EQ ADVISORS TRUST, 485APOS, 1997-10-31

EQ ADVISORS TRUST
485APOS, 1997-10-31

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<PAGE>

Registration Nos. 33-17217
811-07953

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 31, 1997.

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933 /x/
Pre-Effective Amendment No. / /
Post-Effective Amendment No. 3 /x/
and/or
REGISTRATION STATEMENT UNDER THE
INVESTMENT COMPANY ACT OF 1940 /x/
Amendment No. 5 /x/
(Check appropriate box or boxes)

EQ ADVISORS TRUST
(formerly 787 Trust)
(Exact name of registrant as specified in charter)

1290 Avenue of the Americas
New York, New York 10104
(Address of principal executive offices)

Registrant's Telephone Number, including area code: (212) 554-1234

Peter D. Noris, Executive Vice President and
Chief Investment Officer
The Equitable Life Assurance Society of the United States
1290 Avenue of the Americas
New York, New York 10104
(Name and address of agent for service)

Please send copies of all communications
to:

Jane A. Kanter Mary P. Breen
Dechert Price & Rhoads Vice President & Associate General Counsel
1500 K Street, N.W. The Equitable Life Assurance Society of the
Suite 500 United States
Washington, D.C. 20005 1290 Avenue of the Americas
New York, New York 10104

It is proposed that this filing will become effective:

_____ immediately upon filing pursuant to paragraph (b)
_____ on [date] pursuant to paragraph (b)
_____ 60 days after filing pursuant to paragraph (a)
_____ on [date] pursuant to paragraph (a) of Rule 485
__X__ 75 days after filing pursuant to paragraph (a) or sooner pursuant
to a request for acceleration to December 30, 1997

<PAGE>

EQ ADVISORS TRUST

Contents of Registration Statement

This registration statement consists of the following papers and documents:

Cover Sheet
Contents of Registration Statement
Cross Reference Sheet
Part A - Prospectuses
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits

<PAGE>

EQ ADVISORS TRUST

CROSS REFERENCE SHEET
POST-EFFECTIVE AMENDMENT NO. 3

<TABLE>
<CAPTION>
PART A. ITEM NO. AND CAPTIONS CAPTION IN PROSPECTUS
<S> <C> <C>
1. Cover Page Cover Page
2. Synopsis Not Applicable
3. Condensed Financial Information Not Applicable
4. General Description of Registrant The Trust; Description of the Trust
and Trust's Shares -- The Trust
5. Management of the Fund Management of the Trust
5A. Management's Discussion of Fund Not Applicable
Performance
6. Capital Stock and Other Securities Dividends, Distributions And Taxes
7. Purchase of Securities Being Offered Description of the Trust and Trust's Shares
- Purchase and Redemption of Shares
8. Redemption or Repurchase Description of the Trust and Trust's Shares
- Purchase and Redemption of Shares
9. Pending Legal Proceedings Not Applicable

PART B. ITEM NO. AND CAPTIONS CAPTION IN STATEMENT OF
ADDITIONAL INFORMATION
10. Cover Page Cover Page
11. Table of Contents Table of Contents
12. General Information and History General Information and History
13. Investment Objectives and Policies Description of Certain Securities In Which
the Portfolios May Invest; Investment
Restrictions
14. Management of the Fund Management of the Trust
15. Control Persons and Principal Holders of General Information and History
Securities
16. Investment Advisory and Other Services Investment Management and Other

<PAGE>

Services

17. Brokerage Allocation and Other Practices Brokerage Allocation

18. Capital Stock and Other Securities General Information and History

19. Purchase, Redemption, and Pricing of Purchase and Pricing of Securities;
Securities Being Offered Redemption of Shares

20. Tax Status Certain Tax Considerations

21. Underwriters Investment Management and Other Services

22. Calculation of Performance Data Not Applicable

23. Financial Statements Financial Statements

PART C Information required to be included in Part C is set forth under the appropriate item, so numbered,
in Part C of this Registration Statement.
</TABLE>

<PAGE>

PROSPECTUS DATED JANUARY ___, 1998

EQ ADVISORS TRUST
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104

EQ Advisors Trust ("Trust") is an open-end management investment company that
offers a selection of professionally managed investment portfolios
("Portfolios"). Each Portfolio has its own investment objective and policies
that are designed to meet different investment goals.

This Prospectus describes the following eighteen Portfolios currently offered
by the Trust.

* T. Rowe Price International Stock Portfolio
* T. Rowe Price Equity Income Portfolio
* EQ/Putnam Growth & Income Value Portfolio
* EQ/Putnam International Equity Portfolio
* EQ/Putnam Investors Growth Portfolio
* EQ/Putnam Balanced Portfolio
* MFS Research Portfolio
* MFS Emerging Growth Companies Portfolio
* Morgan Stanley Emerging Markets Equity Portfolio
* Warburg Pincus Small Company Value Portfolio
* Merrill Lynch World Strategy Portfolio
* Merrill Lynch Basic Value Equity Portfolio
* Lazard Large Cap Value Portfolio
* Lazard Small Cap Value Portfolio
* JPM Core Bond Portfolio
* BT Small Company Index Portfolio
* BT International Equity Index Portfolio
* BT Equity 500 Index Portfolio

The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares offered hereby and Class IB shares offered pursuant to another
prospectus.

This Prospectus sets forth concisely the information about the Trust and the
Portfolios that a prospective investor should know before investing. Please
read the Prospectus and retain it for future reference. Additional information
contained in a Statement of Additional Information also dated January __, 1998
has been filed with the Securities and Exchange Commission and is available
upon request without charge by writing to the Trust at the address noted
above. California residents can obtain a copy of the Statement of Additional
Information by calling 1-800-999-3527. The Statement of Additional Information
is incorporated into this Prospectus by reference.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

-1-
<PAGE>

FINANCIAL HIGHLIGHTS

The financial information in the table below for the period May 1,
1997** to June 30, 1997 is unaudited and relates only to the Class IB
shares of the Trust. The Trust's semi-annual report, which contains
other financial information, is incorporated by reference into the
Trust's Statement of Additional Information and is available without
charge upon request.

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Net asset value, Net Net realized Total from Net Total Net assets,
beginning of period Investment and unrealized investment asset return end of
Income gain (loss) on operations value, (b) period
investments end of (000's)
and foreign period
currency
transactions
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. Rowe $10.00 0.02 0.72 0.74 $10.74 7.40% $20,200
Price
International
Stock
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe $10.00 0.02 0.85 0.87 $10.87 8.70% $15,889
Price
Equity
Income
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam $10.00 0.02 0.87 0.89 $10.89 8.90% $18,720
Growth &
Income
Value
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam $10.00 0.05 0.59 0.64 $10.64 6.40% $7,051
Balanced
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam $10.00 0.04 0.83 0.87 $10.87 8.70% $12,100
International
Equity
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam $10.00 0.01 1.08 1.09 $11.09 10.90% $8,937
Investors
Growth
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
MFS $10.00 0.01 1.00 1.01 $11.01 10.10% $16,702
Research
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
MFS $10.00 0.01 1.22 1.23 $11.23 12.30% $15,400
Emerging
Growth
Companies
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Warburg $10.00 0.01 1.22 1.23 $11.23 12.30% $16,029
Pincus
Small
Company
Value
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Merrill $10.00 0.04 0.88 0.92 $10.92 9.20% $6,488
Lynch
World
Strategy
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Merrill $10.00 0.02 0.96 0.98 $10.98 9.80% $6,054
Lynch
Basic
Value
Equity
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

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<PAGE>

<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
Ratio of expenses Ratio of Ratio of net Ratio of net Portfolio Average Per share
to average net expenses to investment investment turnover commission benefit
assets after average net income to income to rate (a) rate paid to net
waivers (a)(c) assets average net average net investment
before assets after assets before income(c)
waivers waivers (a)(c) waivers (a)(c)
(a)(c)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
T. Rowe 1.20% 7.70% 1.28% (5.22)% 10% $0.0012 $0.08
Price
International
Stock
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
T. Rowe 0.85% 5.48% 3.20% (1.42)% 14% $0.0283 $0.03
Price
Equity
Income
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam 0.85% 5.07% 2.71% (1.51)% 37% $0.0233 $0.03
Growth &
Income
Value
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam 1.20% 8.06% 3.69% (3.17)% 54% $0.0472 $0.08
International
Equity
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam 0.85% 7.35% 1.00% (5.50)% 83% $0.0259 $0.09
Investors
Growth
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
EQ/Putnam 0.90% 7.97% 3.76% (3.31)% 75% $0.0256 $0.10
Balanced
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
MFS 0.85% 5.99% 1.35% (3.79)% 45% $0.0388 $0.05
Research
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
MFS 0.85% 5.71% 0.59% (4.27)% 426% $0.0474 $0.05
Emerging
Growth
Companies
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Warburg 1.00% 4.78% 2.03% (1.75)% 30% $0.0544 $0.02
Pincus
Small
Company
Value
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Merrill 1.20% 9.93% 2.79% (5.94)% 75% $0.0356 $0.14
Lynch
World
Strategy
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
Merrill 0.85% 7.97% 2.12% (5.01)% 49% $0.0570 $0.08
Lynch
Basic
Value
Equity
Portfolio
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

** Commencement of Operations. No financial highlights are presented for the
Morgan Stanley Emerging Markets Equity Portfolio, which commenced operations
on August 20, 1997, the Lazard Large Cap Value Portfolio, Lazard Small Cap
Value Portfolio and the JPM Core Bond Portfolio, each of which commenced
operations on January 1, 1998 and the BT Small Company Index Portfolio, the BT
International Equity Index Portfolio, or the BT Equity 500 Index Portfolio,
each of which commenced operations on January ___, 1998.
(a) Annualized
(b) Total return calculated for a period of less than one year is not
annualized

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<PAGE>

(c) For further information concerning fee waivers, see the section entitled
"Expense Limitation Agreements" of the Prospectus

THE TRUST

The Trust is an open-end management investment company registered under the
Investment Company Act of 1940, as amended ("1940 Act"). As a "series" type of
mutual fund, the Trust issues shares of beneficial interest that are currently
divided among eighteen Portfolios. Each Portfolio is a separate series of the
Trust with its own objective and policies. Each of the Portfolios set forth
below, except for the Morgan Stanley Emerging Markets Equity Portfolio, the
Merrill Lynch World Strategy Portfolio and the Lazard Small Cap Value
Portfolio, are diversified for 1940 Act purposes. The Trustees of the Trust
may establish additional Portfolios at any time.

Each Portfolio is managed by EQ Financial Consultants, Inc. ("Manager") which
directs the day to day operations of each Portfolio. Rowe Price-Fleming
International, Inc., T. Rowe Price Associates, Inc., Putnam Investment
Management, Inc., Massachusetts Financial Services Company, Morgan Stanley
Asset Management Inc., Warburg Pincus Asset Management, Inc., Merrill Lynch
Asset Management, L.P.,Lazard Asset Management, a division of Lazard Freres &
Co. LLC, J.P. Morgan Investment Management Inc., and Bankers Trust Company
serve as the advisers (each an "Adviser" and, together the "Advisers") to one
or more of the Portfolios, as detailed in the table below.

<TABLE>
<CAPTION>
PORTFOLIO ADVISER
<S> <C>
T. Rowe Price International Stock Portfolio Rowe Price-Fleming International, Inc.
T. Rowe Price Equity Income Portfolio T. Rowe Price Associates, Inc.
EQ/Putnam Growth & Income Value Portfolio Putnam Investment Management, Inc.
EQ/Putnam International Equity Portfolio Putnam Investment Management, Inc.
EQ/Putnam Investors Growth Portfolio Putnam Investment Management, Inc.
EQ/Putnam Balanced Portfolio Putnam Investment Management, Inc.
MFS Research Portfolio Massachusetts Financial Services Company
MFS Emerging Growth Companies Portfolio Massachusetts Financial Services Company
Morgan Stanley Emerging Markets Equity Morgan Stanley Asset Management Inc.
Portfolio
Warburg Pincus Small Company Value Portfolio Warburg Pincus Asset Management, Inc.
Merrill Lynch World Strategy Portfolio Merrill Lynch Asset Management, L.P.
Merrill Lynch Basic Value Equity Portfolio Merrill Lynch Asset Management, L.P.

-4-
<PAGE>

Lazard Large Cap Value Portfolio Lazard Asset Management
Lazard Small Cap Value Portfolio Lazard Asset Management
JPM Core Bond Portfolio J.P. Morgan Investment Management Inc.
BT Small Company Index Portfolio Bankers Trust Company
BT International Equity Index Portfolio Bankers Trust Company
BT Equity 500 Index Portfolio Bankers Trust Company
</TABLE>

The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc. ("EQ Financial"),
the Trust's Manager, serves as one of the distributors for the Class IA shares
of the Trust offered by this Prospectus. Equitable Distributors, Inc. ("EDI")
also serves as one of the distributors for the Class IA shares of the Trust.
(EQ Financial and EDI are collectively referred to as the "Distributors").
The Trust's shares are currently sold only to insurance company separate
accounts in connection with variable life insurance contracts and variable
annuity certificates and contracts (collectively, the "Contracts") issued by
The Equitable Life Assurance Society of the United States ("Equitable"). Both
classes of shares are offered and redeemed at their net asset value without
the imposition of any sales load.

Class IB shares are offered pursuant to another prospectus and are subject to
the same expenses as the Class IA shares, but unlike the Class IA shares they
are subject to distribution fees imposed pursuant to a distribution plan
adopted pursuant to Rule 12b-1 under the 1940 Act. Inquiries regarding Class
IB shares should be addressed to Equitable, at 1290 Avenue of the Americas,
New York, NY 10104 or by calling 1-212-314-4300.

INVESTMENT OBJECTIVES AND POLICIES

The following is a brief description of the investment objectives and policies
of each of the Portfolios. All of the objectives and policies of each
Portfolio, unless otherwise noted, are not fundamental and may be changed by
the Board of Trustees of the Trust without the approval of shareholders.
Certain investment strategies and instruments discussed below are described in
greater detail in the Statement of Additional Information. Because of the
uncertainty inherent in all investments, there can be no assurance that the
Portfolios will be able to achieve their respective investment objectives.

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

The investment objective of the T. Rowe Price International Stock Portfolio is
to seek long-term growth of capital through investment primarily in common
stocks of established non-United States companies. The Adviser intends to
invest substantially all of the Portfolio's assets outside the United States
and to diversify broadly among countries throughout the world--developed,
newly industrialized and emerging--by having at least five different countries
represented in the Portfolio. The Portfolio may invest in countries of the Far
East and Europe as well as South Africa, Australia, Canada, and other areas
(including developing countries). No more than 20% of the

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<PAGE>

Portfolio's net assets will be invested in securities of issuers located in any
one country with the exception of issuers located in Australia, Canada, France,
Japan, the United Kingdom or Germany (where the investment limitation is 35%).
In determining the appropriate distribution of investments among various
countries and geographic regions, the Adviser ordinarily considers the
following factors: prospects for relative economic growth between foreign
countries; expected levels of inflation; government policies influencing
business conditions; the outlook for currency relationships; and the range of
individual investment opportunities available to international investors.

The Portfolio expects to invest substantially all of its assets in common
stocks. However, the Portfolio may also invest in a variety of other
equity-related securities (such as preferred stocks, warrants and convertible
securities) as well as corporate and governmental debt securities, when
considered consistent with the Portfolio's investment objective and program.
The Portfolio may also invest in certain foreign investment portfolios or
trusts commonly referred to as passive foreign investment companies. These
entities have been authorized by the governments of certain countries
specifically to permit foreign investment in securities of companies listed or
traded on the stock exchanges in those countries. The Portfolio may also
engage in a variety of investment management practices such as buying and
selling options and futures contracts and engaging in foreign currency
exchange contracts and may invest up to 10% of its total assets in hybrid
instruments, which are a type of high-risk instrument that can combine the
characteristics of securities, futures contracts and options.

Under normal conditions, the Portfolio's investment in securities other than
common stocks is limited to no more than 35% of its total assets. However, for
temporary defensive purposes, the Portfolio may invest all or a significant
portion of its assets in United States Government securities and corporate
debt obligations. The Portfolio will not purchase any debt security which, at
the time of purchase, is rated below investment grade by a nationally
recognized statistical rating organization ("NRSRO"). This restriction would
not prevent the Portfolio from retaining a security downgraded to below
investment grade after purchase. In addition, the Portfolio may invest without
limitation in high quality United States and foreign dollar-denominated money
market securities for temporary defensive purposes or to meet redemption
requests.

In analyzing companies for investment, the Adviser uses a "bottom up"
approach. A company's prospects for achieving and sustaining above-average,
long-term earnings growth is generally the Adviser's primary focus. However
the Adviser also considers certain other factors in making its investment
decisions, including: above-average earnings growth per share; high return on
invested capital; healthy balance sheet; sound financial and accounting
policies and overall financial strength; strong competitive advantages;
effective research, product development and marketing; efficient service;
pricing flexibility; strength of management; and general operating
characteristics that should enable the companies to compete successfully in
their market place. While current dividend income is not a prerequisite in the
selection of portfolio companies, the companies in which the Portfolio invests
normally will have a record of paying dividends, and will generally be
expected to increase the amounts of such dividends in future years as earnings
increase. It is expected that the Portfolio's investments will ordinarily be
made on exchanges located at least in the respective countries in which the
various issuers of such securities are principally based.

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<PAGE>

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts, hybrid
instruments, foreign securities, foreign currency transactions, passive
foreign investment companies, United States Government securities, convertible
securities, borrowings, derivatives, investment grade fixed-income securities,
securities loans and illiquid securities) are discussed under the caption
"Investment Strategies" below and in the Statement of Additional Information.

T. ROWE PRICE EQUITY INCOME PORTFOLIO

The investment objective of the T. Rowe Price Equity Income Portfolio is to
seek to provide substantial dividend income and also capital appreciation by
investing primarily in dividend-paying common stocks of established companies.
In pursuing its objective, the Portfolio emphasizes companies with favorable
prospects for increasing dividend income and capital appreciation. Over time,
the income component (dividends and interest earned) of the Portfolio's
investments is expected to be a significant contributor to the Portfolio's
total return. The Portfolio's yield is expected to be significantly above that
of the Standard & Poor's 500 Composite Stock Price Index ("S&P 500"). Total
return will consist primarily of dividend income and secondarily of capital
appreciation (or depreciation).

The investment program of the Portfolio is based on several premises. First,
the Adviser believes that over time, dividend income can account for a
significant component of the total return from equity investments. Second,
dividends are normally a more stable and predictable source of return than
capital appreciation. While the price of a company's stock generally increases
or decreases in response to short-term earnings and market fluctuations, its
dividends are generally less volatile. Finally, the Adviser believes that
stocks that distribute a high level of current income tend to have less price
volatility than those that pay below average dividends.

Under normal circumstances, the Portfolio will invest at least 65% of its
total assets in income-producing common stocks of established companies paying
above-average dividends. The Adviser uses a "value" approach and invests in
common stocks and other equities-related securities it believes are
temporarily undervalued by various measures, such as price/earnings ratios.
The Portfolio's investments will generally be made in companies that share
some of the following characteristics: established operating histories;
above-average current dividend yields relative to the S&P 500; low
price/earnings ratios relative to the S&P 500; sound balance sheets and other
financial characteristics; and low stock price relative to company's
underlying value as measured by assets, earnings, cash flow or business
franchises.

Although the Portfolio will invest primarily in United States common stocks,
it may also purchase other types of securities (for example, foreign
securities, preferred stocks, convertible securities and warrants) when
considered consistent with the Portfolio's investment objective and program.
The Portfolio may invest up to 25% of its total assets in foreign securities.
These include non-dollar denominated securities traded outside the United
States and dollar-denominated securities traded in the United States (such as
American Depositary Receipts ("ADRs"). Such investments increase a portfolio's
diversification and may enhance return, but they may represent a greater
degree of risk than investing in domestic securities.

-7-
<PAGE>

The Portfolio may also engage in a variety of investment practices, such as
buying and selling options and futures contracts and engaging in foreign
currency exchange transactions. In addition, the Portfolio may invest up to
10% of its total assets in hybrid instruments.

The Portfolio may also invest a portion of its assets in United States
government securities and high-quality United States and foreign
dollar-denominated money market securities (i.e., within the two highest
rating categories assigned by a NRSRO) including certificates of deposit,
bankers' acceptances, commercial paper, short-term corporate securities and
repurchase agreements. For temporary defensive purposes or to meet redemption
requests, the Portfolio may invest without limitation in such securities.

The Portfolio may also invest in debt securities of any type including
municipal securities, without regard to quality or rating. Such securities
would be purchased in companies that meet the investment criteria for the
Portfolio. The price of a bond generally fluctuates with changes in interest
rates, rising when interest rates fall and falling when interest rates rise.
The Portfolio, however, will not invest more than 10% of its total assets in
securities rated below investment grade (commonly known as "junk bonds").

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
convertible securities, borrowings, foreign securities, repurchase agreements,
derivatives, United States government securities, securities loans, foreign
currency transactions, illiquid securities and investment grade and lower
quality fixed-income securities) are discussed under the caption "Investment
Strategies" below and in the Statement of Additional Information.

EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO

The investment objective of the EQ/Putnam Growth & Income Value Portfolio is
capital growth. Current income is a secondary objective. The Adviser intends
to invest primarily in common stocks that offer potential for capital growth
and may, consistent with the Portfolio's investment objective, invest in
common stocks that offer potential for current income. The Portfolio may also
purchase corporate bonds, notes and debentures, preferred stocks and
convertible securities (which include both debt securities and preferred
stocks). The types of securities held by the Portfolio may vary from time to
time in light of the Portfolio's investment objective, changes in interest
rates, and economic and other factors. In analyzing companies for investment,
the Adviser will seek to identify companies whose securities are significantly
undervalued in relation to their underlying asset values or earnings
potential.

At times, the Adviser may judge that conditions in the securities markets may
make pursuing the Portfolio's basic investment strategy inconsistent with the
best interests of the Portfolio's shareholders. At such times, the Adviser may
temporarily use alternative strategies that are primarily designed to reduce
fluctuations in the value of the Portfolio's assets. In implementing these
defensive strategies, the Portfolio may invest without limit in debt
securities or preferred stocks, or may invest in any other securities the
Adviser considers consistent with such defensive strategies. It is impossible
to predict when, or for how long, the Adviser will use these alternative
defensive strategies.

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<PAGE>

The Portfolio may invest up to 20% of its total assets in foreign securities.
The Portfolio may also purchase Eurodollar certificates of deposit (i.e.,
short-term time deposits issued by European banks) without regard to this 20%
limit. Such investments increase the Portfolio's diversification and may
enhance return, but they may represent a greater degree of risk than investing
in domestic securities.

In addition, the Portfolio may also invest a portion of its assets in United
States government securities and high-quality United States and foreign
dollar-denominated money market securities (i.e., within the two highest
rating categories assigned by a NRSRO) including certificates of deposit,
bankers' acceptances, commercial paper, short-term corporate securities and
repurchase agreements. For temporary defensive purposes or to meet redemption
requests, the Portfolio may invest without limitation in such securities.

The Portfolio may also invest in investment grade debt securities and may
invest a portion of its total assets in debt securities rated below investment
grade (commonly known as "junk bonds"). The price of a bond generally
fluctuates with changes in interest rates, rising when interest rates fall and
falling when interest rates rise.

The Portfolio may also engage in a variety of investment management practices
such as buying and selling options and futures contracts and engaging in
foreign currency exchange contracts.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
foreign securities, securities loans, convertible securities, borrowings,
repurchase agreements, illiquid securities, forward commitments, zero-coupon
bonds, derivatives, United States Government securities, foreign currency
transactions, passive foreign investment companies, payment-in-kind bonds, and
investment grade and lower quality fixed-income securities) are discussed
under the caption "Investment Strategies" below and in the Statement of
Additional Information.

EQ/PUTNAM INTERNATIONAL EQUITY PORTFOLIO

The investment objective of the EQ/Putnam International Equity Portfolio is
capital appreciation. The Portfolio is designed for investors seeking capital
appreciation primarily through a diversified portfolio of equity securities of
companies organized under the laws of a country other than the United States.
Such equity securities normally will include common stocks, preferred stocks,
securities convertible into common or preferred stocks, and warrants. The
Portfolio may also invest to a lesser extent in debt securities and other
types of investments if the Adviser believes that purchasing them would help
to achieve the Portfolio's objective. The Portfolio may hold a portion of its
assets in cash or money market instruments. The Portfolio may also engage in a
variety of investment management practices such as buying and selling options
and futures contracts and engaging in foreign currency exchange contracts.

Under normal circumstances the Portfolio will invest at least 65% of its
assets in issuers located in at least three different countries outside the
United States. The Portfolio will consider an issuer to be located outside the
United States if the issuer is organized under the laws of a country outside
the United States. The Portfolio may invest in securities of issuers in
emerging markets, as well as more developed markets. Investing in securities
of issuers in emerging markets generally involves more risks than investing in
securities of issuers in developed markets.

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<PAGE>

The Adviser believes that the securities markets of many countries move
relatively independently of one another because business cycles and other
economic or political events that influence one country's securities markets
may have little effect on securities markets in other countries. By investing
in a diversified portfolio of securities of issuers located in different
foreign countries, the Adviser attempts to reduce the risks associated with
being invested in the securities of issuers within the economy of only one
country. Countries that the Adviser believes offer attractive opportunities
for investment may change from time to time.

The Portfolio will not limit its investments to any particular type of
company. The Portfolio may invest in companies, large or small, whose earnings
are believed by the Adviser to be in a relatively strong growth trend or it
may invest in companies that are not expected to experience significant
further growth but whose market value per share is considered by the Adviser
to be undervalued. The Portfolio also may invest in small and relatively less
well-known companies that meet these characteristics.

At times, the Adviser may believe that conditions in the international
securities markets may make pursuing the Portfolio's basic investment strategy
inconsistent with the best interests of its shareholders. At such times, the
Portfolio may temporarily use alternative strategies that are primarily
designed to reduce fluctuations in the value of the Portfolio's assets. In
implementing these defensive strategies, the Portfolio may invest, without
limitation, in securities of any kind, including securities traded primarily
in United States markets and in cash and money market instruments. It is
impossible to predict when, or for how long, the Portfolio will use these
alternative strategies.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, borrowings, derivatives,
repurchase agreements, futures contracts, foreign securities, forward
commitments, foreign currency transactions, securities loans, and illiquid
securities) are discussed under the caption "Investment Strategies" below and
in the Statement of Additional Information.

EQ/PUTNAM INVESTORS GROWTH PORTFOLIO

The investment objective of the EQ/Putnam Investors Growth Portfolio is
long-term growth of capital and any increased income that results from this
growth. The Adviser intends to invest primarily in common stocks in view of
the Adviser's belief that equity ownership affords the best opportunity for
capital growth over the long term. The Portfolio may also purchase convertible
bonds, convertible preferred stocks, preferred stocks and debt securities if
the Adviser believes that they will help to achieve the Portfolio's objective.
In addition, the Portfolio may hold a portion of its assets in cash or money
market instruments.

In analyzing potential investments, the Adviser considers three main factors:
(i) the general outlook of the economy; (ii) a study of various industries to
determine those with the best possibilities for long-term growth; and (iii) a
detailed study of what appear to be the most promising individual companies.
In evaluating individual companies, the Adviser gives more weight to growth
potential characteristics than to dividend income. In particular, the Adviser
believes that evaluating a company's probable future earnings, dividends,
financial strength, working assets and competitive position may be more
profitable in the long run than seeking current dividend income.

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Although the Portfolio's investments are not limited to any particular type of
company, the Adviser currently expects that the Portfolio will invest a
substantial portion of its assets in common stocks of companies with equity
market capitalizations of more than $1 billion. The Portfolio may also invest
in small to medium-sized companies having a proprietary product or profitable
market niche and the potential to grow very rapidly. The Adviser believes that
such small to medium-sized companies may present greater opportunities for
capital appreciation because of their high potential earnings growth, but also
may involve greater risk.

At times, the Adviser may judge that conditions in the securities markets may
make pursuing the Portfolio's basic investment strategy inconsistent with the
best interests of the Portfolio's shareholders. At such times, the Adviser may
temporarily use alternative strategies that are primarily designed to reduce
fluctuations in the value of the Portfolio's assets. In implementing these
defensive strategies, the Portfolio may invest, without limit, in debt
securities, preferred stocks, United States government and agency obligations,
cash or money market instruments, or may invest in any other securities the
Adviser considers consistent with such defensive strategies. It is impossible
to predict when, or for how long, the Adviser will use these alternative
defensive strategies.

The Portfolio may also engage in a variety of investment management practices
such as buying and selling options and futures contracts and entering into
foreign currency exchange contracts.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, borrowings, futures
contracts, foreign securities, foreign currency transactions, securities
loans, illiquid securities, derivatives, repurchase agreements and forward
commitments) are discussed under the caption "Investment Strategies" below and
in the Statement of Additional Information.

EQ/PUTNAM BALANCED PORTFOLIO

The investment objective of the EQ/Putnam Balanced Portfolio is to provide a
balanced investment composed of a well-diversified portfolio of stocks and
bonds that will produce both capital growth and current income. In seeking its
objective, the Portfolio may invest in almost any type of security or
negotiable instrument, including cash or money market instruments. While the
proportion invested in each type of security is not fixed, ordinarily the
Adviser will invest no more than 75% of the Portfolio's assets in common
stocks and conversion rights with respect to convertible securities. The
Adviser may, however, invest more than 75% of the Portfolio's assets in such
securities if it determines that unusual market or economic conditions make it
appropriate to do so.

The Portfolio may also invest in debt securities, including lower-rated debt
securities (commonly referred to as "junk bonds"). The Portfolio will not
necessarily dispose of a security when its rating

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<PAGE>

is reduced below its rating at the time of purchase. However, the Adviser will
consider such reduction in its determination of whether the Portfolio should
continue to hold the security.

At times, the Adviser may judge that conditions in the securities markets may
make pursuing the Portfolio's basic investment strategy inconsistent with the
best interests of the Portfolio's shareholders. At such times, the Adviser may
temporarily use alternative strategies that are primarily designed to reduce
fluctuations in the value of the Portfolio's assets. In implementing these
defensive strategies, the Portfolio may invest without limit in debt
securities, preferred stocks, United States Government and agency obligations,
cash or money market instruments, or may invest in any other securities the
Adviser considers consistent with such defensive strategies. It is impossible
to predict when, or for how long, the Adviser will use these alternative
defensive strategies.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
foreign securities, securities loans, illiquid securities, zero-coupon bonds,
investment grade and lower quality fixed-income securities, payment-in-kind
bonds, derivatives, foreign currency transactions, repurchase agreements,
forward commitments and investment grade and lower quality fixed-income
securities) are discussed under the caption "Investment Strategies" below and
in the Statement of Additional Information.

MFS RESEARCH PORTFOLIO

The investment objective of the MFS Research Portfolio is to provide long-term
growth of capital and future income. In pursuing its objective, the Portfolio
invests a substantial portion of its assets in the common stock or securities
convertible into common stock of companies believed by the Adviser to possess
better than average prospects for long-term growth. A smaller proportion of
the assets of the Portfolio may be invested in bonds, short-term debt
obligations, preferred stocks or common stocks whose principal characteristic
is income production rather than growth. Such securities may also offer
opportunities for growth of capital as well as income. In the case of both
growth stocks and income securities, the Adviser emphasizes progressive,
well-managed companies.

The portfolio securities of the Portfolio are selected by a committee of
investment research analysts. This committee includes investment analysts
employed not only by the Adviser but also by MFS International (U.K.) Limited,
a wholly-owned subsidiary of the Adviser. The Portfolio's assets are allocated
among industries by the analysts acting together as a group. Individual
analysts are then responsible for selecting what they view as the securities
best suited to meet the Portfolio's investment objective within their assigned
industry responsibility.

To the extent that such investments comply with the Portfolio's investment
objective, the Portfolio may invest up to 20% of its total assets in foreign
securities, including those in emerging markets. These securities include
dollar-denominated and non-dollar-denominated foreign securities. Such

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<PAGE>

foreign investments increase a portfolio's diversification and may enhance
return, but they may represent a greater degree of risk than investing
exclusively in domestic securities.

The Portfolio may invest in investment grade debt securities and may invest up
to 10% of its total assets in securities rated below investment grade
(commonly known as "junk bonds"). The price of a bond generally fluctuates
with changes in interest rates, rising when interest rates fall and falling
when interest rates rise.

Certain investment strategies and practices which may be employed by the
Portfolio (such as foreign securities, convertible securities, borrowings,
repurchase agreements, securities loans, illiquid securities and investment
grade and lower quality fixed-income securities) are discussed under the
caption "Investment Strategies" below and in the Statement of Additional
Information.

MFS EMERGING GROWTH COMPANIES PORTFOLIO

The investment objective of the MFS Emerging Growth Companies Portfolio is to
provide long-term growth of capital. Dividend and interest income from
portfolio securities, if any, is incidental to the Portfolio's investment
objective. In pursuing its objective, the Portfolio invests primarily (i.e.,
at least 80% of its assets under normal circumstances) in common stocks of
emerging growth companies that the Adviser believes are early in their life
cycle but which have the potential to become major enterprises. Such emerging
growth companies generally are expected to: (i) show earnings growth over time
that is well above the growth rate of the overall economy and the rate of
inflation; and (ii) have the products, technologies, management and market and
other opportunities that are usually necessary to become more widely
recognized as growth companies.

Emerging growth companies can be of any size and the Portfolio may invest in
larger or more established companies whose rates of earnings growth are
expected to accelerate because of special factors, such as rejuvenated
management, new products, changes in customer demand, or basic changes in the
economic environment. Investing in emerging growth companies involves greater
risk than is customarily associated with investments in more established
companies. Emerging growth companies often have limited product lines, markets
or financial resources and may be more dependent on one-person management. In
addition, there may be less research available on many promising small or
medium-sized emerging growth companies, making it more difficult both to
identify and to analyze such companies. Moreover, the securities of such
companies may have limited marketability and may be subject to more abrupt or
erratic market movements than the securities of larger, more established
companies.

While the Portfolio may invest primarily in common stocks, the Portfolio may,
to a limited extent, seek long-term growth in other types of securities such
as convertible securities and warrants. To the extent that such investments
comply with the Portfolio's investment objective, the Portfolio may invest up
to 25% of its total assets in foreign securities, including those in emerging
markets. These securities include non-United States dollar-denominated
securities traded outside the United States and dollar-denominated securities
traded in the United States (such as ADRs). Such foreign investments increase
a portfolio's diversification and may enhance return, but they may represent a
greater degree of risk than investing exclusively in domestic securities. The
Portfolio may also invest in debt securities and hold cash and cash
equivalents. In addition, the Portfolio may invest in lower-rated debt
securities (commonly referred to as "junk bonds").

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<PAGE>

The Portfolio is aggressively managed and, therefore, the value of its shares
is subject to greater fluctuation and investment in its shares generally
involves a higher degree of risk than would be the case with an investment in
a conservative equity or growth fund investing entirely in proven growth
companies.

Certain investment strategies and practices which may be employed by the
Portfolio (such as foreign securities, repurchase agreements, loan
participations, derivatives, United States Government securities, securities
loans, forward commitments, asset-backed securities, borrowings, options,
futures contracts, convertible securities, foreign currency transactions,
illiquid securities and investment grade and lower quality fixed-income
securities) are discussed under the caption "Investment Strategies" below and
in the Statement of Additional Information.

MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO

The investment objective of the Morgan Stanley Emerging Markets Equity
Portfolio is long-term capital appreciation by investing primarily in equity
securities of emerging market country issuers. In pursuing its investment
objective, the Adviser focuses on issuers in emerging market countries in
which it believes the economies are developing strongly and in which the
markets are becoming more sophisticated.

Under normal circumstances, at least 65% of the Portfolio's total assets will
be invested in emerging market country equity securities, including common
stocks, preferred stocks, convertible securities, rights and warrants to
purchase common stocks, depository receipts and other equity securities of
emerging market country issuers. For these purposes, an emerging market
country security is a security issued by a company that has one or more of the
following characteristics: (i) its principal securities trading market is in
an emerging market country; (ii) alone or on a consolidated basis, it derives
50% or more of its revenue from either goods produced, sales made or services
performed in emerging markets countries; or (iii) it is organized under the
laws of, and has a principal office in, an emerging market country. The
Adviser will base determinations as to eligibility on publicly available
information and inquiries made to the companies.

The Portfolio intends to invest primarily in some or all of the following
emerging market countries: Argentina, Botswana, Brazil, Chile, China,
Colombia, Greece, Hong Kong, Hungary, India, Indonesia, Jamaica, Jordan,
Kenya, Malaysia, Mexico, Nigeria, Pakistan, Peru, Philippines, Poland,
Portugal, Russia, South Africa, South Korea, Sri Lanka, Taiwan, Thailand,
Turkey, Venezuela and Zimbabwe. As markets in other countries develop, the
Portfolio expects to expand and further diversify the emerging market
countries in which it invests. The Portfolio does not intend to invest in any
security in a country where the currency is not freely convertible to United
States dollars, unless: (i) the Portfolio has obtained the necessary
governmental licensing to convert such currency or other appropriately
licensed or sanctioned contractual guarantees to protect such investment
against loss of that currency's external value, or (ii) the Portfolio has a
reasonable expectation at the time the investment is made that such
governmental licensing or other appropriately licensed or sanctioned
guarantees would be obtained or that the currency in which the security is
quoted would be freely convertible at the time of any proposed sale of the
security by the Portfolio. Currently, investing in many emerging market
countries is not feasible or may involve unacceptable political risks.

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<PAGE>

In selecting industries and particular issuers, the Adviser will analyze
assets, revenues and earnings of an issuer and, with respect to particular
countries, evaluate costs of labor and raw materials, access to technology,
export of products and government regulation. Although the Portfolio seeks to
invest in larger companies, it may invest in small and medium-size companies
that, in the Adviser's view, have potential for growth.

The Portfolio may also invest in fixed-income securities denominated in the
currency of an emerging market country or issued or guaranteed by an emerging
market country company or the government of an emerging market country. In
addition, the Portfolio may invest in equity or fixed-income securities of
corporate or governmental issuers located in industrialized countries, foreign
currency and investment funds (i.e., funds specifically authorized to invest
in companies of a particular emerging market country). The Portfolio may also
invest in debt securities issued or guaranteed by international organizations
designed or supported by multiple governmental entities to promote economic
reconstruction or development such as the International Bank for
Reconstruction and Development (i.e., the World Bank). The Portfolio may
invest up to 10% of its total assets (measured at the time of investment) in
fixed-income securities that are not investment grade securities (commonly
referred to as "junk bonds").

For temporary defensive purposes, the Portfolio may invest less than 65% of
its assets in equity securities of emerging market countries in which case the
Portfolio may invest in other equity securities or fixed income securities.
Moreover, the Portfolio may invest without limitation in high-quality money
market instruments.

The value of the Portfolio's investments and the income they generate will
vary from day to day and generally reflect market conditions, interest rates,
and other company, political, or economic news both in the United States and
abroad. In the short-term, stock prices can fluctuate dramatically in response
to these factors. Over time, however, stocks have shown greater growth
potential than other types of securities. The prices of fixed-income
securities also fluctuate and generally move in the opposite direction from
interest rates.

The Portfolio is a non-diversified portfolio under the 1940 Act, which means
that it may invest a greater proportion of its assets in the securities of a
small number of issuers than a diversified investment company. In this regard,
the Portfolio is not subject to the general limitation that it not invest more
than 5% of its total assets in the securities of a single issuer. As a result,
because the Portfolio is permitted greater flexibility to invest its assets in
the obligations of a single issuer it is exposed to increased risk of loss if
such an investment underperforms expectations. However, the Portfolio intends
to limit its investments so as to comply with diversification requirements
imposed by the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a "regulated investment company." The Portfolio spreads
investment risk by limiting its holdings in any one company or industry.
Nevertheless, the Portfolio will experience price volatility, the extent of
which will be affected by the types of securities and techniques the Portfolio
uses. The Adviser may use various investment techniques to hedge risks,
including derivatives, but there is no guarantee that these strategies will
work as intended.

Certain investment strategies and practices which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts, United
States Government securities, hybrid instruments, illiquid securities, foreign
securities, securities loans, borrowings, payment-in-kind

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<PAGE>

bonds, passive foreign investment companies, derivatives, convertible
securities, zero coupon bonds, investment grade and lower quality fixed-income
securities, mortgage-backed securities, forward commitments, stripped
mortgage-backed securities, collateralized mortgage obligations, asset-backed
securities, floaters, inverse floaters, foreign currency transactions, loan
participations, repurchase agreements, structured notes and swaps) are
discussed under the caption "Investment Strategies" below and in the Statement
of Additional Information.

WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO

The investment objective of the Warburg Pincus Small Company Value Portfolio
is to seek long-term capital appreciation. The Portfolio is a diversified
management investment company that pursues its investment objective by
investing primarily in a portfolio of equity securities of small
capitalization companies (i.e., companies having market capitalizations of $1
billion or less at the time of initial purchase) that the Adviser considers to
be relatively undervalued. Current income is a secondary consideration in
selecting portfolio investments.

Under normal market conditions, the Portfolio will invest at least 65% of its
total assets in common stock, preferred stocks, debt securities convertible
into common stocks, warrants and other rights of small companies.
The Portfolio may invest up to 10% of its total assets in warrants.

The Adviser will determine whether a company is undervalued based on a variety
of measures, including: price/earnings ratio, price/book ratio, price/cash
flow ratio, earnings growth and debt/capital ratio. Other relevant factors,
including a company's asset value, franchise value and quality of management,
will also be considered. The Portfolio will invest primarily in companies
whose securities are traded on United States stock exchanges or in the United
States over-the-counter market, but it may invest up to 20% of its total
assets in foreign securities.

The Portfolio may also invest up to 20% of its total assets in investment
grade securities (other than money market obligations) that are not
convertible into common stock for the purpose of seeking capital appreciation.
Subsequent to its purchase by the Portfolio, an issue of securities may cease
to be rated or its rating may be reduced below the minimum required for
purchase by the Portfolio. Neither event will require the sale of such
securities by the Portfolio. The Adviser will consider such events in its
determination of whether the Portfolio should continue to hold the securities.
The interest income to be derived may be considered as one factor in selecting
debt securities by the Adviser.

The Portfolio is authorized to invest, under normal market conditions, up to
20% of its total assets in domestic and foreign short-term (one year or less
remaining to maturity) and mediumterm (five years of less remaining to
maturity) money market obligations. For temporary defensive purposes, the
Portfolio may invest in these securities without limit. These instruments
consist of: obligations issued or guaranteed by the United States Government
or a foreign government, their agencies or instrumentalities; bank obligations
(including certificates of deposit, time deposits and bankers' acceptances of
domestic or foreign banks, domestic savings and loans and similar
institutions) that are high-quality investments or, if unrated, deemed by the
Adviser to be high-quality investments; commercial paper rated no lower than
A2 by Standard & Poor's Rating Service ("S&P") or Prime2 by Moody's Investors
Service, Inc. ("Moody's") or the equivalent from another NRSRO or, if unrated,
of an issuer having an outstanding, unsecured debt issue then rated within the
three highest rating categories by any NRSRO; and repurchase agreements with
respect to the foregoing.

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<PAGE>

When the Adviser believes that a defensive posture is warranted, the Portfolio
may invest temporarily, without limit, in investment grade debt obligations
and in domestic and foreign money market instruments, including repurchase
agreements.

Certain investment strategies and practices which may be employed by the
Portfolio (such as foreign securities, repurchase agreements, borrowings,
options, securities loans, small company securities, derivatives, futures
contracts, foreign currency transactions, United States Government securities,
short sales against the box, convertible securities, investment grade and
lower-quality fixed-income securities, and illiquid securities) are discussed
under the caption "Investment Strategies" below and in the Statement of
Additional Information.

MERRILL LYNCH WORLD STRATEGY PORTFOLIO

The investment objective of the Merrill Lynch World Strategy Portfolio is to
seek high total investment return by investing primarily in a portfolio of
equity and fixed income securities, including convertible securities, of U.S.
and foreign issuers. Total investment return consists of interest, dividends,
discount accruals and capital changes, including changes in the value of
non-dollar denominated securities and other assets and liabilities resulting
from currency fluctuations. Investing in foreign securities involves special
considerations. The Portfolio may employ a variety of instruments and
techniques to enhance income and to hedge against market and currency risk.

The Portfolio seeks to achieve its objective by investing primarily in the
securities of issuers located in the United States, Canada, Western Europe and
the Far East. There are no prescribed limits on the geographical allocation of
the Portfolio among these regions. Such allocation will be made primarily on
the basis of the anticipated total return from investments in the securities
of issuers wherever located, considering such factors as: the condition and
growth potential of the various economies and securities markets and the
issuers domiciled therein; anticipated movements in interest rates in the
various capital markets and in the value of foreign currencies relative to the
U.S. dollar; tax considerations; and economic, social, financial, national and
political factors that may affect the climate for investing within the various
securities markets. When in the judgment of the Adviser, economic or market
conditions warrant, the Portfolio reserves the right to concentrate its
investments in one or more capital markets, including the United States.

The equity and convertible preferred securities in which the Portfolio may
invest are primarily securities issued by quality companies. Generally, the
characteristics of such companies include a strong balance sheet, good
financial resources, a satisfactory rate of return on capital, a good industry
position and superior management.

The corporate debt securities, including convertible debt securities, in which
the Portfolio may invest will be primarily investment grade securities rated
BBB or better by S&P or Baa or better by Moody's or of comparable quality. The
Fund may also invest in debt obligations issued or guaranteed by sovereign
governments, political subdivisions thereof (including states, provinces and
municipalities) or their agencies or instrumentalities or issued or guaranteed
by international organizations designated or supported by governmental
entities to promote economic reconstruction or development (`supranational
entities') such as the International Bank for Reconstruction and Development
(the "World Bank) and the European Coal and Steel Community. Investments in
securities of supranational entities are subject to the risk that member
governments will fail to make

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<PAGE>

required capital contributions and that a supranational entity will thus be
unable to meet its obligations.

When market or financial conditions warrant, the Portfolio may invest as a
temporary defensive measure up to 100% of its assets in United States
Government or Government agency securities issued or guaranteed by the United
States Government or its agencies or instrumentalities, money market
securities or other fixed income securities deemed by the Adviser to be
consistent with a defensive posture, or may hold its assets in cash.

The Portfolio is non-diversified for 1940 Act purposes and as such may invest
a larger percentage of its assets in individual issuers than a diversified
investment company. In this regard, the Portfolio is not subject to the
general limitation that it not invest more than 5% of its total assets in the
securities of any one issuer. To the extent the Portfolio makes investments in
excess of 5% of its assets in a particular issuer, its exposure to credit and
market risks associated with that issuer is increased. However, the
Portfolio's investments will be limited so as to qualify for the special tax
treatment afforded "regulated investment companies" under the Code.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, floaters, futures
contracts, foreign securities, foreign currency transactions, United States
Government securities, convertible securities, borrowings, derivatives,
investment grade fixed-income securities, repurchase agreements, securities
loans, illiquid securities and forward commitments) are discussed under the
caption "Investment Strategies" below and in the Statement of Additional
Information.

MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO

The investment objective of the Merrill Lynch Basic Value Equity Portfolio is
to seek capital appreciation and, secondarily, income by investing in
securities, primarily equities, that the Adviser of the Portfolio believes are
undervalued and therefore represent basic investment value. The Portfolio
seeks special opportunities in securities that are selling at a discount,
either from book value or historical price-earnings ratios, or seem capable of
recovering from temporarily out of favor considerations. Particular emphasis
is placed on securities that provide an above-average dividend return and sell
at a below-average price-earnings ratio.

The investment policy of the Portfolio is based on the belief that the pricing
mechanism of the securities market lacks total efficiency and has a tendency
to inflate prices of securities in favorable market climates and depress
prices of securities in unfavorable climates. Based on this premise, the
Adviser believes that favorable changes in market prices are more likely to
begin when securities are out of favor, earnings are depressed, price-earnings
ratios are relatively low, investment expectations are limited, and there is
no real general interest in the particular security or industry involved. On
the other hand, the Adviser believes that negative developments are more
likely to occur when investment expectations are generally high, stock prices
are advancing or have advanced rapidly, price-earnings ratios have been
inflated, and the industry or issue continues to gain new investment
acceptance on an accelerated basis. In other words, the Adviser believes that
market prices of securities with relative high price-earnings ratios are more
susceptible to unexpected adverse developments while securities with
relatively low price-earnings ratios are more favorably positioned to benefit
from favorable, but generally unanticipated events. This investment policy
departs from traditional philosophy. The Adviser believes that the market risk
involved in

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<PAGE>

this policy is moderated somewhat by an emphasis on securities with
above-average dividend returns.

The current institutionally-dominated market tends to ignore, to some extent,
the numerous secondary issues whose market capitalizations are below those of
the relatively few larger size growth companies. It is expected that the
Portfolio's portfolio generally will have significant representation in this
secondary segment of the market. The Adviser is responsible for the management
of the Portfolio's securities portfolio and makes portfolio decisions based on
its own research information supplemented by research information provided by
other sources. The basic orientation of the Portfolio's investment policies is
such that at times a large portion of its common stock holdings may carry less
than favorable research ratings from research analysts.

Investment emphasis is on equities, primarily common stock and, to a lesser
extent, securities convertible into common stocks. The Portfolio also may
invest in preferred stocks and non-convertible investment grade debt
securities and utilize covered call options with respect to portfolio
securities. The Portfolio has the right, as a defensive measure, to hold other
types of securities, including United States Government and Government agency
securities, money market securities, or other fixed-income securities deemed
by the Adviser to be consistent with a defensive posture, or cash, in such
proportions as, in the opinion of the Adviser, prevailing market or economic
conditions warrant. The Portfolio may invest up to 10% of its total assets,
taken at market value at the time of acquisition, in the securities of foreign
issuers.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as options, convertible securities, United States Government
securities, repurchase agreements, securities loans, foreign securities,
borrowings and illiquid securities) are discussed under the caption
"Investment Strategies" below and in the Statement of Additional Information.

LAZARD LARGE CAP VALUE PORTFOLIO

The investment objective of the Lazard Large Cap Value Portfolio is to seek
capital appreciation by investing primarily in equity securities of companies
with relatively large capitalizations (i.e., companies having market
capitalizations of [please provide] at the time of initial purchase) that
appear to the Adviser to be inexpensively priced relative to the return on
total capital or equity. In managing the Portfolio, the Adviser engages in a
value-oriented search for equity securities before they have attracted wide
investor interest. The Adviser attempts to identify inexpensive securities
through traditional measures of value, including low price to earnings ratio,
high yield, unrecognized assets, potential for management change, and/or the
potential to improve profitability. The Adviser focuses on individual stock
selection (a "bottom-up" approach) rather than on forecasting stock market
trends (a "top-down" approach). Risk is tempered by diversification of
investments.

