485BPOS 1 file002.txt RIA REGISTRATION STATEMENT ON FORM N-4 Registration No. 333-59404 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 -------------------------------------- FORM N-4 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 |_| Pre-Effective Amendment No.___ |_| Post-Effective Amendment No. 5 |X| --- AND/OR REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 |_| Amendment No.___ |_| (Check appropriate box or boxes) -------------------------------- THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (Exact Name of Registrant) -------------------------- THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (Name of Depositor) 1290 Avenue of the Americas, New York, New York 10104 (Address of Depositor's Principal Executive Offices) Depositor's Telephone Number, including Area Code: (212) 554-1234 ------------------------- DODIE KENT VICE PRESIDENT AND COUNSEL The Equitable Life Assurance Society of the United States 1290 Avenue of the Americas, New York, New York 10104 (Names and Addresses of Agents for Service) ------------------------------------------- Please send copies of all communications to: PETER E. PANARITES, ESQ Foley & Lardner Washington Harbour 3000 K Street, Northwest Washington, D.C. 20007 ---------------------------------------- Approximate Date of Proposed Public Offering: Continuous. It is proposed that this filing will become effective (check appropriate box): [_] Immediately upon filing pursuant to paragraph (b) of Rule 485. [_] On (date) pursuant to paragraph (b) of Rule 485. [_] 60 days after filing pursuant to paragraph (a)(1) of Rule 485. [X] On May 1, 2004 pursuant to paragraph (b)(1) of Rule 485. If appropriate, check the following box: [_] This post-effective amendment designates a new effective date for previously filed post-effective amendment. Title of Securities Being Registered: Units of interest in Separate Account under variable annuity contracts. Retirement Investment Account(R) PROSPECTUS DATED MAY 1, 2004 Please read this prospectus and keep it for future reference. It contains important information that you should know before purchasing, or taking any other action under a policy. Also, you should read the prospectuses for AXA Premier VIP Trust and EQ Advisors Trust which contain important information about their portfolios. -------------------------------------------------------------------------------- ABOUT THE RETIREMENT INVESTMENT ACCOUNT(R) The Retirement Investment Account(R) ("RIA") is an investment program that allows employer plan assets to accumulate on a tax-deferred basis. Thirty-two investment funds ("Funds") and a guaranteed interest option are available under RIA. The Funds and guaranteed interest option comprise the "investment options" covered by this prospectus. RIA is offered under a group annuity contract issued by The Equitable Life Assurance Society of the United States.
-------------------------------------------------------------------------------- Funds -------------------------------------------------------------------------------- Pooled separate accounts -------------------------------------------------------------------------------- o Alliance Balanced -- Separate o Alliance Common Stock -- Separate Account No. 10 Account No. 4 o Alliance Bond -- Separate o Alliance Mid Cap Growth Fund -- Account No. 13 Separate Account No. 3 -------------------------------------------------------------------------------- Separate Account No. 66 -------------------------------------------------------------------------------- o AXA Premier VIP High Yield o EQ/Evergreen Omega o EQ/Alliance Growth and Income o EQ/FI Mid Cap o EQ/Alliance Intermediate Government o EQ/FI Small/Mid Cap Value Securities o EQ/Janus Large Cap Growth o EQ/Alliance International o EQ/Lazard Small Cap Value o EQ/Alliance Premier Growth o EQ/Marsico Focus o EQ/Alliance Quality Bond o EQ/Mercury Basic Value Equity o EQ/Alliance Small Cap Growth o EQ/Mercury International Value o EQ/Bernstein Diversified Value o EQ/MFS Emerging Growth Companies o EQ/Calvert Socially Responsible o EQ/MFS Investors Trust o EQ/Capital Guardian International o EQ/Money Market o EQ/Capital Guardian Research o EQ/Putnam Growth & Income Value o EQ/Capital Guardian U.S. Equity o EQ/Putnam Voyager o EQ/Emerging Markets Equity o EQ/Technology(1) o EQ/Equity 500 Index --------------------------------------------------------------------------------
(1) Subject to shareholder approval, on or about May 14, 2004, we anticipate that the EQ/Technology investment option (the "replaced option"), which invests in a corresponding portfolio of EQ Advisors Trust, will be merged into the AXA Premier VIP Technology investment option (the "surviving option"), which invests in a corresponding portfolio of AXA Premier VIP Trust. The AXA Premier VIP Technology option will first become available under the contracts at the time that its interests replace interests in the EQ/Technology option. At that time, we will move the assets in the replaced option into the surviving option and all allocation elections to the replaced option will be considered allocations to the surviving option. The Alliance Bond, Alliance Balanced, Alliance Common Stock, and Alliance Mid Cap Growth Funds are managed by Equitable Life. The Alliance Bond Fund is available only to employer plans that signed an agreement to allocate monies in the Alliance Bond Fund before June 1, 1994. Separate Account No. 66 Funds invest in shares of a corresponding portfolio ("portfolio") of AXA Premier VIP Trust and EQ Advisors Trust (the "Trusts"). In each case, the Funds and the corresponding portfolios have the same name. You should read the prospectuses for each Trust and keep them for future reference. GUARANTEED INTEREST OPTION. The guaranteed interest option credits interest daily and we guarantee principal. Registration statements relating to this offering have been filed with the Securities and Exchange Commission ("SEC"). The Statement of Additional Information ("SAI") dated May 1, 2004, is a part of the registration statement. The SAI is available free of charge. You may request one by writing to our RIA service office or calling 1-800-967-4560. The SAI has been incorporated by reference into this prospectus. This prospectus and the SAI can also be obtained from the SEC's Website at http://www.sec.gov. The table of contents for the SAI appears at the back of this prospectus. The SEC has not approved or disapproved these securities or determined if this prospectus is accurate or complete. Any representation to the contrary is a criminal offense. The securities are not insured by the FDIC or any other agency. They are not deposits or other obligations of any bank and are not bank guaranteed. They are subject to investment risks and possible loss of principal. X00746 Contents of this prospectus -------------------------------------------------------------------------------- RETIREMENT INVESTMENT ACCOUNT(R) -------------------------------------------------------------------------------- Index of key words and phrases 4 Who is Equitable Life? 5 How to reach us 6 RIA at a glance - key features 7 -------------------------------------------------------------------------------- FEE TABLE 9 -------------------------------------------------------------------------------- Examples 11 Condensed financial information 14 -------------------------------------------------------------------------------- 1. RIA FEATURES AND BENEFITS 15 -------------------------------------------------------------------------------- Investment options 15 The Alliance Bond Fund 15 The Alliance Balanced Fund 15 The Alliance Common Stock Fund 16 The Alliance Mid Cap Growth Fund 16 Investment manager of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds 17 Funds investing in the Trusts 17 Risks of investing in the Funds 20 Risk factors -- Alliance Bond, Alliance Common Stock, Alliance Mid Cap Growth and Alliance Balanced Funds 20 Change of investment objectives 21 Guaranteed interest option 21 -------------------------------------------------------------------------------- 2. HOW WE VALUE YOUR ACCOUNT VALUE 22 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 3. TRANSFERS 23 -------------------------------------------------------------------------------- Transfers among investment options 23 Special rules applicable to the Alliance Bond Fund 23 Disruptive transfer activity 23 -------------------------------------------------------------------------------- 4. ACCESS TO YOUR ACCOUNT VALUE 25 -------------------------------------------------------------------------------- Participant loans 25 Choosing benefit payment options 25 ---------------------- When we use the words "we," "us" and "our," we mean Equitable Life. When we address the reader of this prospectus with words such as "you" and "your", we generally mean the employer or plan sponsor of the plans who use RIA as an investment vehicle, unless otherwise explained. Further, the terms and conditions of the employer's plan govern the aspects of RIA available to plan participants. Accordingly, participants also should carefully consider the features of their employer's plan, which may be different from the features of RIA described in this prospectus. 2 Contents of this prospectus -------------------------------------------------------------------------------- 5. RIA 26 -------------------------------------------------------------------------------- Summary of plan choices of RIA 26 How to make contributions 26 Selecting investment options 26 Allocating program contributions 27 -------------------------------------------------------------------------------- 6. DISTRIBUTIONS 28 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 7. OPTIONAL PARTICIPANT RECORDKEEPING SERVICES 30 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- 8. CHARGES AND EXPENSES 31 -------------------------------------------------------------------------------- Charges reflected in the unit values 31 Indirect expenses borne by the Funds 31 Charges which reduce the number of units 31 Participant recordkeeping services charge 32 Other billing arrangements 32 Individual annuity charges 32 General information on fees and charges 32 -------------------------------------------------------------------------------- 9. TAX INFORMATION 33 -------------------------------------------------------------------------------- Buying a contract to fund a retirement arrangement 33 Tax aspects of contributions to a plan 33 Tax aspects of distributions from a plan 34 Certain rules applicable to plan loans 36 Impact of taxes to Equitable Life 37 Certain rules applicable to plans designed to comply with Section 404(c) of ERISA 37 -------------------------------------------------------------------------------- 10. MORE INFORMATION 38 -------------------------------------------------------------------------------- About changes or terminations 38 IRS disqualification 38 About the separate accounts 38 Combination of certain investment options 38 About the Trusts 38 About the general account 39 When we pay proceeds 39 When transaction requests are effective 39 Voting rights 39 About legal proceedings 39 About our independent auditors 39 About the trustee 39 Reports we provide and available information 39 Acceptance and responsibilities 40 About registered units 40 Assignment and creditors' claims 40 Distribution of the contracts 40 Commissions and service fees we pay 41 -------------------------------------------------------------------------------- APPENDIX: CONDENSED FINANCIAL INFORMATION I-1 -------------------------------------------------------------------------------- -------------------------------------------------------------------------------- STATEMENT OF ADDITIONAL INFORMATION TABLE OF CONTENTS -------------------------------------------------------------------------------- Contents of this prospectus 3 Index of key words and phrases -------------------------------------------------------------------------------- Below is an index of key words and phrases used in this prospectus. The index will refer you to the page where particular terms are defined or explained. This index should help you locate more information on the terms used in this prospectus.
Page business day 22 benefit payment options 25 Code 7 contracts 23 contributions 26 CWC 31 current rate 21 disruptive transfer activity 23 DOL 26 ERISA 7 Equitable Life 5 exclusive funding employer plan 26 financial professional 40 Funds cover guaranteed interest option cover IRS 33 investment options cover market timing 23 Master Retirement Trust 26 minimum rate 21 optional participant recordkeeping service 30 PRS 7 partial funding employer plan 26 participant-directed plans 23 portfolios cover QDRO 40 RIA cover SAI cover separate accounts 38 Trusts cover, 38 trustee-directed plans 23 unit 22 unit value 22
4 Index of key words and phrases Who is Equitable Life? -------------------------------------------------------------------------------- We are The Equitable Life Assurance Society of the United States ("Equitable Life"), a New York stock life insurance corporation. We have been doing business since 1859. Equitable Life is a subsidiary of AXA Financial, Inc. (previously, The Equitable Companies Incorporated). The sole shareholder of AXA Financial, Inc. is AXA, a French holding company for an international group of insurance and related financial services companies. As the sole shareholder, and under its other arrangements with Equitable Life and Equitable Life's parent, AXA exercises significant influence over the operations and capital structure of Equitable Life and its parent. No company other than Equitable Life, however, has any legal responsibility to pay amounts that Equitable Life owes under the contract. AXA Financial, Inc. and its consolidated subsidiaries managed approximately $508.31 billion in assets as of December 31, 2003. For over 100 years Equitable Life has been among the largest insurance companies in the United States. We are licensed to sell life insurance and annuities in all fifty states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104. Effective on or about September 7, 2004, we expect, subject to regulatory approval, to change the name of "The Equitable Life Assurance Society of the United States" to "AXA Equitable Life Insurance Company." When the name change becomes effective, all references in any current prospectus, prospectus supplement or statement of additional information to "The Equitable Life Assurance Society of the United States" will become references to "AXA Equitable Life Insurance Company." Accordingly, all references to "Equitable Life" or "Equitable" will become references to "AXA Equitable." Who is Equitable Life? 5 HOW TO REACH US You may communicate with our processing office as listed below for the purposes described. Certain methods of contacting us, such as by telephone or electronically may be unavailable or delayed (for example our facsimile service may not be available at all times and/or we may be unavailable due to emergency closing). In addition, the level and type of service available may be restricted based on criteria established by us. We reserve the right to limit access to these services if we determine that you are engaged in a disruptive transfer activity, such as "market timing" (see "Disruptive transfer activity" in "Transfers" later in this prospectus). You can reach us to obtain: o Participation agreements, or enrollment or other forms used in RIA o Unit values and other values under your plan o Any other information or materials that we provide in connection with RIA INFORMATION ON JOINING RIA -------------------------------------------------------------------------------- BY PHONE: -------------------------------------------------------------------------------- 1-800-967-4560 or (201) 583-2302 (9 a.m. to 5 p.m. Eastern time) Fax: (201) 583-2304 -------------------------------------------------------------------------------- BY REGULAR MAIL: -------------------------------------------------------------------------------- RIA Service Office c/o Equitable Life 200 Plaza Drive, 1st floor Secaucus, NJ 07094 -------------------------------------------------------------------------------- BY REGISTERED, CERTIFIED, OR OVERNIGHT DELIVERY: -------------------------------------------------------------------------------- RIA Service Office c/o Equitable Life 200 Plaza Drive, 1st floor Secaucus, NJ 07094 INFORMATION ONCE YOU JOIN RIA -------------------------------------------------------------------------------- BY REGULAR MAIL: (CORRESPONDENCE): -------------------------------------------------------------------------------- Equitable Life 200 Plaza Drive, 1st floor Secaucus, NJ 07094 -------------------------------------------------------------------------------- FOR CONTRIBUTION CHECKS ONLY: -------------------------------------------------------------------------------- Equitable Life RIA/EPP P.O. Box 13503 Newark, NJ 07188 -------------------------------------------------------------------------------- FOR OVERNIGHT DELIVERY FOR CONTRIBUTION CHECKS ONLY: -------------------------------------------------------------------------------- Bank One, N.A. Processing Center 300 Harmon Meadow Boulevard, 3rd Floor Attn: Box 13503 Secaucus, NJ 07094 BY PHONE: 1-800-967-4560 (service consultants are available weekdays 9 a.m. to 5 p.m. Eastern time). To obtain pre-recorded Fund unit values, call 1-800-967-4560. No person is authorized by Equitable Life to give any information or make any representations other than those contained in this prospectus and the SAI, or in other printed or written material issued by Equitable Life. You should not rely on any other information or representation. 6 Who is Equitable Life? RIA at a glance -- key features -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------ Employer RIA is an investment program designed for employer plans that qualify for tax-favored treatment under Section plan 401(a) of the Internal Revenue Code of 1986, as amended ("Code"). Eligible employer plans include defined arrangements benefit plans, defined contribution plans or profit-sharing plans, including 401(k) plans. These employer that plans generally also must meet the requirements of the Employee Retirement Income Security Act of 1974, as use the amended ("ERISA"). RIA contract Employer plan arrangements chose RIA: o As the exclusive funding vehicle for an employer plan. If you chose this option, the annual amount of plan contributions must be at least $10,000. o As a partial investment funding vehicle for an employer plan. Under this option, the aggregate amount of contributions in the initial participation year were at least $50,000, and the annual aggregate amount of contributions thereafter must be at least $25,000. The guaranteed interest option is not available. Also, a partial funding agreement was completed. ------------------------------------------------------------------------------------------------------------------------------------ RIA features o 33 investment options. The maximum number of active investment options that may be selected at any time is 25. o Benefit distribution payments. o Optional Participant Recordkeeping Services ("PRS"), which includes participant-level recordkeeping and making benefit payments. o Available for trustee-directed or participant-directed plans. ------------------------------------------------------------------------------------------------------------- A participant-directed employer plan, is an employer plan that permits investment direction by plan participants for contribution allocations or transfers among investment options. A trustee-directed employer plan, is an employer plan that permits those same types of investment decisions only by the employer, a trustee or any named fiduciary or an authorized delegate of the plan. ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------ Contributions o Can be allocated to any one investment option or divided among them. o May be made by check or wire transfer. o Are credited on the day of receipt if accompanied by properly completed forms. ------------------------------------------------------------------------------------------------------------------------------------ Transfers among o Generally, amounts may be transferred among the investment options. investment options o There is no charge for transfers and no tax liability. o Transfers to the Alliance Bond Fund and from the guaranteed interest option may be subject to limitations. ------------------------------------------------------------------------------------------------------------------------------------ Professional The Funds are managed by professional investment advisers. investment management ------------------------------------------------------------------------------------------------------------------------------------ Guaranteed The guaranteed interest option pays interest at guaranteed rates and provides guarantees of principal. options ------------------------------------------------------------------------------------------------------------------------------------ Tax considerations o On earnings No tax until you make withdrawals under the plan. o On transfers No tax on internal transfers among the investment options. ------------------------------------------------------------------------------------------------------------- Because you are enrolling in an annuity contract that funds a qualified employer sponsored retirement arrangement, you should be aware that such annuities do not provide tax deferral benefits beyond those already provided by the Code. Before purchasing one of these annuities, you should consider whether its features and benefits beyond tax deferral meet your needs and goals. You may also want to consider the relative features, benefits and costs of these annuities with any other investment that you may use in connection with your retirement plan or arrangement. (For more information, see "Tax information" later in this prospectus.) ------------------------------------------------------------------------------------------------------------------------------------
RIA at a glance -- key features 7 ------------------------------------------------------------------------------------------------------------------------------------ Charges and expenses o Ongoing operations fee assessed against assets invested in investment options including any outstanding loan balance. o Investment management and financial accounting fees and other expenses charged on a Fund-by-Fund basis, as applicable. o No sales charges deducted from contributions, but contingent withdrawal charges may apply for non-benefit distributions. o Charges of the Trusts' portfolios for management fees and other expenses, and 12b-1 fees. o Administrative fee if you purchase an annuity payout option. o Participant recordkeeping (optional) charge per participant annual fee of $25.00. o Loan fee of 1% of loan principal amount at the time the plan loan is made. o Administrative charge for certain Funds of Separate Account No. 66. o We deduct a charge designed to approximate certain taxes that may be imposed on us, such as premium taxes in your state. This charge is generally deducted from the amount applied to an annuity payout option. ------------------------------------------------------------------------------------------------------------------------------------ Benefit o Lump sum. payment options o Installments on a time certain or dollar certain basis. o Variety of fixed annuity benefit payout options as available under an employer's plan. ------------------------------------------------------------------------------------------------------------------------------------ Additional o Participant loans (if elected by your employer; some restrictions apply). features o Quarterly reports showing: o transactions in the investment options during the quarter for the employer plan; o the number of units in the Funds credited to the employer plan; and o the unit values and/or the balances in all of the investment options as of the end of the quarter. o Automatic confirmation notice to employer/trustee following the processing of an investment option transfer. o Annual and semiannual report of the Funds. ------------------------------------------------------------------------------------------------------------------------------------
THE ABOVE IS NOT A COMPLETE DESCRIPTION OF ALL MATERIAL PROVISIONS OF THE CONTRACT. IN SOME CASES RESTRICTIONS OR EXCEPTIONS APPLY. ALSO, ALL FEATURES OF THE CONTRACT ARE NOT NECESSARILY AVAILABLE IN YOUR STATE OR AT CERTAIN AGES. For more detailed information we urge you to read the contents of this prospectus, as well as your contract. Please feel free to speak with your financial professional, or call us, if you have any questions. OTHER CONTRACTS We offer a variety of fixed and variable annuity contracts. They may offer features, including investment options, fees and/or charges that are different from those in the contracts offered by this prospectus. Not every contract is offered through the same distributor. Upon request, your financial professional can show you information regarding other Equitable Life annuity contracts that he or she distributes. You can also contact us to find out more about any of the Equitable Life annuity contracts. 8 RIA at a glance -- key features Fee table -------------------------------------------------------------------------------- The following tables describe the fees and expenses that you will pay when enrolling in, owning, and surrendering the RIA contract. The tables reflect charges that affect plan balances participating in the Funds through the group annuity contract, as well as charges you will bear directly under your contract. The table also shows charges and expenses of the portfolios of each Trust that you will bear indirectly. Each of the charges and expenses is more fully described in "Charges and expenses" later in this prospectus. The first table describes fees and expenses that you will pay at the time that you surrender the contract, make certain withdrawals, purchase an annuity payout option or take a loan from the contract. Charges designed to approximate certain taxes that may be imposed on us, such as premium taxes in your state, may also apply. We deduct no sales loads from plan contributions, and there are no transfer or exchange fees when moving assets among the investment options. Charges for certain features shown in the fee table are mutually exclusive.
------------------------------------------------------------------------------------------------------------------------------------ Charges we deduct from your account value at the time you request certain transactions: ------------------------------------------------------------------------------------------------------------------------------------ Maximum contingent withdrawal charge (as a percentage of Fund assets)(1) 6% Administrative fee if you purchase an annuity payout option $175 Loan fee (as a percentage of amount withdrawn as loan principal at the time the 1% loan is made)
The next table describes the fees and expenses that you will pay periodically during the time that you own the contract, not including underlying Trust portfolio fees and expenses.
------------------------------------------------------------------------------------------------------------------------------------ Charges we deduct from the Funds expressed as an annual percentage of daily net assets: ------------------------------------------------------------------------------------------------------------------------------------ Maximum annual ongoing operations fee (as an annual percentage of daily net 1.25% Fund assets)(2) Administrative charge (applies only to certain Funds(3) in Separate Account No. 66)(4) 0.05% Investment management and accounting fees (applies only to the Alliance Bond 0.50% Fund, Alliance Balanced Fund, Alliance Common Stock Fund and Alliance Mid Cap Growth Fund.)(4) ------------------------------------------------------------------------------------------------------------------------------------ Charges we deduct at the end of each month ------------------------------------------------------------------------------------------------------------------------------------ Annual Optional Participant Recordkeeping Services Fee(5) $25 per plan participant ------------------------------------------------------------------------------------------------------------------------------------
A proportionate share of all fees and expenses paid by a portfolio that corresponds to any variable investment option of the Trusts to which plan balances are allocated also applies. The table below shows the lowest and highest total operating expenses (as of December 31, 2003) charged by any of the portfolios. These fees and expenses are reflected in the portfolio's net asset value each day. Therefore, they reduce the investment return of the portfolio and the related variable investment option. Actual fees and expenses are likely to fluctuate from year to year. More detail concern- ing each portfolio's fees and expenses is contained in the Trust prospectus for the portfolio.
----------------------------------------------------------------------------------------------------------------------------------- Portfolio operating expenses expressed as an annual percentage of average daily net assets ----------------------------------------------------------------------------------------------------------------------------------- Total Annual Portfolio Operating Expenses for 2003 (expenses that are deducted Lowest Highest from portfolio assets including management fees, 12b-1 fees, service fees, and/or ------- ------- other expenses) 0.31% 2.28%
Fee table 9 This table shows the fees and expenses for 2003 as an annual percentage of each Portfolio's daily average net assets.
-------------------------------------------------------------------------------- Separate Account Annual Expense Administra- tive Portfolio Name Charge (3)(4) -------------------------------------------------------------------------------- AXA PREMIER VIP TRUST: -------------------------------------------------------------------------------- AXA Premier VIP High Yield 0.05% AXA Premier VIP Technology* -- -------------------------------------------------------------------------------- EQ ADVISORS TRUST: -------------------------------------------------------------------------------- EQ/Alliance Growth and Income 0.05% EQ/Alliance Intermediate Government Securities 0.05% EQ/Alliance International 0.05% EQ/Alliance Premier Growth -- EQ/Alliance Quality Bond 0.05% EQ/Alliance Small Cap Growth 0.05% EQ/Bernstein Diversified Value -- EQ/Calvert Socially Responsible -- EQ/Capital Guardian International -- EQ/Capital Guardian Research -- EQ/Capital Guardian U.S. Equity -- EQ/Emerging Markets Equity -- EQ/Equity 500 Index 0.05% EQ/Evergreen Omega -- EQ/FI Mid Cap -- EQ/FI Small/Mid Cap Value -- EQ/Janus Large Cap Growth -- EQ/Lazard Small Cap Value -- EQ/Marsico Focus -- EQ/Mercury Basic Value Equity -- EQ/Mercury International Value -- EQ/MFS Emerging Growth Companies -- EQ/MFS Investors Trust -- EQ/Money Market 0.05% EQ/Putnam Growth & Income Value -- EQ/Putnam Voyager -- EQ/Technology* -- -------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------------------------------ Trust Related Expenses Total Annual Fee Waivers Net Total Expenses and/or Annual Before Expense Expenses Management Other Expense Reimburse- After Expense Portfolio Name Fees(6) 12b-1 Fees(7) Expenses(8) Limitation ments(9) Limitations ------------------------------------------------------------------------------------------------------------------------------------ AXA PREMIER VIP TRUST: ------------------------------------------------------------------------------------------------------------------------------------ AXA Premier VIP High Yield 0.59% 0.00% 0.16% 0.75% -- 0.75% AXA Premier VIP Technology* 1.20% 0.25% 0.83% 2.28% (0.43)% 1.85% ------------------------------------------------------------------------------------------------------------------------------------ EQ ADVISORS TRUST: ------------------------------------------------------------------------------------------------------------------------------------ EQ/Alliance Growth and Income 0.57% 0.00% 0.06% 0.63% -- 0.63% EQ/Alliance Intermediate Government Securities 0.49% 0.00% 0.08% 0.57% -- 0.57% EQ/Alliance International 0.74% 0.00% 0.13% 0.87% (0.02)% 0.85% EQ/Alliance Premier Growth 0.90% 0.25% 0.05% 1.20% (0.04)% 1.16% EQ/Alliance Quality Bond 0.52% 0.00% 0.06% 0.58% -- 0.58% EQ/Alliance Small Cap Growth 0.75% 0.00% 0.07% 0.82% -- 0.82% EQ/Bernstein Diversified Value 0.64% 0.25% 0.06% 0.95% 0.00% 0.95% EQ/Calvert Socially Responsible 0.65% 0.25% 0.55% 1.45% (0.40)% 1.05% EQ/Capital Guardian International 0.85% 0.25% 0.21% 1.31% (0.11)% 1.20% EQ/Capital Guardian Research 0.65% 0.25% 0.07% 0.97% (0.02)% 0.95% EQ/Capital Guardian U.S. Equity 0.65% 0.25% 0.07% 0.97% (0.02)% 0.95% EQ/Emerging Markets Equity 1.15% 0.25% 0.40% 1.80% 0.00% 1.80% EQ/Equity 500 Index 0.25% 0.00% 0.06% 0.31% -- 0.31% EQ/Evergreen Omega 0.65% 0.25% 0.25% 1.15% (0.20)% 0.95% EQ/FI Mid Cap 0.70% 0.25% 0.08% 1.03% (0.03)% 1.00% EQ/FI Small/Mid Cap Value 0.75% 0.25% 0.10% 1.10% 0.00% 1.10% EQ/Janus Large Cap Growth 0.90% 0.25% 0.09% 1.24% (0.09)% 1.15% EQ/Lazard Small Cap Value 0.75% 0.25% 0.10% 1.10% 0.00% 1.10% EQ/Marsico Focus 0.90% 0.25% 0.07% 1.22% (0.07)% 1.15% EQ/Mercury Basic Value Equity 0.60% 0.25% 0.07% 0.92% 0.00% 0.92% EQ/Mercury International Value 0.85% 0.25% 0.16% 1.26% (0.01)% 1.25% EQ/MFS Emerging Growth Companies 0.65% 0.25% 0.07% 0.97% -- 0.97% EQ/MFS Investors Trust 0.60% 0.25% 0.11% 0.96% (0.01)% 0.95% EQ/Money Market 0.33% 0.00% 0.06% 0.39% -- 0.39% EQ/Putnam Growth & Income Value 0.60% 0.25% 0.10% 0.95% 0.00% 0.95% EQ/Putnam Voyager 0.65% 0.25% 0.13% 1.03% (0.08)% 0.95% EQ/Technology* 0.90% 0.25% 0.09% 1.24% (0.09)% 1.15% ------------------------------------------------------------------------------------------------------------------------------------
* The EQ/Technology investment option will be merged into the AXA Premier VIP Technology investment option. See "Combination of certain investment options" later in this prospectus. Notes: (1) The contingent withdrawal charge is waived in certain circumstances. The charge reduces to 2% of the amount withdrawn in the ninth participation year and cannot be imposed after the ninth anniversary of a plan's participation in RIA. (2) The annual ongoing operations fee is deducted monthly and applied on a decremental scale, declining to 0.50% on the account value over $1,000,000, except for plans that adopted RIA before February 9, 1986. (3) The Funds that have an Administrative charge are: EQ/Alliance Growth and Income, EQ/Alliance Intermediate Government Securities, EQ/Alliance International, EQ/Alliance Quality Bond, EQ/Alliance Small Cap Growth, EQ/Equity 500 Index, AXA Premier VIP High Yield and EQ/Money Market. (4) The Fund annual expenses and the Trusts' annual expenses (if applicable) are reflected in the unit value. (5) We deduct this fee on a monthly basis at the rate of $2.08 per participant. (6) The management fee for each portfolio cannot be increased without a vote of each portfolio's shareholders. See footnote (9) for any expense limitation agreement information. (7) The Class IB/B shares of each Trust are subject to fees imposed under a distribution plan adopted by each Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940. The 12b-1 fee will not be increased for the life of the contracts. 10 Fee table (8) The amount shown as "Other Expenses" will fluctuate from year to year depending on actual expenses. See footnote (9) for any expense limitation agreement information. (9) The amounts shown reflect any fee waivers and/or expense reimbursements that apply to each portfolio. A"--" indicates that there is no expense limitation in effect, and "0.00%" indicates that the expense limitation arrangement did not result in a fee waiver or reimbursement. Equitable Life, the manager of the AXA Premier VIP Trust and the EQ Advisors Trust, has entered into Expense Limitation Agreements with respect to certain portfolios, which are effective through April 30, 2005. Under these Agreements, Equitable Life has agreed to waive or limit its fees and assume other expenses of certain portfolios, if necessary, in an amount that limits such portfolio's Total Annual Expenses (exclusive of interest, taxes, brokerage commissions, capitalized expenditures and extraordinary expenses) to not more than specified amounts. Each portfolio may at a later date make a reimbursement to Equitable Life for any of the management fees waived or limited and other expenses assumed and paid by Equitable Life pursuant to the expense limitation agreement provided that the portfolio's current annual operating expenses do not exceed the operating expense limit determined for such portfolio. See the prospectuses for each applicable underlying trust for more information about the arrangements. In addition, a portion of the brokerage commissions of certain portfolios of AXA Premier VIP Trust and EQ Advisors Trust is used to reduce the applicable portfolio's expenses. If the above table reflected both the expense limitation arrangements plus the portion of the brokerage commissions used to reduce portfolio expenses, the net expenses would be as shown in the table below:
------------------------------------------------- Portfolio Name ------------------------------------------------- AXA Premier VIP Technology* 1.70% ------------------------------------------------- EQ/Alliance Growth and Income 0.60% ------------------------------------------------- EQ/Alliance Premier Growth 1.15% ------------------------------------------------- EQ/Alliance Small Cap Growth 0.78% ------------------------------------------------- EQ/Calvert Socially Responsible 1.00% ------------------------------------------------- EQ/Capital Guardian International 1.18% ------------------------------------------------- EQ/Capital Guardian Research 0.93% ------------------------------------------------- EQ/Capital Guardian U.S. Equity 0.93% ------------------------------------------------- EQ/Emerging Markets Equity 1.78% ------------------------------------------------- EQ/Evergreen Omega 0.84% ------------------------------------------------- EQ/FI Mid Cap 0.88% ------------------------------------------------- EQ/FI Small/Mid Cap Value 1.04% ------------------------------------------------- EQ/Lazard Small Cap Value 1.00% ------------------------------------------------- EQ/Marsico Focus 1.10% ------------------------------------------------- EQ/Mercury Basic Value Equity 0.91% ------------------------------------------------- EQ/Mercury International Value 1.18% ------------------------------------------------- EQ/MFS Emerging Growth Companies 0.96% ------------------------------------------------- EQ/MFS Investors Trust 0.94% ------------------------------------------------- EQ/Putnam Growth & Income Value 0.93% ------------------------------------------------- EQ/Putnam Voyager 0.93% ------------------------------------------------- EQ/Technology* 1.01% -------------------------------------------------
* The EQ/Technology investment option will be merged into the AXA Premier VIP Technology investment option. See "Combination of certain investment options" later in this prospectus. EXAMPLES These examples are intended to help you compare the cost of investing in the RIA(SM) contract with the cost of investing in other variable annuity contracts. These costs include contract owner transaction expenses, contract fees, separate account annual expenses, and underlying Trust fees and expenses. The examples below show the expenses (which expenses, including the Optional Participants Recordkeeping Services fee, are directly reflected in the participant's retirement account value) that a hypothetical contract owner would pay in the situations illustrated. For purposes of the two sets of examples below, the ongoing operations fee is computed by reference to the actual aggregate annual ongoing operations fee as a percentage of total assets by employer plans in the RIA annuity contract other than corporate plans, resulting in an estimated ongoing operations fee of $82.35 per $10,000 or $8.23 per $1,000, as applicable. The examples reflect the $25 annual charge for the Optional Participant Recordkeeping Services. We assume there is no waiver of the withdrawal charge and that no loan has been taken. The charges used in the examples are the maximum expenses rather than the lower current expenses. The guaranteed interest option is not covered by the fee table and examples. However, the ongoing operations fee, the withdrawal charge, the loan fee, the Optional Participant Recordkeeping Services fee, and the administrative fee if you purchase an annuity payout option do apply to amounts in the guaranteed interest option. These examples should not be considered a representation of past or future expenses for any 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. Fee table 11 Separate Account No. 66 example: This example assumes that you invest $10,000 in variable investment Funds of Separate Account No. 66 under the contract for the time periods indicated. The example also assumes that your investment has a 5% return each year and assumes the highest and lowest fees and expenses of any of the available portfolios of each Trust. Although your actual costs may be higher or lower, based on these assumptions, your costs would be: 12 Fee table
------------------------------------------------------------------------------------------------------- If you surrender your contract at the end of the applicable time period ------------------------------------------------------------------------------------------------------- 1 year 3 years 5 years 10 years ------------------------------------------------------------------------------------------------------- AXA PREMIER VIP TRUST: ------------------------------------------------------------------------------------------------------- AXA Premier VIP High Yield $ 734.78 $ 905.34 $ 1,076.76 $ 1,283.79 AXA Premier VIP Technology* $ 734.78 $ 905.34 $ 1,076.76 $ 1,283.79 ------------------------------------------------------------------------------------------------------- EQ ADVISOR TRUST: ------------------------------------------------------------------------------------------------------- EQ/Alliance Growth and Income $ 801.34 $ 1,111.31 $ 1,431.16 $ 2,069.50 EQ/Alliance Intermediate Government Securities $ 795.47 $ 1,093.25 $ 1,400.30 $ 2,002.29 EQ/Alliance International $ 824.84 $ 1,183.31 $ 1,553.82 $ 2,334.34 EQ/Alliance Premier Growth $ 852.24 $ 1,266.86 $ 1,695.35 $ 2,635.37 EQ/Alliance Quality Bond $ 796.45 $ 1,096.27 $ 1,405.45 $ 2,013.52 EQ/Alliance Small Cap Growth $ 819.94 $ 1,168.34 $ 1,528.37 $ 2,279.69 EQ/Bernstein Diversified Value $ 827.77 $ 1,192.29 $ 1,569.07 $ 2,367.00 EQ/Calvert Socially Responsible $ 876.72 $ 1,341.04 $ 1,820.29 $ 2,897.08 EQ/Capital Guardian International $ 863.01 $ 1,299.54 $ 1,750.49 $ 2,751.34 EQ/Capital Guardian Research $ 829.73 $ 1,198.27 $ 1,579.22 $ 2,388.72 EQ/Capital Guardian U.S. Equity $ 829.73 $ 1,198.27 $ 1,579.22 $ 2,388.72 EQ/Emerging Markets Equity $ 910.98 $ 1,444.23 $ 1,992.97 $ 3,252.52 EQ/Equity 500 Index $ 770.02 $ 1,014.75 $ 1,265.65 $ 1,706.36 EQ/Evergreen Omega $ 847.35 $ 1,251.97 $ 1,670.20 $ 2,582.24 EQ/FI Mid Cap $ 835.60 $ 1,216.19 $ 1,609.63 $ 2,453.62 EQ/FI Small/Mid Cap Value $ 842.46 $ 1,237.07 $ 1,645.00 $ 2,528.83 EQ/Janus Large Cap Growth $ 856.16 $ 1,278.75 $ 1,715.43 $ 2,677.69 EQ/Lazard Small Cap Value $ 842.46 $ 1,237.07 $ 1,645.00 $ 2,528.83 EQ/Marsico Focus $ 854.20 $ 1,272.80 $ 1,705.40 $ 2,656.55 EQ/Mercury Basic Value Equity $ 824.84 $ 1,183.31 $ 1,553.82 $ 2,334.34 EQ/Mercury International Value Equity $ 858.12 $ 1,284.69 $ 1,725.46 $ 2,698.79 EQ/MFS Emerging Growth Companies $ 829.73 $ 1,198.27 $ 1,579.22 $ 2,388.72 EQ/MFS Investors Trust $ 828.75 $ 1,195.28 $ 1,574.15 $ 2,377.87 EQ/Money Market $ 777.85 $ 1,038.95 $ 1,307.24 $ 1,798.24 EQ/Putnam Growth & Income Value $ 827.77 $ 1,192.29 $ 1,569.07 $ 2,367.00 EQ/Putnam Voyager $ 835.60 $ 1,216.19 $ 1,609.63 $ 2,453.62 EQ/Technology* $ 856.16 $ 1,278.75 $ 1,715.43 $ 2,677.69 -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- If you annuitize at the end of the applicable time period -------------------------------------------------------------------------------------------------------- 1 year 3 years 5 years 10 years -------------------------------------------------------------------------------------------------------- AXA PREMIER VIP TRUST: -------------------------------------------------------------------------------------------------------- AXA Premier VIP High Yield $ 286.47 $ 519.62 $ 767.35 $ 1,458.79 AXA Premier VIP Technology* $ 286.47 $ 519.62 $ 767.35 $ 1,458.79 -------------------------------------------------------------------------------------------------------- EQ ADVISOR TRUST: -------------------------------------------------------------------------------------------------------- EQ/Alliance Growth and Income $ 357.28 $ 737.00 $ 1,138.11 $ 2,244.50 EQ/Alliance Intermediate Government Securities $ 351.03 $ 717.94 $ 1,105.82 $ 2,177.29 EQ/Alliance International $ 382.27 $ 812.99 $ 1,266.44 $ 2,509.34 EQ/Alliance Premier Growth $ 411.43 $ 901.17 $ 1,414.51 $ 2,810.37 EQ/Alliance Quality Bond $ 352.07 $ 721.12 $ 1,111.21 $ 2,188.52 EQ/Alliance Small Cap Growth $ 377.07 $ 797.19 $ 1,239.81 $ 2,454.69 EQ/Bernstein Diversified Value $ 385.40 $ 822.46 $ 1,282.39 $ 2,542.00 EQ/Calvert Socially Responsible $ 437.46 $ 979.46 $ 1,545.23 $ 3,072.08 EQ/Capital Guardian International $ 422.88 $ 935.67 $ 1,472.20 $ 2,926.34 EQ/Capital Guardian Research $ 387.48 $ 828.78 $ 1,293.01 $ 2,563.72 EQ/Capital Guardian U.S. Equity $ 387.48 $ 828.78 $ 1,293.01 $ 2,563.72 EQ/Emerging Markets Equity $ 473.91 $ 1,088.38 $ 1,725.90 $ 3,427.52 EQ/Equity 500 Index $ 323.96 $ 635.09 $ 964.96 $ 1,881.36 EQ/Evergreen Omega $ 406.22 $ 885.46 $ 1,388.20 $ 2,757.24 EQ/FI Mid Cap $ 393.73 $ 847.69 $ 1,324.82 $ 2,628.62 EQ/FI Small/Mid Cap Value $ 401.02 $ 869.74 $ 1,361.83 $ 2,703.83 EQ/Janus Large Cap Growth $ 415.60 $ 913.72 $ 1,435.52 $ 2,852.69 EQ/Lazard Small Cap Value $ 401.02 $ 869.74 $ 1,361.83 $ 2,703.83 EQ/Marsico Focus $ 413.51 $ 907.45 $ 1,425.02 $ 2,831.55 EQ/Mercury Basic Value Equity $ 382.27 $ 812.99 $ 1,266.44 $ 2,509.34 EQ/Mercury International Value Equity $ 417.68 $ 920.00 $ 1,446.01 $ 2,873.79 EQ/MFS Emerging Growth Companies $ 387.48 $ 828.78 $ 1,293.01 $ 2,563.72 EQ/MFS Investors Trust $ 386.44 $ 825.62 $ 1,287.70 $ 2,552.87 EQ/Money Market $ 332.29 $ 660.63 $ 1,008.47 $ 1,973.24 EQ/Putnam Growth & Income Value $ 385.40 $ 822.46 $ 1,282.39 $ 2,542.00 EQ/Putnam Voyager $ 393.73 $ 847.69 $ 1,324.82 $ 2,628.62 EQ/Technology* $ 415.60 $ 913.72 $ 1,435.52 $ 2,852.69 -------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------------------------------- If you do not surrender your contract at the end of the applicable time period -------------------------------------------------------------------------------------------------------- 1 year 3 years 5 years 10 years -------------------------------------------------------------------------------------------------------- AXA PREMIER VIP TRUST: -------------------------------------------------------------------------------------------------------- AXA Premier VIP High Yield $ 111.47 $ 344.62 $ 592.35 $ 1,283.79 AXA Premier VIP Technology* $ 111.47 $ 344.62 $ 592.35 $ 1,283.79 -------------------------------------------------------------------------------------------------------- EQ ADVISOR TRUST: -------------------------------------------------------------------------------------------------------- EQ/Alliance Growth and Income $ 182.28 $ 562.00 $ 963.11 $ 2,069.50 EQ/Alliance Intermediate Government Securities $ 176.03 $ 542.94 $ 930.82 $ 2,002.29 EQ/Alliance International $ 207.27 $ 637.99 $ 1,091.44 $ 2,334.34 EQ/Alliance Premier Growth $ 236.43 $ 726.17 $ 1,239.51 $ 2,635.37 EQ/Alliance Quality Bond $ 177.07 $ 546.12 $ 936.21 $ 2,013.52 EQ/Alliance Small Cap Growth $ 202.07 $ 622.19 $ 1,064.81 $ 2,279.69 EQ/Bernstein Diversified Value $ 210.40 $ 647.46 $ 1,107.39 $ 2,367.00 EQ/Calvert Socially Responsible $ 262.46 $ 804.46 $ 1,370.23 $ 2,897.08 EQ/Capital Guardian International $ 247.88 $ 760.67 $ 1,297.20 $ 2,751.34 EQ/Capital Guardian Research $ 212.48 $ 653.78 $ 1,118.01 $ 2,388.72 EQ/Capital Guardian U.S. Equity $ 212.48 $ 653.78 $ 1,118.01 $ 2,388.72 EQ/Emerging Markets Equity $ 298.91 $ 913.38 $ 1,550.90 $ 3,252.52 EQ/Equity 500 Index $ 148.96 $ 460.09 $ 789.96 $ 1,706.36 EQ/Evergreen Omega $ 231.22 $ 710.46 $ 1,213.20 $ 2,582.24 EQ/FI Mid Cap $ 218.73 $ 672.69 $ 1,149.82 $ 2,453.62 EQ/FI Small/Mid Cap Value $ 226.02 $ 694.74 $ 1,186.83 $ 2,528.83 EQ/Janus Large Cap Growth $ 240.60 $ 738.72 $ 1,260.52 $ 2,677.69 EQ/Lazard Small Cap Value $ 226.02 $ 694.74 $ 1,186.83 $ 2,528.83 EQ/Marsico Focus $ 238.51 $ 732.45 $ 1,250.02 $ 2,656.55 EQ/Mercury Basic Value Equity $ 207.27 $ 637.99 $ 1,091.44 $ 2,334.34 EQ/Mercury International Value Equity $ 242.68 $ 745.00 $ 1,271.01 $ 2,698.79 EQ/MFS Emerging Growth Companies $ 212.48 $ 653.78 $ 1,118.01 $ 2,388.72 EQ/MFS Investors Trust $ 211.44 $ 650.62 $ 1,112.70 $ 2,377.87 EQ/Money Market $ 157.29 $ 485.63 $ 833.47 $ 1,798.24 EQ/Putnam Growth & Income Value $ 210.40 $ 647.46 $ 1,107.39 $ 2,367.00 EQ/Putnam Voyager $ 218.73 $ 672.69 $ 1,149.82 $ 2,453.62 EQ/Technology* $ 240.60 $ 738.72 $ 1,260.52 $ 2,677.69 --------------------------------------------------------------------------------------------------------
* The EQ/Technology investment option will be merged into the AXA Premier VIP Technology investment option. See "Combination of certain investment options" later in this prospectus. Fee table 13 Pooled separate account examples: These examples assume that you invest $1,000* in the variable investment Funds of the Pooled separate accounts under the contract for the time periods indicated. The examples also assume that your investment has a 5% return each year. Although your actual costs may be higher or lower, based on these assumptions, your costs would be:
------------------------------------------------------------------------------------------------------------------------------------ If you surrender your contract If you annuitize at the end of the at the end of the applicable time period applicable time period ------------------------------------------------------------------------------------------------------------------------------------ 1 year 3 years 5 years 10 years 1 year 3 years 5 years 10 years ------------------------------------------------------------------------------------------------------------------------------------ Alliance Balanced $ 99.52 $ 168.76 $ 238.26 $ 396.20 $ 213.85 $ 292.03 $ 370.87 $ 571.20 Alliance Bond $ 99.52 $ 168.76 $ 238.26 $ 396.20 $ 213.85 $ 292.03 $ 370.87 $ 571.20 Alliance Common Stock $ 99.52 $ 168.76 $ 238.26 $ 396.20 $ 213.85 $ 292.03 $ 370.87 $ 571.20 Alliance Mid Cap Growth $ 99.52 $ 168.76 $ 238.26 $ 396.20 $ 213.85 $ 292.03 $ 370.87 $ 571.20 ------------------------------------------------------------------------------------------------------------------------------------ -------------------------------------------------------------------------------- If you do not surrender your contract at the end of the applicable time period -------------------------------------------------------------------------------- 10 1 year 3 years 5 years years -------------------------------------------------------------------------------- Alliance Balanced $ 38.85 $ 117.03 $ 195.87 $ 396.20 Alliance Bond $ 38.85 $ 117.03 $ 195.87 $ 396.20 Alliance Common Stock $ 38.85 $ 117.03 $ 195.87 $ 396.20 Alliance Mid Cap Growth $ 38.85 $ 117.03 $ 195.87 $ 396.20 --------------------------------------------------------------------------------
* Assuming an annuity payout option could be issued. Generally, the minimum amount that can be used to purchase any type of annuity is $3,500 (see "Access to your plan balances"). CONDENSED FINANCIAL INFORMATION Please see the Appendix at the end of this prospectus for unit values and the number of units outstanding of each Fund available as of December 31, 2003. FINANCIAL STATEMENTS OF THE FUNDS Each of the Funds is, or is part of, one of our separate accounts as described in "About the separate accounts" under "More information" later in this prospectus. The financial statements of the Funds are contained in the SAI. The financial statements for the portfolios of each Trust are included in the SAI for each Trust. 14 Fee table 1. RIA features and benefits -------------------------------------------------------------------------------- INVESTMENT OPTIONS We offer 33 investment options under RIA, including the Funds and the guaranteed interest option. Each Fund has a different investment objective. The Funds try to meet their investment objectives by investing either in a portfolio of securities or by holding mutual fund shares. The maximum number of active investment options that can be available under any RIA annuity contract at any time is 25. We cannot assure you that any of the Funds will meet their investment objectives. You can lose your principal when investing in the Funds. In periods of poor market performance, the net return, after charges and expenses, may result in negative yields, including for the EQ/Money Market Fund. THE ALLIANCE BOND FUND OBJECTIVE The Alliance Bond Fund (Separate Account No. 13) is available only to employer plans that signed an agreement to invest monies through the RIA annuity contract in the Alliance Bond Fund before June 1, 1994. The Alliance Bond Fund seeks to achieve maximum total return, consistent with investment quality, with less volatility than a long-term bond account, by investing primarily in publicly traded fixed-income securities, such as bonds, debentures and notes. The Fund maintains its own portfolio of securities. The Alliance Bond Fund is designed for participants who seek a greater rate of return than that normally provided by money market investments and less volatility than that experienced by long-term bond investments. INVESTMENT STRATEGIES The Alliance Bond Fund invests primarily in investment grade fixed-income securities including, but not limited to, the following: obligations issued or guaranteed by the U.S. Government (such as U.S. Treasury securities), its agencies (such as the Government National Mortgage Association), or instrumentalities (such as the Federal National Mortgage Association); corporate debt securities; mortgage pass-through securities; collateralized mortgage obligations; asset-backed securities; zero coupon bonds; and equipment trust certificates. The Fund may also purchase 144A restricted securities. Investment grade securities are those rated within the four highest credit categories (AAA, AA, A or BBB) by Standard & Poor's Corp. ("S&P") or (Aaa, Aa, A or Baa) by Moody's Investors Service, Inc. ("Moody's"), or, if unrated, are of comparable investment quality as determined by our credit analysis. Bonds rated below A by S&P or Moody's are more susceptible to adverse economic conditions or changing circumstances than those rated A or higher, but we regard these lower-rated bonds as having an adequate capacity to pay principal and interest. The weighted average duration of the Fund's total portfolio is expected to be close to that of the Lehman Intermediate Government/Credit Index. Duration is a principle used in selecting portfolio securities that indicates a particular fixed-income security's price volatility. Duration is measured by taking into account (1) all of the expected payments relating to that security and (2) the time in the future when each payment will be made, and then weighting all such times by the present value of the corresponding payments. The duration of a fixed-income security with interest payments occurring prior to its maturity is always shorter than its term to maturity (except in the case of a zero coupon security). In addition, given identical maturities, the lower the stated rate of interest of a fixed-income security, the longer its duration, and, conversely, the higher the stated rate of interest of a fixed-income security, the shorter its duration. We believe that the Alliance Bond Fund's policy of purchasing intermediate duration bonds significantly reduces the volatility of the Fund's unit price over that of a long-term bond account. Additionally, the Alliance Bond Fund also may invest in high-quality money market securities, including, but not limited to, obligations of the U.S. Government, its agencies and instrumentalities; negotiable certificates of deposit; banker's acceptances or bank time deposits; repurchase agreements; master demand notes; and other money market instruments. For temporary or defensive purposes, the Alliance Bond Fund also may invest in money market securities without limitation. Finally, the Alliance Bond Fund may purchase fixed-income securities and money market securities having adjustable rates of interest with periodic demand features. The Alliance Bond Fund also may purchase fixed-income securities and certain money market securities on a when-issued or delayed delivery basis. RISKS OF INVESTMENT STRATEGIES See "Risks of investing in the Funds" later in this Prospectus, for information on the risks associated with an investment in the Funds generally, and in the Alliance Bond Fund specifically. THE ALLIANCE BALANCED FUND OBJECTIVES The Alliance Balanced Fund (Separate Account No. 10) seeks both appreciation of capital and current income by investing in a diversified portfolio of common stocks, other equity-type securities and longer-term fixed income securities. The Fund also seeks current income by investing in publicly traded debt securities and short-term money market instruments. The Fund maintains its own portfolio of securities. INVESTMENT STRATEGIES The Alliance Balanced Fund varies the portion of its assets invested in each type of security in accordance with our evaluation of economic conditions, the general level of common stock prices, anticipated interest rates and other relevant considerations, including our assessment of the risks associated with each investment medium. In general, the Fund invests the greatest portion of its assets in equity securities. During each of the past ten years, the Fund invested RIA features and benefits 15 between 43% and 86% of its assets in equity securities, including equity-type securities such as convertible preferred stocks or convertible debt instruments. The Fund's investment in non-money market debt securities consists primarily of (a) publicly traded securities issued or guaranteed by the United States Government or its agencies or instrumentalities and (b) corporate fixed-income securities, including, but not limited to, sovereign debt, bank obligations, notes, asset-backed securities, mortgage pass-through obligations, collateralized mortgage obligations, zero coupon bonds, and preferred stock. The Fund may also buy debt securities with equity features such as conversion or exchange rights, warrants for the acquisition of stock, or participations based on revenues, sales or profits. The Fund only invests in investment grade non-money market debt securities, i.e., those rated, at the time of acquisition, BBB or higher by S&P or Baa or higher by Moody's or, if unrated, are of comparable investment quality. The average maturity of the debt securities held by the Fund varies according to market conditions and the stage of interest rate cycles. The Fund may realize gains on debt securities when such actions are considered advantageous in light of existing market conditions. The Fund also may invest (a) up to 10% of its total assets in restricted securities; (b) in foreign securities without substantial business in the United States; (c) in repurchase agreements; and (d) in money market securities. The Fund may also purchase and sell securities on a when-issued or delayed delivery basis. Finally, the Fund may (a) invest in put and call options and (b) trade in stock index or interest rate futures, and foreign currency forward contracts, for hedging purposes only. In option transactions, the economic benefit will be offset by the cost of the option, while any loss would be limited to such cost. The Fund also enters into hedging transactions. These transactions are undertaken only when any required regulatory procedures have been completed and when economic and market conditions indicate that such transactions would serve the best interests of the Fund. RISKS OF INVESTMENT STRATEGIES See "Risks of investing in the Funds" later in this prospectus, for information on the risks associated with an investment in the Funds generally, and in the Alliance Balanced Fund specifically. THE ALLIANCE COMMON STOCK FUND OBJECTIVE The Alliance Common Stock Fund seeks to achieve long-term growth of capital by investing in the securities of companies that we believe will share in the growth of our nation's economy -- and those of other leading industrialized countries -- over a long period. The Fund maintains its own portfolio of securities. INVESTMENT STRATEGIES The Alliance Common Stock Fund (Separate Account No. 4) invests primarily in common stock. The Fund generally invests in securities of intermediate and large sized companies, but may invest in stocks of companies of any size. At times the Fund may invest its equity holdings in a relatively small number of issuers, provided that no investment when made causes more than 10% of the Fund's assets to be invested in the securities of one issuer. The Alliance Common Stock Fund also may invest smaller amounts in other equity-type securities, such as convertible preferred stocks or convertible debt instruments. The Fund also may invest in non-equity investments, including non-participating and non-convertible preferred stocks, bonds and debentures. The Fund also may invest up to 15% of its total assets in foreign securities (securities of established foreign companies without substantial business in the United States). The Alliance Common Stock Fund may make temporary investments in government obligations, short-term commercial paper and other money market instruments. RISKS OF INVESTMENT STRATEGIES See "Risks of investing in the Funds" later in this prospectus, for information on the risks associated with an investment in the Funds generally, and in the Alliance Common Stock Fund specifically. THE ALLIANCE MID CAP GROWTH FUND OBJECTIVE The Alliance Mid Cap Growth Fund (Separate Account No. 3) seeks to achieve long-term capital growth through a diversified portfolio of equity securities. The account will attempt to achieve this objective by investing primarily in the common stock of medium-sized companies which have the potential to grow faster than the general economy and to grow into much larger companies. INVESTMENT STRATEGIES The Alliance Mid Cap Growth Fund is actively managed to obtain excess return versus the Russell Mid Cap Growth Index. The Fund invested at least 80% of its total assets in the common stock of companies with medium capitalizations at the time of the Fund's investment, similar to the market capitalizations of companies in the Russell Mid Cap Growth Index. Companies whose capitalizations no longer meet this definition after purchase continue to be considered to have a medium market capitalization for purposes of the 80% policy. If deemed appropriate, in order to meet the investment objectives, the Fund may invest in companies in cyclical industries as well as in securities that the adviser believes are temporarily undervalued. The Fund may also invest in foreign companies without substantial business in the United States. The Fund may also invest in convertible preferred stocks, convertible debt securities and short-term debt securities such as corporate notes, and temporarily invest in money market instruments. Additionally, the Fund may invest up to 10% of its total assets in restricted securities. The Fund attempts to generate excess return by taking active risk in security selection, and implementing a "bottom up" stock selection approach, looking for companies with unique growth potential. Economic sector allocation will also be taken into consideration, and the account may often be concentrated in industries where research resources indicate there is high growth potential. The Fund is fully invested. 16 RIA features and benefits RISKS OF INVESTMENT STRATEGIES See "Risks of investing in the Funds" later in this Prospectus, for information on the risks associated with an investment in the Funds generally, and in the Alliance Mid Cap Growth Fund specifically. Note, however, that due to the Alliance Mid Cap Growth Fund's investment policies, this Fund provides greater growth potential and greater risk than the Alliance Bond, Alliance Common Stock and Alliance Balanced Funds. As a result, you should consider limiting the amount allocated to this Fund, particularly as you near retirement. INVESTMENT MANAGER OF THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE COMMON STOCK AND ALLIANCE MID CAP GROWTH FUNDS We manage the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds. We currently use the personnel and facilities of Alliance Capital Management L.P. ("Alliance") for portfolio management, securities selection and transaction services. We are the majority-owners of Alliance, a limited partnership. We and Alliance are each registered investment advisers under the Investment Advisers Act of 1940, as amended. Alliance acts as investment adviser to various separate accounts and general accounts of Equitable Life and other affiliated insurance companies. Alliance also provides investment management and advisory services to mutual funds, endowment funds, insurance companies, foreign entities, qualified and non-tax qualified corporate funds, public and private pension and profit-sharing plans, foundations and tax-exempt organizations. As of December 31, 2003 Alliance had total assets under management of approximately $475 billion. Alliance's main office is located at 1345 Avenue of the Americas, New York, New York 10105. The Investment Committee of our Board of Directors must authorize or approve the securities held in the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds. Subject to the Investment Committee's broad supervisory authority, our investment officers and managers have complete discretion over the assets of these Funds and have been given discretion as to sales and, within specified limits, purchases of stocks, other equity securities and certain debt securities. When an investment opportunity arises that is consistent with the objectives of more than one account, we allocate investment opportunities among accounts in an impartial manner based on certain factors such as investment objective and current investment and cash positions. FUNDS INVESTING IN THE TRUSTS The Funds of Separate Account No. 66 invest in corresponding portfolios of AXA Premier VIP Trust and EQ Advisors Trust. The investment results you will experience in any one of those Funds will depend on the investment performance of the corresponding portfolios. The table below shows the names of the corresponding portfolios, their investment objectives, and their advisers. RIA features and benefits 17 PORTFOLIOS OF THE TRUSTS You should note that some portfolios have objectives and strategies that are substantially similar to those of certain retail funds that are purchased directly rather than under a variable insurance product such as Retirement Investment Account variable annuity. These funds may even have the same manager(s) and/or a similar name. However, there are numerous factors that can contribute to differences in performance between two investments, particularly over short periods of time. Such factors include the timing of stock purchases and sales; differences in fund cash flows; and specific strategies employed by the portfolio manager.
------------------------------------------------------------------------------------------------------------------------------------ AXA Premier VIP Trust Portfolio Name Objective Adviser(s) ------------------------------------------------------------------------------------------------------------------------------------ AXA PREMIER VIP HIGH YIELD Seeks high total return through a combination of current o Alliance Capital Management L.P. income and capital appreciation. o Pacific Investment Management Company LLC ------------------------------------------------------------------------------------------------------------------------------------ AXA PREMIER VIP TECHNOLOGY* Seeks long-term growth of capital. o Firsthand Capital Management, Inc. o RCM Capital Management LLC o Wellington Management Company, LLP ------------------------------------------------------------------------------------------------------------------------------------ EQ Advisors Trust Portfolio Name Objective Adviser(s) ------------------------------------------------------------------------------------------------------------------------------------ EQ/ALLIANCE GROWTH AND Seeks to provide a high total return. o Alliance Capital Management L.P. INCOME ------------------------------------------------------------------------------------------------------------------------------------ EQ/ALLIANCE INTERMEDIATE Seeks to achieve high current income consistent with o Alliance Capital Management L.P. GOVERNMENT SECURITIES relative stability of principal. ------------------------------------------------------------------------------------------------------------------------------------ EQ/ALLIANCE INTERNATIONAL Seeks to achieve long-term growth of capital. o Alliance Capital Management L.P. ------------------------------------------------------------------------------------------------------------------------------------ EQ/ALLIANCE PREMIER GROWTH Seeks to achieve long-term growth of capital. o Alliance Capital Management L.P. ------------------------------------------------------------------------------------------------------------------------------------ EQ/ALLIANCE QUALITY BOND Seeks to achieve high current income consistent with o Alliance Capital Management L.P. moderate risk to capital. ------------------------------------------------------------------------------------------------------------------------------------ EQ/ALLIANCE SMALL CAP Seeks to achieve long-term growth of capital. o Alliance Capital Management L.P. GROWTH ------------------------------------------------------------------------------------------------------------------------------------ EQ/BERNSTEIN DIVERSIFIED VALUE Seeks capital appreciation. o Alliance Capital Management L.P., through its Bernstein Investment Research and Management Unit ------------------------------------------------------------------------------------------------------------------------------------ EQ/CALVERT SOCIALLY Seeks long-term capital appreciation. o Calvert Asset Management Company, Inc. RESPONSIBLE and Brown Capital Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ EQ/CAPITAL GUARDIAN To achieve long-term growth of capital. o Capital Guardian Trust Company INTERNATIONAL ------------------------------------------------------------------------------------------------------------------------------------ EQ/CAPITAL GUARDIAN Seeks to achieve long-term growth of capital. o Capital Guardian Trust Company RESEARCH ------------------------------------------------------------------------------------------------------------------------------------ EQ/CAPITAL GUARDIAN U.S. Seeks to achieve long-term growth of capital. o Capital Guardian Trust Company EQUITY ------------------------------------------------------------------------------------------------------------------------------------ EQ/EMERGING MARKETS EQUITY Seeks long-term capital appreciation. o Morgan Stanley Investment Management, Inc. ------------------------------------------------------------------------------------------------------------------------------------ EQ/EQUITY 500 INDEX Seeks a total return before expenses that approximates o Alliance Capital Management L.P. the total return performance of the S&P 500 Index, including reinvestment of dividends, at a risk level consistent with that of the S&P 500 Index. ------------------------------------------------------------------------------------------------------------------------------------
18 RIA features and benefits Portfolios of the Trusts (continued)
------------------------------------------------------------------------------------------------------------------------------------ EQ Advisors Trust Portfolio Name Objective Adviser(s) ------------------------------------------------------------------------------------------------------------------------------------ EQ/EVERGREEN OMEGA Seeks long-term capital growth. o Evergreen Investment Management Company, LLC ------------------------------------------------------------------------------------------------------------------------------------ EQ/FI MID CAP Seeks long-term growth of capital. o Fidelity Management & Research Company ------------------------------------------------------------------------------------------------------------------------------------ EQ/FI SMALL/MID CAP VALUE Seeks long-term capital appreciation. o Fidelity Management & Research Company ------------------------------------------------------------------------------------------------------------------------------------ EQ/JANUS LARGE CAP GROWTH Seeks long-term growth of capital. o Janus Capital Management LLC ------------------------------------------------------------------------------------------------------------------------------------ EQ/LAZARD SMALL CAP VALUE Seeks capital appreciation. o Lazard Asset Management, LLC ------------------------------------------------------------------------------------------------------------------------------------ EQ/MARSICO FOCUS Seeks long-term growth of capital. o Marsico Capital Management, LLC ------------------------------------------------------------------------------------------------------------------------------------ EQ/MERCURY BASIC VALUE Seeks capital appreciation and secondarily, income. o Mercury Advisors EQUITY ------------------------------------------------------------------------------------------------------------------------------------ EQ/MERCURY INTERNATIONAL Seeks capital appreciation. o Merrill Lynch Investment Managers VALUE International Limited ------------------------------------------------------------------------------------------------------------------------------------ EQ/MFS EMERGING GROWTH Seeks to provide long-term capital growth. o MFS Investment Management COMPANIES ------------------------------------------------------------------------------------------------------------------------------------ EQ/MFS INVESTORS TRUST Seeks long-term growth of capital with secondary objec- o MFS Investment Management tive to seek reasonable current income. ------------------------------------------------------------------------------------------------------------------------------------ EQ/MONEY MARKET Seeks to obtain a high level of current income, preserve o Alliance Capital Management L.P. its assets and maintain liquidity. ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM GROWTH & INCOME Seeks capital growth. Current income is a secondary o Putnam Investment Management, LLC VALUE objective. ------------------------------------------------------------------------------------------------------------------------------------ EQ/PUTNAM VOYAGER Seeks long-term growth of capital and any increased o Putnam Investment Management, LLC income that results from this growth. ------------------------------------------------------------------------------------------------------------------------------------ EQ/TECHNOLOGY* Seeks to achieve long-term growth of capital. o Firsthand Capital Management, Inc. o RCM Capital Management LLC o Wellington Management Company, LLP ------------------------------------------------------------------------------------------------------------------------------------
* The EQ/Technology investment option will be merged into the AXA Premier VIP Technology investment option. See "Combination of certain investment options" later in this prospectus. You should consider the investment objectives, risks, and charges and expenses of the Portfolios carefully before investing. The prospectuses for the Trusts contain this and other important information about the Portfolios. The prospectuses should be read carefully before investing. RIA features and benefits 19 RISKS OF INVESTING IN THE FUNDS All of the Funds invest in securities of one type or another. You should be aware that any investment in securities carries with it a risk of loss, and you could lose money investing in the Funds. The different investment objectives and policies of each Fund may affect the return of each Fund and the risks associated with an investment in that Fund. Additionally, market and financial risks are inherent in any securities investment. By market risks, we mean factors which do not necessarily relate to a particular issuer, but affect the way markets, and securities within those markets, perform. Market risks can be described in terms of volatility, that is, the range and frequency of market value changes. Market risks include such things as changes in interest rates, general economic conditions and investor perceptions regarding the value of debt and equity securities. By financial risks we mean factors associated with a particular issuer which may affect the price of its securities, such as its competitive posture, its earnings and its ability to meet its debt obligations. Both the financial and market risks of an investment in the Alliance Bond Fund are expected to be less than those for the Alliance Common Stock, Alliance Balanced and Alliance Mid Cap Growth Funds. The risk factors associated with an investment in the Alliance Bond, Alliance Common Stock, Alliance Mid Cap Growth and Alliance Balanced Funds are described below. See the SAI for additional information regarding certain investment techniques used by these Funds. See the prospectus for each Trust for risk factors and investment techniques associated with the portfolios in which the other Funds invest. RISK FACTORS -- ALLIANCE BOND, ALLIANCE COMMON STOCK, ALLIANCE MID CAP GROWTH AND ALLIANCE BALANCED FUNDS COMMON STOCK. Investing in common stocks and related securities involves the risk that the value of the stocks or related securities purchased will fluctuate. These fluctuations could occur for a single company, an industry, a sector of the economy, or the stock market as a whole. These fluctuations could cause the value of the Fund's investments -- and, therefore, the value of the Fund's units -- to fluctuate. SECURITIES OF MEDIUM AND SMALLER SIZED COMPANIES. The Alliance Mid Cap Growth Fund invests primarily in the securities of medium-sized companies. The Alliance Common Stock and Alliance Balanced Funds may also make these investments, as well as investments in smaller-sized companies. The securities of small and medium- sized, less mature, lesser known companies involve greater risks than those normally associated with larger, more mature, well-known companies. Therefore, consistent earnings may not be as likely in small companies as in large companies. The Funds also run a risk of increased and more rapid fluctuations in the value of its investments in securities of small or medium-sized companies. This is due to the greater business risks of small-size and limited product lines, markets, distribution channels, and financial and managerial resources. Historically, the price of small (less than $1 billion) and medium (between $1 and $15 billion) capitalization stocks and stocks of recently organized companies have fluctuated more than the larger capitalization stocks and the overall stock market. One reason is that small and medium-sized companies have a lower degree of liquidity in the markets for their stocks, and greater sensitivity to changing economic conditions. NON-EQUITY SECURITIES. Investing in non-equity securities, such as bonds and debentures, involves the risk that the value of these securities held by the Alliance Bond, the Alliance Balanced and the Alliance Common Stock Funds -- and, therefore, the value of each of the Fund's units -- will fluctuate with changes in interest rates (interest rate risk) and the perceived ability of the issuer to make interest or principal payments on time (credit risk). A decline in prevailing interest rates generally will increase the value of the securities held by the Alliance Bond Fund, while an increase in prevailing interest rates usually reduces the value of the Alliance Bond Fund's holdings. As a result, interest rate fluctuations will affect the value of Alliance Bond Fund units, but will not affect the income received from the Fund's current portfolio holdings. Moreover, convertible securities, which may be in the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, such as convertible preferred stocks or convertible debt instruments, contain both debt and equity features, and may lose significant value in periods of extreme market volatility. FOREIGN INVESTING. Investing in securities of foreign companies that may not do substantial business in the United States involves additional risks, including risk of loss from changes in the political or economic climate of the countries in which these companies do business. Foreign currency fluctuations, exchange controls or financial instability could cause the value of the Alliance Common Stock, Mid Cap Growth and Balanced Funds' foreign investments to fluctuate. Additionally, foreign accounting, auditing and disclosure standards may differ from domestic standards, and there may be less regulation in foreign countries of stock exchanges, brokers, banks, and listed companies than in the United States. As a result, the Fund's foreign investments may be less liquid and their prices may be subject to greater fluctuations than comparable investments in securities of U.S. issuers. RESTRICTED SECURITIES. Investing in restricted securities involves additional risks because these securities generally (1) are less liquid than non-restricted securities and (2) lack readily available market quotations. Accordingly, the Alliance Balanced and the Alliance Mid Cap Growth Funds may be unable to quickly sell their restricted security holdings at fair market value. The following discussion describes investment risks unique to either the Alliance Common Stock Fund, Alliance Mid Cap Growth Fund or the Alliance Balanced Fund. INVESTMENT CONCENTRATION. Concentrating the Alliance Common Stock Fund's equity holdings in the stocks of a few companies increases the risk of loss, because a decline in the value of one of these stocks would have a greater impact on the Fund. As of December 31, 2003, the Fund held 16.7% of its net assets in the stocks of four issuers. See Separate Account No. 4 (Pooled) Statement of Investments and Net Assets in the SAI. 20 RIA features and benefits RISKS OF INVESTMENT STRATEGIES. Due to the Alliance Mid Cap Growth Fund's aggressive investment policies, this Fund provides greater growth potential and greater risk than the Alliance Common Stock and Alliance Balanced Funds. As a result, you should consider limiting the amount allocated to this Fund, particularly as you near retirement. ASSET ALLOCATION POLICIES. The Alliance Balanced Fund varies the portion of it's assets invested in equity and non-equity securities with our evaluation of various factors. The Fund is subject to the risk that we may incorrectly predict changes in the relative values of the stock and bond markets. CHANGE OF INVESTMENT OBJECTIVES We can change the investment objectives of the Alliance Bond, Alliance Common Stock, Alliance Mid Cap Growth and Alliance Balanced Funds if the New York State Insurance Department approves the change. The investment objectives of the portfolios of the Trusts may be changed by the Board of Trustees of each Trust without the approval of shareholders. See "Voting rights" under "More information" later in this prospectus. GUARANTEED INTEREST OPTION The guaranteed interest option is part of our general account and pays interest at guaranteed rates. We discuss our general account under "More information" later in this prospectus. The amount allocated to the guaranteed interest option earns interest at the current guaranteed interest rate which is an annual effective rate. After we credit the interest, we deduct certain charges and fees. We credit interest through and allocate interest on the date of any transfer or withdrawal transaction. We credit interest each day of the month to the account value in the guaranteed interest account at the beginning of the day at a daily rate equivalent to the guaranteed interest rate that applies to those amounts. CURRENT AND MINIMUM INTEREST RATES Except as described below, the "current rate" is the rate of interest that we actually credit to amounts in the guaranteed interest option for any given calendar year. We declare current rates for each class of employer plan that is using the RIA annuity contract as its funding vehicle before the beginning of each calendar year. In addition to the current rate, we declare "minimum rates" for the next two calendar years. Except as stated below, the minimum interest rates will never be lower than 4%. If the employer plan's contract permits investment in the Alliance Bond Fund, we may at times have the right to declare a lower current rate of interest ("revised rate") which will remain in effect for the remainder of the calendar year only for new amounts contributed or transferred by the employer plan to the guaranteed interest option. See "Special rules applicable to the Alliance Bond Fund" later in this prospectus, for the circumstances under which a revised rate might be declared. Such revised rate will reflect market interest rates for money market instruments and other short-term investments existing at the time any such amount is contributed or transferred to the guaranteed interest option without regard to any previously declared minimum rate. The current interest rate for 2004 and the minimum interest rates for 2005 and 2006 guaranteed for each class, are stated in the proposal documents submitted to sponsors of prospective RIA employer plans. The establishment of new classes will not decrease the rates that apply to employer plans already assigned to a previous class. The effective current rate for 2005 and the minimum rates effective for calendar year 2007 will be declared in December 2004. CLASSES OF EMPLOYER PLANS We assigned an employer plan to a "class" of employer plans upon its participation in the Master Retirement Trust in order to help us determine the current and minimum guaranteed rates of interest that apply for the employer plan participating in the guaranteed interest option under the RIA annuity contract. The initial class of employer plans to which an employer plan was assigned depended on the date the plan was adopted. REVISED INTEREST RATES All of the following conditions must exist for us to declare a revised rate: o on the date of the allocation, the aggregate amount held in the Alliance Bond Fund with respect to all employer plans comprising Equitable Life's Small Pension book of business is at least 10% of the aggregate amount then held under all the contracts which fund those plans; o on the date of the allocation, the "current" guaranteed interest rate with respect to the employer plan's guaranteed interest option that would otherwise apply, exceeds the benchmark treasury rate by at least 0.75%; and o prior allocations to the guaranteed interest option for the employer plan during that calendar year equal or exceed 110% of the average annual allocations to the guaranteed interest option for the employer plan during the three immediately preceding calendar years. If we declare a revised rate for plans permitted to invest in the Alliance Bond Fund the employer or plan trustee may, by written notice, withdraw all or part of the amount that would be credited with such lower revised rate, without deduction of the contingent withdrawal charge. The investment, for the remainder of the calendar year, of such withdrawn or returned amounts in a funding vehicle other than RIA shall not be considered a violation of an employer plan's exclusive funding obligation provided such amount is contributed to RIA at the beginning of the following calendar year. RIA features and benefits 21 2. How we value your account value -------------------------------------------------------------------------------- FOR THE FUNDS. When you invest in a Fund, your contribution or transfer purchases "units" of that Fund. The unit value on any day reflects the value of the Fund's investments for the day and the charges and expenses we deduct from the Fund. We calculate the number of units you purchase by dividing the amount you invest by the unit value of the Fund as of the close of business on the day we receive your contribution or transfer instruction. -------------------------------------------------------------------------------- Generally, our "business day" is any day on which the New York Stock Exchange is open for trading. A business day does not include any day we choose not to open due to emergency conditions. We may also close early due to emergency conditions. -------------------------------------------------------------------------------- On any given day, your account value in any Fund equals the number of the Fund's units credited to your account, adjusted for any Fund's units cancelled from your account, multiplied by that day's value for one Fund unit. In order to take deductions from any Fund, we cancel units having a value equal to the amount we need to deduct. Otherwise, the number of your Fund units of any Fund does not change unless you make additional contributions, make a withdrawal, make a transfer, or request some other transaction that involves moving assets into or out of that Fund. For a description of how Fund unit values are computed, see "How we determine the unit value" in the SAI. FOR THE GUARANTEED INTEREST OPTION. The value of any investment in the guaranteed interest option is, at any time, the total contributions allocated to the guaranteed interest option, plus the interest earned, less (i) withdrawals to make employer plan benefit payments, (ii) withdrawals to make other employer plan withdrawals (including loans) and (iii) charges and fees provided for under the contracts. 22 How we value your account value 3. Transfers -------------------------------------------------------------------------------- TRANSFERS AMONG INVESTMENT OPTIONS You may transfer accumulated amounts among the investment options at any time and in any amount, subject to the transfer limitations described below. In addition to our rules, transfers among the investment options may be subject to employer plan provisions which may limit or disallow such movements. We do not impose a charge for transfers among the investment options. The following section describes transfer limitations that apply, under certain situations, to amounts transferred out of the guaranteed interest option during the calendar quarter in which the request is made and the three preceding calendar quarters ("transfer period"). PARTICIPANT-DIRECTED PLANS. Under these plans, the contract owner has instructed us to accept the plan trustee's allocations that are in accordance with the plan participants' directions. If the employer elects to fund the employer plan with the guaranteed interest option and the EQ/Money Market, Alliance Bond, EQ/Alliance Intermediate Government Securities, EQ/Alliance Quality Bond or AXA Premier VIP High Yield Funds, during any transfer period, the following limitations apply: For plans electing the optional participant recordkeeping services ("PRS"), the maximum amount that may be transferred by the trustee on behalf of a participant from the guaranteed interest option is equal to the greater of: (i) 25% of the amount the participant had in the guaranteed interest option as of the last calendar day of the prior calendar year, or (ii) the total of all amounts transferred out of the guaranteed interest option during the prior calendar year on the participant's behalf. Generally, this means that new participants will not be able to direct the trustee to transfer amounts out of the guaranteed interest option during the first calendar year of their participation under the contract. If assets have been transferred from another funding vehicle by the employer, then the participant, for the remainder of that calendar year, may direct the trustee to transfer to the Funds up to 25% of such transferred amount that the participant initially allocated to the guaranteed interest option. For plans not electing the PRS, the maximum amount that may be transferred from the guaranteed interest option is equal to the greater of: (i) 25% of the amount the employer plan had in the guaranteed interest option as of the last calendar day of the prior calendar year, or (ii) the total of all amounts the employer plan transferred out of the guaranteed interest option during the prior calendar year. The employer plan is responsible for monitoring this transfer limitation. PRS is discussed in "Optional participant recordkeeping services" later in this Prospectus. If assets have been transferred from another funding vehicle by the employer, then the trustee on behalf of the participant, for the remainder of that calendar year, may transfer to the Funds up to 25% of such transferred amount that was initially allocated to the guaranteed interest option. From time to time, we may remove certain restrictions that apply to transferring amounts out of the guaranteed interest option. If we do so, we will tell you. We will also tell you at least 45 days in advance of the day that we intend to reimpose the transfer restrictions. TRUSTEE-DIRECTED PLANS. Transfers of accumulated amounts among the investment options will be permitted as determined by us in our sole discretion only. If assets have been transferred from another funding vehicle by the employer, then the plan trustee, for the remainder of that calendar year, may transfer to an investment option up to 25% of such transferred amount that was initially allocated to the guaranteed interest option. SPECIAL RULES APPLICABLE TO THE ALLIANCE BOND FUND The Alliance Bond Fund is available only to participant-directed employer plans that signed an agreement to participate in that Fund prior to June 1, 1994 ("old employer plans"). If the employer has not made Funds of Separate Account No. 66 available under a participant-directed employer plan, special transfer rules which provide transfer restrictions, described below will apply. If an old employer plan adds any of the Funds held in Separate Account No. 66, the Alliance Bond Fund will no longer be subject to any transfer restrictions. However, transfers out of the guaranteed interest option will be subject to certain restrictions described above. TRANSFERS TO THE ALLIANCE BOND FUND. Except as described below, a plan participant in an old employer plan may elect to transfer to the Alliance Bond Fund any amount (in whole percentages) arising from participant-directed contributions. We will process requests to transfer amounts to the Alliance Bond Fund only if, at the time of the transfer request, the current guaranteed interest rate for the plan's guaranteed interest option is higher than the then-current "benchmark treasury rate." The benchmark treasury rate, as determined in accordance with our procedures, can be obtained via a daily tape recording by calling the RIA service office at 1-800-967-4560. If we will not process a transfer request, we will notify the employer within four business days. We will not redirect the transfer to another investment option and will not maintain any record of such request for future processing. TRANSFERS FROM THE ALLIANCE BOND FUND. A plan participant in an old employer plan may elect to transfer any amount (in whole percentages) held in the Alliance Bond Fund to one or more investment options. DISRUPTIVE TRANSFER ACTIVITY Frequent transfers, including market timing and other program trading strategies, may be disruptive to the underlying portfolios in which the variable investment options invest. Disruptive transfer activity may Transfers 23 hurt the long term performance of a portfolio by, for example, requiring it to maintain larger amounts of cash or to liquidate portfolio holdings at a disadvantageous time or price. We currently use the procedures described below to discourage disruptive transfer activity in AXA Premier VIP Trust and EQ Advisors Trust. We may also use these procedures with respect to the Pooled Separate Accounts at any time without prior notice. You should understand, however, that these procedures are subject to the following limitations: (1) they do not eliminate the possibility that disruptive transfer activity, including market timing, will occur or that portfolio performance will be affected by such activity; (2) the design of these procedures involves inherently subjective judgments, which we and AXA Premier VIP Trust and EQ Advisors Trust seek to make in a fair and reasonable manner consistent with interests of all policy and contract owners. Certain frequent transfer activities attempt to exploit inefficiencies in how portfolio securities are valued. Please see the prospectuses for the underlying portfolios for more information on how portfolio shares are priced. If we determine that your transfer patterns are disruptive, we may, among other things, restrict the availability of personal telephone requests, facsimile transmissions, automated telephone services, or any electronic transfer services. We may also refuse to act on transfer instructions of an agent who is acting on behalf of one or more owners. In making these determinations, we may consider the combined transfer activity of annuity contracts and life insurance policies that we believe are under common ownership, control or direction. We currently consider transfers into and out of (or vice versa) the same variable investment option within a five business day period as potentially disruptive transfer activity. In order to reduce disruptive activity, we monitor the frequency of transfers, including the size of transfers in relation to portfolio assets, in each underlying portfolio. When a potentially disruptive transfer into or out of a portfolio occurs on a day when the portfolio's aggregate deposits or aggregate redemptions exceed our monitoring threshold, we may take the actions described above to restrict availability of voice, fax and automated transaction services. We currently apply such action for the remaining life of each affected contract. We also currently provide a letter to owners who have engaged in disruptive transfer activity of our intention to restrict access to communication services. However, we may not continue to provide such letters. We may also, in our sole discretion and without further notice, change what we consider potentially disruptive transfer activity and our monitoring procedures and thresholds, as well as change our procedures to restrict this activity. Our ability to monitor potentially disruptive transfer activity is limited in certain circumstances. Group annuity contracts may be owned by retirement plans on whose behalf we provide transfer instructions on an omnibus (aggregate) basis, which may mask the disruptive transfer activity of individual plan participants, and/or interfere with our ability to restrict communication services. 24 Transfers 4. Access to your account value -------------------------------------------------------------------------------- PARTICIPANT LOANS Contract withdrawals to make participant loans are available under RIA, if the employer plan permits them. Participants must apply for a plan loan through the employer plan. The plan administrator is responsible for administering the loan program. Loans are subject to restrictions under federal tax rules and ERISA. See "Tax information" later in this prospectus. Below we briefly summarize some of the important terms of the loan provisions under RIA. A more detailed discussion is provided in the SAI under "Loan provisions." Generally, all loan amounts must be taken from the guaranteed interest option. The participant must pay the interest as required by federal income tax rules. All repayments are made back into the guaranteed interest option. If the participant fails to repay the loan when due, the amount of the unpaid balance may be subject to a contingent withdrawal charge, taxes, and additional penalty taxes. Interest paid on a retirement plan loan is not deductible. The minimum amount of a loan for a participant is $1,000, and the maximum amount is 90% of the balances attributable to the plan participant in all the investment options. An employer plan may impose additional conditions or restrictions on loan transactions. We also charge a loan fee in an amount equal to 1% of the loan principal amount on the date a loan is made. CHOOSING BENEFIT PAYMENT OPTIONS RIA offers a variety of benefit payment options, subject to the provisions of an employer's plan. Plan participants should consult their employer for details. An employer's plan may allow a choice of one or more of the following forms of distribution: o purchase of one of our annuities; o lump sum distribution; o use of part of the proceeds to purchase one of our annuities with the balance to be paid as a lump sum; or o permitted cash withdrawals. Subject to the provisions of your plan, RIA makes available the following forms of fixed annuities: o life annuity; o life annuity - period certain; o life annuity - refund certain; o period certain annuity; and o qualified joint and survivor life annuity. All of the forms outlined above (with the exception of the qualified joint and survivor life annuity) are available as either single or joint life annuities. We also offer other annuity forms not outlined here. The various fixed annuities we offer under RIA are described in greater detail in the SAI under "Annuity benefits." As a general matter, the minimum amount that can be used to purchase any type of annuity, net of all applicable charges and fees, is $3,500. An annuity administrative fee of $175 will be deducted from the amount used to purchase an annuity. We require that the amount of any benefit distribution from an employer plan that uses RIA as a partial investment funding vehicle be in proportion to the amount of plan assets held in RIA, unless we and the plan trustees specifically agree in writing to some other method. Requests for cash distributions must be made to us on an aggregate basis opposed to a participant-by-participant basis, except for employer plans using the PRS discussed in "Optional participant recordkeeping services" later in this prospectus. Cash withdrawals by a plan participant prior to retirement may give rise to contingent withdrawal charges, and tax penalties or other adverse tax consequences. See "Tax information" later in this prospectus. We make distribution checks payable to the trustees of the plan. The plan trustees are responsible for distribution of Funds to the participant or other payee and for any applicable federal and state income tax withholding and reporting. See "Tax information" later in this prospectus. RIA does not have separate disability or death benefit provisions. All disability and death benefits are provided in accordance with the employer plan. Access to your account value 25 5. RIA -------------------------------------------------------------------------------- This section explains RIA in further detail. It is intended for employers who use RIA, but contains information of interest to plan participants as well. Plan participants should, of course, understand the provisions of their plan that describes their rights in more specific terms. RIA is an investment program designed for employer plans that qualify for tax-favored treatment under Section 401(a) of the Code. Eligible employer plans include defined benefit plans, defined contribution plans or profit-sharing plans, including 401(k) plans. These employer plans generally must also meet the requirements of ERISA. RIA consists of two group annuity contracts ("contracts") issued by Equitable Life, a Master Retirement Trust agreement, a participation or installation agreement, and an optional participant recordkeeping services ("PRS") agreement. RIA had $213.1 million in assets as of December 31, 2003. Our service consultants are available to answer your questions about RIA. Please contact us by using the telephone number or addresses listed under "How to reach us - Information on joining RIA" earlier in this prospectus. SUMMARY OF PLAN CHOICES OF RIA RIA is used: o as the exclusive funding vehicle for the assets of an employer plan. Under this option, the annual amount of plan contributions must be at least $10,000. We call this type of plan an "exclusive funding employer plan"; or o as a partial investment funding vehicle for an employer plan. Under this option, the aggregate amount of contributions in the initial participation year must be at least $50,000, and the annual aggregate amount of contributions thereafter must be at least $25,000. We call this type of plan a "partial funding employer plan." We do not offer the guaranteed interest option with a partial funding employer plan. A partial funding agreement with us was required to use this partial funding employer plan. An exclusive funding employer plan may not change its participation basis to that of a partial funding employer plan, or vice versa, unless the underwriting and other requirements referred to above are satisfied and approved by us. We reserve the right to impose higher annual minimums for certain plans. We will give you advance notice of any such changes. You have the choice of using RIA with two types of plans. You may use RIA for: o participant-directed employer plans, which permit participants to allocate contributions and transfer account accumulations among the investment options; or o trustee-directed employer plans, which permit these types of investment decisions to be made only by the employer, a trustee or any named fiduciary or an authorized delegate of the plan. At our sole discretion, a trustee-directed plan may change its participation basis to a participant-directed plan. Making the right choices for your plan depends on your own set of circumstances. We recommend that you review all contracts and trust, participation and related agreements with your legal and tax counsel. HOW TO MAKE CONTRIBUTIONS REGULAR CONTRIBUTIONS. Contributions may be made by check or by wire transfer. All contributions under an employer plan should be sent to the address under "For contributions checks only" in "Information once you join RIA" earlier in this prospectus. All contributions made by check must be drawn on a U.S. bank, in U.S. dollars, and made payable to Equitable Life. Third-party checks are not acceptable, except for rollover contributions, tax-free exchanges or trustee checks that involve no refund. All checks are subject to our ability to collect the funds. We reserve the right to reject a payment if it is received in an unacceptable form. Contributions are normally credited on the business day that we receive them. Contributions are only accepted from the employer or plan trustee. There is no minimum amount for each contribution where employer plan contributions are made on a basis more frequent than annually. The total amount of contributions under an employer plan is limited by law. See "Tax information" later in this prospectus. To make a rollover or transfer to an existing RIA Plan, funds must be in cash. Therefore, any assets accumulated under another existing plan will have to be liquidated for cash. SELECTING INVESTMENT OPTIONS You can select from the investment options available under the contracts. The maximum number of active options you may select at any time is 25. Plan participant choices will be limited to the investment options selected. If the Plan is intended to comply with the requirements of ERISA Section 404(c), the employer or the plan trustee is responsible for making sure that the investment options chosen constitute a broad range of investment choices as required by the Department of Labor ("DOL") Section 404(c) regulations. Generally, for participant-directed plans, if you intend for your plan to comply with ERISA Section 404(c), you should, among other things: o select the EQ/Money Market Fund if you select any of the EQ/Alliance Intermediate Government Securities, EQ/Alliance Quality Bond or AXA Premier VIP High Yield Funds; or o select the guaranteed interest option if you do not select any of the EQ/Money Market, EQ/Alliance Intermediate Government Securities, EQ/Alliance Quality Bond, AXA Premier VIP High Yield or EQ/Alliance Small Cap Growth Funds. 26 RIA If you select any of the EQ/Money Market, Alliance Bond, EQ/Alliance Intermediate Government Securities, EQ/Alliance Quality Bond or AXA Premier VIP High Yield Funds and the guaranteed interest option, certain restrictions will apply to transfers out of the guaranteed interest option. The Alliance Bond Fund is available only to employer plans that signed an agreement to participate in that Fund through the RIA annuity contract prior to June 1, 1994, and, as described above, special transfer rules apply for these employer plans. If you add any of the Funds of Separate Account No. 66, the Alliance Bond Fund will no longer be subject to any transfer restrictions. However, transfers out of the guaranteed interest option will be subject to certain restrictions. ALLOCATING PROGRAM CONTRIBUTIONS We allocate contributions to the investment options in accordance with the allocation instructions provided to us by the plan trustee or the individual who the plan trustee has previously authorized in writing. Allocations may be made by dollar amounts or in any whole number percentages that total 100%. Allocation changes may be made without charge, but may be subject to employer plan provisions that may limit or disallow such movements. RIA 27 6. Distributions -------------------------------------------------------------------------------- Keep in mind two sets of rules when considering distributions or withdrawals from RIA. The first are rules and procedures that apply to the investment options, exclusive of the provisions of your plan. We discuss those in this section. The second are rules specific to your plan, which are not described here. Moreover, distribution and benefit payment options under a tax qualified retirement plan are subject to complicated legal requirements. A general explanation of the federal income tax treatment of distributions and benefit payment options is provided in "Tax information" later in this prospectus and the SAI. The participant should discuss his or her options with a qualified financial advisor. Our service consultants also can be of assistance. Certain plan distributions may be subject to a contingent withdrawal charge, federal income tax, and penalty taxes. See "Charges and expenses" and "Tax information" later in this prospectus. AMOUNTS IN THE FUNDS. These are generally available for distribution at any time, subject to the provisions of your plan. Distributions from the Alliance Bond, Alliance Common Stock, Alliance Mid Cap Growth and Alliance Balanced Funds are permitted at any time. Distributions from remaining Funds are permitted at any time except if there is any delay in redemptions from the corresponding portfolio of each Trust, as applicable. See "When we pay proceeds" later in this prospectus. AMOUNTS IN THE GUARANTEED INTEREST OPTION. These are generally available for distribution at any time, subject to the provisions of your plan. A deferred payout provision, however, applies to trustee-directed employer plans which are terminating their RIA contract. Under that provision, we can defer payment of the employer plan balance held in the guaranteed interest option, less the contingent withdrawal charge, by paying out the balance in six installments over five years. During the deferred payout period, we credit the balances upon which we defer payment with the current interest rate declared for each year. We also continue to deduct the ongoing operations fee monthly from the balance during the deferred payout period. When we impose the deferred payout provision, any trustee-directed employer plan benefits becoming due during the deferred payout period will not be paid from the employer plan balance in the guaranteed interest option. If, however, sufficient funds are available, the benefits would be paid from the new funding vehicle for the trustee-directed employer plan. Participant-directed employer plans are not subject to the deferred payout provision. 28 Distributions ILLUSTRATION OF DEFERRED PAYOUT PROVISION
Transaction Date End of Year 1 End of Year 2 End of Year 3 ----------------------------------------------------------------------------------------------------------------- guaranteed interest option Balance 1 Balance 2 Balance 3 Plan Assets + Interest + Interest + Interest - Withdrawal Charge - Operations Fee - Operations Fee - Operations Fee -------------------- ----------------- ----------------- ----------------- Distribution Amount 1 Distribution Amount 2 Distribution Amount 3 Distribution Amount 4 Dist. Amt. 1 = 1st Payment Dist. Amt. 2 = 2nd Payment Dist. Amt. 3 = 3rd Payment Dist. Amt. 4 = 4th Payment --------------- ----------------- ---------------- ---------------- 6 5 4 3 Dist. Amount 1 Dist. Amount 2 Dist. Amount 3 Dist. Amount 4 - 1st Payment - 2nd Payment - 3rd Payment - 4th Payment --------------- --------------- ---------------- ---------------- Balance 1 --> Balance --> Balance --> Balance --> Transaction Date End of Year 4 End of Year 5 -------------------------------------------------------------------------------- guaranteed interest option Balance 4 Balance 5 Plan Assets + Interest + Interest - Withdrawal Charge - Operations Fee - Operations Fee -------------------- ----------------- ---------------- Distribution Amount 1 Distribution Amount 5 Final Distribution Dist. Amt. 1 = 1st Payment Dist. Amt. 5 = 5th Payment --------------- ---------------- 6 2 Dist. Amount 1 Dist. Amount 5 - 1st Payment - 5th Payment --------------- ---------------- Balance 1 --> Balance -->
Distributions 29 7. Optional participant recordkeeping services -------------------------------------------------------------------------------- SERVICES PROVIDED. If you elected the PRS program, we: o establish an individual participant account for each participant covered by your plan based on data you provide; o receive and deposit contributions on behalf of participants to individual participant accounts; o maintain records reflecting, for each participant, contributions, transfers, loan transactions, withdrawals and investment experience and interest accrued, as applicable, on an individual participant's proportionate values in the plan; o provide to you individual participant's reports reflecting the activity in the individual participant's proportionate interest in the plan; and o process transfers and distributions of the participant's portion of his or her share of the employer plan assets among the investment options as you instruct. You are responsible for providing Equitable Life with required information and for complying with our procedures relating to the PRS program. We will not be liable for errors in recordkeeping if the information you provide is not provided on a timely basis or is incorrect. The plan administrator retains full responsibility for the income tax withholding and reporting requirements including required notices to the plan participants, as set forth in the federal income tax rules and applicable Treasury Regulations. INVESTMENT OPTIONS. You must include the guaranteed interest option in the investment options if you select PRS. FEES. We charge an annual fee of $25 per active participant paid in twelve equal monthly installments of $2.08. We deduct the fee from the amounts attributable to each individual participant at the end of each month by means of a reduction of units or a cash withdrawal from the guaranteed interest option. We retain the right to change the fee upon 30 days' notice to the employer. See "Charges and expenses" later in this Prospectus. ENROLLMENT. Enrollment of your plan in PRS is no longer available. 30 Optional participant recordkeeping services 8. Charges and expenses -------------------------------------------------------------------------------- You will incur two general types of charges under RIA: (1) Charges reflected as reductions in the unit values of the Funds which are recorded as expenses of the Fund. These charges apply to all amounts invested in RIA, including installment payout option payments. (2) Charges stated as a defined percentage or fixed dollar amount and deducted by reducing the number of units in the appropriate Funds and the dollars in the guaranteed interest option. We make no deduction from your contributions for sales expenses. CHARGES REFLECTED IN THE UNIT VALUES INVESTMENT MANAGEMENT AND ACCOUNTING FEES The computation of unit values for the Alliance Bond, Alliance Common Stock, Alliance Mid Cap Growth and Alliance Balanced Funds reflects fees we charge for investment management and accounting. We receive fees for investment management and financial accounting services we provide for these Funds, as well as a portion of our related administrative costs. This fee is charged daily at an effective annual rate of .50% of the net assets of the Alliance Bond, Alliance Common Stock, Alliance Mid Cap Growth and Alliance Balanced Funds. ADMINISTRATIVE CHARGE FOR CERTAIN OF THE FUNDS OF SEPARATE ACCOUNT NO. 66 We make a daily charge at an annual rate of 0.05% of the assets invested in certain of the Funds of Separate Account No. 66 as indicated under the "Fee Table" earlier in this prospectus. The charge is designed to reimburse us for our costs in providing administrative services in connection with the contracts. INDIRECT EXPENSES BORNE BY THE FUNDS ANNUAL EXPENSES OF THE TRUSTS. The Funds that invest in portfolios of the Trusts are indirectly subject to investment advisory and other expenses charged against assets of their corresponding portfolios. These expenses are described in the prospectuses for the Trusts. CHARGES WHICH REDUCE THE NUMBER OF UNITS CONTINGENT WITHDRAWAL CHARGE We may impose a contingent withdrawal charge ("CWC") against withdrawals made from any of the Funds or the guaranteed interest option at any time up to and including the ninth anniversary of the date on which the employer plan began its participation in RIA. The CWC is designed to recover the unamortized sales and promotion expenses and initial enrollment expenses incurred by us. We will not apply a CWC against amounts withdrawn for the purpose of making benefit distribution payments unless such withdrawals are made (i) on or after the date of discontinuance of an employer plan's participation in RIA or (ii) as a result of a full or partial termination, within the meaning of applicable Internal Revenue Service ("IRS") or court interpretations. We will apply a CWC against amounts withdrawn for purposes of making benefit payments to participants who terminated employment either voluntarily or involuntarily, but only when such terminations are attributable to (i) the employer's merger with another company, (ii) the sale of the employer or (iii) the bankruptcy of the employer which leads to the full or partial termination of the plan or the discontinuance of the employer plan's participation in RIA. We do not apply a CWC on transfers between the investment options. However, we do apply a CWC to withdrawals from RIA for the purpose of transferring to another funding vehicle under the employer plan, unless an officer of Equitable Life agrees, in writing, to waive this charge. We do not consider withdrawals from RIA for the purpose of paying plan expenses or the premium on a life insurance policy, including one held under the employer plan, to be in-service withdrawals or any other type of benefit distribution. These withdrawals are subject to the CWC. The amount of any CWC is determined in accordance with the rate schedule set forth below. We include outstanding loan balances in the plan's assets for purposes of assessing the CWC.
