Index.
ALLIANCE GROWTH & INCOME: 75% Standard & Poor's 500 Index
and 25% Value Line Convertibles Index.
ALLIANCE GROWTH INVESTORS: 30% Lehman Government/Corporate
Bond Index and 70% Standard & Poor's 500 Index.
ALLIANCE HIGH YIELD: Merrill Lynch High Yield Master Index.
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES: Lehman
Intermediate Government Bond Index.
ALLIANCE INTERNATIONAL: Morgan Stanley Capital International
Europe, Australia, Far East Index.
ALLIANCE MONEY MARKET: Salomon Brothers Three-Month T-Bill
Index.
ALLIANCE QUALITY BOND: Lehman Aggregate Bond Index.
ALLIANCE SMALL CAP GROWTH: Russell 2000 Growth Index.
MFS EMERGING GROWTH COMPANIES: Russell 2000 Index.
MFS RESEARCH: Standard & Poor's 500 Index.
MERRILL LYNCH BASIC VALUE EQUITY: Standard & Poor's 500 Index.
MERRILL LYNCH WORLD STRATEGY: 36% Standard & Poor's 500
Index/24% Morgan Stanley Capital International Europe, Australia,
Far East Index/21% Salomon Brothers U.S. Treasury Bond 1 Year+
14% Salomon Brothers World Government Bond (excluding
U.S.)/and 5% Three-Month U.S. Treasury Bill.
MORGAN STANLEY EMERGING MARKETS EQUITY: Morgan Stanley
Capital International Emerging Markets Free Price Return Index.
EQ/PUTNAM BALANCED: 60% Standard & Poor's 500 Index and 40%
Lehman Government/Corporate Bond Index.
EQ/PUTNAM GROWTH & INCOME VALUE: Standard & Poor's 500
Index.
T. ROWE PRICE EQUITY INCOME: Standard & Poor's 500 Index.
T. ROWE PRICE INTERNATIONAL STOCK: Morgan Stanley Capital
International Europe, Australia, Far East Index.
WARBURG PINCUS SMALL COMPANY VALUE: Russell 2000 Index.
LIPPER SURVEY. The Lipper Variable Insurance Products Performance Analysis
Survey (Lipper Survey) records the performance of a large group of variable
annuity 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 expenses and asset-based charges
applicable under annuity contracts. Lipper data provide a more accurate picture
than market benchmarks of the EQUI-VEST performance relative to other variable
annuity products.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 13
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 1
AVERAGE ANNUAL TOTAL RETURN UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
----------------------------------------
1 3 5
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS
- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Aggressive Stock (8.40)% 4.98% 6.46%
- -----------------------------------------------------------------------------------
Alliance Balanced 7.94% 8.95% 5.86%
- -----------------------------------------------------------------------------------
Alliance Common Stock 18.25% 21.69% 17.20%
- -----------------------------------------------------------------------------------
Alliance Conservative Investors 4.07% 4.97% 4.50%
- -----------------------------------------------------------------------------------
Alliance Equity Index 17.05% 21.71% --
- -----------------------------------------------------------------------------------
Alliance Global 11.31% 9.91% 9.31%
- -----------------------------------------------------------------------------------
Alliance Growth & Income 10.44% 16.53% 13.00%
- -----------------------------------------------------------------------------------
Alliance Growth Investors 8.04% 9.85% 8.78%
- -----------------------------------------------------------------------------------
Alliance High Yield (13.33)% 5.61% 5.08%
- -----------------------------------------------------------------------------------
Alliance Intermediate Government Securities (1.55)% 0.75% 0.67%
- -----------------------------------------------------------------------------------
Alliance International 1.04% 0.10% --
- -----------------------------------------------------------------------------------
Alliance Money Market (3.75)% (0.10)% 0.46%
- -----------------------------------------------------------------------------------
Alliance Quality Bond (0.69)% 2.14% 2.00%
- -----------------------------------------------------------------------------------
Alliance Small Cap Growth (12.57)% -- --
- -----------------------------------------------------------------------------------
MFS Emerging Growth Companies 23.21% -- --
- -----------------------------------------------------------------------------------
MFS Research 13.68% -- --
- -----------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity (0.21)% -- --
- -----------------------------------------------------------------------------------
Merrill Lynch World Strategy (2.15)% -- --
- -----------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity (33.15)% -- --
- -----------------------------------------------------------------------------------
E/Q Putnam Balanced 2.42% -- --
- -----------------------------------------------------------------------------------
