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Filed Pursuant to Rule 497 (c)
Registration File No.: 333-17217
EQ Advisors Trust
PROSPECTUS DATED AUGUST 30, 1999
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This Prospectus describes the twenty-eight (28) Portfolios offered by EQ
Advisors Trust and the Class IB shares offered by the Trust on behalf of each
Portfolio that you can choose as investment alternatives. Each Portfolio has its
own investment objective and strategies that are designed to meet different
investment goals. This Prospectus contains information you should know before
investing. Please read this Prospectus carefully before investing and keep it
for future reference. The Portfolios followed by an asterisk (*) below will not
be available for investment until October 18, 1999.
<TABLE>
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GLOBAL/INTERNATIONAL PORTFOLIOS
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FIXED INCOME PORTFOLIOS
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Alliance Global*
Alliance High Yield* Alliance International*
Alliance Intermediate Government Securities* BT International Equity Index
Alliance Money Market* Morgan Stanley Emerging Markets Equity
T. Rowe Price International Stock
DOMESTIC EQUITY PORTFOLIOS AGGRESSIVE EQUITY PORTFOLIOS
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Alliance Common Stock* Alliance Aggressive Stock*
Alliance Growth and Income* Alliance Small Cap Growth*
BT Equity 500 Index BT Small Company Index
Capital Guardian Research EQ/Evergreen
Capital Guardian U.S. Equity MFS Emerging Growth Companies
EQ/Alliance Premier Growth Warburg Pincus Small Company Value
Merrill Lynch Basic Value Equity
MFS Growth with Income ASSET ALLOCATION PORTFOLIOS
MFS Research ---------------------------------------
T. Rowe Price Equity Income Alliance Conservative Investors*
Alliance Growth Investors*
EQ/Evergreen Foundation
Merrill Lynch World Strategy
</TABLE>
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YOU SHOULD BE AWARE THAT THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THE INVESTMENT MERIT OF THESE PORTFOLIOS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Version 15 - Class B
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Overview
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EQ ADVISORS TRUST
This Prospectus tells you about the twenty-eight (28) current Portfolios of
the EQ Advisors Trust ("Trust") and the Class IB shares offered by the Trust
on behalf of each Portfolio. The Trust is an open-end management investment
company. Each Portfolio is a separate series of the Trust with its own
investment objective, investment strategies and risks, which are described in
this Prospectus. Each of the current Portfolios of the Trust, except for the
Morgan Stanley Emerging Markets Equity Portfolio and the Merrill Lynch World
Strategy Portfolio, is diversified for purposes of the Investment Company Act
of 1940, as amended ("1940 Act").
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 (the "Contract" or collectively, the
"Contracts") issued by The Equitable Life Assurance Society of the United
States ("Equitable") and Equitable of Colorado, Inc. ("EOC"), as well as
insurance companies that are not affiliated with Equitable or EOC
("non-affiliated insurance companies") and to The Equitable Investment Plan
for Employees, Managers and Agents ("Equitable Plan"). The prospectus is
designed to help you make informed decisions about the Portfolios that are
available under your Contract or under the Equitable Plan. You will find
information about your Contract and how it works in the accompanying
prospectus for the Contracts if you are a Contractholder or participant under
a Contract.
EQ Financial Consultants, Inc. ("EQFC") currently serves as the Manager of the
Trust. In such capacity, EQFC currently has overall responsibility for the
general management and administration of the Trust. The Board of Trustees of
the Trust have approved a transfer to Equitable, the indirect corporate parent
of EQFC, of the Trust's Investment Management Agreement with EQFC. This
transfer is expected to be completed in September 1999. Upon completion of the
transfer, Equitable will serve as the Manager of the Trust. However, until
completion of the transfer, EQFC will continue to serve in that capacity.
Each of the Portfolios has its own investment adviser ("Adviser"). Information
about the Advisers for each Portfolio is contained in the description
concerning that Portfolio in the section entitled "About the Investment
Portfolios." The Manager has the ultimate responsibility to oversee each of
the Advisers and to recommend their hiring, termination and replacement.
Subject to approval by the Board of Trustees, the Manager has been granted
relief by the Securities and Exchange Commission ("SEC") ("Multi-Manager
Order") that enables the Manager without obtaining shareholder approval to:
(i) select Advisers for each of the Trust's Portfolios; (ii) enter into and
materially modify existing investment advisory agreements; and (iii) terminate
and replace the Advisers.
The Manager and certain non-affiliated insurance companies and certain of
their separate accounts (collectively, "Applicants") have filed applications
requesting that the SEC approve the substitution of: (i) Class IA shares of
certain Portfolios for Class IA shares of corresponding portfolios of The
Hudson River Trust ("HRT"); and (ii) Class IB shares of certain Portfolios for
Class IB shares of corresponding HRT portfolios ("Substitution Application").
Alliance Capital Management L.P. ("Alliance") serves as Adviser for each
Portfolio to be substituted for the corresponding HRT portfolio. Applicants
have included, as a term of the Substitution Application, that with respect to
those Portfolios for which Alliance serves as Adviser (other than EQ/Alliance
Premier Growth Portfolio, which will not be substituted for a portfolio of
HRT), the Manager will not: (i) terminate Alliance and select a new Adviser
for those Portfolios or (ii) materially modify the existing investment
advisory agreement without first either obtaining approval of shareholders for
such actions or obtaining approval of shareholders to utilize the
Multi-Manager Order.
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Table of contents
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1
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SUMMARY INFORMATION CONCERNING EQ
ADVISORS TRUST 4
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2
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ABOUT THE INVESTMENT PORTFOLIOS 16
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FIXED INCOME PORTFOLIOS 19
Alliance High Yield Portfolio 19
Alliance Intermediate Government Securities
Portfolio 23
Alliance Money Market Portfolio 27
DOMESTIC EQUITY PORTFOLIOS 30
Alliance Common Stock Portfolio 30
Alliance Growth and Income Portfolio 33
BT Equity 500 Index Portfolio 36
Capital Guardian Research Portfolio 38
Capital Guardian U.S. Equity Portfolio 40
EQ/Alliance Premier Growth Portfolio 42
Merrill Lynch Basic Value Equity Portfolio 44
MFS Growth with Income Portfolio 46
MFS Research Portfolio 48
T. Rowe Price Equity Income Portfolio 51
GLOBAL/INTERNATIONAL PORTFOLIOS 53
Alliance Global Portfolio 53
Alliance International Portfolio 56
BT International Equity Index Portfolio 59
Morgan Stanley Emerging Markets Equity Portfolio 62
T. Rowe Price International Stock Portfolio 65
AGGRESSIVE EQUITY PORTFOLIOS 68
Alliance Aggressive Stock Portfolio 68
Alliance Small Cap Growth Portfolio 71
BT Small Company Index Portfolio 74
EQ/Evergreen Portfolio 76
MFS Emerging Growth Companies Portfolio 78
Warburg Pincus Small Company Value Portfolio 80
ASSET ALLOCATION PORTFOLIOS 82
Alliance Conservative Investors Portfolio 83
Alliance Growth Investors Portfolio 87
EQ/Evergreen Foundation Portfolio 90
Merrill Lynch World Strategy Portfolio 92
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MORE INFORMATION ON PRINCIPAL RISKS 95
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4
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MANAGEMENT OF THE TRUST 102
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The Trust 102
The Manager 102
Expense Limitation Agreement 103
The Advisers 104
The Administrator 105
The Transfer Agent 105
Brokerage Practices 105
Brokerage Transactions with Affiliates 105
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5
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FUND DISTRIBUTION ARRANGEMENTS 106
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6
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PURCHASE AND REDEMPTION 107
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7
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HOW ASSETS ARE VALUED 108
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8
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TAX INFORMATION 109
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9
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PRIOR PERFORMANCE OF EACH ADVISER 110
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10
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FINANCIAL HIGHLIGHTS 114
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1
Summary information concerning EQ Advisors Trust
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The following chart highlights the twenty-eight (28) Portfolios described in
this Prospectus that you can choose as investment alternatives under your
Contracts offered by Equitable or EOC. The chart and accompanying information
identify each Portfolio's investment objective(s), principal investment
strategies, and principal risks. "More Information on Principal Risks", which
more fully describes each of the principal risks, is provided beginning on page
95.
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EQ ADVISORS TRUST FIXED INCOME PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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ALLIANCE HIGH YIELD Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective,
capital appreciation
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES Seeks to achieve high current income consistent with
relative stability of principal through investment primarily in
debt securities issued or guaranteed as to principal and
interest by the U.S. Government or its agencies or
instrumentalities
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ALLIANCE MONEY MARKET Seeks to obtain a high level of current income, preserve its
assets and maintain liquidity
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</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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High yield debt securities rated below BBB/Baa or unrated General investment, fixed income, leveraging, loan
securities of comparable quality ("junk bonds"), common participation and assignment, derivatives, liquidity, junk
stocks and other equity securities, foreign securities, bond, foreign securities, small-cap and mid-cap company,
derivatives, and securities lending and securities lending risks
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Securities issued or guaranteed by the U.S. Government, General investment, fixed income, leveraging, derivatives,
including repurchase agreements and forward and securities lending risks
commitments related to U.S. Government securities, debt
securities of non-governmental issuers that own
mortgages, short sales, the purchase or sale of securities
on a when-issued or delayed delivery basis, derivatives,
and securities lending
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High quality U.S. dollar-denominated money market General investment, money market, leveraging, foreign
instruments (including foreign securities) and securities securities, and securities lending risks
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lending
</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE COMMON STOCK Seeks to achieve long-term growth of its capital and
increased income
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ALLIANCE GROWTH AND INCOME Seeks to provide a high total return through a combination
of current income and capital appreciation by investing
primarily in income-producing common stocks and
securities convertible into common stocks
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BT EQUITY 500 INDEX Seeks to replicate as closely as possible (before deduction
of Portfolio expenses) the total return of the S&P 500 Index
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CAPITAL GUARDIAN RESEARCH Seeks long-term growth of capital
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CAPITAL GUARDIAN U.S. EQUITY Seeks long-term growth of capital
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EQ/ALLIANCE PREMIER GROWTH Seeks long-term growth of capital by primarily investing in
equity securities of a limited number of large, carefully
selected, high quality United States companies that are
judged, by the Adviser, likely to achieve superior earnings
growth
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MERRILL LYNCH BASIC VALUE EQUITY Seeks capital appreciation and secondarily, income by
investing in securities, primarily equities, that the Adviser
believes are undervalued and therefore represent basic
investment value
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MFS GROWTH WITH INCOME Seeks to provide reasonable current income and long-term
growth of capital and income
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</TABLE>
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<TABLE>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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Stocks and other equity securities (including preferred General investment, foreign securities, leveraging,
stocks or convertible debt) and fixed income securities derivatives, convertible securities, small-cap and mid-cap
(including junk bonds), foreign securities, derivatives, and company, junk bond, securities lending, and fixed income
securities lending risks
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Stocks and securities convertible into stocks (including junk General investment, convertible securities, leveraging,
bonds) derivatives, foreign securities, junk bond, and fixed income
risks
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Common stocks of companies in the S&P 500 Index General investment, index-fund, and fixed income risks
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Equity securities primarily of United States issuers and General investment, growth investing, convertible
securities whose principal markets are in the United States securities, and foreign securities risks
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Equity securities primarily of United States companies with General investment, growth investing, convertible
market capitalization greater than $1 billion at the time of securities, and foreign securities risks
purchase
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Equity securities of a limited number of large, high-quality General investment, focused portfolio, growth investing,
companies that are likely to offer superior earnings growth convertible securities, derivatives, and foreign securities
risks
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Equity securities that the Adviser believes are undervalued General investment, small-cap and mid-cap company,
value investing, and foreign securities risks
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Equity securities (common stock, preferred stock, General investment, mid-cap company, foreign securities,
convertible securities, warrants and depositary receipts) and growth investing risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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MFS RESEARCH Seeks to provide long-term growth of capital and future
income
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T. ROWE PRICE EQUITY INCOME Seeks to provide substantial dividend income and also
capital appreciation by investing primarily in
dividend-paying common stocks of established companies
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</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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Common stock or securities convertible into common stock General investment, small-cap and mid-cap company,
of companies with better than average prospects for foreign securities, fixed income, and growth investing risks
long-term growth
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Dividend-paying common stocks of established companies General investment, value investing, foreign securities, and
fixed income risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
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EQ ADVISORS TRUST GLOBAL/INTERNATIONAL PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE GLOBAL Seeks long-term growth of capital
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ALLIANCE INTERNATIONAL Seeks to achieve long-term growth of capital by investing
primarily in a diversified portfolio of equity securities
selected principally to permit participation in non-U.S.
companies with prospects for growth
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BT INTERNATIONAL EQUITY INDEX Seeks to replicate as closely as possible (before deduction
of Portfolio expenses) the total return of the MSCI EAFE
Index
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MORGAN STANLEY EMERGING MARKETS EQUITY Seeks long-term capital appreciation by investing primarily
in equity securities of emerging country issuers
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T. ROWE PRICE INTERNATIONAL STOCK Seeks long-term growth of capital through investment
primarily in common stocks of established non-U.S.
companies
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</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Equity securities of U.S. and established foreign companies General investment, foreign securities, liquidity, derivatives,
(including shares of other mutual funds investing in foreign securities lending, and fixed income risks
securities), debt securities, derivatives, and securities
lending
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Equity securities of non-U.S. companies (including those in General investment, foreign securities, liquidity, growth
emerging markets securities) or foreign government investing, leveraging, derivatives, securities lending, and
enterprises (including other mutual funds investing in fixed income risks
foreign securities), debt securities, derivatives, and
securities lending)
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Equity securities of companies in the MSCI EAFE Index General investment, index-fund, foreign securities, liquidity,
and derivatives risks
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Equity securities of emerging market country companies General investment, foreign securities, convertible
securities, liquidity, derivatives, portfolio turnover,
non-diversification, and fixed income risks
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Common stocks of established foreign companies General investment, foreign securities, liquidity, fixed
income, and growth investing risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST AGGRESSIVE EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE AGGRESSIVE STOCK Seeks to achieve long-term growth of capital
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ALLIANCE SMALL CAP GROWTH Seeks to achieve long-term growth of capital
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BT SMALL COMPANY INDEX Seeks to replicate as closely as possible (before the
deduction of Portfolio expenses) the total return of the
Russell 2000 Index
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EQ/EVERGREEN Seeks capital appreciation
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MFS EMERGING GROWTH COMPANIES Seeks to provide long-term capital growth
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WARBURG PINCUS SMALL COMPANY VALUE Seeks long-term capital appreciation
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</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Stocks and other equity securities of small and General investment, small-cap and mid-cap company,
medium-sized companies (including securities of growth investing, leveraging, derivatives, liquidity,
companies in cyclical industries, companies whose securities lending, and foreign securities risks
securities are temporarily undervalued, companies in
special situations (e.g., change in management, new
products or changes in customer demand) and less widely
known companies)
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Stocks and other equity securities of smaller companies General investment, small-cap and mid-cap company,
and undervalued securities (including securities of growth investing, leveraging, derivatives, liquidity,
companies in cyclical industries, companies whose securities lending, and foreign securities risks
securities are temporarily undervalued, companies in
special situations (e.g., change in management, new
products or changes in customer demand) and less widely
known companies)
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Common stocks of small-cap companies in the Russell General investment, index-fund, small-cap and mid-cap
2000 Index company, derivatives, and fixed income risks
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Common stocks offering potential for capital growth (plus General investment, fixed income, small-cap and mid-cap
corporate bonds, notes and debentures, preferred stocks company, and value investing risks
and convertible securities)
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Equity securities of emerging growth companies with the General investment, small-cap and mid-cap company,
potential to become major enterprises or that are major foreign securities, and growth investing risks
enterprises whose rates of earnings growth are expected to
accelerate
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Equity securities of U.S. small cap companies General investment, small-cap and mid-cap company,
portfolio turnover foreign securities, fixed income, and
value investing risks
</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST ASSET ALLOCATION PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE CONSERVATIVE INVESTORS Seeks to achieve a high total return without, in the opinion
of the Adviser, undue risk to principal
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ALLIANCE GROWTH INVESTORS Seeks to achieve the highest total return consistent with
the Adviser's determination of reasonable risk
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EQ/EVERGREEN FOUNDATION Seeks to provide, in order of priority, reasonable income,
conservation of capital and capital appreciation
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MERRILL LYNCH WORLD STRATEGY Seeks high total investment return by investing primarily in
a portfolio of equity and fixed income securities, including
convertible securities, of U.S. and foreign issuers
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</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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Investment grade debt securities and equity securities of General investment, asset allocation, fixed income,
U.S. and foreign issuers, derivatives, and securities lending derivatives, convertible securities, liquidity, leveraging,
securities lending, and foreign securities risks
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Equity securities (including foreign stocks, preferred stocks, General investment, asset allocation, fixed income,
convertible securities, securities of small and medium-sized leveraging, derivatives, liquidity, convertible securities,
companies) and debt securities (including foreign debt small-cap and mid-cap company, securities lending, junk
securities and junk bonds), derivatives, and securities bond, and foreign securities risks
lending
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Common stocks, preferred stocks, securities convertible General investment and fixed income risks
into or exchangeable for common stocks, corporate debt
obligations, U.S. Government securities and short-term
debt instruments
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Equity and fixed income securities of U.S. and foreign General investment, foreign securities, fixed income,
companies derivatives, non-diversification, liquidity, and portfolio
turnover risks
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</TABLE>
------------------------- EQ Advisors Trust
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2
About the investment portfolios
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This section of the Prospectus provides a more complete description of the
principal investment objectives, strategies, and risks of each of the
Portfolios. Of course, there can be no assurance that any Portfolio will
achieve its investment objective.
Please note that:
o A fuller description of each of the principal risks is included in the
section "More Information on Principal Risks," which follows the
description of each Portfolio in this section of the Prospectus.
o Additional information concerning each Portfolio's strategies, investments,
and risks can also be found in the Trust's Statement of Additional
Information.
GENERAL INVESTMENT RISKS
Each of the Portfolios is subject to the following risks:
ASSET CLASS RISK: The returns from the types of securities in which a
Portfolio invests may underperform returns from the various general securities
markets or different asset classes.
MARKET RISK: You could lose money over short periods due to fluctuation in a
Portfolio's share price in reaction to stock or bond market movements, and
over longer periods during extended market downturns.
SECURITY SELECTION RISK: There is the possibility that the specific securities
selected by a Portfolio's Adviser will underperform other funds in the same
asset class or benchmarks that are representative of the general performance
of the asset class.
YEAR 2000 RISK: A Portfolio could be adversely affected if the computer
systems used by the Trust, Adviser, other service providers, or persons with
whom they deal, do not properly process and calculate date-related information
and data dated on and after January 1, 2000 ("Year 2000 Problem"). The extent
of such impact cannot be predicted and there can be no assurances that the
Year 2000 Problem will not have an adverse effect on the issuers whose
securities are held by a Portfolio. This risk is greater for Portfolios that
make foreign investments, particularly in emerging market countries.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
THE BENCHMARKS
The performance of each of the Trust's Portfolios as shown on the following
pages compares each Portfolio's performance to that of a broad-based
securities market index, an index of funds with similar investment objectives
and/or a blended index. The performance shown below is from each Portfolio's
predecessor registered investment company managed by the Adviser using the
same investment objectives and strategies as the Portfolio. Each of the
Portfolios' annualized rates of return are net of: (i) its investment
management fees; and (ii) its other expenses. These rates are not
representative of the actual return you would receive under your Equitable
Contract.
Broad-based securities indices are unmanaged and are not subject to fees and
expenses typically associated with managed investment company portfolios.
Broad-based securities indices are also not subject to contract and
insurance-related expenses and charges. Investments cannot be made directly in
a broad-based securities index. Comparisons with these benchmarks, therefore,
are of limited use. They are included because they are widely known and may
help you to understand the universe of securities from which each Portfolio is
likely to select its holdings. "Blended" performance numbers (e.g., 50% S&P
400/50% Russell 2000 or 60% S&P 500/40% Lehman Gov't/Corp) assume a static mix
of the two indices.
THE COMPOSITE MARKET BENCHMARK is made up of 36%
S&P 500, 24% MSCI EAFE Index, 21% Salomon Brothers
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U.S. Treasury Bond 1 year and, 14% Salomon Brothers World Government ex U.S.,
and 5% U.S. Treasury Bill.
THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX
("Lehman Gov't/Corp") represents an unmanaged group of securities widely
regarded by investors as representative of the bond market.
THE LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX
("Lehman Intermediate Government Bonds") represents an unmanaged group of
securities consisting of all U.S. Treasury and agency securities with remaining
maturities of from one to ten years and issue amounts of at least $100 million
outstanding.
THE LEHMAN TREASURY BOND INDEX ("Lehman Treasury") represents an unmanaged group
of securities consisting of all currently offered public obligations of the U.S.
Treasury intended for distribution in the domestic market.
THE LIPPER AVERAGES are contained in Lipper's survey of the performance of a
large number of mutual funds. This survey is published by Lipper Analytical
Services, Inc., a firm recognized for its reporting of performance of actively
managed funds. According to Lipper, performance data are presented net of
investment management fees and direct operating expenses, and, for funds with
Rule 12b-1 plans, asset-based sales charges. Performance data for funds which
assess sales charges in other ways do not reflect deductions for sales charges.
Performance data shown for the Portfolios does not reflect deduction for sales
charges (which are assessed at the contract level). This means that to the
extent that asset-based sales charges deducted by some funds have lowered the
Lipper averages, the performance data shown for the Portfolios appears
relatively more favorable than the performance data for the Lipper averages.
THE MERRILL LYNCH HIGH YIELD MASTER INDEX ("ML Master") represents an unmanaged
group of securities widely regarded by investors as representative of the high
yield bond market.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX ("MSCI EAFE") is a market
capitalization weighted equity index composed of a sample of companies
representative of the market structure of Europe, Australia and the Far East.
MSCI EAFE Index returns assume dividends reinvested net of withholding tax and
do not reflect any fees or expenses.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE PRICE RETURN
INDEX ("MSCI Emerging Markets Free") is a market capitalization weighted equity
index composed of companies that are representative of the market structure of
the following countries: Argentina, Brazil, Chile, China Free, Colombia, Czech
Republic, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea (@ 50%),
Mexico Free, Pakistan, Peru, Philippines Free, Poland, Russia, South Africa, Sri
Lanka, Taiwan (@50%), Thailand, Turkey and Venezuela Free. The base date for the
index is December 31, 1987. "Free" MSCI indices exclude those shares not
purchasable by foreign investors. The average size of the emerging market
companies within this index is US $800 million.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX ("MSCI World") is an
arithmetic, market value-weighted average of the performance of over 1,300
securities listed on the stock exchanges of twenty foreign countries and the
United States.
THE RUSSELL 2000 GROWTH INDEX ("Russell 2000 Growth") consists of that half of
the 2,000 smallest of the 3,000 largest capitalization U.S. companies that has
higher price-to-book ratios and higher forecasted growth. It is compiled by the
Frank Russell Company.
THE RUSSELL 2000 INDEX ("Russell 2000") is an unmanaged index (with no defined
investment objective) of 2000 small-cap stocks and reflects reinvestment of
dividends. It is compiled by the Frank Russell Company.
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500") is an
unmanaged index containing common stock of 500 industrial, transportation,
utility and
---------------------------------------------------- EQ Advisors Trust
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18
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financial companies, regarded as generally representative of the larger
capitalization portion of the United States stock market. The S&P 500 returns
reflect the reinvestment of dividends, if any, but do not reflect fees,
brokerage commissions or other expenses of investing.
THE STANDARD & POOR'S MIDCAP 400 INDEX ("S&P 400 MidCap") is an unmanaged
weighted index of 400 domestic stocks chosen for market size (median market
capitalization of about $610 million), liquidity, and industry group
representation. The S&P 400 returns reflect the reinvestment of dividends, if
any, but do not reflect fees, brokerage commissions or other expenses of
investing.
THE VALUE LINE CONVERTIBLE INDEX ("Value Line Convertible") is comprised of
585 of the most actively traded convertible bonds and preferred stocks on an
unweighted basis.
<PAGE>
FIXED INCOME PORTFOLIOS
- ----------
19
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective, capital appreciation.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in diversified mix of high yield, fixed income
securities (so-called "junk bonds"), which generally involve greater
volatility of price and risk of principal and income than high quality fixed
income securities. Junk bonds generally have a higher current yield but are
rated either in the lower categories by NRSROs (i.e., rated Baa or lower by
Moody's or BBB or lower by S&P) or are unrated securities of comparable
quality.
The Portfolio will attempt to maximize current income by taking advantage of
market developments, yield disparities and variations in the creditworthiness
of issuers. Substantially all of the Portfolio's investments will be income
producing.
The Portfolio may also make use of various other investment strategies,
including investments in common stocks and other equity-type securities (such
as convertible debt securities) and secured loans of its portfolio securities
without limitation in order to enhance its current return and to reduce
fluctuations in net asset value. The Portfolio may also use derivatives,
including: writing covered call and put options; purchasing call and put
options on individual fixed income securities, securities indexes and foreign
currencies; and purchasing and selling stock index, interest rate and foreign
currency futures contracts and options thereon. The Portfolio may also invest
in participations and assignments of loans originally made by institutional
lenders or lending syndicates.
The Portfolio will not invest more than 10% of its total assets in:
(i) fixed income securities which are rated lower than B3 or B- or their
equivalents by one NRSRO or if unrated are of equivalent quality as determined
by the Adviser; and
(ii) money market instruments of any entity which has an outstanding issue of
unsecured debt that is rated lower than B3 or B- or their equivalents by an
NRSRO or if unrated is of equivalent quality as determined by the Adviser;
however, this restriction will not apply to:
o fixed income securities which the Adviser believes have similar
characteristics to securities which are rated B3 or higher by Moody's or
B- or higher by S&P, or
o money market instruments of any entity that has an unsecured issue of
outstanding debt which the Adviser believes has similar characteristics to
securities which are so rated.
In the event that any securities held by the Portfolio fall below those
ratings, the Portfolio will not be obligated to dispose of such securities and
may continue to hold such securities if the Adviser believes that such
investments are considered appropriate under the circumstances.
The Portfolio may also invest in fixed income securities that are providing
high current yields because of risks other than credit, such as prepayment
risks, in the case of mortgage-backed securities, or currency risks, in the
case of non-U.S. dollar denominated foreign securities.
When market or financial conditions warrant, the Portfolio may also make
temporary investments in high-quality U.S. dollar-denominated money market
instruments. Such investment strategies could result in the Portfolio not
achieving its investment objective.
THE PRINCIPAL RISKS
JUNK BOND RISK: The Portfolio invests primarily in "junk bonds" or lower-rated
securities rated BBB or lower by S&P or an equivalent rating by any other
NRSRO or unrated securities of similar quality. Junk bonds have speculative
elements or are predominantly speculative credit risks, therefore, credit risk
is particularly significant for this Portfolio. Although junk bonds generally
have higher yields than debt securities with higher credit ratings, they are
high-risk investments that may not pay interest or return principal as
scheduled. Junk bonds generally are also less liquid and experience more price
volatility than higher rated fixed income securities. This Portfolio may also
be subject to
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
20
- --------------------------------------------------------------------------------
greater credit risk because it may invest in debt securities issued in
connection with corporate restructurings by highly leveraged issuers or in
debt securities not current in the payment of interest or principal, or in
default.
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income securities,
therefore, the Portfolio's performance will be affected by changes in interest
rates, credit risks of the issuer, the duration and maturity of the Portfolio's
fixed income holdings, and adverse market and economic conditions. Other risks
that relate to the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the
duration of mortgage-backed securities to increase, making them even more
susceptible to interest rate changes. Falling interest rates may cause the
value and yield of mortgage-backed securities to fall. Falling interest
rates also may encourage borrowers to pay off their mortgages sooner than
anticipated (pre-payment). The Portfolio would need to reinvest the pre-paid
funds at the newer, lower interest rates.