-------------------------------------------------------------------------------- Withdrawal in Participation Years Contingent Withdrawal Charge -------------------------------------------------------------------------------- 1 or 2 6% of Amount Withdrawn 3 or 4 5% 5 or 6 4% 7 or 8 3% 9 2% 10 and later 0% --------------------------------------------------------------------------------
Benefit distribution payments are those payments that become payable with respect to participants under the terms of the employer plan as follows: 1. as the result of the retirement, death or disability of a participant; 2. as the result of a participant's separation from service as defined under Section 402(d)(4)(A) of the Code; 3. in connection with a loan transaction, if the loan is repaid in accordance with its terms; 4. as a minimum distribution pursuant to Section 401(a)(9) of the Code; 5. as a hardship withdrawal pursuant to Section 401(k) of the Code; Charges and expenses 31 6. pursuant to a qualified domestic relations order ("QDRO") under Section 414(p) of the Code, but only if the QDRO specifically requires that the plan administrator withdraw amounts for payment to an alternate payee; 7. as a result of an in-service withdrawal attributable to the after-tax contributions of a participant; or 8. as a result of an in-service withdrawal from a profit-sharing plan after meeting a minimum number of years of service and/or participation in the plan, and the attainment of a minimum age specified in the plan. Prior to any withdrawal from RIA for benefit distribution purposes, Equitable Life reserves the right to receive from the employer and/or trustees of the plan, evidence satisfactory to it that such benefit distribution conforms to at least one of the types mentioned above. ONGOING OPERATIONS FEE The ongoing operations fee is based on the combined net balances (including any outstanding loan balance) of an employer plan in the investment options at the close of business on the last business day of each month. The amount of the ongoing operations fee is determined under the rate schedule that applies to the employer plan. Unless you make other arrangements, we deduct the charge from employer plan balances at the close of business on the last business day of the following month. Set forth below is the rate schedule for employer plans which adopted RIA after February 9, 1986. Information concerning the rate schedule for employer plans that adopted RIA on or before February 9, 1986 is included in the SAI under "Additional information about RIA."
-------------------------------------------------------------------------------- Combined balance Monthly of investment options Rate -------------------------------------------------------------------------------- First $ 150,000 1/12 of 1.25% Next $ 350,000 1/12 of 1.00% Next $ 500,000 1/12 of 0.75% Over $1,000,000 1/12 of 0.50% --------------------------------------------------------------------------------
The ongoing operations fee is designed to cover such expenses as contract underwriting and issuance for employer plans, employer plan-level recordkeeping, processing transactions and benefit distributions, administratively maintaining the investment options, commissions, promotion of RIA, administrative costs (including certain enrollment and other servicing costs), systems development, legal and technical support, product and financial planning and part of our general overhead expenses. Administrative costs and overhead expenses include such items as salaries, rent, postage, telephone, travel, office equipment and stationery, and legal, actuarial and accounting fees. PARTICIPANT RECORDKEEPING SERVICES CHARGE The PRS is an optional service. If you elected this service, we charge a per participant annual fee of $25. We deduct this fee on a monthly basis at the rate of $2.08 per participant. We determine the amount of the fee for an employer plan at the close of business on the last business day of each month based on the number of participants enrolled with us at that time. Unless you make other arrangements, we deduct this fee from the balances attributable to each participant in the investment options at the close of business on the last business day of the following month. The PRS fee covers expenses incurred for establishing and maintaining individual records, issuing statements and reports for individual employees and employer plans, and processing individual transactions and benefit distributions. We are not responsible for reconciling participants' individual account balances with the entire amount of the employer plan where we do not maintain individual account balances. LOAN FEE We charge a loan fee in an amount equal to 1% of the amount withdrawn as loan principal on the date the plan loan is made. OTHER BILLING ARRANGEMENTS The ongoing operations and participant recordkeeping services fees can be paid by a direct billing arrangement we have with the employer subject to a written agreement between Equitable Life and the employer. INDIVIDUAL ANNUITY CHARGES ANNUITY ADMINISTRATIVE CHARGE. If a participant elects an annuity payout option, we deduct a $175 charge from the amount used to purchase the annuity. This charge reimburses us for administrative expenses associated with processing the application for the annuity and issuing each month's annuity payment. CHARGES FOR STATE PREMIUM AND OTHER APPLICABLE TAXES. We deduct a charge designed to approximate certain taxes that may be imposed on us, such as premium taxes 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 by us varies by state and ranges from 0% to 1% (1% in Puerto Rico). GENERAL INFORMATION ON FEES AND CHARGES We reserve the right (1) to change from time to time the charges and fees described in this prospectus upon prior notice to the employer and (2) to establish separate fee schedules for requested non-routine administrative services and for newly scheduled services not presently contemplated under the contracts. 32 Charges and expenses 9. Tax information -------------------------------------------------------------------------------- President Bush signed the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") on June 7, 2001. Many of the provisions of EGTRRA began to be effective on January 1, 2002 and are phased in during the first decade of the twenty-first century. In the absence of future legislation, all of the amendments made by EGTRRA will no longer apply after December 31, 2010, and the law in effect in 2001 will apply again. In general, EGTRRA liberalizes contributions that can be made to all types of tax-favored retirement plans. In addition to increasing amounts that can be contributed and permitting individuals over age 50 to make additional contributions, EGTRRA also permits rollover contributions to be made between different types of tax-favored retirement plans. Please discuss with your tax advisor how EGTRRA affects your personal financial situation. Employer retirement plans that may qualify for tax-favored treatment are governed by the provisions of the Code and ERISA. The Code is administered by the IRS. ERISA is administered primarily by the DOL. Provisions of the Code and ERISA include requirements for various features including: o participation, vesting and funding; o nondiscrimination; o limits on contributions and benefits; o distributions; o penalties; o duties of fiduciaries; o prohibited transactions; and o withholding, reporting and disclosure. It is the responsibility of the employer, plan trustee and plan administrator to satisfy the requirements of the Code and ERISA. This prospectus does not provide detailed tax or ERISA information. The following discussion briefly outlines the Code provisions relating to contributions to and distributions from certain tax-qualified retirement plans, although some information on other provisions is also provided. Various tax disadvantages, including penalties, may result from actions that conflict with requirements of the Code or ERISA, and regulations or other interpretations thereof. In addition, federal tax laws and ERISA are continually under review by the Congress, and any changes in those laws, or in the regulations pertaining to those laws, may affect the tax treatment of amounts contributed to tax-qualified retirement plans or the legality of fiduciary actions under ERISA. Certain tax advantages of tax-qualified retirement plans may not be available under certain state and local tax laws. This outline does not discuss the effect of any state or local tax laws. It also does not discuss the effect of federal estate and gift tax laws (or state and local estate, inheritance and other similar tax laws). This outline assumes that the participant does not participate in any other qualified retirement plan. Finally, it should be noted that many tax consequences depend on the particular jurisdiction or circumstances of a participant or beneficiary. The provisions of the Code and ERISA are highly complex. For complete information on these provisions, as well as all other federal, state, local and other tax considerations, qualified legal and tax advisers should be consulted. Certain tax advantages of a tax-qualified retirement plan may not be available under certain state and local tax laws. This outline does not discuss the effect of any state or local tax laws. It also does not discuss the effect of federal estate and gift tax laws (or state and local estate, inheritance and other similar tax laws). This outline assumes that the participant does not participate in any other qualified retirement plan. Finally, it should be noted that many tax consequences depend on the particular jurisdiction or circumstances of a participant or beneficiary. We cannot provide detailed information on all tax aspects of the plans or contracts. Moreover, the tax aspects that apply to a particular person's plan or contract may vary depending on the facts applicable to that person. We do not discuss state income and other state taxes, federal income tax and withholding rules for non-U.S. taxpayers, or federal gift and estate taxes. Rights or values under plans or contracts or payments under the contracts, for example, amounts due to beneficiaries, may be subject to gift or estate taxes. You should not rely only on this document, but should consult your tax advisor before your purchase. BUYING A CONTRACT TO FUND A RETIREMENT ARRANGEMENT Annuity contracts can be purchased in connection with retirement plans qualified under Code Section 401. How these arrangements work, including special rules applicable to each, are described below. You should be aware that the funding vehicle for a qualified arrangement does not provide any tax deferral benefit beyond that already provided by the Code for all permissible funding vehicles. Before choosing an annuity contract, therefore, one should consider the annuity's features and benefits, such as the selection of investment funds and guaranteed interest option and choices of pay-out options, as well as the features and benefits of other permissible funding vehicles and the relative costs of annuities and other arrangements. You should be aware that cost may vary depending on the features and benefits made available and the charges and expenses of the investment options or funds that you select. TAX ASPECTS OF CONTRIBUTIONS TO A PLAN Corporations, partnerships and self-employed individuals can establish qualified plans for the working owners and their employees who participate in the plan. Qualified plans established by partnerships and sole proprietorships are frequently referred to as "Keogh" plans. Both employer and employee contributions to these plans are subject to a variety of limitations, some of which are discussed here briefly. See Tax information 33 your tax adviser for more information. Violation of contribution limits may result in disqualification and/or imposition of monetary penalties. The trustee or plan administrator may make contributions on behalf of the plan participants which are deductible from the employer's federal gross income. Employer contributions which exceed the amount currently deductible are subject to a 10% penalty tax. There are special rules for corporate plans and Keogh plans which are top heavy plans (i.e., more than 60% of the contributions or benefits are allocated to certain highly compensated employees otherwise known as key employees). The limits on the amount of contributions that can be made and/or forfeitures that can be allocated to each participant in defined contribution plans is the lesser of $41,000 or 100% of the compensation or earned income for each participant. In 2004, the employer may not consider compensation in excess of $205,000 in calculating contributions or benefits to the plan. This amount will be adjusted for cost-of-living changes in future years in $5,000 increments, rounded to the next lowest multiple of $5,000. For self-employed individuals, earned income is defined so as to exclude deductible contributions made to all tax-qualified retirement plans, including Keogh plans, and takes into account the deduction for one-half the individual's self-employment tax. Deductions for aggregate contributions to profit-sharing plans may not exceed 25% of all participants' compensation. The deductible limits for corporate plans and Keogh plans which are defined benefit plans are based on the minimum funding standard determined by the plan actuary each year. No participant can receive a benefit which exceeds the lesser of (i) $165,000 or (ii) 100% of the participant's average compensation for the consecutive three-year period which results in the highest such average, or other applicable plan limit. The $165,000 limit is actuarially reduced for participants retiring prior to the social security retirement age and actuarially increased for participants retiring after the social security retirement age. A qualified plan may allow the participant to direct the employer to make contributions which will not be included in the employee's income (elective deferrals) by entering into a salary reduction agreement with the employer under Section 401(k) of the Code. The 401(k) plan, otherwise known as a cash or deferred arrangement, must not allow withdrawals of elective deferrals and the earnings thereon prior to the earliest of the following events: (i) attainment of age 59-1/2, (ii) death, (iii) disability, (iv) certain business dispositions and plan terminations or (v) termination of employment. In addition, in-service withdrawals of elective deferrals (but not earnings after 1988) may be made in the case of financial hardship. A participant cannot elect to defer annually more than $13,000 in 2004 (which amount shall increase by $1,000 each year up to 2006) under all salary reduction arrangements with all employers in which the individual participates. Effective January 1, 2004, employees who are at least age 50 at any time during the calendar year 2004 can make an additional $3,000 of "catch-up" elective deferrals if their plan so permits (which "catch-up" amount will increase by $1,000 each year through 2006). Employer matching contributions to a 401(k) plan for self-employed individuals are no longer treated as elective deferrals, and are treated the same as employer matching contributions for other employees. A qualified plan must not discriminate in favor of highly compensated employees. Two special nondiscrimination rules limit contributions and benefits for highly compensated employees in the case of (1) a 401(k) plan and (2) any defined contribution plan, whether or not a 401(k) plan, which provides for employer matching contributions to employee after-tax contributions or elective deferrals. Generally, these nondiscrimination tests require an employer to compare the deferrals or the aggregate contributions, as the case may be, made by the eligible highly compensated employees with those made by the non-highly compensated employees, although alternative simplified tests are available. Highly compensated participants include five percent owners and employees earning more than $90,000 for the prior year. (If desired the latter group can be limited to employees who are in the top 20% of all employees based on compensation.) Certain 401(k) plans can adopt a "SIMPLE 401(k)" feature which will enable the plan to meet nondiscrimination requirements without testing. The SIMPLE 401(k) feature requires the plan to meet specified contribution, vesting and exclusive plan requirements. Employers may adopt a safe harbor 401(k) arrangement. Under this arrangement, an employer agrees to offer a matching contribution equal to (a) 100% of salary deferral contributions up to 3% of compensation and (b) 50% of salary deferral contributions that exceed 3% but are less than 5% of compensation. These contributions must be nonforfeitable. If the employer makes these contributions and gives proper notification to plan participants, the plan is not subject to non-discrimination testing on salary deferral and the above contributions. TAX ASPECTS OF DISTRIBUTIONS FROM A PLAN Amounts held under qualified plans are generally not subject to federal income tax until benefits are distributed to the participant or other recipient. In addition, there will not be any tax liability for transfers of any part of the value of an employer plan among the Funds. The various types of benefit payments include withdrawals, annuity payments and lump sum distributions. Each benefit payment made to the participant or other recipient is generally fully taxable as ordinary income. An exception to this general rule is made, however, to the extent a distribution is treated as a recovery of after-tax contributions made by the participant. In addition to income tax, the taxable portion of any distribution may be subject to a 10% penalty tax. See "Penalty tax on premature distributions" below. INCOME TAXATION OF WITHDRAWALS The amount of any partial distribution prior to the annuity starting date is treated as ordinary income except to the extent the distribution is treated as a withdrawal of after-tax contributions. Withdrawals from a qualified plan are normally treated as pro rata withdrawals of after-tax contributions and earnings on those contributions. If the plan allowed withdrawals prior to separation from service as of May 5, 1986, however, all after-tax contributions made prior to January 1, 34 Tax information 1987 may be withdrawn tax free prior to withdrawing any taxable amounts if properly accounted for by the plan. As discussed below in "Certain rules applicable to plan loans," taking a loan or failing to repay an outstanding loan as required may, in certain situations, be treated as a taxable distribution. INCOME TAXATION OF ANNUITY PAYMENTS In the case of a distribution in the form of an annuity, the amount of each annuity payment is treated as ordinary income except where the participant has a cost basis in the annuity. The cost basis is equal to the amount of after-tax contributions, plus any employer contributions that had to be included in gross income in prior years. If the participant has a cost basis in the annuity, a portion of each payment received will be excluded from gross income to reflect the return of the cost basis. The remainder of each payment will be includable in gross income as ordinary income. The excludable portion is based on the ratio of the participant's cost basis in the annuity on the annuity starting date to the expected return, generally determined in accordance with a statutory table, under the annuity as of such date. The full amount of the payments received after the cost basis of the annuity is recovered is fully taxable. If there is a refund feature under the annuity, the beneficiary of the refund may recover the remaining cost basis as payments are made. If the participant (and beneficiary under a joint and survivor annuity) die prior to recovering the full cost basis of the annuity, a deduction is allowed on the participant's (or beneficiary's) final tax return. INCOME TAXATION OF LUMP SUM DISTRIBUTIONS If benefits are paid in a lump sum, the payment may be eligible for the special tax treatment accorded lump sum distributions. In certain limited cases, the distribution may be eligible for favorable ten year averaging and long-term capital gain treatment. ELIGIBLE ROLLOVER DISTRIBUTIONS Many types of distributions from qualified plans are "eligible rollover distributions" that can be rolled over directly to another qualified plan or a traditional individual retirement arrangement ("IRA"), an annuity under Section 403(b) of the Code or a retirement plan under section 457 of the Code, or rolled over to another plan or IRA within 60 days of receipt by the individual. Employee's surviving spouse may roll over distributions to a qualified plan, IRA, 403(b) qualified annuity, Section 457 plan or 403(b) Tax Shelter Annuity. To the extent a distribution is rolled over, it remains tax deferred. Distributions not rolled over directly, however, are subject to 20% mandatory withholding. See "Federal income tax withholding" below. Most distributions will generally be an "eligible rollover distribution" unless the distribution falls within the following list of exceptions: o one of a series of substantially equal periodic payments made (not less frequently than annually); (a) for the life (or life expectancy) of the participant or the joint lives (or joint life expectancies) of the participant and his or her designated beneficiary in accordance with IRS formulas, or (b) for a specified period of ten years or more. o hardship withdrawals; o any distribution to the extent it is a required distribution under Section 401(a)(9) of the Code (see "Distribution requirements and limits" below); o certain corrective distributions in plans subject to Sections 401(k), 401(m) or 402(g) of the Code; o loans that are treated as deemed distributions under Section 72(p) of the Code; o P.S. 58 costs (incurred if the plan provides life insurance protection for participants); o dividends paid on employer securities as described in Section 404(k) of the Code; and o a distribution to a non-spousal beneficiary. If a distribution is made to a participant's surviving spouse, or to a current or former spouse under a qualified domestic relations order, the distribution may be an eligible rollover distribution, subject to mandatory 20% withholding, unless one of the exceptions described above applies. PENALTY TAX ON PREMATURE DISTRIBUTIONS An additional 10% penalty tax is imposed on all taxable amounts distributed to a participant who has not reached age 59-1/2 unless the distribution falls within a specified exception or is rolled over into an IRA or other qualified plan. The specified exceptions are for: (a) distributions made on account of the participant's death or disability; (b) distributions (which begin after separation from service) in the form of a life annuity or substantially equal periodic installments over the participant's life expectancy (or the joint life expectancy of the participant and the beneficiary); (c) distributions due to separation from active service after age 55 and (d) distributions used to pay certain extraordinary medical expenses. FEDERAL INCOME TAX WITHHOLDING Mandatory federal income tax withholding at a 20% rate will apply to all "eligible rollover distributions" unless the participant elects to have the distribution directly rolled over to another qualified plan or traditional IRA. See the "Eligible rollover distributions" above. With respect to distributions that are not eligible rollover distributions, federal income tax must be withheld on the taxable portion of pension and annuity payments, unless the recipient elects otherwise. The rate of withholding will depend on the type of distribution and, in certain cases, the amount of the distribution. Special rules may apply to foreign recipients, or United States citizens residing outside the United States. If a recipient does not have sufficient income tax withheld, or does not make sufficient estimated income tax payments, the recipient may incur penalties under the estimated income tax rules. Recipients should consult their tax advisers to determine whether they should elect out of withholding. Tax information 35 Requests not to withhold federal income tax must be made in writing prior to receiving payments and submitted in accordance with the terms of the employer plan. No election out of withholding is valid unless the recipient provides the recipient's correct Taxpayer Identification Number and a U.S. residence address. STATE INCOME TAX WITHHOLDING Certain states have indicated that pension and annuity withholding will apply to payments made to residents of such states. In some states a recipient may elect out of state income tax withholding, even if federal withholding applies. It is not clear whether such states may require mandatory withholding with respect to eligible rollover distributions that are not rolled over (as described below under "Eligible rollover distributions" above). Contact your tax adviser to see how state withholding may apply to your payment. DISTRIBUTION REQUIREMENTS AND LIMITS Distributions must be made according to rules in the Code and Treasury Regulations and the terms of the plan. Treasury Regulations on required minimum distributions were proposed in 1987, revised in 2001 and finalized in 2002. The 2002 final Regulations generally apply beginning in January 2003. The 2002 final Regulations include Temporary Regulations applicable to annuity contracts used to fund plans. Certain provisions of the Temporary Regulations concerning the actuarial value of additional contract benefits which could have increased the amount required to be distributed from contracts have currently been suspended. However, these or similar provisions may apply in future years. Under transitional rules, the 1987 and 2001 proposed regulations may continue to apply to annuity payments. Please consult your plan administrator and tax advisor concerning applicability of these complex rules to your situation. Distributions from qualified plans generally must commence no later than April 1st of the calendar year following the calendar year in which the participant reaches age 70-1/2 (or retires from the employer sponsoring the plan if later). Five percent owners of qualified plans must commence distribution after age 70-1/2 even if they are still working. Distributions can generally be made: (1) in a lump sum payment; (2) over the life of the participant; (3) over the joint lives of the participant and his or her designated beneficiary; (4) over a period not extending beyond the life expectancy of the participant; or (5) over a period not extending beyond the joint life expectancies of the participant and his or her designated beneficiary. The plan document will specify the options available to participants. The minimum amount required to be distributed in each year after minimum distributions are required to begin is described in the Code, Treasury Regulations and IRS guidelines. If the participant dies after required distribution has begun, the rules require that payment of the remaining interest under the plan must be made at least as rapidly as under the method used prior to the participant's death. If a participant dies before required distribution has begun, the rules require that payment of the entire interest under the plan must be completed within five years after death, unless payments to a designated beneficiary begin within one year of the participant's death and are made over the beneficiary's life or over a period certain which does not extend beyond the beneficiary's life expectancy. If the surviving spouse is the designated beneficiary, the spouse may delay the commencement of such payments up until the date that the participant would have attained age 70-1/2. Distributions received by a beneficiary are generally given the same tax treatment the participant would have received if distribution had been made to the participant. If there is an insufficient distribution in any year, a 50% tax may be imposed on the amount by which the minimum required to be distributed exceeds the amount actually distributed. Failure to have distributions made as the Code and Treasury Regulations require may result in plan disqualification. SPOUSAL REQUIREMENTS In the case of many qualified retirement plans, if a participant is married at the time benefit payments become payable, unless the participant elects otherwise with written consent of the spouse, the benefit must be paid in the form of a qualified joint and survivor annuity ("QJSA"). A QJSA is an annuity payable for the life of the participant with a survivor annuity for the life of the spouse in an amount which is not less than one-half of the amount payable to the participant during his or her lifetime. In addition, a married participant's beneficiary must be the spouse, unless the spouse consents in writing to the designation of a different beneficiary. CERTAIN RULES APPLICABLE TO PLAN LOANS The following are federal tax and ERISA rules that apply to loan provisions of all employer plans. Employer plans may have additional restrictions. Employers and participants should review these matters with their own tax advisers before requesting a loan. There will not generally be any tax liability with respect to properly made loans in accordance with an employer plan. A loan may be in violation of applicable provisions unless it complies with the following conditions: o With respect to specific loans made by the plan to a plan participant, the loan administrator determines the interest rate, the maximum term and all other terms and conditions of the loan. o In general, the term of the loan cannot exceed five years unless the loan is used to acquire the participant's primary residence. o All principal and interest must be amortized in substantially level payments over the term of the loan, with payments being made at least quarterly. o The amount of a loan to a participant, when aggregated with all other loans to the participant from all qualified plans of the employer, cannot exceed the greater of $10,000 or 50% of the participant's nonforfeitable accrued benefits, and cannot exceed $50,000 in any event. This $50,000 limit is reduced by the excess (if any) of the highest outstanding loan balance over the previous twelve months over the outstanding balance of plan loans on the date the loan was made. 36 Tax information o For loans made prior to January 1, 1987 and not renewed, modified, renegotiated or extended after December 31, 1986 the $50,000 maximum aggregate loan balance is not required to be reduced, the quarterly amortization requirement does not apply, and the term of a loan may exceed five years if used to purchase the principal residence of the participant or a member of his or her family, as defined in the Code. o Only 50% of the participant's vested account balance may serve as security for a loan. To the extent that a participant borrows an amount which should be secured by more than 50% of the participant's vested account balance, it is the responsibility of the trustee or plan administrator to obtain the additional security. o Loans must be available to all plan participants, former participants who still have account balances under the plan, beneficiaries and alternate payees on a reasonably equivalent basis. o Each new or renewed loan must bear a reasonable rate of interest commensurate with the interest rates charged by persons in the business of lending money for loans that would be made under similar circumstances. o Many plans provide that the participant's spouse must consent in writing to the loan. o Except to the extent permitted in accordance with the terms of a prohibited transaction exemption issued by the DOL, loans are not available (i) in a Keogh (non-corporate plan to an owner-employee or a partner who owns more than 10% of a partnership, or (ii) to 5% shareholders in an S corporation. If the loan does not qualify under the conditions above, the participant fails to repay the interest or principal when due, or in some instances, if the participant separates from service or the plan is terminated, the amount borrowed or not repaid may be treated as a distribution. The participant may be required to include as ordinary income the unpaid amount due and a 10% penalty tax on early distributions may apply. The plan should report the amount of the unpaid loan balance to the IRS as a distribution. See "Tax aspects of distributions from a plan" earlier in this Prospectus. The loan requirements and provisions of RIA shall apply regardless of the plan administrator's guidelines. IMPACT OF TAXES TO EQUITABLE LIFE Under existing federal income tax law, no taxes are payable on investment income and capital gains of the Funds that are applied to increase the reserves under the contracts. Accordingly, Equitable Life does not anticipate that it will incur any federal income tax liability attributable to income allocated to the variable annuity contracts participating in the Funds and it does not currently impose a charge for federal income tax on this income when it computes unit values for the Funds. If changes in federal tax laws or interpretations thereof would result in Equitable Life being taxed, then Equitable Life may impose a charge against the Funds (on some or all contracts) to provide for payment of such taxes. CERTAIN RULES APPLICABLE TO PLANS DESIGNED TO COMPLY WITH SECTION 404(C) OF ERISA Section 404(c) of ERISA, and the related DOL regulation, provide that if a plan participant or beneficiary exercises control over the assets in his or her plan account, plan fiduciaries will not be liable for any loss that is the direct and necessary result of the plan participant's or beneficiary's exercise of control. As a result, if the plan complies with Section 404(c) and the DOL regulation thereunder, the plan participant can make and is responsible for the results of his or her own investment decisions. Section 404(c) plans must provide, among other things, that a broad range of investment choices are available to plan participants and beneficiaries and must provide such plan participants and beneficiaries with enough information to make informed investment decisions. Compliance with the Section 404(c) regulation is completely voluntary by the plan sponsor, and the plan sponsor may choose not to comply with Section 404(c). The RIA Program provides employer plans with the broad range of investment choices and information needed in order to meet the requirements of the Section 404(c) regulation. If the plan is intended to be a Section 404(c) plan, it is, however, the plan sponsor's responsibility to see that the requirements of the DOL regulation are met. Equitable Life and its agents shall not be responsible if a plan fails to meet the requirements of Section 404(c). Tax information 37 10. More information -------------------------------------------------------------------------------- ABOUT CHANGES OR TERMINATIONS AMENDMENTS. The contracts have been amended in the past and we and the trustee under the Master Trust Agreement may agree to amendments in the future. No future change can affect annuity benefits in the course of payment. If certain conditions are met, we may: (1) terminate the offer of any of the investment options and (2) offer new investment options with different terms. We may unilaterally amend or modify the contracts or the Master Retirement Trust without the consent of the employer or plan sponsor, as the case may be, in order to keep the contracts or the Master Retirement Trust in compliance with law. TERMINATION. We can discontinue offering RIA at any time. Discontinuance of RIA would not affect annuities in the course of payment, but we would not accept further contributions. The employer may elect to maintain investment options balances with us to provide annuity benefits in accordance with the terms of the contracts. The employer may elect to discontinue the participation of the employer plan in RIA at any time upon advance written notice to us. We may elect, upon written notice to the employer, to discontinue the participation of the employer plan in RIA if (1) the employer fails to comply with any terms of the Master Retirement Trust, (2) the employer fails to make the required minimum contributions, (3) as may be agreed upon in writing between Equitable Life and the employer if the plan fails to maintain minimum amounts of Funds invested in RIA, or (4) the employer fails to comply with any representations and warranties made by the employer, trustees or employer plan to Equitable Life in connection with the employer plan's participation in RIA. At any time on or after the participation of the employer in RIA has been discontinued, we may withdraw the entire amount of the employer plan assets held in the investment options, and pay them to the trustee of the employer plan, subject to our right to defer payout of amounts held in the guaranteed interest option, less any applicable charges and fees and outstanding loan balances. IRS DISQUALIFICATION If your plan is found not to qualify under the Code, we can terminate your participation under RIA. In this event, we will withdraw the employer plan balances from the investment options, less applicable charges and fees and any outstanding loan balances, and pay the amounts to the trustees of the plan. ABOUT THE SEPARATE ACCOUNTS Each Fund is one, or part of one, of our separate accounts. We established the separate accounts under provisions of the New York Insurance Law. These provisions prevent creditors from any other business we conduct from reaching the assets we hold in our Funds for owners of our variable annuity contracts, including our group annuity contracts. The results of each separate account's operations are accounted for without regard to Equitable Life's, or any other separate account's, operating results. We are the legal owner of all of the assets in the separate accounts and may withdraw any amounts we have in the separate accounts that exceed our reserves and other liabilities under variable annuity contracts. We reserve the right to take certain actions in connection with our operations and the operations of the Funds as permitted by applicable law. If necessary, we will seek approval by participants in RIA. We established the Alliance Bond Fund in 1981, Alliance Common Stock and Alliance Mid Cap Growth Funds in 1969, and Alliance Balanced Fund in 1979. We established Separate Account No. 66, which holds the other Funds offered under the contract, in 1997. Because of exclusionary provisions, none of the Funds is subject to regulation under the Investment Company Act of 1940, as amended ("1940 Act"). The Trusts' shares are purchased by Separate Account No. 66. COMBINATION OF CERTAIN INVESTMENT OPTIONS Subject to shareholder approval, on or about May 14, 2004, we anticipate that the EQ/Technology investment option (the "replaced option"), which invests in a corresponding portfolio of EQ Advisors Trust, will be merged into the AXA Premier VIP Technology investment option (the "surviving option"), which invests in a corresponding portfolio of AXA Premier VIP Trust. The AXA Premier VIP Technology option will first become available under the contracts at the time that its interests replace interests in the EQ/Technology option. At that time, we will move the assets in the replaced option into the surviving option and all allocation elections to the replaced option will be considered allocations to the surviving option. ABOUT THE TRUSTS AXA Premier VIP Trust and EQ Advisors Trust are registered under the Investment Company Act of 1940. They are classified as "open-end management investment companies," more commonly called mutual funds. Each Trust issues different shares relating to each Portfolio. Equitable Life serves as the investment manager of the Trusts. As such, Equitable Life oversees the activities of the investment advisers with respect to the Trusts and is responsible for retaining or discontinuing the services of those advisers. The Trusts do not impose sales charges or "loads" for buying and selling their shares. All dividends and other distributions on Trust shares are reinvested in full. The Board of Trustees of each Trust may establish additional Portfolios or eliminate existing Portfolios at any time. More detailed information about each Trust, its Portfolio investment objectives, policies, restrictions, risks, expenses, its Rule 12b-1 Plan relating to class 1B/B shares and other aspects of its operations, appears in the prospectuses for each Trust, which accompany this prospectus, or in their respective SAIs which are available upon request. 38 More information ABOUT THE GENERAL ACCOUNT Our general account supports all of our policy and contract guarantees, including those that apply to the guaranteed interest option, as well as our general obligations. The general account is subject to regulation and supervision by the Insurance Department of the State of New York and to the insurance laws and regulations of all jurisdictions where we are authorized to do business. Because of exemptions and exclusionary provisions that apply, interests in the general account have not been registered under the Securities Act of 1933, as amended (the "1933 Act"), nor is the general account an investment company under the Investment Company Act of 1940 Act. We have been advised that the staff of the SEC has not reviewed the portions of this prospectus that relate to the general account. The disclosure, however, may be subject to certain provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses. WHEN WE PAY PROCEEDS Ordinarily we will apply proceeds to an annuity and make payments or withdrawals out of the investment options promptly after the date of the transaction. However, we can defer payments, apply proceeds to an annuity and process withdrawals from the Funds for any period during which the New York Stock Exchange is closed for trading, sales of securities are restricted or determination of the fair market value of assets of the Funds is not reasonably practicable because of an emergency. We may also defer withdrawals from the plan in installments in order to protect the interests of the other contract holder in a Fund. WHEN TRANSACTION REQUESTS ARE EFFECTIVE Transaction requests may be made by the authorized person for the employer plan as shown on our records, in written or facsimile form acceptable to us and signed by the employer. All requests will be effective on the business day we receive a properly completed and signed written or facsimile request for a financial transaction at the RIA service office. Transaction requests received after the end of a business day will be processed the next business day. We will honor your properly completed transaction requests received via facsimile only if we receive a properly completed transaction form. The request form must be signed by an individual who the plan trustees have previously authorized in writing. We are not responsible for determining the accuracy of a transmission and are not liable for any consequences, including but not limited to, investment losses and lost investment gains, resulting from a faulty or incomplete transmission. If your request form is not properly completed, we will contact you within 24 hours of our receipt of your facsimile. We will use our best efforts to acknowledge receipt of a facsimile transmission, but our failure to acknowledge or a failure in your receipt of such acknowledgment will not invalidate your transaction request. If you do not receive acknowledgment of your facsimile within 24 hours, contact the RIA service office at the toll free 800 number. VOTING RIGHTS No voting rights apply to any of the separate accounts or to the guaranteed interest option. We do, however, have the right to vote shares of the Trusts held by the Funds. If a Trust holds a meeting of shareholders, we will vote shares of the portfolios of the Trusts allocated to the corresponding Funds in accordance with instructions received from employers, participants or trustees, as the case may be. Shares will be voted in proportion to the voter's interest in the Funds holding the shares as of the record date for the shareholders meeting. We will vote the shares for which no instructions have been received in the same proportion as we vote shares for which we have received instructions. Employers, participants or trustees will receive: (1) periodic reports relating to each Trust and (2) proxy materials, together with a voting instruction form, in connection with shareholder meetings. The Trusts sell their shares to Equitable Life separate accounts in connection with Equitable Life's variable annuity and/or life insurance products, and to separate accounts of insurance companies, both affiliated and unaffiliated with Equitable Life. AXA Premier VIP Trust and EQ Advisors Trust also sell their shares to the trustee of a qualified plan for Equitable Life. We currently do not foresee any disadvantages to our policyowners arising out of these arrangements. However, the Board of Trustees or Directors of each Trust intends to monitor events to identify any material irreconcilable conflicts that may arise and to determine what action, if any, should be taken in response. If we believe that a Board's response insufficiently protects our policyowners, we will see to it that appropriate action is taken to do so. ABOUT LEGAL PROCEEDINGS Equitable Life and its affiliates are parties to various legal proceedings. In our view, none of these proceedings is likely to have a material adverse effect upon the separate accounts, our ability to meet our obligations under RIA, or the distribution of group annuity contract interests under RIA. ABOUT OUR INDEPENDENT AUDITORS The financial statements listed below and incorporated in the SAI have been so incorporated in reliance on the reports of PricewaterhouseCoopers LLP, independent auditors, given on the authority of said firm as experts in auditing and accounting. o The financial statements for Separate Account Nos. 13,10, 4, 3 and 66 as of December 31, 2003 and for each of the two years in the period then ended. o The financial statements for Equitable Life as of December 31, 2003 and 2002 and for each of the three years in the period ended December 31, 2003. ABOUT THE TRUSTEE As trustee, JP Morgan Chase Bank serves as a party to the group annuity contracts. It has no responsibility for the administration of RIA or for any distributions or duties under the group annuity contracts. REPORTS WE PROVIDE AND AVAILABLE INFORMATION We send the employer a report each quarter that shows transactions in the investment options during the quarter for the employer plan, the number of units in the Funds credited to the employer plan, the unit values and the balances in all of the investment options as of the end More information 39 of the quarter. The employer automatically receives a confirmation notice following the processing of a financial investment option transaction. The employer will also receive an annual report and a semiannual report containing financial statements of the Funds and a list of the Funds' or Trust's portfolio securities. As permitted by the SEC's rules, we omitted certain portions of the registration statement filed with the SEC from this prospectus and the SAI. You may obtain the omitted information by: (1) requesting a copy of the registration statement from the SEC's principal office in Washington, D.C., and paying prescribed fees, or (2) by accessing the EDGAR Database at the SEC's Web site at www.sec.gov. ACCEPTANCE AND RESPONSIBILITIES The employer or plan sponsor, as the case may be, was solely responsible for determining whether RIA is a suitable funding vehicle and entered into a participation or installation agreement with us. Our duties and responsibilities are limited to those described in this prospectus. Except as explicitly set forth in the PRS program, we do not provide administrative services in connection with an employer plan. In addition, no financial professional or firm operated by a financial professional is authorized to solicit or agree to perform plan administrative services in his capacity as a financial professional. If an employer or trustee engages a financial professional to provide administrative support services to an employer plan, the employer or trustee engages that financial professional as its representative rather than Equitable Life's. We are not liable to any employer, trustee or employer plan for any damages arising from or in connection with any plan administration services performed or agreed to be performed by a financial professional. ABOUT REGISTERED UNITS This prospectus relates to our offering of units of interest in the Funds that are registered under the 1933 Act. Financial data and other information contained in this prospectus may refer to such "registered units," as offered in the RIA program. We also offer units under RIA to retirement plans maintained by corporations or governmental entities (collectively, "corporate plans"). However, because of an exemption under the 1933 Act, these corporate plan units are not registered under the 1933 Act or covered by this prospectus. ASSIGNMENT AND CREDITORS' CLAIMS Employers and plan participants cannot assign, sell, alienate, discount or pledge as collateral for a loan or other obligation to any party the employer plan balances and rights under RIA, except to the extent allowed by law for a QDRO as that term is defined in the Code. (This reference to a loan does not apply to a loan under RIA.) Proceeds we pay under our contracts cannot be assigned or encumbered by the payee. We will pay all proceeds under our contracts free from the claims of creditors to the extent allowed by law. DISTRIBUTION OF THE CONTRACTS AXA Advisors, LLC ("AXA Advisors"), the successor to EQ Financial Consultants, Inc. and an affiliate of Equitable Life, is the distributor of the contracts and has responsibility for marketing and service functions of the contracts. AXA Advisors is registered with the SEC as a broker-dealer and a member of the National Association of Securities Dealers, Inc. The principal business address of AXA Advisors is 1290 Avenue of the Americas, New York, New York 10104. As of July 9, 2003 the RIA contract is no longer offered as a funding vehicle to new employer plans; however, we continue to support existing RIA contracts, and new participants may continue to be enrolled under existing RIA plans. The contracts are serviced by financial professionals who are registered representatives of AXA Advisors and its affiliates, who are also our licensed insurance agents. AXA Advisors may also receive compensation and reimbursement for its marketing services under the terms of its distribution agreement with Equitable Life. The offering of units of interest under the contracts is intended to be continuous. We pay broker-dealer sales compensation that will generally not exceed 4.0% of the total contributions made under the contracts. Broker-dealers receiving sales compensation will generally pay a portion of it to their financial representatives as commissions related to sales under the contracts. Equitable and/or AXA Advisors may use their respective past profits or other resources to pay brokers and other financial intermediaries for certain expenses they incur in providing services intended to promote the sales of our products and/or shares in the underlying Trusts. These services may include sales personnel training, prospectus review, marketing and related services as well as support services that benefit contract owners. Similarly, in an effort to promote the sale of our products, AXA Advisors may provide its financial professionals and managerial personnel with a higher percentage of sales commissions and/or more compensation for the sale of an Equitable variable product than it would for the sale of another product. Such practice is known as providing differential compensation. Other forms of compensation financial professionals may receive include health and retirement benefits, credits towards stock options awards and rewards for sales incentive campaigns. In addition, managerial personnel may receive expense reimbursements, marketing allowances and so called "overrides." In part for tax reasons, AXA Advisors financial professionals and managerial personnel qualify for health and retirement benefits based on their sales of our variable products. These payments and differential compensation (together,"payments") can vary in amount based on the applicable product and/or entity or individual involved. As with any incentive, such payments may cause the recipient to show preference in recommending the purchase or sale of our products. However, under applicable rules of the National Association of Securities Dealers, Inc., AXA Advisors financial professionals may only recommend to you products that they reasonably believe are suitable for you based on facts that you have disclosed as to your other security holdings, financial situation and needs. In making any recommendation, financial professionals may nonetheless face conflicts of interest because of the differences in compensation from one product category to another, and because of differences in compensation between products in the same category. Although Equitable 40 More information takes all of its costs into account in establishing the level of fees and expenses in our products, payments made will not result in any separate charge to you under your contract. COMMISSIONS AND SERVICE FEES WE PAY Financial professionals who assisted in establishing employer plans in RIA and who are providing necessary services (not including recordkeeping services) are entitled to receive commissions and service fees from us. We pay these commissions and fees, and they are not in addition to the fees and charges we describe in "Charges and expenses" earlier in this Prospectus. Any service fees we pay to financial professionals are contingent upon their providing service satisfactory to us. While the charges and expenses that we receive from a RIA employer plan initially may be less than the commissions and service fees we pay to financial professionals, we expect that over time those charges and expenses we collect will be adequate to cover all of our expenses. Certain retirement plans that use RIA may allow employer plan assets to be used in part to buy life insurance policies rather than applying all of the contributions to RIA. Financial professionals will receive commissions on any such Equitable Life insurance policies at standard rates. These commissions are subject to regulation by state law and are at rates higher than those applicable to commissions payable for placing an employer plan under RIA. More information 41 Appendix: Condensed financial information -------------------------------------------------------------------------------- These selected per unit data and ratios for the years ended December 31, 2003 through 1994 have been derived from the financial statements audited by PricewaterhouseCoopers LLP, independent auditors, in their reports included in the SAI. The financial statements of each of the Funds as well as the consolidated financial statements of Equitable Life are contained in the SAI. Information is provided for the period that each Fund has been available under RIA, but not longer than ten years. SEPARATE ACCOUNT NO. 13 -- POOLED (ALLIANCE BOND FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIOD INDICATED AND OTHER SUPPLEMENTARY DATA (NOTES E AND F)
------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Income $ 2.64 $ 2.99 $ 3.88 $ 3.77 $ 3.27 $ 3.25 $ 3.29 $ 3.09 $ 3.07 $ 2.32 Expenses (Note B) (0.39) (0.36) (0.34) (0.29) (0.28) (0.28) (0.25) (0.25) (0.23) (0.12) ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 2.25 2.63 3.54 3.48 2.99 2.97 3.04 2.84 2.84 2.20 Net realized and unrealized gain (loss) on investments (Note C) 1.04 1.43 2.16 2.47 (3.20) 1.35 0.79 (1.49) 3.72 (2.99) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in unit value 3.29 4.06 5.70 5.95 (0.21) 4.32 3.83 1.35 6.56 (0.79) Alliance Bond Fund unit value (Note A): Beginning of Period 73.91 69.85 64.15 58.20 58.41 54.09 50.26 48.91 42.35 43.14 ------------------------------------------------------------------------------------------------------------------------------------ End of Period $ 77.20 $ 73.91 $ 69.85 $ 64.15 $ 58.20 $ 58.41 $ 54.09 $ 50.26 $ 48.91 $ 42.35 ==================================================================================================================================== Ratio of expenses to average net assets (Note B) 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.36% Ratio of net investment income to average net assets 2.97% 3.75% 5.28% 5.81% 5.13% 5.26% 5.89% 5.81% 6.17% 5.12% Number of units outstanding at end of period 0 0 0 0 264 3,003 2,021 2,698 2,392 1,632 Portfolio turnover rate (Note D) 427% 458% 212% 337% 88% 133% 188% 137% 288% 264% ====================================================================================================================================
See Notes following tables. I-1 Appendix: Condensed financial information SEPARATE ACCOUNT NO. 10 -- POOLED (ALLIANCE BALANCED FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE E)
------------------------------------------------------------------------------------------------------------------------------------ Year Ended December 31, ------------------------------------------------------------------------------------------------------------------------------------ 2003 2002 2001 2000 1999 1998 1997 1996 1995 1994 ------------------------------------------------------------------------------------------------------------------------------------ Income $ 3.38 $ 4.23 $ 5.32 $ 5.89 $ 5.05 $ 4.80 $ 4.41 $ 3.60 $ 3.18 $ 2.63 Expenses (Note B) (0.76) (0.73) (0.79) (0.84) (0.76) (0.66) (0.56) (0.50) (0.43) (0.23) ------------------------------------------------------------------------------------------------------------------------------------ Net investment income 2.62 3.50 4.53 5.05 4.29 4.14 3.85 3.10 2.75 2.40 Net realized and unre- alized gain (loss) on investments (Note C) 21.84 (16.02) (11.65) (8.98) 17.51 19.07 10.33 7.66 13.34 (9.48) ------------------------------------------------------------------------------------------------------------------------------------ Net increase (decrease) in unit value 24.46 (12.52) (7.12) (3.93) 21.80 23.21 14.18 10.76 16.09 (7.08) Alliance Balanced Fund unit value (Note A): Beginning of Period 141.24 153.76 160.88 164.81 143.01 119.80 105.62 94.86 78.77 85.85 ------------------------------------------------------------------------------------------------------------------------------------ End of Period 165.70 $ 141.24 $ 153.76 $ 160.88 $ 164.81 $ 143.01 $ 119.80 $ 105.62 $ 94.86 $ 78.77 ==================================================================================================================================== Ratio of expenses to average net assets (Note B) 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.50% 0.30% Ratio of net invest- ment income to average net assets 1.74% 2.39% 2.93% 3.06% 2.88% 3.19% 3.42% 3.13% 3.19% 2.94% Number of units out- standing at end of period 7,314 8,071 6,834 9,759 11,870 29,340 38,304 52,080 73,979 86,914 Portfolio turnover rate (Note D) 339% 288% 168% 145% 95% 89% 165% 177% 170% 107% ====================================================================================================================================
See Notes following tables. Appendix: Condensed financial information I-2 SEPARATE ACCOUNT NO. 4 -- POOLED (ALLIANCE COMMON STOCK FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE E)
---------------------------------------------------------------------------------------- Year Ended December 31, ---------------------------------------------------------------------------------------- 2003 2002 2001 2000 ---------------------------------------------------------------------------------------- Income $ 2.37 $ 2.07 $ 3.00 $ 3.61 Expenses (Note B) (2.55) (2.58) (3.29) (4.02) ---------------------------------------------------------------------------------------- Net investment income (loss) (0.18) (0.51) (0.29) (0.41) Net realized and unre- alized gain (loss) on investments (Note C) 159.26 (167.15) (137.35) (149.19) ---------------------------------------------------------------------------------------- Net increase (decrease) in unit value 159.08 (167.66) (137.64) (149.60) Alliance Common Stock Fund unit value (Note A): Beginning of Period 443.82 611.48 749.12 898.72 ---------------------------------------------------------------------------------------- End of Period 602.90 $ 443.82 $ 611.48 $ 749.12 ======================================================================================== Ratio of expenses to average net assets (Note B) 0.50% 0.50% 0.50% 0.50% Ratio of net invest- ment income (loss) to average net assets (0.03)% (0.10)% (0.04)% (0.05)% Number of units out- standing at end of period 3,370 4,305 5,420 7,195 Portfolio turnover rate (Note D) 51% 39% 132% 48% ======================================================================================== --------------------------------------------------------------------------------------------------- Year Ended December 31, --------------------------------------------------------------------------------------------------- 1999 1998 1997 1996 1995 1994 --------------------------------------------------------------------------------------------------- Income $ 4.02 $ 3.57 $ 3.39 $ 2.99 $ 3.98 $ 3.83 Expenses (Note B) (3.74) (3.38) (3.11) (2.51) (2.03) (1.00) --------------------------------------------------------------------------------------------------- Net investment income (loss) 0.28 0.19 0.28 0.48 1.95 2.83 Net realized and unre- alized gain (loss) on investments (Note C) 233.22 (18.53) 144.74 80.65 108.54 (8.98) --------------------------------------------------------------------------------------------------- Net increase (decrease) in unit value 233.50 (18.34) 145.02 81.13 110.49 (6.15) Alliance Common Stock Fund unit value (Note A): Beginning of Period 665.22 683.56 538.54 457.41 346.92 353.07 --------------------------------------------------------------------------------------------------- End of Period $ 898.72 $ 665.22 $ 683.56 $ 538.54 $ 457.41 $ 346.92 =================================================================================================== Ratio of expenses to average net assets (Note B) 0.50% 0.50% 0.50% 0.50% 0.50% 0.30% Ratio of net invest- ment income (loss) to average net assets 0.04% 0.03% 0.05% 0.10% 0.49% 0.81% Number of units out- standing at end of period 10,056 17,216 21,142 24,332 25,937 27,438 Portfolio turnover rate (Note D) 72% 71% 62% 105% 108% 91% ===================================================================================================
See Notes following tables. I-3 Appendix: Condensed financial information SEPARATE ACCOUNT NO. 3 -- POOLED (ALLIANCE MID CAP GROWTH FUND) OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES INCOME, EXPENSES AND CAPITAL CHANGES PER REGISTERED UNIT OUTSTANDING DURING THE PERIODS INDICATED AND OTHER SUPPLEMENTARY DATA (NOTE E)
-------------------------------------------------------------------------------- Year Ended December 31, -------------------------------------------------------------------------------- 2003 2002 2001 2000 -------------------------------------------------------------------------------- Income $ 0.42 $ 0.36 $ 0.80 $ 1.70 Expenses (Note B) (0.78) (0.69) (0.89) (1.15) -------------------------------------------------------------------------------- Net investment income (loss) (0.36) (0.33) (0.09) 0.55 Net realized and unreal- ized gain (loss) on investments (Note C) 82.82 (49.92) (36.98) (31.20) -------------------------------------------------------------------------------- Net increase (decrease) in unit value 82.46 (50.25) (37.07) (30.65) Alliance Mid Cap Growth Fund unit value (Note A): Beginning of Period 120.44 170.69 207.76 238.41 -------------------------------------------------------------------------------- End of Period $ 202.90 $ 120.44 $ 170.69 $ 207.76 ================================================================================ Ratio of expenses to average net assets (Note B) 0.50% 0.50% 0.50% 0.50% Ratio of net investment income (loss) to average net assets (0.23)% (0.24)% (0.05)% 0.24% Number of units outstanding at end of period 4,858 4,909 5,338 7,276 Portfolio turn- over rate (Note D) 113% 161% 200% 136% ================================================================================ --------------------------------------------------------------------------------------------- Year Ended December 31, 1999 1998 1997 1996 1995 1994 Income $ 1.61 $ 1.42 $ 1.08 $ 1.33 $ 0.98 $ 0.71 Expenses (Note B) (1.06) (1.13) (1.13) (0.98) (0.75) (0.37) --------------------------------------------------------------------------------------------- Net investment income (loss) 0.55 0.29 ( 0.05) 0.35 0.23 0.34 Net realized and unreal- ized gain (loss) on investments (Note C) 34.80 (31.58) 25.34 38.04 40.49 (5.81) --------------------------------------------------------------------------------------------- Net increase (decrease) in unit value 35.35 (31.29) 25.29 38.39 40.72 (5.47) Alliance Mid Cap Growth Fund unit value (Note A): Beginning of Period 203.06 234.35 209.06 170.67 129.95 135.42 --------------------------------------------------------------------------------------------- End of Period $ 238.41 $ 203.06 $ 234.35 $ 209.06 $ 170.67 $ 129.95 ============================================================================================= Ratio of expenses to average net assets (Note B) 0.50% 0.50% 0.50% 0.50% 0.50% 0.30% Ratio of net investment income (loss) to average net assets 0.27% 0.13% (0.02)% 0.18% 0.15% 0.25% Number of units outstanding at end of period 10,300 21,322 27,762 26,777 26,043 26,964 Portfolio turn- over rate (Note D) 108% 195% 176% 118% 137% 94% =============================================================================================
See Notes following tables. Appendix: Condensed financial information I-4 Notes: A. The values for a registered Alliance Bond Fund, Alliance Balanced Fund, Alliance Common Stock Fund and Alliance Mid Cap Growth Fund unit on May 1, 1992, January 23, 1985, April 8, 1985 and July 7, 1986, the first date on which payments were allocated to purchase registered units in each Fund, were $36.35, $28.07, $84.15 and $44.82, respectively. B. Certain expenses under RIA are borne directly by employer plans participating in RIA. Accordingly, those charges and fees discussed in "Charges and expenses" earlier in this prospectus, are not included above and did not affect the Fund unit values. Those charges and fees are recovered by Equitable Life through an appropriate reduction in the number of units credited to each employer plan participating in the Fund unless the charges and fees are billed directly to and paid by the employer. The dollar amount recovered is included under the caption "For Contributions and Withdrawals" as administrative fees and asset management fees in the Statement of Changes in Net Assets for each Fund, which appear in the Financial Statements in the SAI. As of June 1, 1994, the annual investment management and financial accounting fee is deducted from the assets of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds and is reflected in the computation of their unit values. If all charges and fees had been made directly against employer plan assets in the Funds and had been reflected in the computation of Fund unit value, RIA registered unit expenses would have amounted to $1.22, $2.53, $8.36 and $2.52 for the year ended December 31, 2003 on a per unit basis for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, respectively. For the same reporting periods, the ratio of expenses to average net assets attributable to registered units would have been (on an annualized basis), 1.61%, 1.68%, 1.64% and 1.62% for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, respectively. (See Note F.) C. See Note 2 to Financial Statements of Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 (Pooled) which appear in the SAI. D. The portfolio turnover rate excludes all short-term U.S. Government securities and all other securities whose maturities at the time of acquisition were one year or less. The rate stated is the annual turnover rate for the entire Separate Account Nos. 13 -- Pooled, 10 -- Pooled, 4 -- Pooled and 3 -- Pooled. E. Income, expenses, gains and losses shown above pertain only to employer plans' accumulations attributable to RIA registered units. Other plans and trusts also participate in Separate Account Nos. 13 -- Pooled, 10 -- Pooled, 4 -- Pooled and 3 -- Pooled and may have operating results and other supplementary data different from those shown above. F. Because contractholders withdrew their participating interest in Separate Account No. 13 during March of 2000, the per unit data and ratios shown are hypothetical for these registered units. However, the per unit data and ratios developed are based upon actual values for non-registered units of Separate Account No. 13, which carry fees and expenses identical to those imposed upon registered units of the Separate Account. I-5 Appendix: Condensed financial information SEPARATE ACCOUNT NO. 66 (POOLED) UNIT VALUES AND NUMBER OF REGISTERED UNITS OUTSTANDING
------------------------------------------------------------------------------------------------------------------------------------ EQ/Alliance EQ/Alliance Intermediate EQ/Alliance EQ/Alliance EQ/Alliance Growth Government EQ/Alliance Premier Quality Small Cap AXA Premier and Income Securities International Growth Bond Growth VIP High Yield Fund Fund Fund Fund Fund Fund ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1994 $ 98.99 $ 99.81 $ 98.94 -- -- $ 99.83 -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1994 -- 192 -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1995 $ 118.64 $ 123.78 $ 112.07 $ 104.60 -- $ 116.76 -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1995 40 1,323 248 -- -- 52 -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1996 $ 145.72 $ 148.57 $ 116.24 $ 114.80 -- $ 122.96 -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1996 69 2,078 593 853 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1997 $ 172.55 $ 188.22 $ 124.66 $ 111.25 -- $ 134.14 $ 114.18 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1997 1,414 6,083 783 1,531 -- 270 2,235 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1998 $ 163.58 $ 227.38 $ 134.24 $ 122.93 -- $ 145.72 $ 109.25 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1998 259 6,500 1,110 1,659 -- 1,038 1,625 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1999 $ 158.02 $ 269.68 $ 134.36 $ 169.30 $ 113.69 $ 142.73 $ 139.67 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1999 187 6,182 1,419 1,302 94 4,298 1,064 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2000 $ 144.28 $ 293.68 $ 146.61 $ 130.25 $ 92.79 $ 159.04 $ 159.12 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2000 414 2,424 -- 1,522 1,017 4,295 1,166 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2001 $ 145.57 $ 289.75 $ 158.49 $ 100.42 $ 70.55 $ 172.14 $ 138.34 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2001 464 2,862 -- 1,519 1,220 3,094 475 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2002 $ 141.56 $ 228.60 $ 172.44 $ 90.42 $ 48.57 $ 185.72 $ 96.68 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2002 156 2,649 -- 3,854 1,226 1,262 593 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2003 $ 173.86 $ 298.75 $ 176.49 $ 122.39 $ 59.84 $ 192.69 $ 136.53 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2003 143 2,354 -- 4,074 480 1,014 365 ------------------------------------------------------------------------------------------------------------------------------------
Appendix: Condensed financial information I-6 SEPARATE ACCOUNT NO. 66 (POOLED) UNIT VALUES AND NUMBER OF REGISTERED UNITS OUTSTANDING (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ EQ/Calvert EQ/Capital EQ/Capital EQ/Capital EQ/Emerging EQ/Bernstein Socially Guardian Guardian Guardian Markets EQ/Equity Diversified Responsible International Research U.S. Equity 500 Value Fund Fund Fund Fund Equity Fund Fund Index Fund ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1994 -- -- -- -- -- -- $ 101.71 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1994 -- -- -- -- -- -- 10 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1995 -- -- -- -- -- -- $ 138.75 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1995 -- -- -- -- -- -- 641 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1996 -- -- -- -- -- -- $ 169.72 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1996 -- -- -- -- -- -- 3,856 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1997 -- -- -- -- -- -- $ 224.89 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1997 -- -- -- -- -- -- 7,176 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1998 -- -- -- -- -- $ 111.23 $ 287.87 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1998 -- -- -- -- -- -- 11,983 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1999 $ 95.43 $ 106.58 $ 128.61 $ 105.35 $ 101.11 $ 217.72 $ 346.38 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1999 -- -- -- -- -- 197 12,855 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2000 $ 97.35 $ 103.48 $ 104.06 $ 111.58 $ 104.73 $ 130.53 $ 313.02 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2000 -- -- 1 -- -- 190 5,112 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2001 $ 98.39 $ 88.27 $ 82.32 $ 109.33 $ 102.63 $ 123.81 $ 275.50 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2001 156 -- 301 263 538 209 3,528 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2002 $ 84.97 $ 64.92 $ 69.94 $ 82.36 $ 78.34 $ 116.49 $ 214.26 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2002 158 -- 296 445 646 158 2,322 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2003 $ 109.39 $ 83.07 $ 92.75 $ 108.30 $ 106.85 $ 181.64 $ 274.41 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2003 157 -- 293 320 639 66 1,595 ------------------------------------------------------------------------------------------------------------------------------------
I-7 Appendix: Condensed financial information SEPARATE ACCOUNT NO. 66 (POOLED) UNIT VALUES AND NUMBER OF REGISTERED UNITS OUTSTANDING (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ EQ/Janus EQ/FI Mid EQ/FI Small/ Large Cap EQ/Lazard EQ/Mercury EQ/Evergreen Cap Mid Cap Growth Small Cap EQ/Marsico Basic Value Omega Fund Fund Value Fund Fund Value Fund Focus Fund Equity Fund ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1994 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1994 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1995 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1995 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1996 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1996 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1997 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1997 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1998 -- -- $ 105.06 -- -- -- $ 107.43 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1998 -- -- -- -- -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1999 $ 105.75 -- $ 106.96 -- $ 97.39 -- $ 127.78 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1999 -- -- 32 -- -- -- 164 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2000 $ 93.36 $ 100.42 $ 112.45 $ 84.32 $ 115.42 -- $ 142.86 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2000 1 -- 32 -- -- -- 110 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2001 $ 77.48 $ 86.96 $ 116.95 $ 64.96 $ 135.90 $ 106.25 $ 150.76 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2001 16 123 37 -- 57 -- 1,078 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2002 $ 58.87 $ 70.90 $ 99.75 $ 45.27 $ 117.08 $ 93.97 $ 125.65 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2002 59 496 547 -- 262 -- 228 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2003 $ 81.36 $ 101.82 $ 132.94 $ 56.98 $ 160.84 $ 123.22 $ 164.84 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2003 80 87 405 19 62 -- 192 ------------------------------------------------------------------------------------------------------------------------------------
Appendix: Condensed financial information I-8 SEPARATE ACCOUNT NO. 66 (POOLED) UNIT VALUES AND NUMBER OF REGISTERED UNITS OUTSTANDING (CONTINUED)
------------------------------------------------------------------------------------------------------------------------------------ EQ/MFS EQ/Putnam Emerging EQ/MFS Growth & EQ/Mercury Growth Investors EQ/Money Income EQ/Putnam International Companies Trust Market Value Voyager EQ/Technology Value Fund Fund Fund Fund Fund Fund Fund ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1994 -- -- -- $ 102.65 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1994 -- -- -- 28 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1995 -- -- -- $ 108.49 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1995 -- -- -- 1,374 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1996 -- -- -- $ 114.22 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1996 -- -- -- 1,397 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1997 -- -- -- $ 120.35 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1997 -- -- -- 1,351 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1998 -- $ 123.19 -- $ 126.71 $ 113.78 -- -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1998 -- 30 -- 1,249 -- -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 1999 $ 136.14 $ 213.94 $ 104.35 $ 132.95 $ 112.24 $ 120.77 -- ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 1999 26 3,035 -- 601 50 -- -- ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2000 $ 119.37 $ 173.64 $ 103.62 $ 141.19 $ 119.84 $ 99.31 $ 79.21 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2000 125 3,680 478 438 475 400 532 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2001 $ 93.68 $ 114.52 $ 87.07 $ 146.56 $ 111.68 $ 75.02 $ 59.85 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2001 459 2,173 472 653 487 448 678 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2002 $ 78.10 $ 75.21 $ 68.77 $ 148.67 $ 90.40 $ 55.26 $ 35.44 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2002 605 1,328 466 4,189 487 389 742 ------------------------------------------------------------------------------------------------------------------------------------ Unit value as of: December 31, 2003 $ 99.99 $ 97.26 $ 83.93 $ 149.82 $ 114.64 $ 68.49 $ 50.87 ------------------------------------------------------------------------------------------------------------------------------------ Number of units outstanding at December 31, 2003 430 1,340 415 223 472 498 867 ------------------------------------------------------------------------------------------------------------------------------------