Under normal market conditions, the Portfolio will invest at least 80% of its
total assets in equity securities, including common stocks, preferred stocks
and securities convertible into or exchangeable for common stocks. In
addition, at times judged by the Adviser to be appropriate, the Portfolio may
hold up to 20% of its total assets in United States Government securities and
investment grade debt obligations of domestic corporations rated BBB or better
by S&P or Baa or better by Moody's. The Portfolio may also invest without
limitation in high-quality short-term money market instruments, including
United States Government securities, repurchase agreements,

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<PAGE>

certificates of deposits, time deposits and other short-term obligations issued
by banks, commercial paper and loan participations. In addition, the Portfolio
may invest up to 10% of its total assets in foreign equity or debt securities
trading in U.S. markets or listed on a domestic securities exchange or
represented by ADRs or Global Depositary Receipts ("GDRs"). The Portfolio may
also engage in various investment techniques, such as options transactions and,
although it has no present intention to do so, leveraging and lending portfolio
securities.

Securities owned by the Portfolio are kept under continuing supervision, and
changes may be made whenever such securities no longer seem to meet the
Portfolio's objective. Changes in the securities owned by the Portfolio also
may be made to increase or decrease investments in anticipation of changes in
security prices in general or to provide funds required for redemptions,
distributions to shareholders or other corporate purposes.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as securities loans, borrowing, loan participations,
derivatives, options, mortgage-related securities, forward commitments,
convertible securities, floaters, illiquid securities, foreign securities,
investment grade fixed-income securities, United States Government securities
and repurchase agreements) are discussed under the caption "Investment
Strategies" below and in the Statement of Additional Information.

LAZARD SMALL CAP VALUE PORTFOLIO

The investment objective of the Lazard Small Cap Value Portfolio is to seek
capital appreciation by investing primarily in equity securities of United
States companies with small market capitalizations (i.e., companies in the
range of companies represented in the Russell 2000 Index) that the Adviser
considers inexpensively priced relative to the return on total capital or
equity. The Russell 2000 Index is composed of selected common stocks of small,
generally unseasoned U.S. companies with market capitalizations ranging
between $100 million and $1 billion. The equity securities in which the
Portfolio may invest include: common stocks, preferred stocks, securities
convertible into or exchangeable for common stocks, rights and warrants.

Investments are generally made in equity securities of companies that in the
Adviser's opinion have one or more of the following characteristics: (i) are
undervalued relative to their earnings power, cash flow, and/or asset values;
(ii) have an attractive price/value relationship (i.e., have high returns on
equity and/or assets with correspondingly low price-to-book and/or
price-to-asset value as compared to the market generally or the companies'
industry groups in particular) with the expectation that some catalyst will
cause the perception of value to change within a 24-month time horizon; (iii)
have experienced significant relative underperformance and are out of favor
due to a set of circumstances that are unlikely to harm a company's franchise
or earnings power over the longer term; (iv) have low projected
price-to-earnings or price-to-cash-flow multiples relative to their industry
peer group and/or the market in general; (v) have the prospect, or the
industry in which the company operates has the prospect, to allow it to become
a larger factor in the business and receive a higher valuation as such; (vi)
have significant financial leverage but have high levels of free cash flow
that may be used to reduce leverage and enhance shareholder value; and (vii)
have a relatively short corporate history with the expectation that the
business may grow to generate meaningful cash flow and earnings over a
reasonable investment horizon.

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Under normal market conditions, the Portfolio will invest at least 80% of the
value of its total assets in the small capitalization equity securities
described above. Assets not invested in such small capitalization equity
securities generally will be invested in larger capitalization equity
securities or debt securities, including cash equivalents.

The Adviser believes that issuers of small capitalization stocks often have
sales and earnings growth rates that exceed those of larger companies, and
that such growth rates may, in turn, be reflected in more rapid share price
appreciation. However, investing in smaller capitalization stocks can involve
greater risk than is customarily associated with larger, more established
companies. (Such risks are discussed under the caption "Investment Strategies
- -- Small Company Securities" below).

The Adviser continually evaluates the securities owned by the Portfolio, and
changes may be made whenever the Adviser determines such securities no longer
meet the Portfolio's objective. Changes in Portfolio holdings may also be made
to increase or decrease investments in anticipation of changes in security
prices in general or to provide funds required for redemptions, distributions
to shareholders or other corporate purposes.

When, in the judgment of the Adviser, business or financial conditions
warrant, the Portfolio may assume a temporary defensive position and invest,
without limitation, in large capitalization companies or short-term money
market instruments or hold its assets in cash.

Certain investment strategies and investments which may be employed by the
Portfolio (such as securities loans, borrowings, loan participations,
derivatives, mortgage-related securities, convertible securities, floaters,
illiquid securities, investment grade fixed-income securities, forward
commitments, United States Government securities, repurchase agreements and
small company securities) are discussed under the caption "Investment
Strategies" below and in the Statement of Additional Information.

JPM CORE BOND PORTFOLIO

The investment objective of the JPM Core Bond Portfolio is to provide a high
total return consistent with moderate risk of capital and maintenance of
liquidity. Total return will consist of income plus realized and unrealized
capital gains and losses. Although the net asset value of the Portfolio will
fluctuate, the Portfolio attempts to preserve the value of its investments to
the extent consistent with its objective.

It is the current policy of the Portfolio that, under normal circumstances,
all of the Portfolio's assets will, at the time of purchase, consist of
investment grade securities rated BBB or better by S&P or Baa or better by
Moody's or unrated securities of comparable quality. If the quality of the
investment later declines, the Portfolio may continue to hold the investment.

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<PAGE>

The Adviser actively manages the Portfolio's duration, the allocation of
securities across market sectors, and the selection of specific securities
within market sectors. Based on fundamental, economic and capital markets
research, the Adviser adjusts the duration of the Portfolio in light of market
conditions and the Adviser's interest rate outlook. For example, if interest
rates are expected to fall, the duration may be lengthened to take advantage
of the expected increase in bond prices. The Adviser also actively allocates
the Portfolio's assets among the broad sectors of the fixed income market
including, but not limited to, United States Government and agency securities,
corporate securities, private placements, asset-backed securities,
mortgage-related securities, and direct mortgage obligations. The Portfolio
may also invest up to 25% of its assets in securities of foreign issuers,
including up to 20% of its assets in debt secruities denominated in foreign
currencies of developed countries. In addition, the Portfolio may invest in
municipal obligations provided such securities are issued on a taxable basis
or have an attractive yield excluding tax considerations. Specific securities
that the Adviser believes are undervalued are selected for purchase within the
sectors using advanced quantitative tools, analysis of credit risk, the
expertise of a dedicated trading desk, and the judgment of fixed income
portfolio managers and analysts. Under normal circumstances, the Adviser
intends to have the Portfolio invest at least 65% of its assets in bonds. The
Portfolio may to a limited extent invest in convertible securities, including
convertible debt securities and preferred stock.

Duration is a measure of the weighted average maturity of bonds and can be
used by the Adviser as a measure of the sensitivity of the market value of the
Portfolio's bond holdings to changes in interest rates. Generally, the longer
the duration of the Portfolio's bond holdings, the more sensitive their market
value will be to changes in interest rates. Under normal market conditions the
Portfolio's duration will range between one year shorter and one year longer
than the duration of the domestic investment grade fixed income universe, as
represented by Salomon Brothers Broad Investment Grade Bond Index. Currently,
the duration of that index is approximately 4.5 years. The maturities of the
individual securities in the Portfolio may vary widely, however.

The Adviser intends to actively manage the Portfolio in pursuit of its
investment objective. Portfolio transactions are undertaken principally to
accomplish the Portfolio's objective in relation to expected movements in the
general level of interest rates. However, the Portfolio may also engage in
short-term trading consistent with its objective. To the extent the Portfolio
engages in short-term trading, it may incur increased transaction costs. The
Portfolio may purchase high-quality money market instruments to invest
temporary cash balances or to maintain liquidity to meet withdrawals. When
market or financial conditions warrant, the Portfolio may invest as a
temporary defensive measure up to 100% of its assets in money market
instruments.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
foreign securities, securities loans, illiquid securities, zero-coupon bonds,
investment grade fixed-income securities, payment-in-kind bonds, derivatives,
foreign currency transactions, repurchase agreements, reverse repurchase
agreements, forward commitments, United States Government securities,
borrowings, asset-backed securities, convertible securities, mortgage-related
securities and swaps) are discussed under the caption "Investment Strategies"
below and in the Statement of Additional Information.

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BT Small Company Index Portfolio

The investment objective of the BT Small Company Index Portfolio is to replicate
as closely as possible (before deduction of Portfolio expenses) the total
return of the Russell 2000 Small Stock Index. The Russell 2000 is composed of
approximately 2,000 small-capitalization common stocks. A company's stock
market capitalization is the total market value of its floating outstanding
shares. As of ______________ the average stock market capitalization of the
Russell 2000 was $___ million and the weighted average stock market
capitalization of the Russell 2000 was $___ million. The Portfolio is neither
sponsored by nor affiliated with the Frank Russell Company, which is the owner
of the trademarks and copyrights relating to the Russell indices.. Frank
Russell's only relationship to the Portfolio is the licensing by the Adviser
of the use of the Russell 2000.

The Portfolio invests in a statistically selected sample of the 2,000 stocks
included in the Russell 2000. The stocks of the Russell 2000 to be included in
the Portfolio will be selected utilizing a statistical sampling technique
known as "optimization." This process selects stocks for the Portfolio so that
various industry weightings, market capitalizations and fundamental
characteristics (e.g., price-to-book, price-to-earnings and debt-to-asset
ratios and dividend yields) closely approximate those of the Russell 2000. For
instance, if 10% of the capitalization of the Russell 2000 consists of utility
companies with relatively small capitalizations, then the Portfolio is
constructed so that approximately 10% of the Portfolio's assets are invested
in the stocks of utility companies with relatively small capitalizations. The
stocks held by the Portfolio are weighted to make the Portfolio's aggregate
investment characteristics similar to those of the Russell 2000 as a whole.

Over time, the correlation between the performance of the Portfolio and the
Russell 2000 is expected to be 0.95 or higher before deduction of Portfolio
expenses. A correlation of 1.00 would indicate perfect correlation, which
would be achieved when the net asset value of the Portfolio, including the
value of its dividend and any capital gain distributions, increases or
decreases in exact proportion to changes in the Russell 2000. The Portfolio's
ability to track the Russell 2000 may be affected by, among other things,
transaction costs, administration and other expenses incurred by the
Portfolio, changes in either the composition of the Russell 2000 or the assets
of the Portfolio, and the timing and amount of Portfolio investor
contributions and withdrawals, if any. Because the Portfolio seeks to track
the Russell 2000, the Adviser generally will not attempt to judge the merits
of any particular stock as an investment. Under normal circumstances, the
Portfolio will invest at least 80% of its assets in the securities of the
Russell 2000. The Portfolio is a diversified fund and will not concentrate
more than 25% of its assets in the securities of issuers in the same industry.
In the event that the Russell 2000 should concentrate to an extent
greater than 25% in the securities of issuers in the same industry, the
Portfolio's ability to achieve its objective may be impaired since the
Portfolio is not permitted to so invest.

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<PAGE>

2000 while retaining a cash balance for portfolio management purposes; to
facilitate trading; to reduce transaction costs; or to seek higher investment
returns when a futures contract, option, warrant or convertible security is
priced more attractively than the underlying equity security or the Russell
2000. These instruments may be considered derivatives. The use of derivatives
for non-hedging purposes may be considered speculative. While each of these
instruments can be used as leveraged investments, the Portfolio will not use
them to leverage its net assets. The Portfolio will not invest in such
instruments as part of a temporary defensive strategy (in anticipation of
declining stock prices) to protect the Portfolio against potential market
declines.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
securities loans, small company securities, illiquid securities, investment
grade fixed-income securities, derivatives, repurchase agreements, reverse
repurchase agreements, forward commitments, United States Government
securities, borrowings, asset-backed securities, and convertible securities)
are discussed under the caption "Investment Strategies" below and in the
Statement of Additional Information.

BT INTERNATIONAL EQUITY INDEX PORTFOLIO

The Portfolio seeks to replicate as closely as possible (before deduction of
Portfolio expenses) the total return of the Morgan Stanley Capital
International Europe, Australia, Far East Index ("EAFE Index"). The EAFE Index
is a capitalization-weighted index containing approximately 1,100 equity
securities of companies located in countries outside the United States. The
countries currently included in the EAFE Index are Australia, Austria,
Belgium, Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan,
Malaysia, The Netherlands, New Zealand, Norway, Singapore, Spain, Sweden,
Switzerland and The United Kingdom. The EAFE Index is the exclusive property
of Morgan Stanley. The Portfolio is not sponsored, endorsed, sold or
promoted by Morgan Stanley and Morgan Stanley makes no guarantee as to the
accuracy or completeness of the EAFE Index or any data included therein.

The Portfolio is constructed to have aggregate investment characteristics
similar to those of the EAFE Index. The Portfolio invests in a statistically
selected sample of the securities of companies included in the EAFE Index,
although not all companies within a country will be represented in the
Portfolio at the same time. Stocks are selected for inclusion in the Portfolio
based on country of origin, market capitalization, yield, volatility and
industry sector. The Adviser will manage the Portfolio using advanced
statistical techniques to determine which stocks should be purchased or sold
to replicate the EAFE Index. From time to time, adjustments may be made in the
Portfolio because of changes in the composition of the EAFE Index, but such
changes are expected to be infrequent.

Over time, the correlation between the performance of the Portfolio and the
EAFE Index is expected to be 0.95 or higher before deduction of Portfolio
expenses. A correlation of 1.00 would indicate perfect correlation, which
would be achieved when the net asset value of the Portfolio, including the
value of its dividend and any capital gain distributions, increases or
decreases in exact proportion to changes in the EAFE Index. The Portfolio's
ability to track the EAFE Index may be affected by, among other things,
transaction costs, administration and other expenses incurred by the
Portfolio, changes in either the composition of the EAFE Index or the assets
of the Portfolio, and the timing and amount of Portfolio investor
contributions and withdrawals, if any. Because the Portfolio seeks to track
the EAFE Index, Bankers Trust generally will not attempt to judge the merits
of any particular stock as an investment. Under normal circumstances, the
Portfolio will invest at least 80% of its assets in the securities of the EAFE
Index.

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<PAGE>

The Portfolio is a diversified fund and will not concentrate more than 25% of
its assets in the securities of issuers in the same industry. In the event
that the EAFE Index should concentrate to an extent greater than 25% in the
securities of issuers in the same industry, the Portfolio's ability to achieve
its objective may be impaired since the Portfolio may not so invest

The Portfolio may maintain up to 20% of its assets in short-term debt
securities and money market instruments to meet redemption requests or to
facilitate investment in the securities of the EAFE Index. Securities index
futures contracts and related options, warrants and convertible securities may
be used for several reasons: to simulate full investment in the EAFE Index
while retaining a cash balance for fund management purposes; to facilitate
trading; to reduce transaction costs; or to seek higher investment returns
when a futures contract, option, warrant or convertible security is priced
more attractively than the underlying equity security or EAFE Index. These
instruments may be considered derivatives. The use of derivatives for
non-hedging purposes may be considered speculative. While each of these
instruments can be used as leveraged investments, the Portfolio will not use
them to leverage its net assets. The Portfolio will not invest in such
instruments as part of a temporary defensive strategy (in anticipation of
declining stock prices) to protect the Portfolio against potential market
declines.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
foreign securities, foreign currency transactions, securities loans, illiquid
securities, investment grade fixed-income securities, derivatives, swaps,
repurchase agreements, reverse repurchase agreements, forward commitments,
United States Government securities, borrowings, asset-backed securities, and
convertible securities) are discussed under the caption "Investment
Strategies" below and in the Statement of Additional Information.

BT EQUITY 500 INDEX PORTFOLIO

The Portfolio seeks to replicate as closely as possible (before deduction of
Portfolio expenses) the total return of the Standard & Poor's 500 Composite
Stock Price Index ("S&P 500"). The S&P 500 is an index of 500 common stocks of
companies from many industrial sectors representing a significant portion of
the market value of all common stocks publicly traded in the United States,
most of which trade on the New York Stock Exchange Inc. (the "NYSE"). The
Adviser believes that the performance of the S&P 500 is representative of the
performance of publicly-traded common stocks in the U.S. in general.

The composition of the S&P 500 is determined by Standard & Poor's and is based
on such factors as the market capitalization and trading activity on each
stock and its adequacy as a representation of stocks in a particular industry,
and may be changed from time to time. The Portfolio is not sponsored,
endorsed, sold or promoted by Standard & Poor's and Standard & Poor's makes no
guarantee as to the accuracy and/or completeness of the S&P 500 or any data
included therein. In seeking to replicate the performance of the S&P 500,
before deduction of Portfolio expenses, the Adviser will attempt over time to
allocate the Portfolio's investment among common stocks included in the S&P
500 in approximately the same proportions as they are represented in the S&P
500, beginning with the heaviest weighted stocks that make up a larger portion
of the Index's value. Bankers Trust utilizes a two-stage sampling approach in
seeking to achieve its objective. Stage one, which

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<PAGE>

encompasses large capitalization stocks, maintains the stock holdings at or
near their benchmark weights. Large capitalization stocks are defined as those
securities which represent 0.10% or more of the S&P 500. In stage two, smaller
stocks are analyzed and selected using risk characteristics and industry
weights in order to match the sector and risk characteristics of the smaller
companies in the S&P 500. This approach helps to increase the Portfolio's
liquidity while reducing costs.

The Adviser generally will seek to match the composition of the S&P 500 but
usually will not invest the Portfolio's stock portfolio to mirror the S&P 500
exactly. Because of the difficulty and cost of executing relatively small
stock transactions, the Portfolio may not always be invested in the less
heavily weighted S&P 500 stocks, and may at times have its portfolio weighted
differently than the S&P 500, particularly if the Portfolio has a low level of
assets. In addition, the Portfolio may omit or remove any S&P 500 stock from
the Portfolio if, following objective criteria, the Adviser judges the stock
to be insufficiently liquid or believes the merit of the investment has been
substantially impaired by extraordinary events or financial conditions. The
Portfolio will not purchase the stock of Bankers Trust New York Corporation,
which is included in the S&P 500, and instead will overweight its holdings of
companies engaged in similar businesses.

Over time, the correlation between the performance of the Portfolio and the
S&P 500 is expected to be 0.95 or higher before deduction of Portfolio
expenses. A correlation of 1.00 would indicate perfect correlation, which
would be achieved when the net asset value of the Portfolio, including the
value of its dividend and any capital gain distributions, increases or
decreases in exact proportion to changes in the S&P 500. The Portfolio's
ability to track the S&P 500 may be affected by, among other things,
transaction costs, administration and other expenses incurred by the
Portfolio, changes in either the composition of the S&P 500 or the assets of
the Portfolio, and the timing and amount of Portfolio investor contributions
and withdrawals, if any. Because the Portfolio seeks to track the S&P 500, the
Adviser generally will not attempt to judge the merits of any particular stock
as an investment. Under normal circumstances, the Portfolio will invest at
least 80% of its assets in the securities of the S&P 500.

The Portfolio is a diversified fund and will not concentrate more than 25% of
its assets in the securities of issuers in the same industry. In the unlikely
event that the S&P 500 should concentrate to an extent greater than 25% in the
securities of issuers in the same industry, the Portfolio's ability to achieve
its objective may be impaired since the Portfolio may not so invest.

The Portfolio may maintain up to 20% of its assets in short-term debt
securities and money market instruments to meet redemption requests or to
facilitate investment in the securities of the S&P 500. Securities index
futures contracts and related options, warrants and convertible securities may
be used for several reasons: to simulate full investment in the S&P 500 while
retaining a cash balance for fund management purposes; to facilitate trading;
to reduce transaction costs; or to seek higher investment returns when a
futures contract, option, warrant or convertible security is priced more
attractively than the underlying equity security or S&P 500. These instruments
may be considered derivatives. The use of derivatives for non-hedging purposes
may be considered speculative. While each of these instruments can be used as
leveraged investments, the Portfolio may not use them to leverage its net
assets. The Portfolio may not invest in such instruments as part of a
temporary defensive strategy (in anticipation of declining stock prices) to
protect the Portfolio against potential market declines.

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<PAGE>

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
securities loans, illiquid securities, investment grade fixed-income
securities, derivatives, repurchase agreements, reverse repurchase agreements,
forward commitments, United States Government securities, borrowings,
asset-backed securities, and convertible securities) are discussed under the
caption "Investment Strategies" below and in the Statement of Additional
Information.

INVESTMENT STRATEGIES

In addition to making investments directly in securities, to the extent
described above and below, each of the Portfolios, for example, may purchase
and sell call and put options(except for MFS Research Portfolio and Lazard
Small Cap Value Portfolio), engage in transactions in futures contracts and
related options (except for Lazard Large Cap Value Portfolio and Lazard Small
Cap Value Portfolio), and engage in forward foreign currency exchange
transactions (except for MFS Research Portfolio, Lazard Large Cap Value
Portfolio, Lazard Small Cap Value Portfolio, BT Small Company Index Portfolio,
and BT Equity 500 Index Portfolio). They may also enter into repurchase
agreements, and borrow funds under certain limited circumstances. In addition,
each Portfolio may engage in other types of investment strategies as described
below. Each Portfolio may invest in or utilize any of these investment
strategies and instruments or engage in any of these practices except where
otherwise prohibited by law or the Portfolio's own investment restrictions.
Portfolios that anticipate committing 5% or more of their net assets to a
particular type of investment strategy or instruments are specifically
referred to in the descriptions below of such investment strategy or
instrument. Certain investment strategies and instruments and the risks
related to them are summarized below and certain of these strategies and
instruments are described in more detail in the Statement of Additional
Information.

ASSET-BACKED SECURITIES. The EQ/Putnam Balanced Portfolio, MFS Emerging Growth
Companies Portfolio, Morgan Stanley Emerging Markets Equity Portfolio, JPM
Core Bond Portfolio, BT Small Company Index Portfolio, BT International Equity
Index Portfolio and BT Equity 500 Index Portfolio may invest in asset-backed
securities. These asset-backed securities, issued by trusts and special
purpose corporations, are collateralized by a pool of assets, such as credit
card or automobile loans, home equity loans or computer leases, and represent
the obligations of a number of different parties. Asset-backed securities
present certain risks. For instance, in the case of credit card receivables,
these securities may not have the benefit of any security interest in the
related collateral. Due to the possibility that prepayments (on automobile
loans and other collateral) will alter the cash flow on asset-backed
securities, it is not possible to determine in advance the actual final
maturity date or average life. Faster prepayment will shorten the average life
and slower prepayments will lengthen it. However, it is possible to determine
what the range of that movement could be and to calculate the effect that it
will have on the price of the security. In selecting these securities, the
Adviser will look for those securities that offer a higher yield to compensate
for any variation in average maturity.

BORROWINGS. The Portfolios may borrow money from banks or other lenders as a
temporary measure for emergency purposes, to facilitate redemption requests,
or for other purposes consistent with each Portfolio's investment objective
and program. The Lazard Large Cap Value Portfolio may borrow for leveraging
purposes (in order to increase its investment in portfolio securities) to

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<PAGE>

the extent that the amount so borrowed does not exceed 33 1/3% of the
Portfolio's total assets. Leveraging exaggerates the effect on net asset value
of any increase or decrease in market value of the Lazard Large Cap Value
Portfolio's investment. In addition, such borrowings would be subject to
interest costs which may or may not be recovered by appreciation of securities
purchased. The Lazard Large Cap Value Portfolio may also borrow up to 10% of
its total assets for temporary or emergency purposes. Borrowings for the T.
Rowe Price International Stock Portfolio, T. Rowe Price Equity Income
Portfolio, MFS Research Portfolio, MFS Emerging Growth Companies Portfolio,
Morgan Stanley Emerging Markets Equity Portfolio, Merrill Lynch World Strategy
Portfolio, Merrill Lynch Basic Value Equity Portfolio, JPM Core Bond
Portfolio, BT Small Company Index Portfolio, BT International Equity Index
Portfolio and BT Equity 500 Index Portfolio may not exceed 33 1/3% of each
Portfolio's total assets. Borrowings for the Warburg Pincus Small Company
Value Portfolio may not exceed 30% of the Portfolio's total assets. Borrowing
for the Lazard Small Cap Value Portfolio may not exceed 15% of its total
assets for temporary or emergency purposes, including to meet redemptions
(otherwise such borrowings may not exceed 5% of the value of the Portfolio's
total assets). Borrowings for the EQ/Putnam Growth & Income Value Portfolio,
the EQ/Putnam International Equity Portfolio, EQ/Putnam Investors Growth
Portfolio, EQ/Putnam Balanced Portfolio may not exceed 10% of each Portfolio's
total assets. Each Portfolio may pledge its assets to secure these permissible
borrowings. No Portfolio, except the Lazard Large Cap Value Portfolio, may
purchase additional securities when its borrowings exceed 5% of its total
assets. See also "Reverse Repurchase Agreements" for information concerning an
investment technique that may be deemed to involve a borrowing. Further
information concerning each Portfolio's fundamental policy with respect to
borrowings is provided in the Statement of Additional Information.

CONVERTIBLE SECURITIES. Each of the Portfolios may invest in convertible
securities, including both convertible debt and convertible preferred stock.
Such securities may be converted into shares of the underlying common stock at
either a stated price or stated rate. Because of this feature, convertible
securities enable an investor to benefit from increases in the market price of
the underlying common stock. Convertible securities provide higher yields than
the underlying common stocks, but generally offer lower yields than
nonconvertible securities of similar quality. Like bonds, the value of
convertible securities fluctuates in relation to changes in interest rates
and, in addition, fluctuates in relation to the underlying common stock.
Subsequent to purchase by a Portfolio, convertible securities may cease to be
rated or a rating may be reduced below the minimum required for purchase by
that Portfolio. Neither event will require sale of such securities, although
each Adviser will consider such event in its determination of whether a
Portfolio should continue to hold the securities.

DERIVATIVES. Each Portfolio (except the MFS Research Portfolio) may invest in
one or more types of derivatives. Derivatives are financial products or
instruments that derive their value from the value of one or more underlying
assets, reference rates or indices. Derivatives include, but are not limited
to, the following: asset-backed securities, collateralized mortgage
obligations, floaters, futures, hybrid instruments, inverse floaters,
mortgage-backed securities, options, stripped mortgage-backed securities,
structured notes and swaps. Further information about these instruments and
the risks involved in their use are contained under the description of each of
these instruments in this section or the Statement of Additional Information.

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<PAGE>

FLOATERS AND INVERSE FLOATERS. The EQ/Putnam Balanced Portfolio, Morgan
Stanley Emerging Markets Equity Portfolio, Lazard Large Cap Value Portfolio
and the Lazard Small Cap Value Portfolio each may invest in floaters, which
are fixed-income securities with a floating or variable rate of interest,
i.e., the rate of interest varies with changes in specified market rates or
indices, such as the prime rate, or at specified intervals. Certain floaters
may carry a demand feature that permits the holder to tender them back to the
issuer of the underlying instrument, or to a third party, at par value prior
to maturity. When the demand feature of certain floaters represents an
obligation of a foreign entity, the demand feature will be subject to certain
risks discussed under "Foreign Securities ".

In addition, the Morgan Stanley Emerging Markets Equity Portfolio may invest
in inverse floating rate obligations which are fixed-income securities that
have coupon rates that vary inversely at a multiple of a designated floating
rate, such as London Inter-Bank Offered Rate ("LIBOR"). Any rise in the
reference rate of an inverse floater (as a consequence of an increase in
interest rates) causes a drop in the coupon rate while any drop in the
reference rate of an inverse floater causes an increase in the coupon rate.
Inverse floaters may exhibit substantially greater price volatility than fixed
rate obligations having similar credit quality, redemption provisions and
maturity, and inverse floater collateralized mortgage obligations ("CMOs")
exhibit greater price volatility than the majority of mortgage-related
securities. In addition, some inverse floater CMOs exhibit extreme sensitivity
to changes in prepayments. As a result, the yield to maturity of an inverse
floater CMO is sensitive not only to changes in interest rates but also to
changes in prepayment rates on the related underlying mortgage assets.

FOREIGN SECURITIES. Foreign investments involve certain risks that are not
present in domestic securities. Because each of the Portfolios (except the
Lazard Small Cap Value Portfolio, BT Small Company Index Portfolio and BT Equity
500 Index Portfolio) may purchase securities denominated in foreign
currencies, a change in the value of any such currency against the United
States dollar will result in a change in the United States dollar value of a
Portfolio's assets and income. In addition, although a portion of a
Portfolio's investment income may be received or realized in such currencies,
the Portfolio will be required to compute and distribute its income in United
States dollars. Therefore, if the exchange rate for any such currency declines
after a Portfolio's income has been earned and computed in United States
dollars but before conversion and payment, the Portfolio could be required to
liquidate portfolio securities to make such distributions.

The value of foreign investments and the investment income derived from them
may also be affected unfavorably by changes in currency exchange control
regulations. Although the Portfolios will invest only in securities
denominated in foreign currencies that are fully exchangeable into United
States dollars without legal restriction at the time of investment, there can
be no assurance that currency controls will not be imposed subsequently. In
addition, the value of foreign fixed income investments may fluctuate in
response to changes in United States and foreign interest rates.

There may be less information publicly available about a foreign issuer than
about a United States issuer, and a foreign issuer is not generally subject to
accounting, auditing and financial reporting standards and practices
comparable to those in the United States. Foreign stock markets are generally
not as developed or efficient as, and may be more volatile than, those in the
United States. While growing in volume, they usually have substantially less
volume than United States

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markets and a Portfolio's investment securities may be less liquid and subject
to more rapid and erratic price movements than securities of comparable United
States companies. Equity securities may trade at price/earnings multiples
higher than comparable United States securities and such levels may not be
sustainable. There is generally less government supervision and regulation of
foreign stock exchanges, brokers and listed companies than in the United
States. Moreover, settlement practices for transactions in foreign markets may
differ from those in United States markets. Such differences may include delays
beyond periods customary in the United States and practices, such as delivery
of securities prior to receipt of payment, which increase the likelihood of a
"failed settlement." Failed settlements can result in losses to a Portfolio. In
less liquid and well developed stock markets, such as those in some Asian and
Latin American countries, volatility may be heightened by actions of a few
major investors. For example, substantial increases or decreases in cash flows
of mutual funds investing in these markets could significantly affect stock
prices and, therefore, share prices.

Foreign brokerage commissions, custodial expenses and other fees are also
generally higher than for securities traded in the United States.
Consequently, the overall expense ratios of international or global funds are
usually somewhat higher than those of typical domestic stock funds.

In addition, the economies, markets and political structures of a number of
the countries in which the Portfolios can invest do not compare favorably with
the United States and other mature economies in terms of wealth and stability.
Therefore, investments in these countries may be riskier, and will be subject
to erratic and abrupt price movements. Some economies are less well developed
and less diverse (for example, Latin America, Eastern Europe and certain Asian
countries), and more vulnerable to the ebb and flow of international trade,
trade barriers and other protectionist or retaliatory measures (for example,
Japan, Southeast Asia and Latin America). Some countries, particularly in
Latin America, are grappling with severe inflation and high levels of national
debt. Investments in countries that have recently begun moving away from
central planning and state-owned industries toward free markets, such as the
Eastern European or Chinese economies, should be regarded as speculative.

In addition, investment in foreign securities may also include the risk of
expropriation by a foreign government.

Moreover, investments in foreign government debt securities, particularly
those of emerging market country governments, involve special risks. Certain
emerging market countries have historically experienced, and may continue to
experience, high rates of inflation, high interest rates, exchange rate
fluctuations, large amounts of external debt, balance of payments and trade
difficulties and extreme poverty and unemployment. The issuer or governmental
authority that controls the repayment of an emerging market country's debt may
not be able or willing to repay the principal and/or interest when due in
accordance with the terms of such debt. A debtor's willingness or ability to
repay principal and interest due in a timely manner may be affected by, among
other factors, its cash flow situation, and, in the case of a government
debtor, the extent of its foreign reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole and the political constraints to
which a government debtor may be subject. Government debtors may default on
their debt and may also be dependent on expected disbursements from foreign
governments, multilateral agencies and others abroad to reduce principal and
interest arrearages on their debt. Holders of government debt may

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be requested to participate in the rescheduling of such debt and to extend
further loans to government debtors.

Certain Portfolios may invest in the following types of foreign securities or
engage in the following types of transactions related to foreign securities.

Brady Bonds. The EQ/Putnam Balanced Portfolio, MFS Emerging Growth Companies
Portfolio, Morgan Stanley Emerging Markets Equity Portfolio, and the JPM Core
Bond Portfolio each may invest in "Brady Bonds," which are fixed-income
securities created through the exchange of existing commercial bank loans to
foreign entities for new obligations in connection with debt restructuring
under a plan introduced by Nicholas F. Brady when he was the United States
Secretary of the Treasury. Brady Bonds have been issued only recently, and,
accordingly, do not have a long payment history. They may be collateralized or
uncollateralized and issued in various currencies (although most are United
States dollar-denominated) and they are actively traded in the
over-the-counter ("OTC") secondary market. Each Portfolio will invest in Brady
Bonds only if they are consistent with quality specifications established from
time to time by the Adviser to that Portfolio.

Depositary Receipts. Each of the Portfolios (except the Lazard Small Cap Value
Portfolio) may purchase depositary receipts, which are securities representing
ownership interests in securities of foreign companies (an "underlying
issuer") and are deposited with a securities depositary. Depositary receipts
are not necessarily denominated in the same currency as the underlying
securities. Depositary receipts include ADRs and GDRs and other types of
depositary receipts (which, together with ADRs and GDRs, are hereinafter
collectively referred to as "Depositary Receipts"). ADRs are
dollar-denominated Depositary Receipts typically issued by a United States
financial institution which evidence ownership interests in a security or pool
of securities issued by a foreign issuer. ADRs are listed and traded in the
United States. GDRs and other types of depositary receipts are typically
issued by foreign banks or trust companies, although they also may be issued
by United States financial institutions, and evidence ownership interests in a
security or pool of securities issued by either a foreign or a United States
corporation. Generally, depositary receipts in registered form are designed
for use in the United States securities market and depositary receipts in
bearer form are designed for use in securities markets outside the United
States. Although there may be more reliable information available regarding
issuers of certain ADRs that are issued under so-called "sponsored" programs
and ADRs do not involve foreign currency risks, ADRs and other Depositary
Receipts are subject to the risks of other investments in foreign securities,
as described directly above.

FOREIGN CURRENCY TRANSACTIONS. Each of the Portfolios (except the Lazard Small
Cap Value Portfolio, BT Small Company Index Portfolio and BT Equity 500 Index
Portfolio) may purchase foreign currency on a spot (or cash) basis. In
addition, each of the Portfolios (except the MFS Research Portfolio, the
Lazard Large Cap Value Portfolio, the Lazard Small Cap Value Portfolio, BT
Small Company Index Portfolio and BT Equity 500 Index Portfolio) may enter into
contracts to purchase or sell foreign currencies at a future date ("forward
contracts"). Each of the Portfolios (except the MFS Research Portfolio, Lazard
Large Cap Value Portfolio, Lazard Small Cap Value Portfolio, BT Small Cap
Index Portfolio and BT Equity 500 Index Portfolio) may also purchase and sell
foreign currency futures contracts and may purchase and sell exchange traded
call and put options on foreign currency futures contracts and on foreign
currencies. The

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EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam International Equity
Portfolio, EQ/Putnam Investors Growth Portfolio, EQ/Putnam Balanced Portfolio,
MFS Emerging Growth Companies Portfolio, Morgan Stanley Emerging Markets Equity
Portfolio, Merrill Lynch World Strategy Portfolio, the JPM Core Bond Portfolio
and the BT EAFE(R) Equity Index Portfolio may engage in over-the-counter
("OTC") options on foreign currency transactions. The Merrill Lynch World
Strategy Portfolio will engage in OTC options on foreign currency transactions
only with financial institutions that have capital of at least $50 million or
whose obligations are guaranteed by an entity having capital of at least $50
million. The MFS Emerging Growth Companies Portfolio may only enter into
forward contracts on currencies in the OTC market. The Advisers may engage in
these transactions to protect against uncertainty in the level of future
exchange rates in connection with the purchase and sale of portfolio securities
("transaction hedging") and to protect the value of specific portfolio
positions ("position hedging").

Hedging transactions involve costs and may result in losses. Each of the
Portfolios (except the MFS Research Portfolio, Lazard Small Cap Value
Portfolio, BT Small Company Index Portfolio and BT Equity 500 Index Portfolio)
may also write covered call options on foreign currencies to offset some of the
costs of hedging those currencies. A Portfolio will engage in OTC options
transactions on foreign currencies only when appropriate exchange traded
transactions are unavailable and when, in the Adviser's opinion, the pricing
mechanism and liquidity are satisfactory and the participants are responsible
parties likely to meet their contractual obligations. A Portfolio's ability to
engage in hedging and related option transactions may be limited by tax
considerations.

Transactions and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Portfolios own or intend to
purchase or sell. They simply establish a rate of exchange which one can
achieve at some future point in time. Additionally, although these techniques
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, they tend to limit any potential gain which might result from the
increase in the value of such currency.

FORWARD COMMITMENTS. Each Portfolio (except the Warburg Pincus Small Company
Value Portfolio) may make contracts to purchase securities for a fixed price
at a future date beyond customary settlement time ("forward commitments") if
it holds, and maintains until the settlement date in a segregated account,
cash or liquid securities in an amount sufficient to meet the purchase price,
or if it enters into offsetting contracts for the forward sale of other
securities it owns. Forward commitments may be considered securities in
themselves and involve a risk of loss if the value of the security to be
purchased declines prior to the settlement date, which risk is in addition to
the risk of decline in value of the Portfolio's other assets. Where such
purchases are made through dealers, a Portfolio relies on the dealer to
consummate the sale. The dealer's failure to do so may result in the loss to a
Portfolio of an advantageous yield or price.

HYBRID INSTRUMENTS. The T. Rowe Price International Stock Portfolio, T. Rowe
Price Equity Income Portfolio and Morgan Stanley Emerging Markets Equity
Portfolio may invest in hybrid instruments. Hybrid instruments have recently
been developed and combine the elements of futures contacts or options with
those of debt, preferred equity or a depository instrument. Often these hybrid
instruments are indexed to the price of a commodity, particular currency, or a
domestic or foreign debt or equity securities index. Hybrid instruments may
take a variety of

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forms, including, but not limited to, debt instruments with interest or
principal payments or redemption terms determined by reference to the value of
a currency or commodity or securities index at a future point in time,
preferred stock with dividend rates determined by reference to the value of a
currency, or convertible securities with the conversion terms related to a
particular commodity. Hybrid instruments may bear interest or pay dividends at
below market (or even relatively nominal) rates. Under certain conditions, the
redemption value of such an instrument could be zero. Hybrid instruments can
have volatile prices and limited liquidity and their use by a Portfolio may not
be successful.

ILLIQUID SECURITIES. The Warburg Pincus Small Company Value Portfolio, Lazard
Large Cap Value Portfolio and Lazard Small Cap Value Portfolio each may invest
up to 10% of its assets and each other Portfolio may invest up to 15% of its
net assets in illiquid securities and other securities which are not readily
marketable, including nonnegotiable time deposits, certain restricted
securities not deemed by the Trust's Board of Trustees to be liquid, and
repurchase agreements with maturities longer than seven days. Securities
eligible for resale pursuant to Rule 144A under the Securities Act of 1933, as
amended, which have been determined by the Board of Trustees to be liquid,
will not be considered by the Adviser to be illiquid or not readily marketable
and, therefore, are not subject to the 10% or 15% limit. The inability of a
Portfolio to dispose of illiquid or not readily marketable investments readily
or at a reasonable price could impair the Portfolio's ability to raise cash
for redemptions or other purposes. The liquidity of securities purchased by a
Portfolio which are eligible for resale pursuant to Rule 144A will be
monitored by each Portfolio's Adviser on an ongoing basis, subject to the
oversight of the Board of Trustees of the Trust. In the event that such a
security is deemed to be no longer liquid, a Portfolio's holdings will be
reviewed to determine what action, if any, is required to ensure that the
retention of such security does not result in a Portfolio's having more than
10% or 15% of its assets invested in illiquid or not readily marketable
securities.

INVESTMENT GRADE AND LOWER QUALITY FIXED INCOME SECURITIES. Each Portfolio may
invest in or hold a portion of its total assets in investment grade or, except
as noted below, lower quality fixed income securities. The T. Rowe Price
International Stock Portfolio, Merrill Lynch Basic Value Equity Portfolio,
Lazard Large Cap Value Portfolio, Lazard Small Cap Value Portfolio and JPM
Core Bond Portfolio each may invest in or hold investment grade securities,
but not lower quality fixed income securities. Investment grade securities are
securities rated Baa or higher by Moody's or BBB or higher by S&P or
comparable quality unrated securities. Investment grade securities while
normally exhibiting adequate protection parameters, have speculative
characteristics, and, consequently, changes in economic conditions or other
circumstances are more likely to lead to a weakened capacity of such issuers
to make principal and interest payments than is the case for higher grade
fixed income securities. Lower quality fixed income securities are securities
that are rated in the lower categories by NRSROs (i.e., Ba or lower by Moody's
and BB or lower by S&P) or comparable quality unrated securities. Such lower
quality securities are known as "junk bonds" and are regarded as predominantly
speculative with respect to the issuer's continuing ability to meet principal
and interest payments. (Each NRSRO's descriptions of these bond ratings are
set forth in the Appendix to the Statement of Additional Information.) Because
investment in lower quality securities involves greater investment risk,
achievement of a Portfolio's investment objective will be more dependent on
the Adviser's analysis than would be the case if that Portfolio were investing
in higher quality bonds. In addition, lower quality securities may be more
susceptible to real or perceived adverse economic and individual

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corporate developments than would investment grade bonds. Moreover, the
secondary trading market for lower quality securities may be less liquid than
the market for investment grade bonds. This potential lack of liquidity may
make it more difficult for an Adviser to value accurately certain portfolio
securities.

LOAN PARTICIPATIONS. The EQ/Putnam Balanced Portfolio, MFS Emerging Growth
Companies Portfolio, Morgan Stanley Emerging Markets Equity Portfolio, Lazard
Large Cap Value Portfolio, Lazard Small Cap Value Portfolio, and the JPM Core
Bond Portfolio may invest a portion of each of their assets in loan
participations and other direct indebtedness. By purchasing a loan, a
Portfolio acquires some or all of the interest of a bank or other lending
institution in a loan to a corporate borrower. Many such loans are secured,
and most impose restrictive covenants that must be met by the borrower. These
loans are made generally to finance internal growth, mergers, acquisitions,
stock repurchases, leveraged buy-outs and other corporate activities. Such
loans may be in default at the time of purchase. The MFS Emerging Growth
Companies Portfolio may also purchase other direct indebtedness such as trade
or other claims against companies, which generally represent money owed by a
company to a supplier of goods and services. These claims may also be
purchased at a time when the company is in default. Certain of the loans and
other direct indebtedness acquired by the Portfolio may involve revolving
credit facilities or other standby financing commitments which obligate the
Portfolio to pay additional cash on a certain date or on demand. The highly
leveraged nature of many such loans and other direct indebtedness may make
such loans especially vulnerable to adverse changes in economic or market
conditions. Loans and other direct indebtedness may not be in the form of
securities or may be subject to restrictions on transfer, and only limited
opportunities may exist to resell such instruments. As a result, the Portfolio
may be unable to sell such investments at an opportune time or may have to
resell them at less than fair market value.

MORTGAGES AND MORTGAGE-RELATED SECURITIES. The EQ/Putnam Balanced Portfolio,
Morgan Stanley Emerging Markets Equity Portfolio, the Lazard Large Cap Value
Portfolio, Lazard Small Cap Value Portfolio, the JPM Core Bond Portfolio, BT
Small Company Index Portfolio, BT EAFE(R) Equity Index Portfolio and BT Equity
500 Index Portfolio may invest in mortgage-related securities (i.e.,
mortgage-backed securities). A mortgage-backed security may be an obligation
of the issuer backed by a mortgage or pool of mortgages or a direct interest
in an underlying pool of mortgages. Some mortgage-backed securities, such as
CMOs, make payments of both principal and interest at a variety of intervals;
others make semiannual interest payments at a predetermined rate and repay
principal at maturity (like a typical bond). Mortgage-backed securities are
based on different types of mortgages including those on commercial real
estate or residential properties.

The value of mortgage-backed securities may change due to shifts in the
market's perception of issuers. In addition, regulatory or tax changes may
adversely affect the mortgage securities market as a whole. Non-government
mortgage-backed securities may offer higher yields than those issued by
government entities, but also may be subject to greater price changes than
government issues. Mortgage-backed securities are subject to prepayment risk.
Prepayment, which occurs when unscheduled or early payments are made on the
underlying mortgages, may shorten the effective maturities of these securities
and may lower their returns.

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Stripped mortgage-backed securities are created when a United States
government agency or a financial institution separates the interest and
principal components of a mortgage-backed security and sells them as
individual securities. The holder of the "principal-only" security ("PO")
receives the principal payments made by the underlying mortgage-backed
security, while the holder of the "interest-only" security ("IO") receives
interest payments from the same underlying security. The prices of stripped
mortgage-backed securities may be particularly affected by changes in interest
rates. As interest rates fall, prepayment rates tend to increase, which tends
to reduce prices of IOs and increase prices of POs. Rising interest rates can
have the opposite effect.

The JPM Core Bond Portfolio may also invest in directly placed mortgages
including residential mortgages, multifamily mortgages, mortgages on
cooperative apartment buildings, commercial mortgages, and sale-leasebacks.
These investments are backed by assets such as office buildings, shopping
centers, retail stores, warehouses, apartment buildings and single-family
dwellings. In the event that the Portfolio forecloses on any non-performing
mortgage, and acquires a direct interest in the real property, the Portfolio
will be subject to the risks generally associated with the ownership of real
property. There may be fluctuations in the market value of the foreclosed
property and its occupancy rates, rent schedules and operating expenses.

MUNICIPAL SECURITIES. The Morgan Stanley Emerging Markets Equity Portfolio and
the JPM Core Bond Portfolio may invest in municipal securities ("municipals"),
which are debt obligations issued by local, state and regional governments
that provide interest income that is exempt from federal income taxes.
Municipals include both municipal bonds (those securities with maturities of
five years or more) and municipal notes (those with maturities of less than
five years). Municipal bonds are issued for a wide variety of reasons: to
construct public facilities, such as airports, highways, bridges, schools,
hospitals, mass transportation, streets, water and sewer works; to obtain
funds for operating expenses; to refund outstanding municipal obligations; and
to loan funds to various public institutions and facilities. Certain
industrial development bonds are also considered municipal bonds if their
interest is exempt from federal income tax. Industrial development bonds are
issued by or on behalf of public authorities to obtain funds for various
privately-operated manufacturing facilities, housing, sports arenas,
convention centers, airports, mass transportation systems and water, gas or
sewer works. Industrial development bonds are ordinarily dependent on the
credit quality of a private user, not the public issuer.

OPTIONS AND FUTURES TRANSACTIONS. Each Portfolio (except the MFS Research
Portfolio, Lazard Large Cap Value Portfolio and Lazard Small Cap Value
Portfolio) may utilize futures contracts. Futures contracts (a type of
potentially high-risk security) enable the investor to buy or sell an asset in
the future at an agreed upon price. Each Portfolio (except the MFS Research
Portfolio and Lazard Small Cap Value Portfolio) may also write and purchase
put and call options Options (another type of potentially high-risk security)
give the purchaser of an option the right, but not the obligation, to buy or
sell in the future an asset at a predetermined price during the term of the
option. (The writer of a put or call option would be obligated to buy or sell
the underlying asset at a predetermined price during the term of the option.)
Each Portfolio will write put and call options only if such options are
considered to be "covered". A call option on a security is covered, for
example, when the writer of the call option owns throughout the option period
the security on which the option is written (or a security convertible into
such a security without the payment of additional consideration). A put option
on a security is covered, for example, when the writer of the put has
deposited and maintained in a segregated account throughout the option period
sufficient

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cash or other liquid assets in an amount equal to or greater than the exercise
price of the put option. Each Portfolio that is permitted to invest in futures
contracts and related options may utilize such transactions for other than
hedging purposes to the extent that aggregate initial margin deposits and
premiums paid do not exceed 5% of the Portfolio's net assets. Each Portfolio
(other than the Warburg Pincus Small Company Value Portfolio) will not commit
more than 5% of its total assets to premiums when purchasing call or put
options. The BT Small Company Index Portfolio, BT International Equity Index
Portfolio and BT Equity 500 Index Portfolio each may not at any time commit
20% of its assets to options and futures contracts. The Warburg Pincus Small
Company Value Portfolio may commit up to 10% of its total assets to premiums
when purchasing put or call options. In addition, the total market value of
securities against which a Portfolio has written call or put options may not
exceed 25% of its total assets. The Merrill Lynch Basic Value Equity Portfolio
will not write covered call options on underlying securities exceeding 15% of
the value of its total assets. The MFS Emerging Growth Companies Portfolio and
Morgan Stanley Emerging Markets Equity Portfolio will not enter a futures
contract if the obligations underlying all such futures contracts would exceed
50% of the value of each such Portfolio's total assets. The Warburg Pincus
Small Company Value Portfolio may utilize up to 10% of its total assets to
purchase exchange-listed and OTC put and call options on stock indexes. The
EQ/Putnam Growth & Income Portfolio, EQ/Putnam International Equity Portfolio,
EQ/Putnam Investors Growth Portfolios, EQ/Putnam Balanced Portfolio, MFS
Emerging Growth Companies Portfolio, Merrill Lynch World Strategy Portfolio,
Morgan Stanley Emerging Markets Equity Portfolio and the JPM Core Bond
Portfolio may engage in OTC put and call option transactions. Options traded
in the OTC market may not be as actively traded as those on an exchange, so it
may be more difficult to value such options. In addition, it may be difficult
to enter into closing transactions with respect to such options. Such OTC
options, and the securities used as "cover" for such options, may be
considered illiquid securities.

Each Portfolio may buy and sell futures and options contracts for any number
of reasons, including: to manage its exposure to changes in securities prices
and foreign currencies; as an efficient means of adjusting its overall
exposure to certain markets; in an effort to enhance income; and to protect
the value of portfolio securities. Each Portfolio may purchase, sell, or write
call and put options and futures contracts on securities, financial indices,
and foreign currencies and options on futures contracts.

The risk of loss in trading futures contracts can be substantial because of
the low margin deposits required and the extremely high degree of leveraging
involved in futures pricing. As a result, a relatively small price movement in
a futures contract may cause an immediate and substantial loss or gain. The
primary risks associated with the use of futures contracts and options are:
(i) imperfect correlation between the change in market value of the stocks
held by a Portfolio and the prices of futures contracts and options; and (ii)
possible lack of a liquid secondary market for a futures contract or an OTC
option and the resulting inability to close a futures position or OTC option
prior to its maturity date.