E/Q Putnam Growth & Income Value 3.34% -- --
- -----------------------------------------------------------------------------------
T. Rowe Price Equity Income (0.09)% -- --
- -----------------------------------------------------------------------------------
T. Rowe Price International Stock 4.14% -- --
- -----------------------------------------------------------------------------------
Warburg Pincus Small Company Value (17.57)% -- --
- -----------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
--------------------------------------------------
SINCE SINCE PORTFOLIO
10 OPTION PORTFOLIO INCEPTION
VARIABLE INVESTMENT OPTIONS YEARS INCEPTION* INCEPTION DATE
- --------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Alliance Aggressive Stock 15.83% -- -- 5/1/84
- --------------------------------------------------------------------------------------------------
Alliance Balanced 9.04% -- -- 5/1/84
- --------------------------------------------------------------------------------------------------
Alliance Common Stock 15.14% -- -- 8/1/68
- --------------------------------------------------------------------------------------------------
Alliance Conservative Investors -- 4.69% 6.30% 10/2/89
- --------------------------------------------------------------------------------------------------
Alliance Equity Index -- 21.38% 19.64% 3/1/94
- --------------------------------------------------------------------------------------------------
Alliance Global 11.30% -- -- 8/27/87
- --------------------------------------------------------------------------------------------------
Alliance Growth & Income -- 13.20% 12.03% 10/1/93
- --------------------------------------------------------------------------------------------------
Alliance Growth Investors -- 9.22% 12.52% 10/2/89
- --------------------------------------------------------------------------------------------------
Alliance High Yield 7.61% -- -- 1/2/87
- --------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities -- 1.84% 3.45% 4/1/91
- --------------------------------------------------------------------------------------------------
Alliance International -- 1.10% 2.13% 4/3/95
- --------------------------------------------------------------------------------------------------
Alliance Money Market 2.01% -- -- 5/11/82
- --------------------------------------------------------------------------------------------------
Alliance Quality Bond -- 2.09% 1.63% 10/1/93
- --------------------------------------------------------------------------------------------------
Alliance Small Cap Growth -- (1.34)% 4.87% 5/1/97
- --------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies -- 21.32% 26.55% 5/1/97
- --------------------------------------------------------------------------------------------------
MFS Research -- 12.93% 16.54% 5/1/97
- --------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity -- 4.28% 8.60% 5/1/97
- --------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy -- (3.07)% (0.17)% 5/1/97
- --------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity -- (37.56)% (37.35)% 8/20/97
- --------------------------------------------------------------------------------------------------
E/Q Putnam Balanced -- 6.57% 8.59% 5/1/97
- --------------------------------------------------------------------------------------------------
E/Q Putnam Growth & Income Value -- 7.30% 10.16% 5/1/97
- --------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income -- 8.55% 11.21% 5/1/97
- --------------------------------------------------------------------------------------------------
T. Rowe Price International Stock -- (2.17)% (0.23)% 5/1/97
- --------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value -- (6.50)% (2.35)% 5/1/97
- --------------------------------------------------------------------------------------------------
</TABLE>
* Option inception dates are: Alliance Aggressive Stock (5/1/84), Alliance
Balanced (5/1/84), Alliance Common Stock (8/27/81), Alliance Conservative
Investors (1/4/94), Alliance Equity Index (6/1/94), Alliance Global
(1/4/94), Alliance Growth & Income (1/4/94), Alliance Growth Investors
(1/4/94), Alliance High Yield (1/4/94), Alliance Intermediate Government
Securities (6/1/94), Alliance International (9/1/95), Alliance Money
Market (5/11/82), Alliance Quality Bond (1/4/94), Alliance Small Cap
Growth (6/2/97), MFS Emerging Growth Companies (6/2/97), MFS Research
(6/2/97), Merrill Lynch Basic Value Equity (6/2/97), Merrill Lynch World
Strategy (6/2/97), Morgan Stanley Emerging Markets Equity (8/20/97),
EQ/Putnam Balanced (6/2/97), EQ/Putnam Growth & Income Value (6/2/97), T.
Rowe Price Equity Income (6/2/97), T. Rowe Price International Stock
(6/2/97), Warburg Pincus Small Company Value (6/2/97).