LOAN PARTICIPATION AND ASSIGNMENT RISK: In addition to the risks associated
with fixed income investments generally, the Portfolio's investments in loan
participations and assignments are subject to the risk that the financial
institution acting as agent for all interests in a loan, might fail
financially. It is also possible that, under emerging legal theories of lender
liability, the Portfolio could be held liable as a co-lender.
SMALL CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known; held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
<PAGE>
- ----------
21
- --------------------------------------------------------------------------------
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities without restriction. The risk 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.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance High Yield Portfolio) managed by
the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance High
Yield Portfolio) whose inception date is January 2, 1987. The assets of the
predecessor will be transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN*
[GRAPHIC OMITTED]
1989---------------------------- 4.9%
1990---------------------------- -1.4%
1991---------------------------- 24.2%
1992---------------------------- 12.1%
1993---------------------------- 22.9%
1994---------------------------- -3.0%
1995---------------------------- 19.7%
1996---------------------------- 22.6%
1997---------------------------- 18.2%
1998---------------------------- -5.4%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
7.90% (1997 2nd Quarter) -11.03% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance High Yield Portfolio
- Class IB Shares -5.38% 9.74% 10.91%
- --------------------------------------------------------------------------------
ML Master** 3.66% 9.01% 11.08%
- --------------------------------------------------------------------------------
Lipper High Current Yield Bond
Funds Average** -0.44% 7.37% 9.34%
- --------------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 6.63%. The return for the ML Master for the comparable period
(which dates from month-end of the Class IB inception date) was 9.06%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
22
- --------------------------------------------------------------------------------
WAYNE C. TAPPE has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1995. Mr. Tappe, a Senior Vice President of
Alliance, has been associated with Alliance since 1987.
<PAGE>
- ----------
23
- --------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve high current income consistent with
relative stability of principal through investment primarily in debt securities
issued or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in U.S. Government Securities. The Portfolio
may also invest in repurchase agreements and forward commitments related to
U.S. Government Securities and may also purchase debt securities of
non-government issuers that own mortgages.
Duration is a measure of the weighted average maturity of the bonds held by
the Portfolio and can be used by the Adviser as a measure of the
sensitivity of the market value of the Portfolio to changes in interest
rates. Generally, the longer the duration of the Portfolio, the more
sensitive its market value will be to changes in interest rates.
In some cases, the Adviser's calculation of duration will be based on
certain assumptions (including assumptions regarding prepayment rates, in
the mortgage-backed or asset-backed securities, and foreign and domestic
interest rates). As of December 31, 1998, the Adviser considered the
duration of a 10-year Treasury bond to be 4.68 years. The Portfolio's
investments will generally have a final maturity of not more than ten years
or a duration not exceeding that of a 10-year Treasury note.
The Portfolio buys and sells securities with a view to maximizing current
return without, in the opinion of the Adviser, undue risk to principal.
Potential capital gains resulting from possible changes in interest rates will
not be a major consideration. The Portfolio may take full advantage of a wide
range of maturities of U.S. Government Securities and may adjust the
dollar-weighted average maturity of its portfolio from time to time, depending
on the Adviser's assessment of relative yields on securities of different
maturities and the expected effect of future changes in interest rates on the
market value of the securities held by the Portfolio. The Portfolio may also
invest a substantial portion of its assets in money market instruments.
In order to enhance its current return, to reduce fluctuations in net asset
value, and to hedge against changes in interest rates, the Portfolio may write
covered call and put options on U.S. Government Securities and may purchase
call and put options on U.S. Government Securities. The Portfolio may also
enter into interest rate futures contracts with respect to U.S. Government
Securities, and may write and purchase options thereon. The Portfolio may also
make secured loans of its portfolio securities without limitation and enter
into repurchase agreement with respect to U.S. Government Securities with
commercial banks and registered broker-dealers.
The Portfolio may also make use of various other investment strategies,
including covered short sales, and the purchase or sale of securities on a
when-issued, delayed delivery or forward commitment basis.
Under normal market conditions, the Portfolio will invest at least 65%, and
expects to invest at least 80%, of its total assets in U.S. Government
Securities and repurchase agreements and forward commitments relating to U.S.
Government Securities. U.S. Government Securities include:
o U.S. Treasury Bills: Direct obligations of the U.S. Treasury which are
issued in maturities of one year or less.
o U.S. Treasury Notes: Direct obligations of the U.S. Treasury issued in
maturities which vary between one and ten years, with interest payable
every six months.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
24
- --------------------------------------------------------------------------------
o U.S. Treasury Bonds: Direct obligations of the U.S. Treasury which are
issued in maturities more than ten years from the date of issue, with
interest payable every six months.
o "Ginnie Maes": Debt securities issued by a mortgage banker or other
mortgagee and represent an interest in a pool of mortgages insured by the
Federal Housing Administration or the Farmer's Home Administration or
guaranteed by the Veteran's Administration. The Government National
Mortgage Association ("GNMA") guarantees the timely payment of principal
and interest. Ginnie Maes, although not direct obligations of the U.S.
Government, are guaranteed by the U.S. Treasury.
o "Fannie Maes": The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders
that purchases residential mortgages from a list of approved
seller/servicers. Pass-through securities issued by FNMA are guaranteed as
to timely payment of principal and interest by FNMA and supported by
FNMA's right to borrow from the U.S. Treasury, at the discretion of the
U.S. Treasury. Fannie Maes are not backed by the full faith and credit of
the U.S. Government.
o "Freddie Macs": The Federal Home Loan Mortgage Corporation ("FHLMC"), a
corporate instrumentality of the U.S. Government, issues participation
certificates ("PCs") which represent an interest in residential mortgages
from FHLMC's National Portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal, but PCs are not backed by
the full faith and credit of the U.S. Government.
o Governmental Collateralized Mortgage Obligations: These are securities
issued by a U.S. Government instrumentality or agency which are backed by
a portfolio of mortgages or mortgage-backed securities held under an
indenture.
o "Sallie Maes": The Student Loan Marketing Association ("SLMA") is a
government-sponsored corporation owned entirely by private stockholders
that provides liquidity for banks and other institutions engaged in the
Guaranteed Student Loan Program. These loans are either directly
guaranteed by the U.S. Treasury or guaranteed by state agencies and
reinsured by the U.S. Government. SLMA issues both short term notes and
longer term public bonds to finance its activities.
The Portfolio may also invest in "zero coupon" U.S. Government Securities
which have been stripped of their unmatured interest coupons and receipts or
in certificates representing undivided interests in such stripped U.S.
Government Securities and coupons. These securities tend to be more volatile
than other types of U.S. Government Securities.
Guarantees of the Portfolio's U.S. Government Securities guarantee only the
payment of principal at maturity and interest when due on the guaranteed
securities, and do not guarantee the securities' yield or value or the
yield or value of the Portfolio's shares.
The Portfolio may also purchase collateralized mortgage obligations ("CMOs")
issued by non-governmental issuers and securities issued by a real estate
mortgage investment conduits ("REMICs"), but only if they are collateralized
by U.S. Government Securities. However, CMOs issued by entities other than
U.S. Government agencies and instrumentalities and securities issued by REMICs
are not considered U.S. Government Securities for purposes of the Portfolio
meeting its policy of investing at least 65% of its total assets in U.S.
Government Securities.
THE PRINCIPAL RISKS
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income
securities, therefore, the Portfolio's performance will be affected by changes
in interest rates, the duration and maturity of the Portfolio's fixed income
holdings, and adverse market and economic conditions. Other risks that relate
to the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed
<PAGE>
- ----------
25
- --------------------------------------------------------------------------------
income securities, particularly those with longer durations or maturities,
will go down. When interest rates fall, the reverse is true.
INVESTMENT-GRADE SECURITIES RISK: With respect to fixed income investments of
the Portfolio, other than U.S. Government Securities, rated BBB by S&P or an
equivalent rating by any other nationally recognized statistical rating
organization ("NRSRO"), the Portfolio could lose money if the issuer or
guarantor of a debt security or counterparty to a Portfolio's transaction is
unable or unwilling to make timely principal and/or interest payments, or to
honor its financial obligations. Investment grade securities which are rated
BBB by S&P, or an equivalent rating by any other NRSRO, are somewhat riskier
than higher rated obligations because they are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the duration
of mortgage-backed securities to increase, making them even more susceptible
to interest rate changes. Falling interest rates may cause the value and yield
of mortgage-backed securities to fall. Falling interest rates also may
encourage borrowers to pay off their mortgages sooner than anticipated
(pre-payment). The Portfolio would need to reinvest the pre-paid funds at the
newer, lower interest rates.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities without restriction. The risk 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.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last seven calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one
year, five years and since inception and compares the Portfolio's performance
to: (i) the returns of a broad-based index and (ii) the returns of an index of
funds with similar investment objectives. Past performance is not an
indication of future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Intermediate Government Securities
Portfolio) managed by the Adviser using the same investment objectives and
strategy as the Portfolio. For these purposes, the Portfolio is considered to
be the successor entity to the predecessor registered investment company
(HRT/Alliance Intermediate Government Securities Portfolio) whose inception
date is April 1, 1991. The assets of the predecessor will be transferred to
the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
26
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN*
[GRAPHIC OMITTED]
1992---------------------------- 5.4%
1993---------------------------- 10.3%
1994---------------------------- -4.6%
1995---------------------------- 13.1%
1996---------------------------- 3.5%
1997---------------------------- 7.0%
1998---------------------------- 7.5%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
5.25% (1991 3rd Quarter) -3.03% (1994 1st Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- -----------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Intermediate
Government Securities
Portfolio - Class IB Shares 7.48% 5.13% 6.83%
- -----------------------------------------------------------------------------
Lehman Intermediate
Government Bonds** 8.49% 6.45% 7.60%
- -----------------------------------------------------------------------------
Lipper Intermediate Government
Funds Average** 7.68% 5.91% 7.25%
- -----------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (May 2, 1997),
performance information shown is the performance of Class IA shares adjusted
to reflect the 12b-1 fees paid by Class IB shares. The average annual total
return for the Class IB shares since the Class IB inception date was 8.01%.
The return for Lehman Intermediate Government Bonds for the comparable
period (which dates from month-end of the Class IB inception date) was
9.08%.
**For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
JEFFREY S. PHLEGAR has been responsible for the day-to-day management of the
Portfolio and its predecessor since January 1999. Mr. Phlegar, a Senior Vice
President of Alliance, has been associated with Alliance since 1998.
<PAGE>
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27
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to obtain a high level of
current income, preserve its assets and maintain liquidity.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified portfolio of high-quality U.S.
dollar-denominated money market instruments. The Portfolio will maintain a
dollar-weighted average portfolio maturity of 90 days or less.
The instruments in which the Portfolio invests include:
o marketable obligations of, or guaranteed as to the timely payment of
principal and interest by, the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities");
o certificates of deposit, bankers' acceptances, bank notes, time deposits
and interest bearing savings deposits issued or guaranteed by:
(a) domestic banks (including their foreign branches) or savings and
loan associations having total assets of more than $1 billion and
which are FDIC members in the case of banks, or insured by the FDIC,
in the case of savings and loan associations; or
(b) foreign banks (either by their foreign or U.S. branches) having
total assets of at least $5 billion and having an issue of either (i)
commercial paper rated at least A-1 by Standard & Poor's ("S&P") or
Prime-1 by Moody's Investors Service, Inc. ("Moody's") or (ii) long
term debt rated at least AA by S&P or Aa by Moody's;
o commercial paper (rated at least A-1 by S&P or Prime-1 by Moody's or, if
not rated, issued by domestic or foreign companies having outstanding debt
securities rated at least AA by S&P or Aa by Moody's) and participation
interests in loans extended by banks to such companies;
o mortgage-backed and asset-backed securities that have remaining maturities
of less than one year;
o corporate debt obligations with remaining maturities of less than one year,
rated at least AA by S&P or Aa by Moody's, as well as corporate debt
obligations rated at least A by S&P or Moody's, provided the corporation
also has outstanding an issue of commercial paper rated at least A-1 by S&P
or Prime-1 by Moody's;
o floating rate or master demand notes; and
o repurchase agreements covering U.S. Government securities.
If the Adviser believes a security held by the Portfolio is no longer deemed
to present minimal credit risk, the Portfolio will dispose of the security as
soon as practicable unless the Board of Trustees determines that such action
would not be in the best interest of the Portfolio.
Purchases of securities that are unrated must be ratified by the Board of
Trustees. Because the market value of debt obligations fluctuates as an
inverse function of changing interest rates, the Portfolio seeks to minimize
the effect of such fluctuations by investing only in instruments with a
remaining maturity of 397 calendar days or less at the time of investment,
except for obligations of the U.S. Government, which may have a remaining
maturity of 762 calendar days or less. Time deposits with maturities greater
than seven days are considered to be illiquid securities.
The Portfolio may make use of various other investment strategies, including
investing up to 20% of its total assets in U.S. dollar-denominated money
market instruments of foreign issuers and making secured loans of up to 50% of
its total portfolio securities.
THE PRINCIPAL RISKS
MONEY MARKET RISK: While money market funds are designed to be relatively low
risk investments, they are not entirely free of risk. Despite the short
maturities and high credit quality of the Portfolio's investments, increases
in interest rates and deteriorations in the credit quality of the instruments
the Portfolio has purchased may reduce the Portfolio's net asset value. In
addition, the Portfolio is still subject to the risk that the value of an
investment may be eroded over time by inflation. An investment in the
Portfolio is not insured or guaranteed by the Federal Deposit Insurance
Corporation or any other government agency.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
28
- --------------------------------------------------------------------------------
Although the Portfolio seeks to preserve the value of your investment, it is
possible to lose money by investing in the Portfolio.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risks will tend to be compounded.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. 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.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last ten calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one, five and ten
years and compares the Portfolio's performance to: (i) the returns on
three-month U.S. Treasury bills and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Money Market Portfolio) managed by
the Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance Money Market
Portfolio) whose inception date is July 13, 1981. The assets of the predecessor
will be transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN*
[GRAPHIC OMITTED]
1989---------------------------- 8.9%
1990---------------------------- 8.0%
1991---------------------------- 5.9%
1992---------------------------- 3.3%
1993---------------------------- 2.7%
1994---------------------------- 3.8%
1995---------------------------- 5.5%
1996---------------------------- 5.1%
1997---------------------------- 5.2%
1998---------------------------- 5.1%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
2.31% (1989 2nd Quarter) 0.63% (1992 4th Quarter)
The Portfolio's 7-day yield for the quarter ended December 31, 1998 was
4.45%.
</TABLE>
<PAGE>
- ----------
29
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- -----------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- -----------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Money Market Portfolio
- Class IB Shares 5.08% 4.91% 5.33%
- -----------------------------------------------------------------------------
3-Month Treasury Bill 5.05% 5.11% 5.44%
- -----------------------------------------------------------------------------
Lipper Money Market Mutual
Fund Average** 4.84% 4.77% 5.20%
- -----------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (October 10, 1996),
performance information shown is the performance of Class IA shares adjusted
to reflect the 12b-1 fees paid by Class IB shares. The average annual total
return for the Class IB shares since the Class IB inception date was 5.13%.
The return on a 3-month Treasury Bill for the comparable period (which dates
from month-end of the Class IB inception date) was 5.04%.
**For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
RAYMOND J. PAPERA has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1990. Mr. Papera, a Senior Vice President of
Alliance, has been associated with Alliance since 1990.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS
- ----------
30
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of its capital and
increase income.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in common stocks and other equity-type
securities (such as preferred stocks or convertible debt) that the Adviser
believes will share in the growth of the nation's economy over a long period.
Most of the time, the Portfolio will invest primarily in common stocks that
are listed on national securities exchanges. Smaller amounts will be invested
in stocks that are traded over-the-counter and in other equity-type
securities. Current income is an incidental consideration. The Portfolio
generally will not invest more than 20% of its total assets in foreign
securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives, including: writing covered call and put options,
buying call and put options on individual common stocks and other equity-type
securities, securities indexes, and foreign currencies. The Portfolio may also
purchase and sell stock index and foreign currency futures contracts and
options thereon.
When market or financial conditions warrant or it appears that the Portfolio's
investment objective will not be achieved by purchasing equity securities, the
Portfolio may invest a portion of its assets in debt securities, including
nonparticipating and nonconvertible preferred stocks, investment-grade debt
securities and junk bonds, e.g., rated BB or lower by S&P or Ba or lower by
Moody's. The Portfolio also may make temporary investments in high-quality
U.S. dollar-denominated money market instruments. Such investment strategies
could result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. The value of convertible securities fluctuates both in relation to
changes in interest rates and changes in the value of the underlying common
stock.
<PAGE>
- ----------
31
- --------------------------------------------------------------------------------
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment-grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
if it invested in higher-rated obligations because BBB-rated securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality. Junk bonds
have speculative elements or are predominantly speculative credit risks,
therefore, credit risk is particularly significant for this Portfolio. This
Portfolio may also be subject to greater credit risk because it may invest in
debt securities issued in connection with corporate restructurings by highly
leveraged issuers or in debt securities not current in the payment of interest
or principal, or in default.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. 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.
LEVERAGING RISK. When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Common Stock Portfolio) managed by
the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Common
Stock Portfolio) whose inception date is June 16, 1975. The assets of the
predecessor will be transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
32
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1989---------------------------- 25.3%
1990---------------------------- -8.4%
1991---------------------------- 37.6%
1992---------------------------- 3.0%
1993---------------------------- 24.6%
1994---------------------------- -2.4%
1995---------------------------- 32.2%
1996---------------------------- 24.0%
1997---------------------------- 29.1%
1998---------------------------- 29.1%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
28.36% (1998 4th Quarter) -20.28% (1990 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- ----------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- ----------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Common Stock Portfolio
- Class IB Shares 29.06% 21.67% 18.38%
- ----------------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 19.21%
- ----------------------------------------------------------------------------
Lipper Growth Equity Mutual
Funds Average** 22.86% 18.63% 16.72%
- ----------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (October 1, 1998),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 30.09%. The return for the S&P 500 Index for the comparable
period (which dates from month-end of the Class IB inception date) was
31.69%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
TYLER J. SMITH has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1977. Mr. Smith, a Senior Vice President
of Alliance, has been associated with Alliance since 1970.
<PAGE>
- ----------
33
- --------------------------------------------------------------------------------
ALLIANCE GROWTH AND INCOME
PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide a high total return through a combination
of current income and capital appreciation by investing primarily in
income-producing common stocks and securities convertible into common stocks.
THE INVESTMENT STRATEGY
The Portfolio seeks to maintain a portfolio yield above that of issuers
comprising the S&P 500 and to achieve (in the long run) a rate of growth in
Portfolio income that exceeds the rate of inflation. The Portfolio will
generally invest in common stocks of "blue chip" issuers, i.e., those:
o that have a total market capitalization of at least $1 billion;
o that pay periodic dividends; and
o whose common stock is in the highest four issuer ratings for S&P (i.e., A+,
A, Ab or B+) or Moody's (i.e., high grade, investment grade, upper medium
grade or medium grade) or, if unrated, is determined to be of comparable
quality by the Adviser.
It is expected that on average the dividend rate of these issuers will exceed
the average rate of issuers constituting the S&P 500.
The Portfolio may also invest without limit in securities convertible into
common stocks, which include convertible bonds, convertible preferred stocks
and convertible warrants. The Portfolio may also invest up to 30% of its total
assets in high yield, high risk convertible securities rated at the time of
purchase below investment grade (i.e., rated BB or lower by S&P or Ba or lower
by Moody's or determined by the Adviser to be of comparable quality).
The Portfolio does not expect to invest more than 25% of its total assets in
foreign securities, although it may do so without limit. It may enter into
foreign currency futures contracts (and related options), forward foreign
currency exchange contracts and options on currencies for hedging purposes.
The Portfolio may also write covered call and put options on securities and
securities indexes for hedging purposes or to enhance its return and may
purchase call and put options on securities and securities indexes for hedging
purposes. The Portfolio may also purchase and sell securities index futures
contracts and may write and purchase options thereon for hedging purposes.
When market or financial conditions warrant, the Portfolio may invest in
certain money market instruments for temporary or defensive purposes. Such
investment strategies could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. The value of convertible securities fluctuates both in relation to
changes in interest rates and changes in the value of the underlying common
stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
34
- --------------------------------------------------------------------------------
securities, that portion of the Portfolio's performance will be affected by
changes in interest rates, the credit risk of the issuer, the duration or
maturity of the Portfolio's fixed income holdings, and adverse market or
economic conditions. When interest rates rise, the value of the Portfolio's
fixed income securities, particularly those with longer durations or
maturities, will go down. When interest rates fall, the reverse is true. In
addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality. Therefore,
credit risk is particularly significant for this Portfolio. Junk bonds have
speculative elements or are predominantly speculative credit risks. This
Portfolio may also be subject to greater credit risk because it may invest in
debt securities issued in connection with corporate restructurings by highly
leveraged issuers or in debt securities not current in the payment of interest
or principal, or in default.
FOREIGN SECURITIES RISKS: To the extent the Portfolio invests in foreign
securities, it is subject to risks not associated with investing in U.S.
securities, which can adversely affect the Portfolio's performance. Foreign
markets, particularly emerging markets, may be less liquid, more volatile, and
subject to less government supervision than domestic markets. There may be
difficulties enforcing contractual obligations, and it may take more time for
trades to clear and settle. In addition, the value of foreign investments can
be adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last five calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one
year, five years and since inception and compares the Portfolio's performance
to: (i) the returns of a broad-based index; (ii) the returns of a "blended"
index of equity and fixed income securities; and (iii) the returns of an index
of funds with similar investment objectives. Past performance is not an
indication of future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Growth and Income Portfolio)
managed by the Adviser using the same investment objectives and strategy as
the Portfolio. For these purposes, the Portfolio is considered to be the
successor entity to the predecessor registered investment company
(HRT/Alliance and Growth Income Portfolio) whose inception date is October 1,
1993. The assets of the predecessor will be transferred to the Portfolio on
October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<PAGE>
- ----------
35
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1994---------------------------- -0.8%
1995---------------------------- 23.8%
1996---------------------------- 19.8%
1997---------------------------- 26.6%
1998---------------------------- 20.6%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
26.22% (1998 4th Quarter) -15.09% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- ---------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Growth and Income
Portfolio - Class IB Shares 20.56% 17.57% 16.56%
- ---------------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 23.32%
- ---------------------------------------------------------------------------
75% S&P 500 Index/25%
Value Line Convertible** 20.10% 21.07% 20.48%
- ---------------------------------------------------------------------------
Lipper Growth and Income Funds
Average** 15.61% 18.35% 17.89%
- ---------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (May 2, 1997),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 26.25%. The return for the S&P 500 Index for the comparable
period (which dates from month-end of the Class IB inception date) was
25.94%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
PAUL RISSMAN and W. THEODORE KUCK have been the persons responsible for the
day-to-day management of the Portfolio, Mr. Rissman since 1996 and Mr. Kuck
since the Portfolio and its predecessor's inception. Mr. Rissman, a Senior
Vice President of Alliance, has been associated with Alliance since 1989. Mr.
Kuck, a Vice President of Alliance, has been associated with Alliance since
1971.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
36
- --------------------------------------------------------------------------------
BT EQUITY 500 INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to replicate as closely as possible (before
deduction of Portfolio expenses) the total return of the S&P 500.
THE INVESTMENT STRATEGY
The Portfolio invests in equity securities of companies included in the S&P
500. The Adviser seeks to match the risk and return characteristics of the S&P
500 by investing in a statistically selected sample of the securities found in
the S&P 500, using a process known as "optimization". This process selects
stocks for the Portfolio so that industry weightings, market capitalizations
and fundamental characteristics (price to book ratios, price to earnings
ratios, debt to asset ratios and dividend yields) closely match those of the
securities included in the S&P 500. This approach helps to increase the
Portfolio's liquidity and reduce costs. The securities held by the Portfolio
are weighted to make the Portfolio's total investment characteristics similar
to those of the S&P 500 as a whole.
The Adviser generally will seek to match the composition of the S&P 500 but
usually will not invest the Portfolio's stock portfolio to mirror the S&P 500
exactly. Because of the difficulty and cost of executing relatively small stock
transactions, the Portfolio may not always be invested in the less heavily
weighted S&P 500 stocks, and may at times have its portfolio weighted
differently than the S&P 500, particularly if the Portfolio has a low level of
assets. In addition, the Portfolio may omit or remove any S&P 500 stock from the
Portfolio if, following objective criteria, the Adviser judges the stock to be
insufficiently liquid or believes the merit of the investment has been
substantially impaired by extraordinary events or financial conditions. The
Portfolio will not purchase the stock of Bankers Trust New York Corporation,
which is included in the S&P 500, and instead will overweight its holdings of
companies engaged in similar businesses.
For more information on the S&P 500, see the preceding section "The
Benchmarks." The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation ("S&P") and S&P makes no guarantee as to the
accuracy and/or completeness of the S&P 500 or any data included therein.
Over time, the correlation between the performance of the Portfolio and the
S&P is expected to be 95% or higher before deduction of Portfolio expenses.
The Portfolio's ability to track the S&P 500 may be affected by, among others,
transaction costs, administration and other expenses incurred by the
Portfolio, changes in either the composition of the S&P 500 or the assets of
the Portfolio, and the timing and amount of Portfolio investor contributions
and withdrawals, if any. The Portfolio seeks securities to track the S&P 500,
therefore, the Adviser generally will not attempt to judge the merits of any
particular security as an investment.
The Portfolio may also invest up to 20% of its assets in short-term debt
securities and money market instruments to meet redemption requests or to
facilitate investment in the securities of the S&P 500. Securities index
futures contracts and related options, warrants and convertible securities may
be used for a number of reasons, including: to simulate full investment in the
S&P 500 while retaining a cash balance for Portfolio management purposes; to
facilitate trading; to reduce transaction costs; or to seek higher investment
returns when a futures contract, option, warrant or convertible security is
priced more attractively than the underlying equity security or S&P 500. These
instruments are considered to be derivatives.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
<PAGE>
- ----------
37
- --------------------------------------------------------------------------------
INDEX-FUND RISK: The Portfolio is not actively managed and invests in securities
included in the index regardless of their investment merit. Therefore, the
Portfolio cannot modify its investment strategies to respond to changes in the
economy and may be particularly susceptible to a general decline in the U.S. or
global stock market segment relating to the index.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
Nationally Recognized Statistical Rating Organization ("NRSRO"), it will be
exposed to greater risk than higher-rated obligations because BBB rated
investment grade securities are regarded as having only an adequate capacity to
pay principal and interest, are considered to lack outstanding investment
characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first year of existence. The table below shows the Portfolio's
average annual total returns for the Portfolio for one year and since inception.
The table also compares the Portfolio's performance to the returns of a broad
based index. Both the bar chart and table assume reinvestment of dividends and
distributions. Past performance is not an indication of future performance. The
performance results presented below do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
The Portfolio's inception date was January 1, 1998.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 25.14%
<S> <C>
Best quarter: Worst quarter:
21.26% (1998 4th Quarter) (10.03)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------
<S> <C> <C>
BT Equity 500 Index Portfolio 25.14% 25.14%
- -------------------------------------------------------------
S&P 500 Index* 28.58% 28.58%
- -------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
BANKERS TRUST COMPANY: ("Bankers Trust"), 130 Liberty Street (One Bankers Trust
Plaza), New York, New York 10006. Bankers Trust has been the Adviser to the
Portfolio since it commenced operations. Bankers Trust is a wholly-owned
subsidiary of Bankers Trust Corporation. Bankers Trust conducts a variety of
general banking and trust activities and is a major wholesale supplier of
financial services, including investment management to the international and
domestic institutional markets. During 1999, Bankers Trust Corporation and a
wholly owned subsidiary of Deutsche Bank AG ("Deutsche Bank") expect to finalize
a merger in which Bankers Trust Corporation will be acquired by and become a
subsidiary of Deutsche Bank.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
38
- --------------------------------------------------------------------------------
CAPITAL GUARDIAN RESEARCH
PORTFOLIO
INVESTMENT OBJECTIVE: To achieve long-term growth
of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of United States issuers
and securities whose principal markets are in the United States, including
American Depositary Receipts and other United States registered foreign
securities. The Portfolio invests primarily in common stocks (or securities
convertible or exchangeable into common stocks) of companies with market
capitalization greater than $1 billion at the time of purchase.
