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Filed Pursuant to Rule 497(c)
Registration File No.: 333-17217
EQ Advisors Trust
PROSPECTUS DATED AUGUST 30, 1999
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This Prospectus describes the six (6) Portfolios offered by EQ Advisors Trust
that you can choose as investment alternatives. Each Portfolio has its own
investment objective and strategies that are designed to meet different
investment goals. This Prospectus contains information you should know before
investing. Please read this Prospectus carefully before investing and keep it
for future reference. The Portfolios followed by an asterisk (*) below will not
be available for investment until October 1, 1999.
FIXED INCOME PORTFOLIOS GLOBAL/INTERNATIONAL PORTFOLIO
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Alliance High Yield* Alliance Global*
Alliance Money Market*
DOMESTIC EQUITY PORTFOLIO AGGRESSIVE EQUITY PORTFOLIO
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Alliance Common Stock* Alliance Aggressive Stock*
ASSET ALLOCATION PORTFOLIO
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Alliance Balanced*
See Prospectus dated May 1, 1999 for additional investment alternatives.
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YOU SHOULD BE AWARE THAT THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THE INVESTMENT MERIT OF THESE PORTFOLIOS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Version ARM-AF Supp
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Overview
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EQ ADVISORS TRUST
This Prospectus tells you about the six (6) current Portfolios of the EQ
Advisors Trust ("Trust") and the Class IA shares offered by the Trust on
behalf of each Portfolio. The Trust is an open-end management investment
company. Each Portfolio is a separate series of the Trust with its own
investment objective, investment strategies and risks, which are described in
this Prospectus. Each of the current Portfolios of the Trust is diversified
for purposes of the Investment Company Act of 1940, as amended ("1940 Act").
The Trust's shares are currently sold only to insurance company separate
accounts in connection with variable life insurance contracts and variable
annuity certificates and contracts (the "Contract" or collectively, the
"Contracts") issued by The Equitable Life Assurance Society of the United
States ("Equitable") and Equitable of Colorado, Inc. ("EOC"), as well as
insurance companies that are not affiliated with Equitable of EOC
("non-affiliated insurance companies") and to The Equitable Investment Plan
for Employees, Managers and Agents ("Equitable Plan"). The prospectus is
designed to help you make informed decisions about the Portfolios that are
available under your Contract or under the Equitable Plan. You will find
information about your Contract and how it works in the accompanying
prospectus for the Contracts if you are a Contractholder or participant under
a Contract.
EQ Financial Consultants, Inc. ("EQFC") currently serves as the Manager of the
Trust. The Board of Trustees of the Trust approved a transfer of its
Investment Management Agreement with EQFC to Equitable, the indirect corporate
parent of EQFC, which is expected to be completed in September 1999. Upon
completion of the transfer, Equitable (to be referred to as the "Manager"
following completion of the transfer, however, until completion of the
transfer, "Manager" refers to EQFC) will serve as the Manager of the Trust
subject to the supervision and direction of the Board of Trustees. EQFC
currently has overall responsibility for the general management and
administration of the Trust. EQFC and Equitable are each an investment adviser
registered with the SEC under the Investment Advisers Act of 1940, as amended
("Advisers Act").
Following the transfer, Equitable will serve as Manager and exercise all
functions of the Manager as set forth in the Investment Management Agreement.
Management of the Trust and its Board of Trustees are of the view that the
transfer of the Investment Management Agreement from EQFC to Equitable does
not constitute an "assignment" of that agreement as that term is defined in
Section 2(a)(4) of the 1940 Act and Section 202(a)(1) of the Advisers Act.
Each of the Portfolios has its own investment adviser ("Adviser"). Information
about the Adviser for each Portfolio is contained in the description
concerning that Portfolio in the section entitled "About the Investment
Portfolios." The Manager has the ultimate responsibility to oversee each of
the Advisers and to recommend their hiring, termination and replacement.
Subject to approval by the Board of Trustees, the Manager has been granted
relief by the Securities and Exchange Commission ("SEC") ("Multi-Manager
Order") that enables the Manager without obtaining shareholder approval to:
(i) select Advisers for each of the Trust's Portfolios; (ii) enter into and
materially modify existing investment advisory agreements; and (iii) terminate
and replace the Advisers.
The Manager and certain non-affiliated insurance companies and certain of
their separate accounts (collectively, "Applicants") have filed applications
requesting that the SEC approve the substitution of: (i) Class IA shares of
certain Portfolios for Class IA shares of corresponding portfolios of The
Hudson River Trust ("HRT"); and (ii) Class IB shares of certain Portfolios for
Class IB shares of corresponding HRT portfolios ("Substitution Application").
Alliance Capital Management L.P. ("Alliance") serves as Adviser for each
Portfolio to be substituted for the corresponding HRT portfolio. Applicants
have included, as a term of the Substitution Application, that with respect to
those Portfolios
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for which Alliance serves as Adviser, the Manager will not: (i) terminate
Alliance and select a new Adviser for those Portfolios or (ii) materially
modify the existing investment advisory agreement without first either
obtaining approval of shareholders for such actions or obtaining approval of
shareholders to utilize the Multi-Manager Order.
---------------------------------------------------- EQ Advisors Trust
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Table of contents
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1
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SUMMARY INFORMATION CONCERNING EQ
ADVISORS TRUST 6
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2
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ABOUT THE INVESTMENT PORTFOLIOS 16
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FIXED INCOME PORTFOLIOS 18
Alliance High Yield Portfolio 18
Alliance Money Market Portfolio 21
DOMESTIC EQUITY PORTFOLIO 24
Alliance Common Stock Portfolio 24
GLOBAL/INTERNATIONAL PORTFOLIO 27
Alliance Global Portfolio 27
AGGRESSIVE EQUITY PORTFOLIO 30
Alliance Aggressive Stock Portfolio 30
ASSET ALLOCATION PORTFOLIO 33
Alliance Balanced Portfolio 34
3
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MORE INFORMATION ON PRINCIPAL RISKS 37
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4
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MANAGEMENT OF THE TRUST 43
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The Trust 43
The Manager 43
The Advisers 44
The Administrator 44
The Transfer Agent 45
Brokerage Practices 45
Brokerage Transactions with Affiliates 45
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5
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FUND DISTRIBUTION ARRANGEMENTS 46
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6
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PURCHASE AND REDEMPTION 47
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7
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HOW ASSETS ARE VALUED 48
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8
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TAX INFORMATION 49
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9
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FINANCIAL HIGHLIGHTS 50
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(Intentionally Left Blank)
------------------------- EQ Advisors Trust
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1
Summary information concerning
EQ Advisors Trust
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The following chart highlights the six (6) Portfolios described in this
Prospectus that you can choose as investment alternatives under your Contracts
offered by Equitable or EOC and non-affiliated insurance companies. The chart
and accompanying information identify each Portfolio's investment objective(s),
principal investment strategies, and principal risks. "More Information on
Principal Risks", which more fully describes each of the principal risks, is
provided beginning on page 29.
<TABLE>
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EQ ADVISORS TRUST FIXED INCOME PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE HIGH YIELD Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective,
capital appreciation
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ALLIANCE MONEY MARKET Seeks to obtain a high level of current income, preserve its
assets and maintain liquidity
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
High yield debt securities rated below BBB/Baa or unrated General investment, fixed income, leveraging, loan
securities of comparable quality ("junk bonds"), common participation and assignment, derivatives, liquidity, junk
stocks and other equity securities, foreign securities, bond, foreign securities, small-cap and mid-cap company,
derivatives, and securities lending and securities lending risks
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High quality U.S. dollar-denominated money market General investment, money market, leveraging, foreign
instruments (including foreign securities) and securities securities, and securities lending risks
lending
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIO
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE COMMON STOCK Seeks to achieve long-term growth of its capital and
increased income
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Stocks and other equity securities (including preferred General investment, foreign securities, leveraging,
stocks or convertible debt) and fixed income securities derivatives, convertible securities, small-cap and mid-cap
(including junk bonds), foreign securities, derivatives, and company, junk bond, securities lending, and fixed income
securities lending risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST GLOBAL/INTERNATIONAL PORTFOLIO
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE GLOBAL Seeks long-term growth of capital
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Equity securities of U.S. and established foreign companies General investment, foreign securities, liquidity, derivatives,
(including shares of other mutual funds investing in foreign securities lending, and fixed income risks
securities), debt securities, derivatives, and securities
lending
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST AGGRESSIVE EQUITY PORTFOLIO
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE AGGRESSIVE STOCK Seeks to achieve long-term growth of capital
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Stocks and other equity securities of small and General investment, small-cap and mid-cap company,
medium-sized companies (including securities of growth investing, leveraging, derivatives, liquidity and
companies in cyclical industries, companies whose foreign securities risks
securities are temporarily undervalued, companies in
special situations (e.g., change in management, new
products or changes in customer demand) and less widely
known companies)
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST ASSET ALLOCATION PORTFOLIO
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE BALANCED Seeks to achieve a high return through both appreciation
of capital and current income
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Debt and equity securities, money market instruments, General investment, asset allocation, fixed income,
foreign securities, derivatives, and securities lending derivatives, leveraging, liquidity, securities lending, and
foreign securities risks
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</TABLE>
------------------------- EQ Advisors Trust
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About the investment portfolios
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This section of the Prospectus provides a more complete description of the
principal investment objectives, strategies, and risks of each of the
Portfolios. Of course, there can be no assurance that any Portfolio will
achieve its investment objective.
Please note that:
o A fuller description of each of the principal risks is included in the
section "More Information on Principal Risks," which follows the
description of each Portfolio in this section of the Prospectus.
o Additional information concerning each Portfolio's strategies, investments,
and risks can also be found in the Trust's Statement of Additional
Information.
GENERAL INVESTMENT RISKS
Each of the Portfolios is subject to the following risks:
ASSET CLASS RISK: The returns from the types of securities in which a
Portfolio invests may underperform returns from the various general securities
markets or different asset classes.
MARKET RISK: You could lose money over short periods due to fluctuation in a
Portfolio's share price in reaction to stock or bond market movements, and
over longer periods during extended market downturns.
SECURITY SELECTION RISK: There is the possibility that the specific securities
selected by a Portfolio's Adviser will underperform other funds in the same
asset class or benchmarks that are representative of the general performance
of the asset class.
YEAR 2000 RISK: A Portfolio could be adversely affected if the computer
systems used by the Trust, Adviser, other service providers, or persons with
whom they deal, do not properly process and calculate date-related information
and data dated on and after January 1, 2000 ("Year 2000 Problem"). The extent
of such impact cannot be predicted and there can be no assurances that the
Year 2000 Problem will not have an adverse effect on the issuers whose
securities are held by a Portfolio. This risk is greater for Portfolios that
make foreign investments, particularly in emerging market countries.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
THE BENCHMARKS
The performance of each of the Trust's Portfolios as shown on the following
pages compares each Portfolio's performance to that of a broad-based
securities market index, an index of funds with similar investment objectives
and/or a blended index. The performance shown below is from each Portfolio's
predecessor registered investment company managed by the Adviser using the
same investment objectives and strategies as the Portfolio. Each of the
Portfolios' annualized rates of return are net of: (i) its investment
management fees; and (ii) its other expenses. These rates are not
representative of the actual return you would receive under your Equitable
Contract.
Broad-based securities indices are unmanaged and are not subject to fees and
expenses typically associated with managed investment company portfolios.
