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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 (20) Portfolios offered by EQ Advisors
Trust 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 1, 1999.
<TABLE>
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FIXED INCOME PORTFOLIOS GLOBAL/INTERNATIONAL PORTFOLIOS
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Alliance High Yield* Alliance Global*
Alliance Intermediate Government Securities* Alliance International*
Alliance Money Market*
Alliance Quality Bond* AGGRESSIVE EQUITY PORTFOLIOS
---------------------------------
Alliance Aggressive Stock*
Alliance Small Cap Growth*
EQ/Evergreen
DOMESTIC EQUITY PORTFOLIOS
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Alliance Common Stock*
Alliance Equity Index* ASSET ALLOCATION PORTFOLIOS
Alliance Growth and Income* ---------------------------------
Capital Guardian Research
Capital Guardian U.S. Equity Alliance Balanced*
EQ/Alliance Premier Growth Alliance Conservative Investors*
MFS Growth with Income Alliance Growth Investors*
EQ/Evergreen Foundation
</TABLE>
See Prospectus dated May 1, 1999 for additional investment alternatives.
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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 5 Supp
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Overview
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EQ ADVISORS TRUST
This Prospectus tells you about the twenty (20) current Portfolios of the EQ
Advisors Trust ("Trust") and the Class IA shares or 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 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. The Board of Trustees of the Trust approved a transfer of its Investment
Management Agreement with EQFC to Equitable, the indirect corporate parent of
EQFC, which is expected to be completed in September 1999. Upon completion of
the transfer, Equitable (to be referred to as the "Manager" following
completion of the transfer, however, until completion of the transfer,
"Manager" refers to EQFC) will serve as the Manager of the Trust subject to the
supervision and direction of the Board of Trustees. EQFC currently has overall
responsibility for the general management and administration of the Trust. EQFC
and Equitable are each an investment adviser registered with the SEC under the
Investment Advisers Act of 1940, as amended ("Advisers Act").
Following the transfer, Equitable will serve as Manager and exercise all
functions of the Manager as set forth in the Investment Management Agreement.
Management of the Trust and its Board of Trustees are of the view that the
transfer of the Investment Management Agreement from EQFC to Equitable does not
constitute an "assignment" of that agreement as that term is defined in Section
2(a)(4) of the 1940 Act and Section 202(a)(1) of the Advisers Act.
Each of the Portfolios has its own investment adviser ("Adviser"). Information
about the Adviser 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
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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.
_____________ EQ Advisors Trust
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Table of contents
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<TABLE>
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SUMMARY INFORMATION CONCERNING EQ
ADVISORS TRUST 6
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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 22
Alliance Money Market Portfolio 26
Alliance Quality Bond Portfolio 29
DOMESTIC EQUITY PORTFOLIOS 32
Alliance Common Stock Portfolio 32
Alliance Equity Index Portfolio 35
Alliance Growth and Income Portfolio 37
Capital Guardian Research Portfolio 40
Capital Guardian U.S. Equity Portfolio 42
EQ/Alliance Premier Growth Portfolio 44
MFS Growth with Income Portfolio 46
GLOBAL/INTERNATIONAL PORTFOLIOS 48
Alliance Global Portfolio 48
Alliance International Portfolio 51
AGGRESSIVE EQUITY PORTFOLIOS 54
Alliance Aggressive Stock Portfolio 54
Alliance Small Cap Growth Portfolio 57
EQ/Evergreen Portfolio 60
ASSET ALLOCATION PORTFOLIOS 62
Alliance Balanced Portfolio 63
Alliance Conservative Investors Portfolio 66
Alliance Growth Investors Portfolio 69
EQ/Evergreen Foundation Portfolio 72
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MORE INFORMATION ON PRINCIPAL RISKS 74
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MANAGEMENT OF THE TRUST 80
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The Trust 80
The Manager 80
Expense Limitation Agreement 81
The Advisers 82
The Administrator 82
The Transfer Agent 83
Brokerage Practices 83
Brokerage Transactions with Affiliates 83
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FUND DISTRIBUTION ARRANGEMENTS 84
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PURCHASE AND REDEMPTION 85
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HOW ASSETS ARE VALUED 86
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TAX INFORMATION 87
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PRIOR PERFORMANCE OF EACH ADVISER 88
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FINANCIAL HIGHLIGHTS 90
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</TABLE>
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(Intentionally Left Blank)
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1 Summary information concerning EQ Advisors Trust
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The following chart highlights the twenty (20) Portfolios described in this
Prospectus that you can choose as investment alternatives under your Contracts
offered by Equitable or EOC and non-affiliated insurance companies. 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 74.