The Portfolio may invest up to 10% of its total assets, at the time of purchase,
in securities of issuers domiciled outside the United States and not included in
the S&P 500 (i.e., foreign securities).
When market or financial conditions warrant, the Portfolio may invest a
substantial portion of its assets in high-quality debt securities, including
short-term obligations for temporary or defensive purposes. If such action is
taken, it will detract from achievement of the Portfolio's investment objective
during such periods.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities markets.
CONVERTIBLE SECURITIES RISK: Convertible securities enable the Portfolio to
benefit from increases in the market price of the underlying common stock and
provide higher yields than the underlying common stocks, but generally offer
lower yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates both in relation to changes in interest
rates and changes in the value of the underlying common stock.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is April 30, 1999. Therefore, no prior
performance is available.
WHO MANAGES THE PORTFOLIO
CAPITAL GUARDIAN TRUST COMPANY ("Capital Guardian"), 333 South Hope Street,
Los Angeles, CA 90071. Capital Guardian is a wholly-owned subsidiary of
Capital Group International, Inc., which itself is a wholly owned subsidiary
of The Capital Group Companies, Inc. Capital Guardian has been providing
investment management services since 1968 and manages approximately $80
billion as of December 31, 1998.
<PAGE>
- ----------
39
- --------------------------------------------------------------------------------
The Portfolio is managed by a group of investment research professionals, led by
the Research Portfolio Coordinator, each of whom has investment discretion over
a segment of the total Portfolio. The size of each segment will vary over time
and may be based upon: (1) the level of conviction of specific research
professionals as to their designated sectors; (2) industry weights within the
relevant benchmark for the Portfolio; and (3) the judgment of the Research
Portfolio Coordinator in assessing the level of conviction of research
professionals compared to industry weights within the relevant benchmark.
Sectors may be overweighted relative to their benchmark weighting if there is a
substantial number of stocks that are judged to be attractive based on the
research professionals research in that sector, or may be underweighted if there
are relatively fewer stocks viewed to be attractive in the sector. The Research
Portfolio Coordinator also coordinates the cash holdings of the Portfolio.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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40
- --------------------------------------------------------------------------------
CAPITAL GUARDIAN U.S. EQUITY PORTFOLIO
INVESTMENT OBJECTIVE: To achieve long-term growth
of capital.
THE INVESTMENT STRATEGY
The Portfolio strives to accomplish its investment objectives through constant
supervision, careful securities selection and broad diversification.
The Portfolio invests primarily in equity securities of United States
companies with market capitalization greater than $1 billion at the time of
purchase. In selecting securities for investment, the Adviser focuses
primarily on the potential of capital appreciation.
The Portfolio may invest up to 10% of its total assets in securities of
issuers domiciled outside the United States and not included in the S&P 500
(i.e., foreign securities). These securities may include American Depositary
Receipts.
When market or financial conditions warrant, the Portfolio may invest a
substantial portion of its assets in high-quality debt securities, including
short-term obligations for temporary or defensive purposes. If such action is
taken, it will detract from achievement of the Portfolio's investment
objective during such periods.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities markets.
CONVERTIBLE SECURITIES RISK: Convertible securities enable the Portfolio to
benefit from increases in the market price of the underlying common stock and
provide higher yields than the underlying common stocks, but generally offer
lower yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates both in relation to changes in interest
rates and changes in the value of the underlying common stock.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is April 30, 1999. Therefore, no prior
performance is available.
WHO MANAGES THE PORTFOLIO
CAPITAL GUARDIAN TRUST COMPANY ("Capital Guardian"), 333 South Hope Street,
Los Angeles, CA 90071. Capital Guardian is a wholly-owned subsidiary of
Capital Group International, Inc., which itself is a wholly owned subsidiary
of The Capital Group Companies, Inc. Capital Guardian has been providing
investment management services since 1968 and manages approximately $80
billion as of December 31, 1998.
<PAGE>
- ----------
41
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Capital Guardian uses a multiple portfolio manager system under which the
Portfolio is divided into several segments. Each segment is individually
managed with the portfolio manager free to decide on company and industry
selections as well as valuation and transaction assessment. An additional
portion of the Portfolio is managed by a group of investment research
analysts.
The individual portfolio managers of each segment of the Portfolio, other than
that managed by the group of research analysts, are as follows:
DONNALISA P. BARNUM. Donnalisa Barnum is a Senior Vice President and a
portfolio manager for Capital Guardian. She joined the Capital Guardian
organization in 1986.
MICHAEL R. ERICKSON. Michael Erickson is a Senior Vice President and portfolio
manager for Capital Guardian and a Senior Vice President and Director for
Capital International Limited. He joined the Capital Guardian organization
in 1987.
DAVID I. FISHER. David Fisher is Chairman of the Board of Capital Group
International, Inc. and Capital Guardian. He joined the Capital Guardian
organization in 1969.
THEODORE R. SAMUELS. Theodore Samuels is a Senior Vice President and a
Director for Capital Guardian, as well as a Director of Capital International
Research, Inc. He joined the Capital Guardian organization in 1981.
EUGENE P. STEIN. Eugene Stein is Executive Vice President, a Director, a
portfolio manager, and Chairman of the Investment Committee for Capital
Guardian. He joined the Capital Guardian organization in 1972.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
42
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EQ/ALLIANCE PREMIER GROWTH PORTFOLIO
INVESTMENT OBJECTIVE: To achieve long-term growth of capital by primarily
investing in equity securities of a limited number of large, carefully
selected, high-quality United States companies that are judged, by the
Adviser, likely to achieve superior earnings growth.
THE INVESTMENT STRATEGY
The Portfolio invests primarily (at least 85% of its total assets) in equity
securities of United States companies. The Portfolio is diversified for
purposes of the 1940 Act, however it is still highly concentrated. The
Portfolio focuses on a relatively small number of intensively researched
companies. The Adviser selects the Portfolio's investments from a research
universe of more than 600 companies that have strong management, superior
industry positions, excellent balance sheets and superior earnings growth
prospects. An emphasis is placed on identifying securities of companies whose
substantially above-average prospective earnings growth is not fully reflected
in current market valuations.
Normally, the Portfolio invests in about 40-50 companies, with the 25 most
highly regarded of these companies usually constituting approximately 70% of
the Portfolio's net assets. In managing the Portfolio, the Adviser seeks to
capitalize on apparently unwarranted price fluctuations both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. The
Portfolio normally remains nearly fully invested and does not take significant
cash positions for market timing purposes. During market declines, while
adding to positions in favored stocks, the Portfolio becomes somewhat more
aggressive, gradually reducing the number of companies represented in its
holdings. Conversely, in rising markets, while reducing or eliminating fully
valued positions, the Portfolio becomes somewhat more conservative, gradually
increasing the number of companies represented in its holdings. Through this
approach, the Adviser seeks to gain positive returns in good markets while
providing some measure of protection in poor markets.
The Adviser expects the average market capitalization of companies represented
in the Portfolio normally to be in the range, or in excess, of the average
market capitalization of companies included in the S&P 500.
The Portfolio may invest up to 20% of its net assets in convertible securities
and 15% of its total assets in securities of foreign issuers.
The Portfolio may write covered exchange-traded call options on its securities
of up to 15% of its total assets, and purchase and sell exchange-traded call
and put options on common stocks written by others of up to, for all options,
10% of its total assets.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOCUSED PORTFOLIO RISK: The Portfolio invests in the securities of a limited
number of companies. Consequently, the Portfolio may incur more risk because
changes in the value of a single security may have a more significant effect,
either positive or negative, on the Portfolio's net asset value.
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities markets.
CONVERTIBLE SECURITIES RISK: Convertible securities enable the Portfolio to
benefit from increases in the market price of the underlying common stock and
provide higher yields than the underlying common stocks, but generally offer
lower yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates both in
<PAGE>
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43
- --------------------------------------------------------------------------------
relation to changes in interest rates and changes in the value of the
underlying common stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is April 30, 1999. Therefore, no prior
performance is available.
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance's sole general partner is Alliance Capital
Management Corporation, which is an indirect wholly-owned subsidiary of
Equitable, one of the largest life insurance companies in the United States
and a wholly-owned subsidiary of The Equitable Companies Incorporated.
Therefore, the Manager and Alliance are affiliates of each other. Alliance, a
Delaware limited partnership, is a leading international investment manager.
ALFRED HARRISON is the Portfolio Manager and has been responsible for the
day-to-day management of the Portfolio since its inception. Mr. Harrison is
Vice Chairman of Alliance Capital Management Corporation and has been with
Alliance since 1978. Prior to 1978, Mr. Harrison was co-founder, President,
and Chief Executive Officer of IDS Advisory Corporation, the pension fund
investment management subsidiary of Investors Diversified Services, Inc.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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44
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MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO
INVESTMENT OBJECTIVE: Seeks 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 INVESTMENT STRATEGY
The Portfolio chooses securities for capital appreciation that are expected to
increase in value. In selecting securities the Adviser emphasizes stocks that
are undervalued, are selling at a discount, or seem capable of recovering from
being temporarily out of favor. The Adviser places particular emphasis on
securities with statistical characteristics associated with undervaluation.
The Adviser follows a contrary opinion/out-of-favor investment style. The
Adviser believes that favorable changes in market prices are more likely to
occur when:
o stocks are out of favor;
o company earnings are depressed;
o price/earnings ratios are relatively low;
o investment expectations are limited; and/or
o there is no general interest in a security or industry.
On the other hand, the Adviser believes that negative
developments are more likely to occur when:
o investment expectations are high;
o stock prices are advancing or have advanced rapidly;
o price/earnings ratios have been inflated; and/or
o an industry or security continues to become popular among investors.
In other words, the Adviser believes that stocks with relatively high
price/earnings ratios are more vulnerable to price declines from unexpected
adverse developments. At the same time, stocks with relatively low
price/earnings ratios are more likely to benefit from favorable but generally
unanticipated events. Thus, the Portfolio may invest a
large part of its net assets in stocks that have weak
research ratings.
The Portfolio invests primarily in common stocks of U.S. companies, but may
buy equity securities other than common stock and may also invest up to 10% of
its total assets in securities issued by foreign companies. The Portfolio may
also invest a substantial portion of its assets in companies with market
capitalizations below the largest companies. The Adviser believes that large
institutional investors may overlook these companies, making them undervalued.
The Portfolio has no minimum holding period for investments, and will buy or
sell securities whenever the Portfolio's management sees an appropriate
opportunity.
When market or financial conditions warrant, the Portfolio may invest in U.S.
Government and agency securities,
money market securities and other fixed income securities for temporary or
defensive purposes. Such investment strategies are inconsistent with the
Portfolio's investment objectives and could result in the Portfolio not
achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a
value stock's intrinsic value may never be fully recognized or realized by the
market, or its price may go down. There is also the risk that a stock judged
to be undervalued may actually be appropriately priced.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because:
<PAGE>
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45
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the securities of such companies are less well-known and may trade less
frequently and in lower volume; such companies are more likely to experience
greater or more unexpected changes in their earnings and growth prospects; and
the products or technologies of such companies may be at a relatively early
stage of development or not fully tested.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. The performance results presented below do
not reflect any insurance and Contract-related fees and expenses, which would
reduce the performance results and if reflected the results would be reduced.
The inception date for the Portfolio is May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 11.59%
<S> <C>
Best quarter: Worst quarter:
11.20% (1997 3rd Quarter) (10.91)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------
<S> <C> <C>
Merrill Lynch Basic Value Portfolio 11.59% 17.29%
- --------------------------------------------------------------------
S&P 500 Index* 28.58% 31.63%
- --------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MERRILL LYNCH ASSET MANAGEMENT, L.P. ("MLAM"), 800 Scudders Mill Road,
Plainsboro, NJ 08543. MLAM has been the Adviser to the Portfolio since it
commenced operations. MLAM is an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc., a financial services holding company. The general partner of
MLAM is Princeton Services, Inc., a wholly-owned subsidiary of Merrill Lynch &
Co., Inc. MLAM and its affiliates act as the manager for more than 100
registered investment companies. MLAM also offers portfolio management and
portfolio analysis services to individuals and institutions.
KEVIN RENDINO, a First Vice President of MLAM since 1997, has been the Portfolio
Manager responsible for the day to day management of the Portfolio since it
commenced operations. Mr. Rendino was a Vice President of MLAM from 1993 to
1997.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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46
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MFS GROWTH WITH INCOME PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide reasonable current income and long-term
growth of capital and income.
For purposes of this Portfolio, the words "reasonable current income" mean
moderate income.
THE INVESTMENT STRATEGY
The Portfolio invests, under normal market conditions, primarily (at least 65%
of its total assets) in equity securities, including common stocks, preferred
stocks, convertible securities, warrants and depositary receipts for those
securities. Equity securities may be listed on a securities exchange or traded
in the over-the-counter markets. While the Portfolio may invest in companies
of any size, the Portfolio generally focuses on companies with larger market
capitalizations that the Adviser believes have sustainable growth prospects
and attractive valuations based on current and expected earnings or cash flow.
The Adviser uses a "bottom-up" investment style in managing the Portfolio.
This means that securities are selected based upon fundamental analysis
performed by the Adviser's large group of equity research analysts.
The Portfolio may invest in foreign securities and may have exposure to
foreign currencies through its investment in these securities, its direct
holdings of foreign currencies or through its use of forward foreign currency
exchange contracts for the purchase or sale of a fixed quantity of foreign
currency at a future date.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal strategies for temporary or defensive purposes.
Such investment strategies are inconsistent with the Portfolio's investment
objective and could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
<PAGE>
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47
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PORTFOLIO PERFORMANCE
The inception date for this Portfolio is December 31, 1998. Therefore, no
prior performance information is available.
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. 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. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
The Portfolio Managers are JOHN D. LAUPHEIMER, JR., Senior Vice President of
MFS, who has been employed as a portfolio manager by MFS since 1986; and
MITCHELL D. DYNAN, a Vice President of MFS, who has been employed as a
portfolio manager by MFS since 1981.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
48
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MFS RESEARCH PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide long-term growth of capital and future
income.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities, such as common stocks,
securities convertible into common stocks, preferred stocks and depositary
receipts of companies believed by the Adviser to have:
o favorable prospects for long-term growth;
o attractive valuations based on current and expected earnings or cash flow;
o dominant or growing market share; and
o superior management.
The Portfolio may invest in securities of companies of any size. The
Portfolio's investments may include securities traded on securities exchanges
or in the over-the-counter markets.
The Portfolio may invest in foreign equity securities, and may have exposure
to foreign currencies through its investment in these securities, its direct
holdings of foreign currencies or through its use of foreign currency exchange
contracts for the purchase or sale of a fixed quantity of foreign currency at
a future date.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal investment strategies for temporary or defensive
purposes. Such investment strategies are inconsistent with the Portfolio's
investment objectives and could result in the Portfolio not achieving its
investment objective.
The Portfolio may invest up to 10% of its assets in high yielding debt
securities rated below investment grade
("junk bonds").
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding
<PAGE>
- ----------
49
- --------------------------------------------------------------------------------
investment characteristics, and may be speculative. The risk that an issuer or
guarantor of a fixed income security or counterparty to the Portfolio's fixed
income transaction is unable to meets its financial obligations is
particularly significant for this Portfolio because this Portfolio invests a
portion of its assets in "junk bonds" (i.e., securities rated below investment
grade). Junk bonds are issued by companies with questionable credit strength
and, consequently, are considered to be speculative in nature and may be
subject to greater market fluctuations than investment grade fixed-income
securities.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results. The inception date for the Portfolio is May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 24.11%
<S> <C>
Best quarter: Worst quarter:
21.36% (1998 4th Quarter) (17.35)% (1997 4th Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------
SINCE
ONE YEAR INCEPTION
<S> <C> <C>
MFS Research Portfolio 24.11% 24.41%
- ------------------------------------------------------
S&P 500 Index* 28.58% 31.63%
- ------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. 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. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
A committee of investment research analysts selects portfolio securities for
the Portfolio. This committee includes investment analysts employed not only
by MFS, but also by MFS International (U.K.) Limited, a wholly owned
subsidiary of MFS. The committee allocates the Portfolio's assets among
various industries. Individual analysts then select
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
50
- --------------------------------------------------------------------------------
what they view as the securities best suited to achieve the Portfolio's
investment objective within their assigned industry responsibility.
<PAGE>
- ----------
51
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide substantial dividend income and also
capital appreciation by investing primarily in dividend-paying common stocks
of established companies.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in dividend-paying common stocks of
established companies that have favorable prospects for increasing dividend
income and capital appreciation. The Portfolio's yield as a result of that
dividend income is expected to be significantly above the average yield of the
companies of the S&P 500.
The Adviser bases its investment decisions on three premises: (1) over time,
dividend income can account for a significant portion of the Portfolio's
return; (2) dividends are a more stable and predictable source of return; and
(3) prices of stocks that pay a high current income level tend to be less
volatile than those paying below average dividends.
The Adviser uses a "value" approach in choosing securities. It looks for
common stocks of companies that have:
o established operating histories;
o above-average dividend yields relative to the S&P 500;
o low price to earnings ratios relative to the S&P 500;
o sound balance sheets; and
o low stock price relative to the company's asset value, earnings and cash
flow.
Equity income investing involves finding common stocks that pay dividend
income. As an example, utility company stocks often provide dividend income
while a shareholder waits for the stock price to move. Dividends can help
reduce the Portfolio's volatility during turbulent markets and help offset
losses when stock prices are falling.
The Portfolio may invest up to 25% of its total assets in foreign securities.
These securities include non-dollar-denominated securities traded outside the
United States and dollar-denominated securities such as American Depositary
Receipts. The Portfolio may also purchase preferred stocks, convertible
securities, warrants, U.S. Government securities, high-quality money market
securities, as well as investment grade debt securities and high yielding debt
securities ("junk bonds").
When market or financial conditions warrant, the Portfolio may invest without
limitation in high quality money market securities, and United States
Government debt securities for temporary or defensive purposes. Such
investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a
value stock's intrinsic value may never be fully recognized or realized by the
market, or its price may go down. There is also the risk that a stock judged
to be undervalued may actually be appropriately priced.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- ----------
52
- --------------------------------------------------------------------------------
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; adverse changes in foreign
economic and tax policies; and foreign government instability, war or other
adverse political or economic actions.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative. The risk that an issuer or guarantor of a fixed income security
or counterparty to the Portfolio's fixed income transaction is unable to meet
its financial obligations is particularly significant for this Portfolio
because this Portfolio invests a portion of its assets in "junk bonds" (i.e.,
securities rated below investment grade). Junk bonds are issued by companies
with questionable credit strength and, consequently, are considered to be
speculative in nature and may be subject to greater market fluctuations than
investment grade fixed-income securities.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses,which would reduce the
perfomance results. The inception date for the Portfolio is May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 9.11%
<S> <C>
Best quarter: Worst quarter:
11.16% (1998 4th Quarter) (7.66)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------
<S> <C> <C>
T. Rowe Price Equity Income Portfolio 9.11% 18.73%
- --------------------------------------------------------------------
S&P 500 Index* 28.58% 31.63%
- --------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
T. ROWE PRICE ASSOCIATES, INC. ("T. Rowe Price"), 100 East Pratt Street,
Baltimore, MD 21202. T. Rowe Price has been the Adviser to the Portfolio since
the Portfolio commenced operations. T. Rowe Price serves as investment manager
to a variety of individual and institutional investor accounts, including
limited partnerships and other
mutual funds.
Investment decisions with respect to the Portfolio are made by an Investment
Advisory Committee. BRIAN C. ROGERS has been the Committee Chairman since the
inception of the Portfolio and has day-to-day responsibility for managing the
Portfolio. Mr. Rogers joined T. Rowe Price in 1982 and has been managing
investments since 1983.
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS
- ----------
53
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified mix of equity securities of
U.S. and established foreign companies. The Adviser believes the equity
securities of these established non-U.S. companies have prospects for growth.
The Portfolio intends to make investments in several countries and to have
represented in the Portfolio business activities in not less than three
different countries (including the United States).
These non-U.S. companies may have operations in the United States, in their
country of incorporation or in other countries.
The Portfolio may invest in any type of security including, but not limited
to, common and preferred stock, as well as shares of mutual funds that invest
in foreign securities, bonds and other evidences of indebtedness, and other
securities of issuers wherever organized and governments and their political
subdivisions. Although no particular proportion of stocks, bonds or other
securities is required to be maintained, the Portfolio intends under normal
conditions to invest in equity securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives including: writing covered call and put options,
purchasing call and put options on individual equity securities, securities
indexes, and foreign currencies. The Portfolio may also purchase and sell
stock index, foreign currency and interest rate futures contracts and options
on such contracts, as well as forward foreign currency exchange contracts.
When market or financial conditions warrant, the Portfolio may at times invest
substantially all of its assets in securities issued by U.S. companies or in
cash or cash equivalents, including money market instruments issued by foreign
entities for temporary or defensive purposes. Such investment strategies could
result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: Investing in foreign securities involves risks not
associated with investing in U.S. securities that can adversely affect the
Portfolio's performance. Foreign markets, particularly emerging markets, may
be less liquid, more volatile and subject to less government supervision than
domestic markets. There may be difficulties enforcing contractual obligations,
and it may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political systems,
more restrictive foreign investment policies, smaller-sized securities
markets and low trading volumes. Such risks can make investments illiquid
and more volatile than investments in developed countries and such
securities may be subject to abrupt and severe price declines.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the recent introduction of the
"Euro" as a common currency in 11 European Monetary Union member
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
54
- --------------------------------------------------------------------------------
states. The Euro may result in various legal and accounting differences,
tax treatments, the creation and implementation of suitable clearing and
settlement systems and other operational problems, that may cause market
disruptions that could adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. 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.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment-grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
if it invested in higher-rated obligations because BBB-rated securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Global Portfolio) managed by the
Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance Global Portfolio)
whose inception date is August 27, 1987. The assets of the predecessor will be
transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<PAGE>
- ----------
55
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1989---------------------------- 26.5%
1990---------------------------- -6.3%
1991---------------------------- 30.2%
1992---------------------------- -0.7%
1993---------------------------- 31.9%
1994---------------------------- 5.0%
1995---------------------------- 18.6%
1996---------------------------- 14.4%
1997---------------------------- 11.4%
1998---------------------------- 21.5%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
26.53% (1998 4th Quarter) -17.05% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- -------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- -------------------------------------------------------------
<S> <C> <C> <C>
Alliance Global
Portfolio -
Class IB Shares 21.50% 14.01% 14.55%
- -------------------------------------------------------------
MSCI World
Index** 24.34% 15.68% 10.66%
- -------------------------------------------------------------
Lipper Global
Mutual Funds
Average** 14.34% 11.98% 11.21%
- -------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 16.89%. The return for the MSCI World Index for the comparable
period (which dates from month-end of the Class IB inception date) was
20.40%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio's and its predecessor's investment program since 1998. Ms. Yeager, a
Senior Vice President of Alliance, has been associated with Alliance since
1990.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
56
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital by
investing primarily in a diversified portfolio of equity securities selected
principally to permit participation in non-U.S. companies with prospects for
growth.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified portfolio of equity
securities selected principally to permit participation in non-U.S. companies
or foreign governmental enterprises that the Adviser believes have prospects
for growth. The Portfolio may invest anywhere in the world (including
developing countries or "emerging markets"), although it will not generally
invest in the United States. The Portfolio may purchase securities of
developing countries, which include, among others, Mexico, Brazil, Hong Kong,
India, Poland, Turkey and South Africa.
These non-U.S. companies may have operations in the United States, in their
country of incorporation and/or in other countries.
The Portfolio intends to have represented in the Portfolio
business activities in not less than three different countries.
The Portfolio may also invest in any type of investment grade, fixed income
security including, but not limited to, preferred stock, convertible
securities, bonds, notes and other evidences of indebtedness of foreign
issuers, including obligations of foreign governments. Although no particular
proportion of stocks, bonds or other securities is required to be maintained,
the Portfolio intends under normal market conditions to invest primarily in
equity securities.
The Portfolio may also make use of various other investment strategies,
including the purchase and sale of shares of other mutual funds investing in
foreign securities and making loans of up to 50% of its portfolio securities.
The Portfolio may also use derivatives, including: writing covered call and
put options, purchasing purchase call and put options on individual equity
securities, securities indexes, and foreign currencies. The Portfolio may also
purchase and sell stock index, foreign currency and interest rate futures
contracts and options on such contracts, as well as forward foreign currency
exchange contracts.
For temporary or defensive purposes, when market or financial conditions
warrant, the Portfolio may at times invest substantially all of its assets in
securities issued by a single major developed country (e.g., the United
States) or in cash or cash equivalents, including money market instruments
issued by that country. In addition, the Portfolio may establish and maintain
temporary cash balances in U.S. and foreign short-term high-grade money market
instruments for defensive purposes or to take advantage of buying
opportunities. Such investments could result in the Portfolio not achieving
its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: Investing in foreign securities involves risks not
associated with investing in U.S. securities that can adversely affect the
Portfolio's performance. Foreign markets, particularly emerging markets, may
be less liquid, more volatile and subject to less government supervision than
domestic markets. There may be difficulties enforcing contractual obligations,
and it may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
<PAGE>
- ----------
57
- --------------------------------------------------------------------------------
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political systems,
more restrictive foreign investment policies, smaller-sized securities
markets and low trading volumes. Such risks can make investments illiquid
and more volatile than investments in developed countries and such
securities may be subject to abrupt and severe price declines.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the recent introduction of the
"Euro" as a common currency in 11 European Monetary Union member states.
The Euro may result in various legal and accounting differences, tax
treatments, the creation and implementation of suitable clearing and
settlement systems and other operational problems, that may cause market
disruptions that could adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment-grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
if it invested in higher-rated obligations because BBB-rated securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. 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.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last three calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
58
- --------------------------------------------------------------------------------
shows the Portfolio's average annual total returns for the past one year and
since inception and compares the Portfolio's performance to: (i) the returns
of a broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance International Portfolio) managed
by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance
International Portfolio) whose inception date is April 3, 1995. The assets of
the predecessor will be transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1996---------------------------- 9.6%
1997---------------------------- -3.2%
1998---------------------------- 10.3%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
16.49% (1998 4th Quarter) -15.74% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ---------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- ---------------------------------------------------------
<S> <C> <C>
Alliance International
Portfolio - Class IB
Shares 10.30% 7.22%
- ---------------------------------------------------------
MSCI EAFE Index** 20.00% 9.68%
- ---------------------------------------------------------
Lipper International Mutual
Funds Average** 13.02% 10.74%
- ---------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (May 1, 1997),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 4.42%. The return for the MSCI EAFE Index for the comparable
period (which dates from month-end of the Class IB inception date) was
13.77%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio and its predecessor since January 1999. Ms. Yeager, a Senior Vice
President of Alliance, has been associated with Alliance since 1990.
<PAGE>
- ----------
59
- --------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to replicate as closely as possible (before
deduction of Portfolio expenses) the total return of the MSCI EAFE Index.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of companies included in
the MSCI EAFE Index. The Portfolio is constructed to have aggregate investment
characteristics similar to those of the MSCI EAFE Index. The Portfolio invests
in a statistically selected sample of the securities of companies included in
the MSCI EAFE Index, although not all companies within a country will be
represented in the Portfolio at the same time. Stocks are selected based on
country of origin, market capitalization, yield, volatility and industry
sector. The Adviser will manage the Portfolio using advanced statistical
techniques to determine which securities should be purchased or sold in order
to replicate the MSCI EAFE index.
