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Filed Pursuant to Rule 497(c)
Registration File No.: 333-17217
EQ ADVISORS TRUST
SUPPLEMENT DATED JANUARY 4, 1999 TO THE PROSPECTUS DATED MAY 1, 1998.
This Supplement updates certain information contained in the above-dated
Prospectus. Except where indicated, this Supplement does not supersede any
prior supplements. You may obtain an additional copy of the Prospectus, free of
charge, by writing the Trust at 1290 Avenue of the Americas, New York, New York
10104.
Effective January 4, 1999, the Trust will offer three additional professionally
managed investment portfolios ("Portfolios") for investment. Each Portfolio has
its own investment objective and policies that are designed to meet different
investment goals. Only Class IB shares of each Portfolio are currently offered
for investment. The three additional Portfolios offered by the Trust are as
follows:
o EQ/Evergreen Foundation Portfolio
o EQ/Evergreen Portfolio
o MFS Growth with Income Portfolio
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THE TRUST
Each of the Portfolios set forth below is diversified for purposes of the
Investment Company Act of 1940, as amended ("1940 Act").
Each Portfolio is managed by EQ Financial Consultants, Inc. ("Manager") which
directs the day to day operations of each Portfolio. Evergreen Asset Management
Corp. and Massachusetts Financial Services Company serve as the advisers (each
an "Adviser" and, together the "Advisers") to one or more of the Portfolios, as
detailed in the table below.
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PORTFOLIO ADVISER
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EQ/Evergreen Foundation Portfolio Evergreen Asset Management Corp.
EQ/Evergreen Portfolio Evergreen Asset Management Corp.
MFS Growth with Income Portfolio Massachusetts Financial Services Company
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The Manager has the ultimate responsibility to oversee each of the Advisers and
to recommend their hiring, termination and replacement. The Trust and the
Manager have received exemptive relief from the Securities and Exchange
Commission that permits the Manager, subject to approval by the Board of
Trustees, to (i) select Advisers for each of the Trust's Portfolios and (ii)
materially modify existing investment advisory agreements without obtaining
shareholder approval.
EQ Financial Consultants, Inc. ("EQ Financial"), the Trust's Manager, and
Equitable Distributors, Inc. ("EDI") each serve as one of the distributors for
the Class IB shares of the Trust offered by the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The following is a brief description of the investment objectives and policies
of each of the new Portfolios. All of the objectives and policies of each
Portfolio, unless otherwise noted, are not fundamental and may be changed by
the Board of Trustees of the Trust without the approval of shareholders.
Certain investment strategies and instruments discussed below are described in
greater detail in the May 1, 1998 Prospectus ("Prospectus") and in the
Statement of Additional Information dated January 4, 1999 ("Statement of
Additional Information"). Because of the uncertainty inherent in all
investments, there can be no assurance that the Portfolios will be able to
achieve their respective investment objectives.
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EQ/EVERGREEN FOUNDATION PORTFOLIO
The investment objectives of the EQ/Evergreen Foundation Portfolio, in order of
priority, are reasonable income, conservation of capital and capital
appreciation. The Portfolio seeks to achieve these objectives by investing in a
combination of common stocks, preferred stocks, securities convertible into or
exchangeable for common stocks, corporate debt obligations and United States
Government securities, and short-term debt instruments, such as commercial
paper. The Portfolio's common stock investments will include those which at the
time of purchase pay dividends and in the view of the Adviser have potential
for capital enhancement. For purposes of this Portfolio, the words "reasonable
income" mean moderate income.
The Portfolio's asset allocation will vary from time to time in accordance with
changing economic and market conditions, including: inflation rates, business
cycle trends, business regulations and tax law impacts on the investment
markets. The composition of the Portfolio will be subject to the discretion of
the Adviser, although it intends at all times to be diversified for 1940 Act
purposes. Under normal circumstances, the Adviser anticipates that at least 25%
of the Portfolio's net assets will consist of fixed income securities. The
balance will be invested in equity securities (including common stocks,
preferred stocks and convertible securities).
In selecting fixed income securities for the Portfolio, emphasis will be placed
on those securities that the Adviser expects will fluctuate little in value,
other than as a result of changes in prevailing interest rates. The market
values of the debt obligations in the Portfolio are expected to vary inversely
to any changes in prevailing interest rates. While the Portfolio's fixed income
investments will generally be made for the purpose of generating interest
income, investments in medium to long-term debt securities (i.e., those with
maturities from five to ten years and those with maturities over ten years,
respectively) may be made with a view to realizing capital appreciation when
the Adviser believes changes in interest rates will lead to an increase in the
value of such securities.
The fixed income portion of the Portfolio's portfolio may include: (i)
marketable obligations of, or guaranteed by, the United States Government, its
agencies or instrumentalities, including issues of the United States Treasury,
such as bills, certificates of indebtedness, notes and bonds, and issues of
agencies and instrumentalities established under the authority of an act of
Congress; (ii) corporate debt obligations rated no lower than A by Moody's, or
A-2 by S&P; (iii) obligations of banks or banking institutions having total
assets of more than $2 billion that are members of the Federal Deposit
Insurance Corporation; and (iv) commercial paper of high-quality (rated no
lower than A-2 by S&P or Prime-2 by Moody's or, if not rated, issued by
companies which have an outstanding long-term debt issue rated AAA or AA by S&P
or Aaa or Aa by Moody's).
Certain debt obligations of the Portfolio may be entitled to the benefit of
standby letters of credit or similar commitments issued by banks and, in such
instances, the Adviser will take into account the obligation of the bank in
assessing the credit quality of such security.
Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
illiquid securities, borrowings, repurchase agreements, reverse repurchase
agreements, forward commitments, real estate investment trusts, foreign
securities, foreign currency transactions, depositary receipts, convertible
securities, securities loans, forward commitments, mortgages and
mortgage-related securities and United States Government securities) are
discussed under the caption "Investment Strategies" below and in the Statement
of Additional Information.
EQ/EVERGREEN PORTFOLIO
The investment objective of the EQ/Evergreen Portfolio is to seek to achieve
capital appreciation. The Portfolio seeks to achieve its investment objective
principally through investment in common stocks and convertible securities of
companies that are little-known, relatively small or represent special
situations which, in the opinion of the Adviser, offer potential for capital
appreciation. For these purposes, a "little-known" company is one whose
business is limited to a regional market or whose securities are closely held
with only a small proportion traded publicly. A "relatively small" company is
one that has a
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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. For these purposes, a "special situation" company is one that offers
potential for capital appreciation because of a recent or anticipated change in
structure, management, products or services.
In addition to securities described above, the Portfolio may invest in
securities of relatively well-known and large companies with potential for
capital appreciation. Investments may also be made, to a limited degree, in
debt securities and preferred stocks that offer an opportunity for capital
appreciation. Short-term investments may also be made if the Adviser believes
that such action will benefit the Portfolio. The Portfolio may invest up to
100% of its assets in short-term obligations for temporary defensive purposes
when in the Adviser's view, market or financial conditions warrant such
investments.
Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options, futures contracts,
borrowings, repurchase agreements, reverse repurchase agreements, forward
commitments, illiquid securities, small company securities, derivatives,
securities loans, investment in securities of other investment companies, and
United States Government securities) are discussed under the caption
"Investment Strategies" below and in the Statement of Additional Information.
MFS GROWTH WITH INCOME PORTFOLIO
The investment objectives of the MFS Growth with Income Portfolio are to
provide reasonable current income and long-term growth of capital and income.
The Portfolio is designed to constitute a conservative means to invest that
portion of an investor's capital that an investor wishes to have in securities
that are considered by the Adviser to be of high or improving investment
quality. In seeking to achieve its objectives, the Adviser attempts to exercise
prudence, discretion and intelligence in the selection of investments with due
regard for both probable income and probable safety of capital. For purposes of
the Portfolio, the words "reasonable current income" mean moderate income. For
purposes of this Portfolio, the words "high investment quality" reflect the
Adviser's intention to avoid the acquisition of speculative securities or those
of doubtful character even if immediate prospects are tempting.
The Portfolio's assets are normally invested in equity securities, including
common stocks, preferred stocks and preference stock, convertible securities,
warrants and depositary receipts for those securities. These equity securities
may be listed on securities exchanges, traded in various over-the-counter
markets or have no organized markets. However, the Portfolio may hold its
assets in cash or invest in commercial paper, repurchase agreements or other
forms of debt securities either to provide reserves for future purchase of
securities or as a temporary defensive measure in certain economic
environments.
Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options and futures, warrants,
repurchase agreements, forward commitments, depositary receipts, foreign
securities, foreign currency transactions, securities loans, illiquid
securities, and zero coupon bonds) are discussed under the caption "Investment
Strategies" below and in the Statement of Additional Information.
INVESTMENT STRATEGIES
In addition to making investments directly in securities, to the extent
described above and below, each of the three new Portfolios may utilize other
investment strategies. Each Portfolio may invest in or utilize any of these
investment strategies and instruments or engage in any of these practices
except where otherwise prohibited by law or the Portfolio's own investment
restrictions. Portfolios that anticipate committing 5% or more of their net
assets to a particular type of investment strategy or instruments are
specifically referred to in the descriptions below of such investment strategy
or instrument. Certain of these strategies and instruments and the risks
related to them are summarized below and are described in more detail in the
Prospectus and in the Statement of Additional Information.
Borrowings. The Portfolios may borrow money from banks or other lenders as a
temporary measure for emergency purposes, such as to facilitate redemption
requests, or (except for EQ/Evergreen Foundation
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Portfolio and EQ/Evergreen Portfolio) for other purposes consistent with each
Portfolio's investment objective and program. Such borrowings would be subject
to interest costs which may or may not be recovered by appreciation of
securities purchased. Borrowings for the EQ/Evergreen Foundation Portfolio and
EQ/Evergreen Portfolio may not exceed 33 1/3% of each Portfolio's total assets.
The EQ/Evergreen Foundation Portfolio and EQ/Evergreen Portfolio may also
borrow up to an additional 5% of its total assets from banks or other lenders.
Borrowings for the MFS Growth with Income Portfolio may not exceed 10% of the
Portfolio's total assets. Each Portfolio may pledge its assets to secure these
permissible borrowings. Each Portfolio may not purchase additional securities
when its borrowings exceed 5% of its total assets. See also "Reverse Repurchase
Agreements" for information concerning an investment technique that may be
deemed to involve a borrowing. For more information on borrowings, please see
"Investment Strategies--Borrowings" in the Prospectus.
Convertible Securities. Each of the Portfolios may invest in convertible
securities, including both convertible debt and convertible preferred stock.
For more information on convertible securities, please see "Investment
Strategies--Convertible Securities" in the Prospectus.
Derivatives. Each Portfolio may invest in one of more types of derivatives.
Derivatives are financial products or instruments that derive their value from
the value of one of more underlying assets, reference rates or indices.