PASSIVE FOREIGN INVESTMENT COMPANIES. The T. Rowe Price International Stock
Portfolio, EQ/Putnam International Equity Portfolio, and Morgan Stanley
Emerging Markets Equity Portfolio may purchase the securities of certain
foreign investment funds or trusts called passive foreign investment
companies. Such entities have been the only or primary way to invest in
certain countries. In addition to bearing their proportionate share of a
Portfolio's expenses

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(management fees and operating expenses), shareholders will also indirectly
bear similar expenses of such entities. Like other foreign securities,
interests in passive foreign investment companies also involve the risk of
foreign securities, as described above.

PAYMENT-IN-KIND BONDS. The EQ/Putnam Growth & Income Value Portfolio, the
EQ/Putnam Balanced Portfolio, the Morgan Stanley Emerging Markets Equity
Portfolio and the JPM Core Bond Portfolio may invest in payment-in-kind bonds.
Payment-in-kind bonds allow the issuer, at its option, to make current
interest payments on the bonds either in cash or in additional bonds. The
value of payment-in-kind bonds is subject to greater fluctuation in response
to changes in market interest rates than bonds which pay interest in cash
currently. Payment-in-kind bonds allow an issuer to avoid the need to generate
cash to meet current interest payments. Accordingly, such bonds may involve
greater credit risks than bonds paying interest currently. Even though such
bonds do not pay current interest in cash, the Portfolios are nonetheless
required to accrue interest income on such investments and to distribute such
amounts at least annually to shareholders. Thus, the Portfolios could be
required, at times, to liquidate other investments in order to satisfy its
distribution requirements.

REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements
with qualified and Board approved banks, brokerdealers or other financial
institutions as a means of earning a fixed rate of return on its cash reserves
for periods as short as overnight. A repurchase agreement is a contract
pursuant to which a Portfolio, against receipt of securities of at least equal
value including accrued interest, agrees to advance a specified sum to the
financial institution which agrees to reacquire the securities at a mutually
agreed upon time (usually one day) and price. Each repurchase agreement
entered into by a Portfolio will provide that the value of the collateral
underlying the repurchase agreement will always be at least equal to the
repurchase price, including any accrued interest. A Portfolio's right to
liquidate such securities in the event of a default by the seller could
involve certain costs, losses or delays and, to the extent that proceeds from
any sale upon a default of the obligation to repurchase are less than the
repurchase price, the Portfolio could suffer a loss.

REVERSE REPURCHASE AGREEMENTS. The Morgan Stanley Emerging Markets Equity
Portfolio, the Lazard Large Cap Value Portfolio, the JPM Core Bond Portfolio,
BT Small Company Index Portfolio, BT International Equity Index Portfolio and
BT Equity 500 Index Portfolio may each enter into reverse repurchase
agreements with brokers, dealers, domestic and foreign banks or other
financial institutions. In a reverse repurchase agreement, the Portfolio sells
a security and agrees to repurchase it at a mutually agreed upon date and
price, reflecting the interest rate effective for the term of the agreement.
It may also be viewed as the borrowing of money by the Portfolio. The
Portfolio's investment of the proceeds of a reverse repurchase agreement is
the speculative factor known as leverage. The Portfolio may enter into a
reverse repurchase agreement only if the interest income from investment of
the proceeds is greater than the interest expense of the transaction and the
proceeds are invested for a period no longer than the term of the agreement.
The Portfolio will maintain with the custodian a separate account with a
segregated portfolio of unencumbered liquid assets in an amount at least equal
to its purchase obligations under these agreements. If interest rates rise
during a reverse repurchase agreement, it may adversely affect the Portfolio's
net asset value. See "Borrowing" for more information concerning restrictions
on borrowing by each Portfolio.

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SECURITIES LOANS. The T. Rowe Price International Stock Portfolio, T. Rowe
Price Equity Income Portfolio, MFS Research Portfolio, Morgan Stanley
Emerging Markets Equity Portfolio and the JPM Core Bond Portfolio may each
seek to earn additional income by making secured loans of portfolio securities
with a value up to 33 1/3% of their respective total assets. The MFS Emerging
Growth Companies Portfolio, BT Small Company Index Portfolio, BT International
Equity Index Portfolio and BT Equity 500 Index Portfolio may lend portfolio
securities in an amount up to 30% of their respective total assets. The
EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam International Equity
Portfolio, EQ/Putnam Investors Growth Portfolio and EQ/Putnam Balanced
Portfolio may lend portfolio securities in an amount up to 25% of their
respective total assets. The Merrill Lynch Basic Value Equity Portfolio,
Merrill Lynch World Strategy Portfolio, and Warburg Pincus Small Company Value
Portfolio may each lend portfolio securities in an amount up to 20% of their
respective total assets. The Lazard Large Cap Value Portfolio and Lazard Small
Cap Value Portfolio may each lend portfolio securities in an amount up to 10%
of their respective total assets. All securities loans will be made pursuant
to agreements requiring the loans to be continuously secured by collateral in
cash or highgrade debt obligations at least equal at all times to the market
value of the loaned securities. The borrower pays to the Portfolios an amount
equal to any dividends or interest received on loaned securities. The
Portfolios retain all or a portion of the interest received on investment of
cash collateral or receive a fee from the borrower. Lending portfolio
securities involves risks of delay in recovery of the loaned securities or in
some cases loss of rights in the collateral should the borrower fail
financially. Further information concerning each Portfolio's fundamental
policy with respect to loans is provided in the Statement of Additional
Information.

SHORT SALES AGAINST THE BOX. The Warburg Pincus Small Company Value Portfolio
and Morgan Stanley Emerging Markets Equity Portfolio may enter into a "short
sale" of securities in circumstances in which, at the time the short position
is open, the Portfolio owns an equal amount of the securities sold short or
owns preferred stocks or debt securities, convertible or exchangeable without
payment of further consideration, into an equal number of securities sold
short. This kind of short sale, which is referred to as one "against the box,"
may be entered into by each Portfolio to, for example, lock in a sale price
for a security the Portfolio does not wish to sell immediately. Each Portfolio
will deposit, in a segregated account with its custodian or a qualified
subcustodian, the securities sold short or convertible or exchangeable
preferred stocks or debt securities sold in connection with short sales
against the box. Each Portfolio will endeavor to offset transaction costs
associated with short sales against the box with the income from the
investment of the cash proceeds. Not more than 10% of a Portfolio's net assets
(taken at current value) may be held as collateral for short sales against the
box at any one time. The extent to which a Portfolio may make short sales may
be limited by Code requirements for qualification as a regulated investment
company.

SMALL COMPANY SECURITIES. The EQ/Putnam International Equity Portfolio,
EQ/Putnam Balanced Portfolio, Morgan Stanley Emerging Markets Equity
Portfolio, Warburg Pincus Small Company Value Portfolio, Lazard Small Cap
Value Portfolio and BT Small Company Index Portfolio may invest in the
securities of smaller capitalization companies. Investing in securities of
small companies may involve greater risks since these securities may have
limited marketability and, thus, may be more volatile. Because smaller
companies normally have fewer shares outstanding than larger companies, it may
be more difficult for a Portfolio to buy or sell significant amounts of shares
without an unfavorable impact on prevailing prices. In addition,

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small companies often have limited product lines, markets or financial
resources and are typically subject to greater changes in earnings and business
prospects than are larger, more established companies. There is typically less
publicly available information concerning smaller companies than for larger,
more established ones and smaller companies may be dependent for management on
one or a few key persons. Therefore, an investment in these Portfolios may
involve a greater degree of risk than an investment in other Portfolios that
seek capital appreciation by investing in better known, larger companies.

STRUCTURED NOTES. The Morgan Stanley Emerging Markets Equity Portfolio may
invest in structured notes, which are derivatives on which the amount of
principal repayment and/or interest payments is based upon the movement of one
or more factors. These factors include, but are not limited to, currency
exchange rates, interest rates (such as the prime lending rate and LIBOR) and
stock indices such as the S&P 500. In some cases, the impact of the movements
of these factors may increase or decrease through the use of multipliers or
deflators. The use of structured notes allows the Portfolio to tailor its
investments to the specific risks and returns the Adviser wishes to accept
while avoiding or reducing certain other risks.

SWAPS. The Morgan Stanley Emerging Markets Equity Portfolio, the JPM Core Bond
Portfolio and the BT International Equity Index Portfolio may each invest in
swap contracts, which are derivatives in the form of a contract or other
similar instrument which is an agreement to exchange the return generated by
one instrument for the return generated by another instrument. The payment
streams are calculated by reference to a specified index and agreed upon
notional amount. The term "specified index" includes, but is not limited to,
currencies, fixed interest rates, prices and total return on interest rate
indices, fixed-income indices, stock indices and commodity indices (as well as
amounts derived from arithmetic operations on these indices). For example, a
Portfolio may agree to swap the return generated by a fixed-income index for
the return generated by a second fixed-income index. The Portfolio will
usually enter into swaps on a net basis, i.e., the two return streams are
netted out in a cash settlement on the payment date or dates specified in the
instrument, with the Portfolio receiving or paying, as the case may be, only
the net amount of the two returns. The Portfolio's obligations under a swap
agreement will be accrued daily (offset against any amounts owing to the
Portfolio) and any accrued but unpaid net amounts owed to a swap counterparty
will be covered by the maintenance of a segregated account consisting of cash,
United States Governments, or high grade debt obligations. No Portfolio will
enter into any swap agreement unless the counterparty meets the rating
requirements set forth in guidelines established by the Trust's Board of
Trustees. The swap market has grown substantially in recent years with a large
number of banks and investment banking firms acting both as principals and as
agents utilizing standardized swap documentation. As a result, the swap market
has become relatively liquid. Swaps that include more recent innovations for
which standardized documentation has not yet been fully developed are less
liquid than "traditional" swaps. The use of swaps is a highly specialized
activity that involves investment techniques and risks different from those
associated with ordinary portfolio securities transactions. If an Adviser is
incorrect in its forecasts of market values, interest rates, and currency
exchange rates, the investment performance of the Portfolio would be less
favorable than it would have been if this investment technique were not used.

UNITED STATES GOVERNMENT SECURITIES. Each Portfolio may invest in debt
obligations of varying maturities issued or guaranteed by the United States
Government, its agencies or instrumentalities ("United States Government
securities"). Direct obligations of the

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United States Treasury include a variety of securities that differ in their
interest rates, maturities and dates of issuance. United States Government
securities also include securities issued or guaranteed by government agencies
that are supported by the full faith and credit of the United States (e.g.,
securities issued by the Government National Mortgage Association); securities
issued or guaranteed by government agencies that are supported by the ability
to borrow from the United States Treasury (e.g., securities issued by the
Federal National Mortgage Association); and securities issued or guaranteed by
government agencies that are only supported by the credit of the particular
agency (e.g., the Tennessee Valley Authority).

WARRANTS. Warrants are securities that give the holder the right, but not the
obligation to purchase equity issues of the company issuing the warrants, or a
related company, at a fixed price either on a date certain or during a set
period. At the time of issue, the cost of a warrant is substantially less than
the cost of the underlying security itself, and price movements in the
underlying security are generally magnified in the price movements of the
warrant. This effect enables the investor to gain exposure to the underlying
security with a relatively low capital investment but increases an investor's
risk in the event of a decline in the value of the underlying security and can
result in a complete loss of the amount invested in the warrant. In addition,
the price of a warrant tends to be more volatile than, and may not correlate
exactly to, the price of the underlying security. If the market price of the
underlying security is below the exercise price of the warrant on its
expiration date, the warrant will generally expire without value.

ZERO-COUPON BONDS. The EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam
Balanced Portfolio, Morgan Stanley Emerging Markets Equity Portfolio and JPM
Core Bond Portfolio may invest in zero-coupon bonds. Zero-coupon bonds are
issued at a significant discount from their principal amount and pay interest
only at maturity rather than at intervals during the life of the security. The
value of zero-coupon bonds is subject to greater fluctuation in response to
changes in market interest rates than bonds which pay interest in cash
currently. Zero-coupon bonds allow an issuer to avoid the need to generate
cash to meet current interest payments. Accordingly, such bonds may involve
greater credit risks than bonds paying interest currently. Even though such
bonds do not pay current interest in cash, a Portfolio is nonetheless required
to accrue interest income on such investments and to distribute such amounts
at least annually to investors in such instruments. Thus, each Portfolio could
be required, at times, to liquidate other investments in order to satisfy its
distribution requirements.

PORTFOLIO TURNOVER. The length of time a Portfolio has held a particular
security is not generally a consideration in investment decisions. A change in
the securities held by a Portfolio is known as "portfolio turnover." Each
Portfolio's turnover rate is not expected to exceed 100% during its first year
of operation. A high turnover rate increases transaction costs (e.g.,
brokerage commissions) and increases realized gains and losses.

MANAGEMENT OF THE TRUST

THE BOARD OF TRUSTEES

The Board of Trustees of the Trust provides broad supervision over the
business and affairs of the Portfolios and the Trust as provided in the
Trust's Amended and Restated Declaration of Trust and By-Laws.

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THE MANAGER

The Trust is managed by EQ Financial Consultants, Inc. which, subject to the
supervision and direction of the Trustees of the Trust, has overall
responsibility for the general management and administration of the Trust. The
Manager is an investment adviser registered under the Investment Advisers Act
of 1940, as amended, and a broker-dealer registered under the Securities
Exchange Act of 1934, as amended ("1934 Act"). It is located at 1755 Broadway,
New York, New York 10019. The Manager currently furnishes specialized
investment advice to other clients, including individuals, pension and profit
sharing plans, trusts, charitable organizations, corporations and other
business entities. The Manager is a Delaware corporation and an indirect,
wholly-owned subsidiary of Equitable, a New York stock life insurance company.

The Manager is responsible for providing investment management and
administrative services to the Trust and in the exercise of such
responsibility selects, subject to review and approval by the Trustees, the
investment advisers for the Trust's Portfolios and monitors the Advisers'
investment programs and results, reviews brokerage matters, oversees
compliance by the Trust with various federal and state statutes, and carries
out the directives of the Board of Trustees. The Manager is responsible for
providing the Trust with office space, office equipment, and personnel
necessary to operate and administer the Trust's business, and also supervises
the provision of services by third parties such as the Trust's custodian.

As compensation for managing the T. Rowe Price Equity Income Portfolio,
EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam Investors Growth
Portfolio, EQ/Putnam Balanced Portfolio, MFS Research Portfolio, MFS Emerging
Growth Companies Portfolio, Merrill Lynch Basic Value Equity Portfolio and
Lazard Large Cap Value Portfolio the Trust pays the Manager a monthly fee at
the annual rate of .55% of the respective Portfolio's average daily net
assets. As compensation for managing the T. Rowe Price International Stock
Portfolio, the Trust pays the Manager a monthly fee at the annual rate of .75%
of the Portfolio's average daily net assets. As compensation for managing the
EQ/Putnam International Equity Portfolio, and Merrill Lynch World Strategy
Portfolio, the Trust pays the Manager a monthly fee at an annual rate of .70%
of the respective Portfolio's average daily net assets. As compensation for
managing the Morgan Stanley Emerging Markets Equity Portfolio, the Trust pays
the Manager a monthly fee at an annual rate of 1.15% of the Portfolio's
average daily net assets. As compensation for managing the Warburg Pincus
Small Company Value Portfolio, the Trust pays the Manager a monthly fee at an
annual rate of .65% of the Portfolio's average daily net assets. As
compensation for managing the Lazard Small Cap Value Portfolio the Trust pays
the Manager a monthly fee at an annual rate of .80% of the Portfolio's average
daily net assets. As compensation for managing the JPM Core Bond Portfolio the
Trust pays the Manager a monthly fee at the annual rate of .30 % of the
Portfolio's average daily net assets. As compensation for managing the BT
Small Company Index Portfolio the Trust pays the Manager a monthly fee at the
annual rate of ___% of the Portfolio's average daily net assets. As
compensation for managing the BT International Equity Index Portfolio the
Trust pays the Manager a monthly fee at the annual rate of ___% of the
Portfolio's average daily net assets. As compensation for managing the BT
Equity 500 Index Portfolio the Trust pays the Manager a monthly fee at the
annual rate of ___% of the Portfolio's average daily net assets.

The Manager pays the expenses of providing investment advisory services to the
Portfolios, including the fees of the Adviser of each Portfolio.

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In addition to the management fees, the Trust pays all expenses not assumed by
the Manager, including, without limitation: the fees and expenses of its
independent accountants and of its legal counsel; the costs of printing and
mailing annual and semi-annual reports to shareholders, proxy statements,
prospectuses, prospectus supplements and statements of additional information,
all to the extent they are sent to existing Contract owners; the costs of
printing registration statements; bank transaction charges and custodian's
fees; any proxy solicitors' fees and expenses; filing fees; any federal, state
or local income or other taxes; any interest; any membership fees of the
Investment Company Institute and similar organizations; fidelity bond and
Trustees' liability insurance premiums; and any extraordinary expenses, such
as indemnification payments or damages awarded in litigation or settlements
made. All general Trust expenses are allocated among and charged to the assets
of the Portfolios of the Trust on a basis that the Trustees deem fair and
equitable, which may be on the basis of relative net assets of each Portfolio
or the nature of the services performed and relative applicability to each
Portfolio. The Class IB shares may pay for certain distribution related
expenses in connection with activities primarily intended to result in the
sale of its shares, pursuant to a distribution plan for the Class IB shares
adopted pursuant to Rule 12b-1 under the 1940 Act.

THE ADVISERS

Pursuant to an investment advisory agreement with the Manager, each Adviser to
a Portfolio furnishes continuously an investment program for the Portfolio,
makes investment decisions on behalf of the Portfolio, places all orders for
the purchase and sale of investments for the Portfolio's account with brokers
or dealers selected by such Adviser and may perform certain limited related
administrative functions in connection therewith.

For its services, the Manager pays each Adviser an advisory fee based on a
percentage of the average daily net assets of the Portfolio that it advises.
Monthly, with respect to each Portfolio, each Adviser is paid the pro rata
portion of an annual fee, based on the monthly average of the assets of the
Portfolio for which it serves as the Adviser. The Manager will retain, as
compensation for the services described under "The Manager" and to pay its
expenses, the difference between the fees paid to each Adviser and the
management fee of the applicable Portfolio. Each Adviser has agreed that once
the Portfolio has paid the Manager its management fee the Adviser will look
only to the Manager as the party responsible for making the payment of its
advisory fee.

The Advisers are employed for management of the assets of a Portfolio pursuant
to investment advisory agreements approved by the Board of Trustees of the
Trust (including a majority of certain Trustees who are not interested persons
of the Trust or the Manager), and an Adviser's services may be terminated at
any time by the Manager, the Board of Trustees, or the shareholders of an
affected Portfolio.

The Trust has submitted an application requesting an exemptive order from the
Securities and Exchange Commission ("SEC") that would permit the Manager,
subject to certain conditions, and without the approval of shareholders to:
(a) employ a new Adviser or Advisers for any Portfolio pursuant to the terms
of a new Advisory Agreement, in each case either as a replacement for an
existing Adviser or as an additional Adviser; (b) change the terms of any
Advisory Agreement; and (c) continue the employment of an existing Adviser on
the same advisory contract terms where a

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contract has been assigned because of a change in control of the Adviser. In
such circumstances, shareholders would receive notice of such action, including
the information concerning the Adviser that normally is provided in the
Prospectus. It is uncertain at this time whether such exemptive relief will be
granted by the SEC.

T. Rowe Price Associates, Inc. ("T. Rowe Price"), 100 East Pratt Street,
Baltimore, MD 21202, has been the Adviser to the T. Rowe Price Equity Income
Portfolio since the Portfolio commenced its operations. As compensation for
services as the Portfolio's Adviser, the Manager pays T. Rowe Price a monthly
fee at the annual rate of .40% of the Portfolio's average daily net assets.

T. Rowe Price was incorporated in Maryland in 1947 as successor to the
investment counseling business founded by the late Thomas Rowe Price, Jr., in
1937. As of December31, 1996, T. Rowe Price and its affiliates managed more
than $95 billion of assets. T. Rowe Price serves as investment manager to a
variety of individual and institutional investor accounts, including limited
and real estate partnerships and other mutual funds. Investment decisions with
respect to the T. Rowe Price Equity Income Portfolio are made by an Investment
Advisory Committee composed of the following members: Brian C. Rogers,
Chairman, Thomas H. Broadus, Jr., Richard P. Howard, and William J. Stromberg.
The Committee Chairman has day-to-day responsibility for managing the Portfolio
and works with the Committee in developing and executing the Portfolio's
investment program. Mr. Rogers has been Chairman of the Committee since 1993.
He joined T. Rowe Price in 1982 and has been managing investments since 1983.

Rowe Price-Fleming International, Inc. ("Price-Fleming"), 100 East Pratt
Street, Baltimore, MD 21202, has been the Adviser to the T. Rowe Price
International Stock Portfolio. As compensation for services as the Portfolio's
Adviser, the Manager pays Price-Fleming a monthly fee at the annual rate equal
to: .75% of the Portfolio's average daily net assets up to and including $20
million; .60% of the Portfolio's average daily net assets over $20 million and
up to and including $50 million; and .50% of the Portfolio's average daily net
assets in excess of $50 million.

Price-Fleming was incorporated in Maryland in 1979 as a joint venture between
T. Rowe Price and Robert Fleming Holdings Limited ("Flemings"). As of
December31, 1996, Price-Fleming managed the United States equivalent of
approximately $25 billion. Flemings was incorporated in 1974 in the United
Kingdom as successor to the business founded by Robert Fleming in 1873.
Flemings is a diversified investment organization which participates in a
global network of regional investment offices in New York, London, Zurich,
Geneva, Tokyo, Hong Kong, Manila, Kuala Lumpur, South Korea and Taiwan. The
common stock of Price-Fleming is 50% owned by a whollyowned subsidiary of T.
Rowe Price, 25% by a subsidiary of Flemings and 25% by Jardine Fleming Group
Limited ("Jardine Fleming"). (Half of Jardine Fleming is owned by Flemings and
half by Jardine Matheson Holdings Limited.) T. Rowe Price has the right to
elect a majority of the board of directors of Price-Fleming, and Flemings has
the right to elect the remaining directors, one of whom will be nominated by
Jardine Fleming.

Investment decisions with respect to the T. Rowe Price International Stock
Portfolio are made by an investment advisory group composed of the following
members: Martin G. Wade, Christopher D. Alderson, Peter B. Askew, Richard J.
Bruce, Mark J. T. Edwards, John R. Ford, Robert C. Howe, James B. M. Seddon,
Benedict R. F. Thomas and David J. L. Warren. Martin Wade joined Price-Fleming
in 1979 and has 27 years of experience with the Fleming Group in research,

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client service and investment management. (Fleming Group includes Flemings
and/or Jardine Fleming.) Christopher Alderson joined Price-Fleming in 1988 and
has 10 years of experience with the Fleming Group in research and portfolio
management. Peter Askew joined Price-Fleming in 1988 and has 21 years of
experience managing multicurrency fixed income portfolios. Richard Bruce joined
Price-Fleming in 1991 and has eight years of experience in investment
management with the Fleming Group in Tokyo. Mark Edwards joined Price-Fleming
in 1986 and has 15 years of experience in financial analysis. John Ford joined
Price-Fleming in 1982 and has 16 years of experience with the Fleming Group in
research and portfolio management. Robert Howe joined Price Fleming in 1986 and
has 15 years of experience in economic research, company research and portfolio
management. James Seddon joined Price-Fleming in 1987 and has nine years of
experience in investment management. Benedict Thomas joined Price-Fleming in
1988 and has seven years of portfolio management experience. David Warren
joined Price-Fleming in 1984 and has 16 years of experience in equity research,
fixed income research and portfolio management.

Putnam Investment Management, Inc. ("Putnam Management") has been the Adviser
to the EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam International
Equity Portfolio, EQ/Putnam Investors Growth Portfolio and EQ/Putnam Balanced
Portfolio since each Portfolio commenced operations. As compensation for
services as the Adviser to the EQ/Putnam Growth & Income Portfolio, EQ/Putnam
Investors Growth Portfolio and EQ/Putnam Balanced Portfolio, the Manager pays
Putnam Management a monthly fee at an annual rate equal to: .50% of the
respective Portfolio's average daily net assets up to and including $150
million; .45% of the respective Portfolio's average daily net assets over $150
million and up to and including $300 million; and .35% of the respective
Portfolio's average daily net assets in excess of $300 million. As
compensation for services as the EQ/Putnam International Equity Portfolio's
Adviser, the Manager pays Putnam Management a monthly fee at the annual rate
equal to: .65% of the Portfolio's average daily net assets up to and including
$150 million; .55% of the Portfolio's average daily net assets over $150
million and up to and including $300 million; and .45% of the Portfolio's
average daily net assets in excess of $300 million.

Putnam Management has been managing mutual funds since 1937. Putnam Management
is located at One Post Office Square, Boston, MA 02109. As of December 31,
1996, Putnam Management and its affiliates managed more than $173 billion of
assets. Putnam Management is a subsidiary of Putnam Investments, Inc., which is
wholly owned by Marsh & McLennan Companies, Inc., a publicly-owned holding
company whose principal businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment management. Anthony I.
Kreisel has been responsible for the day to day management of the EQ/Putnam
Growth & Income Value Portfolio since the Portfolio commenced operations, which
includes investment decisions made on behalf of the Portfolio. Mr. Kreisel has
been employed by Putnam Management as an investment professional since 1986.
Justin Scott is responsible for the day to day management of the EQ/Putnam
International Equity Portfolio, which includes investment decisions made on
behalf of the Portfolio. Mr. Scott has been employed by Putnam Management as an
investment professional since 1988. Ms. C. Beth Cotner and Messrs. Richard
England, Manuel Weiss Herrero and David J. Santos are responsible for the day
to day management of the EQ/Putnam Investors Growth Portfolio, which includes
investment decisions made on behalf of the Portfolio. Ms. Cotner has been
employed by Putnam Management as an investment professional since 1995. Prior
to 1995, Ms. Cotner was Executive Vice President of Kemper Financial Services.
Mr. England has been employed by Putnam Management as an investment
professional since

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December, 1992. Prior to December, 1992, Mr. England was an investment officer
at Aetna Equity Investors. Mr. Herrero has been employed by Putnam Management
as an investment professional since 1987. Mr. Santos has been employed by
Putnam Management as an investment professional since 1988. Messrs. Edward P.
Bousa, Kenneth J. Taubes and Robert M. Paine are responsible for the day to day
management of the EQ/Putnam Balanced Portfolio, which includes investment
decisions made on behalf of the Portfolio. Mr. Bousa has been employed by
Putnam Management as an investment professional since October, 1992. Prior to
October, 1992, Mr. Bousa was Vice President and Portfolio Manager at Fidelity
Investments. Mr. Taubes has been employed by Putnam Management as an investment
professional since 1991. Mr. Paine has been employed by Putnam Management as an
investment professional since 1987.

Massachusetts Financial Services Company ("MFS") has been the Adviser to the
MFS Research Portfolio and the MFS Emerging Growth Companies Portfolio since
each Portfolio commenced operations. As compensation for services as the
Adviser to each of those Portfolios, the Manager pays MFS a monthly fee at an
annual rate equal to: .40% of the respective Portfolio's average daily net
assets up to and including $150 million; .375% of the respective Portfolio's
average daily net assets over $150 million and up to and including $300
million; and .35% of the respective Portfolio's average daily net assets in
excess of $300 million. MFS has agreed to waive its advisory fees for the
first six months after the commencement of each Portfolio's investment
operations.

MFS is America's oldest mutual fund organization. MFS is located at 500
Boylston Street, Boston, MA 02116. MFS and its predecessor organizations have
a history of money management dating from 1924 and the founding of the first
mutual fund in the United States, Massachusetts Investors Trust. As of January
31, 1996, MFS managed more than $54.0 billion on behalf of over 2.3 million
investors accounts. MFS is a subsidiary of Sun Life of Canada (United States),
which, in turn, is a wholly-owned subsidiary of Sun Life Assurance Company of
Canada. MFS has established a strategic alliance with Foreign & Colonial
Management Ltd. ("Foreign & Colonial"). Foreign & Colonial is a subsidiary of
two of the world's oldest financial services institutions, the London-based
Foreign & Colonial Investment Trust PLC, which pioneered the idea of
investment management in 1868, and HYPO-BANK (Bayerische Hypotheken-und
Weschsel-Bank AG), the oldest publicly listed bank in Germany, founded in
1835. As part of this alliance, the portfolio managers and investment analysts
of MFS and Foreign & Colonial share their views on a variety of investment
related issues, such as the economy, securities markets, portfolio securities
and their issuers, investment recommendations, strategies and techniques, risk
analysis, trading strategies and other portfolio management matters. The
portfolio securities of the MFS Research Portfolio are selected by a committee
of investment research analysts. This committee includes investment analysts
employed not only by MFS but also by MFS International (U.K.) Limited, a
wholly owned subsidiary of MFS. The assets of the MFS Research Portfolio are
allocated among industries by the analysts acting together as a group.
Individual analysts are then responsible for selecting what they view as the
securities best suited to meet the investment objectives of the MFS Research
Portfolio within their assigned industry responsibility. Since it commenced
operations the MFS Emerging Growth Companies Portfolio has been managed by
John W. Ballen, a Senior Vice President of MFS, who has been employed by the
Adviser as a portfolio manager since 1984, and Toni K. Shimura, a Vice
President of MFS, who has been employed as a portfolio manager by the Adviser
since 1987.

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Morgan Stanley Asset Management Inc. ("MSAM") has been the Adviser to the
Morgan Stanley Emerging Markets Equity Portfolio since the Portfolio commenced
operations. MSAM is located at 1221 Avenue of the Americas, New York, NY
10020. As compensation for services as the Portfolio's Adviser, the Manager
pays MSAM a monthly fee at an annual rate equal to: 1.15% of the Portfolio's
average daily net assets up to and including $100 million; .90% of the
Portfolio's average daily net assets over $100 million and up to and including
$150 million; .80% of the Portfolio's average daily net assets over $150
million and up to and including $200 million; .60% of the Portfolio's average
daily net assets over $200 million and up to and including $500 million; and
.40% of the Portfolio's average daily net assets in excess of $500 million.

MSAM conducts a worldwide investment management business, providing a broad
range of portfolio management services to customers in the United States and
abroad. MSAM is a wholly owned subsidiary of Morgan Stanley Group Inc., which
is a publicly owned financial services corporation listed on the New York,
London and Pacific stock exchanges. MSAM serves an investment adviser to
numerous open-end and closed-end investment companies. As of December 31,
1996, MSAM, together with its affiliated asset management companies, had
approximately $172 billion in assets under management and fiduciary care. On
February 5, 1997, Morgan Stanley Group Inc. and Dean Witter, Discover & Co.
announced that they had entered into an Agreement and Plan of Merger to form
Morgan Stanley, Dean Witter, Discover & Co. Morgan Stanley Group Inc. is the
direct parent of MSAM. It is currently anticipated that the transaction will
close in mid-1997. Thereafter, MSAM will be a subsidiary of Morgan Stanley,
Dean Witter, Discover & Co. Dean Witter, Discover & Co. is a financial
services company with three major businesses: full service brokerage, credit
services and asset management.

Madhav Dhar has been responsible for the day to day management of the Morgan
Stanley Emerging Markets Equity Portfolio, which includes investment decisions
made on behalf of the Portfolio, since the Portfolio commenced operations. Mr.
Robert Meyer is also responsible for the day to day management of the Morgan
Stanley Emerging Markets Equity Portfolio. Mr. Dhar is a Managing Director of
MSAM and Morgan Stanley & Co. Incorporated ("Morgan Stanley") and a Director of
the Morgan Stanley Emerging Markets Fund, Inc. He joined MSAM in 1984. Mr.
Meyer joined MSAM in 1989. He is a Principal of Morgan Stanley & Co. and has
primary responsibility for MSAM's equity investments in Latin America. Prior to
joining MSAM's Latin American Group, he worked in their U.S. Equity Group. He
was born in Argentina and graduated from Yale University with a B.A. in
Economics & Political Science. He received a J.D. from Harvard Law School. In
addition, he is also a Chartered Financial Analyst.

Warburg Pincus Asset Management, Inc. ("WPC") has been the Adviser to the
Warburg Pincus Small Company Value Portfolio since the Portfolio commenced
operations. WPC is located at 466 Lexington Avenue, New York, New York
10017-3147. As compensation for services as the Portfolio's Adviser, the
Manager pays WPC a monthly fee at an annual rate of .50% of the Portfolio's
average daily net assets.

WPC is a professional investment counseling firm that provides investment
services to investment companies, employee benefit plans, endowment funds,
foundations and other institutions and individuals. As of January 31, 1997, WPC
managed approximately $17.9 billion in assets. WPC, incorporated in 1970, is a
wholly-owned subsidiary of Warburg, Pincus Counsellors G.P. ("Warburg G.P."),
a New York general partnership, which itself is controlled by Warburg, Pincus

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& Co. ("WP&Co."), also a New York general partnership. LionelI. Pincus, the
managing partner of WP&Co., may be deemed to control both WP&Co. and WPC.
Warburg G. P. has no business other than being a holding company of WPC and
its subsidiaries.

George U. Wyper has been responsible for the day to day management of the
Warburg Pincus Small Company Value Portfolio, which includes investment
decisions made on behalf of the Portfolio, since the Portfolio commenced
operations. Mr. Wyper is a managing director of WPC, which he joined in
August, 1994. Before joining WPC, he was chief investment officer of White
River Corporation and president of Hanover Advisors, Inc. from 1993 to August,
1994. Prior to that position, he was chief investment officer of Fund American
Enterprises, Inc. from 1990 to 1993. Kyle F. Frey, a senior vice president of
WPC, is associate portfolio manager and research analyst of the Portfolio. Mr.
Frey has been with WPC since 1989.

Merrill Lynch Asset Management, L.P. ("MLAM") has been the Adviser to the
Merrill Lynch World Strategy Portfolio and the Merrill Lynch Basic Value
Equity Portfolio since each Portfolio commenced operations. MLAM is located at
800 Scudders Mill Road, Plainsboro, New Jersey 08543-9011. As compensation for
services as the Merrill Lynch World Strategy Portfolio's Adviser, the Manager
pays MLAM a monthly fee at an annual rate equal to: .50% of the Portfolio's
average daily net assets up to and including $100 million; .45% of the
Portfolio's average daily net assets over $100 million and up to and including
$300 million; and .35% of the Portfolio's average daily net assets in excess
of $300 million. As compensation for services as the Merrill Lynch Basic Value
Equity Portfolio's Adviser, the Manager pays MLAM a monthly fee at an annual
rate equal to: .40% of the Portfolio's average daily net assets up to and
including $100 million; .375% of the Portfolio's average daily net assets over
$100 million and up to and including $300 million; and .35% of the Portfolio's
average daily net assets in excess of $300 million.

MLAM is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc., a
financial services holding company and the parent of Merrill Lynch, Pierce,
Fenner& Smith Incorporated. The general partner of MLAM is Princeton Services,
Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc. MLAM and its
affiliates act as the manager for more than 130 registered investment
companies. MLAM also offers portfolio management and portfolio analysis
services to individuals and institutions. As of December 31, 1996, the Adviser
and its affiliates had a total of approximately $234 billion in investment
company and other portfolio assets under management, including assets of
certain affiliates of MLAM.

Thomas R. Robinson is the portfolio manager of the Merrill Lynch World
Strategy Portfolio. Mr. Robinson has served as a Senior Portfolio Manager of
MLAM since 1995. Mr. Robinson has been primarily responsible for the day to
day management of the Portfolio's securities portfolio since it commenced
operations. Kevin Rendino is the portfolio manager of the Merrill Lynch Basic
Value Equity Portfolio. Mr. Rendino has been a Vice President of MLAM since
1993 and was a Senior Research Analyst of MLAM from 1990 to 1992. Mr. Rendino
has been primarily responsible for the day to day management of the
Portfolio's securities portfolio since it commenced operations.

Lazard Asset Management ("LAM") has been the Adviser to the Lazard Large Cap
Value Portfolio and the Lazard Small Cap Value Portfolio since each Portfolio
commenced operations. As compensation for services as the Adviser to the Lazard
Large Cap Value Portfolio, the Manager pays LAM a monthly fee at an annual rate
equal to: .425% of the Portfolio's average daily net

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<PAGE>

assets up to and including $50 million; .40% of the Portfolio's average daily
net assets over $50 million and up to and including $250 million; .375% of the
Portfolio's average daily net assets over $250 million and up to and including
$400 million; and .35% of the Portfolio's average daily net assets in excess of
$400 million. As compensation for services as the Adviser to the Lazard Small
Cap Value Portfolio, the Manager pays LAM a monthly fee of an annual rate equal
to: .65% of the Portfolio's average daily net assets up to and including $250
million; .55% of the Portfolio's average daily net assets over $250 million and
up to and including $500 million; and .50% of the Portfolio's average daily net
assets in excess of $500 million.

LAM is a division of Lazard Freres & Co. LLC ("Lazard Freres"), a New York
limited liability company, which is registered as an investment adviser with
the SEC and is a member of the New York, American and Midwest Stock Exchanges.
Lazard Freres, 30 Rockefeller Plaza, New York, New York 10112, provides its
clients with a wide variety of investment banking and related services,
including investment management. It is a major underwriter of corporate
securities, conducts a broad range of trading and brokerage activities in
corporate and governmental bonds and stocks and acts as a financial adviser to
utilities. LAM provides investment management services to client discretionary
accounts with assets as of December 31, 1996 totaling approximately $38.1
billion. Its clients are both individuals and institutions, some of whose
accounts have investment policies similar to the Portfolios.

Herbert W. Gullquist and Michael S. Rome have been responsible for the day to
day management of the Lazard Large Cap Value Portfolio, which includes
investment decisions made on behalf of the Portfolio, since the Portfolio
commenced operations. Eileen Alexanderson, Herbert W. Gullquist, Bradley
Purcell, Michael S. Rome and Leonard M. Wilson have been responsible for the
day to day management of the Lazard Small Cap Value Portfolio, which includes
investment decisions made on behalf of the Portfolio, since the Portfolio
commenced operations. Ms. Alexanderson is Managing Director of the Adviser and
has been with the Adviser since 1979. Mr. Gullquist is a Managing Director of
the Adviser and has been with the Adviser since 1982. Mr. Purcell is a Vice
President of the Adviser and has been with the Adviser since 1991. Mr. Rome is
also a Managing Director of the Adviser and has been with the Adviser since
1991. Mr. Wilson has been a Senior Vice President of the Adviser since 1988.

J.P. Morgan Investment Management Inc. ("J.P. Morgan") has been the Adviser to
the JPM Core Bond Portfolio since the Portfolio commenced operations. As
compensation for services as the Adviser to the JPM Core Bond Portfolio, the
Manager pays J.P. Morgan a monthly fee at an annual rate equal to: .30% of
the Portfolio's average daily net assets up to and including $125 million;
.25% of the Portfolio's average daily net assets up to and including $200
million; .22% of the Portfolio's average daily net assets up to and including
$350 million; and .15% of the Portfolio's average daily net assets in excess of
$350 million.

J.P. Morgan is a Delaware corporation and a registered investment adviser. It
is a wholly owned subsidiary of J.P. Morgan & Co. Incorporated ("JPM & Co."),
a bank holding company organized under the laws of the state of Delaware. JPM
& Co. through J.P. Morgan and other subsidiaries, offers a wide range of
services to governmental, institutional, corporate and individual customers
and acts as investment adviser to individual and institutional clients with
combined assets under management of over $234 billion (of which J.P. Morgan
advises over $181 billion). In particular, J.P. Morgan, 522 Fifth Avenue, New
York, New York 10036, provides investment management services to public,
corporate and union employee benefit plans, as well as foundations,
endowments, insurance companies, state and local governments and their
agencies, and affiliates of J.P. Morgan.

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<PAGE>

J.P. Morgan uses a sophisticated, disciplined, collaborative process for
managing all asset classes. For fixed income portfolios, this process focuses
on the systematic analysis of real interest rates, sector diversification and
quantitative and credit analysis. The portfolio managers making investments
work in conjunction with fixed income, credit, capital markets and economic
research analysts, as well as traders and administrative officers. The
following persons are primarily responsible for the day-to-day management and
implementation of J.P. Morgan's process for the Portfolio, since the Portfolio
commenced operations: Paul L. Zemsky and Robert J. Teatom. Mr. Zemsky is a
Managing Director of J.P. Morgan and a portfolio manager specializing in
quantitative techniques. Mr. Zemsky joined J.P. Morgan in 1985. Robert J.
Teatom is a Managing Director of J.P. Morgan and Co-head of its U.S. Fixed
Income Group. Mr. Teatom joined J.P. Morgan in 1975.

Bankers Trust Company ("Bankers Trust") has been the Adviser to the BT Small
Company Index Portfolio, BT International Equity Index Portfolio and BT Equity
500 Index Portfolio since each Portfolio commenced operations. As compensation
for services as the Adviser to the BT Small Cap Index Portfolio, the Manager
pays Bankers Trust a monthly fee at an annual rate equal to .5% of the
Portfolio's average daily net assets. As compensation for services as the
Adviser to the BT International Equity Index Portfolio, the Manager pays
Bankers Trust a monthly fee of an annual rate equal to .15% of the Portfolio's
average daily net assets. As compensation for services as the Adviser to the
BT Equity 500 Index Portfolio, the Manager pays Bankers Trust a monthly fee
of an annual rate equal to: .5% of the Portfolio's average daily net assets.

Bankers Trust is a New York banking corporation with executive offices at 130
Liberty Street (One Bankers Trust Plaza), New York, New York 10006. Bankers
Trust is a wholly-owned subsidiary of Bankers Trust New York Corporation.
Bankers Trust conducts a variety of general banking and trust activities and
is a major wholesale supplier of financial services to the international and
domestic institutional markets. As of September 30, 1997, Bankers Trust New
York Corporation was the [seventh] largest bank holding company in the United
States with total assets of approximately [$129] billion.

Bankers Trust is a worldwide merchant bank dedicated to servicing the needs of
corporations, governments, financial institutions and private clients through
a global network of over 80 offices in more than 50 countries. Investment
management is a core business of Bankers Trust, built on a tradition of
excellence from its roots as a trust bank founded in 1903. Bankers Trust is a
leader in both active and passive quantitative management and conducts
business in major equity and fixed income markets around the world.

Bankers Trust is one of the nation's largest and most experienced investment
managers with approximately [$240] billion in assets under management globally.

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<PAGE>

THE ADMINISTRATOR

Pursuant to an agreement ("Mutual Funds Service Agreement"), Chase Global
Funds Services Company (the "Administrator") assists the Manager in the
performance of its administrative responsibilities to the Trust and provides
the Trust with other necessary administrative, fund accounting and compliance
services. In addition, the Administrator makes available the office space,
equipment, personnel and facilities required to provide such services to the
Trust. For these services, the Trust pays the Administrator a monthly fee at
the annual rate of .0525 of 1% of the total Trust assets, plus $25,000 for
each Portfolio, until the total Trust assets reach $2.0 billion, and when the
total Trust assets exceed $2.0 billion: .0425 of 1% of the first $0.5 billion
of the total Trust assets; .035 of 1% of the next $2.0 billion of the total
Trust assets; .025 of 1% of the next $1.0 billion of the total Trust assets;
.015 of 1% of the next $2.5 billion of the total Trust assets; .01 of 1% of
the total Trust assets in excess of $6.0 billion; and except that the annual
fee payable to Chase with respect to any Portfolio which commences operation
after July 1, 1997 and whose assets do not exceed $200 million shall be
computed at the annual rate of .0525% of the Portfolio's total assets plus
$25,000.

THE TRANSFER AGENT

Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.

EXPENSE LIMITATION AGREEMENT

In the interest of limiting expenses of the Portfolios, the Manager has
entered into an expense limitation agreement with the Trust, with respect to
each Portfolio ("Expense Limitation Agreements"), pursuant to which the
Manager has agreed to waive or limit its fees and to assume other expenses so
that the total annual operating expenses of each Portfolio are limited to:
.85% of the respective average daily net assets of the T.Rowe Price Equity
Income, EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, MFS
Research, MFS Emerging Growth Companies and Merrill Lynch Basic Value Equity
Portfolios; .90% of the EQ/Putnam Balanced Portfolio's average daily net
assets; 1.00% of the Warburg Pincus Small Company Value Portfolio's average
daily net assets; 1.20% of the respective average daily net assets of the T.
Rowe Price International Stock, EQ/Putnam International Equity and Merrill
Lynch World Strategy Portfolios; 1.75% of the Morgan Stanley Emerging Markets
Equity Portfolio's average daily net assets; .90% of the average daily net
assets of the Lazard Large Cap Value Portfolio; 1.20% of the average daily net
assets of the Lazard Small Cap Value Portfolio; ___% of the average daily net
assets of the JPM Core Bond Portfolio; ___% of the average daily net assets of
the BT Small Company Index Portfolio; ___% of the average daily net assets of
the BT EAFE(R) Equity Index Portfolio; and ___% of the average daily net assets
of the BT Equity 500 Index Portfolio.

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<PAGE>

Each Portfolio may at a later date reimburse to the Manager the management
fees waived or limited and other expenses assumed and paid by the Manager
pursuant to the Expense Limitation Agreement provided such Portfolio has
reached a sufficient asset size to permit such reimbursement to be made
without causing the total annual expense ratio of each Portfolio to exceed the
percentage limits stated above. Consequently, no reimbursement by a Portfolio
will be made unless: (i) the Portfolio's assets exceed $100 million; (ii) the
Portfolio's total annual expense ratio is less than the respective percentages
stated above; and (iii) the payment of such reimbursement has been approved by
the Trust's Board of Trustees on a quarterly basis.

BROKERAGE PRACTICES

In selecting brokers and dealers, the Manager and each Adviser may consider
research and brokerage services furnished to either company and their
affiliates. Subject to seeking the most favorable net price and execution
available, the Manager and each Adviser may also consider sales of shares of
the Trust as a factor in the selection of brokers and dealers.

TRANSACTIONS WITH AFFILIATES

In December 1984, Equitable acquired Donaldson, Lufkin & Jenrette, Inc.
("DLJ"). A DLJ subsidiary, Donaldson, Lufkin & Jenrette Securities
Corporation, is one of the nation's largest investment banking and securities
firms. Another DLJ subsidiary, Autranet, Inc., is a securities broker that
markets independently originated research to institutions. Through the
Pershing Division of Donaldson, Lufkin & Jenrette Securities Corporation, DLJ
supplies security execution and clearance services to financial intermediaries
including broker-dealers and banks. To the extent permitted by law, the Trust
may engage in securities and other transactions with the above entities or may
invest in shares of the investment companies with which those entities have
affiliations. The Adviser to the T. Rowe Price International Stock and T. Rowe
Price Equity Income Portfolios may execute portfolio transactions through
certain affiliates of Robert Fleming Holdings Limited and Jardine Fleming
Group Limited, which are persons indirectly related to the Adviser, acting as
an agent in accordance with procedures established by the Trust's Board of
Trustees. The Adviser to the Merrill Lynch World Strategy Portfolio and
Merrill Lynch Basic Value Equity Portfolio may execute portfolio transactions
through certain of the Adviser's affiliates. The Adviser to the Morgan Stanley
Emerging Markets Equity Portfolio may execute portfolio transactions through
certain affiliates. The Adviser to the Lazard Large Cap Value Portfolio and
Lazard Small Cap Value Portfolio may execute portfolio transactions through
certain affiliates of LAM. The Adviser to the JPM Core Bond Portfolio may
execute portfolio transactions through certain affiliates of J.P. Morgan. The
Adviser to BT Small Company Index Portfolio, BT EAFE(R) Equity Index Portfolio
and BT Equity 500 Index Portfolio may execute portfolio transactions through
certain affiliates of Bankers Trust.

The 1940 Act generally prohibits the Trust from engaging in principal
securities transactions with an affiliate of the Manager or Advisers unless
pursuant to an exemptive order from the SEC. The Trust may apply for such
exemptive relief. The Trust has adopted procedures, prescribed by Section
17(e)(2)(A) of the 1940 Act and Rule 17e-1 thereunder, which are reasonably
designed to provide that any commission it pays to affiliates of the Manager
or Advisers does not exceed the usual and customary broker's commission. In
addition, the Trust will adhere to Section 11(a) of the 1934 Act and any
applicable rules thereunder governing floor trading. The Trust has adopted
procedures permitting it to purchase securities, under certain restrictions
prescribed by a rule under

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<PAGE>

the 1940 Act, in a public offering in which an affiliate of the Manager or
Advisers is an underwriter.

DESCRIPTION OF THE TRUST AND TRUST'S SHARES

THE TRUST

The Trust is a registered open-end management investment company that was
organized as a Delaware business trust on October 31, 1996. The Trust
currently is divided into eighteen portfolios, each of which has Class IA and
Class IB shares. The Board of Trustees may establish additional portfolios and
additional classes of shares.

CHARACTERISTICS OF TRUST'S SHARES

The Board of Trustees of the Trust has authority to issue an unlimited number
of shares of beneficial interest, without par value. Each share of each class
of a Portfolio shall be entitled to one vote (or fraction thereof in respect
of a fractional share) on matters that such shares (or class of shares) shall
be entitled to vote. Shareholders of each Portfolio shall vote together on any
matter, except to the extent otherwise required by the 1940 Act, or when the
Board of Trustees of the Trust has determined that the matter affects only the
interest of shareholders of one or more classes, in which case only the
shareholders of such class or classes shall be entitled to vote thereon. Any
matter shall be deemed to have been effectively acted upon with respect to
each Portfolio if acted upon as provided in Rule 18f-2 under the 1940 Act, or
any successor rule, and in the Amended and Restated Declaration of Trust. The
Trust is not required to hold annual shareholder meetings, but special
meetings may be called for purposes such as electing or removing Trustees,
changing fundamental policies or approving an investment management or
advisory agreement.

Under the Trust's multi-class system, shares of each class of a Portfolio
represent an equal pro rata interest in that Portfolio and, generally, shall
have identical voting, dividend, liquidation, and other rights, preferences,
powers, restrictions, limitations, qualifications and terms and conditions,
except that: (a) each class shall have a different designation; (b) each class
of shares shall bear its "Class Expenses;" (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to
its distribution arrangements; (d) each class shall have separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class; (e) each class may have
separate exchange privileges, although exchange privileges are not currently
contemplated; and (f) each class may have different conversion features,
although a conversion feature is not currently contemplated. Expenses
currently designated as "Class Expenses" by the Trust's Board of Trustees
under the plan pursuant to Rule 18f-3 are currently limited to payments made
to the distributor for the Class IB shares, pursuant to the distribution plan
for the Class IB shares adopted pursuant to Rule 12b-1 under the 1940 Act.