<PAGE>
- --------------------------------------------------------------------------------
14 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 2
GROWTH OF $1,000 UNDER A CONTRACT SURRENDERED ON DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
LENGTH OF INVESTMENT PERIOD
-----------------------------------------------------------------
SINCE
1 3 5 10 PORTFOLIO
VARIABLE INVESTMENT OPTIONS YEAR YEARS YEARS YEARS INCEPTION*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Aggressive Stock $ 916.03 $1,157.01 $1,367.26 $4,347.57 $7,407.55
- ------------------------------------------------------------------------------------------------------------------
Alliance Balanced $1,079.38 $1,293.42 $1,329.16 $2,376.23 $3,549.36
- ------------------------------------------------------------------------------------------------------------------
Alliance Common Stock $1,182.51 $1,802.21 $2,210.81 $4,093.76 --
- ------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors $1,040.66 $1,156.66 $1,246.27 -- $1,759.95
- ------------------------------------------------------------------------------------------------------------------
Alliance Equity Index $1,170.46 $1,802.90 -- -- $2,380.69
- ------------------------------------------------------------------------------------------------------------------
Alliance Global $1,113.14 $1,327.56 $1,560.83 $2,918.07 $2,648.32
- ------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income $1,104.45 $1,582.32 $1,842.30 -- $1,816.09
- ------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors $1,080.44 $1,325.70 $1,523.35 -- $2,978.20
- ------------------------------------------------------------------------------------------------------------------
Alliance High Yield $ 866.73 $1,177.81 $1,281.40 $2,082.03 $2,247.69
- ------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government Securities $ 984.52 $1,022.68 $1,034.06 -- $1,300.55
- ------------------------------------------------------------------------------------------------------------------
Alliance International $1,010.43 $1,003.08 -- -- $1,082.35
- ------------------------------------------------------------------------------------------------------------------
Alliance Money Market $ 962.52 $ 997.11 $1,023.37 $1,219.70 $1,698.08
- ------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond $ 993.14 $1,065.51 $1,104.10 -- $1,088.92
- ------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth $ 874.31 -- -- -- $1,082.61
- ------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies $1,232.13 -- -- -- $1,481.70
- ------------------------------------------------------------------------------------------------------------------
MFS Research $1,136.75 -- -- -- $1,291.19
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity $1,002.11 -- -- -- $1,147.75
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy $ 978.45 -- -- -- $1,002.78
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity $ 668.45 -- -- -- $ 527.22
- ------------------------------------------------------------------------------------------------------------------
E/Q Putnam Balanced $1,024.16 -- -- -- $1,147.54
- ------------------------------------------------------------------------------------------------------------------
E/Q Putnam Growth & Income Value $1,033.39 -- -- -- $1,175.42
- ------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income $ 999.06 -- -- -- $1,194.21
- ------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock $1,041.42 -- -- -- $1,003.92
- ------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value $ 824.30 -- -- -- $ 961.08
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolios inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 15
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SINCE
PORTFOLIO
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK (1.19)% 9.12% 9.83% 17.17% -- 15.80%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 16.33% 14.87% 15.44% -- 13.95%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 17.77% 15.56% 16.49% -- 15.78%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE BALANCED 16.43% 13.25% 9.22% 10.99% -- 10.70%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Balanced 13.48% 15.79% 13.84% 12.97% -- 13.56%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 19.02% 18.70% 16.88% 15.21% -- 15.37%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.55% 25.79% 20.17% 16.97% 17.03% 11.90%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 22.23% 18.63% 16.72% 16.30% 11.34%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% 24.06% 19.21% 17.76% 12.75%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 12.25% 9.11% 7.82% -- -- 8.42%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Income 14.20% 15.62% 14.31% -- -- 12.55%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 14.45% 13.37% -- -- 12.08%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 26.25% 25.79% -- -- -- 22.57%
- ---------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index Funds 28.05% 27.67% -- -- -- 24.31%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 28.23% -- -- -- 24.79%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 20.07% 14.24% 12.62% 13.16% -- 10.92%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 14.67% 11.98% 11.21% -- 9.64%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 17.77% 15.68% 10.66% -- 9.55%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 19.13% 20.78% 16.13% -- -- 15.18%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% 21.25% 18.35% -- -- 17.89%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 20.10% 23.99% 21.07% -- -- 20.48%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 16.54% 14.19% 12.11% -- -- 14.34%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 15.62% 14.31% -- -- 12.55%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 22.69% 19.96% -- -- 15.55%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.51)% 9.77% 8.42% 9.58% -- 8.92%