Derivatives include, but are not limited to, the following: asset-backed
securities, floaters and inverse floaters, hybrid instruments, mortgage-backed
securities, options, futures contracts, stripped mortgage-backed securities,
structured notes and swaps. Further information about these instruments and the
risks involved in their use are contained under the description of each of
these instruments in the Statement of Additional Information.
Foreign Securities. Foreign investments involve certain risks that are not
present in domestic securities. Each of the Portfolios (except the EQ/Evergreen
Portfolio) may purchase securities denominated in foreign currencies, and,
therefore, a change in the value of any such currency against the United States
dollar will result in a change in the United States dollar value of a
Portfolio's assets and income. In addition, although a portion of a Portfolio's
investment income may be received or realized in such currencies, the Portfolio
will be required to compute and distribute its income in United States dollars.
Therefore, if the exchange rate for any such currency declines after a
Portfolio's income has been earned and computed in United States dollars but
before conversion and payment, the Portfolio could be required to liquidate
portfolio securities to make such distributions.
Currency exchange rates may be affected unpredictably by intervention (or the
failure to intervene by United States or foreign governments or central banks,
by currency controls or political developments in the United States or abroad.
For example, significant uncertainty surrounds the proposed introduction of the
Euro (a common currency for the European Union) in January 1999 and its effect
on the value of the securities denominated in local European currencies. These
and other currencies in which a Portfolio's assets are denominated may be
devalued against the United States dollar, resulting in a loss to the
Portfolio.
The value of foreign investments and the investment income derived from them
may also be affected unfavorably by changes in currency exchange control
regulations. Although the Portfolios will invest only in securities denominated
in foreign currencies that are fully exchangeable into United States dollars
without legal restriction at the time of investment, there can be no assurance
that currency controls will not be imposed subsequently. In addition, the value
of foreign fixed income investments may fluctuate in response to changes in
United States and foreign interest rates.
There may be less information publicly available about a foreign issuer than
about a United States issuer, and a foreign issuer is not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the United States. Foreign stock markets are generally not as
developed or efficient as, and may be more volatile than, those in the United
States. While growing in volume, they usually have substantially less volume
than United States markets and a Portfolio's investment securities may be less
liquid and subject to more rapid and erratic price movements than securities of
comparable United States companies. Equity securities may trade at
price/earnings multiples higher than comparable United States securities and
such levels may not be sustainable. There is generally less government
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supervision and regulation of foreign stock exchanges, brokers and listed
companies than in the United States. Moreover, settlement practices for
transactions in foreign markets may differ from those in United States markets.
Such differences may include delays beyond periods customary in the United
States and practices, such as delivery of securities prior to receipt of
payment, which increase the likelihood of a "failed settlement." Failed
settlements can result in losses to a Portfolio. In less liquid and less
developed stock markets, such as those in some Eastern European, Southeast
Asian, and Latin American countries, volatility may be heightened by actions of
a few major investors. For example, substantial increases or decreases in cash
flows of mutual funds investing in these markets could significantly affect
stock prices and, therefore, share prices.
Foreign brokerage commissions, custodial expenses and other fees are also
generally higher than for securities traded in the United States. Consequently,
the overall expense ratios of international or global funds are usually
somewhat higher than those of typical domestic stock funds.
In addition, the economies, markets and political structures of a number of the
emerging market countries in which the Portfolios can invest do not compare
favorably with the United States and other mature economies in terms of wealth
and stability. Therefore, investments in these countries may be riskier, and
will be subject to abrupt price movements. Some economies are less well
developed and less diverse (for example, Latin America, Eastern Europe and
certain Asian countries), and more vulnerable to the ebb and flow of
international trade, trade barriers and other protectionist or retaliatory
measures (for example, Southeast Asia and Latin America). Some countries,
particularly in Southeast Asia, Latin America, and Eastern Europe are grappling
with severe inflation or recession, high levels of national debt, currency
exchange problems and government instability. Investments in countries that
have recently begun moving away from central planning and state-owned
industries toward free markets, such as the Eastern European or Chinese
economies, should be regarded as speculative. For more information on foreign
securities, please see "Investment Strategies--Foreign Securities" in the
Prospectus.
Each of the Portfolios may invest in certain types of foreign securities or
engage in certain types of transactions related to foreign securities, to the
extent discussed below.
Depositary Receipts. Each of the Portfolios (except the EQ/Evergreen Portfolio)
may purchase depositary receipts, which are securities representing ownership
interests in securities of foreign companies (as "underlying issuer") and
deposited with a securities depository. For more information on depository
receipts, please see "Investment Strategies--Depositary Receipts" in the
Prospectus.
Foreign Currency Transactions. Each of the Portfolios (except the EQ/Evergreen
Portfolio) may purchase foreign currency on a spot (or cash) basis. In
addition, each of the Portfolios (except the EQ/Evergreen Portfolio) may enter
into contracts to purchase or sell foreign currencies at a future date
("forward contracts"). Each of the Portfolios (except the EQ/Evergreen
Portfolio) may also purchase and sell foreign currency futures contracts and
may purchase and write exchange-traded call and put options on foreign currency
futures contracts and on foreign currencies. The EQ/Evergreen Portfolio and MFS
Growth with Income Portfolio may engage in over-the-counter options on foreign
currency transactions. The Advisers may engage in these transactions to protect
against uncertainty in the level of future exchange rates in connection with
the purchase and sale of portfolio securities ("transaction hedging") and to
protect the value of specific portfolio positions ("position hedging").
Hedging transactions involve costs and may result in losses. Each of the
Portfolios may also write covered call options on foreign currencies to offset
some of the costs of hedging those currencies. A Portfolio will engage in
over-the-counter options transactions on foreign currencies only when
appropriate exchange traded transactions are unavailable and when, in the
Adviser's opinion, the pricing mechanism and liquidity are satisfactory and the
participants are responsible parties likely to meet their contractual
obligations. A Portfolio's ability to engage in hedging and related option
transactions may be limited by tax considerations.
Transactions and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Portfolios own or intend to
purchase or sell. They simply establish a rate of exchange which one can
achieve at some future point in time. Additionally, although these techniques
tend to minimize the
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risk of loss due to a decline in the value of the hedged currency, they tend to
limit any potential gain which might result from the increase in the value of
such currency. For more information on foreign currency transactions, please
see "Investment Strategies--Foreign Currency Transactions" in the Prospectus.
Forward Commitments. Each Portfolio may make contracts to purchase securities
for a fixed price at a future date beyond customary settlement time ("forward
commitments"). For more information on forward commitments, please see
"Investment Strategies--Forward Commitments" in the Prospectus.
Illiquid Securities. Each of the Portfolios may invest up to 15% of its net
assets in illiquid securities and other securities which are not readily
marketable, including nonnegotiable time deposits, certain restricted
securities not deemed by the Trust's Board of Trustees to be liquid, and
repurchase agreements with maturities longer than seven days. For more
information on illiquid securities, please see "Investment Strategies--Illiquid
Securities" in the Prospectus.
Investment Grade and Lower Quality Fixed Income Securities. Each Portfolio
(except the EQ/Evergreen Foundation Portfolio) may invest in or hold a portion
of its total assets in investment grade or, except as noted below, lower
quality fixed income securities. The EQ/Evergreen Portfolio may invest in or
hold investment grade securities, but not lower quality fixed income
securities. The EQ/Evergreen Foundation Portfolio may invest in or hold only
securities rated A or higher. Investment grade securities are securities rated
Baa or higher by Moody's or BBB or higher by S&P or comparable quality unrated
securities. Investment grade securities while normally exhibiting adequate
protection parameters, have speculative characteristics, and, consequently,
changes in economic conditions or other circumstances are more likely to lead
to a weakened capacity of such issuers to make principal and interest payments
than is the case for higher grade fixed income securities. For more information
on investment grade and lower quality fixed income securities, please see
"Investment Strategies--Investment Grade and Lower Quality Fixed Income
Securities" in the Prospectus.
Mortgages and Mortgage-Related Securities. The EQ/Evergreen Foundation
Portfolio may invest in mortgage-related securities (i.e., mortgage-backed
securities). A mortgage-backed security may be an obligation of the issuer
backed by a mortgage or pool of mortgages or a direct interest in an underlying
pool of mortgages. Some mortgage-backed securities, such as CMOs, make payments
of both principal and interest at a variety of intervals; others make
semiannual interest payments at a predetermined rate and repay principal at
maturity (like a typical bond). Mortgage-backed securities are based on
different types of mortgages including those on commercial real estate or
residential properties. For more information about mortgages and
mortgage-related securities, please see "Investment Strategies--Mortgages and
Mortgage-Related Securities" in the Prospectus.
Options and Futures Transactions. Each Portfolio may utilize futures contracts.
Futures contracts (a type of potentially high-risk security) enable the
investor to buy or sell an asset in the future at an agreed upon price. Each
Portfolio may also write and purchase put and call options. Options (another
type of potentially high-risk security) give the purchaser of an option the
right, but not the obligation, to buy or sell in the future an asset at a
predetermined price during the term of the option. (The writer of a put or call
option would be obligated to buy or sell the underlying asset at a
predetermined price during the term of the option.) Each Portfolio will write
put and call options only if such options are considered to be "covered". A
call option on a security is covered, for example, when the writer of the call
option owns throughout the option period the security on which the option is
written (or a security convertible into such a security without the payment of
additional consideration). A put option on a security is covered, for example,
when the writer of the put has deposited and maintained in a segregated account
throughout the option period sufficient cash or other liquid assets in an
amount equal to or greater than the exercise price of the put option. Each
Portfolio that is permitted to invest in futures contracts and related options
may utilize such transactions for other than hedging purposes to the extent
that aggregate initial margin deposits and premiums paid do not exceed 5% of
the Portfolio's net assets.
The MFS Growth with Income Portfolio will not commit more than 5% of its total
assets to premiums when purchasing call or put options. In addition, the total
market value of securities against which any Portfolio has written call or put
options may not exceed 25% of its total assets. Each Portfolio may engage in
over-the-counter put and call option transactions. Options traded in the
over-the-counter market may
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not be as actively traded as those on an exchange, so it may be more difficult
to value such options. In addition, it may be difficult to enter into closing
transactions with respect to such options. Such over-the-counter options, and
the securities used as "cover" for such options, may be considered illiquid
securities.
Each Portfolio may buy and sell futures and options contracts for any number of
reasons, including: to manage its exposure to changes in securities prices and
foreign currencies; as an efficient means of adjusting its overall exposure to
certain markets; in an effort to enhance income; to protect the value of
portfolio securities and to adjust the duration of fixed income investments.
Each Portfolio may purchase, sell, or write call and put options and futures
contracts on securities, financial indices, and foreign currencies and options
on futures contracts.