I-9 Appendix: Condensed financial information Statement of additional information -------------------------------------------------------------------------------- TABLE OF CONTENTS Page Fund Information 2 General 2 Restrictions and requirements of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds 2 Certain investments of the Alliance Bond and Alliance Balanced Funds 2 How we determine the unit value 4 Brokerage fees and charges for securities transactions 5 Additional information about RIA 6 Loan provisions 6 Annuity benefits 6 Amount of fixed-annuity payments 7 Ongoing operations fee 7 Management for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds and Equitable Life 7 Funds 7 Distribution of the contracts 7 Equitable Life's pending name change 7 Equitable Life 8 Directors 8 Officer-Directors 9 Other Officers 9 Financial statements index 11 Financial statements FSA-1 Send or Fax this request form to receive a Statement of Additional Information To: The Equitable Life Assurance Society of the United States--RIA service office 200 Plaza Drive--1st Floor Secaucus, NJ 07094-3689 Fax: (201) 583-2304 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Please send me an Retirement Investment Account(R) SAI for May 1, 2004. -------------------------------------------------------------------------------- Name -------------------------------------------------------------------------------- Address -------------------------------------------------------------------------------- City State Zip Client number: ----------------------------------------------------------------- (SAI__ (5/04)) Retirement Investment Account(R) Statement of additional information dated May 1, 2004 -------------------------------------------------------------------------------- This statement of additional information ("SAI") is not a prospectus. It should be read in conjunction with the prospectus for our Retirement Investment Account(R) ("RIA"), dated May 1, 2004 ("prospectus"), and any supplements. Terms defined in the prospectus have the same meaning in the SAI unless the context otherwise requires. You can obtain a copy of the prospectus, and any supplements to the prospectus, from us free of charge by writing or calling the RIA service office listed on the back of this SAI, or by contacting your financial professional. Our home office is located at 1290 Avenue of the Americas, New York, N.Y. 10104 and our telephone number is (212) 554-1234. TABLE OF CONTENTS Fund information 2 General 2 Restrictions and requirements of the Alliance Bond (Separate Account No. 13), Alliance Balanced (Separate Account No. 10), Alliance Common Stock (Separate Account No. 4) and Alliance Mid Cap Growth (Separate Account No. 3) Funds 2 Certain investments of the Alliance Bond and Alliance Balanced Funds 2 How we determine the unit value 4 Brokerage fees and charges for securities transactions 5 Additional information about RIA 6 Loan provisions 6 Annuity benefits 6 Amount of fixed-annuity payments 7 Ongoing operations fee 7 Management for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds and Equitable Life 7 Funds 7 Distribution of the contracts 7 Equitable Life's pending name change 7 Equitable Life 8 Directors 8 Officer-Directors 9 Other Officers 9 Financial statements index 11 Financial statements FSA-1 Copyright 2004. The Equitable Life Assurance Society of the United States 1290 Avenue of the Americas, New York, New York 10104. All rights reserved. Retirement Investment Account(R) is a service mark of The Equitable Life Assurance Society of the United States. SAI 4ACS x00747 FUND INFORMATION GENERAL In our prospectus we discuss in more detail, among other things, the structure of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, their investment objectives and policies, including the types of portfolio securities that they may hold and levels of investment risks that may be involved, and investment management. We also summarize certain of these matters with respect to the Investment Funds and their corresponding portfolios. See "Investment options" in the prospectus. Here we will discuss special restrictions, requirements and transaction expenses that apply to the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, certain investments of the Alliance Bond Fund and determination of the value of units for all Funds, including some historical information. You can find information about the investment objectives and policies, as well as restrictions, requirements and risks pertaining to the corresponding AXA Premier VIP Trust or EQ Advisors Trust portfolio in which the Investment Funds invest in the prospectus and SAI for each Trust. RESTRICTIONS AND REQUIREMENTS OF THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE COMMON STOCK AND ALLIANCE MID CAP GROWTH FUNDS Neither the Alliance Common Stock Fund nor the Alliance Balanced Fund will make an investment in an industry if that investment would cause either Fund's holding in that industry to exceed 25% of either Fund's assets. The Alliance Bond Fund, Alliance Common Stock Fund and Alliance Mid Cap Growth Fund will not purchase or write puts or calls (options). The Alliance Balanced Fund's investment policies do not prohibit hedging transactions such as through the use of put and call options and stock index or interest rate futures. However, the Alliance Balanced Fund currently has no plans to enter into such transactions. The following investment restrictions apply to the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds. None of those Funds will: o trade in foreign exchange (except transactions incidental to the settlement of purchases or sales of securities for a Fund and contracts for the purchase or sale of a specific foreign currency at a future date at a price set at the time of the contract); o make an investment in order to exercise control or management over a company; o underwrite the securities of other companies, including purchasing securities that are restricted under the 1933 Act or rules or regulations thereunder (restricted securities cannot be sold publicly until they are registered under the 1933 Act), except as stated below; o make short sales, except when the Fund has, by reason of ownership of other securities, the right to obtain securities of equivalent kind and amount that will be held so long as they are in short position; o trade in commodities or commodity contracts (except the Alliance Balanced Fund is not prohibited from entering into hedging transactions through the use of stock index or interest rate futures); o purchase real estate or mortgages, except as stated below. The Funds may buy shares of real estate investment trusts listed on stock exchanges or reported on the NASDAQ; o have more than 5% of its assets invested in the securities of any one registered investment company. A Fund may not own more than 3% of a registered investment company's outstanding voting securities. The Fund's total holdings of registered investment company securities may not exceed 10% of the value of the Fund's assets; o purchase any security on margin or borrow money except for short-term credits necessary for clearance of securities transactions; o make loans, except loans through the purchase of debt obligations or through entry into repurchase agreements; or o invest more than 10% of its total assets in restricted securities, real estate investments, or portfolio securities not readily marketable (The Alliance Common Stock Fund will not invest in restricted securities). CERTAIN INVESTMENTS OF THE ALLIANCE BOND AND ALLIANCE BALANCED FUNDS The following are brief descriptions of certain types of investments which may be made by the Alliance Bond and Alliance Balanced Funds and certain risks and investment techniques. Mortgage pass-through securities. The Alliance Bond and Alliance Balanced Funds may invest in mortgage pass-through securities, which are securities representing interests in pools of mortgages. Principal and interest payments made on the mortgages in the pools are passed through to the holder of such securities. Payment of principal and interest on some mortgage pass-through securities (but not the market value of the securities themselves) may be guaranteed by the full faith and credit of the U.S. Government (in the case of securities guaranteed by the Government National Mortgage Association, or "GNMA"), or guaranteed by agencies or instrumen-talities of the U.S. Government (in the case of securities guaranteed by the Federal National Mortgage Association ("FNMA") or the Federal Home Loan Mortgage Corporation ("FHLMC"), which are supported only by discretionary authority of the U.S. Government to purchase the agency's obligations). Mortgage pass-through securities created by non-governmental issuers (such as commercial banks, savings and loan institutions, private mortgage insurance companies, mortgage bankers, and other secondary market issuers) may be supported by various forms of insurance or guarantees, including individual loan, title, pool, and hazard insurance, and letters of credit, which may be issued by governmental entities, private insurers or the mortgage poolers. The definition of pass-through mortgage related securities includes adjustable-rate securities ("ARMS"), commercial mortgage-backed securities ("CMBS") and dollar rolls. 2 Collateralized mortgage obligations. The Alliance Bond and Alliance Balanced Funds may invest in collateralized mortgage obligations ("CMOs"). CMOs are debt securities collateralized by underlying mortgage loans or pools of mortgage pass-through securities guaranteed by GNMA, FHLMC or FNMA and are generally issued by limited purpose finance subsidiaries of U.S. Government instrumentalities. CMOs are not, however, mortgage pass-through securities. Rather, they are pay-through securities, i.e., securities backed by the cash flow from the underlying mortgages. Investors in CMOs are not owners of the underlying mortgages, which serve as collateral for such debt securities, but are simply owners of a debt security backed by such pledged assets. CMOs are typically structured into multiple classes, with each class bearing a different stated maturity and having different payment streams. Monthly payments of principal, including prepayments, are first returned to investors holding the shortest maturity class; investors holding longer maturity classes receive principal payments only after the shorter class or classes have been retired. Asset-backed securities. The Alliance Bond and Alliance Balanced Funds may purchase asset-backed securities that represent either fractional interests or participation in pools of leases, retail installment loans or revolving credit receivables held by a trust or limited purpose finance subsidiary. Such asset-backed securities may be secured by the underlying assets (such as Certificates for Automobile Receivables) or may be unsecured (such as Credit Card Receivable Securities). Depending on the structure of the asset-backed security, monthly or quarterly payments of principal and interest or interest only are passed through like mortgage pass-through securities or paid through (like CMOs) to certificate holders. Asset-backed securities may be guaranteed up to certain amounts by guarantees, insurance or letters of credit issued by a financial institution affiliated or unaffiliated with the originator of the pool. Underlying automobile sales contracts and credit card receivables are, of course, subject to prepayment (although to a lesser degree than mortgage pass-through securities), which may shorten the securities' weighted average life and reduce their overall return to certificate holders. Certificate holders may also experience delays in payment if the full amounts due on underlying loans, leases or receivables are not realized because of unanticipated legal or administrative costs of enforcing the contracts or because of depreciation or damage to the collateral (usually automobiles) securing certain contracts, or other factors. The value of these securities also may change because of changes in the market's perception of the creditworthiness of the servicing agent for the pool, the originator of the pool, or the financial institution providing credit support enhancement for the pool. If consistent with its investment objective and policies, the Alliance Bond and Alliance Balanced Funds may invest in other asset-backed securities that may be developed in the future. Zero coupon bonds. The Alliance Bond and Alliance Balanced Funds may invest in zero coupon bonds. Such bonds may be issued directly by agencies and instrumentalities of the U.S. Government or by private corporations. Zero coupon bonds may originate as such or may be created by stripping an outstanding bond. Zero coupon bonds do not make regular interest payments. Instead, they are sold at a deep discount from their face value. Because a zero coupon bond does not pay current income, its price can be very volatile when interest rates change. Repurchase agreements. In repurchase agreements, the Alliance Bond or Alliance Balanced Fund buys securities from a seller, usually a bank or brokerage firm, with the understanding that the seller will repurchase the securities at a higher price at a future date. During the term of the repurchase agreement the Fund retains the securities subject to the repurchase agreement as collateral securing the seller's repurchase obligation, continually monitors on a daily basis the market value of the securities subject to the agreement and requires the seller to deposit with the Fund collateral equal to any amount by which the market value of the securities subject to the repurchase agreement falls below the resale amount provided under the repurchase agreement. We evaluate the creditworthiness of sellers with whom we enter into repurchase agreements. Such transactions afford an opportunity for the Fund to earn a fixed rate of return on available cash at minimal market risk, although the Fund may be subject to various delays and risks of loss if the seller is unable to meet its obligation to repurchase. The Funds currently treat repurchase agreements maturing in more than seven days as illiquid securities. Debt securities subject to prepayment risks. Mortgage pass-through securities and certain collateralized mortgage obligations, asset-backed securities and other debt instruments in which the Alliance Balanced Fund and Alliance Bond Fund may invest are subject to prepayments prior to their stated maturity. The Fund usually is unable to accurately predict the rate at which prepayments will be made, which rate may be affected, among other things, by changes in generally prevailing market interest rates. If prepayments occur, the Fund suffers the risk that it will not be able to reinvest the proceeds at as high a rate of interest as it had previously been receiving. Also, the Fund will incur a loss to the extent that prepayments are made for an amount that is less than the value at which the security was then being carried by the Fund. Moreover, securities that may be prepaid tend to increase in value less during times of declining interest rates, and to decrease in value more during times of increasing interest rates, than do securities that are not subject to prepayment. When-issued and delayed delivery securities. The Alliance Bond and Alliance Balanced Funds may purchase and sell securities on a when-issued or delayed delivery basis. In these transactions, securities are purchased or sold by a Fund with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price or yield to the Fund at the time of entering into the transaction. However, the market value of such securities at the time of settlement may be more or less than the purchase price then payable. When a Fund engages in when-issued or delayed delivery transactions, the Fund relies on the other party to consummate the transaction. Failure to consummate the transaction may result in the Fund missing the opportunity of obtaining a price or yield considered to be advantageous. When-issued and delayed delivery transactions are generally expected to settle within three months from the date the transactions are entered into, although the Fund may close out its position prior to the settlement date. The Fund will sell on a forward settlement basis only securities it owns or has the right to acquire. 3 Foreign currency forward contracts. The Alliance Balanced Fund may enter into contracts for the purchase or sale of a specific foreign currency at a future date at a price set at the time of the contract. Generally, such forward contracts will be for a period of less than three months. The Fund will enter into such forward contracts for hedging purposes only. These transactions will include forward purchases or sales of foreign currencies for the purpose of protecting the dollar value of securities denominated in a foreign currency or protecting the dollar equivalent of interest or dividends to be paid on such securities. Forward contracts are traded in the inter-bank market, and not on organized commodities or securities exchanges. Accordingly, the Fund is dependent upon the good faith and creditworthiness of the other party to the transaction, as evaluated by the Fund's Manager. To the extent inconsistent with any restrictions in the SAI concerning the Fund's trading in foreign exchange, this paragraph will control. Hedging transactions. The Alliance Balanced Fund may engage in hedging transactions which are designed to protect against anticipated adverse price movements in securities owned or intended to be purchased by the Fund. When interest rates go up, the market value of outstanding debt securities declines and vice versa. In recent years the volatility of the market for debt securities has increased significantly, and market prices of longer-term obligations have been subject to wide fluctuations, particularly as contrasted with those of short-term instruments. The Fund will take certain risks into consideration when determining which, if any, options or financial futures contracts it will use. If the price movements of hedged portfolio securities are in fact favorable to the Fund, the hedging transactions will tend to reduce and may eliminate the economic benefit to the Fund which otherwise would result. Also, the price movements of options and futures used for hedging purposes may not correlate as anticipated with price movements of the securities being hedged. This can make a hedge transaction less effective than anticipated and could result in a loss. The options and futures markets can sometimes become illiquid and the exchanges on which such instruments are traded may impose trading halts or delays on the exercise of options and liquidation of futures positions in certain circumstances. This could in some cases operate to the Fund's detriment. HOW WE DETERMINE THE UNIT VALUE In our prospectus, we discuss how employer plan assets are put into and taken out of the Funds by the purchase and redemption of units under the contracts, respectively. See "How we value your plan balances" in the prospectus. Here we will discuss how we determine the value of units. When contributions are invested in the Funds, the number of units outstanding attributable to each Fund is correspondingly increased; and when amounts are withdrawn from one of these Funds, the number of units outstanding attributable to that Fund is correspondingly decreased. For the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, the unit values reflect investment performance and investment management and financial accounting fees. We determine the respective unit values for these Funds by multiplying the unit value for the preceding business day by the net investment factor for that subsequent day. We determine the net investment factor as follows: o First, we take the value of the Fund's assets at the close of business on the preceding business day. o Next, we add the investment income and capital gains, realized and unrealized, that are credited to the assets of the Fund during the business day for which the net investment factor is being determined. o Then, we subtract the capital losses, realized and unrealized, and investment management and financial accounting fees charged to the Fund during that business day. o Finally, we divide this amount by the value of the Fund's assets at the close of the preceding business day. Prior to June 1, 1994, for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds, the investment management and financial accounting fees were deducted monthly from employer plan balances in these Funds. Assets of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds are valued as follows: o Common stocks and other equity-type securities listed on national securities exchanges and certain over-the-counter issues traded on the NASDAQ system are valued at the last sale price or, if no sale, at the latest available bid price. Other unlisted securities reported on the NASDAQ system are valued at inside (highest) quoted bid prices. o Foreign securities not traded directly, or in American Depository Receipt form in the United States are valued at the last sale price in the local currency on an exchange in the country of origin. Foreign currency is converted into dollars at current exchange rates. o United States Treasury securities and other obligations issued or guaranteed by the United States Government, its agencies or instrumentalities are valued at representative quoted prices. o Long-term (maturing in more than a year) publicly traded corporate bonds are valued at prices obtained from a bond pricing service of a major dealer in bonds when such prices are available; however, in circumstances where it is deemed appropriate to do so, an over-the-counter or exchange quotation may be used. o Short-term debt securities maturing in 60 days or less are valued at amortized cost, which approximates market value. Short-term debt securities maturing in more than 60 days are valued at representative quoted prices. As of January 1, 2002, the Funds acquire short-term debt securities directly. See "Investment options" in the prospectus. o Convertible preferred stocks listed on national securities exchanges are valued as of their last sale price or, if there is no last sale, at the latest available bid price. o Convertible bonds and unlisted convertible preferred stocks are valued at bid prices obtained from one or more major dealers in 4 such securities; where there is a discrepancy between dealers, values may be adjusted based on recent premium spreads to the underlying common stock. The unit value for a Fund of Separate Account No. 66 for any business day together with any preceding non-business days ("valuation period") is equal to the unit value for the preceding valuation period multiplied by the net investment factor for that Investment Fund for that valuation period. The net investment factor for a valuation period is: (a / b) - c where: (a) is the value of the Fund's shares of the corresponding portfolio at the end of the valuation period before giving effect to any amounts allocated to or withdrawn from the Investment Fund for the valuation period. For this purpose, we use the share value reported to us by the applicable Trust. This share value is after deduction for investment advisory fees and other expenses of each Trust. (b) is the value of the Fund's shares of the corresponding portfolio at the end of the preceding valuation period (after any amounts are allocated or withdrawn for that valuation period). (c) is the daily factor for the separate account administrative charge multiplied by the number of calendar days in the valuation period. Our investment officers and each Trust's investment adviser determine in good faith the fair value of securities and other assets that do not have a readily available market price in accordance with accepted accounting practices and applicable laws and regulations. BROKERAGE FEES AND CHARGES FOR SECURITIES TRANSACTIONS We discuss in the prospectus that we are the investment manager of the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds. As the investment manager of these Funds, we invest and reinvest the assets of these Funds in a manner consistent with the policies described in the prospectus. In providing these services we currently use the personnel and facilities of our majority-owned subsidiary, Alliance Capital Management L.P. ("Alliance"), for portfolio selection and transaction services, including arranging the execution of portfolio transactions. Alliance is also an adviser for certain portfolios in EQ Advisors Trust and AXA Premier VIP Trust. Information on brokerage fees and charges for securities transactions for the Trusts' portfolios is provided in the prospectus for each Trust. The Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds are charged for securities brokers commissions, transfer taxes and other fees and expenses relating to their operation. Transactions in equity securities for a Fund are executed primarily through brokers which receive a commission paid by the Fund. Brokers are selected by Alliance. Alliance seeks to obtain the best price and execution of all orders placed for the portfolio of the Funds, considering all the circumstances. If transactions are executed in the over-the-counter market Alliance will deal with the principal market makers, unless more favorable prices or better execution is otherwise obtainable. There are occasions on which portfolio transactions for the Funds may be executed as part of concurrent authorizations to purchase or sell the same security for certain other accounts or clients advised by Alliance. Although these concurrent authorizations potentially can be either advantageous or disadvantageous to the Funds, they are effected only when it is believed that to do so is in the best interest of the Funds. When these concurrent authorizations occur, the objective is to allocate the executions among the accounts or clients in a fair manner. We try to choose only brokers which we believe will obtain the best prices and executions on securities transactions. Subject to this general requirement, we also consider the amount and quality of securities research services provided by a broker. Typical research services include general economic information and analyses and specific information on and analyses of companies, industries and markets. Factors we use in evaluating research services include the diversity of sources used by the broker and the broker's experience, analytical ability and professional stature. The receipt of research services from brokers tends to reduce our expenses in managing the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds. We take this into account when setting the expense charges. Brokers who provide research services may charge somewhat higher commissions than those who do not. However, we will select only brokers whose commissions we believe are reasonable in all the circumstances. We periodically evaluate the services provided by brokers and prepare internal proposals for allocating among those various brokers business for all the accounts we manage or advise. That evaluation involves consideration of the overall capacity of the broker to execute transactions, its financial condition, its past performance and the value of research services provided by the broker in servicing the various accounts advised or managed by us. Generally, we do not tell brokers that we will try to allocate a particular amount of business to them. We do occasionally let brokers know how their performance has been evaluated. Research information that we obtain may be used in servicing all clients or accounts under our management, including our general account. Similarly, we will not necessarily use all research provided by a broker or dealer with which the Funds transact business in connection with those Funds. Transactions for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds in the over-the-counter market are normally executed as principal transactions with a dealer that is a principal market maker in the security, unless a better price or better execution can be obtained from another source. Under these circumstances, the Funds pay no commission. Similarly, portfolio 5 transactions in money market and debt securities will normally be executed through dealers or underwriters under circumstances where the Fund pays no commission. When making securities transactions for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds that do not involve paying a brokerage commission (such as the purchase of short-term debt securities), we seek to obtain prompt execution in an effective manner at the best price. Subject to this general objective, we may give orders to dealers or underwriters who provide investment research. None of the Funds will pay a higher price, however, and the fact that we may benefit from such research is not considered in setting the expense charges. In addition to using brokers and dealers to execute portfolio securities transactions for clients or accounts we manage, we may enter into other types of business transactions with brokers or dealers. These other transactions will be unrelated to allocation of the Funds' portfolio transactions. For the years ended December 31, 2003, 2002 and 2001, total brokerage commissions for Separate Account No. 10 -- Pooled were $78,626, $85,206 and $84,086, respectively; for Separate Account No. 4 -- Pooled were $929,767, $1,298,849 and $3,576,437, respectively; for Separate Account No. 3 -- Pooled were $466,820, $522,922 and $317,615, respectively; and for Separate Account No. 13 -- Pooled were $-0-, $-0-, and $ -0-, respectively. For the fiscal year ended December 31, 2003, commissions of $48,690, $350,047 and $192,041 were paid to brokers providing research services to Separate Account No. 10 -- Pooled, Separate Account No. 4 -- Pooled and Separate Account No. 3 -- Pooled, respectively, on portfolio transactions of $37,692,860, $664,462,701 and $211,832,029, respectively. ADDITIONAL INFORMATION ABOUT RIA LOAN PROVISIONS Loans to plan trustees on behalf of participants are permitted in our RIA program. It is the plan administrator's responsibility to administer the loan program. The following are important features of the RIA loan provision: o We will only permit loans from the guaranteed interest option. If the amount requested to be borrowed plus the loan fee and loan reserve we discuss below is more than the amount available in the guaranteed interest option for the loan transaction, the employer can move the additional amounts necessary from one or more Funds to the guaranteed interest option. o The plan administrator determines the interest rate, the maximum term and all other terms and conditions of the loan. o Repayment of loan principal and interest can be made only to the guaranteed interest option. The employer must identify the portion of the repayment amount which is principal and which is interest. o Upon repayment of a loan amount, any repayment of loan principal and loan reserve (see below) taken from one or more Funds for loan purposes may be moved back to a Fund. o We charge a loan fee in an amount equal to 1% of the loan principal amount on the date a loan is made. The contingent withdrawal charge will be applied to any unpaid principal, as if the amount had been withdrawn on the day the principal payment was due. See "Charges and expenses" in the prospectus. o The minimum amount of a loan for a participant is $1,000, and the maximum amount is 90% of the balances in all the investment options for a participant. An employer plan, the Code and the DOL (as described in "Tax information" in the prospectus) may impose additional conditions or restrictions on loan transactions. o On the date a loan is made, we create a loan reserve account in the guaranteed interest option in an amount equal to 10% of the loan amount. The 10% loan reserve is intended to cover (1) the ongoing operations fee applicable to amounts borrowed, (2) the possibility of our having to deduct applicable contingent withdrawal charges (see "Charges and expenses" in the prospectus) and (3) the deduction of any other withholdings, if required. The loan amount will not earn any interest under the contracts while the loan is outstanding. The amount of the loan reserve will continue to earn interest at the guaranteed interest option rate applicable for the employer plan. o The ongoing operations fee will apply to the sum of the investment option balances (including the loan reserve) plus any unpaid loan principal. If the employer plan is terminated or any amount is withdrawn, or if any withdrawal from RIA results in the reduction of the 10% loan reserve amount in the guaranteed interest option, during the time a loan is outstanding, the contingent withdrawal charge will be applied to any principal loan balances outstanding as well as to any employer plan balances (including the loan reserve) in the investment options. See "Charges and expenses" in the prospectus. ANNUITY BENEFITS Subject to the provisions of an employer plan, we have available under RIA the following forms of fixed annuities. o Life annuity: An annuity which guarantees a lifetime income to the retired employee-participant ("annuitant") and ends with the last monthly payment before the annuitant's death. There is no death benefit associated with this annuity form and it provides the highest monthly amount of any of the guaranteed life annuity forms. If this form of annuity is selected, it is possible that only one payment will be made if the annuitant dies after that payment. o Life annuity -- period certain: This annuity form guarantees a lifetime income to the annuitant and, if the annuitant dies during a previously selected minimum payment period, continuation 6 of payments to a designated beneficiary for the balance of the period. The minimum period is usually 5, 10, 15 or 20 years. o Life annuity -- refund certain: This annuity form guarantees a lifetime income to the annuitant and, if the annuitant dies before the initial single premium has been recovered, payments will continue to a designated beneficiary until the single premium has been recovered. If no beneficiary survives the annuitant, the refund will be paid in one lump sum to the estate. o Period certain annuity: Instead of guaranteed lifetime income, this annuity form provides for payments to the annuitant over a specified period, usually 5, 10, 15 or 20 years, with payments continuing to the designated beneficiary for the balance of the period if the annuitant dies before the period expires. o Qualified joint and survivor life annuity: This annuity form guarantees lifetime income to the annuitant, and, after the annuitant's death, the continuation of income to the surviving spouse. Generally, unless a married annuitant elects otherwise with the written consent of his spouse, this will be the form of annuity payment. If this form of annuity is selected, it is possible that only one payment will be made if both the annuitant and the spouse die after that payment. All of the forms outlined above (with the exception of qualified joint and survivor life annuity) are available as either Single or Joint life annuities. We offer other forms not outlined here. Your financial professional can provide details. AMOUNT OF FIXED-ANNUITY PAYMENTS Our forms of a fixed annuity provide monthly payments of specified amounts. Fixed-annuity payments, once begun, will not change. The size of payments will depend on the form of annuity that is chosen, our annuity rate tables in effect when the first payment is made, and, in the case of a life income annuity, on the annuitant's age. The tables in our contracts show monthly payments for each $1,000 of proceeds applied under an annuity. If our annuity rates in effect on the annuitant's retirement date would yield a larger payment, those current rates will apply instead of the tables. Our annuity rate tables are designed to determine the amounts required for the annuity benefits elected and for administrative and investment expenses and mortality and expense risks. Under our contracts we can change the annuity rate tables every five years. Such changes would not affect annuity payments being made. ONGOING OPERATIONS FEE We determine the ongoing operations fee based on the combined net balances of an employer plan in all the investment options (including any outstanding loan balances) at the close of business on the last business day of each month. For employer plans that adopted RIA on or before February 9, 1986, we use the rate schedule set forth below, and apply it to the employer plan balances at the close of business on the last business day of the following month. For employer plans that adopted RIA after February 9, 1986 we use the rate schedule set forth in the prospectus. See "Charges and expenses" in the prospectus.
------------------------------------------------- Combined balance Monthly of investment options rate ------------------------------------------------- First $150,000 1/12 of 1.25% Next $350,000 1/12 of 1.00% Next $500,000 1/12 of 0.75% Next $1,500,000 1/12 of 0.50% Over $2,500,000 1/12 of 0.25% -------------------------------------------------
MANAGEMENT FOR THE ALLIANCE BOND, ALLIANCE BALANCED, ALLIANCE COMMON STOCK AND ALLIANCE MID CAP GROWTH FUNDS AND EQUITABLE LIFE FUNDS In the Prospectus we give information about us, the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds and how we, together with Alliance, provide investment management for the investments and operations of these Funds. See "More information" in the prospectus. The amounts of the investment management and financial accounting fees we received from employer plans participating through registered contracts in the Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds in 2003 were $6,150, $9,082 and $3,707, respectively; in 2002 were $5,143, $12,781 and $3,465, respectively; in 2001 were $6,235, $20,542 and $5,630, respectively. The amount of such fees received under the Alliance Bond Fund in 2003, 2002 and 2001 were $0, $0 and $-0-, respectively. DISTRIBUTION OF THE CONTRACTS Pursuant to a Distribution and Servicing Agreement between AXA Advisors, Equitable Life, and certain of Equitable Life's separate accounts, Equitable Life paid AXA Advisors a fee of $325,380 for each of the years 2003, 2002 and 2001. Equitable Life paid AXA Advisors as the distributor of certain contracts, including these contracts, and as the principal underwriter of several Equitable Life separate accounts $562,696,578 in 2003, $536,113,253 in 2002 and $543,488,990 in 2001. Of these amounts, AXA Advisors retained $287,344,634, $283,213,274 and $277,057,837, respectively. EQUITABLE LIFE'S PENDING NAME CHANGE Effective on or about September 7, 2004, we expect, subject to regulatory approval, to change the name of "The Equitable Life Assurance Society of the United States" to "AXA Equitable Life Insurance Company." When the name change becomes effective, all references in any current prospectus, prospectus supplement or statement of additional information to "The Equitable Life Assurance Society of the United States" will become references to "AXA Equitable Life Insurance Company." Accordingly, all references to "Equitable Life" or "Equitable" will become references to "AXA Equitable." 7 EQUITABLE LIFE We are managed by a Board of Directors which is elected by our shareholder(s). Our directors and certain of our executive officers and their principal occupations are as follows. Unless otherwise indicated, the following persons have been involved in the management of Equitable and/or its affiliates in various executive positions during the last five years.
------------------------------------------------------------------------------------------------------------------------------------ Directors Name Age Principal occupation ------------------------------------------------------------------------------------------------------------------------------------ Henri de Castries 49 Chairman of the Board, AXA Financial, Inc.; Chairman of the Management Board of AXA; prior thereto, CEO, AXA. ------------------------------------------------------------------------------------------------------------------------------------ Claus-Michael Dill 50 Chairman of the Management Board of AXA Konzern AG; prior thereto, member of the Holding Management Board of Gerling-Konzern in Cologne. ------------------------------------------------------------------------------------------------------------------------------------ Joseph L. Dionne 70 Retired Chairman and Chief Executive Officer, The McGraw-Hill Companies. ------------------------------------------------------------------------------------------------------------------------------------ Denis Duverne 50 Executive Vice President, AXA; Member, AXA Executive Committee; prior thereto, Member of the AXA Management Board and Chief Financial Officer. ------------------------------------------------------------------------------------------------------------------------------------ Jean-Rene Fourtou 64 Chairman and Chief Executive Officer, Vivendi Universal and Vice Chairman of the Supervisory Board, Aventis; prior thereto, Chairman and Chief Executive Officer, Rhone-Poulenc, S.A. ------------------------------------------------------------------------------------------------------------------------------------ Donald J. Greene 70 Counsel, LeBoeuf, Lamb, Greene & MacRae; prior thereto, Of Counsel and Partner of the firm. ------------------------------------------------------------------------------------------------------------------------------------ Mary (Nina) Henderson 53 Retired Corporate Vice President, Core Business Development of Bestfoods (formerly CPC International, Inc.); prior thereto, Vice President and President, Bestfoods Grocery. ------------------------------------------------------------------------------------------------------------------------------------ W. Edwin Jarmain 65 President, Jarmain Group Inc. ------------------------------------------------------------------------------------------------------------------------------------ Peter J. Tobin 60 Special Assistant to the President, St. John's University; prior thereto, Dean, Peter J. Tobin College of Business, St. John's University; prior thereto, Chief Financial Officer, Chase Manhattan Corp. ------------------------------------------------------------------------------------------------------------------------------------ Bruce W. Calvert 57 Chairman, Alliance Capital Management Corporation. Former Chief Executive Officer. ------------------------------------------------------------------------------------------------------------------------------------ John C. Graves 40 President and Chief Operating Officer, Graves Ventures, LLC. Chief of Staff, Earl G. Graves, Ltd. and President of Black Enterprise Unlimited. ------------------------------------------------------------------------------------------------------------------------------------ James F. Higgins 56 Senior Advisor, Morgan Stanley. Prior thereto, President and Chief Operating Officer -- Individual Investor Group, Morgan Stanley Dean Witter. ------------------------------------------------------------------------------------------------------------------------------------ Christina Johnson 53 Former President and Chief Executive Officer, Saks Fifth Avenue Enterprises. Prior thereto, President and CEO, Saks Fifth Avenue. ------------------------------------------------------------------------------------------------------------------------------------ Scott D. Miller 51 Vice Chairman, Hyatt Hotels Corporation; prior thereto, President, Hyatt Hotels Corporation; Executive Vice President, Hyatt Development Corporation. ------------------------------------------------------------------------------------------------------------------------------------ Joseph H. Moglia 54 Chief Executive Officer, Ameritrade Holding Corporation; prior thereto, Senior Vice President, Merrill Lynch & Co., Inc.. ------------------------------------------------------------------------------------------------------------------------------------
8
------------------------------------------------------------------------------------------------------------------------------------ Officer-Directors Name Age Principal occupation ------------------------------------------------------------------------------------------------------------------------------------ Christopher M. Condron 56 Director, Chairman of the Board, President and Chief Executive Officer, Equitable Life and AXA Financial Services, LLC; Director, President and Chief Executive Officer, AXA Financial, Inc., Director Chairman of the Board, President and Chief Executive Officer, The Equitable of Colorado, Inc. and AXA Distribution Holding Company; prior thereto, President and Chief Operating Officer, Mellon Financial Corporation and Chairman and Chief Executive Officer, Dreyfus Corp. ------------------------------------------------------------------------------------------------------------------------------------ Stanley B. Tulin 54 Vice Chairman of the Board and Chief Financial Officer of Equitable Life, AXA Financial, Inc. and AXA Financial Services, LLC; Executive Vice President and Member of the Executive Committee of AXA; prior thereto, Co-Chairman of the Insurance Consulting and Actuarial Practice of Coopers & Lybrand, L.L.P. ------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------ Other Officers Name Age Principal occupation ------------------------------------------------------------------------------------------------------------------------------------ Leon B. Billis 57 Executive Vice President and AXA Group Deputy Chief Information Officer, Equitable Life and AXA Financial Services, LLC; Director, Chief Executive Officer and President of AXA Technology Services of America, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Harvey Blitz 58 Senior Vice President, Equitable Life, AXA Financial, Inc. and AXA Financial Services, LLC; Director and Executive Vice President, AXA Advisors, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Kevin R. Byrne 48 Senior Vice President and Treasurer, Equitable Life, AXA Financial, Inc., AXA Financial Services, LLC and The Equitable of Colorado, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Judy A. Faucett 55 Senior Vice President of Equitable Life and AXA Financial Services, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Alvin H. Fenichel 59 Senior Vice President and Controller of Equitable Life, AXA Financial, Inc. and AXA Financial Services, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Paul J. Flora 57 Senior Vice President and Auditor of Equitable Life, AXA Financial, Inc. and AXA Financial Services, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Donald R. Kaplan 49 Senior Vice President, Chief Compliance Officer and Associate General Counsel of Equitable Life and AXA Financial Services, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Peter D. Noris 48 Executive Vice President and Chief Investment Officer of Equitable Life, AXA Financial, Inc. and AXA Financial Services, LLC; Chairman and Trustee of EQ Advisors Trust; Executive Vice President and Chief Investment Officer of The Equitable of Colorado, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Anthony C. Pasquale 56 Senior Vice President of Equitable Life and AXA Financial Services, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Pauline Sherman 60 Senior Vice President, Secretary and Associate General Counsel of Equitable Life, AXA Financial, Inc., AXA Financial Services, LLC; and The Equitable of Colorado, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Richard V. Silver 48 Executive Vice President and General Counsel, Equitable Life, AXA Financial, Inc., AXA Financial Services, LLC and The Equitable of Colorado, Inc.; Director, AXA Advisors, LLC. ------------------------------------------------------------------------------------------------------------------------------------ Jennifer L. Blevins 46 Executive Vice President, Equitable Life and AXA Financial Services, LLC; prior thereto, Senior Vice President and Managing Director, Worldwide Human Resources, Chubb and Son, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Mary Beth Farrell 46 Executive Vice President, Equitable Life and AXA Financial Services, LLC; prior thereto, Controller and Senior Vice President, GreenPoint Financial/GreenPoint Bank. ------------------------------------------------------------------------------------------------------------------------------------ Stuart L. Faust 51 Senior Vice President and Deputy General Counsel, Equitable Life, AXA Financial, Inc. and AXA Financial Services, LLC. ------------------------------------------------------------------------------------------------------------------------------------ William I. Levine 60 Executive Vice President and Chief Information Officer, Equitable Life and AXA Financial Services, LLC; prior thereto, Senior Vice President, Paine Webber. ------------------------------------------------------------------------------------------------------------------------------------ Deanna M. Mulligan 40 Executive Vice President, Equitable Life and AXA Financial Services, LLC; prior thereto, Principal, McKinsey and Company, Inc. ------------------------------------------------------------------------------------------------------------------------------------ Jerald E. Hampton 49 Executive Vice President, Equitable Life and AXA Financial Services, LLC; Director and Vice Chairman of the Board, AXA Advisors, LLC; Director, Chairman and CEO, AXA Network, LLC; Director and Chairman of the Board of AXA Distributors, LLC; prior thereto, Executive Vice President and Director of the Private Client Financial Services Division, Salomon Smith Barney. ------------------------------------------------------------------------------------------------------------------------------------ Charles A. Marino 45 Senior Vice President and Actuary, Equitable Life and AXA Financial Services, LLC; prior thereto, Vice President of Equitable Life. ------------------------------------------------------------------------------------------------------------------------------------
9 -------------------------------------------------------------------------------- Retirement Investment Account(R) -------------------------------------------------------------------------------- SEPARATE ACCOUNT UNITS OF INTEREST UNDER GROUP ANNUITY CONTRACTS
FUNDS ------------------------------------------------------------------------------------------------------------------ Pooled Separate Accounts Separate Account No. 66 o Alliance Balanced, Separate Account No. 10 -- Pooled o AXA Premier VIP High Yield o Alliance Bond, Separate Account No. 13 -- Pooled o AXA Premier VIP Technology* o Alliance Common Stock, Separate Account No. 4 -- Pooled o EQ/Alliance Growth and Income o Alliance Mid Cap Growth, Separate Account No. 3 -- Pooled o EQ/Alliance Intermediate Government Securities o EQ/Alliance International o EQ/Alliance Premier Growth o EQ/Alliance Quality Bond o EQ/Alliance Small Cap Growth o EQ/Bernstein Diversified Value o EQ/Calvert Socially Responsible o EQ/Capital Guardian International o EQ/Capital Guardian Research o EQ/Capital Guardian U.S. Equity o EQ/Emerging Markets Equity o EQ/Equity 500 Index o EQ/Evergreen Omega o EQ/FI Mid Cap o EQ/FI Small/Mid Cap Value o EQ/Janus Large Cap Growth o EQ/Lazard Small Cap Value o EQ/Marsico Focus o EQ/Mercury Basic Value Equity o EQ/Mercury International Value o EQ/MFS Emerging Growth Companies o EQ/MFS Investors Trust o EQ/Money Market o EQ/Putnam Growth & Income Value o EQ/Putnam Voyager o EQ/Technology*
* The EQ/Technology investment option will be merged into the AXA Premier VIP Technology investment option. See "Combination of certain investment options" in the prospectus. OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES RIA service office: Contributions only: Express Mail Contributions only: Equitable Life Equitable Life Bank One, NA RIA Service Office RIA/EPP 300 Harmon Meadow Boulevard, 3rd Floor 200 Plaza Drive, 1st Floor P.O. Box 13503 Attn: Box 13503 Secaucus, NJ 07094-3689 Newark, NJ 07188 Secaucus, NJ 07094 Tel.: (800) 967-4560 (201) 583-2302 (9 A.M. to 5 P.M. Eastern time) Fax: (201) 583-2304 (To obtain pre-recorded Fund unit values, use our toll-free number listed above) 10
------------------------------------------------------------------------------------------------------------------------------------ Financial statements index ------------------------------------------------------------------------------------------------------------------------------------ Page ------------------------------------------------------------------------------------------------------------------------------------ Separate Account Nos. 13 (Pooled), Report of Independent Auditors -- ..................................................... FSA-1 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 (Pooled) ------------------------------------------------------------------------------------------------------------------------------------ Separate Account No. 13 (Pooled) Statement of Assets and Liabilities, December 31, 2003 ................................ 2 ----------------------------------------------------------------------------------------------- Statement of Operations for the Year Ended December 31, 2003 .......................... 3 ----------------------------------------------------------------------------------------------- Statements of Changes in Net Assets for the Years Ended December 31, 2003 and 2002 ...................................................... 4 ----------------------------------------------------------------------------------------------- Portfolio of Investments, December 31, 2003 ........................................... 5 ------------------------------------------------------------------------------------------------------------------------------------ Separate Account No. 10 (Pooled) Statement of Assets and Liabilities, December 31, 2003 ................................ 10 ----------------------------------------------------------------------------------------------- Statement of Operations for the Year Ended December 31, 2003 .......................... 11 ----------------------------------------------------------------------------------------------- Statements of Changes in Net Assets for the Years Ended December 31, 2003 and 2002 ...................................................... 12 ----------------------------------------------------------------------------------------------- Portfolio of Investments, December 31, 2003 ........................................... 13 ------------------------------------------------------------------------------------------------------------------------------------ Separate Account No. 4 (Pooled) Statement of Assets and Liabilities, December 31, 2003 ................................ 22 ----------------------------------------------------------------------------------------------- Statement of Operations for the Year Ended December 31, 2003 .......................... 23 ----------------------------------------------------------------------------------------------- Statements of Changes in Net Assets for the Years Ended December 31, 2003 and 2002 ...................................................... 24 ----------------------------------------------------------------------------------------------- Portfolio of Investments, December 31, 2003 ........................................... 25 ------------------------------------------------------------------------------------------------------------------------------------ Separate Account No. 3 (Pooled) Statement of Assets and Liabilities, December 31, 2003 ................................ 27 ----------------------------------------------------------------------------------------------- Statements of Operations for the Year Ended December 31, 2003 ......................... 28 ----------------------------------------------------------------------------------------------- Statements of Changes in Net Assets for the Years Ended December 31, 2003 and 2002 ...................................................... 29 ----------------------------------------------------------------------------------------------- Portfolio of Investments, December 31, 2003 ........................................... 30 ------------------------------------------------------------------------------------------------------------------------------------ Separate Account No. 66 (Pooled) Statements of Assets and Liabilities, December 31, 2003 ............................... 32 ----------------------------------------------------------------------------------------------- Statements of Operations for the Year Ended December 31, 2003 ......................... 39 ----------------------------------------------------------------------------------------------- Statements of Changes in Net Assets for the Years Ended December 31, 2003 and 2002 ...................................................... 46 ------------------------------------------------------------------------------------------------------------------------------------ Separate Account Nos. 13 (Pooled), Notes to Financial Statements ......................................................... 56 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 (Pooled) ------------------------------------------------------------------------------------------------------------------------------------ The Equitable Life Assurance Report of Independent Auditors -- ..................................................... F-1 Society of the United States ----------------------------------------------------------------------------------------------- Consolidated Balance Sheets as of December 31, 2003 and 2002 .......................... F-2 ----------------------------------------------------------------------------------------------- Consolidated Statements of Earnings for the Years Ended December 31, 2003, 2002 and 2001 ................................................ F-3 ----------------------------------------------------------------------------------------------- Consolidated Statements of Shareholder's Equity for the Years Ended December 31, 2003, 2002 and 2001 ................................................ F-4 ----------------------------------------------------------------------------------------------- Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001 ................................................ F-5 ----------------------------------------------------------------------------------------------- Notes to Consolidated Financial Statements ............................................ F-7 ------------------------------------------------------------------------------------------------------------------------------------ The financial statements of the Funds reflect fees, charges and other expenses of the Separate Accounts applicable to contracts under RIA as in effect during the periods covered, as well as the expense charges made in accordance with the terms of all other contracts participating in the respective Funds. ------------------------------------------------------------------------------------------------------------------------------------
11 -------------------------------------------------------------------------------- Report of Independent Auditors To the Board of Directors of The Equitable Life Assurance Society of the United States and the Contractowners of Separate Account Nos. 13, 10, 4, 3, and 66 of the Equitable Life Assurance Society of the United States In our opinion, the accompanying statements of assets and liabilities, including the portfolios of investments, and the related statements of operations and of changes in net assets present fairly, in all material respects, the financial position of Separate Account Nos. 13 (Pooled) (The Alliance Bond Fund), 10 (Pooled) (The Alliance Balanced Fund), 4 (Pooled) (The Alliance Common Stock Fund), 3 (Pooled) (The Alliance Mid Cap Growth Fund) and 66 of The Equitable Life Assurance Society of the United States ("Equitable Life") at December 31, 2003, the results of each of their operations for the year then ended and the changes in each of their net assets for each of the two years in the period then ended, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Equitable Life's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 9, 2004 FSA-1 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States
Statement of Assets and Liabilities December 31, 2003 ---------------------------------------------------------------------------------------- Assets: Investments (Notes 2 and 3): Long-term debt securities - at value (amortized cost: $113,871,030)...... $117,141,878 Short-term debt securities - at value (amortized cost: $4,299,857) ...... 4,299,857 Cash ..................................................................... 69,947 Interest and other receivable ............................................ 1,163,764 ---------------------------------------------------------------------------------------- Total assets ............................................................. 122,675,446 ---------------------------------------------------------------------------------------- Liabilities: Due to Equitable Life's General Account .................................. 543 Accrued expenses ......................................................... 56,696 ---------------------------------------------------------------------------------------- Total liabilities ........................................................ 57,239 ---------------------------------------------------------------------------------------- Net Assets ............................................................... $122,618,207 ======================================================================================== Units Outstanding Unit Values ----------------- ----------- Institutional ....................................... 15,072 $ 8,099.71 Momentum Strategy ................................... 3,372 132.03 RIA ................................................. 1,152 77.20
The accompanying notes are an integral part of these financial statements. 2 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States
Statement of Operations Year Ended December 31, 2003 ------------------------------------------------------------------------------------- Investment Income (Note 2): -- Interest ............................... $ 4,596,757 ------------------------------------------------------------------------------------- Expenses (Note 5): Investment management fees ............................................ (808) Operating and expense charges ......................................... (66,517) ------------------------------------------------------------------------------------- Total expenses ........................................................ (67,325) ------------------------------------------------------------------------------------- Net investment income ................................................. 4,529,432 ------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments (Note 2): Realized gain from security transactions .............................. 3,090,587 Change in unrealized appreciation/depreciation of investments ......... (1,382,730) ------------------------------------------------------------------------------------- Net realized and unrealized gain on investments ....................... 1,707,857 ------------------------------------------------------------------------------------- Net Increase in Net Assets Attributable to Operations ................. $ 6,237,289 =====================================================================================
The accompanying notes are an integral part of these financial statements. 3 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States
Statements of Changes in Net Assets --------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 2003 2002 --------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets: From Operations: Net investment income ................................................................ $ 4,529,432 $ 5,146,651 Net realized gain on investments ..................................................... 3,090,587 1,294,581 Change in unrealized appreciation/depreciation of investments ........................ (1,382,730) 2,710,923 --------------------------------------------------------------------------------------------------------------------- Net increase in net assets attributable to operations ................................ 6,237,289 9,152,155 --------------------------------------------------------------------------------------------------------------------- From Contributions and Withdrawals: Contributions ........................................................................ 17,047,804 75,400,133 Withdrawals .......................................................................... (60,506,675) (28,054,425) Asset management fees ................................................................ (429,375) (411,412) Administrative fees .................................................................. (1,716) (7,704) --------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets attributable to contributions and withdrawals .. (43,889,962) 46,926,592 --------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................................................... (37,652,673) 56,078,747 Net Assets - Beginning of Year ....................................................... 160,270,880 104,192,133 --------------------------------------------------------------------------------------------------------------------- Net Assets - End of Year ............................................................. $ 122,618,207 $ 160,270,880 =====================================================================================================================
The accompanying notes are an integral part of these financial statements. 4 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- LONG-TERM DEBT SECURITIES: AEROSPACE & DEFENSE (0.6%) Aerospace (0.6%) Boeing Capital Corp. 4.75%, 8/25/08 .................... $ 180,000 $ 185,691 Raytheon Co. 4.85%, 1/15/11 .................... 490,000 490,648 --------- 676,339 --------- ASSET BACKED SECURITIES (5.8%) Chase Funding Mortgage Loan 1.26%, 2/25/21 .................... 642,011 641,882 Countrywide Asset Backed Certificate 1.249%, 10/25/19 .................. 308,618 308,632 DaimlerChrysler Auto Trust 2.86%, 3/08/09 .................... 845,000 844,761 Fleet Credit Card Master Trust II 5.6%, 12/15/08 .................... 1,860,000 1,987,369 Honda Auto Receivables Owner Trust 2.19%, 5/15/07 .................... 340,000 340,495 Master Asset Backed Securities Trust I 1.29%, 3/25/20 .................... 275,985 275,899 MBNA Credit Card Master Note Trust 2.75%, 10/15/10 ................... 985,000 957,957 Residential Asset Mortgage Products, Inc.: 1.27%, 7/25/18 .................... 315,442 315,283 1.309%, 10/25/22 .................. 278,950 278,950 Structured Asset Investment Loan Trust 1.249%, 7/25/33 ................... 452,963 452,657 World Omni Auto Receivables Trust: 2.2%, 1/15/08 ..................... 245,000 244,977 2.87%, 11/15/10 ................... 470,000 469,860 --------- 7,118,722 --------- BASIC INDUSTRIES (1.0%) Chemicals (0.3%) Praxair, Inc. 2.75%, 6/15/08 .................... 350,000 338,176 --------- Mining & Metals (0.2%) Alcan, Inc. 4.5%, 5/15/13 ..................... 230,000 221,642 --------- Paper & Forest Products (0.5%) International Paper Co. 5.85%, 10/30/12 ................... 345,000 359,430 Weyerhaeuser Co. 6.75%, 3/15/12 .................... 305,000 332,737 --------- 692,167 --------- 1,251,985 --------- -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- CAPITAL GOODS (1.6%) Pollution Control (0.4%) Waste Management, Inc. 6.875%, 5/15/09 ................... $ 475,000 $ 530,946 --------- Miscellaneous (1.2%) General Electric Co.: 1.22%, 10/24/05 ................... 620,000 620,217 5.0%, 2/01/13 ..................... 370,000 374,194 Hutchison Whampoa International Ltd. 6.5%, 2/13/13 ..................... 485,000 505,129 --------- 1,499,540 --------- 2,030,486 --------- COMMERCIAL MORTGAGE BACKED SECURITIES (5.2%) First Union-Lehman Brothers-Bank of America Series 1998-C2, Class A4 6.56%, 11/18/35 ................... 1,190,000 1,327,388 GS Mortgage Securities Corp. II Series 2003-C1, Class A2A 3.59%, 1/10/40 .................... 1,320,000 1,324,680 Merrill Lynch Mortgage Trust Series 2003-Key1, Class A4 5.236%, 11/12/35 .................. 765,000 784,954 Morgan Stanley Capital I Series 2003-T11, Class A4 5.15%, 6/13/41 .................... 1,300,000 1,332,177 Nomura Asset Securities Corp. Series 1998-D6, Class A1B 6.59%, 3/15/30 .................... 1,400,000 1,566,669 --------- 6,335,868 --------- CONSUMER MANUFACTURING (0.8%) Auto & Related (0.7%) DaimlerChrysler NA Holding Corp. 4.75%, 1/15/08 .................... 535,000 547,378 General Motors Corp. 7.125%, 7/15/13 ................... 280,000 307,068 --------- 854,446 --------- Building & Related (0.1%) Lennar Corp. 5.95%, 3/01/13 .................... 70,000 73,245 --------- 927,691 --------- CONSUMER SERVICES (6.5%) Broadcasting & Cable (4.8%) AOL Time Warner, Inc. 6.875%, 5/01/12 ................... 565,000 635,797
5 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Clear Channel Communications, Inc.: 4.625%, 1/15/08 ................ $ 390,000 $ 402,268 4.25%, 5/15/09 ................. 340,000 340,874 Comcast Cable Communications, Inc. 6.2%, 11/15/08 ................. 955,000 1,047,982 Comcast Corp. 5.5%, 3/15/11 .................. 305,000 317,024 Cox Communications, Inc. 7.125%, 10/01/12 ............... 310,000 357,558 Lenfest Communications, Inc. 8.375%, 11/01/05 ............... 475,000 523,492 Liberty Media Corp. 5.7%, 5/15/13 .................. 535,000 541,027 Time Warner Entertainment Co. 7.25%, 9/01/08 ................. 1,460,000 1,674,538 --------- 5,840,560 --------- Cellular Communications (1.3%) AT&T Wireless Services, Inc. 7.875%, 3/01/11 ................ 270,000 312,429 Telus Corporation 7.5%, 6/01/07 .................. 485,000 542,785 Verizon Wireless Capital LLC 5.375%, 12/15/06 ............... 475,000 506,874 Vodafone Group PLC 7.75%, 2/15/10 ................. 215,000 254,817 --------- 1,616,905 --------- Printing & Publishing (0.4%) News America, Inc. 4.75%, 3/15/10 ................. 500,000 512,814 --------- 7,970,279 --------- CONSUMER STAPLES (2.4%) Beverages (1.1%) Anheuser Busch Cos., Inc. 4.375%, 1/15/13 ................ 1,050,000 1,022,110 Diago Finance BV 3.0%, 12/15/06 ................. 370,000 371,935 --------- 1,394,045 --------- Food (0.7%) Kellogg Co. 2.875%, 6/01/08 ................ 345,000 333,118 Kraft Foods, Inc. 5.25%, 10/01/13 ................ 470,000 474,236 --------- 807,354 --------- Retail-Food & Drug (0.4%) Albertson's, Inc. 7.5%, 2/15/11 .................. 190,000 217,807 -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Safeway, Inc. 5.8%, 8/15/12 .................. $ 315,000 $ 325,699 --------- 543,506 --------- Miscellaneous (0.2%) Fortune Brands, Inc. 2.875%, 12/01/06 ............... 210,000 211,300 --------- 2,956,205 --------- ENERGY (4.6%) Domestic Integrated (1.0%) Amerada Hess Corp. 6.65%, 8/15/11 ................. 1,150,000 1,246,310 --------- Domestic Producers (0.7%) Anadarko Petroleum Corp. 5.375%, 3/01/07 ................ 750,000 801,793 --------- Oil Service (2.6%) Conoco Funding Co.: 5.45%, 10/15/06 ................ 740,000 793,943 6.35%, 10/15/11 ................ 1,025,000 1,149,187 Devon Financing Corp. 6.875%, 9/30/11 ................ 720,000 816,426 Petronas Capital Ltd. 7.0%, 5/22/12 .................. 420,000 478,431 --------- 3,237,987 --------- Miscellaneous (0.3%) Valero Energy Corp. 6.875%, 4/15/12 ................ 315,000 348,579 --------- 5,634,669 --------- FINANCE (22.2%) Banking-Money Center (3.3%) Capital One Bank 6.5%, 6/13/13 .................. 345,000 361,702 Citicorp. 6.375%, 11/15/08 ............... 790,000 873,791 JP Morgan Chase & Co.: 6.75%, 8/15/08 ................. 1,165,000 1,310,877 6.75%, 2/01/11 ................. 885,000 997,918 MBNA America Bank NA 6.5%, 6/20/06 .................. 465,000 506,286 --------- 4,050,574 --------- Banking-Regional (3.7%) Bank of America Corp. 6.25%, 4/15/12 ................. 645,000 711,033 Bank One Corp. 7.875% 8/01/10 ................. 490,000 588,593 M&T Bank Corp. 3.85%, 4/01/13 ................. 225,000 223,470
6 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- National City Corp. 3.2%, 4/01/08 ................... $ 315,000 $ 311,053 UFJ Finance Aruba AEC 6.75%, 7/15/13 .................. 390,000 415,935 US Bank NA : 2.85%, 11/15/06 ................. 620,000 623,000 6.375%, 8/01/11 ................. 870,000 970,020 Wachovia Bank 3.5%, 8/15/08 ................... 710,000 706,985 ---------- 4,550,089 ---------- Brokerage & Money Management (2.8%) Bear Stearns & Co., Inc. 4.0%, 1/31/08 ................... 320,000 325,931 Credit Suisse FB USA, Inc. 5.5%, 8/15/13 ................... 360,000 370,985 Goldman Sachs Group, Inc. 4.75%, 7/15/13 .................. 605,000 589,615 Lehman Brothers Holdings, Inc.: 4.0%, 1/22/08 ................... 975,000 994,445 6.625%, 1/18/12 ................. 330,000 372,410 Morgan Stanley DeanWitter & Co. 5.8%, 4/01/07 ................... 735,000 798,932 ---------- 3,452,318 ---------- Insurance (0.8%) Humana, Inc. 7.25%, 8/01/06 .................. 405,000 442,510 Metlife, Inc. : 5.375%, 12/15/12 ................ 255,000 262,576 5.0%, 11/24/13 .................. 330,000 327,672 ---------- 1,032,758 ---------- Mortgage Banking (0.9%) Countrywide Financial Corp. 4.25%, 12/19/07 ................. 515,000 531,139 Greenpoint Financial Corp. 3.2%, 6/06/08 ................... 555,000 536,466 ---------- 1,067,605 ---------- Real Estate (0.9%) EOP Operating LP 5.875%, 1/15/13 ................. 320,000 334,064 ERP Operating LP 5.2%, 4/01/13 ................... 250,000 251,570 Vornado Realty Trust : 4.75%, 12/01/10 ................. 225,000 225,024 5.625%, 6/15/07 ................. 305,000 325,632 ---------- 1,136,290 ---------- -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Miscellaneous (9.8%) American Express Co. 4.875%, 7/15/13 ................. $ 60,000 $ 60,127 American General Finance Corp. : 3.0%, 11/15/06 .................. 435,000 437,784 4.5%, 11/15/07 .................. 325,000 339,080 Capital One Financial Corp. 6.25%, 11/15/13 ................. 185,000 189,660 CIT Group, Inc. : 4.125%, 2/21/06 ................. 700,000 724,366 5.5%, 11/30/07 .................. 235,000 251,609 Citigroup, Inc. 7.25%, 10/01/10 ................. 1,325,000 1,544,364 Ford Motor Credit Co. : 7.0%, 10/01/13 .................. 795,000 838,470 7.375%, 10/28/09 ................ 535,000 587,516 7.375%, 2/01/11 ................. 1,240,000 1,351,526 General Electric Capital Corp. 6.0%, 6/15/12 ................... 785,000 851,296 General Motors Acceptance Corp. 6.875%, 9/15/11 ................. 1,195,000 1,287,167 Household Finance Corp.: 6.5%, 11/15/08 .................. 705,000 785,896 7.0%, 5/15/12 ................... 300,000 342,110 John Deere Capital Corp. 4.5%, 8/22/07 ................... 325,000 340,060 MBNA Corp. 4.625%, 9/15/08 ................. 380,000 390,004 National Rural Utilities Cooperative 7.25%, 3/01/12 .................. 235,000 273,819 Washington Mutual Finance Corp. 6.25%, 5/15/06 .................. 1,330,000 1,445,241 ---------- 12,040,095 ---------- 27,329,729 ---------- HEALTH CARE (2.5%) Drugs (0.9%) Bristol Myers Squibb Co. 4.75%, 10/01/06 ................. 455,000 481,141 Schering-Plough Corp. 5.3%, 12/01/13 .................. 580,000 590,120 ---------- 1,071,261 ---------- Medical Services (1.6%) Anthem, Inc. 6.8%, 8/01/12 ................... 290,000 327,549 HCA, Inc. : 6.75%, 7/15/13 .................. 265,000 281,032 7.125%, 6/01/06 ................. 730,000 790,905 Health Net, Inc. 8.375%, 4/15/11 ................. 225,000 270,353
7 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- UnitedHealth Group, Inc. 3.3%, 1/30/08 ................ $ 375,000 $ 373,276 ---------- 2,043,115 ---------- 3,114,376 ---------- SOVEREIGN DEBT OBLIGATIONS (5.2%) Sovereign Debt Securities (5.2%) Korea Development Bank 5.75%, 9/10/13 ............... 110,000 115,485 Province of Quebec 6.125%, 1/22/11 .............. 1,435,000 1,599,596 Republic of Italy 2.5%, 3/31/06 ................ 1,705,000 1,709,726 United Mexican States : 4.625%, 10/08/08 ............. 1,630,000 1,650,375 7.5%, 1/14/12 ................ 1,110,000 1,252,080 ---------- 6,327,262 ---------- TECHNOLOGY (2.4%) Communication Services (1.8%) British Telecom PLC 8.375%, 12/15/10 ............. 645,000 784,885 Citizens Communications Co. 9.25%, 5/15/11 ............... 230,000 271,916 Koninklijke KPN NV 8.0%, 10/01/10 ............... 315,000 376,824 Verizon Global Funding Corp. 7.375%, 9/01/12 .............. 685,000 793,749 ---------- 2,227,374 ---------- Computer Hardware/Storage (0.3%) Hewlett-Packard Co. 7.15%, 6/15/05 ............... 320,000 344,040 ---------- Computer Services (0.3%) Computer Sciences Corp. 5.0%, 2/15/13 ................ 310,000 313,603 ---------- 2,885,017 ---------- TRANSPORTATION (0.7%) Railroad (0.7%) CSX Corp. 6.75%, 3/15/11 ............... 730,000 821,789 ---------- U. S. GOVERNMENT & AGENCY OBLIGATIONS (28.5%) Federal Agencies (15.1%) Federal Home Loan Bank 2.5%, 3/15/06 ................ 315,000 317,539 ---------- Federal Home Loan Mortgage Corp.: 2.125%, 11/15/05 ............. 6,575,000 6,603,982 -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- 2.75%, 8/15/06 ............... $ 1,950,000 $1,967,891 2.875%, 12/15/06 ............. 3,950,000 3,978,318 4.75%, 10/11/12 .............. 2,020,000 1,988,696 5.125%, 11/07/13 ............. 1,475,000 1,469,302 ---------- 16,008,189 ---------- Federal National Mortgage Association: 3.875%, 11/17/08 ............. 900,000 901,530 4.0% 12/15/08 ................ 1,340,000 1,336,716 ---------- 2,238,246 ---------- Federal Agency-Pass Thru's (0.6%) Federal National Mortgage Association: 4.0%, 8/01/18 ................ 736,860 718,978 ---------- U. S. Treasury (12.8%) U.S.Treasury Notes: 1.125%, 6/30/05 .............. 10,300,000 10,244,874 2.0%, 5/15/06 ................ 5,500,000 5,501,073 ---------- 15,745,947 ---------- 35,028,899 ---------- UTILITIES (5.5%) Electric & Gas Utility (2.6%) Carolina Power & Light Co. 6.5%, 7/15/12 ................ 360,000 398,437 Cincinnati Gas & Electric Co. 5.7%, 9/15/12 ................ 145,000 152,551 Columbus Southern Power Co. 5.5%, 3/01/13 ................ 50,000 51,778 Dominion Resources, Inc. 5.0%, 3/15/13 ................ 315,000 313,532 Duke Energy Corp. 3.75%, 3/05/08 ............... 330,000 332,581 First Energy Corp. 6.45%, 11/15/11 .............. 205,000 212,472 KeySpan Corp. 7.25%, 11/15/05 .............. 935,000 1,018,848 Public Service Co. of Colorado 7.875%, 10/01/12 ............. 185,000 224,534 Xcel Energy, Inc. 7.0%, 12/01/10 ............... 375,000 425,231 ---------- 3,129,964 ---------- Gas Utility (0.4%) Noram Energy Corp. 6.5%, 2/01/08 ................ 450,000 482,073 ----------
8 -------------------------------------------------------------------------------- Separate Account No. 13 (Pooled) (The Alliance Bond Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Concluded)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Telephone Utility (2.1%) AT&T Corp. 8.05%, 11/15/11 ...................... $ 245,000 $ 281,990 Deutsche Telekom International Finance BV 8.5%, 6/15/10 ........................ 165,000 199,504 France Telecom SA 9.0%, 3/01/11 ........................ 165,000 198,179 Sprint Capital Corp. : 6.0%, 1/15/07 ........................ 510,000 544,704 7.625%, 1/30/11 ...................... 220,000 246,606 Telecom Italia Capital 5.25%, 11/15/13 ...................... 445,000 445,886 Telefonos de Mexico SA de CV : 4.5%, 11/19/08 ....................... 310,000 310,471 8.25%, 01/26/06 ...................... 360,000 396,929 ------------ 2,624,269 ------------ Miscellaneous (0.4%) MidAmerican Energy Holdings 5.875%, 10/01/12 ..................... 150,000 157,280 Nisource Finance Corp. 7.875%, 11/15/10 ..................... 285,000 338,976 ------------ 496,256 ------------ 6,732,562 ------------ TOTAL LONG-TERM DEBT SECURITIES (95.5%) (Amortized Cost $113,871,030)......... 117,141,878 ------------ -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- SHORT-TERM DEBT SECURITIES: U. S. GOVERNMENT AGENCY (3.5%) Federal Home Loan Bank 0.60%, 1/02/04 ....................... $4,300,000 $ 4,299,857 ------------ TOTAL SHORT-TERM DEBT SECURITIES (3.5%) (Amortized Cost $4,299,857)........... 4,299,857 ------------ TOTAL INVESTMENTS (99.0%) (Amortized Cost $118,170,887)......... 121,441,735 OTHER ASSETS LESS LIABILITIES (1.0%) .................. 1,176,472 ------------ NET ASSETS (100.0%) ..................... $122,618,207 ============
The accompanying notes are an integral part of these financial statements. 9 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States
Statement of Assets and Liabilities December 31, 2003 ----------------------------------------------------------------------------------------- Assets: Investments (Notes 2 and 3): Common stocks -- at value (cost: $48,029,780) ............................ $ 54,079,879 Preferred stocks -- at value (cost: $131,167) ............................ 194,412 Long-term debt securities -- at value (amortized cost: $31,477,578) ...... 32,016,940 Short-term debt securities -- at value (amortized cost: $11,599,613) ..... 11,599,613 Cash ...................................................................... 434,131 Receivable for investment securities sold ................................. 1,547,516 Interest receivable ....................................................... 258,529 Dividends and other receivable ............................................ 61,703 ----------------------------------------------------------------------------------------- Total assets .............................................................. 100,192,723 ----------------------------------------------------------------------------------------- Liabilities: Payable for investment securities purchased ............................... 10,968,372 Due to Equitable Life's General Account ................................... 175,064 Accrued expenses .......................................................... 127,352 ----------------------------------------------------------------------------------------- Total liabilities ......................................................... 11,270,788 ----------------------------------------------------------------------------------------- Net Assets ................................................................ $ 88,921,935 ========================================================================================= Units Outstanding Unit Values ----------------- -------------- Institutional ....................................... 347 $ 17,388.93 RIA ................................................. 240,690 165.70 Momentum Strategy ................................... 20,714 116.51 MRP ................................................. 790,375 41.83 EPP ................................................. 44,149 169.74
The accompanying notes are an integral part of these financial statements. 10 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States
Statement of Operations Year Ended December 31, 2003 ------------------------------------------------------------------------------------- Investment Income (Note 2): Dividends (net of foreign taxes withheld of $25,803)................... $ 819,063 Interest .............................................................. 1,050,068 ------------------------------------------------------------------------------------- Total investment income ............................................... 1,869,131 ------------------------------------------------------------------------------------- Expenses (Note 5): Investment management fees ............................................ (360,223) Operating and expense charges ......................................... (499,658) ------------------------------------------------------------------------------------- Total expenses ........................................................ (859,881) ------------------------------------------------------------------------------------- Net investment income ................................................. 1,009,250 ------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments (Note 2): Realized loss from security and foreign currency transactions ......... (549,738) Change in unrealized appreciation/depreciation of investments ......... 12,591,550 ------------------------------------------------------------------------------------- Net realized and unrealized gain on investments ....................... 12,041,812 ------------------------------------------------------------------------------------- Net Increase in Net Assets Attributable to Operations ................. $13,051,062 =====================================================================================
The accompanying notes are an integral part of these financial statements. 11 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States
Statements of Changes in Net Assets ------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 2003 2002 ------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets: From Operations: Net investment income ................................................................... $ 1,009,250 $ 1,272,275 Net realized loss on investments and foreign currency transactions ...................... (549,738) (2,698,068) Change in unrealized appreciation/depreciation of investments ........................... 12,591,550 (5,272,377) ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets attributable to operations ........................ 13,051,062 (6,698,170) ------------------------------------------------------------------------------------------------------------------------- From Contributions and Withdrawals: Contributions ........................................................................... 11,520,355 38,613,788 Withdrawals ............................................................................. (16,362,710) (24,507,295) Asset management fees ................................................................... (39,862) (143,661) Administrative fees ..................................................................... (359,780) (369,974) ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets attributable to contributions and withdrawals ..... (5,241,997) 13,592,858 ------------------------------------------------------------------------------------------------------------------------- Increase in Net Assets .................................................................. 7,809,065 6,894,688 Net Assets -- Beginning of Year ......................................................... 81,112,870 74,218,182 ------------------------------------------------------------------------------------------------------------------------- Net Assets -- End of Year ............................................................... $ 88,921,935 $ 81,112,870 =========================================================================================================================
The accompanying notes are an integral part of these financial statements. 12 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- COMMON STOCKS: AEROSPACE & DEFENSE (0.3%) Aerospace (0.3%) Lockheed Martin Corp. ....................... 5,700 $ 292,980 ---------- BASIC INDUSTRIES (0.9%) Chemicals (0.7%) Du Pont (E.I.) de Nemours & Co. ............. 5,000 229,450 Monsanto Co. ................................ 832 23,945 Praxair, Inc. ............................... 10,600 404,920 Syngenta AG ................................. 57 3,837 ---------- 662,152 ---------- Mining & Metals (0.1%) BHP Billiton PLC ............................ 8,500 74,044 ---------- Miscellaneous (0.1%) JRS Corp. ................................... 3,000 67,065 ---------- 803,261 ---------- CAPITAL GOODS (3.9%) Electrical Equipment (0.7%) Funai Electric Co. Ltd. ..................... 1,300 178,494 Johnson Controls, Inc. ...................... 2,400 278,688 Johnson Electric Holdings Ltd. .............. 63,200 80,590 Schneider Electric SA ....................... 1,755 114,762 ---------- 652,534 ---------- Machinery (0.5%) Atlas Copco AB * ............................ 1,400 50,120 Parker-Hannifin Corp. ....................... 3,700 220,150 SMC Corp. ................................... 1,200 149,419 ---------- 419,689 ---------- Miscellaneous (2.7%) General Electric Co. ........................ 48,100 1,490,138 Nitto Denko Corp. ........................... 4,800 255,379 United Technologies Corp. ................... 6,400 606,528 ---------- 2,352,045 ---------- 3,424,268 ---------- CONSUMER MANUFACTURING (1.4%) Auto & Related (0.6%) Bayerische Motoren Werke AG ................. 3,013 140,271 Magna International, Inc. (Class A) ......... 3,700 296,185 Nissan Motor Co. Ltd. ....................... 8,500 97,111 ---------- 533,567 ---------- Building & Related (0.8%) American Standard Companies, Inc. * ....................... 4,100 412,870 CRH PLC ..................................... 15,453 316,777 ---------- 729,647 ---------- 1,263,214 ---------- -------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- CONSUMER SERVICES (7.9%) Advertising (0.1%) WPP Group PLC ............................... 9,400 $ 92,371 ---------- Airlines (0.1%) Continental Airlines, Inc. * ................ 1,500 24,405 Southwest Airlines Co. ...................... 6,400 103,296 ---------- 127,701 ---------- Broadcasting & Cable (1.5%) Comcast Corp. (Class A) * ................... 5,814 191,106 Comcast Corp. SPL (Class A) * ............... 10,700 334,696 Time Warner, Inc. * ......................... 3,700 66,563 Viacom, Inc. (Class B) ...................... 12,040 534,335 Westwood One, Inc. * ........................ 6,200 212,102 ---------- 1,338,802 ---------- Cellular Communications (0.7%) America Movil SA de CV (Class A) ............ 3,500 95,690 Sprint Corp. (PCS Group) * .................. 39,700 223,114 Vodafone Group PLC .......................... 114,774 283,755 ---------- 602,559 ---------- Entertainment & Leisure (1.3%) Carnival Corp. .............................. 3,300 131,109 Carnival PLC. ............................... 8,164 328,625 Harley-Davidson, Inc. ....................... 6,800 323,204 Royal Caribbean Cruises Ltd. ................ 9,500 330,505 ---------- 1,113,443 ---------- Printing & Publishing (0.4%) Gannett Co., Inc. ........................... 1,000 89,160 Tribune Co. ................................. 5,100 263,160 ---------- 352,320 ---------- Restaurants & Lodging (0.2%) Hilton Group PLC ............................ 46,769 187,633 ---------- Retail-General Merchandise (3.0%) Bed Bath & Beyond, Inc. * ................... 8,100 351,135 Federated Department Stores, Inc. ........... 8,200 386,466 GUS PLC * ................................... 13,631 187,843 Home Depot, Inc. ............................ 4,300 152,607 May Department Stores Co. ................... 4,000 116,280 Ross Stores, Inc. ........................... 7,800 206,154 Wal-Mart Stores, Inc. ....................... 23,500 1,246,675 ---------- 2,647,160 ---------- Miscellaneous (0.6%) Adecco SA ................................... 1,510 97,022 Cendant Corp. * ............................. 15,400 342,958 Li & Fung Limited ........................... 74,000 126,769 ---------- 566,749 ---------- 7,028,738 ----------
13 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- CONSUMER STAPLES (5.7%) Beverages (1.5%) Anheuser Busch Cos., Inc. .................. 7,100 $ 374,028 Coca Cola Co. .............................. 5,900 299,425 LVMH Moet Hennessy Louis Vuitton SA ............................. 4,900 356,226 Pepsi Bottling Group, Inc. ................. 11,000 265,980 Pepsico, Inc. .............................. 1,800 83,916 --------- 1,379,575 --------- Cosmetics (0.8%) Avon Products, Inc. ........................ 8,000 539,920 L'Oreal SA ................................. 2,441 199,910 --------- 739,830 --------- Food (0.2%) Del Monte Foods Co. * ...................... 2,054 21,362 Heinz (H. J.) Co. .......................... 4,600 167,578 J. M. Smucker Co. .......................... 96 4,348 --------- 193,288 --------- Household Products (1.4%) Colgate Palmolive Co. ...................... 3,600 180,180 Procter & Gamble Co. ....................... 7,300 729,124 Reckitt Benckiser PLC ...................... 13,552 306,258 --------- 1,215,562 --------- Retail-Food & Drug (0.9%) Safeway, Inc. * ............................ 10,000 219,100 Tesco PLC .................................. 89,442 411,120 Walgreen Co. ............................... 4,800 174,624 --------- 804,844 --------- Tobacco (0.9%) Altria Group, Inc. ......................... 14,200 772,764 --------- 5,105,863 --------- ENERGY (3.8%) Domestic Producers (0.2%) Apache Corp. ............................... 2,500 202,750 --------- International (2.2%) ChevronTexaco Corp. ........................ 6,500 561,535 Eni Spa (ADR) .............................. 4,200 398,916 ExxonMobil Corp. ........................... 18,912 775,392 Talisman Energy, Inc. ...................... 4,100 232,060 --------- 1,967,903 --------- Oil Service (0.9%) Baker Hughes, Inc. ......................... 6,600 212,256 Nabors, Industries Ltd. * .................. 4,100 170,150 Total SA ................................... 2,069 384,248 --------- 766,654 --------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Miscellaneous (0.5%) ConocoPhillips ............................. 6,800 $ 445,876 Dynegy, Inc. (Class A) * ................... 3,300 14,124 ---------- 460,000 ---------- 3,397,307 ---------- FINANCE (13.5%) Banking-Money Center (3.3%) BNP Paribas SA ............................. 7,215 453,800 Credit Suisse Group ........................ 10,302 376,760 HSBC Holdings PLC .......................... 19,838 311,270 JP Morgan Chase & Co. ...................... 14,385 528,361 Mitsubishi Tokyo Financial Group, Inc. .................. 26 202,884 SLM Corp. .................................. 5,900 222,312 Standard Chartered PLC ..................... 18,885 311,318 UBS AG ..................................... 4,485 307,023 Wachovia Corp. ............................. 5,600 260,904 ---------- 2,974,632 ---------- Banking-Regional (3.3%) Bank of America Corp. ...................... 11,442 920,280 Bank One Corp. ............................. 13,532 616,924 FleetBoston Financial Corp. ................ 5,200 226,980 KeyCorp .................................... 14,600 428,072 National City Corp. ........................ 10,100 342,794 Royal Bank of Scotland Group PLC ........... 7,297 214,921 Unicredito Italiano SPA * .................. 36,026 194,273 ---------- 2,944,244 ---------- Brokerage & Money Management (1.6%) Franklin Resources, Inc. ................... 4,100 213,446 Lehman Brothers Holdings, Inc. ............. 2,600 200,772 Merrill Lynch & Co., Inc. .................. 9,300 545,445 Morgan Stanley DeanWitter & Co. ............ 4,800 277,776 Nomura Holdings, Inc. ...................... 10,000 170,346 ---------- 1,407,785 ---------- Insurance (2.2%) Ace Ltd. ................................... 7,000 289,940 American International Group, Inc. ......... 14,200 941,176 Swiss Re-Registered ........................ 3,115 210,218 Travelers Property Casualty Co. (Class A) .............................. 12,509 209,901 Travelers Property Casualty Co. (Class B) .............................. 1,662 28,204 XL Capital Ltd. (Class A) .................. 3,100 240,405 ---------- 1,919,844 ---------- Miscellaneous (1.9%) Citigroup, Inc. ............................ 28,132 1,365,527 MBNA Corp. ................................. 12,618 313,557 ---------- 1,679,084 ----------
14 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Mortgage Banking (1.2%) Fannie Mae ............................ 7,100 $ 532,926 Freddie Mac ........................... 3,000 174,960 Washington Mutual, Inc. ............... 8,500 341,020 ---------- 1,048,906 ---------- Real Estate (0.0%) MI Developments, Inc. (Class A) * ..... 1,850 51,652 ---------- 12,026,147 ---------- HEALTH CARE (7.6%) Biotechnology (0.6%) Amgen, Inc. * ......................... 7,000 432,600 Human Genome Sciences, Inc. * ......... 8,100 107,325 ---------- 539,925 ---------- Drugs (4.3%) Allergan, Inc. ........................ 2,500 192,025 Altana AG ............................. 3,387 204,326 AstraZeneca Group PLC ................. 8,176 391,135 Barr Pharmaceuticals, Inc. * .......... 2,500 192,375 Bristol Myers Squibb Co. .............. 8,600 245,960 Dr. Reddy's Laboratories Ltd. ......... 700 22,155 Merck & Co., Inc. ..................... 6,400 295,680 Pfizer, Inc. .......................... 40,604 1,434,539 Sanofi-Synthelabo SA .................. 3,840 288,841 Takeda Chemical Industries ............ 2,200 87,273 Wyeth ................................. 10,400 441,480 Yamanouchi Pharmaceutical Co. Ltd. 900 27,974 ---------- 3,823,763 ---------- Medical Products (1.7%) Guidant Corp. ......................... 4,300 258,860 Johnson & Johnson ..................... 17,000 878,220 Smith & Nephew ........................ 10,600 88,695 Zimmer Holdings, Inc. * ............... 3,930 276,672 ---------- 1,502,447 ---------- Medical Services (1.0%) Anthem, Inc. * ........................ 2,700 202,500 Caremark Rx, Inc. * ................... 7,200 182,376 Medco Health Solutions, Inc. * ........ 771 26,206 UnitedHealth Group, Inc. .............. 3,200 186,176 Wellpoint Health Networks, Inc. * ..... 2,800 271,572 ---------- 868,830 ---------- 6,734,965 ---------- MULTI-INDUSTRY COMPANIES (0.4%) Mitsubishi Corp. ...................... 16,000 169,655 Siemens AG * .......................... 1,612 129,580 ---------- 299,235 ---------- -------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- TECHNOLOGY (12.5%) Communication Equipment (2.3%) Alcatel * ............................. 10,135 $ 130,378 Avaya, Inc. * ......................... 22 285 Cisco Systems, Inc. * ................. 25,000 607,250 Corning, Inc. * ....................... 21,700 226,331 Juniper Networks, Inc. * .............. 27,200 508,096 Lucent Technologies, Inc. * ........... 39,375 111,825 Motorola, Inc. ........................ 25,200 354,564 Nortel Networks Corp. * ............... 4,800 20,304 QUALCOMM, Inc. ........................ 1,600 86,288 ---------- 2,045,321 ---------- Computer Hardware/Storage (2.1%) Agilent Technologies, Inc. * .......... 7,600 222,224 Dell, Inc. * .......................... 18,700 635,052 EMC Corp. * ........................... 6,400 82,688 Hewlett-Packard Co. ................... 21,000 482,370 International Business Machines Corp. .................... 4,300 398,524 Sun Microsystems, Inc. * .............. 20,300 91,147 ---------- 1,912,005 ---------- Computer Services (0.2%) Fiserv, Inc. * ........................ 5,000 197,550 ---------- Contract Manufacturing (0.1%) Flextronics International Ltd. * ...... 4,100 60,844 Solectron Corp. * ..................... 7,600 44,916 ---------- 105,760 ---------- Internet Infrastructure (0.4%) eBay, Inc. * .......................... 5,000 322,950 ---------- Internet Media (0.3%) Yahoo!, Inc. * ........................ 5,800 261,986 ---------- Semiconductor Capital Equipment (0.3%) Applied Materials, Inc. * ............. 10,700 240,215 ---------- Semiconductor Components (2.6%) Advantest Corp. ....................... 1,400 111,075 Agere Systems, Inc. (Class A) * ....... 372 1,135 Altera Corp. * ........................ 9,836 223,277 ASML Holding N.V. * ................... 10,810 214,107 Intel Corp. ........................... 24,944 803,197 Linear Technology Corp. ............... 4,700 197,729 Marvell Technology Group, Inc. * ...... 6,200 235,166 Maxim Integrated Products, Inc. ....... 2,600 129,480 Micron Technology, Inc. * ............. 14,400 193,968 NEC Electronics Corp. ................. 1,100 80,497 Samsung Electronics Co. Ltd. (GDR)..... 700 132,480 ---------- 2,322,111 ----------
15 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
---------------------------------------------------------------------------- Number of Value Shares (Note 2) ---------------------------------------------------------------------------- Software (2.5%) Mercury Interactive Corp. * ............... 4,200 $ 204,288 Microsoft Corp. ........................... 53,800 1,481,652 Sap AG .................................... 2,255 380,151 Symantec Corp. * .......................... 4,600 159,390 ----------- 2,225,481 ----------- Miscellaneous (1.7%) Canon, Inc. ............................... 8,000 372,614 Hoya Corp. ................................ 4,500 413,310 Keyence Corp. ............................. 900 189,770 Ricoh Company Ltd. ........................ 15,000 296,122 Sanmina-SCI Corp. * ....................... 5,300 66,833 Tokyo Electron Ltd. ....................... 2,200 167,154 ----------- 1,505,803 ----------- 11,139,182 ----------- TRANSPORTATION (0.4%) Railroad (0.4%) Union Pacific Corp. ....................... 4,600 319,608 ----------- UTILITIES (2.5%) Electric & Gas Utility (1.0%) American Electric Power Co., Inc. ......... 6,200 189,162 Constellation Energy Group ................ 6,200 242,792 Entergy Corp. ............................. 5,200 297,076 PPL Corp. ................................. 4,600 201,250 ----------- 930,280 ----------- Telephone Utility (1.5%) BellSouth Corp. ........................... 5,200 147,160 France Telecom SA * ....................... 3,994 114,031 Qwest Communications International, Inc. * ................. 5,200 22,464 SBC Communications, Inc. .................. 14,486 377,650 Sprint Corp. (FON Group) .................. 16,300 267,646 Verizon Communications, Inc. .............. 11,000 385,880 ----------- 1,314,831 ----------- 2,245,111 ----------- TOTAL COMMON STOCKS (60.8%) (Cost $48,029,780)...................... 54,079,879 ----------- PREFERRED STOCKS: CONSUMER MANUFACTURING (0.2%) Auto & Related (0.2%) Porsche AG ................................ 329 194,412 ----------- TOTAL PREFERRED STOCKS (0.2%) (Cost $131,167)......................... 194,412 ----------- ---------------------------------------------------------------------------- Principal Value Amount (Note 2) ---------------------------------------------------------------------------- LONG-TERM DEBT SECURITIES: AEROSPACE & DEFENSE (0.1%) Aerospace (0.1%) Boeing Capital Corp. 4.75%, 8/25/08 ..................... $15,000 $ 15,474 Raytheon Co. 4.85%, 1/15/11 ..................... 80,000 80,106 ---------- 95,580 ---------- ASSET BACKED SECURITIES (1.9%) Chase Funding Mortgage Loan 1.26%, 2/25/21 ..................... 173,319 173,288 Citibank Credit Card Issuance Trust: 3.5%, 8/16/10 ...................... 220,000 219,556 4.15%, 7/07/17 ..................... 155,000 143,891 Countrywide Asset Backed Certificate 1.27%, 10/25/19 .................... 81,802 81,806 DaimlerChrysler Auto Trust 2.86%, 3/08/09 ..................... 225,000 224,935 Discover Card Master Trust I 6.35%, 7/15/08 ..................... 295,000 318,888 Honda Auto Receivables Owner Trust 2.19%, 5/15/07 ..................... 65,000 65,095 Master Asset Backed Securities Trust I 1.29%, 3/25/20 ..................... 63,689 63,669 Residential Asset Mortgage Products, Inc.: 1.27%, 7/25/18 ..................... 90,126 90,081 1.309%, 10/25/22 ................... 28,368 28,368 Structured Asset Investment Loan Trust 1.249%, 7/25/33 .................... 117,596 117,517 World Omni Auto Receivables Trust: 2.2%, 1/15/08 ...................... 65,000 64,994 2.87%, 11/15/10 .................... 125,000 124,963 ---------- 1,717,051 ---------- BASIC INDUSTRIES (0.2%) Chemicals (0.0%) Praxair, Inc. 2.75%, 6/15/08 ..................... 40,000 38,649 ---------- Mining & Metals (0.0%) Alcan, Inc. 4.5%, 5/15/13 ...................... 30,000 28,910 ---------- Paper & Forest Products (0.2%) International Paper Co. 5.3%, 4/01/15 ...................... 45,000 43,991 Weyerhaeuser Co. 7.375%, 3/15/32 .................... 45,000 48,928 ---------- 92,919 ---------- 160,478 ----------
