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Filed Pursuant to Rule 497(e)
Registration File No.: 333-17217
EQ Advisors Trust
PROSPECTUS DATED MAY 1, 1999
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This Prospectus describes the four (4) 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.
DOMESTIC EQUITY PORTFOLIOS
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BT Equity 500 Index
AGGRESSIVE EQUITY PORTFOLIOS
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Lazard Small Cap Value
MFS Emerging Growth Companies
INTERNATIONAL PORTFOLIOS
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T. Rowe Price International Stock
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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.
Ver 300+
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Overview
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EQ ADVISORS TRUST
This Prospectus tells you about the four (4) current Portfolios of the EQ
Advisors Trust ("Trust") and the Class IB shares offered by the Trust on
behalf of each Portfolio. The Trust is an open-end management investment
company. Each Portfolio is a separate series of the Trust with its own
investment objective, investment strategies and risks, which are described in
this Prospectus. Each of the current Portfolios of the Trust, except for the
Morgan Stanley Emerging Markets Equity Portfolio and the Merrill Lynch World
Strategy Portfolio, are 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") 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. ("Manager") serves as the Manager of the Trust,
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. During 1999, the Manager plans to change its name to AXA Advisors,
Inc.
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 may without
obtaining shareholder approval: (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.
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Table of contents
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<TABLE>
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SUMMARY INFORMATION CONCERNING EQ
ADVISORS TRUST 4
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ABOUT THE INVESTMENT PORTFOLIOS 6
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DOMESTIC EQUITY PORTFOLIO 8
BT Equity 500 Index Portfolio 8
AGGRESSIVE EQUITY PORTFOLIOS 10
Lazard Small Cap Value Portfolio 10
MFS Emerging Growth Companies Portfolio 12
INTERNATIONAL PORTFOLIO 14
T. Rowe Price International Stock Portfolio 14
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MORE INFORMATION ON PRINCIPAL RISKS 17
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MANAGEMENT OF THE TRUST 23
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The Trust 23
The Manager 23
Expense Limitation Agreement 24
The Advisers 24
The Administrator 25
The Transfer Agent 25
Brokerage Practices 25
Brokerage Transactions with Affiliates 25
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FUND DISTRIBUTION ARRANGEMENTS 26
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PURCHASE AND REDEMPTION 27
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HOW ASSETS ARE VALUED 28
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TAX INFORMATION 29
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PRIOR PERFORMANCE OF EACH ADVISER 30
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FINANCIAL HIGHLIGHTS 32
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</TABLE>
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Summary information concerning EQ Advisors Trust
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The following chart highlights the four (4) Portfolios described in this
Prospectus that you can choose as investment alternatives under your Contracts
offered by Equitable or EOC. The chart and accompanying information identify
each Portfolio's investment objective(s), principal investment strategies, and
principal risks. "More Information on Principal Risks", which more fully
describes each of the principal risks, is provided beginning on page 17.
<TABLE>
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EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIO
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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BT EQUITY 500 INDEX Seeks to replicate as closely as possible (before deduction
of Portfolio expenses) the total return of the S&P 500 Index
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EQ ADVISORS TRUST AGGRESSIVE EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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LAZARD SMALL CAP VALUE Seeks capital appreciation by investing in equity securities
of U.S. companies with small market capitalizations (i.e.,
companies in the range of companies represented in the
Russell 2000 Index) that the Adviser considers
inexpensively priced relative to the return on total capital
or equity
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MFS EMERGING GROWTH COMPANIES Seeks to provide long-term capital growth
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EQ ADVISORS TRUST INTERNATIONAL EQUITY PORTFOLIO
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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T. ROWE PRICE INTERNATIONAL STOCK Seeks long-term growth of capital through investment
primarily in common stocks of established non-U.S.
companies
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</TABLE>
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<TABLE>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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Common stocks of companies in the S&P 500 Index General investment, index-fund, and fixed income risks
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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Equity securities of small-cap U.S. companies in the range General investment, small-cap and mid-cap company,
of companies included in the Russell 2000 Index that the value investing, non-diversification, and fixed income risks
Adviser believes are undervalued based on their return on
equity or capital
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Equity securities of emerging growth companies with the General investment, small-cap and mid-cap company,
potential to become major enterprises foreign securities, and growth investing risks
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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Common stocks of established foreign companies General investment, foreign securities, liquidity, fixed
income, and growth investing risks
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</TABLE>
------------------------- EQ Advisors Trust
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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
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
index. 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.
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., 60% S&P 500/40% Lehman
Gov't/Corp) assume a static mix of the two indices.
THE COMPOSITE MARKET BENCHMARK is made up of 36% S&P 500, 24% MSCI EAFE Index,
21% Salomon Brothers U.S. Treasury Bond 1 year and, 14% Salomon Brothers World
Government ex U.S., and 5% U.S. Treasury Bill.
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
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market. The S&P 500 reflects the reinvestment of dividends, if any, but does
not reflect fees, brokerage commissions or other expenses of investing.
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 MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX ("MSCI EAFE") is a market
capitalization weighted equity index composed of a sample of companies
representative of the market structure of Europe, Australia and the Far East.
MSCI EAFE Index returns assume dividends reinvested net of withholding tax and
do not reflect any fees or expenses.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE PRICE RETURN
INDEX ("MSCI Emerging Markets Free") is a market capitalization weighted equity
index composed of companies that are representative of the market structure of
the following countries: Argentina, Brazil, Chile, China Free, Columbia, Czech
Republic, Greece, Hungary, India, Indonesia, Israel, Jordan, Korea (@ 50%),
Mexico Free, Pakistan, Peru, Philippines Free, Poland, Russia, South Africa,
Sri Lanka, Taiwan (@50%), Thailand, Turkey and Venezuela Free. The base date
for the index is December 31, 1987. "Free" MSCI indices exclude those shares
not purchasable by foreign investors. The average size of the emerging market
companies within this index is US $800 million.
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.
---------------------------------------------------- EQ Advisors Trust
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DOMESTIC EQUITY PORTFOLIO
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BT EQUITY 500 INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to replicate as closely as possible (before
deduction of Portfolio expenses) the total return of the S&P 500.
