EQ ADVISORS TRUST, N-1A EL/A, 1997-01-23

EQ ADVISORS TRUST
N-1A EL/A, 1997-01-23

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Registration Nos. 33-17217
811-07953

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 23, 1997.

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

REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OF 1933

Pre-Effective Amendment No. 1 /x/

Post-Effective Amendment No. / /
and/or
REGISTRATION STATEMENT UNDER THE

INVESTMENT COMPANY ACT OF 1940 / /

Amendment No. 1 /x/
(Check appropriate box or boxes)

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

787 Seventh Avenue
New York, New York 10019
(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
787 Seventh Avenue, 47th Floor
New York, New York 10019
(Name and address of agent for service)

Please send copies of all communications to:

Jane A. Kanter Naomi Friedland-Wechsler
Katten Muchin & Zavis General Counsel
1025 Thomas Jefferson Street, N.W. EQ Financial Consultants, Inc.
East Lobby, Suite 700 787 Seventh Avenue
Washington, D.C. 20007 New York, New York 10019

Approximate date of proposed public offering: As soon as practicable after the
effective date of this Registration Statement.

The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.

Pursuant to the provisions of Rule 24f-2 under the Investment Company Act of
1940, an indefinite number of shares of common stock is being registered by
this Registration Statement.

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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 - Prospectus
Part B - Statement of Additional Information
Part C - Other Information
Signature Page
Exhibits

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EQ ADVISORS TRUST:

CROSS REFERENCE SHEET

<S> <C> <C>
PART A. ITEM NO. AND CAPTIONS CAPTION IN PROSPECTUS

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
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
</TABLE>

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22. Calculation of Performance Data Not Applicable

23. Financial Statements Not Applicable

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.
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SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED , 1997

EQ ADVISORS TRUST
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019

EQ Advisors Trust ("Trust") is a 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 twelve 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 Global Allocation Portfolio
* Merrill Lynch Basic Value 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.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. THE TRUST'S
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE TRUST'S REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

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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 __________, 1997
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
or calling 1-800-__________. 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.

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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 twelve Portfolios. Each Portfolio is a separate series of the
Trust with its own objective and policies. All of the Portfolios, except for
the Morgan Stanley Emerging Markets Equity Portfolio and Merrill Lynch Global
Allocation 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 Counsellors, Inc., and Merrill Lynch
Asset Management, L.P. serve as the advisers (each an "Adviser" and, together
the "Advisers") to one or more of the Portfolios, as detailed in the table
below.

PORTFOLIO ADVISER

T. Rowe Price International Stock Rowe Price-Fleming International,
Portfolio Inc.

T. Rowe Price Equity Income T. Rowe Price Associates, Inc.
Portfolio

EQ Putnam Growth & Income Value Putnam Investment Management, Inc.
Portfolio

EQ Putnam International Equity Putnam Investment Management, Inc.
Portfolio

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 Massachusetts Financial Services
Portfolio Company

Morgan Stanley Emerging Markets Morgan Stanley Asset Management
Equity Portfolio Inc.

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Warburg Pincus Small Value Warburg, Pincus Counsellors, Inc.
Portfolio

Merrill Lynch Global Allocation Merrill Lynch Asset Management,
Portfolio L.P.

Merrill Lynch Basic Value Portfolio Merrill Lynch Asset Management,
L.P.

The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc. ("Distributor"), the
Trust's Manager, also serves as the distributor for the Class IA shares of the
Trust offered by this Prospectus. 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 (Attention: ____________).

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 Portfolio's net
assets will be invested in securities of issuers located in any one country

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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

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ordinarily be made on exchanges located at least in the respective countries in
which the various issuers of such securities are principally based.

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-

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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.

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.

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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.

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 located outside 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

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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.

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.

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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.

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.

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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 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

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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
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 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

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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").

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.

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<PAGE>

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.

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

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<PAGE>

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 "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, illiquid securities, foreign securities,
securities loans, borrowings, payment-in-kind 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, assetbacked 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.

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<PAGE>

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 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. The Portfolio may
also hold debt securities that are not investment grade securities (commonly
referred to as "junk bonds"). 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 medium-term (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 A-2 by S&P or
Prime-2 by 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.

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, futures contracts, foreign currency transactions, United States
Government securities, short sales against the box,

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<PAGE>

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 GLOBAL ALLOCATION PORTFOLIO

The investment objective of the Merrill Lynch Global Allocation Portfolio is to
seek a high total investment return, consistent with prudent risk, through a
fully-managed investment policy utilizing United States and foreign equity,
debt and money market securities the combination of which will be varied from
time to time both with respect to types of securities and markets in response
to changing market and economic trends. Total investment return is the
aggregate of capital value changes and income. The Portfolio may employ a
variety of instruments and techniques to enhance income and to hedge against
market and currency risk.

The Portfolio will invest in a portfolio of United States and foreign equity,
debt and money market securities. The composition of the portfolio among these
securities and capital markets will be varied from time to time by the Adviser,
in response to changing market and economic trends. This fully managed
investment approach provides the Portfolio with the opportunity to benefit from
anticipated shifts in the relative performance of different types of securities
and different capital markets. For example, at times the Portfolio may
emphasize investments in equity securities in anticipation of significant
advances in stock markets and at times may emphasize debt securities in
anticipation of significant declines in interest rates. Similarly, the
Portfolio may emphasize foreign markets in its security selection when such
markets are expected to outperform, in United States dollar terms, the United
States markets. The Portfolio will seek to identify longer-term structural or
cyclical changes in the various economies and markets of the world which are
expected to benefit certain capital markets and certain securities in those
markets to a greater extent than other investment opportunities.

In determining the allocation of assets among capital markets, the Adviser will
consider, among other factors, the relative valuation, condition and growth
potential of the various economies, including current and anticipated changes
in the rates of economic growth, rates of inflation, corporate profits, capital
reinvestment, resources, self-sufficiency, balance of payments, governmental
deficits or surpluses and other pertinent financial, social and political
factors which may affect such markets. In allocating among equity, debt and
money market securities within each market, the Adviser also will consider the
relative opportunity for capital appreciation rates paid on debt securities of
various maturities.

In selecting securities denominated in foreign currencies, the Adviser will
consider, among other factors, the effect of movement in currency exchange
rates on the United States dollar value of such securities. An increase in the
value of a currency will increase the total return to the Portfolio of
securities denominated in such currency. Conversely, a decline in the value of
the currency will reduce the total return. The Adviser may seek to hedge all or
a portion of the Portfolio's use of foreign securities through the use of
forward foreign currency exchange contracts, currency options, futures
contracts and options thereon.

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<PAGE>

While there are no prescribed limits on the geographical allocation of the
Portfolio's assets, the Adviser anticipates that it will invest primarily in
the securities of corporate and governmental issuers domiciled or located in
North and South America, Western Europe and the Far East. In addition, the
Adviser anticipates that a portion of the Portfolio's assets normally will be
invested in the United States securities markets and the other major capital
markets. Under normal conditions, the Portfolio's investments will be
denominated in at least three currencies or multinational currency units.
However, the Portfolio reserves the right to invest substantially all of its
assets in United States markets or United States dollar-denominated obligations
when the Adviser believes market conditions warrant such investment.

Similarly, there are no prescribed limits on the allocation of the Portfolio's
assets among equity, debt and money market securities. Therefore, at any given
time, the Portfolio's assets may be primarily invested in equity, debt or money
market securities or in any combination thereof. However, the Adviser
anticipates that the Portfolio's securities portfolio generally will include
both equity and debt securities.

Within the portion of the Portfolio's securities portfolio allocated to equity
securities, the Adviser will seek to identify the securities of companies and
industry sectors which are expected to provide high total return relative to
alternative equity investments. The Portfolio generally will seek to invest in
securities the Adviser believes to be undervalued. Undervalued issues include
securities selling at a discount from the price-to-book value ratios and
price/earnings rations computed with respect to the relevant stock market
averages. The Portfolio may also consider as undervalued, securities selling at
a discount from their historic price-to-book value or price/earnings rations,
even though these ratios may be above the ratios for the stock market averages.
Securities offering dividend yields higher than the yields for the relevant
stock market averages or higher than such securities' historic yield may also
be considered to be undervalued. The Portfolio may also invest in the
securities of small and emerging growth companies when such companies are
expected to provide a higher total return than other equity investments. Such
companies are characterized by rapid historical growth rates, above-average
returns on equity or special investment value in terms of their products or
services, research capabilities or other unique attributes. The Adviser will
seek to identify small and emerging growth companies that possess superior
management, marketing ability, research and product development skills and
sound balance sheets. Investment in the securities of small and emerging growth
companies involves greater risk than investment in larger, more established
companies. Such risks include the fact that securities of small or emerging
growth companies may be subject to more abrupt or erratic market movements than
larger, more established companies or the market average in general. Also,
these companies may have limited product lines, markets or financial resources,
or they may be dependent on a limited management group.

Within the portion of the Portfolio's securities portfolio allocated to debt
securities, the Portfolio may 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).
In addition, the Portfolio may invest in United States Government securities,
which include: (i) United States Treasury obligations (bills, notes and bonds),
all of which are backed by the full

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<PAGE>

faith and credit of the United States; and (ii) obligations issued or
guaranteed by United States Government agencies or instrumentalities. The
Portfolio is also authorized to invest in investment grade debt securities of
governmental issuers and corporate issuers as well as fixed income securities
of such issuers rated below investment grade by an NRSRO. The Portfolio will
invest no more than 35% of its assets in high yielding securities rated below
investment grade (commonly referred to as "junk bonds"). The average maturity
of the Portfolio's debt securities will vary based on the Adviser's assessment
of pertinent economic market conditions.

The Portfolio is non-diversified for the 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, investment grade and lower
quality fixed-income securities, floaters, inverse floaters, futures contracts,
foreign securities, precious metal related securities, real estate related
securities, United States Government securities, convertible securities,
borrowings, mortgage-backed securities, repurchase agreements, securities
loans, illiquid securities, forward commitments, and swaps) are discussed under
the caption "Investment Strategies" below and in the Statement of Additional
Information.

MERRILL LYNCH BASIC VALUE PORTFOLIO

The investment objective of the Merrill Lynch Basic Value 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

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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 rations 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 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. The Adviser makes extensive use of
investment research information provided by unaffiliated brokers and dealers
and of the securities research, economic research and computer applications
facilities provided by the Adviser or certain of its affiliates, as described
below.

The securities research division of the Adviser (and its affiliates) employs
approximately 150 professionals responsible for fundamental and technical
securities analysis. The fundamental research staff consists of approximately
136 professionals who follow approximately 1,500 companies. The types of
securities in which the Portfolio will invest often receive limited research
coverage and, therefore, the Portfolio will benefit from its access to these
extensive research resources. The Adviser and affiliates continually analyzes
the changing patterns of market forces and trends in the overall market, groups
of securities and individual securities and carefully monitors indicators of
investor psychology.

The economic research facilities of the Adviser conduct detailed analyses of
overall economic conditions, both nationally and internationally. Economists
employed by affiliates of the Adviser work closely with analysts of the Adviser
in the continuous analysis of factors affecting the securities markets,
industry performance and short-term and long-term market risks.

The computer applications facilities of certain affiliates of the Adviser
provide, among other things, proprietary computer screening programs used to
identify securities on the basis of various characteristics, which may include
dividend return, price-earnings ratios, price trends and other factors deemed
significant in analyzing a particular segment of the securities markets.

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 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
Government and money market securities, repurchase agreements or cash, in such
proportions

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as, in the opinion of the Adviser, prevailing market or economic conditions
warrant. The Portfolio may invest up to 25% 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.

INVESTMENT STRATEGIES

In addition to making investments directly in securities, to the extent
described above, each of the Portfolios (except for MFS Research Portfolio) may
purchase and sell call and put options, engage in transactions in futures
contracts and related options, loans and other direct indebtedness and engage
in forward foreign currency exchange transactions. They may also enter into
repurchase agreements, lend their portfolio securities, and borrow funds under
certain limited circumstances. In addition, each Portfolio may engage in other
types of investment strategies as described below. The investment strategies
and instruments referred to above 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 and Morgan Stanley Emerging Markets Equity 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. 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, Merrill Lynch
Global Allocation Portfolio and Merrill Lynch Basic Value 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. Borrowings for the EQ Putnam Growth & Income Value Portfolio, the
EQ Putnam International Equity Portfolio, EQ Putnam Investors Growth Portfolio
and EQ Putnam Balanced Portfolio may not exceed 10% of each

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Portfolio's total assets. Each Portfolio may pledge its assets to secure these
permissible borrowings. No 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.

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 that
non-convertible 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
derivatives. Derivatives are financial products or instruments that derive
their value from the value of an underlying asset, reference rate or index.
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.

FLOATERS AND INVERSE FLOATERS. The Morgan Stanley Emerging Markets Equity
Portfolio and Merrill Lynch Global Allocation Portfolio 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 Investment".

In addition, the Morgan Stanley Emerging Markets Equity Portfolio and Merrill
Lynch Global Allocation 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

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collateralized mortgage obligations ("CMOs") exhibit greater price volatility
than the majority of mortgage-related securities. In addition, some inverse
floater collateralized mortgage obligations exhibit extreme sensitivity to
changes in prepayments. As a result, the yield to maturity of an inverse
floater collateralized mortgage obligation 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 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 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.

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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 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.

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 Morgan Stanley Emerging Markets Equity Portfolio 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. The Morgan Stanley
Emerging Markets Equity 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 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
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 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.

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FOREIGN CURRENCY TRANSACTIONS. Each of the Portfolios (except the MFS Research
Portfolio and Merrill Lynch Basic Value Portfolio) may purchase foreign
currency on a spot (or cash) basis, and may enter into contracts to purchase
or sell foreign currencies at a future date ("forward contracts"). Each of the
Portfolios (except MFS Research Portfolio, and Merrill Lynch Basic Value
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 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 and Merrill Lynch Global Allocation Portfolio may engage in OTC
options on foreign currency transactions. The Merrill Lynch Global Allocation
Portfolio will engage in OTC option on foreign currency transactions only with
member banks of the Federal Reserve System and primary dealers in United
States Government securities or with affiliates of such banks or dealers which
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 and Merrill Lynch Basic Value
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
over-the-counter 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 MFS Research Portfolio, Warburg
Pincus Small Company Value Portfolio and Merrill Lynch Basic 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 high-grade
debt obligations 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

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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 and T. Rowe
Price Equity Income 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 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 MFS Research Portfolio, MFS Emerging Growth Companies
Portfolio and Warburg Pincus Small Company Value Portfolio may each invest up
to 10% of its assets and each other Portfolio may invest up to 15% of their
respective net assets in illiquid securities and other securities which are not
readily marketable, including non-negotiable 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
(except the Merrill Lynch Basic Value Portfolio) may invest in or hold a
portion of its total assets in investment grade or lower quality fixed income
securities. The T. Rowe Price International Stock Portfolio may invest in or
hold investment grade securities, but not lower quality fixed income
securities. Investment grade securities are securities rated Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings Service
("S&P") and comparable unrated securities. Investment grade securities while
normally exhibiting adequate protection parameters, have speculative
characteristics, and, consequently, changes in economic conditions or other

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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 or BB
or lower by S&P) or comparable 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 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 the Adviser to value accurately certain portfolio securities.

LOAN PARTICIPATIONS. The EQ Putnam Balanced Portfolio, MFS Emerging Growth
Companies Portfolio and the Morgan Stanley Emerging Markets Equity Portfolio
may invest a portion of each of their assets in loan participations and other
direct indebtedness. By purchasing a loan, 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.