Broad-based securities indices are also not subject to contract and
insurance-related expenses and charges. Investments cannot be made directly in
a broad-based securities index. Comparisons with these benchmarks, therefore,
are of limited use. They are included because they are widely known and may
help you to understand the universe of securities from which each Portfolio is
likely to select its holdings. "Blended" performance numbers (e.g., 50% S&P
400/50% Russell 2000 or 60% S&P 500/40% Lehman Gov't/Corp) assume a static mix
of the two indices.
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THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX
("Lehman Gov't/Corp") represents an unmanaged group of securities widely
regarded by investors as representative of the bond market.
THE LIPPER AVERAGES are contained in Lipper's survey of the performance of a
large number of mutual funds. This survey is published by Lipper Analytical
Services, Inc., a firm recognized for its reporting of performance of actively
managed funds. According to Lipper, performance data are presented net of
investment management fees and direct operating expenses. Performance data for
funds which assess sales charges in other ways do not reflect deductions for
sales charges. Performance data shown for the Portfolios does not reflect
deduction for sales charges (which are assessed at the contract level). This
means that to the extent that asset-based sales charges deducted by some funds
have lowered the Lipper averages, the performance data shown for the
Portfolios appears relatively more favorable than the performance data for the
Lipper averages.
THE MERRILL LYNCH HIGH YIELD MASTER INDEX ("ML Master") represents an
unmanaged group of securities widely regarded by investors as representative
of the high yield bond market.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD
INDEX ("MSCI World") is an arithmetic, market value-weighted average of the
performance of over 1,300 securities listed on the stock exchanges of twenty
foreign countries and the United States.
THE RUSSELL 2000 INDEX ("Russell 2000") is an unmanaged index (with no defined
investment objective) of 2000 small-cap stocks and reflects reinvestment of
dividends. It is compiled by the Frank Russell Company.
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE
INDEX ("S&P 500") is an unmanaged index containing common stock of 500
industrial, transportation, utility and financial companies, regarded as
generally representative of the larger capitalization portion of the United
States stock market. The S&P 500 returns reflect the reinvestment of
dividends, if any, but do not reflect fees, brokerage commissions or other
expenses of investing.
THE STANDARD & POOR'S MIDCAP 400 INDEX ("S&P 400 MidCap") is an unmanaged
weighted index of 400 domestic stocks chosen for market size (median market
capitalization of about $610 million), liquidity, and industry group
representation. The S&P 400 returns reflect the reinvestment of dividends, if
any, but do not reflect fees, brokerage commissions or other expenses of
investing.
---------------------------------------------------- EQ Advisors Trust
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FIXED INCOME PORTFOLIOS
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ALLIANCE HIGH YIELD PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective, capital
appreciation.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in diversified mix of high yield, fixed income
securities (so-called "junk bonds"), which generally involve greater
volatility of price and risk of principal and income than high quality fixed
income securities. Junk bonds generally have a higher current yield but are
rated either in the lower categories by NRSROs (i.e., rated Baa or lower by
Moody's or BBB or lower by S&P) or are unrated securities of comparable
quality.
The Portfolio will attempt to maximize current income by taking advantage of
market developments, yield disparities and variations in the creditworthiness
of issuers. Substantially all of the Portfolio's investments will be income
producing.
The Portfolio may also make use of various other investment strategies,
including investments in common stocks and other equity-type securities (such
as convertible debt securities) and secured loans of its portfolio securities
without limitation in order to enhance its current return and to reduce
fluctuations in net asset value. The Portfolio may also use derivatives,
including: writing covered call and put options; purchasing call and put
options on individual fixed income securities, securities indexes and foreign
currencies; and purchasing and selling stock index, interest rate and foreign
currency futures contracts and options thereon. The Portfolio may also invest
in participations and assignments of loans originally made by institutional
lenders or lending syndicates.
The Portfolio will not invest more than 10% of its total assets in:
(i) fixed income securities which are rated lower than B3 or B- or their
equivalents by one NRSRO or if unrated are of equivalent quality as determined
by the Adviser; and
(ii) money market instruments of any entity which has an outstanding issue of
unsecured debt that is rated lower than B3 or B- or their equivalents by an
NRSRO or if unrated is of equivalent quality as determined by the Adviser;
however, this restriction will not apply to:
o fixed income securities which the Adviser believes have similar
characteristics to securities which are rated B3 or higher by Moody's or
B- or higher by S&P, or
o money market instruments of any entity that has an unsecured issue of
outstanding debt which the Adviser believes has similar characteristics to
securities which are so rated.
In the event that any securities held by the Portfolio fall below those
ratings, the Portfolio will not be obligated to dispose of such securities and
may continue to hold such securities if the Adviser believes that such
investments are considered appropriate under the circumstances.
The Portfolio may also invest in fixed income securities that are providing
high current yields because of risks other than credit, such as prepayment
risks, in the case of mortgage-backed securities, or currency risks, in the
case of non-U.S. dollar denominated foreign securities.
When market or financial conditions warrant, the Portfolio may also make
temporary investments in high-quality U.S. dollar-denominated money market
instruments. Such investment strategies could result in the Portfolio not
achieving its investment objective.
THE PRINCIPAL RISKS
JUNK BOND RISK: The Portfolio invests primarily in "junk bonds" or lower-rated
securities rated BBB or lower by S&P or an equivalent rating by any other
NRSRO or unrated securities of similar quality. Junk bonds have speculative
elements or are predominantly speculative credit risks, therefore, credit risk
is particularly significant for this Portfolio. Although junk bonds generally
have higher yields than debt securities with higher credit ratings, they are
high risk investments that may not pay interest or return principal as
scheduled. Junk bonds generally are also less liquid and experience more price
volatility than higher rated fixed income securities. This Portfolio may also
be subject to
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greater credit risk because it may invest in debt securities issued in
connection with corporate restructurings by highly leveraged issuers or in
debt securities not current in the payment of interest or principal, or in
default.
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income
securities, therefore, the Portfolio's performance will be affected by changes
in interest rates, credit risks of the issuer, the duration and maturity of
the Portfolio's fixed income holdings, and adverse market and economic
conditions. Other risks that relate to the Portfolio's investment in fixed
income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the
duration of mortgage-backed securities to increase, making them even more
susceptible to interest rate changes. Falling interest rates may cause the
value and yield of mortgage-backed securities to fall. Falling interest
rates also may encourage borrowers to pay off their mortgages sooner than
anticipated (pre-payment). The Portfolio would need to reinvest the pre-paid
funds at the newer, lower interest rates.
LOAN PARTICIPATION AND ASSIGNMENT RISK: In addition to the risks associated
with fixed income investments generally, the Portfolio's investments in loan
participations and assignments are subject to the risk that the financial
institution acting as agent for all interests in a loan, might fail
financially. It is also possible that, under emerging legal theories of lender
liability, the Portfolio could be held liable as a co-lender.
SMALL CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known; held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LEVERAGING RISK: When the Portfolio is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more
volatile and all other risk will tend to be compounded.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities without restriction. The risk in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral, or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance High Yield Portfolio) managed by
the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance High
Yield Portfolio) whose inception date is January 2, 1987. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989............. 5.1%
1990.............-1.1%
1991.............24.5%
1992.............12.3%
1993.............23.2%
1994.............-2.8%
1995.............19.9%
1996.............23.0%
1997.............18.5%
1998.............-5.2%
Best quarter (% and time period) Worst quarter (% and time period)
7.96% (1997 2nd Quarter) -10.97% (1998 3rd Quarter)
<TABLE>
<CAPTION>
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AVERAGE ANNUAL TOTAL RETURNS
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ONE YEAR FIVE YEARS TEN YEARS
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<S> <C> <C> <C>
Alliance High Yield Portfolio-
Class IA Shares (5.15)% 9.99% 11.17%
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ML Master* 3.66% 9.01% 11.08%
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Lipper High Current Yield
Bond Funds Average* (0.44)% 7.37% 9.34%
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</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
WAYNE C. TAPPE has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1995. Mr. Tappe, a Senior Vice President
of Alliance, has been associated with Alliance since 1987.
<PAGE>
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ALLIANCE MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to obtain a high level of
current income, preserve its assets and maintain liquidity.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified portfolio of high-quality
U.S. dollar-denominated money market instruments. The Portfolio will maintain
a dollar-weighted average portfolio maturity of 90 days or less.
The instruments in which the Portfolio invests include:
o marketable obligations of, or guaranteed as to the timely payment of
principal and interest by, the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities");
o certificates of deposit, bankers' acceptances, bank notes, time deposits and
interest bearing savings deposits issued or guaranteed by:
(a) domestic banks (including their foreign branches) or savings and loan
associations having total assets of more than $1 billion and which
are FDIC members in the case of banks, or insured by the FDIC, in
the case of savings and loan associations; or
(b) foreign banks (either by their foreign or U.S. branches) having total
assets of at least $5 billion and having an issue of either (i)
commercial paper rated at least A-1 by Standard & Poor's ("S&P") or
Prime-1 by Moody's Investors Service, Inc. ("Moody's") or (ii) long
term debt rated at least AA by S&P or Aa by Moody's;
o commercial paper (rated at least A-1 by S&P or Prime-1 by Moody's or, if not
rated, issued by domestic or foreign companies having outstanding debt
securities rated at least AA by S&P or Aa by Moody's) and participation
interests in loans extended by banks to such companies;
o mortgage-backed and asset-backed securities that have remaining maturities
of less than one year;
o corporate debt obligations with remaining maturities of less than one year,
rated at least AA by S&P or Aa by Moody's, as well as corporate debt
obligations rated at least A by S&P or Moody's, provided the corporation
also has outstanding an issue of commercial paper rated at least A-1 by
S&P or Prime-1 by Moody's;
o floating rate or master demand notes; and
o repurchase agreements covering U.S. Government securities.
If the Adviser believes a security held by the Portfolio is no longer deemed
to present minimal credit risk, the Portfolio will dispose of the security as
soon as practicable unless the Board of Trustees determines that such action
would not be in the best interest of the Portfolio.
Purchases of securities that are unrated must be ratified by the Board of
Trustees. Because the market value of debt obligations fluctuates as an
inverse function of changing interest rates, the Portfolio seeks to minimize
the effect of such fluctuations by investing only in instruments with a
remaining maturity of 397 calendar days or less at the time of investment,
except for obligations of the U.S. Government, which may have a remaining
maturity of 762 calendar days or less. Time deposits with maturities greater
than seven days are considered to be illiquid securities.
The Portfolio may make use of various other investment strategies, including
investing up to 20% of its total assets in U.S. dollar-denominated money
market instruments of foreign issuers and making secured loans of up to 50% of
its total portfolio securities.