THE INVESTMENT STRATEGY
The Portfolio invests in equity securities of companies included in the S&P
500. The Adviser seeks to match the risk and return characteristics of the S&P
500 by investing in a statistically selected sample of the securities found in
the S&P 500, using a process known as "optimization". This process selects
stocks for the Portfolio so that industry weightings, market capitalizations
and fundamental characteristics (price to book ratios, price to earnings
ratios, debt to asset ratios and dividend yields) closely match those of the
securities included in the S&P 500. This approach helps to increase the
Portfolio's liquidity and reduce costs. The securities held by the Portfolio
are weighted to make the Portfolio's total investment characteristics similar
to those of the S&P 500 as a whole.
The Adviser generally will seek to match the composition of the S&P 500 but
usually will not invest the Portfolio's stock portfolio to mirror the S&P 500
exactly. Because of the difficulty and cost of executing relatively small stock
transactions, the Portfolio may not always be invested in the less heavily
weighted S&P 500 stocks, and may at times have its portfolio weighted
differently than the S&P 500, particularly if the Portfolio has a low level of
assets. In addition, the Portfolio may omit or remove any S&P 500 stock from
the Portfolio if, following objective criteria, the Adviser judges the stock to
be insufficiently liquid or believes the merit of the investment has been
substantially impaired by extraordinary events or financial conditions. The
Portfolio will not purchase the stock of Bankers Trust New York Corporation,
which is included in the S&P 500, and instead will overweight its holdings of
companies engaged in similar businesses.
For more information on the S&P 500, see the preceding section "The
Benchmarks." The Portfolio is not sponsored, endorsed, sold or promoted by
Standard & Poor's Corporation ("S&P") and S&P makes no guarantee as to the
accuracy and/or completeness of the S&P 500 or any data included therein.
Over time, the correlation between the performance of the Portfolio and the S&P
is expected to be 95% or higher before deduction of Portfolio expenses. The
Portfolio's ability to track the S&P 500 may be affected by, among others,
transaction costs, administration and other expenses incurred by the Portfolio,
changes in either the composition of the S&P 500 or the assets of the
Portfolio, and the timing and amount of Portfolio investor contributions and
withdrawals, if any. The Portfolio seeks securities to track the S&P 500,
therefore, the Adviser generally will not attempt to judge the merits of any
particular security as an investment.
The Portfolio may also invest up to 20% of its assets in short-term debt
securities and money market instruments to meet redemption requests or to
facilitate investment in the securities of the S&P 500. Securities index
futures contracts and related options, warrants and convertible securities may
be used for a number of reasons, including: to simulate full investment in the
S&P 500 while retaining a cash balance for Portfolio management purposes; to
facilitate trading; to reduce transaction costs; or to seek higher investment
returns when a futures contract, option, warrant or convertible security is
priced more attractively than the underlying equity security or S&P 500. These
instruments are considered to be derivatives.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
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INDEX-FUND RISK: The Portfolio is not actively managed and invests in
securities included in the index regardless of their investment merit.
Therefore, the Portfolio cannot modify its investment strategies to respond to
changes in the economy and may be particularly susceptible to a general decline
in the U.S. or global stock market segment relating to the index.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
Nationally Recognized Statistical Rating Organization ("NRSRO"), it will be
exposed to greater risk than higher-rated obligations because BBB rated
investment grade securities are regarded as having only an adequate capacity to
pay principal and interest, are considered to lack outstanding investment
characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart which follows illustrates the Portfolio's annual total return for
1998, the Portfolio's first year of existence. The table which follows shows
the Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. In addition, holders of variable insurance
contracts representing interests in the Portfolio will be subject to charges
and expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expenses and if reflected
the results would be reduced. The Portfolio's inception date was January 1,
1998.
CALENDAR YEAR ANNUAL TOTAL RETURN
25.14%
1998
Best quarter: Worst quarter:
21.26% (1998 4th Quarter) (10.03)% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
BT Equity 500 Index Portfolio 25.14% 25.14%
S&P 500 Index* 28.58% 28.58%
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
BANKERS TRUST COMPANY: ("Bankers Trust"), 130 Liberty Street (One Bankers Trust
Plaza), New York, New York 10006. Bankers Trust has been the Adviser to the
Portfolio since it commenced operations. Bankers Trust is a wholly-owned
subsidiary of Bankers Trust Corporation. Bankers Trust conducts a variety of
general banking and trust activities and is a major wholesale supplier of
financial services, including investment management to the international and
domestic institutional markets. During 1999, Bankers Trust Corporation and a
wholly owned subsidiary of Deutsche Bank AG ("Deutsche Bank") expect to
finalize a merger in which Bankers Trust Corporation will be acquired by and
become a subsidiary of Deutsche Bank.
---------------------------------------------------- EQ Advisors Trust
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AGGRESSIVE EQUITY PORTFOLIOS
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LAZARD SMALL CAP VALUE PORTFOLIO
INVESTMENT OBJECTIVE: Seeks capital appreciation by investing in equity
securities of United States companies with small market capitalizations (i.e.,
companies in the range of companies represented in the Russell 2000 Index) that
the Adviser considers inexpensively priced relative to the return on total
capital or equity.
THE INVESTMENT STRATEGY
The Portfolio is a non-diversified Portfolio that invests primarily in equity
securities of U.S. companies with small market capitalizations that the Adviser
believes are undervalued based on their return on equity or capital. The
Portfolio will have characteristics similar to the Russell 2000 Index. The
equity securities that may be purchased by the Portfolio include common stocks,
preferred stocks, securities convertible into or exchangeable for common
stocks, rights and warrants.
For more information on The Russell 2000, see the preceding section "The
Benchmarks".
A Portfolio may be considered to be "non-diversified" for federal securities
law purposes because it invests in a limited number of securities. In all
cases, the Portfolio intends to be diversified for tax purposes so that it can
qualify as a regulated investment company.