MORTGAGE-RELATED SECURITIES. The EQ Putnam Balanced Portfolio, Morgan Stanley
Emerging Markets Equity Portfolio and Merrill Lynch Global Allocation 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.

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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.

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.

MUNICIPAL SECURITIES. The Morgan Stanley Emerging Markets Equity 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 privatelyoperated 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) may utilize futures contracts and write and purchase put and call
options. The Merrill Lynch Basic Value Portfolio may not enter into futures
contracts, although it may utilize options. 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. 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 may utilize futures contracts and
related options 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 will not commit more than 5% of its total assets to
premiums when purchasing call or put options. In addition, the total market
value

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of securities against which a Portfolio has written call or put options may not
exceed 25% of its total assets. The MFS Emerging Growth Companies Portfolio
will not enter a futures contract if the obligations underlying all such
futures contracts would exceed 50% of the value of the 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 International Equity Portfolio, EQ Putnam Balanced
Portfolio, MFS Emerging Growth Companies Portfolio and Merrill Lynch Global
Allocation 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 on securities, financial indices, and foreign currencies.

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 the
Trust's expenses (management fees and operating expenses), shareholders will
also indirectly bear similar expenses of such entities.

PAYMENT-IN-KIND BONDS. The EQ Putnam Growth & Income Value Portfolio, the EQ
Balanced Portfolio and Morgan Stanley Emerging Markets Equity 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

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Portfolios could be required, at times, to liquidate other investments in order
to satisfy its distribution requirements.

PRECIOUS METAL-RELATED SECURITIES. The Merrill Lynch Global Allocation
Portfolio may invest in precious metal-related securities, which are equity
securities of companies that explore for, extract, process or deal in precious
metals, i.e., gold, silver and platinum, and asset-based securities indexed to
the value of such metals. Based on historical experience, during periods of
economic or financial instability the securities of such companies may be
subject to extreme price fluctuations, reflecting the high volatility of
precious metal prices during such periods. In addition, the instability of
precious metal prices may result in volatile earnings of precious metal-related
companies which, in turn, may affect adversely the financial condition of such
companies. The Portfolio will purchase only asset-based securities indexed to
the value of precious metals that are rated, or are issued by issuers that have
outstanding debt obligations rated, BBB or better by S&P or Baa or better by
Moody's or commercial paper rated A-1 by S&P or Prime-1 by Moody's or of
issuers that the Adviser has determined to be of similar creditworthiness. If
the asset-based security is backed by a bank letter of credit or other similar
facility, the Adviser may take such backing into account in determining the
creditworthiness of the issuer.

REAL ESTATE-RELATED SECURITIES. The Merrill Lynch Global Allocation Portfolio
may invest in real estate-related securities. The real estate-related
securities that will be emphasized by the Adviser are equity and convertible
debt securities of real estate investment trusts, which own income-producing
properties, and mortgage real estate investment trusts which make various types
of mortgage loans often combined with equity features. The securities of such
trusts generally pay above average dividends and may offer the potential for
capital appreciation. Such securities may be subject to the risks customarily
associated with the real estate industry, including declines in the value of
the real estate investments of the trusts. Real estate values are affected by
numerous factors including (i) governmental regulation (such as zoning and
environmental laws) and changes in tax laws; (ii) operating costs; (iii) the
location and the attractiveness of the properties; (iv) changes in economic
conditions (such as fluctuations in interest and inflation rates and business
conditions); and (v) supply and demand for improved real estate. Such trusts
also are dependent on management skill and may not be diversified in their
investments.

REPURCHASE AGREEMENTS. Each Portfolio may enter into repurchase agreements with
a bank, broker-dealer or other financial institution 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

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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 may 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.

SECURITIES LOANS. The T. Rowe Price International Stock Portfolio, T. Rowe
Price Equity Income Portfolio, Morgan Stanley Emerging Markets Equity Portfolio
and Merrill Lynch Global Allocation Portfolio may seek to obtain additional
income by making secured loans of portfolio securities with a value up to
331/3% 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 MFS Research Portfolio
and MFS Emerging Growth Companies Portfolio may lend portfolio securities in an
amount up to 30% of each Portfolio's total assets. The Merrill Lynch Basic
Value Portfolio may lend portfolio securities in an amount up to 20% of its
total assets. All securities loans will be made pursuant to agreements
requiring the loans to be continuously secured by collateral in cash or
high-grade 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.

SHORT SALES AGAINST THE BOX. The Warburg Pincus Small Company Value 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," will be entered into by the Portfolio for the purpose of
receiving a portion of the interest earned by the executing broker from the
proceeds of the sale. The proceeds of the sale will generally be held by the
broker until the settlement date when the Portfolio delivers securities to
close out its short position. Although prior to delivery of any securities sold
short the Portfolio will have to pay an amount equal to any dividends paid on
the securities sold short,

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the Portfolio will receive the dividends from the securities sold short or
dividends from the preferred stock or interest from the debt securities
convertible or exchangeable into the securities sold short, plus a portion of
the interest earned from the proceeds of the short sale. The Portfolio will
deposit, in a segregated account with its custodian or a qualified
subcustodian, the securities sold short or securities convertible into or
exchangeable for the securities sold short. The 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 the
Portfolio's net assets (taken at current value) may be held as collateral for
short sales against the box at any one time.

SMALL COMPANY SECURITIES. The EQ Putnam International Equity Portfolio, Morgan
Stanley Emerging Markets Equity Portfolio, Warburg Pincus Small Company Value
Portfolio and Merrill Lynch Global Allocation 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 Portfolio to buy or sell significant amounts of shares
without an unfavorable impact on prevailing prices. In addition, small
companies are typically subject to a greater degree of 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. 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.

STANDBY COMMITMENT AGREEMENTS. The Merrill Lynch Global Allocation Portfolio
may invest in standby commitment agreements which commit the Portfolio, for a
stated period of time, to purchase a stated amount of a fixed income security
that may be issued and sold to the Portfolio at the option of the issuer. The
price and coupon of the security is fixed at the time of the commitment. At the
time of entering into the agreement, the Portfolio is paid a commitment fee,
regardless of whether or not the security is ultimately issued. The Portfolio
will enter into such agreements only for the purpose of investing in the
security underlying the commitment at a yield and price that is considered
advantageous to the Portfolio. The Portfolio will not enter into a standby
commitment with a remaining term in excess of 90 days and will limit its
investment in such commitments so that the aggregate purchase price of the
securities subject to such commitments, together with the value of portfolio
securities subject to legal restrictions on resale (i.e., restricted
securities), will not exceed 15% of its total assets taken at the time of
acquisition of such commitment or security. The Portfolio will at all times
maintain a segregated account with its custodian in an aggregate amount equal
to the purchase price of the securities underlying the commitment. There can be
no assurance that the securities subject to a standby commitment will be issued
and the value of the security, if issued, on the delivery date may be more or
less than its purchase price. Since the issuance of the security underlying the
commitment is at the option of the issuer, the Portfolio may bear the risk of a
decline in the value of such security and may not benefit from an appreciation
in the value of the security during the commitment period.

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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 and Merrill Lynch
Global Allocation Portfolio may 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, the Portfolio may agree to swap the return
generated by a fixed-income index for the return generated by a second
fixed-income index. A 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. The Portfolio will not 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 the 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 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.,

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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).

ZERO-COUPON BONDS. The EQ Putnam Growth & Income Value Portfolio, EQ Putnam
Balanced Portfolio and Morgan Stanley Emerging Markets Equity 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, the 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.

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"). 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.

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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, the
Trust pays the Manager a monthly fee at the annual rate of .80% of the
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 equal to: 1.15% of the Portfolio's average daily net assets
up to and including $20 million; 1.00% of the Portfolio's average daily net
assets over $20 million and up to and including $50 million; and .90% of the
Portfolio's average daily net assets in excess of $50 million. As compensation
for managing the EQ Putnam Growth & Income Value Portfolio, EQ Putnam
Investors Growth Portfolio and EQ Putnam Balanced Portfolio, the Trust pays
the Manager a monthly fee at an annual rate equal to: .90% of the respective
Portfolio's average daily net assets up to and including $150 million; .85% of
the respective Portfolio's average daily net assets over $150 million and up
to and including $300 million; and .75% of the respective Portfolio's average
daily net assets in excess of $300 million. As compensation for managing the
EQ Putnam International Equity Portfolio, the Trust pays the Manager a monthly
fee at an annual rate equal to: 1.05% of the Portfolio's average daily net
assets up to and including $150 million; .95% of the Portfolio's average daily
net assets over $150 million and up to and including $300 million; and .85% of
the Portfolio's average daily net assets in excess of $300 million. As
compensation for managing the MFS Research Portfolio and MFS Emerging Growth
Companies Portfolio, the Trust pays the Manager a monthly fee at an annual
rate equal to: .80% of the respective Portfolio's average daily net assets up
to and including $150 million; .775% of the respective Portfolio's average
daily net assets over $150 million and up to and including $300 million; and
.75% of the respective Portfolio's average daily net assets in excess of $300
million. As compensation for managing the Morgan Stanley Emerging Markets
Equity Portfolio, the Trust pays the Manager a monthly fee at an annual rate
equal to: 1.50% of the Portfolio's average daily net assets up to and
including $200 million; and 1.00% of the Portfolio's average daily net assets
in excess of $200 million. As compensation for managing the Warburg Pincus
Small Company Value Portfolio, the Trust pays the Manager a monthly fee at an
annual rate equal to: .90% of the Portfolio's average daily net assets. As
compensation for managing the Merrill Lynch Global Allocation Portfolio, the
Trust pays the Manager a monthly fee at an annual rate equal to: .90% of the
Portfolio's average daily net assets up to and including $100 million; .85% of
the Portfolio's average daily net assets over $100 million and up to and
including $300 million; .75% of the Portfolio's average daily net assets in
excess of $300 million. As compensation for managing the Merrill Lynch Basic
Value Portfolio, the Trust pays the Manager a monthly fee at an annual rate
equal to: .80% of the Portfolio's average daily net assets up to and including
$100 million; .775% of the Portfolio's average daily net assets over $100
million and up to and including $300 million; and .75% of the Portfolio's
average daily net assets in excess of $300 million.

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The management fees paid by the Portfolios, although higher than the fees paid
by other investment companies in general, are comparable to management fees
paid for similar services by many investment companies with similar investment
objectives and policies. From the management fees, the Manager pays the
expenses of providing investment advisory services to the Portfolios, including
the fees of the Adviser of each Portfolio.

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 auditors 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

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 these 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 assets of each Portfolio are allocated currently among the Advisers listed
on pages 3 and 4 of the Prospectus. If a Portfolio shall at any time have more
than one Adviser, the allocation of a Portfolio's assets among Advisers may be
changed at any time by the Manager. The Advisers are employed for management
of the assets of a Portfolio pursuant to investment advisory

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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 received an exemptive order from the Securities and Exchange
Commission ("SEC") that permits 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
contract has been assigned because of a change in control of the Adviser.
Shareholders would receive notice of such action, including the information
concerning the Adviser that normally is provided in the Prospectus.

T. Rowe Price Associates, Inc. ("T. Rowe Price") is the Adviser to the T. Rowe
Price Equity Income Portfolio. 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 December 31, 1996, T. Rowe Price and its
affiliates managed more than $__ 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") is the Adviser to the
T. Rowe Price International Stock Portfolio. Price-Fleming was incorporated in
Maryland in 1979 as a joint venture between T. Rowe Price and Robert Fleming
Holdings Limited ("Flemings"). As of December 31, 1996, Price-Fleming managed
the United States equivalent of approximately $___ 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
wholly-owned 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.

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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,
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 multi-currency 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") is the adviser to the
EQ Putnam Growth & Income Value Portfolio, EQ Putnam International Equity
Portfolio, EQ Putnam Investors Growth Portfolios and EQ Putnam Balanced
Portfolio. Putnam Management has been managing mutual funds since 1937. 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 is responsible for the day to day management of the EQ
Putnam Growth & Income Value Portfolio, 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,
Manuael H. Weiss 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 December, 1992. Prior to December, 1992, Mr. England was an
investment officer at Aetna Equity Investors. Mr. Weiss 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.
Ms. Rosemary H. Thomses and Messrs. Edward P. Bousa and Kenneth J. Taubes are
responsible for

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the day to day management of the EQ Putnam Balanced Portfolio, which includes
investment decisions made on behalf of the Portfolio. Ms. Thomas has been
employed by Putnam Management as an investment professional since 1986. 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.

Massachusetts Financial Services Company ("MFS") is the adviser to the MFS
Research Portfolio and the MFS Emerging Growth Companies Portfolio. MFS is
America's oldest mutual fund organization. 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 December 31, 1996, MFS managed more than $52.1 billion on behalf
of over 1.8 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 MFS Research Portfolio and the MFS
Emerging Growth Companies Portfolio is each currently managed by a committee
comprised of various equity research analysts.

Morgan Stanley Asset Management Inc. ("MSAM") is the adviser to the Morgan
Stanley Emerging Markets Equity Portfolio. 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 $___ billion in assets under management
and fiduciary care.

Madhave Dhar and Marianne L. Hay are 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. 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. Ms. Hay is a Managing Director of Morgan Stanley. She joined MSAM in June
1993. Prior to joining MSAM, she was a director of Martin Currie Investment
Management, Ltd., where her responsibilities included geographic asset
allocation and portfolio management for global and emerging markets funds.

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Warburg, Pincus Counsellors, Inc. ("WPC") is the adviser to the Warburg Pincus
Small Company Value Portfolio. WPC is a professional investment counselling
firm that provides investment services to investment companies, employee
benefit plans, endowment funds, foundations and other institutions and
individuals. As of December 31, 1996, WPC managed approximately $___ 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. E.M.
Warburg, Pincus & Co., Inc. ("EMW") controls WPC through its ownership of a
class of voting preferred stock of WPC. Warburg G. P. has no business other
than being a holding company of WPC and its subsidiaries.

George U. Wyper is 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. Mr. Wyper is a managing director of EMW, which he
joined in August, 1994. Before joining EMW, 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 is associate
portfolio manager and research analysts of the Portfolio. Mr. Frey has been
with WPC since 1989.

Merrill Lynch Asset Management, L.P. ("MLAM") is the adviser to the Merrill
Lynch Global Allocation Portfolio and the Merrill Lynch Basic Value Portfolio.
MLAM is owned and controlled by ML & Co., a financial services holding company
and the parent of Merrill Lynch Pierce, Fenner & Smith Incorporated. 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 $___._ billion in investment
company and other portfolio assets under management.

Bryan N. Ison, Vice President of the Merrill Lynch Global Allocation Portfolio,
is the Portfolio's portfolio manager. Mr. Ison has been a portfolio manager of
the Portfolio since 1984 and a Vice President of MLAM since 1985. Mr. Ison has
been primarily responsible for the day to day management of the Portfolio's
portfolio since it commenced operations. Paul M. Hoffmann is a Vice President
and the portfolio manager of the Merrill Lynch Basic Value Portfolio. Mr.
Hoffmann has been a portfolio manager and a Vice President of MLAM since 1976.
Mr. Hoffmann has been primarily responsible for the management of the
Portfolio's securities portfolio since 1987.

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

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these services, the Trust pays the Administrator a monthly fee at the annual
rate of ___% of the average daily net assets of the Trust.