<TABLE>
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EQ ADVISORS TRUST FIXED INCOME PORTFOLIOS
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
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
ALLIANCE MONEY MARKET Seeks to obtain a high level of
current income, preserve its
assets and maintain liquidity
ALLIANCE QUALITY BOND Seeks to achieve high current
income consistent with
preservation of capital by
investing primarily in
investment grade fixed income
securities
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
<S> <C>
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
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
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
lending
Investment-grade debt securities rated at least BBB/Baa or General investment, fixed income, convertible securities,
unrated securities of comparable quality at the time of leveraging, derivatives, securities lending and foreign
purchase, convertible debt securities, preferred stock, securities risks
dividend-paying common stocks, foreign securities, the
purchase or sale of securities on a when-issued,
delayed-delivery or forward commitment basis, derivatives,
and securities lending
</TABLE>
____________________ EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIOS
PORTFOLIO INVESTMENT OBJECTIVE(S)
<S> <C>
ALLIANCE COMMON STOCK Seeks to achieve long-term growth of its
capital and increased income
ALLIANCE EQUITY INDEX Seeks a total return before expenses that
approximates the total return performance of
the S&P 500 Index, including reinvestment of
dividends, at a risk level consistent with that
of the S&P 500 Index
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
CAPITAL GUARDIAN RESEARCH Seeks long-term growth of capital
CAPITAL GUARDIAN U.S. EQUITY Seeks long-term growth of capital
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
MFS GROWTH WITH INCOME Seeks to provide reasonable current income and
long-term growth of capital and income
</TABLE>
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<TABLE>
<CAPTION>
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 Securities in the
S&P 500 Index, derivatives, and securities General investment, index-fund, derivatives, leveraging,
lending and securities lending risks
Stocks and securities convertible into stocks (including junk General investment, convertible securities, leveraging,
bonds) derivatives, foreign securities, junk bond, and fixed income
risks
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
Equity securities primarily of United States companies with General investment, growth investing,
convertible market capitalization greater than $1 billion at securities, and foreign securities risks
the time of purchase
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
Equity securities (common stock, preferred stock, General investment, small-cap and mid-cap company,
preference stock, convertible securities, warrants and foreign securities, and growth investing risks
risks depositary receipts)
</TABLE>
________________ EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST GLOBAL/INTERNATIONAL PORTFOLIOS
PORTFOLIO INVESTMENT OBJECTIVE(S)
<S> <C>
ALLIANCE GLOBAL Seeks long-term growth of capital
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
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
<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
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)
</TABLE>
______________ EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST AGGRESSIVE EQUITY PORTFOLIOS
PORTFOLIO INVESTMENT OBJECTIVE(S)
<S> <C>
ALLIANCE AGGRESSIVE STOCK Seeks to achieve long-term growth of capital
ALLIANCE SMALL CAP GROWTH Seeks to achieve long-term growth of capital
EQ/EVERGREEN Seeks capital appreciation
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
<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 and
companies in cyclical industries, companies whose 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)
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 and
companies in cyclical industries, companies whose 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)
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)
</TABLE>
_________________ EQ Advisors Trust
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<TABLE>
<CAPTION>
EQ ADVISORS TRUST ASSET ALLOCATION PORTFOLIOS
PORTFOLIO INVESTMENT OBJECTIVE(S)
<S> <C>
ALLIANCE BALANCED Seeks to achieve a high return through both appreciation
of capital and current income
ALLIANCE CONSERVATIVE INVESTORS Seeks to achieve a high total return without, in the opinion
of the Adviser, undue risk to principal
ALLIANCE GROWTH INVESTORS Seeks to achieve the highest total return consistent with
the Adviser's determination of reasonable risk
EQ/EVERGREEN FOUNDATION Seeks to provide, in order of priority, reasonable income,
conservation of capital and capital appreciation
</TABLE>
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<TABLE>
<CAPTION>
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
<S> <C>
Debt and equity securities, money market instruments, General investment, asset allocation, fixed income,
foreign securities, derivatives, and securities lending derivatives, leveraging, liquidity, securities
lending, and foreign securities risks
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
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 security risks
lending
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
</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 LEHMAN AGGREGATE BOND INDEX ("Lehman Aggregate Bond") is an index comprised
of investment grade fixed income securities, including U.S. Treasury,
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mortgage-backed, corporate and "Yankee" bonds (U.S. dollar-denominated bonds
issued outside the United States).
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. 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 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 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.
______________________________ EQ Advisors Trust
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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
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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)
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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 is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more
volatile and all other risk will tend to be compounded.
<PAGE>
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21
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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 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
5.1% -1.1% 24.5% 12.3% 23.2% -2.8% 19.9% 23.0% 18.5% -5.2%
Best quarter (% and time period) Worst quarter (% and time period)
7.96% (1997 2nd Quarter) -10.97% (1998 3rd Quarter)
<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS
<S> <C> <C> <C>
Alliance High Yield Portfolio-
Class IA Shares (5.15)% 9.99% 11.17%
ML Master* 3.66% 9.01% 11.08%
Lipper High Current Yield
Bond Funds Average* (0.44)% 7.37% 9.34%
</TABLE>
* 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.
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.
_____________________ EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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22
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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.
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")
<PAGE>
----------
23
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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 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
_________________ EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
24
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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 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1992 1993 1994 1995 1996 1997 1998
5.5% 10.6% -4.4% 13.3% 3.8% 7.3% 7.7%
Best quarter (% and time period) Worst quarter (% and time period)
5.31% (1991 3rd Quarter) -2.97% (1994 1st Quarter)
<PAGE>
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25
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<TABLE>
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR FIVE YEARS INCEPTION
<S> <C> <C> <C>
Alliance Intermediate
Government Securities
Portfolio - Class IA
Shares 7.74% 5.39% 7.10%
Lehman Intermediate
Government Bonds* 8.49% 6.45% 7.60%
Lipper Intermediate
Government Funds
Average* 7.68% 5.91% 7.25%
</TABLE>
* 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 as 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.