In selecting investments for the Portfolio, the Adviser looks for equity
securities of companies that have one or more of the following characteristics:
(i) are undervalued relative to their earnings, cash flow or asset values; (ii)
have an attractive price/value relationship with expectations that some
catalyst will cause the perception of value to change within two years; (iii)
are out of favor due to circumstances which are unlikely to harm the company's
franchise or earnings power; (iv) have low projected price to earnings or
price-to-cash flow multiples; (v) have the potential to become a larger factor
in the company's business; (vi) have significant debt but have high levels of
free cash flow; and (vii) have a relatively short corporate history with the
expectation that the business may grow.
Although the Portfolio will principally invest at least 80% of its assets in
small capitalization securities, the Portfolio may also invest up to 20% of its
assets in larger capitalization equity securities or investment grade debt
securities.
When market or financial conditions warrant, the Portfolio may invest without
limitation in short-term money market instruments or hold its assets in cash
for temporary or defensive purposes. Such investment strategies could have the
effect of reducing the benefit of any upswing in the market. Such investment
strategies are inconsistent with the Portfolio's investment objectives and
could result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a
value stock's intrinsic value may never be fully recognized or realized by the
market, or its price may go down. There is also the risk that a stock judged to
be undervalued may actually be appropriately priced.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less-well known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
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NON-DIVERSIFICATION RISK: Since a relatively high percentage of the Portfolio's
assets may be invested in the securities of a limited number of issuers, some
of which may be within the same industry, the securities of the Portfolio may
be more sensitive to changes in the market value of a single issuer or industry
or to risks associated with a single economic, political or regulatory event
than a diversified portfolio.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities, which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart which follows illustrates the Portfolio's annual total return for
1998, the Portfolio's first year of existence. The table which follows shows
the Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. In addition, holders of variable insurance
contracts representing interests in the Portfolio will be subject to charges
and expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expenses and if reflected
the results would be reduced. The Portfolio's inception date was January 1,
1998.
CALENDAR YEAR ANNUAL TOTAL RETURN
1998
(7.03)%
Best quarter: Worst quarter:
15.78% (1998 4th Quarter) (20.10)% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
Lazard Small Cap Value Portfolio (7.03)% (7.03)%
Russell 2000 Index* (2.54)% (2.54)%
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
LAZARD ASSET MANAGEMENT ("LAM"), 30 Rockefeller Plaza, New York, New York
10112. LAM has been the Adviser to the Portfolio since it commenced operations.
LAM is a division of Lazard Fr-res & Co. LLC ("Lazard Fr-res"), a New York
limited liability company, which is registered as an investment adviser with
the SEC. Lazard Freres provides its clients with a wide variety of investment
banking and related services, including investment management.
The Portfolio Managers, responsible for the day to day management since the
inception of the Portfolio, are: EILEEN D. ALEXANDERSON, a Managing Director of
LAM who has been with LAM since 1979 and HERBERT W. GULLQUIST, a Vice-Chairman,
Managing Director and Chief Investment Officer of LAM, who has been with LAM
since 1982.
---------------------------------------------------- EQ Advisors Trust
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AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
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MFS EMERGING GROWTH COMPANIES PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide long-term capital growth.
THE INVESTMENT STRATEGY
The Portfolio invests, under normal market conditions, primarily (at least 65%
of its total assets) in common stocks and related securities, such as preferred
stock, convertible securities and depositary receipts of emerging growth
companies. Emerging growth companies that the Adviser believes are either:
o early in their life cycle but have the potential to become major
enterprises, or
o are major enterprises whose rates of earnings growth are expected to
accelerate because of special factors such as rejuvenated management, new
products, changes in customer demand or basic changes in the economic
environment.
For purposes of this Portfolio, emerging growth companies may be of any size
and the Adviser would expect these companies to have products, technologies,
management, markets and opportunities that will facilitate earnings growth over
time that is well above the growth rate of the overall economy and rate of
inflation. The Portfolio's investments may include securities traded in the
over-the-counter markets.
The Adviser uses a "bottom-up" investment style in managing the Portfolio. This
means the securities are selected based upon fundamental analysis performed by
the Adviser.
In addition, up to 15% of the Portfolio's assets may be invested in foreign
securities, including those in emerging markets, or in cash and cash
equivalents.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal strategies for temporary or defensive purposes.
Such investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
The Portfolio may engage in active and frequent trading to achieve its
principal investment strategies. Frequent trading increases transaction costs,
which could detract from the Portfolio's performance.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known and may trade less frequently
and in lower volume; such companies are more likely to experience greater or
more unexpected changes in their earnings and growth prospects; and the
products or technologies of such companies may be at a relatively early stage
of development or not fully tested.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In
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addition, the value of foreign investments can be adversely affected by:
unfavorable currency exchange rates (relative to the U.S. dollar for securities
denominated in foreign currencies); inadequate or inaccurate information about
foreign companies; higher transaction, brokerage and custody costs; adverse
changes in foreign economic and tax policies; and foreign government
instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart which follows illustrates the Portfolio's annual total return for
1998, the Portfolio's first full year of operations. The table which follows
shows the Portfolio's average annual total returns for the Portfolio for one
year and since inception. The table also compares the Portfolio's performance
to the returns of a broad-based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. In addition, holders of variable insurance
contracts representing interests in the Portfolio will be subject to charges
and expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expenses and if reflected
the results would be reduced. The inception date for the Portfolio is May 1,
1997.
CALENDAR YEAR ANNUAL TOTAL RETURN
34.57%
1998
Best quarter: Worst quarter:
26.70% (1998 4th Quarter) (12.69)% (1998 3rd Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
MFS Emerging Growth Companies
Portfolio 34.57% 34.81%
Russell 2000 Index* (2.54)% (14.53)%
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. MFS is America's oldest mutual fund organization. MFS and its
predecessor organizations have a history of money management dating from 1924
and the founding of the first mutual fund in the United States, Massachusetts
Investors Trust. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
The Portfolio Managers are JOHN W. BALLEN, President of MFS, who has been
employed by MFS as a portfolio manager of the Portfolio since 1984, and TONI Y.