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 AGREEMENTS

In the interest of limiting expenses of the Portfolios, the Manager has entered
into expense limitation agreements with the Trust ("Expense Limitation
Agreements"), with respect to each Portfolio, pursuant to which the Manager has
agreed to waive or limit its fees and total annual operating expenses
(expressed as a percentage of the Portfolios' average daily net assets) to
[____]%. The Portfolios may at a later date reimburse to the Manager the
management fees waived or limited and other expenses paid by the Manager
pursuant to the Expense Limitation Agreements provided the Portfolios have
reached a sufficient asset size to permit such reimbursement to be made without
causing the total annual expense rate of each Portfolio to exceed [____]%.
Consequently, no reimbursement by a Portfolio will be made unless: (i) the
Portfolio's assets exceed [$__] million; (ii) the Portfolio's total annual
expense ratio is less than [____]%; 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 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 Global Allocation Portfolio and
Merrill Lynch Basic

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Value Portfolio may execute portfolio transactions through certain affiliates
of Merrill Lynch Asset Management, L.P.

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 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. As of May 1, 1997,
Equitable owned 100% of the shares of each Portfolio and through such
ownership may be deemed a controlling person of each Portfolio. The Trust
currently is divided into twelve 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,

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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 Consultants, Inc., formerly Equico Securities, Inc., a
wholly-owned subsidiary of Equitable, serves as distributor for the Trust's
Class IA shares pursuant to a distribution agreement with the Trust. The
Distributor's address is 1755 Broadway, New York, New York 10019. 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.

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 normally will 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:

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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.

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.

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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.

PRIOR PERFORMANCE OF EACH ADVISER

The following table provides information concerning the historical performance
of another registered investment company 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.

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Each Adviser's performance data shown below for the [name of other fund] was
calculated in accordance with standards proscribed 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.

In the table below, the only account that is included is another registered
investment company, i.e., [name of other fund] that is managed by the Adviser.
However, such other investment company may be subject to different expenses
than the Portfolios.

The investment results of [name of other fund] presented below are unaudited
and are not intended to predict or suggest the returns that might be
experienced by the Portfolios or an individual investor investing in such
Portfolios.

NAME OF PORTFOLIO

[NAME OF [S&P 500
YEAR OTHER FUND1, 2] INDEX3]

One Year4

Three Years4

Five Years4

Since inception4

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

[1 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 [name of fund] was capped at ____% for the period
__________ to __________ (reflecting annualized reimbursement of expenses
of ____%). Thereafter the expense ratio declined from _____% to ____%,
reflecting, in general, economies of scale associated with an increase in
assets under management. The expense ratio of the [name of fund] is capped
at ____% through December 31, 1996.]

[3 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.]

[4 Through December 31, 1996.]

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SUBJECT TO COMPLETION

PRELIMINARY PROSPECTUS DATED , 1997

EQ ADVISORS TRUST
787 SEVENTH AVENUE
NEW YORK, NEW YORK 10019

This Prospectus describes the following twelve 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.

<PAGE>

THE TRUST

PORTFOLIO ADVISER

T. Rowe Price International Stock Rowe Price-Fleming International, Inc.
Portfolio

T. Rowe Price Equity Income T. Rowe Price Associates, Inc.
Portfolio

EQ Putnam Growth & Income Value Putnam Investment Management, Inc.
Portfolio

EQ Putnam International Equity Putnam Investment Management,
Portfolio

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 Massachusetts Financial Services
Portfolio Company

Morgan Stanley Emerging Markets Morgan Stanley Asset Management Inc.
Equity Portfolio

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Warburg Pincus Small Value Warburg, Pincus Counsellors, Inc.
Portfolio

Merrill Lynch Global Allocation Merrill Lynch Asset Management, L.P.
Portfolio

Merrill Lynch Basic Value Portfolio Merrill Lynch Asset Management, L.P.

The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. Equitable Distributors, Inc. ("Distributor") serves
as the distributor for the Class IB shares of the Trust offered by this
Prospectus. 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 should be addressed to Equitable, at 1290
Avenue of the Americas, New York, NY 10104 (Attention: ____________).

INVESTMENT OBJECTIVES AND POLICIES

T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO

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ordinarily be made on exchanges located at least in the respective countries in
which the various issuers of such securities are principally based.

T. ROWE PRICE EQUITY INCOME PORTFOLIO

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EQ PUTNAM GROWTH & INCOME VALUE PORTFOLIO

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.

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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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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 (i) 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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EQ PUTNAM INVESTORS GROWTH PORTFOLIO

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.

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EQ PUTNAM BALANCED PORTFOLIO

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

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discussed under the caption "Investment Strategies" below and in the Statement
of Additional Information.

MFS RESEARCH PORTFOLIO

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

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MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO

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

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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, illiquid securities, foreign securities,
securities loans, borrowings, payment-in-kind 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.

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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.

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MERRILL LYNCH GLOBAL ALLOCATION PORTFOLIO

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MERRILL LYNCH BASIC VALUE PORTFOLIO

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INVESTMENT STRATEGIES

ASSET-BACKED SECURITIES. The EQ Putnam Balanced Portfolio, MFS Emerging Growth
Companies Portfolio and Morgan Stanley Emerging Markets Equity 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. 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, Merrill
Lynch Global Allocation Portfolio and Merrill Lynch Basic Value 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. Borrowings for the EQ Putnam Growth & Income Value
Portfolio, the EQ Putnam International Equity Portfolio, EQ Putnam Investors
Growth Portfolio and EQ Putnam Balanced Portfolio may not exceed 10% of each

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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 that
non-convertible 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.

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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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FOREIGN CURRENCY TRANSACTIONS. Each of the Portfolios (except the MFS Research
Portfolio and Merrill Lynch Basic Value Portfolio) may purchase foreign
currency on a spot (or cash) basis, and may enter into contracts to purchase
or sell foreign currencies at a future date ("forward contracts"). Each of the
Portfolios (except MFS Research Portfolio, and Merrill Lynch Basic Value
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 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 and Merrill Lynch Global Allocation Portfolio may engage in OTC
options on foreign currency transactions. The Merrill Lynch Global Allocation
Portfolio will engage in OTC option on foreign currency transactions only with
member banks of the Federal Reserve System and primary dealers in United
States Government securities or with affiliates of such banks or dealers which
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").

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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.

INVESTMENT GRADE AND LOWER QUALITY FIXED INCOME SECURITIES. Each Portfolio
(except the Merrill Lynch Basic Value Portfolio) may invest in or hold a
portion of its total assets in investment grade or lower quality fixed income
securities. The T. Rowe Price International Stock Portfolio may invest in or
hold investment grade securities, but not lower quality fixed income
securities. Investment grade securities are securities rated Baa by Moody's
Investors Service, Inc. ("Moody's") or BBB by Standard & Poor's Ratings
Service ("S&P") and comparable unrated securities. Investment grade securities
while normally exhibiting adequate protection parameters, have speculative
characteristics, and, consequently, changes in economic conditions or other

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MORTGAGE-RELATED SECURITIES. The EQ Putnam Balanced Portfolio, Morgan Stanley
Emerging Markets Equity Portfolio and Merrill Lynch Global Allocation
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.

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MUNICIPAL SECURITIES. The Morgan Stanley Emerging Markets Equity 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.

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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 the
Trust's expenses (management fees and operating expenses), shareholders will
also indirectly bear similar expenses of such entities.

PAYMENT-IN-KIND BONDS. The EQ Putnam Growth & Income Value Portfolio, the EQ
Putnam Balanced Portfolio and Morgan Stanley Emerging Markets Equity 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

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Portfolios could be required, at times, to liquidate other investments in order
to satisfy its distribution requirements.

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a default of the obligation to repurchase are less than the repurchase price,
the Portfolio could suffer a loss.

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ZERO-COUPON BONDS. The EQ Putnam Growth & Income Value Portfolio, EQ Putnam
Balanced Portfolio and Morgan Stanley Emerging Markets Equity 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, the 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.

MANAGEMENT OF THE TRUST

THE BOARD OF TRUSTEES

THE MANAGER

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THE ADVISERS

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Anthony I. Kreisel is responsible for the day to day management of the EQ
Putnam Growth & Income Value Portfolio, 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,
Manuael H. Weiss 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 December, 1992. Prior to December, 1992, Mr. England was an investment
officer at Aetna Equity Investors. Mr. Weiss 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.
Ms. Rosemary H. Thomses and Messrs. Edward P. Bousa and Kenneth J. Taubes are
responsible for

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<PAGE>

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<PAGE>

Merrill Lynch Asset Management, L.P. ("MLAM") is the adviser to the Merrill
Lynch Global Allocation Portfolio and the Merrill Lynch Basic Value Portfolio.
MLAM is owned and controlled by ML & Co., a financial services holding company
and the parent of Merrill Lynch, Pierce, Fenner & Smith Incorporated. 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 $___._ billion in investment
company and other portfolio assets under management.

THE ADMINISTRATOR

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<PAGE>

these services, the Trust pays the Administrator a monthly fee at the annual
rate of ___% of the average daily net assets of the Trust.

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 AGREEMENTS

BROKERAGE PRACTICES

TRANSACTIONS WITH AFFILIATES

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<PAGE>

Value Portfolio may execute portfolio transactions through certain affiliates
of Merrill Lynch Asset Management, L.P.

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. As of May 1, 1997,
Equitable owned 100% of the shares of each Portfolio and through such ownership
may be deemed a controlling person of each Portfolio. The Trust currently is
divided into twelve 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

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,

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<PAGE>

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

Class IB shares are offered and redeemed, without a sales charge, at net asset
value and are subject to distribution fees under the Distribution Plan. 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 has a distribution agreement for its Class IB shares with Equitable
Distributors, Inc., a Delaware corporation and an indirect, wholly-owned
subsidiary of Equitable pursuant to which it 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 Distributor 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
Distributor will be used to defray various costs incurred or paid by the
Distributor 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
Distributor 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
Agreement, payments to the Distributor for activities pursuant to the
Distribution

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<PAGE>

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 Agreement, each Portfolio is
authorized to make payments monthly to the Distributor 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 Distributor. 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 Distributor has indicated that it
expects its 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
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 Distributor determines is primarily
intended to result in the sale of Class IB shares.

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 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.

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<PAGE>

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

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.

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<PAGE>

PERFORMANCE INFORMATION

PRIOR PERFORMANCE OF EACH ADVISER

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<PAGE>

fluctuate reflecting market conditions as well as changes in company-specific
fundamentals of portfolio securities.

NAME OF PORTFOLIO

[NAME OF [S&P 500
YEAR OTHER FUND1, 2] INDEX3]
---- --------------- -------

One Year4

Three Years4

Five Years4

Since inception4

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

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

[4 Through December 31, 1996.]

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<PAGE>

EQ ADVISORS TRUST

STATEMENT OF ADDITIONAL INFORMATION

____________, 1997

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
_______, 1997, which may be obtained without charge by writing to the Trust at
787 Seventh Avenue, New York, New York 10019 or by calling 1-800-___-____.
Unless otherwise defined herein, capitalized terms have the meanings given to
them in the Prospectus.

TABLE OF CONTENTS

Page

General Information and History................................................
Investment Restrictions........................................................
Description of Certain Securities in Which the
Portfolio May Invest.........................................................
Management of the Trust........................................................
Investment Management and Other Services.......................................
Brokerage Allocation...........................................................
Purchase and Pricing of Securities.............................................
Redemption of Shares ..........................................................
Certain Tax Considerations.....................................................
Portfolio Performance..........................................................
Other Services.................................................................
Appendix ......................................................................

<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 Global Allocation
Portfolio and Merrill Lynch Basic Value 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 currently offered under the Trust's multi-class
distribution system approved by the Trust's Board of Trustees on _________,
1997, which is designed to allow promotion of insurance products investing in
the Trust though 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, "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"). As of
_________, 1997, Equitable owned 100% of the Trust's outstanding Class IA
shares and Class IB shares and, as a result, may be deemed to be a control
person with respect to the Trust.

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 ("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.

<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. ("Price-Fleming"), Putnam Investment Management Inc.
("Putnam Management"), Massachusetts Financial Services Company ("MFS"),
Morgan Stanley Asset Management Inc. ("MSAM"), Warburg, Pincus Counsellors,
Inc. ("Warburg"), and Merrill Lynch Asset Management, L.P. ("MLAM") (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.

<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 Portfolio and the Merrill Lynch Global
Allocation 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 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. 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 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, and EQ Putnam Balanced 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 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

<PAGE>

at lower of cost or current value), not including the amount
borrowed, at the time the borrowing is made. Each Portfolio will
repay borrowings before any additional investments are purchased;

d. the Warburg Pincus Small Company Value Portfolio, as a matter of non-
fundamental operating policy, may (i) borrow from banks for temporary
or emergency purposes and (ii) enter into reverse repurchase
agreements, dollar roll transactions that are accounted for as
financing and any other transactions constituting borrowing, provided
that the combination of (i) and (ii) shall not exceed 30% of the
value of the Portfolio's total assets at the time of such borrowing.

e. the Merrill Lynch Global Allocation Portfolio and the Merrill Lynch
Basic Value 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.

(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 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;

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

<PAGE>

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, as a matter or non-
fundamental operating policy, may 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 its total assets (taken at market
value).

(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 each 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;

(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 ("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.

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

<PAGE>

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 (and
with respect to the Warburg Pincus Small Company Value Portfolio 10% of
its net assets) 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) may 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 331/3% of
the respective total assets of each Portfolio (except for the EQ Putnam
International Growth Portfolio), and may not exceed 15% of EQ Putnam
International Growth 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 Global Allocation
Portfolio, and Merrill Lynch Basic Value 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; or

(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

<PAGE>

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. 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. Liquidity protection refers to the
provision of advances, generally by the entity administering the pool of
assets, to ensure that the receipt of

<PAGE>

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 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

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change as a consequence of market movements in the value of those securities
between the date the forward 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, high-grade debt
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 of 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 (except for the MFS Research Portfolio and Merrill
Lynch Basic Value Portfolio) 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

<PAGE>

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 custodian cash, United States 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-United States 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 United States 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

<PAGE>

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.

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
materials 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.

<PAGE>

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 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 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 Equity Securities and Fixed Income Securities. Investments in
emerging market country government fixed income securities involve special
risks. Certain emerging

<PAGE>

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 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.

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 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,

<PAGE>

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 sale
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").

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

<PAGE>

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 to 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 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.

<PAGE>

Options on Futures Contracts. Each Portfolio, as specified 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 high-grade debt obligations 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 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

<PAGE>

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.

<PAGE>

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 (hereinafter "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
transactions 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 transactions 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

<PAGE>

for Underlying Assets have been highly volatile, and such volatility may be
expected in the future.

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 United States, the
SEC, which regulates the offer and sale of securities by and to persons in the
United States, 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 unaffiliated
investment company and limits such investments to no more than 5% of the
Portfolio's total assets in any unaffiliated investment company and no more
than 10% in any combination of unaffiliated investment companies. The 1940 Act
also prohibits a Portfolio from acquiring in the aggregate more than 10% of the
outstanding voting shares of any registered closed-end investment company.

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INVESTMENT GRADE AND LOWER QUALITY FIXED INCOME SECURITIES

Investment grade securities are securities rated Baa by Moody's Investors
Service Inc. ("Moody's") or BBB by Standard & Poor's Ratings Service, a
division of McGraw-Hill Companies, Inc. ("S&P") and comparable unrated
securities. Such investment grade 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 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

<PAGE>

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, 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 risk 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

<PAGE>

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.