For more information on the MSCI EAFE Index see the preceding section "The
Benchmarks." The MSCI EAFE Index is the exclusive property of Morgan
Stanley. The Portfolio is not sponsored, endorsed, sold or promoted by
Morgan Stanley and Morgan Stanley makes no guarantee as to the accuracy or
completeness of the MSCI EAFE Index or any data included therein.
Over time, the correlation between the performance of the Portfolio and the
MSCI EAFE Index is expected to be 95% or higher before deduction of Portfolio
expenses. The Portfolio's ability to track the MSCI EAFE Index may be affected
by, among others, transaction costs, administration and other expenses
incurred by the Portfolio, changes in either the composition of the MSCI EAFE
Index or the assets of the Portfolio, and the timing and amount of Portfolio
investor contributions and withdrawals, if any. The Portfolio seeks to track
the MSCI EAFE Index, therefore, the Adviser generally will not attempt to
judge the merits of any particular security as an investment.
The Portfolio may invest to a lesser extent in short-term debt securities and
money market instruments to meet redemption requests or to facilitate
investment in the securities of the MSCI EAFE Index. Securities index futures
contracts and related options, warrants and convertible securities may be used
for a number of reasons, including: to simulate full investment in the MSCI
EAFE Index while retaining a cash balance for Portfolio management purposes;
to facilitate trading; to reduce transaction costs; or to seek higher
investment returns when a futures contract, option, warrant or convertible
security is priced more attractively than the underlying equity security or
MSCI EAFE Index. These instruments are considered to be derivatives.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
INDEX-FUND RISK: The Portfolio is not actively managed and invests in
securities included in the index regardless of their investment merit.
Therefore, the Portfolio cannot modify its investment strategies to respond to
changes in the economy and may be particularly susceptible to a general
decline in the U.S. or global stock market segment relating to the index.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, foreign investments can be adversely affected
by: unfavorable currency exchange rates (relative to the U.S. dollar for
securities denominated in a foreign currencies);
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
60
- --------------------------------------------------------------------------------
inadequate or inaccurate information about foreign companies; higher
transaction, brokerage and custody costs; adverse changes in foreign economic
and tax policies; and foreign government instability, war or other adverse
political or economic actions. Other specific risks of investing in foreign
securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political systems,
more restrictive foreign investment policies, smaller-sized securities
markets and low trading volumes. Such risks can make investments illiquid
and more volatile than investments in developed countries and such
securities may be subject to abrupt and severe price declines. The Year 2000
problem may also be especially acute in emerging market countries, which
also may adversely affect the value of the Portfolio's investments.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the introduction of the "Euro" as a
common currency in 11 European Monetary Union member states. The Euro may
result in various legal and accounting differences, tax treatments, the
creation and implementation of suitable clearing and settlement systems and
other operational problems, that may cause market disruptions that could
adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's average annual total return
for 1998, the Portfolio's first year of existence. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. The performance results presented below do
not reflect any insurance and Contract-related fees and expenses, which would
reduce the perfomance results. The Portfolio's inception date was January 1,
1998.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 20.07%
<S> <C>
Best quarter: Worst quarter:
20.43% (1998 4th Quarter) (13.90)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -----------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -----------------------------------------------------------------------
<S> <C> <C>
BT International Equity Index Portfolio 20.07% 20.07%
- -----------------------------------------------------------------------
MSCI EAFE Index* 20.00% 20.00%
- -----------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
<PAGE>
- ----------
61
- --------------------------------------------------------------------------------
WHO MANAGES THE PORTFOLIO
BANKERS TRUST COMPANY ("Bankers Trust"), 130 Liberty Street (One Bankers Trust
Plaza), New York, New York 10006. Bankers Trust has been the Adviser to the
Portfolio since it commenced operations. Bankers Trust is a wholly-owned
subsidiary of Bankers Trust New York Corporation. Bankers Trust conducts a
variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic institutional
markets, including investment management. During 1999, Bankers Trust Corporation
and a wholly owned subsidiary of Deutsche Bank AG ("Deutsche Bank") expect to
finalize a merger in which Bankers Trust Corporation will be acquired by and
become a subsidiary of Deutsche Bank.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
62
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS
EQUITY PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term capital appreciation by investing
primarily in equity securities of emerging country issuers.
THE INVESTMENT STRATEGY
The Portfolio is a non-diversified Portfolio that invests primarily in equity
securities of companies located in emerging markets countries. Such equity
securities may include common stocks, preferred stocks, convertible
securities, depositary receipts, rights and warrants. The Adviser focuses on
growth-oriented companies in emerging market countries that it believes have
strong developing economies and increasingly sophisticated markets. The
Portfolio generally invests only in emerging markets countries whose
currencies are freely convertible into United States dollars.
A Portfolio may be considered to be "non-diversified" for federal
securities law purposes because it invests in a limited number of
securities. In all cases, the Portfolio intends to be diversified for tax
purposes so that it can qualify as a regulated investment company.
For purposes of this Portfolio, an emerging market country security is
defined as a security of an issuer having one or more of the following
characteristics:
o Its principal securities trading market is in an emerging market
country;
o alone or on a consolidated basis, at least 50% of its revenues are
derived from goods produced, sales made or services performed in
emerging market countries; and
o it is organized under the laws of or has a principal office in an
emerging market country.
The Adviser's investment approach combines top-down country allocation with
bottom-up stock selection.
In a "top-down" approach, country allocations are made based on forecasts
of stock market trends. In a "bottom-up" approach, securities are reviewed
and chosen individually.
The Portfolio may invest to a lesser extent in corporate or government-issued
or guaranteed debt securities of emerging markets countries, including debt
securities that are rated or considered to be below investment grade ("junk
bonds"). The Portfolio also may, to a lesser extent, invest in equity or debt
securities (including "junk bonds") of corporate or governmental issuers
located in industrialized countries, foreign currency or investment funds and
supranational entities such as the World Bank. In addition, the Portfolio may
utilize forward foreign currency contracts, options and futures contracts and
swap transactions.
When market or financial conditions warrant, the Portfolio may invest in
certain short- and medium-term fixed income securities of issuers other than
emerging market issuers and may invest without limitation in high quality
money market instruments for temporary or defensive purposes. Such investment
strategies are inconsistent with the Portfolio's investment objectives and
could result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it
<PAGE>
- ----------
63
- --------------------------------------------------------------------------------
may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; adverse changes in foreign
economic and tax policies; and foreign government instability, war or other
adverse political or economic actions. Other specific risks of investing in
foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political systems,
more restrictive foreign investment policies, smaller-sized securities
markets and low trading volumes. Such risks can make investments illiquid
and more volatile than investments in developed countries and such
securities may be subject to abrupt and severe price declines. The Year 2000
problem may also be especially acute in emerging market countries, which
also may adversely affect the value of the Portfolio's investments.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the introduction of the "Euro" as a
common currency in 11 European Monetary Union member states. The Euro may
result in various legal and accounting differences, tax treatments, the
creation and implementation of suitable clearing and settlement systems and
other operational problems, that may cause market disruptions that could
adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate has been over 100% per
year. Higher portfolio turnover (e.g., over 100% per year) will cause the
Portfolio to incur additional transaction costs and may result in higher
taxable gains that could be passed through to shareholders.
NON-DIVERSIFICATION RISK: Since a relatively high percentage of the
Portfolio's assets may be invested in the securities of a limited number of
issuers, some of which may be within the same industry, the securities of the
Portfolio may be more sensitive to changes in the market value of a single
issuer or industry or to risks associated with a single economic, political or
regulatory event than a diversified portfolio.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities, which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
64
- --------------------------------------------------------------------------------
are regarded as having only an adequate capacity to pay principal and
interest, are considered to lack outstanding investment characteristics, and
may be speculative. The risk that an issuer or guarantor of a fixed income
security or counterparty to the Portfolio's fixed income transaction is unable
to meets its financial obligations is particularly significant for this
Portfolio because this Portfolio invests a portion of its assets in "junk
bonds" (i.e., securities rated below investment grade). Junk bonds are issued
by companies with questionable credit strength and, consequently, are
considered to be speculative in nature and may be subject to greater market
fluctuations than investment grade fixed-income securities.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results. The inception date for the Portfolio is August 20, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- (27.10)%
<S> <C>
Best quarter: Worst quarter:
14.56% (1998 4th Quarter) (22.14)% (1998 2nd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------------
<S> <C> <C>
Morgan Stanley Emerging Markets
Equity Portfolio (27.10)% (32.69)%
- -------------------------------------------------------------------
MSCI Emerging Markets Free* (25.34)% (28.92)%
- -------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MORGAN STANLEY ASSET MANAGEMENT ("MSAM"), 1221 Avenue of the Americas, New York,
NY 10020. MSAM has been the Adviser to the Portfolio since the Portfolio
commenced operations. MSAM conducts a worldwide investment management business,
providing a broad range of portfolio management services to customers in the
United States and abroad. MSAM serves as an investment adviser to numerous
open-end and closed-end investment companies. On December 1, 1998, Morgan
Stanley Asset Management Inc. changed its name to Morgan Stanley Dean Witter
Investment Management Inc. but continues to do business in certain instances
using the name Morgan Stanley Asset Management.
The Portfolio Managers, responsible for the day to day management of the
Portfolio since the Portfolio commenced operations, are: ROBERT MEYER, a
Managing Director of MSAM and Morgan Stanley & Co. Incorporated, who is head of
MSAM's Emerging Markets Equity Group and who joined MSAM in 1989; and ANDY SKOV,
a Principal of MSAM and Morgan Stanley & Co. Incorporated who joined MSAM in
1994.
<PAGE>
- ----------
65
- --------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital through investment
primarily in common stocks of established non-United States companies.
THE INVESTMENT STRATEGY
The Portfolio invests substantially all of its assets in common stocks of
established companies outside of the United States. The Portfolio intends to
diversify broadly among countries throughout the world by having securities
from at least five different countries represented in the Portfolio. No more
than 20% of its assets will be invested in securities of any one country,
except that up to 35% can be invested in stocks of companies in Australia,
Canada, France, Japan, United Kingdom or Germany. In determining the
appropriate distribution of investments among various countries and geographic
regions, the Adviser ordinarily considers the following factors:
o prospects for relative economic growth between foreign countries;
o expected levels of inflation;
o government policies influencing business conditions;
o the outlook for currency relationships; and
o 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
securities such as preferred stocks, warrants and convertible securities as
well as governmental debt securities and investment grade debt securities. The
Portfolio may also invest in certain foreign investment funds, hybrid
instruments and derivative instruments in keeping with the Portfolio
objective.
In analyzing companies for investment, the Adviser uses a "bottom-up" approach
and looks for companies that have:
o prospects for achieving and sustaining above-average, long-term earnings
growth per share;
o a high return on invested capital;
o healthy balance sheet;
o sound financial and accounting policies and overall financial strength;
o strong competitive advantages;
o effective research, product development and marketing,
o pricing flexibility;
o strong management; and
o record of paying dividends.
This means that the securities are selected based upon fundamental analysis
performed by the Adviser, and are not selected based upon the type of
industries to which they belong.
When market or financial conditions warrant, the Portfolio may invest without
limitation in high quality U.S. Government and corporate debt obligations for
temporary or defensive purposes. Such investment strategies are inconsistent
with the Portfolio's investment objectives and could result in the Portfolio
not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- ----------
66
- --------------------------------------------------------------------------------
markets, may be less liquid, more volatile and subject to less government
supervision than domestic markets. There may be difficulties enforcing
contractual obligations, and it may take more time for trades to clear and
settle. In addition, foreign investments can be adversely affected by:
unfavorable currency exchange rates (relative to the U.S. dollar for
securities denominated in a foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
Other specific risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political systems,
more restrictive foreign investment policies, smaller-sized securities
markets and low trading volumes. Such risks can make investments illiquid
and more volatile than investments in developed countries and such
securities may be subject to abrupt and severe price declines. The Year 2000
problem may also be especially acute in emerging market countries, which
also may adversely affect the value of the Portfolio's investments.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the introduction of the "Euro" as a
common currency in 11 European Monetary Union member states. The Euro may
result in various legal and accounting differences, tax treatments, the
creation and implementation of suitable clearing and settlement systems and
other operational problems, that may cause market disruptions that could
adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities, which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. The performance results presented below do
not reflect any insurance and Contract-related fees and expenses, which would
reduce the performance results. The inception date for the Portfolio is May 1,
1997.
<PAGE>
- ----------
67
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 13.68%
<S> <C>
Best quarter: Worst quarter:
16.86% (1998 4th Quarter) (13.63)% (1998 4th Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------
<S> <C> <C>
T. Rowe Price International
Stock Portfolio 13.68% 7.01%
- --------------------------------------------------------
MSCI EAFE Index* 20.00% 13.43%
- --------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ROWE PRICE-FLEMING INTERNATIONAL, INC.
("Price-Fleming"), 100 East Pratt Street, Baltimore, MD 21202. Price-Fleming has
been the Adviser to the Portfolio since it commenced its operations.
Price-Fleming was incorporated in Maryland in 1979 as a joint venture between T.
Rowe Price and Robert Fleming Holdings Limited ("Flemings"). Flemings is a
diversified investment organization that participates in a global network of
regional investment offices. The common stock of Price-Fleming is 50% owned by a
wholly owned subsidiary of T. Rowe Price, 25% owned by a subsidiary of Flemings
and 25% owned by Jardine Fleming Group Limited ("Jardine Fleming").
Investment decisions with respect to the Portfolio are made by an Investment
Advisory Committee Group. The Investment Advisory Group has day-to-day
responsibility for managing the Portfolio and developing and executing the
Portfolio's investment program.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS
- ----------
68
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in common stocks and other equity securities
of small and medium-sized companies that, in the opinion of the Adviser, have
favorable growth prospects. The Portfolio may also invest in securities of
companies in cyclical industries, companies whose securities are temporarily
undervalued, companies in special situations (e.g., change in management, new
products or changes in customer demand) and less widely known companies.
The Portfolio may also invest up to 20% of its total assets in foreign
securities and may also make use of various other investment strategies,
including investments in debt securities and making secured loans of up to 50%
of its total portfolio securities. The Portfolio may also use derivatives,
including: writing covered call options and purchasing call and put options on
individual equity securities, securities indexes and foreign currencies. The
Portfolio may also purchase and sell stock index and foreign currency futures
contracts and options thereon.
When market or financial conditions warrant, or it appears that the
Portfolio's investment objective will not be achieved primarily through
investments in common stocks, the Portfolio may invest in other equity-type
securities (such as preferred stocks and convertible debt instruments) and
options for hedging purposes. The Portfolio may also make temporary
investments in corporate fixed income securities, which will generally be
investment grade, or invest part its assets in cash or cash equivalents,
including high-quality money market instruments for liquidity or defensive
purposes. Such investments could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
<PAGE>
- ----------
69
- --------------------------------------------------------------------------------
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index; (ii) the returns of a "blended" index of two
broad-based indices; and (iii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Aggressive Stock Portfolio)
managed by the Adviser using the same investment objectives and strategy as
the Portfolio. For these purposes, the Portfolio is considered to be the
successor entity to the predecessor registered investment company
(HRT/Alliance Aggressive Stock Portfolio) whose inception date is January 27,
1986. The assets of the predecessor will be transferred to the Portfolio on
October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1989---------------------------- 43.2%
1990---------------------------- 7.9%
1991---------------------------- 86.6%
1992---------------------------- -3.4%
1993---------------------------- 16.5%
1994---------------------------- -4.1%
1995---------------------------- 31.4%
1996---------------------------- 22.1%
1997---------------------------- 10.7%
1998---------------------------- 0.1%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
40.04% (1991 1st Quarter) -27.25% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- ------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- ------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Aggressive Stock
Portfolio - Class IB Shares 0.10% 11.25% 18.65%
- ------------------------------------------------------------------------
S&P 400 MidCap Index** 19.11% 18.84% 19.29%
- ------------------------------------------------------------------------
50% S&P 400 MidCap
Index/50% Russell 2000** 8.28% 15.56% 16.49%
- ------------------------------------------------------------------------
Lipper MidCap Growth Funds
Average** 12.16% 14.87% 15.44%
- ------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 5.70%. The return for the S&P 400 MidCap Index for the comparable
period (which dates from month-end of the Class IB inception date) was
18.11%.
** For more information on this index, see the preceding section "The
Benchmarks."
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
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70
- --------------------------------------------------------------------------------
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
ALDEN M. STEWART and RANDALL E. HAASE have been the persons principally
responsible for the day-to-day management of the Portfolio and its predecessor
since 1993. Mr. Stewart, an Executive Vice President of Alliance, has been
associated with Alliance since 1970. Mr. Haase, a Senior Vice President of
Alliance, has been associated with Alliance since 1988.
<PAGE>
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71
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in U.S. common stocks and other equity-type
securities issued by smaller companies with favorable growth prospects. The
Portfolio may at times invest in companies in cyclical industries, companies
whose securities are temporarily undervalued, companies in special situations
(e.g., change in management, new products or changes in customer demand) and
less widely known companies.
Under normal market conditions, the Portfolio intends to invest at least 65%
of its total assets in securities of smaller capitalization companies
(currently considered by the Adviser to mean companies with market
capitalization at or below $2 billion).
The Portfolio may invest in foreign securities and may also make use of
various other investment strategies, including making secured loans of up to
50% of its total portfolio securities. The Portfolio may also use derivatives
including: writing covered call options and purchasing call and put options on
individual equity securities, securities indexes and foreign currencies. The
Portfolio may also purchase and sell stock index and foreign currency futures
contracts and options thereon.
The Portfolio will invest up to 20% of its net asset value, measured at the
time of investment, in securities principally traded on foreign securities
markets (other than commercial paper).
When market or financial conditions warrant, the Portfolio may invest in other
equity-type securities (such as preferred stocks and convertible debt
instruments) and investment-grade corporate fixed income securities. For
temporary or defensive purposes, the Portfolio may invest without limitation
in cash or cash equivalents or high-quality money market instruments. Such
investments could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
- ----------
72
- --------------------------------------------------------------------------------
risk that changes in value of the derivative may not correlate perfectly with
the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for 1998,
the Portfolio's first full year of existence and some of the risks of
investing in the Portfolio by showing yearly changes in the Portfolio's
performance. The table below shows the Portfolio's average annual total
returns for one year and since inception and compares the Portfolio's
performance to: (i) the returns of a broad-based index and (ii) the returns of
an index of funds with similar investment objectives. Past performance is not
an indication of future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Small Cap Growth Portfolio)
managed by the Adviser using the same investment objectives and strategy as
the Portfolio. For these purposes, the Portfolio is considered to be the
successor entity to the predecessor registered investment company
(HRT/Alliance Small Cap Growth Portfolio) whose inception date is May 1, 1997.
The assets of the predecessor will be transferred to the Portfolio on October
18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- -4.4%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
22.92% (1998 4th Quarter) -28.13% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------------
<S> <C> <C>
Alliance Small Cap Growth Portfolio -
Class IB Shares -4.44% 12.06%
- -------------------------------------------------------------------
Russell 2000 Growth Index* 1.23% 16.58%
- -------------------------------------------------------------------
Lipper Small Company Growth Funds
Average* -0.33% 16.72%
- -------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks." Index returns are from the end of the month of inception.
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly
<PAGE>
- ----------
73
- --------------------------------------------------------------------------------
traded limited partnership, is indirectly majority-owned by Equitable. Alliance
manages investment companies, endowment funds, insurance companies, foreign
entities, qualified and non-tax qualified corporate funds, public and private
pension and profit-sharing plans, foundations and tax-exempt organizations.
MARK J. CUNNEEN has been responsible for the day-to-day management of Portfolio
and its predecessor since January 1999. Mr. Cunneen, a Senior Vice President of
Alliance, has been associated with Alliance since January 1999. Prior to joining
Alliance, Mr. Cunneen had been associated with INVESCO since May 1998, and
before that with Chancellor LGT Asset Management, Inc. ("Chancellor") since
1992. Mr. Cunneen had been the head of Chancellor's Small Cap Equity Group since
1997.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
- ----------
74
- --------------------------------------------------------------------------------
BT SMALL COMPANY INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to replicate as closely as possible (before the
deduction of Portfolio expenses) the total return of the Russell 2000 Index
("Russell 2000").
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of small-cap companies
included in the Russell 2000. The Adviser seeks to match the returns of the
Russell 2000. The Portfolio invests in a statistically selected sample of the
securities found in the Russell 2000, using a process known as "optimization."
This process selects stocks for the Portfolio so that industry weightings,
market capitalizations and fundamental characteristics (price to book ratios,
price to earnings ratios, debt to asset ratios and dividend yields) closely
match those of the securities included in the Russell 2000. This approach helps
to increase the Portfolio's liquidity and reduce costs. The securities held by
the Portfolio are weighted to make the Portfolio's total investment
characteristics similar to those of the Russell 2000 as a whole.
For more information on The Russell 2000, see the preceding section "The
Benchmarks." The Portfolio is neither sponsored by nor affiliated with the
Frank Russell Company, which is the owner of the trademarks and copyrights
relating to the Russell indices.
Over time, the correlation between the performance of the Portfolio and the
Russell 2000 is expected to be 95% or higher before the deduction of Portfolio
expenses. The Portfolio's ability to track the Russell 2000 may be affected
by, among other things, transaction costs, administration and other expenses
incurred by the Portfolio, changes in either the composition of the Russell
2000 or the assets of the Portfolio, and the timing and amount of Portfolio
investor contributions and withdrawals, if any. The Portfolio seeks to track
the Russell 2000, therefore, the Adviser generally will not attempt to judge
the merits of any particular security as an investment.
Securities index futures contracts and related options, warrants and
convertible securities may be used for a number of reasons, including: to
simulate full investment in the Russell 2000 while retaining a cash balance
for fund management purposes; to facilitate trading; to reduce transaction
costs; or to seek higher investment returns when a futures contract, option,
warrant or convertible security is priced more attractively than the
underlying equity security or Russell 2000. These instruments are considered
to be derivatives.
The Portfolio may invest to a lesser extent in short-term debt securities and
money market securities to meet redemption requests or to facilitate
investment in the securities included in the Russell 2000.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
INDEX-FUND RISK: The Portfolio is not actively managed and invests in
securities included in the index regardless of their investment merit.
Therefore, the Portfolio cannot modify its investment strategies to respond to
changes in the economy and may be particularly susceptible to a general
decline in the U.S. or global stock market segment relating to the index.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less known and may trade less frequently and
in lower volume; such companies are more likely to experience greater or more
unexpected changes in their earnings and growth prospects; and the products or
technologies of such companies may be at a relatively early stage of
development or not fully tested.
<PAGE>
- ----------
75
- --------------------------------------------------------------------------------
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first year of existence. The table below shows the Portfolio's
average annual total returns for the Portfolio for one year and since
inception. The table also compares the Portfolio's performance to the returns
of a broad based index. Both the bar chart and table assume reinvestment of
dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results. The Portfolio's inception date was January 1, 1998.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- (2.27)%
<S> <C>
Best quarter: Worst quarter:
16.21% (1998 4th Quarter) (19.52)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------------
<S> <C> <C>
BT Small Company Index Portfolio (2.27)% (2.27)%
- -------------------------------------------------------------------
Russell 2000 Index* (2.54)% (2.54)%
- -------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
BANKERS TRUST COMPANY ("Bankers Trust"), 130 Liberty Street (One Bankers Trust
Plaza), New York, New York 10006. Bankers Trust has been the Adviser to the
Portfolio since it commenced operations. Bankers Trust is a wholly-owned
subsidiary of Bankers Trust New York Corporation. Bankers Trust conducts a
variety of general banking and trust activities and is a major wholesale
supplier of financial services to the international and domestic institutional
markets. Investment management is a core business of Bankers Trust built on a
tradition of excellence from its roots as a trust bank founded in 1903. During
1999, Bankers Trust Corporation and a wholly owned subsidiary of Deutsche Bank
AG ("Deutsche Bank") expect to finalize a merger in which Bankers Trust
Corporation will be acquired by and become a subsidiary of Deutsche Bank.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
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76
- --------------------------------------------------------------------------------
EQ/EVERGREEN PORTFOLIO
INVESTMENT OBJECTIVE: Seeks capital appreciation.
THE INVESTMENT STRATEGY
The Evergreen Portfolio invests primarily in common stocks and convertible
securities of companies that are relatively small or little-known or represent
special situations which the Adviser believes offer potential for capital
appreciation. In addition, the Portfolio may invest in relatively well-known,
large company securities that have the potential for capital appreciation.
Securities are selected based on a combination of comparative undervaluation
relative to growth potential and/or merger/acquisition price.
For purposes of this Portfolio, a "little-known" company is one whose
business is limited to a regional market or whose securities are mainly
privately held. A "relatively small" company is one that has a small share
of the market for its products or services in comparison with other
companies in its field or that provides goods or services for a limited
market. A "special situation" company is one which offers potential for
capital appreciation because of a recent or anticipated change in
structure, management, products or services.
The Portfolio also may invest to a lesser extent in non-convertible debt
securities and preferred stocks that offer an opportunity for capital
appreciation.
When market or financial conditions warrant, the Portfolio may invest up to
100% of its assets in short-term obligations for temporary or defensive
purposes. Such investment strategies are inconsistent with the Portfolio's
investment objectives and could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a
value stock's intrinsic value may never be fully recognized or realized by the
market, or its price may go down. There is also the risk that a stock judged
to be undervalued may actually be appropriately priced.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
<PAGE>
- ----------
77
- --------------------------------------------------------------------------------
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is December 31, 1998. Therefore, no
prior performance information is available.
WHO MANAGES THE PORTFOLIO
EVERGREEN ASSET MANAGEMENT CORP. ("Evergreen"), 2500 Westchester Avenue,
Purchase, New York 10577. Evergreen has been the Adviser to the Portfolio
since it commenced operations. Evergreen is a registered investment adviser
and a wholly-owned subsidiary of First Union Corporation. Evergreen offers a
broad range of financial services to individuals and businesses throughout the
United States.
JEAN LEDFORD and RICHARD WELSH became co-managers of the Portfolio in August
1999. Jean Ledford, CFA, became President and Chief Executive Officer of
Evergreen in August 1999. From February 1997 until she joined Evergreen, Ms.
Ledford worked as a portfolio manager at American Century Investments
("American Century"). From 1980 until she joined American Century, Ms. Ledford
was the investment director at the State of Wisconsin Investment Board.
Mr. Welsh joined Evergreen as Senior Vice President and portfolio manager in
August 1999. Prior to joining Evergreen, he worked for five years as a
portfolio manager and analyst at American Century.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
- ----------
78
- --------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide long-term
capital growth.
THE INVESTMENT STRATEGY
The Portfolio invests, under normal market conditions, primarily (at least 65%
of its total assets) in common stocks and related securities, such as preferred
stock, convertible securities and depositary receipts of emerging growth
companies. Emerging growth companies that the Adviser believes are either:
o early in their life cycle but have the potential to become major
enterprises; or
o are major enterprises 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.
For purposes of this Portfolio, emerging growth companies may be of any size
and the Adviser would expect these companies to have products, technologies,
management, markets and opportunities that will facilitate earnings growth
over time that is well above the growth rate of the overall economy and rate
of inflation. The Portfolio's investments may include securities traded in the
over-the-counter markets.
The Adviser uses a "bottom-up" investment style in managing the Portfolio.
This means the securities are selected based upon fundamental analysis
performed by
the Adviser.
In addition, up to 15% of the Portfolio's assets may be invested in foreign
securities, including those in emerging markets, or in cash and cash
equivalents.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal strategies for temporary or defensive purposes.