SHIMURA, a Vice President of MFS, who has been employed by MFS as a portfolio
manager for the Portfolio since 1995.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL PORTFOLIO
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T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital through investment
primarily in common stocks of established non-United States companies.
THE INVESTMENT STRATEGY
The Portfolio invests substantially all of its assets in common stocks of
established companies outside of the United States. The Portfolio intends to
diversify broadly among countries throughout the world by having securities
from at least five different countries represented in the Portfolio. No more
than 20% of its assets will be invested in securities of any one country,
except that up to 35% can be invested in stocks of companies in Australia,
Canada, France, Japan, United Kingdom or Germany. In determining the
appropriate distribution of investments among various countries and geographic
regions, the Adviser ordinarily considers the following factors:
o prospects for relative economic growth between foreign countries,
o expected levels of inflation,
o government policies influencing business conditions,
o the outlook for currency relationships, and
o the range of individual investment opportunities available to
international investors.
The Portfolio expects to invest substantially all of its assets in common
stocks. However, the Portfolio may also invest in a variety of other equity
securities such as preferred stocks, warrants and convertible securities as
well as governmental debt securities and investment grade debt securities. The
Portfolio may also invest in certain foreign investment funds, hybrid
instruments and derivative instruments in keeping with the Portfolio objective.
In analyzing companies for investment, the Adviser uses a "bottom-up" approach
and looks for companies that have:
o prospects for achieving and sustaining above-average, long-term earnings
growth per share;
o a high return on invested capital,
o healthy balance sheet,
o sound financial and accounting policies and overall financial strength;
o strong competitive advantages,
o effective research, product development and marketing,
o pricing flexibility,
o strong management and
o record of paying dividends.
This means that the securities are selected based upon fundamental analysis
performed by the Adviser, and are not selected based upon the type of
industries to which they belong.
When market or financial conditions warrant, the Portfolio may invest without
limitation in high quality U.S. Government and corporate debt obligations for
temporary or defensive purposes. Such investment strategies are inconsistent
with the Portfolio's investment objectives and could result in the Portfolio
not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging
<PAGE>
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15
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markets, may be less liquid, more volatile and subject to less government
supervision than domestic markets. There may be difficulties enforcing
contractual obligations, and it may take more time for trades to clear and
settle. In addition, foreign investments can be adversely affected by:
unfavorable currency exchange rates (relative to the U.S. dollar for securities
denominated in a foreign currencies); inadequate or inaccurate information
about foreign companies; higher transaction, brokerage and custody costs;
adverse changes in foreign economic and tax policies; and foreign government
instability, war or other adverse political or economic actions. Other specific
risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in emerging
markets countries and/or their securities markets, such as less diverse and
less mature economic structures, less stable political systems, more
restrictive foreign investment policies, smaller-sized securities markets and
low trading volumes. Such risks can make investments illiquid and more volatile
than investments in developed countries and such securities may be subject to
abrupt and severe price declines. The Year 2000 problem may also be especially
acute in emerging market countries, which also may adversely affect the value
of the Portfolio's investments.
EURO RISK: The Portfolio invests in securities issued by European issuers that
that may be adversely impacted by the introduction of the "Euro" as a common
currency in 11 European Monetary Union member states. The Euro may result in
various legal and accounting differences, tax treatments, the creation and
implementation of suitable clearing and settlement systems and other
operational problems, that may cause market disruptions that could adversely
affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to uniform
accounting, auditing and financial reporting standards or to other regulatory
practices and requirements as are U.S. companies, which could adversely affect
their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities, which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart which follows illustrates the Portfolio's annual total return for
1998, the Portfolio's first full year of operations. The table which follows
shows the Portfolio's average annual total returns for the Portfolio for one
year and since inception. The table also compares the Portfolio's performance
to the returns of a broad-based index. Both the bar chart and table assume
reinvestment of dividends and distributions. Past performance is not an
indication of future performance. In addition, holders of variable insurance
contracts representing interests in the Portfolio will be subject to charges
and expenses relating to such insurance contracts. The performance results
presented below do not reflect any insurance related expenses and if reflected
the
---------------------------------------------------- EQ Advisors Trust
<PAGE>
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results would be reduced. The inception date for the Portfolio is May 1, 1997.
CALENDAR YEAR ANNUAL TOTAL RETURN
13.68%
1998
Best quarter: Worst quarter:
16.86% (1998 4th Quarter) (13.63)% (1998 4th Quarter)
AVERAGE ANNUAL TOTAL RETURNS
SINCE
ONE YEAR INCEPTION
T. Rowe Price International
Stock Portfolio 13.68% 7.01%
MSCI EAFE Index* 20.00% 13.43%
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ROWE PRICE-FLEMING INTERNATIONAL, INC. ("Price-Fleming"), 100 East Pratt
Street, Baltimore, MD 21202. Price-Fleming has been the Adviser to the
Portfolio since it commenced its operations. Price-Fleming was incorporated in
Maryland in 1979 as a joint venture between T. Rowe Price and Robert Fleming
Holdings Limited ("Flemings"). Flemings is a diversified investment
organization that participates in a global network of regional investment
offices. The common stock of Price-Fleming is 50% owned by a wholly owned
subsidiary of T. Rowe Price, 25% owned by a subsidiary of Flemings and 25%
owned by Jardine Fleming Group Limited ("Jardine Fleming").
Investment decisions with respect to the Portfolio are made by an Investment
Advisory Committee Group. The Investment Advisory Group has day-to-day
responsibility for managing the Portfolio and developing and executing the
Portfolio's investment program.
<PAGE>
3
More information on principal risks
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Risk is the chance that you will lose money on your investment or that it will
not earn as much as you expect. In general, the greater the risk, the more
money your investment can earn for you and the more you can lose. Like other
investment companies, the value of each Portfolio's shares may be affected by
the Portfolio's investment objective(s), principal investment strategies and
particular risk factors. Consequently, each Portfolio may be subject to
different principal risks. Some of the principal risks of investing in the
Portfolios are discussed below. However, other factors may also affect each
Portfolio's net asset value.