THE PRINCIPAL RISKS
MONEY MARKET RISK: While money market funds are designed to be relatively low
risk investments, they are not entirely free of risk. Despite the short
maturities and high credit quality of the Portfolio's investments, increases
in interest rates and deteriorations in the credit quality of the instruments
the Portfolio has purchased may reduce the Portfolio's net asset value. In
addition, the Portfolio is still subject to the risk that the value of an
investment may be eroded over time by inflation. An investment in the
Portfolio is not insured or guaranteed by the Federal Deposit
---------------------------------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
- ----------
22
- --------------------------------------------------------------------------------
Insurance Corporation or any other government agency. Although the Portfolio
seeks to preserve the value of your investment, it is possible to lose money
by investing in the Portfolio.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risks will tend to be compounded.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: inadequate or inaccurate information about foreign
companies; higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving
additional collateral, or in the recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns on three-month U.S. Treasury bills and (ii) the returns of an index of
funds with similar investment objectives. Past performance is not an
indication of future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Money Market Portfolio) managed by
the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company whose inception date
is July 13, 1981. The assets of the predecessor will be transferred to the
Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989....................9.2%
1990....................8.2%
1991....................6.2%
1992....................3.6%
1993....................3.0%
1994....................4.0%
1995....................5.7%
1996....................5.3%
1997....................5.4%
1998....................5.3%
Best quarter (% and time period) Worst quarter (% and time period)
2.37% (1989 2nd Quarter) 0.69% (1992 4th Quarter)
The Portfolio's 7-day yield for the quarter ended
December 31, 1998 was 4.69%.
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Money Market Portfolio
- Class IA Shares 5.34% 5.17% 5.58%
-------------------------------------------------------------------------------
3-Month Treasury Bill 5.05% 5.11% 5.44%
-------------------------------------------------------------------------------
Lipper Money Market Mutual
Fund Average* 4.84% 4.77% 5.20%
-------------------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
<PAGE>
- ----------
23
- --------------------------------------------------------------------------------
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
RAYMOND J. PAPERA has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1990. Mr. Papera, a Senior Vice President
of Alliance, has been associated with Alliance since 1990.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIO
- ----------
24
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of its capital and
increase income.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in common stocks and other equity-type
securities (such as preferred stocks or convertible debt) that the Adviser
believes will share in the growth of the nation's economy over a long period.
Most of the time, the Portfolio will invest primarily in common stocks that
are listed on national securities exchanges. Smaller amounts will be invested
in stocks that are traded over-the-counter and in other equity-type
securities. Current income is an incidental consideration. The Portfolio
generally will not invest more than 20% of its total assets in foreign
securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives, including: writing covered call and put options,
buying call and put options on individual common stocks and other equity-type
securities, securities indexes, and foreign currencies. The Portfolio may also
purchase and sell stock index and foreign currency futures contracts and
options thereon.
When market or financial conditions warrant or it appears that the Portfolio's
investment objective will not be achieved by purchasing equity securities, the
Portfolio may invest a portion of its assets in debt securities, including
nonparticipating and nonconvertible preferred stocks, investment-grade debt
securities and junk bonds, e.g., rated BB or lower by S&P or Ba or lower by
Moody's. The Portfolio also may make temporary investments in high-quality
U.S. dollar-denominated money market instruments. Such investment strategies
could result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. The value of convertible securities fluctuates both in relation to
changes in interest rates and changes in the value of the underlying common
stock.
<PAGE>
----------
25
-------------------------------------------------------------------------------
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment-grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
if it invested in higher-rated obligations because BBB-rated securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality. Junk bonds
have speculative elements or are predominantly speculative credit risks,
therefore, credit risk is particularly significant for this Portfolio. This
Portfolio may also be subject to greater credit risk because it may invest in
debt securities issued in connection with corporate restructurings by highly
leveraged issuers or in debt securities not current in the payment of interest
or principal, or in default.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving
additional collateral, or in the recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company managed (HRT/Alliance Common Stock Portfolio) by
the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Common
Stock Portfolio) whose inception date is June 16, 1975. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIO (CONTINUED)
- ----------
26
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
1989..................... 25.6%
1990..................... -8.1%
1991.....................40.00%
1992..................... 3.2%
1993..................... 24.8%
1994..................... -2.1%
1995..................... 32.5%
1996.....................24.30%
1997..................... 29.4%
1998..................... 29.4%
Best quarter (% and time period) Worst quarter (% and time period)
28.42% (1998 4th Quarter) -20.22% (1990 3rd Quarter)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Common Stock Portfolio
- Class IA Shares 29.39% 21.95% 18.65%
-------------------------------------------------------------------------------
S&P 500 Index* 28.58% 24.06% 19.21%
-------------------------------------------------------------------------------
Lipper Growth Equity Mutual
Funds Average* 22.86% 18.63% 16.72%
-------------------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
TYLER J. SMITH has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1977. Mr. Smith, a Senior Vice President
of Alliance, has been associated with Alliance since 1970.
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIO
----------
27
-------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified mix of equity securities of
U.S. and established foreign companies. The Adviser believes the equity
securities of these established non-U.S. companies have prospects for growth.
The Portfolio intends to make investments in several countries and to have
represented in the Portfolio business activities in not less than three
different countries (including the United States).
(sidebar)
These non-U.S. companies may have operations in the United States, in their
country of incorporation or in other countries.
(end sidebar)
The Portfolio may invest in any type of security including, but not limited
to, common and preferred stock, as well as shares of mutual funds that invest
in foreign securities, bonds and other evidences of indebtedness, and other
securities of issuers wherever organized and governments and their political
subdivisions. Although no particular proportion of stocks, bonds or other
securities is required to be maintained, the Portfolio intends under normal
conditions to invest in equity securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives including: writing covered call and put options,
purchasing call and put options on individual equity securities, securities
indexes, and foreign currencies. The Portfolio may also purchase and sell
stock index, foreign currency and interest rate futures contracts and options
on such contracts, as well as forward foreign currency exchange contracts
When market or financial conditions warrant, the Portfolio may at times invest
substantially all of its assets in securities issued by U.S. companies or in
cash or cash equivalents, including money market instruments issued by foreign
entities for temporary or defensive purposes. Such investment strategies could
result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: Investing in foreign securities involves risks not
associated with investing in U.S. securities that can adversely affect the
Portfolio's performance. Foreign markets, particularly emerging markets, may
be less liquid, more volatile and subject to less government supervision than
domestic markets. There may be difficulties enforcing contractual obligations,
and it may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political
systems, more restrictive foreign investment policies, smaller-sized
securities markets and low trading volumes. Such risks can make
investments illiquid and more volatile than investments in developed
countries and such securities may be subject to abrupt and severe price
declines.
EURO RISK: The Portfolio invests in securities issued by European
issuers that that may be adversely impacted by the recent introduction
of the "Euro" as a common currency in 11 European Monetary Union member
---------------------------------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIO (CONTINUED)
- ----------
28
- --------------------------------------------------------------------------------
states. The Euro may result in various legal and accounting differences,
tax treatments, the creation and implementation of suitable clearing and
settlement systems and other operational problems, that may cause market
disruptions that could adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements as are U.S. companies, which
could adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices. Leveraging
Risk. When the Portfolio is borrowing money or otherwise leveraging its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving
additional collateral, or in the recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the
Portfolio's performance will be affected by changes in interest rates, the
credit risk of the issuer, the duration or maturity of the Portfolio's fixed
income holdings, and adverse market or economic conditions. When interest
rates rise, the value of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true. In addition, to the extent that the Portfolio
invests in investment-grade securities which are rated BBB by S&P or an
equivalent rating by any other NRSRO, it will be exposed to greater risk than
if it invested in higher-rated obligations because BBB-rated securities are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Global Portfolio) managed by the
Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance Global Portfolio)
whose inception date is August 27, 1987. The assets of the predecessor will be
transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance.
<PAGE>
- ----------
29
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
1989....................26.7%
1990....................-6.1%
1991....................30.5%
1992....................-0.5%
1993....................32.1%
1994.................... 5.2%
1995....................18.8%
1996....................14.6%
1997....................11.7%
1998....................21.8%
Best quarter (% and time period) Worst quarter (% and time period)
26.59% (1998 4th Quarter) -16.99% (1998 3rd Quarter)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Global Portfolio -
Class IA Shares 21.80% 14.28% 14.81%
-------------------------------------------------------------------------------
MSCI World Index* 24.34% 15.68% 10.66%
-------------------------------------------------------------------------------
Lipper Global Mutual Funds
Average* 14.34% 11.98% 11.21%
-------------------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio's and its predecessor's investment program since 1998. Ms. Yeager, a
Senior Vice President of Alliance, has been associated with Alliance since
1990.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIO
- ----------
30
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term
growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in common stocks and other equity securities
of small and medium-sized companies that, in the opinion of the Adviser, have
favorable growth prospects. The Portfolio may also invest in securities of
companies in cyclical industries, companies whose securities are temporarily
undervalued, companies in special situations (i.e., change in management, new
products or changes in customer demand) and less widely known companies.
The Portfolio may also invest up to 20% of its total assets in foreign
securities and may also make use of various other investment strategies,
including investments in debt securities and making secured loans of up to 50%
of its total portfolio securities. The Portfolio may also use derivatives,
including: writing covered call options and purchasing call and put options on
individual equity securities, securities indexes and foreign currencies. The
Portfolio may also purchase and sell stock index and foreign currency futures
contracts and options thereon.
When market or financial conditions warrant, or it appears that the
Portfolio's investment objective will not be achieved primarily through
investments in common stocks, the Portfolio may invest in other equity-type
securities (such as preferred stocks and convertible debt instruments) and
options for hedging purposes. The Portfolio may also make temporary
investments in corporate fixed income securities, which will generally be
investment grade, or invest part its assets in cash or cash equivalents,
including high-quality money market instruments for liquidity or defensive
purposes. Such investments could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
The price of growth stocks is also subject to the risk that the stock price of
one or more companies will fall or will fail to appreciate as anticipated by
the Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders
or institutional investors and may trade less frequently and in lower volume;
such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; such companies have limited
financial resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
<PAGE>
----------
31
-------------------------------------------------------------------------------
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LEVERAGING RISK: When the Portfolio is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more
volatile and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index; (ii) the returns of a "blended" index of two
broad-based indices; and (iii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Aggressive Stock Portfolio)
managed by the Adviser using the same investment objectives and strategy as
the Portfolio. For these purposes, the Portfolio is considered to be the
successor entity to the predecessor registered investment company
(HRT/Alliance Aggressive Stock Portfolio) whose inception date is January 27,
1986. The assets of the predecessor will be transferred to the Portfolio on
October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
CALENDAR YEAR ANNUAL TOTAL RETURN
1989.......................43.5%
1990....................... 8.2%
1991.......................86.9%
1992.......................-3.2%
1993.......................16.8%
1994.......................-3.8%
1995.......................31.6%
1996.......................22.2%
1997.......................10.9%
1998....................... 0.3%
Best quarter (% and time period) Worst quarter (% and time period)
40.10% (1991 1st Quarter) -27.19% (1998 3rd Quarter)
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Aggressive Stock
Portfolio - Class IA Shares 0.29% 11.47% 18.90%
-------------------------------------------------------------------------------
50% S&P 400 MidCap
Index/50% Russell 2000* 8.28% 15.56% 16.49%
-------------------------------------------------------------------------------
S&P 400 MidCap Index* 19.11% 18.84% 19.29%
-------------------------------------------------------------------------------
Lipper MidCap Growth Funds
Average* 12.16% 14.87% 15.44%
-------------------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the
---------------------------------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIO (CONTINUED)
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32
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predecessor commenced operations. Alliance, a publicly traded limited
partnership, is indirectly majority-owned by Equitable. Alliance manages
investment companies, endowment funds, insurance companies, foreign entities,
qualified and non-tax qualified corporate funds, public and private pension
and profit-sharing plans, foundations and tax-exempt organizations.