The risk of loss in trading futures contracts can be substantial because of the
low margin deposits required and the extremely high degree of leveraging
involved in futures pricing. As a result, a relatively small price movement in
a futures contract may cause an immediate and substantial loss or gain. The
primary risks associated with the use of futures contracts and options are: (i)
imperfect correlation between the change in market value of the stocks held by
a Portfolio and the prices of futures contracts and options; and (ii) possible
lack of a liquid secondary market for a futures contract or an over-the counter
option and the resulting inability to close a futures position or
over-the-counter option prior to its maturity date.
Repurchase Agreements. Each Portfolio may enter into repurchase agreements with
qualified and Board approved banks, broker-dealers, or other financial
institutions. For more information on repurchase agreements, please see
"Investment Strategies--Repurchase Agreements" in the Prospectus.
Real Estate Investment Trusts. The EQ/Evergreen Foundation Portfolio may invest
up to a 15% of its respective net assets in investments related to real estate,
including real estate investment trusts ("REITS"). Risks associated with
investments in securities of companies in the real estate industry include:
decline in the value of real estate; risks related to general and local
economic conditions; overbuilding and increased competition; increases in
property taxes and operating expenses; changes in zoning laws; casualty or
condemnation losses; variations in rental income; changes in neighborhood
values; the appeal of properties to tenants; and increases in interest rates.
In addition, equity REITS may be affected by changes in the values of the
underlying property owned by the trusts, while mortgage real estate investment
trusts may be affected by the quality of credit extended. REITS are dependent
upon management skills, may not be diversified and are subject to the risks of
financing projects. Such REITS are also subject to heavy cash flow dependency,
defaults by borrowers, self liquidation and the possibility of failing to
qualify for tax-free pass-through of income under the Code and to maintain
exemption from the 1940 Act. In the event an issuer of debt securities
collateralized by real estate defaults, it is conceivable that the REITS could
end up holding the underlying real estate.
Reverse Repurchase Agreements. The EQ/Evergreen Foundation Portfolio and
EQ/Evergreen Portfolio may each enter into reverse repurchase agreements with
brokers, dealers, domestic and foreign banks or other financial institutions.
In a reverse repurchase agreement, the Portfolio sells a security and agrees to
repurchase it at a mutually agreed upon date and price, reflecting the interest
rate effective for the term of the agreement. It may also be viewed as the
borrowing of money by the Portfolio. The Portfolio's investment of the proceeds
of a reverse repurchase agreement is the speculative factor known as leverage.
The Portfolio may enter into a reverse repurchase agreement only if the
interest income from investment of the proceeds is greater than the interest
expense of the transaction and the proceeds are invested for a period no longer
than the term of the agreement. The Portfolio will maintain with the custodian
a separate account with a segregated portfolio of unencumbered liquid assets in
an amount at least equal to its purchase obligations under these agreements. If
interest rates rise during a reverse repurchase agreement, it may adversely
affect the Portfolio's net asset value. For more information concerning
restrictions on borrowing by each Portfolio, please see "Investment
Strategies--Borrowing" in the Prospectus.
Securities Loans. The EQ/Evergreen Foundation Portfolio and EQ/Evergreen
Portfolio may each seek to earn additional income by making secured loans of
portfolio securities with a value up to 33 1/3% of their respective total
assets. The MFS Growth with Income Portfolio may lend portfolio securities in
an amount up to 25% of its respective total assets. For more information on
securities loans, please see "Investment Strategies--Securities Loans" in the
Prospectus.
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Short Sales Against the Box. The EQ/Evergreen Portfolio may enter into a "short
sale" of securities in circumstances in which, at the time the short position
is open, the Portfolio owns an equal amount of the securities sold short or
owns preferred stocks or debt securities, convertible or exchangeable without
payment of further consideration, into an equal number of securities sold
short. This kind of short sale, which is referred to as one "against the box,"
may be entered into by the Portfolio to, for example, lock in a sale price for
a security the Portfolio does not wish to sell immediately. The Portfolio will
deposit, in a segregated account with its custodian or a qualified
subcustodian, the securities sold short or convertible or exchangeable
preferred stocks or debt securities sold in connection with short sales against
the box. The Portfolio will endeavor to offset transaction costs associated
with short sales against the box with the income from the investment of the
cash proceeds. Not more than 10% of the Portfolio's net assets (taken at
current value) may be held as collateral for short sales against the box at any
one time. The extent to which the Portfolio may make short sales may be limited
by Code requirements for qualification as a regulated investment company.
Small Company Securities. The EQ/Evergreen Portfolio may invest in the
securities of smaller capitalization companies. For more information on small
company securities, please see "Investment Strategies--Small Company
Securities" in the Prospectus.
United States Government Securities. Each Portfolio may invest in debt
obligations of varying maturities issued or guaranteed by the United States
Government, its agencies or instrumentalities ("United States Government
securities"). Direct obligations of the United States Treasury include a
variety of securities that differ in their interest rates, maturities and dates
of issuance. United States Government securities also include securities issued
or guaranteed by government agencies that are supported by the full faith and
credit of the United States (e.g., securities issued by the Federal Housing
Administration, Export-Import Bank of the United States, Small Business
Administration, and Government National Mortgage Association); securities
issued or guaranteed by government agencies that are supported by the ability
to borrow from the United States Treasury (e.g., securities issued by the
Federal National Mortgage Association); and securities issued or guaranteed by
government agencies that are only supported by the credit of the particular
agency (e.g., Interamerican Development Bank, the International Bank for
Reconstruction and Development, and the Tennessee Valley Authority).
Warrants. Each Portfolio may invest in warrants. For more information on
warrants, please see "Investment Strategies--Warrants" in the Prospectus.
Zero-Coupon Bonds. The MFS Growth with Income Portfolio may invest in
zero-coupon bonds. For more information on zero-coupon bonds, please see
"Investment Strategies--Zero-Coupon Bonds" in the Prospectus.
Portfolio Turnover. Each Portfolio's turnover is not expected to exceed 100%
during its first year of operation.
MANAGEMENT OF THE TRUST
THE BOARD OF TRUSTEES
The Board of Trustees of the Trust provides broad supervision over the business
and affairs of the Portfolios and the Trust as provided in the Trust's Amended
and Restated Declaration of Trust and By-Laws.
THE MANAGER
The Trust is managed by EQ Financial Consultants, Inc. which, subject to the
supervision and direction of the Trustees of the Trust, has overall
responsibility for the general management and administration of the Trust. For
more information on the manager and its duties and expenses please see
"Management of the Trust--The Manager" in the Prospectus.
As compensation for managing the EQ/Evergreen Foundation Portfolio, the Trust
pays the Manager a monthly fee at the annual rate of .63% of the Portfolio's
average daily net assets. As compensation for
8
<PAGE>
managing the EQ/Evergreen Portfolio, the Trust pays the Manager a monthly fee
at the annual rate of .75% of the Portfolio's average daily net assets. As
compensation for managing the MFS Growth with Income Portfolio, the Trust pays
the Manager a monthly fee at the annual rate of .55% of the Portfolio's average
daily net assets.
THE ADVISERS
Pursuant to an investment advisory agreement with the Manager, each Adviser to
a Portfolio furnishes continuously an investment program for the Portfolio,
makes investment decisions on behalf of the Portfolio, places all orders for
the purchase and sale of investments for the Portfolio's account with brokers
or dealers selected by such Adviser and may perform certain limited related
administrative functions in connection therewith. For its services, the Manager
pays each Adviser an advisory fee based on a percentage of the average daily
net assets of each Portfolio that it advises.
Evergreen Asset Management Corp. ("Evergreen") has been the adviser to the
EQ/Evergreen Foundation Portfolio and EQ/Evergreen Portfolio since each
Portfolio commenced operations. As compensation for services as the Adviser to
the EQ/Evergreen Foundation Portfolio, the Manager pays Evergreen a monthly fee
at an annual rate equal to .425% of the Portfolio's average daily net assets.
As compensation for services as the Adviser to the EQ/Evergreen Portfolio, the
Manager pays Evergreen, a monthly fee at an annual rate equal to .55% of the
Portfolio's average daily net assets. Evergreen, which is located at 2500
Westchester Avenue, Purchase, New York, NY 10577, is a registered investment
adviser. It is a wholly-owned subsidiary of First Union Corporation ("First
Union"), a bank holding company. First Union, through Evergreen and other
subsidiaries, offers a broad range of financial services to individuals and
businesses throughout the United States.
Stephen A. Lieber is the portfolio manager responsible for the day-to-day
management of the Evergreen Foundation Portfolio since its inception. Mr.
Lieber and Nola Maddox Falcone, C.F.A., have been responsible for the
day-to-day management of the Evergreen Portfolio since its inception. Mr.
Lieber has been Chairman and Co-Chief Executive Officer of Evergreen since 1994
(he has been associated with Evergreen and its predecessor (as Chairman) since
1971). Ms. Falcone has been President and Co-Chief Executive Officer of
Evergreen since 1994 (she has been associated with Evergreen and its
predecessor (as portfolio manager) since 1974). Evergreen has entered into a
sub-advisory agreement with Lieber & Company which provides that Lieber &
Company's research department and staff will furnish Evergreen with
information, investment recommendations, advice and assistance, and will
generally be available for consultation on EQ/Evergreen Portfolio. Lieber &
Company will be reimbursed by Evergreen in connection with rendering such
services. There is no additional charge to the Evergreen Portfolio for the
services provided by Lieber & Company.
Massachusetts Financial Services Company ("MFS") has been the Adviser to the
MFS Growth with Income Portfolio since the Portfolio commenced operations. As
compensation for services as the Adviser to the MFS Growth with Income
Portfolio, the Manager pays MFS a monthly fee at an annual rate equal to: .40%
of the Portfolio's average daily net assets up to and including $150 million;
.375% of the Portfolio's average daily net assets over $150 million and up to
and including $300 million; and .35% of the Portfolio's average daily net
assets in excess of $300 million.
MFS is America's oldest mutual fund organization. MFS is located at 500
Boylston Street, Boston, MA 02116. MFS and its predecessor organizations have a
history of money management dating from 1924 and the founding of the first
mutual fund in the United States, Massachusetts Investors Trust. As of December
31, 1997, MFS managed more than $70.2 billion on behalf of over 2.7 million
investors accounts. 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. John D. Laupheimer, Jr. and
Mitchell D. Dynan are the portfolio managers for the MFS Growth with Income
Portfolio. Mr. Laupheimer, Jr., a Senior Vice President of MFS, has been
employed as a portfolio manager by MFS since 1986. Mr. Dynan, a Vice President
of MFS, has been employed as a portfolio manager by MFS since 1981.
9
<PAGE>
With respect to the MFS Emerging Growth Portfolio, the description of portfolio
managers is hereby restated as follows: John W. Ballen, President and Chief
Investment Officer of the Adviser, and Stephen Pesek, Jr., a Vice President of
the Adviser, are the portfolio managers of the Fund. Mr. Ballen has been the
Fund's portfolio manager since its inception in 1986; Mr. Pesek joined Mr.