There is no guarantee that a Portfolio will achieve its investment objective(s)
or that it will not lose principal value.
GENERAL INVESTMENT RISKS: Each Portfolio is subject to the following risks:
ASSET CLASS RISK: There is the possibility that the returns from the types of
securities in which a Portfolio invests will underperform returns from the
various general securities markets or different asset classes. Different types
of securities tend to go through cycles of outperformance and underperformance
in comparison to the general securities markets.
MARKET RISK: Each Portfolio's share price moves up and down over the short term
in reaction to stock or bond market movements. This means that you could lose
money over short periods, and perhaps over longer periods during extended
market downturns.
SECURITY SELECTION RISK: The Advisers for each Portfolio rely on the insights
of different specialists in making investment decisions based on each
Portfolio's particular investment objective(s) and investment strategies. There
is the possibility that the specific securities held by a Portfolio will
underperform other funds in the same asset class or benchmarks that are
representative of the general performance of the asset class because of the
Adviser's choice of portfolio securities.
YEAR 2000 RISK: Like other mutual funds, financial and business organizations
and individuals around the world, the Trust and its Portfolios could be
adversely affected if the computer systems used by the Advisers, other service
providers, or persons with whom they deal, do not properly process and
calculate date-related information and data dated on and after January 1, 2000.
This possibility is commonly known as the "Year 2000 Problem." Virtually all
operations of the Trust and its Portfolios are computer reliant. The Manager,
Advisers, administrator, transfer agent, distributors and custodian have
informed the Trust that they are actively taking steps to address the Year 2000
Problem with regard to their respective computer systems and the interfaces
between their respective computer systems. The Trust is also taking measures to
obtain assurances from necessary persons that comparable steps are being taken
by the key service providers to the Trust's Advisers, administrator, transfer
agent, distributors, and custodian. There can be no assurance that the Trust
and the Portfolios' key service providers will be Year 2000 compliant. If not
adequately addressed, the Year 2000 Problem could result in the inability of
the Trust to perform its mission critical functions, including trading and
settling trades of Portfolio securities, pricing of portfolio securities and
processing shareholder transactions, and the net asset value of its Portfolios'
shares may be materially affected.
In addition, because the Year 2000 Problem affects virtually all issuers, the
companies or entities in which the Portfolios may invest also could be
adversely impacted by the Year 2000 Problem. For example, issuers may incur
substantial costs to address the Year 2000 problem. The extent of such impact
cannot be predicted and there can be no assurances that the Year 2000 Problem
will not have an adverse effect on the issuers whose securities are held by the
Portfolios. The Advisers have assured the Trust that they consider such issues
in making investment decisions for the Portfolios. Furthermore, certain of the
Portfolios make international investments thereby exposing these Portfolios to
operations, custody and settlement processes outside the United States.
<PAGE>
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In many countries outside the United States the Year 2000 Problem has not been
adequately addressed and concerns have been raised that capital flight, among
other issues, may be triggered by full disclosure of the Year 2000 Problem on
countries outside the United States. Additional information on the impact of
the Year 2000 Problem on emerging market countries is provided in this section,
under "FOREIGN SECURITIES RISKS-EMERGING MARKET RISK."
As indicated in "Summary Information Concerning EQ Advisors Trust" and "About
the Investment Portfolios," a particular Portfolio may also be subject to the
following risks:
CONVERTIBLE SECURITIES RISK: Convertible securities may include both
convertible debt and convertible preferred stock. Such securities may be
converted into shares of the underlying common stock at either a stated price
or stated rate. Therefore, convertible securities enable you to benefit from
increases in the market price of the underlying common stock. Convertible
securities provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar quality.
Like bonds, the value of convertible securities fluctuates in relation to
changes in interest rates and, in addition, fluctuates in relation to the
underlying common stock. Subsequent to purchase by a Portfolio, convertible
securities may cease to be rated or a rating may be reduced below the minimum
required for purchase by that Portfolio. 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, which involve a promise by a third party to honor an obligation to
the Portfolio. Credit risk is particularly significant for the Portfolios
that invest a portion of their assets in "junk bonds" or lower-rated
securities.
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 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.
<PAGE>
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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 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.
---------------------------------------------------- EQ Advisors Trust
<PAGE>
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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 invest 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
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
<PAGE>
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will fall or will fail to appreciate as anticipated by the Advisers, regardless
of movements in the securities market.
INDEX-FUND RISK: The BT Equity 500 Index is not actively managed (which
involves buying and selling of securities based upon economic, financial and
market analysis and investment judgment). Rather, the Portfolio utilizes a
"passive" or "indexing" investment approach and attempts to duplicate the
investment performance of the S&P 500 Index through statistical procedures.
Therefore, the Portfolio will invest in the securities included in the relevant
index or substantially identical securities regardless of market trends. The
Portfolio cannot modify its investment strategies to respond to changes in the
economy, which means it may be particularly susceptible to a general decline in
the U.S. stock market.
LEVERAGING RISK: When a Portfolio is borrowing money or otherwise leveraging
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.
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.
SMALL-CAP AND MID-CAP COMPANY RISK: A Portfolio's investments in small-cap and
mid-cap companies may involve greater risks than investments in larger, more
established issuers. Smaller companies may have narrower product lines, more
limited financial resources and more limited trading markets for their stock,
as compared with larger companies. Their securities may be less well-known and
trade less frequently and in more limited volume than the securities of larger,
more established companies. In addition, small-cap and mid-cap companies are
typically subject to greater changes in earnings and business prospects than
are those of 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.
---------------------------------------------------- EQ Advisors Trust
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The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
<PAGE>
4
Management of the Trust
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This section gives you information on the Trust, the Manager and the Advisers
for the Portfolios. More detailed information concerning each of the Advisers
and portfolio managers is included in the description for each Portfolio in the
section "About The Investment Portfolios."