ALDEN M. STEWART and RANDALL E. HAASE have been the persons principally
responsible for the day-to-day management of the Portfolio and its predecessor
since 1993. Mr. Stewart, an Executive Vice President of Alliance, has been
associated with Alliance since 1970. Mr. Haase, a Senior Vice President of
Alliance, has been associated with Alliance since 1988.
<PAGE>
ASSET ALLOCATION PORTFOLIO
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33
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The Alliance Balanced Portfolio is called an Asset Allocation Portfolio. This
Portfolio invests in a variety of fixed income and equity securities, pursuant
to an asset allocation strategy, as described below. The term "asset
allocation" is used to describe the process of shifting assets among discrete
categories of investments in an effort to reduce risk while producing desired
return objectives. Portfolio management, therefore, will consist not only of
selecting specific securities but also of setting, monitoring and changing,
when necessary, the asset mix.
The Portfolio has been designed with a view toward an "investor profile." The
"balanced investor" is somewhat less aggressive than the growth investor and
has a medium- to long-term investment horizon. This investor is sensitive to
risk, but is willing to take on some risk in seeking high total return.
Consequently, the asset mix for the Alliance Balanced Portfolio attempts to
capture a sizable portion of the market's upside while diversifying risk among
asset classes.
The Adviser has established an asset allocation committee (the "Committee"),
all the members of which are employees of the Adviser, which is responsible
for setting and continually reviewing the asset mix ranges of the Portfolio.
Under normal market conditions, the Committee is expected to change allocation
ranges approximately three to five times per year. However, the Committee has
broad latitude to establish the frequency, as well as the magnitude, of
allocation changes within the guidelines established for the Portfolio. During
periods of severe market disruption, allocation ranges may change frequently.
It is also possible that in periods of stable and consistent outlook no change
will be made. The Committee's decisions are based on a variety of factors,
including liquidity, portfolio size, tax consequences and general market
conditions, always within the context of the appropriate investor profile for
the Portfolio.
When the Committee establishes a new allocation range for the Portfolio, it
also prescribes the length of time during which the Portfolio should achieve
an asset mix within the new range. To achieve a new asset mix, the Portfolio
looks first to available cash flow. If the Adviser believes that cash flow
will be insufficient to achieve the desired asset mix, the Portfolio will sell
securities and reinvest the proceeds in the appropriate asset class.
The Asset Allocation Portfolio is permitted to use a variety of hedging
techniques to attempt to control stock market, interest rate and currency
risks. The Portfolio may make loans of up to 50% of its total portfolio
securities. The Portfolio may write covered call and put options and may
purchase call and put options on all the types of securities in which it may
invest, as well as securities indexes and foreign currencies. The Portfolio
may also purchase and sell stock index, interest rate and foreign currency
futures contracts and options thereon, as well as forward foreign currency
exchange contracts.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIO (CONTINUED)
----------
34
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ALLIANCE BALANCED PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return
through both appreciation of capital and current income.
THE INVESTMENT STRATEGY
The Portfolio invests varying portions of its assets in publicly-traded equity
and debt securities and money market instruments depending on economic
conditions, the general level of common stock prices, interest rates and other
relevant considerations, including the risks associated with each investment
medium.
The Portfolio attempts to achieve long-term growth of capital by investing in
common stock and other equity-type instruments. It will try to achieve a
competitive level of current income and capital appreciation through
investments in publicly traded debt securities and a high level of current
income through investments primarily in high-quality U.S. dollar denominated
money market instruments.
The Portfolio's investments in common stocks will primarily consist of common
stocks that are listed on national securities exchanges. Smaller amounts will
be invested in stocks that are traded over-the-counter and in other
equity-type securities.
The Portfolio at all times will hold at least 25% of its total assets in fixed
income securities (including, for these purposes, that portion of the value of
securities convertible into common stock which is attributable to the fixed
income characteristics of those securities, as well as money market
instruments). The Portfolio's equity securities will always comprise at least
25%, but never more than 75%, of the Portfolio's total assets. Consequently,
the Portfolio will have a minimum or "core holdings" of at least 25% fixed
income securities and 25% equity securities. Over time, holdings by the
Portfolio's holdings are currently expected to average approximately 50% in
fixed income securities and approximately 50% in equity securities. Actual
asset mixes will be adjusted in response to economic and credit market cycles.
The Portfolio may also invest up to 20% of its total assets in foreign
securities and may also make use of various other investment strategies,
including using of up to 50% of its total portfolio assets for securities
lending purposes. The Portfolio may also use derivatives, including: writing
covered call and put options, purchasing call and put options on all the types
of securities in which it may invest, as well as securities indexes and
foreign currencies. The Portfolio may also purchase and sell stock index,
interest rate and foreign currency futures contracts and options thereon.
The debt securities will consist principally of bonds, notes, debentures and
equipment trust certificates, as well as debt securities with equity features
such as conversion or exchange rights or warrants for the acquisition of stock
or participations based on revenues, rates or profits. These debt securities
will principally be investment grade securities rated at least Baa by Moody's
or BBB by S&P, or will be U.S. Government Securities. If such Baa or BBB debt
securities held by the Portfolio fall below those ratings, the Portfolio will
not be obligated to dispose of them and may continue to hold them if the
Adviser considers them appropriate investments under the circumstances. In
addition, the Portfolio may at times hold some of its assets in cash.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
ASSET ALLOCATION RISK: In addition to the risks associated with the securities
in which the Portfolio invests, the Portfolio is subject to the risk that the
Adviser's allocation of the Portfolio's assets between debt and equity
securities may adversely affect the Portfolio's value.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the
<PAGE>
----------
35
-------------------------------------------------------------------------------
risk that changes in value of the derivative may not correlate perfectly with
the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in
foreign economic and tax policies; and foreign government instability, war or
other adverse political or economic actions.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
FIXED INCOME RISKS: This Portfolio invests at least 25% of its total assets in
fixed income securities, therefore, the Portfolio's performance will be
affected by changes in interest rates, credit risks of the issuer, the
duration and maturity of the Portfolio's fixed income holdings, and adverse
market and economic conditions. Other risks that relate to the Portfolio's
investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true.
INVESTMENT GRADE SECURITIES RISK: The Portfolio could lose money if the
issuer or guarantor of a debt security or counterparty to a Portfolio's
transaction is unable or unwilling to make timely principal and/or interest
payments, or to honor its financial obligations. Investment grade securities
which are rated BBB by S&P or an equivalent rating by any other NRSRO, are
somewhat riskier than higher rated obligations because they are regarded as
having only an adequate capacity to pay principal and interest, are considered
to lack outstanding investment characteristics, and may be speculative.
LEVERAGING RISK: When the Portfolio is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more
volatile and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its
portfolio securities. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving
additional collateral, or in the recovery of the securities or possible loss
of rights in the collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one,
five and ten years and compares the Portfolio's performance to: (i) the
returns of a broad-based index; (ii) the returns of a "blended" index of
equity and fixed income securities; and (iii) the returns of an index of funds
with similar investment objectives. Past performance is not an indication of
future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Balanced Portfolio) managed by the
Adviser using the same investment objectives and strategy as the
---------------------------------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIO (CONTINUED)
----------
36
-------------------------------------------------------------------------------
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Balanced
Portfolio) whose inception date is January 27, 1986. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance
results.
<TABLE>
<CAPTION>
CALENDAR YEAR ANNUAL TOTAL RETURN
<S> <C>
1989.....................25.8%
1990..................... 0.3%
1991.....................41.3%
1992.....................-2.8%
1993.....................12.3%
1994.....................-8.0%
1995.....................19.8%
1996.....................11.70%
1997.....................15.1%
1998.....................18.1%
Best quarter (% and time period) Worst quarter (% and time period)
15.13% (1991 4th Quarter) -8.29% (1990 3rd Quarter)
</TABLE>
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
-------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
-------------------------------------------------------------------------------
<S> <C> <C> <C>
Alliance Balanced Portfolio
- Class IA Shares 18.11% 10.82% 12.51%
-------------------------------------------------------------------------------
50% S&P 500 Index/50%
Lehman Gov't/Corp.* 19.02% 16.88% 15.21%
-------------------------------------------------------------------------------
S&P 500 Index* 28.58% 24.06% 19.21%
-------------------------------------------------------------------------------
Lipper Balanced Mutual
Funds Average 13.48% 13.84% 12.97%
-------------------------------------------------------------------------------
</TABLE>
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly traded limited partnership, is
indirectly majority-owned by Equitable. Alliance manages investment companies,
endowment funds, insurance companies, foreign entities, qualified and non-tax
qualified corporate funds, public and private pension and profit-sharing
plans, foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of
the Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a
Senior Vice President of Alliance and Global Economic Policy Analysis, has
been associated with Alliance since 1977.
<PAGE>
3
More information on principal risks
----------------
37
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Risk is the chance that you will lose money on your investment or that it will
not earn as much as you expect. In general, the greater the risk, the more
money your investment can earn for you and the more you can lose. Like other
investment companies, the value of each Portfolio's shares may be affected by
the Portfolio's investment objective(s), principal investment strategies and
particular risk factors. Consequently, each Portfolio may be subject to
different principal risks. Some of the principal risks of investing in the
Portfolios are discussed below. However, other factors may also affect each
Portfolio's net asset value.
There is no guarantee that a Portfolio will achieve its investment
objective(s) or that it will not lose principal value.
GENERAL INVESTMENT RISKS: Each Portfolio is subject to the following risks:
ASSET CLASS RISK: There is the possibility that the returns from the types of
securities in which a Portfolio invests will underperform returns from the
various general securities markets or different asset classes. Different types
of securities tend to go through cycles of outperformance and underperformance
in comparison to the general securities markets.
MARKET RISK: Each Portfolio's share price moves up and down over the short
term in reaction to stock or bond market movements. This means that you could
lose money over short periods, and perhaps over longer periods during extended
market downturns.
SECURITY SELECTION RISK: The Advisers for each Portfolio rely on the insights
of different specialists in making investment decisions based on each
Portfolio's particular investment objective(s) and investment strategies.
There is the possibility that the specific securities held by a Portfolio will
underperform other funds in the same asset class or benchmarks that are
representative of the general performance of the asset class because of the
Adviser's choice of portfolio securities.
YEAR 2000 RISK: Like other mutual funds, financial and business organizations
and individuals around the world, the Trust and its Portfolios could be
adversely affected if the computer systems used by the Advisers, other service
providers, or persons with whom they deal, do not properly process and
calculate date-related information and data dated on and after January 1,
2000. This possibility is commonly known as the "Year 2000 Problem." Virtually
all operations of the Trust and its Portfolios are computer reliant. The
Manager, Advisers, administrator, transfer agent, distributors and custodian
have informed the Trust that they are actively taking steps to address the
Year 2000 Problem with regard to their respective computer systems and the
interfaces between their respective computer systems. The Trust is also taking
measures to obtain assurances from necessary persons that comparable steps are
being taken by the key service providers to the Trust's Advisers,
administrator, transfer agent, distributors, and custodian. There can be no
assurance that the Trust and the Portfolios' key service providers will be
Year 2000 compliant. If not adequately addressed, the Year 2000 Problem could
result in the inability of the Trust to perform its mission critical
functions, including trading and settling trades of Portfolio securities,
pricing of portfolio securities and processing shareholder transactions, and
the net asset value of its Portfolios' shares may be materially affected.