- ---------------------------------------------------------------------------------------------------------------------
Lipper High Yield (0.44)% 8.21% 7.37% 9.34% -- 8.97%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 9.11% 9.01% 11.08% -- 10.72%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT
SECURITIES 6.20% 4.73% 3.87% -- -- 5.56%
- ---------------------------------------------------------------------------------------------------------------------
Lipper U.S. Government 7.68% 6.21% 5.91% -- -- 7.25%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 6.74% 6.45% -- -- 7.60%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 8.99% 4.05% -- -- -- 5.78%
- ---------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 9.94% -- -- -- 10.74%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 9.00% -- -- -- 9.68%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE MONEY MARKET 3.82% 3.85% 3.66% 4.09% -- 5.25%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 4.87% 4.77% 5.20% -- 6.34%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 5.18% 5.11% 5.44% -- 6.41%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
16 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 3
ANNUALIZED RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
SINCE
PORTFOLIO
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE QUALITY BOND 7.13% 6.17% 5.24% -- -- 4.81%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Corporate Bond A-Rated 7.47% 6.38% 6.54% -- -- 6.21%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 8.69% 7.29% 7.27% -- -- 6.92%
- ---------------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.69)% -- -- -- -- 10.64%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Small-Cap (0.33)% -- -- -- -- 16.72%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 16.58%
- ---------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.90% -- -- -- -- 33.27%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% -- -- -- -- 22.72%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 14.53%
- ---------------------------------------------------------------------------------------------------------------------
MFS RESEARCH 22.62% -- -- -- -- 22.97%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 28.73%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- ---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 8.09% -- -- -- -- 14.58%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 21.32%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- ---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.54% -- -- -- -- 5.67%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% -- -- -- -- 11.15%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- 20.00%
- ---------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS EQUITY (27.90)% -- -- -- -- (33.48)%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- (36.28)%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (28.92)%
- ---------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 10.47% -- -- -- -- 14.57%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Balanced 14.61% -- -- -- -- 17.83%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 21.36% -- -- -- -- 23.48%
- ---------------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE 11.47% -- -- -- -- 16.23%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 21.32%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- ---------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME 7.76% -- -- -- -- 17.34%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.76% -- -- -- -- 19.07%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 31.63%
- ---------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK 12.33% -- -- -- -- 5.74%
- ---------------------------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 9.06%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 13.43%
- ---------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE (11.09)% -- -- -- -- 3.01%
- ---------------------------------------------------------------------------------------------------------------------
Lipper Small-Cap 1.53% -- -- -- -- 16.77%
- ---------------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 14.53%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolios inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 17
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK (1.19)% 29.95% 59.84% 387.82% -- 759.93%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap Growth 12.16% 58.64% 102.73% 334.88% -- 613.05%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.28% 63.35% 106.12% 360.30% -- 759.55%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE BALANCED 16.43% 45.27% 55.44% 183.58% -- 344.46%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Balanced 13.48% 55.60% 91.92% 240.69% -- 553.21%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 19.02% 67.24% 118.34% 311.86% -- 715.64%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE COMMON STOCK 27.55% 99.03% 150.65% 379.60% 2,223.36% 2,957.30%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Growth 22.86% 84.52% 138.97% 388.00% 2,185.68% 1,208.81%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% 193.91% 479.62% 2,530.43% 3,755.68%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS 12.25% 29.91% 45.74% -- -- 111.22%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Income 14.20% 55.28% 97.15% -- -- 202.48%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 15.59% 49.92% 87.28% -- -- 187.40%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX 26.25% 99.06% -- -- -- 167.54%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper S&P 500 Index Funds 28.05% 108.12% -- -- -- 186.34%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 28.58% 110.85% -- -- -- 192.17%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GLOBAL 20.07% 49.01% 81.15% 244.24% -- 224.14%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Global 14.34% 51.58% 