Ballen as a portfolio manager on December 15, 1998. Messrs. Ballen and Pesek
have been employed as portfolio managers by the Adviser since 1984 and 1994,
respectively. From 1987 to 1994, Mr. Pesek worked at Fidelity Investments as a
research analyst.
With respect to the Morgan Stanley Emerging Markets Equity Portfolio, the
description of portfolio managers is hereby restated as follows: Robert L.
Meyer and Andy Skov share primary responsibility for managing the assets of the
Morgan Stanley Emerging Markets Equity Portfolio, which includes investment
decisions made on behalf of the Portfolio. Mr. Meyer has shared primary
responsibility for managing the Portfolio's assets since September 1997. Since
October 1998, Mr. Skov also became responsible for managing the Portfolio's
assets. Mr. Meyer joined MSAM in 1989 and is a Managing Director of MSAM and
Morgan Stanley & Co. Incorporated ("Morgan Stanley"), a co-manager of MSAM's
emerging markets group and head of MSAM's Latin American equity investment
group. Prior to joining MSAM's Latin American Group, Mr. Meyer worked in MSAM's
U.S. Equity Group. Mr. Skov joined MSAM in 1994 as a Portfolio Manager.
Currently, Mr. Skov is a Principal of MSAM and of Morgan Stanley. Prior to
joining MSAM, Mr. Skov worked in the Latin America group at Bankers Trust.
For further information about the Advisers, their duties and responsibilities,
please see "Management of the Trust--The Advisers" in the Prospectus.
THE ADMINISTRATOR
Pursuant to an agreement ("Mutual Funds Services 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. For
more information on the Administrator, including the fees the Trust pays to the
Administrator for its services, please see "Management of the Trust--The
Administrator" in the Prospectus.
THE TRANSFER AGENT
Equitable Life serves as the transfer agent and dividend disbursing agent of
the Trust and receives no compensation for serving in such capacity.
EXPENSE LIMITATION AGREEMENT
In the interest of limiting expenses of the Portfolios, the Manager has entered
into an expense limitation agreement with the Trust, with respect to each
Portfolio ("Expense Limitation Agreement"), pursuant to which the Manager has
agreed to waive or limit its fees and to assume other expenses so that the
total annual operating expenses of each Portfolio 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: .60% of the respective average daily net assets of the MFS
Growth with Income Portfolio; .70% of the average daily net assets of the
EQ/Evergreen Foundation Portfolio; and .80% of the average daily net assets of
the EQ/Evergreen Portfolio. For further information on the Expense Limitation
Agreement, please see "Management of the Trust--Expense Limitation Agreement"
in the Prospectus.
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.
10
<PAGE>
TRANSACTIONS WITH AFFILIATES
The Adviser to each Portfolio may execute portfolio transactions through
certain of their affiliates. Evergreen, the Adviser to EQ/Evergreen Foundation
Portfolio and EQ/Evergreen Portfolio, may execute transactions through certain
affiliates of Evergreen and First Union, including Lieber & Company. For
further information on transactions with affiliates, please see "Management of
the Trust--Transactions with Affiliates" in the Prospectus.
DESCRIPTION OF THE TRUST AND TRUST'S SHARES
For more information on the Trust and Trust's shares, including how to purchase
and redeem shares, please see "Description of the Trust and Trust's Shares" in
the Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For information on dividends, distributions and taxes, please see "Dividends,
Distributions and Taxes" in the Prospectus.
PERFORMANCE INFORMATION
For information on how the Trust may advertise the performance of its
Portfolios, please see "Performance Information" in the Prospectus.
PRIOR PERFORMANCE OF EACH ADVISER
The following tables provide information concerning the historical performance
of another registered investment company (or series) managed by each Adviser,
that has investment objectives, policies, strategies and risks substantially
similar to those of its 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 and does not represent the past performance of
any of the Portfolios or the future performance of any Portfolio or its
Adviser. Consequently, potential investors should not consider this performance
data with respect to each Adviser as an indication of the future performance of
any Portfolio of the Trust or of its Adviser. Such performance data, as shown
below, for each Adviser's substantially similar investment companies is not the
performance data of any Portfolio of the Trust and should not be confused with
the performance data for each of the Trust's Portfolios, which is shown under
the caption "Performance Information" in the Prospectus.
Each Adviser's performance data shown below for other registered investment
companies or series thereof was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Share prices and investment
returns will fluctuate reflecting market conditions as well as changes in
company-specific fundamentals of portfolio securities. For more information on
the prior performance of each Adviser, please see "Prior Performance of Each
Adviser" in the Prospectus.
11
<PAGE>
EQ/EVERGREEN FOUNDATION PORTFOLIO
In the table below, the only account which is included is another registered
investment company, i.e., Evergreen Foundation Fund which is managed by
Evergreen, and whose investment policies are substantially similar to the
EQ/Evergreen Foundation Portfolio. However, the EQ/Evergreen Foundation
Portfolio will be subject to different expenses than the Evergreen Foundation
Fund. In addition, holders of variable insurance contracts representing
interests in the EQ/Evergreen Foundation Portfolio will be subject to charges
and expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expense.
The investment results of Evergreen Foundation Fund presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the EQ/Evergreen Foundation Portfolio or an individual investor
investing in the EQ/Evergreen Foundation Portfolio.
<TABLE>
<CAPTION>
EVERGREEN
FOUNDATION S&P 500
YEAR ENDED 9/30/98 FUND(1),(3) INDEX(2)
------------------ ----------- --------
<S> <C> <C>
One Year ................ 5.09% 9.05%
Five Years .............. 12.76% 19.91%
Since Inception ......... 16.05% 12.86%
</TABLE>
- ----------
(1) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(2) The S&P 500 Index ("S&P 500") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the United States stock market.
The 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) Annualized performance for the Class Y shares of the Evergreen Foundation
Fund, whose annual expense ratio for the year ended 09/30/98 was 1.03%.
The inception date for the Evergreen Foundation Fund was January 2, 1990.
12
<PAGE>
EQ/EVERGREEN PORTFOLIO
In the table below, the only account which is included is another registered
investment company, i.e., Evergreen Fund, which is managed by Evergreen Asset
Management Corp. and whose investment policies are substantially similar to the
EQ/Evergreen Portfolio. However, the EQ/Evergreen Portfolio will be subject to
different expenses than the Evergreen Fund. In addition, holders of variable
insurance contracts representing interests in the EQ/Evergreen Portfolio will
be subject to charges and expenses relating to such insurance contracts. The
performance results presented below do not reflect any insurance related
expense.
The investment results of Evergreen Fund presented below are unaudited and are
not intended to predict or suggest the returns that might be experienced by the
EQ/Evergreen Portfolio or an individual investor investing in the EQ/Evergreen
Portfolio.
<TABLE>
<CAPTION>
EVERGREEN RUSSELL 2000
YEAR ENDED 9/30/98 FUND(1),(3) INDEX(2)
------------------ ----------- --------
<S> <C> <C>
One Year ........... (5.25)% (19.02)%
Five Years ......... 15.16% 9.09%
Ten Years .......... 12.25% 11.16%
</TABLE>
- ----------
(1) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(2) The Russell 2000 Index is an unmanaged index (with no defined investment
objective) of 2,000 small-cap stocks, and includes reinvestment of
dividends. It is compiled by the Frank Russell Company.
(3) Annualized performance for the Class Y shares of the Evergreen Fund, whose
annual expense ratio for the year ended 09/30/98 was 1.18%.
13
<PAGE>
MFS GROWTH WITH INCOME PORTFOLIO
In the table below, the only account which is included is another registered
investment company, i.e., Massachusetts Investors Trust, which is managed by
Massachusetts Financial Services Company, and whose investment policies are
substantially similar to the MFS Growth with Income Portfolio. However, the MFS
Growth with Income Portfolio will be subject to different expenses than the
Massachusetts Investors Trust. In addition, holders of variable insurance
contracts representing interests in the MFS Growth with Income Portfolio will
be subject to charges and expenses relating to such insurance contracts. The
performance results presented below do not reflect any insurance related
expense.
The investment results of Massachusetts Investors Trust presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the MFS Growth with Income Portfolio or an individual investor
investing in the MFS Growth with Income Portfolio.
<TABLE>
<CAPTION>
MASSACHUSETTS
INVESTORS S&P 500
YEAR ENDED 9/30/98 TRUST(1),(3) INDEX(2)
------------------ ------------ --------
<S> <C> <C>
One Year ........... 8.14% 9.05%
Five Years ......... 19.23% 19.91%
Ten Years .......... 17.33% 17.29%
</TABLE>
- ----------
(1) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(2) The S&P 500 Index ("S&P 500") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the United States stock market.
The 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) Annualized performance for the Class A shares of the Massachusetts
Investors Trust, whose annual expense ratio for the year ended 9/30/98 was
0.74%.
14
<PAGE>
APPENDIX A
The following table summarizes the historical performance information of
certain other registered investment companies that appears on pages 12 through
14 of this Supplement. Each other registered investment company is managed by
an Adviser and has investment objectives, policies, strategies and risks
substantially similar to the Portfolio managed by that 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 and does not represent the past performance of any of the Portfolios or
the future performance of any Portfolio or its Adviser. Consequently, potential
investors should not consider this performance data with respect to each
Adviser as an indication of the future performance of any Portfolio of the
Trust or of its Adviser. Such performance data, as shown below, for each
Adviser's substantially similar investment companies or institutional accounts
is not the performance data of any Portfolio of the Trust and should not be
confused with the performance data for each of the Trust's Portfolios, which is
shown directly above under the caption "Performance Information".
For further information regarding each of the registered investment companies
and the indexes presented below, please refer to pages 12 through 14 of this
Supplement.
ANNUALIZED RATES OF RETURN
PERIOD ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------
SINCE
FUND NAME 1 YEAR 5 YEAR 10 YEAR INCEPTION(1)
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Evergreen Fund (5.25)% 15.16% 12.25% --
Russell 2000 Index (19.02)% 9.09% 11.16% --
Evergreen Foundation Fund 5.09% 12.76% -- 16.05%
S&P 500 Index 9.05% 19.91% -- 12.86%
Massachusetts Investors Trust 8.14% 19.23% 17.33% --
S&P 500 Index 9.05% 19.91% 17.29% --
- ----------------------------------------------------------------------------------------------
</TABLE>
(1) The inception date for the Evergreen Foundation Fund was January 2, 1990.
A-1
<PAGE>
EQ ADVISORS TRUST
SUPPLEMENT DATED JANUARY 4, 1999 TO THE PROSPECTUS DATED MAY 1, 1998.