In addition, because the Year 2000 Problem affects virtually all issuers, the
companies or entities in which the Portfolios may invest also could be
adversely impacted by the Year 2000 Problem. For example, issuers may incur
substantial costs to address the Year 2000 problem. The extent of such impact
cannot be predicted and there can be no assurances that the Year 2000 Problem
will not have an adverse effect on the issuers whose securities are held by
the Portfolios. The Advisers have assured the Trust that they consider such
issues in making investment decisions for the Portfolios. Furthermore, certain
of the Portfolios make international investments thereby exposing these
Portfolios to operations, custody and settlement processes outside the United
States.
<PAGE>
- ----------
38
- --------------------------------------------------------------------------------
In many countries outside the United States the Year 2000 Problem has not been
adequately addressed and concerns have been raised that capital flight, among
other issues, may be triggered by full disclosure of the Year 2000 Problem on
countries outside the United States. Additional information on the impact of
the Year 2000 Problem on emerging market countries is provided in this
section, under "FOREIGN SECURITIES RISKS-EMERGING MARKET RISK."
As indicated in "Summary Information Concerning EQ Advisors Trust" and "About
the Investment Portfolios," a particular Portfolio may also be subject to the
following risks:
CONVERTIBLE SECURITIES RISK: Convertible securities may include both
convertible debt and convertible preferred stock. Such securities may be
converted into shares of the underlying common stock at either a stated price
or stated rate. Therefore, convertible securities enable you to benefit from
increases in the market price of the underlying common stock. Convertible
securities provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar
quality. The value of convertible securities fluctuates in relation to changes
in interest rates and, in addition, fluctuates in relation to the underlying
common stock. Subsequent to purchase by a Portfolio, convertible securities
may cease to be rated or a rating may be reduced below the minimum required
for purchase by that Portfolio. Each Adviser will consider such event in its
determination of whether a Portfolio should continue to hold the securities.
DERIVATIVES RISK: Derivatives are financial contracts whose value depends on,
or is derived from the value of an underlying asset, reference rate or index.
Derivatives include stock options, securities index options, currency options,
forward currency exchange contracts, futures contracts, swaps and options on
futures contracts. Certain Portfolios can use derivatives involving the U.S.
Government and foreign government securities and currencies. Investments in
derivatives can significantly increase your exposure to market risk, or credit
risk of the counterparty. Derivatives also involve the risk of mispricing or
improper valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that any of the Portfolios invest a
substantial amount of its assets in fixed income securities, a Portfolio may
be subject to the following risks:
CREDIT RISK: Credit risk is the risk that the issuer or guarantor of a debt
security or counterparty to a Portfolio's transactions will be unable or
unwilling to make timely principal and/or interest payments, or otherwise will
be unable or unwilling to honor its financial obligations. Each of the
Portfolios may be subject to credit risk to the extent that it invests in debt
securities or engages in transactions, such as securities loans or repurchase
agreements, which involve a promise by a third party to honor an obligation to
the Portfolio.
Credit risk is particularly significant for the Alliance High Yield Portfolio,
that invests a material portion of its assets in "junk bonds" or lower-rated
securities (i.e., rated BB or lower by S&P or an equivalent rating by any
other NRSRO or unrated securities of similar quality). These debt securities
and similar unrated securities have speculative elements or are predominantly
speculative. A Portfolio such as Alliance High Yield Portfolio may also be
subject to greater credit risk because it may invest in debt securities issued
in connection with corporate restructurings by highly leveraged issuers or in
debt securities not current in the payment of interest or principal, or in
default.
INTEREST RATE RISK: The price of a bond or a fixed income security is
dependent upon interest rates. Therefore, the share price and total return of
a Portfolio investing a significant portion of its assets in bonds or fixed
income securities will vary in response to changes in interest rates. A rise
in interest rates
<PAGE>
- ----------
39
- --------------------------------------------------------------------------------
causes the value of a bond to decrease, and vice versa. There is the
possibility that the value of a Portfolio's investment in bonds or fixed
income securities may fall because bonds or fixed income securities generally
fall in value when interest rates rise. The longer the term of a bond or fixed
income instrument, the more sensitive it will be to fluctuations in value from
interest rate changes. Changes in interest rates may have a significant effect
on Portfolios holding a significant portion of their assets in fixed income
securities with long term maturities.
MORTGAGE-BACKED SECURITIES RISK: In the case of mortgage-backed securities,
rising interest rates tend to extend the term to maturity of the securities,
making them even more susceptible to interest rate changes. When interest
rates drop, not only can the value of fixed income securities drop, but the
yield can drop, particularly where the yield on the fixed income securities is
tied to changes in interest rates, such as adjustable mortgages. Also when
interest rates drop, the holdings of mortgage-backed securities by a Portfolio
can reduce returns if the owners of the underlying mortgages pay off their
mortgages sooner than anticipated since the funds prepaid will have to be
reinvested at the then lower prevailing rates. This is known as prepayment
risk. When interest rates rise, the holdings of mortgage-backed securities by
a Portfolio can reduce returns if the owners of the underlying mortgages pay
off their mortgages later than anticipated. This is known as extension risk.
INVESTMENT GRADE SECURITIES RISK: Debt securities are rated by national bond
ratings agencies. Securities rated BBB by S&P or Baa by Moody's are considered
investment grade securities, but are somewhat riskier than higher rated
obligations because they are regarded as having only an adequate capacity to
pay principal and interest, and are considered to lack outstanding investment
characteristics and may be speculative.
JUNK BONDS OR LOWER RATED SECURITIES RISK: Bonds rated below investment grade
by S&P and Moody's are speculative in nature, may be subject to certain risks
with respect to the issuing entity and to greater market fluctuations than
higher rated fixed income securities. They are usually issued by companies
without long track records of sales and earnings, or by those companies with
questionable credit strength. These bonds are considered "below investment
grade." The retail secondary market for these "junk bonds" may be less liquid
than that of higher rated securities and adverse conditions could make it
difficult at times to sell certain securities or could result in lower prices
than those used in calculating the Portfolio's net asset value.
FOREIGN SECURITIES RISKS: A Portfolio's investments in foreign securities,
including depositary receipts, involve risks not associated with investing in
U.S. securities and can affect a Portfolio's performance. Foreign markets,
particularly emerging markets, may be less liquid, more volatile and subject
to less government supervision than domestic markets. There may be
difficulties enforcing contractual obligations, and it may take more time for
trades to clear and settle. The specific risks of investing in foreign
securities, among others, include:
CURRENCY RISK: The risk that changes in currency exchange rates will
negatively affect securities denominated in, and/or receiving revenues in,
foreign currencies. Adverse changes in currency exchange rates (relative to
the U.S. dollar) may erode or reverse any potential gains from a Portfolio's
investment in securities denominated in a foreign currency or may widen
existing losses.
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets. Generally,
economic structures in these countries are less diverse and mature than those
in developed countries, and their
---------------------------------------------------- EQ Advisors Trust
<PAGE>
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40
- --------------------------------------------------------------------------------
political systems are less stable. Investments in emerging markets countries
may be affected by national policies that restrict foreign investment in
certain issuers or industries. The small size of their securities markets and
low trading volumes can make investments illiquid and more volatile than
investments in developed countries and such securities may be subject to
abrupt and severe price declines. As a result, a Portfolio investing in
emerging markets countries may be required to establish special custody or
other arrangements before investing.
The YEAR 2000 PROBLEM may also be especially acute in emerging market
countries. Many emerging market countries are currently lagging behind more
developed countries in their Year 2000 preparedness because they lack the
financial resources to undertake the necessary remedial actions. A lack of
Year 2000 preparedness may adversely affect the health, security and economic
well-being of emerging market countries and could, obviously, adversely affect
the value of a Portfolio's investments in emerging market countries. More
information on the Year 2000 Problem is provided in this section, under
"GENERAL INVESTMENT RISKS-YEAR 2000 RISK."
EURO RISK: Certain of the Portfolios invests in securities issued by European
issuers. On January 1, 1999, 11 of the 15 member states of the European
Monetary Union ("EMU") introduced the "Euro" as a common currency. During a
three-year transitional period, the Euro will coexist with each participating
state's currency and, on July 1, 2002, the Euro is expected to become the sole
currency of the participating states. The introduction of the Euro will result
in the redenomination of European debt and equity securities over a period of
time, which may result in various legal and accounting differences and/or tax
treatments that otherwise would not likely occur. During this period, the
creation and implementation of suitable clearing and settlement systems and
other operational problems may cause market disruptions that could adversely
affect investments quoted in the Euro.
The consequences of the Euro conversion for foreign exchange rates, interest
rates and the value of European securities eligible for purchase by the
Portfolios are presently unclear and it is not possible to predict the
eventual impact of the Euro implementation plan on the Portfolios. There are a
number of significant risks associated with EMU. Monetary and economic union
on this scale has never been attempted before. There is a significant degree
of uncertainty as to whether participating countries will remain committed to
EMU in the face of changing economic conditions. The conversion may adversely
affect a Portfolio if the Euro does not take effect as planned or if a
participating state withdraws from the EMU. Such actions may adversely affect
the value and/or increase the volatility of securities held by the Portfolios.
POLITICAL/ECONOMIC RISK: Changes in economic and tax policies, government
instability, war or other political or economic actions or factors may have an
adverse effect on a Portfolio's foreign investments.
REGULATORY RISK: Less information may be available about foreign companies. In
general, foreign companies are not subject to uniform accounting, auditing and
financial reporting standards or to other regulatory practices and
requirements as are U.S. companies.
TRANSACTION COSTS RISK: The costs of buying and selling foreign securities,
including tax, brokerage and custody costs, generally are higher than those
involving domestic transactions.
GROWTH INVESTING RISK: Growth investing generally focuses on companies that,
due to their strong earnings and revenue potential, offer above-average
prospects for capital growth, with less emphasis on dividend income. Earnings
<PAGE>
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41
- --------------------------------------------------------------------------------
predictability and confidence in earnings forecasts are an important part of
the selection process. As a result, the price of growth stocks may be more
sensitive to changes in current or expected earnings than the prices of other
stocks. Advisers using this approach generally seek out companies experiencing
some or all of the following: high sales growth, high unit growth, high or
improving returns on assets and equity, and a strong balance sheet. Such
Advisers also prefer companies with a competitive advantage such as unique
management, marketing or research and development. Growth investing is also
subject to the risk that the stock price of one or more companies will fall or
will fail to appreciate as anticipated by the Advisers, regardless of
movements in the securities market.
LEVERAGING RISK: When a Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in that Portfolio will be more volatile
and all other risks will tend to be compounded. All of the Portfolios may take
on leveraging risk by investing in collateral from securities loans and by
borrowing money to meet redemption requests.
LIQUIDITY RISK: Certain securities held by a Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like. A
Portfolio may have to hold these securities longer than it would like and may
forego other investment opportunities. There is the possibility that a
Portfolio may lose money or be prevented from earning capital gains if it can
not sell a security at the time and price that is most beneficial to the
Portfolio. Portfolios that invest in privately-placed securities, high-yield
bonds, mortgage-backed securities or foreign or emerging markets securities,
which have all experienced periods of illiquidity, are subject to liquidity
risks. A particular Portfolio may be more susceptible to some of these risks
than others, as noted in the description of each Portfolio.
MONEY MARKET RISK: Although a money market fund is designed to be a relatively
low risk investment, it is not entirely free of risk. Despite the short
maturities and high credit quality of the Alliance Money Market Portfolio's
investments, increases in interest rates and deteriorations in the credit
quality of the instruments the Portfolio has purchased may reduce the
Portfolio's yield. In addition, the Portfolio is still subject to the risk
that the value of an investment may be eroded over time by inflation.