77.94% 194.96% -- 188.08%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 24.34% 63.34% 107.19% 175.31% -- 181.57%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME 19.13% 76.21% 111.23% -- -- 109.92%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.61% 79.05% 133.95% -- -- 139.10%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.10% 90.62% 160.09% -- -- 166.00%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS 16.54% 48.89% 77.08% -- -- 245.21%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper Flexible Portfolio 14.20% 55.28% 97.15% -- -- 202.45%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 22.85% 84.68% 148.41% -- -- 280.88%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE HIGH YIELD (6.51)% 32.28% 49.83% 149.64% -- 178.62%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper High Yield (0.44)% 26.80% 43.00% 145.62% -- 182.21%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 3.66% 29.90% 53.96% 186.01% -- 239.69%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE
GOVERNMENT SECURITIES 6.20% 14.86% 20.93% -- -- 52.12%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper U.S. Government 7.68% 19.84% 33.36% -- -- 72.35%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 8.49% 21.61% 36.71% -- -- 76.55%
- ------------------------------------------------------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL 8.99% 12.66% -- -- -- 23.41%
- ------------------------------------------------------------------------------------------------------------------------------
Lipper International 13.02% 33.62% -- -- -- 47.74%
- ------------------------------------------------------------------------------------------------------------------------------
Benchmark 20.00% 29.52% -- -- -- 41.40%
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
18 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE MONEY MARKET 3.82% 11.99% 19.68% 49.28% -- 134.48%
- -----------------------------------------------------------------------------------------------------------------
Lipper Money Market 4.84% 15.34% 26.25% 66.09% -- 178.83%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 5.05% 16.35% 28.27% 69.88% -- 181.74%
- -----------------------------------------------------------------------------------------------------------------
ALLIANCE QUALITY BOND 7.13% 19.67% 29.12% -- -- 28.00%
- -----------------------------------------------------------------------------------------------------------------
Lipper Corporate Bond A-Rated 7.47% 20.42% 37.37% -- -- 37.26%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 8.69% 23.51% 42.06% -- -- 42.14%
- -----------------------------------------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH (5.69)% -- -- -- -- 18.36%
- -----------------------------------------------------------------------------------------------------------------
Lipper Small-Cap (0.33)% -- -- -- -- 28.98%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 1.23% -- -- -- -- 29.23%
- -----------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES 32.90% -- -- -- -- 61.42%
- -----------------------------------------------------------------------------------------------------------------
Lipper Mid-Cap 15.97% -- -- -- -- 42.16%
- -----------------------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 25.40%
- -----------------------------------------------------------------------------------------------------------------
MFS RESEARCH 22.62% -- -- -- -- 41.16%
- -----------------------------------------------------------------------------------------------------------------
Lipper Growth 25.82% -- -- -- -- 52.86%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -----------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY 8.09% -- -- -- -- 25.48%
- -----------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 15.59%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -----------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY 5.54% -- -- -- -- 9.63%
- -----------------------------------------------------------------------------------------------------------------
Lipper Global Flexible Portfolio 9.34% -- -- -- -- 19.41%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 19.55% -- -- -- -- 33.33%
- -----------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING
MARKETS EQUITY (27.90)% -- -- -- -- (42.71)%
- -----------------------------------------------------------------------------------------------------------------
Lipper Emerging Markets (30.50)% -- -- -- -- (45.67)%
- -----------------------------------------------------------------------------------------------------------------
Benchmark (25.34)% -- -- -- -- (36.71)%
- -----------------------------------------------------------------------------------------------------------------
EQ/PUTNAM BALANCED 10.47% -- -- -- -- 25.46%
- -----------------------------------------------------------------------------------------------------------------
Lipper Balanced 14.61% -- -- -- -- 31.59%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 21.36% -- -- -- -- 42.22%
- -----------------------------------------------------------------------------------------------------------------
EQ/PUTNAM GROWTH &
INCOME VALUE 11.47% -- -- -- -- 28.50%
- -----------------------------------------------------------------------------------------------------------------
Lipper Growth & Income 15.54% -- -- -- -- 38.49%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -----------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME 7.76% -- -- -- -- 30.56%
- -----------------------------------------------------------------------------------------------------------------
Lipper Equity Income 10.76% -- -- -- -- 33.92%
- -----------------------------------------------------------------------------------------------------------------
Benchmark 28.58% -- -- -- -- 57.60%
- -----------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 19