16 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- CAPITAL GOODS (0.2%) Pollution Control (0.1%) Waste Management Inc. 6.875%, 5/15/09 ................ $ 75,000 $ 83,834 ---------- Miscellaneous (0.1%) General Electric Co. : 1.22%, 10/24/05 ................ 65,000 65,023 5.0%, 2/01/13 .................. 65,000 65,737 ---------- 130,760 ---------- 214,594 ---------- COMMERCIAL MORTGAGE BACKED SECURITIES (2.3%) First Union-Lehman Brothers-Bank of America, Series 1998-C2, Class A4 6.56%, 11/18/35 ................ 285,000 317,903 Greenwich Capital Commercial Funding Corp. 4.533%, 7/05/10 ................ 130,000 130,479 GS Mortgage Securities Corp. II Series 2003-C1, Class A2A 3.59%, 1/10/40 ................. 160,000 160,567 LB-UBS Commercial Mortgage Trust : 3.478%, 7/15/27 ................ 285,000 282,513 6.653%, 11/15/27 ............... 235,000 265,655 Merrill Lynch Mortgage Trust Series 2003-Key1, Class A4 5.236%, 11/12/35 ............... 210,000 215,477 Morgan Stanley Capital I Series 2003-T11, Class A4 5.15%, 6/13/41 ................. 350,000 358,662 Nomura Asset Securities Corp. Series 1998-D6, Class A1B 6.59%, 3/15/30 ................. 280,000 313,334 ---------- 2,044,590 ---------- CONSUMER MANUFACTURING (0.3%) Auto & Related (0.3%) DaimlerChrysler NA Holding Corp. 4.75%, 1/15/08 ................. 90,000 92,082 Ford Motor Co. 7.45%, 7/16/31 ................. 30,000 30,316 General Motors Corp. 8.375%, 7/15/33 ................ 120,000 139,298 ---------- 261,696 ---------- Building & Related (0.0%) Lennar Corp. 5.95%, 3/01/13 ................. 20,000 20,927 ---------- 282,623 ---------- -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- CONSUMER SERVICES (1.5%) Airlines (0.1%) Continental Airlines Inc. 7.875%, 7/02/18 ................ $ 45,000 $ 45,264 ---------- Broadcasting & Cable (1.0%) AOL Time Warner, Inc. 7.7%, 5/01/32 .................. 95,000 110,875 Clear Channel Communications, Inc.: 4.625%, 1/15/08 ................ 70,000 72,202 4.25%, 5/15/09 ................. 55,000 55,141 Comcast Cable Communications, Inc. 6.2%, 11/15/08 ................. 130,000 142,657 Comcast Corp. 7.05%, 3/15/33 ................. 35,000 38,074 Cox Communications, Inc. 7.125%, 10/01/12 ............... 50,000 57,671 Lenfest Communications, Inc. 8.375%, 11/01/05 ............... 75,000 82,657 Liberty Media Corp. 5.7%, 5/15/13 .................. 95,000 96,070 Time Warner Entertainment Co. : 8.375%, 3/15/23 ................ 165,000 204,454 8.375%, 7/15/33 ................ 30,000 38,094 ---------- 897,895 ---------- Cellular Communications (0.3%) AT&T Wireless Services, Inc. 8.75%, 3/01/31 ................. 45,000 55,522 Telus Corporation 7.5%, 6/01/07 .................. 90,000 100,723 Verizon Wireless Capital LLC 5.375%, 12/15/06 ............... 85,000 90,704 Vodafone Group PLC 7.875%, 2/15/30 ................ 40,000 49,138 ---------- 296,087 ---------- Printing & Publishing (0.1%) News America, Inc. 6.55%, 3/15/33 ................. 90,000 93,494 ---------- 1,332,740 ---------- CONSUMER STAPLES (0.4%) Beverages (0.1%) Diago Finance BV 3.0%, 12/15/06 ................. 60,000 60,314 ---------- Food (0.2%) Kellogg Co. 2.875%, 6/01/08 ................ 55,000 53,106 Kraft Foods, Inc. 5.25%, 10/01/13 ................ 80,000 80,721 ---------- 133,827 ----------
17 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Retail-Food & Drug (0.1%) Safeway, Inc. 7.25%, 2/01/31 ............... $ 50,000 $ 54,881 -------- Miscellaneous (0.0%) Fortune Brands, Inc. 2.875%, 12/01/06 ............. 40,000 40,248 -------- 289,270 -------- ENERGY (0.7%) Domestic Integrated (0.1%) Amerada Hess Corp. 7.875%, 10/01/29 ............. 75,000 82,288 -------- Oil Service (0.5%) Conoco Funding Co.: 5.45%, 10/15/06 .............. 85,000 91,196 6.95%, 4/15/29 ............... 115,000 130,414 Devon Financing Corp. 7.875%, 09/30/31 ............. 100,000 119,460 Petronas Capital Ltd. 7.0%, 5/22/12 ................ 100,000 113,912 -------- 454,982 -------- Miscellaneous (0.1%) Valero Energy Corp. 7.5%, 04/15/32 ............... 50,000 55,724 -------- 592,994 -------- FINANCE (5.7%) Banking-Money Center (0.6%) Barclays Bank PLC 8.55%, 12/31/49 .............. 75,000 92,144 Capital One Bank 6.5%, 6/13/13 ................ 50,000 52,421 Citicorp. 6.375%, 11/15/08 ............. 135,000 149,319 JP Morgan Chase & Co. 6.75%, 2/01/11 ............... 115,000 129,673 RBS Capital Trust 4.5%, 12/31/49 ............... 160,000 152,985 -------- 576,542 -------- Banking-Regional (0.8%) Bank of America Corp. 6.25%, 4/15/12 ............... 105,000 115,750 CBA Capital Trust 5.805%, 12/31/49 ............. 90,000 92,777 M&T Bank Corp. 3.85%, 4/01/13 ............... 40,000 39,728 National City Corp. 3.2%, 4/01/08 ................ 45,000 44,436 Unicredito Italiano Capital Trust 9.2%, 10/29/49 ............... 110,000 138,187 US Bank NA : 2.85%, 11/15/06 .............. 100,000 100,484 6.375%, 8/01/11 .............. 135,000 150,520 -------- 681,882 -------- -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Brokerage & Money Management (0.6%) Bear Stearns & Co., Inc. 4.0%, 1/31/08 ................ $ 50,000 $ 50,927 Credit Suisse FB USA, Inc. 5.5%, 8/15/13 ................ 60,000 61,831 Goldman Sachs Group, Inc. : 4.75%, 7/15/13 ............... 55,000 53,601 6.125%, 2/15/33 .............. 85,000 85,599 Lehman Brothers Holdings, Inc.: 4.0%, 1/22/08 ................ 155,000 158,091 6.625%, 1/18/12 .............. 55,000 62,068 Morgan Stanley DeanWitter & Co. 7.25%, 4/01/32 ............... 55,000 64,461 -------- 536,578 -------- Insurance (0.5%) Humana, Inc. 6.3%, 8/01/18 ................ 60,000 63,163 ING Capital Funding Trust III 8.439%, 12/31/49 ............. 75,000 90,789 Metlife, Inc. : 5.0%, 11/24/13 ............... 55,000 54,612 6.5%, 12/15/32 ............... 45,000 47,717 New York Life Insurance Co. 5.875%, 05/15/33 ............. 70,000 69,572 Oil Insurance Ltd. 5.15%, 8/15/33 ............... 75,000 75,531 -------- 401,384 -------- Miscellaneous (2.7%) American General Finance Corp. : 3.0%, 11/15/06 ............... 70,000 70,448 4.5%, 11/15/07 ............... 55,000 57,383 Capital One Financial Corp. 6.25%, 11/15/13 .............. 25,000 25,630 CIT Group, Inc. : 4.125%, 2/21/06 .............. 120,000 124,177 5.5%, 11/30/07 ............... 40,000 42,827 Citigroup, Inc. 7.25%, 10/01/10 .............. 220,000 256,423 Ford Motor Credit Co. : 7.0%, 10/01/13 ............... 130,000 137,108 7.375%, 10/28/09 ............. 10,000 10,982 7.375%, 2/01/11 .............. 210,000 228,887 General Electric Capital Corp. : 5.45%, 1/15/13 ............... 85,000 88,428 6.75%, 3/15/32 ............... 215,000 238,030 General Motors Acceptance Corp. : 6.875%, 9/15/11 .............. 180,000 193,882 8.0%, 11/01/31 ............... 35,000 39,304
18 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Great Western Financial Corp. 8.206%, 2/01/27 ................. $ 160,000 $ 182,680 Household Finance Corp.: 6.5%, 11/15/08 .................. 115,000 128,196 7.0%, 5/15/12 ................... 45,000 51,317 HSBC Capital Funding 10.176%, 12/29/49 ............... 55,000 80,555 John Deere Capital Corp. 4.5%, 8/22/07 ................... 55,000 57,549 Mangrove Bay Trust 6.102%, 7/15/33 ................. 100,000 96,700 MBNA Corp. 4.625%, 9/15/08 ................. 70,000 71,843 National Rural Utilities Cooperative 7.25%, 3/01/12 .................. 30,000 34,956 Washington Mutual Finance Corp. 6.875%, 5/15/11 ................. 150,000 172,212 ---------- 2,389,517 ---------- Mortgage Banking (0.3%) Countrywide Financial Corp. 4.25%, 12/19/07 ................. 85,000 87,664 Countrywide Loans 1.6418%, 12/19/33 ............... 93,950 93,245 Greenpoint Financial Corp. 3.2%, 6/06/08 ................... 85,000 82,161 ---------- 263,070 ---------- Real Estate (0.2%) ERP Operating LP 5.2%, 4/01/13 ................... 40,000 40,251 EOP Operating LP 5.875%, 1/15/13 ................. 55,000 57,417 Vornado Realty Trust : 4.75%, 12/01/10 ................. 60,000 60,006 5.625%, 6/15/07 ................. 50,000 53,382 ---------- 211,056 ---------- 5,060,029 ---------- HEALTH CARE (0.5%) Drugs (0.2%) Bristol Myers Squibb Co. 4.75%, 10/01/06 ................. 45,000 47,585 Schering-Plough Corp. 6.5%, 12/01/33 .................. 90,000 93,621 Wyeth 6.5%, 2/01/34 ................... 45,000 46,014 ---------- 187,220 ---------- Medical Services (0.3%) Anthem, Inc. 6.8%, 8/01/12 ................... 50,000 56,474 HCA, Inc. : 6.75%, 7/15/2013 ................ 40,000 42,420 7.125%, 6/01/2006 ............... 65,000 70,423 -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Health Net, Inc. 8.375%, 4/15/11 ................. 40,000 48,063 UnitedHealth Group, Inc. 3.3%, 1/30/08 ................... 60,000 59,724 --------- 277,104 --------- 464,324 --------- SOVEREIGN DEBT OBLIGATIONS (1.0%) Sovereign Debt Securities (1.0%) Korea Development Bank 5.75%, 9/10/13 .................. 30,000 31,496 Province of Quebec 7.5%, 9/15/29 ................... 25,000 31,139 Republic of Italy 2.5%, 3/31/06 ................... $ 320,000 $ 320,887 United Mexican States : 4.625%, 10/08/08 ................ 265,000 268,312 7.5%, 1/14/12 ................... 170,000 191,760 --------- 843,594 --------- TECHNOLOGY (0.5%) Communication Services (0.4%) AT&T Broadband Corp. 9.455%, 11/15/22 ................ 60,000 81,268 British Telecom PLC 8.875%, 12/15/30 ................ 75,000 98,070 Citizens Communications Co. 9.0%, 8/15/31 ................... 15,000 17,502 Koninklijke KPN NV 8.0%, 10/01/10 .................. 50,000 59,813 Verizon Global Funding Corp. 7.375%, 9/01/12 ................. 120,000 139,050 --------- 395,703 --------- Computer Hardware/Storage (0.1%) Hewlett-Packard Co. 7.15%, 6/15/05 .................. 50,000 53,756 --------- 449,459 --------- TRANSPORTATION (0.1%) Railroad (0.1%) CSX Corp. 7.95%, 5/01/27 .................. 95,000 115,210 --------- U. S. GOVERNMENT & AGENCY OBLIGATIONS (19.2%) Federal Agencies (3.6%) Federal Home Loan Mortgage Corp.: 2.125%, 11/15/05 ................ 870,000 873,834 2.875%, 12/15/06 ................ 335,000 337,402 4.75%, 10/11/12 ................. 350,000 344,576 5.125%, 11/07/13 ................ 390,000 388,493 --------- 1,944,305 ---------
19 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Continued)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Federal National Mortgage Association: 2.5%, 6/15/08 ............. 100,000 96,630 3.875%, 11/17/08 .......... 240,000 240,408 4.0%, 12/15/08 ............ 425,000 423,958 4.375%, 3/15/13 ........... 200,000 196,425 5.0%, 4/25/14 ............. 270,000 278,798 ---------- 1,236,219 ---------- Federal Agencies-Pass Thru's (13.6%) Government National Mortgage Association: 5.5%, 1/15/34 ............. $ 830,000 $ 843,746 6.0%, 1/15/34 ............. 310,000 322,109 ---------- 1,165,855 ---------- Federal Home Loan Mortgage Corp.: 5.5% 1/15/34 .............. 2,605,000 2,635,934 6.0% 1/15/34 .............. 735,000 759,346 ---------- 3,395,280 ---------- Federal National Mortgage Association: 4.0%, 9/01/18 ............. 607,160 592,426 5.5%, 2/01/18 ............. 425,550 441,454 5.0%, 1/25/19 ............. 480,000 489,450 5.5%, 1/25/19 ............. 615,000 637,102 6.5%, 7/01/29 ............. 4,027 4,214 7.5%, 11/01/31 ............ 260,574 278,464 5.5%, 12/01/33 ............ 743,303 753,360 6.0%, 10/01/33 ............ 439,423 454,431 4.5%, 2/25/34 ............. 350,000 333,813 6.0% 1/25/34 .............. 720,000 744,075 6.5%, 1/25/34 ............. 2,715,000 2,838,871 ---------- 7,567,660 ---------- U. S. Treasury (2.0%) U.S.Treasury Bonds: 8.75%, 5/15/17 ............ 380,000 532,534 7.875%, 2/15/21 ........... 320,000 425,763 6.625%, 2/15/27 ........... 65,000 77,637 5.375%, 2/15/31 ........... 80,000 83,428 U.S.Treasury Note 2.0%, 5/15/06 ............. 675,000 675,131 ---------- 1,794,493 ---------- 17,103,812 ---------- UTILITIES (1.4%) Electric & Gas Utility (0.6%) Carolina Power & Light Co. 6.5%, 7/15/12 ............. 50,000 55,339 Cincinnati Gas & Electric Co. 5.7%, 9/15/12 ............. 30,000 31,562 -------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- Columbus Southern Power Co. 5.5%, 3/01/13 ............. 15,000 15,533 Dominion Resources, Inc. 5.0%, 3/15/13 ............. 55,000 54,744 Duke Energy Corp. 3.75%, 3/05/08 ............ 70,000 70,548 First Energy Corp. 7.375%, 11/15/31 .......... $ 85,000 $ 86,953 KeySpan Corp. 7.25%, 11/15/05 ........... 100,000 108,968 Public Service Co. of Colorado 7.875%, 10/01/12 .......... 40,000 48,548 Xcel Energy, Inc. 7.0%, 12/01/10 ............ 50,000 56,698 ---------- 528,893 ---------- Gas Utility (0.1%) Noram Energy Corp. 6.5%, 2/01/08 ............. 65,000 69,633 ---------- Telephone Utility (0.6%) AT&T Corp. 8.05%, 11/15/11 ........... 35,000 40,284 Deutsche Telekom International Finance BV 8.75%, 6/15/30 ............ 90,000 114,969 France Telecom SA 9.75%, 3/01/31 ............ 25,000 33,217 Sprint Capital Corp. : 7.625%, 1/30/11 ........... 135,000 151,327 8.75%, 3/15/32 ............ 30,000 35,442 Telecom Italia Capital 6.375%, 11/15/33 .......... 65,000 65,366 Telefonos de Mexico SA de CV : 4.5%, 11/19/08 ............ 55,000 55,084 8.25%, 1/26/06 ............ 60,000 66,155 ---------- 561,844 ---------- Miscellaneous (0.1%) MidAmerican Energy Holdings 5.875%, 10/01/12 .......... 35,000 36,699 Nisource Finance Corp. 7.875%, 11/15/10 .......... 45,000 53,523 ---------- 90,222 ---------- 1,250,592 ---------- TOTAL LONG-TERM DEBT SECURITIES (36.0%) (Amortized Cost $31,477,578) 32,016,940 ----------
20 -------------------------------------------------------------------------------- Separate Account No. 10 (Pooled) (The Alliance Balanced Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Concluded)
-------------------------------------------------------------------------------- Principal Value Amount (Note 2) -------------------------------------------------------------------------------- SHORT-TERM DEBT SECURITIES: U. S. GOVERNMENT AGENCY (13.1%) Federal Home Loan Bank 0.60%, 1/02/04 .............. $11,600,000 $11,599,613 ----------- TOTAL SHORT-TERM DEBT SECURITIES (13.1%) (Amortized Cost $11,599,613). 11,599,613 ----------- TOTAL INVESTMENTS (110.1%) (Cost/Amortized Cost $91,238,138)............... 97,890,844 OTHER ASSETS LESS LIABILITIES (-10.1%) ....... (8,968,909) ----------- NET ASSETS (100.0%) ............ $88,921,935 ===========
Distribution of Investments by Global Region % of Investment ---------- United States ** ................. 86.4% United Kingdom ................... 3.4 Japan ............................ 3.2 France ........................... 2.1 Italy ............................ 1.1 Germany .......................... 1.0 Switzerland ...................... 1.0 Mexico ........................... 0.7 Southeast Asia ................... 0.3 Canada ........................... 0.1 Scandinavia ...................... 0.1 Other European Countries ......... 0.6 ----- 100.0% ===== ------------------------- * Non-income producing security. ** Includes short-term investments. The accompanying notes are an integral part of these financial statements. 21 -------------------------------------------------------------------------------- Separate Account No. 4 (Pooled) (The Alliance Common Stock Fund) of The Equitable Life Assurance Society of the United States
Statement of Assets and Liabilities December 31, 2003 ---------------------------------------------------------------------------------------- Assets: Investments (Notes 2 and 3): Common stocks -- at value (cost: $544,355,567)........................... $688,441,577 Short-term debt securities -- at value (amortized cost: $2,899,903) ..... 2,899,903 Cash ..................................................................... 28,861 Interest and dividends receivable ........................................ 173,513 ---------------------------------------------------------------------------------------- Total assets ............................................................. 691,543,854 ---------------------------------------------------------------------------------------- Liabilities: Due to Equitable Life's General Account .................................. 1,479,136 Due to custodian ......................................................... 158,346 Accrued expenses ......................................................... 634,709 ---------------------------------------------------------------------------------------- Total liabilities ........................................................ 2,272,191 ---------------------------------------------------------------------------------------- Net Assets ............................................................... $689,271,663 ======================================================================================== Amount retained by Equitable Life in Separate Account No. 4 .............. $ 1,900,151 Net assets attributable to contract owners ............................... 650,055,629 Net assets allocated to contracts in payout period ....................... 37,315,883 ---------------------------------------------------------------------------------------- Net Assets ............................................................... $689,271,663 ======================================================================================== Units Outstanding Unit Values ------------------- ------------- Institutional ......................................... 57,451 $ 6,324.43 RIA ................................................... 38,302 602.90 Momentum Strategy ..................................... 5,481 79.38 MRP ................................................... 153,077 251.02 ADA ................................................... 827,037 302.18 EPP ................................................... 22,647 617.58
The accompanying notes are an integral part of these financial statements. 22 -------------------------------------------------------------------------------- Separate Account No. 4 (Pooled) (The Alliance Common Stock Fund) of The Equitable Life Assurance Society of the United States
Statement of Operations Year Ended December 31, 2003 --------------------------------------------------------------------------------------- Investment Income (Note 2): Dividends (net of foreign taxes withheld of $2,550)..................... $ 2,841,875 Interest ............................................................... 31,716 --------------------------------------------------------------------------------------- Total investment income ................................................ 2,873,591 --------------------------------------------------------------------------------------- Expenses (Note 5): Investment management fees ............................................. (1,133,660) Operating and expense charges .......................................... (2,010,575) --------------------------------------------------------------------------------------- Total expenses ......................................................... (3,144,235) --------------------------------------------------------------------------------------- Net investment loss .................................................... (270,644) --------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments (Note 2): Realized loss from security and foreign currency transactions .......... (17,379,109) Change in unrealized appreciation /depreciation of investments ......... 208,381,402 --------------------------------------------------------------------------------------- Net realized and unrealized gain on investments ........................ 191,002,293 --------------------------------------------------------------------------------------- Net Increase in Net Assets Attributable to Operations .................. $ 190,731,649 =======================================================================================
The accompanying notes are an integral part of these financial statements. 23 -------------------------------------------------------------------------------- Separate Account No. 4 (Pooled) (The Alliance Common Stock Fund) of The Equitable Life Assurance Society of the United States Statements of Changes in Net Assets
--------------------------------------------------------------------------------------------------------------- Year Ended December 31, 2003 2002 --------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets: From Operations: Net investment loss .......................................................... $ (270,644) $ (702,786) Net realized loss on investments and foreign currency transactions ........... (17,379,109) (232,393,293) Change in unrealized appreciation/depreciation of investments ................ 208,381,402 (71,538) --------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets attributable to operations ............. 190,731,649 (233,167,617) --------------------------------------------------------------------------------------------------------------- From Contributions and Withdrawals: Contributions ................................................................ 93,626,844 115,415,532 Withdrawals .................................................................. (129,176,442) (240,773,263) Asset management fees ........................................................ (1,011,672) (1,363,796) Administrative fees .......................................................... (434,123) (629,647) --------------------------------------------------------------------------------------------------------------- Net decrease in net assets attributable to contributions and withdrawals ..... (36,995,393) (127,351,174) --------------------------------------------------------------------------------------------------------------- Net increase in net assets attributable to Equitable Life's transactions ..... 11,716 19,350 --------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets ............................................ 153,747,972 (360,499,441) Net Assets -- Beginning of Year .............................................. 535,523,691 896,023,132 --------------------------------------------------------------------------------------------------------------- Net Assets -- End of Year .................................................... $ 689,271,663 $ 535,523,691 ===============================================================================================================
The accompanying notes are an integral part of these financial statements. 24 -------------------------------------------------------------------------------- Separate Account No. 4 (Pooled) (The Alliance Common Stock Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- COMMON STOCKS: AEROSPACE & DEFENSE (0.5%) Defense Electronics (0.5%) L-3 Communications Holdings, Inc. * ................... 71,800 $ 3,687,648 ------------ CAPITAL GOODS (0.9%) Engineering & Construction (0.9%) Jacobs Engineering Group, Inc. * ....... 129,100 6,198,091 ------------ CONSUMER MANUFACTURING (14.9%) Building & Related (5.5%) Centex Corp. ........................... 106,300 11,443,195 D. R. Horton, Inc. ..................... 212,300 9,184,098 Lennar Corp. (Class A) ................. 112,600 10,809,600 NVR, Inc. * ............................ 14,500 6,757,000 ------------ 38,193,893 ------------ CONSUMER SERVICES (14.9%) Broadcasting & Cable (2.3%) Comcast Corp. SPL (Class A) * .......... 518,300 16,212,424 ------------ Entertainment & Leisure (3.0%) Harley-Davidson, Inc. .................. 440,600 20,941,718 ------------ Retail-General Merchandise (3.2%) Bed Bath & Beyond, Inc. * .............. 249,000 10,794,150 Lowe's Companies, Inc. ................. 142,300 7,881,997 Tiffany & Co. .......................... 65,300 2,951,560 ------------ 21,627,707 ------------ Miscellaneous (6.4%) Apollo Group, Inc. * ................... 21,300 1,448,400 Career Education Corp. * ............... 460,600 18,456,242 CDW Corp. .............................. 130,700 7,549,232 Education Management Corp. * ........... 119,600 3,712,384 Iron Mountain, Inc. * .................. 252,600 9,987,804 Strayer Education, Inc. ................ 26,400 2,873,112 ------------ 44,027,174 ------------ 102,809,023 ------------ ENERGY (1.2%) Domestic Producers (1.2%) Apache Corp. ........................... 97,180 7,881,298 ------------ FINANCE (24.1%) Brokerage & Money Management (9.4%) Goldman Sachs Group, Inc. .............. 130,700 12,904,011 Legg Mason, Inc. ....................... 399,700 30,848,846 Merrill Lynch & Co., Inc. .............. 152,300 8,932,395 Morgan Stanley DeanWitter & Co. ........ 206,700 11,961,729 ------------ 64,646,981 ------------ -------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Insurance (5.1%) American International Group, Inc. ..... 377,900 $ 25,047,212 Everest Re Group Ltd. .................. 122,400 10,355,040 ------------ 35,402,252 ------------ Miscellaneous (9.6%) AMBAC Financial Group, Inc. ............ 242,700 16,840,953 Citigroup, Inc. ........................ 634,400 30,793,776 MBNA Corp. ............................. 733,750 18,233,688 ------------ 65,868,417 ------------ 165,917,650 ------------ HEALTH CARE (21.8%) Biotechnology (1.4%) Cephalon, Inc. * ....................... 69,600 3,369,336 Gilead Sciences, Inc. * ................ 106,300 6,180,282 ------------ 9,549,618 ------------ Drugs (5.3%) Forest Laboratories, Inc. * ............ 456,600 28,217,880 Teva Pharmaceutical Industries Ltd...... 140,200 7,950,742 ------------ 36,168,622 ------------ Medical Products (5.2%) Alcon, Inc. ............................ 95,100 5,757,354 Patterson Dental Company * ............. 104,700 6,717,552 St. Jude Medical, Inc. * ............... 43,300 2,656,455 Stryker Corp. .......................... 219,700 18,676,697 Zimmer Holdings, Inc. * ................ 29,100 2,048,640 ------------ 35,856,698 ------------ Medical Services (9.9%) Anthem, Inc. * ......................... 90,700 6,802,500 Caremark Rx, Inc. * .................... 174,900 4,430,217 Express Scripts, Inc. * ................ 268,900 17,863,027 Health Management Associates, Inc. (Class A) .......................... 511,500 12,276,000 Stericycle, Inc. * ..................... 152,600 7,126,420 Wellpoint Health Networks, Inc. * ...... 207,600 20,135,124 ------------ 68,633,288 ------------ 150,208,226 ------------ MULTI-INDUSTRY COMPANIES (1.3%) Danaher Corp. .......................... 97,200 8,918,100 ------------ TECHNOLOGY (29.7%) Communication Equipment (4.5%) Cisco Systems, Inc. * .................. 372,180 9,040,252 Juniper Networks, Inc. * ............... 1,177,600 21,997,568 ------------ 31,037,820 ------------ Computer Hardware/Storage (3.0%) Dell, Inc. * ........................... 611,600 20,769,936 ------------
25 -------------------------------------------------------------------------------- Separate Account No. 4 (Pooled) (The Alliance Common Stock Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Concluded)
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Computer Services (0.5%) Affiliated Computer Services, Inc. (Class A) * ......................... 57,450 $ 3,128,727 ------------ Internet Infrastructure (3.6%) eBay, Inc. * ............................ 384,800 24,854,232 ------------ Semiconductor Components (7.4%) Broadcom Corp. * ........................ 440,200 15,006,418 Intel Corp. ............................. 84,000 2,704,800 Linear Technology Corp. ................. 201,600 8,481,312 Marvell Technology Group Ltd. * ......... 502,820 19,071,962 Maxim Integrated Products, Inc. ......... 109,800 5,468,040 ------------ 50,732,532 ------------ Software (8.9%) Electronic Arts, Inc. * ................. 231,750 11,073,015 Intuit, Inc. * .......................... 127,500 6,746,025 Mercury Interactive Corp. * ............. 204,250 9,934,720 Symantec Corp. * ........................ 406,800 14,095,620 Veritas Software Corp. * ................ 541,100 20,107,276 ------------ 61,956,656 ------------ Miscellaneous (1.8%) Amphenol Corp. (Class A) * .............. 126,500 8,087,145 Tektronix, Inc. ......................... 128,500 4,060,600 ------------ 12,147,745 ------------ 204,627,648 ------------ TOTAL COMMON STOCKS (99.9%) (Cost $544,355,567)................... 688,441,577 ------------ -------------------------------------------------------------------------------- Principal Value Amount Note (2) -------------------------------------------------------------------------------- SHORT-TERM DEBT SECURITIES: U. S. GOVERNMENT AGENCY (0.4%) Federal Home Loan Bank 0.60%, 1/02/04 ..................... $2,900,000 $ 2,899,903 ------------ TOTAL SHORT-TERM DEBT SECURITIES (0.4%) (Amortized Cost $2,899,903)......... 2,899,903 ------------ TOTAL INVESTMENTS (100.3%) (Cost/Amortized Cost $547,255,470)..................... 691,341,480 OTHER ASSETS LESS LIABILITIES (-0.3%) ............... (2,069,817) ------------ NET ASSETS (100.0%) ................... $689,271,663 ============
------------------------- * Non-income producing security. The accompanying notes are an integral part of these financial statements. 26 -------------------------------------------------------------------------------- Separate Account No. 3 (Pooled) (The Alliance Mid Cap Growth Fund) of The Equitable Life Assurance Society of the United States
Statement of Assets and Liabilities December 31, 2003 --------------------------------------------------------------------- Assets: Investments (Notes 2 and 3): Common stocks -- at value (cost: $85,907,893)......... $108,957,191 Cash .................................................. 1,195,556 Receivable for investment securities sold ............. 542,293 Dividends receivable .................................. 10,356 --------------------------------------------------------------------- Total assets .......................................... 110,705,396 --------------------------------------------------------------------- Liabilities: Due to Equitable Life's General Account ............... 354,609 Payable for investment securities purchased ........... 801,179 Accrued expenses ...................................... 78,938 --------------------------------------------------------------------- Total liabilities ..................................... 1,234,726 --------------------------------------------------------------------- Net Assets ............................................ $109,470,670 ===================================================================== Units Outstanding Unit Values ----------------- ------------- Institutional ..................... 3,704 $21,289.52 RIA ............................... 53,514 202.90 Momentum Strategy ................. 9,125 75.69 MRP ............................... 427,830 44.47 EPP ............................... 125 202.90
The accompanying notes are an integral part of these financial statements. 27 -------------------------------------------------------------------------------- Separate Account No. 3 (Pooled) (The Alliance Mid Cap Growth Fund) of The Equitable Life Assurance Society of the United States
Statement of Operations Year Ended December 31, 2003 -------------------------------------------------------------------------------------- Investment Income (Note 2): Dividends .............................................................. $ 248,004 Interest ............................................................... 997 -------------------------------------------------------------------------------------- Total investment income ................................................ 249,001 -------------------------------------------------------------------------------------- Expenses (Note 5): Investment management fees ............................................. (132,768) Operating and expense charges .......................................... (213,263) -------------------------------------------------------------------------------------- Total expenses ......................................................... (346,031) -------------------------------------------------------------------------------------- Net investment loss .................................................... (97,030) -------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments (Note 2): Realized gain from security and foreign currency transactions .......... 23,418,411 Change in unrealized appreciation /depreciation of investments ......... 25,253,528 -------------------------------------------------------------------------------------- Net realized and unrealized gain on investments ........................ 48,671,939 -------------------------------------------------------------------------------------- Net Increase in Net Assets Attributable to Operations .................. $48,574,909 ======================================================================================
The accompanying notes are an integral part of these financial statements. 28 -------------------------------------------------------------------------------- Separate Account No. 3 (Pooled) (The Alliance Mid Cap Growth Fund) of The Equitable Life Assurance Society of the United States
Statements of Changes in Net Assets ------------------------------------------------------------------------------------------------------------------------- Year Ended December 31, 2003 2002 ------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets: From Operations: Net investment loss ..................................................................... $ (97,030) $ (170,821) Net realized gain (loss) on investments and foreign currency transactions ............... 23,418,411 (16,529,166) Change in unrealized appreciation/depreciation of investments ........................... 25,253,528 (12,953,026) ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets attributable to operations ........................ 48,574,909 (29,653,013) ------------------------------------------------------------------------------------------------------------------------- From Contributions and Withdrawals: Contributions ........................................................................... 29,058,327 91,333,641 Withdrawals ............................................................................. (38,923,606) (72,694,551) Asset management fees ................................................................... (173,933) (212,326) Administrative fees ..................................................................... (100,735) (140,077) ------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets attributable to contributions and withdrawals ..... (10,139,947) 18,286,687 ------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets ....................................................... 38,434,962 (11,366,326) ------------------------------------------------------------------------------------------------------------------------- Net Assets -- Beginning of Year ......................................................... 71,035,708 82,402,034 ------------------------------------------------------------------------------------------------------------------------- Net Assets -- End of Year ............................................................... $ 109,470,670 $ 71,035,708 =========================================================================================================================
The accompanying notes are an integral part of these financial statements. 29 -------------------------------------------------------------------------------- Separate Account No. 3 (Pooled) (The Alliance Mid Cap Growth Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- COMMON STOCKS: AEROSPACE & DEFENSE (2.6%) Aerospace (2.6%) Northrop Grumman Corp. ...................... 30,340 $ 2,900,504 ----------- BASIC INDUSTRIES (1.5%) Paper & Forest Products (1.5%) Smurfit-Stone Container Corp. * ............. 90,230 1,675,571 ----------- CAPITAL GOODS (4.0%) Electrical Equipment (2.4%) Alliant Techsystems, Inc. * ................. 45,565 2,631,835 ----------- Miscellaneous (1.6%) Shaw Group, Inc. * .......................... 124,710 1,698,550 ----------- 4,330,385 ----------- CONSUMER MANUFACTURING (2.9%) Building & Related (2.9%) D. R. Horton, Inc. .......................... 47,970 2,075,182 Lennar Corp. (Class A) ...................... 10,920 1,048,320 ----------- 3,123,502 ----------- CONSUMER SERVICES (13.9%) Airlines (1.2%) Southwest Airlines Co. ...................... 83,610 1,349,465 ----------- Broadcasting & Cable (1.7%) XM Satellite Radio Holdings, Inc. * ......... 71,600 1,887,376 ----------- Cellular Communications (5.6%) Nextel Partners, Inc. * ..................... 43,600 586,420 Sprint Corp. (PCS Group) * .................. 990,120 5,564,474 ----------- 6,150,894 ----------- Gaming (1.2%) Wynn Resorts Ltd. * ......................... 46,760 1,309,748 ----------- Restaurants & Lodging (1.0%) Starbucks Corporation * ..................... 33,960 1,122,718 ----------- Retail-General Merchandise (3.2%) Amazon.com, Inc. * .......................... 29,800 1,568,672 Tiffany & Co. ............................... 42,400 1,916,480 ----------- 3,485,152 ----------- 15,305,353 ----------- CONSUMER STAPLES (0.9%) Retail-Food & Drug (0.9%) Whole Foods Market, Inc. * .................. 15,110 1,014,334 ---------- ENERGY (10.2%) Domestic Producers (3.3%) Apache Corp. ................................ 26,350 2,136,985 Noble Energy, Inc. .......................... 34,370 1,527,059 ---------- 3,664,044 ---------- -------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Oil Service (4.1%) BJ Services Co. * ........................... 87,560 $ 3,143,404 FMC Technologies, Inc. * .................... 57,250 1,333,925 ----------- 4,477,329 ----------- Miscellaneous (2.8%) Evergreen Resources, Inc. * ................. 40,360 1,312,104 Valero Energy Corp. ......................... 36,800 1,705,312 ----------- 3,017,416 ----------- 11,158,789 ----------- FINANCE (4.6%) Banking-Money Center (1.0%) SLM Corp. ................................... 30,180 1,137,182 ----------- Brokerage & Money Management (2.2%) Ameritrade Holding Corp. (Class A) * ............................. 90,550 1,274,039 Legg Mason, Inc. ............................ 14,290 1,102,902 ----------- 2,376,941 ----------- Miscellaneous (1.4%) Providian Financial Corp. * ................. 130,030 1,513,549 ----------- 5,027,672 ----------- HEALTH CARE (17.1%) Biotechnology (13.6%) Affymetrix, Inc. * .......................... 113,460 2,792,251 Applera Corp. * ............................. 120,600 1,677,546 Applied Biosystems Group-Applera Corp. ................................... 163,030 3,376,351 Biogen Idec, Inc. * ......................... 56,570 2,080,645 Compugen Ltd. * ............................. 221,110 1,116,606 Gilead Sciences, Inc. * ..................... 26,190 1,522,687 Millennium Pharmaceuticals, Inc. * .......... 126,050 2,353,353 ----------- 14,919,439 ----------- Medical Services (1.3%) Cepheid, Inc. * ............................. 147,880 1,416,690 ----------- Medical Products (2.2%) Cerus Corp. * ............................... 269,260 1,222,440 Zimmer Holdings, Inc. * ..................... 16,450 1,158,080 ----------- 2,380,520 ----------- 18,716,649 ----------- TECHNOLOGY (41.8%) Communication Equipment (6.7%) Corning, Inc. * ............................. 192,720 2,010,070 JDS Uniphase Corp. * ........................ 328,490 1,198,988 Juniper Networks, Inc. * .................... 193,760 3,619,437 3Com Corp. * ................................ 66,460 542,978 ----------- 7,371,473 -----------
30 -------------------------------------------------------------------------------- Separate Account No. 3 (Pooled) (The Alliance Mid Cap Growth Fund) of The Equitable Life Assurance Society of the United States Portfolio of Investments -- December 31, 2003 (Concluded)
-------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Computer Peripherals (2.7%) Network Appliance, Inc. * ............... 142,230 $ 2,919,982 ------------ Internet Infrastructure (1.5%) eBay, Inc. * ............................ 26,106 1,686,187 ------------ Internet Media (3.1%) Equinix, Inc. * ......................... 9,900 279,180 RealNetworks, Inc. * .................... 177,050 1,010,956 SINA Corp. * ............................ 15,950 538,312 Yahoo!, Inc. * .......................... 34,516 1,559,088 ------------ 3,387,536 ------------ Semiconductor Capital Equipment (1.9%) KLA-Tencor Corp. * ...................... 35,300 2,071,051 ------------ Semiconductor Components (11.7%) Broadcom Corp. * ........................ 56,030 1,910,063 Marvell Technology Group Ltd. * ......... 32,700 1,240,311 Micron Technology, Inc. * ............... 324,440 4,370,207 Nvidia Corp. * .......................... 135,910 3,159,907 Silicon Laboratories, Inc. * ............ 50,370 2,176,991 ------------ 12,857,479 ------------ -------------------------------------------------------------------------------- Number of Value Shares (Note 2) -------------------------------------------------------------------------------- Software (14.2%) BEA Systems, Inc. * ..................... 182,060 $ 2,239,338 CNET Networks, Inc. * ................... 218,100 1,487,442 Electronic Arts, Inc. * ................. 25,668 1,226,417 Intuit, Inc. * .......................... 41,739 2,208,410 NetScreen Technologies, Inc. * .......... 105,780 2,618,055 PeopleSoft, Inc. * ...................... 181,940 4,148,232 Red Hat, Inc. * ......................... 79,000 1,482,830 ------------ 15,410,724 ------------ 45,704,432 ------------ TOTAL COMMON STOCKS (99.5%) (Cost $85,907,893).................... 108,957,191 ------------ TOTAL INVESTMENTS (99.5%) (Cost $85,907,893).................... 108,957,191 OTHER ASSETS LESS LIABILITIES (0.5%) .................. 513,479 ------------ NET ASSETS (100.0%) ..................... $109,470,670 ============
------------------------- * Non-income producing security. The accompanying notes are an integral part of these financial statements. 31 Separate Account No. 66 of The Equitable Life Assurance Society of the United States ---------------------------------------------------- Statements of Assets and Liabilities ---------------------------- December 31, 2003 ----------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------- EQ/Alliance EQ/Alliance Intermediate AXA Premier VIP Growth Government EQ/Alliance High Yield and Income Securities International -------------------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 1,196,266 $ 7,317,086 $ 12,920,044 $ 16,376,897 Receivable for Trust shares sold ..................... 981 75,516 7,716 77,485 Receivable for policy-related transactions ........... -- -- -- -- -------------------------------------------------------------------------------------------------------------------------- Total assets ...................................... 1,197,247 7,392,602 12,927,760 16,454,382 -------------------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... -- -- -- -- Payable for policy-related transactions .............. 981 75,516 7,716 82,206 -------------------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 981 75,516 7,716 82,206 -------------------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 1,196,266 $ 7,317,086 $ 12,920,044 $ 16,372,176 ======================================================================================================================== Accumulation Units ................................... 1,196,266 7,317,086 12,920,044 16,372,176 Retained by Equitable Life in Separate Account No. 66 .............................................. -- -- -- -- -------------------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 1,196,266 $ 7,317,086 $ 12,920,044 $ 16,372,176 ======================================================================================================================== Investments in shares of The Trust - at cost ......... $ 1,471,965 $ 7,423,894 $ 13,012,385 $ 12,844,360 Trust shares held Class A ............................................. 212,471 440,232 228,495 1,701,694 Class B ............................................. -- -- 1,050,227 -- Units outstanding (000's): MRP ................................................. -- -- 226 795 RIA ................................................. 7 24 60 40 Unit value: MRP ................................................. -- -- $ 10.16 $ 14.48 RIA ................................................. $ 173.86 $ 298.75 $ 176.49 $ 122.39
The accompanying notes are an integral part of these financial statements. 32 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Assets and Liabilities (Continued) ----------------------- December 31, 2003 --------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------- EQ/Alliance EQ/Bernstein EQ/Alliance EQ/Alliance Small Cap Diversified Premier Growth Quality Bond Growth Value ----------------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 1,054,079 $ 2,468,702 $ 1,911,124 $ 15,890,615 Receivable for Trust shares sold ..................... 767 1,651 -- 1,571 Receivable for policy-related transactions ........... -- -- 1,115 -- ----------------------------------------------------------------------------------------------------------------------- Total assets ...................................... 1,054,846 2,470,353 1,912,239 15,892,186 ----------------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... -- -- 1,115 -- Payable for policy-related transactions .............. 767 1,651 -- 1,571 ----------------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 767 1,651 1,115 1,571 ----------------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 1,054,079 $ 2,468,702 $ 1,911,124 $ 15,890,615 ======================================================================================================================= Accumulation Units ................................... 1,052,579 2,468,702 1,911,124 15,889,115 Retained by Equitable Life in Separate Account No. 66 .............................................. 1,500 -- -- 1,500 ----------------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 1,054,079 $ 2,468,702 $ 1,911,124 $ 15,890,615 ======================================================================================================================= Investments in shares of The Trust - at cost ......... $ 1,398,216 $ 2,413,847 $ 1,737,531 $ 14,635,949 Trust shares held Class A ............................................. -- 240,888 149,936 -- Class B ............................................. 169,976 -- -- 1,245,507 Units outstanding (000's): MRP ................................................. -- -- -- 487 RIA ................................................. 18 13 14 97 Unit value: MRP ................................................. -- -- -- $ 10.89 RIA ................................................. $ 59.84 $ 192.69 $ 136.53 $ 109.39
The accompanying notes are an integral part of these financial statements. 33 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Assets and Liabilities (Continued) ------------------------ December 31, 2003 --------------------------------------------------------
------------------------------------------------------------------------------------------------------------------- EQ/Calvert EQ/Capital EQ/Capital EQ/Capital Socially Guardian Guardian Guardian Responsible International Research US Equity ------------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 737,021 $ 635,114 $ 5,789,323 $ 1,151,427 Receivable for Trust shares sold ..................... -- -- -- 3 Receivable for policy-related transactions ........... 1,701 78 217 -- ------------------------------------------------------------------------------------------------------------------- Total assets ...................................... 738,722 635,192 5,789,540 1,151,430 ------------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... 1,774 78 217 -- Payable for policy-related transactions .............. -- -- -- 3 ------------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 1,774 78 217 3 ------------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 736,948 $ 635,114 $ 5,789,323 $ 1,151,427 =================================================================================================================== Accumulation Units ................................... 735,448 633,614 5,787,823 1,149,927 Retained by Equitable Life in Separate Account No. 66 .............................................. 1,500 1,500 1,500 1,500 ------------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 736,948 $ 635,114 $ 5,789,323 $ 1,151,427 =================================================================================================================== Investments in shares of The Trust - at cost ......... $ 668,100 $ 543,328 $ 4,766,356 $ 975,469 Trust shares held Class A ............................................. -- -- -- -- Class B ............................................. 97,966 65,862 537,929 108,916 Units outstanding (000's): MRP ................................................. 99 55 364 64 RIA ................................................. -- 2 6 3 Unit value: MRP ................................................. $ 7.41 $ 8.82 $ 14.10 $ 12.24 RIA ................................................. $ 83.07 $ 92.75 $ 108.30 $ 106.85
The accompanying notes are an integral part of these financial statements. 34 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Assets and Liabilities (Continued) ----------------------- December 31, 2003 --------------------------------------------------------
--------------------------------------------------------------------------------------------------------------- EQ/Emerging Markets EQ/Equity EQ/Evergreen EQ/FI Equity 500 Index Omega Mid Cap --------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 367,718 $ 17,797,208 $ 56,705 $ 599,635 Receivable for Trust shares sold ..................... 262 21,812 57 -- Receivable for policy-related transactions ........... -- -- -- 2,022 --------------------------------------------------------------------------------------------------------------- Total assets ...................................... 367,980 17,819,020 56,762 601,657 --------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... -- -- -- 2,022 Payable for policy-related transactions .............. 262 21,812 57 -- --------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 262 21,812 57 2,022 --------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 367,718 $ 17,797,208 $ 56,705 $ 599,635 =============================================================================================================== Accumulation Units ................................... 366,218 17,795,708 55,205 598,135 Retained by Equitable Life in Separate Account No. 66 .............................................. 1,500 1,500 1,500 1,500 --------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 367,718 $ 17,797,208 $ 56,705 $ 599,635 =============================================================================================================== Investments in shares of The Trust - at cost ......... $ 261,596 $ 18,272,339 $ 52,672 $ 475,750 Trust shares held Class A ............................................. -- 327,054 -- -- Class B ............................................. 44,914 507,811 6,760 59,090 Units outstanding (000's): MRP ................................................. -- 1,477 -- -- RIA ................................................. 2 25 1 6 Unit value: MRP ................................................. -- $ 7.32 -- -- RIA ................................................. $ 181.64 $ 274.41 $ 81.36 $ 101.82
The accompanying notes are an integral part of these financial statements. 35 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Assets and Liabilities (Continued) ------------------------ December 31, 2003 --------------------------------------------------------
--------------------------------------------------------------------------------------------------------------- EQ/FI EQ/Janus EQ/Lazard Small/Mid Large Cap Small Cap EQ/Marsico Cap Value Growth Value Focus --------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 5,666,530 $ 137,684 $ 720,891 $ 291,345 Receivable for Trust shares sold ..................... -- 119 -- -- Receivable for policy-related transactions ........... 53,292 -- 1,980 2,250 --------------------------------------------------------------------------------------------------------------- Total assets ...................................... 5,719,822 137,803 722,871 293,595 --------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... 55,102 -- 1,980 2,250 Payable for policy-related transactions .............. -- 119 -- -- --------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 55,102 119 1,980 2,250 --------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 5,664,720 $ 137,684 $ 720,891 $ 291,345 ============================================================================================================== Accumulation Units ................................... 5,663,221 136,184 719,391 289,845 Retained by Equitable Life in Separate Account No. 66 .............................................. 1,499 1,500 1,500 1,500 --------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 5,664,720 $ 137,684 $ 720,891 $ 291,345 ============================================================================================================== Investments in shares of The Trust - at cost ......... $ 4,823,925 $ 127,537 $ 625,029 $ 247,409 Trust shares held Class A ............................................. -- -- -- -- Class B ............................................. 433,335 24,199 54,205 22,071 Units outstanding (000's): MRP ................................................. 431 -- -- -- RIA ................................................. 7 2 5 2 Unit value: MRP ................................................. $ 11.08 -- -- -- RIA ................................................. $ 132.94 $ 56.98 $ 160.84 $ 123.22
The accompanying notes are an integral part of these financial statements. 36 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Assets and Liabilities (Continued) ------------------------ December 31, 2003 --------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------- EQ/Mercury EQ/Mercury EQ/MFS EQ/MFS Basic Value International Emerging Investors Equity Value Growth Companies Trust --------------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 1,237,639 $ 356,745 $ 2,736,472 $ 48,384 Receivable for Trust shares sold ..................... 646 416 -- -- Receivable for policy-related transactions ........... -- -- 4,630 48 --------------------------------------------------------------------------------------------------------------------- Total assets ...................................... 1,238,285 357,161 2,741,102 48,432 --------------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... -- -- 5,291 48 Payable for policy-related transactions .............. 646 416 -- -- --------------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 646 416 5,291 48 --------------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 1,237,639 $ 356,745 $ 2,735,811 $ 48,384 ===================================================================================================================== Accumulation Units ................................... 1,236,139 355,245 2,734,312 46,884 Retained by Equitable Life in Separate Account No. 66 .............................................. 1,500 1,500 1,499 1,500 --------------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 1,237,639 $ 356,745 $ 2,735,811 $ 48,384 ===================================================================================================================== Investments in shares of The Trust - at cost ......... $ 1,055,699 $ 325,823 $ 2,725,369 $ 56,000 Trust shares held Class A ............................................. -- -- -- -- Class B ............................................. 83,981 32,837 235,157 5,660 Units outstanding (000's): MRP ................................................. -- -- 295 -- RIA ................................................. 8 4 15 1 Unit value: MRP ................................................. -- -- $ 4.29 -- RIA ................................................. $ 164.84 $ 99.99 $ 97.26 $ 83.93
The accompanying notes are an integral part of these financial statements. 37 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Assets and Liabilities (Concluded) ------------------------ December 31, 2003 --------------------------------------------------------
----------------------------------------------------------------------------------------------------------------- EQ/Putnam EQ/Money Growth & EQ/Putnam Market Income Value Voyager EQ/Technology ----------------------------------------------------------------------------------------------------------------- Assets: Investments in shares of The Trust - at fair value ............................................... $ 2,671,103 $ 319,555 $ 48,340 $ 1,237,724 Receivable for Trust shares sold ..................... 1,795 270 46 -- Receivable for policy-related transactions ........... -- -- -- 18,912 ----------------------------------------------------------------------------------------------------------------- Total assets ...................................... 2,672,898 319,825 48,386 1,256,636 ----------------------------------------------------------------------------------------------------------------- Liabilities: Payable for Trust shares purchased ................... -- -- -- 18,912 Payable for policy-related transactions .............. 1,795 270 46 -- ----------------------------------------------------------------------------------------------------------------- Total liabilities ................................. 1,795 270 46 18,912 ----------------------------------------------------------------------------------------------------------------- Net assets ........................................... $ 2,671,103 $ 319,555 $ 48,340 $ 1,237,724 ================================================================================================================= Accumulation Units ................................... 2,671,103 318,055 46,840 1,236,224 Retained by Equitable Life in Separate Account No. 66 .............................................. -- 1,500 1,500 1,500 ----------------------------------------------------------------------------------------------------------------- Total net assets ..................................... $ 2,671,103 $ 319,555 $ 48,340 $ 1,237,724 ================================================================================================================= Investments in shares of The Trust - at cost ......... $ 2,689,457 $ 318,100 $ 43,402 $ 1,087,357 Trust shares held Class A ............................................. 257,669 -- -- -- Class B ............................................. -- 28,388 4,074 288,805 Units outstanding (000's): MRP ................................................. -- -- -- 128 RIA ................................................. 18 3 1 7 Unit value: MRP ................................................. -- -- -- $ 6.74 RIA ................................................. $ 149.82 $ 114.64 $ 68.49 $ 50.87
The accompanying notes are an integral part of these financial statements. 38 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
------------------------------------------------------------------------------------------------------------------- EQ/Alliance EQ/Alliance Intermediate AXA Premier VIP Growth Government EQ/Alliance High Yield and Income Securities International ------------------------------------------------------------------------------------------------------------------- Income and Expense: Investment Income: Dividends from The Trusts ......................... $ 59,816 $ 84,605 $ 519,071 $ 276,989 ------------------------------------------------------------------------------------------------------------------- Expenses: Asset-based charges ............................... (596) (3,893) (31,020) (122,180) ------------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) ......................... 59,220 80,712 488,051 154,809 ------------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments ............... (13,868) (837,102) 94,964 40,176 Realized gain distribution from The Trust ......... -- -- 4,635 -- ------------------------------------------------------------------------------------------------------------------- Net realized gain (loss) ............................ (13,868) (837,102) 99,599 40,176 ------------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation/(depreciation) of investments .................................... 198,710 2,788,951 (322,804) 4,035,343 ------------------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments ......................................... 184,842 1,951,849 (223,205) 4,075,519 ------------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Asset Results from Operations ..................................... $ 244,062 $2,032,561 $ 264,846 $4,230,328 ===================================================================================================================
The accompanying notes are an integral part of these financial statements. 39 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations (Continued) ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
------------------------------------------------------------------------------------------------------------------ EQ/Alliance EQ/Bernstein EQ/Alliance EQ/Alliance Small Cap Diversified Premier Growth Quality Bond Growth Value ------------------------------------------------------------------------------------------------------------------ Income and Expense: Investment Income: Dividends from The Trusts ......................... $ -- $ 68,388 $ -- $ 181,416 ------------------------------------------------------------------------------------------------------------------ Expenses: Asset-based charges ............................... -- (1,478) (743) (57,472) ------------------------------------------------------------------------------------------------------------------ Net Investment Income (Loss) ......................... -- 66,910 (743) 123,944 ------------------------------------------------------------------------------------------------------------------ Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments ............... (575,281) 93,625 (86,293) (81,136) Realized gain distribution from The Trust ......... -- 8,007 -- -- ------------------------------------------------------------------------------------------------------------------ Net realized gain (loss) ............................ (575,281) 101,632 (86,293) (81,136) ------------------------------------------------------------------------------------------------------------------ Change in unrealized appreciation/(depreciation) of investments .................................... 805,950 (67,090) 604,308 3,265,390 ------------------------------------------------------------------------------------------------------------------ Net Realized and Unrealized Gain (Loss) on Investments ......................................... 230,669 34,542 518,015 3,184,254 ------------------------------------------------------------------------------------------------------------------ Net Increase (Decrease) in Net Asset Results from Operations ..................................... $ 230,669 $ 101,452 $ 517,272 $3,308,198 ==================================================================================================================
The accompanying notes are an integral part of these financial statements. 40 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations (Continued) ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
--------------------------------------------------------------------------------------------------------------- EQ/Calvert EQ/Capital EQ/Capital EQ/Capital Socially Guardian Guardian Guardian Responsible International Research US Equity --------------------------------------------------------------------------------------------------------------- Income and Expense: Investment Income: Dividends from The Trusts ......................... $ -- $ 5,728 $ 21,491 $ 2,636 --------------------------------------------------------------------------------------------------------------- Expenses: Asset-based charges ............................... (6,702) (3,624) (56,296) (5,119) --------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) ......................... (6,702) 2,104 (34,805) (2,483) --------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments ............... (16,466) 4,518 24,033 12,303 Realized gain distribution from The Trust ......... -- -- -- -- --------------------------------------------------------------------------------------------------------------- Net realized gain (loss) ............................ (16,466) 4,518 24,033 12,303 --------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation/(depreciation) of investments .................................... 151,795 118,377 1,319,057 210,076 --------------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments ......................................... 135,329 122,895 1,343,090 222,379 --------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Asset Results from Operations ..................................... $ 128,627 $124,999 $1,308,285 $219,896 ===============================================================================================================
The accompanying notes are an integral part of these financial statements. 41 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations (Continued) ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
-------------------------------------------------------------------------------------------------------------- EQ/Emerging Markets EQ/Equity 500 EQ/Evergreen EQ/FI Equity Index Omega Mid Cap -------------------------------------------------------------------------------------------------------------- Income and Expense: Investment Income: Dividends from The Trusts ......................... $ 2,224 $ 217,622 $ -- $ -- -------------------------------------------------------------------------------------------------------------- Expenses: Asset-based charges ............................... -- (115,515) -- -- -------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) ......................... 2,224 102,107 -- -- -------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments ............... (27,869) (2,212,969) (1,781) (3,840) Realized gain distribution from The Trust ......... -- -- -- -- -------------------------------------------------------------------------------------------------------------- Net realized gain (loss) ............................ (27,869) (2,212,969) (1,781) (3,840) -------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation/(depreciation) of investments .................................... 159,081 6,196,751 17,327 154,827 -------------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments ......................................... 131,212 3,983,782 15,546 150,987 -------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Asset Results from Operations ..................................... $ 133,436 $ 4,085,889 $ 15,546 $150,987 ==============================================================================================================
The accompanying notes are an integral part of these financial statements. 42 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations (Continued) ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
-------------------------------------------------------------------------------------------------------- EQ/FI EQ/Janus EQ/Lazard Small/Mid Large Cap Small Cap EQ/Marsico Cap Value Growth Value Focus -------------------------------------------------------------------------------------------------------- Income and Expense: Investment Income: Dividends from The Trusts ........................ $ 18,059 $ -- $ 5,130 $ -- -------------------------------------------------------------------------------------------------------- Expenses: Asset-based charges .............................. (50,055) -- -- -- -------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) ........................ (31,996) -- 5,130 -- -------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments .............. (78,375) (20,826) (12,994) 1,722 Realized gain distribution from The Trust ........ -- -- 1,327 -- -------------------------------------------------------------------------------------------------------- Net realized gain (loss) ........................... (78,375) (20,826) (11,667) 1,722 -------------------------------------------------------------------------------------------------------- Change in unrealized appreciation/(depreciation) of investments ................................... 1,471,997 51,118 189,958 47,139 -------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments ........................................ 1,393,622 30,292 178,291 48,861 -------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Asset Results from Operations .................................... $1,361,626 $ 30,292 $ 183,421 $48,861 ========================================================================================================
The accompanying notes are an integral part of these financial statements. 43 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations (Continued) ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
--------------------------------------------------------------------------------------------------------------- EQ/MFS EQ/Mercury EQ/Mercury Emerging EQ/MFS Basic Value International Growth Investors Equity Value Companies Trust --------------------------------------------------------------------------------------------------------------- Income and Expense: Investment Income: Dividends from The Trusts ......................... $ 5,554 $ 7,044 $ -- $ 261 --------------------------------------------------------------------------------------------------------------- Expenses: Asset-based charges ............................... -- -- (13,047) -- --------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) ......................... 5,554 7,044 (13,047) 261 --------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments ............... (52,910) (23,274) (1,277,685) (3,089) Realized gain distribution from The Trust ......... -- -- -- -- --------------------------------------------------------------------------------------------------------------- Net realized gain (loss) ............................ (52,910) (23,274) (1,277,685) (3,089) --------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation/(depreciation) of investments .................................... 369,056 96,460 1,945,429 11,679 --------------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments ......................................... 316,146 73,186 667,744 8,590 --------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Asset Results from Operations ..................................... $ 321,700 $ 80,230 $ 654,697 $ 8,851 ===============================================================================================================
The accompanying notes are an integral part of these financial statements. 44 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Operations (Concluded) ------------------------ For the Year Ended December 31, 2003 --------------------------------------------------------
--------------------------------------------------------------------------------------------------------------- EQ/Putnam EQ/Money Growth & EQ/Putnam Market Inccome Value Voyager EQ/Technology --------------------------------------------------------------------------------------------------------------- Income and Expense: Investment Income: Dividends from The Trusts ......................... $ 24,454 $ 3,850 $ 58 $ -- --------------------------------------------------------------------------------------------------------------- Expenses: Asset-based charges ............................... (2,434) -- -- (7,198) --------------------------------------------------------------------------------------------------------------- Net Investment Income (Loss) ......................... 22,020 3,850 58 (7,198) --------------------------------------------------------------------------------------------------------------- Realized and Unrealized Gain (Loss) on Investments: Realized gain (loss) on investments ............... (29,715) (10,214) (60,748) (50,939) Realized gain distribution from The Trust ......... -- -- -- -- --------------------------------------------------------------------------------------------------------------- Net realized gain (loss) ............................ (29,715) (10,214) (60,748) (50,939) --------------------------------------------------------------------------------------------------------------- Change in unrealized appreciation/(depreciation) of investments .................................... 46,166 74,966 78,427 358,137 --------------------------------------------------------------------------------------------------------------- Net Realized and Unrealized Gain (Loss) on Investments ......................................... 16,451 64,752 17,679 307,198 --------------------------------------------------------------------------------------------------------------- Net Increase (Decrease) in Net Asset Results from Operations ..................................... $ 38,471 $ 68,602 $ 17,737 $ 300,000 ===============================================================================================================
The accompanying notes are an integral part of these financial statements. 45 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets ------------------------ For the Years Ended December 31, --------------------------------------------------------
----------------------------------------------------------------------------------------------------------------- EQ/Alliance AXA Premier VIP Growth High Yield and Income ---------------------------- ------------------------------- 2003 2002 2003 2002 ----------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 59,220 $ 111,758 $ 80,712 $ 141,605 Net realized gain (loss) on investments ........... (13,868) (132,657) (837,102) (1,121,293) Change in unrealized appreciation (depreciation) of investments ................... 198,710 (24,807) 2,788,951 (1,778,585) ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 244,062 (45,706) 2,032,561 (2,758,273) ----------------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 117,150 61,040 1,260,316 1,395,808 Transfers between funds and guaranteed interest account, net .......................... 28,530 (43,990) (329,810) (647,309) Transfers for contract benefits and terminations ................................... (361,457) (240,689) (3,805,623) (5,318,508) Contract maintenance charges .................... (11,170) (12,187) (66,743) (101,095) ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (226,947) (235,826) (2,941,860) (4,671,104) ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- ----------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 17,115 (281,532) (909,299) (7,429,377) Net Assets--Beginning of Period .................... 1,179,151 1,460,683 8,226,385 15,655,762 ----------------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $1,196,266 $1,179,151 $ 7,317,086 $8,226,385 ================================================================================================================= EQ/Alliance Intermediate Government Securities (b) ------------------------------- 2003 2002 ------------------------------------------------------------------------------------ Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 488,051 $ 400,417 Net realized gain (loss) on investments ........... 99,599 18,349 Change in unrealized appreciation (depreciation) of investments ................... (322,804) 232,150 ------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........................................ 264,846 650,916 ------------------------------------------------------------------------------------ Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 3,498,444 1,616,213 Transfers between funds and guaranteed interest account, net .......................... (33,762) 7,113,755 Transfers for contract benefits and terminations ................................... (1,252,208) (139,800) Contract maintenance charges .................... (46,498) (28,932) ------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contractowners transactions ....................... 2,165,976 8,561,236 ------------------------------------------------------------------------------------ Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- ------------------------------------------------------------------------------------ Increase (Decrease) in Net Assets .................. 2,430,822 9,212,152 Net Assets--Beginning of Period .................... 10,489,222 1,277,070 ------------------------------------------------------------------------------------ Net Assets--End of Period .......................... $12,920,044 $10,489,222 ====================================================================================
The accompanying notes are an integral part of these financial statements. 46 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
----------------------------------------------------------------------------------------------------------------- EQ/Alliance EQ/Alliance International (a) Premier Growth ------------------------------ ----------------------------- 2003 2002 2003 2002 ----------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 154,809 $ (13,689) $ -- $ -- Net realized gain (loss) on investments ........... 40,176 (564,669) (575,281) (662,484) Change in unrealized appreciation (depreciation) of investments ................... 4,035,343 84,140 805,950 8,739 ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 4,230,328 (494,218) 230,669 (653,745) ----------------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 2,251,680 224,342 122,091 144,145 Transfers between funds and guaranteed interest account, net .......................... (312,928) 12,933,951 (195,190) (277,773) Transfers for contract benefits and terminations ................................... (2,726,270) (900,142) (265,698) (335,197) Contract maintenance charges .................... (41,441) (13,919) (11,716) (15,737) ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (828,959) 12,244,232 (350,513) (484,562) ----------------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- ----------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 3,401,369 11,750,014 (119,844) (1,138,307) Net Assets--Beginning of Period .................... 12,970,807 1,220,793 1,173,923 2,312,230 ----------------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $16,372,176 $12,970,807 $1,054,079 $ 1,173,923 ================================================================================================================= ---------------------------------------------------------------------------------- EQ/Alliance Quality Bond ----------------------------- 2003 2002 ---------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 66,910 $ 124,223 Net realized gain (loss) on investments ........... 101,632 51,244 Change in unrealized appreciation (depreciation) of investments ................... (67,090) 83,876 ---------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 101,452 259,343 ---------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 352,976 510,164 Transfers between funds and guaranteed interest account, net .......................... 103,850 (112,760) Transfers for contract benefits and terminations ................................... (1,251,012) (456,782) Contract maintenance charges .................... (26,671) (28,215) ---------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (820,857) (87,593) ---------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- ---------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. (719,405) 171,750 Net Assets--Beginning of Period .................... 3,188,107 3,016,357 ---------------------------------------------------------------------------------- Net Assets--End of Period .......................... $ 2,468,702 $3,188,107 ==================================================================================
The accompanying notes are an integral part of these financial statements. 47 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
-------------------------------------------------------------------------------- EQ/Alliance Small Cap Growth ---------------------------- 2003 2002 -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ (743) $ (798) Net realized gain (loss) on investments ........... (86,293) (353,726) Change in unrealized appreciation (depreciation) of investments ................... 604,308 (245,136) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 517,272 (599,660) -------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 164,879 164,967 Transfers between funds and guaranteed interest account, net .......................... 419,441 (210,418) Transfers for contract benefits and terminations ................................... (391,265) (323,537) Contract maintenance charges .................... (13,458) (15,497) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 179,597 (384,485) -------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 696,869 (984,145) Net Assets--Beginning of Period .................... 1,214,255 2,198,400 -------------------------------------------------------------------------------- Net Assets--End of Period .......................... $1,911,124 $1,214,255 ================================================================================ --------------------------------------------------------------------------------------------------------------- EQ/Bernstein EQ/Calvert Diversified Socially Value Responsible ------------------------------- -------------------------- 2003 2002 2003 2002 --------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 123,944 $ 96,755 $ (6,702) $ (4,975) Net realized gain (loss) on investments ........... (81,136) (112,129) (16,466) (63,098) Change in unrealized appreciation (depreciation) of investments ................... 3,265,390 (1,873,293) 151,795 (37,104) --------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 3,308,198 (1,888,667) 128,627 (105,177) --------------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 2,320,276 2,284,286 318,600 311,342 Transfers between funds and guaranteed interest account, net .......................... (436,862) 7,458,557 (29,956) (123,827) Transfers for contract benefits and terminations ................................... (541,503) (613,650) (14,180) (42,563) Contract maintenance charges .................... (27,406) (19,193) -- (21) --------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 1,314,505 9,110,000 274,464 144,931 --------------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- --------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 4,622,703 7,221,333 403,091 39,754 Net Assets--Beginning of Period .................... 11,267,912 4,046,579 333,857 294,103 --------------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $15,890,615 $11,267,912 $ 736,948 $ 333,857 ===============================================================================================================
The accompanying notes are an integral part of these financial statements. 48 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
--------------------------------------------------------------------------------------------------------- EQ/Capital EQ/Capital Guardian Guardian International Research(d) ------------------------ --------------------------- 2003 2002 2003 2002 --------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 2,104 $ 1,760 $ (34,805) $ 6,071 Net realized gain (loss) on investments ........... 4,518 (9,027) 24,033 (14,803) Change in unrealized appreciation (depreciation) of investments ................... 118,377 (23,443) 1,319,057 (300,210) --------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 124,999 (30,710) 1,308,285 (308,942) --------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 307,020 196,427 1,067,658 135,070 Transfers between funds and guaranteed interest account, net .......................... 14,514 499 (47,144) 4,240,763 Transfers for contract benefits and terminations ................................... (34,239) (12,582) (748,427) (56,258) Contract maintenance charges .................... (936) (647) (6,279) (2,583) --------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 286,359 183,697 265,808 4,316,992 --------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- --------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 411,358 152,987 1,574,093 4,008,050 Net Assets--Beginning of Period .................... 223,756 70,769 4,215,230 207,180 --------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $ 635,114 $223,756 $5,789,323 $4,215,230 ========================================================================================================= -------------------------------------------------------------------------------- EQ/Capital Guardian U.S. Equity(c) --------------------------- 2003 2002 -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ (2,483) $ 871 Net realized gain (loss) on investments ........... 12,303 (43,166) Change in unrealized appreciation (depreciation) of investments ................... 210,076 (39,603) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 219,896 (81,898) -------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 557,673 106,590 Transfers between funds and guaranteed interest account, net .......................... 16,115 208,578 Transfers for contract benefits and terminations ................................... (48,951) (26,867) Contract maintenance charges .................... (3,039) (3,152) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 521,798 285,149 -------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 741,694 203,251 Net Assets--Beginning of Period .................... 409,733 206,482 -------------------------------------------------------------------------------- Net Assets--End of Period .......................... $1,151,427 $ 409,733 ================================================================================
The accompanying notes are an integral part of these financial statements. 49 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
------------------------------------------------------------------------------ EQ/Emerging Markets Equity ------------------------- 2003 2002 ------------------------------------------------------------------------------ Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 2,224 $ -- Net realized gain (loss) on investments ........... (27,869) (72,915) Change in unrealized appreciation (depreciation) of investments ................... 159,081 59,143 ------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........................................ 133,436 (13,772) ------------------------------------------------------------------------------ Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 56,266 21,063 Transfers between funds and guaranteed interest account, net .......................... 44,429 389 Transfers for contract benefits and terminations ................................... (79,939) (20,438) Contract maintenance charges .................... (2,416) (2,462) ------------------------------------------------------------------------------ Net increase (decrease) in net assets from contractowners transactions ....................... 18,340 (1,448) ------------------------------------------------------------------------------ Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- ------------------------------------------------------------------------------ Increase (Decrease) in Net Assets .................. 151,776 (15,220) Net Assets--Beginning of Period .................... 215,942 231,162 ------------------------------------------------------------------------------ Net Assets--End of Period .......................... $ 367,718 $ 215,942 ============================================================================== -------------------------------------------------------------------------------------------------------------- EQ/Equity EQ/Evergreen 500 Index Omega -------------------------------- ------------------------ 2003 2002 2003 2002 -------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 102,107 $ 102,697 $ -- $ -- Net realized gain (loss) on investments ........... (2,212,969) (3,667,490) (1,781) (11,496) Change in unrealized appreciation (depreciation) of investments ................... 6,196,751 (2,174,722) 17,327 (6,763) -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 4,085,889 (5,739,515) 15,546 (18,259) -------------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 4,376,688 5,169,317 1,675 11,196 Transfers between funds and guaranteed interest account, net .......................... (785,661) (2,331,504) (632) -- Transfers for contract benefits and terminations ................................... (4,932,598) (7,341,959) (3,570) (20,187) Contract maintenance charges .................... (74,051) (121,469) (565) (738) -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (1,415,622) (4,625,615) (3,092) (9,729) -------------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- (10,000) -- -- -------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 2,670,267 (10,375,130) 12,454 (27,988) Net Assets--Beginning of Period .................... 15,126,941 25,502,071 44,251 72,239 -------------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $17,797,208 $15,126,941 $ 56,705 $ 44,251 ==============================================================================================================
The accompanying notes are an integral part of these financial statements. 50 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------------- EQ/FI EQ/Janus EQ/FI Small/Mid Large Cap Mid Cap Cap Value Growth ----------------------- --------------------------- ------------------------- 2003 2002 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ -- $ 45 $ (31,996) $ (22,380) $ -- $ -- Net realized gain (loss) on investments ........... (3,840) (2,824) (78,375) (763) (20,826) (43,983) Change in unrealized appreciation (depreciation) of investments ................... 154,827 (26,833) 1,471,997 (783,563) 51,118 (11,847) ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 150,987 (29,612) 1,361,626 (806,706) 30,292 (55,830) ---------------------------------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 58,512 61,806 1,715,553 1,761,271 42,068 37,225 Transfers between funds and guaranteed interest account, net .......................... 125,708 204,017 (880,401) 827,301 (30,820) -- Transfers for contract benefits and terminations ................................... (1,903) (85,085) (769,786) (329,508) (10,254) (37,081) Contract maintenance charges .................... (3,742) (624) (9,472) (10,233) (1,303) (1,406) ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 178,575 180,114 55,894 2,248,831 (309) (1,262) ---------------------------------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- -- -- ---------------------------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 329,562 150,502 1,417,520 1,442,125 29,983 (57,092) Net Assets--Beginning of Period .................... 270,073 119,571 4,247,200 2,805,075 107,701 164,793 ---------------------------------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $599,635 $270,073 $5,664,720 $4,247,200 $ 137,684 $ 107,701 ==================================================================================================================================
The accompanying notes are an integral part of these financial statements. 51 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
-------------------------------------------------------------------------------- EQ/Lazard Small Cap Value --------------------------- 2003 2002 -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 5,130 $ 4,424 Net realized gain (loss) on investments ........... (11,667) (14,403) Change in unrealized appreciation (depreciation) of investments .................................. 189,958 (94,275) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 183,421 (104,254) -------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 141,250 143,078 Transfers between funds and guaranteed interest account, net .......................... 37,769 440,438 Transfers for contract benefits and terminations ................................... (120,357) (9,433) Contract maintenance charges .................... (4,982) (3,133) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 53,680 570,950 -------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 237,101 466,696 Net Assets--Beginning of Period .................... 483,790 17,094 -------------------------------------------------------------------------------- Net Assets--End of Period .......................... $ 720,891 $ 483,790 ================================================================================ ---------------------------------------------------------------------------------------------------------- EQ/Mercury EQ/Marsico Basic Value Focus Equity ------------------------ ---------------------------- 2003 2002 2003 2002 ---------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ -- $ 1 $ 5,554 $ 17,099 Net realized gain (loss) on investments ........... 1,722 (23) (52,910) (181,636) Change in unrealized appreciation (depreciation) of investments .................................. 47,139 (3,273) 369,056 (155,667) ---------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 48,861 (3,295) 321,700 (320,204) ---------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 86,003 35,082 237,687 254,545 Transfers between funds and guaranteed interest account, net .......................... 11,820 114,296 (719) 240,614 Transfers for contract benefits and terminations ................................... (385) (190) (445,753) (548,928) Contract maintenance charges .................... (1,959) (459) (11,564) (14,619) ---------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 95,479 148,729 (220,349) (68,388) ---------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- ---------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 144,340 145,434 101,351 (388,592) Net Assets--Beginning of Period .................... 147,005 1,571 1,136,288 1,524,880 ---------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $291,345 $147,005 $1,237,639 $1,136,288 ==========================================================================================================