This Supplement updates certain information contained in the above-dated
Prospectus. Except where indicated, this Supplement does not supersede any
prior supplements. You may obtain an additional copy of the Prospectus, free of
charge, by writing the Trust at 1290 Avenue of the Americas, New York, New York
10104.
Effective January 4, 1999, the Trust will offer one additional professionally
managed investment portfolio ("Portfolio") for investment. The Portfolio has
its own investment objective and policies that are designed to meet certain
investment goals. Only Class IB shares of the Portfolio are currently offered
for investment. The one additional Portfolio offered by the Trust is as
follows:
o MFS Growth with Income Portfolio
- --------------------------------------------------------------------------------
THE TRUST
The Portfolio, set forth below, is diversified for purposes of the Investment
Company Act of 1940, as amended ("1940 Act").
The Portfolio is managed by EQ Financial Consultants, Inc. ("Manager") which
directs the day to day operations of the Portfolio. Massachusetts Financial
Services Company serves as the adviser (the "Adviser") to the Portfolio, as
listed below.
<TABLE>
<CAPTION>
PORTFOLIO ADVISER
- --------- -------
<S> <C>
MFS Growth with Income Portfolio Massachusetts Financial Services Company
</TABLE>
The Manager has the ultimate responsibility to oversee the Adviser and to
recommend its hiring, termination and replacement. The Trust and the Manager
have received exemptive relief from the Securities and Exchange Commission that
permits the Manager, subject to approval by the Board of Trustees, to (i)
select Advisers for each of the Trust's Portfolios and (ii) materially modify
existing investment advisory agreements without obtaining shareholder approval.
EQ Financial Consultants, Inc. ("EQ Financial"), the Trust's Manager, and
Equitable Distributors, Inc. ("EDI") each serve as one of the distributors for
the Class IB shares of the Trust offered by the Prospectus.
INVESTMENT OBJECTIVES AND POLICIES
The following is a brief description of the investment objectives and policies
of the new Portfolio. All of the objectives and policies of the Portfolio,
unless otherwise noted, are not fundamental and may be changed by the Board of
Trustees of the Trust without the approval of shareholders. Certain investment
strategies and instruments discussed below are described in greater detail in
the May 1, 1998 Prospectus ("Prospectus") and in the Statement of Additional
Information dated January 4, 1999 ("Statement of Additional Information").
Because of the uncertainty inherent in all investments, there can be no
assurance that the Portfolio will be able to achieve its respective investment
objectives.
MFS GROWTH WITH INCOME PORTFOLIO
The investment objectives of the MFS Growth with Income Portfolio are to
provide reasonable current income and long-term growth of capital and income.
The Portfolio is designed to constitute a conservative
<PAGE>
means to invest that portion of an investor's capital that an investor wishes
to have in securities that are considered by the Adviser to be of high or
improving investment quality. In seeking to achieve its objectives, the Adviser
attempts to exercise prudence, discretion and intelligence in the selection of
investments with due regard for both probable income and probable safety of
capital. For purposes of this Portfolio, the words "reasonable current income"
mean moderate income. For purposes of this Portfolio, the words "high
investment quality" reflect the Adviser's intention to avoid the acquisition of
speculative securities or those of doubtful character even if immediate
prospects are tempting.
The Portfolio's assets are normally invested in equity securities, including
common stocks, preferred stocks and preference stock, convertible securities,
warrants and depositary receipts for those securities. These equity securities
may be listed on securities exchanges, traded in various over-the-counter
markets or have no organized markets. However, the Portfolio may hold its
assets in cash or invest in commercial paper, repurchase agreements or other
forms of debt securities either to provide reserves for future purchase of
securities or as a temporary defensive measure in certain economic
environments.
Certain investment strategies and instruments which may be employed by the
Portfolio (such as the purchase and sale of options and futures, warrants,
repurchase agreements, forward commitments, depositary receipts, foreign
securities, foreign currency transactions, securities loans, illiquid
securities, and zero coupon bonds) are discussed under the caption "Investment
Strategies" below and in the Statement of Additional Information.
INVESTMENT STRATEGIES
In addition to making investments directly in securities, to the extent
described above and below, the new Portfolio may utilize other investment
strategies. The Portfolio may invest in or utilize any of these investment
strategies and instruments or engage in any of these practices except where
otherwise prohibited by law or the Portfolio's own investment restrictions.
Portfolios that anticipate committing 5% or more of their net assets to a
particular type of investment strategy or instruments are specifically referred
to in the descriptions below of such investment strategy or instrument. Certain
of these strategies and instruments and the risks related to them are
summarized below and are described in more detail in the Prospectus and in the
Statement of Additional Information.
Borrowings. The Portfolio may borrow money from banks or other lenders as a
temporary measure for emergency purposes, such as to facilitate redemption
requests, or for other purposes consistent with the Portfolio's investment
objective and program. Such borrowings would be subject to interest costs which
may or may not be recovered by appreciation of securities purchased. Borrowing
for the MFS Growth with Income Portfolio may not exceed 10% of the Portfolio's
total assets. The Portfolio may pledge its assets to secure these permissible
borrowings. The Portfolio may not purchase additional securities when its
borrowings exceed 5% of its total assets. See also "Reverse Repurchase
Agreements" for information concerning an investment technique that may be
deemed to involve a borrowing. For more information on borrowing, please see
"Investment Strategies--Borrowings" in the Prospectus.
Convertible Securities. The Portfolio may invest in convertible securities,
including both convertible debt and convertible preferred stock. For more
information on convertible securities, please see "Investment
Strategies--Convertible Securities" in the Prospectus.
Derivatives. The Portfolio may invest in one or more types of derivatives.
Derivatives are financial products or instruments that derive their value from
the value of one or more underlying assets, reference rates or indices.
Derivatives include, but are not limited to, the following: asset-backed
securities, floaters and inverse floaters, hybrid instruments, mortgage-backed
securities, options, futures contracts, stripped mortgage-backed securities,
structured notes and swaps. Further information about there instruments and the
risks involved in their use are contained under the description of each of
these instruments in the Statement of Additional Information.
Foreign Securities. Foreign investments involve certain risks that are not
present in domestic securities. The Portfolio may purchase securities
denominated in foreign currencies, and, therefore, a change in the value of any
such currency against the United States dollar will result in a change in the
United States dollar value of the Portfolio's assets and income. In addition,
although a portion of the Portfolio's
2
<PAGE>
investment income may be received or realized in such currencies, the Portfolio
will be required to compute and distribute its income in United States dollars.
Therefore, if the exchange rate for any such currency declines after the
Portfolio's income has been earned and computed in United States dollars but
before conversion and payment, the Portfolio could be required to liquidate
portfolio securities to make such distributions.
Currency exchange rates may be affected unpredictably by intervention (or the
failure to intervene) by United States or foreign governments or central banks,
by currency controls or political developments in the United States or abroad.
For example, significant uncertainty surrounds the proposed introduction of the
Euro (a common currency for the European Union) in January 1999 and its effect
on the value of securities denominated in local European currencies. These and
other currencies in which the Portfolio's assets are denominated may be
devalued against the United States dollar, resulting in a loss to the
Portfolio.
The value of foreign investments and the investment income derived from them
may also be affected unfavorably by changes in currency exchange control
regulations. Although the Portfolio will invest only in securities denominated
in foreign currencies that are fully exchangeable into United States dollars
without legal restriction at the time of investment, there can be no assurance
that currency controls will not be imposed subsequently. In addition, the value
of foreign fixed income investments may fluctuate in response to changes in
United States and foreign interest rates.
There may be less information publicly available about a foreign issuer than
about a United States issuer, and a foreign issuer is not generally subject to
accounting, auditing and financial reporting standards and practices comparable
to those in the United States. Foreign stock markets are generally not as
developed or efficient as, and may be more volatile than, those in the United
States. While growing in volume, they usually have substantially less volume
than United States markets and the Portfolio's investment securities may be
less liquid and subject to more rapid and erratic price movements than
securities of comparable United States companies. Equity securities may trade
at price/earnings multiples higher than comparable United States securities and
such levels may not be sustainable. There is generally less government
supervision and regulation of foreign stock exchanges, brokers and listed
companies than in the United States. Moreover, settlement practices for
transactions in foreign markets may differ from those in United States markets.
Such differences may include delays beyond periods customary in the United
States and practices, such as delivery of securities prior to receipt of
payment, which increase the likelihood of a "failed settlement". Failed
settlements can result in losses to the Portfolio. In less liquid and less
developed stock markets, such as those in some Eastern European, Southeast
Asian, and Latin American countries, volatility may be heightened by actions of
a few major investors. For example, substantial increases or decreases in cash
flows of mutual funds investing in these markets could significantly affect
stock prices and, therefore, share prices.
Foreign brokerage commissions, custodial expenses and other fees are also
generally higher than for securities traded in the United States. Consequently,
the overall expense ratios of international or global funds are usually
somewhat higher than those of typical domestic stock funds.
In addition, the economies, markets and political structures of a number of the
emerging market countries in which the Portfolio can invest do not compare
favorably with the United States and other mature economies in terms of wealth
and stability. Therefore, investments in these countries may be riskier, and
will be subject to erratic and abrupt price movements. Some economies are less
well developed and less diverse (for example, Latin America, Eastern Europe and
certain Asian countries), and more vulnerable to the ebb and flow of
international trade, trade barriers and other protectionist or retaliatory
measures (for example, Southeast Asia and Latin America). Some countries,
particularly in Southeast Asia, Latin America, and Eastern Europe are grappling
with severe inflation or recession, high levels of national debt, currency
exchange problems and government instability. Investments in countries that
have recently begun moving away from central planning and state-owned
industries toward free markets, such as the Eastern European or Chinese
economies, should be regarded as speculative. For more information on foreign
securities, please see "Investment Strategies--Foreign Securities" in the
Prospectus.
3
<PAGE>
The Portfolio may invest in certain types of foreign securities or engage in
certain types of transactions related to foreign securities, to the extent
discussed below.
Depositary Receipts. The Portfolio may purchase depositary receipts, which are
securities representing ownership interests in securities of foreign companies
(an "underlying issuer") and are deposited with securities depository. For more
information on depositary receipts, please see "Investment Strategies--
Depositary Receipts" in the Prospectus.
Foreign Currency Transactions. The Portfolio may purchase foreign currency on a
spot (or cash) basis. In addition, the Portfolio may enter into contracts to
purchase or sell foreign currencies at a future date ("forward contracts"). The
Portfolio may also purchase and sell foreign currency futures contracts and may
purchase and write exchanged-traded call and put options on foreign currency
futures contracts and on foreign currencies. The Portfolio may engage in
over-the-counter options on foreign currency transactions. The Adviser may
engage in these transactions to protect against uncertainty in the level of
future exchange rates in connection with the purchase and sale of portfolio
securities ("transaction hedging") and to protect the value of specific
portfolio positions ("position hedging").