Such investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
The Portfolio may engage in active and frequent trading to achieve its
principal investment strategies. Frequent trading increases transaction costs,
which could detract from the Portfolio's performance.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In
<PAGE>
- ----------
79
- --------------------------------------------------------------------------------
addition, the value of foreign investments can be adversely affected by:
unfavorable currency exchange rates (relative to the U.S. dollar for securities
denominated in foreign currencies); inadequate or inaccurate information about
foreign companies; higher transaction, brokerage and custody costs; adverse
changes in foreign economic and tax policies; and foreign government
instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results. The inception date for the Portfolio is May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 34.57%
<S> <C>
Best quarter: Worst quarter:
26.70% (1998 4th Quarter) (12.69)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- ----------------------------------------------------------------
<S> <C> <C>
MFS Emerging Growth Companies
Portfolio 34.57% 34.81%
- ----------------------------------------------------------------
Russell 2000 Index* (2.54)% (14.53)%
- ----------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. 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. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
The Portfolio Managers are JOHN W. BALLEN, President of MFS, who has been
employed by MFS as a portfolio manager of the Portfolio since 1984, and TONI Y.
SHIMURA, a Vice President of MFS, who has been employed by MFS as a portfolio
manager for the Portfolio since 1995.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
- ----------
80
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term capital
appreciation.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of U.S. small-cap
companies with above-average growth potential that the Adviser believes to be
undervalued. Typically, such investments may include common stocks, preferred
stocks, convertible securities, warrants and rights of small-cap companies.
Once 65% of the Portfolio's assets are invested in small-cap companies, the
Portfolio may also invest in companies with a market capitalization of any
size.
For purposes of this Portfolio, small-cap companies are companies having
market capitalizations within the range of capitalizations of companies
represented in the Russell 2000 Index.
In determining whether a company's stock is undervalued, the Adviser considers
all relevant factors which may include a company's:
o price/earnings ratio;
o price to book value ratio;
o price to cash flow ratio; and
o debt to capital ratio.
The Portfolio will invest primarily (at least 65% of its net assets) in the
securities of U.S. companies traded in the U.S. securities markets. The
Portfolio may invest to a lesser extent in foreign securities, investment
grade debt securities and high quality domestic and foreign short-term (one
year or less) and medium-term money-market securities.
When market or financial conditions warrant, the Portfolio may invest without
limitation in investment grade debt obligations and in domestic and foreign
obligations, including repurchase agreements for temporary or defensive
purposes. Such investment strategies are inconsistent with the Portfolio's
investment objectives and could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a
value stock's intrinsic value may never be fully recognized or realized by the
market, or its price may go down. There is also the risk that a stock judged
to be undervalued may actually be appropriately priced.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate has been over 100% per
year. Higher portfolio turnover (e.g., over 100% per year) will cause the
Portfolio to incur additional transaction costs and may result in higher
taxable gains that could be passed through to shareholders.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely
<PAGE>
- ----------
81
- --------------------------------------------------------------------------------
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities, which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. The performance results presented below do
not reflect any insurance and Contract-related fees and expenses, which would
reduce performance results. The inception date for the Portfolio is May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- (10.02)%
<S> <C>
Best quarter: Worst quarter:
15.49% (1997 3rd Quarter) (20.25)% (1998 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- ----------------------------------------------------------------------
<S> <C> <C>
Warburg Pincus Small Company Value
Portfolio (10.02)% 4.25%
- ----------------------------------------------------------------------
Russell 2000 Index* ( 2.54)% 14.53%
- ----------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
WARBURG PINCUS ASSET MANAGEMENT, INC. ("WPAM"), 466 Lexington Avenue, New York,
New York 10017-3147. WPAM has been the Adviser to the Portfolio since it
commenced operations. WPAM is a professional investment advisory firm that
provides investment services to investment companies, employee benefit plans,
endowment funds, foundations and other institutions and individuals. WPAM is
indirectly controlled by Warburg, Pincus & Co., a New York partnership which has
no business other than being a holding company of WPAM and its affiliates.
During 1999, WPAM and Credit Suisse Group expect to finalize Credit Suisse
Group's acquisition of WPAM. WPAM will be combined with and into Credit Suisse
Group's global asset management subsidiary, Credit Suisse Asset Management, LLC.
KYLE F. FREY is the Portfolio Manager and has been responsible for the
day-to-day management of the Portfolio since the Portfolio commenced operations.
Mr. Frey is a managing director of WPAM and has been with WPAM since 1989.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS
- ----------
82
- --------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIOS
The Alliance Conservative Investors Portfolio and the Alliance Growth
Investors Portfolio together are called the Asset Allocation Portfolios. These
Portfolios invest in a variety of fixed income and equity securities, each
pursuant to a different asset allocation strategy, as described below. The
term "asset allocation" is used to describe the process of shifting assets
among discrete categories of investments in an effort to reduce risk while
producing desired return objectives. Portfolio management, therefore, will
consist not only of selecting specific securities but also of setting,
monitoring and changing, when necessary, the asset mix.
Each Portfolio has been designed with a view toward a different "investor
profile." The "conservative investor"' has a relatively short-term investment
bias, either because of a limited tolerance for market volatility or a short
investment horizon. This investor is averse to taking risks that may result in
principal loss, even though such aversion may reduce the potential for higher
long-term gains and result in lower performance during periods of equity
market strength. Consequently, the asset mix for the Alliance Conservative
Investors Portfolio attempts to reduce volatility while providing modest
upside potential. The "growth investor" has a longer-term investment horizon
and is therefore willing to take more risks in an attempt to achieve long-term
growth of principal. This investor wishes, in effect, to be risk conscious
without being risk averse. The asset mix for the Alliance Growth Investors
Portfolio attempts to provide for upside potential without excessive
volatility.
The Adviser has established an asset allocation committee (the "Committee"),
all the members of which are employees of the Adviser, which is responsible
for setting and continually reviewing the asset mix ranges of each Portfolio.
Under normal market conditions, the Committee is expected to change allocation
ranges approximately three to five times per year. However, the Committee has
broad latitude to establish the frequency, as well as the magnitude, of
allocation changes within the guidelines established for each Portfolio.
During periods of severe market disruption, allocation ranges may change
frequently. It is also possible that in periods of stable and consistent
outlook no change will be made. The Committee's decisions are based on a
variety of factors, including liquidity, portfolio size, tax consequences and
general market conditions, always within the context of the appropriate
investor profile for each Portfolio. Consequently, asset mix decisions for the
Alliance Conservative Investors Portfolio particularly emphasize risk
assessment of each asset class viewed over the shorter term, while decisions
for the Alliance Growth Investors Portfolio are principally based on the
longer term total return potential for each asset class.
When the Committee establishes a new allocation range for a Portfolio, it also
prescribes the length of time during which that Portfolio should achieve an
asset mix within the new range. To achieve a new asset mix, the Portfolios
look first to available cash flow. If the Adviser believes that cash flow will
be insufficient to achieve the desired asset mix, the Portfolios will sell
securities and reinvest the proceeds in the appropriate asset class.
The Asset Allocation Portfolios are permitted to use a variety of hedging
techniques to attempt to control stock market, interest rate and currency
risks. Each of the Portfolios in the Asset Allocation Portfolios may make
loans of up to 50% of its total portfolio securities. Each of the Portfolios
in the Asset Allocation Portfolios may write covered call and put options and
may purchase call and put options on all the types of securities in which it
may invest, as well as securities indexes and foreign currencies. Each
Portfolio may also purchase and sell stock index, interest rate and foreign
currency futures contracts and options thereon, as well as forward foreign
currency exchange contracts.
<PAGE>
- ----------
83
- --------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high total return without, in the
opinion of the Adviser, undue risk to principal.
THE INVESTMENT STRATEGY
The Portfolio invests varying portions of its assets in high quality,
publicly-traded fixed income securities (including money market instruments
and cash) and publicly-traded common stocks and other equity securities of
U.S. and non-U.S. issuers.
The Portfolio will at all times hold at least 40% of its assets in investment
grade fixed income securities, each having a duration, as determined by the
Adviser, that is less than that of a 10-year Treasury bond (the "fixed income
core"). The Portfolio is generally expected to hold approximately 70% of its
assets in fixed income securities (including the fixed income core) and 30% in
equity securities. Actual asset mixes will be adjusted in response to economic
and credit market cycles. The fixed income asset class will always comprise at
least 50%, but never more than 90%, of the Portfolio's total assets. The
equity class will always comprise at least 10%, but never more than 50%, of
the Portfolio's total assets.
Duration is a measure of the weighted average maturity of the bonds held by
the Portfolio and can be used by the Adviser as a measure of the
sensitivity of the market value of the Portfolio to changes in interest
rates. Generally, the longer the duration of the Portfolio, the more
sensitive its market value will be to changes in interest rates.
In some cases, the Adviser's calculation of duration will be based on
certain assumptions (including assumptions regarding prepayment rates, in
the mortgage-backed or asset-backed securities, and foreign and domestic
interest rates). As of December 31, 1998, the Adviser considered the
duration of a 10-year Treasury bond to be 4.68 years. The Portfolio's
investments will generally have a final maturity of not more than ten years
or a duration not exceeding that of a 10-year Treasury note.
All debt securities held by the Portfolio will be of investment grade (i.e.,
rated at least BBB by S&P or Baa by Moody's) or unrated securities of
comparable quality as determined by the Adviser. The equity securities
invested in by the Portfolio will consist primarily of common stocks,
including convertible securities, common stocks that are listed on national
securities exchanges. The Portfolio may also invest in stocks that are traded
over-the-counter and in other equity-type securities. No more than 15% of the
Portfolio's assets will be invested in securities of non-U.S. issuers.
The Portfolio may also make use of various other investment strategies and
derivatives. Up to 50% of its total assets may be used for securities lending
purposes.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
ASSET ALLOCATION RISK: In addition to the risks associated with the securities
in which the Portfolio invests, the Portfolio is subject to the risk that the
Adviser's allocation of the Portfolio's assets between debt and equity
securities may adversely affect the Portfolio's value.
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income
securities, therefore, the Portfolio's performance will be affected by changes
in interest rates,
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- ----------
84
- --------------------------------------------------------------------------------
credit risks of the issuer, the duration and maturity of the Portfolio's fixed
income holdings, and adverse market and economic conditions. Other risks that
relate to the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true.
INVESTMENT-GRADE SECURITIES RISK: The Portfolio could lose money if the
issuer or guarantor of a debt security or counterparty to a Portfolio's
transaction is unable or unwilling to make timely principal and/or interest
payments, or to honor its financial obligations. Investment grade securities
which are rated BBB by S&P or an equivalent rating by any other NRSRO, are
somewhat riskier than higher rated obligations because they are regarded as
having only an adequate capacity to pay principal and interest, are
considered to lack outstanding investment characteristics, and may be
speculative.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the
duration of mortgage-backed securities to increase, making them even more
susceptible to interest rate changes. Falling interest rates may cause the
value and yield of mortgage-backed securities to fall. Falling interest
rates also may encourage borrowers to pay off their mortgages sooner than
anticipated (pre-payment). The Portfolio would need to reinvest the pre-paid
funds at the newer, lower interest rates.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. The value of convertible securities fluctuates both in relation to
changes in interest rates and changes in the value of the underlying common
stock.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. 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.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like, which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
<PAGE>
- ----------
85
- --------------------------------------------------------------------------------
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last nine calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one
year, five years and since inception and compares the Portfolio's performance
to: (i) the returns of a broad-based index; (ii) the returns of a "blended"
index of fixed income and equity securities; and (iii) the returns of an index
of funds with similar investment objectives. Past performance is not an
indication of future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Conservative Investors Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance
Conservative Investors Portfolio) whose inception date is October 2, 1989. The
assets of the predecessor will be transferred to the Portfolio on October 18,
1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN *
[GRAPHIC OMITTED]
1990---------------------------- 6.2%
1991---------------------------- 19.6%
1992---------------------------- 5.5%
1993---------------------------- 10.5%
1994---------------------------- -4.4%
1995---------------------------- 20.2%
1996---------------------------- 5.0%
1997---------------------------- 13.0%
1998---------------------------- 13.6%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
- ------------------------------------ ----------------------------------
7.59% (1998 4th Quarter) -3.27% (1994 1st Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Conservative
Investors Portfolio -
Class IB Shares 13.60% 9.13% 9.17%
- --------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 17.62%
- --------------------------------------------------------------------
70% Lehman Treasury/30%
S&P 500 Index** 15.59% 13.37% 12.08%
- --------------------------------------------------------------------
Lipper Flexible Portfolio
Average** 14.20% 14.31% 12.55%
- --------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (May 2, 1997),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 15.42%. The return for the S&P 500 Index for the comparable
period (which dates from month-end of the Class IB inception date) was
17.64%.
** For more information on this index, see the preceding section "The
Benchmarks."
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- ----------
86
- --------------------------------------------------------------------------------
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of the
Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a Senior
Vice President of Alliance and Global Economic Policy Analysis, has been
associated with Alliance since 1977.
<PAGE>
- ----------
87
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS
PORTFOLIOS
INVESTMENT OBJECTIVE: Seeks to achieve the highest total return consistent with
the Adviser's determination of reasonable risk.
THE INVESTMENT STRATEGY
The Portfolio allocates varying portions of its assets to a number of asset
classes. The fixed income asset class will always comprise at least 10%, but
never more than 60%, of the Portfolio's total assets. The equity class will
always comprise at least 40%, but never more than 90%, of the Portfolio's
total assets. Over time, the Portfolio's holdings, on average, are expected to
be allocated 70% to equity securities and 30% to debt securities. Actual asset
mixes will be adjusted in response to economic and credit market cycles.
The Portfolio's investments in equity securities will include both
exchange-traded and over-the counter common stocks and other equity
securities, including foreign stocks, preferred stocks, convertible debt
instruments, as well as securities issued by small-and mid-sized companies
that have favorable growth prospects.
The Portfolio's debt securities may include foreign debt securities,
investment grade fixed income securities (including cash and money market
instruments) as well as lower quality, higher yielding debt securities (junk
bonds). The Portfolio may also make use of various other investment strategies
and derivatives. Up to 50% of its total assets may be used for securities
lending purposes. No more than 30% of the Portfolio's assets will be invested
in securities of foreign issuers.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
ASSET ALLOCATION RISK: In addition to the risks associated with the securities
in which the Portfolio invests, the Portfolio is subject to the risk that the
Adviser's allocation of the Portfolio's assets between debt and equity
securities may adversely affect the Portfolio's value.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment-grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
if it invested in higher-rated obligations because BBB- rated securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative. Other risks that relate to the Portfolio's investment in fixed
income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest
rates fall, the reverse is true.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality.
Therefore, credit risk is particularly significant for this Portfolio. Junk
bonds have speculative elements or are predominantly speculative credit
risks. This Portfolio may also be subject to greater credit risk because it
may invest in debt securities issued in connection with corporate
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- ----------
88
- --------------------------------------------------------------------------------
restructurings by highly leveraged issuers or in debt securities not
current in the payment of interest or principal, or in default.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SMALL CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. The value of convertible securities fluctuates both in relation to
changes in interest rates and changes in the value of the underlying common
stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. 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.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last nine calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one
year, five years and since inception and compares the Portfolio's performance
to: (i) the returns of a broad-based index; (ii) the returns of a "blended"
index of equity and fixed income securities; and (iii) the returns of an index
of funds with similar investment objectives. Past performance is not an
indication of future performance.
<PAGE>
- ----------
89
- --------------------------------------------------------------------------------
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Growth Investors Portfolio)
managed by the Adviser using the same investment objectives and strategy as
the Portfolio. For these purposes, the Portfolio is considered to be the
successor entity to the predecessor registered investment company
(HRT/Alliance Growth Investors Portfolio) whose inception date is October 2,
1989. The assets of the predecessor will be transferred to the Portfolio on
October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN *
[GRAPHIC OMITTED]
1990---------------------------- 10.4%
1991---------------------------- 48.7%
1992---------------------------- 4.7%
1993---------------------------- 15.0%
1994---------------------------- -3.4%
1995---------------------------- 26.1%
1996---------------------------- 12.4%
1997---------------------------- 16.6%
1998---------------------------- 18.8%
<S> <C>
Best quarter (% and time period) Worst quarter (% and time period)
18.10% (1998 4th Quarter) -10.66% (1990 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS*
- -------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- -------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Growth Investors
Portfolio - Class IB Shares 18.83% 13.36% 15.81%
- -------------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 17.62%
- -------------------------------------------------------------------------
70% S&P 500 Index/30%
Lehman Gov't/Corp.** 22.85% 19.96% 15.55%
- -------------------------------------------------------------------------
Lipper Flexible Portfolio
Average* 14.20% 14.31% 12.55%
- -------------------------------------------------------------------------
</TABLE>
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 17.94%. The return for the S&P 500 Index for the comparable
period (which dates from month-end of the Class IB inception date) was
25.17%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of the
Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a Senior
Vice President of Alliance and Global Economic Policy Analysis, has been
associated with Alliance since 1977.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- ----------
90
- --------------------------------------------------------------------------------
EQ/EVERGREEN FOUNDATION PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide, in order of priority, reasonable income,
conservation of capital and capital appreciation.
For purposes of this Portfolio, the words
"reasonable income" mean moderate income.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a combination of common stocks, preferred
stocks, securities that are convertible into or exchangeable for common
stocks, investment grade corporate debt securities, securities of or
guaranteed by the U.S. Government, its agencies or instrumentalities, and
short-term debt instruments, such as high quality commercial paper, and
obligations of FDIC-member banks. Investments in common stocks focus on those
that pay dividends and have the potential for capital appreciation. Common
stocks are selected based on a combination of financial strength and estimated
growth potential. Bonds are selected based on the Adviser's projections of
interest rates, varying amounts and maturities in order to achieve capital
protection and, when possible, capital appreciation. The asset allocation of
the Portfolio will vary in accordance with changing economic and market
conditions.
Under normal market conditions, at least 25% of the Portfolio's net assets
will be invested in fixed income securities. In selecting debt securities, the
Adviser will emphasize securities that the Adviser believes will not be
subject to significant fluctuations in value. The corporate debt obligations
purchased by the Portfolio will be rated A or higher by S&P and Moody's. The
Fund is not managed with a targeted maturity.
When market or financial conditions warrant, the Portfolio may invest 100% of
its assets in short-term obligations for temporary or defensive purposes. Such
investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities which are rated BBB by S&P or an
equivalent rating by any other Nationally Recognized Statistical Rating
Organization ("NRSRO"), it will be exposed to greater risk than higher-rated
obligations because BBB rated investment grade securities are regarded as
having only an adequate capacity to pay principal and interest, are considered
to lack outstanding investment characteristics, and may be speculative.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stocks, but generally offer lower yields than unconvertible securities
of similar quality. The value of convertible securities fluctuates both in
relation to changes in interest rates and changes in the value of the
underlying common stock.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is December 31, 1998. Therefore, no
performance information is available.
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WHO MANAGES THE PORTFOLIO
EVERGREEN ASSET MANAGEMENT CORP. ("Evergreen"), 2500 Westchester Avenue,
Purchase, New York 10577. Evergreen has been the Adviser to the Portfolio
since it commenced operations. Evergreen is a registered investment adviser
and a wholly-owned subsidiary of First Union Corporation. Evergreen offers a
broad range of financial services to individuals and businesses throughout the
United States.
JEAN LEDFORD and RICHARD WELSH became co-managers of the Portfolio in August
1999. Jean Ledford, CFA, became President and Chief Executive Officer of
Evergreen in August 1999. From February 1997 until she joined Evergreen, Ms.
Ledford worked as a portfolio manager at American Century Investments
("American Century"). From 1980 until she joined American Century, Ms. Ledford
was the investment director at the State of Wisconsin Investment Board.
Mr. Welsh joined Evergreen as Senior Vice President and portfolio manager in
August 1999. Prior to joining Evergreen, he worked for five years as a
portfolio manager and analyst at American Century.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
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MERRILL LYNCH WORLD STRATEGY
PORTFOLIO
INVESTMENT OBJECTIVE: Seek high total investment return by investing primarily
in a portfolio of equity and fixed income securities, including convertible
securities, of U.S. and foreign issuers.
For purposes of this Portfolio, "total investment return" consists of
interest, dividends, discount accruals and capital changes, including
changes in the value of non-dollar denominated securities and other assets
and liabilities resulting from currency fluctuations.
THE INVESTMENT STRATEGY
The Portfolio is a non-diversified Portfolio that invests in both equity
securities and fixed income securities. The Portfolio may invest entirely in
equity securities, entirely in fixed income securities, or partly in equity
securities and partly in fixed income securities.
A Portfolio may be considered to be "non-diversified" for federal
securities law purposes because it invests in a limited number of
securities. In all cases, the Portfolio intends to be diversified for tax
purposes so that it can qualify as a regulated investment company.
The Portfolio will normally invest a significant portion of its assets in equity
securities of companies throughout the world. The equity securities in which the
Portfolio invests will primarily be common stocks of large companies.
There are no limits on the Portfolio's ability to invest in any country or
geographic region. The Portfolio can invest primarily in U.S. securities,
primarily in foreign securities, or partly in both. It normally invests in at
least three countries at any given time. The Portfolio may invest in companies
in emerging markets, but the Adviser anticipates that a substantially greater
portion of the Portfolio's equity investments will be in companies in
developed countries. At the present time, the Portfolio focuses on investments
in Canada, Western Europe, the Far East, and Latin America, as well as in the
United States. The Adviser will select the percentage of the Portfolio's
assets that will be invested in equity securities and fixed income securities,
as well as the geographic allocation of the Portfolio's investments, based on
its view of general economic and financial trends in various countries and
industries, such as inflation, commodity prices, the direction of interest and
currency movements, estimates of growth in industry output and profits, and
government fiscal policies. For example, if the Adviser believes that falling
commodity prices and decreasing estimates of industrial output globally signal
low growth and limited returns from equity securities, the Portfolio may
emphasize fixed income investments. Similarly, if the Adviser believes that
low inflation, new technologies and improvements in economic productivity in a
country or region signal a promising environment for equity securities in that
country or region the Portfolio may emphasize equity investments in that
country or region.
The Portfolio may invest in fixed-income securities of any maturity, including
United States and foreign government securities and corporate debt securities.
The Portfolio will only invest in debt securities that are rated investment
grade by S&P or Moody's or unrated securities that are of comparable quality.
The Portfolio may also invest in securities denominated in currencies other
than the U.S. dollar. The Portfolio may also engage in currency transactions
to hedge against the risk of loss from changes in currency exchange rates. In
addition, the Portfolio may also employ a variety of instruments and
techniques to enhance income and to hedge against market and currency risk.
The Portfolio has no stated minimum holding period for investments, and will
buy or sell securities whenever the Adviser sees an appropriate opportunity.
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When market or financial conditions warrant, the Portfolio may invest up to
100% of its assets in United States Government or Government agency
securities, money market securities, other fixed income securities, or cash
for temporary or defensive purposes. Such investment strategies are
inconsistent with the Portfolio's investment objective and could result in the
Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stocks, but generally offer lower yields than unconvertible securities
of similar quality. The value of convertible securities fluctuates both in
relation to changes in interest rates and changes in the value of the
underlying common stock.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, foreign investments can be adversely affected
by: unfavorable currency exchange rates (relative to the U.S. dollar for
securities denominated in a foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
Other specific risks of investing in foreign securities include:
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the introduction of the "Euro" as a
common currency in 11 European Monetary Union member states. The Euro may
result in various legal and accounting differences, tax treatments, the
creation and implementation of suitable clearing and settlement systems and
other operational problems, that may cause market disruptions that could
adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
higher-rated obligations because BBB rated investment grade securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
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NON-DIVERSIFICATION RISK: Since a relatively high percentage of the
Portfolio's assets may be invested in the securities of a limited number of
issuers, some of which may be within the same industry, the securities of the
Portfolio may be more sensitive to changes in the market value of a single
issuer or industry or to risks associated with a single economic, political or
regulatory event than a diversified portfolio.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate has been over 100% per
year. Higher portfolio turnover (e.g., over 100% per year) will cause the
Portfolio to incur additional transaction costs and may result in higher
taxable gains that could be passed through to shareholders.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results. The inception date for the Portfolio is May 1, 1997.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
[GRAPHIC OMITTED]
1998---------------------------- 6.81%
<S> <C>
Best quarter: Worst quarter:
10.56% (1998 4th Quarter) (11.15)% (1998 3rd Quarter)
</TABLE>
AVERAGE ANNUAL TOTAL RETURNS
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SINCE
ONE YEAR INCEPTION
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Merrill Lynch World Strategy Portfolio 6.81% 6.91%
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Composite Market Benchmark Index* (25.34)% (28.92)%
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* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MERRILL LYNCH ASSET MANAGEMENT, L.P. ("MLAM"), 800 Scudders Mill Road,
Plainsboro, New Jersey 08543. MLAM has been the Adviser to the Portfolio since
it commenced operations. MLAM is an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc., a financial services holding company. MLAM and its affiliates
act as the manager for more than 100 registered investment companies. MLAM also
offers portfolio management and portfolio analysis services to individuals and
institutions.
THOMAS R. ROBINSON: is the Portfolio Manager primarily responsible for the
day-to-day management of the Portfolio since it commenced operations. Mr.
Robinson has served as a First Vice President of MLAM since 1997 and as a Senior
Portfolio Manager of MLAM since 1995. Prior to 1995, Mr. Robinson served as
Manager of International Strategy for Merrill Lynch & Co. Global Securities
Research and Economics Group.
<PAGE>
3
More information on principal risks
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Risk is the chance that you will lose money on your investment or that it will
not earn as much as you expect. In general, the greater the risk, the more
money your investment can earn for you and the more you can lose. Like other
investment companies, the value of each Portfolio's shares may be affected by
the Portfolio's investment objective(s), principal investment strategies and
particular risk factors. Consequently, each Portfolio may be subject to
different principal risks. Some of the principal risks of investing in the
Portfolios are discussed below. However, other factors may also affect each
Portfolio's net asset value.
There is no guarantee that a Portfolio will achieve its investment
objective(s) or that it will not lose principal value.
GENERAL INVESTMENT RISKS: Each Portfolio is subject to
the following risks:
ASSET CLASS RISK: There is the possibility that the returns from the types of
securities in which a Portfolio invests will underperform returns from the
various general securities markets or different asset classes. Different types
of securities tend to go through cycles of outperformance and underperformance
in comparison to the general securities markets.
MARKET RISK: Each Portfolio's share price moves up and down over the short
term in reaction to stock or bond market movements. This means that you could
lose money over short periods, and perhaps over longer periods during extended
market downturns.
SECURITY SELECTION RISK: The Advisers for each Portfolio rely on the insights
of different specialists in making investment decisions based on each
Portfolio's particular investment objective(s) and investment strategies.
There is the possibility that the specific securities held by a Portfolio will
underperform other funds in the same asset class or benchmarks that are
representative of the general performance of the asset class because of the
Adviser's choice of portfolio securities.
YEAR 2000 RISK: Like other mutual funds, financial and business organizations
and individuals around the world, the Trust and its Portfolios could be
adversely affected if the computer systems used by the Advisers, other service
providers, or persons with whom they deal, do not properly process and
calculate date-related information and data dated on and after January 1,
2000. This possibility is commonly known as the "Year 2000 Problem." Virtually
all operations of the Trust and its Portfolios are computer reliant. The
Manager, Advisers, administrator, transfer agent, distributors and custodian
have informed the Trust that they are actively taking steps to address the
Year 2000 Problem with regard to their respective computer systems and the
interfaces between their respective computer systems. The Trust is also taking
measures to obtain assurances from necessary persons that comparable steps are
being taken by the key service providers to the Trust's Advisers,
administrator, transfer agent, distributors, and custodian. There can be no
assurance that the Trust and the Portfolios' key service providers will be
Year 2000 compliant. If not adequately addressed, the Year 2000 Problem could
result in the inability of the Trust to perform its mission critical
functions, including trading and settling trades of Portfolio securities,
pricing of portfolio securities and processing shareholder transactions, and
the net asset value of its Portfolios' shares may be materially affected.