THE TRUST
The Trust is organized as a Delaware business trust and is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company. The Trust issues shares of beneficial interest that are currently
divided among twenty-five 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., 1290 Avenue of the Americas, New York, New York
10104, serves as the Manager of the Trust, 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 is an investment adviser registered under the 1940 Act and a
broker-dealer registered under the Securities Exchange Act of 1934, as amended.
EQ Financial Consultants, Inc. is a wholly-owned subsidiary of Equitable.
During 1999, the Manager plans to change its name to AXA Advisors, Inc.
<PAGE>
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The table below shows the annual rate of the management fees (as a percentage
of each Portfolio's average daily net assets) that the Manager received in 1998
for managing each of the Portfolios and the rate of the management fees waived
by the Manager in 1998 in accordance with the provisions of the Expense
Limitation Agreement, as defined directly below, between the Manager and the
Trust.
MANAGEMENT FEES PAID BY THE PORTFOLIOS TO EQ FINANCIAL CONSULTANTS, INC. IN
1998
<TABLE>
<CAPTION>
ANNUAL RATE OF
RATE FEES
PORTFOLIOS RECEIVED WAIVED
<S> <C> <C>
BT Equity 500 Index 0.00% 0.25%
Lazard Small Cap Value 0.62% 0.18%
MFS Emerging Growth
Companies 0.36% 0.19%
T. Rowe Price International Stock 0.54% 0.21%
</TABLE>
EXPENSE LIMITATION AGREEMENT
In the interest of limiting expenses of each Portfolio, the Manager has entered
into an expense limitation agreement with the Trust with respect to each
Portfolio ("Expense Limitation Agreement"). Pursuant to that Expense Limitation
Agreement, the Manager has agreed to waive or limit its fees and to assume
other expenses so that the total annual operating expenses of each Portfolio
other than interest, taxes, brokerage commissions, other expenditures which are
capitalized in accordance with generally accepted accounting principles, other
extraordinary expenses not incurred in the ordinary course of each Portfolio's
business and amounts payable pursuant to a plan adopted in accordance with Rule
12b-1 under the 1940 Act, are limited to the following fees:
MANAGEMENT EXPENSE LIMITATION FEES
<TABLE>
<CAPTION>
AMOUNT EXPENSES
LIMITED TO (% OF
PORTFOLIOS DAILY NET ASSETS)
<S> <C>
BT Equity 500 Index 0.30%
Lazard Small Cap Value 0.95%
MFS Emerging Growth Companies 0.60%
T. Rowe Price International Stock 0.95%
</TABLE>
Each Portfolio may at a later date reimburse to the Manager the management fees
waived or limited and other expenses assumed and paid by the Manager pursuant
to the Expense Limitation Agreement provided such Portfolio has reached a
sufficient asset size to permit such reimbursement to be made without causing
the total annual expense ratio of each Portfolio to exceed the percentage
limits stated above. Consequently, no reimbursement by a Portfolio will be made
unless: (i) the Portfolio's assets exceed $100 million; (ii) the Portfolio's
total annual expense ratio is less than the respective percentages stated
above; and (iii) the payment of such reimbursement has been approved by the
Trust's Board of Trustees on a quarterly basis.
THE 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 from the SEC that permits the
Manager, subject to certain conditions, including 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
<PAGE>
----------
25
- --------------------------------------------------------------------------------
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 pays each Adviser a fee based on the Portfolio's average daily net
assets. No Portfolio is responsible for the fees paid to each of the Advisers.
THE ADMINISTRATOR
Pursuant to an agreement, Chase Global Funds Services Company ("Administrator")
assists the Manager in the performance of its administrative responsibilities
to the Trust and provides the Trust with other necessary administrative, fund
accounting and compliance services. In addition, the Administrator makes
available the office space, equipment, personnel and facilities required to
provide such services to the Trust. For these services, the Trust pays the
Administrator a monthly fee at the annual rate of .0525 of 1% of the total
Trust assets, plus $25,000 for each Portfolio, until the total Trust assets
reach $2.0 billion, and when the total Trust assets exceed $2.0 billion: .0425
of 1% of the next $0.5 billion of the total Trust assets; .035 of 1% of the
next $2.0 billion of the total Trust assets; .025 of 1% of the next $1.0
billion of the total Trust assets; .015 of 1% of the next $2.5 billion of the
total Trust assets; .01 of 1% of the total Trust assets in excess of $8.0
billion; provided, however, that the annual fee payable to Chase with respect
to any Portfolio which commenced operations after July 1, 1997 and whose assets
do not exceed $200 million shall be computed at the annual rate of .0525% of 1%
of the Portfolio's total assets plus $25,000.
THE TRANSFER AGENT
Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.
BROKERAGE PRACTICES
In selecting brokers and dealers, the Manager and each Adviser may consider
research and brokerage services furnished to either company and their
affiliates. Subject to seeking the most favorable net price and execution
available, the Manager and each Adviser may also consider sales of shares of
the Trust as a factor in the selection of brokers and dealers.
BROKERAGE TRANSACTIONS WITH AFFILIATES
To the extent permitted by law, the Trust may engage in securities and other
transactions with entities that may be affiliated with the Manager or the
Advisers. The 1940 Act generally prohibits the Trust from engaging in principal
securities transactions with an affiliate of the Manager or Advisers unless
pursuant to an exemptive order from the SEC. For these purposes, however, the
Trust has considered this issue and believes 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
- ----------
26
- --------------------------------------------------------------------------------
The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc., the Trust's
Manager, 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. 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.
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
----------
27
- --------------------------------------------------------------------------------
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 is closed for trading.
Foreign securities (other depositary receipts) are valued at the close of
business in the applicable foreign country. Consequently, 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.
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
- ----------
28
- --------------------------------------------------------------------------------
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 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 dollars equivalents at
current exchange rates.
o Short-term debt securities in the Portfolios which mature in 60 days or
less are valued at amortized cost, which approximates market value.
o Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided are valued in good
faith by the Valuation Committee of the Board of Trustees of the Trust
using its best judgment.