MORTGAGE RELATED SECURITIES

The EQ Putnam Balanced Portfolio, Morgan Stanley Emerging Markets Equity
Portfolio and Merrill Lynch Global Allocation Portfolio may invest in mortgage
related securities (i.e., mortgage-backed 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.

<PAGE>

The Morgan Stanley Emerging Markets Equity Portfolio 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 United States 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
United States 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 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 United States 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 investment in these
securities. Conversely, POs tend to increase in value if prepayment 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.

<PAGE>

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 Securities 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 Securities 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 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 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.

<PAGE>

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,
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.

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 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.

<PAGE>

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 cost 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.

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

<PAGE>

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.

PRECIOUS METAL-RELATED SECURITIES

The Merrill Lynch Global Allocation Portfolio may invest in the equity
securities of companies that explore for, extract, process or deal in precious
metals, i.e., gold, silver and platinum, and in asset-based securities indexed
to the value of such metals. Such securities may be purchased when the Adviser
for the Portfolio believes they are attractively priced in relation to the
value of a company's precious metal-related assets or when the value of
precious metals are expected to benefit from inflationary pressure or other
economic, political or financial uncertainty or instability. The prices of
precious metals and of the securities of precious metal-related companies
historically have been subject to high volatility. In addition, the earnings of
precious metal-related companies may be adversely affected by volatile metals
prices when may adversely affect the financial condition of such companies.

The major producers of gold include the Republic of South Africa, Russia,
Canada, the United States, Brazil and Australia. Sales of gold by Russia are
largely unpredictable and often relate to political and economic considerations
rather than to market forces. Economic, social and political developments
within South Africa may significantly affect South African gold production.

A Portfolio may invest in debt securities, preferred stock or convertible
securities, the principal amount, redemption terms or conversion terms of which
are related to the market price of some precious metals such as gold bullion.
(These securities are referred to herein as "Asset-Based Securities".) A
Portfolio will purchase only Asset-Based Securities that are rated, or are
issued

<PAGE>

by issuers that have outstanding debt obligations rated, BBB or better by S&P
or Baa or better by Moody's or commercial paper rated A-1 by S&P or Prime-1 by
Moody's or of issuers that the Adviser has determined to be of similar
creditworthiness. If the Asset-Based Security is backed by a bank letter of
credit or other similar facility, the Adviser may take such backing into
account in determining the creditworthiness of the issuer. While the market
prices for an Asset-Based Security and the related natural resource asset
generally are expected to more in the same direction, there may not be perfect
correlation in the two price movements. Asset-Based Securities may not be
secured by a security interest in or claim on the underlying natural resource
asset. The Asset-Based Securities in which a Portfolio may invest may bear
interest or pay preferred dividends at below market (or even at relatively
nominal) rates. Certain Asset-Based Securities may be payable at maturity in
cash at the stated principal amount or, at the option of the holder, directly
in a stated amount of the asset to which it is related. In such instance,
because a Portfolio presently does not intend to invest directly in natural
resource assets, a Portfolio would sell the Asset-Based Security in the stated
amount of the asset exceeds the stated principal amount and thereby realize the
appreciation in the underlying asset.

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 United States Government obligations, certificates
of deposit, or bankers' acceptances) with registered brokers-dealers, United
States 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 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

<PAGE>

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

The Warbury Pincus Small Company Portfolio may enter into 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 the
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 contain 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). The 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 the Portfolio has sold but it obligated to repurchase. In the
even 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 the Portfolio's use of the
proceeds of the reverse repurchase agreement may effectively be restricted
pending such decision.

The Portfolio may also enter into "dollar rolls," in which the 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, the
Portfolio would forego principal and interest paid on such securities. The
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 the 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

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.

<PAGE>

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.

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

<PAGE>

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
(except for the MFS Research Portfolio) 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

<PAGE>

profit and loss thereon, 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 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.

STANDBY COMMITMENT AGREEMENTS

Standby commitment agreements commit a Portfolio, for a stated period of time,
to purchase a stated amount of a fixed income security that may be issued and
sold to the Portfolio at the option of the issuer. The price and coupon of the
security is fixed at the time of the commitment. At the time of entering into
the standby commitment agreement, the Portfolio is paid a commitment fee,
regardless of whether or not the security is ultimately issued, which is
typically approximately 0.5% of the aggregate purchase price of the security
which the Portfolio

<PAGE>

has committed to purchase. A Portfolio will enter into such agreement only for
the purpose of investing in the security underlying the commitment at a yield
and price which is considered advantageous to the Portfolio. A Portfolio will
not enter into a standby commitment with a remaining term in excess of 90 days
and will limit its investment in such commitments so that the aggregate
purchase price of the securities subject to legal restrictions on resale, will
not exceed 15% of its total assets taken at the time of acquisition of such
commitment or security. A Portfolio will at all times maintain a segregated
account with its custodian consisting of cash in an aggregate amount equal to
the purchase price of the securities underlying the commitment.

There can be no assurance that the securities subject to a standby commitment
will be issued, and the value of the security, if issued, on the delivery date
may be more or less than its purchase price. Since the issuance of the security
underlying the commitment is at the option of the issue, the Portfolio may bear
the risk of a decline in the value of such security and may not benefit from an
appreciation in the value of the security during the commitment period.

The purchase of a security subject to a standby commitment agreement and the
related commitment fee will be recorded on the date on which the security can
reasonably be expected to be issued, and the value of the security will
thereafter be reflected in the calculation of the Portfolio's net asset value.
The cost basis of the security will be adjusted by the amount of the commitment
fee. In the event the security is not issued, the commitment fee will be
recorded as income on the expiration date of the standby commitment.

STRUCTURED NOTES

The Morgan Stanley Emerging Markets Equity Portfolio may enter into structured
notes transactions. 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 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.

<PAGE>

SWAPS

The Morgan Stanley Emerging Markets Equity Portfolio and Merrill Lynch Global
Allocation Portfolio may enter into swap transactions. 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 the Portfolios 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 the Portfolios 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 that Portfolio is contractually obligated to make.
If the other party to a swap defaults, a Portfolio's risk of loss consists of
the net amount of payments that a Portfolio s 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, the Portfolios 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 a Portfolio receiving 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
the Portfolio. To the extent that these swaps are entered into for hedging
purposes, the Adviser believes 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
Adviser in accordance with guidelines established by the

<PAGE>

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 a S&P rating below AA.

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 Portfolios would be less favorable than it would have been if this
investment technique were not used.

WARRANTS

Because a warrant does not carry with it the right to dividends or voting
rights with respect to the securities which it entitles a holder to purchase,
and because it does not represent any rights in the assets of the issuer,
warrants may be considered more speculative than certain other types of
investments. Also, the value of a warrant does not necessarily change with the
value of the underlying securities and a warrant ceases to have value if it is
not exercised prior to its expiration date.

MANAGEMENT OF THE TRUST

As of _________, 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* (40) Executive Vice President and Chief Investment
Equitable Officer of Equitable since May 1995; prior
787 Seventh Avenue thereto, Vice President of Salomon Brothers Inc.,
New York, New York from 1992 to 1995. Principal of Equity Division,
10019 Morgan Stanley & Co. Inc., from 1984 to 1992.
Director of Equitable Real Estate Investment
Management, Inc. since September 1995 and of
Alliance Capital Management Co. since July 1995.
Trustee of the Hudson River Trust (investment
company) since July 1995. Executive Vice
President of EQ Financial Consultants, Inc. since
November 1996.

<PAGE>

* Mr. Noris is an "interested person" (as defined in the 1940 Act) of the
Trust. Mr. Noris is deemed an "interested person" of the Trust by virtue
of his position as an officer 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 auditors 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 auditors for professional services. In addition, the committee
meets with the independent auditors and representatives of management to review
accounting activities and areas of financial reporting and control.

The Trust has a valuation committee consisting of __________________________.
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
__________________________. The compensation committee's function is to review
the Trustees' compensation arrangements.

The Trust has a conflicts committee consisting of ________________________. The
conflicts committee's function is to take any action necessary to resolve
conflicts among shareholders.

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

<S> <C> <C> <C> <C>
Peter D. Noris $-0- $-0- $-0- $-0-
</TABLE>

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 $______ plus
an additional fee of $_____ per Board meeting and $______ per committee meeting
attended in person or by telephone. Trustees receive $_______ for each day
spent performing special services requested by the Chairman or

<PAGE>

the President of the Trust, and reimbursement for expenses in connection with
the performance of regular and special services.

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 EQ Financial Consultants, Inc. ("EQ
Financial"), Equitable Distributors, Inc. ("EDI") or Equitable. The Trust's
principal officers are:

NAME, AGE AND POSITION PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
WITH TRUST

Peter D. Noris (40) (see above)
President

Harvey Blitz (50) Senior Vice President of Equitable since
Chief Financial Officer and September 1987. Deputy Chief Financial
Controller Officer of Equitable since September 1992.
Senior Vice President of The Equitable
Companies Incorporated since July 1992.
Director of The Equitable of Colorado, Inc.
since September 1992. Director and Chairman
of Frontier Trust Company since April 1993
and September 1995, respectively. Director of
EDI from February 1995 to May 1996. Director
and Senior Vice President of EquiSource since
October 1992 and June 1993, respectively.
Director and Executive Vice President of EQ
Financial since September 1992 and November
1996, respectively.

INVESTMENT MANAGEMENT AND OTHER SERVICES

THE MANAGER

The Manager, EQ Financial Consultants, Inc. ("EQ Financial"), 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

<PAGE>

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 787 Seventh Avenue, New York, New York
10019.

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 eleventh largest insurance group in the world based on
worldwide revenues in 1994 and the second largest French insurance group based
on worldwide gross premiums in 1994. 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 (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).

<PAGE>

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. Finally, the Manager has entered into Advisory
Agreements on behalf of Merrill Lynch Global Allocation Portfolio and Merrill
Lynch Basic Value Portfolio with MLAM. The Advisory Agreements obligate T.
Rowe Price, Price-Fleming, Putnam Management, MFS, Warburg, MSAM and MLAM 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 Manger 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 obtained from the SEC an order permitting 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, the Manager is to 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 will not
be required for the termination of Advisory Agreements, shareholders of a
Portfolio will 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.

When a Portfolio has more the 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.

<PAGE>

Generally, no Adviser provides any services to any Portfolio except asset
management and related recordkeeping services. However, a Portfolio or its
affiliated broker-dealer may execute portfolio transactions for a Fund and
receive brokerage commissions in connection therewith as permitted by Section
17(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 ________________. Its principal place of
business is at 73 Tremont Street, Boston, Massachusetts 02108. Under the Mutual
Funds Services Agreement, the Administrator is entitled to a fee from the
Trust, which is calculated daily and paid monthly, at an annual rate of ____%
of the average daily net assets of the Trust. The Mutual Funds Services
Agreement shall remain in effect until ___________, 199_ 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 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 787 Seventh
Avenue, New York, New York 10019, and that for EQ Financial is 1755 Broadway,
Third Floor, New York, New York 10019. EQ Financial is the distributor for the
Trust's Class IA shares and also serves as the Manager of the Trust.
EDI is the distributor for the Trust's Class IB shares.

The Trust's distribution agreements with respect to the Class IA shares and
Class IB shares, each dated ______, 199__ ("Distribution Agreements"), will
remain in effect until ______, 199__, 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.

The Distributor or its 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

<PAGE>

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 Distributor 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 Distributor 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 _______, 199__, 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 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.

The Distribution Plan and any Rule 12b-1 related agreement that is entered into
by the Trust or the Distributor 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

<PAGE>

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 ALLOCATION

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, seeks to obtain the best price and execution on
all orders placed for the Portfolios, considering all the circumstances except
to the extent it 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 United States, 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.

<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 SECURITIES

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

<PAGE>

each business day. The net asset value per share of each class of a Portfolio
will be computed by dividing the sum of the 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.

<PAGE>

o Foreign securities not traded directly, or in ADRs or similar form in
the United States, 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.

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.

<PAGE>

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 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

<PAGE>

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 Contract owners.

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.
A Portfolio must also derive less than 30% of its gross income in each taxable
year from gains from the sale or other disposition of stock or securities held
for less than three months. Other investments subject to this three-month limit
are options, futures or forward contracts (other than those relating to foreign
currency), or in certain circumstances, foreign currencies and related options,
futures and forward contracts the gains on which are not directly related to
the Portfolio's business of investing in stock or securities. See "Federal Tax
Treatment of Options, Futures Contracts and Forward Foreign Exchange
Contracts." This 30% rule may be inapplicable in the context of certain
abnormal redemptions of Portfolio shares. For purposes of these tests, 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 or
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.

<PAGE>

The excise tax 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 United States Government securities (including
any security that is issued, guaranteed or insured by the United States or an
instrumentality of the United States) each United States 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.

<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. In
addition, gains realized on futures or foreign forward exchange contracts on
securities or securities indexes and, in some cases, currencies, held for less
than three months, must be limited to less than 30% of the Portfolio's annual
gross income. In order to avoid realizing excessive gains on securities or
currencies held less than three months, the Portfolio may be required to defer
the closing out of option, futures or foreign forward exchange contracts beyond
the time when it would otherwise be advantageous to do so. It is anticipated
that unrealized gains on Section 1256 option, futures and foreign forward
exchange contracts, which have been open for less than three months as of the
end of the Portfolio's fiscal year and which are recognized for tax purposes,
will not be considered gains on securities or currencies held less than three
months for purposes of the 30% test.

<PAGE>

Under Internal Revenue 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
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 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" ("PFIC") for United States 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.

<PAGE>

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 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 accountant.

CUSTODIAN

Chase Manhattan Bank, N.A., 1211 Avenue of the Americas, New York, New York
10036 serve as custodian of the Trust's portfolio securities and other assets.

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.

<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.

<PAGE>

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:

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

<PAGE>

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 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

<PAGE>

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>

PART C: OTHER INFORMATION

Item 24. Financial Statements and Exhibits

(a) Financial Statements:

To be filed by amendment.

(b) Exhibits:

1(a) Agreement and Declaration of Trust.*

1(b) Amended and Restated Agreement and Declaration of Trust.

1(c) Certificate of Trust.*

1(d) Certificate of Amendment.

2. By-Laws of the Trust.*

3. Not applicable.

4. None other than Exhibit 1.

5(a) Form of Investment Management Agreement between the EQ
Advisors Trust and EQ Financial Consultants, Inc.*

5(b) Form of Investment Advisory Agreement between EQ Financial
Consultants, Inc. and T. Rowe Price Associates, Inc.*

5(c) Form of Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Rowe Price-Fleming International,
Inc.*

5(d) Form of Investment Advisory Agreement between, EQ Financial
Consultants, Inc. and Putnam Investment Management, Inc.*

5(e) Form of Investment Advisory Agreement between, EQ Financial
Consultants, Inc. and Massachusetts Financial Services
Company.*

5(f) Form of Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Morgan Stanley Asset Management, Inc.
(to be provided by amendment).

5(g) Form of Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Warburg, Pincus Counsellors, Inc. (to
be provided by amendment).

5(h) Form of Investment Advisory Agreement between EQ Financial
Consultants, Inc. and Merrill Lynch Asset Management, L.P.
(to be provided by amendment).

6(a) Form of Distribution Agreement between the EQ Advisors
Trust and EQ Financial Consultants, Inc. with respect to
the Class IA shares (to be provided by amendment).