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 4
CUMULATIVE RATES OF RETURN FOR PERIODS ENDED DECEMBER 31, 1998 (CONTINUED)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
SINCE
1 YEAR 3 YEARS 5 YEARS 10 YEARS 20 YEARS INCEPTION*
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
T. ROWE PRICE
INTERNATIONAL STOCK 12.33% -- -- -- -- 9.75%
- -----------------------------------------------------------------------------------------------------
Lipper International 12.17% -- -- -- -- 15.88%
- -----------------------------------------------------------------------------------------------------
Benchmark 20.00% -- -- -- -- 23.42%
- -----------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL
COMPANY VALUE (11.09)% -- -- -- -- 5.07%
- -----------------------------------------------------------------------------------------------------
Lipper Small-Cap 1.53% -- -- -- -- 29.95%
- -----------------------------------------------------------------------------------------------------
Benchmark (2.54)% -- -- -- -- 25.40%
- -----------------------------------------------------------------------------------------------------
</TABLE>
- ----------
* Portfolios inception dates are shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
20 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TABLE 5
YEAR-BY-YEAR RATES OF RETURN
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
1989 1990 1991 1992 1993
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Aggressive Stock 42.82% 5.52% 84.47% (4.61)% 15.08%
- ------------------------------------------------------------------------------------------------------------------
Alliance Balanced 24.66% (1.45)% 40.11% (4.26)% 10.71%
- ------------------------------------------------------------------------------------------------------------------
Alliance Common Stock 24.12% (9.36)% 35.86% 1.72% 23.07%
- ------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors 2.73%+ 4.88% 18.16% 4.27% 9.18%
- ------------------------------------------------------------------------------------------------------------------
Alliance Equity Index -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Alliance Global 24.95% (7.49)% 28.72% (1.96)% 30.27%
- ------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income -- -- -- -- (0.62)%+
- ------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors 3.63%+ 9.01% 46.85% 3.42% 13.63%
- ------------------------------------------------------------------------------------------------------------------
Alliance High Yield 3.62% (2.54)% 22.72% 10.72% 21.42%
- ------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government
Securities -- -- 10.88%+ 4.08% 9.01%
- ------------------------------------------------------------------------------------------------------------------
Alliance International -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Alliance Money Market 7.70% 6.80% 4.69% 2.07% 1.48%
- ------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond -- -- -- -- (0.87)%+
- ------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
MFS Research -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
E/Q Putnam Balanced -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
E/Q Putnam Growth & Income Value -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value -- -- -- -- --
- ------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
1994 1995 1996 1997 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Aggressive Stock (5.24)% 29.81% 20.44% 9.20% (1.19)%
- ------------------------------------------------------------------------------------------------------------------
Alliance Balanced (9.38)% 18.07% 10.07% 13.35% 16.43%
- ------------------------------------------------------------------------------------------------------------------
Alliance Common Stock (3.58)% 30.61% 22.50% 27.37% 27.55%
- ------------------------------------------------------------------------------------------------------------------
Alliance Conservative Investors (5.50)% 18.71% 3.68% 11.62% 12.25%
- ------------------------------------------------------------------------------------------------------------------
Alliance Equity Index (0.14)%+ 34.60% 20.64% 30.69% 26.25%
- ------------------------------------------------------------------------------------------------------------------
Alliance Global 3.71% 17.14% 12.96% 9.93% 20.07%
- ------------------------------------------------------------------------------------------------------------------
Alliance Growth & Income (2.02)% 22.34% 18.37% 24.95% 19.13%
- ------------------------------------------------------------------------------------------------------------------
Alliance Growth Investors (4.56)% 24.61% 10.99% 15.11% 16.54%
- ------------------------------------------------------------------------------------------------------------------
Alliance High Yield (4.20)% 18.24% 21.15% 16.79% (6.51)%
- ------------------------------------------------------------------------------------------------------------------
Alliance Intermediate Government
Securities (5.77)% 11.73% 2.27% 5.76% 6.20%
- ------------------------------------------------------------------------------------------------------------------
Alliance International -- 9.54%+ 8.23% (4.49)% 8.99%
- ------------------------------------------------------------------------------------------------------------------
Alliance Money Market 2.53% 4.23% 3.81% 3.91% 3.82%
- ------------------------------------------------------------------------------------------------------------------
Alliance Quality Bond (6.49)% 15.38% 3.84% 7.58% 7.13%
- ------------------------------------------------------------------------------------------------------------------
Alliance Small Cap Growth -- -- -- 25.50%+ (5.69)%
- ------------------------------------------------------------------------------------------------------------------
MFS Emerging Growth Companies -- -- -- 21.45%+ 32.90%