PORTFOLIO TURNOVER RISK: Consistent with their investment policies, the
Portfolios also will purchase and sell securities without regard to the effect
on portfolio turnover. Higher portfolio turnover (e.g., over 100% per year)
will cause a Portfolio to incur additional transaction costs and may result in
taxable gains being passed through to shareholders.
SECURITIES LENDING RISK: For purposes of realizing additional income, each
Portfolio may lend securities to broker-dealers approved by the Board of
Trustees. In addition, the Alliance High Yield Portfolio may make secured
loans of its portfolio securities without restriction. Any such loan of
portfolio securities will be continuously secured by collateral at least equal
to the value of the security loaned. Such collateral will be in the form of
cash, marketable securities issued or guaranteed by the U.S. Government or its
agencies, or a standby letter of credit issued by qualified banks. The risks
in lending portfolio securities, as with other extensions of secured credit,
consist of possible delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Loans will only be made to firms deemed by the
Adviser to be of good standing and will not be made unless, in the judgment of
the Adviser, the consideration to be earned from such loans would justify the
risk.
SMALL-CAP AND MID-CAP COMPANY RISK: A Portfolio's investments in small-cap and
mid-cap companies may involve greater risks than investments in larger, more
established issuers. Smaller companies may have narrower product lines, more
limited financial resources and more limited trading markets for their stock,
as compared with larger companies. Their securities may be less well-known
---------------------------------------------------- EQ Advisors Trust
<PAGE>
- ----------
42
- --------------------------------------------------------------------------------
and trade less frequently and in more limited volume than the securities of
larger, more established companies. In addition, small-cap and mid-cap
companies are typically subject to greater changes in earnings and business
prospects than larger companies. Consequently, the prices of small company
stocks tend to rise and fall in value more frequently than the stocks of
larger companies. Although investing in small-cap and mid-cap companies offers
potential for above-average returns, the companies may not succeed and the
value of their stock could decline significantly.
VALUE INVESTING RISK: Value investing attempts to identify strong companies
selling at a discount from their perceived true worth. Advisers using this
approach generally select stocks at prices, in their view, that are
temporarily low relative to the company's earnings, assets, cash flow and
dividends. Value investing is subject to the risk that the stocks' intrinsic
value may never be fully recognized or realized by the market, or their prices
may go down. In addition, there is the risk that a stock judged to be
undervalued may actually be appropriately priced. Value investing generally
emphasizes companies that, considering their assets and earnings history, are
attractively priced and may provide dividend income.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
<PAGE>
4
Management of the Trust
- ----------------
43
- --------------------------------------------------------------------------------
This section gives you information on the Trust, the Manager and the Advisers
for the Portfolios. More detailed information concerning each of the Advisers
and portfolio managers is included in the description for each Portfolio in
the section "About The Investment Portfolios."
THE TRUST
The Trust is organized as a Delaware business trust and is registered with the
Securities and Exchange Commission ("SEC") as an open-end management
investment company. The Trust issues shares of beneficial interest that are
currently divided among forty (40) Portfolios, each of which has authorized
Class IA and Class IB shares. Each Portfolio has its own objectives,
investment strategies and risks, which have been previously described in this
prospectus.
THE MANAGER
EQ Financial Consultants, Inc. ("EQFC"), 1290 Avenue of the Americas, New
York, New York 10104, currently serves as the Manager of the Trust. The Board
of Trustees of the Trust has approved a transfer to Equitable of the Trust's
Investment Management Agreement with EQFC. This transfer is expected to be
completed in September 1999. Upon completion of the transfer, Equitable will
serve as the Manager of the Trust. However, until completion of the transfer,
EQFC will continue to serve in that capacity. Equitable, 1290 Avenue of the
Americas, New York, New York 10104, is the indirect corporate parent of EQFC.
Both EQFC and Equitable are investment advisers registered under the
Investment Advisers Act of 1940, as amended, and EQFC is a broker-dealer
registered under the Securities Exchange Act of 1934, as amended.
Subject to the supervision and direction of the Board of Trustees, the Manager
has overall responsibility for the general management and administration of
the Trust. In the exercise of that responsibility, the Manager, without
obtaining shareholder approval but subject to the review and approval by the
Board of Trustees, may: (i) select the Advisers for the Portfolios; (ii) enter
into and materially modify existing investment advisory agreements; and (iii)
terminate and replace the Advisers. The Manager also monitors each Adviser's
investment program and results, reviews brokerage matters, oversees compliance
by the Trust with various federal and state statutes, and carries out the
directives of the Board of Trustees. The Manager also supervises the provision
of services by third parties such as the Trust's custodian and administrator.
The Manager has filed an application ("Substitution Application") requesting
that the SEC approve the substitution of Class IA and Class IB shares of 14
new Portfolios of the Trust for the same class of shares of corresponding
portfolios of The Hudson River Trust ("HRT"). Alliance Capital Management L.P.
("Alliance") will serve as Adviser for each of those 14 new Portfolios. The
Substitution Application states that, with respect to those 14 new Portfolios
advised by Alliance, the Manager will not use the powers granted to it under
the Multi-Manager Order (i) to terminate Alliance and select a new Adviser for
those Portfolios or (ii) to materially modify the Investment Advisory
Agreement between the Manager and Alliance without first obtaining shareholder
approval to utilize the powers granted under the Multi-Manager Order or the
approval of shareholders to materially modify the Investment Advisory
Agreement.
<PAGE>
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44
- --------------------------------------------------------------------------------
The six (6) Portfolios listed in the table below did not commence operations
during 1998. The table below shows the annual rate of the management fees (as
a percentage of each Portfolio's average daily net assets) that the Manager is
entitled to receive in 1999 for managing each of these Portfolios.
ANNUAL RATE OF MANAGEMENT FEES
--------------------------------------------------------
PORTFOLIOS ANNUAL RATE
--------------------------------------------------------
Alliance Aggressive Stock(1) 0.54%
Alliance Balanced(1) 0.41%
Alliance Common Stock(1) 0.36%
Alliance Global(1) 0.64%
Alliance High Yield(1) 0.60%
Alliance Money Market(1) 0.35%
--------------------------------------------------------
(1) The inception date for this Portfolio was April 30, 1999.
THE ADVISERS
Each Portfolio has an Adviser that furnishes an investment program for the
Portfolio pursuant to an investment advisory agreement with the Manager. Each
Adviser makes investment decisions on behalf of the Portfolio, places all
orders for the purchase and sale of investments for the Portfolio's account
with brokers or dealers selected by such Adviser and may perform certain
limited related administrative functions in connection therewith.
The Manager has received an exemptive order, the Multi-Manager Order, from the
SEC that permits the Manager, subject to board approval and without the
approval of shareholders to: (a) employ a new Adviser or Advisers for any
Portfolio pursuant to the terms of a new Advisory Agreement, in each case
either as a replacement for an existing Adviser or as an additional Adviser;
(b) change the terms of any Advisory Agreement; and (c) continue the
employment of an existing Adviser on the same advisory contract terms where a
contract has been assigned because of a change in control of the Adviser. In
such circumstances, shareholders would receive notice of such action,
including the information concerning the Adviser that normally is provided in
the Prospectus.
The Manager and certain non-affiliated insurance companies and certain of
their separate accounts (collectively, "Applicants") have filed a Substitution
Application with the SEC. Applicants have included, as a term of the
Substitution Application, that with respect to those Portfolios for which
Alliance serves as Adviser, the Manager will not: (i) terminate Alliance and
select a new Adviser for those Portfolios or (ii) materially modify the
existing investment advisory agreement without first either obtaining approval
of shareholders for such actions or obtaining approval of shareholders to
utilize the Multi-Manager Order.
The Manager pays each Adviser a fee based on the Portfolio's average daily net
assets. No Portfolio is responsible for the fees paid to each of the Advisers.
THE ADMINISTRATOR
Pursuant to an agreement, Chase Global Funds Services Company
("Administrator") assists the Manager in the performance of its administrative
responsibilities to the Trust and provides the Trust with other necessary
administrative, fund accounting and compliance services. In addition, the
Administrator makes available the office space, equipment, personnel and
facilities required to provide such services to the Trust. For these services,
the Trust pays the Administrator a monthly fee at the annual rate of .0525 of
1% of the total Trust assets, plus $25,000 for each Portfolio, until the total
Trust assets reach $2.0 billion, and when the total Trust assets exceed $2.0
billion: .0425 of 1% of the next $0.5 billion of the total Trust assets; .035
of 1% of the next $2.0 billion of the total Trust assets; .025 of 1% of
the next $1.0 billion of the total Trust assets; .015 of 1%
of the next $2.5 billion of the total Trust assets; .01 of 1% of the total
Trust assets in excess of $8.0 billion; provided, however, that the annual fee
payable to Chase with respect to any Portfolio which commenced operations
after July 1, 1997 and whose assets do not exceed $200 million shall be
<PAGE>
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45
- --------------------------------------------------------------------------------
computed at the annual rate of .0525% of 1% of the Portfolio's total assets
plus $25,000.
THE TRANSFER AGENT
Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.
BROKERAGE PRACTICES
In selecting brokers and dealers, the Manager and each Adviser may consider
research and brokerage services furnished to either company and their
affiliates. Subject to seeking the most favorable net price and execution
available, the Manager and each Adviser may also consider sales of shares of
the Trust as a factor in the selection of brokers and dealers.
BROKERAGE TRANSACTIONS WITH AFFILIATES
To the extent permitted by law, the Trust may engage in securities and other
transactions with entities that may be affiliated with the Manager or the
Advisers. The 1940 Act generally prohibits the Trust from engaging in
principal securities transactions with an affiliate of the Manager or Advisers
unless pursuant to an exemptive order from the SEC. For these purposes,
however, the Trust has considered this issue and believes, based upon advice
of counsel, that a broker-dealer affiliate of an Adviser to one Portfolio
should not be treated as an affiliate of the Adviser to another Portfolio for
which such Adviser does not provide investment advice. The Trust has adopted
procedures that are reasonably designed to provide that any commission it pays
to affiliates of the Manager or Advisers does not exceed the usual and
customary broker's commission. The Trust has also adopted procedures
permitting it to purchase securities, under certain restrictions prescribed by
a rule under the 1940 Act, in a public offering in which an affiliate of the
Manager or Advisers is an underwriter.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
5
Fund distribution arrangements
- ----------------
46
- --------------------------------------------------------------------------------
The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc. ("EQFC") serves as
one of the distributors for the Class IB shares of the Trust offered by this
Prospectus as well as one of the distributors for the Class IA shares.
Equitable Distributors, Inc. ("EDI") serves as the other distributor for the
Class IB shares of the Trust as well as the Class IA shares. Both classes of
shares are offered and redeemed at their net asset value without any sales
load. EQFC and EDI are affiliates of Equitable. Both EQFC and EDI are
registered as broker-dealers under the Securities Exchange Act of 1934 and are
members of the National Association of Securities Dealers, Inc.
The Trust has adopted a Distribution Plan under Rule 12b-1 under the 1940 Act
for the Trust's Class IB shares. Under the Class IB Distribution Plan the
Class IB shares of the Trust pay each of the distributors an annual fee to
compensate them for promoting, selling and servicing shares of the Portfolios.