Hedging transactions involve costs and may result in losses. Each of the
Portfolios may also write covered call options on foreign currencies to offset
some of the costs of hedging those currencies. A Portfolio will engage in
over-the-counter options transactions on foreign currencies only when
appropriate exchange traded transactions are unavailable and when, in the
Adviser's opinion, the pricing mechanism and liquidity are satisfactory and the
participants are responsible parties likely to meet their contractual
obligations. A Portfolio's ability to engage in hedging and related option
transactions may be limited by tax considerations.
Transactions and position hedging do not eliminate fluctuations in the
underlying prices of the securities which the Portfolios own or intend to
purchase or sell. They simply establish a rate of exchange which one can
achieve at some future point in time. Additionally, although these techniques
tend to minimize the risk of loss due to a decline in the value of the hedged
currency, they tend to limit any potential gain which might result from the
increase in the value of such currency. For more information on foreign
currency transactions, please see "Investment Strategies--Foreign Currency
Transactions" in the Prospectus.
Forward Commitments. The Portfolio may make contracts to purchase securities
for a fixed price at a future date beyond customary settlement time ("forward
commitments"). For more information on forward commitments, please see
"Investment Strategies--Forward Commitments" in the Prospectus.
Illiquid Securities. The Portfolio may invest up to 15% of its net assets in
illiquid securities and other securities which are not readily marketable,
including nonnegotiable time deposits, certain restricted securities not deemed
by the Trust's Board of Trustees to be liquid, and repurchase agreements with
maturities longer than seven days. For more information on illiquid securities,
please see "Investment Strategies--Illiquid Securities" in the Prospectus.
Investment Grade and Lower Quality Fixed Income Securities. The Portfolio may
invest in or hold a portion of its total assets in investment grade or lower
quality fixed income securities. For more information on investment grade and
lower quality fixed income securities, please see "Investment
Strategies--Investment Grade and Lower Quality Fixed Income Securities" in the
Prospectus.
Options and Futures Transactions. The Portfolio may utilize futures contracts.
Futures contracts (a type of potentially high-risk security) enable the
investor to buy or sell an asset in the future at an agreed upon price. The
Portfolio may also write and purchase put and call options. Options (another
type of potentially high-risk security) give the purchaser of an option the
right, but not the obligation, to buy or sell in the future an asset at a
predetermined price during the term of the option. (The writer of a put or call
option would be obligated to buy or sell the underlying asset at a
predetermined price during the term of the option.) The Portfolio will write
put and call options only if such options are considered to be "covered". A
call option on a security is covered, for example, when the writer of the call
option owns throughout the option period the security on which the option is
written (or a security convertible into such a security without the payment of
additional consideration). A put option on a security is covered, for example,
when the writer of the put has deposited and maintained in a segregated account
throughout the option
4
<PAGE>
period sufficient cash or other liquid assets in an amount equal to or greater
than the exercise price of the put option. The Portfolio is permitted to invest
in futures contracts and related options and may utilize such transactions for
other than hedging purposes to the extent that aggregate initial margin
deposits and premiums paid do not exceed 5% of the Portfolio's net assets.
The Portfolio will not commit more than 5% of its total assets to premiums when
purchasing call or put options. In addition, the total market value of
securities against which the Portfolio has written call or put options may not
exceed 25% of its total assets. The Portfolio may engage in over-the-counter
put and call option transactions. Options traded in the over-the-counter market
may not be as actively traded as those on an exchange, so it may be more
difficult to value such options. In addition, it may be difficult to enter into
closing transactions with respect to such options. Such over-the-counter
options, and the securities used as "cover" for such options, may be considered
illiquid securities.
The Portfolio may buy and sell futures and options contracts for any number of
reasons, including: to manage its exposure to changes in securities prices and
foreign currencies; as an efficient means of adjusting its overall exposure to
certain markets; in an effort to enhance income; to protect the value of
portfolio securities and to adjust the duration of fixed income investments.
The Portfolio may purchase, sell, or write call and put options and futures
contracts on securities, financial indices, and foreign currencies and options
on futures contracts.
The risk of loss in trading futures contracts can be substantial because of the
low margin deposits required and the extremely high degree of leveraging
involved in futures pricing. As a result, a relatively small price movement in
a futures contract may cause an immediate and substantial loss or gain. The
primary risks associated with the use of futures contracts and options are: (i)
imperfect correlation between the change in market value of the stocks held by
the Portfolio and the prices of futures contracts and options; and (ii)
possible lack of a liquid secondary market for a futures contract or an
over-the-counter option and the resulting inability to close a futures position
or over-the-counter option prior to its maturity date.
Repurchase Agreements. The Portfolio may enter into repurchase agreements with
qualified and Board approved banks, broker-dealers or other financial
institutions. For more information on repurchase agreements, please see
"Investment Strategies--Repurchase Agreements" in the Prospectus.
Securities Loans. The Portfolio may lend portfolio securities in an amount up
to 25% of its respective total assets. For more information on securities
loans, please see "Investment Strategies--Securities Loans" in the Prospectus.
United States Government Securities. The Portfolio may invest in debt
obligations of varying maturities issued or guaranteed by the United States
Government, its agencies or instrumentalities ("United States Government
securities"). Direct obligations of the United States Treasury include a
variety of securities that differ in their interest rates, maturities and dates
of issuance. United States Government securities also include securities issued
or guaranteed by government agencies that are supported by the full faith and
credit of the United States (e.g., securities issued by the Federal Housing
Administration, Export-Import Bank of the United States, Small Business
Administration, and Government National Mortgage Association); securities
issued or guaranteed by government agencies that are supported by the ability
to borrow from the United States Treasury (e.g., securities issued by the
Federal National Mortgage Association); and securities issued or guaranteed by
government agencies that are only supported by the credit of the particular
agency (e.g., Interamerican Development Bank, the International Bank for
Reconstruction and Development, and the Tennessee Valley Authority).
Warrants. The Portfolio may invest in warrants. For more information on
warrants, please see "Investment Strategies--Warrants" in the Prospectus.
Zero-Coupon Bonds. The Portfolio may invest in zero-coupon bonds. For more
information on zero-coupon bonds, please see "Investment
Strategies--Zero-Coupon Bonds" in the Prospectus.
Portfolio Turnover. The Portfolio's turnover rate is not expected to exceed
100% during its first year of operation.
5
<PAGE>
MANAGEMENT OF THE TRUST
THE BOARD OF TRUSTEES
The Board of Trustees of the Trust provides broad supervision over the business
and affairs of the Portfolios and the Trust as provided in the Trust's Amended
and Restated Declaration of Trust and By-Laws.
THE MANAGER
The Trust is managed by EQ Financial Consultants, Inc. which, subject to the
supervision and direction of the Trustees of the Trust, has overall
responsibility for the general management and administration of the Trust. For
more information on the manager and its duties and expenses please see
"Management of the Trust--The Manager" in the Prospectus.
As compensation for managing the MFS Growth with Income Portfolio, the Trust
pays the Manager a monthly fee at the annual rate of .55% of the Portfolio's
average daily net assets.
THE ADVISERS
Pursuant to an investment advisory agreement with the Manager, each Adviser to
a Portfolio furnishes continuously an investment program for the Portfolio,
makes investment decisions on behalf of the Portfolio, places all orders for
the purchase and sale of investments for the Portfolio's account with brokers
or dealers selected by such Adviser and may perform certain limited related
administrative functions in connection therewith. For its services, the Manager
pays each Adviser an advisory fee based on a percentage of the average daily
net assets of each Portfolio that it advises.
Massachusetts Financial Services Company ("MFS") has been the Adviser to the
MFS Growth with Income Portfolio since the Portfolio commenced operations. As
compensation for services as the Adviser to the MFS Growth with Income
Portfolio, the Manager pays MFS a monthly fee at an annual rate equal to: .40%
of the Portfolio's average daily net assets up to and including $150 million;
.375% of the Portfolio's average daily net assets over $150 million and up to
and including $300 million; and .35% of the Portfolio's average daily net
assets in excess of $300 million.
MFS is America's oldest mutual fund organization. MFS is located at 500
Boylston Street, Boston, MA 02116. MFS and its predecessor organizations have a
history of money management dating from 1924 and the founding of the first
mutual fund in the United States, Massachusetts Investors Trust. As of December
31, 1997, MFS managed more than $70.2 billion on behalf of over 2.7 million
investors accounts. 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. John D. Laupheimer, Jr. and
Mitchell D. Dynan are the portfolio managers for the MFS Growth with Income
Portfolio. Mr. Laupheimer, Jr., a Senior Vice President of MFS, has been
employed as a portfolio manager by MFS since 1986. Mr. Dynan, a Vice President
of MFS, has been employed as a portfolio manager by MFS since 1981.
With respect to the MFS Emerging Growth Portfolio, the description of portfolio
managers is hereby restated as follows: John W. Ballen, President and Chief
Investment Officer of the Adviser, and Stephen Pesek, Jr., a Vice President of
the Adviser, are the portfolio managers of the Fund. Mr. Ballen has been the
Fund's portfolio manager since its inception in 1986; Mr. Pesek joined Mr.
Ballen as a portfolio manager on December 15, 1998. Messrs. Ballen and Pesek
have been employed as portfolio managers by the Adviser since 1984 and 1994,
respectively. From 1987 to 1994, Mr. Pesek worked at Fidelity Investments as a
research analyst.
With respect to the Morgan Stanley Emerging Markets Equity Portfolio, the
description of portfolio managers is hereby restated as follows: Robert L.
Meyer and Andy Skov share primary responsibility for managing the assets of the
Morgan Stanley Emerging Markets Equity Portfolio, which includes investment
decisions made on behalf of the Portfolio. Mr. Meyer has shared primary
responsibility for managing the Portfolio's assets since September 1997. Since
October 1998, Mr. Skov also became
6
<PAGE>
responsible for managing the Portfolio's assets. Mr. Meyer joined MSAM in 1989
and is a Managing Director of MSAM and Morgan Stanley & Co. Incorporated
("Morgan Stanley"), a co-manager of MSAM's emerging markets group and head of
MSAM's Latin American equity investment group. Prior to joining MSAM's Latin
American Group, Mr. Meyer worked in MSAM's U.S. Equity Group. Mr. Skov joined
MSAM in 1994 as a Portfolio Manager. Currently, Mr. Skov is a Principal of MSAM
and of Morgan Stanley. Prior to joining MSAM, Mr. Skov worked in the Latin
America group at Bankers Trust.
For further information about the Advisers, their duties and responsibilities,
please see "Management of the Trust--The Advisers" in the Prospectus.
THE ADMINISTRATOR
Pursuant to an agreement ("Mutual Funds Services 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. For
more information on the Administrator, including the fees the Trust pays to the
Administrator for its services, please see "Management of the Trust--The
Administrator" in the Prospectus.
THE TRANSFER AGENT
Equitable Life serves as the transfer agent and dividend disbursing agent of
the Trust and receives no compensation for serving in such capacity.