6(b) Form of Distribution Agreement between the EQ Advisors
Trust and Equitable Distributors, Inc. with respect to the
Class IB shares (to be provided by amendment).

7. Form of Deferred Compensation Plan (to be provided by
amendment).

C-1

<PAGE>

8. Custodian Agreement (to be provided by amendment).

9(a) Form of Mutual Fund Services Agreement between EQ Advisors
Trust and Chase Global Funds Services Company (to be
provided by amendment).

9(b) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of T. Rowe Price International Stock
Portfolio, and EQ Financial Consultants, Inc.*

9(c) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of T. Rowe Price Equity Income Portfolio,
and EQ Financial Consultants, Inc.*

9(d) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of EQ Putnam Growth & Income Value
Portfolio, and EQ Financial Consultants, Inc.*

9(e) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of EQ Putnam International Equity
Portfolio, and EQ Financial Consultants, Inc.*

9(f) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of EQ Putnam Investors Growth Portfolio,
and EQ Financial Consultants, Inc. (to be provided by
amendment).

9(g) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of EQ Putnam Balanced Portfolio, and EQ
Financial Consultants, Inc. (to be provided by amendment).

9(h) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of MFS Research Portfolio, and EQ
Financial Consultants, Inc.*

9(i) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of MFS Emerging Growth Companies
Portfolio, and EQ Financial Consultants, Inc. (to be
provided by amendment).

9(j) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of Morgan Stanley Emerging Markets Equity
Portfolio, and EQ Financial Consultants, Inc. (to be
provided by amendment).

9(k) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of Warburg Pincus Small Company Value
Portfolio, and EQ Financial Consultants, Inc. (to be
provided by amendment).

9(l) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of Merrill Lynch Global Allocation
Portfolio, and EQ Financial Consultants, Inc. (to be
provided by amendment).

9(l) Form of Expense Limitation Agreement between EQ Advisors
Trust, on behalf of Merrill Lynch Basic Value Portfolio,
and EQ Financial Consultants, Inc. (to be provided by
amendment).

9(m) Form of Participation Agreement (to be provided by
amendment).

10. Opinion and Consent of Katten Muchin & Zavis regarding the
legality of the securities being registered.*

11. Consent of the Independent Public Accountants (to be
provided by amendment).

C-2

<PAGE>

12. Not applicable.

13. Form of Stock Subscription Agreement between the Trust and
The Equitable Life Assurance Society of the United States.*

14. Not Applicable.

15. Form of Distribution Plan Pursuant to Rule 12b-1 for the
Trust's Class IB Shares.*

16. Not Applicable.

17. Financial Data Schedule (to be provided by amendment).

18. Form of Plan Pursuant to Rule 18f-3 under the 1940 Act.*

19. Not Applicable.

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

* Incorporated herein by reference to Registrant's Registration
Statement on Form N-1A filed on December 3, 1996 (File No. 33-17217).

Item 25. Persons Controlled by or under Common Control with Registrant

Upon commencement of the EQ Advisors Trust's operations, The
Equitable Life Assurance Society of the United States ("Equitable Life") will
be the sole initial shareholder of the EQ Advisors Trust and will control the
EQ Advisors Trust by virtue of its ownership of 100% of the EQ Advisors Trust's
outstanding shares. 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 Life converted from a New York mutual
life insurance company to a publicly-owned New York stock life insurance
company. At that time Equitable Life became a wholly-owned subsidiary of The
Equitable Companies Incorporated ("Holding Company"). The Holding Company
continues to own 100% of Equitable Life'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 or insurance and related financial services
companies. AXA is the eleventh largest insurance group in the world based on
worldwide revenues in 1994 and the second largest French insurance group based
on worldwide gross premiums in 1994. 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.

C-3

<PAGE>

Item 26. Number of Holders of Securities

NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF JANUARY __, 1997
- ------------------------------ ------------------------

Class IA Shares of beneficial interest None
Class IB Shares of beneficial interest None

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 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 By-Laws 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

C-4

<PAGE>

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.

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 February 29, 1996 (File
No. 801-15757) and amended through the date hereof, is incorporated by
reference.

C-5

<PAGE>

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.

Item 29. Principal Underwriters

(a) EQ Financial Consultants, Inc. is the principal underwriter of
the Trust's Class IA shares, and Equitable Distributors, Inc. is the principal
underwriter of the Trust's 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 Variable Life Insurance Company.
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., the principal underwriter of
the Trust's Class IA shares, and of Equitable Distributors, Inc., the principal
underwriter of the Trust's Class IB shares. The business address of the persons
whose names are preceded by a single asterisk is EQ Advisors Seventh Avenue,
New York, New York 10019. 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. Krumsiek'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. Radbill'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.

===============================================================================
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS WITH EQ FINANCIAL WITH REGISTRANT
CONSULTANTS, INC.

- -------------------------------------------------------------------------------
DIRECTORS
* Derry E. Bishop Director
* Harvey Blitz Director
Barbara J. Krumsiek Director
* Michael S. Martin Director
** Michael F. McNelis Director
* Richard V. Silver Director
* Mark R. Wutt Director

C-6

<PAGE>

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

OFFICERS
* Michael S. Martin Chairman of the Board and
Chief Executive Officer
** Michael F. McNelis President and Chief Operating
Officer
* Derry E. Bishop Executive Vice President
* Harvey Blitz Executive Vice President
* Gordon G. Dinsmore Executive Vice President
* Donald D. Higgins Executive Vice President
** Martin J. Telles Executive Vice President and
Chief Marketing 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
* Peter D. Noris Executive Vice President
* Dennis D. Witte Executive Vice President
** Robert McKenna Senior Vice President and
Chief Financial Officer
** Theresa A. Nurge-Alws Senior Vice President
* Naomi Friedland-Wechsler General Counsel
** Ronald Boswell First Vice President
** Donna M. Dazzo First Vice President
** Nancy Yurman First Vice President
** Michael Brzozowski Vice President and
Compliance Director
** 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
* Janet E. Hannon Secretary
* Linda J. Galasso Assistant Secretary

===============================================================================

C-7

<PAGE>

===============================================================================
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND
BUSINESS ADDRESS WITH EQUITABLE OFFICES WITH
DISTRIBUTORS, INC. REGISTRANT

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

DIRECTORS
* James M. Benson Director
Greg Brakovich Director
* Jerome S. Golden Director
* William T. McCaffrey Director
James A. Shepherdson, Director
III
- -------------------------------------------------------------------------------
OFFICERS
* Jerome S. Golden Chairman of the Board

* Greg Brakovich Co-President and Co-Chief Executive
Officer and Managing Director
* James A. Shepherdson, Co-President and Co-Chief Executive
III Officer and Managing Director

* Dennis D. Witte Senior Vice President
Philip D. Meserve Managing Director
* Thomas D. Bullen Chief Financial Officer
** Michael Brzozowski Chief Compliance Officer
* Naomi Friedland- Chief Legal Officer
Wechsler
* Ronald R. Quist Treasurer
* Janet Hannon Secretary
* Linda J. Galasso Assistant Secretary
===============================================================================

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-8

<PAGE>

(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.
755 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.
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

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 Trust or the effective
date of this Registration Statement.

C-9

<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
Pre-Effective Amendment No. 1 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 22nd day of January, 1997.

EQ ADVISORS TRUST

By: /s/ Peter D. Noris
------------------
Peter D. Noris
President

Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

Signature Title Date
--------- ----- ----

/s/ Peter D. Noris President and Trustee January 22, 1997
- ---------------------
Peter D. Noris

/s/ Harvey Blitz Chief Financial Officer January 22, 1997
- ---------------------
Harvey Blitz and Controller

C-10

<PAGE>

EXHIBIT LIST

EXHIBIT
NUMBER DESCRIPTION

1(b). Amended and Restated Agreement and Declaration of Trust of the EQ
Advisors Trust.

1(d). Certificate of Amendment.

EXHIBIT 1(B)
<PAGE>

AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
-------------------------------------------------------

EQ Advisors Trust

a Delaware Business Trust

Principal Place of Business:

787 Seventh Avenue
New York, NY 10019

<PAGE>

TABLE OF CONTENTS
-----------------

AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST

Page

ARTICLE I Name and Definitions...............................1

1. Name .......................................................1
2. Definitions.................................................1
(a) By-Laws............................................1
(b) Certificate of Trust...............................1
(c) Class..............................................2
(d) Commission ........................................2
(e) Declaration of Trust...............................2
(f) Delaware Act.......................................2
(g) Interested Person .................................2
(h) Manager............................................2
(i) 1940 Act...........................................2
(j) Person ............................................2
(k) Principal Underwriter..............................2
(l) Series.............................................2
(m) Shareholder........................................2
(n) Shares.............................................2
(o) Trust..............................................2
(p) Trust Property.....................................2
(q) Trustees...........................................3

ARTICLE II Purpose of Trust...................................3

ARTICLE III Shares.............................................3

1. Division of Beneficial Interest.............................3
2. Ownership of Shares.........................................4
3. Transfer of Shares..........................................4
4. Investments in the Trust....................................5
5. Status of Shares and Limitation of
Personal Liability ................................5
6. Establishment and Designation of Series or Class............5

<PAGE>

(a) Assets Held with Respect to a
Particular Series..................................5
(b) Liabilities Held with Respect to a
Particular Series..................................6
(c) Dividends, Distributions, Redemptions,
and Repurchases....................................6
(d) Equality ..........................................7
(e) Fractions..........................................7
(f) Exchange Privilege.................................7
(g) Combination of Series..............................7
(h) Elimination of Series..............................7
7. Indemnification of Shareholders.............................7

ARTICLE IV Trustees....................................................8

1. Number, Election, and Tenure................................8
2. Effect of Death, Resignation, etc.
of a Trustee.......................................8
3. Powers......................................................8
4. Payment of Expenses by the Trust...........................12
5. Payment of Expenses by Shareholders........................12
6. Ownership of Assets of the Trust...........................12
7. Service Contracts..........................................13
8. Trustees and Officers as Shareholders......................14

ARTICLE V Shareholders' Voting Powers and Meetings...................15

1. Voting Powers, Meetings, Notice and Record Dates...........15
2. Quorum and Required Vote...................................15
3. Record Dates...............................................15
4. Additional Provisions......................................15

ARTICLE VI Net Asset Value, Distributions and
Redemptions.......................................16

1. Determination of Net Asset Value,
Net Income and Distributions......................16
2. Redemptions and Repurchases................................16

<PAGE>

ARTICLE VII Compensation and Limitation of
Liability of Trustees.............................18

1. Compensation ..............................................18
2. Indemnification and Limitation of Liability ...............18
3. Trustee's Good Faith Act, Expert Advice,
No Bond or Surety ................................19
4. Insurance .................................................19

ARTICLE VIII Miscellaneous.....................................19

1. Liability of Third Persons Dealing with Trustees...........19
2. Termination of the Trust or Any Series or Class............19
3. Reorganization.............................................20
4. Amendments.................................................21
5. Filing of Copies, References, Headings.....................21
6. Applicable Law.............................................21
7. Provisions in Conflict with Law or Regulations.............22
8. Business Trust Only .......................................22

iii

<PAGE>

AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST

EQ Advisors Trust

THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST is made
and entered into as of the date set forth below by the Trustees named hereunder
for the purpose of forming a Delaware business trust in accordance with the
provisions hereinafter set forth.

NOW, THEREFORE, the Trustees hereby direct that the Certificate of
Trust be filed with the Office of the Secretary of State of the State of
Delaware and do hereby declare that the Trustees will hold IN TRUST all cash,
securities, and other assets which the Trust now possesses or may hereafter
acquire from time to time in any manner and manage and dispose of the same upon
the following terms and conditions for the benefit of the holders of Shares of
this Trust.

ARTICLE I

Name and Definitions

Section 1. Name. This Trust shall be known as the EQ Advisors Trust
and the Trustees shall conduct the business of the Trust under that name or any
other name as they may from time to time determine.

Section 2. Definitions. Whenever used herein, unless otherwise
required by the context or specifically provided:

(a) "By-Laws" shall mean the By-Laws of the Trust as amended from time
to time, which By-Laws are expressly herein incorporated by reference as part
of the "governing instrument" within the meaning of the Delaware Act;

(b) "Certificate of Trust" means the certificate of trust, as amended
or restated from time to time, filed by the Trustees in the Office of the
Secretary of State of the State of

<PAGE>

Delaware in accordance with the Delaware Act;

(c) "Class" means a class of Shares of a Series of the Trust
established in accordance with the provisions of Article III hereof;

(d) "Commission" shall have the meaning given such term in the 1940
Act;

(e) "Declaration of Trust" means this Agreement and Declaration of
Trust, as amended or restated from time to time;

(f) "Delaware Act" means the Delaware Business Trust Act 12 Del.
C.ss.ss. 3801 et seq., as amended from time to time;

(g) "Interested Person" shall have the meaning given it in Section
2(a)(19) of the 1940 Act;

(h) "Manager" means a party furnishing services to the Trust pursuant
to any contract described in Article IV, Section 7(a) hereof;

(i) "1940 Act" means the Investment Company Act of 1940 and the rules
and regulations thereunder, all as amended from time to time;

(j) "Person" means and includes individuals, corporations,
partnerships, trusts, associations, joint ventures, estates, and other
entities, whether or not legal entities, and governments and agencies and
political subdivisions thereof, whether domestic or foreign;

(k) "Principal Underwriter" shall have the meaning given such term in
the 1940 Act;

(l) "Series" means each Series of Shares established and designated
under or in accordance with the provisions of Article III hereof;

(m) "Shareholder" means a record owner of outstanding Shares;

(n) "Shares" means the shares of beneficial interest into which the
beneficial interest in the Trust shall be divided from time to time and
includes fractions of Shares as well as whole Shares;

(o) "Trust" means the Delaware Business Trust established under the
Delaware Act by this Declaration of Trust and the filing of the Certificate of
Trust in the Office of the Secretary of State of the State of Delaware;

(p) "Trust Property" means any and all property, real or personal,
tangible or intangible, which is from time to time owned or held by or for the
account of the Trust; and

<PAGE>

(q) "Trustees" means the "Person" or "Persons" who have signed this
Declaration of Trust and all other Persons who may from time to time be duly
elected or appointed to serve as Trustees in accordance with the provisions
hereof, in each case so long as such Person shall continue in office in
accordance with the terms of this Declaration of Trust, and reference herein to
a Trustee or the Trustees shall refer to such Person or Persons in his or her
or their capacity as Trustees hereunder.

ARTICLE II

Purpose of Trust

The purpose of the Trust is to conduct, operate and carry on the
business of a management investment company registered under the 1940 Act
through one or more Series investing primarily in securities, and to carry on
such other business as the Trustees may from time to time determine pursuant to
their authority under this Declaration of Trust.