The annual fees equal 0.25% of each Portfolio's average daily net assets. Over
time, the fees will increase your cost of investing and may cost you more than
other types of charges.
<PAGE>
6
Purchase and redemption
- ----------------
47
- --------------------------------------------------------------------------------
The price at which a purchase or redemption is effected is based on the next
calculation of net asset value after an order is placed by an insurance
company or qualified retirement plan investing in or redeeming from the Trust.
Net asset value per share is calculated for purchases and redemption of shares
of each Portfolio by dividing the value of total Portfolio assets, less
liabilities (including Trust expenses and class related expenses, which are
accrued daily), by the total number of outstanding shares of that Portfolio.
The net asset value per share of each Portfolio is determined each business
day at 4:00 p.m. Eastern time. Net asset value per share is not calculated on
days on which the New York Stock Exchange ("NYSE") is closed for trading.
Portfolios that invest a significant portion of their assets in foreign
securities, may experience changes in their net asset value on days when a
shareholder may not purchase or redeem shares of that Portfolio because
foreign securities (other than depositary receipts) are valued at the close of
business in the applicable foreign country.
All shares are purchased and redeemed in accordance with the Trust's Amended
and Restated Declaration of Trust and By-Laws. Sales and redemptions of shares
of the same class by the same shareholder on the same day will be netted for
each Portfolio. All redemption requests will be processed and payment with
respect thereto will normally be made within seven days after tenders.
The Trust may suspend redemption, if permitted by the 1940 Act, for any period
during which the New York Stock Exchange is closed or during which trading is
restricted by the SEC or the SEC declares that an emergency exists. Redemption
may also be suspended during other periods permitted by the SEC for the
protection of the Trust's shareholders. If the Board of Trustees determines
that it would be detrimental to the best interest of the Trust's remaining
shareholders to make payment in cash, the Trust may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.
<PAGE>
7
How assets are valued
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48
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Values are determined according to accepted practices and all laws and
regulations that apply. The assets of each Portfolio are generally valued as
follows:
o Stocks and debt securities which mature in more than 60 days are valued on
the basis of market quotations.
o Foreign securities not traded directly, or in American Depository Receipts
or similar form, in the United States are valued at representative quoted
prices in the currency in the country of origin. Foreign currency is
converted into United States dollar equivalents at current exchange rates.
Because foreign markets may be open at different times than the NYSE, the
value of a Portfolio's shares may change on days when shareholders are not
able to buy or sell them. If events materially affecting the values of the
Portfolios' foreign investments occur between the close of foreign markets
and the close of regular trading on the NYSE, these investments may be
valued at their fair value.
o Short-term debt securities in the Portfolios, other than the Alliance Money
Market Portfolio, which mature in 60 days or less are valued at amortized
cost, which approximates market value. Securities held in the Alliance
Money Market Portfolio are valued at prices based on equivalent yields or
yield spreads.
o Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided are valued in good
faith by the Valuation Committee of the Board of Trustees of the Trust
using its best judgment.
<PAGE>
8
Tax information
----------------
49
-------------------------------------------------------------------------------
Each Portfolio of the Trust is a separate regulated investment company for
federal income tax purposes. Regulated investment companies are usually not
taxed at the entity (Portfolio) level. They pass through their income and
gains to their shareholders by paying dividends. Their shareholders include
this income on their respective tax returns. A Portfolio will be treated as a
regulated investment company if it meets specified federal income tax rules,
including types of investments, limits on investments, calculation of income,
and dividend payment requirements. Although the Trust intends that it and each
Portfolio will be operated to have no federal tax liability, if they have any
federal tax liability, that could hurt the investment performance of the
Portfolio in question. Also, any Portfolio investing in foreign securities or
holding foreign currencies could be subject to foreign taxes which could
reduce the investment performance of the Portfolio.
It is important for each Portfolio to maintain its federal income tax
regulated investment company status because the shareholders of the Portfolio
that are insurance company separate accounts will then be able to use a
favorable federal income tax investment diversification testing rule in
figuring out whether the Contracts indirectly funded by the Portfolio meet tax
qualification rules for variable insurance contracts. If a Portfolio fails to
meet specified investment diversification requirements, owners of non-pension
plan Contracts funded through the Trust could be taxed immediately on the
accumulated investment earnings under their Contracts and could lose any
benefit of tax deferral. The Administrator and the Manager therefore carefully
monitor compliance with all of the regulated investment company rules and
variable insurance contract investment diversification rules.
<PAGE>
9
Financial Highlights
The Hudson River Trust
December 31, 1998
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(A)
- -------
50
- --------------------------------------------------------------------------------
The financial highlights tables below are intended to help you understand the
financial performance for six (6) of the Portfolios that are advised by
Alliance for the past five (5) years (or, if shorter, the period of the
Portfolio's operations). The financial information relating to both the Class
IA shares and the Class IB shares for those six (6) Portfolios has been derived
from the audited financial statements of HRT for the year ended December 31,
1998. The Class IA shares and the Class IB shares of each HRT Portfolio listed
below will be substituted for Class IA shares and the Class IB shares of the
corresponding Portfolio of the Trust and the assets and liabilities of the
respective HRT Portfolio will be transferred to its corresponding Portfolio of
the Trust on or about October 1, 1999. These financial statements have been
audited by PricewaterhouseCoopers LLP, independent accountants.
PricewaterhouseCoopers LLP's report on HRT financial statements as of December
31, 1998 appears in HRT's Annual Report. The information should be read in
conjunction with the financial statements contained in HRT's Annual Report
which are incorporated by reference into the Trust's Statement of Additional
Information (SAI) and available upon request.
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........ $ 36.22 $ 35.85 $ 35.68 $ 30.63 $ 31.89
---------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.09 0.04 0.09 0.10 0.04
Net realized and unrealized gain (loss) on
investments .................................. (0.28) 3.71 7.52 9.54 (1.26)
---------- ---------- --------- --------- ---------
Total from investment operations .............. (0.19) 3.75 7.61 9.64 (1.22)
---------- ---------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.16) (0.05) (0.09) (0.10) (0.04)
Dividends in excess of net investment
income ....................................... - - (0.00) - -
Distributions from realized gains ............. (1.72) (3.33) (7.33) (4.49) -
Distributions in excess of realized gains ..... - - (0.02) - -
Tax return of capital distributions ........... - - - - (0.00)
---------- ---------- ---------- ---------- ---------
Total dividends and distributions ............. (1.88) (3.38) (7.44) (4.59) (0.04)
---------- ---------- ---------- ---------- ---------
Net asset value, end of period .................. $ 34.15 $ 36.22 $ 35.85 $ 35.68 $ 30.63
========== ========== ========== ========== =========
Total return (c) ................................ 0.29% 10.94% 22.20% 31.63% (3.81)%
========== ========== ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $4,346,907 $4,589,771 $3,865,256 $2,700,515 $1,832,164
Ratio of expenses to average net assets ......... 0.56% 0.54% 0.48% 0.49% 0.49%
Ratio of net investment income (loss) to
average net assets ............................ 0.24% 0.11% 0.24% 0.28% 0.12%
Portfolio turnover rate ......................... 105% 123% 108% 127% 92%
<CAPTION>
CLASS IB
-------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------ DECEMBER 31,
1998 1997 1996
------------ ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ........ $ 36.13 $ 35.83 $ 37.28
-------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.01 (0.11) (0.01)
Net realized and unrealized gain (loss) on
investments .................................. (0.29) 3.77 0.85
-------- ------- ----------
Total from investment operations .............. (0.28) 3.66 0.84
-------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.12) (0.03) -
Dividends in excess of net investment
income ....................................... - - (0.02)
Distributions from realized gains ............. (1.72) (3.33) (0.23)
Distributions in excess of realized gains ..... - - (2.04)
Tax return of capital distributions ........... - - -
-------- ------- ----------
Total dividends and distributions ............. (1.84) (3.36) (2.29)
-------- ------- ----------
Net asset value, end of period .................. $ 34.01 $ 36.13 $ 35.83
======== ======= ==========
Total return (c) ................................ 0.05% 10.66% 2.32%
======== ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $153,782 $73,486 $ 613
Ratio of expenses to average net assets ......... 0.82% 0.81% 0.73%(d)
Ratio of net investment income (loss) to
average net assets ............................ 0.02% (0.28)% (0.10)%(d)
Portfolio turnover rate ......................... 105% 123% 108%
</TABLE>
<PAGE>
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51
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ALLIANCE BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------
1998 1997 1996
-------------- -------------- --------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) ................................................. $ 17.58 $ 16.64 $ 16.76
---------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................................... 0.56 0.58 0.53
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ............................. 2.54 1.86 1.31
---------- ---------- ---------
Total from investment operations ........................... 3.10 2.44 1.84
--------- ---------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ....................... (0.50) (0.59) (0.53)
Dividends in excess of net investment income ............... - - -
Distributions from realized gains .......................... (1.67) (0.91) (1.40)
Distributions in excess of realized gains .................. - - (0.03)
Tax return of capital distributions ........................ - - -
---------- ---------- ----------
Total dividends and distributions .......................... (2.17) (1.50) (1.96)
---------- ---------- ----------
Net asset value, end of period ............................... $ 18.51 $ 17.58 $ 16.64
========== ========== ==========
Total return (c) ............................................. 18.11% 15.06% 11.68%
========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................ $1,936,429 $1,724,089 $1,637,856
Ratio of expenses to average net assets ...................... 0.45% 0.45% 0.41%
Ratio of net investment income to average net assets ......... 3.00% 3.30% 3.15%
Portfolio turnover rate ...................................... 95% 146% 177%
<CAPTION>
CLASS IA CLASS IB
------------------------------ ----------------
JULY 8, 1998
YEAR ENDED DECEMBER 31, TO
------------------------------ DECEMBER 31,
1995 1994 1998
-------------- --------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) ................................................. $ 14.87 $ 16.67 $ 19.48
---------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................................... 0.54 0.45 0.24
Net realized and unrealized gain (loss) on investments and
foreign currency transactions ............................. 2.36 (1.78) 0.66
---------- --------- ---------
Total from investment operations ........................... 2.90 (1.33) 0.90
---------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ....................... (0.54) (0.44) (0.20)
Dividends in excess of net investment income ............... - (0.03) -
Distributions from realized gains .......................... (0.47) - (1.67)
Distributions in excess of realized gains .................. - - -
Tax return of capital distributions ........................ - (0.00) -
---------- --------- ---------
Total dividends and distributions .......................... (1.01) (0.47) (1.87)
---------- --------- ---------
Net asset value, end of period ............................... $ 16.76 $ 14.87 $ 18.51
========== ========= =========
Total return (c) ............................................. 19.75% (8.02)% 4.92%
========== ========= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................ $1,523,142 $1,329,820 $ 10