EXPENSE LIMITATION AGREEMENT
In the interest of limiting expenses of the Portfolios, the Manager has entered
into an expense limitation agreement with the Trust, with respect to the
Portfolio ("Expense Limitation Agreement"), pursuant to which the Manager has
agreed to waive or limit its fees and to assume other expenses so that the
total annual operating expenses of the 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 the Portfolio's business and amounts payable
pursuant to a plan adopted in accordance with Rule 12b-1 under the 1940 Act,
are limited to: .60% of the respective average daily net assets of the MFS
Growth with Income Portfolio. For further information on the Expense Limitation
Agreement, please see "Management of the Trust--Expense Limitation Agreement"
in the Prospectus.
BROKERAGE PRACTICES
In selecting brokers and dealers, the Manager and the 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 the Adviser may also consider sales of shares of the
Trust as a factor in the selection of brokers and dealers.
TRANSACTIONS WITH AFFILIATES
For more information on transactions with affiliates, please see "Management of
the Trust--Transactions with Affiliates" in the Prospectus.
DESCRIPTION OF THE TRUST AND TRUST'S SHARES
For more information on the Trust and Trust's shares, including how to purchase
and redeem shares, please see "Description of the Trust and Trust's Shares" in
the Prospectus.
DIVIDENDS, DISTRIBUTIONS AND TAXES
For information on dividends, distributions and taxes, please see "Dividends,
Distributions and Taxes" in the Prospectus.
7
<PAGE>
PERFORMANCE INFORMATION
For information on how the Trust may advertise the performance of the
Portfolio, please see "Performance Information" in the Prospectus.
PRIOR PERFORMANCE OF THE ADVISER
The following table provides information concerning the historical performance
of another registered investment company (or series) managed by the Adviser,
that has investment objectives, policies, strategies and risks substantially
similar to those of its respective Portfolio of the Trust for which it serves
as Adviser. The data is provided to illustrate the past performance of the
Adviser in managing a substantially similar investment vehicle as measured
against specified market indices and does not represent the past performance of
the Portfolio or the future performance of the Portfolio or its Adviser.
Consequently, potential investors should not consider this performance data
with respect to the Adviser as an indication of the future performance of the
Portfolio of the Trust or of its Adviser. Such performance data, as shown
below, for the Adviser's substantially similar investment company is not the
performance data of the Portfolio and should not be confused with the
performance data for the Trust's Portfolio, which is shown under the caption
"Performance Information" in the Prospectus.
The Adviser's performance data shown below for another registered investment
company or series thereof was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Share prices and investment
returns will fluctuate reflecting market conditions as well as changes in
company-specific fundamentals of portfolio securities. For more information on
the prior performance of the Adviser, please see "Prior Performance of Each
Adviser" in the Prospectus.
8
<PAGE>
MFS GROWTH WITH INCOME PORTFOLIO
In the table below, the only account which is included is another registered
investment company, i.e., Massachusetts Investors Trust, which is managed by
Massachusetts Financial Services Company, and whose investment policies are
substantially similar to the MFS Growth with Income Portfolio. However, the MFS
Growth with Income Portfolio will be subject to different expenses than the
Massachusetts Investors Trust. In addition, holders of variable insurance
contracts representing interests in the MFS Growth with Income Portfolio will
be subject to charges and expenses relating to such insurance contracts. The
performance results presented below do not reflect any insurance related
expense.
The investment results of Massachusetts Investors Trust presented below are
unaudited and are not intended to predict or suggest the returns that might be
experienced by the MFS Growth with Income Portfolio or an individual investor
investing in the MFS Growth with Income Portfolio.
<TABLE>
<CAPTION>
MASSACHUSETTS
INVESTORS S&P 500
YEAR ENDED 9/30/98 TRUST(1),(3) INDEX(2)
------------------ ------------ --------
<S> <C> <C>
One Year ........... 8.14% 9.05%
Five Years ......... 19.23% 19.91%
Ten Years .......... 17.33% 17.29%
</TABLE>
- ----------
(1) Average annual total return reflects changes in share prices and
reinvestment of dividends and distributions and is net of fund expenses.
(2) The S&P 500 Index ("S&P 500") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the United States stock market.
The 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) Annualized performance for the Class A shares of the Massachusetts
Investors Trust, whose annual expense ratio for the year ended 9/30/98 was
0.74%.
9
<PAGE>
APPENDIX A
The following table summarizes the historical performance information of
another registered investment company that appears on page 9 of this
Supplement. The other registered investment company is managed by the Adviser
and has investment objectives, policies, strategies and risks substantially
similar to the Portfolio managed by the Adviser. The data is provided to
illustrate the past performance of the Adviser in managing a substantially
similar investment vehicle as measured against a specified market index and
does not represent the past performance of the Portfolio or the future
performance of the Portfolio or its Adviser. Consequently, potential investors
should not consider this performance data with respect to the Adviser as an
indication of the future performance of the Portfolio or of its Adviser. Such
performance data, as shown below, for the Adviser's substantially similar
investment company is not the performance data of the Portfolio and should not
be confused with the performance data of the Trust's Portfolio, which is shown
directly above under the caption "Performance Information".
For further information regarding the registered investment company and the
index presented below, please refer to page 9 of this Supplement.
ANNUALIZED RATES OF RETURN
PERIOD ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
FUND NAME 1 YEAR 5 YEAR 10 YEAR
- ---------------------------------------------------------------------------
<S> <C> <C> <C>
Massachusetts Investors Trust 8.14% 19.23% 17.33%
S&P 500 Index 9.05% 19.91% 17.29%
- ---------------------------------------------------------------------------
</TABLE>
A-1
<PAGE>
EQ ADVISORS TRUST
SUPPLEMENT DATED JANUARY 4, 1999 TO THE STATEMENT OF ADDITIONAL
INFORMATION DATED MAY 1, 1998.
This Supplement updates certain information contained in the above-dated
Statement of Additional Information. This Supplement supersedes all prior
supplements. (This Supplement and the Statement of Additional Information dated
May 1, 1998 are together referred to in the Prospectus as the January 4, 1999
Statement of Additional Information.) You may obtain an additional copy of the
Prospectus, free of charge, by writing the Trust at 1290 Avenue of the
Americas, New York, New York 10104.
Effective January 4, 1999, the Trust will offer three additional professionally
managed investment portfolios ("Portfolios") for investment by certain variable
annuity or variable life insurance contracts issued by The Equitable Life
Assurance Society of the United States ("Equitable Life"). Only Class IB shares
of the following new Portfolios are currently offered for investment:
o EQ/Evergreen Foundation Portfolio
o EQ/Evergreen Portfolio
o MFS Growth with Income Portfolio
The following changes have been made to the May 1, 1998 Statement of Additional
Information:
PAGE 3 -- REPLACE THE LAST PARAGRAPH OF THE SECTION ENTITLED "THE TRUST" WITH
THE FOLLOWING:
EQ Financial Consultants, Inc. ("Manager") is the investment manager for each
Portfolio. T. Rowe Price Associates, Inc. ("T. Rowe Price"), Rowe Price-Fleming
International, Inc. ("Price Fleming"), Putnam Investment Management, Inc.
("Putnam Management"), Massachusetts Financial Services Company ("MFS"), Morgan
Stanley Asset Management Inc. ("MSAM"), Warburg Pincus Asset Management, Inc.
("Warburg"), Merrill Lynch Asset Management, L.P. ("MLAM"), Lazard Asset
Management ("LAM"), a division of Lazard Freres and Company, LLC, J.P. Morgan
Investment Management Inc. ("J.P. Morgan"), Bankers Trust Company ("Bankers
Trust"), and Evergreen Asset Management Corp. ("Evergreen") (each an "Adviser,"
and together the "Advisers") serve as investment advisers to one or more of the
Portfolios, as described more fully in the Prospectus.
PAGE 4 -- INSERT THE FOLLOWING SUBSECTIONS AFTER FUNDAMENTAL RESTRICTION
(1)(F):
Each Portfolio, except as described directly above, may not as a matter of
fundamental policy:
(1) Borrow money, except that:
* * *
g. EQ/Evergreen Portfolio and EQ/Evergreen Foundation Portfolio, each as a
matter of non-fundamental policy, may, in addition to the amount
specified above, also borrow up to an additional 5% of its total assets
from banks or other lenders.
h. the MFS Growth with Income Portfolio, as a matter of non-fundamental
policy, may borrow up to 10% of its total assets (taken at cost), or its
net assets (taken at market value), whichever is less, but only as a
temporary measure for extraordinary or emergency purposes;
PAGE 5 -- INSERT THE FOLLOWING SUBSECTION AFTER FUNDAMENTAL RESTRICTION (4)(E):
Each Portfolio, except as described directly above, may not as a matter of
fundamental policy:
(4) Make loans, except that:
* * *
f. MFS Growth with Income Portfolio, as a matter of non-fundamental
operating policy, may lend its portfolio securities provided that no such
loan may be made if, as a result, the aggregate of such loans would
exceed 25% of its net assets (taken at market value);
<PAGE>
PAGE 6 -- REPLACE NON-FUNDAMENTAL RESTRICTION (4) WITH THE FOLLOWING:
(4) Mortgage, pledge, hypothecate or, in any manner, transfer any security
owned by the Portfolio as security for indebtedness, except as may be necessary
in connection with permissible borrowings or investments; and then such
mortgaging, pledging or hypothecating may not exceed 33 1/3% of the respective
total assets of each Portfolio (except as specified below for the EQ/Putnam
International Equity Portfolio, Merrill Lynch World Strategy Portfolio, Merrill
Lynch Basic Value Equity Portfolio), and MFS Growth with Income Portfolio).
Such mortgaging, pledging or hypothecating may not exceed 15% of EQ/Putnam
International Equity Portfolio's total assets; 10% of each of the Merrill Lynch
World Strategy Portfolio's and Merrill Lynch Basic Value Equity Portfolio's
total assets, (taken at the lower of cost or market value); and 15% of MFS
Growth with Income Portfolio's gross assets (taken at cost), each taken at the
time of the permissible borrowing or investment. The deposit of underlying
securities and other assets in escrow and collateral arrangements with respect
to margin accounts for futures contracts, options, currencies or other
permissible investments are not deemed to be mortgages, pledges, or
hypothecations for these purposes;
PAGE 6 -- REPLACE NON-FUNDAMENTAL RESTRICTION (5) WITH THE FOLLOWING:
Each Portfolio may not:
(5) Purchase participations or other direct interests in or enter into leases
with respect to, oil, gas, or other mineral exploration or development
programs, except that the MFS Emerging Growth Companies Portfolio, Warburg
Pincus Small Company Value Portfolio, Merrill Lynch World Strategy Portfolio,
Merrill Lynch Basic Value Equity Portfolio, JPM Core Bond Portfolio,
EQ/Evergreen Foundation Portfolio, and EQ/Evergreen Portfolio may invest in
securities issued by companies that engage in oil, gas or other mineral
exploration or development activities or hold mineral leases acquired as a
result of its ownership of securities.