In addition, because the Year 2000 Problem affects virtually all issuers, the
companies or entities in which the Portfolios may invest also could be
adversely impacted by the Year 2000 Problem. For example, issuers may incur
substantial costs to address the Year 2000 problem. The extent of such impact
cannot be predicted and there can be no assurances that the Year 2000 Problem
will not have an adverse effect on the issuers whose securities are held by
the Portfolios. The Advisers have assured the Trust that they consider such
issues in making investment decisions for the Portfolios. Furthermore, certain
of the Portfolios make international investments thereby exposing these
Portfolios to operations, custody and settlement processes outside the United
States.
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In many countries outside the United States the Year 2000 Problem has not been
adequately addressed and concerns have been raised that capital flight, among
other issues, may be triggered by full disclosure of the Year 2000 Problem on
countries outside the United States. Additional information on the impact of
the Year 2000 Problem on emerging market countries is provided in this
section, under "FOREIGN SECURITIES RISKS-EMERGING MARKET RISK."
As indicated in "Summary Information Concerning EQ Advisors Trust" and "About
the Investment Portfolios," a particular Portfolio may also be subject to the
following risks:
CONVERTIBLE SECURITIES RISK: Convertible securities may include 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. Therefore, convertible securities enable you to benefit from
increases in the market price of the underlying common stock. Convertible
securities provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. 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. Each Adviser will consider such event in its
determination of whether a Portfolio should continue to hold the securities.
DERIVATIVES RISK: Derivatives are financial contracts whose value depends on,
or is derived from the value of an underlying asset, reference rate or index.
Derivatives include stock options, securities index options, currency options,
forward currency exchange contracts, futures contracts, swaps and options on
futures contracts. Certain Portfolios can use derivatives involving the U.S.
Government and foreign government securities and currencies. Investments in
derivatives can significantly increase your exposure to market risk, or credit
risk of the counterparty. Derivatives also involve the risk of mispricing or
improper valuation
and the risk that changes in value of the derivative may
not correlate perfectly with the relevant assets, rates
and indices.
FIXED INCOME RISKS: To the extent that any of the Portfolios invest a
substantial amount of its assets in fixed income securities, a Portfolio may
be subject to the following risks:
CREDIT RISK: Credit risk is the risk that the issuer or guarantor of a debt
security or counterparty to a Portfolio's transactions will be unable or
unwilling to make timely principal and/or interest payments, or otherwise
will be unable or unwilling to honor its financial obligations. Each of the
Portfolios may be subject to credit risk to the extent that it invests in
debt securities or engages in transactions, such as securities loans or
repurchase agreements, which involve a promise by a third party to honor an
obligation to the Portfolio.
Credit risk is particularly significant for the Portfolios, such as the
Alliance Growth Investors Portfolio and the Alliance High Yield Portfolio,
that invest a material portion of their assets in "JUNK BONDS" or
lower-rated securities (i.e., rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality). These
debt securities and similar unrated securities have speculative elements or
are predominantly speculative credit risks. Portfolios such as the Alliance
Growth Investors Portfolio and the Alliance High Yield Portfolio may also
be subject to greater credit risk because they may invest in debt
securities issued in connection with corporate restructurings by highly
leveraged issuers or in debt securities not current in the payment of
interest or principal, or in default.
INTEREST RATE RISK: The price of a bond or a fixed income security is
dependent upon interest rates. Therefore, the share price and total return
of a
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Portfolio investing a significant portion of its assets in bonds or fixed
income securities will vary in response to changes in interest rates. A
rise in interest rates causes the value of a bond to decrease, and vice
versa. There is the possibility that the value of a Portfolio's investment
in bonds or fixed income securities may fall because bonds or fixed income
securities generally fall in value when interest rates rise. The longer the
term of a bond or fixed income instrument, the more sensitive it will be to
fluctuations in value from interest rate changes. Changes in interest rates
may have a significant effect on Portfolios holding a significant portion
of their assets in fixed income securities with long term maturities.
MORTGAGE-BACKED SECURITIES RISK: In the case of mortgage-backed securities,
rising interest rates tend to extend the term to maturity of the
securities, making them even more susceptible to interest rate changes.
When interest rates drop, not only can the value of fixed income securities
drop, but the yield can drop, particularly where the yield on the fixed
income securities is tied to changes in interest rates, such as adjustable
mortgages. Also when interest rates drop, the holdings of mortgage-backed
securities by a Portfolio can reduce returns if the owners of the
underlying mortgages pay off their mortgages sooner than anticipated since
the funds prepaid will have to be reinvested at the then lower prevailing
rates. This is known as prepayment risk. When interest rates rise, the
holdings of mortgage-backed securities by a Portfolio can reduce returns if
the owners of the underlying mortgages pay off their mortgages later than
anticipated. This is known as extension risk.
INVESTMENT GRADE SECURITIES RISK: Debt securities are rated by national
bond ratings agencies. Securities rated BBB by S&P or Baa by Moody's are
considered investment grade securities, but are somewhat riskier than
higher rated obligations because they are regarded as having only an
adequate capacity to pay principal and interest, and are considered to lack
outstanding investment characteristics and may be speculative.
JUNK BONDS OR LOWER RATED SECURITIES RISK: Bonds rated below investment
grade by S&P and Moody's are speculative in nature, may be subject to
certain risks with respect to the issuing entity and to greater market
fluctuations than higher rated fixed income securities. They are usually
issued by companies without long track records of sales and earnings, or by
those companies with questionable credit strength. These bonds are
considered "below investment grade." The retail secondary market for these
"junk bonds" may be less liquid than that of higher rated securities and
adverse conditions could make it difficult at times to sell certain
securities or could result in lower prices than those used in calculating
the Portfolio's net asset value.
FOREIGN SECURITIES RISKS: A Portfolio's investments in foreign securities,
including depositary receipts, involve risks not associated with investing in
U.S. securities and can affect a Portfolio's performance. Foreign markets,
particularly emerging markets, may be less liquid, more volatile and subject
to less government supervision than domestic markets. There may be
difficulties enforcing contractual obligations, and it may take more time for
trades to clear and settle. The specific risks of investing in foreign
securities, among others, include:
CURRENCY RISK: The risk that changes in currency exchange rates will
negatively affect securities denominated in, and/or receiving revenues in,
foreign currencies. Adverse changes in currency exchange rates (relative to
the U.S. dollar) may erode or reverse any potential gains from a
Portfolio's investment in securities denominated in a foreign currency or
may widen existing losses.
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging market countries
---------------------------------------------------- EQ Advisors Trust
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and/or their securities markets. Generally, economic structures in these
countries are less diverse and mature than those in developed countries,
and their political systems are less stable. Investments in emerging
markets countries may be affected by national policies that restrict
foreign investment in certain issuers or industries. The small size of
their securities markets and low trading volumes can make investments
illiquid and more volatile than investments in developed countries and such
securities may be subject to abrupt and severe price declines. As a result,
a Portfolio investing in emerging markets countries may be required to
establish special custody or other arrangements before investing.
The YEAR 2000 PROBLEM may also be especially acute in emerging market
countries. Many emerging market countries are currently lagging behind more
developed countries in their Year 2000 preparedness because they lack the
financial resources to undertake the necessary remedial actions. A lack of
Year 2000 preparedness may adversely affect the health, security and
economic well-being of emerging market countries and could, obviously,
adversely affect the value of a Portfolio's investments in emerging market
countries. More information on the Year 2000 Problem is provided in this
section, under "GENERAL INVESTMENT RISKS-YEAR 2000 RISK."
EURO RISK: Certain of the Portfolios invests in securities issued by
European issuers. On January 1, 1999, 11 of the 15 member states of the
European Monetary Union ("EMU") introduced the "Euro" as a common currency.
During a three-year transitional period, the Euro will coexist with each
participating state's currency and, on July 1, 2002, the Euro is expected
to become the sole currency of the participating states. The introduction
of the Euro will result in the redenomination of European debt and equity
securities over a period of time, which may result in various legal and
accounting differences and/or tax treatments that otherwise would not
likely occur. During this period, the creation and implementation of
suitable clearing and settlement systems and other operational problems may
cause market disruptions that could adversely affect investments quoted in
the Euro.
The consequences of the Euro conversion for foreign exchange rates,
interest rates and the value of European securities eligible for purchase
by the Portfolios are presently unclear and it is not possible to predict
the eventual impact of the Euro implementation plan on the Portfolios.
There are a number of significant risks associated with EMU. Monetary and
economic union on this scale has never been attempted before. There is a
significant degree of uncertainty as to whether participating countries
will remain committed to EMU in the face of changing economic conditions.
The conversion may adversely affect a Portfolio if the Euro does not take
effect as planned or if a participating state withdraws from the EMU. Such
actions may adversely affect the value and/or increase the volatility of
securities held by the Portfolios.
POLITICAL/ECONOMIC RISK: Changes in economic and tax policies, government
instability, war or other political or economic actions or factors may have
an adverse effect on a Portfolio's foreign investments.
REGULATORY RISK: Less information may be available about foreign companies.
In general, foreign companies are not subject to uniform accounting,
auditing and financial reporting standards or to other regulatory practices
and requirements as are U.S. companies.
TRANSACTION COSTS RISK: The costs of buying and selling foreign securities,
including tax, brokerage and custody costs, generally are higher than those
involving domestic transactions.
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GROWTH INVESTING RISK: Growth investing generally focuses on companies that,
due to their strong earnings and revenue potential, offer above-average
prospects for capital growth, with less emphasis on dividend income. Earnings
predictability and confidence in earnings forecasts are an important part of
the selection process. As a result, the price of growth stocks may be more
sensitive to changes in current or expected earnings than the prices of other
stocks. Advisers using this approach generally seek out companies experiencing
some or all of the following: high sales growth, high unit growth, high or
improving returns on assets and equity, and a strong balance sheet. Such
Advisers also prefer companies with a competitive advantage such as unique
management, marketing or research and development. Growth investing is also
subject to the risk that the stock price of one or more companies will fall or
will fail to appreciate as anticipated by the Advisers, regardless of
movements in the securities market.
INDEX-FUND RISK: The BT Equity 500 Index, BT Small Company Index and BT
International Equity Index Portfolios are not actively managed (which involves
buying and selling of securities based upon economic, financial and market
analysis and investment judgment). Rather, the BT Equity 500 Index, BT Small
Company Index and BT International Equity Index Portfolios utilize a "passive"
or "indexing" investment approach and attempt to duplicate the investment
performance of the particular index the Portfolio is tracking (i.e., S&P 500
Index, Russell 2000 Index or MSCI EAFE Index) through statistical procedures.
Therefore, the Portfolios will invest in the securities included in the
relevant index or substantially identical securities regardless of market
trends. The Portfolios cannot modify their investment strategies to respond to
changes in the economy, which means they may be particularly susceptible to a
general decline in the U.S. or global stock market segment relating to the
relevant index.
LEVERAGING RISK: When a Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in that Portfolio will be more volatile
and all other risks will tend to be compounded. All of the Portfolios may take
on leveraging risk by investing in collateral from securities loans and by
borrowing money to meet redemption requests.
LIQUIDITY RISK: Certain securities held by a Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like. A
Portfolio may have to hold these securities longer than it would like and may
forego other investment opportunities. There is the possibility that a
Portfolio may lose money or be prevented from earning capital gains if it can
not sell a security at the time and price that is most beneficial to the
Portfolio. Portfolios that invest in privately-placed securities, high-yield
bonds, mortgage-backed securities or foreign or emerging markets securities,
which have all experienced periods of illiquidity, are subject to liquidity
risks. A particular Portfolio may be more susceptible to some of these risks
than others, as noted in the description of each Portfolio.
MONEY MARKET RISK: Although a money market fund is designed to be a relatively
low risk investment, it is not entirely free of risk. Despite the short
maturities and high credit quality of the Alliance Money Market Portfolio's
investments, increases in interest rates and deteriorations in the credit
quality of the instruments the Portfolio has purchased may reduce the
Portfolio's yield. In addition, the Portfolio is still subject to the risk
that the value of an investment may be eroded over time by inflation.
NON-DIVERSIFICATION RISK: The Morgan Stanley Emerging Markets Equity and
Merrill Lynch World Strategy Portfolios are classified as "non-diversified"
investment companies, which means that the proportion of each Portfolio's
assets that may be invested in the securities of a single issuer is not
limited by the 1940 Act. Since a relatively high percentage of each
non-diversified Portfolio's assets may be invested in the securities of a
limited number of issuers, some of which may be within the same industry, the
securities of each Portfolio may be more sensitive to changes in the market
value of a single issuer or industry.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
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The use of such a focused investment strategy may increase the volatility of a
Portfolio's investment performance, as the Portfolio may be more susceptible
to risks associated with a single economic, political or regulatory event than
a diversified portfolio. If the securities in which the Portfolio invests
perform poorly, the Portfolio could incur greater losses than it would have
had it been invested in a greater number of securities. However to qualify as
a regulated investment company ("RIC") under the Internal Revenue Code of
1986, as amended (the "Code") and receive pass through tax treatment, each
Portfolio at the close of each fiscal quarter, may not have more than 25% of
its total assets invested in the securities of any one issuer (excluding U.S.
Government obligations) and with respect to 50% of its assets, (i) may not
have more than 5% of its total assets invested in the securities of any one
issuer and (ii) may not own more than 10% of the outstanding voting securities
of any one issuer. Each non-diversified Portfolio intends to qualify as a RIC.
PORTFOLIO TURNOVER RISK: Consistent with their investment policies, the
Portfolios also will purchase and sell securities without regard to the effect
on portfolio turnover. Higher portfolio turnover (e.g., over 100% per year)
will cause a Portfolio to incur additional transaction costs and may result in
taxable gains being passed through to shareholders.
SECURITIES LENDING RISK: For purposes of realizing additional income, each
Portfolio may lend securities to broker-dealers approved by the Board of
Trustees. In addition, the Alliance High Yield and Alliance Intermediate
Government Securities Portfolios may each make secured loans of its portfolio
securities without restriction. Any such loan of portfolio securities will be
continuously secured by collateral at least equal to the value of the security
loaned. Such collateral will be in the form of cash, marketable securities
issued or guaranteed by the U.S. Government or its agencies, or a standby
letter of credit issued by qualified banks. 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 the 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.
SMALL-CAP AND MID-CAP COMPANY RISK: A Portfolio's investments in small-cap and
mid-cap companies may involve greater risks than investments in larger, more
established issuers. Smaller companies may have narrower product lines, more
limited financial resources and more limited trading markets for their stock,
as compared with larger companies. Their securities may be less well-known and
trade less frequently and in more limited volume than the securities of
larger, more established companies. In addition, small-cap and mid-cap
companies are typically subject to greater changes in earnings and business
prospects than larger companies. Consequently, the prices of small company
stocks tend to rise and fall in value more frequently than the stocks of
larger companies. Although investing in small-cap and mid-cap companies offers
potential for above-average returns, the companies may not succeed and the
value of their stock could decline significantly.
VALUE INVESTING RISK: Value investing attempts to identify strong companies
selling at a discount from their perceived true worth. Advisers using this
approach generally select stocks at prices, in their view, that are
temporarily low relative to the company's earnings, assets, cash flow and
dividends. Value investing is subject to the risk that the stocks' intrinsic
value may never be fully recognized or realized by the market, or their prices
may go down. In addition, there is the risk that a stock judged to be
undervalued may actually be appropriately priced. Value investing generally
emphasizes companies that, considering their assets and earnings history, are
attractively priced and may provide dividend income.
<PAGE>
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The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
4
Management of the Trust
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This section gives you information on the Trust, the Manager and the Advisers
for the Portfolios. More detailed information concerning each of the Advisers
and portfolio managers is included in the description for each Portfolio in
the section "About The Investment Portfolios."
THE TRUST
The Trust is organized as a Delaware business trust and is registered with the
Securities and Exchange Commission ("SEC") as an open-end management
investment company. The Trust issues shares of beneficial interest that are
currently divided among forty (40) Portfolios, each of which has authorized
Class IA and Class IB shares. Each Portfolio has its own objectives,
investment strategies and risks, which have been previously described in this
prospectus.
THE MANAGER
EQ Financial Consultants, Inc. ("EQFC"), 1290 Avenue of the Americas, New
York, New York 10104, currently serves as the Manager of the Trust. The Board
of Trustees of the Trust has approved a transfer to Equitable of the Trust's
Investment Management Agreement with EQFC. This transfer is expected to be
completed in September 1999. Upon completion of the transfer, Equitable will
serve as the Manager of the Trust. However, until completion of the transfer,
EQFC will continue to serve in that capacity. Equitable, 1290 Avenue of the
Americas, New York, New York 10104, is the indirect corporate parent of EQFC.
Both EQFC and Equitable are investment advisers registered under the
Investment Advisers Act of 1940, as amended, and EQFC is a broker-dealer
registered under the Securities Exchange Act of 1934, as amended.
Subject to the supervision and direction of the Board of Trustees, the Manager
has overall responsibility for the general management and administration of
the Trust. In the exercise of that responsibility, the Manager, without
obtaining shareholder approval but subject to the review and approval by the
Board of Trustees, may: (i) select the Advisers for the Portfolios; (ii) enter
into and materially modify existing investment advisory agreements; and (iii)
terminate and replace the Advisers. The Manager also monitors each Adviser's
investment program 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 also supervises the provision
of services by third parties such as the Trust's custodian and administrator.
The Manager has filed an application ("Substitution Application") requesting
that the SEC approve the substitution of Class IA and Class IB shares of 14
new Portfolios of the Trust for the same class of shares of corresponding
portfolios of The Hudson River Trust ("HRT"). Alliance Capital Management L.P.
("Alliance") will serve as Adviser for each of those 14 new Portfolios. The
Substitution Application states that, with respect to those 14 new Portfolios
advised by Alliance, the Manager will not use the powers granted to it under
the Multi-Manager Order (i) to terminate Alliance and select a new Adviser for
those Portfolios or (ii) to materially modify the Investment Advisory
Agreement between the Manager and Alliance without first obtaining shareholder
approval to utilize the powers granted under the Multi-Manager Order or the
approval of shareholders to materially modify the Investment Advisory
Agreement.
<PAGE>
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The table below shows the annual rate of the management fees (as a percentage of
each Portfolio's average daily net assets) that the Manager received in 1998 for
managing each of the Portfolios and the rate of the management fees waived by
the Manager in 1998 in accordance with the provisions of the Expense Limitation
Agreement, as defined directly below, between the Manager and the Trust.
MANAGEMENT FEES PAID BY THE PORTFOLIOS TO EQ FINANCIAL CONSULTANTS, INC. IN 1998
ANNUAL RATE OF
RATE FEES
PORTFOLIOS RECEIVED WAIVED
BT Equity 500 Index 0.00% 0.25%
BT International Equity Index 0.00% 0.35%
BT Small Company Index 0.00% 0.25%
Merrill Lynch Basic Value Equity 0.34% 0.21%
Merrill Lynch World Strategy 0.26% 0.44%
MFS Emerging Growth 0.36% 0.19%
Companies
MFS Research 0.35% 0.20%
Morgan Stanley Emerging 0.33% 0.82%
Markets Equity
T. Rowe Price Equity Income 0.36% 0.19%
T. Rowe Price International Stock 0.54% 0.21%
Warburg Pincus Small Company 0.47% 0.18%
Value
The seventeen (17) Portfolios listed in the table below did not commence
operations during 1998. The table below shows the annual rate of the
management fees (as a percentage of each Portfolio's average daily net assets)
that the Manager is entitled to receive in 1999 for managing each of these
Portfolios. As explained in the next section, the Portfolio listed below
(except for the Portfolios for which Alliance serves as Investment Adviser
other than EQ/Alliance Premier Growth Portfolio) are subject to an expense
limitation agreement between the Trust and Manager, which affects the rate of
management fees to be received by the Manager on behalf of each Portfolio.
ANNUAL RATE OF MANAGEMENT FEES
<TABLE>
<CAPTION>
PORTFOLIOS ANNUAL RATE
<S> <C>
Alliance Aggressive Stock (3) 0.54%
Alliance Common Stock (3) 0.36%
Alliance Conservative Investors (3) 0.48%
Alliance Global (3) 0.64%
Alliance Growth and Income (3) 0.55%
Alliance Growth Investors (3) 0.51%
Alliance High Yield (3) 0.60%
Alliance Intermediate Government 0.50%
Securities (3)
Alliance International (3) 0.90%
Alliance Money Market (3) 0.35%
Alliance Small Cap Growth (3) 0.90%
Capital Guardian Research (1) 0.65%
Capital Guardian U.S. Equity (1) 0.65%
EQ/Alliance Premier Growth (1) 0.90%
EQ/Evergreen (2) 0.75%
EQ/Evergreen Foundation (2) 0.63%
MFS Growth with Income (2) 0.55%
</TABLE>
(1) The inception date for this Portfolio was April 30, 1999.
(2) The inception date for this Portfolio was December 31, 1998.
(3) The inception date for this Portfolio is October 18, 1999.
EXPENSE LIMITATION AGREEMENT
In the interest of limiting expenses of each Portfolio (except for the
Portfolios for which Alliance serves as Investment Adviser, other than
EQ/Alliance Premier Growth Portfolio), the Manager has entered into an expense
limitation agreement with the Trust with respect to each Portfolio ("Expense
Limitation Agreement"). Pursuant to that Expense Limitation Agreement, the
Manager has agreed to waive or limit its fees and to assume other expenses so
that the total annual operating expenses of each Portfolio other than interest,
taxes, brokerage commissions, other expenditures which are capitalized in
accordance with generally accepted accounting principles, other extraordinary
expenses not incurred in the ordinary course of each Portfolio's business
---------------------------------------------------- EQ Advisors Trust
<PAGE>
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and amounts payable pursuant to a plan adopted in accordance with Rule 12b-1
under the 1940 Act, are limited to the following fees:
EXPENSE LIMITATION RATES
AMOUNT EXPENSES
LIMITED TO (% OF
PORTFOLIOS DAILY NET ASSETS)
- -------------------------------------------------------------
BT Equity 500 Index 0.30%
BT International Equity Index 0.75%
BT Small Company Index 0.50%
Capital Guardian Research 0.70%
Capital Guardian U.S. Equity 0.70%
EQ/Alliance Premier Growth 0.90%
EQ/Evergreen 0.80%
EQ/Evergreen Foundation 0.70%
Merrill Lynch Basic Value Equity 0.60%
Merrill Lynch World Strategy 0.95%
MFS Emerging Growth Companies 0.60%
MFS Growth with Income 0.60%
MFS Research 0.60%
Morgan Stanley Emerging Markets 1.50%
Equity
T. Rowe Price Equity Income 0.60%
T. Rowe Price International Stock 0.95%
Warburg Pincus Small Company Value 0.75%
Each Portfolio may at a later date reimburse to the Manager the management
fees waived or limited and other expenses assumed and paid by the Manager
pursuant to the Expense Limitation Agreement provided such Portfolio has
reached a sufficient asset size to permit such reimbursement to be made
without causing the total annual expense ratio of each Portfolio to exceed the
percentage limits stated above. Consequently, no reimbursement by a Portfolio
will be made unless: (i) the Portfolio's assets exceed $100 million;
(ii) the Portfolio's total annual expense ratio is less than the respective
percentages stated above; and (iii) the payment of such reimbursement has been
approved by the Trust's Board of Trustees on a quarterly basis.
The total amount of reimbursement to which the Manager may be entitled will
equal, at any time, the sum of (i) all investment management fees previously
waived or reduced by the Manager and (ii) all other payments previously
remitted by the Manager to the Portfolio during any of the previous five (5)
fiscal years, less any reimbursement that the Portfolio has previously paid to
the Manager with respect to (a) such investment management fees previously
waived or reduced and (b) such other payments previously remitted by the
Manager to the Portfolio.
THE ADVISERS
Each Portfolio has an Adviser that furnishes an investment program for the
Portfolio pursuant to an investment advisory agreement with the Manager. Each
Adviser 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.
The Manager has received an exemptive order, the Multi-Manager Order, from the
SEC that permits the Manager, subject to board approval 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. In
such circumstances, shareholders would receive notice of such action,
including the information concerning the Adviser that normally is provided in
the Prospectus.
The Manager and certain non-affiliated insurance companies and certain of
their separate accounts (collectively, "Applicants") have filed a Substitution
Application with the SEC. Applicants have included, as a term of the
Substitution
<PAGE>
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Application, that with respect to those Portfolios for which Alliance serves
as Adviser (other than the EQ/Alliance Premier Growth Portfolio, which will
not be substituted for a portfolio of HRT), the Manager will not: (i)
terminate Alliance and select a new Adviser for those Portfolios or (ii)
materially modify the existing investment advisory agreement without first
either obtaining approval of shareholders for such actions or obtaining
approval of shareholders to utilize the Multi-Manager Order.
The Manager pays each Adviser a fee based on the Portfolio's average daily net
assets. No Portfolio is responsible for the fees paid to each of the Advisers.
THE ADMINISTRATOR
Pursuant to an agreement, Chase Global Funds Services Company ("Administrator")
assists the Manager in the performance of its administrative responsibilities to
the Trust and provides the Trust with other necessary administrative, fund
accounting and compliance services. In addition, the Administrator makes
available the office space, equipment, personnel and facilities required to
provide such services to the Trust. For these services, the Trust pays the
Administrator a monthly fee at the annual rate of .0525 of 1% of the total Trust
assets, plus $25,000 for each Portfolio, until the total Trust assets reach $2.0
billion, and when the total Trust assets exceed $2.0 billion: .0425 of 1% of the
next $0.5 billion of the total Trust assets; .035 of 1% of the next $2.0 billion
of the total Trust assets; .025 of 1% of the next $1.0 billion of the total
Trust assets; .015 of 1% of the next $2.5 billion of the total Trust assets; .01
of 1% of the total Trust assets in excess of $8.0 billion; provided, however,
that the annual fee payable to Chase with respect to any Portfolio which
commenced operations after July 1, 1997 and whose assets do not exceed $200
million shall be computed at the annual rate of .0525% of 1% of the Portfolio's
total assets plus $25,000.
THE TRANSFER AGENT
Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.
BROKERAGE PRACTICES
In selecting brokers and dealers, the Manager and each Adviser may consider
research and brokerage services furnished to either company and their
affiliates. Subject to seeking the most favorable net price and execution
available, the Manager and each Adviser may also consider sales of shares of
the Trust as a factor in the selection of brokers and dealers.
BROKERAGE TRANSACTIONS WITH AFFILIATES
To the extent permitted by law, the Trust may engage in securities and other
transactions with entities that may be affiliated with the Manager or the
Advisers. 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. For these purposes,
however, the Trust has considered this issue and believes, based upon advice
of counsel, that a broker-dealer affiliate of an Adviser to one Portfolio
should not be treated as an affiliate of the Adviser to another Portfolio for
which such Adviser does not provide investment advice. The Trust has adopted
procedures that 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. The Trust has also 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.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
5
Fund distribution arrangements
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The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc., ("EQFC") serves as
one of the distributors for the Class IB shares of the Trust offered by this
Prospectus as well as one of the distributors for the Class IA shares.
Equitable Distributors, Inc. ("EDI") serves as the other distributor for the
Class IB shares of the Trust as well as the Class IA shares. Both classes of
shares are offered and redeemed at their net asset value without any sales
load. EQFC and EDI are affiliates of Equitable. Both EQFC and EDI are
registered as broker-dealers under the Securities Exchange Act of 1934 and are
members of the National Association of Securities Dealers, Inc.
The Trust has adopted a Distribution Plan under Rule 12b-1 under the 1940 Act
for the Trust's Class IB shares. Under the Class IB Distribution Plan the
Class IB shares of the Trust pay each of the distributors an annual fee to
compensate them for promoting, selling and servicing shares of the Portfolios.
The annual fees equal 0.25% of each Portfolio's average daily net assets. Over
time, the fees will increase your cost of investing and may cost you more than
other types of charges.
<PAGE>
6
Purchase and redemption
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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 or qualified retirement plan 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 and class related 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
days on which the New York Stock Exchange ("NYSE") is closed for trading.