_____________________ EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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26
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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
<PAGE>
----------
27
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Insurance Corporation or any other government agency. 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 whose inception date is July 13,
1981. The assets of the predecessor will be transferred to the Portfolio on
October 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
9.2% 8.2% 6.2% 3.6% 3.0% 4.0% 5.7% 5.3% 5.4% 5.3%
Best quarter (% and time period) Worst quarter (% and time period)
2.37% (1989 2nd Quarter) 0.69% (1992 4th Quarter)
The Portfolio's 7-day yield for the quarter ended
December 31, 1998 was 4.69%.
AVERAGE ANNUAL TOTAL RETURN
ONE YEAR FIVE YEARS TEN YEARS
Alliance Money Market Portfolio
- Class IA Shares 5.34% 5.17% 5.58%
3-Month Treasury Bill 5.05% 5.11% 5.44%
Lipper Money Market Mutual
Fund Average* 4.84% 4.77% 5.20%
* For more information on this index, see the preceding section "The
Benchmarks."
____________________ EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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28
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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.
<PAGE>
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29
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ALLIANCE QUALITY BOND PORFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve high current income consistent with
preservation of capital by investing primarily in investment grade fixed income
securities.
THE INVESTMENT STRATEGY
The Portfolio expects to invest in readily marketable securities with
relatively attractive yields that the Adviser believes do not involve undue
risk.
The Portfolio will follow a policy of investing at least 65% of its total
assets in securities which are rated at the time of purchase at least Baa by
Moody's or BBB by S&P, or in unrated fixed income securities that the Adviser
determines to be of comparable quality.
In the event that the credit rating of a security held by the Portfolio falls
below investment grade (or, in the case of unrated securities, the Adviser
determines that the quality of such security has deteriorated below investment
grade), the Portfolio will not be obligated to dispose of such security and may
continue to hold the obligation if the Adviser believes such an investment is
appropriate in the circumstances. The Portfolio will also seek to maintain an
average aggregate quality rating of its portfolio securities of at least A
(Moody's and S&P).
The Portfolio has complete flexibility as to the types of securities in which
it will invest and the relative proportions thereof. In this regard, the
Portfolio plans to vary the proportions of its holdings of long- and short-term
fixed income securities (including debt securities, convertible debt securities
and U.S. Government obligations), preferred stocks and dividend-paying common
stocks in order to reflect the Adviser's assessment of prospective cyclical
changes even if such action may adversely affect current income.
The Portfolio may also invest in foreign securities, although it will not
invest more than 20% of its total assets in securities denominated in
currencies other than the U.S. dollar. The Portfolio may enter into foreign
currency futures contracts (and related options), forward foreign currency
exchange contracts and options on foreign currencies for hedging purposes.
The Portfolio may also make use of various other investment strategies,
including zero coupon pay-in-kind securities, collateralized mortgage
obligations, securities lending with a value of up to 50% of its total assets,
the purchase or sale of securities on a when-issued, delayed delivery or
forward commitment basis and repurchase agreements. The Portfolio may also use
derivatives, including: purchasing put and call options and writing covered put
and call options on securities it may purchase. The Portfolio also intends to
write covered call options for cross-hedging purposes, which are designed to
provide a hedge against a decline in value of another security which the
Portfolio owns or has the right to acquire.
The Portfolio may seek to protect the value of its investments from interest
rate fluctuations by entering into various hedging transactions, such as
interest rate swaps and the purchase or sale of interest rate caps and floors.
When market or financial conditions warrant, the Portfolio may invest in
certain money market instruments for temporary or defensive purposes. Such
investments could result in the Portfolio not achieving its investment
objective.
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, 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.
___________________ EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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30
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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 or S&P or an equivalent rating by
any other nationally recognized statistical rating organization, 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 prepaid funds at the newer, lower interest rates.
ZERO COUPON AND PAY-IN-KIND SECURITIES RISK: A zero coupon or pay-in-kind
security pays no interest in cash to its holder during its life.
Accordingly, zero coupon securities usually trade at a deep discount from
their face or par value and, together with pay-in-kind securities, will
be subject to greater fluctuations in market value in response to
changing interest rates than debt obligations of comparable maturities
that make current distributions of interest in cash.
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.
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.
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.
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>
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31
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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 and
five 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 Quality Bond 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 Quality Bond
Portfolio) whose inception date is October 1, 1993. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
CALENDAR YEAR ANNUAL TOTAL RETURN
1994 1995 1996 1997 1998
-5.1% 17.0% 5.4% 9.1% 8.7%
Best quarter (% and time period) Worst quarter (% and time period)
6.19% (1995 2nd Quarter) -4.03% (1994 1st Quarter)
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.