ARTICLE III

Section 1. Division of Beneficial Interest. The beneficial interest
in the Trust shall be divided into one or more Series. The Trustees may divide
each Series into two or more Classes. Subject to the further provisions of this
Article III and any applicable requirements of the 1940 Act, the Trustees shall
have full power and authority, in their sole discretion, and without obtaining
any authorization or vote of the Shareholders of any Series or Class thereof,
(i) to divide the beneficial interest in each Series or Class thereof into
Shares, with or without par value as the Trustees shall determine, (ii) to
issue Shares without limitation as to number (including fractional Shares) to
such Persons and for such amount and type of consideration, subject to any
restriction set forth in the By-Laws, including cash or securities, at such
time or times and on such terms as the Trustees may deem appropriate, (iii) to
establish and designate and to change in any manner any Series or Class thereof
and to fix such preferences, voting powers, rights, duties and privileges and
business purpose of each Series or Class thereof as the Trustees may from time
to time determine, which preferences, voting powers, rights, duties and
privileges may be senior or subordinate to (or in the case of business purpose,
different from) any existing Series or Class thereof and may be limited to
specified property or obligations of the Trust or profits and losses associated
with specified property or obligations of the Trust, (iv) to divide or combine
the Shares of any Series or Class thereof into a greater or lesser number
without thereby materially changing the proportionate beneficial interest of
the Shares of such Series or Class thereof in the assets held with respect to
that Series, (v) to classify or reclassify any issued Shares of any Series or
Class thereof into shares of one or more Series or Classes thereof; (vi) to
change the name of any Series or Class thereof; (vii) to abolish any one or
more

<PAGE>

Series or Classes thereof; and (viii) to take such other action with respect to
the Shares as the Trustees may deem desirable.

Subject to the distinctions permitted among Classes of the same
Series as established by the Trustees, consistent with the requirements of the
1940 Act, each Share of a Series of the Trust shall represent an equal
beneficial interest in the net assets of such Series, and each holder of Shares
of a Series shall be entitled to receive such holder's pro rata share of
distributions of income and capital gains, if any, made with respect to such
Series. Upon redemption of the Shares of any Series, the applicable Shareholder
shall be paid solely out of the funds and property of such Series of the Trust.

All references to Shares in this Declaration of Trust shall be deemed
to be Shares of any or all Series or Classes thereof, as the context may
require. All provisions herein relating to the Trust shall apply equally to
each Series of the Trust and each Class thereof, except as the context
otherwise requires.

All Shares issued hereunder, including, without limitation, Shares
issued in connection with a dividend in Shares or a split or reverse split of
Shares, shall be fully paid and non-assessable. Except as otherwise provided by
the Trustees, Shareholders shall have no preemptive or other right to subscribe
to any additional Shares or other securities issued by the Trust.

Section 2. Ownership of Shares. The Ownership of Shares shall be
recorded on the books of the Trust or those of a transfer or similar agent for
the Trust, which books shall be maintained separately for the Shares of each
Series or Class of the Trust. No certificates certifying the ownership of
Shares shall be issued except as the Trustees may otherwise determine from time
to time. The Trustees may make such rules as they consider appropriate for the
issuance of Share certificates, the transfer of Shares of each Series or Class
of the Trust and similar matters. The record books of the Trust as kept by the
Trust or any transfer or similar agent, as the case may be, shall be conclusive
as to the identity of the Shareholders of each Series or Class of the Trust and
as to the number of Shares of each Series or Class of the Trust held from time
to time by each Shareholder.

Section 3. Transfer of Shares. Except as otherwise provided by the
Trustees, Shares shall be transferable on the books of the Trust only by the
record holder thereof or by his or her duly authorized agent upon delivery to
the Trustees or the Trust's transfer agent of a duly executed instrument of
transfer, together with a Share certificate if one is outstanding, and such
evidence of the genuineness of each such execution and authorization and of
such other matters as may be required by the Trustees. Upon such delivery, and
subject to any further requirements specified by the Trustees or contained in
the By-Laws, the transfer shall be recorded on the books of the Trust. Until a
transfer is so recorded, the Shareholder of record of Shares shall be deemed to
be the holder of such Shares for all purposes hereunder and neither the
Trustees nor the Trust, nor any transfer agent or registrar or any officer,
employee, or agent

<PAGE>

of the Trust, shall be affected by any notice of a proposed transfer.

Section 4. Investments in the Trust. Investments may be accepted by
the Trust from Persons, at such times, on such terms, and for such
consideration as the Trustees from time to time may authorize.

Section 5. Status of Shares and Limitation of Personal Liability.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof. The
death, incapacity, dissolution, termination, or bankruptcy of a Shareholder
during the existence of the Trust shall not operate to terminate the Trust, nor
entitle the representative of any such Shareholder to an accounting or to take
any action in court or elsewhere against the Trust or the Trustees, but
entitles such representative only to the rights of such Shareholder under this
Trust. Ownership of Shares shall not entitle the Shareholder to any title in or
to the whole or any part of the Trust Property or right to call for a
participation or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. No Shareholder
shall be personally liable for the debts, liabilities, obligations and expenses
incurred by, contracted for, or otherwise existing with respect to, the Trust
or any Series. Neither the Trust nor the Trustees, nor any officer, employee,
or agent of the Trust shall have any power to bind personally any Shareholders,
nor, except as specifically provided herein, to call upon any Shareholder for
the payment of any sum of money or assessment whatsoever other than such as the
Shareholder may at any time personally agree to pay.

Section 6. Establishment and Designation of Series or Class. The
establishment and designation of any Series or Class of Shares of the Trust
shall be effective upon the adoption by a majority of the then Trustees of a
resolution that sets forth such establishment and designation and the relative
rights and preferences of such Series or Class of the Trust, whether directly
in such resolution or by reference to another document including, without
limitation, any registration statement of Trust, or as otherwise provided in
such resolution.

Shares of each Series or Class of the Trust established pursuant to
this Article III, unless otherwise provided in the resolution establishing such
Series or Class, shall have the following relative rights and preferences:

(a) Assets Held with Respect to a Particular Series. All
consideration received by the Trust for the issue or sale of Shares of a
particular Series, together with all assets in which such consideration is
invested or reinvested, all income, earnings, profits, and proceeds thereof
from whatever source derived (including, without limitation, any proceeds
derived from the sale, exchange or liquidation of such assets and any funds or
payments derived from any reinvestment of such proceeds in whatever form the
same may be) shall irrevocably be held separately with respect to that Series
for all purposes, subject only to the rights of creditors of such Series from
the assets of the Trust and every other Series, and shall be so recorded upon
the books of

<PAGE>

account of the Trust. Such consideration, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, (including, without limitation,
any proceeds derived from the sale, exchange or liquidation of such assets, and
any funds or payments derived from any reinvestment of such proceeds), in
whatever form the same may be, are herein referred to as "assets held with
respect to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not readily
identifiable as assets held with respect to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to, between
or among any one or more of the Series in such manner and on such basis as the
Trustees, in their sole discretion, deem fair and equitable, and any General
Assets so allocated to a particular Series shall be held with respect to that
Series. Each such allocation by the Trustees shall be conclusive and binding
upon the Shareholders of all Series for all purposes. Separate and distinct
records shall be maintained for each Series and the assets held with respect to
each Series shall be held and accounted for separately from the assets held
with respect to all other Series and the General Assets of the Trust not
allocated to such Series.

(b) Liabilities Held with Respect to a Particular Series. The assets
of the Trust held with respect to each particular Series shall be charged
against the liabilities of the Trust held with respect to that Series and all
expenses, costs, charges, and reserves attributable to that Series, except that
liabilities and expenses allocated solely to a particular Class shall be borne
by that Class. Any general liabilities of the Trust which are not readily
identifiable as being held with respect to any particular Series or Class shall
be allocated and charged by the Trustees to and among any one or more of the
Series or Classes in such manner and on such basis as the Trustees in their
sole discretion deem fair and equitable. All liabilities, expenses, costs,
charges, and reserves so charged to a Series or Class are herein referred to as
"liabilities held with respect to" that Series or Class. Each allocation of
liabilities, expenses, costs, charges, and reserves by the Trustees shall be
conclusive and binding upon the shareholders of all Series or Classes for all
purposes. Without limiting the foregoing, but subject to the right of the
Trustees to allocate general liabilities, expenses, costs, charges or reserves
as herein provided, the debts, liabilities, obligations and expenses incurred,
contracted for or otherwise existing with respect to a particular Series shall
be enforceable against the assets held with respect to such Series only and not
against the assets of the Trust generally or against the assets held with
respect to any other Series. Notice of this contractual limitation on
liabilities among Series may, in the Trustees' discretion, be set forth in the
certificate of trust of the Trust (whether originally or by amendment) as filed
or to be filed in the Office of the Secretary of State of the State of Delaware
pursuant to the Delaware Act, and upon the giving of such notice in the
certificate of trust, the statutory provisions of Section 3804 of the Delaware
Act relating to limitations on liabilities among Series (and the statutory
effect under Section 3804 of setting forth such notice in the certificate of
trust) shall become applicable to the Trust and each Series. Any person
extending credit to, contracting with or having any claim against any Series
may look only to the assets of that Series to satisfy or enforce any debt, with
respect to that Series. No Shareholder or former Shareholder of any Series
shall have a claim on or any right to any assets allocated or belonging to any
other Series.

<PAGE>

(c) Dividends, Distributions, Redemptions, and Repurchases.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution, including, without
limitation, any distribution paid upon termination of the Trust or of any
Series or Class with respect to, nor any redemption or repurchase of, the
Shares of any Series or Class, shall be effected by the Trust other than from
the assets held with respect to such Series, nor shall any Shareholder or any
particular Series or Class otherwise have any right or claim against the assets
held with respect to any other Series except to the extent that such
Shareholder has such a right or claim hereunder as a Shareholder of such other
Series. The Trustees shall have full discretion, to the extent not inconsistent
with the 1940 Act, to determine which items shall be treated as income and
which items as capital, and each such determination and allocation shall be
conclusive and binding upon the Shareholders.

(d) Equality. All the Shares of each particular Series shall
represent an equal proportionate interest in the assets held with respect to
that Series (subject to the liabilities held with respect to that Series or
Class thereof and such rights and preferences as may have been established and
designated with respect to any Class within such Series), and each Share of any
particular Series shall be equal to each other Share of that Series. With
respect to any Class of a Series, each such Class shall represent interests in
the assets of that Series and have identical voting, dividend, liquidation and
other rights and the same terms and conditions, except that expenses allocated
to a Class may be borne solely by such Class as determined by the Trustees and
a Class may have exclusive voting rights with respect to matters affecting only
that Class.

(e) Fractions. Any fractional Share of a Series or Class thereof,
shall carry proportionately all the rights and obligations of a whole Share of
that Series or Class, including rights with respect to voting, receipt of
dividends and distributions, redemption of Shares and termination of the Trust.

(f) Exchange Privilege. The Trustees shall have the authority to
provide that the holders of Shares of any Series or Class shall have the right
to exchange said Shares for Shares of one or more other Series of Shares or
Class of Shares of the Trust or of other investment companies registered under
the 1940 Act in accordance with such requirements and procedures as may be
established by the Trustees.

(g) Combination of Series. The Trustees shall have the authority,
without the approval of the Shareholders of any Series or Class unless
otherwise required by applicable law, to combine the assets and liabilities
held with respect to any two or more Series or Classes into assets and
liabilities held with respect to a single Series or Class.

Section 7. Indemnification of Shareholders. If any Shareholder or
former Shareholder shall be exposed to liability by reason of a claim or demand
relating to such Person being or having been a Shareholder, and not because of
such Person's acts or omissions, the Shareholder or former Shareholder (or such
Person's heirs, executors, administrators, or other legal representatives or in
the case of a corporation or other entity, its corporate or other general

<PAGE>

successor) shall be entitled to be held harmless from and indemnified out of
the assets of the Trust against all loss and expense arising from such claim or
demand, but only out of the assets held with respect to the particular Series
of Shares of which such Person is or was a Shareholder and from or in relation
to which such liability arose.

ARTICLE IV

Trustees

Section 1. Number, Election and Tenure. The number of Trustees shall
initially be one, who shall be Peter D. Noris. Hereafter, the number of
Trustees shall at all times be at least one and no more than ten as determined,
from time to time, by the Trustees pursuant to Section 3 of this Article IV.
Each Trustee shall serve during the lifetime of the Trust until he or she dies,
resigns, has reached the mandatory retirement age as set by the Trustees, is
declared bankrupt or incompetent by a court of appropriate jurisdiction, or is
removed, or, if sooner, until the next meeting of Shareholders called for the
purpose of electing Trustees and until the election and qualification of his or
her successor. In the event that less than the majority of the Trustees holding
office have been elected by the Shareholders, the Trustees then in office shall
call a Shareholders' meeting for the election of Trustees. Any Trustee may
resign at any time by written instrument signed by him or her and delivered to
any officer of the Trust or to a meeting of the Trustees. Such resignation
shall be effective upon receipt unless specified to be effective at some other
time. Except to the extent expressly provided in a written agreement with the
Trust, no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal. The Shareholders may elect
Trustees at any meeting of Shareholders called by the Trustees for that
purpose. Any Trustee may be removed at any meeting of Shareholders by a vote of
two-thirds of the outstanding Shares of the Trust.

Section 2. Effect of Death, Resignation, etc. of a Trustee. The
death, declination to serve, resignation, retirement, removal or incapacity of
one or more Trustees, or all of them, shall not operate to annul the Trust or
to revoke any existing agency created pursuant to the terms of this Declaration
of Trust. Whenever there shall be fewer than the designated number of Trustees,
until additional Trustees are elected or appointed as provided herein to bring
the total number of Trustees equal to the designated number, the Trustees in
office, regardless of their number, shall have all the powers granted to the
Trustees and shall discharge all the duties imposed upon the Trustees by this
Declaration of Trust. As conclusive evidence of such vacancy, a written
instrument certifying the existence of such vacancy may be executed by an
officer of the Trust or by a majority of the Trustees. In the event of the
death, declination, resignation, retirement, removal, or incapacity of all the
then Trustees within a short period of time and without the opportunity for at
least one Trustee being able to appoint additional Trustees to replace those no
longer serving, the Trust's Manager(s) are empowered to appoint new Trustees
subject to the provisions of Section 16(a) of the 1940 Act.

<PAGE>

Section 3. Powers. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Trustees, and the
Trustees shall have all powers necessary or convenient to carry out that
responsibility including the power to engage in securities transactions of all
kinds on behalf of the Trust. Without limiting the foregoing, the Trustees may:
adopt By-Laws not inconsistent with this Declaration of Trust providing for the
management of the affairs of the Trust and may amend and repeal such By-Laws to
the extent that such By-laws do not reserve that right to the Shareholders;
enlarge or reduce the number of Trustees; remove any Trustee with or without
cause at any time by written instrument signed by a least two-thirds of the
number of Trustees prior to such removal, specifying the date when such removal
shall become effective, and fill vacancies caused by enlargement of their
number or by the death, resignation, retirement or removal of a Trustee; elect
and remove, with or without cause, such officers and appoint and terminate such
agents as they consider appropriate; appoint from their own number and
establish and terminate one or more committees, consisting of two or more
Trustees, that may exercise the powers and authority of the Board of Trustees
to the extent that the Trustees so determine; employ one or more custodians of
the assets of the Trust and may authorize such custodians to employ
subcustodians and to deposit all or any part of such assets in a system or
systems for the central handling of securities or with a Federal Reserve Bank;
employ an administrator for the Trust and may authorize such administrator to
employ subadministrators; employ a Manager to the Trust and may authorize such
Manager to employ subadvisers; retain a transfer agent or a shareholder
servicing agent, or both; provide for the issuance and distribution of Shares
by the Trust directly or through one or more Principal Underwriters or
otherwise; redeem, repurchase and transfer Shares pursuant to applicable law;
set record dates for the determination of Shareholders with respect to various
matters; declare and pay dividends and distributions to Shareholders of each
Series from the assets of such Series; and in general delegate such authority
as they consider desirable to any officer of the Trust, to any committee of the
Trustees and to any agent or employee of the Trust or to any such custodian,
transfer or shareholder servicing agent, or Principal Underwriter. Any
determination as to what is in the interests of the Trust made by the Trustees
in good faith shall be conclusive. In construing the provisions of this
Declaration of Trust, the presumption shall be in favor of a grant of power to
the Trustees. Unless otherwise specified herein or in the By-Laws or required
by law, any action by the Trustees shall be deemed effective if approved or
taken by a majority of the Trustees present at a meeting of Trustees at which a
quorum of Trustees is present, within or without the State of Delaware.