- ------------------------------------------------------------------------------------------------------------------
MFS Research -- -- -- 15.12%+ 22.62%
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch Basic Value Equity -- -- -- 16.08%+ 8.09%
- ------------------------------------------------------------------------------------------------------------------
Merrill Lynch World Strategy -- -- -- 3.87%+ 5.54%
- ------------------------------------------------------------------------------------------------------------------
Morgan Stanley Emerging Markets Equity -- -- -- (20.54)%+ (27.90)%
- ------------------------------------------------------------------------------------------------------------------
E/Q Putnam Balanced -- -- -- 13.56%+ 10.47%
- ------------------------------------------------------------------------------------------------------------------
E/Q Putnam Growth & Income Value -- -- -- 15.28%+ 11.47%
- ------------------------------------------------------------------------------------------------------------------
T. Rowe Price Equity Income -- -- -- 21.15%+ 7.76%
- ------------------------------------------------------------------------------------------------------------------
T. Rowe Price International Stock -- -- -- (2.30)%+ 12.33%
- ------------------------------------------------------------------------------------------------------------------
Warburg Pincus Small Company Value -- -- -- 18.17%+ (11.09)%
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
+ Return for these Portfolios represent less than 12 months of performance. The
returns are as of each Portfolio's inception date as shown in Table 1.
<PAGE>
- --------------------------------------------------------------------------------
Investment performance 21
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
COMMUNICATING PERFORMANCE DATA
In reports or other communications to contract owners or in advertising
material, we may describe general economic and market conditions affecting our
variable investment options and the Portfolios and may compare the performance
or ranking of those options and the Portfolios with:
o those 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;
o other appropriate indices of investment securities and averages for peer
universes of mutual funds; or
o data developed by us derived from such indices or averages.
We also may furnish to present to prospective contract owners advertisements or
other communications that include evaluations of a variable investment option or
Portfolio by nationally recognized financial publications. Examples of such
publications are:
- --------------------------------------------------------------------------------
Barron's Money Management Letter
- --------------------------------------------------------------------------------
Morningstar's Variable Annuity Sourcebook Investment Dealers Digest
- --------------------------------------------------------------------------------
Business Week National Underwriter
- --------------------------------------------------------------------------------
Forbes Pension & Investments
- --------------------------------------------------------------------------------
Fortune USA Today
- --------------------------------------------------------------------------------
Institutional Investor Investor's Business Daily
- --------------------------------------------------------------------------------
Money The New York Times
- --------------------------------------------------------------------------------
Kiplinger's Personal Finance The Wall Street Journal
- --------------------------------------------------------------------------------
Financial Planning The Los Angeles Times
- --------------------------------------------------------------------------------
Investment Adviser The Chicago Tribune
- --------------------------------------------------------------------------------
Investment Management Weekly
- --------------------------------------------------------------------------------
Lipper Analytical Services, Inc. (Lipper) compiles performance data for peer
universes of funds with similar investment objectives in its Lipper Survey.
Morningstar, Inc. compiles similar data in the Morningstar Variable Annuity/Life
Report (Morningstar Report).
The Lipper Survey records performance data as reported to it by over 800 mutual
funds underlying variable annuity and life insurance products. It divides these
actively managed portfolios into 25 categories by portfolio objectives. The
Lipper Survey contains two different universes, which reflect different types of
fees in performance data:
o The "separate account" universe reports performance data net of investment
management fees, direct operating expenses and asset-based charges
applicable under variable insurance and annuity contracts; and
o The "mutual fund" universe reports performance net only of investment
management fees and direct operating expenses, and therefore reflects only
charges that relate to the underlying mutual fund.
The Morningstar Variable Annuity/Life Report consists of nearly 700 variable
life and annuity funds, all of which report their data net of investment
management fees, direct operating expenses and separate account level charges.
VARDS is a monthly reporting service that monitors approximately 2,500 variable
life and variable annuity funds on performance and account information.
YIELD INFORMATION
Current yield for the Alliance Money Market option will be based on net changes
in a hypothetical investment over a given seven-day period, exclusive of capital
changes, and then "annualized" (assuming that the same seven-day result would
occur each week for 52 weeks). Current yield for the other options will be based
on net changes in a hypothetical investment over a given 30-day period,
exclusive of capital changes, and then "annualized" (assuming that the same
30-day result would occur each month for 12 months).