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR FIVE YEARS INCEPTION
Alliance Quality Bond
Portfolio - Class IA
Shares 8.69% 6.78% 6.34%
Lehman Aggregate Bond* 8.69% 7.27% 6.92%
Lipper Corporate Debt Funds
A Rated Average* 7.47% 6.54% 6.21%
* 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.
MATTHEW BLOOM has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1995. Mr. Bloom, a Senior Vice President of
Alliance, has been associated with Alliance since 1989.
_____________________ EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS
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32
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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>
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33
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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 managed (HRT/Alliance Common Stock Portfolio) 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 1, 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)
- ----------
34
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CALENDAR YEAR ANNUAL TOTAL RETURN
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
25.6% -8.1% 40.00% 3.2% 24.8% -2.1% 32.5% 24.30% 29.4% 29.4%
Best quarter (% and time period) Worst quarter (% and time period)
28.42% (1998 4th Quarter) -20.22% (1990 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS
Alliance Common Stock Portfolio
- Class IA Shares 29.39% 21.95% 18.65%
S&P 500 Index* 28.58% 24.06% 19.21%
Lipper Growth Equity Mutual
Funds Average* 22.86% 18.63% 16.72%
* 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>
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35
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ALLIANCE EQUITY INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks a total return before expenses that approximates
the total return performance of the S&P 500 Index, including reinvestment of
dividends, at a risk level consistent with that of the S&P 500 Index.
THE INVESTMENT STRATEGY
The Adviser will not utilize customary economic, financial or market analyses
or other traditional investment techniques in managing the Portfolio. Rather,
the Adviser will use proprietary modeling techniques to construct a portfolio
that it believes will, in the aggregate, approximate the performance results of
the S&P 500 Index.
The Adviser will first select from the largest capitalization securities in the
S&P 500 on a capitalization-weighted basis. Generally, the largest
capitalization securities reasonably track the S&P 500 because the S&P 500 is
significantly influenced by a small number of securities. However, in the
Adviser's view, selecting securities on the basis of their capitalization alone
would distort the Portfolio's industry diversification, and therefore economic
events could potentially have a dramatically different impact on the
performance of the Portfolio from that of the S&P 500. Recognizing this fact,
the modeling techniques also consider industry diversification when selecting
investments for the Portfolio. The Adviser also seeks to diversify the
Portfolio's assets with respect to market capitalization. As a result, the
Portfolio will include securities of smaller and medium-sized capitalization
companies in the S&P 500.
Cash may be accumulated in the Portfolio until it reaches approximately 1% of
the value of the Portfolio at which time such cash will be invested in common
stocks as described above. Accumulation of cash increases tracking error. The
Portfolio will, however, remain substantially fully invested in common stocks
even when common stock prices are generally falling. Similarly, adverse
performance of a stock will ordinarily not result in its elimination from the
Portfolio.
In order to reduce brokerage costs, maintain liquidity to meet shareholder
redemptions or minimize tracking error when the Portfolio holds cash, the
Portfolio may from time to time buy and hold futures contracts on the S&P 500
Index and options on such futures contracts. The contract value of futures
contracts purchased by the Portfolio plus the contract value of futures
contracts underlying call options purchased by the Portfolio will not exceed
20% of the Portfolio's total assets. The Portfolio may seek to increase income
by lending its portfolio securities with a value of up to 50% of its total
assets to brokers-dealers.
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. Although the
Portfolio's modeling techniques are intended to produce performance that
approximates that of the S&P 500 (before expenses), there can be no assurance
that these techniques will reduce "tracking error" (i.e., the difference
between the Portfolio's investment results (before expenses) and the S&P
500's). Tracking error may arise as a result of brokerage costs, fees and
operating expenses and a lack of correlation between the Portfolio's
investments and the S&P 500.
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>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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36
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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 four 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 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/Equity Index 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/Equity Index Portfolio) whose
inception date is March 1, 1994. The assets of the predecessor will be
transferred to the Portfolio on October 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1995 1996 1997 1998
36.5% 22.4% 32.6% 28.1%
Best quarter (% and time period) Worst quarter (% and time period)
21.13% (1998 4th Quarter) -9.97% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
Alliance Equity Index Portfolio - Class IA
Shares 28.07% 24.31%
S&P 500 Index* 28.58% 24.79%
Lipper S&P 500 Index Funds Average* 28.05% 24.31%
* 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.
JUDITH A. DEVIVO has been responsible for the day-to-day management of the
Portfolio and its predecessor since its inception. Ms. DeVivo, a Vice
President of Alliance, has been associated with Alliance since 1970.
<PAGE>
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37
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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)
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38
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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 is borrowing money or otherwise leveraging
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 Growth and Income Portfolio) whose inception date is October 1,
1993. The assets of the predecessor will be transferred to the Portfolio on
October 1, 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>
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39
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CALENDAR YEAR ANNUAL TOTAL RETURN
1994 1995 1996 1997 1998
-0.6% 24.1% 20.1% 26.9% 20.9%
Best quarter (% and time period) Worst quarter (% and time period)
26.28% (1998 4th Quarter) -15.03% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR FIVE YEARS INCEPTION
Alliance Growth and Income
Portfolio - Class IA Shares 20.86% 17.84% 16.86%
75% S&P 500 Index/25%
Value Line Convertible* 20.10% 21.07% 20.48%
S&P 500 Index* 28.58% 24.06% 23.32%
Lipper Growth and Income
Funds Average* 15.61% 18.35% 17.89%
* 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
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DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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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.