Without limiting the foregoing, the Trustees shall have the power and
authority to cause the Trust (or to act on behalf of the Trust):

<PAGE>

(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own,
hold, pledge, sell, assign, transfer, exchange, distribute, write options on,
lend or otherwise deal in or dispose of contracts for the future acquisition or
delivery of fixed income or other securities, and securities of every nature
and kind, including, without limitation, all types of bonds, debentures,
stocks, negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial papers,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all Persons, including
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, and foreign government or any political subdivision of
the United States Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any corporation
or organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities, to change the investments of the assets of the Trust; and to
exercise any and all rights, powers, and privileges of ownership or interest in
respect of any and all such investments of every kind and description,
including, without limitation, the right to consent and otherwise act with
respect thereto, with power to designate one or more Persons, to exercise any
of said rights, powers, and privileges in respect of any of said instruments;

(b) To sell, exchange, lend, pledge, mortgage, hypothecate, lease, or
write options (including, options on futures contracts) with respect to or
otherwise deal in any property rights relating to any or all of the assets of
the Trust or any Series;

(c) To vote or give assent, or exercise any rights of ownership, with
respect to stock or other securities or property; and to execute and deliver
proxies or powers of attorney to such Person or Persons as the Trustees shall
deem proper, granting to such Person or Persons such power and discretion with
relation to securities or property as the Trustees shall deem proper;

(d) To exercise powers and right of subscription or otherwise which
in any manner arise out of ownership or securities;

(e) To hold any security or property in a form not indicating any
trust, whether in bearer, unregistered or other negotiable form, or in its own
name or in the name of a custodian or subcustodian or a nominee or nominees or
otherwise;

(f) To consent to or participate in any plan for the reorganization,
consolidation or merger of any corporation or issuer of any security which is
held in the Trust; to consent to any contract, lease, mortgage, purchase or
sale of property by such corporation or issuer; and to pay calls or
subscriptions with respect to any security held in the Trust;

(g) To join with other security holders in acting through a
committee, depositary,

<PAGE>

voting trustee or otherwise, and in that connection to deposit any security
with, or transfer any security to, any such committee, depositary or trustee,
and to delegate to them such power and authority with relation to any security
(whether or not so deposited or transferred) as the Trustees shall deem proper,
and to agree to pay, and to pay, such portion of the expenses and compensation
of such committee, depositary or trustee as the Trustees shall deem proper;

(h) To compromise, arbitrate or otherwise adjust claims in favor of
or against the Trust or any matter in controversy, including, but not limited
to, claims for taxes;

(i) To enter into joint ventures, general or limited partnerships and
any other combinations or associations;

(j) To borrow funds or other property in the name of the Trust
exclusively for Trust purposes and in connection therewith issue notes or other
evidence of indebtedness; and to mortgage and pledge the Trust Property or any
part thereof to secure any or all of such indebtedness;

(k) To endorse or guarantee the payment of any notes or other
obligations of any Person; to make contracts of guaranty or suretyship, or
otherwise assume liability for payment thereof; and to mortgage and pledge the
Trust Property or any part thereof to secure any of or all of such obligations;

(l) To purchase any pay for entirely out of Trust Property such
insurance as the Trustees may deem necessary or appropriate for the conduct of
the business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its portfolio
investments, and insurance polices insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent contractors of the Trust, individually against all claims and
liabilities of every nature arising by reason of holding, being or having held
any such office or position, or by reason of any action alleged to have been
taken or omitted by any such Person as Trustee, officer, employee, agent,
investment adviser, principal underwriter, or independent contractor, including
any action taken or independent contractor, including any action taken or
omitted that may be determined to constitute negligence, whether or not the
Trust would have the power to indemnify such Person against liability;

(m) To adopt, establish and carry out pension, profit-sharing, share
bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans and trusts, including the purchasing of life insurance and
annuity contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the Trust;

(n) To operate as and carry out the business of an investment
company, and exercise all the powers necessary or appropriate to the conduct of
such operations;

<PAGE>

(o) To enter into contracts of any kind and description;

(p) To employ as custodian of any assets of the Trust one or more
banks, trust companies or companies that are members of a national securities
exchange or such other entities as the Commission may permit as custodians of
the Trust, subject to any conditions set forth in this Declaration of Trust or
in the By-Laws;

(q) To employ auditors, counsel or other agents of the Trust, subject
to any conditions set forth in this Declaration of Trust or in the By-Laws;

(r) To interpret the investment policies, practices, or limitations
of any Series or Class; and

(s) To establish separate and distinct Series with separately defined
investment objectives and policies and distinct investment purposes, and with
separate Shares representing beneficial interests in such Series, and to
establish separate Classes, all in accordance with the provisions of Article
III;

(t) To the full extent permitted by Section 3804 of the Delaware Act,
to allocate assets, liabilities and expenses of the Trust to a particular
Series and liabilities and expenses to a particular Class or to apportion the
same between or among two or more Series or Classes, provided that any
liabilities or expenses incurred by a particular Series or Class shall be
payable solely out of the assets belonging to that Series or Class as provided
for in Article III;

(u) Subject to the 1940 Act, to engage in any other lawful act or
activity in which a business trust organized under the Delaware Act may engage.

The Trust shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its Series. The
Trust shall not in any way be bound or limited by any present or future law or
custom in regard to investment by fiduciaries. The Trust shall not be required
to obtain any court order to deal with any assets of the Trust or take any
other action hereunder.

Section 4. Payment of Expenses by the Trust. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to, the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or Manager, Principal Underwriter, auditors, counsel, custodian, transfer
agent, shareholder servicing agent, and such other agents or independent
contractors and such other expenses and charges as the Trustees may deem
necessary or proper to incur, which expenses, fees, charges, taxes and
liabilities shall be allocated in accordance with Article III, Section 6
hereof.

<PAGE>

Section 5. Payment of Expenses by Shareholders. The Trustees shall
have the power, as frequently as they may determine, to cause each Shareholder,
or each Shareholder of any particular Series, to pay directly, in advance or
arrears, expenses of the Trust as described in Section 4 of this Article IV
("Expenses"), in an amount fixed from time to time by the Trustees, by setting
off such Expenses due from such Shareholder from declared but unpaid dividends
owed such Shareholder and/or by reducing the number of Shares in the account of
such Shareholder by that number of full and/or fractional Shares which
represents the outstanding amount of such Expenses due from such Shareholder,
provided that the direct payment of such Expenses by Shareholders is permitted
under applicable law.

Section 6. Ownership of Assets of the Trust. Title to all of the
assets of the Trust shall at all times be considered as vested in the Trust,
except that the Trustees shall have power to cause legal title to any Trust
Property to be held by or in the name of one or more of the Trustees, or in the
name of the Trust, or in the name of any other Person as nominee, on such terms
as the Trustees may determine. The right, title and interest of the Trustees in
the Trust Property shall vest automatically in each Person who may hereafter
become a Trustee. Upon the resignation, removal or death of a Trustee, he or
she shall automatically cease to have any right, title or interest in any of
the Trust Property, and the right, title and interest of such Trustee in the
Trust Property shall vest automatically in the remaining Trustees. Such vesting
and cessation of title shall be effective whether or not conveyancing documents
have been executed and delivered.

Section 7. Service Contracts.

(a) Subject to such requirements and restrictions as may be set forth
under federal and/or state law and in the By-Laws, including, without
limitation, the requirements of Section 15 of the 1940 Act, the Trustees may,
at any time and from time to time, contract for exclusive or nonexclusive
advisory, management and/or administrative services for the Trust or for any
Series (or Class thereof) with any corporation, trust, association, or other
organization; and any such contract may contain such other terms as the
Trustees may determine, including, without limitation, authority for the
Manager(s) or administrator to delegate certain or all of its duties under such
contracts to qualified investment advisers and administrators and to determine
from time to time without prior consultation with the Trustees what investments
shall be purchased, held sold or exchanged and what portion, if any, of the
assets of the Trust shall be held uninvested and to make changes in the Trust's
investments, or such other activities as may specifically be delegated to such
party.

(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association, or other organization,
appointing it exclusive or nonexclusive distributor or Principal Underwriter
for the Shares of one or more of the Series (or Classes) or other securities to
be issued by the Trust. Every such contract shall comply with such requirements
and restrictions as may be set forth under federal and/or state law and in the
ByLaws, including, without limitation, the requirements of Section 15 of the
1940 Act; and any

<PAGE>

such contract may contain such other terms as the Trustees may determine.

(c) The Trustees are also empowered, at any time and from time to
time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent and/or
shareholder servicing agent for the Trust or one or more of its Series. Every
such contract shall comply with such requirements and restrictions as may be
set forth under federal and/or state law and in the By-Laws or stipulated by
resolution of the Trustees.

(d) Subject to applicable law, the Trustees are further empowered, at
any time and from time to time, to contract with any entity to provide such
other services to the Trust or one or more of the Series, as the Trustees
determine to be in the best interests of the Trust and the applicable Series.

(e) The fact that:

(i) any of the Shareholders, Trustees, or officers of
the Trust is a shareholder, director, officer,
partner, trustee, employee, Manager, adviser,
Principal Underwriter, distributor, or affiliate
or agent of or for any corporation, trust,
association, or other organization, or for any
parent or affiliate of any organization with
which an advisory, management, or administration
contract, or Principal Underwriter's or
distributor's contract, or transfer agent,
shareholder servicing agent or other type of
service contract may have been or may hereafter
be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder or
has an interest in the Trust; or that

(ii) any corporation, trust, association or other
organization with which an advisory, management,
or administration contract or Principal
Underwriter's or distributor's contract, or
transfer agent or shareholder servicing agent
contract may have been or may hereafter be made
also has an advisory, management, or
administration contract, or Principal
Underwriter's or distributor's or other service
contract with one or more other corporations,
trusts, associations, or other organizations, or
has other business or interests,

shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.

Section 8. Trustees and Officers as Shareholders. Any Trustee,
officer or agent of the Trust may acquire, own and dispose of Shares to the
same extent as if he were not a Trustee,

<PAGE>

officer or agent; and the Trustees may issue and sell and cause to be issued
and sold Shares to, and redeem such Shares from, any such Person or any firm or
company in which such Person is interested, subject only to the general
limitations contained herein or in the By-Laws relating to the sale and
redemption of such Shares.

ARTICLE V

Shareholders' Voting Powers and Meetings

Section 1. Voting Powers, Meetings, Notice, and Record Dates. The
Shareholders shall have power to vote only: (i) for the election or removal of
Trustees as provided in Article IV, Section 1 hereof, and (ii) with respect to
such additional matters relating to the Trust as may be required by applicable
law, this Declaration of Trust, the By-Laws or any registration of the Trust
with the Commission (or any successor agency), or as the Trustees may consider
necessary or desirable. Each whole Share shall be entitled to one vote as any
matter on which it is entitled to vote and each fractional Share shall be
entitled to a proportionate fractional vote. Notwithstanding any other
provision of this Declaration of Trust, on any matters submitted to a vote of
the Shareholders, all Shares of the Trust then entitled to vote shall be voted
in aggregate, except: (i) when required by the 1940 Act, Shares shall be voted
by individual Series; (ii) when the matter involves the termination of a Series
or any other action that the Trustees have determined will affect only the
interests of one or more Series, then only Shareholders of such Series shall be
entitled to vote thereon; and (iii) when the matter involves any action that
the Trustees have determined will affect only the interests of one or more
Classes, then only the Shareholders of such Class or Classes shall be entitled
to vote thereon. There shall be no cumulative voting in the election of
Trustees. Shares may be voted in person or by proxy. A proxy may be given in
writing. The By-Laws may provide that proxies may also, or may instead, be
given by an electronic or telecommunications device or in any other manner.
Notwithstanding anything else contained herein or in the By-Laws, in the event
a proposal by anyone other than the officers or Trustees of the Trust is
submitted to a vote of the Shareholders of one or more Series or Classes
thereof or of the Trust, or in the event of any proxy contest or proxy
solicitation or proposal in opposition to any proposal by the officers or
Trustees of the Trust, Shares may be voted only by written proxy or in person
at a meeting. Until Shares are issued, the Trustees may exercise all rights of
Shareholders and may take any action required by law, this Declaration of Trust
or the By-Laws to be taken by the Shareholders. Meetings of the Shareholders
shall be called and notice thereof and record dates therefor shall be given and
set as provided in the By-Laws.

Section 2. Quorum and Required Vote. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
thirty-three and one-third percent (33-1/3%) of the Shares entitled to vote
shall constitute a quorum at a Shareholders' meeting. When any one or more
Series (or Classes) is to vote as a single Class separate from any other
Shares, thirty-three and one-third percent (33-1/3%) of the Shares of each such
Series

<PAGE>

(or Class) entitled to vote shall constitute a quorum at a Shareholders' meting
of that Series (or Class). Except when a larger vote is required by any
provision of this Declaration of Trust or the By-Laws or by applicable law,
when a quorum is present at any meeting, a majority of the Shares voted shall
decide any questions and a plurality of the Shares voted shall elect a Trustee,
provided that where any provision of law or of this Declaration of Trust
requires that the holders of any Series shall vote as a Series (or that holders
of a Class shall vote as a Class), then a majority of the Shares of that Series
(or Class) voted on the matter (or a plurality with respect to the election of
a Trustee) shall decide that matter insofar as that Series (or Class) is
concerned.

Section 3. Record Dates. For the purpose of determining the
Shareholders of any Series (or Class) who are entitled to receive payment of
any dividend or of any other distribution, the Trustees may from time to time
fix a date, which shall be before the date for the payment of such dividend or
such other payment, as the record date for determining the Shareholders of such
Series (or Class) having the right to receive such dividend or distribution.
Without fixing a record date, the Trustees may for distribution purposes close
the register or transfer books for one or more Series (or Classes) at any time
prior to the payment of a distribution. Nothing in this Section shall be
construed as precluding the Trustees from setting different record dates for
different Series (or Classes).

Section 4. Additional Provisions. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.

ARTICLE VI

Net Asset Value, Distributions and Redemptions

Section 1. Determination of Net Asset Value, Net Income, and
Distributions. Subject to applicable law and Article III, Section 6 hereof, the
Trustees, in their absolute discretion, may prescribe and shall set forth in
the By-Laws or in a duly adopted vote of the Trustees such bases and time for
determining the per Share or net asset value of the Shares of any Series or
Class or net income attributable to the Shares of any Series or Class, or the
declaration and payment of dividends and distributions on the Shares of any
Series or Class, as they may deem necessary or desirable.

Section 2. Redemptions and Repurchases.