PURCHASE AND REDEMPTION OF SHARES

EQ Financial, 1755 Broadway, New York, New York, 10019, formerly Equico
Securities, Inc., a wholly-owned subsidiary of Equitable, serves as one of the
Distributors for the Trust's Class IA shares pursuant to a distribution
agreement with the Trust. EDI, 1290 Avenue of the Americas, New York, New
York, 10104, a Delaware corporation and an indirect wholly-owned subsidiary of
Equitable also serves as one of the Distributors for the Trust's Class IA
shares pursuant to a

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<PAGE>

distribution agreement with the Trust. Class IA shares are offered and redeemed
without a sales charge, at net asset value. The price at which a purchase or
redemption is effected is based on the next calculation of net asset value
after an order is placed by an insurance company investing in or redeeming from
the Trust. Net asset value per share is calculated for purchases and redemption
of shares of each Portfolio by dividing the value of total Portfolio assets,
less liabilities (including Trust expenses, which are accrued daily), by the
total number of outstanding shares of that Portfolio. The net asset value per
share of each Portfolio is determined each business day at 4:00 p.m. Eastern
time. Net asset value per share is not calculated on national business
holidays.

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<PAGE>

All shares are purchased and redeemed in accordance with the Trust's Amended
and Restated Declaration of Trust and By-Laws. Sales and redemptions of shares
of the same class by the same shareholder on the same day will be netted for
each Portfolio. All redemption requests will be processed and payment with
respect thereto will normally be made within seven days after tenders. The
Trust may suspend redemption, if permitted by the 1940 Act, for any period
during which the New York Stock Exchange is closed or during which trading is
restricted by the SEC or the SEC declares that an emergency exists. Redemption
may also be suspended during other periods permitted by the SEC for the
protection of the Trust's shareholders. If the Board of Trustees determines
that it would be detrimental to the best interest of the Trust's remaining
shareholders to make payment in cash, the Trust may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.

HOW ASSETS ARE VALUED

Values are determined according to accepted accounting practices and all laws
and regulations that apply. The assets of each Portfolio are generally valued
as follows:

o Stocks and debt securities which mature in more than 60 days are
valued on the basis of market quotations.

o Foreign securities not traded directly in the United States are valued
at representative quoted prices in the currency of the country of
origin. Foreign currency amounts are translated into United States
dollars at the bid price last quoted by a composite list of major
United States banks.

o Short-term debt securities in the Portfolios which mature in 60 days
or less are valued at amortized cost, which approximates market value.

o Other securities and assets for which market quotations are not
readily available or for which valuation cannot be provided are valued
in good faith by the Valuation Committee of the Board of Trustees of
the Trust using its best judgment.

DIVIDENDS, DISTRIBUTIONS AND TAXES

Under current federal income tax law, the Trust believes that each Portfolio
is entitled, and the Trust intends that each Portfolio shall qualify each year
and elect, to be treated as a regulated investment company ("RIC") under
Subchapter M of the Code. As a RIC, a Portfolio will not be subject to federal
tax on its net investment income and net realized capital gains to the extent
such income and gains are timely distributed to its insurance company
shareholders. Accordingly, each Portfolio intends to distribute all of its net
investment income and net realized capital gains to its shareholders. An
insurance company that is a shareholder of a Portfolio will generally not be
taxed on distributions from that Portfolio. All dividend distributions will be
reinvested in full and fractional shares of the Portfolio to which they
relate.

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<PAGE>

Although the Trust intends that it and the Portfolios will be operated so that
they will have no federal income or excise tax liability, if any such
liability is nevertheless incurred, the investment performance of the
Portfolio or Portfolios incurring such liability will be adversely affected.
In addition, Portfolios investing in foreign securities and currencies may be
subject to foreign taxes which could reduce the investment performance of such
Portfolio.

In addition to meeting investment diversification rules applicable to
regulated investment companies under Subchapter M of the Code, each Portfolio
will also comply with the investment diversification requirements of
Subchapter L of the Code. Were any Portfolio to fail to comply with those
requirements, owners of Contracts (other than "pension plan contracts") funded
through the Trust would be taxed immediately on the accumulated investment
earnings under their Contracts and would thereby lose any benefit of tax
deferral. Compliance is therefore carefully monitored by the Administrator and
the Manager.

Certain additional tax information appears in the Statement of Additional
Information.

For more information regarding the tax implications for owners of Contracts
investing in the Trust, refer to the prospectuses for those Contracts.

PERFORMANCE INFORMATION

From time to time, the Trust may advertise the "average annual or cumulative
total return" and may compare the performance of the Portfolios with that of
other mutual funds with similar investment objectives as listed in rankings
prepared by Lipper Analytical Services, Inc., or similar independent services
monitoring mutual fund performance, and with appropriate securities or other
relevant indices. The "average annual total return" of a Portfolio refers to
the average annual compounded rate of return over the stated period that would
equate an initial investment in that Portfolio at the beginning of the period
to its ending redeemable value, assuming reinvestment of all dividends and
distributions and deduction of all recurring charges, other than charges and
deductions which may be imposed under the Contracts. Performance figures will
be given for the recent one, five and ten year periods and for the life of the
Portfolio if it has not been in existence for any such periods. When
considering "average annual total return" figures for periods longer than one
year, it is important to note that a Portfolio's annual total return for any
given year might have been greater or less than its average for the entire
period. "Cumulative total return" represents the total change in value of an
investment in a Portfolio for a specified period (again reflecting changes in
Portfolio share prices and assuming reinvestment of Portfolio distributions).
The methods used to calculate "average annual and cumulative total return" are
described further in the Statement of Additional Information.

The performance of each Portfolio will vary from time to time in response to
fluctuations in market conditions, interest rates, the composition of the
Portfolio's investments and expenses. Consequently, a Portfolio's performance
figures are historical and should not be considered representative of the
performance of the Portfolio for any future period. Such performance does not
reflect fees and charges imposed under the Contracts, which fees and charges
will reduce such performance figures; therefore, these figures may be of
limited use for comparative purposes. No Portfolio will use information
concerning its investment performance in advertisements or sales materials
unless appropriate information concerning the relevant separate account is
also included.

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<PAGE>

PRIOR PERFORMANCE OF EACH ADVISER

The following tables provide information concerning the historical performance
of another registered investment company (or series) or other institutional
private accounts managed by each Adviser, that has investment objectives,
policies, strategies and risks substantially similar to those of its
respective Portfolio(s) of the Trust. The data is provided to illustrate the
past performance of each Adviser in managing a substantially similar
investment vehicle as measured against specified market indices and does not
represent the past performance of any of the Portfolios or the future
performance of any Portfolio or its Adviser. Consequently, potential investors
should not consider this performance data as an indication of the future
performance of any Portfolio of the Trust or of its Adviser.

Each Adviser's performance data shown below for other registered investment
companies or series thereof was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Share prices and investment
returns will fluctuate reflecting market conditions as well as changes in
company-specific fundamentals of portfolio securities. Composite performance
data relating to the historical performance of institutional private accounts
managed by the relevant Adviser was calculated in accordance with recommended
standards of the Association for Investment Management and Research ("AIMR")
retroactively applied to all time periods. All returns present were calculated
on a total return basis and include all losses. All returns reflect the
deduction of investment advisory fees, brokerage commissions and execution
costs paid by the relevant Adviser's institutional private accounts, without
provision for federal or state income taxes. Custodial fees, if any, were not
included in the calculation. The Composite includes all actual, fee-paying,
discretionary institutional private accounts managed by the relevant Adviser
that have investment objectives, policies, strategies and risks substantially
similar to those of the relevant Portfolio. Securities transactions are
accounted for on the trade date and accrual accounting is utilized. Cash and
equivalents are included in performance returns.

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<PAGE>

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., T. Rowe Price International Stock Fund, which is
managed by the Rowe Price-Fleming International, Inc., and whose investment
policies are substantially similar to T. Rowe Price International Stock
Portfolio. However, T. Rowe Price International Stock Fund will be subject to
different expenses than the T. Rowe Price International Stock Portfolio. In
addition, holders of variable insurance contracts representing interests in
the T. Rowe Price International Stock Portfolio will be subject to charges and
expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expense.

The investment results of T. Rowe Price International Stock Fund presented
below are unaudited and are not intended to predict or suggest the returns
that might be experienced by the T. Rowe Price International Stock Portfolio
or an individual investor investing in the T. Rowe Price International Stock
Portfolio.

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 T. ROWE PRICE INTERNATIONAL STOCK MSCI EAFE INDEX2
FUND1
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The Morgan Stanley Capital International Europe, Australia, and Far East
Indes ("MSCI EAFE Index") is an unmanaged capitalization-weighted measure
of stock markets in Europe, Australia, the Far East and Canada. MSCI EAFE
Index returns assume dividends reinvested net of withholding tax and do not
reflect any fees or expenses.

3 Annualized performance for the shares of the T. Rowe Price International
Stock Fund.

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<PAGE>

T. ROWE PRICE EQUITY INCOME PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., T. Rowe Price Equity Income Fund, which is managed
by the T. Rowe Price Associates, Inc., and whose investment policies are
substantially similar to the T. Rowe Price Equity Income Portfolio. However,
the T. Rowe Price Equity Income Fund will be subject to different expenses
than the T. Rowe Price Equity Income Portfolio. In addition, holders of
variable insurance contracts representing interests in the T. Rowe Equity
Income Portfolio will be subject to charges and expenses relating to such
insurance contracts. The performance results presented below do not reflect
any insurance related expenses.

The investment results of T. Rowe Price Equity Income Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the T. Rowe Price Equity Income Portfolio or an individual
investor investing in the T. Rowe Price Equity Income Portfolio.

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 S&P 500 INDEX2
T. ROWE PRICE
EQUITY INCOME FUND1
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The S&P 500 Index ("Index") is an unmanaged index containing common stocks
of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the United States stock market. The
Index reflects the reinvestment of income dividends and capital gain
distributions, if any, but does not reflect fees, brokerage commissions, or
other expenses of investing.

3 Annualized performance for the shares of the T. Rowe Price Equity Income
Fund. The investment advisory fee applicable to the T. Rowe Price Equity
Income Fund was capped at 1.00% in 1986 and capped at the maximum
state-allowed fee in 1987.

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<PAGE>

EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO

The table below sets forth performance history for another registered
investment company, i.e., the Putnam Growth & Income Fund II, which is managed
by the Putnam Investment Management, Inc., and whose investment policies are
substantially similar to those of EQ/Putnam Growth & Income Value Portfolio.
Putnam Growth & Income Fund II will be subject to different expenses than the
EQ/Putnam Growth & Income Value Portfolio. In addition, holders of variable
insurance contracts representing interests in EQ/Putnam Growth & Income Value
Portfolio will be subject to charges and expenses relating to such insurance
contract. The performance results presented below do not reflect any insurance
related expenses.

The investment results of Putnam Growth & Income Fund II presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the EQ/Putnam Growth & Income Value Portfolio or an individual
investor investing in the EQ/Putnam Growth & Income Value Portfolio.

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 PUTNAM GROWTH & INCOME FUND II1 S&P 500 INDEX(2)
------------------ ------------------------------- ----------------
<S> <C> <C>
One Year3 % %
Since inception3 % %
</TABLE>

- ----------------------------------

1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund
expenses.

2 The S&P 500 Index ("Index") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial
companies, regarded as generally representative of the United States
stock market. The Index reflects the reinvestment of income dividends
and capital gain distributions, if any, but does not reflect fees,
brokerage commissions, or other expenses of investing.

3 Annualized performance for the Class A shares of the Putnam Growth &
Income Fund II. The inception date for the Putnam Growth & Income
Fund II was January, 1995. The Class A shares are subject to a
front-end sales charge of up to 5.75%. Other share classes have
different expenses and their performance will vary.

-59-
<PAGE>

EQ/PUTNAM INTERNATIONAL EQUITY PORTFOLIO

The table below sets forth performance history for another registered
investment company, i.e., the Putnam International Growth Fund, which is
managed by Putnam Investment Management, Inc., and whose investment policies
are substantially similar to those of EQ/Putnam International Equity
Portfolio. Putnam International Growth Fund will be subject to different
expenses than the EQ/Putnam International Equity Portfolio. In addition,
holders of variable insurance contracts representing interests in EQ/Putnam
International Equity Portfolio will be subject to charges and expenses
relating to such insurance contract. The performance results presented below
do not reflect any insurance related expenses.

The investment results of Putnam International Growth Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the EQ/Putnam International Equity Portfolio or an individual
investor investing in the EQ/Putnam International Equity Portfolio.

<TABLE>
<CAPTION>
MSCI EAFE
YEAR ENDED 9/30/97 PUTNAM INTERNATIONAL GROWTH FUND1 INDEX(2)
------------------ --------------------------------- --------
<S> <C> <C>
One Year3 % %

Five Years3 % %
Since inception3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The MSCI EAFE ("Index") is an unmanaged capitalization-weighted measure of
stock markets in Europe, Australia, the Far East and Canada. MSCI EAFE
Index returns assume dividends reinvested net of withholding tax and do not
reflect any fees or expenses.

3 Annualized performance the Class A shares of the Putnam International
Growth Fund. The inception date of the Class A shares of the Putnam
International Growth Fund was March, 1991. The Class A shares are subject
to a front-end sales charge of up to 5.75%.

-60-

<PAGE>

EQ/PUTNAM INVESTORS GROWTH PORTFOLIO

The table below sets forth performance history for another registered
investment company, i.e., the Putnam Investors Fund, which is managed by
Putnam Investment Management, Inc., and whose investment policies are
substantially similar to those of EQ/Putnam Investors Growth Portfolio. Putnam
Investors Fund will be subject to different expenses than the EQ/Putnam
Investors Growth Portfolio. In addition, holders of the variable insurance
contracts representing interests in EQ/Putnam Investors Growth Portfolio will
be subject to changes and expenses relating to such insurance contract. The
performance results presented below do not reflect any insurance-related
expenses.

The investment results of Putnam Investors Fund presented below are unaudited
and are not intended to predict or suggest the returns that might be
experienced by the EQ/Putnam Investors Growth Portfolio or an individual
investor investing in the EQ/Putnam Investors Growth Portfolio.

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 PUTNAM INVESTORS FUND1 S&P 500 INDEX(2)
------------------ ---------------------- ----------------
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for the Class A shares of the Putnam Investors Fund.
The Class A shares are subject to a front-end sales charge of up to 5.75%.
Other share classes have different expenses and their performance will
vary.

-61-

<PAGE>

EQ/PUTNAM BALANCED PORTFOLIO

The table below sets forth performance history for another registered
investment company, i.e., The George Putnam Fund of Boston, which is managed
by the Putnam Investment Management, Inc., and whose investment policies are
substantially similar to those of EQ/Putnam Balanced Portfolio. The George
Putnam Fund of Boston will be subject to different expenses than the EQ/Putnam
Balanced Portfolio. In addition, holders of variable insurance contracts
representing interests in EQ/Putnam Balanced Portfolio will be subject to
charges and expenses relating to such insurance contract. The performance
results presented below do not reflect any insurance related expenses.

The investment results of The George Putnam Fund of Boston presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the EQ/Putnam Balanced Portfolio or an individual investor
investing in the EQ/Putnam Balanced Portfolio.

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 THE GEORGE PUTNAM S&P 500
------------------ FUND OF BOSTON(1) INDEX(2)
----------------- --------
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for the Class A shares of The George Putnam Fund of
Boston. The Class A shares are subject to a front-end sales charge or up to
5.75% Other share classes have different expenses and their performance
will vary.

-62-

<PAGE>

MFS RESEARCH PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., MFS Research Fund, which is managed by Massachusetts
Financial Services Company, and whose investment policies are substantially
similar to MFS Research Portfolio. However, MFS Research Fund will be subject
to different expenses than the MFS Research Portfolio. In addition, holders of
variable insurance contracts representing interests in the MFS Research
Portfolio will be subject to charges and expenses relating to such insurance
contracts. The performance results presented below do not reflect any
insurance related expenses.

The investment results of MFS Research Fund presented below are unaudited and
are not intended to predict or suggest the returns that might be experienced
by the MFS Research Portfolio or an individual investor investing in the MFS
Research Portfolio.

<TABLE>
<CAPTION>
S&P 500
YEAR ENDED 9/30/97 MFS RESEARCH FUND1 INDEX2
------------------ ------------------ ------
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for the Class A shares of the MFS Research Fund. The
results for the MFS Research Fund do not reflect any sales charge that may
be imposed on the Class A shares of the MFS Research Fund, nor any charges
that would be imposed at the insurance company separate account level.

-63-

<PAGE>

MFS EMERGING GROWTH COMPANIES PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., MFS Emerging Growth Fund, which is managed by
Massachusetts Financial Services Company, and whose investment policies are
substantially similar to MFS Emerging Growth Companies Portfolio. However, MFS
Emerging Growth Fund will be subject to different expenses than the MFS
Emerging Growth Companies Portfolio. In addition, holders of variable
insurance contracts representing interests in the MFS Emerging Growth
Companies Portfolio will be subject to charges and expenses relating to such
insurance contracts. The performance results presented below do not reflect
any insurance related expenses.

The investment results of MFS Emerging Growth Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the MFS Emerging Growth Companies Portfolio or an individual
investor investing in the MFS Emerging Growth Companies Portfolio.

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 MFS EMERGING GROWTH FUND1 RUSSELL 2000
------------------ ------------------------- INDEX2
------
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2000 small-cap stocks and it includes reinvestments of
dividends. It is compiled by the Frank Russell Company.

3 Annualized performance for the Class B shares of the MFS Emerging Growth
Fund. The results for the MFS Emerging Growth Fund do not reflect sales
charge that may be imposed on the Class B shares of the MFS Emerging Growth
Fund, nor any charges that would be imposed at the insurance company
separate account level.

-64-

<PAGE>

MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., Morgan Stanley Universal Funds, Inc. - Emerging
Markets Equity Portfolio ("MSIF Emerging Markets Portfolio"), which is managed
by the Morgan Stanley Asset Management Inc., and whose investment policies are
substantially similar to the Morgan Stanley Emerging Markets Equity Portfolio.
Operating expenses of the MSIF Emerging Markets Portfolio will be different
from the operating expenses of the Morgan Stanley Emerging Markets Equity
Portfolio. In addition, holders of variable insurance contracts representing
interests in the Morgan Stanley Emerging Markets Equity Portfolio will be
subject to changes and expenses relating to such insurance contracts. The
performance results presented below do not reflect any insurance related
expense.

The investment results of MSIF Emerging Markets Equity Portfolio presented
below, which represent a Class A share outstanding for the period, are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the Morgan Stanley Emerging Markets Equity Portfolio or an
individual investor investing in the Morgan Stanley Emerging Markets Equity
Portfolio.

<TABLE>
<CAPTION>
MSIF EMERGING IFC GLOBAL TOTAL RETURN
MARKETS EQUITY PORTFOLIO1, 2 COMPOSITE INDEX3
---------------------------- ----------------
YEAR ENDED 9/30/97
------------------
<S> <C> <C>
One Year4 % %
Average Annual Total Return % %
since inception4
</TABLE>

- ----------------------------------
1 In accordance with SEC regulations, the performance shown assumes that all
recurring fees (including management fees) were deducted and all dividends
and distributions were reinvested. Average annual total return reflects
changes in share prices and reinvestment of dividends and distributions and
is net of fund expenses.

2 The expense ratio of MSIF Emerging Markets Equity Portfolio has been capped
at 1.75% since inception.

3 The IFC Global Total Return Composite Index is an unmanaged index of common
stocks and includes developing countries in Latin America, East and South
Asia, Europe, the Middle East and Africa. The Index assumes dividends are
reinvested.

4 Annualized performance for the Class A shares of the MSIF Emerging Markets
Portfolio. The Class B shares of the MSIF Emerging Markets Portfolio are
subject to a Rule 12b-1 fee equal to 0.25% of the Portfolio's assets. The
inception date for the MSIF Emerging Markets Portfolio was September 25,
1992.

-65-

<PAGE>

WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., Warburg Pincus Small Company Value Fund, which is
managed by Warburg Pincus Asset Management, Inc. and whose investment policies
are substantially similar to the Warburg Pincus Small Company Value Portfolio.
However, the Warburg Pincus Small Company Value Fund will be subject to
different expenses than the Warburg Pincus Small Company Value Portfolio. In
addition, holders of variable insurance contracts representing interests in
the Warburg Pincus Small Company Value Portfolio will be subject to charges
and expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expenses.

The investment results of Warburg Pincus Small Company Value Portfolio
presented below are unaudited and are not intended to predict or suggest the
returns that might be experienced by the Warburg Pincus Small Company Value
Portfolio or an individual investor investing in such Portfolio and should not
be considered a substitute for the Warburg Pincus Small Company Value
Portfolio's own performance information.

<TABLE>
<CAPTION>
RUSSELL 2000
YEAR ENDED 9/30/97 WARBURG PINCUS SMALL COMPANY VALUE FUND1, 2 INDEX3
------------------ ------------------------------------------- ------
<S> <C> <C>
One Year4 % %
Since inception4 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 Absent the waiver of fees by the Warburg Pincus Small Company Value Fund's
investment adviser and co-administrator, management fees of the Warburg
Pincus Small Company Value Fund would equal 1.00%, other expenses would
equal .94% and total operating expenses would equal 2.19%. The investment
adviser and co-administrator of the Warburg Pincus Small Company Value Fund
are under no obligation to continue these waivers.

3 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2,000 small-cap stocks, and includes reinvestment of
dividends. It is compiled by the Frank Russell Company.

4 Annualized performance for shares of the Warburg Pincus Small Company Value
Fund. The inception date for the Warburg Pincus Small Company Value Fund
was December 29, 1995.

-66-

<PAGE>

MERRILL LYNCH WORLD STRATEGY PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e., Merrill Lynch Global Strategy Focus Fund,
a series of Merrill Lynch Variable Series Funds, Inc., which is managed by
Merrill Lynch Asset Management, L.P., and whose investment policies are
substantially similar to the Merrill Lynch World Strategy Portfolio. However,
the Merrill Lynch Global Strategy Focus Fund will be subject to different
expenses than the Merrill Lynch World Strategy Portfolio. In addition, holders
of variable insurance contracts representing interests in the Merrill Lynch
World Strategy Portfolio will be subject to charges and expenses relating to
such insurance contracts. The performance results presented below do not
reflect any insurance related expenses.

The investment results of Merrill Lynch Global Strategy Focus Fund presented
below are unaudited and are not intended to predict or suggest the returns
that might be experienced by the Merrill Lynch World Strategy Portfolio or an
individual investor investing in the Merrill Lynch World Strategy Portfolio.

<TABLE>
<CAPTION>
MERRILL LYNCH VARIABLE
SERIES FUNDS, INC. - MERRILL LYNCH MSCI EAFE INDEX2
YEAR ENDED 9/30/97 GLOBAL STRATEGY FOCUS FUND1 ----------------
------------------ ---------------------------
<S> <C> <C>
One Year3 % %
Five Years3 % %
Since inception3 % %
</TABLE>

- ---------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The Morgan Stanley Capital International Europe, Australia, and Far East
Index ("MSCI EAFE Index") is an unmanaged capitalization-weighted measure
of stock markets in Europe, Australia, the Far East and Canada. MSCI EAFE
Index returns assume dividends reinvested net of withholding tax and do not
reflect any fees or expenses.

3 Annualized performance for shares of the Merrill Lynch Global Strategy
Focus Fund. The inception date for the Merrill Lynch Global Strategy Focus
Fund was February 28, 1992.

-67-

<PAGE>

MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO

In the table below, the only account which is included is another registered
investment company, i.e., Merrill Lynch Basic Value Focus Fund, a series of
Merrill Lynch Variable Series Funds, Inc., which is managed by Merrill Lynch
Asset Management, L.P., and whose investment policies are substantially
similar to the Merrill Lynch Basic Value Equity Portfolio. However, the
Merrill Lynch Basic Value Focus Fund will be subject to different expenses
than the Merrill Lynch Basic Value Equity Portfolio. In addition, holders of
variable insurance contracts representing interests in the Merrill Lynch Basic
Value Equity Portfolio will be subject to charges and expenses relating to
such insurance contracts. The performance results presented below do not
reflect any insurance related expenses.

The investment results of Merrill Lynch Basic Value Focus Fund presented below
are unaudited and are not intended to predict or suggest the returns that
might be experienced by the Merrill Lynch Basic Value Equity Portfolio or an
individual investor investing in the Merrill Lynch Basic Value Equity
Portfolio.

<TABLE>
<CAPTION>
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL S&P 500
LYNCH INDEX2
YEAR ENDED 9/30/97 BASIC VALUE FOCUS FUND 1 -------
------------------ ------------------------
<S> <C> <C>
One Year3 % %
Since inception3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for shares of the Merrill Lynch Basic Value Focus
Fund. The inception date for the Merrill Lynch Basic Value Focus Fund was
July 1, 1993.

-68-
<PAGE>

LAZARD LARGE CAP VALUE PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e. the Lazard Equity Portfolio, a series of
The Lazard Funds, Inc., which is managed by Lazard Asset Management, and whose
investment policies are substantially similar to the Lazard Large Cap Value
Portfolio. However, the Lazard Equity Portfolio will be subject to different
expenses than the Lazard Large Cap Value Portfolio. In addition, holders of
variable insurance contracts representing interests in the Lazard Large Cap
Value Portfolio will be subject to charges and expenses relating to such
insurance contracts. The performance results presented below do not reflect
any insurance related expenses.

The investment results of the Lazard Equity Portfolio presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the Lazard Large Cap Value Portfolio or an individual investor
investing in the Lazard Large Cap Value Portfolio.

<TABLE>
<CAPTION>
S&P 500
YEAR ENDED 9/30/97 LAZARD EQUITY PORTFOLIO1 INDEX2
------------------ ------------------------ ------
<S> <C> <C>
One Year3 ___________________________ _______
Five Years3 ___________________________ _______
Since inception3 ___________________________ _______
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Through September 30, 1997. The inception date for Lazard Equity Portfolio
was June 1, 1987.

-69-

<PAGE>

LAZARD SMALL CAP VALUE PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e., Lazard Small Cap Portfolio, a series of
The Lazard Funds, Inc., which is managed by Lazard Asset Management, and whose
investment policies are substantially similar to the Lazard Small Cap Value
Portfolio. However, the Lazard Small Cap Portfolio will be subject to
different expenses than the Lazard Small Cap Value Portfolio. In addition,
holders of variable insurance contracts representing interests in the Lazard
Small Cap Value Portfolio will be subject to charges and expenses relating to
such insurance contracts. The performance results presented below do not
reflect any insurance related expenses.

The investment results of the Lazard Small Cap Portfolio presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the Lazard Small Cap Value Portfolio or an individual investor
investing in the Lazard Small Cap Value Portfolio.

LAZARD SMALL CAP RUSSELL 2000
YEAR ENDED 9/30/97 PORTFOLIO1 INDEX
------------------ ---------- -----
<S> <C> <C>
One Year3 ______________________ ___________
Five Years3 ______________________ ___________
Since inception3 ______________________ ___________
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2,000 small-cap stocks, and includes reinvestment of
dividends. It is compiled by the Frank Russell Company..

3 Through September 30, 1997. The inception date for Lazard Small Cap
Portfolio was October 1, 1991.

-70-

<PAGE>

JPM CORE BOND PORTFOLIO

In the table below, the institutional private accounts that are included in
the Adviser's composite are not subject to the same types of expenses to which
the JPM Core Bond Portfolio is subject or to the diversification requirements,
specific tax restrictions and investment limitations imposed on the JPM Core
Bond Portfolio by the 1940 Act or Subchapter M of the Internal Revenue Code.
Consequently, the performance results for the composite could have been
adversely affected if the institutional private accounts included in the
composite had been regulated as investment companies under the federal
securities laws. Moreover, holders of variable insurance contracts
representing interests in the JPM Core Bond Portfolio will be subject to
charges and expenses relating to such insurance contracts. The performance
results presented below do not reflect any insurance related charges.

The investment results presented below are not intended to predict or suggest
the returns that might be experienced by the JPM Core Bond Portfolio or an
individual investing in such Portfolio. Investors should also be aware that
the use of a methodology different from that used below to calculate
performance could result in different performance data.

J.P. MORGAN ACTIVE FIXED SALOMON BROTHERS BROAD
YEAR ENDED 9/30/97 INCOME COMPOSITE1 INVESTMENT GRADE BOND INDEX2
<S> <C> <C>

One Year
Three Years

Five Years
Since inception
</TABLE>

1 Through September 30, 1997. The inception date is May 31, 1977.

2 The Salomon Broad Investment Grade Bond Index is an unmanaged,
market-weighted index which contains approximately 4,700 individually
priced investment grade bonds. The index does not include fees or operating
expenses and is not available for actual investment.

-71-

<PAGE>

BT SMALL COMPANY INDEX PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e., BT Small Company Index Fund - Institutional
Class, a series of BT Advisor Funds, which is managed by Bankers Trust Company,
and whose investment policies are substantially similar to the BT Small
Company Index Portfolio. However, the BT Small Company Index Portfolio will be
subject to different expenses than the Small Cap Index Fund-Institutional Class.
In addition, holders of variable insurance contracts representing interests in
the BT Small Cap Index Portfolio will be subject to charges and expenses
relating to such insurance contracts. The performance results presented below
do not reflect any insurance related expenses.

The investment results of the Small Cap Index Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the BT Small Company Index Portfolio or an individual investor
investing in the BT Small Company Index Portfolio.

SMALL CAP INDEX FUND-
INSTITUTIONAL CLASS RUSSELL 2000 INDEX2
----------------------- -------------------
YEAR ENDED 9/30/97
One Year 33.23% 33.19%
Three Years

Five Years
Since inception 31.05% 32.76%

1 Through [date]. The inception date is [date].

2 The Russell 2000 Index is an unmanaged index composed of approximately 2,000
small-capitalization stocks and includes reinvestments of dividends. The index
does not include fees or operating expenses and is not available for actual
investment. It is compiled by the Frank Russell Company.

-72-

<PAGE>

BT INTERNATIONAL EQUITY INDEX PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e., EAFE(R) Equity Index Fund - Institutional
Class, a series of BT Advisor Funds, which is managed by Bankers Trust Company,
and whose investment policies are substantially similar to the BT International
Equity Index Portfolio. However, the BT International Equity Index Portfolio
will be subject to different expenses than the EAFE(R) Equity Index Fund. In
addition, holders of variable insurance contracts representing interests in
the BT International Equity Index Portfolio will be subject to charges and
expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expenses.

The investment results of the EAFE(R) Equity Index Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the BT International Equity Index Portfolio or an individual
investor investing in the BT International Equity Index Portfolio.

EAFE(R) EQUITY INDEX FUND-
YEAR ENDED 9/30/97 INSTITUTIONAL CLASS MSCI EAFE INDEX2
- ------------------ --------------------------- ----------------

One Year 12.78% 12.18%
Three Years

Five Years
Since inception 10.87% 10.71%

1 Through [date]. The inception date is [date].

2 The Morgan Stanley Capital International Europe, Australia, Far East Index
("MSCI EAFE Index") is an unmanaged capitalization-weighted index containing
approximately 1,100 equity securities of companies located in countries
outside the United States. The MSCI EAFE Index returns assume dividends
reinvested net of withholding tax and do not reflect any fees or operating
expenses. The index does not include fees or operating expenses and is not
available for actual investment.

-73-

<PAGE>

BT EQUITY 500 INDEX PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e., Equity 500 Index Fund, a series of BT
Institutional Funds, which is managed by Bankers Trust Company, and whose
investment policies are substantially similar to the BT Equity 500 Index
Portfolio. However, the BT Equity 500 Index Portfolio will be subject to
different expenses than the Equity 500 Index Fund. In addition, holders of
variable insurance contracts representing interests in the BT Equity 500 Index
Portfolio will be subject to charges and expenses relating to such insurance
contracts. The performance results presented below do not reflect any
insurance related expenses.

The investment results of the Equity 500 Index Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the BT Equity 500 Index Portfolio or an individual investor
investing in the BT Small Company Index Portfolio.

YEAR ENDED 9/30/97 EQUITY 500 INDEX FUND S&P 500 COMPOSITE STOCK
- ------------------ ---------------------- -----------------------
INDEX2
One Year 40.32% 40.44%
Three Years

Five Years
Since inception 20.64% 20.72%

1 Through [date]. The inception date is [date].

2 The S&P 500 Index ("Index") is an unmanaged index containing common stocks
of 500 industrial, transportation, utility and financial companies, regarded
as generally representative of the United States stock market. The Index
reflects the reinvestment of income dividends and capital gain distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses of
investing.

-74-

<PAGE>

APPENDIX A

The following table summarizes the historical performance information of
certain other registered investment companies or accounts that appears on
pages____ through ____ of this Prospectus. Each other registered investment
company or account is managed by an Adviser and has investment objectives,
policies, strategies and risks substantially similar to the Portfolio managed
by that Adviser. For further information regarding each of the registered
investment companies and the indexes presented below, please refer to pages
____ through ____ of this Prospectus.

ANNUALIZED RATES OF RETURN
PERIOD ENDED September 30, 1997
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
FUND NAME 1 YEAR 5 YEARS 10 YEARS SINCE INCEPTION
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BT EAFE(R) EQUITY INDEX FUND-
INSTITUTIONAL CLASS __% __% __% __%
- ---------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index __% __% __% __%
- ---------------------------------------------------------------------------------------------------------------------
BT SMALL CAP INDEX FUND-
INSTITUTIONAL CLASS __% __% __% __%
- ---------------------------------------------------------------------------------------------------------------------
Russell 2000 Index __% __% __% __%
- ---------------------------------------------------------------------------------------------------------------------
BT EQUITY 500 INDEX FUND __% __% __% __%
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% __% __% __%
- ---------------------------------------------------------------------------------------------------------------------
THE GEORGE PUTNAM FUND OF BOSTON __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
J.P. MORGAN ACTIVE FIXED INCOME
COMPOSITE __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
Salomon Brothers Broad Investment Grade __% __% -- --
Bond Index
- ---------------------------------------------------------------------------------------------------------------------
LAZARD EQUITY PORTFOLIO __% __% -- --
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
LAZARD SMALL CAP PORTFOLIO __% __% -- --
- ---------------------------------------------------------------------------------------------------------------------
Russell 2000 Index __% __% -- --
- ---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE FOCUS FUND __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND __% __% -- __%
- ---------------------------------------------------------------------------------------------------------------------

-75-
<PAGE>

- ---------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index __% __% -- __%
- ---------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH FUND __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
Russell 2000 Index __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
MFS RESEARCH FUND __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
MSIF EMERGING MARKETS PORTFOLIO __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
IFC Global Total Return Composite Index __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
PUTNAM GROWTH & INCOME FUND II __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
PUTNAM INTERNATIONAL GROWTH FUND __% __% -- __%
- ---------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index __% __% -- __%
- ---------------------------------------------------------------------------------------------------------------------
PUTNAM INVESTORS FUND __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME FUND __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
S&P 500 Index __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK FUND __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index __% __% __% --
- ---------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE FUND __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
Russell 2000 Index __% -- -- __%
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>

-76-

<PAGE>

PROSPECTUS DATED JANUARY ___, 1998

EQ ADVISORS TRUST
1290 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10104

This Prospectus describes the following eighteen Portfolios currently offered
by the Trust.

The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares offered pursuant to another prospectus, and Class IB shares offered
hereby.

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<PAGE>

FINANCIAL HIGHLIGHTS

The financial information in the table below for the period May 1,
1997** to June 30, 1997 is unaudited. The Trust's semi-annual report,
which contains other financial information, is incorporated by
reference into the Trust's Statement of Additional Information and is
available without charge upon request.

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<PAGE>

-3-
<PAGE>

(c) For further information concerning fee waivers, see the section entitled
"Expense Limitation Agreements" of the Prospectus

THE TRUST

-4-
<PAGE>

The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc. ("EQ Financial"),
the Trust's Manager, serves as one of the distributors for the Class IB shares
of the Trust offered by this Prospectus. Equitable Distributors, Inc. ("EDI")
also serves as one of the distributors for the Class IB shares of the Trust as
well as one of the distributors of the Class IA shares. (EQ Financial and EDI
are collectively referred to as the "Distributors"). The Trust's shares are
currently sold only to insurance company separate accounts in connection with
variable life insurance contracts and variable annuity certificates and
contracts (collectively, the "Contracts") issued by The Equitable Life
Assurance Society of the United States ("Equitable"). Both classes of shares
are offered and redeemed at their net asset value without the imposition of
any sales load.

Class IA shares are offered pursuant to another prospectus and are subject to
the same expenses as the Class IB shares, but unlike the Class IB shares they
are not subject to distribution fees imposed pursuant to a distribution plan.
Class IB shares are subject to distribution fees imposed under a distribution
plan ("Distribution Plan") adopted pursuant to Rule 12b-1 under the 1940 Act.
Inquiries regarding Class IA shares, which are not currently available, should
be addressed to Equitable, at 1290 Avenue of the Americas, New York, NY 10104
or by calling 1-212-314-4300.

INVESTMENT OBJECTIVES AND POLICIES

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

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<PAGE>

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<PAGE>

T. ROWE PRICE EQUITY INCOME PORTFOLIO

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<PAGE>

EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO

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<PAGE>

The Portfolio may also engage in a variety of investment management practices
such as buying and selling options and futures contracts and engaging in
foreign currency exchange contracts.

EQ/PUTNAM INTERNATIONAL EQUITY PORTFOLIO

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<PAGE>

EQ/PUTNAM INVESTORS GROWTH PORTFOLIO

-10-
<PAGE>

At times, the Adviser may judge that conditions in the securities markets may
make pursuing the Portfolio's basic investment strategy inconsistent with the
best interests of the Portfolio's shareholders. At such times, the Adviser may
temporarily use alternative strategies that are primarily designed to reduce
fluctuations in the value of the Portfolio's assets. In implementing these
defensive strategies, the Portfolio may invest, without limit, in debt
securities, preferred stocks, United States government and agency obligations,
cash or money market instruments, or may invest in any other securities the
Adviser considers consistent with such defensive strategies. It is impossible
to predict when, or for how long, the Adviser will use these alternative
defensive strategies.

The Portfolio may also engage in a variety of investment management practices
such as buying and selling options and futures contracts and entering into
foreign currency exchange contracts.

EQ/PUTNAM BALANCED PORTFOLIO

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<PAGE>

is reduced below its rating at the time of purchase. However, the Adviser will
consider such reduction in its determination of whether the Portfolio should
continue to hold the security.

At times, the Adviser may judge that conditions in the securities markets may
make pursuing the Portfolio's basic investment strategy inconsistent with the
best interests of the Portfolio's shareholders. At such times, the Adviser may
temporarily use alternative strategies that are primarily designed to reduce
fluctuations in the value of the Portfolio's assets. In implementing these
defensive strategies, the Portfolio may invest without limit in debt
securities, preferred stocks, United States Government and agency obligations,
cash or money market instruments, or may invest in any other securities the
Adviser considers consistent with such defensive strategies. It is impossible
to predict when, or for how long, the Adviser will use these alternative
defensive strategies.

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
foreign securities, securities loans, illiquid securities, zero-coupon bonds,
investment grade and lower quality fixed-income securities, payment-in-kind
bonds, derivatives, foreign currency transactions, repurchase agreements,
forward commitments and investment grade and lower quality fixed-income
securities) are discussed under the caption "Investment Strategies" below and
in the Statement of Additional Information.

MFS RESEARCH PORTFOLIO

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<PAGE>

foreign investments increase a portfolio's diversification and may enhance
return, but they may represent a greater degree of risk than investing
exclusively in domestic securities.

MFS EMERGING GROWTH COMPANIES PORTFOLIO

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<PAGE>

MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO

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<PAGE>

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<PAGE>

WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO

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<PAGE>

MERRILL LYNCH WORLD STRATEGY PORTFOLIO

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<PAGE>

required capital contributions and that a supranational entity will thus be
unable to meet its obligations.

MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO

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<PAGE>

this policy is moderated somewhat by an emphasis on securities with
above-average dividend returns.

LAZARD LARGE CAP VALUE PORTFOLIO

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<PAGE>

LAZARD SMALL CAP VALUE PORTFOLIO

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<PAGE>

JPM CORE BOND PORTFOLIO

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<PAGE>

Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
foreign securities, securities loans, illiquid securities, zero-coupon bonds,
investment grade fixed-income securities, payment-in-kind bonds, derivatives,
foreign currency transactions, repurchase agreements, reverse repurchase
agreements, forward commitments, United States Government securities,
borrowings, asset-backed securities, convertible securities, mortgage-related
securities and swaps) are discussed under the caption "Investment Strategies"
below and in the Statement of Additional Information.

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<PAGE>

BT SMALL COMPANY INDEX PORTFOLIO

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<PAGE>

BT INTERNATIONAL EQUITY INDEX PORTFOLIO

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<PAGE>

BT EQUITY 500 INDEX PORTFOLIO

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<PAGE>

The Portfolio may maintain up to 20% of its assets in short-term debt
securities and money market instruments to meet redemption requests or to
facilitate investment in the securities of the S&P 500. Securities index
futures contracts and related options, warrants and convertible securities may
be used for several reasons: to simulate full investment in the S&P 500 while
retaining a cash balance for fund management purposes; to facilitate trading;
to reduce transaction costs; or to seek higher investment returns when a
futures contract, option, warrant or convertible security is priced more
attractively than the underlying equity security or S&P 500. These instruments
may be considered derivatives. The use of derivatives for non-hedging purposes
may be considered speculative. While each of these instruments can be used as
leveraged investments, the Portfolio may not use them to leverage its net
assets. The Portfolio may not invest in such instruments as part of a
temporary defensive strategy (in anticipation of declining stock prices) to
protect the Portfolio against potential market declines.

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<PAGE>

INVESTMENT STRATEGIES

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<PAGE>

the extent that the amount so borrowed does not exceed 33 1/3% of the
Portfolio's total assets. Leveraging exaggerates the effect on net asset value
of any increase or decrease in market value of the Lazard Large Cap Value
Portfolio's investment. In addition, such borrowings would be subject to
interest costs which may or may not be recovered by appreciation of securities
purchased. The Lazard Large Cap Value Portfolio may also borrow up to 10% of
its total assets for temporary or emergency purposes. Borrowings for the T.
Rowe Price International Stock Portfolio, T. Rowe Price Equity Income
Portfolio, MFS Research Portfolio, MFS Emerging Growth Companies Portfolio,
Morgan Stanley Emerging Markets Equity Portfolio, Merrill Lynch World Strategy
Portfolio, Merrill Lynch Basic Value Equity Portfolio, JPM Core Bond Portfolio,
BT Small Company Index Portfolio, BT International Equity Index Portfolio and
BT Equity 500 Index Portfolio may not exceed 33 1/3% of each Portfolio's total
assets. Borrowings for the Warburg Pincus Small Company Value Portfolio may
not exceed 30% of the Portfolio's total assets. Borrowing for the Lazard Small
Cap Value Portfolio may not exceed 15% of its total assets for temporary or
emergency purposes, including to meet redemptions (otherwise such borrowings
may not exceed 5% of the value of the Portfolio's total assets). Borrowings
for the EQ/Putnam Growth & Income Value Portfolio, the EQ/Putnam International
Equity Portfolio, EQ/Putnam Investors Growth Portfolio, EQ/Putnam Balanced
Portfolio may not exceed 10% of each Portfolio's total assets. Each Portfolio
may pledge its assets to secure these permissible borrowings. No Portfolio,
except the Lazard Large Cap Value Portfolio, may purchase additional securities
when its borrowings exceed 5% of its total assets. See also "Reverse Repurchase
Agreements" for information concerning an investment technique that may be
deemed to involve a borrowing. Further information concerning each Portfolio's
fundamental policy with respect to borrowings is provided in the Statement of
Additional Information.

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<PAGE>

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<PAGE>

In addition, investment in foreign securities may also include the risk of
expropriation by a foreign government.

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<PAGE>

be requested to participate in the rescheduling of such debt and to extend
further loans to government debtors.

Certain Portfolios may invest in the following types of foreign securities or
engage in the following types of transactions related to foreign securities.

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<PAGE>

-32-
<PAGE>

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<PAGE>

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<PAGE>

The JPM Core Bond Portfolio may also invest in directly placed mortgages
including residential mortgages, multifamily mortgages, mortgages on
cooperative apartment buildings, commercial mortgages, and sale-leasebacks.
These investments are backed by assets such as office buildings, shopping
centers, retail stores, warehouses, apartment buildings and single-family
dwellings. In the event that the Portfolio forecloses on any non-performing
mortgage, and acquires a direct interest in the real property, the Portfolio
will be subject to the risks generally associated with the ownership of real
property. There may be fluctuations in the market value of the foreclosed
property and its occupancy rates, rent schedules and operating expenses.

-35-
<PAGE>

cash or other liquid assets in an amount equal to or greater than the exercise
price of the put option. Each Portfolio that is permitted to invest in futures
contracts and related options may utilize such transactions for other than
hedging purposes to the extent that aggregate initial margin deposits and
premiums paid do not exceed 5% of the Portfolio's net assets. Each Portfolio
(other than the Warburg Pincus Small Company Value Portfolio) will not commit
more than 5% of its total assets to premiums when purchasing call or put
options. The BT Small Company Index Portfolio, BT International Equity Index
Portfolio and BT Equity 500 Index Portfolio each may not at any time commit 20%
of its assets to options and futures contracts. The Warburg Pincus Small
Company Value Portfolio may commit up to 10% of its total assets to premiums
when purchasing put or call options. In addition, the total market value of
securities against which a Portfolio has written call or put options may not
exceed 25% of its total assets. The Merrill Lynch Basic Value Equity Portfolio
will not write covered call options on underlying securities exceeding 15% of
the value of its total assets. The MFS Emerging Growth Companies Portfolio and
Morgan Stanley Emerging Markets Equity Portfolio will not enter a futures
contract if the obligations underlying all such futures contracts would exceed
50% of the value of each such Portfolio's total assets. The Warburg Pincus
Small Company Value Portfolio may utilize up to 10% of its total assets to
purchase exchange-listed and OTC put and call options on stock indexes. The
EQ/Putnam Growth & Income Portfolio, EQ/Putnam International Equity Portfolio,
EQ/Putnam Investors Growth Portfolios, EQ/Putnam Balanced Portfolio, MFS
Emerging Growth Companies Portfolio, Merrill Lynch World Strategy Portfolio,
Morgan Stanley Emerging Markets Equity Portfolio and the JPM Core Bond
Portfolio may engage in OTC put and call option transactions. Options traded
in the OTC market may not be as actively traded as those on an exchange, so it
may be more difficult to value such options. In addition, it may be difficult
to enter into closing transactions with respect to such options. Such OTC
options, and the securities used as "cover" for such options, may be considered
illiquid securities.

-36-
<PAGE>

REVERSE REPURCHASE AGREEMENTS. The Morgan Stanley Emerging Markets Equity
Portfolio, the Lazard Large Cap Value Portfolio, the JPM Core Bond Portfolio,
BT Small Company Index Portfolio, BT International Equity Index Portfolio and
BT Equity 500 Index Portfolio may each enter into reverse repurchase agreements
with brokers, dealers, domestic and foreign banks or other financial
institutions. In a reverse repurchase agreement, the Portfolio sells a security
and agrees to repurchase it at a mutually agreed upon date and price, reflecting
the interest rate effective for the term of the agreement. It may also be viewed
as the borrowing of money by the Portfolio. The Portfolio's investment of the
proceeds of a reverse repurchase agreement is the speculative factor known as
leverage. The Portfolio may enter into a reverse repurchase agreement only if
the interest income from investment of the proceeds is greater than the
interest expense of the transaction and the proceeds are invested for a period
no longer than the term of the agreement. The Portfolio will maintain with the
custodian a separate account with a segregated portfolio of unencumbered
liquid assets in an amount at least equal to its purchase obligations under
these agreements. If interest rates rise during a reverse repurchase
agreement, it may adversely affect the Portfolio's net asset value. See
"Borrowing" for more information concerning restrictions on borrowing by each
Portfolio.

-37-
<PAGE>

SECURITIES LOANS. The T. Rowe Price International Stock Portfolio, T. Rowe
Price Equity Income Portfolio, MFS Research Portfolio, , Morgan Stanley
Emerging Markets Equity Portfolio and the JPM Core Bond Portfolio may each
seek to earn additional income by making secured loans of portfolio securities
with a value up to 33 1/3% of their respective total assets. The MFS Emerging
Growth Companies Portfolio, BT Small Company Index Portfolio, BT International
Equity Index Portfolio and BT Equity 500 Index Portfolio may lend portfolio
securities in an amount up to 30% of their respective total assets. The
EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam International Equity
Portfolio, EQ/Putnam Investors Growth Portfolio and EQ/Putnam Balanced
Portfolio may lend portfolio securities in an amount up to 25% of their
respective total assets. The Merrill Lynch Basic Value Equity Portfolio,
Merrill Lynch World Strategy Portfolio, and Warburg Pincus Small Company Value
Portfolio may each lend portfolio securities in an amount up to 20% of their
respective total assets. The Lazard Large Cap Value Portfolio and Lazard Small
Cap Value Portfolio may each lend portfolio securities in an amount up to 10%
of their respective total assets. All securities loans will be made pursuant
to agreements requiring the loans to be continuously secured by collateral in
cash or highgrade debt obligations at least equal at all times to the market
value of the loaned securities. The borrower pays to the Portfolios an amount
equal to any dividends or interest received on loaned securities. The
Portfolios retain all or a portion of the interest received on investment of
cash collateral or receive a fee from the borrower. Lending portfolio
securities involves risks of delay in recovery of the loaned securities or in
some cases loss of rights in the collateral should the borrower fail
financially. Further information concerning each Portfolio's fundamental
policy with respect to loans is provided in the Statement of Additional
Information.

-38-
<PAGE>

-39-
<PAGE>

MANAGEMENT OF THE TRUST

THE BOARD OF TRUSTEES

-40-
<PAGE>

THE MANAGER

As compensation for managing the T. Rowe Price Equity Income Portfolio,
EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam Investors Growth
Portfolio, EQ/Putnam Balanced Portfolio, MFS Research Portfolio, MFS Emerging
Growth Companies Portfolio, Merrill Lynch Basic Value Equity Portfolio and
Lazard Large Cap Value Portfolio the Trust pays the Manager a monthly fee at
the annual rate of .55% of the respective Portfolio's average daily net
assets. As compensation for managing the T. Rowe Price International Stock
Portfolio, the Trust pays the Manager a monthly fee at the annual rate of .75%
of the Portfolio's average daily net assets. As compensation for managing the
EQ/Putnam International Equity Portfolio, and Merrill Lynch World Strategy
Portfolio, the Trust pays the Manager a monthly fee at an annual rate of .70%
of the respective Portfolio's average daily net assets. As compensation for
managing the Morgan Stanley Emerging Markets Equity Portfolio, the Trust pays
the Manager a monthly fee at an annual rate of 1.15% of the Portfolio's
average daily net assets. As compensation for managing the Warburg Pincus
Small Company Value Portfolio, the Trust pays the Manager a monthly fee at an
annual rate of .65% of the Portfolio's average daily net assets. As
compensation for managing the Lazard Small Cap Value Portfolio the Trust pays
the Manager a monthly fee at an annual rate of .80% of the Portfolio's average
daily net assets. As compensation for managing the JPM Core Bond Portfolio the
Trust pays the Manager a monthly fee at the annual rate of .30 % of the
Portfolio's average daily net assets. As compensation for managing the BT
Small Company Index Portfolio the Trust pays the Manager a monthly fee at the
annual rate of ___% of the Portfolio's average daily net assets. As
compensation for managing the BT International Equity Index Portfolio the Trust
pays the Manager a monthly fee at the annual rate of ___% of the Portfolio's
average daily net assets. As compensation for managing the BT Equity 500 Index
Portfolio the Trust pays the Manager a monthly fee at the annual rate of ___%
of the Portfolio's average daily net assets.