<PAGE>
8
Tax information
----------
29
- --------------------------------------------------------------------------------
Each Portfolio of the Trust is a separate regulated investment company for
federal income tax purposes. Regulated investment companies are usually not
taxed at the entity (Portfolio) level. They pass through their income and gains
to their shareholders by paying dividends. Their shareholders include this
income on their respective tax returns. A Portfolio will be treated as a
regulated investment company if it meets specified federal income tax rules,
including types of investments, limits on investments, calculation of income,
and dividend payment requirements. Although the Trust intends that it and each
Portfolio will be operated to have no federal tax liability, if they have any
federal tax liability, that could hurt the investment performance of the
Portfolio in question. Also, any Portfolio investing in foreign securities or
holding foreign currencies could be subject to foreign taxes which could reduce
the investment performance of the Portfolio.
It is important for each Portfolio to maintain its federal income tax regulated
investment company status because the shareholders of the Portfolio that are
insurance company separate accounts will then be able to use a favorable
federal income tax investment diversification testing rule in figuring out
whether the Contracts indirectly funded by the Portfolio meet tax qualification
rules for variable insurance contracts. If a Portfolio fails to meet specified
investment diversification requirements, owners of non-pension plan Contracts
funded through the Trust could be taxed immediately on the accumulated
investment earnings under their Contracts and could lose any benefit of tax
deferral. The Administrator and the Manager therefore carefully monitor
compliance with all of the regulated investment company rules and variable
insurance contract investment diversification rules.
<PAGE>
9
Prior performance of each adviser
- ----------
30
- --------------------------------------------------------------------------------
The following table provides information concerning the historical performance
of another registered investment company (or series) or other institutional
private accounts managed by each Adviser that has investment objectives,
policies, strategies and risks substantially similar to those of the respective
Portfolio(s) of the Trust for which it serves as Adviser. The data is provided
to illustrate the past performance of each Adviser in managing a substantially
similar investment vehicle as measured against specified market indices. This
data does not represent the past performance of any of the Portfolios or the
future performance of any Portfolio or its Adviser. Consequently, potential
investors should not consider this performance data as an indication of the
future performance of any Portfolio of the Trust or of its Adviser and should
not confuse this performance data with performance data for each of the Trust's
Portfolios, which is shown for each Portfolio under the caption "ABOUT THE
INVESTMENT PORTFOLIOS."
Each Adviser's performance data shown below for other registered investment
companies (or series thereof) was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Average annual total return
reflects changes in share prices and reinvestment of dividends and
distributions and is net of fund expenses. In each such instance, the share
prices and investment returns will fluctuate, reflecting market conditions as
well as changes in company-specific fundamentals of portfolio securities.
Composite performance data relating to the historical performance of
institutional private accounts managed by the relevant Adviser was calculated
on a total return basis and includes all losses. (As specified below, this
composite performance data is provided only for the J.P. Morgan Active Fixed
Income Composite). The total returns for the J.P. Morgan Active Fixed Income
Composite ("Composite") reflect the deduction of investment advisory fees,
brokerage commissions and execution costs paid by J.P. Morgan's institutional
private accounts, without provision for federal or state income taxes.
Custodial fees, if any, were not included in the calculation. The Composite
includes all actual, fee-paying, discretionary institutional private accounts
managed by J.P. Morgan that have investment objectives, policies, strategies
and risks substantially similar to those of the relevant Portfolio. Securities
transactions are accounted for on the trade date and accrual accounting is
utilized. Cash and equivalents are included in performance returns. The
institutional private accounts that are included in the Composite are not
subject to the same types of expenses to which the relevant Portfolio is
subject or to the diversification requirements, specific tax restrictions and
investment limitations imposed on the Portfolio by the 1940 Act or Subchapter M
of the Internal Revenue Code. Consequently, the performance results for the
Composite could have been adversely affected if the institutional private
accounts included in the Composite had been regulated as investment companies
under the federal securities laws.
The major difference between the SEC prescribed calculation of average annual
total returns for registered investment companies or (series thereof) and total
returns for composite performance is that average annual total returns reflects
all fees and charges applicable to the registered investment company in
question and the total return calculation for the Composite reflects only those
fees and charges described in the paragraph directly above.
The performance results for the registered investment companies or Composite
presented below are subject to lower fees and expenses than the relevant
Portfolios although in most instances the fees and expenses are substantially
similar. In addition, holders of Contracts representing interests in the
Portfolio below will be subject to charges and expenses relating to such
insurance contracts. The performance results presented above do not reflect any
insurance related expenses and would be reduced if such charges were reflected.
The investment results presented below are unaudited. For more information on
the specified market indices used below, see the section "The Benchmarks."
<PAGE>
-----
31
- --------------------------------------------------------------------------------
ANNUAL RATES OF RETURN OF OTHER FUNDS OR ACCOUNTS MANAGED BY ADVISERS
AS OF 12/31/98
The name of the other fund or account managed by the Adviser is shown in BOLD.
The name of the Trust Portfolio is shown in (parentheses). The name of the
benchmark is shown in italics.
<TABLE>
<CAPTION>
1 5 10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT PORTFOLIO) Year Years Years Inception Date
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C>
Benchmark
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
BT INSTITUTIONAL FUNDS - EQUITY 500 INDEX FUND - INSTITUTIONAL CLASS (BT EQUITY 500 INDEX PORTFOLIO)
28.75% 24.05% N/A 21.56% 12/31/92
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
S&P 500 Index1 28.57% 24.06% N/A 21.61%
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
THE LAZARD FUNDS, INC.-LAZARD SMALL CAP PORTFOLIO (LAZARD SMALL CAP VALUE PORTFOLIO)
(12.62)% 11.45% N/A 16.10% 10/1/91
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
Russell 2000 Index2 ( 2.54)% 11.86% N/A 13.89%
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
MFS EMERGING GROWTH FUND4 (MFS EMERGING GROWTH COMPANIES PORTFOLIO)
23.56% 19.66% 22.94% 12/29/86
Russell 2000 Index2 ( 2.54)% 11.86% 12.94%
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
T. ROWE PRICE INTERNATIONAL STOCK FUND (T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO)
16.14% 8.87% 10.45% 5/9/80
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
MSCI EAFE Inde3 20.00% 9.19% 9.50%
- ----------------------------------------------------------- ------------- ----------- ----------- ----------- ------------
</TABLE>
1 The S&P 500 Index ("S&P 500") is an unmanaged index containing common stocks
of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the larger capitalization portion
of the United States stock market. The S&P 500 reflects the reinvestment of
income dividends and capital gain distributions, if any, but does not
reflect fees, brokerage commissions, or other expenses of investing.