Portfolios that invest a significant portion of their assets in foreign
securities, may experience changes in their net asset value on days when a
shareholder may not purchase or redeem shares of that Portfolio because
foreign securities (other than depositary receipts) are valued at the close of
business in the applicable foreign country.
All shares are purchased and redeemed in accordance with the Trust's Amended
and Restated Declaration of Trust and By-Laws. Sales and redemptions of shares
of the same class by the same shareholder on the same day will be netted for
each Portfolio. All redemption requests will be processed and payment with
respect thereto will normally be made within seven days after tenders.
The Trust may suspend redemption, if permitted by the 1940 Act, for any period
during which the New York Stock Exchange is closed or during which trading is
restricted by the SEC or the SEC declares that an emergency exists. Redemption
may also be suspended during other periods permitted by the SEC for the
protection of the Trust's shareholders. If the Board of Trustees determines
that it would be detrimental to the best interest of the Trust's remaining
shareholders to make payment in cash, the Trust may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.
<PAGE>
7
How assets are valued
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Values are determined according to accepted practices and all laws and
regulations that apply. The assets of each Portfolio are generally valued as
follows:
o Stocks and debt securities which mature in more than 60 days are valued on
the basis of market quotations.
o Foreign securities not traded directly, or in American Depository Receipts
or similar form, in the United States are valued at representative quoted
prices in the currency in the country of origin. Foreign currency is
converted into United States dollar equivalents at current exchange rates.
Because foreign markets may be open at different times than the NYSE, the
value of a Portfolio's shares may change on days when shareholders are not
able to buy or sell them. If events materially affecting the values of the
Portfolios' foreign investments occur between the close of foreign markets
and the close of regular trading on the NYSE, these investments may be
valued at their fair value.
o Short-term debt securities in the Portfolios, other than the Alliance Money
Market Portfolio, which mature in 60 days or less are valued at amortized
cost, which approximates market value. Securities held in the Alliance
Money Market Portfolio are valued at prices based on equivalent yields or
yield spreads.
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.
<PAGE>
8
Tax information
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Each Portfolio of the Trust is a separate regulated investment company for
federal income tax purposes. Regulated investment companies are usually not
taxed at the entity (Portfolio) level. They pass through their income and
gains to their shareholders by paying dividends. Their shareholders include
this income on their respective tax returns. A Portfolio will be treated as a
regulated investment company if it meets specified federal income tax rules,
including types of investments, limits on investments, calculation of income,
and dividend payment requirements. Although the Trust intends that it and each
Portfolio will be operated to have no federal tax liability, if they have any
federal tax liability, that could hurt the investment performance of the
Portfolio in question. Also, any Portfolio investing in foreign securities or
holding foreign currencies could be subject to foreign taxes which could
reduce the investment performance of the Portfolio.
It is important for each Portfolio to maintain its federal income tax
regulated investment company status because the shareholders of the Portfolio
that are insurance company separate accounts will then be able to use a
favorable federal income tax investment diversification testing rule in
figuring out whether the Contracts indirectly funded by the Portfolio meet tax
qualification rules for variable insurance contracts. If a Portfolio fails to
meet specified investment diversification requirements, owners of non-pension
plan Contracts funded through the Trust could be taxed immediately on the
accumulated investment earnings under their Contracts and could lose any
benefit of tax deferral. The Administrator and the Manager therefore carefully
monitor compliance with all of the regulated investment company rules and
variable insurance contract investment diversification rules.
<PAGE>
9
Prior performance of each adviser
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The following table provides information concerning the historical performance
of another registered investment company (or series) or other institutional
private accounts managed by each Adviser that has investment objectives,
policies, strategies and risks substantially similar to those of the
respective Portfolio(s) of the Trust for which it serves as Adviser. 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. This data 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 and should not confuse this performance data with performance data
for each of the Trust's Portfolios, which is shown for each Portfolio under
the caption "ABOUT THE INVESTMENT PORTFOLIOS."
Each Adviser's performance data shown below for other registered investment
companies (or series thereof) was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Average annual total return
reflects changes in share prices and reinvestment of dividends and
distributions and is net of fund expenses. In each such instance, the share
prices and investment returns will fluctuate, reflecting market conditions as
well as changes in company-specific fundamentals of portfolio securities.
Composite performance data relating to the historical performance of
institutional private accounts managed by the relevant Adviser was calculated
on a total return basis and includes all losses. As specified below, this
composite performance data is provided only for the Capital Guardian U.S.
Equity Research Portfolio Diversified Composite, and the Capital Guardian U.S.
Equity Composite, (collectively, the "Composites"). The total returns for each
Composite reflect the deduction of investment advisory fees, brokerage
commissions and execution costs paid by Capital Guardian's institutional
private accounts, without provision for federal or state income taxes.
Custodial fees, if any, were not included in the calculation. Each Composite
includes all actual, fee-paying, discretionary institutional private accounts
managed by Capital Guardian that have investment objectives, policies,
strategies and risks substantially similar to those of the relevant Portfolio.
Securities transactions are accounted for on the trade date and accrual
accounting is utilized. Cash and equivalents are included in performance
returns. The institutional private accounts that are included in the Composite
are not subject to the same types of expenses to which the relevant Portfolio
is subject or to the diversification requirements, specific tax restrictions
and investment limitations imposed on the Portfolio by the 1940 Act or
Subchapter M of the Internal Revenue Code. Consequently, the performance
results for the Composite could have been adversely affected if the
institutional private accounts included in the Composite had been regulated as
investment companies under the federal securities laws.
The major difference between the SEC prescribed calculation of average annual
total returns for registered investment companies or (series thereof) and
total returns for composite performance is that average annual total returns
reflects all fees and charges applicable to the registered investment company
in question and the total return calculation for the Composite reflects only
those fees and charges described in the paragraph directly above.
The performance results for the registered investment companies or Composite
presented below are subject to somewhat lower fees and expenses than the
relevant Portfolios although in most instances the fees and expenses are
substantially similar. In addition, holders of Contracts representing
interests in the Portfolios below will be subject to charges and expenses
relating to such Contracts. The performance results presented below do not
reflect any insurance related expenses and would be reduced if such charges
were reflected.
<PAGE>
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The investment results presented below are unaudited. For more information on
the specified market indices used below, see the section "The Benchmarks."
ANNUAL RATES OF RETURN OF OTHER FUNDS OR ACCOUNTS MANAGED BY ADVISERS AS OF
12/31/98
The name of the other fund or account managed by the Adviser is shown in BOLD.
The name of the Trust Portfolio is shown in (parentheses). The name of the
benchmark is shown in italics.
<TABLE>
<CAPTION>
1 5 10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Year Years Years Inception Date
- ----------------------------------------------------------- =========== =========== =========== =========== ============
<S> <C> <C> <C> <C> <C>
Benchmark
===========================================================
ALLIANCE PREMIER GROWTH FUND, INC. - ADVISOR CLASS(1) (EQ/ALLIANCE PREMIER GROWTH PORTFOLIO)
49.85% N/A N/A 42.97% 10/1/96
S&P 500 Index(3) 28.57% N/A N/A 21.60%
=========================================================== ===== ===== ===== =====
BT ADVISORS FUNDS - EAFE EQUITY INDEX FUND - INSTITUTIONAL CLASS (BT INTERNATIONAL EQUITY INDEX PORTFOLIO)
19.81% N/A N/A 9.69% 1/24/96
MSCI EAFE Index(5) 20.33% N/A N/A 9.70%
=========================================================== ===== ===== ===== =====
BT ADVISORS FUNDS - SMALL CAP INDEX FUND-INSTITUTIONAL CLASS (BT SMALL COMPANY INDEX PORTFOLIO)
(2.60)% N/A N/A 11.58% 7/10/96
Russell 2000 Index(4) (2.54)% N/A N/A 11.85%
=========================================================== ===== ===== ===== =====
BT INSTITUTIONAL FUNDS - EQUITY 500 INDEX FUND - INSTITUTIONAL CLASS (BT EQUITY 500 INDEX PORTFOLIO)
28.75% 24.05% N/A 21.56% 12/31/92
S&P 500 Index(3) 28.57% 24.06% N/A 21.61%
=========================================================== ===== ========= ===== =====
CAPITAL GUARDIAN U.S. EQUITY COMPOSITE (CAPITAL GUARDIAN U.S. EQUITY PORTFOLIO)
22.76% 22.15% 17.95% 12/31/66
S&P 500 Index(3) 28.57% 24.06% 19.21%
=========================================================== ===== ========= =====
CAPITAL GUARDIAN U.S. EQUITY RESEARCH PORTFOLIO - DIVERSIFIED COMPOSITE (CAPITAL GUARDIAN RESEARCH PORTFOLIO)
28.33% 24.41% N/A 21.62% 3/31/93
S&P 500 Index(3) 28.57% 24.06% N/A 21.68%
=========================================================== ===== ========= ===== =====
EVERGREEN FUND - CLASS Y SHARES (EQ/EVERGREEN PORTFOLIO)
7.23% 17.82% 14.72% 10/15/71
Russell 2000 Index(4) (2.54)% 11.86% 12.94%
EVERGREEN FOUNDATION FUND - CLASS Y SHARES (EQ/EVERGREEN FOUNDATION PORTFOLIO)
12.21% 15.06% N/A 16.89% 1/2/90
S&P 500 Index(3) 28.57% 24.06% N/A 18.82%
=========================================================== ===== ========= ===== =====
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
112
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1 5
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Year Years
- ------------------------------------------------------------------------------------------ ============= ===========
<S> <C> <C>
MASSACHUSETTS INVESTORS TRUST(2) (MFS GROWTH WITH INCOME PORTFOLIO)
22.95% 22.97%
S&P 500 Index(3) 28.57% 24.06%
========================================================================================== ====== =====
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH BASIC VALUE FOCUS FUND (MERRILL LYNCH BASIC VALUE
EQUITY PORTFOLIO)
9.44% 15.40%
S&P 500 Index(3) 28.57% 24.06%
========================================================================================== ====== =====
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND (MERRILL LYNCH WORLD
STRATEGY PORTFOLIO)
8.88% 8.49%
MSCI EAFE Index(5) 20.33% 9.50%
========================================================================================== ====== =====
MFS EMERGING GROWTH FUND6 (MFS EMERGING GROWTH COMPANIES PORTFOLIO)
23.56% 19.66%
Russell 2000 Index(4) (2.54)% 11.86%
========================================================================================== ====== =====
MFS RESEARCH FUND(2), (6) (MFS RESEARCH PORTFOLIO)
22.92% 20.65%
S&P 500 Index(3) 28.57% 24.06%
========================================================================================== ====== =====
MORGAN STANLEY INSTITUTIONAL FUND, INC. - EMERGING MARKETS PORTFOLIO7 (MORGAN STANLEY EMERGING MARKETS
EQUITY PORTFOLIO)
(25.40)% (8.20)%
IFC Global Total Return Composite Index(8) (21.10)% (8.70)%
========================================================================================== ====== =====
T. ROWE PRICE EQUITY INCOME FUND (T. ROWE PRICE EQUITY INCOME PORTFOLIO)
9.23% 18.75%
S&P 500 Index(3) 28.57% 24.06%
========================================================================================== ====== =====
T. ROWE PRICE INTERNATIONAL STOCK FUND (T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO)
16.14% 8.87%
MSCI EAFE Index(5) 20.33% 9.50%
========================================================================================== ====== =====
WARBURG PINCUS SMALL COMPANY VALUE FUND9 (WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO)
(14.88)% N/A
Russell 2000 Index(4) (2.54)% N/A
========================================================================================== ====== =====
<CAPTION>
10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Years Inception Date
- ------------------------------------------------------------------------------------------ =========== =========== =============
<S> <C> <C> <C>
MASSACHUSETTS INVESTORS TRUST2 (MFS GROWTH WITH INCOME PORTFOLIO)
19.15% 7/15/24
S&P 500 Index(3) 19.21%
========================================================================================== =====
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH BASIC VALUE FOCUS FUND (MERRILL LYNCH BASIC VALUE
EQUITY PORTFOLIO)
N/A 15.80% 7/1/93
S&P 500 Index(3) N/A 22.74%
========================================================================================== ===== =====
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND (MERRILL LYNCH WORLD
STRATEGY PORTFOLIO)
N/A 9.57% 2/28/92
MSCI EAFE Index(5) N/A 9.98%
========================================================================================== ===== =====
MFS EMERGING GROWTH FUND(6) (MFS EMERGING GROWTH COMPANIES PORTFOLIO)
22.94% 12/29/86
Russell 2000 Index(4) 12.94%
========================================================================================== =====
MFS RESEARCH FUND(2), (6) (MFS RESEARCH PORTFOLIO)
18.44% 10/13/71
S&P 500 Index(3) 19.21%
========================================================================================== ======
MORGAN STANLEY INSTITUTIONAL FUND, INC. - EMERGING MARKETS PORTFOLIO(7) (MORGAN STANLEY EMERGING MARKETS
EQUITY PORTFOLIO)
N/A 3.50% 9/25/92
IFC Global Total Return Composite Index(8) N/A 1.90%
========================================================================================== ====== =====
T. ROWE PRICE EQUITY INCOME FUND (T. ROWE PRICE EQUITY INCOME PORTFOLIO)
15.18% 10/31/85
S&P 500 Index(3) 19.21%
========================================================================================== =====
T. ROWE PRICE INTERNATIONAL STOCK FUND (T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO)
10.45% 5/9/80
MSCI EAFE Index(5) 5.85%
========================================================================================== =====
WARBURG PINCUS SMALL COMPANY VALUE FUND9 (WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO)
N/A 16.51% 12/29/95
Russell 2000 Index(4) N/A 11.58%
</TABLE>
(1) Annualized performance for the Advisor Class shares. The Advisor Class
shares had a total expense ratio of 1.26% of its average daily net assets
for the year ended December 31, 1998. Other share classes have different
expenses and their performance will vary.
(2) Performance for the Class A shares. The Class A shares are in many
instances subject to a front-end sales charge of up to 5.75%. Other share
classes have different expenses and their performance will vary.
(3) The S&P 500 Index ("S&P 500") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the larger capitalization portion
of the United States stock market. The S&P 500 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) The Russell 2000 Index is an unmanaged index (with no defined investment
objective) composed of approximately 2,000 small-capitalization stocks and
includes reinvestments of dividends. The index does not include fees or
operating expenses and is not available for actual investment. It is
compiled by the Frank Russell Company.
<PAGE>
- -----
113
- --------------------------------------------------------------------------------
(5) The Morgan Stanley Capital International EAFE Index ("EAFE Index") is an
unmanaged capitalization-weighted measure of stock markets in Europe,
Australia and the Far East. The returns of the EAFE Index assume dividends
are reinvested net of withholding tax and do not reflect any fees or
operating expenses. The index is not available for actual investment.
(6) The results for the MFS Research Fund (Class A shares) and the MFS Emerging
Growth Fund (Class B shares) do not reflect sales charges that may be
imposed on the such shares.
(7) Performance for the Class A shares of the Morgan Stanley Institutional
Fund, Inc. - Emerging Markets Portfolio. The Class B shares of the Morgan
Stanley Institutional Fund, Inc. - Emerging Markets Portfolio are subject
to a Rule 12b-1 fee equal to 0.25% of the Portfolio's assets. The expense
ratio of Morgan Stanley Institutional Fund, Inc. - Emerging Markets
Portfolio has been capped at 1.75% since inception.
(8) The IFC Global Total Return Composite Index is an unmanaged index of common
stocks and includes developing countries in Latin America, East and South
Asia, Europe, the Middle East and Africa. The Index assumes dividends are
reinvested.
(9) Absent the waiver of fees in 1998 by the Warburg Pincus Small Company Value
Fund's investment adviser and co-administrator, management fees of the
Warburg Pincus Small Company Value Fund would equal 1.00%, other expenses
would equal 0.94% and total operating expenses would equal 21.9%. The
investment adviser and co-adminstrator of the Warburg Pincus Small Company
Value Fund are under no obligation to continue these waivers.
------------------------- EQ Advisors Trust
<PAGE>
10
Financial Highlights
- -------
114
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Trust's
financial performance since May 1, 1997. The Trust began to offer Class IA
shares for the T. Rowe Price Equity Income, MFS Emerging Growth Companies,
Warburg Pincus Small Company Value and BT International Equity Portfolios on
November 24, 1998. Except for those four Portfolios, the financial information
in the table below for the period May 1, 1997 to December 31, 1998 relates only
to the Class IB shares. The financial information relating to both the Class IA
shares and the Class IB shares has been derived from the audited financial
statements of the Trust. These financial statements have been audited by
PricewaterhouseCoopers LLP, independent public accountants.
PricewaterhouseCoopers LLP's report on the Trust's financial statements as of
December 31, 1998 appears in the Trust's Annual Report. The information should
be read in conjunction with the financial statements contained in the Trust's
Annual Report which are incorporated by reference into the Trust's Statement of
Additional Information (SAI) and available upon request.
NET
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET ASSET ON
VALUE, INVESTMENTS
BEGINNING NET AND FOREIGN
OF INVESTMENT CURRENCY
PERIOD INCOME TRANSACTIONS
- ----------------------------------------------------------------------------
BT EQUITY 500 INDEX PORTFOLIO
- ----------------------------------------------------------------------------
Dec. 31, 1998 $ 10.00 $ 0.06 $ 2.45
- ----------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ----------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX PORTFOLIO
- ----------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 10.00 $ 0.08 $ 1.92
- ----------------------------------------------------------------------------
Class IB Dec. 31, 1997 - - -
- ----------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 11.67 $ 0.03 $ 0.31
- ----------------------------------------------------------------------------
BT SMALL COMPANY INDEX PORTFOLIO
- ----------------------------------------------------------------------------
Dec. 31, 1998 $ 10.00 $ 0.07 $ (0.30)
- ----------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ----------------------------------------------------------------------------
<TABLE>
<CAPTION>
DIVIDENDS IN
DIVIDENDS EXCESS OF DISTRIBUTIONS
TOTAL FROM FROM NET NET FROM
INVESTMENT INVESTMENT INVESTMENT REALIZED
OPERATIONS INCOME INCOME GAINS
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ----------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 2.51 $ (0.06) - -
- ----------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- ----------------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX PORTFOLIO
- ----------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 2.00 $ (0.15) - -
- ----------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 - - - -
- ----------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 0.34 $ (0.17) - -
- ----------------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX PORTFOLIO
- ----------------------------------------------------------------------------------------------
Dec. 31, 1998 $ (0.23) $ (0.07) - $(0.13)
- ----------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- ----------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -----
115
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
DISTRIBUTIONS TOTAL NET ASSET
IN EXCESS OF DIVIDENDS AND VALUE, END OF
REALIZED GAINS DISTRIBUTIONS PERIOD
---------------- --------------- ---------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ----------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.06) $ 12.45
- ----------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ----------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX PORTFOLIO
- ----------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - $ (0.15) $ 11.85
- ----------------------------------------------------------------------------------
Class IB Dec. 31, 1997 - - -
- ----------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - $ (0.17) $ 11.84
- ----------------------------------------------------------------------------------
BT SMALL COMPANY INDEX PORTFOLIO
- ----------------------------------------------------------------------------------
Dec. 31, 1998 $ (0.01) $ (0.21) $ 9.56
- ----------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ----------------------------------------------------------------------------------
<CAPTION>
RATIO OF
EXPENSES TO
NET ASSETS, AVERAGE NET
TOTAL RETURN END OF PERIOD ASSETS AFTER
(B) (000'S) WAIVERS (A)(C)
--------------- --------------- ---------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------
Dec. 31, 1998 25.14% $224,247 0.55%
- ---------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------
BT INTERNATIONAL EQUITY INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 20.07% $ 48,075 0.84%(1)
- ---------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 2.94%(b) $ 735 0.59%(a)(1)
- ---------------------------------------------------------------------------------------
BT SMALL COMPANY INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------
Dec. 31, 1998 (2.27)% $ 32,609 0.60%
- ---------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
116
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NET
REALIZED
AND
UNREALIZED
GAIN (LOSS) DIVIDENDS
NET ASSET ON IN
VALUE, INVESTMENTS DIVIDENDS EXCESS OF DISTRIBUTIONS
BEGINNING NET AND FOREIGN TOTAL FROM FROM NET NET FROM
OF INVESTMENT CURRENCY INVESTMENT INVESTMENT INVESTMENT REALIZED
PERIOD INCOME TRANSACTIONS OPERATIONS INCOME INCOME GAINS
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 11.58 $ 0.12 $ 1.21 $ 1.33 $ (0.12) - $(0.43)
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.06 $ 1.64 $ 1.70 $ (0.06) - $(0.05)
- -----------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY POR FOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 10.31 $ 0.15 $ 0.55 $ 0.70 $ (0.04) $ (0.04) -
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.08 $ 0.39 $ 0.47 $ (0.05) - -
- -----------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PO TFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 11.92 $ (0.03) $ 4.15 $ 4.12 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 10.00 $ 0.02 $ 2.21 $ 2.23 $ (0.02) - $(0.18)
- -----------------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 14.18 - $ 1.86 $ 1.86 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 11.48 $ 0.04 $ 2.73 $ 2.77 $ (0.04) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.02 $ 1.58 $ 1.60 $ (0.02) - $(0.01)
- -----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS QUITY PORTFO IO
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 7.96 $ 0.03 $ (2.18) $ (2.15) $ (0.02) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.04 $ (2.06) $ (2.02) $ (0.02) - -
- -----------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORT OLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 12.08 $ 0.22 $ 0.87 $ 1.09 $ (0.22) - $(0.28)
- -----------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 10.00 $ 0.10 $ 2.11 $ 2.21 $ (0.09) - $(0.04)
- -----------------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 13.22 $ 0.06 $ (0.09)\^ $ (0.03) $ (0.24) - $(0.28)
- -----------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOC PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Dec 31, 1998 $ 9.85 $ 0.06 $ 1.28 $ 1.34 $ (0.07) $ (0.02) -
- -----------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.02 $ (0.17) $ (0.15) - - -
- -----------------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VAL E PORTFOLIO
- -----------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 11.85 $ 0.05 $ (1.24) $ (1.19) $ (0.04) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 10.00 $ 0.01 $ 1.90 $ 1.91 $ (0.01) - -
- -----------------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 10.40 $ 0.03 $ 0.23\^ $ 0.26 $ (0.06) - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -----
117
- --------------------------------------------------------------------------------
DISTRIBUTIONS TOTAL NET ASSET
IN EXCESS OF DIVIDENDS AND VALUE, END OF
REALIZED GAINS DISTRIBUTIONS PERIOD
---------------- --------------- --------------
MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.55) $ 12.36
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ (0.01) $ (0.12) $ 11.58
- --------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.08) $ 10.93
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ (0.11) $ (0.16) $ 10.31
- --------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - - $ 16.04
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ (0.11) $ (0.31) $ 11.92
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - - $ 16.04
- --------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.04) $ 14.21
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ (0.09) $ (0.12) $ 11.48
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.02) $ 5.79
- --------------------------------------------------------------------------------
Dec. 31, 1997 - $ (0.02) $ 7.96
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - $ (0.50) $ 12.67
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 - $ (0.13) $ 12.08
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - $ (0.52) $ 12.67
- --------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.09) $ 11.10
- --------------------------------------------------------------------------------
Dec. 31, 1997 - - $ 9.85
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - $ (0.05) $ 10.61
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ (0.05) $ (0.06) $ 11.85
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - $ (0.07) $ 10.59
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF
EXPENSES TO
NET ASSETS, AVERAGE NET
TOTAL RETURN END OF PERIOD ASSETS AFTER
(B) (000'S) WAIVERS (A)(C)
------------------- --------------- ---------------------
<S> <C> <C> <C>
MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 11.59% $174,104 0.85%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 16.99% $ 49,495 0.85%
- -------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 6.81% $ 30,631 1.20%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 4.70% $ 18,210 1.20%
- -------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 34.57% $461,307 0.85%(1)
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 22.42% $ 99,317 0.85%(a)
- -------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 13.12% $ 5,978 0.60%(a)(1)
- -------------------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 24.11% $407,619 0.85%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 16.07% $114,754 0.85%
- -------------------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 (27.10)% $ 41,359 1.81%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 (20.16)% $ 21,433 1.75%
- -------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 9.11% $242,001 0.85%(1)
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 22.11% $ 99,947 0.85%(a)
- -------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 ( 2.21)%(b) $ 2,415 0.60%(a)(1)
- -------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 13.68% $134,653 1.20%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 ( 1.49)% $ 69,572 1.20%
- -------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 (10.02)% $166,746 1.00%(1)
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 19.15% $120,880 1.00%(a)
- -------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 2.63%(b) $ 747 0.75%(a)(1)
- -------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
118
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF NET RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT INCOME TO INVESTMENT INCOME TO
AVERAGE NET ASSETS AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
BEFORE WAIVERS (A)(C) AFTER WAIVERS (A)(C) BEFORE WAIVERS (A)(C) TURNOVER RATE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
**BT EQUITY 500 INDEX PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 0.83% 1.22% 0.94% 2%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- -------------------------------------------------------------------------------------------------------------------------
**BT INTERNATIONAL EQUITY INDEX PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.49%(1) 1.11%(1) 0.46%(1) 3%
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 - - - -
- -------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 1.24%(a)(1) 1.36%(a)(1) 0.71%(a)(1) 3%
- -------------------------------------------------------------------------------------------------------------------------
**BT SMALL COMPANY INDEX PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.81% 1.18% (0.03)% 35%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH BASIC VALUE EQUITY PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.06% 1.41% 1.20% 83%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 1.89% 1.91% 0.87% 25%
- -------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.61% 1.63% 1.22% 115%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 3.05% 1.89% 0.04% 58%
</TABLE>
<PAGE>
- -----
119
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
RATIO OF NET RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT INCOME TO INVESTMENT INCOME TO
AVERAGE NET ASSETS AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
BEFORE WAIVERS (A)(C) AFTER WAIVERS (A)(C) BEFORE WAIVERS (A)(C) TURNOVER RATE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.04%(1) (0.30)%(1) (0.49)%(1) 79%
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 1.82%(a) 0.61%(a) (0.36)%(a) 116%
- -------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 0.79%(a)(1) (0.05)%(a)(1) (0.24)%(a)(1) 79%
- -------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.05 % 0.44% 0.24% 73%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 1.78% 0.65% (0.28)% 51%
- -------------------------------------------------------------------------------------------------------------------------
*MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 2.63% 0.73% (0.09)% 114%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 2.61% 1.96% 1.10% 25%
- -------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.04%(1) 2.20%(1) 2.01%(1) 17%
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 1.74%(a) 2.49%(a) 1.60%(a) 9%
- -------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 0.79%(a)(1) 2.45%(a)(1) 2.26%(a)(1) 17%
- -------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.40% 0.67% 0.47% 22%
- -------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 2.56% 0.45% (0.91)% 17%
- -------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.17%(1) 0.47%(1) 0.30%(1) 111%
- -------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 1.70%(a) 0.26%(a) (0.44)%(a) 44%
- -------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 0.92%(a)(1) 0.72%(a)(1) 0.55%(a)(1) 111%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
* The Morgan Stanley Emerging Markets Equity Portfolio commenced operations
on August 20, 1997.
** Commencement of operations for the BT Small Company Index Portfolio, BT
International Equity Index Portfolio and BT Equity 500 Index Portfolio was
January 1, 1998. No financial highlights are presented for EQ/Evergreen
Foundation Portfolio, EQ/Evergreen Portfolio and MFS Growth with Income
Portfolio, each of which received initial capital on December 31, 1998. In
addition no financial highlights are presented for Capital Guardian
Research Portfolio, Capital Guardian U.S. Equity Portfolio or EQ/Alliance
Premier Growth Portfolio, each of which received initial capital on April
30, 1999.
+ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net gains on investments for that period because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments of the Portfolio.
(a) Annualized.
(b) Total return calculated for a period of less than one year is not
annualized.
(c) For further information concerning fee waivers, see the section entitled
"Expense Limitation Agreement" in the Prospectus.
(1) Reflects overall fund ratios for investment income and non-class specific
expense.