The Manager pays the expenses of providing investment advisory services to the
Portfolios, including the fees of the Adviser of each Portfolio.

-41-
<PAGE>

In addition to the management fees, the Trust pays all expenses not assumed by
the Manager, including, without limitation: the fees and expenses of its
independent accountants and of its legal counsel; the costs of printing and
mailing annual and semi-annual reports to shareholders, proxy statements,
prospectuses, prospectus supplements and statements of additional information,
all to the extent they are sent to existing Contract owners; the costs of
printing registration statements; bank transaction charges and custodian's
fees; any proxy solicitors' fees and expenses; filing fees; any federal, state
or local income or other taxes; any interest; any membership fees of the
Investment Company Institute and similar organizations; fidelity bond and
Trustees' liability insurance premiums; and any extraordinary expenses, such
as indemnification payments or damages awarded in litigation or settlements
made. All general Trust expenses are allocated among and charged to the assets
of the Portfolios of the Trust on a basis that the Trustees deem fair and
equitable, which may be on the basis of relative net assets of each Portfolio
or the nature of the services performed and relative applicability to each
Portfolio. As discussed in greater detail below, under "Distribution of the
Trust's Shares," the Class IB shares may pay for certain distribution related
expenses in connection with activities primarily intended to result in the
sale of its shares.

THE ADVISERS

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<PAGE>

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<PAGE>

-44-
<PAGE>

-45-
<PAGE>

-46-
<PAGE>

-47-
<PAGE>

-48-
<PAGE>

Bankers Trust Company ("Bankers Trust") has been the Adviser to the BT Small
Company Index Portfolio, BT International Equity Index Portfolio and BT Equity
500 Index Portfolio since each Portfolio commenced operations. As compensation
for services as the Adviser to the BT Small Cap Index Portfolio, the Manager
pays Bankers Trust a monthly fee at an annual rate equal to .5% of the
Portfolio's average daily net assets. As compensation for services as the
Adviser to the BT International Equity Index Portfolio, the Manager pays
Bankers Trust a monthly fee of an annual rate equal to .15% of the Portfolio's
average daily net assets. As compensation for services as the Adviser to the BT
Equity 500 Index Portfolio, the Manager pays Bankers Trust a monthly fee of an
annual rate equal to: .5% of the Portfolio's average daily net assets.

Bankers Trust is a New York banking corporation with executive offices
at 130 Liberty Street (One Bankers Trust Plaza), New York, New York 10006.
Bankers Trust is a wholly-owned subsidiary of Bankers Trust New York
Corporation. Bankers Trust conducts a variety of general banking and trust
activities and is a major wholesale supplier of financial services to the
international and domestic institutional markets. As of September 30, 1997,
Bankers Trust New York Corporation was the [seventh] largest bank holding
company in the United States with total assets of approximately [$129]
billion.

Bankers Trust is a worldwide merchant bank dedicated to servicing the
needs of corporations, governments, financial institutions and private clients
through a global network of over 80 offices in more than 50 countries.
Investment management is a core business of Bankers Trust, built on a
tradition of excellence from its roots as a trust bank founded in 1903.
Bankers Trust is a leader in both active and passive quantitative management
and conducts business in major equity and fixed income markets around the
world.

Bankers Trust is one of the nation's largest and most experienced
investment managers with approximately [$240] billion in assets under
management globally.

-49-
<PAGE>

THE ADMINISTRATOR

THE TRANSFER AGENT

Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.

EXPENSE LIMITATION AGREEMENT

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<PAGE>

BROKERAGE PRACTICES

TRANSACTIONS WITH AFFILIATES

-51-
<PAGE>

the 1940 Act, in a public offering in which an affiliate of the Manager or
Advisers is an underwriter.

DESCRIPTION OF THE TRUST AND TRUST'S SHARES

THE TRUST

CHARACTERISTICS OF TRUST'S SHARES

Under the Trust's multi-class system, shares of each class of a Portfolio
represent an equal pro rata interest in that Portfolio and, generally, shall
have identical voting, dividend, liquidation, and other rights, preferences,
powers, restrictions, limitations, qualifications and terms and conditions,
except that: (a) each class shall have a different designation; (b) each class
of shares shall bear its "Class Expenses;" (c) each class shall have exclusive
voting rights on any matter submitted to shareholders that relates solely to
its distribution arrangements; (d) each class shall have separate voting
rights on any matter submitted to shareholders in which the interests of one
class differ from the interests of any other class; (e) each class may have
separate exchange privileges, although exchange privileges are not currently
contemplated; and (f) each class may have different conversion features,
although a conversion feature is not currently contemplated. Expenses
currently designated as "Class Expenses" by the Trust's Board of Trustees
under the plan pursuant to Rule 18f-3 are currently limited to payments made
to the Distributors for the Class IB shares, pursuant to the Distribution Plan
for the Class IB shares adopted pursuant to Rule 12b-1 under the 1940 Act.

PURCHASE AND REDEMPTION OF SHARES

EQ Financial, 1755 Broadway, New York, New York, 10019, formerly Equico
Securities, Inc., a wholly-owned subsidiary of Equitable, serves as one of the
Distributors for the Trust's Class IB shares pursuant to a distribution
agreement with the Trust. EDI, 1290 Avenue of the Americas, New York, New
York, 10104, a Delaware corporation and an indirect wholly-owned subsidiary of
Equitable also serves as one of the Distributors for the Trust's Class IB
shares pursuant to a

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<PAGE>

distribution agreement with the Trust. Class IB shares are offered and redeemed
without a sales charge, at net asset value. The price at which a purchase or
redemption is effected is based on the next calculation of net asset value
after an order is placed by an insurance company investing in or redeeming from
the Trust. Net asset value per share is calculated for purchases and redemption
of shares of each Portfolio by dividing the value of total Portfolio assets,
less liabilities (including Trust expenses, which are accrued daily), by the
total number of outstanding shares of that Portfolio. The net asset value per
share of each Portfolio is determined each business day at 4:00 p.m. Eastern
time. Net asset value per share is not calculated on national business
holidays.

The Trust also has distribution agreements for its Class IB shares with EQ
Financial and EDI pursuant to which each of them acts as the Distributor for
the Class IB shares of the Trust.

The Trust has adopted the Distribution Plan pursuant to Rule 12b-1 under the
1940 Act for the Class IB shares of the Trust. Pursuant to the Distribution
Plan, the Trust compensates the Distributors from assets attributable to the
Class IB shares for services rendered and expenses borne in connection with
activities primarily intended to result in the sale of the Trust's Class IB
shares. It is anticipated that a portion of the amounts received by the
Distributors will be used to defray various costs incurred or paid by the
Distributors in connection with the printing and mailing of Trust
prospectuses, statements of additional information, any supplements thereto
and shareholder reports and holding seminars and sales meetings with wholesale
and retail sales personnel designed to promote the distribution of Class IB
shares. The Distributors may also use a portion of the amounts received to
provide compensation to financial intermediaries and third-party
broker-dealers for their services in connection with the distribution of Class
IB shares.

The Distribution Plan provides that the Trust, on behalf of each Portfolio,
may pay annually up to 0.50% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of Class IB shares. However, under the
Distribution Agreements, payments to the Distributors for activities pursuant
to the Distribution Plan are limited to payments at an annual rate equal to
0.25% of average daily net assets of a Portfolio attributable to its Class IB
shares. Under terms of the Distribution Plan and the Distribution Agreements,
each Portfolio is authorized to make payments monthly to the Distributors
which may be used to pay or reimburse entities providing distribution and
shareholder servicing with respect to the Class IB shares for such entities'
fees or expenses incurred or paid in that regard.

The Distribution Plan is of a type known as a "compensation" plan because
payments are made for services rendered to the Trust with respect to Class IB
shares regardless of the level of expenditures by the Distributors. The
Trustees will, however, take into account such expenditures for purposes of
reviewing operations under the Distribution Plan and in connection with their
annual consideration of the Plan's renewal. The Distributors have indicated
that they expect their expenditures to include, without limitation: (a) the
printing and mailing of Trust prospectuses, statements of additional
information, any supplements thereto and shareholder reports for prospective
Contract owners with respect to the Class IB shares of the Trust; (b) those
relating to the development, preparation, printing and mailing of
advertisements, sales literature and other promotional materials describing
and/or relating to the Class IB shares of the Trust; (c) holding seminars and
sales meetings designed to promote the distribution of Trust Class IB shares;
(d) obtaining information and providing explanations to wholesale and retail
distributors of Contracts

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<PAGE>

regarding Trust investment objectives and policies and other information about
the Trust and its Portfolios, including the performance of the Portfolios; (e)
training sales personnel regarding the Class IB shares of the Trust; and (f)
financing any other activity that the Distributors determine is primarily
intended to result in the sale of Class IB shares.

HOW ASSETS ARE VALUED

Values are determined according to accepted accounting practices and all laws
and regulations that apply. The assets of each Portfolio are generally valued
as follows:

o Stocks and debt securities which mature in more than 60 days are
valued on the basis of market quotations.

o Short-term debt securities in the Portfolios which mature in 60 days
or less are valued at amortized cost, which approximates market value.

DIVIDENDS, DISTRIBUTIONS AND TAXES

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<PAGE>

Certain additional tax information appears in the Statement of Additional
Information.

For more information regarding the tax implications for owners of Contracts
investing in the Trust, refer to the prospectuses for those Contracts.

PERFORMANCE INFORMATION

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<PAGE>

PRIOR PERFORMANCE OF EACH ADVISER

-56-

<PAGE>

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 T. ROWE PRICE INTERNATIONAL STOCK MSCI EAFE INDEX2
FUND1
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for the shares of the T. Rowe Price International
Stock Fund.

-57-

<PAGE>

T. ROWE PRICE EQUITY INCOME PORTFOLIO

<TABLE>
<CAPTION>
YEAR ENDED 9/30/97 S&P 500 INDEX2
T. ROWE PRICE
EQUITY INCOME FUND1
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

-58-

<PAGE>

EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO

- ----------------------------------

1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund
expenses.

2 The S&P 500 Index ("Index") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial
companies, regarded as generally representative of the United States
stock market. The Index reflects the reinvestment of income dividends
and capital gain distributions, if any, but does not reflect fees,
brokerage commissions, or other expenses of investing.

-59-

<PAGE>

EQ/PUTNAM INTERNATIONAL EQUITY PORTFOLIO

<TABLE>
<CAPTION>
MSCI EAFE
YEAR ENDED 9/30/97 PUTNAM INTERNATIONAL GROWTH FUND1 INDEX(2)
------------------ --------------------------------- --------
<S> <C> <C>
One Year3 % %

Five Years3 % %
Since inception3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

-60-

<PAGE>

EQ/PUTNAM INVESTORS GROWTH PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

-61-

<PAGE>

EQ/PUTNAM BALANCED PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

-62-

<PAGE>

MFS RESEARCH PORTFOLIO

<TABLE>
<CAPTION>
S&P 500
YEAR ENDED 9/30/97 MFS RESEARCH FUND1 INDEX2
------------------ ------------------ ------
<S> <C> <C>
One Year3 % %
Five Years3 % %
Ten Years3 % %
</TABLE>

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

-63-

<PAGE>

MFS EMERGING GROWTH COMPANIES PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2000 small-cap stocks and it includes reinvestments of
dividends. It is compiled by the Frank Russell Company.

-64-

<PAGE>

MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO

2 The expense ratio of MSIF Emerging Markets Equity Portfolio has been capped
at 1.75% since inception.

-65-

<PAGE>

WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2,000 small-cap stocks, and includes reinvestment of
dividends. It is compiled by the Frank Russell Company.

4 Annualized performance for shares of the Warburg Pincus Small Company Value
Fund. The inception date for the Warburg Pincus Small Company Value Fund
was December 29, 1995.

-66-

<PAGE>

MERRILL LYNCH WORLD STRATEGY PORTFOLIO

- ---------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for shares of the Merrill Lynch Global Strategy
Focus Fund. The inception date for the Merrill Lynch Global Strategy Focus
Fund was February 28, 1992.

-67-

<PAGE>

MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Annualized performance for shares of the Merrill Lynch Basic Value Focus
Fund. The inception date for the Merrill Lynch Basic Value Focus Fund was
July 1, 1993.

-68-

<PAGE>

LAZARD LARGE CAP VALUE PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

3 Through September 30, 1997. The inception date for Lazard Equity Portfolio
was June 1, 1987.

-69-

<PAGE>

LAZARD SMALL CAP VALUE PORTFOLIO

- ----------------------------------
1 Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.

2 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2,000 small-cap stocks, and includes reinvestment of
dividends. It is compiled by the Frank Russell Company..

3 Through September 30, 1997. The inception date for Lazard Small Cap
Portfolio was October 1, 1991.

-70-

<PAGE>

JPM CORE BOND PORTFOLIO

J.P. MORGAN ACTIVE FIXED SALOMON BROTHERS BROAD
YEAR ENDED 9/30/97 INCOME COMPOSITE1 INVESTMENT GRADE BOND INDEX2
<S> <C> <C>

One Year
Three Years

Five Years
Since inception
</TABLE>

1 Through September 30, 1997. The inception date is May 31, 1977.

-71-

<PAGE>

BT SMALL COMPANY INDEX PORTFOLIO

SMALL CAP INDEX FUND-
INSTITUTIONAL CLASS RUSSELL 2000 INDEX2
----------------------- -------------------
YEAR ENDED 9/30/97
One Year 33.23% 33.19%
Three Years

Five Years
Since inception 31.05% 32.76%

1 Through [date]. The inception date is [date].

-72-

<PAGE>

BT INTERNATIONAL EQUITY INDEX PORTFOLIO

In the table below, the only account which is included is a series of another
registered investment company, i.e., EAFE(R) Equity Index Fund - Institutional
Class, a series of BT Advisor Funds, which is managed by Bankers Trust Company,
and whose investment policies are substantially similar to the BT International
Equity Index Portfolio. However, the BT International Equity Index Portfolio
will be subject to different expenses than the EAFE(R) Equity Index Fund. In
addition, holders of variable insurance contracts representing interests in the
BT International Equity Index Portfolio will be subject to charges and expenses
relating to such insurance contracts. The performance results presented below
do not reflect any insurance related expenses.

EAFE(R) EQUITY INDEX FUND-
YEAR ENDED 9/30/97 INSTITUTIONAL CLASS MSCI EAFE INDEX2
- ------------------ --------------------------- ----------------

One Year 12.78% 12.18%
Three Years

Five Years
Since inception 10.87% 10.71%

1 Through [date]. The inception date is [date].

-73-

<PAGE>

BT EQUITY 500 INDEX PORTFOLIO

YEAR ENDED 9/30/97 EQUITY 500 INDEX FUND S&P 500 COMPOSITE STOCK
- ------------------ ---------------------- -----------------------
INDEX2
One Year 40.32% 40.44%
Three Years

Five Years
Since inception 20.64% 20.72%

1 Through [date]. The inception date is [date].

2 The S&P 500 Index ("Index") is an unmanaged index containing common stocks
of 500 industrial, transportation, utility and financial companies, regarded
as generally representative of the United States stock market. The Index
reflects the reinvestment of income dividends and capital gain distributions,
if any, but does not reflect fees, brokerage commissions, or other expenses of
investing.

-74-

<PAGE>

APPENDIX A

-75-

<PAGE>

-76-
<PAGE>

EQ ADVISORS TRUST

STATEMENT OF ADDITIONAL INFORMATION

January __, 1998

This Statement of Additional Information is not a prospectus. It should be
read in conjunction with the Prospectus for the EQ Advisors Trust ("Trust")
dated January __, 1998, which may be obtained without charge by writing to the
Trust at 1290 Avenue of the Americas, New York, New York 10104. Unless
otherwise defined herein, capitalized terms have the meanings given to them in
the Prospectus.

TABLE OF CONTENTS

Page

GENERAL INFORMATION AND HISTORY.............................................22
INVESTMENT RESTRICTIONS.....................................................44
DESCRIPTION OF CERTAIN SECURITIES IN WHICH THE PORTFOLIOS MAY INVEST........99
MANAGEMENT OF THE TRUST.....................................................38
INVESTMENT MANAGEMENT AND OTHER SERVICES....................................42
BROKERAGE STRATEGY..........................................................46
PURCHASE AND PRICING OF SHARES..............................................48
REDEMPTION OF SHARES........................................................51
CERTAIN TAX CONSIDERATIONS..................................................51
PORTFOLIO PERFORMANCE.......................................................53
OTHER SERVICES..............................................................54
FINANCIAL STATEMENTS........................................................55
APPENDIX....................................................................56
DESCRIPTION OF BOND RATINGS.................................................56

<PAGE>

GENERAL INFORMATION AND HISTORY

THE TRUST

The Trust is an open-end management investment company--a type of company
commonly known as a "mutual fund." It is registered as such under the
Investment Company Act of 1940, as amended ("1940 Act"). The Trust, organized
as a Delaware business trust, currently offers two classes of shares on behalf
of the T. Rowe Price International Stock Portfolio, T. Rowe Price Equity
Income Portfolio, EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam
International Equity Portfolio, EQ/Putnam Investors Growth Portfolio,
EQ/Putnam Balanced Portfolio, MFS Research Portfolio, MFS Emerging Growth
Companies Portfolio, Morgan Stanley Emerging Markets Equity Portfolio, Warburg
Pincus Small Company Value Portfolio, Merrill Lynch World Strategy Portfolio,
Merrill Lynch Basic Value Equity Portfolio, Lazard Large Cap Value Portfolio,
Lazard Small Cap Value Portfolio, JPM Core Bond Portfolio BT Small Cap Index
Portfolio, BT International Equity Index Portfolio and BT Equity 500 Index
Portfolio (each a "Portfolio," and together the "Portfolios"). Class IA shares
are offered at net asset value and are not subject to distribution fees
imposed pursuant to a distribution plan. Class IB shares are offered at net
asset value and are subject to distribution fees imposed under a distribution
plan ("Distribution Plan") adopted pursuant to Rule 12b-1 under the 1940 Act.

The two classes of shares are offered under the Trust's multi-class
distribution system approved by the Trust's Board of Trustees on March 31,
1997, which is designed to allow promotion of insurance products investing in
the Trust through alternative distribution channels. Under the Trust's
multi-class distribution system, shares of each class of a Portfolio represent
an equal pro rata interest in that Portfolio and, generally, will have
identical voting, dividend, liquidation, and other rights, other than the
payment of distribution fees under the Distribution Plan.

The Trust continuously offers its shares exclusively to separate accounts of
insurance companies in connection with variable life insurance contracts and
variable annuity certificates and contracts (collectively, the "Contracts").
Class IA shares and Class IB shares currently are sold only to separate
accounts of The Equitable Life Assurance Society of the United States
("Equitable"). Equitable may be deemed to be a control person with respect to
the Trust by virtue of its ownership of 100% of the Trust's shares as of
September 30, 1997.

As a "series" type of mutual fund, the Trust issues separate series of shares
of beneficial interest with respect to each Portfolio. Each Portfolio
resembles a separate fund issuing a separate class of stock. Because of
current federal securities law requirements, the Trust expects that its
shareholders will offer to owners of the Contracts (the "Contractowners") the
opportunity to instruct them as to how shares allocable to their Contracts
will be voted with respect to certain matters, such as approval of investment
advisory agreements. [To the Trust's knowledge, as of the date of this
Statement of Additional Information ("SAI"), no Contractowners owned Contracts
entitling such persons to give voting instructions regarding more than 5% of
the outstanding shares of any Portfolio.]

2
<PAGE>

The Trust may in the future offer its shares to separate accounts of insurance
companies unaffiliated with Equitable, as well as to the tax-qualified
retirement plans. The Trust does not currently foresee any disadvantages to
Contractowners arising from offering the Trust's shares to separate accounts
of insurance companies that are unaffiliated with each other or to
tax-qualified retirement plans. However, it is theoretically possible that, at
some time, the interests of various Contractowners participating in the Trust
through their separate accounts and tax-qualified retirement plans might
conflict. In the case of a material irreconcilable conflict, one or more
separate accounts or the tax-qualified retirement plans might withdraw their
investments in the Trust, which would possibly force the Trust to sell
portfolio securities at disadvantageous prices. The Trustees of the Trust
intend to monitor events for the existence of any material irreconcilable
conflicts between or among such separate accounts and tax-qualified retirement
plans and will take whatever remedial action may be necessary.

EQ Financial Consultants, Inc. ("Manager") is the investment manager for each
Portfolio. T. Rowe Price Associates, Inc. ("T. Rowe Price"), Price-Fleming
International, Inc. ("PriceFleming"), Putnam Investment Management Inc.
("Putnam Management"), Massachusetts Financial Services Company ("MFS"),
Morgan Stanley Asset Management Inc. ("MSAM"), Warburg Pincus Asset
Management, Inc. ("Warburg") , Merrill Lynch Asset Management, L.P. ("MLAM"),
Lazard Asset Management ("LAM"), a division of Lazard Freres and Company, LLC,
J.P. Morgan Investment Management Inc. ("J.P. Morgan") and Bankers Trust
Company ("Bankers Trust") (each an "Adviser," and together the "Advisers")
serve as investment advisers to one or more of the Portfolios, as described
more fully in the Prospectus.

LEGAL CONSIDERATIONS

Under Delaware law, annual election of Trustees is not required, and, in the
normal course, the Trust does not expect to hold annual meetings of
shareholders. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a
majority of the Trustees holding office have been elected by shareholders, at
which time the Trustees then in office will call a shareholders' meeting for
the election of Trustees. Pursuant to the procedures set forth in Section
16(c) of the 1940 Act, shareholders of record of not less than two-thirds of
the outstanding shares of the Trust may remove a Trustee by a vote cast in
person or by proxy at a meeting called for that purpose.

Except as set forth above, the Trustees will continue to hold office and may
appoint successor Trustees. Voting rights are not cumulative, so that the
holders of more than 50% of the shares voting in the election of Trustees can,
if they choose to do so, elect all the Trustees of the Trust, in which event
the holders of the remaining shares will be unable to elect any person as a
Trustee. The Amended and Restated Declaration of Trust of the Trust requires
the affirmative vote of a majority of the outstanding shares of the Trust.

The shares of each Portfolio, when issued, will be fully paid and
non-assessable and will have no preference, preemptive, conversion, exchange
or similar rights.

3
<PAGE>

INVESTMENT RESTRICTIONS

FUNDAMENTAL RESTRICTIONS

Each Portfolio has also adopted certain investment restrictions which are
fundamental and may not be changed without approval by a "majority" vote of
the Portfolio's shareholders. Such majority is defined in the 1940 Act as the
lesser of: (i) 67% or more of the voting securities of such Portfolio present
in person or by proxy at a meeting, if the holders of more than 50% of the
outstanding voting securities are present or represented by proxy; or (ii)
more than 50% of the outstanding voting securities of such Portfolio. Set
forth below are each of the fundamental restrictions adopted by each of the
Portfolios. Fundamental policies (5) and (6) below shall not apply to the
Morgan Stanley Emerging Markets Equity Portfolio, the Merrill Lynch World
Strategy Portfolio and the Lazard Small Cap Value Portfolio. Certain
non-fundamental operating policies are also described in this section because
of their direct relevance to the fundamental restrictions adopted by the
Portfolios.

Each Portfolio, except as described directly above, may not as a matter of
fundamental policy:

(1) Borrow money, except that:

a. each Portfolio may (i) borrow for non-leveraging,
temporary or emergency purposes (except the Lazard Large Cap
Value Portfolio, which may also borrow for leveraging
purposes) and (ii) engage in reverse repurchase agreements
and make other investments or engage in other transactions,
which may involve a borrowing, in a manner consistent with
the Portfolios' respective investment objective and program,
provided that the combination of (i) and (ii) shall not
exceed 33 1/3% of the value of the Portfolios' respective
total assets (including the amount borrowed) less
liabilities (other than borrowings) or such other percentage
permitted by law (except that the Merrill Lynch World
Strategy Portfolio and the Merrill Lynch Basic Value Equity
Portfolio may purchase securities on margin to the extent
permitted by applicable law). Any borrowings which come to
exceed this amount will be reduced in accordance with
applicable law. Each Portfolio may borrow from banks or
other persons to the extent permitted by applicable law;

b. as a matter of non-fundamental operating policy, no
Portfolio, except the Lazard Large Cap Value Portfolio,
will purchase additional securities when money borrowed
exceeds 5% of its total assets;

c. the EQ/Putnam Growth & Income Value Portfolio,
EQ/Putnam International Equity Portfolio, EQ/Putnam
Investors Growth Portfolio, EQ/Putnam Balanced Portfolio and
Lazard Large Cap Value Portfolio each, as a matter of
non-fundamental operating policy, may borrow only from banks
(i) as a temporary measure to facilitate the meeting of
redemption requests (not for

4
<PAGE>

leverage) which might otherwise require the untimely
disposition of portfolio investments or (ii) for
extraordinary or emergency purposes, provided that the
combination of (i) and (ii) shall not exceed 10% of the
applicable Portfolio's net assets (taken at lower of cost
or current value), not including the amount borrowed, at
the time the borrowing is made. Each Portfolio will repay
borrowings made for the purposes specified above before
any additional investments are purchased. In addition, the
Lazard Large Cap Value Portfolio may borrow for leveraging
purposes (in order to increase its investment in portfolio
securities) and to the extent that the amount so borrowed
does not exceed 33 1/3% of the Portfolio's total assets
(including the amount borrowed) less liabilities (other
than borrowings).

d. the Merrill Lynch World Strategy Portfolio, as a
matter of fundamental policy, and the Merrill Lynch Basic
Value Equity Portfolio, as a matter of non-fundamental
operating policy, may, to the extent permitted by applicable
law, borrow up to an additional 5% of their respective total
assets for temporary purposes;

e. the Lazard Small Cap Value Portfolio, as a matter
of non-fundamental operating policy, may borrow only from
banks (i) as a temporary measure to facilitate the meeting
of redemption requests (not for leverage) which might
otherwise require the untimely disposition of portfolio
investments or (ii) for extraordinary or emergency purposes,
provided that the combination of (i) and (ii) shall not
exceed 15% of the Portfolio's net assets, not including the
amount borrowed, at the time the borrowing is made. The
Lazard Small Cap Value Portfolio will repay borrowings
before any additional investments are purchased.

f. the Warburg Pincus Small Company Value Portfolio
and JPM Core Bond Portfolio, each as a matter of
non-fundamental operating policy, may borrow only from banks
for extraordinary or emergency purposes, provided such
amount shall not exceed 30% of the respective Portfolio's
total assets, not including the amount borrowed, at the time
the borrowing is made.

(2) Purchase or sell physical commodities, except that it may (i) enter into
futures contracts and options thereon in accordance with applicable law
and (ii) purchase or sell physical commodities if acquired as a result
of ownership of securities or other instruments. No Portfolio will
consider currency contracts, hybrid investments, swaps or other similar
instruments to be commodities;

(3) Purchase the securities of any issuer if, as a result, more than 25% of
the value of the Portfolio's total assets would be invested in the
securities of issuers having their principal business activities in the
same industry. United States, state or local governments, or related
agencies or instrumentalities, are not considered an industry.
Industries are determined by

5
<PAGE>

reference to the classifications of
industries set forth in each Portfolio's semi-annual and annual reports;

(4) Make loans, except that:

a. each Portfolio may: (i) lend portfolio securities
provided that no such loan may be made if, as a result, the
aggregate of such loans would exceed 33 1/3% of the value of
the Portfolio's total assets; (ii) purchase money market
securities and enter into repurchase agreements; and (iii)
acquire publicly-distributed or privately-placed debt
securities and purchase debt securities. Each Portfolio will
consider the acquisition of a debt security to include the
execution of a note or other evidence of an extension of
credit with a term of more than nine months. For purposes of
this restriction, each Portfolio will treat purchases of
loan participations and other direct indebtedness, including
investments in mortgages, as not subject to this limitation;

b. the EQ/Putnam Growth & Income Value Portfolio and
EQ/Putnam International Equity Portfolio, as a matter of
non-fundamental operating policy, may purchase debt
obligations consistent with the respective investment
objectives and policies of each of those Portfolios: (i) by
entering into repurchase agreements with respect to not more
than 25% of the Portfolios' respective total assets (taken
at current value) or (ii) through the lending of the
Portfolios' portfolio securities with respect to not more
than 25% of the Portfolios' respective total assets (taken
at current value);

c. the MFS Emerging Growth Companies Portfolio, BT
Small Company Index Portfolio, BT International Equity Index
Portfolio, and BT Equity 500 Index Portfolio, as a matter of
non-fundamental operating policy, may each lend its
portfolio securities provided that no such loan may be made
if, as a result, the aggregate of such loans would exceed
30% of such Portfolio's total assets (taken at market
value); and

d. the Warburg Pincus Small Company Value Portfolio,
the Merrill Lynch World Strategy Portfolio and the Merrill
Lynch Basic Value Equity Portfolio, as a matter of
non-fundamental policy, may each lend its portfolio
securities provided that no such loan may be made if, as a
result, the aggregate of such loans would exceed 20% of such
Portfolio's total assets (taken at market value);

e. the Lazard Large Cap Value Portfolio and the Lazard
Small Cap Value Portfolio, as a matter of non-fundamental
policy, may each lend its portfolio securities provided that
no such loan may be made if, as a result, the aggregate of
such loans would exceed 10% of such Portfolio's total assets
(taken at market value);

6
<PAGE>

(5) Purchase a security if, as a result, with respect to 75% of the value of
its total assets, more than 5% of the value of the Portfolio's total
assets would be invested in the securities of a single issuer, except
securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities;*

(6) Purchase a security if, as a result, with respect to 75% of the value of
the Portfolio's total assets, more than 10% of the outstanding voting
securities of any issuer would be held by the Portfolio (other than
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities);*

(7) Purchase or sell real estate, except that:

a. each Portfolio except the JPM Core Bond Portfolio
may purchase securities of issuers which deal in real
estate, securities which are secured by interests in real
estate, and securities which represent interests in real
estate, and each Portfolio may acquire and dispose of real
estate or interests in real estate acquired through the
exercise of its rights as a holder of debt obligations
secured by real estate or interests therein;

b. the JPM Core Bond Portfolio may (i) invest in
securities of issuers that invest in real estate or
interests therein, (ii) invest in securities that are
secured by real estate or interests therein (iii) make
direct investments in mortgages, (iv) purchase and sell
mortgage-related securities and (v) hold and sell real
estate acquired by the Portfolio as a result of the
ownership of securities including mortgages.

(8) Issue senior securities except in compliance with the 1940 Act; or

(9) Underwrite securities issued by other persons, except to the extent that
the Portfolio may be deemed to be an underwriter within the meaning of
the Securities Act of 1933, as amended (the "1933 Act"), in connection
with the purchase and sale of its portfolio securities in the ordinary
course of pursuing its investment objective, policies and program.

NON-FUNDAMENTAL RESTRICTIONS

The following investment restrictions apply to each Portfolio, but are not
fundamental. They may be changed for any Portfolio without a vote of that
Portfolio's shareholders.

- ----------------
* The Morgan Stanley Emerging Markets Equity Portfolio, Merrill Lynch
World Strategy Portfolio and Lazard Small Cap Value Portfolio are
classified as non-diversified investment companies under the 1940 Act
and therefore these restrictions are not applicable to these Portfolios.

7
<PAGE>

Each Portfolio may not:

(1) Purchase a futures contract or an option thereon if, with respect to
positions in futures or options on futures which do not represent bona
fide hedging, the aggregate initial margin and premiums on such options
would exceed 5% of the Portfolio's net asset value;

(2) Purchase (a) illiquid securities, (b) securities restricted as to resale
(excluding securities determined by the Board of Trustees to be readily
marketable), and (c) repurchase agreements maturing in more than seven
days if, as a result, more than 15% of each Portfolio's net assets (10%
for the Warburg Pincus Small Company Value Portfolio, Lazard Large Cap
Value Portfolio and Lazard Small Cap Value Portfolio) would be invested
in such securities. (Securities purchased in accordance with Rule 144A
under the 1933 Act and determined to be liquid by the Trust's Board are
not subject to the limitations set forth in this investment
restriction.);

(3) Purchase securities on margin, except that each Portfolio may: (a) make
use of any short-term credit necessary for clearance of purchases and
sales of portfolio securities and (b) make initial or variation margin
deposits in connection with futures contracts, options, currencies, or
other permissible investments;

(4) Mortgage, pledge, hypothecate or, in any manner, transfer any security
owned by the Portfolio as security for indebtedness, except as may be
necessary in connection with permissible borrowings or investments; and
then such mortgaging, pledging or hypothecating may not exceed 33 1/3%
of the respective total assets of each Portfolio (except as specified
below for the EQ/Putnam International Equity Portfolio, Merrill Lynch
World Strategy Portfolio, and the Merrill Lynch Basic Value Equity
Portfolio ); and may not exceed 15% of EQ/Putnam International Equity
Portfolio's total assets; and 10% of each the Merrill Lynch World
Strategy Portfolio's and Merrill Lynch Basic Value Equity Portfolio's
total assets, (taken at the lower of cost or market value), each taken
at the time of the permissible borrowing or investment. The deposit of
underlying securities and other assets in escrow and collateral
arrangements with respect to margin accounts for futures contracts,
options, currencies or other permissible investments are not deemed to
be mortgages, pledges, or hypothecations for these purposes;

(5) Purchase participations or other direct interests in or enter into
leases with respect to, oil, gas, or other mineral exploration or
development programs, except that the MFS Emerging Growth Companies
Portfolio, Warburg Pincus Small Company Value Portfolio, Merrill Lynch
World Strategy Portfolio, Merrill Lynch Basic Value Equity Portfolio and
the JPM Core Bond Portfolio may invest in securities issued by companies
that engage in oil, gas or other mineral exploration or development
activities or hold mineral leases acquired as a result of its ownership
of securities;

(6) Invest in puts, calls, straddles, spreads, swaps or any combination
thereof, except to the extent permitted by the Portfolio's Prospectus
and Statement of Additional Information, as may be amended from time to
time; or

8
<PAGE>

(7) Effect short sales of securities unless at all times when a short
position is open the Portfolio owns an equal amount of such securities
or owns securities which, without payment of any further consideration,
are convertible into or exchangeable for securities of the same issue
as, and at least equal in amount to, the securities sold short.
Permissible futures contracts, options, or currency transactions will
not be deemed to constitute selling securities short.

In addition to the restrictions described above, some foreign countries limit,
or prohibit, all direct foreign investment in the securities of companies
domiciled therein. However, the governments of some countries have authorized
the organization of investment funds to permit indirect foreign investment in
such securities. For tax purposes these funds may be known as passive foreign
investment companies ("PFICs"). The Portfolios are subject to certain
percentage limitations under the 1940 Act relating to the purchase of
securities of investment companies, and, consequently, each Portfolio may have
to subject any of its investments in other investment companies, including
passive foreign investment companies, to the limitation that no more than 10%
of the value of the Portfolio's total assets may be invested in such
securities.

DESCRIPTION OF CERTAIN SECURITIES IN WHICH THE
PORTFOLIOS MAY INVEST

ASSET-BACKED SECURITIES

Asset-backed securities, issued by trusts and special purpose corporations,
are backed by a pool of assets, such as credit card and automobile loan
receivables, representing the obligations of a number of different parties.
Asset-backed securities present certain risks. For instance, in the case of
credit card receivables, these securities may not have the benefit of any
security interest in the related collateral. Credit card receivables are
generally unsecured and the debtors are entitled to the protection of a number
of state and federal consumer credit laws, many of which give such debtors the
right to set off certain amounts owed on the credit cards, thereby reducing
the balance due. Most issuers of automobile receivables permit the servicers
to retain possession of the underlying obligations. If the servicer were to
sell these obligations to another party, there is a risk that the purchaser
would acquire an interest superior to that of the holders of the related
automobile receivables. In addition, because of the large number of vehicles
involved in a typical issuance and technical requirements under state laws,
the trustee for the holders of the automobile receivables may not have a
proper security interest in all of the obligations backing such receivables.
Therefore, there is the possibility that recoveries on repossessed collateral
may not, in some cases, be available to support payments on these securities.
The underlying assets (e.g., loans) are also subject to prepayments which
shorten the securities' weighted average life and may lower their return.

Asset-backed securities are often backed by a pool of assets representing the
obligations of a number of different parties. To lessen the effect of failures
by obligors on underlying assets to make payments, the securities may contain
elements of credit support which fall into two categories: (i) liquidity
protection and (ii) protection against losses resulting from ultimate default
by an obligor on the underlying assets.

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Liquidity protection refers to the provision of advances, generally by the
entity administering the pool of assets, to ensure that the receipt of
payments on the underlying pool occurs in a timely fashion. Protection against
losses resulting from ultimate default ensures payment through insurance
policies or letters of credit obtained by the issuer or sponsor from third
parties. A Portfolio will not pay any additional or separate fees for credit
support. The degree of credit support provided for each issue is generally
based on historical information respecting the level of credit risk associated
with the underlying assets. Delinquency or loss in excess of that anticipated
or failure of the credit support could adversely affect the return on an
investment in such a security.

FOREIGN CURRENCY TRANSACTIONS

FORWARD FOREIGN CURRENCY TRANSACTIONS. A forward foreign currency exchange
contract ("forward contract") involves an obligation to purchase or sell a
specific currency at a future date, which may be any fixed number of days from
the date of the contract agreed upon by the parties, at a price set at the
time of the contract. These contracts are principally traded in the interbank
market conducted directly between currency traders (usually large, commercial
banks) and their customers. A forward contract generally has no margin deposit
requirement, and no commissions are charged at any stage for trades.

A Portfolio may enter into forward contracts for a variety of purposes in
connection with the management of the foreign securities portion of its
portfolio. The Portfolio's use of such contracts will include, but not be
limited to, the following situations.

First, when the Portfolio enters into a contract for the purchase or sale of a
security denominated in a foreign currency, it may desire to "lock in" the
U.S. dollar price of the security. By entering into a forward contract for the
purchase or sale, for a fixed amount of dollars, of the amount of foreign
currency involved in the underlying security transactions, the Portfolio will
be able to protect itself against a possible loss resulting from an adverse
change in the relationship between the U.S. dollar and the subject foreign
currency during the period between the date the security is purchased or sold
and the date on which payment is made or received.

Second, when a Portfolio's Adviser believes that one currency may experience a
substantial movement against another currency, including the U.S. dollar, it
may enter into a forward contract to sell or buy the amount of the former
foreign currency, approximating the value of some or all of the Portfolio's
portfolio securities denominated in such foreign currency. Alternatively,
where appropriate, the Portfolio may hedge all or part of its foreign currency
exposure through the use of a basket of currencies, multinational currency
units, or a proxy currency where such currency or currencies act as an
effective proxy for other currencies. In such a case, the Portfolio may enter
into a forward contract where the amount of the foreign currency to be sold
exceeds the value of the securities denominated in such currency. The use of
this basket hedging technique may be more efficient and economical than
entering into separate forward contracts for each currency held in the
Portfolio.

The precise matching of the forward contract amounts and the value of the
securities involved will not generally be possible since the future value of
such securities in foreign currencies will change as a consequence of market
movements in the value of those securities between the date the forward

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contract is entered into and the date it matures. The projection of short-term
currency market movement is extremely difficult, and the successful execution
of a short-term hedging strategy is highly uncertain. Under normal
circumstances, consideration of the prospect for currency parities will be
incorporated into the diversification strategies. However, the Adviser to the
Portfolio believes that it is important to have the flexibility to enter into
such forward contracts when it determines that the best interests of the
Portfolio will be served.

A Portfolio may enter into forward contracts for any other purpose consistent
with the Portfolio's investment objective and program. However, the Portfolio
will not enter into a forward contract, or maintain exposure to any such
contract(s), if the amount of foreign currency required to be delivered
thereunder would exceed the Portfolio's holdings of liquid, securities and
currency available for cover of the forward contract(s). In determining the
amount to be delivered under a contract, the Portfolio may net offsetting
positions.

At the maturity of a forward contract, a Portfolio may sell the portfolio
security and make delivery of the foreign currency, or it may retain the
security and either extend the maturity of the forward contract (by "rolling"
that contract forward) or may initiate a new forward contract. If a Portfolio
retains the portfolio security and engages in an offsetting transaction, the
Portfolio will incur a gain or a loss (as described below) to the extent that
there has been movement in forward contract prices. If the Portfolio engages
in an offsetting transaction, it may subsequently enter into a new forward
contract to sell the foreign currency.

Should forward prices decline during the period between the Portfolio's
entering into a forward contract for the sale of a foreign currency and the
date it enters into an offsetting contract for the purchase of the foreign
currency, the Portfolio will realize a gain to the extent the price of the
currency it has agreed to sell exceeds the price of the currency it has agreed
to purchase. Should forward prices increase, the Portfolio will suffer a loss
to the extent the price of the currency it has agreed to purchase exceeds the
price of the currency it has agreed to sell.

Although the Portfolio values its assets daily in terms of U.S. dollars, it
does not intend to convert its holdings of foreign currencies into U.S.
dollars on a daily basis. The Portfolio will do so from time to time, and
investors should be aware of the costs of currency conversion. Although
foreign exchange dealers do not charge a fee for conversion, they do realize a
profit based on the difference ("spread") between the prices at which they are
buying and selling various currencies. Thus, a dealer may offer to sell a
foreign currency to a Portfolio at one rate, while offering a lesser rate of
exchange should the Portfolio desire to resell that currency to the dealer.

FOREIGN CURRENCY OPTIONS, FOREIGN CURRENCY FUTURES CONTRACTS AND OPTIONS ON
FUTURES. Each Portfolio, if permitted in the Prospectus, may purchase or sell
exchange-traded foreign currency options, foreign currency futures contracts
and related options on foreign currency futures contracts as a hedge against
possible variations in foreign exchange rates. The Portfolios will write
options on foreign currency or on foreign currency futures contracts only if
they are "covered." A put on a foreign currency or on a foreign currency
futures contract written by a Portfolio will be considered "covered" if, so
long as the Portfolio is obligated as the writer of the put, it segregates
with the Portfolio's

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<PAGE>

custodian cash, U.S. Government securities or other liquid high-grade debt
securities equal at all times to the aggregate exercise price of the put. A
call on a foreign currency or on a foreign currency future contract written by
the Portfolio will be considered "covered" only if the Portfolio owns short
term debt securities with a value equal to the face amount of the option
contract and denominated in the currency upon which the call is written.
Option transactions may be effected to hedge the currency risk on non-U.S.
dollar-denominated securities owned by a Portfolio, sold by a Portfolio but
not yet delivered or anticipated to be purchased by a Portfolio. As an
illustration, a Portfolio may use such techniques to hedge the stated value in
U.S. dollars of an investment in a Japanese yen-denominated security. In these
circumstances, a Portfolio may purchase a foreign currency put option enabling
it to sell a specified amount of yen for dollars at a specified price by a
future date. To the extent the hedge is successful, a loss in the value of the
dollar relative to the yen will tend to be offset by an increase in the value
of the put option.

Certain differences exist between foreign currency hedging instruments.
Foreign currency options provide the holder the right to buy or to sell a
currency at a fixed price on or before a future date. Listed options are
third-party contracts (performance is guaranteed by an exchange or clearing
corporation) which are issued by a clearing corporation, traded on an exchange
and have standardized prices and expiration dates. Over-the-counter options
are two-party contracts and have negotiated prices and expiration dates. A
futures contract on a foreign currency is an agreement between two parties to
buy and sell a specified amount of the currency for a set price on a future
date. Futures contracts and listed options on futures contracts are traded on
boards of trade or futures exchanges. Options traded in the over-the-counter
market may not be as actively traded as those on an exchange, so it may be
more difficult to value such options. In addition, it may be difficult to
enter into closing transactions with respect to options traded
over-the-counter. See "Options" -- "Over-the-Counter Options," below.

A Portfolio will not speculate in foreign currency options, futures or related
options. Accordingly, a Portfolio will not hedge a currency substantially in
excess of the market value of the securities denominated in that currency
which it owns or the expected acquisition price of securities which it
anticipates purchasing.

For information concerning the risks associated with utilizing options,
futures contracts, and forward foreign currency exchange contracts, please see
"Risks of Transactions in Options, Futures Contracts and Forward Currency
Contracts" on page ___.

FOREIGN SECURITIES

Foreign securities involve currency risks. The value of a foreign security
denominated in foreign currency changes with variations in the exchange rates.
Fluctuations in exchange rates may also affect the earning power and asset
value of the foreign entity issuing a security, even one denominated in U.S.
dollars. Dividend and interest payments will be repatriated based on the
exchange rate at the time of disbursement, and restrictions on capital flows
may be imposed.

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<PAGE>

Foreign securities may be subject to foreign government taxes which reduce
their attractiveness. Other risks of investing in such securities include
political or economic instability in the country involved, the difficulty of
predicting international trade patterns and the possibility of imposition of
exchange controls. The prices of such securities may be more volatile than
those of domestic securities. In addition, there may be less publicly
available information about a foreign issuer than about a domestic issuer.
Foreign issuers generally are not subject to uniform accounting, auditing and
financial reporting standards comparable to those applicable to domestic
issuers. There is generally less regulation of stock exchanges, brokers, banks
and listed companies abroad than in the United States, and settlements may be
slower and may be subject to failure. With respect to certain foreign
countries, there is a possibility of expropriation of assets or
nationalization, imposition of withholding taxes on dividend or interest
payments, difficulty in obtaining and enforcing judgments against foreign
entities or diplomatic developments which could affect investment in these
countries. Losses and other expenses may be incurred in converting between
various currencies in connection with purchases and sales of foreign
securities.

DEPOSITARY RECEIPTS. For many foreign securities there are depositary
receipts. Depositary receipts are securities representing ownership interests
in securities of foreign companies (an "underlying issuer") and are deposited
with a securities depositary. Depositary receipts include American Depositary
Receipts ("ADRs"), Global Depositary Receipts ("GDRs") and other types of
Depositary Receipts (which, together with ADRs and GDRs, are hereinafter
collectively referred to as "Depositary Receipts"). ADRs are
dollar-denominated Depositary Receipts typically issued by a U.S. financial
institution which evidence ownership interests in a security of pool of
securities issued by a foreign issuer. ADRs are listed and traded in the
United States. GDRs and other types of Depositary Receipts are typically
issued by foreign banks or trust companies, although they also may be issued
by U.S. financial institutions, and evidence ownership interests in a security
or pool of securities issued by either a foreign or a U.S. corporation.
Generally, Depositary Receipts in registered form are designed for use in the
U.S. securities market and Depositary Receipts in bearer form are designed for
use in securities markets outside the United States.

Depositary receipts may be "sponsored" or "unsponsored". Sponsored depositary
receipts are established jointly by a depositary and the underlying issuer,
whereas unsponsored depositary receipts may be established by a depositary
without participation by the underlying issuer. Holders of an unsponsored
depositary receipt generally bear all the costs associated with establishing
the unsponsored depositary receipt. In addition, the issuers of the securities
underlying unsponsored depositary receipts are not obligated to disclose
material information in the U.S. and, therefore, there may be less information
available regarding such issuers and there may not be a correlation between
such information and the market value of the depositary receipts. For purposes
of a Portfolio's investment policies, the Portfolio's investment in depositary
receipts will be deemed to be investments in the underlying securities except
as noted.

EASTERN EUROPEAN AND RUSSIAN SECURITIES. The economies of Eastern European
countries are currently suffering both from the stagnation resulting from
centralized economic planning and control and the higher prices and
unemployment associated with the transition to market economics. Unstable
economic and political conditions may adversely affect security values. Upon
the accession to power

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of Communist regimes approximately 40 years ago, the governments of a number
of Eastern European countries expropriated a large amount of property. The
claims of many property owners against those governments were never finally
settled. In the event of the return to power of the Communist Party, there can
be no assurance that a Portfolio's investments in Eastern Europe would not be
expropriated, nationalized or otherwise confiscated.

The registration, clearing and settlement of securities transactions involving
Russian issuers are subject to significant risks not normally associated with
securities transactions in the United States and other more developed markets.
Ownership of equity securities in Russian companies is evidenced by entries in
a company's share register (except where shares are held through depositories
that meet the requirements of the 1940 Act) and the issuance of extracts from
the register or, in certain limited cases, by formal share certificates.
However, Russian share registers are frequently unreliable and a Portfolio
could possibly lose its registration through oversight, negligence or fraud.
Moreover, Russia lacks a centralized registry to record shares and companies
themselves maintain share registers. Registrars are under no obligation to
provide extracts to potential purchasers in a timely manner or at all and are
not necessarily subject to effective state supervision. In addition, while
registrars are liable under law for losses resulting from their errors, it may
be difficult for a Portfolio to enforce any rights it may have against the
registrar or issuer of the securities in the event of loss of share
registration. Although Russian companies with more than 1,000 shareholders are
required by law to employ an independent company to maintain share registers,
in practice, such companies have not always followed this law. Because of this
lack of independence of registrars, management of a Russian company may be
able to exert considerable influence over who can purchase and sell the
company's shares by illegally instructing the registrar to refuse to record
transactions on the share register. Furthermore, these practices could cause a
delay in the sale of Russian securities by a Portfolio if the company deems a
purchaser unsuitable, which may expose a Portfolio to potential loss on its
investment.

In light of the risks described above, the Board of Trustees of the Trust has
approved certain procedures concerning a Portfolio's investments in Russian
securities. Among these procedures is a requirement that a Portfolio will not
invest in the securities of a Russian company unless that issuer's registrar
has entered into a contract with a Portfolio's sub-custodian containing
certain protective conditions, including, among other things, the
sub-custodian's right to conduct regular share confirmations on behalf of a
Portfolio. This requirement will likely have the effect of precluding
investments in certain Russian companies that a Portfolio would otherwise
make.

EMERGING MARKET SECURITIES. Investments in emerging market country securities
involve special risks. Certain emerging market countries have historically
experienced, and may continue to experience, high rates of inflation, high
interest rates, exchange rate fluctuations, large amounts of external debt,
balance of payments and trade difficulties and extreme poverty and
unemployment. The issuer or governmental authority that controls the repayment
of an emerging market country's debt may not be able or willing to repay the
principal and/or interest when due in accordance with the terms of such debt.
As a result of the foregoing, a government obligor may default on its
obligations. If such an event occurs, a Portfolio may have limited legal
recourse against the issuer and/or guarantor. Remedies must, in some cases, be
pursued in the courts of the defaulting party itself, and the ability of the
holder of foreign government fixed income securities to obtain recourse may be
subject to the

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<PAGE>

political climate in the relevant country. In addition, no assurance can be
given that the holders of commercial bank debt will not contest payments to
the holders of other foreign government debt obligations in the event of
default under their commercial bank loan agreements.