PAGE 29 -- REPLACE THE SECOND PARAGRAPH UNDER "COMMITTEES OF THE BOARD" WITH
THE FOLLOWING:
The Trust has a valuation committee consisting of Peter D. Noris, Harvey Blitz,
Norman Abrams, Kevin Byrne, and such other officers of the Trust, the Manager,
and Chase Global Funds Services Company, as well as such officers of any
Adviser to any Portfolio as are deemed necessary by Mr. Noris or Mr. Blitz from
time to time, each of whom shall serve at the pleasure of the Board of Trustees
as members of the Valuation Committee. This committee determines the value of
any of the Trust's securities and assets for which market quotations are not
readily available or for which valuation cannot otherwise be provided.
PAGE 30 -- ADD THE FOLLOWING INFORMATION TO THE SECTION ENTITLED "THE TRUST'S
OFFICERS:"
<TABLE>
<CAPTION>
NAME, AGE AND POSITION WITH TRUST PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
--------------------------------- -------------------------------------------
<S> <C>
Mary Joan Hoene (48)
Vice President ................... Vice President and Counsel, Insurance Division,
Equitable Life since 1998. Divisional Senior Vice
President, Financial Institution and Government
Affairs, AIG Technical Services from 1994 to 1998.
General Counsel, Mitchell Hutchins Asset
Management Inc., from 1988 to 1994.
</TABLE>
2
<PAGE>
PAGE 33 -- REPLACE THE TABLE AND SUBSEQUENT PARAGRAPH UNDER THE SECTION
ENTITLED "THE MANAGER" WITH THE FOLLOWING:
<TABLE>
<CAPTION>
MANAGEMENT TOTAL AMOUNT OF
FEE PAID TO FEES WAIVED AND
MANAGER OTHER EXPENSES
AFTER FEE ASSUMED BY
PORTFOLIO MANAGEMENT FEE WAIVER MANAGER
--------- -------------- ------ -------
<S> <C> <C> <C>
Merrill Lynch Basic Value Equity Portfolio ....... $ 73,477 $ 0 $123,460
Merrill Lynch World Strategy Portfolio ........... $ 49,425 $ 0 $115,763
MFS Emerging Growth Companies Portfolio .......... $169,781 $ 0 $280,111
MFS Research Portfolio ........................... $186,533 $ 0 $292,185
EQ/Putnam Balanced Portfolio ..................... $ 50,946 $ 0 $137,739
EQ/Putnam Growth & Income Value Portfolio ........ $227,936 $ 0 $350,861
EQ/Putnam International Equity Portfolio ......... $130,202 $ 0 $228,427
EQ/Putnam Investors Growth Portfolio ............. $ 67,578 $ 0 $141,578
T. Rowe Price Equity Income Portfolio ............ $166,401 $ 0 $250,098
T. Rowe Price International Stock Portfolio ...... $213,839 $ 0 $365,096
Warburg Pincus Small Company Value Portfolio ..... $252,178 $ 5,693 $246,485
Morgan Stanley Emerging Markets Equity
Portfolio ....................................... $ 66,404 $23,496 $ 42,908
</TABLE>
The BT Equity 500 Index, BT International Equity Index, BT Small Company Index,
JPM Core Bond, Lazard Large Cap Value and Lazard Small Cap Portfolios are not
included in the above table because they had no operations during the fiscal
year ended December 31, 1997 except for the issuance of Class IB shares. The
EQ/Evergreen Foundation, EQ/Evergreen, and MFS Investors are not included in
the above table because they had no operations during the fiscal year ended
December 31, 1997.
PAGE 34 -- REPLACE THE SECTION ENTITLED "THE ADVISERS" WITH THE FOLLOWING:
On behalf of the T. Rowe Price Equity Income Portfolio and the T. Rowe Price
International Stock Portfolio, the Manager has entered into investment advisory
agreements ("Advisory Agreements") with T. Rowe Price and Price Fleming,
respectively. Additionally, the Manager has entered into an Advisory Agreement
on behalf of EQ/Putnam Growth & Income Value Portfolio, EQ/Putnam International
Equity Portfolio, EQ/Putnam Investors Growth Portfolio and EQ/Putnam Balanced
Portfolio with Putnam Management. The Manager has entered into an amendment to
the Advisory Agreement on behalf of MFS Research Portfolio, MFS Emerging Growth
Companies Portfolio and MFS Growth with Income Portfolio with MFS. The Manager
has entered into Advisory Agreements on behalf of Morgan Stanley Emerging
Markets Equity Portfolio and Warburg Pincus Small Company Value Portfolio with
MSAM and Warburg, respectively. The Manager has entered into an Advisory
Agreement on behalf of Merrill Lynch World Strategy Portfolio and Merrill Lynch
Basic Value Equity Portfolio with MLAM. The Manager has entered into an
Advisory Agreement on behalf of Lazard Large Cap Value Portfolio and Lazard
Small Cap Value Portfolio with LAM. The Manager has entered into an Advisory
Agreement on behalf of the JPM Core Bond Portfolio with J.P. Morgan. The
Manager has entered into an Advisory Agreement on behalf of BT Small Company
Index Portfolio, BT International Equity Index Portfolio and BT Equity 500
Index Portfolio with Bankers Trust. Finally, the Manager has entered into an
Advisory Agreement on behalf of EQ/Evergreen Foundation Portfolio and
EQ/Evergreen Portfolio with Evergreen. The Advisory Agreements obligate T. Rowe
Price, Price Fleming, Putnam Management, MFS, Warburg, MSAM, MLAM, LAM, J.P.
Morgan, Bankers Trust, and Evergreen to: (i) furnish continuously an investment
program for their respective Portfolios; (ii) place all orders for the purchase
and sale of investments for their respective Portfolios with brokers or dealers
selected by the Manager or an Adviser; and (iii) perform certain limited
related administrative functions in connection therewith.
3
<PAGE>
During the fiscal year ended December 31, 1997, the Manager paid the following
fees to each Adviser with respect to the Portfolios listed below pursuant to
the Investment Advisory Agreements:
<TABLE>
<CAPTION>
PORTFOLIO ADVISORY FEE PAID
--------- -----------------
<S> <C>
Merrill Lynch Basic Value Equity Portfolio ............... $ 53,462
Merrill Lynch World Strategy Portfolio ................... $ 35,301
MFS Emerging Growth Companies Portfolio .................. $123,543
MFS Research Portfolio ................................... $135,730
EQ/Putnam Balanced Portfolio ............................. $ 46,342
EQ/Putnam Growth & Income Value Portfolio ................ $207,320
EQ/Putnam International Equity Portfolio ................. $120,864
EQ/Putnam Investors Growth Portfolio ..................... $ 61,471
T. Rowe Price Equity Income Portfolio .................... $121,142
T. Rowe Price International Stock Portfolio .............. $185,338
Warburg Pincus Small Company Value Portfolio ............. $193,934
Morgan Stanley Emerging Markets Equity Portfolio ......... $ 66,277
</TABLE>
No advisory fees were paid to Bankers Trust, JP Morgan, LAM, or Evergreen
during the fiscal year ended December 31, 1997. No advisory fees were paid to
MFS on behalf of MFS Growth with Income Portfolio during the fiscal year ended
December 31, 1997.
PAGE 35 -- REPLACE THE PARAGRAPHS PRECEDING AND FOLLOWING THE CHART IN THE
SECTION ENTITLED "THE ADMINISTRATOR" WITH THE FOLLOWING:
During the fiscal year ended December 31, 1997, the Administrator was paid the
following fees, net of any fee waivers by Administrator, with respect to each
Portfolio:
<TABLE>
<CAPTION>
PORTFOLIO ADMINISTRATION FEE
--------- ------------------
<S> <C>
Merrill Lynch Basic Value Equity Portfolio ............... $11,213
Merrill Lynch World Strategy Portfolio ................... $13,633
MFS Emerging Growth Companies Portfolio .................. $17,902
MFS Research Portfolio ................................... $18,033
EQ/Putnam Balanced Portfolio ............................. $12,451
EQ/Putnam Growth & Income Value Portfolio ................ $19,904
EQ/Putnam International Equity Portfolio ................. $16,721
EQ/Putnam Investors Growth Portfolio ..................... $11,247
T. Rowe Price Equity Income Portfolio .................... $17,376
T. Rowe Price International Stock Portfolio .............. $30,599
Warburg Pincus Small Company Value Portfolio ............. $17,213
Morgan Stanley Emerging Markets Equity Portfolio ......... $ 9,652
</TABLE>
The BT Equity 500 Index, BT International Equity Index, BT Small Company Index,
JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, EQ/Evergreen
Foundation, EQ/Evergreen, and MFS Growth with Income Portfolios did not pay a
fee to the Administrator during the fiscal year ended December 31, 1997.
PAGE 37 -- REPLACE THE LAST PARAGRAPH OF THE SECTION ENTITLED "THE
DISTRIBUTORS" WITH THE FOLLOWING:
The BT Equity 500 Index, BT International Equity Index, BT Small Company Index,
JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, EQ/Evergreen
Foundation, EQ/Evergreen, and MFS Growth with Income Portfolios did not pay any
distribution fees during the fiscal year ended December 31, 1997.
4
<PAGE>
PAGE 39 -- ADD THE FOLLOWING PARAGRAPH TO THE END OF THE SECTION ENTITLED
"BROKERAGE COMMISSIONS:"
The BT Equity 500 Index, BT International Equity Index, BT Small Company Index,
JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, EQ/Evergreen
Foundation, EQ/Evergreen, and MFS Growth with Income Portfolios did not pay any
brokerage commissions during the fiscal year ended December 31, 1997.
PAGE 39 -- REPLACE THE LAST PARAGRAPH OF THE SECTION ENTITLED "BROKERAGE
TRANSACTIONS WITH AFFILIATES:"
The BT Equity 500 Index, BT International Equity Index, BT Small Company Index,
JPM Core Bond, Lazard Large Cap Value, Lazard Small Cap Value, EQ/Evergreen
Foundation, EQ/Evergreen, and MFS Growth with Income Portfolios did not pay any
brokerage commissions during the fiscal year ended December 31, 1997.
PAGE 44 -- REPLACE THE SECTION ENTITLED "FINANCIAL STATEMENTS" WITH THE
FOLLOWING:
The audited financial statements for the period ended December 31, 1997,
including the financial highlights, appearing in the Trust's Annual Report to
Shareholders are incorporated by reference and made a part of this document.
The unaudited financial statements for the period ended June 30, 1998,
including the financial highlights, appearing in the Trust's Semi-Annual Report
are incorporated by reference and made a part of this document.
5