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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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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.
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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)
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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
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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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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.
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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>
GLOBAL/INTERNATIONAL PORTFOLIOS
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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
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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 is borrowing money or otherwise leveraging 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 1, 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.
______________________ EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
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CALENDAR YEAR ANNUAL TOTAL RETURN
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
26.7% -6.1% 30.5% -0.5% 32.1% 5.2% 18.8% 14.6% 11.7% 21.8%
Best quarter (% and time period) Worst quarter (% and time period)
26.59% (1998 4th Quarter) -16.99% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS
Alliance Global Portfolio -
Class IA Shares 21.80% 14.28% 14.81%
MSCI World Index* 24.34% 15.68% 10.66%
Lipper Global Mutual Funds
Average* 14.34% 11.98% 11.21%
* 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.
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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:
___________________ EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
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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 is borrowing money or otherwise leveraging
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
<PAGE>
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changes in the Portfolio's performance. The table below 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 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1996 1997 1998
9.8% -2.98% 10.6%
Best quarter (% and time period) Worst quarter (% and time period)
16.55% (1998 4th Quarter) -15.68% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
Alliance International Portfolio -
Class IA Shares 10.57% 7.49%
MSCI EAFE Index* 20.00% 9.68%
Lipper International Mutual Funds
Average* 13.02% 10.74%
* 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.
________________________ EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS
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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 (i.e., 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.
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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 is borrowing money or otherwise leveraging
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 1,
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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
43.5% 8.2% 86.9% -3.2% 16.8% -3.8% 31.6% 22.2% 10.9% 0.3%
Best quarter (% and time period) Worst quarter (% and time period)
40.10% (1991 1st Quarter) -27.19% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
ONE YEAR FIVE YEARS TEN YEARS
Alliance Aggressive Stock
Portfolio - Class IA Shares 0.29% 11.47% 18.90%
50% S&P 400 MidCap
Index/50% Russell 2000* 8.28% 15.56% 16.49%
S&P 400 MidCap Index* 19.11% 18.84% 19.29%
Lipper MidCap Growth Funds
Average* 12.16% 14.87% 15.44%
* 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
_____________________ EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
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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.
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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
(i.e., 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)
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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 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1998
-4.3%
Best quarter (% and time period) Worst quarter (% and time period)
22.98 (1998 4th Quarter) -28.07% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
Alliance Small Cap Growth Portfolio -
Class IA Shares -4.28% 12.27%
Russell 2000 Growth Index* 1.23% 16.58%
Lipper Small Company Growth Funds
Average* -0.33% 16.72%
* 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.
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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.
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)
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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.
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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
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
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The Alliance Conservative Investors Portfolio, the Alliance Balanced 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 "balanced investor" is somewhat less aggressive than the growth investor
and has a medium- to long-term investment horizon. This investor is sensitive
to risk, but is willing to take on some risk in seeking high total return.
Consequently, the asset mix for the Alliance Balanced Portfolio attempts to
capture a sizable portion of the market's upside while diversifying risk among
asset classes.
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>
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ALLIANCE BALANCED PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return
through both appreciation of capital and current income.
THE INVESTMENT STRATEGY
The Portfolio invests varying portions of its assets in publicly-traded equity
and debt securities and money market instruments depending on economic
conditions, the general level of common stock prices, interest rates and other
relevant considerations, including the risks associated with each investment
medium.
The Portfolio attempts to achieve long-term growth of capital by investing in
common stock and other equity-type instruments. It will try to achieve a
competitive level of current income and capital appreciation through
investments in publicly traded debt securities and a high level of current
income through investments primarily in high-quality U.S. dollar denominated
money market instruments.
The Portfolio's investments in common stocks will primarily consist of 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.
The Portfolio at all times will hold at least 25% of its total assets in fixed
income securities (including, for these purposes, that portion of the value of
securities convertible into common stock which is attributable to the fixed
income characteristics of those securities, as well as money market
instruments). The Portfolio's equity securities will always comprise at least
25%, but never more than 75%, of the Portfolio's total assets. Consequently,
the Portfolio will have a minimum or "core holdings" of at least 25% fixed
income securities and 25% equity securities. Over time, holdings by the
Portfolio's holdings are currently expected to average approximately 50% in
fixed income securities and approximately 50% in equity securities. Actual
asset mixes will be adjusted in response to economic and credit market cycles.
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 using of up to 50% of its total portfolio assets for securities
lending purposes. The Portfolio may also use derivatives, including: writing
covered call and put options, purchasing call and put options on all the types
of securities in which it may invest, as well as securities indexes and foreign
currencies. The Portfolio may also purchase and sell stock index, interest rate
and foreign currency futures contracts and options thereon.