The economies of individual emerging market countries may differ favorably or
unfavorably from the U.S. economy in such respects as growth of gross domestic
product, rate of inflation, currency depreciation, capital reinvestment,
resource self-sufficiency and balance of payments position. Further, the
economies of developing countries generally are heavily dependent upon
international trade and, accordingly, have been, and may continue to be,
adversely affected by trade barriers, exchange controls, managed adjustments
in relative currency values and other protectionist measures imposed or
negotiated by the countries with which they trade. These economies also have
been, and may continue to be, adversely affected by economic conditions in the
countries with which they trade.

Investing in emerging market countries may entail purchasing securities issued
by or on behalf of entities that are insolvent, bankrupt, in default or
otherwise engaged in an attempt to reorganize or reschedule their obligations,
and in entities that have little or no proven credit rating or credit history.
In any such case, the issuer's poor or deteriorating financial condition may
increase the likelihood that the investing Portfolio will experience losses or
diminution in available gains due to bankruptcy, insolvency or fraud.

HONG KONG, MALAYSIA, SINGAPORE AND JAPAN. Many Asian countries may be subject
to a greater degree of social, political and economic instability than is the
case in the United States and European countries. Such instability may result
from (i) authoritarian governments or military involvement in political and
economic decision-making; (ii) popular unrest associated with demands for
improved political, economic and social conditions; (iii) internal
insurgencies; (iv) hostile relations with neighboring countries; and (v)
ethnic, religious and racial disaffection.

The economies of most of the Asian countries are heavily dependent on
international trade and are accordingly affected by protective trade barriers
and the economic conditions of their trading partners, principally, the United
States, Japan, China and the European Community. The enactment by the United
States or other principal trading partners of protectionist trade legislation,
reduction of foreign investment in the local economies and general declines in
the international securities markets could have a significant adverse effect
upon the securities markets of the Asian countries.

Hong Kong's return to Chinese dominion in 1997 has not initially had a
positive effect on its economic growth which was vigorous in the 1980s.
However, authorities in Beijing have agreed to maintain a capitalist system
for 50 years that, along with Hong Kong's economic growth, continued to
further strong stock market returns. In preparation for 1997, Hong Kong has
had to begin to develop trade with China, where it had been the largest
foreign investor, while also maintaining its long-standing export relationship
with the United States. Spending on infrastructure improvements is a
significant priority of the colonial government while the private

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sector continues to diversify abroad based on its position as an established
international trade center in the Far East.

The Hong Kong stock market is undergoing a period of growth and change which
may result in trading volatility and difficulties in the settlement and
recording of transactions, and in interpreting and applying the relevant law
and regulations.

The Malaysian economy continued to perform well, growing at an average annual
rate of 9% from 1987 through 1991. This placed Malaysia as one
of the fastest growing economies in the Asian-Pacific region. Malaysia has
become the world's third-largest producer of semiconductor devices (after the
US and Japan) and the world's largest exporter of semiconductor devices. More
remarkable is the country's ability to achieve rapid economic growth with
relative price stability (2% inflation over the past five years) as the
government followed prudent fiscal/monetary policies. Malaysia's high export
dependence level leaves it vulnerable to a recession in the Organization for
Economic Cooperation and Development countries or a fall in world commodity
prices.

Singapore has an open entrepreneurial economy with strong service and
manufacturing sectors and excellent international trading links derived from
its history. During the 1970s and early 1980s, the economy expanded rapidly,
achieving an average annual growth rate of 9%. Per capita GDP is among the
highest in Asia. Singapore holds a position as a major oil refining and
services center.

Investing in Japanese securities may involve the risks associated with
investing in foreign securities generally. In addition, because it invests in
Japan, the Fund will be subject to the general economic and political
conditions in Japan.

Share prices of companies listed on Japanese stock exchanges and on the
Japanese OTC market reached historical peaks (which were later referred to as
the "bubble") as well as historically high trading volumes in 1989 and 1990.
Since then, stock prices in both markets decreased significantly, with listed
stock prices reaching their lowest levels in the third quarter of 1992 and OTC
stock prices reaching their lowest levels in the fourth quarter of 1992.
During the period from January 1, 1989 through December 31, 1994, the highest
Nikkei stock average and Nikkei OTC average were 38,915.87 and 4,149.20,
respectively, and the lowest for each were 14,309.41 and 1,099.32,
respectively. There can be no assurance that additional market corrections
will not occur.

The common stocks of many Japanese companies continue to trade at high price
earnings ratios in comparison with those in the United States, even after the
recent market decline. Differences in accounting methods make it difficult to
compare the earnings of Japanese companies with those of companies in other
countries, especially the United States.

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Although the Japanese economy has grown substantially over the past four
decades, recently the rate of growth had slowed substantially. During 1991,
1992 and 199-3, the Japanese economy grew at rates of 4.3%, 1.1% and 0.1%,
respectively, as measured by real gross domestic product.

Japan's success in exporting its products has generated a sizable trade
surplus. Such trade surplus has caused tensions at times between Japan and
some of its trading partners. In particular, Japan's trade relations with the
United States have recently been the subject of discussion and negotiation
between the two nations. The United States has imposed certain measures
designed to address trade issues in specific industries. These measures and
similar measures in the future may adversely affect the performance of the
Portfolio.

Japan's economy has typically exhibited low inflation and low interest rates.
There can be no assurance that low inflation and low interest rates will
continue, and it is likely that a reversal of such factors would adversely
affect the Japanese economy. Moreover, the Japanese economy may differ,
favorably or unfavorably, from the U.S. economy in such respects as growth of
gross national product, rate of inflation, capital reinvestment, resources,
self-sufficiency and balance of payments position.

Japan has a parliamentary form of government. In 1993 a coalition government
was formed which, for the first time since 1955, did not include the Liberal
Democratic Party. Since mid-1993, there have been several changes in
leadership in Japan. What, if any, effect the current political situation will
have on prospective regulatory reforms of the economy in Japan cannot be
predicted. Recent and future developments in Japan and neighboring Asian
countries may lead to changes in policy that might adversely affect the Fund.

EURODOLLAR AND YANKEE DOLLAR OBLIGATIONS. Eurodollar bank obligations are
U.S. dollar-denominated certificates of deposit and time deposits issued
outside the U.S. capital markets by foreign branches of U.S. banks and by
foreign banks. Yankee dollar bank obligations are U.S. dollar-denominated
obligations issued in the U.S. capital markets by foreign banks.

Eurodollar and Yankee dollar obligations are subject to the same risks that
pertain to domestic issues, notably credit risk, market risk and liquidity
risk. Additionally, Eurodollar (and to a limited extent, Yankee dollar)
obligations are subject to certain sovereign risks. One such risk is the
possibility that a sovereign country might prevent capital, in the form of
dollars, from flowing across its borders. Other risks include adverse
political and economic developments; the extent and quality of government
regulation of financial markets and institutions; the imposition of foreign
withholding taxes; and the expropriation or nationalization of foreign
issuers.

FORWARD COMMITMENTS, WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

Forward commitments, when-issued and delayed delivery transactions arise when
securities are purchased by a Portfolio with payment and delivery taking place
in the future in order to secure what is

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<PAGE>

considered to be an advantageous price or yield to the Portfolio at the time
of entering into the transaction. However, the price of or yield on a
comparable security available when delivery takes place may vary from the
price of or yield on the security at the time that the forward commitment or
when-issued or delayed delivery transaction was entered into. Agreements for
such purchases might be entered into, for example, when a Portfolio
anticipates a decline in interest rates and is able to obtain a more
advantageous price or yield by committing currently to purchase securities to
be issued later. When a Portfolio purchases securities on a forward
commitment, when-issued or delayed delivery basis it does not pay for the
securities until they are received, and the Portfolio is required to create a
segregated account with the Trust's custodian and to maintain in that account
cash or other liquid securities in an amount equal to or greater than, on a
daily basis, the amount of the Portfolio's forward commitments, when-issued or
delayed delivery commitments.

A Portfolio will only enter into forward commitments and make commitments to
purchase securities on a when-issued or delayed delivery basis with the
intention of actually acquiring the securities. However, the Portfolio may
sell these securities before the settlement date if it is deemed advisable as
a matter of investment strategy. Forward commitments and when-issued and
delayed delivery transactions are generally expected to settle within three
months from the date the transactions are entered into, although the Portfolio
may close out its position prior to the settlement date by entering into a
matching sales transaction.

Although none of the Portfolios intends to make such purchases for speculative
purposes and each Portfolio intends to adhere to the policies of the
Securities and Exchange Commission ("SEC"), purchases of securities on such a
basis may involve more risk than other types of purchases. For example, by
committing to purchase securities in the future, a Portfolio subjects itself
to a risk of loss on such commitments as well as on its portfolio securities.
Also, a Portfolio may have to sell assets which have been set aside in order
to meet redemptions. In addition, if a Portfolio determines it is advisable as
a matter of investment strategy to sell the forward commitment or when-issued
or delayed delivery securities before delivery, that Portfolio may incur a
gain or loss because of market fluctuations since the time the commitment to
purchase such securities was made. Any such gain or loss would be treated as a
capital gain or loss and would be treated for tax purposes as such. When the
time comes to pay for the securities to be purchased under a forward
commitment or on a when-issued or delayed delivery basis, a Portfolio will
meet its obligations from the then available cash flow or the sale of
securities, or, although it would not normally expect to do so, from the sale
of the forward commitment or when-issued or delayed delivery securities
themselves (which may have a value greater or less than a Portfolio's payment
obligation).

FUTURES

FUTURES TRANSACTIONS. A futures contract is a bilateral agreement to buy or
sell a security (or deliver a cash settlement price, in the case of a contract
relating to an index or otherwise not calling for physical delivery at the end
of trading in the contracts) for a set price in the future. Futures contracts
are designated by boards of trade which have been designated "contracts
markets" by the Commodities Futures Trading Commission ("CFTC").

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<PAGE>

No purchase price is paid or received when the contract is entered into.
Instead, a Portfolio upon entering into a futures contract (and to maintain
the Portfolio's open positions in futures contracts) would be required to
deposit with its custodian in a segregated account in the name of the futures
broker an amount of cash, United States government securities, suitable money
market instruments, or liquid, high-grade debt securities, known as "initial
margin." The margin required for a particular futures contract is set by the
exchange on which the contract is traded, and may be significantly modified
from time to time by the exchange during the term of the contract. Futures
contracts are customarily purchased and sold on margin that may range upward
from less than 5% of the value of the contract being traded. By using futures
contracts as a risk management technique, given the greater liquidity in the
futures market than in the cash market, it may be possible to accomplish
certain results more quickly and with lower transaction costs.

If the price of an open futures contract changes (by increase in the case of a
sale or by decrease in the case of a purchase) so that the loss on the futures
contract reaches a point at which the margin on deposit does not satisfy
margin requirements, the broker will require an increase in the margin.
However, if the value of a position increases because of favorable price
changes in the futures contract so that the margin deposit exceeds the
required margin, the broker will pay the excess to the Portfolio. These
subsequent payments called "variation margin," to and from the futures broker,
are made on a daily basis as the price of the underlying assets fluctuate
making the long and short positions in the futures contract more or less
valuable, a process known as "marking to the market." The Portfolios expect to
earn interest income on their initial and variation margin deposits.

A Portfolio will incur brokerage fees when it purchases and sells futures
contracts. Positions taken in the futures markets are not normally held until
delivery or cash settlement is required, but are instead liquidated through
offsetting transactions which may result in a gain or a loss. While futures
positions taken by a Portfolio will usually be liquidated in this manner, the
Portfolio may instead make or take delivery of underlying securities whenever
it appears economically advantageous for the Portfolio to do so. A clearing
organization associated with the exchange on which futures are traded assumes
responsibility for closing out transactions and guarantees that as between the
clearing members of an exchange, the sale and purchase obligations will be
performed with regard to all positions that remain open at the termination of
the contract.

SECURITIES INDEX FUTURES CONTRACTS. Purchases or sales of securities index
futures contracts may be used in an attempt to protect a Portfolio's current
or intended investments from broad fluctuations in securities prices. A
securities index futures contract does not require the physical delivery of
securities, but merely provides for profits and losses resulting from changes
in the market value of the contract to be credited or debited at the close of
each trading day to the respective accounts of the parties to the contract. On
the contract's expiration date a final cash settlement occurs and the futures
positions are simply closed out. Changes in the market value of a particular
index futures contract reflect changes in the specified index of securities on
which the future is based.

By establishing an appropriate "short" position in index futures, a Portfolio
may also seek to protect the value of its portfolio against an overall decline
in the market for such securities. Alternatively, in anticipation of a
generally rising market, a Portfolio can seek to avoid losing the benefit of
apparently

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<PAGE>

low current prices by establishing a "long" position in securities index
futures and later liquidating that position as particular securities are in
fact acquired. To the extent that these hedging strategies are successful, the
Portfolio will be affected to a lesser degree by adverse overall market price
movements than would otherwise be the case.

OPTIONS ON FUTURES CONTRACTS. Each Portfolio, as specified or excepted in the
Prospectus, may purchase and write exchange-traded call and put options on
futures contracts of the type which the particular Portfolio is authorized to
enter into. These options are traded on exchanges that are licensed and
regulated by the CFTC for the purpose of options trading. A call option on a
futures contract gives the purchaser the right, in return for the premium
paid, to purchase a futures contract (assume a "long" position) at a specified
exercise price at any time before the option expires. A put option gives the
purchaser the right, in return for the premium paid, to sell a futures
contract (assume a "short" position), for a specified exercise price, at any
time before the option expires.

The Portfolios will write only options on futures contracts which are
"covered." A Portfolio will be considered "covered" with respect to a put
option it has written if, so long as it is obligated as a writer of the put,
the Portfolio segregates with its custodian cash, United States Government
securities or liquid securities at all times equal to or greater than the
aggregate exercise price of the puts it has written (less any related margin
deposited with the futures broker). A Portfolio will be considered "covered"
with respect to a call option it has written on a debt security future if, so
long as it is obligated as a writer of the call, the Portfolio owns a security
deliverable under the futures contract. A Portfolio will be considered
"covered" with respect to a call option it has written on a securities index
future if the Portfolio owns, so long as the Portfolio is obligated as the
writer of the call, a portfolio of securities the price changes of which are,
in the opinion of its Adviser, expected to replicate substantially the
movement of the index upon which the futures contract is based.

Upon the exercise of a call option, the writer of the option is obligated to
sell the futures contract (to deliver a "long" position to the option holder)
at the option exercise price, which will presumably be lower than the current
market price of the contract in the futures market. Upon exercise of a put,
the writer of the option is obligated to purchase the futures contract
(deliver a "short" position to the option holder) at the option exercise price
which will presumably be higher than the current market price of the contract
in the futures market. When the holder of an option exercises it and assumes a
long futures position, in the case of a call, or a short futures position, in
the case of a put, its gain will be credited to its futures margin account,
while the loss suffered by the writer of the option will be debited to its
account and must be immediately paid by the writer. However, as with the
trading of futures, most participants in the options markets do not seek to
realize their gains or losses by exercise of their option rights. Instead, the
holder of an option will usually realize a gain or loss by buying or selling
an offsetting option at a market price that will reflect an increase or a
decrease from the premium originally paid.

If a Portfolio writes options on futures contracts, the Portfolio will receive
a premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the Portfolio will realize a gain in
the amount of the premium, which may partially offset unfavorable changes in
the value of securities held in or to

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be acquired for the Portfolio. If the option is exercised, the Portfolio will
incur a loss in the option transaction, which will be reduced by the amount of
the premium it has received, but which will offset any favorable changes in
the value of its portfolio securities or, in the case of a put, lower prices
of securities it intends to acquire.

Options on futures contracts can be used by a Portfolio to hedge substantially
the same risks as might be addressed by the direct purchase or sale of the
underlying futures contracts. If the Portfolio purchases an option on a
futures contract, it may obtain benefits similar to those that would result if
it held the futures position itself. Purchases of options on futures contracts
may present less risk in hedging than the purchase and sale of the underlying
futures contracts since the potential loss is limited to the amount of the
premium plus related transaction costs.

The purchase of put options on futures contracts is a means of hedging a
portfolio of securities against a general decline in market prices. The
purchase of a call option on a futures contract represents a means of hedging
against a market advance when a Portfolio is not fully invested.

The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the underlying securities. If the futures price at
expiration is below the exercise price, the Portfolio will retain the full
amount of the option premium, which provides a partial hedge against any
decline that may have occurred in the value of the Portfolio's holdings of
securities. The writing of a put option on a futures contract is analogous to
the purchase of a futures contract in that it hedges against an increase in
the price of securities the Portfolio intends to acquire. However, the hedge
is limited to the amount of premium received for writing the put.

LIMITATIONS ON PURCHASE AND SALE OF FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS. The Portfolios will not engage in transactions in futures contracts
and related options for speculation. In addition, the Portfolios will not
purchase or sell futures contracts or related options unless either (1) the
futures contracts or options thereon are purchased for "bona fide hedging"
purposes (as that term is defined under the CFTC regulations) or (2) if
purchased for other purposes, the sum of the amounts of initial margin
deposits on a Portfolio's existing futures and premiums required to establish
non-hedging positions would not exceed 5% of the liquidation value of the
Portfolio's total assets. In instances involving the purchase of futures
contracts or the writing of put options thereon by a Portfolio, an amount of
cash and cash equivalents, equal to the cost of such futures contracts or
options written (less any related margin deposits), will be deposited in a
segregated account with its custodian, thereby insuring that the use of such
futures contracts and options is unleveraged. In instances involving the sale
of futures contracts or the writing of call options thereon by a Portfolio,
the securities underlying such futures contracts or options will at all times
be maintained by the Portfolio or, in the case of index futures and related
options, the Portfolio will own securities the price changes of which are, in
the opinion of its Adviser, expected to replicate substantially the movement
of the index upon which the futures contract or option is based.

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HYBRID INSTRUMENTS

Hybrid instruments (a type of potentially high-risk derivative) combine the
elements of futures contracts or options with those of debt, preferred equity
or a depository instrument ("Hybrid Instruments"). Generally, a Hybrid
Instrument will be a debt security, preferred stock, depository share, trust
certificate, certificate of deposit or other evidence of indebtedness on which
a portion of or all interest payments, and/or the principal or stated amount
payable at maturity, redemption or retirement, is determined by reference to
prices, changes in prices, or differences between prices, of securities,
currencies, intangibles, goods, articles or commodities (collectively
"Underlying Assets") or by another objective index, economic factor or other
measure, such as interest rates, currency exchange rates, commodity indices,
and securities indices (collectively "Benchmarks"). Thus, Hybrid Instruments
may take a variety of forms, including, but not limited to, debt instruments
with interest or principal payments or redemption terms determined by
reference to the value of a currency or commodity or securities index at a
future point in time, preferred stock with dividend rates determined by
reference to the value of a currency, or convertible securities with the
conversion terms related to a particular commodity.

Hybrid Instruments can be an efficient means of creating exposure to a
particular market, or segment of a market, with the objective of enhancing
total return. For example, a Portfolio may wish to take advantage of expected
declines in interest rates in several European countries, but avoid the
transaction costs associated with buying and currency-hedging the foreign bond
positions. One solution would be to purchase a U.S. dollar-denominated Hybrid
Instrument whose redemption price is linked to the average three year interest
rate in a designated group of countries. The redemption price formula would
provide for payoffs of greater than par if the average interest rate was lower
than a specified level, and payoffs of less than par if rates were above the
specified level. Furthermore, a Portfolio could limit the downside risk of the
security by establishing a minimum redemption price so that the principal paid
at maturity could not be below a predetermined minimum level if interest rates
were to rise significantly. The purpose of this arrangement, known as a
structured security with an embedded put option, would be to give the
Portfolio the desired European bond exposure while avoiding currency risk,
limiting downside market risk, and lowering transaction costs. Of course,
there is no guarantee that the strategy will be successful and a Portfolio
could lose money if, for example, interest rates do not move as anticipated or
credit problems develop with the issuer of the Hybrid Instrument.

The risks of investing in Hybrid Instruments reflect a combination of the
risks of investing in securities, options, futures and currencies. The risks
of a particular Hybrid Instrument will, of course, depend upon the terms of
the instrument, but may include, without limitation, the possibility of
significant changes in the Benchmarks or the prices of Underlying Assets to
which the instrument is linked. Such risks generally depend upon factors which
are unrelated to the operations or credit quality of the issuer of the Hybrid
Instrument and which may not be readily foreseen by the purchaser, such as
economic and political events, the supply and demand for the Underlying Assets
and interest rate movements. In recent years, various Benchmarks and prices
for Underlying Assets have been highly volatile, and such volatility may be
expected in the future.

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Hybrid Instruments are potentially more volatile and carry greater market
risks than traditional debt instruments. Depending on the structure of the
particular Hybrid Instrument, changes in a Benchmark may be magnified by the
terms of the Hybrid Instrument and have an even more dramatic and substantial
effect upon the value of the Hybrid Instrument. Also, the prices of the Hybrid
Instrument and the Benchmark or Underlying Asset may not move in the same
direction or at the same time.

Hybrid Instruments may bear interest or pay preferred dividends at below
market (or even relatively nominal) rates. Alternatively, Hybrid Instruments
may bear interest at above market rates but bear an increased risk of
principal loss (or gain). The latter scenario may result if "leverage" is used
to structure the Hybrid Instrument. Leverage risk occurs when the Hybrid
Instrument is structured so that a given change in a Benchmark or Underlying
Asset is multiplied to produce a greater value change in the Hybrid
Instrument, thereby magnifying the risk of loss as well as the potential for
gain.

Hybrid Instruments may also carry liquidity risk since the instruments are
often "customized" to meet the portfolio needs of a particular investor, and
therefore, the number of investors that are willing and able to buy such
instruments in the secondary market may be smaller than that for more
traditional debt securities. In addition, because the purchase and sale of
Hybrid Instruments could take place in an over-the-counter market without the
guarantee of a central clearing organization or in a transaction between the
portfolio and the issuer of the Hybrid Instrument, the creditworthiness of the
counter party or issuer of the Hybrid Instrument would be an additional risk
factor which the Portfolio would have to consider and monitor. Hybrid
Instruments also may not be subject to regulation of the CFTC, which generally
regulates the trading of commodity futures by persons in the U.S., the SEC,
which regulates the offer and sale of securities by and to persons in the
U.S., or any other governmental regulatory authority. The various risks
discussed above, particularly the market risk of such instruments, may in turn
cause significant fluctuations in the net asset value of the Portfolio.

INVESTMENT COMPANY SECURITIES

Investment company securities are securities of other open-end or closed-end
investment companies. The 1940 Act generally prohibits a Portfolio from
acquiring more than 3% of the outstanding voting shares of an investment
company and limits such investments to no more than 5% of the Portfolio's
total assets in any investment company and no more than 10% in any combination
of unaffiliated investment companies. The 1940 Act also prohibits a Portfolio
from acquiring shares of an affiliated open-end investment company. The 1940
Act further prohibits a Portfolio from acquiring in the aggregate more than
10% of the outstanding voting shares of any registered closed-end investment
company.

INVESTMENT GRADE AND LOWER QUALITY FIXED INCOME SECURITIES

Investment grade securities rated Baa by Moody's Investors Service Inc.
("Moody's") or BBB by Standard & Poor's Ratings Service, a division of
McGrawHill Companies, Inc. ("S&P") and comparable unrated securities, while
normally exhibiting adequate protection parameters, have speculative
characteristics and changes in economic conditions or other circumstances are
more likely to lead to a weakened capacity to make principal and interest
payments than in the case of higher grade

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fixed income securities. Fixed income investments that are rated in the lower
categories by NRSROs (i.e., Ba or lower by Moody's or BB or lower by S&P) or
are unrated securities of comparative quality are known as "junk bonds." Such
lower quality fixed income securities or junk bonds are considered as
predominantly speculative by those rating agencies. It is the policy of each
Portfolio's Adviser to not rely exclusively on ratings issued by credit rating
agencies but to supplement such ratings with the Adviser's own independent and
ongoing review of credit quality. Junk bonds may be issued as a consequence of
corporate restructuring, such as leveraged buyouts, mergers, acquisitions,
debt recapitalizations, or similar events or by smaller or highly leveraged
companies. When economic conditions appear to be deteriorating, junk bonds may
decline in market value due to investors' heightened concern over credit
quality, regardless of prevailing interest rates. Although the growth of the
high yield securities market in the 1980s had paralleled a long economic
expansion, many issuers have been affected by adverse economic and market
conditions. It should be recognized that an economic downturn or increase in
interest rates is likely to have a negative effect on: (i) the high yield bond
market; (ii) the value of high yield securities; and (iii) the ability of the
securities' issuers to service their principal and interest payment
obligations, to meet their projected business goals or to obtain additional
financing. The market for junk bonds, especially during periods of
deteriorating economic conditions, may be less liquid than the market for
investment grade bonds. In periods of reduced market liquidity, junk bond
prices may become more volatile and may experience sudden and substantial
price declines. Also, there may be significant disparities in the prices
quoted for junk bonds by various dealers. Under such conditions, a Portfolio
may find it difficult to value its junk bonds accurately. Under such
conditions, a Portfolio may have to use subjective rather than objective
criteria to value its junk bond investments accurately and rely more heavily
on the judgment of the Trust's Board of Trustees. Prices for junk bonds also
may be affected by legislative and regulatory developments. For example,
federal rules require that savings and loans gradually reduce their holdings
of high-yield securities. Also, from time to time, Congress has considered
legislation to restrict or eliminate the corporate tax deduction for interest
payments or to regulate corporate restructuring such as takeovers, mergers or
leveraged buyouts. Such legislation, if enacted, could depress the prices of
outstanding junk bonds.

LOANS AND OTHER DIRECT INDEBTEDNESS

In purchasing a loan, a Portfolio acquires some or all of the interest of a
bank or other lending institution in a loan to a corporate borrower. Many such
loans are secured, although some may be unsecured. Such loans may be in
default at the time of purchase. Loans and other direct indebtedness that are
fully secured offer a Portfolio more protection than an unsecured loan in the
event of non-payment of scheduled interest or principal. However, there is no
assurance that the liquidation of collateral from a secured loan or other
direct indebtedness would satisfy the corporate borrower's obligation, or that
the collateral can be liquidated.

These loans and other direct indebtedness are made generally to finance
internal growth, mergers, acquisitions, stock repurchases, leveraged buyouts
and other corporate activities. Such loans and other direct indebtedness loans
are typically made by a syndicate of lending institutions, represented by an
agent lending institution which has negotiated and structured the loan and is
responsible for collecting interest, principal and other amounts due on its
own behalf and on behalf of the others in the syndicate,

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<PAGE>

and for enforcing its rights and the rights of other loan participants against
the borrower. Alternatively, such loans and other direct indebtedness may be
structured as a "novation" (i.e., a new loan) pursuant to which a Portfolio
would assume all of the rights of the lending institution in a loan, or as an
assignment, pursuant to which a Portfolio would purchase an assignment of a
portion of a lender's interest in a loan or other direct indebtedness either
directly from the lender or through an intermediary. A Portfolio may also
purchase trade or other claims against companies, which generally represent
money owed by the company to a supplier of goods or services. These claims may
also be purchased at a time when the company is in default.

Certain of the loans and other direct indebtedness acquired by a Portfolio may
involve revolving credit facilities or other standby financing commitments
that obligate a Portfolio to pay additional cash on a certain date or on
demand. These commitments may have the effect of requiring a Portfolio to
increase its investment in a company at a time when a Portfolio might not
otherwise decide to do so (including at a time when the company's financial
condition makes it unlikely that such amounts will be repaid). To the extent
that a Portfolio is committed to advance additional funds, it will at all
times hold and maintain in a segregated account cash or assets in an amount
sufficient to meet such commitments.

A Portfolio's ability to receive payment of principal, interest and other
amounts due in connection with these investments will depend primarily on the
financial condition of the borrower. In selecting the loans and other direct
indebtedness that a Portfolio will purchase, the Adviser will rely upon its
own credit analysis of the borrower. As a Portfolio may be required to rely
upon another lending institution to collect and pass on to a Portfolio amounts
payable with respect to the loan and to enforce a Portfolio's rights under the
loan and other direct indebtedness, an insolvency, bankruptcy or
reorganization of the lending institution may delay or prevent a Portfolio
from receiving such amounts. In such cases, a Portfolio will also evaluate the
creditworthiness of the lending institution and will treat both the borrower
and the lending institutions as an "issuer" of the loan for purposes of
certain investment restrictions pertaining to the diversification of a
Portfolio's portfolio investments. The highly leveraged nature of many such
loans and other direct indebtedness may make such loans and other direct
indebtedness especially vulnerable to adverse changes in economic or market
conditions. Investments in such loans and other direct indebtedness may
involve additional risks to a Portfolio. For example, if a loan or other
direct indebtedness is foreclosed, a Portfolio could become part owner of any
collateral, and would bear the costs and liabilities associated with owning
and disposing of the collateral. In addition, it is conceivable that under
emerging legal theories of lender liability, a Portfolio could be held liable.
It is unclear whether loans and other forms of direct indebtedness offer
securities law protections against fraud and misrepresentation. In the absence
of definitive regulatory guidance, a Portfolio relies on the Adviser's
research in an attempt to avoid situations where fraud and misrepresentation
could adversely affect a Portfolio. In addition, loans and other direct
investments may not be in the form of securities or may be subject to
restrictions on transfer, and only limited opportunities may exist to resell
such instruments. As a result, a Portfolio may be unable to sell such
investments at an opportune time or may have to resell them at less than fair
market value. To the extent that the Adviser determines that any such
investments are illiquid, a Portfolio will include them in the investment
limitations described below.

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MORTGAGE AND MORTGAGE-RELATED SECURITIES

Mortgage-backed securities have yield and maturity characteristics
corresponding to the underlying assets. Unlike traditional debt securities,
which may pay a fixed rate of interest until maturity, when the entire
principal amount comes due, payments on certain mortgage-backed securities
include both interest and a partial repayment of principal. Besides the
scheduled repayment of principal, repayments of principal may result from the
voluntary prepayment, refinancing, or foreclosure of the underlying mortgage
loans. If property owners make unscheduled prepayments of their mortgage
loans, these prepayments will result in early payment of the applicable
mortgage-related securities. In that event, the Portfolios may be unable to
invest the proceeds from the early payment of the mortgage-related securities
in an investment that provides as high a yield as the mortgage-related
securities. Consequently, early payment associated with mortgage-related
securities may cause these securities to experience significantly greater
price and yield volatility than that experienced by traditional fixed-income
securities. The occurrence of mortgage prepayments is affected by factors
including the level of interest rates, general economic conditions, the
location and age of the mortgage and other social and demographic conditions.
During periods of falling interest rates, the rate of mortgage prepayments
tends to increase, thereby tending to decrease the life of mortgage-related
securities. During periods of rising interest rates, the rate of mortgage
prepayments usually decreases, thereby tending to increase the life of
mortgage-related securities. If the life of a mortgage-related security is
inaccurately predicted, a Portfolio may not be liable to realize the rate of
return it expected.

Mortgage-backed securities are less effective than other types of securities
as a means of "locking in" attractive long-term interest rates. One reason is
the need to reinvest prepayments of principal; another is the possibility of
significant unscheduled prepayments resulting from declines in interest rates.
Prepayments may cause losses on securities purchased at a premium. At times,
some of the mortgage-backed securities in which a Portfolio may invest will
have higher than market interest rates and, therefore, will be purchased at a
premium above their par value. Unscheduled prepayments, which are made at par,
will cause a Portfolio to experience a loss equal to any unamortized premium.

As specified in the Prospectus, certain Portfolios may invest in
collateralized mortgage obligations ("CMOs") and stripped mortgage-backed
securities that represent a participation in, or are secured by, mortgage
loans.

CMOs may be issued by a U.S. Government agency or instrumentality or by a
private issuer. Although payment of the principal of, and interest on, the
underlying collateral securing privately issued CMOs may be guaranteed by the
U.S. Government or its agencies or instrumentalities, these CMOs represent
obligations solely of the private issuer and are not insured or guaranteed by
the U.S. Government, its agencies or instrumentalities or any other person or
entity. Prepayments could cause early retirement of CMOs. CMOs are designed to
reduce the risk of prepayment for investors by issuing multiple classes of
securities (or "tranches"), each having different maturities, interest rates
and payment schedules, and with the principal and interest on the underlying
mortgages allocated among the several classes in various ways. Payment of
interest or principal on some classes or series of CMOs may be subject to
contingencies or some classes or series may bear some or all of the risk of
default on the underlying mortgages. CMOs of different classes or series are
generally retired in sequence as the

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underlying mortgage loans in the mortgage pool are repaid. If enough mortgages
are repaid ahead of schedule, the classes or series of a CMO with the earliest
maturities generally will be retired prior to their maturities. Thus, the
early retirement of particular classes or series of a CMO held by a Portfolio
would have the same effect as the prepayment of mortgages underlying other
mortgage-backed securities. Conversely, slower than anticipated prepayments
can extend the effective maturities of CMOs, subjecting them to a greater risk
of decline in market value in response to rising interest rates than
traditional debt securities, and, therefore, potentially increasing the
volatility of a Portfolio that invests in CMOs.

Prepayments may also result in losses on stripped mortgage-backed securities.
Stripped mortgage-backed securities may be issued by agencies or
instrumentalities of the U.S. Government and private originators of, or
investors in, mortgage loans, including savings and loan associations,
mortgage banks, commercial banks, investment banks and special purpose
entities of the foregoing. Stripped mortgage-backed securities are usually
structured with two classes that receive different portions of the interest
and principal distributions on a pool of mortgage loans. The Portfolios may
invest in both the interest-only or "IO" class and the principal-only or "PO"
class. The yield to maturity on an IO class of stripped mortgage-backed
securities is extremely sensitive not only to changes in prevailing interest
rates but also to the rate of principal payments (including prepayments) on
the underlying assets. A rapid rate of principal prepayments may have a
measurable adverse effect on a Portfolio's yield to maturity to the extent it
invests in IOs. If the assets underlying the IO experience greater than
anticipated prepayments of principal, a Portfolio may fail to recoup fully its
initial investments in these securities. Conversely, POs tend to increase in
value if prepayments are greater than anticipated and decline if prepayments
are slower than anticipated. The secondary market for stripped mortgage-backed
securities may be more volatile and less liquid than that for other
mortgage-backed securities, potentially limiting the Portfolios' ability to
buy or sell those securities at any particular time.

The JPM Core Bond Portfolio may also invest in directly placed mortgages
including residential mortgages, multifamily mortgages, mortgages on
cooperative apartment buildings, commercial mortgages, and sale-leasebacks.
Investment in direct mortgages involve many of the same risks as investments
in mortgage-related securities. In addition, in the event that the Portfolio
forecloses on any non-performing mortgage, and acquires a direct interest in
the real property, the Portfolio will be subject to the risks generally
associated with the ownership of real property. There may be fluctuations in
the market value of the foreclosed property and its occupancy rates, rent
schedules and operating expenses. There may also be adverse changes in local,
regional or general economic conditions, deterioration of the real estate
market and the financial circumstances of tenants and sellers, unfavorable
changes in zoning, building, environmental and other laws, increased real
property taxes, rising interest rates, reduced availability and increased cost
of mortgage borrowings, the need for anticipated renovations, unexpected
increases in the cost of energy, environmental factors, acts of God and other
factors which are beyond the control of the Portfolio or the Adviser.
Hazardous or toxic substances may be present on, at or under the mortgaged
property and adversely affect the value of the property. In addition, the
owners of the property containing such substances may be
held responsible, under various laws, for containing, monitoring, removing or
cleaning up such substances. The presence of such substances may also provide
a basis for other claims by third parties. Costs of clean-up or of liabilities
to third parties may exceed the value of the property. In addition, these
risks may be

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uninsurable. In light of these and similar risks, it may be impossible to
dispose profitably of properties in foreclosure.

MORTGAGE DOLLAR ROLLS

The JPM Core Bond Portfolio may enter into mortgage dollar rolls in which the
Portfolio sells securities for delivery in the current month and
simultaneously contracts with the same counterparty to repurchase similar
(same type, coupon and maturity) but not identical securities on a specified
future date. During the roll period, the Portfolio loses the right to receive
principal (including prepayments of principal) and interest paid on the
securities sold. However, the Portfolio may benefit from the interest earned
on the cash proceeds of the securities sold until the settlement date of the
forward purchase. The Portfolio will hold and maintain in a segregated account
until the settlement date cash or liquid securities in an amount equal to the
forward purchase price. The benefits derived from the use of mortgage dollar
rolls depend upon the Advisor's ability to manage mortgage prepayments. There
is no assurance that mortgage dollar rolls can be successfully employed.

NON-PUBLICLY TRADED AND ILLIQUID SECURITIES

Historically, illiquid securities have included securities subject to
contractual or legal restrictions on resale because they have not been
registered under the 1933 Act, securities which are otherwise not readily
marketable and repurchase agreements having a maturity of longer than seven
days. Securities which have not been registered under the 1933 Act are
referred to as private placements or restricted securities and are purchased
directly from the issuer or in the secondary market. Mutual funds do not
typically hold a significant amount of these restricted or other illiquid
securities because of the potential for delays on resale and uncertainty in
valuation. Limitations on resale may have an adverse effect on the
marketability of portfolio securities and a mutual fund might be unable to
dispose of restricted or other illiquid securities promptly or at reasonable
prices and might thereby experience difficulty satisfying redemptions within
seven days. A mutual fund might also have to register such restricted
securities in order to dispose of them resulting in additional expense and
delay. Adverse market conditions could impede such a public offering of
securities.

In recent years, however, a large institutional market has developed for
certain securities that are not registered under the 1933 Act including
repurchase agreements, commercial paper, foreign securities, municipal
securities and corporate bonds and notes. Institutional investors depend on an
efficient institutional market in which the unregistered security can be
readily resold or on an issuer's ability to honor a demand for repayment. The
fact that there are contractual or legal restrictions on resale to the general
public or to certain institutions may not be indicative of the liquidity of
such investments.

Rule 144A Securities will be considered illiquid and therefore subject to a
Portfolio's limit on the purchase of illiquid securities unless the Board or
its delegates determines that the Rule 144A Securities are liquid. In reaching
liquidity decisions, the Board of Trustees and its delegates may consider,
inter alia, the following factors: (i) the unregistered nature of the
security; (ii) the frequency of trades and quotes for the security; (iii) the
number of dealers wishing to purchase or sell the security and the number of
other potential purchasers; (iv) dealer undertakings to make a market in the
security;

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and (v) the nature of the security and the nature of the marketplace trades
(e.g., the time needed to dispose of the security, the method of soliciting
offers and the mechanics of the transfer).

OPTIONS

WRITING CALL OPTIONS. A call option is a contract which gives the purchaser of
the option (in return for a premium paid) the right to buy, and the writer of
the option (in return for a premium received) the obligation to sell, the
underlying security at the exercise price at any time prior to the expiration
of the option, regardless of the market price of the security during the
option period. A call option on a security is covered, for example, when the
writer of the call option owns the security on which the option is written (or
on a security convertible into such a security without additional
consideration) throughout the option period.

A Portfolio will write covered call options both to reduce the risks
associated with certain of its investments and to increase total investment
return through the receipt of premiums. In return for the premium income, the
Portfolio will give up the opportunity to profit from an increase in the
market price of the underlying security above the exercise price so long as
its obligations under the contract continue, except insofar as the premium
represents a profit. Moreover, in writing the call option, the Portfolio will
retain the risk of loss should the price of the security decline. The premium
is intended to offset that loss in whole or in part. Unlike the situation in
which the Portfolio owns securities not subject to a call option, the
Portfolio, in writing call options, must assume that the call may be exercised
at any time prior to the expiration of its obligation as a writer, and that in
such circumstances the net proceeds realized from the sale of the underlying
securities pursuant to the call may be substantially below the prevailing
market price.

A Portfolio may terminate its obligation under an option it has written by
buying an identical option. Such a transaction is called a "closing purchase
transaction." The Portfolio will realize a gain or loss from a closing
purchase transaction if the amount paid to purchase a call option is less or
more than the amount received from the sale of the corresponding call option.
Also, because increases in the market price of a call option will generally
reflect increases in the market price of the underlying security, any loss
resulting from the exercise or closing out of a call option is likely to be
offset in whole or part by unrealized appreciation of the underlying security
owned by the Portfolio. When an underlying security is sold from the
Portfolio's securities portfolio, the Portfolio will effect a closing purchase
transaction so as to close out any existing covered call option on that
underlying security.

WRITING PUT OPTIONS. The writer of a put option becomes obligated to purchase
the underlying security at a specified price during the option period if the
buyer elects to exercise the option before its expiration date. A Portfolio
which writes a put option will be required to "cover" it, for example, by
depositing and maintaining in a segregated account with its custodian cash,
U.S. Government securities or other liquid securities having a value equal to
or greater than the exercise price of the option.

The Portfolios may write put options either to earn additional income in the
form of option premiums (anticipating that the price of the underlying
security will remain stable or rise during the option period and the option
will therefore not be exercised) or to acquire the underlying security at a
net cost below

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<PAGE>

the current value (e.g., the option is exercised because of a decline in the
price of the underlying security, but the amount paid by the Portfolio, offset
by the option premium, is less than the current price). The risk of either
strategy is that the price of the underlying security may decline by an amount
greater than the premium received. The premium which a Portfolio receives from
writing a put option will reflect, among other things, the current market
price of the underlying security, the relationship of the exercise price to
that market price, the historical price volatility of the underlying security,
the option period, supply and demand and interest rates.

A Portfolio may effect a closing purchase transaction to realize a profit on
an outstanding put option or to prevent an outstanding put option from being
exercised.

PURCHASING PUT AND CALL OPTIONS. A Portfolio may purchase put options on
securities to protect their holdings against a substantial decline in market
value. The purchase of put options on securities will enable a Portfolio to
preserve, at least partially, unrealized gains in an appreciated security in
its portfolio without actually selling the security. In addition, the
Portfolio will continue to receive interest or dividend income on the
security. The Portfolios may also purchase call options on securities to
protect against substantial increases in prices of securities that Portfolios
intend to purchase pending their ability to invest in an orderly manner in
those securities. The Portfolios may sell put or call options they have
previously purchased, which could result in a net gain or loss depending on
whether the amount received on the sale is more or less than the premium and
other transaction costs paid on the put or call option which was bought.

SECURITIES INDEX OPTIONS. A Portfolio may write covered put and call options
and purchase call and put options on securities indexes for the purpose of
hedging against the risk of unfavorable price movements adversely affecting
the value of a Portfolio's securities or securities it intends to purchase.
Each Portfolio writes only "covered" options. A call option on a securities
index is considered covered, for example, if, so long as the Portfolio is
obligated as the writer of the call, it holds securities the price changes of
which are, in the opinion of a Portfolio's Adviser, expected to replicate
substantially the movement of the index or indexes upon which the options
written by the Portfolio are based. A put on a securities index written by a
Portfolio will be considered covered if, so long as it is obligated as the
writer of the put, the Portfolio segregates with its custodian cash, United
States Government securities or other liquid high-grade debt obligations
having a value equal to or greater than the exercise price of the option.
Unlike a stock option, which gives the holder the right to purchase or sell a
specified stock at a specified price, an option on a securities index gives
the holder the right to receive a cash "exercise settlement amount" equal to
(i) the difference between the exercise price of the option and the value of
the underlying stock index on the exercise date, multiplied by (ii) a fixed
"index multiplier."

A securities index fluctuates with changes in the market value of the
securities so included. For example, some securities index options are based
on a broad market index such as the S&P 500 or the NYSE Composite Index, or a
narrower market index such as the S&P 100. Indexes may also be based on an
industry or market segment such as the AMEX Oil and Gas Index or the Computer
and Business Equipment Index.

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<PAGE>

OVER-THE-COUNTER OPTIONS. Certain Portfolios may enter into contracts (or
amend existing contracts) with primary dealers with whom they write
over-the-counter options. The contracts will provide that each Portfolio has
the absolute right to repurchase an option it writes at any time at a
repurchase price which represents the fair market value, as determined in good
faith through negotiation between the parties, but which in no event will
exceed a price determined pursuant to a formula contained in the contract.
Although the specific details of the formula may vary between contracts with
different primary dealers, the formula will generally be based on a multiple
of the premium received by each Portfolio for writing the option, plus the
amount, if any, of the option's intrinsic value (i.e., the amount the option
is "in-the-money"). The formula will also include a factor to account for the
difference between the price of the security and the strike price of the
option if the option is written "out-of-the-money." Although the specific
details of the formula may vary with different primary dealers, each contract
will provide a formula to determine the maximum price at which each Portfolio
can repurchase the option at any time. The Portfolios have established
standards of creditworthiness for these primary dealers, although the
Portfolios may still be subject to the risk that firms participating in such
transactions will fail to meet their obligations. In instances in which a
Portfolio has entered into agreements with respect to the over-the-counter
options it has written, and such agreements would enable the Portfolio to have
an absolute right to repurchase at a pre-established formula price the
over-the-counter option written by it, the Portfolio would treat as illiquid
only securities equal in amount to the formula price described above less the
amount by which the option is "in-the-money," i.e., the amount by which the
price of the option exceeds the exercise price.

REPURCHASE AGREEMENTS

Under a repurchase agreement, underlying debt instruments are acquired for a
relatively short period (usually not more than one week and never more than a
year) subject to an obligation of the seller to repurchase and the Portfolio
to resell the instrument at a fixed price and time, thereby determining the
yield during the Portfolio's holding period. This results in a fixed rate of
return insulated from market fluctuation during that holding period.

Repurchase agreements may have the characteristics of loans by a Portfolio.
During the term of the repurchase agreement, a Portfolio retains the security
subject to the repurchase agreement as collateral securing the seller's
repurchase obligation, continually monitors on a daily basis the market value
of the security subject to the agreement and requires the seller to deposit
with the Portfolio collateral equal to any amount by which the market value of
the security subject to the repurchase agreements falls below the resale
amount provided under the repurchase agreement. A Portfolio will enter into
repurchase agreements (with respect to U.S. Government obligations,
certificates of deposit, or bankers' acceptances) with registered
brokers-dealers, U.S. Government securities dealers or domestic banks whose
creditworthiness is determined to be satisfactory by the Portfolio's Adviser,
pursuant to guidelines adopted by the Board of Trustees. Generally, a
Portfolio does not invest in repurchase

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<PAGE>

agreements maturing in more than seven days. The staff of the SEC currently
takes the position that repurchase agreements maturing in more than seven days
are illiquid securities.

If a seller under a repurchase agreement were to default on the agreement and
be unable to repurchase the security subject to the repurchase agreement, the
Portfolio would look to the collateral underlying the seller's repurchase
agreement, including the security subject to the repurchase agreement, for
satisfaction of the seller's obligation to the Portfolio. In the event a
repurchase agreement is considered a loan and the seller defaults, the
Portfolio might incur a loss if the value of the collateral declines and may
incur disposition costs in liquidating the collateral. In addition, if
bankruptcy proceedings are commenced with respect to the seller, realization
of the collateral may be delayed or limited and a loss may be incurred.

REVERSE REPURCHASE AGREEMENTS AND DOLLAR ROLLS

Reverse repurchase agreements involve the sale of securities held by the
Portfolio pursuant to its agreement to repurchase them at a mutually agreed
upon date, price and rate of interest. At the time a Portfolio enters into a
reverse repurchase agreement, it will establish and maintain a segregated
account with an approved custodian containing cash or other liquid securities
having a value not less than the repurchase price (including accrued
interest). The assets contained in the segregated account will be
marked-to-market daily and additional assets will be placed in such account on
any day in which the assets fall below the repurchase price (plus accrued
interest). A Portfolio's liquidity and ability to manage its assets might be
affected when it sets aside cash or portfolio securities to cover such
commitments. Reverse repurchase agreements involve the risk that the market
value of the securities retained in lieu of sale may decline below the price
of the securities a Portfolio has sold but is obligated to repurchase. In the
event the buyer of securities under a reverse repurchase agreement files for
bankruptcy or becomes insolvent, such buyer or its trustee or receiver may
receive an extension of time to determine whether to enforce a Portfolio's
obligation to repurchase the securities, and a Portfolio's use of the proceeds
of the reverse repurchase agreement may effectively be restricted pending such
decision.

In "dollar rolls" transactions, a Portfolio sells fixed-income securities for
delivery in the current month and simultaneously contracts to repurchase
similar but not identical (same type, coupon and maturity) securities on a
specified future date. During the roll period, a Portfolio would forego
principal and interest paid on such securities. A Portfolio would be
compensated by the difference between the current sales price and the forward
price for the future purchase, as well as by the interest earned on the cash
proceeds of the initial sale. At the time a Portfolio enters into a dollar
roll transaction, it will place in a segregated account maintained with an
approved custodian cash or other liquid securities having a value not less
than the repurchase price (including accrued interest) and will subsequently
monitor the account to ensure that its value is maintained. Reverse repurchase
agreements are considered to be borrowings under the 1940 Act.

RISKS OF TRANSACTIONS IN OPTIONS, FUTURES CONTRACTS AND FORWARD CURRENCY
CONTRACTS

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OPTIONS. A closing purchase transaction for exchange-traded options may be
made only on a national securities exchange ("exchange"). There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option, or at any particular time, and for some options, such as
over-the-counter options, no secondary market on an exchange may exist. If a
Portfolio is unable to effect a closing purchase transaction, the Portfolio
will not sell the underlying security until the option expires or the
Portfolio delivers the underlying security upon exercise.

Options traded in the over-the-counter market may not be as actively traded as
those on an exchange. Accordingly, it may be more difficult to value such
options. In addition, it may be difficult to enter into closing transactions
with respect to options traded over-the-counter. The Portfolios will engage in
such transactions only with firms of sufficient credit so as to minimize these
risks. Such options and the securities used as "cover" for such options may be
considered illiquid securities.

The effectiveness of hedging through the purchase of securities index options
will depend upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements in the
selected securities index. Perfect correlation is not possible because the
securities held or to be acquired by a Portfolio will not exactly match the
composition of the securities indexes on which options are written. In the
purchase of securities index options the principal risk is that the premium
and transaction costs paid by a Portfolio in purchasing an option will be lost
if the changes (increase in the case of a call, decrease in the case of a put)
in the level of the index do not exceed the cost of the option.

FUTURES. The prices of futures contracts are volatile and are influenced,
among other things, by actual and anticipated changes in the market and
interest rates, which in turn are affected by fiscal and monetary policies and
national and international political and economic events.