------------------------- EQ Advisors Trust
<PAGE>
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(A)
- -------
120
- --------------------------------------------------------------------------------
The financial highlights tables below are intended to help you understand the
financial performance for eleven (11) of the Portfolios that are advised by
Alliance (other than the EQ/Alliance Premier Growth Portfolio) for the past five
(5) years (or, if shorter, the period of the Portfolio's operations). The
financial information relating to both the Class IA shares and the Class IB
shares for those eleven (11) Portfolios has been derived from the audited
financial statements of HRT for the year ended December 31, 1998. The Class IA
shares and the Class IB shares of each HRT Portfolio listed below will be
substituted for Class IA and Class IB shares of the corresponding Portfolio of
the Trust and the assets and liabilities of the respective HRT Portfolio will be
transferred to its corresponding Portfolio of the Trust on or about October 18,
1999. These financial statements have been audited by PricewaterhouseCoopers
LLP, independent accountants. PricewaterhouseCoopers LLP's report on HRT's
financial statements as of December 31, 1998 appears in HRT's Annual Report. The
information should be read in conjunction with the financial statements
contained in HRT's Annual Report which are incorporated by reference into the
Trust's Statement of Additional Information (SAI) and available upon request.
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ..... $ 36.22 $ 35.85 $ 35.68 $ 30.63 $ 31.89
----------- --------- --------- --------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ...................... 0.09 0.04 0.09 0.10 0.04
Net realized and unrealized gain (loss)
on investments ............................ (0.28) 3.71 7.52 9.54 (1.26)
----------- --------- --------- --------- ---------
Total from investment operations ........... (0.19) 3.75 7.61 9.64 (1.22)
----------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.16) (0.05) (0.09) (0.10) (0.04)
Dividends in excess of net investment
income .................................... - - (0.00) - -
Distributions from realized gains .......... (1.72) (3.33) (7.33) (4.49) -
Distributions in excess of realized
gains ..................................... - - (0.02) - -
Tax return of capital distributions ........ - - - - (0.00)
----------- --------- --------- --------- ---------
Total dividends and distributions .......... (1.88) (3.38) (7.44) (4.59) (0.04)
----------- --------- --------- --------- ---------
Net asset value, end of period ............... $ 34.15 $ 36.22 $ 35.85 $ 35.68 $ 30.63
=========== =========== =========== ========= =========
Total return (c) ............................. 0.29% 10.94% 22.20% 31.63% (3.81)%
=========== =========== =========== =========== ===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............ $ 4,346,907 $4,589,771 $3,865,256 $2,700,515 $1,832,164
Ratio of expenses to average net assets ...... 0.56% 0.54% 0.48% 0.49% 0.49%
Ratio of net investment income (loss) to
average net assets ......................... 0.24% 0.11% 0.24% 0.28% 0.12%
Portfolio turnover rate ...................... 105% 123% 108% 127% 92%
- -----------------------------------------------------------------------------------------------------------------------
<CAPTION>
CLASS IB
-------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------ DECEMBER 31,
1998 1997 1996
------------ ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ..... $ 36.13 $ 35.83 $ 37.28
------- ------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ...................... 0.01 (0.11) (0.01)
Net realized and unrealized gain (loss)
on investments ............................ (0.29) 3.77 0.85
-------- ------- ----------
Total from investment operations ........... (0.28) 3.66 0.84
-------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.12) (0.03) -
Dividends in excess of net investment
income .................................... - - (0.02)
Distributions from realized gains .......... (1.72) (3.33) (0.23)
Distributions in excess of realized
gains ..................................... - - (2.04)
Tax return of capital distributions ........ - - -
-------- ------- ----------
Total dividends and distributions .......... (1.84) (3.36) (2.29)
-------- ------- ----------
Net asset value, end of period ............... $ 34.01 $ 36.13 $ 35.83
======== ======= ==========
Total return (c) ............................. 0.05% 10.66% 2.32%
======== ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............ $153,782 $73,486 $ 613
Ratio of expenses to average net assets ...... 0.82% 0.81% 0.73%(d)
Ratio of net investment income (loss) to
average net assets ......................... 0.02% (0.28)% (0.10)%(d)
Portfolio turnover rate ...................... 105% 123% 108%
</TABLE>
<PAGE>
- -----
121
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........... $ 21.61 $ 18.23 $ 16.48 $ 13.36 $ 14.65
---------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.18 0.14 0.15 0.20 0.20
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .................................... 5.99 5.12 3.73 4.12 (0.51)
---------- --------- --------- --------- ---------
Total from investment operations ................. 6.17 5.26 3.88 4.32 (0.31)
---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.15) (0.11) (0.15) (0.20) (0.19)
Dividends in excess of net investment income ..... - - - (0.02) (0.01)
Distributions from realized gains ................ (3.28) (1.77) (1.76) (0.95) (0.77)
Distributions in excess of realized gains ........ - - (0.22) (0.03) -
Tax return of capital distributions .............. - - - - (0.01)
----------- ---------- ---------- ---------- ---------
Total dividends and distributions ................ (3.43) (1.88) (2.13) (1.20) (0.98)
----------- ---------- ---------- ---------- ---------
Net asset value, end of period ..................... $ 24.35 $ 21.61 $ 18.23 $ 16.48 $ 13.36
=========== ========== ========== ========== =========
Total return (c) ................................... 29.39% 29.40% 24.28% 32.45% (2.14)%
=========== ========== ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $12,061,977 $9,331,994 $6,625,390 $4,879,677 $3,466,245
Ratio of expenses to average net assets ............ 0.39% 0.39% 0.38% 0.38% 0.38%
Ratio of net investment income to average net
assets ........................................... 0.75% 0.69% 0.85% 1.27% 1.40%
Portfolio turnover rate ............................ 46% 52% 55% 61% 52%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ........... $ 21.58 $ 18.22 $ 17.90
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.10 0.10 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .................................... 6.00 5.11 1.52
------- ------- ---------
Total from investment operations ................. 6.10 5.21 1.54
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.10) (0.08) (0.00)
Dividends in excess of net investment income ..... - - (0.03)
Distributions from realized gains ................ (3.28) (1.77) (0.16)
Distributions in excess of realized gains ........ - - (1.03)
Tax return of capital distributions .............. - - -
-------- -------- ---------
Total dividends and distributions ................ (3.38) (1.85) (1.22)
-------- -------- ---------
Net asset value, end of period ..................... $ 24.30 $ 21.58 $ 18.22
======== ======== =========
Total return (c) ................................... 29.06% 29.07% 8.49%
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $834,144 $228,780 $ 1,244
Ratio of expenses to average net assets ............ 0.64% 0.64% 0.63%(d)
Ratio of net investment income to average net
assets ........................................... 0.44% 0.46% 0.61%(d)
Portfolio turnover rate ............................ 46% 52% 55%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
122
- --------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........ $ 11.89 $ 11.29 $ 11.52 $ 10.15 $ 11.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.49 0.49 0.50 0.60 0.55
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 0.97 0.07 1.43 (1.00)
------- ------- ------- ------- -------
Total from investment operations .............. 1.61 1.46 0.57 2.03 (0.45)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.48) (0.49) (0.51) (0.59) (0.52)
Distributions from realized gains ............. (0.70) (0.37) (0.27) (0.07) -
Distributions in excess of realized gains ..... - - (0.02) - -
-------- -------- -------- -------- -------
Total dividends and distributions ............. (1.18) (0.86) (0.80) (0.66) (0.52)
-------- -------- -------- -------- -------
Net asset value, end of period .................. $ 12.32 $ 11.89 $ 11.29 $ 11.52 $ 10.15
======== ======== ======== ======== =======
Total return (c) ................................ 13.88% 13.25% 5.21% 20.40% (4.10)%
======== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $355,441 $307,847 $282,402 $252,101 $173,691
Ratio of expenses to average net assets ......... 0.53% 0.57% 0.61% 0.59% 0.59%
Ratio of net investment income to average net
assets ........................................ 3.99% 4.17% 4.48% 5.48% 5.22%
Portfolio turnover rate ......................... 103% 206% 181% 287% 228%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ........ $ 11.88 $ 11.29
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.46 0.31
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 1.01
------- ---------
Total from investment operations .............. 1.58 1.32
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.45) (0.36)
Distributions from realized gains ............. (0.70) (0.37)
Distributions in excess of realized gains ..... - -
------- ---------
Total dividends and distributions ............. (1.15) (0.73)
------- ---------
Net asset value, end of period .................. $ 12.31 $ 11.88
======= =========
Total return (c) ................................ 13.60% 11.84%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $32,653 $ 5,694
Ratio of expenses to average net assets ......... 0.78% 0.80%(d)
Ratio of net investment income to average net
assets ........................................ 3.68% 3.82%(d)
Portfolio turnover rate ......................... 103% 206%
</TABLE>
<PAGE>
- -----
123
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ............ $ 17.29 $ 16.92 $ 15.74 $ 13.87 $ 13.62
--------- --------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................. 0.14 0.17 0.21 0.26 0.20
Net realized and unrealized gain on investments
and foreign currency transactions ................ 3.56 1.75 2.05 2.32 0.52
--------- --------- ------- ------- -------
Total from investment operations .................. 3.70 1.92 2.26 2.58 0.72
--------- --------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .............. (0.22) (0.36) (0.21) (0.25) (0.17)
Dividends in excess of net investment income ...... - - (0.08) - -
Distributions from realized gains ................. (1.31) (1.19) (0.79) (0.42) (0.28)
Distributions in excess of realized gains ......... - - - (0.03) (0.00)
Tax return of capital distributions ............... - - (0.00) (0.01) (0.02)
---------- ---------- -------- -------- --------
Total dividends and distributions ................. (1.53) (1.55) (1.08) (0.71) (0.47)
---------- ---------- -------- -------- --------
Net asset value, end of period ...................... $ 19.46 $ 17.29 $ 16.92 $ 15.74 $ 13.87
========== ========== ======== ======== ========
Total return (c) .................................... 21.80% 11.66% 14.60% 18.81% 5.23%
========== ========== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................... $1,360,220 $1,203,867 $997,041 $686,140 $421,698
Ratio of expenses to average net assets ............. 0.71% 0.69% 0.60% 0.61% 0.69%
Ratio of net investment income to average net
assets ............................................ 0.72% 0.97% 1.28% 1.76% 1.41%
Portfolio turnover rate ............................. 105% 57% 59% 67% 71%
<CAPTION>
CLASS IB
----------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ............ $ 17.27 $ 16.91 $ 16.57
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................. 0.08 0.12 0.02
Net realized and unrealized gain on investments
and foreign currency transactions ................ 3.56 1.76 0.81
------- ------- ---------
Total from investment operations .................. 3.64 1.88 0.83
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .............. (0.19) (0.33) -
Dividends in excess of net investment income ...... - - (0.11)
Distributions from realized gains ................. (1.31) (1.19) (0.10)
Distributions in excess of realized gains ......... - - (0.28)
Tax return of capital distributions ............... - - (0.00)
------- ------- ---------
Total dividends and distributions ................. (1.50) (1.52) (0.49)
------- ------- ---------
Net asset value, end of period ...................... $ 19.41 $ 17.27 $ 16.91
======= ======= =========
Total return (c) .................................... 21.50% 11.38% 4.98%
======= ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................... $47,982 $21,520 $ 290
Ratio of expenses to average net assets ............. 0.96% 0.97% 0.86%(d)
Ratio of net investment income to average net
assets ............................................ 0.41% 0.67% 0.48%(d)
Portfolio turnover rate ............................. 105% 57% 59%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
124
- --------------------------------------------------------------------------------
ALLIANCE GROWTH AND INCOME PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................ $ 15.38 $ 13.01 $ 11.70 $ 9.70 $ 9.95
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.06 0.15 0.24 0.33 0.31
Net realized and unrealized gain (loss) on
investments .......................................... 3.08 3.30 2.05 1.97 (0.36)
------- ------- ------- ------- -------
Total from investment operations ...................... 3.14 3.45 2.29 2.30 (0.05)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.05) (0.15) (0.23) (0.30) (0.20)
Distributions from realized gains ..................... (1.48) (0.93) (0.75) - -
-------- -------- -------- ------- -------
Total dividends and distributions ..................... (1.53) (1.08) (0.98) (0.30) (0.20)
-------- -------- -------- ------- -------
Net asset value, end of period .......................... $ 16.99 $ 15.38 $ 13.01 $ 11.70 $ 9.70
======== ======== ======== ======= =======
Total return (c) ........................................ 20.86% 26.90% 20.09% 24.07% (0.58)%
======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $877,744 $555,059 $232,080 $98,053 $31,522
Ratio of expenses to average net assets ................. 0.58% 0.58% 0.58% 0.60% 0.78%
Ratio of net investment income to average net assets .... 0.38% 0.99% 1.94% 3.11% 3.13%
Portfolio turnover rate ................................. 74% 79% 88% 65% 52%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1, 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ................ $ 15.36 $ 13.42
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.03 0.05
Net realized and unrealized gain (loss) on
investments .......................................... 3.07 2.91
------- ---------
Total from investment operations ...................... 3.10 2.96
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.03) (0.09)
Distributions from realized gains ..................... (1.48) (0.93)
-------- ---------
Total dividends and distributions ..................... (1.51) (1.02)
-------- ---------
Net asset value, end of period .......................... $ 16.95 $ 15.36
======== =========
Total return (c) ........................................ 20.56% 22.41%
======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $120,558 $ 32,697
Ratio of expenses to average net assets ................. 0.83% 0.83%(d)
Ratio of net investment income to average net assets .... 0.17% 0.43%(d)
Portfolio turnover rate ................................. 74% 79%
</TABLE>
<PAGE>
- -----
125
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........... $ 18.55 $ 17.20 $ 17.68 $ 14.66 $ 15.61
--------- --------- --------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.41 0.41 0.40 0.57 0.50
Net realized and unrealized gain (loss) on on
investments and foreign currency
transactions .................................... 3.03 2.43 1.66 3.24 (0.98)
--------- --------- --------- ------- -------
Total from investment operations ................. 3.44 2.84 2.06 3.81 (0.48)
--------- --------- --------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.41) (0.46) (0.40) (0.54) (0.46)
Dividends in excess of net investment income ..... - - (0.03) (0.01) (0.01)
Distributions from realized gains ................ (1.71) (1.03) (2.10) (0.24) -
Distributions in excess of realized gains ........ - - (0.01) - -
---------- ---------- ---------- -------- -------
Total dividends and distributions ................ (2.12) (1.49) (2.54) (0.79) (0.47)
---------- ---------- ---------- -------- -------
Net asset value, end of period ..................... $ 19.87 $ 18.55 $ 17.20 $ 17.68 $ 14.66
========== ========== ========== ======== =======
Total return (c) ................................... 19.13% 16.87% 12.61% 26.37% (3.15)%
========== ========== ========== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $1,963,074 $1,630,389 $1,301,643 $896,134 $492,478
Ratio of expenses to average net assets ............ 0.55% 0.57% 0.57% 0.56% 0.59%
Ratio of net investment income to average net
assets ........................................... 2.10% 2.18% 2.31% 3.43% 3.32%
Portfolio turnover rate ............................ 102% 121% 190% 107% 131%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ........... $ 18.52 $ 17.19 $ 16.78
------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.36 0.36 0.07
Net realized and unrealized gain (loss) on on
investments and foreign currency
transactions .................................... 3.03 2.43 0.71
------- ------- ----------
Total from investment operations ................. 3.39 2.79 0.78
------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.36) (0.43) (0.02)
Dividends in excess of net investment income ..... - - (0.09)
Distributions from realized gains ................ (1.71) (1.03) (0.02)
Distributions in excess of realized gains ........ - - (0.24)
------- ------- ----------
Total dividends and distributions ................ (2.07) (1.46) (0.37)
------- ------- ----------
Net asset value, end of period ..................... $ 19.84 $ 18.52 $ 17.19
======= ======= ==========
Total return (c) ................................... 18.83% 16.58% 4.64%
======= ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $92,027 $35,730 $ 472
Ratio of expenses to average net assets ............ 0.80% 0.82% 0.84% (d)
Ratio of net investment income to average net
assets ........................................... 1.85% 1.88% 1.69% (d)
Portfolio turnover rate ............................ 102% 121% 190%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
126
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ............... $ 10.41 $ 10.02 $ 9.64 $ 8.91 $ 10.08
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................ 1.07 1.04 1.02 0.98 0.89
Net realized and unrealized gain (loss) on
investments ......................................... (1.56) 0.75 1.07 0.73 (1.17)
------- ------- ------- ------- -------
Total from investment operations ..................... (0.49) 1.79 2.09 1.71 (0.28)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ................. (1.03) (0.97) (0.98) (0.94) (0.88)
Dividends in excess of net investment income ......... - - (0.03) (0.04) (0.01)
Distributions from realized gains .................... (0.18) (0.43) (0.70) - -
Distributions in excess of realized gains ............ - - - - -
------- -------- -------- -------- -------
Total dividends and distributions .................... (1.21) (1.40) (1.71) (0.98) (0.89)
------- -------- -------- -------- -------
Net asset value, end of period ......................... $ 8.71 $ 10.41 $ 10.02 $ 9.64 $ 8.91
======= ======== ======== ======== =======
Total return (c) ....................................... (5.15)% 18.48% 22.89% 19.92% (2.79)%
======= ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...................... $405,308 $355,473 $199,360 $118,129 $73,895
Ratio of expenses to average net assets ................ 0.63% 0.62% 0.59% 0.60% 0.61%
Ratio of net investment income to average net assets ... 10.67% 9.82% 9.93% 10.34% 9.23%
Portfolio turnover rate ................................ 181% 390% 485% 350% 248%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ............... $ 10.39 $ 10.01 $ 10.25
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................ 1.04 1.05 0.19
Net realized and unrealized gain (loss) on
investments ......................................... (1.56) 0.71 0.15
------- ------- ---------
Total from investment operations ..................... (0.52) 1.76 0.34
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ................. (1.00) (0.95) (0.03)
Dividends in excess of net investment income ......... - - (0.25)
Distributions from realized gains .................... (0.18) (0.43) (0.01)
Distributions in excess of realized gains ............ - - (0.29)
------- ------- ---------
Total dividends and distributions .................... (1.18) (1.38) (0.58)
------- ------- ---------
Net asset value, end of period ......................... $ 8.69 $ 10.39 $ 10.01
======= ======= =========
Total return (c) ....................................... (5.38)% 18.19% 3.32%
======= ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...................... $207,042 $66,338 $ 685
Ratio of expenses to average net assets ................ 0.88% 0.88% 0.82%(d)
Ratio of net investment income to average net assets ... 10.60% 9.76% 8.71%(d)
Portfolio turnover rate ................................ 181% 390% 485%
</TABLE>
<PAGE>
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO(E):
<TABLE>
<CAPTION>
CLASS IA
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................ $ 9.44 $ 9.29 $ 9.47 $ 8.87 $ 10.08
------- ------- ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.50 0.53 0.54 0.58 0.65
Net realized and unrealized gain (loss) on
investments .......................................... 0.21 0.13 (0.19) 0.57 (1.08)
------- ------- ------- ------ -------
Total from investment operations ...................... 0.71 0.66 0.35 1.15 (0.43)
------- ------- ------- ------ -------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.48) (0.51) (0.53) (0.55) (0.78)
-------- -------- ------- ------- -------
Net asset value, end of period .......................... $ 9.67 $ 9.44 $ 9.29 $ 9.47 $ 8.87
======== ======== ======= ======= =======
Total return (c) ........................................ 7.74% 7.29% 3.78% 13.33% (4.37)%
======== ======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $153,383 $115,114 $88,384 $71,780 $48,518
Ratio of expenses to average net assets ................. 0.55% 0.55% 0.56% 0.57% 0.56%
Ratio of net investment income to average net assets .... 5.21% 5.61% 5.73% 6.15% 6.75%
Portfolio turnover rate ................................. 539% 285% 318% 255% 133%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1, 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ................ $ 9.43 $ 9.27
------ ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.47 0.32
Net realized and unrealized gain (loss) on
investments .......................................... 0.22 0.22
------ ---------
Total from investment operations ...................... 0.69 0.54
------ ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.46) (0.38)
------- ---------
Net asset value, end of period .......................... $ 9.66 $ 9.43
======= =========
Total return (c) ........................................ 7.48% 5.83%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $30,898 $ 5,052
Ratio of expenses to average net assets ................. 0.80% 0.81%(d)
Ratio of net investment income to average net assets .... 4.87% 5.15%(d)
Portfolio turnover rate ................................. 539% 285%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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128
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------- APRIL 3,
1995 TO
DECEMBER 31,
1998 1997 1996 1995
------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................ $ 10.27 $ 11.50 $ 10.87 $ 10.00
------- ------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.09 0.10 0.13 0.14
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ 0.97 (0.45) 0.94 0.98
------- ------- ------- ---------
Total from investment operations ...................... 1.06 (0.35) 1.07 1.12
------- ------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.20) (0.32) (0.10) (0.07)
Dividends in excess of net investment income .......... - - (0.09) (0.13)
Distributions from realized gains ..................... (0.00) (0.56) (0.25) (0.05)
-------- ------- -------- ---------
Total dividends and distributions ..................... (0.20) (0.88) (0.44) (0.25)
-------- ------- -------- ---------
Net asset value, end of period .......................... $ 11.13 $ 10.27 $ 11.50 $ 10.87
======== ======= ======== =========
Total return (c) ........................................ 10.57% (2.98)% 9.82% 11.29%
======== ======= ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $204,767 $190,611 $151,907 $ 28,684
Ratio of expenses to average net assets ................. 1.06% 1.08% 1.06% 1.03%(d)
Ratio of net investment income to average net assets .... 0.81% 0.83% 1.10% 1.71%(d)
Portfolio turnover rate ................................. 59% 59% 48% 56%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ................ $ 10.26 $ 11.39
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.05 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ 0.98 (0.31)
------- ---------
Total from investment operations ...................... 1.03 (0.29)
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.18) (0.28)
Dividends in excess of net investment income .......... - -
Distributions from realized gains ..................... (0.00) (0.56)
-------- ---------
Total dividends and distributions ..................... (0.18) (0.84)
-------- ---------
Net asset value, end of period .......................... $ 11.11 $ 10.26
======== =========
Total return (c) ........................................ 10.30% (2.54)%
======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $ 7,543 $ 3,286
Ratio of expenses to average net assets ................. 1.31% 1.38%(d)
Ratio of net investment income to average net assets .... 0.44% 0.20%(d)
Portfolio turnover rate ................................. 59% 59%
</TABLE>
<PAGE>
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129
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ......... $ 10.18 $ 10.17 $ 10.16 $ 10.14 $ 10.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................... 0.53 0.54 0.54 0.57 0.41
Net realized and unrealized gain (loss) on
investments ................................... - - (0.01) - -
-------- -------- -------- -------- --------
Total from investment operations ............... 0.53 0.54 0.53 0.57 0.41
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........... (0.49) (0.53) (0.52) (0.55) (0.39)
Dividends in excess of net investment income ... - - - - -
-------- -------- -------- -------- --------
Total dividends and distributions .............. (0.49) (0.53) (0.52) (0.55) (0.39)
-------- -------- -------- -------- --------
Net asset value, end of period ................... $ 10.22 $ 10.18 $ 10.17 $ 10.16 $ 10.14
======== ======== ======== ======== ========
Total return (c) ................................. 5.34% 5.42% 5.33% 5.74% 4.02%
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................ $723,311 $449,960 $463,422 $386,691 $325,391
Ratio of expenses to average net assets .......... 0.37% 0.39% 0.43% 0.44% 0.42%
Ratio of net investment income to average net
assets ......................................... 5.13% 5.28% 5.17% 5.53% 4.01%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ......... $ 10.17 $ 10.16 $ 10.16
------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................... 0.49 0.52 0.11
Net realized and unrealized gain (loss) on
investments ................................... 0.02 - 0.01
------- -------- --------
Total from investment operations ............... 0.51 0.52 0.12
------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........... (0.47) (0.51) (0.02)
Dividends in excess of net investment income ... - - (0.10)
-------- -------- ---------
Total dividends and distributions .............. (0.47) (0.51) (0.12)
-------- -------- ---------
Net asset value, end of period ................... $ 10.21 $ 10.17 $ 10.16
======== ======== =========
Total return (c) ................................. 5.08% 5.16% 1.29%
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................ $386,718 $123,675 $ 3,184
Ratio of expenses to average net assets .......... 0.62% 0.63% 0.67%(d)
Ratio of net investment income to average net
assets ......................................... 4.82% 5.02% 4.94%(d)
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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130
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA CLASS IB
------------------------------- ---------------------------------
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................... $ 12.35 $ 10.00 $ 12.34 $ 10.00
------- -------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............................. 0.01 0.01 (0.02) (0.01)
Net realized and unrealized gain (loss) on investments ... (0.54) 2.65 (0.53) 2.65
------- -------- ------- ---------
Total from investment operations ......................... (0.53) 2.66 (0.55) 2.64
------- -------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... - (0.01) - -
Distributions from realized gains ........................ - (0.30) - (0.30)
------- -------- ------- ---------
Total dividends and distributions ........................ - (0.31) - (0.30)
------- -------- ------- ---------
Net asset value, end of period ............................. $ 11.82 $ 12.35 $ 11.79 $ 12.34
======= ======== ======= =========
Total return (c) ........................................... (4.28)% 26.74% (4.44)% 26.57%
======= ======== ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .......................... $198,360 $ 94,676 $112,254 $ 46,324
Ratio of expenses to average net assets .................... 0.96% 0.95%(d) 1.20% 1.15%(d)
Ratio of net investment income (loss) to average net assets 0.08% 0.10%(d) (0.17)% (0.12)%(d)
Portfolio turnover rate .................................... 94% 96% 94% 96%
</TABLE>
<PAGE>
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131
- --------------------------------------------------------------------------------
- ----------
(a) Net investment income and capital changes per share are based upon monthly
average shares outstanding.
(b) Date as of which funds were first allocated to the Portfolios are as
follows:
Class IA:
Alliance Common Stock Portfolio-June 16, 1975
Alliance Money Market Portfolio-July 13, 1981
Alliance Aggressive Stock Portfolio-January 27, 1986
Alliance High Yield Portfolio-January 2, 1987
Alliance Global Portfolio-August 27, 1987
Alliance Conservative Investors Portfolio-October 2, 1989
Alliance Growth Investors Portfolio-October 2, 1989
Alliance Intermediate Government Securities Portfolio-April 1, 1991
Alliance Growth and Income Portfolio-October 1, 1993
Alliance International Portfolio-April 3, 1995
Alliance Small Cap Growth Portfolio-May 1, 1997
Class IB:
Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance
Global, Alliance Aggressive Stock and Alliance Growth Investors
Portfolios-October 2, 1996.
Alliance Intermediate Government Securities, Alliance Growth and Income,
Alliance International, Alliance Small Cap Growth and Alliance Conservative
Investors Portfolios-May 1, 1997.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized.
(d) Annualized.
(e) On February 22, 1994, shares of the Alliance Intermediate Government
Securities Portfolio of the Trust were substituted for shares of the
Trust's Alliance Short-Term World Income Portfolio.
------------------------- EQ Advisors Trust
<PAGE>
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- --------------------------------------------------------------------------------
If you wish to know more, you will find additional information about the Trust
and its Portfolios in the following documents:
ANNUAL REPORTS
The Annual Report includes more information about the Trust's performance and is
available upon request free of charge. The reports usually include performance
information, a discussion of market conditions and the investment strategies
that affected the Portfolios' performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, dated August 30, 1999, is incorporated into this Prospectus by
reference and is available upon request free of charge by calling our toll free
number at 1-800-528-0204.
You may visit the SEC's website at www.sec.gov to view the SAI and other
information about the Trust. You can also review and copy information about the
Trust, including the SAI, at the SEC's Public Reference Room in Washington, D.C.
You may have to pay a duplicating fee. To find out more about the Public
Reference Room, call the SEC at 800-SEC-0330.
Investment Company Act File Number: 811-07953