The debt securities will consist principally of bonds, notes, debentures and
equipment trust certificates, as well as debt securities with equity features
such as conversion or exchange rights or warrants for the acquisition of stock
or participations based on revenues, rates or profits. These debt securities
will principally be investment grade securities rated at least Baa by Moody's
or BBB by S&P, or will be U.S. Government Securities. If such Baa or BBB debt
securities held by the Portfolio fall below those ratings, the Portfolio will
not be obligated to dispose of them and may continue to hold them if the
Adviser considers them appropriate investments under the circumstances. In
addition, the Portfolio may at times hold some of its assets in cash.
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.
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
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ASSET ALLOCATION PORTFOLIOS (CONTINUED)
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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.
FIXED INCOME RISKS: This Portfolio invests at least 25% of its total assets 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.
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.
LEVERAGING RISK. When the Portfolio is borrowing money or otherwise leveraging
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.
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 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 Balanced Portfolio) managed by the
Adviser using the same investment objectives and strategy as the
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65
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Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Balanced
Portfolio) whose inception date is January 27, 1986. The assets of the
predecessor will be transferred to the Portfolio on October 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
25.8% 0.3% 41.3% -2.8% 12.3% -8.0% 19.8% 11.70% 15.1% 18.1%
Best quarter (% and time period) Worst quarter (% and time period)
15.13% (1991 4th Quarter) -8.29% (1990 3rd Quarter)
ONE YEAR FIVE YEARS TEN YEARS
Alliance Balanced Portfolio
- Class IA Shares 18.11% 10.82% 12.51%
50% S&P 500 Index/50%
Lehman Gov't/Corp.* 19.02% 16.88% 15.21%
S&P 500 Index* 28.58% 24.06% 19.21%
Lipper Balanced Mutual
Funds Average 13.48% 13.84% 12.97%
* 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
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ASSET ALLOCATION PORTFOLIOS (CONTINUED)
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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, credit risks of the issuer, the duration and maturity of the
Portfolio's fixed income holdings, and adverse market and
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67
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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.
LEVERAGING RISK: When the Portfolio is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more
volatile and all other risk will tend to be compounded.
____________________ EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
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68
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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 1,
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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1990 1991 1992 1993 1994 1995 1996 1997 1998
6.3% 19.8% 5.6% 10.8% -4.1% 20.4% 5.2% 13.3% 13.9%
Best quarter (% and time period) Worst quarter (% and time period)
7.65% (1998 4th Quarter) -3.21% (1994 1st Quarter)
SINCE
ONE YEAR FIVE YEARS INCEPTION
Alliance Conservative
Investors Portfolio -
Class IA Shares 13.88% 9.40% 9.99%
70% Lehman Treasury/30%
S&P 500 Index* 15.59% 13.37% 12.08%
S&P 500 Index* 28.58% 24.06% 17.62%
Lipper Flexible Portfolio
Average 14.20% 14.31% 12.55%
* 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.
<PAGE>
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69
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ALLIANCE GROWTH INVESTORS PORTFOLIO
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)
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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 is borrowing money or otherwise leveraging
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>
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71
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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 1, 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.
CALENDAR YEAR ANNUAL TOTAL RETURN
1990 1991 1992 1993 1994 1995 1996 1997 1998
10.7% 48.8% 4.9% 15.3% -3.2% 26.4% 12.6% 16.9% 19.1%
Best quarter (% and time period) Worst quarter (% and time period)
18.16% (1998 4th Quarter) -10.60% (1990 3rd Quarter)
SINCE
ONE YEAR FIVE YEARS INCEPTION
Alliance Growth Investors
Portfolio - Class IA
Shares 19.13% 13.92% 16.09%
70% S&P 500 Index/30%
Lehman Gov't/Corp.* 22.85% 19.96% 15.55%
S&P 500 Index* 28.58% 24.06% 17.62%
Lipper Flexible Portfolio
Average* 14.20% 14.31% 12.55%
* 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)
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72
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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. Convertible securities fluctuate both in relation to
changes in interest rates and changes in 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
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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. Portfolio 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 Portfolio investing a significant portion of its assets in
____________________________ EQ Advisors Trust
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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 markets countries
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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.
______________________ EQ Advisors Trust
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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 Alliance Equity Index Portfolio is not actively managed
(which involves buying and selling of securities based upon economic, financial
and market analysis and investment judgment). Rather, the Alliance Equity Index
Portfolio utilizes proprietary modeling techniques to match the performance
results of the S&P 500 Index. Therefore, the Portfolio will invest in the
securities included in the relevant index or substantially identical securities
regardless of market trends. The Portfolio cannot modify its investment
strategies to respond to changes in the economy, which means it 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.
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
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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.
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.
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The twenty (20) 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 Portfolios listed below (except for the
Portfolios for which Alliance serves as Investment Adviser) 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
PORTFOLIOS ANNUAL RATE
Alliance Aggressive Stock(3) 0.54%
Alliance Balance(3) 0.41%
Alliance Common Stock(3) 0.36%
Alliance Conservative Investors(3) 0.48%
Alliance Equity Index(3) 0.31%
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 Quality Bond(3) 0.53%
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%
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 1, 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 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)
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%
MFS Growth with Income 0.60%
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
________________________ EQ Advisors Trust
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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 Application, that with respect to those Portfolios for which
Alliance serves as Adviser (other than EQ/Alliance Premier Growth Portfolio),
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.