Ratio of expenses to average net assets ...................... 0.40% 0.39% 0.70%(d)
Ratio of net investment income to average net assets ......... 3.33% 2.87% 2.65%(d)
Portfolio turnover rate ...................................... 186% 115% 95%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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52
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ALLIANCE COMMON STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 21.61 $ 18.23 $ 16.48 $ 13.36 $ 14.65
----------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.18 0.14 0.15 0.20 0.20
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 5.99 5.12 3.73 4.12 (0.51)
----------- --------- --------- --------- ---------
Total from investment operations .............. 6.17 5.26 3.88 4.32 (0.31)
----------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.15) (0.11) (0.15) (0.20) (0.19)
Dividends in excess of net investment
income ....................................... - - - (0.02) (0.01)
Distributions from realized gains ............. (3.28) (1.77) (1.76) (0.95) (0.77)
Distributions in excess of realized gains ..... - - (0.22) (0.03) -
Tax return of capital distributions ........... - - - - (0.01)
----------- --------- ---------- ---------- ---------
Total dividends and distributions ............. (3.43) (1.88) (2.13) (1.20) (0.98)
----------- --------- ---------- ---------- ---------
Net asset value, end of period .................. $ 24.35 $ 21.61 $ 18.23 $ 16.48 $ 13.36
=========== ========= ========== ========== =========
Total return (c) ................................ 29.39% 29.40% 24.28% 32.45% (2.14)%
=========== ========= ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $12,061,977 $9,331,994 $6,625,390 $4,879,677 $3,466,245
Ratio of expenses to average net assets ......... 0.39% 0.39% 0.38% 0.38% 0.38%
Ratio of net investment income to average
net assets .................................... 0.75% 0.69% 0.85% 1.27% 1.40%
Portfolio turnover rate ......................... 46% 52% 55% 61% 52%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 21.58 $ 18.22 $ 17.90
-------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.10 0.10 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 6.00 5.11 1.52
-------- ------- ---------
Total from investment operations .............. 6.10 5.21 1.54
-------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.10) (0.08) (0.00)
Dividends in excess of net investment
income ....................................... - - (0.03)
Distributions from realized gains ............. (3.28) (1.77) (0.16)
Distributions in excess of realized gains ..... - - (1.03)
Tax return of capital distributions ........... - - -
-------- -------- ---------
Total dividends and distributions ............. (3.38) (1.85) (1.22)
-------- -------- ---------
Net asset value, end of period .................. $ 24.30 $ 21.58 $ 18.22
======== ======== =========
Total return (c) ................................ 29.06% 29.07% 8.49%
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $834,144 $228,780 $ 1,244
Ratio of expenses to average net assets ......... 0.64% 0.64% 0.63%(d)
Ratio of net investment income to average
net assets .................................... 0.44% 0.46% 0.61%(d)
Portfolio turnover rate ......................... 46% 52% 55%
</TABLE>
<PAGE>
- -----
53
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 17.29 $ 16.92 $ 15.74 $ 13.87 $ 13.62
---------- --------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.14 0.17 0.21 0.26 0.20
Net realized and unrealized gain on
investments and foreign currency
transactions ................................. 3.56 1.75 2.05 2.32 0.52
---------- --------- ------- ------- -------
Total from investment operations .............. 3.70 1.92 2.26 2.58 0.72
---------- --------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.22) (0.36) (0.21) (0.25) (0.17)
Dividends in excess of net investment
income ....................................... - - (0.08) - -
Distributions from realized gains ............. (1.31) (1.19) (0.79) (0.42) (0.28)
Distributions in excess of realized gains ..... - - - (0.03) (0.00)
Tax return of capital distributions ........... - - (0.00) (0.01) (0.02)
---------- --------- -------- -------- --------
Total dividends and distributions ............. (1.53) (1.55) (1.08) (0.71) (0.47)
---------- --------- -------- -------- --------
Net asset value, end of period .................. $ 19.46 $ 17.29 $ 16.92 $ 15.74 $ 13.87
========== ========== ======== ======== ========
Total return (c) ................................ 21.80% 11.66% 14.60% 18.81% 5.23%
========== ========== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $1,360,220 $1,203,867 $997,041 $686,140 $421,698
Ratio of expenses to average net assets ......... 0.71% 0.69% 0.60% 0.61% 0.69%
Ratio of net investment income to average
net assets .................................... 0.72% 0.97% 1.28% 1.76% 1.41%
Portfolio turnover rate ......................... 105% 57% 59% 67% 71%
<CAPTION>
CLASS IB
----------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 17.27 $ 16.91 $ 16.57
-------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.08 0.12 0.02
Net realized and unrealized gain on
investments and foreign currency
transactions ................................. 3.56 1.76 0.81
-------- ------- ----------
Total from investment operations .............. 3.64 1.88 0.83
-------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.19) (0.33) -
Dividends in excess of net investment
income ....................................... - - (0.11)
Distributions from realized gains ............. (1.31) (1.19) (0.10)
Distributions in excess of realized gains ..... - - (0.28)
Tax return of capital distributions ........... - - (0.00)
-------- ------- ----------
Total dividends and distributions ............. (1.50) (1.52) (0.49)
-------- ------- ---------
Net asset value, end of period .................. $ 19.41 $17.27 $ 16.91
======== ======= ==========
Total return (c) ................................ 21.50% 11.38% 4.98%
======== ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $ 47,982 $21,520 $ 290
Ratio of expenses to average net assets ......... 0.96% 0.97% 0.86%(d)
Ratio of net investment income to average
net assets .................................... 0.41% 0.67% 0.48%(d)
Portfolio turnover rate ......................... 105% 57% 59%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
54
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........ $ 10.41 $ 10.02 $ 9.64 $ 8.91 $ 10.08
------- -------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 1.07 1.04 1.02 0.98 0.89
Net realized and unrealized gain (loss) on
investments .................................. (1.56) 0.75 1.07 0.73 (1.17)
------- -------- ------- ------- -------
Total from investment operations .............. (0.49) 1.79 2.09 1.71 (0.28)
------- -------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (1.03) (0.97) (0.98) (0.94) (0.88)
Dividends in excess of net investment
income ....................................... - - (0.03) (0.04) (0.01)
Distributions from realized gains ............. (0.18) (0.43) (0.70) - -
Distributions in excess of realized gains ..... - - - - -
------- --------- -------- -------- -------
Total dividends and distributions ............. (1.21) (1.40) (1.71) (0.98) (0.89)
------- -------- -------- -------- -------
Net asset value, end of period .................. $ 8.71 $ 10.41 $ 10.02 $ 9.64 $ 8.91
======= ======== ======== ======== =======
Total return (c) ................................ (5.15)% 18.48% 22.89% 19.92% (2.79)%
======= ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $405,308 $355,473 $199,360 $118,129 $73,895
Ratio of expenses to average net assets ......... 0.63% 0.62% 0.59% 0.60% 0.61%
Ratio of net investment income to average
net assets .................................... 10.67% 9.82% 9.93% 10.34% 9.23%
Portfolio turnover rate ......................... 181% 390% 485% 350% 248%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ........ $ 10.39 $ 10.01 $ 10.25
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 1.04 1.05 0.19
Net realized and unrealized gain (loss) on
investments .................................. (1.56) 0.71 0.15
------- ------- ---------
Total from investment operations .............. (0.52) 1.76 0.34
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (1.00) (0.95) (0.03)
Dividends in excess of net investment
income ....................................... - - (0.25)
Distributions from realized gains ............. (0.18) (0.43) (0.01)
Distributions in excess of realized gains ..... - - (0.29)
------- ------- ---------
Total dividends and distributions ............. (1.18) (1.38) (0.58)
------- ------- ---------
Net asset value, end of period .................. $ 8.69 $ 10.39 $ 10.01
======= ======= =========
Total return (c) ................................ (5.38)% 18.19% 3.32%
======= ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $207,042 $66,338 $ 685
Ratio of expenses to average net assets ......... 0.88% 0.88% 0.82%(d)
Ratio of net investment income to average
net assets .................................... 10.60% 9.76% 8.71%(d)
Portfolio turnover rate ......................... 181% 390% 485%
</TABLE>
<PAGE>
- -----
55
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) ................................... $ 10.18 $ 10.17 $ 10.16 $ 10.14 $ 10.12
-------- ------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.53 0.54 0.54 0.57 0.41
Net realized and unrealized gain (loss) on
investments ................................. - - (0.01) - -
--------- -------- --------- -------- --------
Total from investment operations ............. 0.53 0.54 0.53 0.57 0.41
--------- -------- --------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.49) (0.53) (0.52) (0.55) (0.39)
Dividends in excess of net investment
income ...................................... - - - - -
--------- -------- -------- -------- --------
Total dividends and distributions ............ (0.49) (0.53) (0.52) (0.55) (0.39)
--------- -------- -------- ------- -------
Net asset value, end of period ................. $ 10.22 $ 10.18 $ 10.17 $ 10.16 $ 10.14
========= ======== ======== ======= =======
Total return (c) ............................... 5.34% 5.42% 5.33% 5.74% 4.02%
========= ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $723,311 $449,960 $463,422 $386,691 $325,391
Ratio of expenses to average net assets ........ 0.37% 0.39% 0.43% 0.44% 0.42%
Ratio of net investment income to average
net assets ................................... 5.13% 5.28% 5.17% 5.53% 4.01%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) ................................... $ 10.17 $ 10.16 $ 10.16
------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.49 0.52 0.11
Net realized and unrealized gain (loss) on
investments ................................. 0.02 - 0.01
------- -------- --------
Total from investment operations ............. 0.51 0.52 0.12
------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.47) (0.51) (0.02)
Dividends in excess of net investment
income ...................................... - - (0.10)
-------- -------- ---------
Total dividends and distributions ............ (0.47) (0.51) (0.12)
-------- -------- --------
Net asset value, end of period ................. $ 10.21 $ 10.17 $ 10.16
======== ======== =========
Total return (c) ............................... 5.08% 5.16% 1.29%
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $386,718 $123,675 $ 3,184
Ratio of expenses to average net assets ........ 0.62% 0.63% 0.67%(d)
Ratio of net investment income to average
net assets ................................... 4.82% 5.02% 4.94%(d)
</TABLE>
- ----------
(a) Net investment income and capital changes per share are based upon
monthly average shares outstanding.
(b) Date as of which funds were first allocated to the Portfolios are as
follows:
Class IA:
Alliance Common Stock Portfolio-June 16, 1975
Alliance Money Market Portfolio-July 13, 1981
Alliance Balanced Portfolio-January 27, 1986
Alliance Aggressive Stock Portfolio-January 27, 1986
Alliance High Yield Portfolio-January 2, 1987
Alliance Global Portfolio-August 27, 1987
Class IB:
Alliance Money Market, Alliance High Yield, Alliance Common Stock,
Alliance Global and Alliance Aggressive Stock Portfolios-October 2, 1996.
Alliance Balanced Portfolio-July 8, 1998.
(c) Total return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of
all dividends and distributions at net asset value during the
period, and redemption on the last day of the period. Total return
calculated for a period of less than one year is not annualized.
(d) Annualized.
------------------------- EQ Advisors Trust
<PAGE>
- ----------------
56
- --------------------------------------------------------------------------------
If you wish to know more, you will find additional information about the Trust
and its Portfolios in the following documents:
ANNUAL REPORTS
The Annual Report includes more information about the Trust's performance and
is available upon request free of charge. The reports usually include
performance information, a discussion of market conditions and the investment
strategies that affected the Portfolios' performance during the last fiscal
year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, dated August 30, 1999, is incorporated into this Prospectus by
reference and is available upon request free of charge by calling our toll
free number at 1-800-528-0204.
You may visit the SEC's website at www.sec.gov to view the SAI and other
information about the Trust. You can also review and copy information about
the Trust, including the SAI, at the SEC's Public Reference Room in
Washington, D.C. You may have to pay a duplicating fee. To find out more about
the Public Reference Room, call the SEC at 800-SEC-0330.
Investment Company Act File Number: 811-07953