The accompanying notes are an integral part of these financial statements. 52 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
------------------------------------------------------------------------------- EQ/Mercury International Value ------------------------- 2003 2002 ------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 7,044 $ 2,723 Net realized gain (loss) on investments ........... (23,274) (41,128) Change in unrealized appreciation (depreciation) of investments ................... 96,460 (49,280) ------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 80,230 (87,685) ------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 27,312 34,032 Transfers between funds and guaranteed interest account, net .......................... (42,760) 418,366 Transfers for contract benefits and terminations ................................... (79,249) (78,482) Contract maintenance charges .................... (3,141) (3,392) ------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (97,838) 370,524 ------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- ------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. (17,608) 282,839 Net Assets--Beginning of Period .................... 374,353 91,514 ------------------------------------------------------------------------------- Net Assets--End of Period .......................... $ 356,745 $ 374,353 =============================================================================== ------------------------------------------------------------------------------------------------------------- EQ/MFS Emerging EQ/MFS Growth Investors Companies Trust ------------------------------- ------------------------ 2003 2002 2003 2002 ------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ (13,047) $ (9,626) $ 261 $ 293 Net realized gain (loss) on investments ........... (1,277,685) (3,049,206) (3,089) (6,391) Change in unrealized appreciation (depreciation) of investments ................... 1,945,429 1,552,110 11,679 (8,546) ------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 654,697 (1,506,722) 8,851 (14,644) ------------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 903,338 1,067,005 2,517 5,109 Transfers between funds and guaranteed interest account, net .......................... (431,640) (502,410) -- -- Transfers for contract benefits and terminations ................................... (740,198) (1,590,042) (6,568) (11,147) Contract maintenance charges .................... (16,272) (28,440) (507) (605) ------------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (284,772) (1,053,887) (4,558) (6,643) ------------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- ------------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 369,925 (2,560,609) 4,293 (21,287) Net Assets--Beginning of Period .................... 2,365,886 4,926,495 44,091 65,378 ------------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $ 2,735,811 $ 2,365,886 $ 48,384 $ 44,091 =============================================================================================================
The accompanying notes are an integral part of these financial statements. 53 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Continued) ------------------------ For the Years Ended December 31, --------------------------------------------------------
------------------------------------------------------------------------------------ EQ/Money Market ------------------------------- 2003 2002 ------------------------------------------------------------------------------------ Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 22,020 $ 97,435 Net realized gain (loss) on investments ........... (29,715) 2,119 Change in unrealized appreciation (depreciation) of investments ................... 46,166 (11,861) ------------------------------------------------------------------------------------ Net increase (decrease) in net assets from operations ........................................ 38,471 87,693 ------------------------------------------------------------------------------------ Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 647,858 758,383 Transfers between funds and guaranteed interest account, net .......................... (2,237,583) 2,200,931 Transfers for contract benefits and terminations ................................... (2,795,207) (1,494,354) Contract maintenance charges .................... (47,074) (53,884) ------------------------------------------------------------------------------------ Net increase (decrease) in net assets from contractowners transactions ....................... (4,432,006) 1,411,076 ------------------------------------------------------------------------------------ Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- ------------------------------------------------------------------------------------ Increase (Decrease) in Net Assets .................. (4,393,535) 1,498,769 Net Assets--Beginning of Period .................... 7,064,638 5,565,869 ------------------------------------------------------------------------------------ Net Assets--End of Period .......................... $ 2,671,103 $ 7,064,638 ==================================================================================== --------------------------------------------------------------------------------------------------------- EQ/Putnam Growth & EQ/Putnam Income Value Voyager -------------------------- ------------------------- 2003 2002 2003 2002 --------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ 3,850 $ 4,248 $ 58 $ 121 Net realized gain (loss) on investments ........... (10,214) (36,044) (60,748) (18,273) Change in unrealized appreciation (depreciation) of investments ................... 74,966 (64,727) 78,427 (12,680) --------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 68,602 (96,523) 17,737 (30,832) --------------------------------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 43,726 33,901 2,079 3,168 Transfers between funds and guaranteed interest account, net .......................... 1,391 (4,969) (15,944) 16,429 Transfers for contract benefits and terminations ................................... (56,686) (108,703) (52,720) (20,158) Contract maintenance charges .................... (3,084) (4,301) (717) (976) --------------------------------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... (14,653) (84,072) (67,302) (1,537) --------------------------------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -- -- --------------------------------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 53,949 (180,595) (49,565) (32,369) Net Assets--Beginning of Period .................... 265,606 446,201 97,905 130,274 --------------------------------------------------------------------------------------------------------- Net Assets--End of Period .......................... $ 319,555 $ 265,606 $ 48,340 $ 97,905 =========================================================================================================
The accompanying notes are an integral part of these financial statements. 54 Separate Account No. 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Statements of Changes in Net Assets (Concluded) ------------------------ For the Years Ended December 31, --------------------------------------------------------
-------------------------------------------------------------------------------- EQ/Technology --------------------------- 2003 2002 -------------- ------------ Increase (Decrease) in Net Assets From Operations: Net investment income (loss) ...................... $ (7,198) $ (3,636) Net realized gain (loss) on investments ........... (50,939) (572,612) Change in unrealized appreciation (depreciation) of investments ................... 358,137 106,909 -------------------------------------------------------------------------------- Net increase (decrease) in net assets from operations ........................................ 300,000 (469,339) -------------------------------------------------------------------------------- Contractowners Transactions: Contributions and Transfers: Payments received from contractowners ........... 708,301 352,826 Transfers between funds and guaranteed interest account, net .......................... (165,456) (187,852) Transfers for contract benefits and terminations ................................... (107,305) (402,742) Contract maintenance charges .................... (2,131) (2,817) -------------------------------------------------------------------------------- Net increase (decrease) in net assets from contractowners transactions ....................... 433,409 (240,585) -------------------------------------------------------------------------------- Net increase (decrease) in amount retained by Equitable Life in Separate Account No. 66 ......... -- -- -------------------------------------------------------------------------------- Increase (Decrease) in Net Assets .................. 733,409 (709,924) Net Assets--Beginning of Period .................... 504,315 1,214,239 -------------------------------------------------------------------------------- Net Assets--End of Period .......................... $1,237,724 $ 504,315 ================================================================================
55 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements ------------------------ December 31, 2003 -------------------------------------------------------- 1. Organization Separate Account Nos. 13 (Pooled) (the Alliance Bond Fund), 10 (Pooled) (the Alliance Balanced Fund), 4 (Pooled) (the Alliance Common Stock Fund), 3 (Pooled) (the Alliance Mid Cap Growth Fund; formerly the Alliance Aggressive Stock Fund), and 66 (collectively, the Funds or Accounts) of The Equitable Life Assurance Society of the United States (Equitable Life), a subsidiary of AXA Financial, Inc., were established in conformity with the New York State Insurance Law. These financial statements reflect the total net assets and results of operations for Separate Account Nos. 13, 10, 4, 3 and 66. The Retirement Investment Account Program is one of the many products participating in these Funds. The Account invests in shares of mutual funds of EQ Advisors Trust ("EQAT") and AXA Premier VIP Trust ("VIP") (collectively "The Trusts"). EQAT commenced operations on May 1, 1997. VIP commenced operations on December 31, 2001. The Trusts are open-end diversified management companies that sell shares of a portfolio ("Portfolio") of a mutual fund to separate accounts of insurance companies. Each Portfolio of the Trusts has separate investment objectives. These financial statements and notes are those of the Account. Separate Account No. 66 consists of 29 investment options(1) of which 28 are reported herein: o AXA Premier VIP High Yield(2) o EQ/Evergreen Omega(5) o EQ/Alliance Growth and Income o EQ/FI Mid Cap o EQ/Alliance Intermediate o EQ/FI Small/Mid Cap Value Government Securities o EQ/Janus Large Cap Growth o EQ/Alliance International o EQ/Lazard Small Cap Value o EQ/Alliance Premier Growth o EQ/Marsico Focus o EQ/Alliance Quality Bond o EQ/Mercury Basic Value Equity o EQ/Alliance Small Cap Growth o EQ/Mercury International Value(9) o EQ/Bernstein Diversified Value(3) o EQ/MFS Emerging Growth Companies o EQ/Calvert Socially Responsible o EQ/MFS Investors Trust(6) o EQ/Capital Guardian International o EQ/Money Market(7) o EQ/Capital Guardian Research o EQ/Putnam Growth & Income Value o EQ/Capital Guardian U.S. Equity o EQ/Putnam Voyager(8) o EQ/Emerging Markets Equity(4) o EQ/Technology(10) o EQ/Equity 500 Index ----------- (1) Effective on May 18, 2001 the names of the investment options held in Separate Account No. 66 include EQ/. (2) Formerly known as EQ/High Yield. (3) Formerly known as Lazard Large Cap Value. (4) Formerly known as Morgan Stanley Emerging Markets Equity. (5) Formerly known as EQ/Evergreen. (6) Formerly known as MFS Growth with Income. (7) Formerly known as EQ/Alliance Money Market. (8) Formerly known as EQ/Putnam Investors Growth. (9) Formerly known as EQ/Putnam International Equity (10) Formerly known as EQ/Alliance Technology Under applicable insurance law, the assets and liabilities of the Accounts are clearly identified and distinguished from Equitable Life's other assets and liabilities. All contracts are issued by Equitable Life. The assets of the Account are the property of Equitable Life. However, the portion of the Accounts' assets attributable to the 56 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 1. Organization (Concluded) contracts will not be chargeable with liabilities arising out of any other business Equitable Life may conduct. The excess of assets over reserves and other contract liabilities, if any, in Separate Account Nos. 4 and 66 may be transferred to Equitable Life's General Account. Equitable Life's General Account is subject to creditor rights. The amount retained by Equitable Life in Separate Account Nos. 4 and 66 arises principally from (1) contributions from Equitable Life, (2) expense risk charges accumulated in the account, and (3) that portion, determined ratably, of the account's investment results applicable to those assets in the account in excess of the net assets for the contracts. Amounts retained by Equitable Life are not subject to charges for expense risks. 2. Significant Accounting Policies The accompanying financial statements are prepared in conformity with accounting principles generally accepted in the United States of America (GAAP). The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts and disclosures. Actual results could differ from those estimates. On December 29, 2003, The American Institute of Certified Public Accountants issued Statement of Position 03-05, "Financial Highlights of Separate Accounts: An Amendment to the Audit and Accounting Guide Audits of Investment Companies," which was effective for the December 31, 2003 financial statements. Adoption of the new requirements did not have a significant impact on the Account's financial position or results of operations. Investment securities for Separate Account Nos. 13, 10, 4 and 3 are valued as follows: Stocks listed on national securities exchanges and certain over-the-counter issues traded on the National Association of Securities Dealers, Inc. Automated Quotation (NASDAQ) national market system are valued at the last sale price, or, if there is no sale, at the latest available bid price. Foreign securities not traded directly, or in American Depository Receipt (ADR) form in the United States, are valued at the last sale price in the local currency on an exchange in the country of origin. Foreign currency is converted into its U.S. dollar equivalent at current exchange rates. Futures and forward contracts are valued at their last sale price or, if there is no sale, at the latest available bid price. United States Treasury securities and other obligations issued or guaranteed by the United States Government, its agencies or instrumentalities are valued at representative quoted prices. Long-term (i.e., maturing in more than a year) publicly traded corporate bonds are valued at prices obtained from a bond pricing service of a major dealer in bonds when such prices are available; however, in circumstances where Equitable Life and Alliance deem it appropriate to do so, an over-the-counter or exchange quotation may be used. Convertible preferred stocks listed on national securities exchanges are valued at their last sale price or, if there is no sale, at the latest available bid price. Convertible bonds and unlisted convertible preferred stocks are valued at bid prices obtained from one or more major dealers in such securities; where there is a discrepancy between dealers, values may be adjusted based on 57 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 2. Significant Accounting Policies (Continued) recent premium spreads to the underlying common stock. Other assets that do not have a readily available market price are valued at fair value as determined in good faith by Equitable Life's investment officers. Short-term debt securities purchased directly by the Equitable Funds which mature in 60 days or less are valued at amortized cost. Short-term debt securities which mature in more than 60 days are valued at representative quoted prices. The value of the investments in Separate Account No. 66 held in the Trusts is calculated by multiplying the number of shares held in each Portfolio by the net asset value per share of that Portfolio determined as of the close of business each day. The net asset value is determined by the Trusts using the market or fair value of the underlying assets of the Portfolio less liabilities. For Separate Account No. 66, realized gains and losses include (1) gains and losses on redemptions of Trust shares (determined on the identified cost basis) and (2) Trust distributions representing the net realized gains on Trust investment transactions. Dividends and distributions of capital gains of the Trusts are automatically reinvested on the ex-dividend date. Security transactions are recorded on the trade date. Amortized cost of debt securities where applicable are adjusted for amortization of premium or accretion of discount. Dividend income is recorded on the ex-dividend date; interest income (including amortization of premium and discount on securities using the effective yield method) is accrued daily. Realized gains and losses on the sale of investments are computed on the basis of the identified cost of the related investments sold. Transactions denominated in foreign currencies are recorded at the rate prevailing at the date of such transactions. Asset and liability accounts that are denominated in a foreign currency are adjusted to reflect the current exchange rate at the end of the period. Transaction gains or losses resulting from changes in the exchange rate during the reporting period or upon settlement of the foreign currency transactions are reflected under "Realized and Unrealized Gain (Loss) on Investments" in the Statement of Operations. Separate Account No. 10 may enter into forward currency contracts in order to hedge its exposure to changes in foreign currency exchange rates on its foreign security holdings. Forward contracts are agreements to buy or sell a foreign currency for a set price in the future. During the period the forward contracts are open, changes in the value of the contract are recognized as unrealized gains or losses by "marking-to-market" on a daily basis to reflect the market value of the contract at the end of each trading day. The realized gain or loss arising from the difference between the original contracts and the closing of such contracts is included in realized gains or losses from foreign currency transactions. The use of forward transactions involves the risk of imperfect correlation in movements in the price of forward contracts, interest rates and the underlying hedged assets. Forward contracts involve elements of both market and credit risk in excess of the amounts reflected in the Statement of Assets and Liabilities. The contract amounts of these forward contracts reflect the extent of the Fund's exposure to off-balance sheet risk. The Fund bears the market risk that arises from any changes in security values. Forward contracts are entered into directly with the counterparty and not through an exchange and can be terminated only by agreement of both parties to the contract. There is no daily margin settlement and the fund is exposed to the risk of default by the counterparty. At December 31, 2003, Separate Account No. 10 had no outstanding forward currency contracts to buy/sell 58 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 2. Significant Accounting Policies (Concluded) foreign currencies. Net assets allocated to contracts in the payout period are computed according to various mortality tables, depending on the year the benefits were purchased. The tables used are the 1971 GAM table, the 1983 GAM table, and the 1994 GAR. The assumed investment returns vary by contract and range from 4 percent to 6.5 percent. The contracts are participating group annuities, and, thus, the mortality risk is borne by the contractholder, as long as the contract has not been discontinued. Equitable Life retains the ultimate obligation to pay the benefits if the contract funds become insufficient and the contractholder elects to discontinue the contract. Amounts due to/from the General Account or receivable/payable for policy related transactions represent receivables/payables for policy related transactions predominately related to premiums, surrenders and death benefits. Payments received from contractowners represent participant contributions under the contracts (excluding amounts allocated to the guaranteed interest option, reflected in the General Account). The amount allocated to the guaranteed interest option earns interest at the current guaranteed interest rate which is an annual effective rate. The operations of the Account are included in the federal income tax return of Equitable Life, which is taxed as a life insurance company under the provisions of the Internal Revenue Code. No federal income tax based on net income or realized and unrealized capital gains is currently applicable to contracts participating in the Funds by reason of applicable provisions of the Internal Revenue Code and no federal income tax payable by Equitable Life is expected to affect the unit value of the contracts participating in the Account. Accordingly, no provision for federal income taxes is required. However, Equitable Life retains the right to charge for any federal income tax incurred which is applicable to the Account if the law is changed. 59 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 3. Purchases and Sales on Investments The cost of purchases and proceeds from sales of investments for the year ended December 31, 2003 were as follows for Separate Account No. 66:
Purchases Sales ------------ ------------ AXA Premier VIP High Yield ................ $ 230,694 $ 398,421 EQ/Alliance Immediate Government Securities ............................... 5,930,985 3,272,322 EQ/Alliance International ................. 2,246,099 2,920,249 EQ/Alliance Premier Growth ................ 115,625 466,138 EQ/Alliance Quality Bond .................. 884,236 1,630,176 EQ/Alliance Small Cap Growth .............. 625,476 446,623 EQ/Alliance Growth and Income ............. 1,196,004 4,057,152 EQ/Bernstein Diversified Value ............ 4,776,662 3,338,213 EQ/Calvert Socially Responsible ........... 328,918 61,157 EQ/Capital Guardian International ......... 425,500 137,037 EQ/Capital Guardian Research .............. 1,137,450 906,447 EQ/Capital Guardian U.S. Equity ........... 671,121 151,806 EQ/Emerging Markets Equity ................ 89,590 69,025 EQ/Equity 500 Index ....................... 7,133,298 8,446,812 EQ/Evergreen Omega ........................ 2,431 5,522 EQ/FI MidCap .............................. 228,582 50,007 EQ/FI Small/Mid Cap Value ................. 1,692,355 1,668,456 EQ/Janus Large Cap Growth ................. 42,958 43,266 EQ/Lazard Small Cap Value ................. 203,461 143,324 EQ/Marsico Focus .......................... 156,632 61,151 EQ/Mercury Basic Value Equity ............. 289,909 504,704 EQ/Mercury International Value ............ 38,790 129,584 EQ/MFS Emerging Growth Companies .......... 958,665 1,256,484 EQ/MFS Investors Trust .................... 2,651 6,948 EQ/Money Market ........................... 1,010,007 5,419,992 EQ/Putnam Growth and Income Value ......... 57,301 68,103 EQ/Putnam Voyager ......................... 12,764 80,007 EQ/Technology ............................. 836,281 410,069
Investment Security Transactions For the year ended December 31, 2003, investment security transactions, excluding short-term debt securities, were as follows for Separate Account Nos. 13, 10, 4 and 3:
Purchases Sales ----------------------------- ------------------------------ Stocks U.S. Stocks U.S. and Debt Government and Debt Government Fund Securities and Agencies Securities and Agencies --------------------------------- ----------------------------- ------------------------------ Alliance Bond ................... $51,543,599 $488,134,803 $44,440,763 $541,237,049 Alliance Balanced ............... 31,756,303 240,931,637 29,814,795 248,043,490 Alliance Common Stock ........... 313,803,848 -- 354,208,351 -- Alliance Mid Cap Growth ......... 103,439,586 -- 114,597,046 --
60 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 4. Related Party Transactions In Separate Account No. 66 the assets in each variable investment option are invested in shares of a corresponding mutual fund portfolio of the Trusts. Shares are offered by the Trusts at net asset value. Shares in which the variable investment options are invested are in either one of two classes. Both classes are subject to fees for investment management and advisory services and other Trust expenses. One class of shares ("Class A/A1 shares") is not subject to distribution fees imposed pursuant to a distribution plan. The other class of shares ("Class B/B1 shares") is subject to distribution fees imposed under a distribution plan (herein, the "Rule 12b-1 Plans") adopted by the Trusts. The Rule 12b-1 Plans provide that the Trusts, on behalf of each Portfolio, may charge annually up to 0.25% of the average daily net assets of a Portfolio attributable to its Class B/B1 shares in respect of activities primarily intended to result in the sale of the Class B/B1 shares. These fees are reflected in the net asset value of the shares. Equitable Life serves as investment manager of the Trusts and as such receives management fees for services performed in its capacity as investment manager of the Trusts. Equitable Life oversees the activities of the investment advisors with respect to the Trusts and is responsible for retaining or discontinuing the services of those advisors. Fees generally vary depending on net asset levels of individual portfolios and range from a low of 0.25% to a high of 1.15% of average daily net assets. Equitable Life as investment manager pays expenses for providing investment advisory services to the Portfolios, including the fees of the Advisors of each Portfolio. In addition, AXA Advisors, LLC ("AXA Advisors") and AXA Distributors, LLC, affiliates of Equitable Life, may also receive distribution fees under Rule 12b-1 Plans as described above. Alliance Capital Management L.P. ("Alliance") serves as an investment advisor for the EQ/Alliance Portfolios; EQ/Equity 500 Index, and EQ/Bernstein Diversified Value and Separate Accounts 13, 10, 4 and 3; as well as a portion of AXA Premier VIP High Yield and EQ/Money Market. Alliance is a publicly traded limited partnership which is indirectly majority-owned by Equitable Life and AXA Financial, Inc. (parent to Equitable). AXA Advisors is an affiliate of Equitable Life, and a distributor and principal underwriter of the contracts and the Account. AXA Advisors is registered with the SEC as a broker-dealer and is a member of the National Association of Securities Dealers, Inc. The contracts are sold by financial professionals who are registered representatives of AXA Advisors and licensed insurance agents of AXA Network, LLC or its subsidiaries (affiliates of Equitable Life). AXA Advisors receives commissions and other service-related payments under its distribution agreement with Equitable Life and its networking agreement with AXA Network. Equitable Life, Alliance, and AXA Advisors seek to obtain the best price and execution of all orders placed for the portfolios of the Equitable Funds considering all circumstances. In addition to using brokers and dealers to execute portfolio security transactions for accounts under their management, Equitable Life, Alliance, and AXA Advisors may also enter into other types of business and securities transactions with brokers and dealers, which will be unrelated to allocation of the Equitable Funds' portfolio transactions. At December 31, 2003, interests of retirement and investment plans for employees, managers and agents of Equitable Life in Separate Account Nos. 4 and 3 aggregated $187,234,548 (27.2%) and $60,303,971 (55.1%), respectively, of the net assets in these Funds. 61 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 5. Substitutions/Reorganizations Substitutions On November 22, 2002 the EQ/Alliance International Portfolio acquired all the net assets of EQ/Alliance Global pursuant to a substitution transaction. For accounting purposes the transaction was treated as a merger. The substitution was accomplished by a tax-free exchange of 1,104,388 of Class A shares of EQ/Alliance Global (valued at $13,119,770) for 1,761,954 of Class A shares of EQ/Alliance International Portfolio (valued at $13,119,770). The aggregate net assets of EQ/Alliance Global and EQ/Alliance International Portfolios immediately before the substitution were $13,119,770 and $1,008,346, respectively, resulting in combined net assets of $14,128,116. On November 22, 2002 Separate Account No. 66 redeemed its position in EQ/Alliance Growth Investors and purchased units in Alliance Balanced Portfolio (Separate Account No. 10). For accounting purposes this transaction was accounted for as a redemption of shares in EQ/Alliance Growth Investors and purchase of units in the Alliance Balanced Fund. 1,822 Class A units of Alliance Balanced Fund Separate Account 10 (valued at $27,425,748) were purchased. 1,955,686 of Class A Shares of EQ/Alliance Growth Investors (valued at $27,425,748) outstanding on November 22, 2002 were redeemed. On November 22, 2002 the EQ/Capital Guardian Research Portfolio acquired all the net assets of EQ/MFS Research Portfolio pursuant to a substitution transaction. For accounting purposes the transaction was treated as a merger. The substitution was accomplished by a tax-free exchange of 481,530 of Class B shares of EQ/MFS Research Portfolio (valued at $4,234,226) for 484,120 of Class B shares EQ/Capital Guardian Research Portfolio (valued at $4,234,226). The aggregate net assets of EQ/MFS Research and EQ/Capital Guardian Research Portfolios immediately before the substitution were $4,234,226 and $0, respectively, resulting in combined net assets of $4,234,226. On July 12, 2002 the EQ/Capital Guardian U.S. Equity Portfolio acquired all the net assets of EQ/AXP New Dimensions Portfolio pursuant to a substitution transaction. For accounting purposes the transaction was treated as a merger. The substitution was accomplished by a tax-free exchange of 23,802 of Class B shares of EQ/AXP New Dimensions Portfolio (valued at $137,706) for 17,166 of Class B shares EQ/Capital Guardian U.S. Equity Portfolio (valued at $137,706). The aggregate net assets of EQ/AXP New Dimensions and EQ/Capital Guardian U.S. Equity Portfolios immediately before the substitution were $137,706 and $425,264, respectively, resulting in combined net assets of $562,970. On July 12, 2002 the EQ/Alliance Small Cap Growth Portfolio acquired all the net assets of EQ/AXP Strategy Aggressive Portfolio pursuant to a substitution transaction. For accounting purposes the transaction was treated as a merger. The substitution was accomplished by a tax-free exchange of 7,532 of Class B shares of EQ/AXP Strategy Aggressive Portfolio (valued at $22,448) for 2,319 of Class B shares EQ/Alliance Small Cap Growth Portfolio (valued at $22,448). The aggregate net assets of EQ/AXP Strategy Aggressive and EQ/Alliance Small Cap Growth Portfolios immediately before the substitution were $22,448 and $1,451,003, respectively, resulting in combined net assets of $1,473,451. On April 26, 2002 the EQ/Mercury International Value Portfolio acquired all the net assets of the EQ/T. Rowe Price International Portfolio pursuant to a substitution transaction. For accounting purposes this transaction was treated as a merger. The substitution was accomplished by a tax free exchange of 49,393 of Class B shares of EQ/T. Rowe International Portfolio (valued at $419,515) for 39,645 Class B shares of the EQ/Putnam International Equity Portfolio outstanding (valued at $419,515). The aggregate net assets of EQ/Putnam International and T. Rowe Price International Portfolios immediately before the substitution were $93,904 and $419,515 respectively, resulting in combined net assets of $513,419. 62 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 5. Substitutions/Reorganizations (Concluded) Reorganizations The EQ/High Yield Portfolio, a fund of EQAT, was merged into the AXA Premier VIP High Yield Portfolio, a fund of VIP, in a reorganization effective after the close of business on August 15, 2003. 6. Asset Charges Charges and fees relating to the Funds are paid to Equitable Life and are deducted in accordance with the terms of the various contracts which participate in the Funds. Depending upon the terms of a contract, sales-related fees and operating expenses are paid (i) by a reduction of an appropriate number of Fund Units or (ii) by a direct payment. Fees with respect to the Retirement Investment Account (RIA) contracts are as follows: The below discusses expenses related to Separate Account Nos. 13, 10, 4 and 3: Investment Management Fee: An annual fee of 0.50% of the net assets attributable to RIA units is assessed for the Alliance Bond, Alliance Balanced, Alliance Common Stock and Alliance Mid Cap Growth Funds. These fees are reflected as a reduction of the RIA Unit Value. Administrative Fees: Contracts investing in the Funds are subject to certain administrative expenses according to contract terms. Depending upon the terms of a contract, fees are paid (i) by a reduction of an appropriate number of Fund units or (ii) by a direct payment. Ongoing operations and participant recordkeeping fees can be paid by direct billing arrangement. These fees may include: Ongoing Operations Fee -- An expense charge is made based on the combined net balances of each fund. If the employer adopted RIA after February 9, 1986, the monthly rate ranges from 1/12 of 1.25% to 1/12 of 0.50% or from 1/12 of 1.25% to 1/12 of 0.25%. Rates for plans adopted on or before February 9, 1986 are under "Additional information about RIA" earlier in this SAI. Participant Recordkeeping Services Charge -- Employers who elected RIA's optional Participant Recordkeeping Services are subject to an annual charge of $25 per employee-participant under the employer plan. Contingent Withdrawal Charge -- Certain withdrawals are subject to defined contingent withdrawal charges. The maximum charge is 6% of the total plan assets withdrawn. Loan Fee -- A loan fee equal to 1% of the amount withdrawn as loan principal is deducted on the date the plan loan is made. Operating and Expense Charges: In addition to the charges and fees mentioned above, the Funds are charged for certain costs and expenses directly related to their operations. These may include transfer taxes, SEC filing fees and certain related expenses including printing of SEC filings, prospectuses and reports. These charges and fees are reflected as reductions of unit value. 63 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 6. Asset Charges (Concluded) The below discusses expenses related to Separate Account No. 66: Administrative fees paid through a liquidation of units in Separate Account No. 66 are shown in the Statements of Changes in Net Assets in Contract maintenance charges. The aggregate of all other fees are included in Asset-based charges in the Statements of Operations. Asset-based charges are comprised of accounting and administration fees. 64 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 7. Changes in Units Outstanding Accumulation units issued and redeemed during the year ended December 31, 2003 were (in thousands):
Alliance Alliance Balanced Fund Alliance Common Alliance Mid Cap Bond Fund (f)(a) Stock Fund Growth Fund ------------------ ------------------ ----------------- ----------------- 2003 2002 2003 2002 2003 2002 2003 2002 --------- -------- -------- --------- -------- -------- -------- -------- RIA Issued .......................... -- 1 27 162 6 7 11 12 Redeemed ........................ (1) (11) (71) (104) (19) (38) (23) (50) ----- --- --- ---- --- --- --- --- Net Increase (Decrease) ......... (1) (10) (44) 58 (13) (31) (12) (38) ----- --- --- ---- --- --- --- ---
EQ/Alliance Alliance Premier Intermediate VIP Alliance Growth EQ/Alliance Government High Yield Equity Fund Growth and Income Securities ------------------- ----------------- ----------------- -------------- 2003 2002 2003 2002 2003 2002 2003 2002 --------- --------- -------- -------- -------- -------- -------- ----- RIA Net Issued ...................... 1 2 6 7 5 7 10 52 Net Redeemed .................... (2) (4) (19) (25) (17) (25) (10) -- ---- ---- --- --- --- --- --- -- Net Increase (Decrease) ......... (1) (2) (13) (18) 12 (18) -- 52 ---- ---- --- --- --- --- --- --
EQ/Alliance EQ/Alliance EQ/Alliance EQ/Alliance International (e) Premier Growth Quality Bond Small Cap Growth (c) ------------------ -------------------- ------------------- -------------------- 2003 2002 2003 2002 2003 2002 2003 2002 -------- --------- --------- ---------- --------- --------- --------- --------- RIA Net Issued ...................... 6 49 2 4 5 7 6 4 Net Redeemed .................... (19) (8) (8) (13) (9) (7) (5) (7) --- ----- ---- ----- ---- ---- ---- ---- Net Increase (Decrease) ......... (13) 41 6 (9) (4) -- 1 (3) --- ---- --- ----- ---- ---- ---- ----
EQ/Calvert EQ/Capital EQ/Capital EQ/Bernstein Socially Guardian Guardian Diversified Value Responsible International Research (d) ------------------- ------------- ---------------- --------------- 2003 2002 2003 2002 2003 2002 2003 2002 --------- --------- ------ ------ ------ --------- --------- ----- RIA Net Issued ...................... 11 94 -- -- 1 1 3 8 Net Redeemed .................... (3) (8) -- -- -- (1) (6) -- ----- ----- --- --- --- ---- ---- --- Net Increase (Decrease) ......... 8 86 -- -- 1 -- (3) 8 ----- ----- --- --- --- ---- ---- ---
65 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 7. Changes in Units Outstanding (Continued) Accumulation units issued and redeemed during the year ended December 31, 2003 were (in thousands):
EQ/Capital Guardian EQ/Emerging EQ/Equity EQ/Evergreen U.S. Equity (b) Markets Equity 500 Index Omega ---------------- ---------------- ----------------- ------------ 2003 2002 2003 2002 2003 2002 2003 2002 ------ --------- --------- ------ -------- -------- ------ ----- RIA Net Issued ...................... -- 3 1 -- 4 9 -- -- Net Redeemed .................... -- (2) (1) -- 20 (35) -- -- --- --- ---- --- --- --- --- --- Net Increase (Decrease) ......... -- 1 -- -- (16) (26) -- -- -- --- ---- --- --- --- --- ---
EQ/FI EQ/FI Small/Mid EQ/Janus Large Mid Cap Cap Value Cap Growth ------------------- ------------------- ------------------- 2003 2002 2003 2002 2003 2002 --------- --------- --------- --------- --------- --------- RIA Net Issued ...................... 3 7 2 9 1 1 Net Redeemed .................... (1) (4) (6) (2) (1) (2) --- --- ---- ---- ---- ---- Net Increase (Decrease) ......... 2 3 (4) 7 -- (1) --- --- ---- ---- ---- ----
EQ/Mercury EQ/Lazard EQ/Marsico EQ/Mercury International Small Cap Value Focus Basic Value Equity Value (g) ------------------- ---------------- ------------------- ------------------- 2003 2002 2003 2002 2003 2002 2003 2002 --------- --------- --------- ------ --------- --------- --------- --------- RIA Net Issued ...................... 2 6 1 2 2 6 -- 6 Net Redeemed .................... (1) (2) (1) -- (4) (7) (1) (2) ---- ---- ---- --- --- ---- ----- ---- Net Increase (Decrease) ......... 1 4 -- 2 (2) (1) (1) 4 ---- ---- ---- --- --- ---- ----- ----
EQ/MFS EQ/MFS Emerging Investors EQ/Money EQ/Putnam Growth Growth Companies Trust Market & Income Value ------------------- ------------- ----------------- ------------------- 2003 2002 2003 2002 2003 2002 2003 2002 ---------- -------- ------ ------ -------- -------- --------- --------- RIA Net Issued ...................... 4 7 -- -- 7 24 1 2 Net Redeemed .................... (12) (22) -- -- (37) (14) (1) (3) ---- ---- ---- ---- ---- ---- ---- ---- Net Increase (Decrease) ......... (8) (15) -- -- 30 10 -- (1) ---- --- ---- ---- ---- ---- ---- ----
EQ/Putnam Voyager EQ/Technology ---------------- ------------------ 2003 2002 2003 2002 --------- ------ --------- -------- RIA Net Issued ...................... -- -- 3 1 Net Redeemed .................... (1) -- (2) (11) ----- --- ---- --- Net Increase (Decrease) ......... (1) -- 1 (10) ----- --- ---- ---
66 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 7. Changes in Units Outstanding (Concluded) Accumulation units issued and redeemed during the year ended December 31, 2003 were (in thousands): (a) A substitution of the Alliance Conservative Investors Portfolio, EQ/Evergreen Foundation Portfolio, EQ/Putnam Balanced Portfolio and Mercury World Strategy Portfolio occurred on May 18, 2001. Units were purchased in Separate Account No. 10 (Alliance Balanced Portfolio). (b) A substitution of EQ/AXP New Dimensions Portfolio for EQ/Capital Guardian U.S. Equity Portfolio occurred on July 12, 2002 (See Note 5). (c) A substitution of EQ/AXP Strategy Aggressive Portfolio for EQ/Alliance Small Cap Growth Portfolio occurred on July 12, 2002 (See Note 5). (d) A substitution of EQ/MFS Research Portfolio for EQ/Capital Guardian Research Portfolio occurred on November 22, 2002 (See Note 5). (e) A substitution of EQ/Alliance Global Portfolio for EQ/Alliance International Portfolio occurred on November 22, 2002. Units were made available for sale on November 22, 2002 (See Note 5). (f) A substitution of EQ/Alliance Growth Investors Portfolio for Separate Account No. 10 (Alliance Balanced Portfolio) occurred on November 22, 2002 (See Note 5). (g) A substitution of EQ/T. Rowe Price International Portfolio for EQ/Mercury International Value Portfolio occurred on April 26, 2002 (See Note 5). 67 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values Equitable Life issues a number of registered group annuity contracts that allow employer plan assets to accumulate on a tax-deferred basis. The contracts are typically designed for employers wishing to fund defined benefit, defined contribution and/or 401(k) plans. Annuity contracts available through Equitable Life are the Retirement Investment Account ("RIA"), Momentum Strategy, Momentum Select and Momentum Solutions ("Momentum series of contracts"), Members Retirement Program ("MRP"), American Dental Association Members Retirement Program ("ADA") and Equi-Pen-Plus ("EPP") (collectively, the Plans). Assets of the Plans are invested in a number of investment Funds (available Funds vary by Plan). Institutional units presented on the Statement of Assets and Liabilities reflect investments in the Funds by clients other than contractholders of group annuity contracts issued by Equitable Life. Institutional unit values are determined at the end of each business day. Institutional unit values reflect the investment performance of the underlying Fund for the day and charges and expenses deducted by the Fund. Contract unit values (RIA, MRP, ADA, Momentum series of contracts and EPP) reflect the same investment results as the Institutional unit values presented on the Statement of Assets and Liabilities. In addition, contract unit values reflect certain investment management and accounting fees, which vary by contract. These fees are charged as a percentage of net assets and are disclosed below for RIA contracts in percentage terms. Expenses as a percentage of average net assets (0.50% annualized for the Alliance Bond Fund, the Alliance Balanced Fund, the Alliance Common Stock Fund and the Alliance Mid Cap Growth Fund) exclude the effect of the underlying fund portfolios' operating and expense charges borne by the Funds and charges made directly to Contractholder accounts through redemption of units. Shown below is accumulation unit value information for RIA units outstanding of Separate Accounts 13, 10, 4 and 3 for the periods indicated.
Years Ended December 31, ----------------------------------------- 2003 2002 2001 ------------- ------------- ------------- Alliance Bond Fund RIA, .50% Unit Value, end of period .................................. $ 77.20 $ 73.91 $ 69.85 Net Assets (000's) ......................................... $ 89 $ 193 $ 888 Number of units outstanding, end of period (000's) ......... 1 3 13 Total Return* .............................................. 4.45% 5.81% 8.89% Alliance Balanced Fund (a)(b) RIA, .50% Unit Value, end of period .................................. $ 165.70 $ 141.24 $ 153.76 Net Assets (000's) ......................................... $ 39,883 $ 40,233 $ 34,842 Number of units outstanding, end of period (000's) ......... 241 285 227 Total Return* .............................................. 17.32% (8.14)% (4.43)% Alliance Common Stock Fund RIA, .50% Unit Value, end of period .................................. $ 602.90 $ 443.82 $ 611.48 Net Assets (000's) ......................................... $ 23,093 $ 22,530 $ 50,100 Number of units outstanding, end of period (000's) ......... 38 51 82 Total Return* .............................................. 35.84% (27.42)% (18.37)%
68 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values (Continued)
Years Ended December 31, -------------------------------------- 2003 2002 2001 ------------ ------------ ------------ Alliance Mid Cap Growth Fund RIA, .50% Unit Value, end of period .................................. $ 202.90 $ 120.44 $ 170.69 Net Assets (000's) ......................................... $ 10,858 $ 7,945 $ 17,765 Number of units outstanding, end of period (000's) ......... 54 66 104 Total Return* .............................................. 68.47% (29.44)% (17.84)%
(a) A substitution of the Alliance Conservative Investors, EQ/Evergreen Foundation, EQ/Putnam Balanced and Mercury World Strategy Portfolios occurred on May 18, 2001. Units were purchased in Separate Account No. 10 (Alliance Balanced Portfolio). (b) A substitution of EQ/Alliance Growth Investors Portfolio occurred on November 22, 2002. Units were purchased in Separate Account No. 10 (Alliance Balanced Portfolio) (See Note 5). 69 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values (Continued) Shown below is accumulation unit value information for units outstanding of Investment Options in Separate Account No. 66 throughout the periods indicated. Certain investment options are charged administrative expenses as a percentage of average net assets (.05% annualized for RIA). These exclude the effect of the underlying fund portfolios and charges made directly to Contractowner accounts through redemption of units. Under RIA contracts certain investment options may not be charged for Asset-based charges. Amounts appearing as Asset-based charges in the Statements of Operations for these investment options are the result of other contracts investing in Separate Account No. 66.
Years Ended December 31, ----------------------------------------------------------------- 2003 2002 2001 2000 1999 ------------ ------------ ------------- ------------ ------------ AXA Premier VIP High Yield 0.05% RIA Unit value, end of period .................................. $ 173.86 $141.56 $ 145.57 $144.28 $158.02 Net Assets (000's) ......................................... $ 1,196 $ 1,179 $ 1,456 $ 1,731 $ 4,741 Number of units outstanding, end of period (000's) ......... 7 8 10 12 30 Total Return* .............................................. 22.82% (2.75)% 0.89% (8.70)% (3.40)% EQ/Alliance Growth and Income 0.05% RIA Unit value, end of period .................................. $ 298.75 $228.60 $ 289.75 $293.68 $269.68 Net Assets (000's) ......................................... $ 7,317 $ 8,226 $ 15,647 $17,327 $25,620 Number of units outstanding, end of period (000's) ......... 24 36 54 59 95 Total Return* .............................................. 30.69% (21.10)% (1.34)% 8.90% 18.60% EQ/Alliance Intermediate Government Securities 0.05% RIA Unit value, end of period .................................. $ 176.49 $172.44 $ 158.49 $146.61 $ 134.36 Net Assets (000's) ......................................... $ 10,620 $10,317 $ 1,268 $ 733 $ 1,881 Number of units outstanding, end of period (000's) ......... 60 60 8 5 14 Total Return* .............................................. 2.35% 8.80% 8.10% 9.11% 0.09% EQ/Alliance International 0.05% (j) RIA Unit value, end of period .................................. $ 122.39 $ 90.42 $ 100.42 $130.25 $ 169.30 Net Assets (000's) ......................................... $ 4,885 $ 4,765 $ 1,205 $ 1,824 $ 3,555 Number of units outstanding, end of period (000's) ......... 40 53 12 14 21 Total Return* .............................................. 35.36% (9.96)% (22.90)% (23.06)% 37.72% EQ/Alliance Premier Growth (a) RIA Unit value, end of period .................................. $ 59.84 $ 48.57 $ 70.55 $ 92.79 $ 113.69 Net Assets (000's) ......................................... $ 1,052 $ 1,172 $ 2,328 $ 3,340 $ 2,615 Number of units outstanding, end of period (000's) ......... 18 24 33 36 23 Total Return* .............................................. 23.20% (31.15)% (23.97)% (18.38)% 13.69% EQ/Alliance Quality Bond 0.05% RIA Unit value, end of period .................................. $ 192.69 $185.72 $ 172.14 $159.04 $ 142.73 Net Assets (000's) ......................................... $ 2,470 $ 3,188 $ 2,926 $ 2,704 $ 4,425 Number of units outstanding, end of period (000's) ......... 13 17 17 17 31 Total Return* .............................................. 3.75% 7.89% 8.24% 11.43% (2.05)%
70 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values (Continued)
Years Ended December 31, ------------------------------------------------------------------ 2003 2002 2001 2000 1999 ------------ ------------- ------------ ------------- ------------ EQ/Alliance Small Cap Growth 0.05% (h) RIA Unit value, end of period .................................. $ 136.53 $ 96.68 $ 138.34 $ 159.12 $ 139.67 Net Assets (000's) ......................................... $ 1,911 $ 1,214 $ 2,213 $ 2,705 $ 2,654 Number of units outstanding, end of period (000's) ......... 14 13 16 17 19 Total Return* .............................................. 41.21% (30.11)% (13.06)% 13.93% 27.85% EQ/Bernstein Diversified Value (e) RIA Unit value, end of period .................................. $ 109.39 $ 84.97 $ 98.39 $ 97.35 $ 95.43 Net Assets (000's) ......................................... $ 10,583 $ 7,555 $ 295 -- -- Number of units outstanding, end of period (000's) ......... 97 89 3 -- -- Total Return* .............................................. 28.74% (13.64)% 1.61% 2.01% (4.57)% EQ/Calvert Socially Responsible (a) RIA Unit value, end of period .................................. $ 83.07 $ 64.92 $ 88.27 $ 103.48 $ 106.58 Net Assets (000's) ......................................... -- -- -- $ 2,173 -- Number of units outstanding, end of period (000's) ......... -- -- -- 21 -- Total Return* .............................................. 27.96% (26.45)% (14.70)% (2.91)% 6.58% EQ/Capital Guardian International (a) RIA Unit value, end of period .................................. $ 92.75 $ 69.94 $ 82.32 $ 104.06 $ 128.61 Net Assets (000's) ......................................... $ 144 $ 74 $ 82 $ 832 $116,135 Number of units outstanding, end of period (000's) ......... 2 1 1 8 903 Total Return* .............................................. 32.61% (15.04)% (20.88)% (19.09)% 28.61% EQ/Capital Guardian Research (a) (i) RIA Unit value, end of period .................................. $ 108.30 $ 82.36 $ 109.33 $ 111.58 $ 105.35 Net Assets (000's) ......................................... $ 646 $ 724 $ 109 $ 112 -- Number of units outstanding, end of period (000's) ......... 6 9 1 1 -- Total Return* .............................................. 31.49% (24.67)% (2.02)% 5.91% 5.35% EQ/Capital Guardian U.S. Equity (a)(g) RIA Unit value, end of period .................................. $ 106.85 $ 78.34 $ 102.63 $ 104.73 $ 101.11 Net Assets (000's) ......................................... $ 362 $ 244 $ 205 -- $ 404 Number of units outstanding, end of period (000's) ......... 3 3 2 -- 4 Total Return* .............................................. 36.39% (23.67)% (2.01)% 3.58% 1.11% EQ/Emerging Markets Equity RIA Unit value, end of period .................................. $ 181.64 $ 116.49 $ 123.81 $ 130.53 $ 217.72 Net Assets (000's) ......................................... $ 366 $ 214 $ 248 $ 653 $ 653 Number of units outstanding, end of period (000's) ......... 2 2 2 5 3 Total Return* .............................................. 55.93% (5.91)% (5.15)% (40.05)% 95.74%
71 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values (Continued)
Years Ended December 31, ---------------------------------------------------------------- 2003 2002 2001 2000 1999 ------------ ------------ ------------ ------------ ------------ EQ/Equity 500 Index 0.05% (f) RIA Unit value, end of period .................................. $ 274.41 $ 214.26 $ 275.50 $ 313.02 $ 346.38 Net Assets (000's) ......................................... $ 10,817 $ 8,827 $ 18,459 $ 25,041 $ 50,917 Number of units outstanding, end of period (000's) ......... 25 41 67 80 147 Total Return* .............................................. 28.07% (22.23)% (11.99)% (9.63)% 20.32% EQ/Evergreen Omega (a) RIA Unit value, end of period .................................. $ 81.36 $ 58.87 $ 77.48 $ 93.36 $ 105.75 Net Assets (000's) ......................................... $ 55 $ 43 $ 77 -- -- Number of units outstanding, end of period (000's) ......... 1 1 1 -- -- Total Return* .............................................. 38.21% (24.02)% (17.01)% (11.72)% 5.75% EQ/FI Mid Cap (c) RIA Unit value, end of period .................................. $ 101.82 $ 70.90 $ 86.96 $ 100.43 -- Net Assets (000's) ......................................... $ 598 $ 269 $ 87 $ 100 -- Number of units outstanding, end of period (000's) ......... 6 4 1 1 -- Total Return* .............................................. 43.61% (18.47)% (13.41)% 0.43% -- EQ/FI Small/Mid Cap Value RIA Unit value, end of period .................................. $ 132.94 $ 99.75 $ 116.95 $ 112.45 $ 106.96 Net Assets (000's) ......................................... $ 891 $ 1,093 $ 468 -- $ 214 Number of units outstanding, end of period (000's) ......... 7 11 4 -- 2 Total Return* .............................................. 33.27% (14.70)% 3.99% 5.14% 1.80% EQ/Janus Large Cap Growth (c) RIA Unit value, end of period .................................. $ 56.98 $ 45.27 $ 64.96 $ 84.32 -- Net Assets (000's) ......................................... $ 136 $ 106 $ 195 $ 84 -- Number of units outstanding, end of period (000's) ......... 2 2 3 1 -- Total Return* .............................................. 25.87% (30.31)% (22.96)% (15.68)% -- EQ/Lazard Small Cap Value (a) RIA Unit value, end of period .................................. $ 160.84 $ 117.08 $ 135.90 $ 115.42 $ 97.39 Net Assets (000's) ......................................... $ 719 $ 482 -- -- -- Number of units outstanding, end of period (000's) ......... 5 4 -- -- -- Total Return* .............................................. 37.37% (13.85)% 17.73% 18.51% (2.61)% EQ/Marsico Focus (d) RIA Unit value, end of period .................................. $ 123.22 $ 93.97 $ 106.25 -- -- Net Assets (000's) ......................................... $ 290 $ 145 -- -- -- Number of units outstanding, end of period (000's) ......... 2 2 -- -- -- Total Return* .............................................. 31.13% (11.56)% 6.25% -- --
72 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values (Continued)
Years Ended December 31, ------------------------------------------------------------------ 2003 2002 2001 2000 1999 ------------ ------------ ------------- ------------- ------------ EQ/Mercury Basic Value Equity RIA Unit value, end of period .................................. $ 164.84 $125.65 $ 150.76 $ 142.86 $ 127.78 Net Assets (000's) ......................................... $ 1,236 $ 1,135 $ 1,508 $ 1,143 $ 1,022 Number of units outstanding, end of period (000's) ......... 8 9 10 8 8 Total Return* .............................................. 31.17% (16.66)% 5.53% 11.81% 18.94% EQ/Mercury International Value (a)(k) RIA Unit value, end of period .................................. $ 99.99 $ 78.10 $ 93.68 $ 119.37 $ 136.14 Net Assets (000's) ......................................... $ 357 $ 373 $ 94 $ 239 $ 408 Number of units outstanding, end of period (000's) ......... 4 5 1 2 3 Total Return* .............................................. 28.03% (16.63)% (21.52)% (12.32)% 36.14% EQ/MFS Emerging Growth Companies RIA Unit value, end of period .................................. $ 97.26 $ 75.21 $ 114.52 $ 173.64 $ 213.94 Net Assets (000's) ......................................... $ 1,469 $ 1,735 $ 4,352 $ 9,203 $ 9,199 Number of units outstanding, end of period (000's) ......... 15 23 38 53 43 Total Return* .............................................. 29.31% (34.32)% (34.05)% (18.84)% 73.67% EQ/MFS Investors Trust (a) RIA Unit value, end of period .................................. $ 83.93 $ 68.77 $ 87.07 $ 103.63 $ 104.35 Net Assets (000's) ......................................... $ 47 $ 43 $ 87 $ 104 -- Number of units outstanding, end of period (000's) ......... 1 1 1 1 -- Total Return* .............................................. 22.04% (21.02)% (15.98)% (0.69)% 4.35% EQ/Money Market 0.05% RIA Unit value, end of period .................................. $ 149.82 $148.67 $ 146.56 $ 141.19 $ 132.95 Net Assets (000's) ......................................... $ 2,671 $ 7,065 $ 5,569 $ 5,930 $ 11,966 Number of units outstanding, end of period (000's) ......... 18 48 38 42 90 Total Return* .............................................. 0.77% 1.44% 3.80% 6.20% 4.92% EQ/Putnam Growth & Income Value RIA Unit value, end of period .................................. $ 114.64 $ 90.40 $ 111.68 $ 119.84 $ 112.24 Net Assets (000's) ......................................... $ 318 $ 264 $ 447 $ 240 $ 337 Number of units outstanding, end of period (000's) ......... 3 3 4 2 3 Total Return* .............................................. 26.81% (19.05)% (6.81)% 6.77% (1.35)% EQ/Putnam Voyager (a) RIA Unit value, end of period .................................. $ 68.49 $ 55.26 $ 75.02 $ 99.31 $ 120.77 Net Assets (000's) ......................................... $ 47 $ 96 $ 150 $ 397 $ 121 Number of units outstanding, end of period (000's) ......... 1 2 2 4 1 Total Return* .............................................. 23.95% (26.34)% (24.46)% (17.77)% 20.77%
73 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Continued) ------------------------ December 31, 2003 -------------------------------------------------------- 8. Accumulation Unit Values (Concluded)
Years Ended December 31, ----------------------------------------------------------- 2003 2002 2001 2000 1999 ----------- ------------- ------------- ------------- ----- EQ/Technology (b) RIA Unit value, end of period .................................. $ 50.87 $ 35.44 $ 59.85 $ 79.21 -- Net Assets (000's) ......................................... $ 371 $ 227 $ 958 $ 634 -- Number of units outstanding, end of period (000's) ......... 7 6 16 8 -- Total Return* .............................................. 43.54% (40.78)% (24.44)% (20.79)% --
(a) Units were made available for sale on September 2, 1999. (b) Units were made available for sale on May 22, 2000. (c) Units were made available for sale on October 22, 2000. (d) Units were made available for sale on October 22, 2001. (e) A substitution of T. Rowe Equity Income Portfolio for EQ/Bernstein Diversified Portfolio occurred on May 18, 2001 (See Note 5). (f) A substitution of BT Equity 500 Index for EQ/Equity 500 Index occurred on October 6, 2000. (g) A substitution of EQ/AXP New Dimensions Portfolio for EQ/Capital Guardian U.S. Equity Portfolio occurred on July 12, 2002 (See Note 5). (h) A substitution of EQ/AXP Strategy Aggressive Portfolio for EQ/Alliance Small Cap Growth Portfolio occurred on July 12, 2002 (See Note 5). (i) A substitution of EQ/MFS Research Portfolio for EQ/Capital Guardian Research Portfolio occurred on November 22, 2002. Units were made available for sale (See Note 5). (j) A substitution of EQ/Alliance Global Portfolio for EQ/Alliance International Portfolio occurred on November 22, 2002. Units were made available for sale on November 22, 2002 (See Note 5). (k) A substitution of EQ/T. Rowe Price International Portfolio for EQ/Mercury International Value Portfolio occurred on April 26, 2002 (See Note 5). (*) These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and expenses assessed through the reduction of unit values. These ratios do not include any expenses assessed through the redemption of units. Investment options with a date notation indicate the effective date of that investment option in the variable account. The total return is calculated for each period indicated from the effective date through the end of the reporting period. 74 Separate Account Nos. 13 (Pooled), 10 (Pooled), 4 (Pooled), 3 (Pooled) and 66 of The Equitable Life Assurance Society of the United States -------------------------------------------------------- Notes to Financial Statements (Concluded) ------------------------ December 31, 2003 -------------------------------------------------------- 9. Investment Income Ratio Shown below is the Investment Income Ratio throughout the periods indicated for Separate Accounts 13, 10, 4 and 3. The investment income ratio is calculated by taking the gross investment income earned divided by the average net assets of a fund during the periods indicated.
Year Ended December 31, ------------------------------------------------------ 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ---------- Alliance Bond Fund ................... 3.49% 4.25% 5.78% 6.31% 5.63% Alliance Balanced Fund ............... 2.25 2.89 3.43 3.56 3.39 Alliance Common Stock Fund ........... 0.47 0.40 0.46 0.45 0.54 Alliance Mid Cap Growth Fund ......... 0.27 0.26 0.45 0.74 0.77
Shown below is the Investment Income Ratio throughout the periods indicated for Separate Account No. 66. These amounts represent the dividends, excluding distributions of capital gains, received by the Account from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as asset-based charges, that result in direct reductions in the unit values. The recognition of investment income by the Account is affected by the timing of the declaration of dividends by the underlying fund in which the Account invests.
Six Months Ended June 30, ------------------------------------------------------- 2003 2002 2001 2000 1999 ---------- ---------- ---------- ---------- ----------- AXA Premier VIP High Yield ............................. 5.10% 8.55% 7.66% 6.81% 10.46% EQ/Alliance Growth and Income .......................... 1.08% 1.26% 0.91% 0.70% 0.22% EQ/Alliance Intermediate Government Securities ......... 4.29% 6.12% 4.14% 3.20% 4.14% EQ/Alliance International .............................. 2.02% -- 1.82% 0.43% -- EQ/Alliance Premier Growth ............................. -- -- 0.01% 0.75% 0.81% EQ/Alliance Quality Bond ............................... 2.62% 3.96% 5.09% 5.60% 4.58% EQ/Alliance Small Cap Growth ........................... -- -- 1.07% -- -- EQ/Bernstein Diversified Value ......................... 1.41% 1.71% 1.34% 1.15% 7.21% EQ/Calvert Socially Responsible ........................ -- -- 2.95% 12.16% 1.61% EQ/Capital Guardian International ...................... 1.48% 1.76% 2.13% 0.79% -- EQ/Capital Guardian Research ........................... 0.44% 0.58% 0.32% 1.34% 0.54% EQ/Capital Guardian U.S. Equity ........................ 0.37% 0.53% 0.48% 1.56% 0.76% EQ/Emerging Markets Equity ............................. 0.79% -- -- 7.08% 2.44% EQ/Equity 500 Index .................................... 1.31% 2.03% 0.95% 1.45% 0.87% EQ/Evergreen Omega ..................................... -- -- 0.01% 0.49% 1.07% EQ/FI Mid Cap .......................................... -- 0.02% 0.20% 0.46% -- EQ/FI Small/Mid Cap Value .............................. 0.39% 0.61% 0.69% 0.91% 0.17% EQ/Janus Large Cap Growth .............................. -- -- 0.01% 0.35% -- EQ/Lazard Small Cap Value .............................. 1.14% 1.23% 5.93% 5.19% 3.17% EQ/Marsico Focus ....................................... -- -- -- -- -- EQ/Mercury Basic Value Equity .......................... 0.48% 1.16% 3.48% 5.08% 11.52% EQ/Mercury International Value ......................... 2.10% 0.84% 0.53% 7.59% 0.27% EQ/MFS Emerging Growth Companies ....................... -- -- 0.02% 1.99% 3.25% EQ/MFS Investors Trust ................................. 0.60% 0.53% 0.37% 0.55% 0.98% EQ/Money Market ........................................ 0.49% 1.68% 2.97% 4.00% 5.00% EQ/Putnam Growth & Income Value ........................ 1.37% 1.13% 1.00% 0.97% 11.82% EQ/Putnam Voyager ...................................... 0.07% 0.12% -- 1.84% 6.00% EQ/Technology .......................................... -- -- -- -- -- 75
REPORT OF INDEPENDENT AUDITORS To the Board of Directors and Shareholder of The Equitable Life Assurance Society of the United States In our opinion, the accompanying consolidated balance sheets and the related consolidated statement of earnings, of shareholder's equity and comprehensive income and of cash flows present fairly, in all material respects, the financial position of The Equitable Life Assurance Society of the United States and its subsidiaries ("Equitable Life") at December 31, 2003 and December 31, 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of Equitable Life's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with auditing standards generally accepted in the United States of America, which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. /s/ PricewaterhouseCoopers LLP New York, New York March 9, 2004 F-1 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2003 AND 2002
December 31, December 31, 2003 2002 ----------------- ----------------- (In Millions) ASSETS Investments: Fixed maturities available for sale, at estimated fair value.............. $ 29,095.5 $ 26,278.9 Mortgage loans on real estate............................................. 3,503.1 3,746.2 Equity real estate, held for the production of income..................... 656.5 717.3 Policy loans.............................................................. 3,894.3 4,035.6 Other equity investments.................................................. 789.1 720.3 Other invested assets..................................................... 1,101.6 1,327.6 ----------------- ----------------- Total investments..................................................... 39,040.1 36,825.9 Cash and cash equivalents................................................... 722.7 269.6 Cash and securities segregated, at estimated fair value..................... 1,285.8 1,174.3 Broker-dealer related receivables........................................... 2,284.7 1,446.2 Deferred policy acquisition costs........................................... 6,290.4 5,801.0 Goodwill and other intangible assets, net................................... 3,513.4 3,503.8 Amounts due from reinsurers................................................. 2,460.4 2,351.7 Loans to affiliates, at estimated fair value................................ 400.0 413.0 Other assets................................................................ 3,829.7 4,028.7 Separate Accounts' assets................................................... 54,438.1 39,012.1 ----------------- ----------------- Total Assets................................................................ $ 114,265.3 $ 94,826.3 ================= ================= LIABILITIES Policyholders' account balances............................................. $ 25,307.7 $ 23,037.5 Future policy benefits and other policyholders liabilities.................. 13,934.7 13,975.7 Broker-dealer related payables.............................................. 1,261.8 731.0 Customers related payables.................................................. 1,897.5 1,566.8 Amounts due to reinsurers................................................... 936.5 867.5 Short-term and long-term debt............................................... 1,253.2 1,274.7 Federal income taxes payable................................................ 2,362.8 2,006.4 Other liabilities........................................................... 2,006.9 1,751.8 Separate Accounts' liabilities.............................................. 54,300.6 38,883.8 Minority interest in equity of consolidated subsidiaries.................... 1,744.9 1,816.6 Minority interest subject to redemption rights.............................. 488.1 515.4 ----------------- ----------------- Total liabilities..................................................... 105,494.7 86,427.2 ----------------- ----------------- Commitments and contingencies (Notes 12, 14, 15, 16 and 17) SHAREHOLDER'S EQUITY Common stock, $1.25 par value, 2.0 million shares authorized, issued and outstanding.................................................... 2.5 2.5 Capital in excess of par value.............................................. 4,848.2 4,812.8 Retained earnings........................................................... 3,027.1 2,902.7 Accumulated other comprehensive income...................................... 892.8 681.1 ----------------- ----------------- Total shareholder's equity............................................ 8,770.6 8,399.1 ----------------- ----------------- Total Liabilities and Shareholder's Equity.................................. $ 114,265.3 $ 94,826.3 ================= =================
See Notes to Consolidated Financial Statements. F-2 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES CONSOLIDATED STATEMENTS OF EARNINGS YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001 ----------------- ----------------- ----------------- (In Millions) REVENUES Universal life and investment-type product policy fee income........................................... $ 1,376.7 $ 1,315.5 $ 1,342.3 Premiums...................................................... 889.4 945.2 1,019.9 Net investment income......................................... 2,386.9 2,377.2 2,404.3 Investment losses, net........................................ (62.3) (278.5) (207.3) Commissions, fees and other income............................ 2,811.8 2,987.6 3,108.5 ----------------- ----------------- ----------------- Total revenues.......................................... 7,402.5 7,347.0 7,667.7 ----------------- ----------------- ----------------- BENEFITS AND OTHER DEDUCTIONS Policyholders' benefits....................................... 1,708.2 2,036.0 1,888.8 Interest credited to policyholders' account balances.......... 969.7 972.5 981.7 Compensation and benefits..................................... 1,327.0 1,244.3 1,307.1 Commissions................................................... 991.9 788.8 742.1 Distribution plan payments.................................... 370.6 392.8 429.1 Amortization of deferred sales commissions.................... 208.6 229.0 230.8 Interest expense.............................................. 82.3 95.7 102.6 Amortization of deferred policy acquisition costs............. 434.6 296.7 287.9 Capitalization of deferred policy acquisition costs........... (990.7) (754.8) (746.4) Rent expense.................................................. 165.8 168.8 157.5 Amortization of goodwill and other intangible assets, net..... 21.9 21.2 178.2 Alliance charge for mutual fund matters and legal proceedings................................................. 330.0 - - Other operating costs and expenses............................ 832.4 827.4 815.4 ----------------- ----------------- ----------------- Total benefits and other deductions..................... 6,452.3 6,318.4 6,374.8 ----------------- ----------------- ----------------- Earnings from continuing operations before Federal income taxes and minority interest.......................... 950.2 1,028.6 1,292.9 Federal income tax expense.................................... (240.5) (50.9) (316.2) Minority interest in net income of consolidated subsidiaries.. (188.7) (362.8) (370.1) ----------------- ----------------- ----------------- Earnings from continuing operations........................... 521.0 614.9 606.6 Earnings from discontinued operations, net of Federal income taxes.............................................. 3.4 5.6 43.9 Cumulative effect of accounting changes, net of Federal income taxes.............................................. - (33.1) (3.5) ----------------- ----------------- ----------------- Net Earnings.................................................. $ 524.4 $ 587.4 $ 647.0 ================= ================= =================
See Notes to Consolidated Financial Statements. F-3 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY AND COMPREHENSIVE INCOME YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001 ----------------- ---------------- ---------------- (In Millions) Common stock, at par value, beginning and end of year......... $ 2.5 $ 2.5 $ 2.5 ----------------- ---------------- ---------------- Capital in excess of par value, beginning of year as previously reported................................................... 4,753.8 4,694.6 4,723.8 Prior period adjustment related to deferred Federal income taxes.............................................. 59.0 59.0 59.0 ----------------- ---------------- ---------------- Capital in excess of par value, beginning of year as restated. 4,812.8 4,753.6 4,782.8 Increase (decrease) in paid in capital in excess of par value. 35.4 59.2 (29.2) ----------------- ---------------- ---------------- Capital in excess of par value, end of year................... 4,848.2 4,812.8 4,753.6 ----------------- ---------------- ---------------- Retained earnings, beginning of year as previously reported... 2,740.6 2,653.2 3,706.2 Prior period adjustment related to deferred Federal income taxes............................................... 162.1 162.1 162.1 ----------------- ---------------- ---------------- Retained earnings, beginning of year as restated.............. 2,902.7 2,815.3 3,868.3 Net earnings.................................................. 524.4 587.4 647.0 Shareholder dividends paid.................................... (400.0) (500.0) (1,700.0) ----------------- ---------------- ---------------- Retained earnings, end of year................................ 3,027.1 2,902.7 2,815.3 ----------------- ---------------- ---------------- Accumulated other comprehensive income , beginning of year........................................... 681.1 215.4 12.8 Other comprehensive income.................................... 211.7 465.7 202.6 ----------------- ---------------- ---------------- Accumulated other comprehensive income, end of year........... 892.8 681.1 215.4 ----------------- ---------------- ---------------- Total Shareholder's Equity, End of Year....................... $ 8,770.6 $ 8,399.1 $ 7,786.8 ================= ================ ================ COMPREHENSIVE INCOME Net earnings.................................................. $ 524.4 $ 587.4 $ 647.0 ----------------- ---------------- ---------------- Change in unrealized gains (losses), net of reclassification adjustments................................................ 211.7 465.6 202.6 Minimum pension liability adjustment.......................... - .1 - ----------------- ---------------- ---------------- Other comprehensive income.................................... 211.7 465.7 202.6 ----------------- ---------------- ---------------- Comprehensive Income.......................................... $ 736.1 $ 1,053.1 $ 849.6 ================= ================ ================
See Notes to Consolidated Financial Statements. F-4 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001 ----------------- ----------------- ----------------- (In Millions) Net earnings.................................................. $ 524.4 $ 587.4 $ 647.0 Adjustments to reconcile net earnings to net cash provided by operating activities: Interest credited to policyholders' account balances........ 969.7 972.5 981.7 Universal life and investment-type product policy fee income......................................... (1,376.7) (1,315.5) (1,342.3) Net change in broker-dealer and customer related receivables/payables...................................... 22.5 (237.3) 181.0 Investment losses, net...................................... 62.3 278.5 207.3 Change in deferred policy acquisition costs................. (556.1) (458.1) (458.5) Change in future policy benefits............................ (97.4) 218.0 (15.1) Change in property and equipment............................ (55.8) (76.6) (229.2) Change in Federal income tax payable........................ 246.3 93.3 (231.5) Change in accounts payable and accrued expenses............. 276.8 (8.9) (36.8) Change in segregated cash and securities, net............... (111.5) 240.8 (108.8) Minority interest in net income of consolidated subsidiaries............................................. 188.7 362.8 370.1 Change in fair value of guaranteed minimum income benefit reinsurance contracts............................ 91.0 (120.0) - Amortization of deferred sales commissions.................. 208.6 229.0 230.8 Amortization of goodwill and other intangible assets, net... 21.9 21.2 178.2 Other, net.................................................. 272.6 (114.2) 121.9 ----------------- ----------------- ----------------- Net cash provided by operating activities..................... 687.3 672.9 495.8 ----------------- ----------------- ----------------- Cash flows from investing activities: Maturities and repayments................................... 4,216.4 2,996.0 2,454.6 Sales....................................................... 4,818.2 8,035.9 9,285.2 Purchases................................................... (11,457.9) (12,709.0) (11,833.0) Change in short-term investments............................ 334.3 (568.9) 211.8 Acquisition of subsidiary .................................. - (249.7) - Loans to affiliates......................................... - - (400.0) Other, net.................................................. 89.3 126.6 (80.3) ----------------- ----------------- ----------------- Net cash used by investing activities......................... (1,999.7) (2,369.1) (361.7) ----------------- ----------------- ----------------- Cash flows from financing activities: Policyholders' account balances: Deposits................................................. 5,639.1 4,328.5 3,198.8 Withdrawals and transfers to Separate Accounts........... (3,181.1) (2,022.9) (2,458.1) Net change in short-term financings......................... (22.1) (201.2) (552.8) Additions to long-term debt................................. - - 398.1 Shareholder dividends paid.................................. (400.0) (500.0) (1,700.0) Other, net.................................................. (270.4) (318.6) (456.9) ----------------- ----------------- ----------------- Net cash provided (used) by financing activities.............. 1,765.5 1,285.8 (1,570.9) ----------------- ----------------- ----------------- Change in cash and cash equivalents........................... 453.1 (410.4) (1,436.8) Cash and cash equivalents, beginning of year.................. 269.6 680.0 2,116.8 ----------------- ----------------- ----------------- Cash and Cash Equivalents, End of Year........................ $ 722.7 $ 269.6 $ 680.0 ================= ================= =================
F-5 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES CONSOLIDATED STATEMENTS OF CASH FLOWS YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001 CONTINUED
2003 2002 2001 ----------------- ----------------- ----------------- (In Millions) Supplemental cash flow information: Interest Paid............................................... $ 91.0 $ 80.5 $ 82.1 ================= ================= ================= Income Taxes (Refunded) Paid................................ $ (45.7) $ (139.6) $ 524.2 ================= ================= =================