"Effective yield" is calculated in a similar manner, but when annualized, any
income earned by the investment is assumed to be reinvested. The "effective
yield" will be slightly higher than the "current yield" because any earnings are
compounded weekly for the Alliance Money Market option.
<PAGE>
- --------------------------------------------------------------------------------
22 Investment performance
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
The yields and effective yields assume the deduction of all contract charges and
expenses other than the annual administrative charge, withdrawal charge, and any
charge for taxes such as premium tax. For more information, see "Alliance Money
Market Option Yield Information" and "Other Yield Information" in the SAI.
<PAGE>
- --------------------------------------------------------------------------------
A-1
- --------------------------------------------------------------------------------
THE FOLLOWING IS ADDED AFTER PAGE B-6 OF THE PROSPECTUS:
- --------------------------------------------------------------------------------
SERIES 600 CONTRACTS
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING FOR EACH VARIABLE INVESTMENT OPTION
- ------------------------------------------------------------------------
DECEMBER 31,
1998
- ------------------------------------------------------------------------
THE HUDSON RIVER TRUST OPTIONS
- ------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK
- ------------------------------------------------------------------------
Unit value $ 90.25
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE BALANCED
- ------------------------------------------------------------------------
Unit value $ 102.39
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE COMMON STOCK
- ------------------------------------------------------------------------
Unit value $ 102.87
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS
- ------------------------------------------------------------------------
Unit value $ 102.74
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE EQUITY INDEX
- ------------------------------------------------------------------------
Unit value $ 103.69
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE GLOBAL
- ------------------------------------------------------------------------
Unit value $ 98.37
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE GROWTH & INCOME
- ------------------------------------------------------------------------
Unit value $ 102.73
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS
- ------------------------------------------------------------------------
Unit value $ 101.93
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE HIGH YIELD
- ------------------------------------------------------------------------
Unit value $ 89.20
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES
- ------------------------------------------------------------------------
Unit value $ 103.32
- ------------------------------------------------------------------------
Number of units outstanding (000's) --
- ------------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
A-2
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SERIES 600 CONTRACTS
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING FOR EACH VARIABLE INVESTMENT OPTION
(CONTINUED)
- -------------------------------------------------------------------
DECEMBER 31,
1998
- -------------------------------------------------------------------
ALLIANCE INTERNATIONAL
- -------------------------------------------------------------------
Unit value $ 93.00
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
ALLIANCE MONEY MARKET
- -------------------------------------------------------------------
Unit value $ 101.68
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
ALLIANCE QUALITY BOND
- -------------------------------------------------------------------
Unit value $ 103.62
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH
- -------------------------------------------------------------------
Unit value $ 86.94
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
EQ ADVISORS TRUST OPTIONS
- -------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES
- -------------------------------------------------------------------
Unit value $ 103.53
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
MFS RESEARCH
- -------------------------------------------------------------------
Unit value $ 99.10
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY
- -------------------------------------------------------------------
Unit value $ 97.91
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY
- -------------------------------------------------------------------
Unit value $ 94.96
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY
- -------------------------------------------------------------------
Unit value $ 81.49
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
EQ/PUTNAM BALANCED
- -------------------------------------------------------------------
Unit value $ 101.17
- -------------------------------------------------------------------
Number of units outstanding (000's) --
- -------------------------------------------------------------------
<PAGE>
- --------------------------------------------------------------------------------
A-3
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SERIES 600 CONTRACTS
UNIT VALUES AND NUMBER OF UNITS OUTSTANDING FOR EACH VARIABLE INVESTMENT OPTION
(CONTINUED)
- --------------------------------------------------------------
DECEMBER 31,
1998
- --------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE
- --------------------------------------------------------------
Unit value $ 100.60
- --------------------------------------------------------------
Number of units outstanding (000's) -
- --------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME
- --------------------------------------------------------------
Unit value $ 101.12
- --------------------------------------------------------------
Number of units outstanding (000's) -
- --------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK
- --------------------------------------------------------------
Unit value $ 94.15
- --------------------------------------------------------------
Number of units outstanding (000's) -
- --------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE
- --------------------------------------------------------------
Unit value $ 82.88
- --------------------------------------------------------------
Number of units outstanding (000's) -
- --------------------------------------------------------------