(a) The Trust shall purchase such Shares as are offered by any
Shareholder for redemption, upon the presentation of a proper instrument of
transfer together with a request directed to the Trust, or a Person designated
by the Trust, that the Trust purchase such Shares or in accordance with such
other procedures for redemption as the Trustees may from time to time
authorize; and the Trust will pay therefor the net asset value thereof as
determined by the

<PAGE>

Trustees (or on their behalf), in accordance with any applicable provisions of
the By-Laws and applicable law. Unless extraordinary circumstances exist,
payment for said Shares shall be made by the Trust to the Shareholder in
accordance with the 1940 Act and any rules and regulations thereunder or as
otherwise required by the Commission. The obligation set forth in this Section
2 is subject to the provision that, in the event that any time the New York
Stock Exchange (the "Exchange") is closed for other than weekends or holidays,
or if permitted by the rules and regulations or an order of the Commission
during periods when trading on the Exchange is restricted or during any
emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the
net assets held with respect to such Series or during any other period
permitted by order of the Commission for the protection of investors, such
obligation may be suspended or postponed by the Trustees. In the case of a
suspension of the right of redemption as provided herein, a Shareholder may
either withdraw the request for redemption or receive payment based on the net
asset value per share next determined after the termination of such suspension.

(b) The redemption price may in any case or cases be paid wholly or
partly in kind if the Trustees determine that such payment is advisable in the
interest of the remaining Shareholders of the Series or Class thereof for which
the Shares are being redeemed. Subject to the foregoing, the fair value,
selection and quantity of securities or other property so paid or delivered as
all or part of the redemption price may be determined by or under authority of
the Trustees. In no case shall the Trust be liable for any delay of any Manager
or other Person in transferring securities selected for delivery as all or part
of any payment-in-kind.

(c) If the Trustees shall, at any time and in good faith, determine
that direct or indirect ownership of Shares of any Series or Class thereof has
or may become concentrated in any Person to an extent that would disqualify any
Series as a regulated investment company under the Internal Revenue Code of
1986, as amended (or any successor statute thereto), then the Trustees shall
have the power (but not the obligation) by such means as they deem equitable
(i) to call for the redemption by any such Person of a number, or principal
amount, of Shares sufficient to maintain or bring the direct or indirect
ownership of Shares into conformity with the requirements for such
qualification, (ii) to refuse to transfer or issue Shares of any Series or
Class thereof to such Person whose acquisition of the Shares in question would
result in such disqualification, or (iii) to take such other actions as they
deem necessary and appropriate to avoid such disqualification. Any such
redemption shall be effected at the redemption price and in the manner provided
in this Article VI.

(d) The holders of Shares shall upon demand disclose to the Trustees
in writing such information with respect to direct and indirect ownership of
Shares as the Trustees deem necessary to comply with the provisions of the
Internal Revenue Code of 1986, as amended (or any successor statute thereto),
or to comply with the requirements of any other taxing authority.

ARTICLE VII

<PAGE>

Compensation and Limitation of Liability of Trustees

Section 1. Compensation. The Trustees in such capacity shall be
entitled to reasonable compensation from the Trust and they may fix the amount
of such compensation. However, the Trust will not compensate those Trustees who
are Interested Persons of the Trust, its Manager, subadvisers, distributor or
Principal Underwriter. Nothing herein shall in any way prevent the employment
of any Trustee for advisory, management, legal, accounting, investment banking
or other services and payment for such services by the Trust.

Section 2. Indemnification and Limitation of Liability. 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.

All persons extending credit to, contracting with or having any claim
against the Trust of the Trustees shall look only to the assets of the
appropriate Series of the Trust for payment under such credit, contract, or
claim; and neither the Trustees nor the Shareholders, nor any of the Trust's
officers, employees, or agents, whether past, present, or future, shall be
personally liable therefor.

Every note, bond, contract, instrument, certificate or undertaking
and every other act or thing whatsoever executed or done by or on behalf of the
Trust or the Trustees by any of them in connection with the Trust shall
conclusively be deemed to have been executed or done only in or with respect to
his or their capacity as Trustee or Trustees, and such Trustee or Trustees
shall not be personally liable thereon. At the Trustees' discretion, any note,
bond, contract, instrument, certificate or undertaking made or issued by the
Trustees or by any officer or officers may give notice that the Certificate of
Trust is on file in the Office of the Secretary of State of the State of
Delaware and that a limitation on liability of Series exists and such note,
bond, contract, instrument, certificate or undertaking may, if the Trustees so
determine, recite that the same was executed or made on behalf of the Trust by
a Trustee or Trustees in such capacity and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only on the assets and property of
the Trust or a Series thereof, and may contain such further recital as such
Person or Persons may deem appropriate. The omission of any such notice or
recital shall in no way operate to bind any Trustees, officer, or Shareholders
individually.

Section 3. Trustee's Good Faith Action, Expert Advice, No Bond or
Surety. The

<PAGE>

exercise by the Trustees of their powers and discretions hereunder shall be
binding upon everyone interested. A Trustee shall be liable to the Trust and to
any Shareholder solely for his or her own willful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee, and shall not be liable for errors of judgment or mistakes
of fact or law. The Trustees may take advice of counsel or other experts with
respect to the meaning and operation of this Declaration of Trust, and shall be
under no liability for any act or omission in accordance with such advice nor
for failing to follow such advice. The Trustees shall not be required to give
any bond as such, nor any surety if a bond is required.

Section 4. Insurance. 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 VIII

Miscellaneous

Section 1. Liability of Third Persons Dealing with Trustees. No
Person dealing with the Trustees shall be bound to make any inquiry concerning
the validity of any transaction made or to be made by the Trustees or to see to
the application of any payments made or property transferred to the Trust or
upon its order.

Section 2. Termination of the Trust or Any Series or Class.

(a) Unless terminated as provided herein, the Trust shall continue
without limitation of time. The Trust may be terminated at any time by vote of
a majority of the Shares of each Series entitled to vote, voting separately by
Series, or by the Trustees by written notice to the Shareholders. Any Series of
Shares or Class thereof may be terminated at any time by vote of a majority of
the Shares of such Series or Class entitled to vote or by the Trustees by
written notice to the Shareholders of such Series or Class.

(b) Upon the requisite Shareholder vote or action by the Trustees to
terminate the Trust or any one or more Series of Shares or any Class thereof,
after paying or otherwise providing for all charges, taxes, expenses, and
liabilities, whether due or accrued or anticipated, of the Trust or of the
particular Series or any Class thereof as may be determined by the Trustees,
the Trust shall in accordance with such procedures as the Trustees may consider
appropriate reduce the remaining assets of the Trust or of the affected Series
or Class to distributable form in cash or Shares (if any Series remain) or
other securities, or any combination thereof, and distribute the proceeds to
the Shareholders of the Series or Classes

<PAGE>

involved, ratably according to the number of Shares of such Series or Class
held by the Shareholders of such Series or Class on the date of distribution.
Thereupon, the Trust or any affected Series or Class shall terminate and the
Trustees and the Trust shall be discharged of any and all further liabilities
and duties relating thereto or arising therefrom, and the right, title, and
interest of all parties with respect to the Trust or such Series or Class shall
be canceled and discharged.

(c) Upon termination of the Trust, following completion of winding up
of its business, the Trustees shall cause a certificate of cancellation of the
Trust's Certificate of Trust to be filed in accordance with the Delaware Act,
which Certificate of Cancellation may be signed by any one Trustee.

Section 3. Reorganization.

(a) Notwithstanding anything else herein, the Trustees may, without
Shareholder approval unless such approval is required by applicable law, (i)
cause the Trust to merge or consolidate with or into one or more trusts (or
series thereof to the extent permitted by law), partnerships, associations,
corporations or other business entities (including trusts, partnerships,
associations, corporations or other business entities created by the Trustees
to accomplish such merger or consolidation) so long as the surviving or
resulting entity is an investment company as defined in the 1940 Act, or is a
series thereof, that will succeed to or assume the Trust's registration under
the 1940 Act and that is formed, organized, or existing under the laws of the
United States or of a state, commonwealth, possession or colony of the United
States, unless otherwise permitted under the 1940 Act, (ii) cause any one or
more Series (or Classes) of the Trust to merge or consolidate with or into any
one or more other Series (or Classes) of the Trust, one or more trusts (or
series or classes thereof to the extent permitted by law), partnerships,
associations, corporations, (iii) cause the Shares to be exchanged under or
pursuant to any state or federal statute to the extent permitted by law or (iv)
cause the Trust to reorganize as a corporation, limited liability company or
limited liability partnership under the laws of Delaware or any other state or
jurisdiction. Any agreement of merger or consolidation or exchange or
certificate or merger may be signed by a majority of the Trustees and facsimile
signatures conveyed by electronic or telecommunication means shall be valid.

(b) Pursuant to and in accordance with the provisions of Section
3815(f) of the Delaware Act, and notwithstanding anything to the contrary
contained in this Declaration of Trust, an agreement of merger or consolidation
approved by the Trustees in accordance with this Section 3 may (i) effect any
amendment to the governing instrument of the Trust or (ii) effect the adoption
of a new governing instrument of the Trust if the Trust is the surviving or
resulting trust in the merger or consolidation.

(c) The Trustees may create one or more business trusts to which all
or any part of the assets, liabilities, profits, or losses of the Trust or any
Series or Class thereof may be transferred and may provide for the conversion
of Shares in the Trust or any Series or Class

<PAGE>

thereof into beneficial interests in any such newly created trust or trusts or
any series of classes thereof.

Section 4. Amendments. Except as specifically provided in this
Section 4, the Trustees may, without Shareholder vote, restate, amend, or
otherwise supplement this Declaration of Trust. Shareholders shall have the
right to vote on (i) any amendment that would affect their right to vote
granted in Article V, Section 1 hereof, (ii) any amendment to this Section 4 of
Article VIII; (iii) any amendment that may require their vote under applicable
law or by the Trust's registration statement, as filed with the Commission, and
(iv) any amendment submitted to them for their vote by the Trustees. Any
amendment required or permitted to be submitted to the Shareholders that, as
the Trustees determine, shall affect the Shareholders of one or more Series
shall be authorized by a vote of the Shareholders of each Series affected and
no vote of Shareholders of a Series not affected shall be required.
Notwithstanding anything else herein, no amendment hereof shall limit the
rights to insurance provided by Article VII, Section 4 hereof with respect to
any acts or omissions of Persons covered thereby prior to such amendment nor
shall any such amendment limit the rights to indemnification referenced in
Article VII, Section 2 hereof as provided in the By-Laws with respect to any
actions or omissions of Persons covered thereby prior to such amendment. The
Trustees may, without Shareholder vote, restate, amend, or otherwise supplement
the Certificate of Trust as they deem necessary or desirable.

Section 5. Filing of Copies, References, Headings. The original or a
copy of this instrument and of each restatement and/or amendment hereto shall
be kept at the office of the Trust where it may be inspected by any
Shareholder. Anyone dealing with the Trust may rely on a certificate by an
officer of the Trust as to whether or not any such restatements and/or
amendments have been made and as to any matters in connection with the Trust
hereunder; and, with the same effect as if it were the original, may rely on a
copy certified by an officer of the Trust to be a copy of this instrument or of
any such restatements and/or amendments. In this instrument and in any such
restatements and/or amendments, references to this instrument, and all
expressions such as "herein," "hereof," and "hereunder," shall be deemed to
refer to this instrument as amended or affected by any such restatements and/or
amendments. Headings are placed herein for convenience of reference only and
shall not be taken as a part hereof or control or affect the meaning,
construction or effect of this instrument. Whenever the singular number is used
herein, the same shall include the plural; and the neuter, masculine and
feminine genders shall include each other, as applicable. This instrument may
be executed in any number of counterparts each of which shall be deemed an
original.

Section 6. Applicable Law.

(a) The Trust is created under, and this Declaration of Trust is to
be governed by, and construed and enforced in accordance with, the laws of the
State of Delaware. The Trust shall be of the type commonly called a business
trust, and without limiting the provisions hereof, the Trust specifically
reserves the right to exercise any of the powers or privileges afforded to
business trusts or actions that may be engaged in by business trusts under the
Delaware Act, and

<PAGE>

the absence of a specific reference herein to any such power, privilege, or
action shall not imply that the Trust may not exercise such power or privilege
or take such actions.

(b) Notwithstanding the first sentence of Section 6(a) of this
Article VIII, there shall not be applicable to the Trust, the Trustees, or this
Declaration of Trust either the provisions of Section 3540 of Title 12 of the
Delaware Code or any provisions of the laws (statutory or common) of the State
of Delaware (other than the Delaware Act) pertaining to trusts that relate to
or regulate: (i) the filing with any court or governmental body or agency of
trustee accounts or schedules of trustee fees and charges; (ii) affirmative
requirements to post bonds for trustees, officers, agents, or employees of a
trust; (iii) the necessity for obtaining a court or other governmental approval
concerning the acquisition, holding, or disposition of real or personal
property; (iv) fees or other sums applicable to trustees, officers, agents or
employees of a trust; (v) the allocation of receipts and expenditures to income
or principal; (vi) restrictions or limitations on the permissible nature,
amount, or concentration of trust investments or requirements relating to the
titling, storage, or other manner of holding of trust assets; or (vii) the
establishment of fiduciary or other standards or responsibilities or
limitations on the acts or powers or liabilities or authorities and powers of
trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees set forth or referenced in this
Declaration of Trust.

Section 7. Provisions in Conflict with Law or Regulations.

(a) The provisions of this Declaration of Trust are severable, and if
the Trustees shall determine, with the advice of counsel, that any such
provision is in conflict with the 1940 Act, the regulated investment company
provisions of the Internal Revenue Code of 1986, as amended (or any successor
statute thereto), and the regulations thereunder, the Delaware Act or with
other applicable laws and regulations, the conflicting provision shall be
deemed never to have constituted a part of this Declaration of Trust; provided,
however, that such determination shall not affect any of the remaining
provisions of this Declaration of Trust or render invalid or improper any
action taken or omitted prior to such determination.

(b) If any provision of this Declaration of Trust shall be held
invalid or unenforceable in any jurisdiction, such invalidity or
unenforceability shall attach only to such provision in such jurisdiction and
shall not in any manner affect such provision in any other jurisdiction or any
other provision of this Declaration of Trust in any jurisdiction.

Section 8. Business Trust Only. It is the intention of the Trustees
to create a business trust pursuant to the Delaware Act. It is not the
intention of the Trustees to create a general partnership, limited partnership,
joint stock association, corporation, bailment, or any form of legal
relationship other than a business trust pursuant to the Delaware Act. Nothing
in this Declaration of Trust shall be construed to make the Shareholders,
either by themselves or with the Trustees, partners, or members of a joint
stock association.

<PAGE>

IN WITNESS WHEREOF, the Trustee named below does hereby make and
enter into this Amended and Restated Agreement and Declaration of Trust as of
the 22nd day of January, 1997.

/s/ Peter D. Noris
------------------
Peter D. Noris
Trustee

THE PRINCIPAL PLACE OF BUSINESS OF THE TRUST IS:

787 Seventh Avenue
New York, NY 10019

<PAGE>
EXHIBIT 1(D)

CERTIFICATE OF AMENDMENT

787 TRUST

This Certificate of Amendment ("Certificate") is filed in accordance
with the provisions of the Delaware Business Trust Act (Del. Code Ann. tit. 12,
ss.ss. 3801 et seq. (1996)) and sets forth the following:

1. The name of the trust is: 787 Trust ("Trust").

2. The Trust's Certificate of Trust is hereby amended to
change the name of the Trust to EQ Advisors Trust.

3. This Certificate is effective upon filing.

IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust has duly executed this Certificate of Amendment on this 22nd day of
January, 1997.

/s/ Peter D. Noris
------------------
Peter D. Noris
Trustee