Most United States futures exchanges limit the amount of fluctuation permitted
in futures contract prices during a single trading day. The daily limit
establishes the maximum amount that the price of a futures contract may vary
either up or down from the previous day's settlement price at the end of a
trading session. Once the daily limit has been reached in a particular type of
futures contract, no trades may be made on that day at a price beyond that
limit. The daily limit governs only price movement during a particular trading
day and therefore does not limit potential losses, because the limit may
prevent the liquidation of unfavorable positions. Futures contract prices have
occasionally moved to the daily limit for several consecutive trading days
with little or no trading, thereby preventing prompt liquidation of futures
positions and subjecting some futures traders to substantial losses.

Because of the low margin deposits required, futures trading involves an
extremely high degree of leverage. As a result, a relatively small price
movement in a futures contract may result in immediate and substantial loss,
as well as gain, to the investor. For example, if at the time of purchase, 10%
of the value of the futures contract is deposited as margin, a subsequent 10%
decrease in the value of the futures contract would result in a total loss of
the margin deposit, before any deduction for the transaction costs, if the
account were then closed out. A 15% decrease would result in a loss equal to
150% of the original margin deposit, if the contract were closed out. Thus, a
purchase or sale of a futures contract may result in losses in excess of the
amount invested in the futures contract.

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<PAGE>

A decision of whether, when, and how to hedge involves skill and judgment, and
even a well-conceived hedge may be unsuccessful to some degree because of
unexpected market behavior, market trends or interest rate trends. There are
several risks in connection with the use by a Portfolio of futures contracts
as a hedging device. One risk arises because of the imperfect correlation
between movements in the prices of the futures contracts and movements in the
prices of the underlying instruments which are the subject of the hedge. A
Portfolio's Adviser will, however, attempt to reduce this risk by entering
into futures contracts whose movements, in its judgment, will have a
significant correlation with movements in the prices of the Portfolio's
underlying instruments sought to be hedged.

Successful use of futures contracts by a Portfolio for hedging purposes is
also subject to a Portfolio's ability to correctly predict movements in the
direction of the market. It is possible that, when a Portfolio has sold
futures to hedge its portfolio against a decline in the market, the index,
indices, or instruments underlying futures might advance and the value of the
underlying instruments held in the Portfolio's portfolio might decline. If
this were to occur, the Portfolio would lose money on the futures and also
would experience a decline in value in its underlying instruments.

Positions in futures contracts may be closed out only on an exchange or a
board of trade which provides the market for such futures. Although the
Portfolios, specified in the Prospectus, intend to purchase or sell futures
only on exchanges or boards of trade where there appears to be an active
market, there is no guarantee that such will exist for any particular contract
or at any particular time. If there is not a liquid market at a particular
time, it may not be possible to close a futures position at such time, and, in
the event of adverse price movements, a Portfolio would continue to be
required to make daily cash payments of variation margin. However, in the
event futures positions are used to hedge portfolio securities, the securities
will not be sold until the futures positions can be liquidated. In such
circumstances, an increase in the price of securities, if any, may partially
or completely offset losses on the futures contracts.

FOREIGN OPTIONS AND FUTURES. Participation in foreign futures and foreign
options transactions involves the execution and clearing of trades on or
subject to the rules of a foreign board of trade. Neither the National Futures
Association nor any domestic exchange regulates activities of any foreign
boards of trade, including the execution, delivery and clearing of
transactions, or has the power to compel enforcement of the rules of a foreign
board of trade or any applicable foreign law. This is true even if the
exchange is formally linked to a domestic market so that a position taken on
the market may be liquidated by a transaction on another market. Moreover,
such laws or regulations will vary depending on the foreign country in which
the foreign futures or foreign options transaction occurs. For these reasons,
when a Portfolio trades foreign futures or foreign options contracts, it may
not be afforded certain of the protective measures provided by the Commodity
Exchange Act, the CFTC's regulations and the rules of the National Futures
Association and any domestic exchange, including the right to use reparations
proceedings before the CFTC and arbitration proceedings provided by the
National Futures Association or any domestic futures exchange. In particular,
funds received from a Portfolio for foreign futures or foreign options
transactions may not be provided the same protections as funds received in
respect of transactions on United States futures exchanges. In addition, the
price of any foreign futures or foreign options contract and, therefore, the
potential profit and loss thereon,

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<PAGE>

may be affected by any variance in the foreign exchange rate between the time
the Portfolio's order is placed and the time it is liquidated, offset or
exercised.

FOREIGN CURRENCY CONTRACTS. Hedging against a decline in the value of a
currency does not eliminate fluctuations in the prices of portfolio securities
or prevent losses if the prices of such securities decline. These hedging
transactions also preclude the opportunity for gain if the value of the hedged
currency should rise. Whether a currency hedge benefits a Portfolio will
depend on the ability of a Portfolio's Adviser to predict future currency
exchange rates.

The writing of an option on foreign currency will constitute only a partial
hedge, up to the amount of the premium received, and a Portfolio could be
required to purchase or sell foreign currencies at disadvantageous exchange
rates, thereby incurring losses. The purchase of an option on foreign currency
may constitute an effective hedge against fluctuations in exchange rates
although, in the event of rate movements adverse to a Portfolio's position, it
may forfeit the entire amount of the premium plus related transaction costs.

SECURITIES LOANS

Securities loans are made to broker-dealers or institutional investors or
other persons, pursuant to agreements requiring that the loans be continuously
secured by collateral at least equal at all times to the value of the loaned
securities marked to market on a daily basis. The collateral received will
consist of cash, U.S. Government securities, letters of credit or such other
collateral as may be permitted under a Portfolio's investment program. While
the securities are being loaned, a Portfolio will continue to receive the
equivalent of the interest or dividends paid by the issuer on the securities,
as well as interest on the investment of the collateral or a fee from the
borrower. A Portfolio has a right to call each loan and obtain the securities
on five business days' notice or, in connection with securities trading on
foreign markets, within such longer period for purchases and sales of such
securities in such foreign markets. A Portfolio will generally not have the
right to vote securities while they are being loaned, but its Manager or
Adviser will call a loan in anticipation of any important vote. The risks in
lending portfolio securities, as with other extensions of secured credit,
consist of possible delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Loans will only be made to firms deemed by a
Portfolio's Adviser to be of good standing and will not be made unless, in the
judgment of the Adviser, the consideration to be earned from such loans would
justify the risk.

STRUCTURED NOTES

Structured notes are interests in entities organized and operated solely for
the purpose of restructuring the investment characteristics of sovereign debt
obligations. This type of restructuring involves the deposit with or purchase
by an entity, such as a corporation or trust, of specified instruments (such
as commercial bank loans) and the issuance by that entity of one or more
classes of securities and the issuance by that entity of one or more classes
of securities backed by, or representing interests in, the underlying
instruments. The cash flow on the underlying instruments may be apportioned
among the newly issued structured notes to create securities with different
investment characteristics such as

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<PAGE>

varying maturities, payment priorities and interest rate provisions, and the
extent of the payment made with respect to structured notes is dependent on
the extent of the cash flow on the underlying instruments. Because structured
notes of the type in which the Portfolio may invest typically involve no
credit enhancement, their credit risk generally will be equivalent to that of
the underlying instruments. The Portfolio may invest in a class of structured
notes that is either subordinated or unsubordinated to the right of payment of
another class. Subordinated structured notes typically have higher yields and
present greater risks than unsubordinated structured notes. Certain issuers of
structured notes may be deemed to be "investment companies" as defined in the
1940 Act. As a result, the Portfolio's investment in these structured notes
may be limited by restrictions contained in the 1940 Act. Structured notes are
typically sold in private placement transactions, and there currently is no
active trading market for structured notes.

SWAPS

A swap is an agreement to exchange the return generated by one instrument for
the return generated by another instrument. The payment streams are calculated
by reference to a specified index and agreed upon single or fixed amount (or
premium). The term "specified index" includes currencies, fixed interest
rates, prices, total return on interest rate indices, fixed income indices,
stock indices and commodity indices (as well as amounts derived from
arithmetic operations on these indices). For example, a Portfolio may agree to
swap the return generated by a fixed income index for the return generated by
a second fixed income index. The currency swaps in which a Portfolio may enter
will generally involve an agreement to pay interest streams in one currency
based on a specified index in exchange for receiving interest streams
denominated in another currency. Such swaps may involve initial and final
exchanges that correspond to the agreed upon notional amount.

The swaps in which a Portfolio may engage may include instruments under which
one party pays a single or periodic fixed amount(s) (or premium), and the
other party pays periodic amounts based on the movement of a specified index.
Swaps do not involve the delivery of securities, other underlying assets, or
principal. Accordingly, the risk of loss with respect to swaps is limited to
the net amount of payments the Portfolio is contractually obligated to make.
If the other party to a swap defaults, Portfolio's risk of loss consists of
the net amount of payments that the Portfolio contractually entitled to
receive. Currency swaps usually involve the delivery of the entire principal
value of one designated currency in exchange for the other designated
currency. Therefore, the entire principal value of a currency swap is subject
to the risk that the other party to the swap will default on its contractual
delivery obligations. If there is a default by the counterparty, a Portfolio
may have contractual remedies pursuant to the agreements related to the
transaction. The swap market has grown substantially in recent years with a
large number of banks and investment banking firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, the swap
market has become relatively liquid. Certain swap transactions involve more
recent innovations for which standardized documentation has not yet been fully
developed and, accordingly, they are less liquid than traditional swap
transactions.

A Portfolio will usually enter into swaps on a net basis, i.e., the two
payment streams are netted out in a cash settlement on the payment date or
dates specified in the instrument, with the Portfolio receiving

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or paying, as the case may be, only the net amount of the two payments. A
Portfolio's obligations under a swap agreement will be accrued daily (offset
against any amounts owing to the Portfolio) and any accrued but unpaid net
amounts owed to a swap counterparty will be covered by the maintenance of a
segregated account consisting of unencumbered liquid assets, to avoid any
potential leveraging of a Portfolio. To the extent that these swaps are
entered into for hedging purposes, the Advisers believe such obligations do
not constitute "senior securities" under the 1940 Act and, accordingly, the
Adviser will not treat them as being subject to a Portfolio's borrowing
restrictions. A Portfolio may enter into OTC swap transactions with
counterparties that are approved by the Advisers in accordance with guidelines
established by the Board of Trustees. These guidelines provide for a minimum
credit rating for each counterparty and various credit enhancement techniques
(for example, collateralization of amounts due from counterparties) to limit
exposure to counterparties that have lower credit ratings.

The use of swaps is a highly specialized activity which involves investment
techniques and risks different from those associated with ordinary portfolio
securities transactions. If an Adviser is incorrect in its forecasts of market
values, interest rates, and currency exchange rates, the investment
performance of the Portfolio would be less favorable than it would have been
if this investment technique were not used.

WARRANTS

Warrants give the holder, under certain circumstances, the right to purchase
equity securities consisting of common and preferred stock. The equity
security underlying a warrant is authorized at the time the warrant is issued
or is issued together with the warrant. Investing in warrants can provide a
greater potential for profit or loss than an equivalent investment in the
underlying security, and, thus, can be a speculative investment. The value of
a warrant may decline because of a decline in the value of the underlying
security, the passage of time, changes in interest rates or in the dividend or
other policies of the company whose equity underlies the warrant or a change
in the perception as to the future priced of the underlying security, or any
combination thereof. Warrants generally pay no dividends and confer no voting
or other rights other than to purchase the underlying security.

MANAGEMENT OF THE TRUST

As of October 1, 1997 the Trustees and officers of the Trust owned Contracts
entitling them to provide voting instructions in the aggregate with respect to
less than one percent of the Trust's shares of beneficial interest.

THE TRUSTEES

NAME, ADDRESS AND AGE PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
Peter D. Noris* (41) Executive Vice President and Chief
Equitable Equitable Investment Officer, since May
1290 Avenue of the Americas 1995; prior thereto, Vice President,
New York, New York 10104 Salomon Brothers Inc., 1992 to 1995.
Principal, Equity Division, Morgan Stanley
& Co., Inc., 1984 to 1992. Director,
Equitable Real Estate Investment
Management, Inc. since July 1995 and
Alliance Capital Management Co. since July
1995. Trustee, Hudson River Trust

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NAME, ADDRESS AND AGE PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
(investment company) since July 1995.
Executive Vice President, EQ Financial
Consultants, Inc. since November 1996.

Jettie M. Edwards (50) Consultant, Syrus Associates since 1986.
Syrus Associates Trustee, Provident Investment Counsel
880 Third Avenue Trust (investment company) since 1992.
New York, NY 10022 Director, The PBHG Funds, Inc. (investment
company) since 1995.

William M. Kearns, Jr. (61) President, W.M. Kearns & Co., Inc. since
W.M. Kearns & Co., Inc. 1994. Advisory Director, Lehman Brothers,
310 South Street 1992 to 1994.
Morristown, NJ 07960

Christopher P.A. Komisarjevsky President and Chief Executive Officer,
(52) Burson-Marsteller USA since 1996.
Burson-Marsteller President and Chief Executive Officer,
230 Park Avenue South Burson-Marsteller New York, 1995 to 1996.
New York, NY 10003-1566 President and Chief Executive Officer,
Gavin Anderson & Company New York, 1994 to
1995. Prior thereto, he held various
positions with Hill and Knowlton, Inc. for
twenty years.

Harvey Rosenthal (55) Member, Board of Directors of CVS
60 State Street Corporation. President and Chief
Suite 700 Operating Officer, CVS Corporation
Boston, MA 02109 (formerly Melville Corporation) from 1994
to 1996. Prior thereto, he held various
positions with CVS Corporation for
twenty-seven years.

William T. McCaffrey* (60) Director, Senior Executive Vice President
Equitable and Chief Operating Officer, Equitable
1290 Avenue of the Americas since 1996. Executive Vice President and
New York, New York 10104 Chief Administrative Officer, The
Equitable Companies Incorporated since
1994. Director, Equitable Foundation and
Equitable Distributors, Inc. since May
1996.

* Mr. Noris and Mr. McCaffrey are "interested persons" (as defined in the
1940 Act) of the Trust. Mr. Noris and Mr. McCaffrey are deemed
"interested persons" of the Trust by virtue of their position as
officers of Equitable.

COMMITTEES OF THE BOARD

The Trust has a standing audit committee consisting of all of the Trust's
disinterested Trustees. The audit committee's function is to recommend to the
Board of Trustees a firm of independent accountants to conduct the annual
audit of the Trust's financial statements; review with such firm the outline,
scope and results of this annual audit; and review the performance and fees
charged by the independent accountants for professional services. In addition,
the committee meets with the independent accountants and representatives of
management to review accounting activities and areas of financial reporting
and control.

The Trust has a valuation committee consisting of Peter D. Noris, Harvey
Blitz, Mary Breen, Kevin Byrne, and such other officers of the Trust, the
Manager, and Chase Global Funds Services Company, as well as such officers of
any investment adviser to any Portfolio as are deemed necessary by Mr.

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Noris or Mr. Blitz from time to time, each of whom shall serve at the pleasure
of the Board of Trustees as members of the Valuation Committee. This committee
determines the value of any of the Trust's securities and assets for which
market quotations are not readily available or for which valuation cannot
otherwise be provided.

The Trust has a compensation committee consisting of Jettie M. Edwards,
William K. Kearns, Jr., Christopher P.A. Komisarjevsky and Harvey Rosenthal.
The compensation committee's function is to review the Trustees' compensation
arrangements.

The Trust has a conflicts committee consisting of Peter D. Noris and William
T. McCaffrey. The conflicts committee's function is to take any action
necessary to resolve conflicts among shareholders.

COMPENSATION OF THE TRUSTEES

Each Trustee, other than those who are "interested persons" of the Trust (as
defined in the 1940 Act), receives from the Trust an annual fee of $25,000
plus an additional fee of $1,000 per Board meeting and $500 per committee
meeting attended in person or by telephone.

TRUSTEE COMPENSATION TABLE

TRUSTEE AGGREGATE PENSION OR ESTIMATED TOTAL
COMPENSATION RETIREMENT ANNUAL COMPENSATION
FROM THE TRUST* BENEFITS BENEFITS UPON FROM FUND
ACCRUED AS RETIREMENT COMPLEX
PART OF
TRUST
EXPENSES

Peter D. Noris $-0- $-0- $-0- $-0-
Jettie M. Edwards $31,000 $31,000
William M.
Kearns, Jr. $31,000 $31,000
Christopher P.A.
Komisarjevsky $31,000 $31,000
Harvey Rosenthal $31,000 $31,000
William T.
McCaffrey -0- -0- -0- -0-

*For the initial fiscal year.

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A deferred compensation plan for the benefit of the Trustees has been adopted
by the Trust. Under the deferred compensation plan, each Trustee may defer
payment of all or part of the fees payable for such Trustee's services. Each
Trustee may defer payment of such fees until his retirement as a Trustee or
until the earlier attainment of a specified age. Fees deferred under the
deferred compensation plan, together with accrued interest thereon, will be
disbursed to a participating Trustee in monthly installments over a five to
twenty year period elected by such Trustee.

THE TRUST'S OFFICERS

No officer of the Trust receives any compensation paid by the Trust. Each
officer of the Trust is an employee of the Manager, Equitable Distributors,
Inc. ("EDI") or Equitable. The Trust's principal officers are:

NAME, AGE AND POSITION PRINCIPAL OCCUPATION DURING LAST FIVE
WITH TRUST YEARS
Peter D. Noris (41) (see above)
President

Harvey Blitz (51) Senior Vice President, Equitable since
Vice President September 1987. Deputy Chief Financial
and Chief Officer, Equitable since September 1992.
Financial Officer Senior Vice President, The Equitable
Companies Incorporated since July 1992.
Director, The Equitable of Colorado, Inc.
since September 1992. Director and Chairman,
Frontier Trust Company since April 1993 and
September 1995, respectively. Director, Equitable
Distributors, Inc., February 1995 to May 1996.
Director and Senior Vice President, EquiSource
since October 1992 and June 1993, respectively.
Director and Executive Vice President, EQ Financial
Consultants, Inc. since September 1992 and November
1996, respectively. Director, Equitable Realty
Assets Corporation since December 1996.

Mary Breen (39) Vice President and Associate General
Vice President Counsel, Equitable since October 1996.
and Secretary Vice President and Counsel, Equitable,
1992 to 1996. Vice President and Counsel, EQ
Financial Consultants, Inc. since April 1997 and
Equitable Distributors, Inc. since March 1997.

Kevin R. Byrne (41) Vice President and Treasurer, The
Equitable Companies Incorporated and
Vice President Equitable. Treasurer, Frontier Trust
and Treasurer Company and EquiSource. Vice President
and Treasurer, Equitable Casualty
Insurance Company.

Michael S. Martin (50) Senior Vice President and Chief, The
Vice President Marketing Group in Agency Operations,
Equitable. Chairman and Chief Executive
Officer, EQ Financial Consultants, Inc.
Director, The Equitable of Colorado,
Inc., EquiSource and Equitable
Underwriting Sales Agency (Bahamas) Ltd.
Vice President, Hudson River Trust
(investment company).

Robin K. Murray (42) Vice President, Office of the Chief
Investment Officer, and First Vice
President, Equitable Financial
Consultants, Inc. since May

40
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NAME, AGE AND POSITION PRINCIPAL OCCUPATION DURING LAST FIVE
WITH TRUST YEARS
1997. Vice President, Office of the President,
Equitable since 1996. Vice President, Income
Management Group, Equitable since 1994; Assistant
Vice President of Marketing, Equitable from 1989 to
1994.

Samuel B. Senior Vice President, Equitable. Chairman,
Shlesinger (50) President and Chief Executive Officer, The
Vice President Equitable of Colorado, Inc. Director, Equitable
Realty Assets Corporation since December 1996. Vice
President, Hudson River Trust (investment company).

Martin J. Telles (48) Executive Vice President and Chief
Vice President Marketing Officer, Equico Securities since 1993.
Director, Royal Alliance.

Stanley B. Tulin (47) Senior Vice President and Chief Financial Officer,
Vice President Equitable since 1996. Co-Chairman, Insurance
Industry Practice Group, Coopers & Lybrand, 1988 to
1996.

Naomi J. Weinstein (45) Vice President, Income Management Group, Equitable
Vice President since 1996. Vice President, Center Head for
Association Plans, Equitable from 1991 to present.

Allen T. Zabusky (45) Vice President and Deputy Controller, Equitable
Vice President since 1990. Controller, The Equitable of Colorado,
and Controller Inc. since 1996.

Mary Cantwell (35) Director of Operations, Office of the Chief
Assistant Vice Investment Officer, Equitable since September 1997.
President Assistant Vice President, Equitable Financial
Consultants, Inc. since September 1997. Marketing
Director, Income Management Group, Equitable since
1994. Marketing Manager, Equitable since 1991.

John Corcoran (32) Vice President, Fund Administration, Chase Global
Assistant Funds Services Company since July 1996. Second Vice
Treasurer President, Manager of Administration, Chase Global
Funds Services Company from October 1993 to July
1996. Audit Manager, Ernst & Young LLP from August
1987 to September 1993.

Karl O. Hartman (41) Senior Vice President and General Counsel, Chase
Assistant Global Funds Services Company.
Secretary

Lloyd Lipsett (32) Vice President and Associate General Counsel, Chase
Assistant Global Funds Services Company since 1997.
Secretary Associate, Hale and Dorr (law firm), 1995 to 1997.
Associate, Choate, Hall & Stewart (law firm), 1993
to 1995. Associate, Rogers & Wells (law firm), 1990
to 1993.

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<PAGE>

INVESTMENT MANAGEMENT AND OTHER SERVICES

THE MANAGER

The Manager, EQ Financial Consultants, Inc., is an investment adviser
registered with the SEC under the 1940 Act and a broker-dealer registered with
the SEC under the Securities Exchange Act of 1934, as amended ("1934 Act").
The Manager has served as an investment manager to each Portfolio of the Trust
since its inception. The Manager currently furnishes specialized investment
advice to individuals, pension and profit sharing plans, trusts, charitable
organizations, corporations and other business entities. The Manager is a
wholly-owned subsidiary of Equitable Holding Corporation, a wholly-owned
subsidiary of Equitable.

Equitable, which is a New York life insurance company and one of the largest
life insurance companies in the United States, is a wholly-owned subsidiary of
The Equitable Companies Incorporated ("The Equitable Companies"), a
publicly-owned holding company. The principal offices of The Equitable
Companies and Equitable are located at 1290 Avenue of the Americas, New York,
New York 10104.

AXA, a French insurance holding company, currently owns approximately 63.9% of
the outstanding voting shares of common stock of The Equitable Companies. As
majority shareholder of the Equitable Companies, AXA is able to exercise
significant influence over the operations and capital structure of The
Equitable Companies, Equitable and their subsidiaries. AXA is the holding
company for an international group or insurance and related financial services
companies. AXA is the second largest insurance group in the world based on
worldwide revenues in 1996 and also the world's largest insurer-based
investment manager with over $500 billion in assets under management. AXA is
also engaged in asset management, investment banking, securities trading and
other financial services activities principally in the United States, as well
as in Western Europe and the Asia Pacific area.

The Trust and Manager have entered into an investment management agreement
("Management Agreement"). The Management Agreement obligates the Manager to:
(i) provide investment management and certain administrative services to the
Trust; (ii) select the Adviser for each Portfolio; (iii) monitor the Adviser's
investment programs and results; (iv) review brokerage matters; (v) oversee
compliance by the Trust with various federal and state statutes; and (vi)
carry out the directives of the Board of Trustees. The Management Agreement
requires the Manager to provide the Trust with office space, office equipment,
and personnel necessary to operate and administer the Trust's business, and
also to supervise the provision of services by third parties. The continuance
of the Management Agreement, with respect to each Portfolio, after the first
two years must be specifically approved at least annually (i) by the Trust's
Board of Trustees or by vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of such Portfolio and (ii) by the
affirmative vote of a majority of the Trustees who are not parties to the
Management Agreement or "interested persons" (as defined in the 1940 Act) of
any such party by votes cast in person at a meeting called for such purpose.
The Management Agreement with respect to each Portfolio may be terminated (i)
at any time, without the payment of any penalty, by the Trust upon the vote of
a majority of the Trustees or by vote of the majority of the outstanding
voting securities (as defined in the 1940 Act) of such Portfolio upon sixty

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(60) days' written notice to the Manager or (ii) by the Manager at any time
without penalty upon sixty (60) days' written notice to the Trust. The
Management Agreement will also terminate automatically in the event of its
assignment (as defined in the 1940 Act).

THE ADVISERS

On behalf of the T. Rowe Price Equity Income Portfolio and the T. Rowe Price
International Stock Portfolio, the Manager has entered into investment
advisory agreements ("Advisory Agreements") with T. Rowe Price and
Price-Fleming, respectively. The Manager has also entered into Advisory
Agreements on behalf of EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam
International Equity Portfolio, EQ/Putnam Investors Growth Portfolio and
EQ/Putnam Balanced Portfolio with Putnam Management. In addition, the Manager
has entered into Advisory Agreements on behalf of MFS Research Portfolio and
MFS Emerging Growth Companies Portfolio with MFS. Also, the Manager has
entered into Advisory Agreements on behalf of Morgan Stanley Emerging Markets
Equity Portfolio and Warburg Pincus Small Company Value Portfolio with MSAM
and Warburg, respectively. The Manager has entered into Advisory Agreements on
behalf of Merrill Lynch World Strategy Portfolio and Merrill Lynch Basic Value
Equity Portfolio with MLAM. In addition, the Manager has entered into an
Advisory Agreement on behalf of Lazard Large Cap Value Portfolio and Lazard
Small Cap Value Portfolio with LAM. , The Manager has also entered into an
Advisory Agreement on behalf of the JPM Core Bond Portfolio with J.P. Morgan.
Finally, the Manager has entered into an Advisory Agreement on behalf of BT
Small Company Index Portfolio, BT International Equity Index Portfolio and BT
Equity 500 Index Portfolio with Bankers Trust. The Advisory Agreements
obligate T. Rowe Price, Price-Fleming, Putnam Management, MFS, Warburg, MSAM,
MLAM, LAM, J.P. Morgan and Bankers Trust to: (i) furnish continuously an
investment program for their respective Portfolios; (ii) place all orders for
the purchase and sale of investments for their respective Portfolios with
brokers or dealers selected by the Manager or an Adviser; and (iii) perform
certain limited related administrative functions in connection therewith.

The Manager recommends Advisers for each Portfolio to the Trustees based upon
its continuing quantitative and qualitative evaluation of each Adviser's
skills in managing assets pursuant to specific investment styles and
strategies. Unlike many other mutual funds, the Portfolios are not associated
with any one portfolio manager, and benefit from independent specialists
carefully selected from the investment management industry. Short-term
investment performance, by itself, is not a significant factor in selecting or
terminating an Adviser, and the Manager does not expect to recommend frequent
changes of Advisers. The Trust has filed an application with the SEC
requesting an exemptive order to permit the Manager, subject to certain
conditions, to enter into Advisory Agreements with Advisers approved by the
Trustees, but without the requirement of shareholder approval. Pursuant to the
terms of the SEC order, if granted, the Manager would be able, subject to the
approval of the Trustees but without shareholder approval, to employ new
Advisers for new or existing Portfolios, change the terms of particular
Advisory Agreements or continue the employment of existing Advisers after
events that under the 1940 Act and the Advisory Agreements would cause an
automatic termination of the agreement. Although shareholder approval would
not be required for the termination of Advisory Agreements, shareholders of a
Portfolio would continue to have the right to terminate such agreements for
the Portfolio at any time by a vote of a majority of outstanding voting
securities of the Portfolio.

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<PAGE>

When a Portfolio has more than one Adviser, the assets of each Portfolio are
allocated by the Manager among the Advisers selected for the Portfolio. Each
Adviser has discretion, subject to oversight by the Trustees, and the Manager,
to purchase and sell portfolio assets, consistent with each Portfolio's
investment objectives, policies and restrictions and specific investment
strategies developed by the Manager.

Generally, no Adviser provides any services to any Portfolio except asset
management and related recordkeeping services. However, an Adviser or its
affiliated broker-dealer may execute portfolio transactions for a Portfolio
and receive brokerage commissions in connection therewith as permitted by
Section17(e) of the 1940 Act.

THE ADMINISTRATOR

Pursuant to an administrative agreement ("Mutual Funds Services Agreement"),
Chase Global Funds Services Company ("Administrator") assists the Manager in
the performance of its administrative services to the Trust and provides the
Trust with other necessary administrative services. In addition, the
Administrator makes available the office space, equipment, personnel and
facilities required to provide such administrative services to the Trust.

The Administrator was organized as a Delaware corporation. Its principal place
of business is at 73 Tremont Street, Boston, Massachusetts 02108. The Mutual
Funds Services Agreement shall remain in effect until April 14, 1997 and shall
thereafter continue in effect for successive periods of one year, unless
terminated by any party upon not less than ninety (90) days' prior written
notice to the other party.

THE DISTRIBUTORS

The Trust has distribution agreements with EQ Financial Consultants, Inc. and
EDI (each also referred to as a "Distributor," and together "Distributors"),
each an indirect wholly-owned subsidiary of Equitable. The address for EDI is
1290 Avenue of the Americas, New York, New York 10104, and that for EQ
Financial Consultants, Inc. is 1755 Broadway, Third Floor, New York, New York
10019. EQ Financial Consultants, Inc. is the distributor for the Trust's Class
IA shares and Class IB shares and also serves as the Manager of the Trust. EDI
also serves as the distributor for the Trust's Class IA shares Class IB
shares.

The Trust's distribution agreements with respect to the Class IA shares and
Class IB shares, each dated April 14, 1997 ("Distribution Agreements"), will
remain in effect until April 14, 1999, and from year to year thereafter only
if each Distribution Agreement's continuance is approved annually by (i) a
majority of the Trustees who are not parties to such agreement or "interested
persons" (as defined in the 1940 Act) of the Trust or a Portfolio and, if
applicable, who have no direct or indirect financial interest in the operation
of the Distribution Plan or any such related agreement ("Independent
Trustees") and (ii) either by vote of a majority of the Trustees or a majority
of the outstanding voting securities (as defined in the 1940 Act) of the
Trust.

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<PAGE>

The Distributors or their affiliates for the Class IA shares will pay for
printing and distributing prospectuses or reports prepared for its use in
connection with the offering of the Class IA shares to prospective investors
and preparing, printing and mailing any other literature or advertising in
connection with the offering of the Class IA shares to prospective investors.
The Trust, pursuant to the Distribution Plan, will pay for services rendered
and expenses borne in connection with the offering of the Class IB shares.
Such expenses include the printing and mailing of prospectuses, statements of
additional information and reports to prospective purchasers, as well as the
preparation, printing and mailing of advertisements and sales literature in
connection with the offering of the Class IB shares to prospective investors.
The Distributors for each class of shares will pay all fees and expenses in
connection with its qualification and registration as a broker or dealer under
federal and state laws.

In the capacity of agent, each Distributor currently offers shares of each
Portfolio on a continuous basis to the separate accounts of insurance
companies offering the Contracts in all states in which the Portfolio or the
Trust may from time to time be registered or where permitted by applicable
law. Each Distribution Agreement provides that the Distributors shall accept
orders for shares at net asset value without sales commission or load being
charged. The Distributors have made no firm commitment to acquire shares of
any Portfolio.

A description of the Distribution Plan with respect to the Class IB shares and
related services and fees thereunder is provided in the Prospectus for the
Class IB shares of the Portfolios. On March 31, 1997, the Board of Trustees of
the Trust unanimously approved the Distribution Plan. In connection with its
consideration of the Distribution Plan, the Board of Trustees was furnished
with drafts of the Distribution Plan and the related materials, including
information related to the advantages and disadvantages of Rule 12b-1 plans
currently being used in the mutual fund industry. Legal counsel for the
Trustees who are not "interested persons" of the Trust (as defined in the 1940
Act) provided additional information, summarized the provisions of the
proposed Distribution Plan and discussed the legal and regulatory
considerations in adopting such Distribution Plan.

The Board of Trustees considered various factors in connection with its
decision as to whether to approve the Distribution Plan, including: (i) the
nature and causes of the circumstances which make implementation of the
Distribution Plan necessary and appropriate; (ii) the way in which the
Distribution Plan would address those circumstances, including the nature and
potential amount of expenditures; (iii) the nature of the anticipated
benefits; (iv) the possible benefits of the Distribution Plan to any other
person relative to those of the Trust; (v) the effect of the Distribution Plan
on existing owners of variable annuity contracts and variable life insurance
policies; (vi) the merits of possible alternative plans or pricing structures;
(vii) competitive conditions in the variable products industry; and (viii) the
relationship of the Distribution Plan to other distribution efforts of the
Trust.

Based upon its review of the foregoing factors and the materials presented to
it, and in light of its fiduciary duties under the 1940 Act, the Board of
Trustees determined, in the exercise of its business judgment, that the
Distribution Plan is reasonably likely to benefit the Trust and the
shareholders of its Portfolios.

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<PAGE>

The Distribution Plan and any Rule 12b-1 related agreement that is entered
into by the Trust or the Distributors of the Class IB shares in connection
with the Distribution Plan will continue in effect for a period of more than
one year only so long as continuance is specifically approved at least
annually by a vote of a majority of the Trust's Board of Trustees, and of a
majority of the Independent Trustees, cast in person at a meeting called for
the purpose of voting on the Distribution Plan, or any Rule 12b-1 related
agreement, as applicable. In addition, the Distribution Plan and any Rule
12b-1 related agreement may be terminated as to Class IB shares of a Portfolio
at any time, without penalty, by vote of a majority of the outstanding Class
IB shares of the Portfolio or by vote of a majority of the Independent
Trustees. The Distribution Plan also provides that it may not be amended to
increase materially the amount (up to .50% of average daily net assets
annually) that may be spent for distribution of Class IB shares of a Portfolio
without the approval of Class IB shareholders of that Portfolio.

BROKERAGE STRATEGY

BROKERAGE COMMISSIONS

The Portfolios are charged for securities brokers' commissions, transfer taxes
and similar fees relating to securities transactions. The Manager and each of
the Advisers, as appropriate, seek to obtain the best net price and execution
on all orders placed for the Portfolios, considering all the circumstances
except to the extent they may be permitted to pay higher commissions as
described below.

It is expected that securities will ordinarily be purchased in the primary
markets, whether over-the-counter or listed, and that listed securities may be
purchased in the over-the-counter market if that market is deemed the primary
market.

Transactions on stock exchanges involve the payment of brokerage commissions.
In transactions on stock exchanges in the U.S., these commissions are
negotiated, whereas on many foreign stock exchanges these commissions are
fixed. However, brokerage commission rates in certain countries in which the
Portfolios may invest may be discounted for certain large domestic and foreign
investors such as the Portfolios. A number of foreign banks and brokers will
be used for execution of each Portfolio's portfolio transactions. In the case
of securities traded in the foreign and domestic over-the-counter markets,
there is generally no stated commission, but the price usually includes an
undisclosed commission or mark-up. In underwritten offerings, the price
generally includes a disclosed fixed commission or discount.

The Manager and Advisers may, as appropriate, in the allocation of brokerage
business, take into consideration research and other brokerage services
provided by brokers and dealers to Equitable, the Manager or Advisers. The
research services include economic, market, industry and company research
material. Based upon an assessment of the value of research and other
brokerage services provided, proposed allocations of brokerage for commission
transactions are periodically prepared internally. In addition, the Manager
and Advisers may allocate brokerage business to brokers and dealers that have
made or are expected to make significant efforts in facilitating the
distribution of the Trust's shares.

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<PAGE>

Commissions charged by brokers that provide research services may be somewhat
higher than commissions charged by brokers that do not provide research
services. As permitted by Section 28(e) of the 1934 Act and by policies
adopted by the Trustees, the Manager and Advisers may cause the Trust to pay a
broker-dealer that provides brokerage and research services to the Manager and
Advisers an amount of commission for effecting a securities transaction for
the Trust in excess of the commission another broker-dealer would have charged
for effecting that transaction.

The Manager and Advisers do not engage brokers and dealers whose commissions
are believed to be unreasonable in relation to brokerage and research services
provided. The overall reasonableness of commissions paid will be evaluated by
rating brokers on such general factors as execution capabilities, quality of
research (that is, quantity and quality of information provided, diversity of
sources utilized, nature and frequency of communication, professional
experience, analytical ability and professional stature of the broker) and
financial standing, as well as the net results of specific transactions,
taking into account such factors as price, promptness, size of order and
difficulty of execution. The research services obtained will, in general, be
used by the Manager and Advisers for the benefit of all accounts for which the
responsible party makes investment decisions. The receipt of research services
from brokers will tend to reduce the Manager's and Advisers' expenses in
managing the Portfolios.

BROKERAGE TRANSACTIONS WITH AFFILIATES

To the extent permitted by law, the Trust may engage in brokerage transactions
with brokers that are affiliates of the Manager and Advisers, with brokers who
are affiliates of such brokers, or with unaffiliated brokers who trade or
clear through affiliates of the Manager and Advisers. The 1940 Act generally
prohibits the Trust from engaging in principal securities transactions with
brokers that are affiliates of the Manager and Advisers or affiliates of such
brokers, unless pursuant to an exemptive order from the SEC. The Trust may
apply for such exemptive relief. The Trust has adopted procedures, prescribed
by the 1940 Act, which are reasonably designed to provide that any commissions
or other remuneration it pays to brokers that are affiliates of the Manager
and Advisers or brokers that are affiliates of such brokers do not exceed the
usual and customary broker's commission. In addition, the Trust will adhere to
the requirements under the 1934 Act governing floor trading. Also, because of
securities law limitations, the Trust will limit purchases of securities in a
public offering, if such securities are underwritten by brokers that are
affiliates of the Manager and Advisers or their affiliates.

PURCHASE AND PRICING OF SHARES

The Trust will offer and sell its shares at each Portfolio's net asset value
per share, which will be determined in the manner set forth below.

The net asset value of the shares of each class of a Portfolio of the Trust
will be determined once daily, immediately after the declaration of dividends,
if any, at the close of business on each business day. The net asset value per
share of each class of a Portfolio will be computed by dividing the sum of the

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<PAGE>

investments held by that Portfolio applicable to that class, plus any cash or
other assets, minus all liabilities, by the total number of outstanding shares
of that class of the Portfolio at such time. All expenses borne by the Trust
and each of its Classes, will be accrued daily.

The net asset value per share of each Portfolio will be determined and
computed as follows, in accordance with generally accepted accounting
principles, and consistent with the 1940 Act:

o The assets belonging to each Portfolio will include (i) all
consideration received by the Trust for the issue or sale of
shares of that particular Portfolio, together with all assets in
which such consideration is invested or reinvested, (ii) all
income, earnings, profits, and proceeds thereof, including any
proceeds derived from the sale, exchange or liquidation of such
assets, (iii) any funds or payments derived from any reinvestment
of such proceeds in whatever form the same may be, and (iv)
"General Items", if any, allocated to that Portfolio. "General
Items" include any assets, income, earnings, profits, and proceeds
thereof, funds, or payments which are not readily identifiable as
belonging to any particular Portfolio. General Items will be
allocated as the Trust's Board of Trustees considers fair and
equitable.

o The liabilities belonging to each Portfolio will include (i) the
liabilities of the Trust in respect of that Portfolio, (ii) all
expenses, costs, changes and reserves attributable to that
Portfolio, and (iii) any general liabilities, expenses, costs,
charges or reserves of the Trust which are not readily
identifiable as belonging to any particular Portfolio which have
been allocated as the Trust's Board of Trustees considers fair and
equitable.

The value of each Portfolio will be determined at the close of business on
each "business day," i.e., each day in which the degree of trading in the
Portfolio might materially affect the net asset value of such Portfolio.
Normally, this would be each day that the New York Stock Exchange is open and
would include some federal holidays. For stocks and options, the close of
trading is 4:00 p.m. and 4:15 p.m. Eastern Time, respectively; for bonds it is
the close of business in New York City, and for foreign securities it is the
close of business in the applicable foreign country, with exchange rates
determined at 2:00 p.m. Eastern Time.

Values are determined according to accepted accounting practices and all laws
and regulations that apply. The assets of each Portfolio are valued as
follows:

o Stocks listed on national securities exchanges and certain
over-the-counter issues traded on the NASDAQ national market
system are valued at the last sale price, or, if there is no sale,
at the latest available bid price. Other unlisted stocks are
valued at their last sale price or, if there is no reported sale
during the day, at a bid price estimated by a broker.

o Foreign securities not traded directly, or in ADRs or similar
form in the U.S., are valued at representative quoted prices in
the currency of the country of origin. Foreign currency is
converted into U.S. dollar equivalent at current exchange rates.

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<PAGE>

o U.S. Treasury securities and other obligations issued or
guaranteed by the U.S. Government, its agencies or
instrumentalities, are valued at representative quoted prices.

o Long-term corporate bonds are valued at prices obtained from a
bond pricing service of a major dealer in bonds when such prices
are available; however, when such prices are not available, such
bonds are valued at a bid price estimated by a broker.

o Short-term debt securities in the Portfolios which mature in 60
days or less are valued at amortized cost, which approximates
market value. Short-term debt securities in such Portfolios which
mature in more than 60 days are valued at representative quoted
prices.

o Convertible preferred stocks listed on national securities
exchanges are valued as of their last sale price or, if there is
no 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 of the major
dealers in such bonds or stocks. Where there is a discrepancy
between dealers, values may be adjusted based on recent premium
spreads to the underlying common stocks.

o Mortgage-backed and asset-backed securities are valued at prices
obtained from a bond pricing service where available, or at a bid
price obtained from one or more of the major dealers in such
securities. If a quoted price is unavailable, an equivalent yield
or yield spread quotes will be obtained from a broker and
converted to a price.

o Purchased options, including options on futures, are valued at
their last bid price. Written options are valued at their last
asked price.

o Futures contracts are valued as of their last sale price or, if
there is no sale, at the latest available bid price.

o Other securities and assets for which market quotations are not
readily available or for which valuation cannot be provided are
valued in good faith by the valuation committee of the Board of
Trustees using its best judgment.

The market value of a put or call option will usually reflect, among other
factors, the market price of the underlying security.

When the Trust writes a call option, an amount equal to the premium received
by the Trust is included in the Trust's financial statements as an asset and
an equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option written.
When an option expires on its stipulated expiration date or the Trust enters
into a closing purchase or sale

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<PAGE>

transaction, the Trust realizes a gain (or loss) without regard to any
unrealized gain or loss on the underlying security, and the liability related
to such option is extinguished. When an option is exercised, the Trust
realizes a gain or loss from the sale of the underlying security, and the
proceeds of sale are increased by the premium originally received, or reduced
by the price paid for the option.

The Manager and Advisers may, from time to time, under the general supervision
of the Board of Trustees or its valuation committee, utilize the services of
one or more pricing services available in valuing the assets of the Trust. The
Manager and Advisers will continuously monitor the performance of these
services.

REDEMPTION OF SHARES

The Trust may suspend redemption privileges or postpone the date of payment on
shares of the Portfolios for more than seven days during any period (i) when
the New York Stock Exchange is closed or trading on the New York Stock
Exchange is restricted as determined by the SEC, (ii) when an emergency
exists, as defined by the SEC, which makes it not reasonably practicable for a
Portfolio to dispose of securities owned by it or fairly to determine the
value of its assets, or (iii) as the SEC may otherwise permit.

The value of the shares on redemption may be more or less than the
shareholder's cost, depending upon the market value of the portfolio
securities at the time of redemption.

CERTAIN TAX CONSIDERATIONS

Each Portfolio is treated for Federal income tax purposes as a separate
taxpayer. The Trust intends that each Portfolio shall qualify each year and
elect to be treated as a regulated investment company under Subchapter M of
the Code. Such qualification does not involve supervision of management or
investment practices or policies by any governmental agency or bureau.

As a regulated investment company, each Portfolio will not be subject to
federal income or excise tax on any of its net investment income or net
realized capital gains which are timely distributed to shareholders under the
Code. A number of technical rules are prescribed for computing net investment
income and net capital gains. For example, dividends are generally treated as
received on the ex-dividend date. Also, certain foreign currency losses and
capital losses arising after October 31 of a given year may be treated as if
they arise on the first day of the next taxable year.

A Portfolio investing in foreign securities or currencies may be subject to
foreign taxes which could reduce the investment performance of such Portfolio.
However, if foreign securities comprise more than 50% of the year-end value of
a Portfolio, the Portfolio may elect to pass through such foreign taxes as a
deemed dividend to shareholders. In such a case the shareholder and not the
Portfolio would be entitled to claim a federal tax deduction or credit for
foreign taxes, as appropriate. The deduction or credit will not necessarily
result in a direct or immediate benefit to Contractowners.

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To qualify for treatment as a regulated investment company, a Portfolio must,
among other things, derive in each taxable year at least 90% of its gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies, or other income derived with respect to its business of investing.
For purposes of this test, gross income is determined without regard to losses
from the sale or other dispositions of stock or securities.

In addition, the Secretary of the Treasury has regulatory authority to exclude
from qualifying income described above foreign currency gains which are not
"directly related" to a regulated investment company's "principal business of
investing" in stock, securities or related options or futures. The Secretary
of the Treasury has not to date exercised this authority.

Generally, in order to avoid a 4% nondeductible excise tax, each Portfolio
must distribute to its shareholders during the calendar year the following
amounts:

o 98% of the Portfolio's ordinary income for the calendar year;

o 98% of the Portfolio's capital gain net income (all capital
gains, both long-term and short-term, minus all such capital
losses), all computed as if the Portfolio were on a taxable year
ending October 31 of the year in question and beginning the
previous November 1; and

o any undistributed ordinary income or capital gain net income for
the prior year.

The excise tax generally is inapplicable to any regulated investment company
whose sole shareholders are either tax-exempt pension trusts or separate
accounts of life insurance companies funding variable contracts. Although each
Portfolio believes that it is not subject to the excise tax, the Portfolios
intend to make the distributions required to avoid the imposition of such a
tax.

Because the Trust is used to fund non-qualified Contracts, each Portfolio must
meet the diversification requirements imposed by the Code or these Contracts
will fail to qualify as life insurance and annuities. In general, for a
Portfolio to meet the investment diversification requirements of Subchapter L
of the Code, Treasury regulations require that no more than 55% of the total
value of the assets of the Portfolio may be represented by any one investment,
no more than 70% by two investments, no more than 80% by three investments and
no more than 90% by four investments. Generally, for purposes of the
regulations, all securities of the same issuer are treated as a single
investment. In the context of U.S. Government securities (including any
security that is issued, guaranteed or insured by the U.S. or an
instrumentality of the U.S.) each U.S. Government agency or instrumentality is
treated as a separate issuer. Compliance with the regulations is tested on the
first day of each calendar year quarter. There is a thirty (30) day period
after the end of each calendar year quarter in which to cure any
non-compliance.

51
<PAGE>

FEDERAL TAX TREATMENT OF OPTIONS, FUTURES CONTRACTS AND FORWARD FOREIGN
EXCHANGE CONTRACTS

Certain option, futures, and forward foreign exchange contracts, including
options and futures on currencies, will be treated as Section 1256 contracts
or straddles.

Transactions which are considered Section 1256 contracts will be considered to
have been closed at the end of the Portfolio's fiscal year and any gains or
losses will be recognized for tax purposes at that time. Such gains or losses
from the normal closing or settlement of such transactions will generally be
characterized as 60% long-term capital gain or loss and 40% short-term capital
gain or loss regardless of the holding period of the instrument. A Portfolio
will be required to distribute net gains on such transactions to shareholders
even though it may not have closed the transaction and received cash to pay
such distributions.

Options, futures and forward foreign exchange contracts, including options and
futures on currencies, which offset a foreign dollar denominated bond or
currency position may be considered straddles for tax purposes, in which case
a loss on any position in a straddle will be subject to deferral to the extent
of unrealized gain in an offsetting position. The holding period of the
securities or currencies comprising the straddle will be deemed not to begin
until the straddle is terminated. For securities offsetting a purchased put,
this adjustment of the holding period may increase the gain from sales of
securities held less than three months. The holding period of the security
offsetting an "in-the-money qualified covered call" option on an equity
security will not include the period of time the option is outstanding.

Losses on written covered calls and purchased puts on securities, excluding
certain "qualified covered call" options on equity securities, may be
long-term capital loss, if the security covering the option was held for more
than twelve months prior to the writing of the option.

In order for a Portfolio to continue to qualify for federal income tax
treatment as a regulated investment company, at least 90% of its gross income
for a taxable year must be derived from qualifying income; i.e., dividends,
interest, income derived from loans of securities, and gains from the sale of
securities or currencies. Future tax regulations could limit the extent that
net gain realized from option, futures or foreign forward exchange contracts
on currencies is qualifying income for purposes of the 90% requirement.

Under Section 988 of the Code ("Code Section 988"), special rules are provided
for certain transactions in a foreign currency other than the taxpayer's
functional currency (i.e., unless certain special rules apply, currencies
other than the U.S. dollar). In general, foreign currency gains or losses from
forward contracts, from futures contracts that are not "regulated futures
contracts", and from unlisted options will be treated as ordinary income or
loss under Code Section 988. Also, certain foreign exchange gains or losses
derived with respect to foreign fixed-income securities are also subject to
Code Section 988 treatment. In general, therefore, Code Section 988 gains or
losses will increase or decrease the amount of a Portfolio's investment
company taxable income available to be distributed to shareholders as ordinary
income, rather than increasing or decreasing the amount of a Portfolio's net

52
<PAGE>

capital gain. Additionally, if Code Section 988 losses exceed other investment
company taxable income during a taxable year, a Portfolio would not be able to
make any ordinary dividend distributions.

If a Portfolio invests in an entity which is classified as a "passive foreign
investment company" for U.S. tax purposes, the application of certain
technical tax provisions applying to such companies could result in the
imposition of federal income tax with respect to such investments at the
Portfolio level which could not be eliminated by distributions to
shareholders. It is not anticipated that any taxes on the Portfolio with
respect to investments in PFIC's would be significant.

PORTFOLIO PERFORMANCE

COMPUTATION OF TOTAL RETURN

Each Portfolio may provide average annual total return information calculated
according to a formula prescribed by the SEC. According to that formula,
average annual total return figures represent the average annual compounded
rate of return for the stated period. Average annual total return quotations
reflect the percentage change between the beginning value of a static account
in the Portfolio and the ending value of that account measured by the then
current net asset value of that Portfolio assuming that all dividends and
capital gains distributions during the stated period were invested in shares
of the Portfolio when paid. Total return is calculated by finding the average
annual compounded rates of return of a hypothetical investment that would
equate the initial amount invested to the ending redeemable value of such
investment, according to the following formula:

T=(ERV/P)1/n-1

where "T" equals average annual total return; where "ERV", the ending
redeemable value, is the value at the end of the applicable period of a
hypothetical $1,000 investment made at the beginning of the applicable period;
where "P" equals a hypothetical initial investment of $1,000; and where "n"
equals the number of years.