2 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) composed of approximately 2,000 small-capitalization stocks and
includes reinvestments of dividends. The index does not include fees or
operating expenses and is not available for actual investment. It is
compiled by the Frank Russell Company.
3 The Morgan Stanley Capital International EAFE Index ("EAFE Index") is an
unmanaged capitalization-weighted measure of stock markets in Europe,
Australia and the Far East. The returns of the EAFE Index assume dividends
are reinvested net of withholding tax and do not reflect any fees or
operating expenses. The index is not available for actual investment.
4 The results for the MFS Emerging Growth Fund (Class B shares) do not reflect
sales charges that may be imposed on the such shares.
------------------------- EQ Advisors Trust
<PAGE>
10
Financial Highlights
- ----
32
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Trust's
financial performance since May 1, 1997. The Trust began to offer Class IA
shares for the MFS Emerging Growth Companies on November 24, 1998. Except for
this Portfolio, the financial information in the table below for the period May
1, 1997 to December 31, 1998 relates only to the Class IB shares. The financial
information relating to both the Class IA shares and the Class IB shares has
been derived from the audited financial statements of the Trust. These
financial statements have been audited by PricewaterhouseCoopers LLP,
independent public accountants. PricewaterhouseCoopers LLP's report on the
Trust's financial statements as of December 31, 1998 appears in the Trust's
Annual Report. The information should be read in conjunction with the financial
statements contained in the Trust's Annual Report which are incorporated by
reference into the Trust's Statement of Additional Information (SAI) and
available upon request.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
NET
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET ASSET ON
VALUE, INVESTMENTS
BEGINNING NET AND FOREIGN
OF INVESTMENT CURRENCY
PERIOD INCOME TRANSACTIONS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 10.00 $ 0.06 $ 2.45
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 10.00 $ 0.02 $ (0.72)
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 11.92 $ (0.03) $ 4.15
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 10.00 $ 0.02 $ 2.21
- ---------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 14.18 - $ 1.86
- ---------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec 31, 1998 $ 9.85 $ 0.06 $ 1.28
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.02 $ (0.17)
- ---------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------
DIVIDENDS IN
DIVIDENDS EXCESS OF DISTRIBUTIONS
TOTAL FROM FROM NET NET FROM
INVESTMENT INVESTMENT INVESTMENT REALIZED
OPERATIONS INCOME INCOME GAINS
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 2.51 $ (0.06) - -
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- ---------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 $ (0.70) $ (0.03) - -
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- ---------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 4.12 - - -
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 2.23 $ (0.02) - $(0.18)
- ---------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 1.86 - - -
- ---------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec 31, 1998 $ 1.34 $ (0.07) $ (0.02) -
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 $ (0.15) - - -
- ---------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
-----
33
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------
DISTRIBUTIONS TOTAL NET ASSET
IN EXCESS OF DIVIDENDS AND VALUE, END OF
REALIZED GAINS DISTRIBUTIONS PERIOD
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.06) $ 12.45
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.03) $ 9.27
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - - $ 16.04
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ (0.11) $ (0.31) $ 11.92
- ---------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - - $ 16.04
- ---------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.09) $ 11.10
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - $ 9.85
- ---------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------
RATIO OF
EXPENSES TO
NET ASSETS, AVERAGE NET
TOTAL RETURN END OF PERIOD ASSETS AFTER
(B) (000'S) WAIVERS (A)(C)
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 25.14% $224,247 0.55%
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------------
LAZARD SMALL CAP VALUE PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 (7.03)% $ 51,046 1.20%
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- ---------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 34.57% $461,307 0.85%(1)
- ---------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 22.42% $ 99,317 0.85%(a)
- ---------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 13.12% $ 5,978 0.60%(a)(1)
- ---------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- ---------------------------------------------------------------------------------------------
Dec. 31, 1998 13.68% $134,653 1.20%
- ---------------------------------------------------------------------------------------------
Dec. 31, 1997 (1.49)% $ 69,572 1.20%
- ---------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -----
34
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
RATIO OF NET RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT INCOME TO INVESTMENT INCOME TO
AVERAGE NET ASSETS AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
BEFORE WAIVERS (A)(C) AFTER WAIVERS (A)(C) BEFORE WAIVERS (A)(C) TURNOVER RATE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
**BT EQUITY 500 INDEX PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 0.83% 1.22% 0.94% 2%
- -------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- -------------------------------------------------------------------------------------------------------------------------------
**LAZARD SMALL CAP VALUE PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.54% 0.52% 0.18% 21%
- -------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- -------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.04%(1) (0.30)%(1) (0.49)%(1) 79%
- -------------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 1.82%(a) 0.61 %(a) (0.36)%(a) 116%
- -------------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 79%(a)(1) (0.05)%(a)(1) (0.24)%(a)(1) 79%
- -------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
- -------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.40% 0.67% 0.47% 22%
- -------------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 2.56% 0.45% (0.91)% 17%
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Commencement of operations for the BT Equity 500 Index and the Lazard
Small Cap Value Portfolios was January 1, 1998.
+ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net gains on investments for that period because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments of the Portfolio.
(a) Annualized.
(b) Total return calculated for a period of less than one year is not
annualized.
(c) For further information concerning fee waivers, see the section entitled
"Expense Limitation Agreement" in the Prospectus.
(1) Reflects overall fund ratios for investment income and non-class specific
expense.
<PAGE>
----------
35
- --------------------------------------------------------------------------------
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 May 1, 1999, is incorporated into this Prospectus by reference
and is available upon request free of charge by calling our toll free number at
1-800-248-2138.
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