See Notes to Consolidated Financial Statements. F-6 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1) ORGANIZATION The Equitable Life Assurance Society of the United States ("Equitable Life") is an indirect, wholly owned subsidiary of AXA Financial, Inc. (the "Holding Company," and collectively with its consolidated subsidiaries, "AXA Financial"). Equitable Life's insurance business is conducted principally by Equitable Life and its wholly owned life insurance subsidiary, Equitable of Colorado ("EOC"). Equitable Life's investment management business, which comprises the Investment Services segment, is principally conducted by Alliance Capital Management L.P. ("Alliance"). In October 2000, Alliance acquired substantially all of the assets and liabilities of SCB Inc., formerly known as Sanford C. Bernstein, Inc. ("Bernstein"). In the fourth quarter of 2002, Equitable Life and its consolidated subsidiaries (collectively, the "Company") acquired 8.16 million units in Alliance ("Alliance Units") at the aggregate market price of $249.7 million from SCB Inc. and SCB Partners, Inc. under a preexisting agreement (see Note 2). Upon completion of this transaction the Company's beneficial ownership in Alliance increased by approximately 3.2%. The Company's consolidated economic interest in Alliance was 42.6% at December 31, 2003, and together with the Holding Company's economic interest in Alliance was approximately 55.5%. AXA, a French holding company for an international group of insurance and related financial services companies, has been the Holding Company's largest shareholder since 1992. In 2000, AXA acquired the approximately 40% of outstanding Holding Company common stock ("Common Stock") it did not already own. On January 2, 2001, AXA Merger Corp. ("AXA Merger"), a wholly owned subsidiary of AXA, was merged with and into the Holding Company, resulting in AXA Financial becoming a wholly owned subsidiary of AXA. 2) SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation and Principles of Consolidation ----------------------------------------------------- The preparation of the accompanying consolidated financial statements in conformity with U.S. generally accepted accounting principles ("GAAP") requires management to make estimates and assumptions (including normal, recurring accruals) that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. The accompanying consolidated financial statements reflect all adjustments necessary in the opinion of management to present fairly the consolidated financial position of the Company and its consolidated results of operations and cash flows for the periods presented. The accompanying consolidated financial statements include the accounts of Equitable Life and its subsidiary engaged in insurance related businesses (collectively, the "Insurance Group"); other subsidiaries, principally Alliance; and those investment companies, partnerships and joint ventures in which Equitable Life or its subsidiaries has control and a majority economic interest as well as those variable interest entities ("VIEs") that meet the requirements for consolidation. All significant intercompany transactions and balances except those with discontinued operations have been eliminated in consolidation. The years "2003," "2002" and "2001" refer to the years ended December 31, 2003, 2002 and 2001, respectively. Certain reclassifications have been made in the amounts presented for prior periods to conform those periods with the current presentation. Prior Period Adjustment ----------------------- A review by Equitable Life in 2003 of Federal income tax assets and liabilities identified an overstatement of the deferred Federal income tax liability related to the years ended December 31, 2000 and earlier. As a F-7 result, the Federal income tax liability as of December 31, 2002 has been reduced by $221.1 million, and the consolidated shareholder's equity as of December 31, 2002 and 2001 has been increased by $221.1 million, with no impact on the consolidated statements of earnings for the years ended December 31, 2002 and 2001 or any prior period after the adoption on January 1, 1992 of SFAS No. 109, "Accounting for Income Taxes." This adjustment has been reported in the accompanying financial statements as an increase in consolidated shareholder's equity as of January 1, 2001. Closed Block ------------ When it demutualized on July 22, 1992, Equitable Life established a Closed Block for the benefit of certain individual participating policies which were in force on that date. The assets allocated to the Closed Block, together with anticipated revenues from policies included in the Closed Block, were reasonably expected to be sufficient to support such business, including provision for the payment of claims, certain expenses and taxes, and for continuation of dividend scales payable in 1991, assuming the experience underlying such scales continues. Assets allocated to the Closed Block inure solely to the benefit of the Closed Block policyholders and will not revert to the benefit of the Holding Company. No reallocation, transfer, borrowing or lending of assets can be made between the Closed Block and other portions of Equitable Life's General Account, any of its Separate Accounts or any affiliate of Equitable Life without the approval of the New York Superintendent of Insurance (the "Superintendent"). Closed Block assets and liabilities are carried on the same basis as similar assets and liabilities held in the General Account. The excess of Closed Block liabilities over Closed Block assets represents the expected future post-tax contribution from the Closed Block which would be recognized in income over the period the policies and contracts in the Closed Block remain in force. Other Discontinued Operations ----------------------------- In 1991, management discontinued the business of certain pension operations ("Other Discontinued Operations"). Other Discontinued Operations at December 31, 2003 principally consists of the group non-participating wind-up annuities ("Wind-Up Annuities"), for which a premium deficiency reserve has been established. Management reviews the adequacy of the allowance for future losses each quarter and makes adjustments when necessary. Management believes the allowance for future losses at December 31, 2003 is adequate to provide for all future losses; however, the quarterly allowance review continues to involve numerous estimates and subjective judgments regarding the expected performance of invested assets ("Discontinued Operations Investment Assets") held by Other Discontinued Operations. There can be no assurance the losses provided for will not differ from the losses ultimately realized. To the extent actual results or future projections of the Other Discontinued Operations differ from management's current best estimates and assumptions underlying the allowance for future losses, the difference would be reflected in the consolidated statements of earnings in Other Discontinued Operations. See Note 8. Accounting Changes ------------------ In January 2003, the Financial Accounting Standards Board (the "FASB") issued Interpretation ("FIN") No. 46, "Consolidation of Variable Interest Entities". FIN No. 46 addresses when it is appropriate to consolidate financial interests in a VIE, a new term to define a business structure that either (i) does not have equity investors with voting or other similar rights or (ii) has equity investors that do not provide sufficient financial resources to support its activities. For entities with these characteristics, including many formerly known as special purpose entities ("SPEs"), FIN No. 46 imposes a consolidation standard that focuses on the relative exposures of the participants to the economic risks and rewards from the net assets of the VIE rather than on ownership of its voting interests, if any, to determine whether a parent-subsidiary relationship exists. Under FIN No. 46, the party with a majority of the economic risks or rewards associated with a VIE's activities, including those conveyed by guarantees, commitments, derivatives, credit enhancements, and similar instruments or obligations, is the "primary beneficiary" and, therefore, is required to consolidate the VIE. Transition to the consolidation requirements of FIN No. 46 began in first quarter 2003, with immediate application to all new VIEs created after January 31, 2003, and was expected to be followed by application beginning in third quarter 2003 to all existing VIEs. However, in October 2003, the FASB deferred the latter transition date to December 31, 2003 and, likewise, extended the related transitional requirements to disclose if it is "reasonably possible" that a company will have a significant, but not necessarily consolidated, variable F-8 interest in a VIE when the consolidation requirements become effective. On December 24, 2003, the FASB issued FIN No. 46(Revised) ("FIN No. 46(R)"), containing significant modifications to the original interpretation issued in January 2003 and delaying the requirement to consolidate all VIEs for which the company's financial interest therein constitutes a primary beneficiary relationship until March 31, 2004. Although the consolidation requirements of FIN No. 46(R) generally begin in first quarter 2004, no delay was afforded to consolidation of SPEs. However, at December 31, 2003, no entities in which the Company had economic interests were identified as SPEs under the rules previously in effect. While FIN No. 46(R) supports the same underlying principle put forth in the original interpretation, it addresses issues that arose as companies analyzed the potential impact of adopting FIN No. 46's consolidation requirements and resolves some of those issues in a manner expected to make implementation less onerous for certain entities with financial interests in VIEs. The most notable departure of FIN No. 46(R) from the original interpretation is the revised treatment of "decision maker" fees (such as asset management fees) to include only their variability in the calculation of a VIE's expected residual returns. Prior to this change, inclusion of decision maker fees on a gross basis created a bias towards consolidation by a decision maker as the recipient of a majority of a VIE's economic rewards unless another party absorbed a majority of the VIE's economic risks. At December 31, 2003, the Insurance Group's General Account had VIEs deemed to be significant under FIN No. 46 totaling $105.8 million. VIEs totaling $45.5 million and $60.3 million are reflected in the consolidated balance sheets as fixed maturities (collateralized debt obligations) and other equity investments (principally, investment limited partnerships), respectively, and are subject to ongoing review for impairment in value. These VIEs and approximately $17.1 million of funding commitments to the investment limited partnerships at December 31, 2003 represent the Insurance Group's maximum exposure to loss from its direct involvement with these VIEs. The Insurance Group has no further economic interests in these VIEs in the form of related guarantees, commitments, derivatives, credit enhancements or similar instruments and obligations. As a result of management's review and the FASB's implementation guidance to date, these VIEs are not expected to require consolidation because management has determined that the Insurance Group is not the primary beneficiary. Management of Alliance has reviewed its investment management agreements, its investments in and other financial arrangements with certain entities that hold client assets under management of approximately $48 billion. These include certain mutual fund products domiciled in Luxembourg, India, Japan, Singapore and Australia (collectively "Offshore Funds"), hedge funds, structured products, group trusts and joint ventures, to determine the entities that Alliance would be required to consolidate under FIN No. 46(R). As a result of its review, which is still ongoing, Alliance's management believes it is reasonably possible that Alliance will be required to consolidate an investment in a joint venture arrangement including the joint venture's funds under management, and one hedge fund as of March 31, 2004. These entities have client assets under management totaling approximately $231 million. However, Alliance's total investment in these entities is approximately $.4 million and its maximum exposure to loss is limited to its investments and prospective investment management fees. Consolidation of these entities would result in increases in Alliance's assets, principally investments, and in its liabilities, principally minority interests in consolidated entities, of approximately $231 million. Alliance derives no direct benefit from client assets under management other than investment management fees and cannot utilize those assets in its operations. Alliance has significant variable interests in certain other VIEs with approximately $1.1 billion in client assets under management. However, these VIEs do not require consolidation because Alliance's management has determined that Alliance is not the primary beneficiary. Alliance's maximum exposure to loss to these entities is limited to a nominal investment and prospective investment management fees. FIN No. 46(R) is highly complex and requires significant estimates and judgments as to its application. Since implementation of the consolidation of VIEs under FIN No. 46(R) generally has been deferred to reporting periods ending after March 15, 2004 and the FASB is continuing to develop guidance on implementation issues, management's assessment of the effect of FIN No. 46(R) is ongoing and its initial conclusions regarding the consolidation of VIEs may change. F-9 On January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets," and SFAS No. 144, "Accounting for the Impairment or Disposal of Long-lived Assets". SFAS No. 142 embraced an entirely new approach to accounting for goodwill by eliminating the long-standing requirement for systematic amortization and instead imposing periodic impairment testing to determine whether the fair value of the reporting unit to which the goodwill is ascribed supports its continued recognition. Concurrent with its adoption of SFAS No. 142, the Company ceased to amortize goodwill. Amortization of goodwill and other intangible assets for the year ended December 31, 2001 was approximately $73.4 million, net of minority interest of $104.7 million, of which $7.6 million, net of minority interest of $13.6 million, related to other intangible assets. Net income, excluding goodwill amortization expense, for the year ended December 31, 2001 would have been $712.8 million. The carrying amount of goodwill was $3,140.6 million and $3,112.2 million, respectively, at December 31, 2003 and 2002 and relates solely to the Investment Services segment. No losses resulted in 2003 and 2002 from the annual impairment testing of goodwill and indefinite-lived intangible assets. Amounts presently estimated to be recorded in each of the succeeding five years ending December 31, 2008 for amortization of other intangible assets are not expected to vary significantly from the amount for the full year December 31, 2003 of $9.3 million, net of minority interest of $12.6 million. Amortization of other intangible assets for the year ended December 31, 2002 was $8.6 million, net of minority interest of $12.6 million. The gross carrying amount and accumulated amortization of other intangible assets were $534.8 million and $162.0 million, respectively, at December 31, 2003 and $531.7 million and $140.1 million, respectively, at December 31, 2002. SFAS No. 144 retains many of the fundamental recognition and measurement provisions previously required by SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets to be Disposed of," except for the removal of goodwill from its scope, inclusion of specific guidance on cash flow recoverability testing and the criteria that must be met to classify a long-lived asset as held-for-sale. SFAS No. 141 and No. 144 had no material impact on the results of operations or financial position of the Company upon their adoption on January 1, 2002. Effective January 1, 2002, the Company changed its method of accounting for liabilities associated with variable annuity contracts that contain guaranteed minimum death benefit ("GMDB") and guaranteed minimum income benefit ("GMIB") features, to establish reserves for the Company's estimated obligations associated with these features. The method was changed to achieve a better matching of revenues and expenses. The initial impact of adoption as of January 1, 2002 resulted in a charge of $33.1 million for the cumulative effect of this accounting change, net of Federal income taxes of $17.9 million, in the consolidated statements of earnings. Prior to the adoption of this accounting change, benefits under these features were expensed as incurred. The impact of this change was to reduce Earnings from continuing operations in 2002 by $113.0 million, net of Federal income taxes of $61.0 million. The pro-forma effect of retroactive application of this change on 2001 results of operations was not material. On January 1, 2001, the Company adopted SFAS No. 133, as amended, that established new accounting and reporting standards for all derivative instruments, including certain derivatives embedded in other contracts, and for hedging activities. With respect to free-standing derivative positions, at January 1, 2001, the Company recorded a cumulative-effect-type charge to earnings of $3.5 million to recognize the difference between the carrying values and fair values. With respect to embedded derivatives, the Company elected a January 1, 1999 transition date, thereby effectively "grandfathering" existing accounting for derivatives embedded in hybrid instruments. As a consequence of this election, coupled with interpretive guidance specifically related to insurance contracts and features, adoption of the new requirements for embedded derivatives had no material impact on the Company's results of operations or its financial position. None of the Company's derivatives were designated as qualifying hedges under SFAS No. 133 and, consequently, required mark-to-market accounting through earnings for changes in their fair values beginning January 1, 2001. Upon its adoption of SFAS No. 133, the Company reclassified $256.7 million of held-to-maturity securities as available-for-sale. This reclassification resulted in an after-tax cumulative-effect-type adjustment of $8.9 million in other comprehensive income, representing the after-tax unrealized gain on these securities at January 1, 2001. In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". SFAS No. 146 established financial accounting and reporting standards for costs associated with exit or disposal activities initiated after December 31, 2002 and nullifies Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)". SFAS No. 146 requires that a liability for a F-10 cost associated with an exit or disposal activity is recognized only when the liability is incurred and measured initially at fair value. However, the cost of termination benefits provided under the terms of an ongoing benefit arrangement, such as a standard severance offering based on years of service, continues to be covered by other accounting pronouncements and is unchanged by SFAS No. 146. No material impact on the results of operations or financial position of the Company resulted in 2003 from compliance with these new recognition and measurement provisions. In November 2002, the FASB issued FIN No. 45, "Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others". FIN No. 45 addresses the disclosures made by a guarantor in its interim and annual financial statements about obligations under guarantees. FIN No. 45 also clarifies the requirements related to the recognition of a liability by a guarantor at the inception of a guarantee for the obligations that the guarantor has undertaken in issuing that guarantee. The fair value reporting provisions of FIN No. 45 were applied on a prospective basis to guarantees issued or modified after December 31, 2002. The disclosure requirements were effective for financial statements of interim or annual periods ending after December 15, 2002 (see Note 15). The initial recognition and initial measurement provisions were applied only on a prospective basis to guarantees issued or modified after December 31, 2002 and had no material impact on the Company's results of operations or financial position upon adoption. The Company adopted SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity," which was effective for financial instruments entered into or modified after May 31, 2003, and otherwise was effective at the beginning of the first interim period beginning after June 15, 2003. SFAS No. 150 establishes standards for classification and measurement of certain financial instruments with characteristics of both liabilities and equity in the statement of financial position. SFAS No. 150 had no material impact on the Company's results of operations or financial position upon adoption. New Accounting Pronouncements ----------------------------- In July 2003, the American Institute of Certified Public Accountants ("AICPA") issued Statement of Position ("SOP") 03-1, "Accounting and Reporting by Insurance Enterprises for Certain Nontraditional Long-Duration Contracts and for Separate Accounts". SOP 03-1 is effective as of January 1, 2004, and will require a change in the Company's accounting policies relating to (a) general account interests in separate accounts, (b) assets and liabilities associated with market value-adjusted annuities, (c) liabilities related to group pension participating contracts, and (d) liabilities related to certain mortality and annuitization benefits, such as the no lapse guarantee feature contained in variable and universal life contracts. The method of accounting that the Company adopted in 2002 for GMDB and GMIB liabilities is consistent with the requirements of SOP 03-1. Management expects that the impact of adopting SOP 03-1 on January 1, 2004 will result in a one-time decrease to net earnings of approximately $(1.0) million related to the cumulative effect of the required changes in accounting. Approximately $12.5 million of the cumulative effect adjustment represents a reclassification of investment income previously reported in the consolidated statements of earnings to unrealized gains included in other comprehensive income. Therefore, shareholders' equity is expected to increase approximately $11.5 million as a result of the implementation of SOP 03-1. The determination of liabilities associated with group pension participating contracts and mortality and annuitization benefits, as well as related impacts on deferred acquisition costs, is based on models that involve numerous estimates and subjective judgments. There can be no assurance that the ultimate actual experience will not differ from management's estimates. Investments ----------- The carrying values of fixed maturities identified as available for sale are reported at estimated fair value. Changes in estimated fair value are reported in comprehensive income. The amortized cost of fixed maturities is adjusted for impairments in value deemed to be other than temporary. Mortgage loans on real estate are stated at unpaid principal balances, net of unamortized discounts and valuation allowances. Valuation allowances are based on the present value of expected future cash flows discounted at the loan's original effective interest rate or on its collateral value if the loan is collateral dependent. However, if foreclosure is or becomes probable, the collateral value measurement method is used. Impaired mortgage loans without provision for losses are loans where the fair value of the collateral or the net present value of the expected future cash flows related to the loan equals or exceeds the recorded investment. F-11 Interest income earned on loans where the collateral value is used to measure impairment is recorded on a cash basis. Interest income on loans where the present value method is used to measure impairment is accrued on the net carrying value amount of the loan at the interest rate used to discount the cash flows. Changes in the present value attributable to changes in the amount or timing of expected cash flows are reported as investment gains or losses. Real estate held for the production of income, including real estate acquired in satisfaction of debt, is stated at depreciated cost less valuation allowances. At the date of foreclosure (including in-substance foreclosure), real estate acquired in satisfaction of debt is valued at estimated fair value. Impaired real estate is written down to fair value with the impairment loss being included in investment gains (losses), net. Depreciation of real estate held for production of income is computed using the straight-line method over the estimated useful lives of the properties, which generally range from 40 to 50 years. Real estate investments meeting the following criteria are classified as real estate held-for-sale: o Management having the authority to approve the action commits the organization to a plan to sell the property. o The property is available for immediate sale in its present condition subject only to terms that are usual and customary for the sale of such assets. o An active program to locate a buyer and other actions required to complete the plan to sell the asset have been initiated and are continuing. o The sale of the asset is probable and transfer of the asset is expected to qualify for recognition as a completed sale within one year. o The asset is being actively marketed for sale at a price that is reasonable in relation to its current fair value. o Actions required to complete the plan indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn. Real estate held-for-sale is stated at depreciated cost less valuation allowances. Valuation allowances on real estate held-for-sale are computed using the lower of depreciated cost or current estimated fair value, net of disposition costs. Depreciation is discontinued on real estate held-for-sale. In the fourth quarter of 2003, three real estate investments met the criteria of real estate held-for-sale. As a result, the Company transferred these investments with a total carrying value of $56.9 million from real estate held for the production of income to real estate held-for-sale. This amount is included in the Other assets line in the 2003 consolidated balance sheet. The results of operations for these properties in each of the three years ended December 31, 2003 were not significant. Valuation allowances are netted against the asset categories to which they apply. Policy loans are stated at unpaid principal balances. Partnerships, investment companies and joint venture interests in which the Company has control and a majority economic interest (that is, greater than 50% of the economic return generated by the entity) or those that meet FIN No. 46(R) requirements for consolidation are consolidated; those in which the Company does not have control and a majority economic interest and those that do not meet FIN No. 46(R) requirements for consolidation are reported on the equity basis of accounting and are included either with equity real estate or other equity investments, as appropriate. Equity securities include common stock and non-redeemable preferred stock classified as either trading or available for sale securities, are carried at estimated fair value and are included in other equity investments. Short-term investments are stated at amortized cost which approximates fair value and are included with other invested assets. Cash and cash equivalents includes cash on hand, amounts due from banks and highly liquid debt instruments purchased with an original maturity of three months or less. F-12 All securities owned as well as United States government and agency securities, mortgage-backed securities, futures and forwards transactions are recorded in the consolidated financial statements on a trade date basis. Net Investment Income, Investment Gains (Losses), Net and Unrealized -------------------------------------------------------------------- Investment Gains (Losses) ------------------------ Net investment income and realized investment gains (losses), net (together "investment results") related to certain participating group annuity contracts which are passed through to the contractholders are offset by amounts reflected as interest credited to policyholders' account balances. Realized investment gains (losses) are determined by identification with the specific asset and are presented as a component of revenue. Changes in the valuation allowances are included in investment gains or losses. Realized and unrealized holding gains (losses) on trading securities are reflected in net investment income. Unrealized investment gains and losses on fixed maturities and equity securities available for sale held by the Company are accounted for as a separate component of accumulated comprehensive income, net of related deferred Federal income taxes, amounts attributable to Other Discontinued Operations, Closed Block policyholders dividend obligation, participating group annuity contracts and deferred policy acquisition costs ("DAC") related to universal life and investment-type products and participating traditional life contracts. Recognition of Insurance Income and Related Expenses ---------------------------------------------------- Premiums from universal life and investment-type contracts are reported as deposits to policyholders' account balances. Revenues from these contracts consist of amounts assessed during the period against policyholders' account balances for mortality charges, policy administration charges and surrender charges. Policy benefits and claims that are charged to expense include benefit claims incurred in the period in excess of related policyholders' account balances. Premiums from participating and non-participating traditional life and annuity policies with life contingencies generally are recognized as income when due. Benefits and expenses are matched with such income so as to result in the recognition of profits over the life of the contracts. This match is accomplished by means of the provision for liabilities for future policy benefits and the deferral and subsequent amortization of policy acquisition costs. For contracts with a single premium or a limited number of premium payments due over a significantly shorter period than the total period over which benefits are provided, premiums are recorded as income when due with any excess profit deferred and recognized in income in a constant relationship to insurance in-force or, for annuities, the amount of expected future benefit payments. Premiums from individual health contracts are recognized as income over the period to which the premiums relate in proportion to the amount of insurance protection provided. Deferred Policy Acquisition Costs --------------------------------- Acquisition costs that vary with and are primarily related to the acquisition of new and renewal insurance business, including commissions, underwriting, agency and policy issue expenses, are deferred. DAC is subject to recoverability testing at the time of policy issue and loss recognition testing at the end of each accounting period. For universal life products and investment-type products, DAC is amortized over the expected total life of the contract group as a constant percentage of estimated gross profits arising principally from investment results, Separate Account fees, mortality and expense margins and surrender charges based on historical and anticipated future experience, updated at the end of each accounting period. The effect on the amortization of DAC of revisions to estimated gross profits is reflected in earnings in the period such estimated gross profits are revised. A decrease in expected gross profits would accelerate DAC amortization. Conversely, an increase in expected gross profits would slow DAC amortization. The effect on the DAC asset that would result from realization of unrealized gains (losses) is recognized with an offset to accumulated comprehensive income in consolidated shareholders' equity as of the balance sheet date. F-13 A significant assumption in the amortization of DAC on variable and interest-sensitive life insurance and variable annuities relates to projected future Separate Account performance. Expected future gross profit assumptions related to Separate Account performance are set by management using a long-term view of expected average market returns by applying a reversion to the mean approach. In applying this approach to develop estimates of future returns, it is assumed that the market will return to an average gross long-term return estimate, developed with reference to historical long-term equity market performance and subject to assessment of the reasonableness of resulting estimates of future return assumptions. For purposes of making this reasonableness assessment, management has set limitations as to maximum and minimum future rate of return assumptions, as well as a limitation on the duration of use of these maximum or minimum rates of return. Currently, the average gross long-term annual return estimate is 9.0% (7.05% net of product weighted average Separate Account fees), and the gross maximum and minimum annual rate of return limitations are 15.0% (13.05% net of product weighted average Separate Account fees) and 0% (-1.95% net of product weighted average Separate Account fees), respectively. The maximum duration over which these rate limitations may be applied is 5 years. This approach will continue to be applied in future periods. If actual market returns continue at levels that would result in assuming future market returns of 15% for more than 5 years in order to reach the average gross long-term return estimate, the application of the 5 year maximum duration limitation would result in an acceleration of DAC amortization. Conversely, actual market returns resulting in assumed future market returns of 0% for more than 5 years would result in a required deceleration of DAC amortization. As of December 31, 2003, current projections of future average gross market returns assume a 4.7% return for 2004 which is within the maximum and minimum limitations and assume a reversion to the mean of 9.0% after 1 year. In addition, projections of future mortality assumptions related to variable and interest-sensitive life products are based on a long-term average of actual experience. This assumption is updated quarterly to reflect recent experience as it emerges. Improvement of life mortality in future periods from that currently projected would result in future deceleration of DAC amortization. Conversely, deterioration of life mortality in future periods from that currently projected would result in future acceleration of DAC amortization. Generally, life mortality experience has improved in recent periods. Other significant assumptions underlying gross profit estimates relate to contract persistency and general account investment spread. For participating traditional life policies (substantially all of which are in the Closed Block), DAC is amortized over the expected total life of the contract group as a constant percentage based on the present value of the estimated gross margin amounts expected to be realized over the life of the contracts using the expected investment yield. At December 31, 2003, the average rate of assumed investment yields, excluding policy loans, was 7.9% grading to 7.3% over 7 years. Estimated gross margin includes anticipated premiums and investment results less claims and administrative expenses, changes in the net level premium reserve and expected annual policyholder dividends. The effect on the amortization of DAC of revisions to estimated gross margins is reflected in earnings in the period such estimated gross margins are revised. The effect on the DAC asset that would result from realization of unrealized gains (losses) is recognized with an offset to accumulated comprehensive income in consolidated shareholders' equity as of the balance sheet date. For non-participating traditional life policies, DAC is amortized in proportion to anticipated premiums. Assumptions as to anticipated premiums are estimated at the date of policy issue and are consistently applied during the life of the contracts. Deviations from estimated experience are reflected in earnings in the period such deviations occur. For these contracts, the amortization periods generally are for the total life of the policy. Policyholders' Account Balances and Future Policy Benefits ---------------------------------------------------------- Policyholders' account balances for universal life and investment-type contracts are equal to the policy account values. The policy account values represent an accumulation of gross premium payments plus credited interest less expense and mortality charges and withdrawals. Equitable Life issues certain variable annuity products with a GMDB feature. Equitable Life also issues certain variable annuity products that contain a GMIB feature which, if elected by the policyholder after a stipulated waiting period from contract issuance, guarantees a minimum lifetime annuity based on predetermined annuity purchase rates that may be in excess of what the contract account value can purchase F-14 at then-current annuity purchase rates. This minimum lifetime annuity is based on predetermined annuity purchase rates applied to a guaranteed minimum income benefit base. The risk associated with the GMDB and GMIB features is that a protracted under-performance of the financial markets could result in GMDB and GMIB benefits being higher than what accumulated policyholder account balances would support. Reserves for GMDB and GMIB obligations are calculated on the basis of actuarial assumptions related to projected benefits and related contract charges generally over the lives of the contracts using assumptions consistent with those used in estimating gross profits for purposes of amortizing DAC. The determination of this estimated liability is based on models which involve numerous estimates and subjective judgments, including those regarding expected market rates of return and volatility, contract surrender rates, mortality experience, and, for GMIB, GMIB election rates. Assumptions regarding Separate Account performance used for purposes of this calculation are set using a long-term view of expected average market returns by applying a reversion to the mean approach, consistent with that used for DAC amortization. There can be no assurance that ultimate actual experience will not differ from management's estimates. The GMIB reinsurance contracts are considered derivatives under SFAS No. 133 and, therefore, are required to be reported in the balance sheet at their fair value. GMIB fair values are reported in the consolidated balance sheets in Other assets. Changes in GMIB fair values are reflected in Commissions, fees and other income in the consolidated statements of earnings. Since there is no readily available market for GMIB reinsurance contracts, the determination of their fair values is based on models which involve numerous estimates and subjective judgments including those regarding expected market rates of return and volatility, GMIB election rates, contract surrender rates and mortality experience. There can be no assurance that ultimate actual experience will not differ from management's estimates. For reinsurance contracts other than those covering GMIB exposure, reinsurance recoverable balances are calculated using methodologies and assumptions that are consistent with those used to calculate the direct liabilities. For participating traditional life policies, future policy benefit liabilities are calculated using a net level premium method on the basis of actuarial assumptions equal to guaranteed mortality and dividend fund interest rates. The liability for annual dividends represents the accrual of annual dividends earned. Terminal dividends are accrued in proportion to gross margins over the life of the contract. For non-participating traditional life insurance policies, future policy benefit liabilities are estimated using a net level premium method on the basis of actuarial assumptions as to mortality, persistency and interest established at policy issue. Assumptions established at policy issue as to mortality and persistency are based on the Insurance Group's experience that, together with interest and expense assumptions, includes a margin for adverse deviation. When the liabilities for future policy benefits plus the present value of expected future gross premiums for a product are insufficient to provide for expected future policy benefits and expenses for that product, DAC is written off and thereafter, if required, a premium deficiency reserve is established by a charge to earnings. Benefit liabilities for traditional annuities during the accumulation period are equal to accumulated contractholders' fund balances and, after annuitization, are equal to the present value of expected future payments. Interest rates used in establishing such liabilities range from 2.0% to 10.9% for life insurance liabilities and from 2.25% to 8.63% for annuity liabilities. Individual health benefit liabilities for active lives are estimated using the net level premium method and assumptions as to future morbidity, withdrawals and interest. Benefit liabilities for disabled lives are estimated using the present value of benefits method and experience assumptions as to claim terminations, expenses and interest. While management believes its disability income ("DI") reserves have been calculated on a reasonable basis and are adequate, there can be no assurance reserves will be sufficient to provide for future liabilities. Claim reserves and associated liabilities net of reinsurance ceded for individual DI and major medical policies were $69.9 million and $86.0 million at December 31, 2003 and 2002, respectively. At December 31, 2003 and 2002, respectively, $1,109.3 million and $1,088.9 million of DI reserves and associated liabilities were ceded through an indemnity reinsurance agreement principally with a single reinsurer (see Note 12). Incurred benefits (benefits paid plus changes in claim reserves) and benefits paid for individual DI and major medical policies are summarized as follows: F-15
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Incurred benefits related to current year.......... $ 33.8 $ 36.6 $ 44.0 Incurred benefits related to prior years........... (2.8) (6.3) (10.6) ----------------- ---------------- ----------------- Total Incurred Benefits............................ $ 31.0 $ 30.3 $ 33.4 ================= ================ ================= Benefits paid related to current year.............. $ 12.1 $ 11.5 $ 10.7 Benefits paid related to prior years............... 34.9 37.2 38.8 ----------------- ---------------- ----------------- Total Benefits Paid................................ $ 47.0 $ 48.7 $ 49.5 ================= ================ =================
Policyholders' Dividends ------------------------ The amount of policyholders' dividends to be paid (including dividends on policies included in the Closed Block) is determined annually by Equitable Life's board of directors. The aggregate amount of policyholders' dividends is related to actual interest, mortality, morbidity and expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by Equitable Life. At December 31, 2003, participating policies, including those in the Closed Block, represent approximately 18.7% ($34.7 billion) of directly written life insurance in-force, net of amounts ceded. Separate Accounts ----------------- Generally, Separate Accounts established under New York State Insurance Law generally are not chargeable with liabilities that arise from any other business of the Insurance Group. Separate Accounts assets are subject to General Account claims only to the extent Separate Accounts assets exceed Separate Accounts liabilities. Assets and liabilities of the Separate Accounts represent the net deposits and accumulated net investment earnings less fees, held primarily for the benefit of contractholders, and for which the Insurance Group does not bear the investment risk. Separate Accounts' assets and liabilities are shown on separate lines in the consolidated balance sheets. The Insurance Group bears the investment risk on assets held in one Separate Account; therefore, such assets are carried on the same basis as similar assets held in the General Account portfolio. Assets held in the other Separate Accounts are carried at quoted market values or, where quoted values are not readily available, at estimated fair values as determined by the Insurance Group. The investment results of Separate Accounts on which the Insurance Group does not bear the investment risk are reflected directly in Separate Accounts liabilities and are not reported in revenues in the consolidated statements of earnings. For 2003, 2002 and 2001, investment results of such Separate Accounts were losses of $(466.2) million, $(4,740.7) million and $(2,214.4) million, respectively. Deposits to Separate Accounts are reported as increases in Separate Accounts liabilities and are not reported in revenues. Mortality, policy administration and surrender charges on all Separate Accounts are included in revenues. Recognition of Investment Management Revenues and Related Expenses ------------------------------------------------------------------ Commissions, fees and other income principally include Investment Management advisory and service fees. Investment Management advisory and services base fees, generally calculated as a percentage, referred to as "basis points", of assets under management for clients, are recorded as revenue as the related services are performed; they include brokerage transactions charges of Sanford C. Bernstein & Co., LLC ("SCB LLC"), a wholly owned subsidiary of Alliance, for substantially all private client transactions and certain institutional investment management client transactions. Certain investment advisory contracts provide for a performance fee, in addition to or in lieu of a base fee, that is calculated as either a percentage of absolute investment results or a percentage of the related investment results in excess of a stated benchmark over a specified period of time. Performance fees are recorded as revenue at the end of the measurement period. Transaction charges earned and related expenses are recorded on a trade date basis. Distribution revenues and shareholder servicing fees are accrued as earned. F-16 Institutional research services revenue consists of brokerage transaction charges received by SCB LLC and Sanford C. Bernstein Limited, a wholly owned subsidiary of Alliance, for in-depth research and other services provided to institutional investors. Brokerage transaction charges earned and related expenses are recorded on a trade date basis. Sales commissions paid to financial intermediaries in connection with the sale of shares of open-end Alliance mutual funds sold without a front-end sales charge are capitalized as deferred sales commissions and amortized over periods not exceeding five and one-half years, the periods of time during which deferred sales commissions are generally recovered from distribution services fees received from those funds and from contingent deferred sales charges ("CDSC") received from shareholders of those funds upon the redemption of their shares. CDSC cash recoveries are recorded as reductions in unamortized deferred sales commissions when received. At December 31, 2003 and 2002, respectively, net deferred sales commissions totaled $387.2 million and $500.9 million and are included within Other assets. The estimated amortization expense of deferred sales commission, based on December 31, 2003 net balance for each of the next five years is approximately $386.0 million. Alliance's management tests the deferred sales commission asset for recoverability quarterly, or more often when events or changes in circumstances occur that could significantly increase the risk of impairment of the asset. Alliance's management determines recoverability by estimating undiscounted future cash flows to be realized from this asset, as compared to its recorded amount, as well as the estimated remaining life of the deferred sales commission asset over which undiscounted future cash flows are expected to be received. Undiscounted future cash flows consist of ongoing distribution services fees and CDSC. Distribution services fees are calculated as a percentage of average assets under management related to back-end load shares. CDSC is based on the lower of cost or current value, at the time of redemption, of back-end load shares redeemed and the point at which redeemed during the applicable minimum holding period under the mutual fund distribution system. Significant assumptions utilized to estimate future average assets under management of back-end load shares include expected future market levels and redemption rates. Market assumptions are selected using a long-term view of expected average market returns based on historical returns of broad market indices. Future redemption rate assumptions are determined by reference to actual redemption experience over the last five years. These assumptions are updated periodically. Estimates of undiscounted future cash flows and the remaining life of the deferred sales commission asset are made from these assumptions. Alliance's management considers the results of these analyses performed at various dates. If Alliance's management determines in the future that the deferred sales commission asset is not recoverable, an impairment condition would exist and a loss would be measured as the amount by which the recorded amount of the asset exceeds its estimated fair value. Estimated fair value is determined using Alliance's management's best estimate of future cash flows discounted to a present value amount. As such, given the volatility and uncertainty of capital markets and future redemption, Alliance's management believes these to be critical accounting estimates. Other Accounting Policies ------------------------- In accordance with regulations of the Securities and Exchange Commission ("SEC"), securities with a fair value of $1.29 billion and $1.17 billion have been segregated in a special reserve bank custody account at December 31, 2003 and 2002, respectively for the exclusive benefit of securities broker-dealer or brokerage customers under Rule 15c3-3 under the Securities Exchange Act of 1934, as amended. Intangible assets include costs assigned to contracts of businesses acquired. These costs continue to be amortized on a straight-line basis over estimated useful lives of twenty years. Capitalized internal-use software is amortized on a straight-line basis over the estimated useful life of the software. The Holding Company and certain of its consolidated subsidiaries, including the Company, file a consolidated Federal income tax return. Current Federal income taxes are charged or credited to operations based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income tax assets and liabilities are recognized based on the difference between financial F-17 statement carrying amounts and income tax bases of assets and liabilities using enacted income tax rates and laws. Minority interest subject to redemption rights represents the remaining 32.6 million of private Alliance Units issued to former Bernstein shareholders in connection with Alliance's acquisition of Bernstein. The Holding Company agreed to provide liquidity to these former Bernstein shareholders after a two-year lock-out period which ended October 2002. The Company acquired 8.16 million of the former Bernstein shareholders' Alliance Units in 2002. The outstanding 32.6 million Alliance Units may be sold to the Holding Company at the prevailing market price over the remaining six years ending in 2009. Generally, not more than 20% of the original Alliance Units issued to the former Bernstein shareholders may be put to the Holding Company in any one annual period. The Company accounts for its stock option plans and other stock-based compensation plans in accordance with the provisions of Accounting Principles Board Opinion ("APB") No. 25, "Accounting for Stock Issued to Employees," and related interpretations. In accordance with the opinion, stock option awards result in compensation expense only if the current market price of the underlying stock exceeds the option strike price at the grant date. See Note 22 for the pro forma disclosures required by SFAS No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure". F-18 3) INVESTMENTS The following tables provide additional information relating to fixed maturities and equity securities:
Gross Gross Amortized Unrealized Unrealized Estimated Cost Gains Losses Fair Value --------------- ----------------- ----------------- --------------- (In Millions) December 31, 2003 ----------------- Fixed Maturities: Available for Sale: Corporate..................... $ 20,653.7 $ 1,726.2 $ 84.7 $ 22,295.2 Mortgage-backed............... 3,837.0 57.0 17.4 3,876.6 U.S. Treasury, government and agency securities....... 812.3 58.7 .5 870.5 States and political subdivisions................ 188.2 14.1 2.0 200.3 Foreign governments........... 248.4 45.9 .3 294.0 Redeemable preferred stock.... 1,412.0 151.1 4.2 1,558.9 ----------------- ----------------- ----------------- ---------------- Total Available for Sale.... $ 27,151.6 $ 2,053.0 $ 109.1 $ 29,095.5 ================= ================= ================= ================ Equity Securities: Available for sale.............. $ 11.6 $ 1.2 $ .2 $ 12.6 Trading securities.............. 1.9 .6 1.5 1.0 ----------------- ----------------- ----------------- ---------------- Total Equity Securities........... $ 13.5 $ 1.8 $ 1.7 $ 13.6 ================= ================= ================= ================ December 31, 2002 ----------------- Fixed Maturities: Available for Sale: Corporate..................... $ 20,084.0 $ 1,491.0 $ 269.0 $ 21,306.0 Mortgage-backed............... 2,419.2 99.2 - 2,518.4 U.S. Treasury, government and agency securities....... 895.5 84.1 - 979.6 States and political subdivisions................ 197.6 17.9 - 215.5 Foreign governments........... 231.8 37.4 .8 268.4 Redeemable preferred stock.... 923.7 71.4 4.1 991.0 ----------------- ----------------- ----------------- ---------------- Total Available for Sale.... $ 24,751.8 $ 1,801.0 $ 273.9 $ 26,278.9 ================= ================= ================= ================ Equity Securities: Available for sale.............. $ 37.6 $ 2.0 $ 3.4 $ 36.2 Trading securities.............. 3.3 .8 3.0 1.1 ----------------- ----------------- ----------------- ---------------- Total Equity Securities........... $ 40.9 $ 2.8 $ 6.4 $ 37.3 ================= ================= ================= ================
For publicly-traded fixed maturities and equity securities, estimated fair value is determined using quoted market prices. For fixed maturities without a readily ascertainable market value, the Company determines estimated fair values using a discounted cash flow approach, including provisions for credit risk, generally based on the assumption such securities will be held to maturity. Such estimated fair values do not necessarily represent the values for which these securities could have been sold at the dates of the consolidated balance sheets. At December 31, 2003 and 2002, securities without a readily ascertainable market value having an amortized cost of $4,462.1 million and $4,899.8 million, respectively, had estimated fair values of $4,779.6 million and $5,137.2 million, respectively. F-19 The contractual maturity of bonds at December 31, 2003 is shown below:
Available for Sale ------------------------------------ Amortized Estimated Cost Fair Value ---------------- ----------------- (In Millions) Due in one year or less................................................ $ 495.5 $ 514.8 Due in years two through five.......................................... 4,981.3 5,386.0 Due in years six through ten........................................... 9,760.8 10,595.8 Due after ten years.................................................... 6,665.0 7,163.4 Mortgage-backed securities............................................. 3,837.0 3,876.6 ---------------- ----------------- Total.................................................................. $ 25,739.6 $ 27,536.6 ================ =================
Bonds not due at a single maturity date have been included in the above table in the year of final maturity. Actual maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The Company's management, with the assistance of its investment advisors, monitors the investment performance of its portfolio. This review process culminates with a quarterly review of certain assets by the Insurance Group's Investments Under Surveillance Committee that evaluates whether any investments are other than temporarily impaired. The review considers an analysis of individual credit metrics of each issuer as well as industry fundamentals and the outlook for the future. Based on the analysis, a determination is made as to the ability of the issuer to service its debt obligations on an ongoing basis. If this ability is deemed to be impaired, then the appropriate provisions are taken. The following table discloses fixed maturities (598 fixed maturities) that have been in a continuous unrealized loss position for less than a twelve month period and greater than a twelve month period as of December 31, 2003:
Less than 12 Months 12 Months or Longer Total ------------------------------- ---------------------------- ---------------------------- Gross Gross Gross Estimated Unrealized Estimated Unrealized Estimated Unrealized Fair Value Losses Fair Value Losses Fair Value Losses ------------- ------------- ------------- ------------- ------------- ------------- (In Millions) Fixed Maturities: Corporate................. $ 2,342.9 $ 77.6 $ 81.0 $ 7.1 $ 2,423.9 $ 84.7 Mortgage-backed........... 1,406.0 17.4 - - 1,406.0 17.4 U.S. Treasury, government and agency securities.............. 28.3 .5 - - 28.3 .5 States and political subdivisions............ 24.2 2.0 - - 24.2 2.0 Foreign governments....... 7.4 .3 1.0 - 8.4 .3 Redeemable preferred stock......... 58.5 3.2 14.0 1.0 72.5 4.2 -------------- ------------- ------------- -------------- ------------- --------------- Total Temporarily Impaired Securities ...... $ 3,867.3 $ 101.0 $ 96.0 $ 8.1 $ 3,963.3 $ 109.1 ============== ============= ============= ============== ============= ===============
The Insurance Group's fixed maturity investment portfolio includes corporate high yield securities consisting of public high yield bonds, redeemable preferred stocks and directly negotiated debt in leveraged buyout transactions. The Insurance Group seeks to minimize the higher than normal credit risks associated with such securities by monitoring concentrations in any single issuer or a particular industry group. These corporate high yield securities are classified as other than investment grade by the various rating agencies, i.e., a rating below Baa3/BBB- or National Association of Insurance Commissioners ("NAIC") designation of 3 (medium grade), 4 or 5 (below investment grade) or 6 (in or near default). At December 31, 2003, approximately F-20 $1,366.2 million or 5.3% of the $25,739.6 million aggregate amortized cost of bonds held by the Company was considered to be other than investment grade. At December 31, 2003, the carrying value of fixed maturities which are non-income producing for the twelve months preceding the consolidated balance sheet date was $53.0 million. The Insurance Group holds equity in limited partnership interests and other equity method investments that primarily invest in securities considered to be other than investment grade. The carrying values at December 31, 2003 and 2002 were $775.5 million and $683.0 million, respectively. The payment terms of mortgage loans on real estate may from time to time be restructured or modified. The investment in restructured mortgage loans on real estate, based on amortized cost, amounted to $122.4 million and $75.3 million at December 31, 2003 and 2002, respectively. Gross interest income on these loans included in net investment income aggregated $7.8 million, $5.3 million and $3.2 million in 2003, 2002 and 2001, respectively. Gross interest income on restructured mortgage loans on real estate that would have been recorded in accordance with the original terms of such loans amounted to $10.0 million, $6.8 million and $4.2 million in 2003, 2002 and 2001, respectively. Impaired mortgage loans along with the related investment valuation allowances for losses follow:
December 31, ---------------------------------------- 2003 2002 ------------------- ------------------- (In Millions) Impaired mortgage loans with investment valuation allowances....... $ 149.4 $ 111.8 Impaired mortgage loans without investment valuation allowances.... 29.1 20.4 ------------------- ------------------- Recorded investment in impaired mortgage loans..................... 178.5 132.2 Investment valuation allowances.................................... (18.8) (23.4) ------------------- ------------------- Net Impaired Mortgage Loans........................................ $ 159.7 $ 108.8 =================== ===================
During 2003, 2002 and 2001, respectively, the Company's average recorded investment in impaired mortgage loans was $180.9 million, $138.1 million and $141.7 million. Interest income recognized on these impaired mortgage loans totaled $12.3 million, $10.0 million and $7.2 million for 2003, 2002 and 2001, respectively. Mortgage loans on real estate are placed on nonaccrual status once management believes the collection of accrued interest is doubtful. Once mortgage loans on real estate are classified as nonaccrual loans, interest income is recognized under the cash basis of accounting and the resumption of the interest accrual would commence only after all past due interest has been collected or the mortgage loan on real estate has been restructured to where the collection of interest is considered likely. At December 31, 2003 and 2002, respectively, the carrying value of mortgage loans on real estate that had been classified as nonaccrual loans was $143.2 million and $91.1 million. The Insurance Group's investment in equity real estate is through direct ownership and through investments in real estate joint ventures. At December 31, 2003 and 2002, the carrying value of equity real estate held-for-sale amounted to $56.9 million and $107.7 million, respectively. For 2003, 2002 and 2001, respectively, real estate of $2.8 million, $5.6 million and $64.8 million was acquired in satisfaction of debt. At December 31, 2003 and 2002, the Company owned $275.8 million and $268.8 million, respectively, of real estate acquired in satisfaction of debt of which $3.6 million and $2.7 million, respectively, are held as real estate joint ventures. Accumulated depreciation on real estate was $189.6 million and $163.6 million at December 31, 2003 and 2002, respectively. Depreciation expense on real estate totaled $38.8 million, $18.0 million and $16.1 million for 2003, 2002 and 2001, respectively. F-21 Investment valuation allowances for mortgage loans and equity real estate and changes thereto follow:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Balances, beginning of year........................... $ 55.0 $ 87.6 $ 126.2 Additions charged to income........................... 12.2 32.5 40.0 Deductions for writedowns and asset dispositions.................................. (15.2) (65.1) (78.6) Deduction for transfer of real estate held-for-sale to real estate held for the production of income.... (31.5) - - ----------------- ---------------- ----------------- Balances, End of Year................................. $ 20.5 $ 55.0 $ 87.6 ================= ================ ================= Balances, end of year comprise: Mortgage loans on real estate....................... $ 18.8 $ 23.4 $ 19.3 Equity real estate.................................. 1.7 31.6 68.3 ----------------- ---------------- ----------------- Total................................................. $ 20.5 $ 55.0 $ 87.6 ================= ================ =================
4) EQUITY METHOD INVESTMENTS Included in equity real estate or other equity investments, as appropriate, is the Company's interest in real estate joint ventures, limited partnership interests and investment companies accounted for under the equity method with a total carrying value of $896.9 million and $801.7 million, respectively, at December 31, 2003 and 2002. The Company's total equity in net earnings (losses) for these real estate joint ventures and limited partnership interests was $4.3 million, $(18.3) million and $(111.1) million, respectively, for 2003, 2002 and 2001. Summarized below is the combined financial information only for those real estate joint ventures and for those limited partnership interests accounted for under the equity method in which the Company has an investment of $10.0 million or greater and an equity interest of 10% or greater (6 and 7 individual ventures at December 31, 2003 and 2002, respectively) and the Company's carrying value and equity in net earnings for those real estate joint ventures and limited partnership interests:
December 31, ------------------------------------ 2003 2002 ---------------- ----------------- (In Millions) BALANCE SHEETS Investments in real estate, at depreciated cost........................ $ 551.6 $ 550.0 Investments in securities, generally at estimated fair value........... 204.8 237.5 Cash and cash equivalents.............................................. 37.6 27.9 Other assets........................................................... 22.8 32.2 ---------------- ----------------- Total Assets........................................................... $ 816.8 $ 847.6 ================ ================= Borrowed funds - third party........................................... $ 259.7 $ 264.7 Other liabilities...................................................... 19.5 19.2 ---------------- ----------------- Total liabilities...................................................... 279.2 283.9 ---------------- ----------------- Partners' capital...................................................... 537.6 563.7 ---------------- ----------------- Total Liabilities and Partners' Capital................................ $ 816.8 $ 847.6 ================ ================= The Company's Carrying Value in These Entities Included Above.......... $ 168.8 $ 172.3 ================ =================
F-22
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) STATEMENTS OF EARNINGS Revenues of real estate joint ventures............. $ 95.6 $ 98.4 $ 95.6 Net revenues (losses) of other limited partnership interests.............. 26.0 (23.2) 29.8 Interest expense - third party..................... (18.0) (19.8) (11.5) Interest expense - the Company..................... - - (.7) Other expenses..................................... (61.7) (59.3) (58.2) ----------------- ---------------- ----------------- Net Earnings (Losses).............................. $ 41.9 $ (3.9) $ 55.0 ================= ================ ================= The Company's Equity in Net Earnings of These Entities Included Above.......................... $ 5.0 $ 12.8 $ 13.2 ================= ================ =================
5) NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES) The sources of net investment income follows:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Fixed maturities................................... $ 1,792.6 $ 1,755.4 $ 1,662.4 Mortgage loans on real estate...................... 279.5 314.8 361.6 Equity real estate................................. 136.9 153.7 166.2 Other equity investments........................... 49.3 (45.4) (53.6) Policy loans....................................... 260.1 269.4 268.2 Other investment income............................ 66.8 114.1 216.6 ----------------- ---------------- ----------------- Gross investment income.......................... 2,585.2 2,562.0 2,621.4 Investment expenses.............................. (198.3) (184.8) (217.1) ----------------- ---------------- ----------------- Net Investment Income.............................. $ 2,386.9 $ 2,377.2 $ 2,404.3 ================= ================ =================
Investment (losses) gains including changes in the valuation allowances follow:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Fixed maturities................................... $ (100.7) $ (374.3) $ (225.2) Mortgage loans on real estate...................... 1.3 3.7 (11.4) Equity real estate................................. 26.8 101.5 34.5 Other equity investments........................... 2.0 3.3 (13.0) Issuance and sales of Alliance Units............... - .5 (2.3) Other.............................................. 8.3 (13.2) 10.1 ----------------- ---------------- ----------------- Investment Losses, Net........................... $ (62.3) $ (278.5) $ (207.3) ================= ================ =================
Writedowns of fixed maturities amounted to $193.2 million, $312.8 million and $287.5 million for 2003, 2002 and 2001, respectively. Writedowns of mortgage loans on real estate and equity real estate amounted to $5.2 million and zero, respectively, for 2003 and $5.5 million and $5.8 million, respectively, for 2002. For 2003, 2002 and 2001, respectively, proceeds received on sales of fixed maturities classified as available for sale amounted to $4,773.5 million, $7,176.3 million and $7,372.3 million. Gross gains of $105.1 million, $108.4 million and $156.2 million and gross losses of $39.5 million, $172.9 million and $115.9 million, respectively, were realized on these sales. The change in unrealized investment gains (losses) related to fixed F-23 maturities classified as available for sale for 2003, 2002 and 2001 amounted to $416.8 million, $1,047.8 million and $429.5 million, respectively. Net investment income in 2001 included realized gains of $27.1 million on sales of Credit Suisse Group common stock, which was designated as trading account securities and acquired in conjunction with the sale of Donaldson, Lufkin & Jenrette, Inc., formerly a majority owned subsidiary, in 2000. In 2003, 2002 and 2001, respectively, net unrealized holding gains (losses) on trading account equity securities of $2.1 million, $.5 million, and $25.0 million were included in net investment income in the consolidated statements of earnings. These trading securities had a carrying value of $1.0 million and $1.1 million and costs of $1.9 million and $3.3 million at December 31, 2003 and 2002, respectively. For 2003, 2002 and 2001, investment results passed through to certain participating group annuity contracts as interest credited to policyholders' account balances amounted to $76.5 million, $92.1 million and $96.7 million, respectively. Net unrealized investment gains (losses) included in the consolidated balance sheets as a component of accumulated other comprehensive income and the changes for the corresponding years, including Other Discontinued Operations on a line-by-line basis, follow:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Balance, beginning of year......................... $ 681.1 $ 215.5 $ 12.9 Changes in unrealized investment gains (losses).... 440.8 1,049.9 436.0 Changes in unrealized investment (gains) losses attributable to: Participating group annuity contracts, Closed Block policyholder dividend obligation and other........................ (53.0) (157.3) (48.6) DAC............................................ (65.7) (174.1) (71.6) Deferred Federal income taxes.................. (110.4) (252.9) (113.2) ----------------- ---------------- ----------------- Balance, End of Year............................... $ 892.8 $ 681.1 $ 215.5 ================= ================ ================= 2003 2002 2001 ------------- --------------- -------------- (In Millions) Balance, end of year comprises: Unrealized investment gains (losses) on: Fixed maturities............................... $ 2,015.7 $ 1,572.0 $ 496.0 Other equity investments....................... 1.5 (1.5) 4.3 Other.......................................... (28.1) (22.2) (1.9) ----------------- ------------------ ----------------- Total........................................ 1,989.1 1,548.3 498.4 Amounts of unrealized investment (gains) losses attributable to: Participating group annuity contracts, Closed Block policyholder dividend obligation and other....................... (274.2) (221.2) (63.9) DAC.......................................... (339.7) (274.0) (99.9) Deferred Federal income taxes................ (482.4) (372.0) (119.1) ----------------- ------------------ ----------------- Total.............................................. $ 892.8 $ 681.1 $ 215.5 ================= ================== =================
Changes in unrealized gains (losses) reflect changes in fair value of only those fixed maturities and equity securities classified as available for sale and do not reflect any changes in fair value of policyholders' account balances and future policy benefits. F-24 6) ACCUMULATED OTHER COMPREHENSIVE INCOME Accumulated other comprehensive income represents cumulative gains and losses on items that are not reflected in earnings. The balances for the past three years follow:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Unrealized gains on investments.................... $ 892.8 $ 681.1 $ 215.5 Minimum pension liability.......................... - - (.1) ----------------- ---------------- ----------------- Total Accumulated Other Comprehensive Income............................. $ 892.8 $ 681.1 $ 215.4 ================= ================ =================
The components of other comprehensive income for the past three years follow:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Net unrealized gains (losses) on investments: Net unrealized gains arising during the period..................................... $ 416.6 $ 1,008.9 $ 525.2 Losses (gains) reclassified into net earnings during the period.............................. 24.2 41.0 (89.2) ----------------- ---------------- ----------------- Net unrealized gains on investments................ 440.8 1,049.9 436.0 Adjustments for policyholders liabilities, DAC and deferred Federal income taxes.......... (229.1) (584.3) (233.4) ----------------- ---------------- ----------------- Change in unrealized gains, net of adjustments.................................... 211.7 465.6 202.6 Change in minimum pension liability................ - .1 - ----------------- ---------------- ----------------- Total Other Comprehensive Income................... $ 211.7 $ 465.7 $ 202.6 ================= ================ =================
7) CLOSED BLOCK The excess of Closed Block liabilities over Closed Block assets (adjusted to exclude the impact of related amounts in accumulated other comprehensive income) represents the expected maximum future post-tax earnings from the Closed Block which would be recognized in income from continuing operations over the period the policies and contracts in the Closed Block remain in force. As of January 1, 2001, the Company has developed an actuarial calculation of the expected timing of the Closed Block earnings. If the actual cumulative earnings from the Closed Block are greater than the expected cumulative earnings, only the expected earnings will be recognized in net income. Actual cumulative earnings in excess of expected cumulative earnings at any point in time are recorded as a policyholder dividend obligation because they will ultimately be paid to Closed Block policyholders as an additional policyholder dividend unless offset by future performance that is less favorable than originally expected. If a policyholder dividend obligation has been previously established and the actual Closed Block earnings in a subsequent period are less than the expected earnings for that period, the policyholder dividend obligation would be reduced (but not below zero). If, over the period the policies and contracts in the Closed Block remain in force, the actual cumulative earnings of the Closed Block are less than the expected cumulative earnings, only actual earnings would be recognized in income from continuing operations. If the Closed Block has insufficient funds to make guaranteed policy benefit payments, such payments will be made from assets outside the Closed Block. Many expenses related to Closed Block operations, including amortization of DAC, are charged to operations outside of the Closed Block; accordingly, net revenues of the Closed Block do not represent the actual profitability of the Closed Block operations. Operating costs and expenses outside of the Closed Block are, therefore, disproportionate to the business outside of the Closed Block. F-25 Summarized financial information for the Closed Block is as follows:
December 31, December 31, 2003 2002 ----------------- ----------------- (In Millions) CLOSED BLOCK LIABILITIES: Future policy benefits, policyholders' account balances and other........................................................... $ 8,972.1 $ 8,997.3 Policyholder dividend obligation....................................... 242.1 213.3 Other liabilities...................................................... 129.5 134.6 ----------------- ----------------- Total Closed Block liabilities......................................... 9,343.7 9,345.2 ----------------- ----------------- ASSETS DESIGNATED TO THE CLOSED BLOCK: Fixed maturities, available for sale, at estimated fair value (amortized cost of $5,061.0 and $4,794.0)............................ 5,428.5 5,098.4 Mortgage loans on real estate.......................................... 1,297.6 1,456.0 Policy loans........................................................... 1,384.5 1,449.9 Cash and other invested assets......................................... 143.3 141.9 Other assets........................................................... 199.2 219.9 ----------------- ----------------- Total assets designated to the Closed Block........................... 8,453.1 8,366.1 ----------------- ----------------- Excess of Closed Block liabilities over assets designated to the Closed Block.................................................... 890.6 979.1 Amounts included in accumulated other comprehensive income: Net unrealized investment gains, net of deferred Federal income tax of $43.9 and $31.8 and policyholder dividend obligation of $242.1 and $213.3................................................. 81.6 59.1 ----------------- ----------------- Maximum Future Earnings To Be Recognized From Closed Block Assets and Liabilities.............................................. $ 972.2 $ 1,038.2 ================= =================
Closed Block revenues and expenses were as follows:
2003 2002 2001 ---------------- ---------------- -------------------- (In Millions) REVENUES: Premiums and other income.......................... $ 508.5 $ 543.8 $ 571.5 Investment income (net of investment expenses of $2.4, $5.4, and $3.0)............... 559.2 582.4 583.5 Investment losses, net............................. (35.7) (47.0) (42.3) ---------------- ---------------- -------------------- Total revenues..................................... 1,032.0 1,079.2 1,112.7 ---------------- ---------------- -------------------- BENEFITS AND OTHER DEDUCTIONS: Policyholders' benefits and dividends.............. 924.5 980.2 1,009.3 Other operating costs and expenses................. 4.0 4.4 4.7 ---------------- ---------------- -------------------- Total benefits and other deductions................ 928.5 984.6 1,014.0 ---------------- ---------------- -------------------- Net revenues before Federal income taxes........... 103.5 94.6 98.7 Federal income taxes............................... (37.5) (34.7) (36.2) ---------------- ---------------- -------------------- Net Revenues....................................... $ 66.0 $ 59.9 $ 62.5 ================ ================ ====================
F-26 Reconciliation of the policyholder dividend obligation is as follows:
December 31, ------------------------------------ 2003 2002 ---------------- ----------------- (In Millions) Balance at beginning of year........................................... $ 213.3 $ 47.1 Unrealized investment gains............................................ 28.8 166.2 ---------------- ----------------- Balance at End of Year ................................................ $ 242.1 $ 213.3 ================ =================
Impaired mortgage loans along with the related investment valuation allowances follows:
December 31, ------------------------------------ 2003 2002 ---------------- ----------------- (In Millions) Impaired mortgage loans with investment valuation allowances........... $ 58.3 $ 18.6 Impaired mortgage loans without investment valuation allowances........ 5.8 .9 ---------------- ----------------- Recorded investment in impaired mortgages.............................. 64.1 19.5 Investment valuation allowances........................................ (3.7) (4.0) ---------------- ----------------- Net Impaired Mortgage Loans............................................ $ 60.4 $ 15.5 ================ =================
During 2003, 2002 and 2001, the Closed Block's average recorded investment in impaired mortgage loans was $51.9 million, $26.0 million and $30.8 million, respectively. Interest income recognized on these impaired mortgage loans totaled $2.7 million, $2.1 million and $1.2 million for 2003, 2002 and 2001, respectively. Valuation allowances amounted to $3.6 million and $3.9 million on mortgage loans on real estate and $.1 million and $.1 million on equity real estate at December 31, 2003 and 2002, respectively. Writedowns of fixed maturities amounted to $37.8 million, $40.0 million and $30.8 million for 2003, 2002 and 2001, respectively, including $23.3 million in fourth quarter 2001. 8) OTHER DISCONTINUED OPERATIONS Summarized financial information for Other Discontinued Operations follows:
December 31, -------------------------------------- 2003 2002 ----------------- ----------------- (In Millions) BALANCE SHEETS Fixed maturities, available for sale, at estimated fair value (amortized cost of $644.7 and $677.8).............................. $ 716.4 $ 722.7 Equity real estate................................................... 198.2 203.7 Mortgage loans on real estate........................................ 63.9 87.5 Other equity investments............................................. 7.5 9.4 Other invested assets................................................ .2 .2 ----------------- ----------------- Total investments.................................................. 986.2 1,023.5 Cash and cash equivalents............................................ 63.0 31.0 Other assets......................................................... 110.9 126.5 ----------------- ----------------- Total Assets......................................................... $ 1,160.1 $ 1,181.0 ================= ================= Policyholders liabilities............................................ $ 880.3 $ 909.5 Allowance for future losses.......................................... 173.4 164.6 Other liabilities.................................................... 106.4 106.9 ----------------- ----------------- Total Liabilities.................................................... $ 1,160.1 $ 1,181.0 ================= =================
F-27
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) STATEMENTS OF EARNINGS Investment income (net of investment expenses of $21.0, $18.1 and $25.3).............. $ 70.6 $ 69.7 $ 91.6 Investment gains (losses), net..................... 5.4 34.2 33.6 Policy fees, premiums and other income............. - .2 .2 ----------------- ---------------- ----------------- Total revenues..................................... 76.0 104.1 125.4 Benefits and other deductions...................... 89.4 98.7 100.7 (Losses charged) earnings credited to allowance for future losses................................ (13.4) 5.4 24.7 ----------------- ---------------- ----------------- Pre-tax loss from operations....................... - - - Pre-tax earnings from releasing the allowance for future losses................................ 5.2 8.7 46.1 Federal income tax expense......................... (1.8) (3.1) (2.2) ----------------- ---------------- ----------------- Earnings from Discontinued Operations.............. $ 3.4 $ 5.6 $ 43.9 ================= ================ =================
The Company's quarterly process for evaluating the allowance for future losses applies the current period's results of discontinued operations against the allowance, re-estimates future losses and adjusts the allowance, if appropriate. Additionally, as part of the Company's annual planning process, investment and benefit cash flow projections are prepared. These updated assumptions and estimates resulted in a release of allowance in each of the three years presented. Valuation allowances of $2.5 million and $4.9 million on mortgage loans on real estate were held at December 31, 2003 and 2002, respectively. During 2003, 2002 and 2001, discontinued operations' average recorded investment in impaired mortgage loans was $16.2 million, $25.3 million and $32.2 million, respectively. Interest income recognized on these impaired mortgage loans totaled $1.3 million, $2.5 million and $2.5 million for 2003, 2002 and 2001, respectively. In 2001, Federal Income tax expense for discontinued operations reflected a $13.8 million reduction in taxes due to settlement of open tax years. 9) VARIABLE ANNUITY CONTRACTS - GMDB AND GMIB Equitable Life issues certain variable annuity contracts with GMDB and GMIB features that guarantee either: a) Return of Premium: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals); b) Ratchet: the benefit is the greatest of current account value, premiums paid (adjusted for withdrawals), or the highest account value on any anniversary up to contractually specified ages (adjusted for withdrawals); c) Roll-Up: the benefit is the greater of current account value or premiums paid (adjusted for withdrawals) accumulated at contractually specified interest rates up to specified ages; or d) Combo: the benefit is the greater of the ratchet benefit or the roll-up benefit. The following table summarizes the GMDB and GMIB liabilities, before reinsurance ceded, reflected in the General Account in future policy benefits and other policyholders liabilities in 2003: F-28
GMDB GMDB Total ----------------- ---------------- ----------------- (In Millions) Balance at January 1, 2003......................... $ 128.4 $ 117.5 $ 245.9 Paid guarantee benefits.......................... (65.6) - (65.6) Other changes in reserve......................... 6.5 (31.9) (25.4) ----------------- ---------------- ----------------- Balance at December 31, 2003....................... $ 69.3 $ 85.6 $ 154.9 ================= ================ =================
Related GMDB reinsurance ceded amounts were:
GMDB --------------------- (In Millions) Balance at December 31, 2002....................... $ 21.5 Paid guarantee benefits ceded.................... (18.5) Other changes in reserve......................... 14.2 --------------------- Balance at December 31, 2003....................... $ 17.2 =====================
The GMIB reinsurance contracts are considered derivatives and are reported at fair value; see Note 16. The December 31, 2003 values for those variable contracts with GMDB and GMIB features are presented in the following table. Since variable contracts with GMDB guarantees may also offer GMIB guarantees in each contract, the GMDB and GMIB amounts listed are not mutually exclusive:
Return of Premium Ratchet Roll-Up Combo Total -------------- ------------- -------------- ------------- -------------- (Dollars In Millions) GMDB: Account value (1)................... $ 26,849 $ 5,332 $ 8,030 $ 6,160 $ 46,371 Net amount at risk, gross........... $ 2,108 $ 942 $ 2,112 $ 10 $ 5,172 Net amount at risk, net of amounts reinsured......................... $ 2,104 $ 631 $ 1,281 $ 10 $ 4,026 Average attained age of Contractholders................... 49.5 59.6 61.7 59.8 51.7 Percentage of contractholders over age 70....................... 7.1 20.9 25.8 20.3 10.3 Range of guaranteed minimum return rates............................ N/A N/A 3%-6% 3%-6% N/A GMIB: Account value (2)................... N/A N/A $ 5,763 $ 8,589 $ 14,352 Net amount at risk, gross........... N/A N/A $ 442 $ - $ 442 Net amount at risk, net of amounts reinsured......................... N/A N/A $ 110 $ - $ 110 Weighted average years remaining until annuitization.............. N/A N/A 4.6 9.8 7.2 Range of guaranteed minimum return rates............................ N/A N/A 3%-6% 3%-6% 3%-6%
(1) Included General Account balances of $11,379 million, $199 million, $182 million and $380 million, respectively, for a total of $12,140 million. (2) Included General Account balances of $3 million and $568 million, respectively, for a total of $571 million. F-29 For contracts with the GMDB feature, the net amount at risk in the event of death is the amount by which the GMDB benefits exceed related account values. For contracts with the GMIB feature, the net amount at risk in the event of annuitization is defined as the amount by which the present value of the GMIB benefits exceeds related account values, taking into account the relationship between current annuity purchase rates and the GMIB guaranteed annuity purchase rates. In third quarter 2003, Equitable Life initiated a program to hedge certain risks associated with the GMDB feature of the Accumulator series of annuity products sold beginning April 2002. At December 31, 2003, contracts with these features had a total account value and net amount at risk of $13,008 million and $17 million, respectively. This program currently utilizes exchange-traded, equity-based futures contracts that are dynamically managed in an effort to reduce the economic impact of unfavorable changes in GMDB exposure attributable to movements in the equity markets. 10) SHORT-TERM AND LONG-TERM DEBT Short-term and long-term debt consists of the following:
December 31, -------------------------------------- 2003 2002 ----------------- ----------------- (In Millions) Short-term debt: Promissory note, 1.53% .............................................. $ 248.3 $ 248.3 Other................................................................ - 22.0 ----------------- ----------------- Total short-term debt................................................ 248.3 270.3 ----------------- ----------------- Long-term debt: Equitable Life: Surplus notes, 6.95%, due 2005..................................... 399.8 399.8 Surplus notes, 7.70%, due 2015..................................... 199.8 199.7 ----------------- ----------------- Total Equitable Life........................................... 599.6 599.5 ----------------- ----------------- Alliance: Senior Notes, 5.625%, due 2006..................................... 398.8 398.4 Other.............................................................. 6.5 6.5 ----------------- ----------------- Total Alliance................................................. 405.3 404.9 ----------------- ----------------- Total long-term debt................................................. 1,004.9 1,004.4 ----------------- ----------------- Total Short-term and Long-term Debt.................................. $ 1,253.2 $ 1,274.7 ================= =================
Short-term Debt --------------- Equitable Life has a $350.0 million 5 year bank credit facility. The interest rates are based on external indices dependent on the type of borrowing ranging from 1.34% to 4.0%. No amounts were outstanding under this credit facility at December 31, 2003. Equitable Life has a commercial paper program with an issue limit of $500.0 million. This program is available for general corporate purposes used to support Equitable Life's liquidity needs and is supported by Equitable Life's $350.0 million bank credit facility. At December 31, 2003, no amounts were outstanding under this program. Equitable Life has a $350.0 million, one year promissory note, of which $101.7 million is included within Other Discontinued Operations. The promissory note, which matures in March 2004, is related to wholly owned real estate. Certain terms of the promissory note, such as interest rate and maturity date, are negotiated annually. F-30 At December 31, 2003 and 2002, respectively, the Company had pledged real estate of $309.8 million and $322.9 million as collateral for certain short-term debt. Since 1998, Alliance has had a $425.0 million commercial paper program. In September 2002, Alliance entered into an $800.0 million five-year revolving credit facility with a group of commercial banks and other lenders that replaced three credit facilities aggregating $875.0 million.Of the $800.0 million total, $425.0 million is intended to provide back-up liquidity for Alliance's commercial paper program, with the balance available for general purposes, including capital expenditures and funding the payments of sales commissions to financial intermediaries. The interest rate, at the option of Alliance, is a floating rate generally based upon a defined prime rate, a rate related to the London Interbank Offered Rate ("LIBOR") or the Federal funds rate. The credit facility also provides for a facility fee payable on the total facility. In addition, a utilization rate fee is payable in the event the average aggregate daily outstanding balance exceeds $400.0 million for each calendar quarter. The revolving credit facility contains covenants that, among other things, require Alliance to meet certain financial ratios. Alliance was in compliance with the covenants at December 31, 2003. At December 31, 2003, no borrowings were outstanding under Alliance's commercial paper program or revolving credit facilities. Since December 1999, Alliance has maintained a $100.0 million extendible commercial notes ("ECN") program as a supplement to its $425.0 million commercial paper program. ECNs are short-term uncommitted debt instruments that do not require back-up liquidity support. At December 31, 2003, no borrowings were outstanding under the ECN program. Long-term Debt ------------- At December 31, 2003, the Company was in compliance with all debt covenants. At December 31, 2003, aggregate maturities of the long-term debt based on required principal payments at maturity were $400.0 million for 2005, $406.5 million for 2006, zero for 2007, zero for 2008 and $200.1 million thereafter. Under its shelf registration, Alliance may issue up to $600.0 million in senior debt securities. In August 2001, Alliance issued $400.0 million 5.625% notes in a public offering. These Alliance notes mature in 2006 and are redeemable at any time. The proceeds from the Alliance notes were used to reduce commercial paper and credit facility borrowings and for other general partnership purposes. 11) FEDERAL INCOME TAXES A summary of the Federal income tax expense in the consolidated statements of earnings follows:
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Federal income tax expense: Current expense (benefit)........................ $ 112.5 $ (400.0) $ (38.2) Deferred expense................................. 128.0 450.9 354.4 ----------------- ---------------- ----------------- Total.............................................. $ 240.5 $ 50.9 $ 316.2 ================= ================ =================
The Federal income taxes attributable to consolidated operations are different from the amounts determined by multiplying the earnings before Federal income taxes and minority interest by the expected Federal income tax rate of 35%. The sources of the difference and their tax effects follow: F-31
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Expected Federal income tax expense................ $ 332.6 $ 360.0 $ 452.5 Minority interest.................................. (58.7) (128.3) (126.9) Separate Account investment activity............... (29.1) (159.3) - Non-taxable investment income...................... (20.8) 3.4 (1.6) Non deductible penalty............................. 14.8 - - Adjustment of tax audit reserves................... (9.9) (34.2) (28.2) Other.............................................. 11.6 9.3 20.4 ----------------- ---------------- ----------------- Federal Income Tax Expense......................... $ 240.5 $ 50.9 $ 316.2 ================= ================ =================
The components of the net deferred Federal income taxes are as follows:
December 31, 2003 December 31, 2002 --------------------------------- --------------------------------- Assets Liabilities Assets Liabilities --------------- ---------------- --------------- --------------- (In Millions) Compensation and related benefits...... $ - $ 271.8 $ - $ 244.2 Reserves and reinsurance............... 801.9 - 646.2 - DAC.................................... - 1,855.6 - 1,680.5 Unrealized investment gains............ - 482.4 - 372.0 Investments............................ - 525.3 - 138.6 Other.................................. 6.7 - - 68.2 --------------- ---------------- --------------- --------------- Total.................................. $ 808.6 $ 3,135.1 $ 646.2 $ 2,503.5 =============== ================ =============== ===============
In 2002, the Company recorded a $144.3 million benefit resulting from the favorable treatment of certain tax matters related to Separate Account investment activity arising during the 1997-2001 tax years and a settlement with the Internal Revenue Service (the "IRS") with respect to such tax matters for the 1992-1996 tax years. In January 2003, the IRS commenced an examination of the AXA Financial's consolidated Federal income tax returns, which includes the Company, for the years 1997 through 2001. Management believes this audit will have no material adverse effect on the Company's consolidated results of operations or financial position. 12) REINSURANCE AGREEMENTS The Insurance Group assumes and cedes reinsurance with other insurance companies. The Insurance Group evaluates the financial condition of its reinsurers to minimize its exposure to significant losses from reinsurer insolvencies. Ceded reinsurance does not relieve the originating insurer of liability. The effect of reinsurance (excluding group life and health) is summarized as follows: F-32
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Direct premiums.................................... $ 913.8 $ 954.6 $ 990.0 Reinsurance assumed................................ 153.2 181.4 203.0 Reinsurance ceded.................................. (177.6) (190.8) (173.1) ----------------- ---------------- ----------------- Premiums........................................... $ 889.4 $ 945.2 $ 1,019.9 ================= ================ ================= Universal Life and Investment-type Product Policy Fee Income Ceded.......................... $ 100.3 $ 96.6 $ 86.9 ================= ================ ================= Policyholders' Benefits Ceded...................... $ 390.9 $ 346.3 $ 370.3 ================= ================ ================= Interest Credited to Policyholders' Account Balances Ceded................................... $ 49.7 $ 54.6 $ 50.4 ================= ================ =================
During the first quarter of 2003, the Insurance Group began to transition to excess of retention reinsurance on most new variable life, universal life and term life policies whereby mortality risk will be retained up to a maximum of $15 million on single-life policies and $20 million on second-to-die policies with the excess 100% reinsured. Previously the Insurance Group ceded 90% of mortality risk on substantially all new variable life, universal life and term life policies, with risk retained to a maximum of $5 million on single-life policies, and $15 million on second-to-die policies. Substantially all other in-force business above the joint survivorship and single life policies retention limit is reinsured. The Insurance Group also reinsures the entire risk on certain substandard underwriting risks and in certain other cases. At December 31, 2003, Equitable Life had reinsured in the aggregate approximately 22% of its current exposure to the GMDB obligation on annuity contracts in-force and, subject to certain maximum amounts or caps in any one period, approximately 75% of its current liability exposure resulting from the GMIB feature. At December 31, 2003 and 2002, respectively, reinsurance recoverables related to insurance contracts amounted to $2,460.4 million and $2,351.7 million, of which $1,069.8 million and $1,049.2 million relates to one specific reinsurer. Reinsurance payables related to insurance contracts amounting to $936.5 million and $867.5, respectively million are included in Other liabilities in the consolidated balance sheets. Based on management's estimates of future contract cash flows and experience, the estimated fair values of the GMIB reinsurance contracts, considered derivatives under SFAS No. 133, at December 31, 2003 and 2002 were $29.0 million and $120.0 million, respectively. The (decrease) increase in estimated fair value of $(91.0) million and $120.0 million for the years ended December 31, 2003 and 2002, respectively, were due primarily to significant equity market increases in 2003 and declines during 2002. The Insurance Group cedes 100% of its group life and health business to a third party insurer. Insurance liabilities ceded totaled $389.7 million and $410.9 million at December 31, 2003 and 2002, respectively. In addition to the sale of insurance products, the Insurance Group acts as a professional retrocessionaire by assuming life and annuity reinsurance from professional reinsurers. The Insurance Group also assumes accident, health, aviation and space risks by participating in various reinsurance pools. Reinsurance assumed reserves at December 31, 2003 and 2002 were $587.5 million and $572.8 million, respectively. 13) EMPLOYEE BENEFIT PLANS The Company sponsors qualified and non-qualified defined benefit plans covering substantially all employees (including certain qualified part-time employees), managers and certain agents. The pension plans are non-contributory. Equitable Life's benefits are based on a cash balance formula or years of service and final average earnings, if greater, under certain grandfathering rules in the plans. Alliance's benefits are based on years of credited service, average final base salary and primary social security benefits. The Company uses a December 31 measurement date for its plans. Generally, the Company's funding policy is to make the minimum contribution required by the Employee Retirement Income Security Act of 1974 ("ERISA"). The Company made cash contributions in 2002 to the F-33 qualified plans of $348.2 million. The Company's cash contributions to the qualified plans for the year ended 2004 is estimated to be $1.4 million, reflecting the amount needed to satisfy its minimum funding requirements. Components of net periodic pension expense (credit) follow:
2003 2002 2001 ----------------- ---------------- ------------------ (In Millions) Service cost....................................... $ 31.8 $ 32.1 $ 32.1 Interest cost on projected benefit obligations..... 122.6 125.3 128.8 Expected return on assets.......................... (173.9) (181.8) (218.7) Net amortization and deferrals..................... 53.4 6.4 .1 ----------------- ---------------- ------------------ Net Periodic Pension Credit........................ $ 33.9 $ (18.0) $ (57.7) ================= ================ ==================
The projected benefit obligations under the pension plans were comprised of:
December 31, ------------------------------------ 2003 2002 ---------------- ----------------- (In Millions) Benefit obligations, beginning of year................................. $ 1,883.9 $ 1,812.3 Service cost........................................................... 26.8 27.1 Interest cost.......................................................... 122.6 125.3 Actuarial losses....................................................... 113.5 42.5 Benefits paid.......................................................... (133.5) (123.3) ---------------- ----------------- Benefit Obligation, End of Year........................................ $ 2,013.3 $ 1,883.9 ================ =================
The change in plan assets and the funded status of the pension plans were as follows:
December 31, ------------------------------------ 2003 2002 ---------------- ----------------- (In Millions) Plan assets at fair value, beginning of year........................... $ 1,785.4 $ 1,845.3 Actual return on plan assets........................................... 359.7 (278.2) Contributions.......................................................... 10.0 348.2 Benefits paid and fees................................................. (140.0) (129.9) ---------------- ----------------- Plan assets at fair value, end of year................................. 2,015.1 1,785.4 Projected benefit obligations.......................................... 2,013.3 1,883.9 ---------------- ----------------- Excess of plan assets over projected benefit obligations............... 1.8 (98.5) Unrecognized prior service cost........................................ (34.8) (40.0) Unrecognized net loss from past experience different from that assumed.................................................... 904.3 1,033.9 Unrecognized net asset at transition................................... (1.3) (1.5) ---------------- ----------------- Prepaid Pension Cost, Net.............................................. $ 870.0 $ 893.9 ================ =================
The aggregate accumulated benefit obligation and fair value of plan assets for pension plans with accumulated benefit obligations in excess of plan assets were $51.1 million and $37.3 million, respectively, at December 31, 2003 and $42.0 million and $24.2 million, respectively, at December 31, 2002. The following table discloses the estimated fair value of plan assets and the percentage of estimated fair value to total plan assets: F-34
December 31, ----------------------------------------------------------- 2003 2002 ----------------------------------------------------------- (In Millions) Estimated Estimated Fair Value % Fair Value % ------------------------ ------- ----------------- ------ Corporate and government debt securities....... $ 438.2 21.7 $ 551.3 30.9 Equity securities.............................. 1,387.4 68.9 793.9 44.5 Equity real estate ............................ 184.8 9.2 180.2 10.1 Short-term investments......................... 2.1 .1 258.6 14.5 Other.......................................... 2.6 .1 1.4 - ------------------------ ------------------- Total Plan Assets.................. $ 2,015.1 $ 1,785.4 ======================== ===================
The asset mix is designed to meet, and, if possible, exceed the long-term rate-of-return assumptions for benefit obligations. The asset allocation is designed with a long-term investment horizon, based on target investment of 65% equities, 25% fixed income and 10% real estate. Emphasis is given to equity investments, given their high expected rate of return. Fixed income investments are included to provide less volatile return. Real Estate investments offer diversity to the total portfolio and long-term inflation protection. The primary investment objective of the plan is to maximize return on assets, giving consideration to prudent risk, in order to minimize net periodic cost. A secondary investment objective is to minimize variation in annual net periodic pension cost over the long term and to fund as much of the future liability growth as practical. Specifically, a reasonable total rate of return is defined as income plus realized and unrealized capital gains and losses such that the growth in projected benefit obligation is less than the return on investments plus the Company's contributions. The following table discloses the weighted-average assumptions used to determine the pension benefit obligations and net periodic pension cost at and for the years ended December 31, 2003 and 2002:
Equitable Life -------------------------------- 2003 2002 ---- ---- Discount rate: Benefit obligation................................................. 6.25% 6.75% Periodic cost...................................................... 6.75% 7.25% Rate of compensation increase: Benefit obligation and periodic cost............................... 5.78% 6.73% Expected long-term rate of return on plan assets (periodic cost)... 8.5% 9.0%
As noted above, the pension plan's target asset allocation is 65% equities, 25% fixed maturities, and 10% real estate. The Company reviewed the historical investment returns for these asset classes. Based on that analysis, management concluded that a long-term expected rate of return of 8.5% is reasonable. Prior to 1987, the qualified plan funded participants' benefits through the purchase of non-participating annuity contracts from Equitable Life. Benefit payments under these contracts were approximately $24.5 million, $26.0 million and $27.3 million for 2003, 2002 and 2001, respectively. On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the "2003 Medicare Act") was signed into law. It introduces a prescription drug benefit under Medicare Part D as well as a Federal subsidy to employers whose plans provide an "actuarially equivalent" prescription drug benefit. While the Company expects its postretirement prescription drug benefit program will qualify for this subsidy, detailed regulations necessary to implement and administer the 2003 Medicare Act have not yet been issued. Similarly, certain accounting issues raised by the Medicare Act are pending further discussion and resolution by the FASB, thereby further reducing the likelihood at this time of producing a sufficiently reliable measure of the effects of the 2003 Medicare Act. Consequently, and in accordance with FASB Staff Position FAS 106-1, "Accounting and Disclosure Requirements Related to the Medicare Prescription Drug, Improvement and Modernization Act of 2003," measures of the accumulated postretirement benefits obligation and net periodic postretirement benefits costs, as presented in the consolidated financial statements F-35 and accompanying notes thereto, at and for the year ended December 31, 2003, do not reflect the effects of the 2003 Medicare Act on the plan. This election to defer accounting for the effects of the 2003 Medicare Act generally will continue to apply until authoritative guidance on the accounting for the Federal subsidy is issued, at which time transition could result in a change to previously reported information. Alliance maintains several unfunded deferred compensation plans for the benefit of certain eligible employees and executives. The Capital Accumulation Plan was frozen on December 31, 1987 and no additional awards have been made. For the active plans, benefits vest over a period ranging from 3 to 8 years and are amortized as compensation and benefit expense. ACMC, Inc. ("ACMC"), a subsidiary of the Company, is obligated to make capital contributions to Alliance in amounts equal to benefits paid under the Capital Accumulation Plan and the contractual unfunded deferred compensation arrangements. In connection with the acquisition of Bernstein, Alliance agreed to invest $96.0 million per annum for three years to fund purchases of Alliance Holding units or an Alliance sponsored money market fund in each case for the benefit of certain individuals who were stockholders or principals of Bernstein or were hired to replace them. The Company has recorded compensation and benefit expenses in connection with these deferred compensation plans totaling $127.3 million, $101.4 million and $58.3 million for 2003, 2002 and 2001, respectively (including $83.4 million and $63.7 million and $34.5 million for 2003, 2002 and 2001, respectively, relating to the Bernstein deferred compensation plan). 14) DERIVATIVES AND FAIR VALUE OF FINANCIAL INSTRUMENTS The Insurance Group primarily uses derivatives for asset/liability risk management, for hedging individual securities and to reduce the Insurance Group's exposure to interest rate fluctuations. Similarly, the Holding Company utilizes derivatives to reduce the fixed interest cost of its long-term debt obligations. Various derivative financial instruments are used to achieve these objectives, including interest rate caps and floors to hedge crediting rates on interest-sensitive individual annuity contracts, interest rate futures to protect against declines in interest rates between receipt of funds and purchase of appropriate assets, and interest rate swaps to modify the duration and cash flows of fixed maturity investments and long-term debt. In addition, the Company periodically enters into forward and futures contracts to hedge certain equity exposures, including the program to hedge certain risks associated with the GMDB feature of the Accumulator series of annuity products. At December 31, 2003, the Company's outstanding equity-based futures contracts were exchange-traded and net settled each day. Also, the Company has purchased reinsurance contracts to mitigate the risks associated with the impact of potential market fluctuations on future policyholder elections of GMIB features contained in certain annuity contracts issued by the Company. See Note 12. As described in Note 2, the Company adopted SFAS No. 133, as amended, on January 1, 2001. Consequently, all derivatives outstanding at December 31, 2003 and 2002 are recognized on the balance sheet at their fair values. These amounts principally consist of interest rate floors that have a total fair value at December 31, 2003 of $9.7 million, excluding the estimated fair value of the GMIB reinsurance contracts. The outstanding notional amounts of derivative financial instruments purchased and sold were:
December 31, ------------------------------------ 2003 2002 ---------------- ----------------- (In Millions) Notional Amount by Derivative Type:: Options: Caps............................................................ $ - $ 5,050 Floors.......................................................... 12,000 4,000 Equity-based futures................................................ 275 50 ---------------- ----------------- Total............................................................... $ 12,275 $ 9,100 ================ =================
At December 31, 2003 and during the year then ended, there were no hybrid instruments that required bifurcation of an embedded derivative component under the provisions of SFAS No. 133. All gains and losses on derivative financial instruments utilized by the Company in 2003 and 2002 are reported in earnings. None of the derivatives were designated as qualifying hedges under SFAS No. 133. For 2003 and 2002, respectively, investment results, principally in net investment income, included gross gains of F-36 $.6 million and $24.3 million and gross losses of $42.6 million and $7.7 million that were recognized on derivative positions. Fair Value of Financial Instruments ----------------------------------- The Company defines fair value as the quoted market prices for those instruments that are actively traded in financial markets. In cases where quoted market prices are not available, fair values are estimated using present value or other valuation techniques. The fair value estimates are made at a specific point in time, based on available market information and judgments about the financial instrument, including estimates of the timing and amount of expected future cash flows and the credit standing of counterparties. Such estimates do not reflect any premium or discount that could result from offering for sale at one time the Company's entire holdings of a particular financial instrument, nor do they consider the tax impact of the realization of unrealized gains or losses. In many cases, the fair value estimates cannot be substantiated by comparison to independent markets, nor can the disclosed value be realized in immediate settlement of the instrument. Certain financial instruments are excluded, particularly insurance liabilities other than financial guarantees and investment contracts. Fair market values of off-balance-sheet financial instruments of the Insurance Group were not material at December 31, 2003 and 2002. Fair values for mortgage loans on real estate are estimated by discounting future contractual cash flows using interest rates at which loans with similar characteristics and credit quality would be made. Fair values for foreclosed mortgage loans and problem mortgage loans are limited to the estimated fair value of the underlying collateral if lower. Fair values of policy loans are estimated by discounting the face value of the loans from the time of the next interest rate review to the present, at a rate equal to the excess of the current estimated market rates over the current interest rate charged on the loan. The estimated fair values for the Company's association plan contracts, supplementary contracts not involving life contingencies ("SCNILC") and annuities certain, which are included in policyholders' account balances, and guaranteed interest contracts are estimated using projected cash flows discounted at rates reflecting expected current offering rates. The fair values for variable deferred annuities and single premium deferred annuities, included in policyholders' account balances, are estimated as the discounted value of projected account values. Current account values are projected to the time of the next crediting rate review at the current crediting rates and are projected beyond that date at the greater of current estimated market rates offered on new policies or the guaranteed minimum crediting rate. Expected cash flows and projected account values are discounted back to the present at the current estimated market rates. Fair values for long-term debt are determined using published market values, where available, or contractual cash flows discounted at market interest rates. The estimated fair values for non-recourse mortgage debt are determined by discounting contractual cash flows at a rate which takes into account the level of current market interest rates and collateral risk. The estimated fair values for recourse mortgage debt are determined by discounting contractual cash flows at a rate based upon current interest rates of other companies with credit ratings similar to the Company. The Company's carrying value of short-term borrowings approximates their estimated fair value. The carrying value and estimated fair value for financial instruments not previously disclosed in Notes 3, 7, 8 and 10 are presented below: F-37
December 31, -------------------------------------------------------------------- 2003 2002 --------------------------------- --------------------------------- Carrying Estimated Carrying Estimated Value Fair Value Value Fair Value --------------- ---------------- --------------- --------------- (In Millions) Consolidated: ------------ Mortgage loans on real estate.......... $ 3,503.1 $ 3,761.7 $ 3,746.2 $ 4,070.1 Other limited partnership interests.... 775.5 775.5 683.0 683.0 Policy loans........................... 3,894.3 4,481.9 4,035.6 4,728.2 Policyholders liabilities: Investment contracts................. 16,817.0 17,245.9 14,555.0 15,114.9 Long-term debt......................... 1,004.9 1,105.7 1,004.4 1,086.4 Closed Block: ------------ Mortgage loans on real estate.......... $ 1,297.6 $ 1,386.0 $ 1,456.0 $ 1,572.6 Other equity investments............... 14.2 14.2 16.4 16.4 Policy loans........................... 1,384.5 1,626.7 1,449.9 1,740.9 SCNILC liability....................... 14.8 14.9 16.5 16.6 Other Discontinued Operations: ----------------------------- Mortgage loans on real estate.......... $ 63.9 $ 69.5 $ 87.5 $ 94.7 Other equity investments............... 7.5 7.5 9.4 9.4 Guaranteed interest contracts.......... 17.8 16.3 18.3 17.0 Long-term debt......................... 101.7 101.7 101.7 101.7
15) COMMITMENTS AND CONTINGENT LIABILITIES In addition to its debt and lease commitments discussed in Notes 10 and 17, from time to time, the Company has provided certain guarantees or commitments to affiliates, investors and others. At December 31, 2003, these arrangements included commitments by the Company to provide equity financing of $342.6 million to certain limited partnerships under certain conditions. Management believes the Company will not incur material losses as a result of these commitments. Equitable Life is the obligor under certain structured settlement agreements it had entered into with unaffiliated insurance companies and beneficiaries. To satisfy its obligations under these agreements, Equitable Life owns single premium annuities issued by previously wholly owned life insurance subsidiaries. Equitable Life has directed payment under these annuities to be made directly to the beneficiaries under the structured settlement agreements. A contingent liability exists with respect to these agreements should the previously wholly owned subsidiaries be unable to meet their obligations. Management believes the need for Equitable Life to satisfy those obligations is remote. The Company had $169.9 million of letters of credit related to reinsurance of which no amounts were outstanding at December 31, 2003. In February 2002, Alliance signed a $125.0 million agreement with a commercial bank under which it guaranteed certain obligations of SCB LLC incurred in the ordinary course of its business in the event SCB LLC is unable to meet these obligations. At December 31, 2003, Alliance was not required to perform under the agreement and had no liability outstanding in connection with the agreement. 16) LITIGATION A number of lawsuits have been filed against life and health insurers in the jurisdictions in which Equitable Life and its subsidiaries do business involving insurers' sales practices, alleged agent misconduct, alleged failure to properly supervise agents, and other matters. Some of the lawsuits have resulted in the award of substantial judgments against other insurers, including material amounts of punitive damages, or in substantial settlements. In some states, juries have substantial discretion in awarding punitive damages. Equitable Life, F-38 Equitable Variable Life Insurance Company ("EVLICO," which was merged into Equitable Life effective January 1, 1997, but whose existence continues for certain limited purposes, including the defense of litigation) and EOC, like other life and health insurers, from time to time are involved in such litigations. Among litigations against Equitable Life, EVLICO and EOC of the type referred to in this paragraph are the litigations described in the following two paragraphs. In October 2000, an action entitled SHAM MALHOTRA, ET AL. V. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES, AXA ADVISORS, LLC AND EQUITABLE DISTRIBUTORS, INC. was commenced in the Supreme Court of the State of New York, County of Nassau. The action was brought by two individuals who purchased Equitable Life deferred annuity products. The action purports to be on behalf of a class consisting of all persons who purchased an individual deferred annuity contract or who received a certificate to a group deferred annuity contract, sold by one of the defendants, which was used to fund a contributory retirement plan or arrangement qualified for favorable income tax treatment; excluded from the class are officers, directors and agents of the defendants. The complaint alleges that the defendants engaged in fraudulent and deceptive practices in connection with the marketing and sale of deferred annuity products to fund tax-qualified contributory retirement plans. The complaint asserts claims for: deceptive business acts and practices in violation of the New York General Business Law ("GBL"); use of misrepresentations and misleading statements in violation of the New York Insurance Law; false or misleading advertising in violation of the GBL; fraud, fraudulent concealment and deceit; negligent misrepresentation; negligence; unjust enrichment and imposition of a constructive trust; declaratory and injunctive relief; and reformation of the annuity contracts. The complaint seeks injunctive and declaratory relief, an unspecified amount of compensatory and punitive damages, restitution for all members of the class, and an award of attorneys' fees, costs and expenses. In October 2000, the defendants removed the action to the United States District Court for the Eastern District of New York, and thereafter filed a motion to dismiss. Plaintiffs filed a motion to remand the case to state court. In September 2001, the District Court issued a decision granting defendants' motion to dismiss and denying plaintiffs' motion to remand, and judgment was entered in favor of the defendants. In October 2001, plaintiffs filed a motion seeking leave to reopen the case for the purpose of filing an amended complaint. In addition, plaintiffs filed a new complaint in the District Court, alleging a similar class and similar facts. The new complaint asserts causes of action for violations of Federal securities laws in addition to the state law causes of action asserted in the previous complaint. In January 2002, plaintiffs amended their new complaint in response to defendants' motion to dismiss and, subsequently, in March 2002, defendants filed a motion to dismiss the amended complaint. In March 2003, the United States District Court for the Eastern District of New York: (i) granted plaintiffs' motion, filed October 2001, seeking leave to reopen their original case for the purpose of filing an amended complaint and accepted plaintiffs' proposed amended complaint, (ii) appointed the named plaintiffs as lead plaintiffs and their counsel as lead counsel for the putative class, (iii) consolidated plaintiffs' original action with their second action, which was filed in October 2001, and (iv) ruled that the court would apply Equitable Life's motion to dismiss the amended complaint in the second action to the plaintiffs' amended complaint from the original action. In April 2003, plaintiffs filed a second amended complaint alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The action purports to be on behalf of a class consisting of all persons who on or after October 3, 1997 purchased an individual variable deferred annuity contract, received a certificate to a group variable deferred annuity contract or made an additional investment through such a contract, which contract was used to fund a contributory retirement plan or arrangement qualified for favorable income tax treatment. In May 2003, the defendants filed a motion to dismiss the second amended complaint and that motion is currently pending. The previously disclosed lawsuit, BRENDA MCEACHERN V. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES AND GARY RAYMOND, JR., has been settled and dismissed with prejudice. In addition, all of the Mississippi Actions, including the agents' cross-claims, have been settled and dismissed with prejudice. In October 2000, an action entitled AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE F/B/O EMERALD INVESTMENTS LP AND EMERALD INVESTMENTS LP V. AXA CLIENT SOLUTIONS, LLC; THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES; AND AXA FINANCIAL, INC. was commenced in the United States District Court for the Northern District of Illinois. The complaint alleges that the defendants (i) in connection with certain annuities issued by Equitable Life breached an agreement with the plaintiffs involving the execution of mutual fund transfers, and (ii) wrongfully withheld withdrawal charges in connection with the termination of such annuities. Plaintiffs seek substantial lost profits and injunctive relief, punitive damages and attorneys' fees. Plaintiffs also seek return of the withdrawal charges. In February 2001, the District Court granted in part and denied in part defendants' motion to dismiss the complaint. In March 2001, F-39 plaintiffs filed an amended complaint. The District Court granted defendants' motion to dismiss AXA Client Solutions and the Holding Company from the amended complaint, and dismissed the conversion claims in June 2001. The District Court denied defendants' motion to dismiss the remaining claims. Equitable Life has answered the amended complaint. While the monetary damages sought by plaintiffs, if awarded, could have a material adverse effect on the consolidated financial position and results of operations of the Company, management believes that the ultimate resolution of this litigation should not have a material adverse on the Company's consolidated financial position. After the District Court denied defendants' motion to assert certain defenses and counterclaims in AMERICAN NATIONAL BANK, Equitable Life commenced an action, in December 2001, entitled THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES V. AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE F/B/O EMERALD INVESTMENTS LP AND EMERALD INVESTMENTS LP, in the United States District Court for the Northern District of Illinois. The complaint arises out of the same facts and circumstances as described in AMERICAN NATIONAL BANK. Equitable Life's complaint alleges common law fraud and equitable rescission in connection with certain annuities issued by Equitable Life. Equitable Life seeks unspecified money damages, rescission, punitive damages and attorneys' fees. In March 2002, defendants filed an answer to Equitable Life's complaint and asserted counterclaims. Defendants' counterclaims allege common law fraud, violations of the Federal and Illinois Securities Acts and violations of the Illinois and New York Consumer Fraud Acts. Defendants seek unspecified money damages, punitive damages and attorneys' fees. In May 2002, the District Court granted in part and denied in part Equitable Life's motion to dismiss defendants' counterclaims, dismissing defendants' Illinois Securities Act and New York Consumer Fraud Act claims. Equitable Life has answered defendants' remaining counterclaims. In November 2003, Emerald filed a motion for summary judgment; Equitable Life filed its opposition to this motion in December 2003. In January 2004, DH2, Inc., an entity related to Emerald Investments L.P., filed a lawsuit in the United States District Court for the Northern District of Illinois, against Equitable Life and Equitable Advisors Trust, asserting claims for breach of contract and breach of fiduciary duty, claims under the Federal securities laws, and misappropriation of trade secrets. The complaint alleges that Equitable Life and Equitable Advisors Trust wrongfully misappropriated DH2, Inc.'s confidential and proprietary information to implement fair value pricing of securities within the subaccounts of DH2, Inc.'s variable annuity, which diminished the profitability of its proprietary trading strategy. The complaint also alleges that Equitable Life and Equitable Advisors Trust implemented fair value pricing for an improper purpose and without adequate disclosure. The complaint further alleges that Equitable Life and Equitable Advisors Trust are not permitted to implement fair value pricing of securities. The complaint has not been served upon either Equitable Life or Equitable Advisors Trust. In November 1997, an amended complaint was filed in PETER FISCHEL, ET AL. V. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES alleging, among other things, that Equitable Life violated ERISA by eliminating certain alternatives pursuant to which agents of Equitable Life could qualify for health care coverage. In March 1999, the United States District Court for the Northern District of California entered an order certifying a class consisting of "[a]ll current, former and retired Equitable agents, who while associated with Equitable satisfied [certain alternatives] to qualify for health coverage or contributions thereto under applicable plans." Plaintiffs allege various causes of action under ERISA, including claims for enforcement of alleged promises contained in plan documents and for enforcement of agent bulletins, breach of a unilateral contract, breach of fiduciary duty and promissory estoppel. In May 2001, plaintiffs filed a second amended complaint which, among other things, alleges that Equitable Life failed to comply with plan amendment procedures and deletes the promissory estoppel claim. In September 2001, Equitable Life filed a motion for summary judgment on all of plaintiffs' claims, and plaintiffs filed a motion for partial summary judgment on all claims except their claim for breach of fiduciary duty. In May 2002, the District Court issued an order granting plaintiffs' motion for partial summary judgment, granting Equitable Life's motion for summary judgment on plaintiffs' claim for breach of fiduciary duty and otherwise denying Equitable Life's motion for summary judgment. The court ruled that Equitable Life is liable to plaintiffs on their contract claims for subsidized benefits under ERISA. The court has deferred addressing the relief to which plaintiffs are entitled in light of the May 2002 order. In June 2000, plaintiffs appealed to the Court of Appeals for the Ninth Circuit contesting the District Court's award of F-40 legal fees to plaintiffs' counsel in connection with a previously settled count of the complaint unrelated to the health benefit claims. In that appeal, plaintiffs challenged the District Court's subject matter jurisdiction over the health benefit claims. A decision was rendered in October 2002 on that appeal. The Court of Appeals denied plaintiffs' challenge to the District Court's subject matter jurisdiction over the settled claim, affirmed the method that the District Court used to calculate the award of legal fees to plaintiffs' counsel and remanded for further consideration of the fee award. In May 2003, plaintiffs' motion for an award of additional legal fees from the settled claim settlement fund was denied by the District Court. Plaintiffs have appealed that order. A putative class action entitled STEFANIE HIRT, ET AL. V. THE EQUITABLE RETIREMENT PLAN FOR EMPLOYEES, MANAGERS AND AGENTS, ET AL. was filed in the District Court for the Southern District of New York in August 2001 against The Equitable Retirement Plan for Employees, Managers and Agents (the "Retirement Plan") and The Officers Committee on Benefit Plans of Equitable Life, as Plan Administrator. The action was brought by five participants in the Retirement Plan and purports to be on behalf of "all Plan participants, whether active or retired, their beneficiaries and Estates, whose accrued benefits or pension benefits are based on the Plan's Cash Balance Formula." The complaint challenges the change, effective January 1, 1989, in the pension benefit formula from a final average pay formula to a cash balance formula. Plaintiffs allege that the change to the cash balance formula violates ERISA by reducing the rate of accruals based on age, failing to comply with ERISA's notice requirements and improperly applying the formula to retroactively reduce accrued benefits. The relief sought includes a declaration that the cash balance plan violates ERISA, an order enjoining the enforcement of the cash balance formula, reformation and damages. Defendants answered the complaint in October 2001. In April 2002, plaintiffs filed a motion seeking to certify a class of "all Plan participants, whether active or retired, their beneficiaries and Estates, whose accrued benefits or pension benefits are based on the Plan's Cash Balance Formula." Also in April 2002, plaintiffs agreed to dismiss with prejudice their claim that the change to the cash balance formula violates ERISA by improperly applying the formula to retroactively reduce accrued benefits. That claim has been dismissed. In March 2003, plaintiffs filed an amended complaint elaborating on the remaining claims in the original complaint and adding additional class and individual claims alleging that the adoption and announcement of the cash balance formula and the subsequent announcement of changes in the application of the cash balance formula failed to comply with ERISA. The parties agreed that the new individual claims of the five named plaintiffs regarding the delivery of announcements to them would be excluded from the class certification. In April 2003, defendants filed an answer to the amended complaint. By order dated May 2003, the District Court, as requested by the parties, certified the case as a class action, including a sub-class of all current and former Plan participants, whether active, inactive or retired, their beneficiaries or estates, who were subject to a 1991 change in application of the cash balance formula. In July 2003, defendants filed a motion for summary judgment on the grounds that plaintiffs' claims are barred by applicable statutes of limitations. In October 2003, the District Court denied that motion. In January 2003, a putative class action entitled BERGER ET AL. V. AXA NETWORK, LLC AND THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES was commenced in the United States District Court for the Northern District of Illinois by two former agents on behalf of themselves and other similarly situated present, former and retired agents who, according to the complaint, "(a) were discharged by Equitable Life from `statutory employee status' after January 1, 1999, because of Equitable Life's adoption of a new policy stating that in any given year, those who failed to meet specified sales goals during the preceding year would not be treated as `statutory employees,' or (b) remain subject to discharge from `statutory employee' status based on the policy applied by Equitable Life." The complaint alleges that the company improperly "terminated" the agents' full-time life insurance salesman statutory employee status in or after 1999 by requiring attainment of minimum production credit levels for 1998, thereby making the agents ineligible for benefits and "requiring" them to pay Self-Employment Contribution Act taxes. The former agents, who assert claims for violations of ERISA and 26 U.S.C. 3121, and breach of contract, seek declaratory and injunctive relief, plus restoration of benefits and an adjustment of their benefit plan contributions and payroll tax withholdings. In March 2003, Equitable Life filed a motion to dismiss the complaint. In July 2003, the United States District Court for the Northern District of Illinois granted in part and denied in part Equitable Life's motion to dismiss the complaint, dismissing plaintiffs' claims for violation of 26 U.S.C. 3121 and breach of contract. Equitable Life has answered plaintiffs' remaining claim for violation of ERISA. In July 2003, plaintiffs filed a motion for class certification. In November 2003, Equitable Life filed its opposition to the motion for class certification; that motion is currently pending and the case is currently in discovery. In May 2003, a putative class action complaint entitled ECKERT V. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES was filed in the United States District Court for the Eastern District of New York, as a case related to the MALHOTRA action described above. The complaint asserts a single claim for relief under Section 47(b) of the Investment Company Act of 1940, as amended based on Equitable Life's alleged failure to register as an investment company. According to the complaint, Equitable Life was required to register as an investment company because it was allegedly issuing securities in the form of variable insurance products and F-41 allegedly investing its assets primarily in other securities. The plaintiff purports to act on behalf of all persons who purchased or made an investment in variable insurance products from Equitable Life on or after May 7, 1998. The complaint seeks declaratory judgment permitting putative class members to elect to void their variable insurance contracts; restitution of all fees and penalties paid by the putative class members on the variable insurance products, disgorgement of all revenues received by Equitable Life on those products, and an injunction against the payment of any dividends by Equitable Life to the Holding Company. In June 2003, Equitable Life filed a motion to dismiss the complaint and that motion is currently pending. Between September and October 2003, ten substantially similar putative class action lawsuits were filed against AXA Financial (and in some cases AIMA Acquisition Co., a wholly owned subsidiary of AXA Financial ("AIMA")), The MONY Group Inc. ("MONY") and MONY's directors in the Court of Chancery of the State of Delaware in and for New Castle County, entitled BEAKOVITZ V. AXA FINANCIAL, INC., ET AL.; BELODOFF V. THE MONY GROUP INC., ET AL.; BRIAN V. THE MONY GROUP INC., ET AL.; BRICKLAYERS LOCAL 8 AND PLASTERERS LOCAL 233 PENSION FUND V. THE MONY GROUP, INC., ET AL.; CANTOR V. THE MONY GROUP INC., ET AL.; E.M. CAPITAL, INC. V. THE MONY GROUP INC., ET AL.; GARRETT V. THE MONY GROUP INC., ET AL.; LEBEDDA V. THE MONY GROUP INC., ET AL.; MARTIN V. ROTH, ET AL.; AND MUSKAL V. THE MONY GROUP INC., ET AL. (collectively, the MONY Stockholder Litigation). The complaints in these actions, all of which purport to be brought on behalf of a class consisting of all MONY stockholders, excluding the defendants and their affiliates, challenge the proposed merger of MONY into AIMA and allege, among other things, that the $31.00 cash price per share to be paid to MONY stockholders in connection with the proposed merger is inadequate and that MONY's directors breached their fiduciary duties in negotiating and approving the merger agreement. The complaints also allege that AXA Financial, and in some cases AIMA, aided and abetted the alleged breaches of fiduciary duty by MONY's directors. The complaints seek various forms of relief, including damages and injunctive relief that would, if granted, prevent completion of the merger. In September 2003, a joint motion was filed on behalf of plaintiffs in six of the Delaware actions seeking to consolidate all actions. In November 2003, the Court of Chancery signed an order consolidating the actions and plaintiffs served a consolidated complaint. Pursuant to stipulation, in December 2003 defendants have contested the complaint. In January 2004, the Court of Chancery granted plaintiffs leave to amend their complaint. Plaintiffs have stated that they intend to file a motion for a preliminary injunction seeking to prevent completion of the merger. Defendants will oppose a motion for a preliminary injunction. The Court of Chancery has scheduled the hearing on plaintiffs' planned motion for February 17, 2004 and the parties are engaged in discovery. In addition, AXA Financial, MONY and MONY's directors have been named in two putative class action lawsuits filed in New York State Supreme Court in Manhattan, entitled LAUFER V. THE MONY GROUP, ET AL. and NORTH BORDER INVESTMENTS V. BARRETT, ET AL.. The complaints in these actions contain allegations substantially similar to those in the Delaware cases, and likewise purport to assert claims for breach of fiduciary duty against MONY's directors and for aiding and abetting a breach of fiduciary duty against AXA Financial. The complaints in these actions also purport to be brought on behalf of a class consisting of all MONY stockholders, excluding the defendants and their affiliates, and seek various forms of relief, including damages and injunctive relief that would, if granted, prevent the completion of the merger. In December 2003, defendants contested the claims in the LAUFER and NORTH BORDER complaints. The parties in each of these actions are engaged in discovery. Although the outcome of litigation generally cannot be predicted with certainty, the Company's management believes that, subject to the foregoing, (i) the settlement of the MCEACHERN litigation and the Mississippi Actions, including the agents' cross-claims, will not have a material adverse effect on the consolidated financial position or results of operations of the Company and (ii) the ultimate resolution of the other litigations described above should not have a material adverse effect on the consolidated financial position of the Company. The Company's management cannot make an estimate of loss, if any, or predict whether or not any of such other litigations described above will have a material adverse effect on the Company's consolidated results of operations in any particular period. Alliance Litigations -------------------- In April 2001, an amended class action complaint entitled MILLER, ET AL. V. MITCHELL HUTCHINS ASSET MANAGEMENT, INC., ET AL. was filed in the United States District Court for the Southern District of Illinois against Alliance, Alliance Fund Distributors, Inc. (now known as AllianceBernstein Investment Research and Management, Inc., "ABIRM"), a wholly owned subsidiary of Alliance, and other defendants alleging violations of the Investment Company Act of 1940, as amended ("ICA"), and breaches of common law F-42 fiduciary duty. The principal allegations of the amended complaint were that the advisory and distribution fees for certain mutual funds managed by Alliance were excessive and in violation of the ICA and the common law. Plaintiffs subsequently amended their compliant to include, as plaintiffs, shareholders of the AllianceBernstein Premier Growth Fund ("Premier Growth Fund"), the AllianceBernstein Quasar Fund (now known as AllianceBernstein Small Cap Growth Fund), the AllianceBernstein Growth and Income Fund, the AllianceBernstein Corporate Bond Fund, the AllianceBernstein Growth Fund, the AllianceBernstein Balanced Shares Fund, and the AllianceBernstein Americas Government Income Trust. In December 2003, the parties entered into a settlement agreement resolving the matter and the matter has been dismissed by the court. In December 2001, a complaint entitled BENAK V. ALLIANCE CAPITAL MANAGEMENT L.P. AND ALLIANCE PREMIER GROWTH FUND ("BENAK COMPLAINT") was filed in the United States District Court for the District of New Jersey against Alliance and Premier Growth Fund alleging that defendants violated Section 36(b) of the ICA. The principal allegations of the Benak Complaint are that Alliance breached its duty of loyalty to Premier Growth Fund because one of the directors of the general partner of Alliance served as a director of Enron Corp. ("Enron") when Premier Growth Fund purchased shares of Enron, and as a consequence thereof, the investment advisory fees paid to Alliance by Premier Growth Fund should be returned as a means of recovering for Premier Growth Fund the losses plaintiff alleges were caused by the alleged breach of the duty of loyalty. Subsequently, between December 2001 and July 2002, five complaints making substantially the same allegations and seeking substantially the same relief as the Benak Complaint were filed against Alliance and Premier Growth Fund. All of those actions were consolidated in the United States District Court for the District of New Jersey. In January 2003, a consolidated amended complaint entitled BENAK V. ALLIANCE CAPITAL MANAGEMENT L.P. ("BENAK CONSOLIDATED AMENDED COMPLAINT") was filed containing allegations similar to those in the individual complaints although it does not name the Premier Growth Fund as a defendant. In February 2003, the court granted with prejudice Alliance's motion to dismiss the Benak Consolidated Amended Complaint, holding that plaintiffs' allegations failed to state a claim under Section 36(b). Plaintiffs have thirty days from the entry of the dismissal order to appeal the court's decision dismissing the action. Alliance believes that plaintiffs' allegations in the Benak Consolidated Amended Complaint were without merit and intends to vigorously defend against any appeal that may be taken from the dismissal with prejudice of the action. In April 2002, a consolidated complaint entitled IN RE ENRON CORPORATION SECURITIES LITIGATION ("ENRON COMPLAINT") was filed in the United States District Court for the Southern District of Texas, Houston Division, against numerous defendants, including Alliance. The principal allegations of the Enron Complaint, as they pertain to Alliance, are that Alliance violated Sections 11 and 15 of the Securities Act of 1933, as amended ("Securities Act") with respect to a registration statement filed by Enron and effective with the SEC on July 18, 2001, which was used to sell $1.9 billion Enron Corp. Zero Coupon Convertible Notes due 2021. Plaintiffs allege that Frank Savage, who was at that time an employee of Alliance and who was and remains a director of the general partner of Alliance, signed the registration statement at issue. Plaintiffs allege that the registration statement was materially misleading. Plaintiffs further allege that Alliance was a controlling person of Frank Savage. Plaintiffs therefore assert that Alliance is itself liable for the allegedly misleading registration statement. Plaintiffs seek recission or a recissionary measure of damages. In June 2002, Alliance moved to dismiss the Enron Complaint as the allegations therein pertain to it. In March 2003, that motion was denied. In May 2003, a First Amended Consolidated Complaint ("Enron Amended Consolidated Complaint"), with substantially identical allegations as to Alliance, was filed. Alliance filed its answer in June 2003. In May 2003, plaintiffs filed an Amended Motion For Class Certification. In October 2003, following the completion of class discovery, Alliance filed its opposition to class certification. Alliance's motion is pending. The case is currently in discovery. Alliance believes that plaintiffs' allegations in the Enron Amended Consolidated Complaint as to it are without merit and intends to vigorously defend against these allegations. In May 2002, a complaint entitled THE FLORIDA STATE BOARD OF ADMINISTRATION V. ALLIANCE CAPITAL MANAGEMENT L.P. ("SBA COMPLAINT") was filed in the Circuit Court of the Second Judicial Circuit, in and for Leon County, Florida against Alliance. The SBA Complaint alleges breach of contract relating to the Investment Management Agreement between The Florida State Board of Administration ("SBA") and Alliance, breach of the covenant of good faith and fair dealing contained in the Investment Management Agreement, breach of fiduciary duty, negligence, gross negligence and violation of the Florida Securities and Investor Protection Act, in connection with purchases and sales of Enron common stock for the SBA investment account. The SBA seeks more than $300 million in compensatory damages and an unspecified F-43 amount of punitive damages. In June 2002, Alliance moved to dismiss the SBA Complaint; in September 2002, the court denied Alliance's motion to dismiss the SBA Complaint in its entirety. In November 2003, the SBA filed an amended complaint ("Amended SBA Complaint"). While the Amended SBA Complaint contains the Enron claims, the Amended SBA Complaint also alleges that Alliance breached its contract with the SBA by investing in or continuing to hold stocks for the SBA's investment portfolio that were not "1 rated," the highest rating that Alliance's research analysts could assign. The SBA also added claims for negligent supervision and common law fraud. In December 2003, Alliance moved to dismiss the fraud and breach of fiduciary duty claims in the Amended SBA Complaint. In January 2004, the court denied that motion. The case is currently in discovery. Alliance believes the SBA's allegations in the Amended SBA Complaint are without merit and intends to vigorously defend against these allegations. In September 2002, a complaint entitled LAWRENCE E. JAFFE PENSION PLAN, LAWRENCE E. JAFFE TRUSTEE U/A 1198 V. ALLIANCE CAPITAL MANAGEMENT L.P., ALFRED HARRISON AND ALLIANCE PREMIER GROWTH FUND, INC. ("JAFFE COMPLAINT") was filed in the United States District Court for the Southern District of New York against Alliance, Alfred Harrison and Premier Growth Fund alleging violation of the ICA. Plaintiff seeks damages equal to Premier Growth Fund's losses as a result of Premier Growth Fund's investment in shares of Enron and a recovery of all fees paid to Alliance beginning November 1, 2000. In March 2003, the court granted Alliance's motion to transfer the Jaffe Complaint to the United States District Court for the District of New Jersey to be consolidated with the Benak Consolidated Amended Complaint already pending there. In December 2003, plaintiff filed an amended complaint ("Amended Jaffe Complaint") in the United States District Court for the District of New Jersey. The Amended Jaffe Complaint alleges violations of Section 36(a) of the ICA, common law negligence, and negligent misrepresentation. Specifically, the Amended Jaffe Complaint alleges that (i) the defendants breached their fiduciary duties of loyalty, care and good faith to Premier Growth Fund by causing Premier Growth Fund to invest in the securities of Enron, (ii) the defendants were negligent for investing in securities of Enron, and (iii) through prospectuses and other documents, defendants misrepresented material facts related to Premier Growth Fund's investment objective and policies. In January 2004, defendants moved to dismiss the Amended JAFFE COMPLAINT. Alliance and Alfred Harrison believe that plaintiff's allegations in the Amended JAFFE COMPLAINT are without merit and intend to vigorously defend against these allegations. In December 2002, a putative class action complaint entitled PATRICK J. GOGGINS ET AL. V. ALLIANCE CAPITAL MANAGEMENT L.P. ET AL. ("GOGGINS COMPLAINT") was filed in the United States District Court for the Southern District of New York against Alliance, Premier Growth Fund and individual directors and certain officers of Premier Growth Fund. In August 2003, the court granted Alliance's motion to transfer the Goggins Complaint to the United States District Court for the District of New Jersey. In December 2003, plaintiffs filed an amended complaint ("Amended Goggins Compliant") in the United States District Court for the District of New Jersey. The Amended Goggins Complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act because Premier Growth Fund's registration statements and prospectuses contained untrue statements of material fact and omitted material facts. More specifically, the Amended Goggins Complaint alleges that the Premier Growth Fund's investment in Enron was inconsistent with the fund's stated strategic objectives and investment strategies. Plaintiffs seek rescissory relief or an unspecified amount of compensatory damages on behalf of a class of persons who purchased shares of Premier Growth Fund during the period October 31, 2000 through February 14, 2002. In January 2004, Alliance moved to dismiss the Amended Goggins Complaint. Alliance, Premier Growth Fund and the other defendants believe the plaintiffs' allegations in the Amended Goggins Complaint are without merit and intend to vigorously defend against these allegations. In August 2003, the Securities and Exchange Board of India ("SEBI") ordered that Samir C. Arora, a former research analyst/portfolio manager of Alliance, refrain from buying, selling or dealing in Indian securities. Until August 4, 2003, when Mr. Arora announced his resignation from Alliance, he served as head of Asian emerging markets equities and a fund manager of Alliance Capital Asset Management (India) Pvt. Ltd. ("ACAML"), a fund management company 75% owned by Alliance. The order states that Mr. Arora relied on unpublished price sensitive information in making certain investment decisions on behalf of certain clients of ACAML and Alliance, that there were failures to make required disclosures regarding the size of certain equity holdings, and that Mr. Arora tried to influence the sale of Alliance's stake in ACAML. Mr. Arora contested the findings in the order by filing objections and at a personal hearing held in August 2003. In September 2003, SEBI issued an order confirming its previous order against Mr. Arora. In October 2003, Mr. Arora filed an appeal with the Securities Appellate Tribunal ("SAT") seeking certain interim reliefs. Mr. F-44 Arora's appeal was heard by the SAT on December 15, 2003. The SAT passed an order on January 12, 2004 wherein it did not grant any interim reliefs to Mr. Arora since SEBI had stated that the investigations in the matter were in progress. However, the SAT has directed SEBI to complete the investigations by February 28, 2004 and to pass final orders in the matter by March 31, 2004. Alliance is reviewing this matter and, at the present time, management of Alliance does not believe its outcome will have a material impact on Alliance's results of operations or financial condition, and the Company's management does not believe its outcome will have a material impact on the Company's consolidated results of operations or financial position. In September 2003, SEBI issued to Alliance a show cause notice and finding of investigation (the "Notice"). The Notice requires Alliance to explain its failure to make disclosure filings as to the acquisition of shares of five (5) Indian equity securities held at various times by Alliance (through sub-accounts under foreign institutional investor licenses), ACAML and Alliance's local Indian mutual fund as required under the SEBI (Insider Trading) Regulations, 1992, and the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 1997 when the holdings of the said entities in the Relevant Scrips crossed five percent (5%) which could make Alliance liable to pay penalties prescribed under Section 15A of the SEBI Act, 1992, which requires that disclosure be made when the holdings of an investor (or group of investors acting in concert) in an Indian security exceeds either five percent (5%) of the outstanding shares or changes by more than two percent (2%). In October 2003 and November 2003, Alliance filed its reply and written submissions, respectively. Alliance also had a personal hearing before the SEBI on October 21, 2003 and the decision of SEBI in relation to the Notice is pending. At the present time, management of Alliance does not believe the outcome of this matter will have a material impact on Alliance's results of operations or financial condition and the Company's management does not believe its outcome will have a material impact on the Company's consolidated results of operations or financial position. In October 2003, a purported class action complaint entitled ERB ET AL. V. ALLIANCE CAPITAL MANAGEMENT L.P. ET AL. ("ERB COMPLAINT") was filed in the Circuit Court of St. Clair County, State of Illinois against Alliance. Plaintiff, purportedly a shareholder in the Premier Growth Fund, alleges that Alliance breached unidentified provisions of Premier Growth Fund's prospectus and subscription and confirmation agreements that allegedly required that every security bought for Premier Growth Fund's portfolio must be a "1-rated" stock, the highest rating that Alliance's analysts could assign. Plaintiff alleges that Alliance impermissibly purchased shares of stocks that were not 1-rated. Plaintiff seeks rescission of all purchases of any non-1-rated stocks Alliance made for Premier Growth Fund over the past ten years, as well as an unspecified amount of damages. In November 2003, Alliance removed the Erb Complaint to the United States District Court for the Southern District of Illinois on the basis that plaintiff's alleged breach of contract claims are preempted under the Securities Litigation Uniform Standards Act. In December 2003, plaintiff filed a motion for remand. In February 2004, the court granted that motion and remanded the action to state court. Alliance believes that plaintiff's allegations in the Erb Complaint are without merit and intends to vigorously defend against these allegations. In October 2003, a purported class action complaint entitled HINDO ET AL. V. ALLIANCEBERNSTEIN GROWTH & INCOME FUND ET AL. ("HINDO COMPLAINT") was filed against Alliance, Alliance Holding, ACMC, AXA Financial, the AllianceBernstein family of mutual funds ("AllianceBernstein Funds"), the registrants and issuers of those funds, certain officers of Alliance (the "Alliance defendants"), and certain other defendants not affiliated with Alliance, as well as unnamed Doe defendants. The Hindo Complaint was filed in the United States District Court for the Southern District of New York by alleged shareholders of two of the AllianceBernstein Funds. The Hindo Complaint alleges that certain of the Alliance defendants failed to disclose that they improperly allowed certain hedge funds and other unidentified parties to engage in "late trading" and "market timing" of AllianceBernstein Fund securities, violating Sections 11 and 15 of the Securities Act, Sections 10(b) and 20(a) of the Exchange Act, and Sections 206 and 215 of the Investment Advisers Act of 1940 (the "Advisers Act"). Plaintiffs seek an unspecified amount of compensatory damages and rescission of their contracts with Alliance, including recovery of all fees paid to Alliance pursuant to such contracts. Between October 3 and January 29, 2004, forty additional lawsuits making factual allegations generally similar to those in the Hindo Complaint were filed against Alliance and certain other defendants, and others may be filed. These forty additional lawsuits are as follows: a) Federal Court Class Actions: Twenty-five of the lawsuits were brought as class actions filed in Federal court (twenty-one in the United States District Court for the Southern District of New York, two in the United States District Court for the District of New Jersey, one in the United States District Court for the Northern District of California, and one in the United States District Court for the District of Connecticut). Certain of these additional lawsuits allege claims under the Securities Act, the Exchange Act, the Advisers Act, the ICA and common law. All of F-45 these lawsuits are brought on behalf of shareholders of AllianceBernstein Funds, except three. Of these three, one was brought on behalf of a unitholder of Alliance Holding and two were brought on behalf of participants in the Profit Sharing Plan for Employees of Alliance Capital ("Plan"). The latter two lawsuits allege claims under Sections 404, 405 and 406 of ERISA, on the grounds that defendants violated fiduciary obligations to the Plan by failing to disclose the alleged market timing and late trading activities in AllianceBernstein Funds, and by permitting the Plan to invest in funds subject to those activities. One of these ERISA actions has been voluntarily dismissed. AXA Financial is named as a defendant, primarily as a control person of Alliance, in all but two of these cases (two of the twenty-five cases pending before the United States District Court for the Southern District of New York). b) Federal Court Derivative Actions: Eight of the lawsuits were brought as derivative actions in Federal court (one in the United States District Court for the Southern District of New York, five in the United States District Court for the Eastern District of New York, and two in the United States District Court for the District of New Jersey). These lawsuits allege claims under the Exchange Act, Section 36(b) of the ICA and/or common law. Six of the lawsuits were brought derivatively on behalf of certain AllianceBernstein Funds, with the broadest lawsuits being brought derivatively on behalf of all AllianceBernstein Funds, generally alleging that defendants violated fiduciary obligations to the AllianceBernstein Funds and/or fund shareholders by permitting select investors to engage in market timing activities and failing to disclose those activities. Two of the lawsuits were brought derivatively on behalf of Alliance Holding, generally alleging that defendants breached fiduciary obligations to Alliance Holding or its unitholders by failing to prevent the alleged undisclosed market timing and late trading activities from occurring. AXA Financial is named as a defendant, primarily as a control person of Alliance, in all but two of these cases (the one case pending before the United States District Court for the Southern District of New York and one of the two cases pending before the United States District Court for the District of New Jersey). c) State Court Representative Actions: Two lawsuits were brought as class actions in the Supreme Court of the State of New York, County of New York, by alleged shareholders of an AllianceBernstein Fund on behalf of shareholders of the AllianceBernstein Funds. The lawsuits allege that defendants allowed certain parties to engage in late trading and market timing transactions in the AllianceBernstein Funds and that such arrangements breached defendants' fiduciary duty to investors, and purport to state a claim for breach of fiduciary duty. One of the complaints also purports to state claims for breach of contract and tortious interference with contract. AXA Financial is named as a defendant, primarily as a control person of Alliance, in one of these two lawsuits. d) A lawsuit was filed in Superior Court for the State of California, County of Los Angeles, alleging that defendants violated fiduciary responsibilities and disclosure obligations by permitting certain favored customers to engage in market timing and late trading activities in the AllianceBernstein Funds, and purports to state claims of unfair business practices under Sections 17200 and 17303 of the California Business & Professional Code. Pursuant to these statutes, the action was brought on behalf of members of the general public of the State of California. AXA Financial is named as a defendant, primarily as a control person of Alliance. e) State Court Derivative Actions: Three lawsuits were brought as derivative actions in state court (one in the Supreme Court of the State of New York, County of New York, and two in the Superior Court of the State of Massachusetts, County of Suffolk). The New York action was brought derivatively on behalf of Alliance Holding and alleges that, in connection with alleged market timing and late trading transactions, defendants breached their fiduciary duties to Alliance Holding and its unitholders by failing to maintain adequate controls and employing improper practices in managing unspecified AllianceBernstein Funds. AXA Financial is named as a defendant, primarily as a control person of Alliance in the New York lawsuit. The Massachusetts actions were brought derivatively on behalf of certain AllianceBernstein Funds and allege state common law claims for breach of fiduciary duty, abuse of control, gross mismanagement, waste and unjust enrichment. Both Massachusetts actions attempt to name AXA Financial as a defendant. f) State Court Individual Action: A lawsuit was filed in the District Court of Johnson County, Kansas, Civil Court Department, alleging that defendants were negligent and breached their fiduciary duties by knowingly entering into a number of illegal and improper arrangements with institutional investors for the purpose of engaging in late trading and market timing in AllianceBernstein Funds to the detriment of F-46 plaintiff and failing to disclose such arrangements in the AllianceBernstein Fund prospectuses, and purports to state claims under Sections 624 and 626 of the Kansas Consumer Protection Act, and Section 1268 of the Kansas Securities Act. The lawsuit also purports to state claims of negligent misrepresentation, professional negligence and breach of fiduciary duty under common law. AXA Financial is not named as a defendant in this lawsuit. All of these lawsuits seek an unspecified amount of damages. All of the Federal actions discussed above (i.e., the Hindo Complaint, Federal Court Class Actions and Federal Court Derivative Actions) are the subject of a petition or tag-along notices filed by Alliance before the Judicial Panel on Multidistrict Litigation ("MDL Panel") seeking to have all of the actions centralized in a single forum for pre-trial proceedings. On January 29, 2004, the MDL Panel held a hearing on these petitions. On February 20, 2004, the MDL Panel transferred all of the actions to the United States District Court for the District of Maryland. Pursuant to agreements among the parties, the Alliance defendants' and AXA Financial's responses to the Federal actions that have been served on Alliance and AXA Financial are stayed pending a decision on consolidation by the MDL panel and the filing of an amended or operative complaint. The various plaintiffs seeking appointment to serve as lead plaintiffs have stipulated to stay the lead plaintiff decision until after the MDL Panel makes a decision on the MDL petitions pending before it. In addition, discovery has not commenced in any of these cases. In most of them, discovery is stayed under the Private Securities Litigation Reform Act of 1995 or pursuant to an agreement among the parties. Defendants have removed each of the State Court Representative Actions discussed above, and thereafter submitted the actions to the MDL Panel in a notice of tag-along actions. Plaintiff in each of these actions has moved to remand the action back to state court or has indicated an intention to do so. Where defendants have responded to the complaints, defendants have moved to stay proceedings pending transfer by the MDL Panel. Defendants have not yet responded to the complaints filed in the State Court Derivative Actions. Alliance recorded charges to income totaling $330.0 million in 2003 in connection with establishing the $250.0 million restitution fund (which is discussed in detail under "Business - Regulation" in this Form 10-K) and certain other matters discussed above under "Alliance Litigations". Management of Alliance, however, cannot determine at this time the eventual outcome, timing or impact of these matters. Accordingly, it is possible that additional charges in the future may be required. With respect to the matters discussed above under "Alliance Litigations" (other than those referred to in the preceding paragraph and those related to SEBI), management of Alliance is unable to estimate the impact, if any, that the outcome of these matters may have on Alliance' results of operations or financial condition and the Company's management is unable to estimate the impact, if any, that the outcome of these matters may have on the Company's results of operations or financial position. In addition to the matters previously reported and those described above, the Holding Company and its subsidiaries are involved in various legal actions and proceedings in connection with their businesses. Some of the actions and proceedings have been brought on behalf of various alleged classes of claimants and certain of these claimants seek damages of unspecified amounts. While the ultimate outcome of such matters cannot be predicted with certainty, in the opinion of management no such matter is likely to have a material adverse effect on the Company's consolidated financial position or results of operations. However, it should be noted that the frequency of large damage awards, including large punitive damage awards that bear little or no relation to actual economic damages incurred by plaintiffs in some jurisdictions, continues to create the potential for an unpredictable judgment in any given matter. 17) LEASES The Company has entered into operating leases for office space and certain other assets, principally information technology equipment and office furniture and equipment. Future minimum payments under noncancelable operating leases for 2004 and the four successive years are $125.8 million, $123.6 million, $111.5 million, $97.8 million, $90.1 million and $764.0 million thereafter. Minimum future sublease rental income on these noncancelable operating leases for 2004 and the four successive years is $13.0 million, $9.2 million, $2.9 million, $2.7 million, $2.3 million and $16.1 million thereafter. F-47 At December 31, 2003, the minimum future rental income on noncancelable operating leases for wholly owned investments in real estate for 2004 and the four successive years is $80.7 million, $79.4 million, $78.4 million, $69.8 million, $62.2 million and $497.7 million thereafter. The Company has entered into capital leases for certain information technology equipment. Future minimum payments under noncancelable capital leases for 2004 and 2005 are $2.0 million and $1.9 million, respectively. 18) INSURANCE GROUP STATUTORY FINANCIAL INFORMATION Equitable Life is restricted as to the amounts it may pay as dividends to the Holding Company. Under the New York Insurance Law, a domestic life insurer may, without prior approval of the Superintendent; pay a dividend to its shareholders not exceeding an amount calculated based on a statutory formula. This formula would permit Equitable Life to pay shareholder dividends not greater than $413.2 million during 2004. Payment of dividends exceeding this amount requires the insurer to file notice of its intent to declare such dividends with the Superintendent who then has 30 days to disapprove the distribution. For 2003, 2002 and 2001, the Insurance Group statutory net income totaled $549.4 million, $451.6 million and $547.7 million, respectively. Statutory surplus, capital stock and Asset Valuation Reserve ("AVR") totaled $4,476.6 million and $4,281.0 million at December 31, 2003 and 2002, respectively. In 2003, 2002 and 2001, respectively, $400.0 million, $500.0 million and $1.7 billion in shareholder dividends were paid by Equitable Life. At December 31, 2003, the Insurance Group, in accordance with various government and state regulations, had $27.2 million of securities deposited with such government or state agencies. In 1998, the NAIC approved a codification of statutory accounting practices ("Codification"), which provides regulators and insurers with uniform statutory guidance, addresses areas where statutory accounting previously was silent and changes certain existing statutory positions. Equitable Life and Equitable of Colorado became subject to Codification rules for all state filings upon adoption of Codification by the respective states. On December 27, 2000, an emergency rule was issued by the New York Insurance Department (NYID), which adopted Codification in New York effective on January 1, 2001 except where the guidance conflicted with New York Law. Differences in the New York regulation adopted in 2000 from Codification were in accounting for deferred taxes and goodwill, which are required to be disclosed in the notes to the Annual Statement, as well as the Annual Audited Report. On September 24, 2002, the bill authorizing the admissibility of deferred taxes by New York insurers was signed into law and was effective as of January 1, 2002. The impact of adopting the accounting for deferred taxes at January 1, 2002 was a $363.6 million decrease to surplus. The implementation of Codification in 2001 resulted in a $1,630.9 million increase to surplus and capital stock, principally due to the $1,660.8 million valuation adjustment related to Alliance. The application of the Codification rules as adopted by the State of Colorado had no significant effect on Equitable Life or Equitable of Colorado. At December 31, 2003 and for the year then ended, there were no differences in net income and capital and surplus resulting from practices prescribed and permitted by the State of New York and those prescribed by NAIC Accounting Practices and Procedures effective at December 31, 2003. Accounting practices used to prepare statutory financial statements for regulatory filings of stock life insurance companies differ in certain instances from GAAP. The differences between statutory surplus and capital stock determined in accordance with Statutory Accounting Principles ("SAP") and total shareholders' equity under GAAP are primarily: (a) the inclusion in SAP of an AVR intended to stabilize surplus from fluctuations in the value of the investment portfolio; (b) future policy benefits and policyholders' account balances under SAP differ from GAAP due to differences between actuarial assumptions and reserving methodologies; (c) certain policy acquisition costs are expensed under SAP but deferred under GAAP and amortized over future periods to achieve a matching of revenues and expenses; (d) under SAP, Federal income taxes are provided on the basis of amounts currently payable with provisions made for deferred F-48 amounts that reverse within one year while under GAAP, deferred taxes are recorded for temporary differences between the financial statements and tax basis of assets and liabilities where the probability of realization is reasonably assured, (e) the valuation of assets under SAP and GAAP differ due to different investment valuation and depreciation methodologies, as well as the deferral of interest-related realized capital gains and losses on fixed income investments; (f) the valuation of the investment in Alliance and Alliance Holding under SAP reflects a portion of the market value appreciation rather than the equity in the underlying net assets as required under GAAP; (g) the provision for future losses of the discontinued Wind-Up Annuities business is only required under GAAP; (h) reporting the surplus notes as a component of surplus in SAP but as a liability in GAAP; (i) computer software development costs are capitalized under GAAP but expensed under SAP; and (j) certain assets, primarily pre-paid assets, are not admissible under SAP but are admissible under GAAP. The following reconciles the Insurance Group's statutory change in surplus and capital stock and statutory surplus and capital stock determined in accordance with accounting practices prescribed by the NYID with net earnings and equity on a GAAP basis.
2003 2002 2001 ----------------- ---------------- ----------------- (In Millions) Net change in statutory surplus and capital stock.................................... $ 43.4 $ (1,354.7) $ 104.1 Change in AVR...................................... 152.2 (464.7) (230.2) ----------------- ---------------- ----------------- Net change in statutory surplus, capital stock and AVR.......................................... 195.6 (1,819.4) (126.1) Adjustments: Future policy benefits and policyholders' account balances............................... (245.7) 255.2 270.8 DAC.............................................. 556.1 458.1 458.5 Deferred Federal income taxes.................... 30.9 (634.6) (354.8) Valuation of investments......................... 39.6 (74.8) 67.9 Valuation of investment subsidiary............... (321.6) 1,399.4 (1,507.9) Change in fair value of guaranteed minimum income benefit reinsurance contracts.................. (91.0) 120.0 - Shareholder dividends paid...................... 400.0 500.0 1,700.0 Changes in non-admitted assets................... (35.1) 384.2 138.3 Other, net....................................... (2.1) (23.7) 5.4 GAAP adjustments for Other Discontinued Operations..................................... (2.3) 23.0 (5.1) ----------------- ---------------- ----------------- Net Earnings of the Insurance Group................ $ 524.4 $ 587.4 $ 647.0 ================= ================ ================= F-49 December 31, --------------------------------------------------------- 2003 2002 2001 ----------------- ---------------- ------------------ (In Millions) Statutory surplus and capital stock................ $ 4,134.7 $ 4,091.3 $ 5,446.0 AVR................................................ 341.9 189.7 654.4 ----------------- ---------------- ------------------ Statutory surplus, capital stock and AVR........... 4,476.6 4,281.0 6,100.4 Adjustments: Future policy benefits and policyholders' account balances............................... (1,483.3) (1,237.6) (1,492.8) DAC.............................................. 6,290.4 5,801.0 5,513.7 Deferred Federal income taxes.................... (1,729.8) (1,835.8) (1,252.2) Valuation of investments......................... 2,196.3 1,629.6 635.9 Valuation of investment subsidiary............... (1,513.0) (1,191.4) (2,590.8) Fair value of guaranteed minimum income benefit reinsurance contracts.......................... 29.0 120.0 - Non-admitted assets.............................. 1,130.2 1,162.3 778.1 Issuance of surplus notes........................ (599.6) (599.6) (539.4) Other, net....................................... 77.7 157.2 536.6 GAAP adjustments for Other Discontinued Operations..................................... (103.9) (108.7) (123.8) ----------------- ---------------- ------------------ Equity of the Insurance Group...................... $ 8,770.6 $ 8,178.0 $ 7,565.7 ================= ================ ==================
19) ALLIANCE CHARGE FOR MUTUAL FUND MATTERS AND LEGAL PROCEEDINGS On December 18, 2003, Alliance reached terms with the SEC for the resolution of regulatory claims against Alliance with respect to market timing. The SEC accepted an Offer of Settlement submitted by Alliance. Alliance concurrently reached an agreement in principle with the New York Attorney General ("NYAG"), which is subject to final definitive documentation. The key provisions of the settlement with the SEC and NYAG are that Alliance must establish a $250 million fund to compensate fund shareholders for the adverse effect of market timing. Of the $250 million fund, $150 million is characterized as disgorgement and $100 million is characterized as a penalty. In addition, the agreement with the NYAG requires a weighted average reduction in fees of 20% on Alliance's U.S. long-term open-end retail funds for a minimum of five years, which commenced January 1, 2004. This reduction in fees is expected to reduce Alliance Capital revenues by approximately $70 million in 2004. Alliance recorded pre-tax charges to income of $190 million and a $140 million for the quarters ended September 30, 2003 and December 31, 2003, respectively, or $330 million for the year 2003, to cover restitution, litigation and other costs associated with these investigations and other litigation. The effect of this settlement on the Company's 2003 net earnings after reflecting its impact on incentive compensation, income taxes and minority interest was $90.1 million. 20) BUSINESS SEGMENT INFORMATION The Company's operations consist of Insurance and Investment Services segments. The Company's management evaluates the performance of each of these segments independently and allocates resources based on current and future requirements of each segment. The Insurance segment offers a variety of traditional, variable and interest-sensitive life insurance products, disability income, annuity products, mutual funds, and other investment products to individuals and small groups. It also administers traditional participating group annuity contracts with conversion features, generally for corporate qualified pension plans, and association plans which provide full service retirement programs for individuals affiliated with professional and trade associations. This segment includes Separate Accounts for individual insurance and annuity products. F-50 The Investment Services segment principally includes Alliance. Alliance provides diversified investment management and related services globally to a broad range of clients including: (a) institutional clients, including pension funds, endowment funds and domestic and foreign financial institutions and governments, (b) private clients, including high net worth individuals, trusts and estates, charitable foundations and other entities, by means of separately managed accounts, hedge funds and other investment vehicles, (c) individual investors, principally through a broad line of mutual funds, and (d) institutional investors by means of in-depth research, portfolio strategy, trading and other services. This segment also includes institutional Separate Accounts that provide various investment options for large group pension clients, primarily defined benefit and contribution plans, through pooled or single group accounts. Intersegment investment advisory and other fees of approximately $103.0 million, $102.2 million and $116.6 million for 2003, 2002 and 2001, respectively, are included in total revenues of the Investment Services segment. The following tables reconcile segment revenues and earnings from continuing operations before Federal income taxes to total revenues and earnings as reported on the consolidated statements of earnings and segment assets to total assets on the consolidated balance sheets, respectively.
2003 2002 2001 ----------------- ---------------- ------------------ (In Millions) Segment revenues: Insurance.......................................... $ 4,734.4 $ 4,673.4 $ 4,763.3 Investment Services................................ 2,738.5 2,744.9 2,994.4 Consolidation/elimination.......................... (70.4) (71.3) (90.0) ----------------- ---------------- ------------------ Total Revenues..................................... $ 7,402.5 $ 7,347.0 $ 7,667.7 ================= ================ ================== Segment earnings (loss) from continuing operations before Federal income taxes and minority interest: Insurance.......................................... $ 631.6 $ 437.9 $ 707.5 Investment Services................................ 318.6 590.7 585.4 ----------------- ---------------- ------------------ Total Earnings from Continuing Operations before Federal Income Taxes and Minority Interest........................... $ 950.2 $ 1,028.6 $ 1,292.9 ================= ================ ================== December 31, 2003 2002 2001 ----------------- ---------------- ------------------ (In Millions) Assets: Insurance.......................................... $ 98,822.1 $ 80,638.7 $ 84,572.2 Investment Services................................ 15,410.1 14,160.3 15,808.8 Consolidation/elimination.......................... 33.1 27.3 (94.4) ----------------- ---------------- ------------------ Total Assets....................................... $ 114,265.3 $ 94,826.3 $ 100,286.6 ================= ================ ==================
F-51 21) QUARTERLY RESULTS OF OPERATIONS (UNAUDITED) The quarterly results of operations for 2003 and 2002 are summarized below:
Three Months Ended ------------------------------------------------------------------------------ March 31 June 30 September 30 December 31 ----------------- ----------------- ------------------ ------------------ (In Millions) 2003 Total Revenues................ $ 1,674.7 $ 1,826.8 $ 1,857.8 $ 2,043.2 ================= ================= ================== ================== Earnings from Continuing Operations....... $ 35.7 $ 209.7 $ 134.8 $ 140.8 ================= ================= ================== ================== Net Earnings.................. $ 35.7 $ 209.8 $ 135.5 $ 143.4 ================= ================= ================== ================== 2002 Total Revenues................ $ 1,883.9 $ 2,072.1 $ 1,860.9 $ 1,530.1 ================= ================= ================== ================== Earnings from Continuing Operations.................. $ 162.6 $ 206.5 $ 267.1 $ (21.3) ================= ================= ================== ================== Net Earnings.................. $ 130.4 $ 205.1 $ 286.5 $ (34.6) ================= ================= ================== ==================
22) ACCOUNTING FOR STOCK-BASED COMPENSATION The Holding Company sponsors a stock incentive plan for employees of Equitable Life. Alliance sponsors its own stock option plans for certain employees. The Company has elected to continue to account for stock-based compensation using the intrinsic value method prescribed in APB No. 25. Stock-based employee compensation expense is not reflected in the statement of earnings as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of the grant. The following table illustrates the effect on net income had compensation expense as related to options awarded under the Company's Stock Incentive Plans been determined based on SFAS No. 123's fair value based method, including the cost of the amendments and modifications made in connection with AXA's acquisition of the minority interest in the Holding Company:
2003 2002 2001 ----------------- ---------------- ------------------- (In Millions) Net income, as reported............................ $ 524.4 $ 587.4 $ 647.0 Less: total stock-based employee compensation expense determined under fair value method for all awards, net of Federal income tax benefit... (35.8) (36.0) (22.2) ----------------- ---------------- ------------------- Pro Forma Net Earnings............................. $ 488.6 $ 551.4 $ 624.8 ================= ================ ===================
In conjunction with approval of the agreement for AXA's acquisition of the minority interest in the Holding Company's Common Stock, generally all outstanding options awarded under the 1997 and 1991 Stock Incentive Plans were amended to become immediately and fully exercisable pursuant to their terms upon expiration of the initial tender offer. In addition, the agreement provided that at the effective time of the merger, the terms of all outstanding options granted under those Plans would be further amended and converted into options of equivalent intrinsic value to acquire a number of AXA ordinary shares in the form of ADRs. Also pursuant to the agreement, holders of non-qualified options were provided with an alternative to elect cancellation of those options at the effective time of the merger in exchange for a cash payment from the Holding Company. For the year ended December 31, 2000, the Company recognized compensation expense of $493.9 million, representing the cost of these Plan amendments and modifications offset by an addition to capital in excess of par value. F-52 Beginning in 2001, under the 1997 Stock Incentive Plan, the Holding Company can grant AXA ADRs and options to purchase AXA ADRs. The options, which include Incentive Stock Options and Nonstatutory Stock Options, are issued at the fair market value of the AXA ADRs on the date of grant. Generally, one-third of stock options granted vest and become exercisable on each of the first three anniversaries of the date such options were granted. Options are currently exercisable up to 10 years from the date of grant. Following completion of the merger of AXA Merger Corp. with and into the Holding Company, certain employees exchanged AXA ADR options for tandem Stock Appreciation Rights and at-the-money AXA ADR options of equivalent intrinsic value. The maximum obligation for the Stock Appreciation Rights is $73.3 million, based upon the underlying price of AXA ADRs at January 2, 2001, the closing date of the aforementioned merger. The Company recorded an increase (reduction) in the Stock Appreciation Rights liability of $12.0 million and $(10.2) million for 2003 and 2002, respectively, reflecting the variable accounting for the Stock Appreciation Rights, based on the change in the market value of AXA ADRs in 2003 and 2002. The Black-Scholes option pricing model was used in determining the fair values of option awards used in the pro-forma disclosures above. The option pricing assumptions for 2003, 2002 and 2001 follow:
Holding Company Alliance ----------------------------------------- ------------------------------- 2003 2002 2001 2003 2002 2001 ------------- ------------- ------------ -------------------- ---------- Dividend yield.... 2.48% 2.54% 1.52% 6.1% 5.80% 5.80% Expected volatility...... 46% 46% 29% 32% 32% 33% Risk-free interest rate............ 2.72% 4.04% 4.98% 3.0% 4.2% 4.5% Expected life in years........ 5 5 5 7.0 7.0 7.2 Weighted average fair value per option at grant-date...... $4.39 $6.30 $9.42 $5.96 $5.89 $9.23
A summary of the activity in the option shares of the Holding Company and Alliance's option plans follows, including information about options outstanding and exercisable at December 31, 2003. Outstanding options at January 2, 2001 to acquire AXA ADRs reflect the conversion of 11.5 million share options of the Holding Company that remained outstanding following the above-described cash settlement made pursuant to the agreement for AXA's acquisition of the minority interest in the Holding Company's Common Stock. All information presented below as related to options to acquire AXA ADRs gives appropriate effect to AXA's May 2001 four-for-one stock split and the related changes in ADR parity for each Holding Company share option: F-53
Holding Company Alliance ------------------------------------ --------------------------------- Weighted Weighted Average Average AXA ADRs Exercise Units Exercise (In Millions) Price (In Millions) Price ------------------- ---------------- --------------- ----------------- : Balance at January 2, 2001 18.3 $21.65 15.4 $28.73 Granted........................ 17.0 $31.55 2.5 $50.34 Exercised...................... (2.2) $11.57 (1.7) $13.45 Forfeited...................... (3.1) $32.02 (.3) $34.51 ------------------- --------------- Balance at December 31, 2001..... 30.0 $31.55 15.9 $33.58 Granted........................ 6.7 $17.24 2.4 $33.32 Exercised...................... (.2) $10.70 (1.4) $14.83 Forfeited...................... (1.2) $27.12 (.5) $42.99 ------------------- --------------- Balance at December 31, 2002 35.3 $25.14 16.4 $34.92 Granted......................... 9.1 $12.60 .1 $35.01 Exercised....................... (1.7) $7.85 (1.2) $17.26 Forfeited....................... (1.8) $25.16 (1.5) $43.26 ------------------- --------------- Balance at December 31, 2003 40.9 $23.04 13.8 $35.55 =================== ===============
Information about options outstanding and exercisable at December 31, 2003 follows:
Options Outstanding Options Exercisable --------------------------------------------------- ------------------------------------- Weighted Average Weighted Weighted Range of Number Remaining Average Number Average Exercise Outstanding Contractual Exercise Exercisable Exercise Prices (In Millions) Life (Years) Price (In Millions) Price --------------------------------------- ---------------- --------------- ------------------ ---------------- AXA ADRs ---------------------- $ 6.325 - $ 9.01 .4 1.86 $ 7.64 .4 $ 7.63 $10.195 - $15.20 11.8 8.35 $12.73 2.1 $13.23 $15.995 - $22.84 9.9 6.82 $18.50 6.3 $18.66 $26.095 - $33.025 13.8 4.63 $30.85 9.6 $30.48 $36.031 5.0 5.48 $36.03 5.0 $36.03 ----------------- ------------------ $ 6.325 - $36.031 40.9 6.31 $23.04 23.4 $26.52 ================= ==================
Alliance ---------------------- $ 8.81 - $18.47 2.6 2.48 $13.19 2.6 $13.19 $24.84 - $30.25 3.2 5.35 $27.90 2.9 $27.69 $30.94 - $48.50 4.3 7.76 $40.63 1.8 $44.85 $50.15 - $50.56 2.0 7.92 $50.25 .8 $50.25 $51.10 - $58.50 1.7 6.95 $53.77 1.0 $53.76 ----------------- ------------------ $ 8.81 - $58.50 13.8 6.13 $35.55 9.1 $31.89 ================= ==================