Each Portfolio's total return will vary from time to time depending upon
market conditions, the composition of each Portfolio's investment portfolio
and operating expenses of the Trust allocated to each Portfolio. Total return
should also be considered relative to changes in the value of a Portfolio's
shares and to the relative risks associated with the investment objectives and
policies of the Portfolios. These total return figures do not reflect
insurance company expenses and fees applicable to the Contracts. At any time
in the future, total return may be higher or lower than in the past and there
can be no assurance that any historical results will continue.

NON-STANDARD PERFORMANCE

In addition to the performance information described above, each Portfolio may
provide total return information with respect to the Portfolios for designated
periods, such as for the most recent six

53
<PAGE>

months or most recent twelve months. This total return information is computed
as described under "Computation of Total Return" above except that no
annualization is made.

OTHER SERVICES

INDEPENDENT ACCOUNTANT

Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036,
serves as the Trust's independent accountants. Price Waterhouse LLP is
responsible for auditing the annual financial statements of the Trust.

CUSTODIAN

Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York
10036 serves as custodian of the Trust's portfolio securities and other
assets. Under the terms of the custody agreement between the Trust and Chase
Manhattan Bank, Chase Manhattan Bank maintains and deposits in separate
accounts, cash, securities and other assets of the Portfolios. Chase Manhattan
Bank is also required, upon the order of the Trust, to deliver securities held
by Chase Manhattan Bank, and to make payments for securities purchased by the
Trust. Chase Manhattan Bank has also entered into sub-custodian agreements
with a number of foreign banks and clearing agencies, pursuant to which
portfolio securities purchased outside the U.S.
are maintained in the custody of these entities.

TRANSFER AGENT

Equitable serves as the transfer agent and dividend disbursing agent for the
Trust. Equitable receives no compensation for providing such services for the
Trust.

COUNSEL

Dechert, Price & Rhoads, 1500 K Street, N.W. Washington, D.C. 20005, serves as
counsel to the Trust.

Sullivan & Worcester, LLP, 1025 Connecticut Avenue, N.W., Suite 1000,
Washington, D.C. 20036, Boston, Massachusetts 02109, serves as counsel to the
independent Trustees of the Trust.

FINANCIAL STATEMENTS

The unaudited financial statements for the semi-annual period ended June 30,
1997, including the financial highlights, appearing in the Trust's Semi-Annual
Report to Shareholders are incorporated by reference and made a part of this
document The Trust's audited statement of Assets and Liabilities at April 1,
1997 is set forth in the following pages.

54
<PAGE>

APPENDIX

DESCRIPTION OF COMMERCIAL PAPER RATINGS

A-1 AND PRIME-1 COMMERCIAL PAPER RATINGS

The rating A-1 (including A-1+) is the highest commercial paper rating
assigned by S&P. Commercial paper rated A-1 by S&P has the following
characteristics:

o liquidity ratios are adequate to meet cash requirements;

o long-term senior debt is rated "A" or better;

o the issuer has access to at least two additional channels of
borrowing;

o basic earnings and cash flow have an upward trend with allowance
made for unusual circumstances;

o typically, the issuer's industry is well established and the
issuer has a strong position within the industry; and

o the reliability and quality of management are unquestioned.

Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that are
determined by S&P to have overwhelming safety characteristics are designated
A-1+.

The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the
following:

o evaluation of the management of the issuer;

o economic evaluation of the issuer's industry or industries and
an appraisal of speculative-type risks which may be inherent in
certain areas;

o evaluation of the issuer's products in relation to competition
and customer acceptance;

o liquidity;

o amount and quality of long-term debt;

o trend of earnings over a period of ten years;

o financial strength of parent company and the relationships which
exist with the issuer; and

o recognition by the management of obligations which may be present
or may arise as a result of public interest questions and
preparations to meet such obligations.

DESCRIPTION OF BOND RATINGS

Bonds are considered to be "investment grade" if they are in one of the top
four ratings.

S&P's ratings are as follows:

55
<PAGE>

o Bonds rated AAA have the highest rating assigned by S&P. Capacity
to pay interest and repay principal is extremely strong.

o Bonds rated AA have a very strong capacity to pay interest and
repay principal although they are somewhat more susceptible to
the adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.

o Bonds rated A have a strong capacity to pay interest and repay
principal although they are somewhat more susceptible to the
adverse effects of changes in circumstances and economic
conditions than bonds in higher rated categories.

o Bonds rated BBB are regarded as having an adequate capacity to
pay interest and repay principal. Whereas they normally exhibit
adequate protection parameters, adverse economic conditions or
changing circumstances are more likely to lead to a weakened
capacity to pay interest and repay principal for bonds in this
category than in higher rated categories.

o Debt rated BB, B, CCC, CC or C is regarded, on balance, as
predominantly speculative with respect to the issuer's capacity to
pay interest and repay principal in accordance with the terms of
the obligation. While such debt will likely have some quality and
protective characteristics, these are outweighed by large
uncertainties or major risk exposures to adverse debt conditions.

o The rating C1 is reserved for income bonds on which no interest
is being paid.

o Debt rated D is in default and payment of interest and/or
repayment of principal is in arrears.

The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.

Moody's ratings are as follows:

o Bonds which are rated Aaa are judged to be of the best quality.
They carry the smallest degree of investment risk and are
generally referred to as "gilt-edged." Interest payments are
protected by a large or by an exceptionally stable margin and
principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of such
issues.

o Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are
generally known as high grade bonds. They are rated lower than
the best bonds because margins of protection may not be as
large as in Aaa securities or fluctuation of protective elements
may be of greater

<PAGE>

amplitude or there may be other elements present which make the
long term risks appear somewhat larger than in Aaa securities.

o Bonds which are rated A possess many favorably investment
attributes and are to be considered as upper medium grade
obligations. Factors giving security to principal and interest
are considered adequate but elements may be present which
suggest a susceptibility to impairment some time in the future.

o Bonds which are rated Baa are considered as medium grade
obligations, i.e., they are neither highly protected nor poorly
secured. Interest payments and principal security appear adequate
for the present but certain protective elements may be lacking
or may be characteristically unreliable over any great length of
time. Such bonds lack outstanding investment characteristics and
in fact have speculative characteristics as well.

o Bonds which are rated Ba are judged to have speculative
elements; their future cannot be considered as well assured.
Often the protection of interest and principal payments may be
very moderate and thereby not well safeguarded during both good
and bad times over the future. Uncertainty of position
characterizes bonds in this class.

o Bonds which are rated B generally lack characteristics of the
desirable investment. Assurance of interest and principal
payments or of maintenance of other terms of the contract over
any long period of time may be small.

o Bonds which are rated Caa are of poor standing. Such issues may
be in default or there may be present elements of danger with
respect to principal or interest.

o Bonds which are rated Ca represent obligations which are
speculative to a high degree. Such issues are often in default or
have other marked shortcomings.

o Bonds which are rated C are the lowest class of bonds and issues
so rated can be regarded as having extremely poor prospects of
ever attaining any real investment standing.

Moody's applies modifiers to each rating classification from Aa through B to
indicate relative ranking within its rating categories. The modifier "1"
indicates that a security ranks in the higher end of its rating category; the
modifier "2" indicates a mid-range ranking' and the modifier "3" indicates
that the issue ranks in the lower end of its rating category.

<PAGE>

Set forth below is the initial audited Statement of Assets and Liabilities at
April 1, 1997 for the Trust.

EQ Advisors Trust
Statement of Assets and Liabilities
April 1, 1997

T. ROWE T. ROWE EQ/PUTNAM
PRICE PRICE GROWTH & EQ/PUTNAM
EQUITY INTERNATIONAL INCOME INTERNATIONAL
INCOME STOCK VALUE EQUITY
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Assets
Cash $100,000 $ 0 $ 0 $ 0
Deferred organization
costs (Note 3) 28,750 28,750 28,750 28,750
====== ====== ====== ======
Total Assets 128,750 28,750 28,750 28,750

Liabilities
Organization costs payable 28,750 28,750 28,750 28,750
Commitments and
contingencies(Note 2)
Net Assets
Common Stock, $.01 par
value, unlimited
shares authorized,
10,000 shares of
Class IA issued and
outstanding (of the
T. Rowe Price Equity
Income Portfolio) 100,000

Total Net Assets $100,000 $0 $0 $0
======== == == ==
Net Asset Value per Share $10.00 $0 $0 $0
====== == == ==

</TABLE>

The accompanying notes are an integral part of the financial statements.

<PAGE>

MORGAN
MFS STANLEY WARBURG MERRILL MERRILL
EQ/PUTNAM EMERGING EMERGING PINCUS LYNCH LYNCH
INVESTORS EQ/PUTNAM MFS GROWTH MARKETS SMALL WORLD BASIC
GROWTH BALANCED RESEARCH COMPANIES EQUITY COMPANY STRATEGY VALUE
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO VALUE PORTFOLIO EQUITY
PORTFOLIO PORTFOLIO
<S> <C> <C> <C> <C> <C> <C> <C>
$ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
28,750 28,750 28,750 28,750 28,750 28,750 28,750 28,750
- -------- ------- ------- ------- ------- ------- ------- -------
28,750 28,750 28,750 28,750 28,750 28,750 28,750 28,750

28,750 28,750 28,750 28,750 28,750 28,750 28,750 28,750

0 0 0 0 0 0 0 0
======= ======== ======== ======== ======== ======== ======== ======
0 0 0 0 0 0 0 0
======= ======== ======== ======== ======== ======== ======== ======
</TABLE>

NOTE 1 ORGANIZATION

EQ Advisors Trust (the "Trust") was organized as a Delaware business trust on
October 31, 1996 and is registered with the Securities and Exchange Commission
("SEC") under the Investment Company Act of 1940, as amended (the "1940 Act"),
as an open-end management investment company with diversified and
non-diversified series portfolios. Its shares are registered with the SEC
under the 1933 Act. It is anticipated that the Trust will offer twelve
portfolios (the "Portfolios") each with two classes of shares: Class IA and
Class IB. The Trust's shares are currently sold only to insurance company
separate accounts in connection with variable life insurance contracts and
variable annuity certificates and contracts issued by The Equitable Life
Assurance Society of the United States ("Equitable"), a wholly-owned
subsidiary of The Equitable Companies Incorporated. The Trust has had no
operations other than the issuance of 10,000 shares of its Class IA common
stock of the T. Rowe Price Equity Income Portfolio (the "Portfolio") to
Equitable Separate Account FP on April 1, 1997.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts and disclosures. Actual results could differ
from those estimates.

NOTE 2 AGREEMENTS

The Trust intends to enter into an investment management agreement (the
"Management Agreement") with EQ Financial Consultants, Inc. (the "Manager"),
an indirect wholly-owned subsidiary of Equitable. The Management Agreement
obligates the Manager to (i) provide investment, management and certain
administrative services to the Trust; (ii) select Advisers for the Portfolios;
(iii) monitor the Advisers' investment programs and results; (iv) review
brokerage matters; (v) oversee compliance by the Trust with various federal
and state statutes; and (vi) carry out the directives of the Board of
Trustees. For its services under the Management Agreement, the Manager will
receive an annual fee for each of the Portfolios, calculated daily and payable
quarterly. The fee is calculated based on an annual rate of .55% of average
daily net assets of the T. Rowe Price Equity Income Portfolio, the EQ/Putnam
Growth & Income Value Portfolio, the EQ/Putnam Investors Growth Portfolio, the
EQ/Putnam Balanced Portfolio, the MFS Research Portfolio, the MFS Emerging
Growth Companies Portfolio and the Merrill Lynch Basic Value Equity Portfolio;
.65% of average daily net assets of the Warburg Pincus Small Company Value
Portfolio; .70% of average daily net assets of the EQ/Putnam International
Equity Portfolio and the Merrill Lynch World Strategy Portfolio; .75% of
average daily net assets of the T. Rowe Price International Stock Portfolio,
and 1.15% of average daily net assets of the Morgan Stanley Emerging Markets
Equity Portfolio.

59
<PAGE>

The Trust intends to enter into distribution agreements with the Manager and
Equitable Distributors, Inc. ("EDI"), an indirect wholly-owned subsidiary of
Equitable (collectively, the "Distributors") pursuant to which the
Distributors will serve as principal underwriters of the Class IA and Class IB
shares of the Trust. Class IB shares are subject to distribution fees imposed
pursuant to a distribution plan ("Distribution Plan") adopted pursuant to Rule
12b-1 under the 1940 Act. Under the Distribution Plan, the Distributors will
be entitled to receive a distribution fee of .25% of the average net assets
attributable to the Trust's Class IB shares. The Trust's Class IA shares will
not be subject to such fees.

On behalf of the Trust, the Manager intends to enter into investment advisory
agreements ("Advisory Agreements") with unaffiliated sub-advisers. Each of the
Advisory Agreements obligates the sub-advisers for the respective Portfolios
to: (i) continuously furnish investment programs for the Portfolios; (ii)
place all orders for the purchase and sale of investments for the Portfolios
with brokers or dealers selected by the Manager or the respective
sub-advisers; and (iii) perform certain limited related administrative
functions in connection therewith. The Manager pays the expenses of providing
investment advisory services to the Portfolios, including the fees of the
sub-advisers of each Portfolio.

The Trust intends to enter into an Administrative Agreement, with Chase Global
Funds Services Company ("Chase Global"), a subsidiary of The Chase Manhattan
Bank, ("Chase"), pursuant to which Chase Global will provide certain transfer
agent, fund accounting and administrative services to the Trust. For such
services, Chase Global will receive compensation at the annual rate of .0525
of 1% of the total Trust assets, plus $25,000 for each Portfolio, until the
total Trust assets reach $2.0 billion, and when the total Trust assets exceed
$2.0 billion: .0425 of 1% of the first $500 million of the total Trust assets;
.035 of 1% of the next $2.0 billion of the total Trust assets; .025 of 1% of
the next $1.0 billion of the total Trust assets; .015 of 1% of the next $2.5
billion of the total Trust assets; and .010 of 1% of the total Trust assets in
excess of $6.0 billion; except that the annual fee payable to Chase Global
with respect to any Portfolio which commences operation after July 1, 1997 and
whose assets do no exceed $200 million shall be computed at the rate of .0525
of 1% of the Portfolio's total assets plus $25,000.

The Trust intends to enter into a Custody Agreement with Chase. The Custody
Agreement will provide for an annual fee based on the amount of assets under
custody plus transaction charges.

In the interest of limiting expenses of each of the Portfolios, the Manager
has entered into an expense limitation agreement with the Trust, with respect
to each Portfolio, ("Expense Limitation Agreements") pursuant to which the
Manager has agreed to waive or limit its fees and to assume other expenses so
that the total annual operating expenses of each Portfolio are limited to .85%
of the respective average daily net assets of the T. Rowe Price Equity Income,
EQ/Putnam Growth & Income Value, EQ/Putnam Investors Growth, MFS Research, MFS
Emerging Growth Companies and Merrill Lynch Basic Value Equity Portfolios;
.90% of the EQ/Putnam Balanced Portfolio's average daily net assets; 1.00% of
the Warburg Pincus Small Company Value Portfolio's average daily net assets;
1.20% of the respective average daily net assets of the T. Rowe Price
International Stock, EQ/Putnam International Equity and Merrill Lynch World
Strategy Portfolios; and 1.75% of the Morgan Stanley Emerging Markets Equity
Portfolio's average daily net assets.

Each Portfolio may at a later date reimburse to the Manager the management
fees waived or limited and other expenses assumed and paid by the Manager
pursuant to the Expense Limitation Agreement provided such Portfolio has
reached a sufficient asset size to permit such reimbursement to be made
without causing the total annual expense ratio of each Portfolio to exceed the
percentage limit stated above. Consequently, no reimbursement by a Portfolio
will be made unless: (i) the Portfolio's average daily net assets exceed $100
million; (ii) the Portfolio's total annual expense ratio is less than the
respective percentages stated above; and (iii) the payment of such
reimbursement has been approved by the Trust's Board of Trustees on a
quarterly basis.

Certain employees of the Manager and Chase Global are officers of the Trust.
60
<PAGE>

NOTE 3 ORGANIZATION COSTS

Trust organization costs estimated at $345,000 have been allocated equally to
and capitalized by each of the Portfolios and will be deferred and amortized
on a straight line basis over a 60-month period from the date the Portfolios
commence operations. In the event that any of the shares representing initial
capital of the Portfolios are redeemed by any holder thereof during the period
that the Portfolios are amortizing their organization costs, the redemption
proceeds payable to the holder thereof by the Portfolios will be reduced by
the unamortized organization costs in the same ratio as the number of such
shares being redeemed bears to the number of initial shares outstanding
immediately prior to redemption.

The Trust has entered into an Organization Expense Reimbursement Agreement
with the Manager under which the Trust is obligated to reimburse and pay to
the Manager, or affiliated companies of the Manager and its affiliates,
organizational expenses incurred prior to the Portfolios commencing
operations.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Shareholder and Board of Trustees of EQ Advisers Trust

In our opinion, the accompanying statement of assets and liabilities presents
fairly, in all material respects, the financial position of each of the
portfolios constituting EQ Advisors Trust (the "Fund") at April 1, 1997, in
conformity with generally accepted accounting principles. This financial
statement is the responsibility of the Fund's management; our responsibility
is to express an opinion on this financial statement based on our audit. We
conducted our audit of this financial statement in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statement is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statement,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
April 2, 1997

<PAGE>

PART C: OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

Part A - Prospectus:

Financial Highlights

Part B - Statement of Additional Information:

Semi-Annual Report to Shareholders for the period
ended June 30, 1997.

(b) Exhibits:

1(a). Agreement and Declaration of Trust.1

1(b). Amended and Restated Agreement and Declaration
of Trust.2

1(c). Certificate of Trust.1

1(d). Certificate of Amendment.2

2. By-Laws of the Trust.1

3. Not applicable.

4. None other than Exhibit 1.

5(a). Investment Management Agreement between EQ Advisors Trust
and EQ Financial Consultants, Inc. dated April 14, 1997 and
Appendices A and B dated ________, 1997 (to be provided by
amendment).

5(b). Investment Advisory Agreement between EQ Financial
Consultants, Inc. and T. Rowe Price Associates, Inc. dated
April, 1997 and Appendix A dated April, 1997.4

5(c). Investment Advisory Agreement between EQ Financial C
onsultants, Inc. and Rowe Price-Fleming International, Inc.
dated April, 1997 and Appendix A dated April, 1997.4

5(d). Investment Advisory Agreement between, EQ Financial
Consultants, Inc. and Putnam Investment Management, Inc.
dated April, 1997 and Appendix A dated April, 1997.4

5(e). Investment Advisory Agreement between, EQ Financial
Consultants, Inc. and Massachusetts Financial Services
Company dated April, 1997 and Appendix A dated April, 1997.4

5(f). Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Morgan Stanley Asset Management Inc.
dated April, 1997 and Appendix A dated April, 1997.4

5(g). Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Warburg, Pincus Counsellors, Inc.
dated April, 1997 and Appendix A dated April, 1997.4

5(h). Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Merrill Lynch Asset Management, L.P.
dated April, 1997 and Appendix A dated April, 1997.4

C-1

<PAGE>

5(i) Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Lazard Asset Management (a division of
Lazard Freres & Co. LLC) dated _____, 1997 and Appendix A
dated ____, 1997 (to be provided by amendment).

5(j) Investment Advisory Agreement between EQ Financial
Consultants, Inc. and J.P. Morgan Investment Management, Inc.
dated _____, 1997 and Appendix A dated ____, 1997 (to be
provided by amendment).

5(k) Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Bankers Trust Company, dated _______,
1997 and Appendix A dated _______, 1997 (to be provided
by amendment).

6(a). Distribution Agreement between EQ Advisors Trust and EQ
Financial Consultants, Inc. with respect to the Class IA
shares dated April 14, 1997 and Schedule A dated _____,1997
(to be provided by amendment).

6(b). Distribution Agreement between EQ Advisors Trust and EQ
Financial Consultants, Inc. with respect to the Class IB
shares dated April 14, 1997 and Schedule A dated ______,
1997 (to be provided by amendment).

6(c). Distribution Agreement between EQ Advisors Trust and
Equitable Distributors, Inc. with respect to the Class IA
shares dated April 14, 1997 and Schedule A dated _______,
1997 (to be provided by amendment).

6(d). Distribution Agreement between EQ Advisors Trust and
Equitable Distributors, Inc. with respect to the Class IB
shares dated April 14, 1997 and Schedule A dated _______,
1997(to be provided by amendment).

7. Form of Deferred Compensation Plan.3

8. Custody Agreement between EQ Advisors Trust and North
American Insurance Securities Division of the Chase Manhattan
Bank dated April 17, 1997 and Appendix A dated _______, 1997
(to be provided by amendment).

9(a). Mutual Fund Services Agreement between EQ Advisors Trust and
Chase Global Funds Services Company dated April 25, 1997 and
Schedule A dated ________, 1997 (to be provided by amendment).

9(b). Expense Limitation Agreement between EQ Advisors Trust and EQ
Financial Consultants, Inc. dated April 14, 1997 and Schedule
A dated _______, 1997 (to be provided by amendment).

9(c)(1). Organizational Expense Reimbursement Agreement between EQ
Advisors Trust, on behalf of each series of the Trust except
for the Lazard Large Cap Value Portfolio, Lazard Small Cap
Value Portfolio, and the JPM Core Bond Portfolio, and EQ
Financial Consultants, Inc. dated April 14, 1997.4

9(c)(2). Organizational Expense Reimbursement Agreement between EQ
Advisors Trust, on behalf of the Lazard Large Cap Value
Portfolio, Lazard Small Cap Value Portfolio, and JPM Core
Bond Portfolio, and EQ Financial Consultants, Inc.
dated ______, 1997.5

9(c)(3). Organizational Expense Reimbursement Agreement between EQ
Advisors Trust, on behalf of the BT Small Company Index
Portfolio, BT International Equity Index Portfolio, and BT
Equity 500 Index Portfolio, and EQ Financial Consultants,
Inc. dated ______, 1997 (to be provided by amendment.)
C-2
<PAGE>

9(d). Participation Agreement dated April 14, 1997 and Schedule B
dated _______, 1997 (to be provided by amendment).

9(e). License Agreement Relating to Use of Name between Merrill
Lynch & Co., Inc., and EQ Advisors Trust dated
April 28, 1997.4

10(a). Opinion and Consent of Katten Muchin & Zavis regarding the
legality of the securities being registered.1

10(b) Opinion and Consent of Dechert, Price & Rhoads regarding the
legality of the securities being registered with respect to
the Lazard Large Cap Value Portfolio, Lazard Small Cap Value
Portfolio, and JPM Core Bond Portfolio.5

10(c) Opinion and Consent of Dechert, Price & Rhoads regarding the
legality of the securities being registered with respect to
the BT Small Company Index Portfolio, BT International
Equity Index Portfolio, and BT Equity 500 Index Portfolio.

11. Consent of Price Waterhouse, LLP, Independent Public
Accountants.

12. Not applicable.

13. Stock Subscription Agreement between the Trust, on behalf of
the T. Rowe Price Equity Income Portfolio, and Separate
Account FP.3

14. Not Applicable.

15. Distribution Plan Pursuant to Rule 12b-1 for the Trust's
Class IB shares.4

16. Not Applicable.

18. Plan Pursuant to Rule 18f-3 under the 1940 Act.4

19. Not Applicable.

20. Power of Attorney.3

27. Financial Data Schedule.

- -----------

1 Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A filed on December 3, 1996 (File No.33-17217).

2 Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A filed on January 23, 1997 (File No. 33-17217).

3 Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A filed on April 7, 1997 (File No. 33-17217).

4 Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A filed on August 28, 1997 (File No. 33-17217).

C-3

<PAGE>

5 Incorporated herein by reference to Registrant's Registration Statement
on Form N-1A filed on October 15, 1997 (File No. 33-17217).

Item 25. Persons Controlled by or under Common Control with Registrant

The Equitable Life Assurance Society of the United States
("Equitable") controls the Trust by virtue of its ownership of 100% of the
Trust's shares as of September 30, 1997. All EQ Advisors Trust shareholders
are required to solicit instructions from their respective contract owners as
to certain matters. EQ Advisors Trust may in the future offer its shares to
insurance companies unaffiliated with Equitable Life.

On July 22, 1992, Equitable converted from a New York mutual life
insurance company to a publicly-owned New York stock life insurance company.
At that time Equitable became a wholly-owned subsidiary of The Equitable
Companies Incorporated ("Holding Company"). The Holding Company continues to
own 100% of Equitable's common stock as well as approximately 80.2% of the
common stock of Donaldson, Lufkin & Jenrette, Inc., a registered
broker-dealer.

AXA, a French insurance holding company, currently owns approximately
63.9% of the outstanding voting shares of common stock of The Equitable
Companies. As majority shareholder of the Equitable Companies, AXA is able to
exercise significant influence over the operations and capital structure of
The Equitable Companies, Equitable and their subsidiaries. AXA is the holding
company for an international group of insurance and related financial services
companies. AXA is the second largest insurance group in the world based on
worldwide revenues in 1996 and also the world's largest insurer-based
investment manager with over $500 billion in assets under management. AXA is
also engaged in asset management, investment banking, securities trading and
other financial services activities principally in the United States, as well
as in Western Europe and the Asia Pacific area.

Item 26. Number of Holders of Securities

NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF OCTOBER 1, 1997
- ------------------------- ---------------------------

Class IA Shares of beneficial interest None
Class IB Shares of beneficial interest 1

Item 27. Indemnification

Amended and Restated Agreement and Declaration of Trust ("Declaration
of Trust") and By-Laws.

Article VII, Section 2 of the Trust's Declaration of Trust of EQ
Advisors Trust ("Trust") states, in relevant part, that a "Trustee, when
acting in such capacity, shall not be personally liable to any Person, other
than the Trust or a Shareholder to the extent provided in this Article VII,
for any act, omission or obligation of the Trust, of such Trustee or of any
other Trustee. The Trustees shall not be responsible or liable in any event
for any neglect or wrongdoing of any officer, agent, employee, Manager, or
Principal Underwriter of the Trust. The Trust shall indemnify each Person who
is serving or has served at the Trust's request as a director, officer,
trustee, employee, or agent of another organization in which the Trust has any
interest as a shareholder, creditor, or otherwise to the extent and in the
manner provided in the By-Laws." Article VII, Section 4 of the Trust's
Declaration of Trust further states, in relevant part, that the "Trustees
shall be entitled and empowered to the fullest extent permitted by law to
purchase with Trust assets insurance for liability and for all expenses
reasonably incurred or paid or expected to be paid by a Trustee, officer,
employee, or agent of the Trust in connection with any claim, action, suit, or
proceeding in which he or she may become involved by virtue of his or her
capacity or former capacity as a Trustee of the Trust."

Article VI, Section 2 of the Trust's By-Laws states, in relevant
part, that "[s]ubject to the exceptions and limitations contained in Section 3
of this Article VI, every [Trustee, officer, employee or

C-4

<PAGE>

other agent of the Trust] shall be indemnified by the Trust to the fullest
extent permitted by law against all liabilities and against all expenses
reasonably incurred or paid by him or her in connection with any proceeding in
which he or she becomes involved as a party or otherwise by virtue of his or
her being or having been an agent." Article VI, Section 3 of the Trust's
ByLaws further states, in relevant part, that "[n]o indemnification shall be
provided hereunder to [a Trustee, officer, employee or other agent of the
Trust]: (a) who shall have been adjudicated, by the court or other body before
which the proceeding was brought, to be liable to the Trust or its
Shareholders by reason of willful misfeasance, bad faith, gross negligence or
reckless disregard of the duties involved in the conduct of his or her office
(collectively, "disabling conduct"); or (b) with respect to any proceeding
disposed of (whether by settlement, pursuant to a consent decree or otherwise)
without an adjudication by the court or other body before which the proceeding
was brought that such [Trustee, officer, employee or other agent of the Trust]
was liable to the Trust or its Shareholders by reason of disabling conduct,
unless there has been a determination that such [Trustee, officer, employee or
other agent of the Trust] did not engage in disabling conduct: (i) by the
court or other body before which the proceeding was brought; (ii) by at least
a majority of those Trustees who are neither Interested Persons of the Trust
nor are parties to the proceeding based upon a review of readily available
facts (as opposed to a full trial-type inquiry); or (iii) by written opinion
of independent legal counsel based upon a review of readily available facts
(as opposed to a full trial-type inquiry); provided, however, that
indemnification shall be provided hereunder to [a Trustee, officer, employee
or other agent of the Trust] with respect to any proceeding in the event of
(1) a final decision on the merits by the court or other body before which the
proceeding was brought that the [Trustee, officer, employee or other agent of
the Trust] was not liable by reason of disabling conduct, or (2) the dismissal
of the proceeding by the court or other body before which it was brought for
insufficiency of evidence of any disabling conduct with which such [Trustee,
officer, employee or other agent of the Trust] has been charged." Article VI,
Section 4 of the Trust's By-Laws also states that the "rights of
indemnification herein provided (i) may be insured against by policies
maintained by the Trust on behalf of any [Trustee, officer, employee or other
agent of the Trust], (ii) shall be severable, (iii) shall not be exclusive of
or affect any other rights to which any [Trustee, officer, employee or other
agent of the Trust] may now or hereafter be entitled and (iv) shall inure to
the benefit of [such party's] heirs, executors and administrators."

UNDERTAKING

Insofar as indemnification for liability arising under the Securities
Act of 1933 (the "Act") may be permitted to trustees, 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 trustee, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such trustee, 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 28. Business and Other Connections of the Manager and Advisers

The description of EQ Financial Consultants, Inc. under the caption of
"Management of the Trust" in the Prospectus and under the caption "Investment
Management and Other Services" in the Statement of Additional Information
constituting Parts A and B, respectively, of this Registration Statement are
incorporated by reference herein.

The information as to the directors and officers of EQ Financial Consultants,
Inc. is set forth in EQ Financial Consultants, Inc.'s Form ADV filed with the
Securities and Exchange Commission on July 1, 1996 (File No. 801-14065) and
amended through the date hereof, is incorporated by reference.

C-5

<PAGE>

The information as to the directors and officers of T. Rowe Price Associates,
Inc., is set forth in T. Rowe Price Associates, Inc.'s Form ADV filed with the
Securities and Exchange Commission on March 29, 1996 (File No. 801-00856) and
amended through the date hereof, is incorporated by reference.

The information as to the directors and officers of Rowe Price-Fleming
International, Inc. is set forth in Rowe Price-Fleming International, Inc.'s
Form ADV filed with the Securities and Exchange Commission on March 29, 1996
(File No. 801-14713) and amended through the date hereof, is incorporated by
reference.

The information as to the directors and officers of Putnam Investment
Management, Inc. is set forth in Putnam Investment Management, Inc.'s Form ADV
filed with the Securities and Exchange Commission on April 2, 1996 (File No.
801-07974) and amended through the date hereof, is incorporated by reference.

The information as to the directors and officers of Massachusetts Financial
Services Company is set forth in Massachusetts Financial Services Company's
Form ADV filed with the Securities and Exchange Commission on May 23, 1996
(File No. 801-17352) and amended through the date hereof, is incorporated by
reference.

The information as to the directors and officers of Morgan Stanley Asset
Management Inc. is set forth in Morgan Stanley Asset Management Inc.'s Form
ADV filed with the Securities and Exchange Commission on July 8, 1996 (File
No. 801-15757) and amended through the date hereof, is incorporated by
reference.

The information as to the directors and officers of Warburg, Pincus
Counsellors, Inc. is set forth in Warburg, Pincus Counsellors, Inc.'s Form ADV
filed with the Securities and Exchange Commission on April 4, 1996 (File No.
801-07321) and amended through the date hereof, is incorporated by reference.

The information as to the directors and officers of Merrill Lynch Asset
Management, L.P. is set forth in Merrill Lynch Asset Management, L.P.'s Form
ADV filed with the Securities and Exchange Commission on November 18, 1996
(File No. 801-11583) and amended through the date hereof, is incorporated by
reference.

The information as to the directors and officers of Lazard Asset Management (a
division of Lazard Freres & Co. LLC) is set forth in Lazard Freres & Co. LLC's
Form ADV filed with the Securities and Exchange Commission on June 9, 1997
(File No. 801-6568) and amended through the date hereof, is incorporated by
reference.

The information as to the directors and officers of the J. P. Morgan
Investment Management Inc. is set forth in the J.P. Morgan Investment
Management Inc.'s Form ADV filed with the Securities and Exchange Commission
on January 24, 1997 (File No. 801-21011) and amended through the date hereof,
is incorporated by reference.

The information as to the directors and officers of Bankers Trust Company is
set forth below. To the knowledge of the Trust, none of the directors or
officers of Bankers Trust, except those set forth below, is or has been at
anytime during the past two fiscal years engaged in any other business,
profession, vocation or employment of a substantial nature, except that
certain directors and officers also hold various positions with and engage in
business for Bankers Trust New York Corporation. Set forth below are the names
and principal businesses of the directors and officers of Bankers Trust who
are or during the past two fiscal years have been engaged in any other
business, profession, vocation or employment of a substantial nature. These
persons may be contacted c/o Bankers Trust Company, 130 Liberty Street, New
York, New York 10006.

George B. Beitzel, International Business Machines Corporation, Old Orchard
Road, Armonk, NY 10504. Director, Bankers Trust Company; Retired senior vice
president and Director, International Business Machines Corporation; Director,
Computer Task Group; Director, Phillips Petroleum Company; Director, Caliber
Systems, Inc. (formerly, Roadway Services Inc.); Director, Rohm and Haas
Company; Director, TIG Holdings; Chairman emeritus of Amherst College; and
Chairman of the Colonial Williamsburg Foundation.

C-6

<PAGE>

Richard H. Daniel, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Vice chairman and chief financial officer, Bankers Trust Company
and Bankers Trust New York Corporation; Beneficial owner, general partner,
Daniel Brothers, Daniel Lingo & Assoc., Daniel Pelt & Assoc.; Beneficial
owner, Rhea C. Daniel Trust.

Philip A. Griffiths, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Director, Institute for Advanced Study; Director, Bankers Trust
Company; Chairman, Committee on Science, Engineering and Public Policy of the
National Academies of Sciences and Engineering & the Institute of Medicine;
and Chairman and member, Nominations Committee and Committee on Science and
Engineering Indicators, National Science Board; Trustee, North Carolina School
of Science and Mathematics and the Woodward Academy.

William R. Howell, J.C. Penney Company, Inc., P.O. Box 10001, Plano, TX
75301-0001. Chairman Emeritus, J.C. Penney Company, Inc.; Director, Bankers
Trust Company; Director, Exxon Corporation; Director, Halliburton Company;
Director, Warner-Lambert Corporation; Director, The Williams Companies, Inc.;
and Director, National Retail Federation.

Vernon E. Jordan, Jr., Akin, Gump, Strauss, Hauer & Feld, LLP, 1333 New
Hampshire Ave., N.W., Washington, DC 20036. Senior Partner, Akin, Gump,
Strauss, Hauer & Feld, LLP; Director, Bankers Trust Company; Director,
American Express Company; Director, Dow-Jones, Inc.; Director, J.C. Penney
Company, Inc.; Director, Revlon Group Incorporated; Director, Ryder System,
Inc.; Director, Sara Lee Corporation; Director, Union Carbide Corporation;
Director, Xerox Corporation; Trustee, Brookings Institution; Trustee, The Ford
Foundation; and Trustee, Howard University.

David Marshall, 130 Liberty Street, New York, New York 10006. Chief
Information Officer and Executive Vice President, Bankers Trust New York
Corporation; Senior Managing Director, Bankers Trust Company.

Hamish Maxwell, Philip Morris Companies Inc., 120 Park Avenue, New York, NY
10006. Retired Chairman and Chief Executive Officer, Philip Morris Companies
Inc.; Director, Bankers Trust Company; Director, The News Corporation Limited;
Director, Sola International Inc.; and Chairman, WWP Group pic.

Frank N. Newman, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Chairman of the Board, Chief Executive Officer and President, Bankers
Trust New York Corporation and Bankers Trust Company; Director, Bankers Trust
Company; Director, Dow-Jones, Inc.; and Director, Carnegie Hall.

N.J. Nicholas Jr., 745 Fifth Avenue, New York, NY 10020. Director, Bankers
Trust Company; Director, Boston Scientific Corporation; and Director, Xerox
Corporation.

Russell E. Palmer, The Palmer Group, 3600 Market Street, Suite 530,
Philadelphia, PA 19104. Chairman and Chief Executive Officer of The Palmer
Group; Director, Bankers Trust Company; Director, Allied-Signal Inc.;
Director, Federal Home Loan Mortgage Corporation; Director, GTE Corporation;
Director, The May Department Stores Company; Director, Safeguard Scientifics,
Inc.; and Trustee, University of Pennsylvania.

Donald L. Staheli, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Chairman of the Board and Chief Executive Officer, Continental
Grain Company; Director, Bankers Trust Company; Director, ContiFinancial
Corporation; Director, Prudential Life Insurance Company of America; Director,
Fresenius Medical Care, A.g.; Director, America-China Society; Director,
National Committee on United States-China Relations; Director, New York City
Partnership; Chairman, U.S.-China Business Council; Chairman, Council on
Foreign Relations; Chairman, National Advisor Council of Brigham Young
University's Marriott School of Management; Vice Chairman, The Points of Light
Foundation; and Trustee, American Graduate School of International Management.

C-7

<PAGE>

Patricia Carry Stewart, c/o Office of the Secretary, 130 Liberty Street, New
York, NY 10006. Director, Bankers Trust Company; Director, CVS Corporation;
Director, Community Foundation for Palm Beach and Martin Counties; Trustee
Emerita, Cornell University.

George J. Vojta, Bankers Trust Company, 130 Liberty Street, New York, NY
10006. Vice Chairman, Bankers Trust New York Corporation and Bankers Trust
Company; Director, bankers Trust Company; Director; Alicorp S.A.; Director;
Northwest Airlines; Director, Private Export Funding Corp.; Director, New York
State Banking Board; Director, St. Lukes-Roosevelt Hospital Center; Partner,
New York City Partnership; and Chairman, Wharton Financial Services Center.

Paul A. Volcker, Bankers Trust Company, 130 Liberty Street, New York, New York
10006. Director, Bankers Trust Company; Director, American Stock Exchange;
Director, Nestle S.A.; Director, Prudential Insurance Company; Director, UAL
Corporation; Chairman, Group of 30; North American Chairman, Trilateral
Commission; Co-Chairman, Bretton Woods Committee; Co-Chairman, U.S./Hong Kong
Economic Cooperation Committee; Director, American Council on Germany;
Director, Aspen Institute; Director, Council on Foreign Relations; Director,
The Japan Society; and Trustee, The American Assembly.

Melvin A. Yellin, Bankers Trust Company, 130 Liberty Street, New York, New
York 10006. Senior Managing Director and General Counsel of Bankers Trust New
York Corporation and Bankers Trust Company; Director, 1136 Tenants
Corporation; and Director, ABA Securities Association.

Item 29. Principal Underwriters

(a) EQ Financial Consultants, Inc. is a principal underwriter of the
Trust's Class IA shares and Class IB shares, and Equitable Distributors, Inc.
is also a principal underwriter of the Trust's Class IA shares and Class IB
shares. EQ Financial Consultants Inc. also serves as the principal underwriter
for the following entities: the Class IA shares of The Hudson River Trust;
Separate Accounts A and No. 301 of Equitable; and Separate Accounts I and FP
of Equitable. Equitable Distributors, Inc. serves as the principal underwriter
for the Class IB shares of The Hudson River Trust and Separate Account Nos. 45
and 49 of Equitable.

(b) Set forth below is certain information regarding the directors
and officers of EQ Financial Consultants, Inc., and of Equitable Distributors,
Inc., the principal underwriters of the Trust's Class IA and Class IB shares.
The business address of the persons whose names are preceded by a single
asterisk is EQ Advisors Trust, 1290 Avenue of the Americas, New York, New York
10104. The business address of the persons whose names are preceded by a
double asterisk is 1755 Broadway, 3rd Floor, New York, New York 10019. Ms.
Laughlin's business address is 1345 Avenue of the Americas, 39th Floor, New
York, New York 10105. Mr. Kornweiss's business address is 4251 Crums Mill
Road, Harrisburg, PA 17112. Mr. Witte's business address is 135 West Fiftieth
Street, 4th Floor, New York, New York 10020. The business address of Mr.
Brakovich, Mr. Shepherdson and Mr. Meserve is 660 Newport Center Drive, Suite
350, Newport Beach, CA 92660. The business address of Mr. Hayes and Mr. Bullen
is 200 Plaza Drive, Secaucus, New Jersey 07096.

C-8

<PAGE>

POSITIONS AND OFFICES POSITIONS AND OFFICES
NAME AND PRINCIPAL WITH WITH EQ FINANCIAL REGISTRANT
BUSINESS ADDRESS CONSULTANTS, INC. (EQ ADVISORS TRUST)
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
DIRECTORS
* Derry E. Bishop Director
* Harvey Blitz Director Chief Financial Officer and
Vice President
Michael J. Laughlin Director Vice President
* Michael S. Martin Director
** Michael F. McNelis Director
* Richard V. Silver Director
* Mark R. Wut Director

OFFICERS
* Michael S. Martin Chairman of the Board and Chief Vice President
Executive Officer
Officer
** Michael F. McNelis President and Chief Operationg
Officer
* Derry E. Bishop Executive Vice President
* Harvey Blitz Executive Vice President Chief Financial Officer and
Vice President
** Martin J. Telles Executive Vice President and Vice President
Chief Mmarketing Officer
* Fred A. Folco Executive Vice President
* Thomas J. Duddy, Jr. Executive Vice President
* William J. Green Executive Vice President
* A. Frank Beaz Executive Vice President
Edward J. Hayes Executive Vice President
* Peter D. Noris Executive Vice President President
Dennis D. Witte Executive Vice President
** Robert McKenna Senior Vice President and
Financial officer
** Theresa A. Nurge-Alws Senior Vice President
** Ronald Boswell First Vice President
** Donna M. Dazzo First Vice President
* Robin K. Murray Forst Vice President
* Michael Brzozowski Vice President and Compliance
Director
* Mary P. Breen Vice President and Counsel Vice President and Secretary
** Amy Franceschini Vice President
** Linda Funigiello Vice President
** James Furlong Vice President
Peter R. Kornweiss Vice President
** Frank Lupo Vice President
** Rosemary Magee Vice President
** T.S. Narayanan Vice President
** James R. Anderson Vice President
* Raymond T.Barry Vice President
** Laura A. Pellegrini Vice President
* Mary A. Cantwell Assistant Vice President
* Janet E. Hannon Secretary
* Linda J. Galasso Assisstant Secretary
- ---------------------------------------------------------------------------
</TABLE>

C-9
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
DIRECTORS
Greg Brakovich Director
* Jerome S. Golden Director
* William T. McCaffrey Director Trustee
James A. Shepherdson, III Director

OFFICERS
* Jerome S. Golden Chairman of the Board
Greg Brakovich Co-President and Co-Chief
Executive Officer and
Managing Director
James A. Shepherdson, III Co-President and Co-Chief
Executive Officer and Managing
Director
Dennis D. Witte Director
Philip D. Meserve Senior vice President
Thomas D. Bullen Managing Director
* Michael Brzozowski Chief Financial Officer
* Mary P. Breen Vice President and Counsel Vice President and Secretary
* Ronald R. Quist Treasurer
* Janet Hannon Secretary
* Linda J. Galasso Assistant Secretary
- ---------------------------------------------------------------------------
</TABLE>

Item 30. Location of Accounts and Records

Books or other documents required to be maintained by Section 31(a)
of the Investment Company Act of 1940, and the Rules promulgated thereunder,
are maintained as follows:

(a) With respect to Rules 31a-1(a); 31a-1(b)(1); (2)(a) and (b); (3); (6);
(8); (12); and 31a-1(d), the required books and records are maintained at
the offices of Registrant's Custodian:

1211 Avenue of the Americas
New York, New York 10036

(b) With respect to Rules 31a-1(a); 31a-1(b)(1), (4); (2)(C) and (D); (4);
(5); (6); (8); (9); (10); (11) and 31a-1(f), the required books and
records are currently maintained at the offices of the Registrant's
Administrator:

73 Tremont Street
Boston, Massachusetts 02108

(c) With respect to Rules 31a-1(b)(5), (6), (9) and (10) and 31a-1(f), the
required books and records are maintained at the principal offices of the
Registrant's Manager or Advisers:

EQ Financial Consultants, Inc. T. Rowe Price Associates, Inc.
1755 Broadway, 3rd Floor 100 East Pratt St.
New York, New York 10019 Baltimore, MD 21202

Rowe Price-Fleming International, Inc. Putnam Investment Management, Inc.
100 East Pratt Street One Post Office Square
Baltimore, MD 21202 Boston, MA 02109

Massachusetts Financial Services Company Merrill Lynch Asset Management, L.P.
C-10

<PAGE>

500 Boylston Street 800 Scudders Mill Road
Boston, MA 02116 Plainsboro, New Jersey 08543-9011

Warburg, Pincus Counsellors, Inc. Morgan Stanley Asset Management Inc.
466 Lexington Avenue 1221 Avenue of the Americas
New York, New York 10017-3147 New York, New York 10020

Lazard Asset Management J.P Morgan Investment Management Inc.
30 Rockefeller Plaza 522 Fifth Avenue
New York, New York 10020 New York, New York 10036

Bankers Trust Company
130 Liberty Street
One Bankers Trust Plaza
New York, New York 10006

Item 31. Management Services: None.

Item 32. Undertakings

(a) Inapplicable.

(b) The Registrant hereby undertakes to file a post-effective
amendment, including financial statements which need not be audited, within
four to six months from the later of the commencement of operations of the
Morgan Stanley Emerging Markets Equity Portfolio or the effective date of
Post-Effective Amendment No. 1 to the Registrant's 1933 Act Registration
Statement.

The Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be audited, within four to six
months from the later of the commencement of operations of the Lazard Large
Cap Value Portfolio, Lazard Small Cap Value Portfolio, and JPM Core Bond
Portfolio or the effective date of Post-Effective Amendment No. 2 to the
Registrant's 1933 Act Registration Statement.

The Registrant hereby undertakes to file a post-effective amendment,
including financial statements which need not be audited, within four to six
months from the later of the commencement of operations of the BT Small
Company Index Portfolio, BT International Equity Index Portfolio, and BT
Equity 500 Index Portfolio, or the effective date of Post-Effective Amendment
No. 3 to the Registrant's 1933 Act Registration Statement.

C-11

<PAGE>

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, and
the Investment Company Act of 1940, as amended, the Registrant has duly caused
this Post-Effective Amendment No. 3 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
New York, and the State of New York on the 30th day of October, 1997.

EQ ADVISORS TRUST

By:
--------------------------
Peter D. Noris
President

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Post-Effective Amendment No. 2 to the Registration Statement has been signed
below by the following persons in the capacities and on the dates indicated.

Signature Title Date
- ---------------- --------- -------

- -------------------------------
Peter D. Noris President and Trustee October 30, 1997

* Trustee October 30, 1997
- -------------------------------
William T. McCaffrey

* Trustee October 30, 199
- -------------------------------
Jettie M. Edwards

* Trustee October 30, 1997
- -------------------------------
William M. Kearns, Jr.

* Trustee October 30, 1997
- -------------------------------
Christopher P.A. Komisarjevsky

* Trustee October 30, 1997
- -------------------------------
Harvey Rosenthal

* Chief Financial Officer October 30, 1997
- -------------------------------
Harvey Blitz

* By: _______________________
Peter D. Noris
(Attorney-in-Fact)

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<PAGE>

EXHIBIT LIST

EXHIBIT
NUMBER DESCRIPTION

10(b) Opinion and consent of Dechert, Price & Rhoads regarding the legality of
the securities being registered with respect to the BT Small Company
Index Portfolio, BT International Equity Index Portfolio, and BT Equity
500 Index Portfolio.

11. Consent of Price Waterhouse, LLP, Independent Public Accountants.

27. Financial Data Schedule.

C-13

<PAGE>

Exhibit 10(b)

October 30, 1997

Opinion and Consent of Counsel

EQ Advisors Trust
1290 Avenue of the Americas
New York, New York 10104

Dear Gentlemen:

This opinion is given in connection with the filing by EQ Advisors Trust, a
Delaware business trust ("Trust"), of Post-Effective Amendment No. 3 to the
Registration Statement on Form N-1A ("Registration Statement") under the
Securities Act of 1933 ("1933 Act") and Amendment No. 4 under the Investment
Company Act of 1940 ("1940 Act") relating to an indefinite amount of authorized
shares of beneficial interest, at a par value of $.01 per share, of three new
separate series of the Trust, BT Small Company Index Portfolio, BT
International Equity Portfolio, and BT Equity 500 Index Portfolio (individually
"Portfolio" and, together, the "Portfolios"). The authorized shares of
beneficial interest of the Portfolios are hereinafter referred to as the
"Shares."

We have examined the following Trust documents: Certificate of Trust;
Certificate of Amendment; Amended and Restated Agreement and Declaration of
Trust; By-Laws; Registration Statement on Form N-1A filed on December 3, 1996;
Pre-Effective Amendment No. 1 to the Registration Statement on Form N-1A filed
January 23, 1997; Pre-Effective Amendment No. 2 to the Registration Statement
on Form N-1A filed April 7, 1997; Post-Effective Amendment No. 1 to the
Registration Statement on Form N-1A filed August 28, 1997; Post-Effective
Amendment No. 2 to the Registration Statement on Form N-1A filed October 15,
1997 and Post-Effective Amendment No. 3 to the Registration Statement to be
filed with the Securities and Exchange Commission on or about October 31, 1997;
pertinent provisions of the laws of the State of Delaware; and such other
corporate records, certificates, documents and statutes that we have deemed
relevant in order to render the opinion expressed herein.

Based on such examination, we are of the opinion that:

1. EQ Advisors Trust is a Delaware business trust duly organized, validly
existing, and in good standing under the laws of the State of
Delaware; and

<PAGE>

2. The Shares to be offered for sale by EQ Advisors Trust, when issued in
the manner contemplated by the Registration Statement, will be legally
issued, fully-paid and non-assessable.

This letter expresses our opinion as to the Delaware Business Trust Act
governing matters such as the due organization of EQ Advisors Trust and the
authorization and issuance of the Shares, but does not extend to the securities
or "Blue Sky" laws of the State of Delaware or to federal securities or other
laws.

We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to Dechert Price & Rhoads under the caption
"Legal Matters" in the Statement of Additional Information, which is
incorporated by reference into the Prospectus comprising a part of the
Registration Statement.

Very truly yours,

/s/ DECHERT PRICE & RHOADS

DECHERT PRICE & RHOADS

<PAGE>

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Statement of Additional Information
constituting part of this Post-Effective Amendment No. 3 to the registration
statement on Form N-1A (the "Registration Statement") of our report dated April
2, 1997, relating to the statement of assets and liabilities of EQ Advisors
Trust, which appears in such Statement of Additional Information. We also
consent to the reference to us under the heading "Other Services--Independent
Accountant" in such Statement of Additional Information.

PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York
October 29, 1997

<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>

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<NAME> EQ ADVISORS TRUST
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<PAGE>

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<PAGE>

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