<PAGE>
----------
83
- --------------------------------------------------------------------------------
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
- -----------
84
- --------------------------------------------------------------------------------
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
---------
85
- --------------------------------------------------------------------------------
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
- -----------
86
- --------------------------------------------------------------------------------
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
-----------
87
- --------------------------------------------------------------------------------
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
----------
88
- --------------------------------------------------------------------------------
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 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
Portfolio below will be subject to charges and expenses relating to such
insurance
<PAGE>
-----
89
- --------------------------------------------------------------------------------
contracts. The performance results presented above do not reflect any insurance
related expenses and would be reduced if such charges were reflected.
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(4)(EQ/ALLIANCE PREMIER GROWTH PORTFOLIO)
49.85% N/A N/A 42.97% 10/1/96
S&P 500 Index(2) 28.57% N/A N/A 21.60%
- ------------------------------------------------------------------------------------------------------------------------
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(2) 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(2) 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(3) (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(2) 28.57% 24.06% N/A 18.82%
- ------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS INVESTORS TRUST1 (MFS GROWTH WITH INCOME PORTFOLIO)
22.95% 22.97% 19.15% 7/15/24
S&P 500 Index(2) 28.57% 24.06% 19.21%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) 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.
(2) 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.
(3) 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.
(4) 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.
____________________ EQ Advisors Trust
<PAGE>
10 Financial Highlights
- -------
90
- --------------------------------------------------------------------------------
No financial highlights are presented for EQ/Evergreen Foundation Portfolio,
EQ/Evergreen Portfolio and MFS Growth with Income, 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.
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS
December 31, 1998Financial Highlights
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(A)
-----
91
- --------------------------------------------------------------------------------
The financial highlights tables below are intended to help you understand the
financial performance for fourteen (14) 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 fourteen (14) 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 1,
1999. These financial statements have been audited by PricewaterhouseCoopers
LLP, independent accountants. PricewaterhouseCoopers LLP's report on HRT
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>
_______________ EQ Advisors Trust
<PAGE>
- -----
92
- --------------------------------------------------------------------------------
ALLIANCE BALANCED 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) .................................... $ 17.58 $ 16.64 $ 16.76 $ 14.87 $ 16.67
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.56 0.58 0.53 0.54 0.45
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 2.54 1.86 1.31 2.36 (1.78)
--------- --------- --------- --------- ---------
Total from investment operations .............. 3.10 2.44 1.84 2.90 (1.33)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.50) (0.59) (0.53) (0.54) (0.44)
Dividends in excess of net investment
income ....................................... - - - - (0.03)
Distributions from realized gains ............. (1.67) (0.91) (1.40) (0.47) -
Distributions in excess of realized gains ..... - - (0.03) - -
Tax return of capital distributions ........... - - - - (0.00)
---------- ---------- ---------- ---------- ---------
Total dividends and distributions ............. (2.17) (1.50) (1.96) (1.01) (0.47)
---------- ---------- ---------- ---------- ---------
Net asset value, end of period .................. $ 18.51 $ 17.58 $ 16.64 $ 16.76 $ 14.87
========== ========== ========== ========== =========
Total return (c) ................................ 18.11% 15.06% 11.68% 19.75% (8.02)%
========== ========== ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $1,936,429 $1,724,089 $1,637,856 $1,523,142 $1,329,820
Ratio of expenses to average net assets ......... 0.45% 0.45% 0.41% 0.40% 0.39%
Ratio of net investment income to average
net assets .................................... 3.00% 3.30% 3.15% 3.33% 2.87%
Portfolio turnover rate ......................... 95% 146% 177% 186% 115%
<CAPTION>
CLASS IB
---------------
JULY 8, 1998
TO
DECEMBER 31,
1998
---------------
<S> <C>
Net asset value, beginning of
period (b) .................................... $ 19.48
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.24
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 0.66
---------
Total from investment operations .............. 0.90
---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.20)
Dividends in excess of net investment
income ....................................... -
Distributions from realized gains ............. (1.67)
Distributions in excess of realized gains ..... -
Tax return of capital distributions ........... -
---------
Total dividends and distributions ............. (1.87)
---------
Net asset value, end of period .................. $ 18.51
=========
Total return (c) ................................ 4.92%
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $ 10
Ratio of expenses to average net assets ......... 0.70%(d)
Ratio of net investment income to average
net assets .................................... 2.65%(d)
Portfolio turnover rate ......................... 95%
</TABLE>
<PAGE>
-----
93
- --------------------------------------------------------------------------------
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>
- -----
94
- --------------------------------------------------------------------------------
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>
-----
95
- --------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1998 1997 1996 1995
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 19.74 $ 15.16 $ 13.13 $ 9.87