The Company's ownership interest in Alliance will continue to be reduced upon the exercise of unit options granted to certain Alliance employees. Options are exercisable over periods of up to ten years. In 1997, Alliance Holding established a long-term incentive compensation plan under which grants are made to key employees for terms established by Alliance Holding at the time of grant. These awards include options, restricted Alliance Holding units and phantom restricted Alliance Holding units, performance awards, other Alliance Holding unit based awards, or any combination thereof. At December 31, 2003, approximately 13.0 million Alliance Holding units of a maximum 41.0 million units were subject to options granted and 103,262 Alliance Holding units were subject to awards made under this plan. F-54 23) RELATED PARTY TRANSACTIONS Beginning January 1, 2000, the Company reimburses the Holding Company for expenses relating to the Excess Retirement Plan, Supplemental Executive Retirement Plan and certain other employee benefit plans that provide participants with medical, life insurance, and deferred compensation benefits. Such reimbursement was based on the cost to the Holding Company of the benefits provided which totaled $57.6 million and $39.7 million, respectively, for 2003 and 2002. The Company paid $639.1 million and $596.6 million, respectively, of commissions and fees to AXA Distribution and its subsidiaries for sales of insurance products for 2003 and 2002. The Company charged AXA Distribution's subsidiaries $304.4 million and $411.9 million, respectively, for their applicable share of operating expenses for 2003 and 2002, pursuant to the Agreements for Services. In September 2001, Equitable Life loaned $400.0 million to AXA Insurance Holding Co. Ltd., a subsidiary of AXA. This investment has an interest rate of 5.89% and matures on June 15, 2007. All payments, including interest payable semi-annually, are guaranteed by AXA. Both Equitable Life and Alliance, along with other AXA affiliates, participate in certain intercompany cost sharing and service agreements which include technology and professional development arrangements. Payments by Equitable Life and Alliance to AXA under such agreements totaled approximately $16.7 million and $17.9 million in 2003 and 2002, respectively. Payments by AXA and AXA affiliates to Equitable Life under such agreements totaled $32.5 million and $17.6 million in 2003 and 2002, respectively. In 2003, Equitable Life entered into a reinsurance agreement with AXA Financial Reinsurance Company (Bermuda), LTD ("AXA Bermuda"), an indirect wholly owned subsidiary of the Holding Company, to cede certain term insurance policies written after December 2002. Equitable Life ceded $9.0 million of premiums and $2.8 million of reinsurance reserves to AXA Bermuda in 2003. Commissions, fees and other income includes certain revenues for services provided to mutual funds managed by Alliance described below:
2003 2002 2001 ----------------- ---------------- ------------------ (In Millions) Investment advisory and services fees.............. $ 824.6 $ 854.5 $ 997.1 Distribution revenues.............................. 436.0 467.5 544.6 Shareholder servicing fees......................... 82.3 89.7 87.2 Other revenues..................................... 11.4 10.2 11.0 Brokerage.......................................... 3.6 7.0 5.7
F-55 REPORT OF INDEPENDENT AUDITORS ON CONSOLIDATED FINANCIAL STATEMENT SCHEDULES To the Board of Directors of The Equitable Life Assurance Society of the United States Our audits of the consolidated financial statements referred to in our report dated March 9, 2004 appearing on page F-1 of this Annual Report on Form 10-K also included an audit of the financial statement schedules listed in Item 15(a)2 of this Form 10-K. In our opinion, these financial statement schedules present fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. /s/PricewaterhouseCoopers LLP New York, New York March 9, 2004 F-56 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE I SUMMARY OF INVESTMENTS - OTHER THAN INVESTMENTS IN RELATED PARTIES DECEMBER 31, 2003
Estimated Carrying Type of Investment Cost (A) Fair Value Value ------------------- ----------------- ---------------- --------------- (In Millions) Fixed maturities: U.S. government, agencies and authorities.............. $ 812.3 $ 870.5 $ 870.5 State, municipalities and political subdivisions....... 188.2 200.3 200.3 Foreign governments.................................... 248.4 294.0 294.0 Public utilities....................................... 2,994.1 3,214.1 3,214.1 All other corporate bonds.............................. 21,496.6 22,957.7 22,957.7 Redeemable preferred stocks............................ 1,412.0 1,558.9 1,558.9 ----------------- ---------------- --------------- Total fixed maturities.................................... 27,151.6 29,095.5 29,095.5 ----------------- ---------------- --------------- Equity securities: Common stocks: Industrial, miscellaneous and all other............... 13.5 13.6 13.6 Mortgage loans on real estate............................. 3,503.1 3,761.7 3,503.1 Real estate............................................... 310.8 XXX 310.8 Real estate acquired in satisfaction of debt.............. 275.8 XXX 275.8 Real estate joint ventures................................ 69.9 XXX 69.9 Policy loans.............................................. 3,894.3 4,481.9 3,894.3 Other limited partnership interests....................... 775.5 775.5 775.5 Other invested assets..................................... 1,101.6 1,101.6 1,101.6 ----------------- ---------------- --------------- Total Investments......................................... $ 37,096.1 $ 39,229.8 $ 39,040.1 ================= ================ ===============
(A) Cost for fixed maturities represents original cost, reduced by repayments and writedowns and adjusted for amortization of premiums or accretion of discount; for equity securities, cost represents original cost reduced by writedowns; for other limited partnership interests, cost represents original cost adjusted for equity in earnings and distributions. F-57 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE II BALANCE SHEETS (PARENT COMPANY) DECEMBER 31, 2003 AND 2002
2003 2002 ----------------- ----------------- (In Millions) ASSETS Investment: Fixed maturities: Available for sale, at estimated fair value (amortized cost of $26,874.1 and $24,480.4, respectively)........................ $ 28,787.4 $ 25,981.9 Mortgage loans on real estate............................................. 3,503.1 3,746.2 Equity real estate........................................................ 656.4 717.3 Policy loans.............................................................. 3,670.4 3,805.8 Investments in and loans to affiliates.................................... 1,246.9 1,359.3 Other equity investments.................................................. 789.0 720.2 Other invested assets..................................................... 590.7 892.4 ----------------- ----------------- Total investments..................................................... 39,243.9 37,223.1 Cash and cash equivalents................................................... 402.4 15.3 Deferred policy acquisition costs........................................... 6,248.6 5,749.8 Amounts due from reinsurers................................................. 1,510.8 1,482.4 Other assets................................................................ 2,228.8 2,289.2 Loans to affiliates......................................................... 400.0 413.0 Prepaid pension asset....................................................... 838.3 865.1 Separate Accounts assets.................................................... 54,438.1 39,012.1 ----------------- ----------------- Total Assets................................................................ $ 105,310.9 $ 87,050.0 ================= ================= LIABILITIES Policyholders' account balances............................................. $ 24,907.5 $ 22,630.6 Future policy benefits and other policyholders liabilities.................. 13,831.4 13,892.5 Short-term and long-term debt............................................... 847.9 847.8 Federal income taxes payable................................................ 1,775.9 1,474.2 Other liabilities........................................................... 877.0 922.0 Separate Accounts liabilities............................................... 54,300.6 38,883.8 ----------------- ----------------- Total liabilities..................................................... 96,540.3 78,650.9 ----------------- ----------------- SHAREHOLDER'S EQUITY Common stock, $1.25 par value, 2.0 million shares authorized, issued and outstanding........................................................... 2.5 2.5 Capital in excess of par value.............................................. 4,848.2 4,812.8 Retained earnings........................................................... 3,027.1 2,902.7 Accumulated other comprehensive income...................................... 892.8 681.1 ----------------- ----------------- Total shareholder's equity............................................ 8,770.6 8,399.1 ----------------- ----------------- Total Liabilities and Shareholder's Equity.................................. $ 105,310.9 $ 87,050.0 ================= =================
The financial information of The Equitable Life Assurance Society of the United States (Parent Company) should be read in conjunction with the Consolidated Financial Statements and Notes thereto. For information regarding capital in excess of par value refer to Note 1 of Notes to Consolidated Financial Statements. F-58 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE II STATEMENTS OF EARNINGS (PARENT COMPANY) YEARS ENDED DECEMBER 31, 2003, 2002, 2001
2003 2002 2001 ----------------- ----------------- --------------- (In Millions) REVENUES Universal life and investment-type product policy fee income........................................................ $ 1,373.1 $ 1,312.3 $ 1,337.4 Premiums........................................................ 882.8 936.7 1,010.0 Net investment income........................................... 2,338.3 2,321.7 2,301.9 Investment losses, net.......................................... (70.6) (264.1) (201.4) Equity in earnings of subsidiaries ............................. 44.3 113.1 134.2 Commissions, fees and other income.............................. 163.2 337.6 244.1 ----------------- ----------------- ---------------- Total revenues............................................ 4,731.1 4,757.3 4,826.2 ----------------- ----------------- ---------------- BENEFITS AND OTHER DEDUCTIONS Policyholders' benefits......................................... 1,691.0 2,025.7 1,878.9 Interest credited to policyholders' account balances............ 946.6 945.5 957.1 Compensation and benefits....................................... 379.1 310.2 371.3 Commissions..................................................... 1,072.4 835.5 825.0 Interest expense................................................ 58.8 72.5 71.5 Amortization of deferred policy acquisition costs............... 424.9 292.6 284.0 Capitalization of deferred policy acquisition costs............. (990.0) (753.2) (743.4) Rent expense.................................................... 67.9 66.7 62.8 Amortization and depreciation................................... 98.1 88.0 92.1 Premium taxes................................................... 35.7 36.3 36.9 Other operating costs and expenses.............................. 242.7 248.0 159.0 ----------------- ----------------- ---------------- Total benefits and other deductions....................... 4,027.2 4,167.8 3,995.2 ----------------- ----------------- ---------------- Earnings from continuing operations before Federal income taxes.......................................... 703.9 589.5 831.0 Federal income tax (expense) benefit............................ (182.9) 25.4 (224.4) ----------------- ----------------- ---------------- Earnings from continuing operations............................. 521.0 614.9 606.6 Earnings from discontinued operations, net of Federal income taxes......................................... 3.4 5.6 43.9 Cumulative effect of accounting changes, net of Federal income taxes......................................... - (33.1) (3.5) ----------------- ----------------- ---------------- Net Earnings.................................................... $ 524.4 $ 587.4 $ 647.0 ================= ================= ================
F-59 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE II STATEMENTS OF CASH FLOWS (PARENT COMPANY) YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
2003 2002 2001 ----------------- ----------------- ---------------- (In Millions) Net earnings.................................................... $ 524.4 $ 587.4 $ 647.0 Adjustments to reconcile net earnings to net cash provided by operating activities: Interest credited to policyholders' account balances.......... 946.6 945.5 957.1 Universal life and investment-type policy fee income.......... (1,373.1) (1,312.3) (1,337.4) Investment losses net......................................... 70.6 264.1 201.4 Equity in net earnings of subsidiaries........................ (44.3) (113.1) (134.2) Dividends from subsidiaries................................... 181.8 213.6 1,289.4 Change in deferred policy acquisition costs................... (565.1) (460.6) (459.4) Change in future policy benefits and other policyholder funds....................................................... (98.7) 216.1 (15.6) Change in prepaid pension asset............................... 26.8 (363.0) (56.7) Change in fair value of guaranteed minimum income benefit reinsurance contract.............................. 91.0 (120.0) - Change in property and equipment.............................. (23.9) (23.2) (121.7) Change in Federal income tax payable.......................... 193.0 93.2 573.9 Amortization and depreciation................................. 98.1 88.0 92.1 Other, net.................................................... 187.2 118.2 57.9 ----------------- ----------------- ----------------- Net cash provided by operating activities....................... 214.4 133.9 1,693.8 ----------------- ----------------- ----------------- Cash flows from investing activities: Maturities and repayments..................................... 4,180.6 2,973.1 2,429.1 Sales......................................................... 4,778.7 7,624.4 7,470.3 Purchases..................................................... (11,403.4) (12,609.2) (11,775.1) Increase in loans to discontinued operations.................. 2.5 38.1 14.7 Change in short-term investments.............................. 357.0 (570.9) 123.1 Change in policy loans........................................ 135.6 71.5 (52.2) Loans to affiliates........................................... - - (400.0) Other, net.................................................... (61.7) 97.5 (60.3) ----------------- ----------------- ----------------- Net cash used by investing activities........................... (2,010.7) (2,375.5) (2,250.4) ----------------- ----------------- ----------------- Cash flows from financing activities: Policyholders' account balances: Deposits.................................................... 5,689.6 4,384.9 3,252.1 Withdrawals and transfers to Separate Accounts.............. (3,141.6) (1,995.9) (2,445.4) Net decrease in short-term financings......................... (.2) (.2) (.2) Shareholder dividends paid.................................... (400.0) (500.0) (1,700.0) Other, net.................................................... 35.6 59.1 (29.3) ----------------- ----------------- ----------------- Net cash provided (used) by financing activities................ 2,183.4 1,947.9 (922.8) ----------------- ----------------- ----------------- Change in cash and cash equivalents............................. 387.1 (293.7) (1,479.4) Cash and cash equivalents, beginning of year.................... 15.3 309.0 1,788.4 ----------------- ----------------- ----------------- Cash and Cash Equivalents, End of Year.......................... $ 402.4 $ 15.3 $ 309.0 ================= ================= ================= Supplemental cash flow information Interest Paid................................................. $ 43.2 $ 43.6 $ 43.4 ================= ================= ================= Income Taxes (Refunded) Paid.................................. $ (58.8) $ (153.6) $ 517.0 ================= ================= =================
F-60 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION AT AND FOR THE YEAR ENDED DECEMBER 31, 2003
Future Policy Policy Deferred Benefits Charges (1) Policy Policyholders' and Other and Net Acquisition Account Policyholders' Premium Investment Segment Costs Balance Funds Revenue Income -------------------------- --------------- ------------------ ----------------- -------------- --------------- (In Millions) Insurance.............. $ 6,290.4 $ 25,307.7 $ 13,934.7 $ 2,266.1 $ 2,340.8 Investment Services............. - - - - 16.9 Consolidation/ elimination.......... - - - - 29.2 --------------- ------------------ ----------------- -------------- --------------- Total.................. $ 6,290.4 $ 25,307.7 $ 13,934.7 $ 2,266.1 $ 2,386.9 =============== ================== ================= ============== =============== Amortization Policyholders' of Deferred (2) Benefits and Policy Other Interest Acquisition Operating Segment Credited Cost Expense -------------------------- ----------------- ------------------ --------------- Insurance.............. $ 2,677.9 $ 434.6 $ 990.3 Investment Services............. - - 2,419.9 Consolidation/ elimination.......... - - (70.4) ----------------- ------------------ --------------- Total.................. $ 2,677.9 $ 434.6 $ 3,339.8 ================= ================== ===============
(1) Net investment income is based upon specific identification of portfolios within segments. (2) Operating expenses are principally incurred directly by a segment. F-61 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION AT AND FOR THE YEAR ENDED DECEMBER 31, 2002
Future Policy Policy Deferred Benefits Charges (1) Policy Policyholders' and Other and Net Acquisition Account Policyholders' Premium Investment Segment Costs Balance Funds Revenue Income -------------------------- -------------- ------------------- ----------------- -------------- --------------- (In Millions) Insurance.............. $ 5,801.0 $ 23,037.5 $ 13,975.7 $ 2,260.7 $ 2,331.2 Investment Services............. - - - - 18.0 Consolidation/ elimination.......... - - - - 28.0 -------------- ------------------- ----------------- -------------- --------------- Total.................. $ 5,801.0 $ 23,037.5 $ 13,975.7 $ 2,260.7 $ 2,377.2 ============== =================== ================= ============== =============== Amortization Policyholders' of Deferred (2) Benefits and Policy Other Interest Acquisition Operating Segment Credited Cost Expense -------------------------- ----------------- ------------------ --------------- Insurance.............. $ 3,008.5 $ 296.7 $ 930.3 Investment Services............. - - 2,154.2 Consolidation/ elimination.......... - - (71.3) ----------------- ------------------ --------------- Total.................. $ 3,008.5 $ 296.7 $ 3,013.2 ================= ================== ===============
(1) Net investment income is based upon specific identification of portfolios within segments. (2) Operating expenses are principally incurred directly by a segment. F-62 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE III SUPPLEMENTARY INSURANCE INFORMATION FOR THE YEAR ENDED DECEMBER 31, 2001
Policy Charges (1) Policyholders' and Net Benefits and Premium Investment Interest Segment Revenue Income Credited --------------------------------------------------------------- --------------- ----------------- ---------------------- (In Millions) Insurance................................................... $ 2,362.2 $ 2,337.9 $ 2,870.5 Investment Services.................................................. - 39.9 - Consolidation/ elimination............................................... - 26.5 - --------------- ----------------- ---------------------- Total....................................................... $ 2,362.2 $ 2,404.3 $ 2,870.5 =============== ================= ====================== Amortization of Deferred (2) Policy Other Acquisition Operating Cost Expense -------------------- -------------------- Insurance................................................... $ 287.9 $ 897.4 Investment Services.................................................. - 2,409.0 Consolidation/ elimination............................................... - (90.0) -------------------- -------------------- Total....................................................... $ 287.9 $ 3,216.4 ===================== ====================
(1) Net investment income is based upon specific identification of portfolios within segments. (2) Operating expenses are principally incurred directly by a segment. F-63 THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES SCHEDULE IV REINSURANCE (A) AT AND FOR THE YEARS ENDED DECEMBER 31, 2003, 2002 AND 2001
Assumed Percentage Ceded to from of Amount Gross Other Other Net Assumed Amount Companies Companies Amount to Net ----------------- ---------------- ----------------- --------------- --------------- (Dollars In Millions) 2003 ---- Life Insurance In-Force...... $ 266,115.8 $ 90,031.1 $ 41,078.1 $ 217,162.8 18.92% ================= ================ ================= =============== Premiums: Life insurance and annuities.................. $ 769.0 $ 70.2 $ 140.9 $ 839.7 16.78% Accident and health.......... 144.8 98.2 12.1 58.7 20.61% ----------------- ---------------- ----------------- --------------- Total Premiums............... $ 913.8 $ 168.4 $ 153.0 $ 898.4 17.03% ================= ================ ================= =============== 2002 ---- Life Insurance In-Force...... $ 264,456.6 $ 89,413.1 $ 42,228.6 $ 217,281.1 19.44% ================= ================ ================= =============== Premiums: Life insurance and annuities.................. $ 803.3 $ 86.8 $ 145.7 $ 862.2 16.90% Accident and health.......... 151.3 104.0 35.7 83.0 43.01% ----------------- ---------------- ----------------- --------------- Total Premiums............... $ 954.6 $ 190.8 $ 181.4 $ 945.2 19.19% ================= ================ ================= =============== 2001 ---- Life Insurance In-Force...... $ 263,375.6 $ 75,190.5 $ 42,640.4 $ 230,825.5 18.47% ================= ================ ================= =============== Premiums: Life insurance and annuities.................. $ 830.2 $ 63.6 $ 138.5 $ 905.1 15.30% Accident and health.......... 159.8 109.5 64.5 114.8 56.18% ----------------- ---------------- ----------------- --------------- Total Premiums............... $ 990.0 $ 173.1 $ 203.0 $ 1,019.9 19.90% ================= ================ ================= ===============
(A) Includes amounts related to the discontinued group life and health business. F-64 PART C OTHER INFORMATION ----------------- Item 24. Financial Statements and Exhibits --------------------------------- (a) Financial Statements included in Part B. 1. Separate Account Nos. 3 (Pooled), 4 (Pooled), 10 (Pooled) and 13 (Pooled) (The Alliance Mid Cap Growth, Common Stock, Balanced and Bond Funds): - Report of Independent Auditors - PricewaterhouseCoopers LLP 2. Separate Account No. 3 (Pooled): - Statements of Assets and Liabilities, December 31, 2003 - Statements of Operations and Changes in Net Assets for the Years Ended December 31, 2003 and 2002 - Portfolio of Investments, December 31, 2003 3. Separate Account No. 4 (Pooled): - Statements of Assets and Liabilities, December 31, 2003 - Statements of Operations and Changes in Net Assets for the Years Ended December 31, 2003 and 2002 - Portfolio of Investments, December 31, 2003 4. Separate Account No. 10 (Pooled): - Statements of Assets and Liabilities, December 31, 2003 - Statements of Operations and Changes in Net Assets for the Years Ended December 31, 2003 and 2002 - Portfolio of Investments, December 31, 2003 5. Separate Account No. 13 (Pooled): - Statements of Assets and Liabilities, December 31, 2003 - Statements of Operations and Changes in Net Assets for the Years Ended December 31, 2003 and 2002 - Portfolio of Investments, December 31, 2003 6. Separate Account No. 66: - Report of Independent Auditors - PricewaterhouseCoopers LLP - Statement of Assets and Liabilities, December 31, 2003 - Statement of Operations for the Year Ended December 31, 2003 - Statement of Changes in Net Assets for the Years Ended December 31, 2003 and 2002 - Notes to Financial Statements 7. Separate Account Nos. 3 (Pooled), 4 (Pooled), 10 (Pooled), and 13 (Pooled) - Notes to Financial Statements C-1 8. The Equitable Life Assurance Society of the United States: - Report of Independent Auditors - PricewaterhouseCoopers LLP - Consolidated Balance Sheets, December 31, 2003 and 2002 - Consolidated Statements of Earnings for the Years Ended December 31, 2003, 2002 and 2001 - Consolidated Statements of Shareholder's Equity Years Ended December 31, 2003, 2002 and 2001 - Consolidated Statements of Cash Flows for the Years Ended December 31, 2003, 2002 and 2001 - Notes to Consolidated Financial Statements (b) Exhibits. The following Exhibits are filed herewith: 1. Resolutions of the Board of Directors of The Equitable Life Assurance Society of the United States ("Equitable") authorizing the establishment of Separate Account Nos. 3, 4 and 10 and additional similar separate accounts, incorporated herein by reference to Exhibit 1 to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. 2. Not Applicable. 3. (a) Investment Advisory Agreement between Equitable and Equitable Investment Management Corporation dated October 31, 1983, incorporated herein by reference to Exhibit 4 to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (b) Investment Advisory and Management Agreement by and between Alliance Capital Management L.P., Alliance Corporate Finance Group Incorporated, an indirect wholly owned subsidiary of Alliance, and The Equitable Life Assurance Society of the United States, incorporated by reference to Exhibit No. 3(b) to Registration Statement No. 33-76030, filed on March 3, 1994. (c) Participation Agreement among EQ Advisors Trust, The Equitable Life Assurance Society of the United States, Equitable Distributors, Inc. and EQ Financial Consultants, Inc. (now AXA Advisors, LLC), dated as of the 14th day of April 1997, incorporated by reference to the Registration Statement of EQ Advisors Trust (File No. 333-17217) on Form N-1A, filed August 28, 1997. (d) Sales Agreement, dated as of January 1, 1995, by and among Equico Securities, Inc. (now AXA Advisors, LLC), Equitable, Separate Account A, Separate Account No. 301 and Separate Account No. 51, incorporated by reference to Exhibit No. 3(d) to Registration Statement No. 33-76030, filed on April 24, 1995. (e) Distribution Agreement for services by The Equitable Life Assurance Society of the United States to AXA Network, LLC, and its subsidiaries dated January 1, 2000, incorporated by reference to Exhibit No. 3(d) to Registration Statement File No. 33-58950, filed on April 19, 2001. (f) Distribution Agreement for services by AXA Network, LLC and its subsidiaries to The Equitable Life Assurance Society of the United States dated January 1, 2000. Incorporated by reference to Exhibit No. 3(e) to Registration Statement File No. 33-58950 filed on April 19, 2001. (g) Form of Participation Agreement among AXA Premier VIP Trust, The Equitable Life Assurance Society of the United States, Equitable Distributors, Inc., AXA Distributors LLC, and AXA Advisors, LLC, incorporated by reference to Exhibit No. 8(b) to Registration Statement File No. 333-60730, filed on December 5, 2001. (h) General Agent Sales Agreement dated January 1, 2000 between The Equitable Life Assurance Society of the United States and AXA Network, LLC and its subsidiaries, incorporated herein by reference to Exhibit 3(h) to the Registration Statement on Form N-4, File No. 2-30070, filed April 19, 2004. (i) First Amendment General Agent Sales Agreement dated January 1, 2000 between The Equitable Life Assurance Society of the United States and AXA Network, LLC and its subsidiaries, incorporated herein by reference to Exhibit 3(i) to the Registration Statement on Form N-4, File No. 2-30070, filed April 19, 2004. (j) Second Amendment to General Agent Sales Agreement dated January 1, 2000 between The Equitable Life Assurance Society of the United States and AXA Network, LLC and its subsidiaries, incorporated herein by reference to Exhibit 3(j) to the Registration Statement on Form N-4, File No. 2-30070, filed April 19, 2004. 4. (a)1 Group Annuity Contract AC 5000-83T (No. 15,740) between Equitable and United States Trust Company of New York as Trustee under Retirement Investment Account Master Retirement Trust, incorporated herein by reference to Exhibit 6(a)1 to Post-Effective Amendment No. 2 to Registration No. 2-91983 filed on April 14, 1986. C-2 (a)2 Riders 1, 2, 3, 4, 5, 6 and 7 to Group Annuity Contract AC 5000-83T (No. 15,740) between Equitable and United States Trust Company of New York as Trustee under Retirement Investment Account Master Retirement Trust, as executed, incorporated herein by reference to Exhibit 6(a)2 to Post-Effective Amendment No. 4 to Registration No. 2-91983 filed on April 28, 1988. (a)3 Form of Rider 8 to Group Annuity Contract AC 5000-83T (No. 15,740) between Equitable and United States Trust Company of New York as Trustee under Retirement Investment Account Master Retirement Trust, incorporated herein by reference to Exhibit 6(a)3 to Post-Effective Amendment No. 8 to Registration No. 2-91983, filed on February 25, 1992. (a)4 Form of Rider 9 to Group Annuity Contract AC 5000-83T between Equitable and United States Trust Company of New York as Trustee under Retirement Investment Account Master Retirement Trust, incorporated by reference to Exhibit No. 4(a)4 to Registration Statement No. 33-76030, filed on March 3, 1994. (b)1 Group Annuity Contract AC 5000-83E (No. 15,739) between Equitable and United States Trust Company of New York as Trustee under Retirement Investment Account Retirement Trust, incorporated herein by reference to Exhibit 6(b)1 to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (b)2 Riders l, 2, 3, 4, 5, 6 and 7 to Group Annuity Contract AC 5000-83E (No. 15,739) between Equitable and United States Trust Company of New York as Trustee under Retirement Investment Account Retirement Trust, as executed, incorporated herein by reference to Exhibit 6(b)2 to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (b)3 Form of Rider 8 to Group Annuity Contract AC 5000-83E (No. 15,739) between Equitable and United States Trust Company of New York, as Trustee under Retirement Investment Account Master Retirement Trust, incorporated herein by reference to Exhibit 6(b)3 to Post-Effective Amendment No. 8 to Registration No. 2-91983, filed on February 25, 1992. (b)4 Form of Rider 9 to Group Annuity Contract AC 5000-83E between Equitable and United States Trust Company of New York, as Trustee under Retirement Investment Account Master Retirement Trust, incorporated by reference to Exhibit No. 4(b)4 to Registration Statement No. 33-76030, filed on March 3, 1994. (c)1 Retirement Investment Account Master Retirement Trust effective as of January 1, 1979, incorporated herein by reference to Exhibit 6(c)1 to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (c)2 Amendment to the Retirement Investment Account Master Retirement Trust effective July 1, 1984, incorporated herein by reference to Exhibit 6(c)3 to Post-Effective Amendment No. 2 to Registration No. 2-9983, filed on April 14, 1986. C-3 (c)3 Revised Retirement Investment Account Master Retirement Trust effective as of March 1, 1990, incorporated herein by reference to Exhibit 6(c)3 to Post-Effective Amendment No. 6 to Registration No. 2-91983, filed on April 27, 1990. (c)4 Form of Restated Retirement Investment Account Master Retirement Trust as submitted to the Internal Revenue Service, incorporated herein by reference to Exhibit 6(c)4 to Post-Effective Amendment No. 8 to Registration No. 2-91983, filed on February 25, 1992. 5. Not applicable. 6. (a) Copy of the Restated Charter of Equitable, as amended January 1, 1997, incorporated by reference to Exhibit No. 6(a) to Registration Statement No. 33-76030 on April 28, 1997. (b) By-Laws of Equitable, as amended November 21, 1996, as amended January 1, 1997, incorporated by reference to Exhibit No. 6(b) to Registration Statement No. 33-76030 on April 28, 1997. 7. Not applicable. 8. (a) Retirement Investment Account Enrollment Forms - Including Participation and Enrollment Agreements, incorporated herein by reference to Exhibit 7(a) to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (b)(1) Supplementary Agreement to Master Retirement Trust Participation Agreement, incorporated herein by reference to Exhibit 7(b)(1) to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (b)(2) Supplementary Agreement B to Master Retirement Trust Participation Agreement (RIA Loans), incorporated herein by reference to Exhibit 7(b)(2) to Post-Effective Amendment No. 4 to Registration No. 2-91983, filed on April 28, 1988. (b)(3) Form of Supplementary Agreement A to Master Retirement Trust Participation Agreement (RIA Partial Funding), as amended, incorporated herein by reference to Exhibit 7(b)(3) to Post-Effective Amendment No. 4 to Registration No. 2-91983, filed on April 30, 1991. C-4 (b)(4) Form of Supplementary Agreement to Master Retirement Trust Participation Agreement (The Bond Account), incorporated herein by reference to Exhibit 7(b)(4) to Post-Effective Amendment No. 8 to Registration No. 2-91983, filed on April 14, 1986. (c) Basic Installation Information Form, dated May, 1989, incorporated herein by reference to Exhibit 7(c) to Post-Effective Amendment No. 9 to Registration Statement No. 2-91983, filed on April 24, 1992. (d) RIA Installation Agreement, dated May, 1989, incorporated herein by reference to Exhibit 7(d) to Post-Effective Amendment No. 9 to Registration No. 2-91983, filed on April 24, 1992. 9. (a) Opinion and consent of Herbert P. Shyer, Executive Vice President and General Counsel of Equitable Life, dated August 28, 1984, incorporated herein by reference to Exhibit 12(a) to Pre-Effective Amendment No. l to Registration No. 2-91983, filed on August 28, 1984. (b) Opinion and consent of Herbert P. Shyer, Executive Vice President and General Counsel of Equitable, dated April 14, 1986, incorporated herein by reference to Post-Effective Amendment No. 2 to Registration No. 2-91983, filed on April 14, 1986. (c) Opinion and consent of Melvin S. Altman, Esq., Vice President and Associate General Counsel of Equitable, incorporated herein by reference to Post-Effective Amendment No. 9 to Registration No. 2-91983, filed on April 24, 1992. (d) Opinion and consent of Hope E. Rosenbaum, Esq., Vice President and Counsel of Equitable, incorporated by reference to Exhibit No. 9(d) to Registration Statement No. 33-76030, filed on March 3, 1994. (e) Opinion and Consent of Robin Wagner, Esq., Vice President and Counsel previously filed with this Registration Statement File No. 333-59404 on April 24, 2001. (f) Opinion and Consent of Dodie Kent, Vice President and Counsel, as to the legality of the Securities being registered. 10. (a) Consent of PricewaterhouseCoopers LLP. (b) Powers of Attorney, incorporated herein by reference to Exhibit 10.(a) Registration Statement File No. 2-30070 on Form N-4, filed on April 16, 2004. 11. Not applicable. 12. Not applicable. 13. Not applicable. C-5 Item 25. Directors and Officers of Equitable. Set forth below is information regarding the directors and principal officers of Equitable. Equitable's address is 1290 Avenue of Americas, New York, New York 10104. The business address of the persons whose names are preceded by an asterisk is that of Equitable. POSITIONS AND NAME AND PRINCIPAL OFFICES WITH BUSINESS ADDRESS EQUITABLE ---------------- --------- DIRECTORS Bruce W. Calvert Director Alliance Capital Management Corporation 1345 Avenue of the Americas New York, NY 10105 Claus-Michael Dill Director AXA Konzern AG Gereonsdriesch 9-11 50670 Cologne, Germany Henri de Castries Director AXA 25, Avenue Matignon 75008 Paris, France Joseph L. Dionne Director 198 North Wilton Rd. New Canaan, CT 06840 Denis Duverne Director AXA 25, Avenue Matignon 75008 Paris, France Jean-Rene Fourtou Director Vivendi Universal 42, avenue de Friedland 75380 Paris France John C. Graves Director Graves Ventures, LLC 130 Fifth Avenue New York, NY 10011 C-6 POSITIONS AND NAME AND PRINCIPAL OFFICES WITH BUSINESS ADDRESS EQUITABLE ---------------- --------- Donald J. Greene Director c/o LeBouef, Lamb, Greene & MacRae 125 West 55th Street New York, NY 10019-4513 Mary R. (Nina) Henderson Director 425 East 86th Street Apt 12-C New York, NY 10028 W. Edwin Jarmain Director Jarmain Group Inc. 77 King Street West Toronto, M5K 1K2 Canada James F. Higgins Director Morgan Stanley Harborside Financial Center Plaza Two, Second Floor Jersey City, NJ 07311 Christina Johnson Director 230 Byram Shore Road Greenwich, CT 06830 Scott D. Miller Director Hyatt Hotels Corporation 200 West Madison Street Chicago, IL 60606 C-7 POSITIONS AND NAME AND PRINCIPAL OFFICES WITH BUSINESS ADDRESS EQUITABLE ---------------- --------- Joseph H. Moglia Director Ameritrade Holding Corporation 4211 South 102nd Street Omaha, NE 68127 Peter J. Tobin Director St. John's University 101 Murray Street New York, NY 10007 OFFICER-DIRECTORS ----------------- *Christopher M. Condron Chairman of the Board, President, Chief Executive Officer and Director *Stanley B. Tulin Vice Chairman of the Board, Chief Financial Officer and Director OTHER OFFICERS -------------- *Leon Billis Executive Vice President and AXA Group Deputy Chief Information Officer *Harvey Blitz Senior Vice President *Kevin R. Byrne Senior Vice President and Treasurer *Stuart L. Faust Senior Vice President and Deputy General Counsel *Alvin H. Fenichel Senior Vice President and Controller *Jennifer Blevins Executive Vice President *Mary Beth Farrell Executive Vice President *Deanna M. Mulligan Executive Vice President *Jerald E. Hampton Executive Vice President C-8 POSITIONS AND NAME AND PRINCIPAL OFFICES WITH BUSINESS ADDRESS EQUITABLE ---------------- --------- *Paul J. Flora Senior Vice President and Auditor *James D. Goodwin Senior Vice President *Edward J. Hayes Senior Vice President *Donald R. Kaplan Senior Vice President, Chief Compliance Officer and Associate General Counsel *William I. Levine Executive Vice President and Chief Information Officer *Peter D. Noris Executive Vice President and Chief Investment Officer *Anthony C. Pasquale Senior Vice President *Pauline Sherman Senior Vice President, Secretary and Associate General Counsel *Richard V. Silver Executive Vice President and General Counsel *Naomi J. Weinstein Vice President *Charles A. Marino Senior Vice President and Actuary C-9 Item 26. Persons Controlled by or under Common Control with Equitable or ---------------------------------------------------------------- Registrant ---------- Separate Account Nos. 3, 4, 10, 13 and 66 of The Equitable Life Assurance Society of the United States (the "Separate Account") are each separate accounts of Equitable. Equitable, a New York stock life insurance company, is a wholly owned subsidiary of AXA Financial, Inc. (the "Holding Company") (formerly "The Equitable Companies, Incorporated"). AXA owns 100% of the outstanding common stock of the Holding Company (assuming conversion of the convertible preferred stock held by AXA). AXA is able to exercise significant influence over the operations and capital structure of the Holding Company and its subsidiaries, including Equitable Life. AXA, a French company, is the holding company for an international group of insurance and related financial services companies. C-10 Consolidated companies as at December 31, 2002 AXA GROUP CONSOLIDATED COMPANIES AS AT DECEMBER 31, 2002
------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL SERVICES BELGIUM IPPA VASTGOED AXA HOLDINGS BELGIUM 100.00 & REAL ESTATE FINANCIAL SERVICES BELGIUM AXA INVESTMENT MANAGERS BENELUX AXA ASSET MANAGEMENT LIMITED 0.01 & REAL ESTATE FINANCIAL SERVICES BELGIUM AXA INVESTMENT MANAGERS BENELUX AXA INVESTMENT MANAGERS SA 99.99 & REAL ESTATE FINANCIAL SERVICES BELGIUM ROYALE BELGE INVESTISSEMENT AXA HOLDINGS BELGIUM 0.00 & REAL ESTATE FINANCIAL SERVICES BELGIUM AXA BANK BELGIUM AXA HOLDINGS BELGIUM 100.00 & REAL ESTATE FINANCIAL SERVICES BELGIUM AXA REAL ESTATE INVESMENT MANAGERS AXA BANK BELGIUM 0.10 & REAL ESTATE BENELUX FINANCIAL SERVICES BELGIUM AXA REAL ESTATE INVESMENT MANAGERS AXA REAL ESTATE INVESMENT 99.90 & REAL ESTATE BENELUX MANAGERS SA FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGEMENT PRIVATE AXA INVESTMENT MANAGERS SA 99.93 & REAL ESTATE EQUITY SA FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGEMENT PRIVATE AXA INVESTMENT MANAGERS PARIS 0.01 & REAL ESTATE EQUITY SA FINANCIAL SERVICES FRANCE AXA INVESTMENT PRIVATE EQUITY AXA INVESTMENT MANAGEMENT PRIVATE 100.00 & REAL ESTATE EUROPE SA EQUITY SA FINANCIAL SERVICES FRANCE AXA REAL ESTATE MANAGEMENT AXA REAL ESTATE INVESMENT 99.96 & REAL ESTATE INVESTMENT MANAGERS France MANAGERS SA FINANCIAL SERVICES FRANCE AXA REAL ESTATE MANAGEMENT INVEST AXA INVESTMENT MANAGERS SA 0.01 & REAL ESTATE MANAGERS France FINANCIAL SERVICES FRANCE AXA ASSET MANAGEMENT PRIVATE EQUITY AXA INVESTMENT MANAGERS PARIS 0.01 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA ASSET MANAGEMENT PRIVATE EQUITY AXA INVESTMENT PRIVATE EQUITY 85.46 & REAL ESTATE EUROPE SA FINANCIAL SERVICES FRANCE AXA ASSET MANAGEMENT PRIVATE EQUITY AXA INVESTMENT MANAGERS SA 0.01 & REAL ESTATE FINANCIAL SERVICES FRANCE COLISEE SURESNES JOUR FINANCE 20.63 & REAL ESTATE FINANCIAL SERVICES FRANCE COLISEE SURESNES COMPAGNIE FINANCIERE DE PARIS 51.07 & REAL ESTATE FINANCIAL SERVICES FRANCE COLISEE SURESNES SOCIETE BEAUJON 0.92 & REAL ESTATE FINANCIAL SERVICES FRANCE COLISEE SURESNES AXA ASSURANCES IARD 23.72 & REAL ESTATE FINANCIAL SERVICES FRANCE SOFAPI COMPAGNIE FINANCIERE DE PARIS 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE HOLDING SOFFIM COMPAGNIE FINANCIERE DE PARIS 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE SOFINAD COMPAGNIE FINANCIERE DE PARIS 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA CREDIT AXA BANQUE 65.00 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA BANQUE AXA ASSURANCES VIE 37.38 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA BANQUE AXA FRANCE ASSURANCE 62.62 & REAL ESTATE FINANCIAL SERVICES FRANCE COMPAGNIE FINANCIERE DE PARIS AXA 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE BANQUE DE MARCHES ET D'ARBITRAGE AXA ASSURANCES IARD 8.20 & REAL ESTATE FINANCIAL SERVICES FRANCE BANQUE DE MARCHES ET D'ARBITRAGE AXA 19.51 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA ASSET MANAGEMENT CONSULTANT AXA INVESTMENT MANAGERS SA 99.94 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA ASSET MANAGEMENT CONSULTANT AXA GRANDE ARMEE 0.01 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA ASSET MANAGEMENT CONSULTANT AXA INVESTMENT MANAGERS PARIS 0.02 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA 47.42 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA ROYALE BELGE 3.81 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA LEVEN NV 1.90 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA UK PLC 16.66 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA RE 0.73 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA NATIONAL MUTUAL FUND MANAGEMENT VIE 3.68 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA KONZERN AG 6.68 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA AXA ASSURANCES IARD 14.50 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS SA DIRECT ASSURANCES IARD 0.18 & REAL ESTATE FINANCIAL SERVICES FRANCE CFP - CREDIT COMPAGNIE FINANCIERE DE PARIS 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA INVESTMENT MANAGERS PARIS AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA GESTION FCP AXA INVESTMENT MANAGERS PARIS 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE GIE AXA GESTION DES ACTIFS AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA FUNDS MANAGEMENT LUXEMBOURG AXA INVESTMENT MANAGERS SA 98.84 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA FUNDS MANAGEMENT LUXEMBOURG AXA INVESTMENT MANAGERS PARIS 1.16 & REAL ESTATE FINANCIAL SERVICES FRANCE FONDS IMMOBILIERS PARIS OFFICE AXA COLLECTIVES 15.00 & REAL ESTATE FUNDS
Page 1 de 2 Consolidated companies as at December 31, 2002
------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ FINANCIAL SERVICES FRANCE FONDS IMMOBILIERS PARIS OFFICE AXA ASSURANCES VIE 20.00 & REAL ESTATE FUNDS FINANCIAL SERVICES FRANCE FONDS IMMOBILIERS PARIS OFFICE AXA ASSURANCES IARD 15.00 & REAL ESTATE FUNDS FINANCIAL SERVICES FRANCE AXA REAL ESTATE INVESMENT AXA INVESTMENT MANAGERS SA 99.99 & REAL ESTATE MANAGERS SA FINANCIAL SERVICES FRANCE AXA MULTIMANAGER SA AXA MULTIMANAGER LIMITED 99.98 & REAL ESTATE FINANCIAL SERVICES FRANCE AXA GESTION INTERESSEMENT AXA INVESTMENT MANAGERS PARIS 100.00 & REAL ESTATE FINANCIAL SERVICES GERMANY AXA INVESTMENT MANAGERS AXA INVESTMENT MANAGERS SA 85.00 & REAL ESTATE DEUTSCHLAND GMBH FINANCIAL SERVICES GERMANY AXA ASSET MANAGEMENT DEUTSCHLAND AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE GMBH FINANCIAL SERVICES GERMANY AXA FUNDS TRUST GMBH AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES GERMANY AXA REAL ESTATE MANAGERS AXA INVESTMENT IMOBILIEN 100.00 & REAL ESTATE DEUTSCHLAND FINANCIAL SERVICES GERMANY AXA MERKENS FONDS GMBH AXA INVESTMENT IMOBILIEN 100.00 & REAL ESTATE FINANCIAL SERVICES GERMANY AXA IMOBILIEN AG AXA REAL ESTATE INVESMENT 100.00 & REAL ESTATE MANAGERS SA FINANCIAL SERVICES GERMANY AXA PRIVATE EQUITY DEUTSCHLAND AXA INVESTMENT PRIVATE EQUITY 100.00 & REAL ESTATE GMBH EUROPE SA FINANCIAL SERVICES GERMANY AXA VORSORGEBANK AXA KONZERN AG 100.00 & REAL ESTATE FINANCIAL SERVICES GERMANY AXA BAUSPARKASSE AG AXA LEBENSVERSICHERING AG 33.02 & REAL ESTATE FINANCIAL SERVICES GERMANY AXA BAUSPARKASSE AG AXA KONZERN AG 66.67 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA INVESTMENTS MANAGERS LIMITED AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA MULTIMANAGER LIMITED AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA INVESTMENT MANAGERS UK AXA ASSET MANAGEMENT LIMITED 33.33 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA INVESTMENT MANAGERS UK AXA INVESTMENT MANAGERS SA 66.67 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA INVESTMENT MANAGERS AWF AXA ASSET MANAGEMENT LIMITED 100.00 & REAL ESTATE SERVICES LIMITED FINANCIAL SERVICES GREAT BRITAIN AXA INVESTMENT MANAGERS DEUTSCHLAND AXA ASSET MANAGEMENT LIMITED 100.00 & REAL ESTATE LIMITED FINANCIAL SERVICES GREAT BRITAIN AXA INVESTMENT MANAGERS GLOBAL AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE SERVICES FINANCIAL SERVICES GREAT BRITAIN SUN LIFE GLOBAL MANAGEMENT LIMITED AXA ASSET MANAGEMENT LIMITED 100.00 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA ASSET MANAGEMENT LIMITED AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA FUNDS MANAGEMENT UK LIMITED AXA INVESTMENT MANAGERS UK 100.00 & REAL ESTATE FINANCIAL SERVICES GREAT BRITAIN AXA REAL ESTATE INVESMENT AXA REAL ESTATE INVESMENT 100.00 & REAL ESTATE MANAGERS LIMITED MANAGERS SA FINANCIAL SERVICES HONG KONG AXA ROSENBERG INVESTMENT MANAGERS AXA ROSENBERG IM ASIA PACIFIC 100.00 & REAL ESTATE ASIA PACIFIC HONG KONG HOLD. LLC FINANCIAL SERVICES HONG KONG AXA INVESTMENT MANAGERS HK SAR AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES HUNGARY AXA BIZTOSITO PENSION FUND AXA NORDSTERN HOLDING 100.00 & REAL ESTATE FINANCIAL SERVICES IRELAND AXA INVESTMENT MANAGERS IRELAND AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES ITALY AXA INVESTMENT MANAGERS ITALIA AXA INVESTMENT MANAGERS SA 99.77 & REAL ESTATE FINANCIAL SERVICES ITALY AXA INVESTMENT MANAGERS ITALIA AXA ASSICURAZIONI 0.23 & REAL ESTATE FINANCIAL SERVICES ITALY AXA REAL ESTATE INVESMENT AXA REAL ESTATE INVESMENT 100.00 & REAL ESTATE MANAGERS ITALIA MANAGERS SA FINANCIAL SERVICES JAPAN AXA INVESTMENT MANAGERS TOKYO AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES JAPAN AXA ROSENBERG IM AXA INVESTMENT MANAGERS ROSENBERG 28.00 & REAL ESTATE FINANCIAL SERVICES JAPAN AXA ROSENBERG IM AXA INVESTMENT MANAGERS SA 59.99 & REAL ESTATE FINANCIAL SERVICES SINGAPORE AXA ROSENBERG INVESTMENT MANAGERS AXA ROSENBERG IM ASIA PACIFIC 100.00 & REAL ESTATE ASIA PACIFIC SINGAPORE HOLD. LLC FINANCIAL SERVICES SPAIN AXA REAL ESTATE INVESMENT AXA REAL ESTATE INVESMENT 100.00 & REAL ESTATE MANAGERS IBERICA MANAGERS SA FINANCIAL SERVICES THE NETHERLANDS AXA INVESTMENT MANAGERS DEN HAAG AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE FINANCIAL SERVICES UNITED STATES AXA INVESTMENT MANAGERS ROSE AXA INVESTMENT MANAGERS SA 90.00 & REAL ESTATE FINANCIAL SERVICES UNITED STATES AXA INVESTMENT MANAGERS ROSE AXA INVESTMENT MANAGERS HOLDING INC. 10.00 & REAL ESTATE FINANCIAL SERVICES UNITED STATES AXA INVESTMENT MANAGERS NORTH AXA INVESTMENT MANAGERS ROSE 100.00 & REAL ESTATE AMERICA FINANCIAL SERVICES UNITED STATES AXA INVESTMENT MANAGER PRIVATE AXA INVESTMENT MANAGEMENT PRIVATE 100.00 & REAL ESTATE EQUITY US EQUITY SA FINANCIAL SERVICES UNITED STATES ALLIANCE CAPITAL MANAGEMENT LLP AXA FINANCIAL INC. 25.09 & REAL ESTATE FINANCIAL SERVICES UNITED STATES ALLIANCE CAPITAL MANAGEMENT LLP THE EQUITABLE LIFE ASSURANCE 74.91 & REAL ESTATE SOCIETY FINANCIAL SERVICES UNITED STATES AXA INVESTMENT MANAGERS AXA INVESTMENT MANAGERS SA 100.00 & REAL ESTATE HOLDING INC. FINANCIAL SERVICES UNITED STATES AXA ROSENBERG LLC AXA INVESTMENT MANAGERS ROSE 75.00 & REAL ESTATE FINANCIAL SERVICES UNITED STATES AXA INVESTMENT MANAGERS AXA ASSET MANAGEMENT LIMITED 100.00 & REAL ESTATE & ADVISOR LIMITED FINANCIAL SERVICES UNITED STATES AXA ROSENBERG INVESTMENT MANAGERS AXA ROSENBERG LLC 80.40 & REAL ESTATE ASIA PACIFIC HOLD. LLC FINANCIAL SERVICES UNITED STATES AXA ROSENBERG INVESTMENT MANAGERS AXA INVESTMENT MANAGERS SA 19.60 & REAL ESTATE ASIA PACIFIC HOLD. LLC FINANCIAL SERVICES UNITED STATES AXA ALTERNATIVE ADVISORS INC AXA INVESTMENT MANAGERS SA 100.00
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------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ INSURANCE & REINSURANCE AUSTRALIA NATIONAL MUTUAL FUND MANAGEMENT AXA ASIA PACIFIC HOLDINGS LIMITED 100.00 INSURANCE & REINSURANCE AUSTRALIA NATIONAL MUTUAL FINANCIAL SERVICES AXA ASIA PACIFIC HOLDINGS LIMITED 100.00 INSURANCE & REINSURANCE AUSTRALIA NATIONAL MUTUAL INTERNATIONAL AXA ASIA PACIFIC HOLDINGS LIMITED 100.00 INSURANCE & REINSURANCE AUSTRIA AXA NORDSTERN LEBEN AXA NORDSTERN HOLDING 100.00 INSURANCE & REINSURANCE AUSTRIA AXA NORDSTERN VERSICHERUNG AXA NORDSTERN HOLDING 100.00 INSURANCE & REINSURANCE BELGIUM ARDENNE PREVOYANTE AXA BELGIUM 0.05 INSURANCE & REINSURANCE BELGIUM ARDENNE PREVOYANTE AXA HOLDINGS BELGIUM 99.95 INSURANCE & REINSURANCE BELGIUM AXA BELGIUM UAB 0.42 INSURANCE & REINSURANCE BELGIUM AXA BELGIUM AXA HOLDINGS BELGIUM 99.58 INSURANCE & REINSURANCE BELGIUM UAB AXA HOLDINGS BELGIUM 100.00 INSURANCE & REINSURANCE BELGIUM ASSURANCES DE LA POSTE VIE AXA HOLDINGS BELGIUM 50.00 INSURANCE & REINSURANCE BELGIUM ASSURANCES DE LA POSTE AXA HOLDINGS BELGIUM 50.00 INSURANCE & REINSURANCE CANADA AXA CANADA AXA 100.00 INSURANCE & REINSURANCE CANADA ACS CANADA VIE AXA RE 100.00 INSURANCE & REINSURANCE CANADA ACS CANADA NON VIE AXA RE 100.00 INSURANCE & REINSURANCE CANADA AXA CS ASSURANCE CANADA AXA CORPORATE SOLUTION ASSURANCE 100.00 INSURANCE & REINSURANCE CANADA AXA CANADA ADP AXA CANADA 100.00 INSURANCE & REINSURANCE FRANCE AXA FRANCE IARD AXA FRANCE ASSURANCE 99.92 INSURANCE & REINSURANCE FRANCE AXA CORPORATE SOLUTION ASSURANCE AXA RE 98.49 INSURANCE & REINSURANCE FRANCE ARGOVIE AXA FRANCE VIE 94.03 INSURANCE & REINSURANCE FRANCE AXA FRANCE VIE AXA COLLECTIVES 8.35 INSURANCE & REINSURANCE FRANCE AXA FRANCE VIE AXA FRANCE ASSURANCE 91.65 INSURANCE & REINSURANCE FRANCE AXA RE FINANCE AXA RE 79.00 INSURANCE & REINSURANCE FRANCE COMPAGNIE GENERALE REASSURANCE AXA RE 99.99 MONTE-CARLO INSURANCE & REINSURANCE FRANCE NATIO ASSURANCES AXA FRANCE IARD 50.00 INSURANCE & REINSURANCE FRANCE NSM VIE AXA FRANCE ASSURANCE 39.93 INSURANCE & REINSURANCE FRANCE AXA COLLECTIVES AXA FRANCE ASSURANCE 95.71 INSURANCE & REINSURANCE FRANCE AXA COLLECTIVES AXA FRANCE IARD 3.69 INSURANCE & REINSURANCE FRANCE AXA RE AXA COLLECTIVES 0.02 INSURANCE & REINSURANCE FRANCE AXA RE AXA FRANCE ASSURANCE 0.10 INSURANCE & REINSURANCE FRANCE AXA RE AXA ASSURANCES IARD 4.90 INSURANCE & REINSURANCE FRANCE AXA RE AXA 94.99 INSURANCE & REINSURANCE FRANCE DIRECT ASSURANCES IARD AXA FRANCE ASSURANCE 100.00 INSURANCE & REINSURANCE FRANCE JURIDICA AXA FRANCE ASSURANCE 98.51 INSURANCE & REINSURANCE FRANCE SAINT GEORGES RE AXA 100.00 INSURANCE & REINSURANCE FRANCE AXA CESSIONS AXA RE 100.00 INSURANCE & REINSURANCE FRANCE SPS RE AXA RE 69.95 INSURANCE & REINSURANCE FRANCE NSM VIE AXA ASSURANCES IARD 0.14 INSURANCE & REINSURANCE FRANCE AXA ASSISTANCE AXA 100.00 INSURANCE & REINSURANCE GERMANY AXA VERSICHERUNG AG AXA KONZERN AG 74.41 INSURANCE & REINSURANCE GERMANY AXA VERSICHERUNG AG GRE CONTINENTAL EUROPE HOLDING GMBH 25.59 INSURANCE & REINSURANCE GERMANY AXA LEBEN AXA VERSICHERUNG AG 52.19 INSURANCE & REINSURANCE GERMANY AXA LEBEN AXA KONZERN AG 47.81 INSURANCE & REINSURANCE GERMANY AXA KRANKENVERSICHERUNG AG AXA KONZERN AG 52.69 INSURANCE & REINSURANCE GERMANY AXA KRANKENVERSICHERUNG AG AXA LEBEN 35.32 INSURANCE & REINSURANCE GERMANY AXA KRANKENVERSICHERUNG AG DEUTSCHE AERZTEVERSICHERUNG 11.41 INSURANCE & REINSURANCE GERMANY AXA NORDSTERN ART AXA KONZERN AG 100.00 INSURANCE & REINSURANCE GERMANY DEUTSCHE AERZTEVERSICHERUNG AG AXA KONZERN AG 97.87 INSURANCE & REINSURANCE GERMANY PRO BAV PENSIONSKASSE AXA KONZERN AG 100.00
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------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ INSURANCE & REINSURANCE GERMANY ACS ASSURANCE ALLEMAGNE AXA CORPORATE SOLUTION ASSURANCE 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA UK HOLDING PLC AXA RE 100.00 INSURANCE & REINSURANCE GREAT BRITAIN PPP GROUP PLC GUARDIAN ROYAL EXCHANGE PLC 100.00 INSURANCE & REINSURANCE GREAT BRITAIN PPP HEALTHCARE PROFESSIONAL SERVICES AXA INSURANCE UK 100.00 LIMITED INSURANCE & REINSURANCE GREAT BRITAIN AXA SUN LIFE PLC AXA UK PLC 100.00 INSURANCE & REINSURANCE GREAT BRITAIN ROYAL EXCHANGE ASSURANCE PLC GUARDIAN ROYAL EXCHANGE PLC 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA INSURANCE UK DISCONTINUED BUSINESS AXA INSURANCE UK 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA REINSURANCE UK PLC - INSURANCE AXA REINSURANCE UK PLC - REINSURANCE 100.00 INSURANCE & REINSURANCE GREAT BRITAIN ACS ASSURANCES UK BRANCH - REINSURANCE ACS ASSURANCE UK BRANCH - INSURANCE 100.00 INSURANCE & REINSURANCE GREAT BRITAIN ACS ASSURANCE UK BRANCH - INSURANCE AXA CORPORATE SOLUTION ASSURANCE 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA UK PLC AXA 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA GLOBAL RISKS (U.K.) LIMITED AXA RE 100.00 INSURANCE & REINSURANCE GREAT BRITAIN ENGLISH & SCOTTISH AXA UK 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA REINSURANCE UK PLC - REINSURANCE AXA UK HOLDING PLC 100.00 INSURANCE & REINSURANCE GREAT BRITAIN AXA INSURANCE UK GUARDIAN ROYAL EXCHANGE PLC 100.00 INSURANCE & REINSURANCE HONG KONG AXA GENERAL INSURANCE HK AXA 100.00 INSURANCE & REINSURANCE HONG KONG AXA INSURANCE HONG-KONG AXA INSURANCE INVESTMENT HOLDING 82.50 INSURANCE & REINSURANCE HONG KONG AXA INSURANCE HONG-KONG AXA 17.50 INSURANCE & REINSURANCE HONG KONG AXA CHINA REGION LIMITED NATIONAL MUTUAL INTERNATIONAL 100.00 INSURANCE & REINSURANCE HUNGARY AXA BIZTOSITO AXA KONZERN AG 100.00 INSURANCE & REINSURANCE IRELAND GUARDIAN PMPA GROUP LIMITED GUARDIAN ROYAL EXCHANGE PLC 100.00 INSURANCE & REINSURANCE ITALY AXA INTERLIFE AXA ITALIA S.P.A 100.00 INSURANCE & REINSURANCE ITALY UAP VITA AXA ITALIA S.P.A 100.00 INSURANCE & REINSURANCE ITALY AXA ASSICURAZIONI AXA ITALIA S.P.A 98.12 INSURANCE & REINSURANCE ITALY AXA ASSICURAZIONI AXA COLLECTIVES 1.88 INSURANCE & REINSURANCE JAPAN AXA GROUP LIFE JAPAN AXA INSURANCE HOLDING JAPAN 100.00 INSURANCE & REINSURANCE JAPAN AXA LIFE JAPAN AXA INSURANCE HOLDING JAPAN 100.00 INSURANCE & REINSURANCE JAPAN AXA NON LIFE INSURANCE CO LIMITED AXA 100.00 INSURANCE & REINSURANCE LUXEMBOURG AXA ASSURANCE VIE LUXEMBOURG AXA LUXEMBOURG SA 100.00 INSURANCE & REINSURANCE LUXEMBOURG AXA ASSURANCES LUXEMBOURG AXA LUXEMBOURG SA 100.00 INSURANCE & REINSURANCE LUXEMBOURG FUTUR RE AXA CORPORATE SOLUTION ASSURANCE 100.00 INSURANCE & REINSURANCE LUXEMBOURG CREALUX AXA HOLDINGS BELGIUM 100.00 INSURANCE & REINSURANCE MOROCCO AXA ASSURANCE MAROC AXA ONA 100.00 INSURANCE & REINSURANCE MOROCCO EPARGNE CROISSANCE AXA ASSURANCE MAROC 99.59 INSURANCE & REINSURANCE PORTUGAL AXA PORTUGAL COMPANHIA DE SEGUROS AXA ASSURANCES VIE 87.63 VIDA SA INSURANCE & REINSURANCE PORTUGAL AXA PORTUGAL COMPANHIA DE SEGUROS AXA 7.46 VIDA SA INSURANCE & REINSURANCE PORTUGAL AXA PORTUGAL COMPANHIA DE SEGUROS AXA ASSURANCES VIE 5.37 INSURANCE & REINSURANCE PORTUGAL AXA PORTUGAL COMPANHIA DE SEGUROS AXA 83.01 INSURANCE & REINSURANCE PORTUGAL AXA PORTUGAL COMPANHIA DE SEGUROS AXA PORTUGAL SEGUROS VIDA 2.15 INSURANCE & REINSURANCE PORTUGAL AXA PORTUGAL COMPANHIA DE SEGUROS AXA CORPORATE SOLUTION ASSURANCE 9.07 INSURANCE & REINSURANCE SINGAPORE AXA LIFE SINGAPOUR NATIONAL MUTUAL INTERNATIONAL 100.00 INSURANCE & REINSURANCE SINGAPORE AXA INSURANCE SINGAPORE AXA INSURANCE INVESTMENT HOLDING 74.23 INSURANCE & REINSURANCE SINGAPORE AXA INSURANCE SINGAPORE AXA 25.77 INSURANCE & REINSURANCE SINGAPORE AXA CORPORATE SOLUTIONS ASIA PACIFIC AXA RE 100.00 PRIVATE LIMITED INSURANCE & REINSURANCE SPAIN AXA AURORA VIDA DE SEGUROS Y AXA AURORA 99.68 REASEGUROS INSURANCE & REINSURANCE SPAIN AXA AURORA VIDA SA AXA 1.45 INSURANCE & REINSURANCE SPAIN AXA AURORA VIDA SA AXA AURORA IBERICA 98.51 INSURANCE & REINSURANCE SPAIN AYUDA LEGAL SA DE SEGUROS Y REASEGUROS AXA AURORA IBERICA 88.00 INSURANCE & REINSURANCE SPAIN AYUDA LEGAL SA DE SEGUROS Y REASEGUROS AXA AURORA VIDA 12.00
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------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ INSURANCE & REINSURANCE SPAIN AXA AURORA IBERICA AXA AURORA 99.68 INSURANCE & REINSURANCE SPAIN HILO DIRECT SA DE SEGUROS Y REASEGUROS AXA AURORA 50.00 INSURANCE & REINSURANCE SWITZERLAND AXA COMPAGNIE D'ASSURANCE SUR LA VIE AXA COMPAGNIE D'ASSURANCES 5.00 INSURANCE & REINSURANCE SWITZERLAND AXA COMPAGNIE D'ASSURANCE SUR LA VIE AXA 95.00 INSURANCE & REINSURANCE SWITZERLAND AXA COMPAGNIE D'ASSURANCES AXA 100.00 INSURANCE & REINSURANCE THE NETHERLANDS AXA ZORG NV AXA VERZEKERINGEN BV 100.00 INSURANCE & REINSURANCE THE NETHERLANDS AXA SCHADE AXA VERZEKERINGEN BV 100.00 INSURANCE & REINSURANCE THE NETHERLANDS UNIROBE GROEP AXA NEDERLAND BV 100.00 INSURANCE & REINSURANCE THE NETHERLANDS AXA LEVEN NV AXA VERZEKERINGEN BV 100.00 INSURANCE & REINSURANCE TURKEY AXA OYAK SIGORTA AXA OYAK HOLDING AS 70.91 INSURANCE & REINSURANCE TURKEY AXA OYAK HAYAT SIGORTA AXA OYAK HOLDING AS 100.00 INSURANCE & REINSURANCE UNITED STATES AXA AMERICA CORPORATE SOLUTIONS, INC AXA RE 100.00 INSURANCE & REINSURANCE UNITED STATES AXA CORPORATE SOLUTION INSURANCE CO AXA CORPORATE SOLUTIONS REINSURANCE CY 100.00 INSURANCE & REINSURANCE UNITED STATES AXA RE AMERICA INSURANCE COMPANY AXA CORPORATE SOLUTIONS PROPERTY 100.00 & CASUALTY INSURANCE & REINSURANCE UNITED STATES AXA CORPORATE SOLUTIONS PROPERTY AXA CORPORATE SOLUTIONS REINSURANCE CY 100.00 & CASUALTY INSURANCE & REINSURANCE UNITED STATES THE EQUITABLE LIFE ASSURANCE SOCIETY AXA FINANCIAL INC. 100.00 INSURANCE & REINSURANCE UNITED STATES AXA CORPORATE SOLUTIONS LIFE AXA CORPORATE SOLUTIONS REINSURANCE CY 100.00 REINSURANCE COMPANY INSURANCE & REINSURANCE UNITED STATES AXA CORPORATE SOLUTIONS REINSURANCE CY AXA AMERICA CORPORATE SOLUTIONS, INC 100.00
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------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ HOLDINGS & MISC. BUSINESSES AUSTRALIA AXA ASIA PACIFIC HOLDINGS AXA 42.65 LIMITED HOLDINGS & MISC. BUSINESSES AUSTRALIA AXA ASIA PACIFIC HOLDINGS AXA EQUITY & LAW ASSURANCE 9.01 LIMITED SOCIETY HOLDINGS & MISC. BUSINESSES AUSTRIA AXA NORDSTERN HOLDING AXA LEBENSVERSICHERUBG AG 10.05 HOLDINGS & MISC. BUSINESSES AUSTRIA AXA NORDSTERN HOLDING AXA VERSICHERUNG AG 89.95 HOLDINGS & MISC. BUSINESSES BELGIUM AXA HOLDINGS BELGIUM AXA 84.28 HOLDINGS & MISC. BUSINESSES BELGIUM AXA HOLDINGS BELGIUM AXA ASSURANCES IARD 5.41 HOLDINGS & MISC. BUSINESSES BELGIUM AXA HOLDINGS BELGIUM VINCI BV 4.07 HOLDINGS & MISC. BUSINESSES BELGIUM AXA HOLDINGS BELGIUM AXA CORPORATE SOLUTION 6.21 ASSURANCE HOLDINGS & MISC. BUSINESSES FRANCE JOUR FINANCE AXA ASSURANCES IARD 39.53 HOLDINGS & MISC. BUSINESSES FRANCE JOUR FINANCE AXA ASSURANCES VIE 60.47 HOLDINGS & MISC. BUSINESSES FRANCE SOCIETE BEAUJON AXA 99.77 HOLDINGS & MISC. BUSINESSES FRANCE MOFIPAR AXA 99.90 HOLDINGS & MISC. BUSINESSES FRANCE SOCIETE BEAUJON AXA ASSURANCES IARD 0.22 HOLDINGS & MISC. BUSINESSES FRANCE COLISEE EXCELLENCE AXA PARTICIPATION II 100.00 HOLDINGS & MISC. BUSINESSES FRANCE AXA CHINA AXA 51.00 HOLDINGS & MISC. BUSINESSES FRANCE AXA CHINA AXA CHINA REGION LIMITED 49.00 HOLDINGS & MISC. BUSINESSES FRANCE FDR PARTICIPATIONS FINAXA 100.00 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA 99.78 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES ALLIANCE CAPITAL MANAGEMENT 0.01 LLP HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA KONZERN AG 0.04 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES THE EQUITABLE LIFE ASSURANCE 0.02 SOCIETY HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES NATIONAL MUTUAL FINANCIAL 0.01 SERVICES HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA UK PLC 0.04 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA FRANCE ASSURANCE 0.06 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA ROYALE BELGE NON VIE 0.01 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA ROYALE BELGE 0.01 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA LIFE JAPAN 0.01 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA RE 0.01 HOLDINGS & MISC. BUSINESSES FRANCE AXA TECHNOLOGY SERVICES AXA INVESTMENT MANAGERS SA 0.01 HOLDINGS & MISC. BUSINESSES FRANCE AXA PARTICIPATION II AXA 100.00 HOLDINGS & MISC. BUSINESSES FRANCE AXA FRANCE ASSURANCE AXA 100.00 HOLDINGS & MISC. BUSINESSES GERMANY AXA KONZERN AG VINCI BV 39.73 HOLDINGS & MISC. BUSINESSES GERMANY AXA KONZERN AG AXA 25.49 HOLDINGS & MISC. BUSINESSES GERMANY AXA KONZERN AG KOLNISCHE VERWALTUNGS 25.63 HOLDINGS & MISC. BUSINESSES GERMANY GRE CONTINENTAL EUROPE AXA KONZERN AG 100.00 HOLDING GMBH HOLDINGS & MISC. BUSINESSES GERMANY KOLNISCHE VERWALTUNGS VINCI BV 67.72 HOLDINGS & MISC. BUSINESSES GERMANY KOLNISCHE VERWALTUNGS AXA 8.83 HOLDINGS & MISC. BUSINESSES GERMANY KOLNISCHE VERWALTUNGS AXA KONZERN AG 23.02 HOLDINGS & MISC. BUSINESSES GREAT BRITAIN GUARDIAN ROYAL EXCHANGE PLC AXA UK PLC 100.00 HOLDINGS & MISC. BUSINESSES GREAT BRITAIN AXA UK PLC AXA EQUITY & LAW PLC 21.69 HOLDINGS & MISC. BUSINESSES GREAT BRITAIN AXA UK PLC AXA 78.31 HOLDINGS & MISC. BUSINESSES GREAT BRITAIN AXA EQUITY & LAW PLC AXA 99.95 HOLDINGS & MISC. BUSINESSES ITALY AXA ITALIA S.P.A AXA 98.24 HOLDINGS & MISC. BUSINESSES ITALY AXA ITALIA S.P.A AXA ASSURANCES VIE 1.76 HOLDINGS & MISC. BUSINESSES JAPAN AXA INSURANCE HOLDING JAPAN AXA 96.42 HOLDINGS & MISC. BUSINESSES LUXEMBOURG AXA LUXEMBOURG SA AXA HOLDINGS BELGIUM 100.00 HOLDINGS & MISC. BUSINESSES MOROCCO AXA ONA AXA 51.00 HOLDINGS & MISC. BUSINESSES SINGAPORE AXA HOLDINGS PTE LTD AXA 100.00 HOLDINGS & MISC. BUSINESSES SPAIN AXA AURORA AXA 100.00
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------------------------------------------------------------------------------------------------------------------------------------ ACTIVITY COUNTRY CONSOLIDATED COMPANY SHAREHOLDERS OWNERSHIP ------------------------------------------------------------------------------------------------------------------------------------ HOLDINGS & MISC. BUSINESSES THE NETHERLANDS AXA NEDERLAND BV ROYALE BELGE INVESTISSEMENT 14.10 HOLDINGS & MISC. BUSINESSES THE NETHERLANDS AXA NEDERLAND BV AXA BELGIUM 40.20 HOLDINGS & MISC. BUSINESSES THE NETHERLANDS AXA NEDERLAND BV AXA HOLDINGS BELGIUM 45.70 HOLDINGS & MISC. BUSINESSES THE NETHERLANDS VINCI BV AXA 100.00 HOLDINGS & MISC. BUSINESSES THE NETHERLANDS AXA VERZEKERINGEN GELDERLAND 100.00 HOLDINGS & MISC. BUSINESSES TURKEY AXA OYAK HOLDING AS AXA 50.00 HOLDINGS & MISC. BUSINESSES UNITED STATES AXA FINANCIAL INC. SOCIETE BEAUJON 0.44 HOLDINGS & MISC. BUSINESSES UNITED STATES AXA FINANCIAL INC. AXA CORPORATE SOLUTIONS 0.03 REINSURANCE CY HOLDINGS & MISC. BUSINESSES UNITED STATES AXA FINANCIAL INC. AXA BELGIUM 0.47 HOLDINGS & MISC. BUSINESSES UNITED STATES AXA FINANCIAL INC. AXA RE 2.95 HOLDINGS & MISC. BUSINESSES UNITED STATES AXA FINANCIAL INC. AXA 96.10
Page 2 de 2 AXA FINANCIAL, INC. - SUBSIDIARY ORGANIZATION CHART- 2003 03/29/04 LAST UPDATED: 9/30/03
State of State of Type of Incorp. or Principal Federal Subsidiary Domicile Operation Tax ID # ---------- -------- --------- -------- AXA Financial, Inc. (Notes 1 & 2) ** DE NY 13-3623351 Frontier Trust Company, FSB (Note 7) ND ND 45-0373941 AXA Financial Services, LLC (Note 2) DE NY 52-2197822 AXA Distribution Holding Corporation (Note 2) DE NY 13-4078005 AXA Advisors, LLC (Note 5) DE NY 13-4071393 AXA Network, LLC (Note 6) Operating DE NY 06-1555494 AXA Network of Alabama, LLC Operating AL AL 06-1562392 AXA Network of Connecticut, Maine and New York, LLC Operating DE NY 13-4085852 AXA Network Insurance Agency of Massachusetts, LLC Operating MA MA 04-3491734 AXA Network of Nevada, Inc. Operating NV NV 13-3389068 AXA Network of Puerto Rico, Inc. Operating P.R. P.R. 66-0577477 AXA Network Insurance Agency of of Texas, Inc. Operating TX TX 75-2529724 Paramount Planners, LLC Operating DE NY 06-1602479 The Equitable Life Assurance Society of the United States (Note 2) * Insurance NY NY 13-5570651 The Equitable of Colorado, Inc. * Insurance CO CO 13-3198083 Equitable Deal Flow Fund, L.P. Investment DE NY 13-3385076 Equitable Managed Assets, L.P. Investment DE NY 13-3385080 Real Estate Partnership Equities (various) Investment ** - Equitable Holdings, LLC (Notes 3 & 4) HCO NY NY 22-2766036 See Attached Listing A ACMC, Inc. (Note 4) HCO DE NY 13-2677213 Wil-Gro, Inc Investment PA PA 23-2702404 STCS, Inc. Investment DE NY 13-3761592 Fox Run, Inc. Investment MA NY 23-2762596 FTM Corp. Investment MD MD 13-3778225 EVSA, Inc. Investment DE PA 23-2671508 Equitable Rowes Wharf, Inc. Investment MA MA 04-3272826 Prime Property Funding II, Inc. Operating DE NY 13-3961599 Sarasota Prime Hotels, LLC Investment FL GA 58-2330533 ECLL, Inc. Investment MI GA 58-2377569 Parent's Number of Percent of Shares Ownership Comments Owned or Control (e.g., Basis of Control) ----- ---------- ------------------------ AXA Financial, Inc. (Notes 1 & 2) ** Frontier Trust Company, FSB (Note 7) 1,000 100.00% AXA Financial Services, LLC (Note 2) - 100.00% AXA Distribution Holding Corporation (Note 2) 1,000 100.00% AXA Advisors, LLC (Note 5) - 100.00% AXA Network, LLC (Note 6) - 100.00% AXA Network of Alabama, LLC - 100.00% AXA Network of Connecticut, Maine and New York, LLC - 100.00% AXA Network Insurance Agency of Massachusetts, LLC - 100.00% AXA Network of Nevada, Inc. 100.00% AXA Network of Puerto Rico, Inc. 100.00% AXA Network Insurance Agency of of Texas, Inc. 1,050 100.00% Paramount Planners, LLC - 100.00% The Equitable Life Assurance Society of the United States (Note 2) * 2,000,000 100.00% NAIC # 62944 The Equitable of Colorado, Inc. * 1,000,000 100.00% NAIC # 62880 Equitable Deal Flow Fund, L.P. - - G.P & L.P. Equitable Managed Assets, L.P. - - G.P. Real Estate Partnership Equities (various) - - ** Equitable Holdings, LLC (Notes 3 & 4) - 100.00% See Attached Listing A ACMC, Inc. (Note 4) 5,000,000 100.00% Wil-Gro, Inc 1,000 100.00% STCS, Inc. 1,000 100.00% Fox Run, Inc. 1,000 100.00% FTM Corp. 1,000 100.00% EVSA, Inc. 50 100.00% Equitable Rowes Wharf, Inc. 1,000 100.00% Prime Property Funding II, Inc. 100.00% Sarasota Prime Hotels, LLC - 100.00% ECLL, Inc. 100.00%
Page 1 of 6 AXA FINANCIAL, INC. - SUBSIDIARY ORGANIZATION CHART- 2003 03/29/04 * Affiliated Insurer ** Information relating to Equitable's Real Estate Partnership Equities is disclosed in Schedule BA, Part 1 of Equitable Life's Annual Statement, which has been filed with the N.Y.S. Insurance Department. *** All subsidiaries are corporations, except as otherwise noted. 1. The Equitable Companies Incorporated changed its name to AXA Financial, Inc. on Sept. 3, 1999. 2. Effective Sept. 20, 1999, AXA Financial, Inc. transferred ownership of Equitable Life to AXA Client Solutions, LLC, which was formed on July 19, 1999. Effective January 1, 2002, AXA Client Solutions, LLC transferred ownership of Equitable Life and AXA Distribution Holding Corp. to AXA Financial, Inc. Effective May 1, 2002, AXA Client Solutions, LLC changed its name to AXA Financial Services, LLC. Effective June 1, 2002, AXA Financial, Inc. transferred ownership of Equitable Life and AXA Distribution Holding Corp. to AXA Financial Services, LLC. 3. Equitable Holding Corp. was merged into Equitable Holdings, LLC on Dec. 19, 1997. 4. In October 1999, Alliance Capital Management Holding L.P. ("Alliance Holding") reorganized by transferring its business and assets to Alliance Capital Management L.P., a newly formed private partnership ("Alliance Capital"). As of June 25, 2003, AXF and its subsidiaries owned 54.6% of the issued and outstanding units of limited partnership interest in Alliance Capital (the "Alliance Capital Units"), as follows: AXF held directly 32,699,154 Alliance Capital Units (13.05%), Equitable Life directly owned 5,219,396 Alliance Capital Units (2.08%), ACMC, Inc. owned 66,220,822 Alliance Capital Units (26.42%), and ECMC, LLC owned 32,720,227 Alliance Capital Units (13.05%). Alliance Capital Management Corporation also owns a 1% general partnership interest in Alliance Capital. In addition, ECMC, LLC and ACMC, Inc. each own 722,178 units (0.29% each), representing assignments of beneficial ownership of limited partnership interests in Alliance Holding (the "Alliance Holding Units"). Alliance Capital Management Corp. owns 100,000 units of general partnership interest (0.04%), in Alliance Holding. Alliance Holding Units are publicly traded on the New York Stock exchange. 5. EQ Financial Consultants (formerly, Equico Securities, Inc.) was merged into AXA Advisors, LLC on Sept. 20, 1999. AXA Advisors, LLC was transferred from Equitable Holdings, LLC to AXA Distribution Holding Corporation on Sept. 21, 1999. 6. Effective March 15, 2000, Equisource of New York, Inc. and 14 of its subsidiaries were merged into AXA Network, LLC, which was then sold to AXA Distribution Holding Corp. EquiSource of Alabama, Inc. became AXA Network of Alabama, LLC. EquiSource Insurance Agency of Massachusetts, Inc. became AXA Network Insurance Agency of Massachusetts, LLC. Equisource of Nevada, Inc., of Puerto Rico, Inc., and of Texas, Inc., changed their names from "EquiSource" to become "AXA Network", respectively. Effective February 1, 2002, Equitable Distributors Insurance Agency of Texas, Inc. changed its name to AXA Distributors Insurance Agency of Texas, Inc. Effective February 13, 2002 Equitable Distributors Insurance Agency of Massachusetts, LLC changed its name to AXA Distributors Insurance Agency of Massachusetts, LLC. 7. Effective June 6, 2000, Frontier Trust Company was sold by ELAS to AXF and merged into Frontier Trust Company, FSB. 8. Effective June 1, 2001, Equitable Structured Settlement Corp was transferred from ELAS to Equitable Holdings, LLC. Page 2 of 6 AXA FINANCIAL, INC. - SUBSIDIARY ORGANIZATION CHART- 2003 03/29/04 Dissolved: - On November 3, 2000, Donaldson, Lufkin & Jenrette, Inc. was sold to Credit Suisse Group. - 100 Federal Street Funding Corporation was dissolved August 31, 1998. - 100 Federal Street Realty Corporation was dissolved December 20, 2001. - CCMI Corp. was dissolved on October 7, 1999. - ELAS Realty, Inc. was dissolved January 29, 2002. - EML Associates, L.P. was dissolved March 27, 2001. - EQ Services, Inc. was dissolved May 11, 2001. - Equitable BJVS, Inc. was dissolved October 3, 1999. - Equitable Capital Management Corp. became ECMC, LLC on November 30, 1999. - Equitable JV Holding Corp. was dissolved on June 1, 2002.F142 - Equitable JVS II, Inc. was dissolved December 4, 1996 - Equitable Underwriting & Sales Agency (Bahamas) Ltd. was dissolved on December 31, 2000. - EREIM LP Associates (L.P.) was dissolved March 27, 2001. - EREIM Managers Corporation was dissolved March 27, 2001. - EVLICO East Ridge, Inc. was dissolved Jan. 13, 2001 - EVLICO, Inc. was dissolved in 1999. - Franconom, Inc. was dissolved on December 4, 2000. - GP/EQ Southwest, Inc. was dissolved October 21, 1997 - HVM Corp. was dissolved on Feb. 16, 1999. - ML/EQ Real Estate Portfolio, L.P. was dissolved March 27, 2001. - Prime Property Funding, Inc. was dissolved in Feb. 1999. - Sarasota Prime Hotels, Inc. became Sarasota Prime Hotels, LLC. - Six-Pac G.P., Inc. was dissolved July 12,1999 Page 3 of 6 AXA FINANCIAL, INC. - SUBSIDIARY ORGANIZATION CHART- 2003 03/29/04 LISTING A - Equitable Holdings, LLC
State of State of Type of Incorp. or Principal Federal Subsidiary Domicile Operation Tax ID # ---------- -------- --------- -------- AXA Financial, Inc. AXA Financial Services, LLC (Note 2) The Equitable Life Assurance Society of the United States * Equitable Holdings, LLC ELAS Securities Acquisition Corporation Operating DE NY 13-3049038 Equitable Casualty Insurance Company * Operating VT VT 06-1166226 ECMC, LLC (See Note 4 on Page 2) Operating DE NY 13-3266813 Equitable Capital Private Income & Equity Partnership II, L.P. Investment DE NY 13-3544879 Alliance Capital Management Corporation (See Note 4 on Page 2) Operating DE NY 13-3633538 See Attached Listing B Equitable JVS, Inc. Investment DE GA 58-1812697 Astor Times Square Corp. Investment NY NY 13-3593699 Astor/Broadway Acquisition Corp. Investment NY NY 13-3593692 PC Landmark, Inc. Investment TX TX 75-2338215 EJSVS, Inc. Investment DE NJ 58-2169594 AXA Distributors, LLC Operating DE NY 52-2233674 AXA Distributors Insurance Agency of Alabama, LLC Operating DE AL 52-2255113 AXA Distriburors Insurance Agency, LLC Operating DE CT, ME,NY 06-1579051 AXA Distributors Insurance Agency of Massachusetts, LLC Operating MA MA 04-3567096 AXA Distributors Insurance Agency of Texas, Inc. Operating TX TX 74-3006330 J.M.R. Realty Services, Inc. Operating DE NY 13-3813232 Equitable Structured Settlement Corp. (See Note 8 on Page 2) Operating DE NJ 22-3492811 Parent's Number of Percent of Shares Ownership Comments Owned or Control (e.g., Basis of Control) ----- ---------- ------------------------ AXA Financial, Inc. AXA Financial Services, LLC (Note 2) The Equitable Life Assurance Society of the United States * Equitable Holdings, LLC ELAS Securities Acquisition Corporation 500 100.00% Equitable Casualty Insurance Company * 1,000 100.00% ECMC, LLC (See Note 4 on Page 2) - 100.00% Equitable Capital Private Income & Equity ECMC is G.P. Partnership II, L.P. - - ("Deal Flow Fund II") Alliance Capital Management Corporation (See Note 4 on Page 2) 100 100.00% See Attached Listing B Equitable JVS, Inc. 1,000 100.00% Astor Times Square Corp. 100 100.00% Astor/Broadway Acquisition Corp. 100 100.00% G.P. of Astor Acquisition. L.P. PC Landmark, Inc. 1,000 100.00% EJSVS, Inc. 1,000 100.00% AXA Distributors, LLC - 100.00% AXA Distributors Insurance Agency of Alabama, LLC - 100.00% AXA Distriburors Insurance Agency, LLC - 100.00% AXA Distributors Insurance Agency of Massachusetts, LLC - 100.00% AXA Distributors Insurance Agency of Texas, Inc. 1,000 100.00% J.M.R. Realty Services, Inc. 1,000 100.00% Equitable Structured Settlement Corp. (See Note 8 on Page 2) 100 100.00%
* Affiliated Insurer Equitable Investment Corp merged into Equitable Holdings, LLC on November 30, 1999. Equitable Capital Management Corp. became ECMC, LLC on November 30, 1999. Effective March 15, 2000, Equisource of New York, Inc. and its subsidiaries were merged into AXA Network, LLC, which was then sold to AXA Distribution Holding Holding Corp. Efective January 1, 2002, Equitable Distributors, Inc. merged into AXA Distributors, LLC. Page 4 of 6 AXA FINANCIAL, INC. - SUBSIDIARY ORGANIZATION CHART- 2003 03/29/04 LISTING B - Alliance Capital Management Corp.
State of State of Type of Incorp. or Principal Federal Subsidiary Domicile Operation Tax ID # ---------- -------- --------- -------- AXA Financial, Inc. AXA Financial Services, LLC (Note 2) The Equitable Life Assurance Society of the United States Equitable Holdings, LLC Alliance Capital Management Corporation Alliance Capital Management Holding L.P. (See Note 4 on Page 2) Operating DE NY Alliance Capital Management L.P. (See Note 4 on Page 2) Operating DE NY 13-3434400 Albion Alliance LLC Operating DE NY 13-3903734 Cursitor Alliance LLC HCO DE MA 22-3424339 Alliance Capital Management LLC HCO DE NY Sanford C. Bernstein & Co., LLC Operating DE NY Alliance Capital Management Corp. of Delaware HCO DE NY 13-2778645 ACAM Trust Company Private Ltd. Operating India India - ACM Global Investor Services S.A. Operating Lux. Lux. - ACM New-Alliance (Luxembourg) S.A. Operating Lux. Lux. - ACM Fund Services (Espana) S.L. Operating Spain Spain - ACM International (France) SAS Operating France France - ACM Software Services Ltd. Operating DE NY 13-3910857 Alliance Barra Research Institute, Inc. Operating DE NY 13-3548918 Alliance Capital Asset Management (Japan) Ltd Operating Japan Japan - Alliance Capital Australia Limited Operating Aust. Aust. - Far Eastern Alliance Asset Management Operating Taiwan Taiwan - Alliance Capital Global Derivatives Corp. Operating DE NY 13-3626546 Alliance Capital Latin America Ltd. Operating Brazil Brazil - Alliance Capital Limited Operating U.K. U.K. - Alliance Capital Services Ltd. Operating U.K. U.K. - Dimensional Trust Management Ltd. Operating U.K. U.K. - Alliance Capital (Luxembourg) S.A. Operating Lux. Lux. - Alliance Capital Management (Asia) Ltd. Operating DE Singapore 13-3752293 Alliance Capital Management Australia Limited Operating Aust. Aust. - Alliance Capital Management Canada, Inc. Operating DE Canada 13-3630460 Alliance Capital Management New Zealand Limited Operating N.Z. N.Z. - Parent's Number of Percent of Shares Ownership Comments Owned or Control (e.g., Basis of Control) ----- ---------- ------------------------ AXA Financial, Inc. AXA Financial Services, LLC (Note 2) The Equitable Life Assurance Society of the United States Equitable Holdings, LLC Alliance Capital Management Corporation owns 1% GP interest in Alliance Capital Management L.P. and 100,000 GP units in Alliance Capital Management Holding L.P. Alliance Capital Management Holding L.P. (See Note 4 on Page 2) - Alliance Capital Management L.P. (See Note 4 on Page 2) Albion Alliance LLC 37.60% Equitable Life = 4.7%; 3rd parties = 57.7% Cursitor Alliance LLC 100.00% Alliance Capital Management LLC 100.00% Sanford C. Bernstein & Co., LLC 100.00% Alliance Capital Management Corp. of Delaware 10 100.00% ACAM Trust Company Private Ltd. 100.00% ACM Global Investor Services S.A. 99.00% Alliance Capital Oceanic Corp. owns 1% ACM New-Alliance (Luxembourg) S.A. 1.00% New Alliance Asset Mngmnt (Asia) Ltd owns 99% ACM Fund Services (Espana) S.L. 100.00% ACM International (France) SAS 100.00% ACM Software Services Ltd. 100.00% Alliance Barra Research Institute, Inc. 1,000 100.00% Alliance Capital Asset Management (Japan) Ltd 100.00% Alliance Capital Australia Limited 100.00% Far Eastern Alliance Asset Management 20.00% 3rd parties = 80% Alliance Capital Global Derivatives Corp. 1,000 100.00% Alliance Capital Latin America Ltd. 99.00% Alliance Capital Oceanic Corp. owns 1% Alliance Capital Limited 250,000 100.00% Alliance Capital Services Ltd. 1,000 100.00% Dimensional Trust Management Ltd. 50,000 100.00% Alliance Capital (Luxembourg) S.A. 3,999 99.98% Alliance Cap. Oceanic Corp. owns 0.025% Alliance Capital Management (Asia) Ltd. 100.00% Alliance Capital Management Australia Limited 50.00% 3rd parties = 50% Alliance Capital Management Canada, Inc. 18,750 100.00% Alliance Capital Management New Zealand Limited 50.00% 3rd parties = 50%
Page 5 of 6 AXA FINANCIAL, INC. - SUBSIDIARY ORGANIZATION CHART- 2003 03/29/04 LISTING B - Alliance Capital Management Corp.
State of State of Type of Incorp. or Principal Federal Subsidiary Domicile Operation Tax ID # ---------- -------- --------- -------- AXA Financial, Inc. AXA Financial Services, LLC (Note 2) The Equitable Life Assurance Society of the United States Equitable Holdings, LLC Alliance Capital Management Corporation Alliance Capital Management L.P. Alliance Capital Management Corp. of Delaware (Cont'd) Alliance Capital Management (Proprietary) Ltd. Operating So Africa So Africa - Alliance-Odyssey Capital Mgmt. (Nambia) (Proprietary) Ltd. Operating Nambia Nambia - Alliance Capital Management (Singapore) Ltd. Operating Singapore Singapore - Alliance Capital (Mauritius) Private Ltd. Operating Mauritius Mauritius - Alliance Capital Asset Management (India) Private Ltd Operating India India - Alliance Capital Oceanic Corp. Operating DE NY 13-3441277 Alliance Corporate Finance Group Inc. Operating DE NY 52-1671668 Alliance Eastern Europe, Inc. Operating DE NY 13-3802178 AllianceBernstein Investment Research and Management, Inc., (Alliance Fund Distributors, Inc.) Operating DE NY 13-3191825 Alliance Global Investor Services, Inc. Operating DE NJ 13-3211780 Alliance SBS-AGRO Capital Management Co. Operating Russia Russia - Hanwha Investment Trust Mgmt. Co., Ltd Operating So Korea So Korea - New Alliance Asset Management (Asia) Ltd Operating H.K. H.K. - Alliance Capital Taiwan Limited Operating Taiwan Taiwan - ACM New-Alliance (Luxembourg) S.A. Operating Lux. Lux. - Meiji - Alliance Capital Corp. Operating DE NY 13-3613617 Sanford C. Bernstein Ltd. Operating U.K. U.K. - Sanford C. Bernstein (CREST Nominees) Ltd. Operating U.K. U.K. - Sanford C. Bernstein Proprietary Ltd. Operating Aust. Aust. - Whittingdale Holdings Ltd. Operating U.K. U.K. - ACM Investments Ltd. Operating U.K. U.K. - Alliance Asset Allocation Ltd. Operating U.K. U.K. - Alliance Capital Whittingdale Ltd. Operating U.K. U.K. - Alliance Cecogest S.A. Operating France France - Cursitor Alliance Services Ltd. Operating U.K. U.K. - Cursitor Holdings Ltd. Operating U.K. U.K. - Whittingdale Nominees Ltd. Operating U.K. U.K. - Parent's Number of Percent of Shares Ownership Comments Owned or Control (e.g., Basis of Control) ----- ---------- ------------------------ AXA Financial, Inc. AXA Financial Services, LLC (Note 2) The Equitable Life Assurance Society of the United States Equitable Holdings, LLC Alliance Capital Management Corporation Alliance Capital Management L.P. Alliance Capital Management Corp. of Delaware (Cont'd) Alliance Capital Management (Proprietary) Ltd. 80.00% 3rd parties = 20% Alliance-Odyssey Capital Mgmt. (Nambia) (Proprietary) Ltd. 100.00% Alliance Capital Management (Singapore) Ltd. 100.00% Alliance Capital (Mauritius) Private Ltd. 100.00% Alliance Capital Asset Management (India) Private Ltd 75.00% 3rd parties = 25% Alliance Capital Oceanic Corp. 1,000 100.00% inactive Alliance Corporate Finance Group Inc. 1,000 100.00% Alliance Eastern Europe, Inc. 100.00% AllianceBernstein Investment Research and Management, Inc., (Alliance Fund Distributors, Inc. 100 1 Alliance Global Investor Services, Inc. 100 100.00% formerly, Alliance Fund Services, Inc. Alliance SBS-AGRO Capital Management Co. 49.00% 3rd parties = 51% Hanwha Investment Trust Mgmt. Co., Ltd 20.00% 3rd parties = 80% New Alliance Asset Management (Asia) Ltd 50.00% 3rd parties = 50% Alliance Capital Taiwan Limited 99.00% Others owns 1% ACM New-Alliance (Luxembourg) S.A. 99.00% ACM Global Investor Svcs owns 1% Meiji - Alliance Capital Corp. 50,000 50.00% Meiji Mutual Life owns 50% Sanford C. Bernstein Ltd. 100.00% Sanford C. Bernstein (CREST Nominees) Ltd. 100.00% Sanford C. Bernstein Proprietary Ltd. 100.00% Whittingdale Holdings Ltd. 100.00% ACM Investments Ltd. 100.00% Alliance Asset Allocation Ltd. 100.00% Alliance Capital Whittingdale Ltd. 100.00% Alliance Cecogest S.A. 100.00% Cursitor Alliance Services Ltd. 100.00% Cursitor Holdings Ltd. 100.00% Whittingdale Nominees Ltd. 100.00%
Page 6 of 6 Item 27. Number of Contractowners ------------------------ As of February 29, 2004, there were 631 owners of qualified and non-qualified RIA Contracts offered by the registrant. Item 28. Indemnification (a) Indemnification of Directors and Officers The By-Laws of The Equitable Life Assurance Society of the United States ("Equitable Life") provide, in Article VII, as follows: 7.4 Indemnification of Directors, Officers and Employees. (a) To the extent permitted by the law of the State of New York and subject to all applicable requirements thereof: (i) any person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that he or she, or his or her testator or intestate, is or was a director, officer or employee of the Company shall be indemnified by the Company; (ii) any person made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact that he or she, or his or her testator or intestate serves or served any other organization in any capacity at the request of the Company may be indemnified by the Company; and (iii) the related expenses of any such person in any of said categories may be advanced by the Company. (b) To the extent permitted by the law of the State of New York, the Company may provide for further indemnification or advancement of expenses by resolution of shareholders of the Company or the Board of Directors, by amendment of these By-Laws, or by agreement. (Business Corporation Law ss. 721-726; Insurance Law ss. 1216) The directors and officers of Equitable Life are insured under policies issued by Lloyd's of London, X.L. Insurance Company and ACE Insurance Company. The annual limit on such policies is $150 million, and the policies insure that officers and directors against certain liabilities arising out of their conduct in such capacities. (b) Indemnification of Principal Underwriter To the extent permitted by law of the State of New York and subject to all applicable requirements thereof, AXA Advisors, LLC has undertaken to indemnify each of its directors and officers who is made or threatened to be made a party to any action or proceeding, whether civil or criminal, by reason of the fact the director or officer, or his or her testator or intestate, is or was a director or officer of AXA Advisors, LLC. (c) Undertaking Insofar as indemnification for liability arising under the Securities Act of 1933 ("Act") may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 29. Principal Underwriters ---------------------- (a) AXA Advisors, LLC (formerly EQ Financial Consultants, Inc.), an affiliate of Equitable, is the principal underwriter for its Separate Account A, Separate Account No. 301, Separate Account No. 45, Separate Account No. 49, Separate Account I, Separate Account FP, AXA Premier VIP Trust and EQ Advisors Trust. AXA Advisors's principal business address is 1290 Avenue of the Americas, NY, NY 10104. (b) Set forth below is certain information regarding the directors and principal officers of AXA Advisors, LLC. The business address of the persons whose names are preceded by an asterisk is that of AXA Advisors, LLC. NAME AND PRINCIPAL POSITIONS AND OFFICES WITH UNDERWRITER BUSINESS ADDRESS (AXA ADVISORS LLC) ---------------- -------------------------------------- *Harvey E. Blitz Assistant Vice President and Director Jerald E. Hampton Chairman of the Board, Co-President, Co-Chief Executive Officer and Director Robert S. Jones, Jr. Co-President, Co-Chief Executive Officer and Director Tom Wirtshafter Chief Operating Officer and Director *Richard V. Silver Director *Mark R. Wutt Director Ned Dane Executive Vice President Edward J. Hayes Executive Vice President 200 Plaza Drive Secaucus, NJ 07096 *Peter D. Noris Executive Vice President *James P. Bodovitz Senior Vice President and General Counsel Stephen T. Burnthall Senior Vice President 6435 Shiloh Road Suite A Alpharetta, GA 30005 Janell Chan Senior Vice President James Goodwin Senior Vice President Paul Gallagher Senior Vice President Jeffrey Green Senior Vice President Kevin R. Byrne Senior Vice President and Treasurer *Erik Mosholt Senior Vice President *Jill Cooley Senior Vice President and Operations Officer David Cerza First Vice President *Donna M. Dazzo First Vice President Amy Franceschini First Vice President *Beth Andreozzi Vice President Peter Mastrantuono First Vice President *Darren Gitlitz First Vice President Raymond T. Barry Vice President *Michael Brzozowski Vice President Claire A. Comerford Vice President *Mark D. Godofsky Vice President and Controller *David Mahler Vice President and Compliance Officer *Linda J. Galasso Vice President and Secretary *Francesca Divone Assistant Secretary Michael Higgins Vice President Gary Gordon Vice President Gisela Jackson Vice President Frank Massa Vice President Jose Montengro Vice President Roger Pacheco Vice President Edna Russo Vice President Michael Ryniker Vice President James Woodley Vice President Frank Acierno Assistant Vice President (c) The information under "Distribution of the Contracts" in the Prospectus and Statement of Additional Information forming a part of this Registration Statement is incorporated herein by reference. Item 30. Location of Accounts and Records -------------------------------- The records required to be maintained by Section 31(a) of the Investment Company Act of 1940 and Rules 31a-1 to 31a-3 thereunder are maintained by The Equitable Life Assurance Society of the United States, at: 135 West 50th Street New York, New York 10020; 1290 Avenue of the Americas, New York, New York 10104; and 200 Plaza Drive, Secaucus, New Jersey 07094. Item 31. Management Services ------------------- Not applicable. Item 32. Undertakings ------------ The Registrant hereby undertakes: (a) to file a post-effective amendment to this registration statement as frequently as is necessary to ensure that the audited financial statements in the registration statement are never more than 16 months old for so long as payments under the variable annuity contracts may be accepted; (b) to include either (1) as part of any application to purchase a contract offered by the prospectus, a space that an applicant can check to request a Statement of Additional Information, or (2) a postcard or similar written communication affixed to or included in the prospectus that the applicant can remove to send for a Statement of Additional Information; and (c) to deliver any Statement of Additional Information and any financial statements required to be made available under this Form promptly upon written or oral request. C-11 SIGNATURES As required by the Securities Act of 1933, the Registrant certifies that it meets the requirements of The Securities Act Rule 485(b) for effectiveness of this amendment to the Registration Statement and has caused this amendment to the Registration Statement to be signed on its behalf, in the City and State of New York, on this 27th day of April, 2004. EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (Registrant) By: The Equitable Life Assurance Society of the United States By: /s/ Dodie Kent -------------------------------- Dodie Kent Vice President and Counsel C-12 SIGNATURES As required by the Securities Act of 1933, the Depositor has caused this amendment to the Registration Statement to be signed on its behalf, in the City and State of New York, on this 27th day of April, 2004. THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES (Depositor) By: /s/ Dodie Kent --------------------------------- Dodie Kent Vice President and Counsel The Equitable Life Assurance Society of the United States As required by the Securities Act of 1933, this amendment to the Registration Statement has been signed by the following persons in the capacities and on the date indicated: PRINCIPAL EXECUTIVE OFFICERS: *Christopher M. Condron Chairman of the Board, President, Chief Executive Officer and Director PRINCIPAL FINANCIAL OFFICER: *Stanley B. Tulin Vice Chairman of the Board Chief Financial Officer and Director PRINCIPAL ACCOUNTING OFFICER: *Alvin H. Fenichel Senior Vice President and Controller *DIRECTORS: Bruce W. Calvert Denis Duverne W. Edwin Jarmain Christopher M. Condron Jean-Rene Fourtou Christina Johnson Henri de Castries John C. Graves Scott D. Miller Claus-Michael Dill Donald J. Greene Joseph H. Moglia Joseph L. Dionne Mary R. (Nina) Henderson Peter J. Tobin James F. Higgins Stanley B. Tulin *By: /s/ Dodie Kent ------------------------ Dodie Kent Attorney-in-Fact April 27, 2004 C-13 EXHIBIT INDEX ------------- EXHIBIT NO. TAG VALUE ----------- ---------- 9(f) Opinion and Consent of Counsel EX-99.9f 10(a) Consent of PricewaterhouseCoopers LLP. EX-99.10a C-14