--------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.27 0.26 0.27 0.26
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 5.25 4.64 2.65 3.32
--------- ------- ------- -------
Total from investment operations .............. 5.52 4.90 2.92 3.58
--------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.25) (0.25) (0.25) (0.22)
Distributions from realized gains ............. (0.01) (0.07) (0.64) (0.09)
Distributions in excess of realized gains ..... - - - (0.01)
---------- -------- -------- --------
Total dividends and distributions ............. (0.26) (0.32) (0.89) (0.32)
---------- -------- -------- --------
Net asset value, end of period .................. $ 25.00 $ 19.74 $ 15.16 $ 13.13
========= ======= ======= =======
Total return (c) ................................ 28.07% 32.58% 22.39% 36.48%
========= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $1,689,913 $943,631 $386,249 $165,785
Ratio of expenses to average net assets ......... 0.34% 0.37% 0.39% 0.48%
Ratio of net investment income to average
net assets .................................... 1.23% 1.46% 1.91% 2.16%
Portfolio turnover rate ......................... 6% 3% 15% 9%
<CAPTION>
CLASS IA CLASS IB
------------------- ---------------------------------
YEAR
MARCH 1, 1994 ENDED MAY 1, 1997
TO DECEMBER 31, TO
DECEMBER 31, 1994 1998 DECEMBER 31, 1997
------------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 10.00 $ 19.73 $ 16.35
--------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.20 0.22 0.14
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. (0.09) 5.24 3.48
--------- ------- ---------
Total from investment operations .............. 0.11 5.46 3.62
--------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.20) (0.20) (0.17)
Distributions from realized gains ............. (0.03) (0.01) (0.07)
Distributions in excess of realized gains ..... (0.01) - -
--------- -------- ---------
Total dividends and distributions ............. (0.24) (0.21) (0.24)
--------- -------- ---------
Net asset value, end of period .................. $ 9.87 $ 24.98 $ 19.73
========= ======== =========
Total return (c) ................................ 1.08% 27.74% 22.28%
========= ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $ 36,748 $ 443 $ 110
Ratio of expenses to average net assets ......... 0.49%(d) 0.59% 0.62%(d)
Ratio of net investment income to average
net assets .................................... 2.42%(d) 0.98% 1.10%(d)
Portfolio turnover rate ......................... 7% 6% 3%
</TABLE>
______________________ EQ Advisors Trust
<PAGE>
- -----
96
- --------------------------------------------------------------------------------
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>
<PAGE>
-----
97
- --------------------------------------------------------------------------------
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>
_________________ EQ Advisors Trust
<PAGE>
- -----
98
- --------------------------------------------------------------------------------
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>
<PAGE>
-----
99
- --------------------------------------------------------------------------------
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>
________________ EQ Advisors Trust
<PAGE>
- -----
100
- --------------------------------------------------------------------------------
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>
<PAGE>
-----
101
- --------------------------------------------------------------------------------
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>
_______________ EQ Advisors Trust
<PAGE>
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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>
<PAGE>
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ALLIANCE QUALITY BOND PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA CLASS IB
---------------------------------------------------------------- ---------------
JULY 8, 1998
YEAR ENDED DECEMBER 31, TO
---------------------------------------------------------------- DECEMBER 31,
1998 1997 1996 1995 1994 1998
------------ ------------ ------------ ------------ ------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) ................................... $ 9.74 $ 9.49 $ 9.61 $ 8.72 $ 9.82 $ 9.90
------- ------- ------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.55 0.60 0.57 0.57 0.66 0.25
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................ 0.28 0.24 (0.07) 0.88 (1.16) 0.14
------- ------- ------- ------- ------- --------
Total from investment operations ............. 0.83 0.84 0.50 1.45 (0.50) 0.39
------- ------- ------- ------- ------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.53) (0.59) (0.60) (0.56) (0.55) (0.25)
Dividends in excess of net investment
income ...................................... - - (0.02) - - -
Distributions from realized gains ............ (0.20) - - - - (0.20)
Tax return of capital distributions .......... - - - - (0.05) -
------- ------- ------- ------- ------- --------
Total dividends and distributions ............ (0.73) (0.59) (0.62) (0.56) (0.60) (0.45)
------- ------- ------- ------- ------- --------
Net asset value, end of period ................. $ 9.84 $ 9.74 $ 9.49 $ 9.61 $ 8.72 $ 9.84
======= ======= ======= ======= ======= ========
Total return (c) ............................... 8.69% 9.14% 5.36% 17.02% (5.10)% 4.05%
======= ======= ======= ======= ======= ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $322,418 $203,233 $155,023 $157,443 $127,575 $ 10
Ratio of expenses to average net assets ........ 0.57% 0.57% 0.59% 0.59% 0.59% 0.81%(d)
Ratio of net investment income to average
net assets ................................... 5.48% 6.19% 6.06% 6.13% 7.17% 5.06%(d)
Portfolio turnover rate ........................ 194% 374% 431% 411% 222% 194%
</TABLE>
_________________ EQ Advisors Trust
<PAGE>
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- --------------------------------------------------------------------------------
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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- --------------------------------------------------------------------------------
- ----------
(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 Balanced Portfolio-January 27, 1986
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 Quality Bond Portfolio-October 1, 1993
Alliance Growth and Income Portfolio-October 1, 1993
Alliance Equity Index Portfolio-March 1, 1994
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 Equity Index, Alliance International, Alliance Small Cap Growth
and Alliance Conservative Investors Portfolios - May 1, 1997.
Alliance Quality Bond and Alliance Balanced Portfolios - July 8, 1998.
(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
