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Filed Pursuant to Rule 497(c)
Registration File No.: 333-17217
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EQ Advisors Trust
PROSPECTUS DATED AUGUST 30, 1999
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This Prospectus describes the eleven (11) Portfolios offered by EQ Advisors
Trust and the Class IB shares offered by the Trust on behalf of each Portfolio
that you can choose as investment alternatives. Each Portfolio has its own
investment objective and strategies that are designed to meet different
investment goals. This Prospectus contains information you should know before
investing. Please read this Prospectus carefully before investing and keep it
for future reference. The Portfolios followed by an asterisk (*) below will not
be available for investment until October 1, 1999.
FIXED INCOME PORTFOLIOS GLOBAL/INTERNATIONAL PORTFOLIOS
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Alliance High Yield* Alliance Global*
Alliance Intermediate Government Securities* Alliance International*
Alliance Money Market*
DOMESTIC EQUITY PORTFOLIOS AGGRESSIVE EQUITY PORTFOLIOS
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Alliance Common Stock* Alliance Aggressive Stock*
Alliance Growth and Income* Alliance Small Cap Growth*
ASSET ALLOCATION PORTFOLIOS
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Alliance Conservative Investors*
Alliance Growth Investors*
See Prospectus dated May 1, 1999 for additional investment alternatives.
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YOU SHOULD BE AWARE THAT THE SECURITIES AND EXCHANGE COMMISSION HAS NOT
APPROVED OR DISAPPROVED OF THE INVESTMENT MERIT OF THESE PORTFOLIOS OR
DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
Version 12 Supp-Class B
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Overview
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EQ ADVISORS TRUST
This Prospectus tells you about the eleven (11) 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 is diversified for purposes of the
Investment Company Act of 1940, as amended ("1940 Act").
The Trust's shares are currently sold only to insurance company separate
accounts in connection with variable life insurance contracts and variable
annuity certificates and contracts (the "Contract" or collectively, the
"Contracts") issued by The Equitable Life Assurance Society of the United States
("Equitable") and Equitable of Colorado, Inc. ("EOC"), as well as insurance
companies that are not affiliated with Equitable or EOC ("non-affiliated
insurance companies") and to The Equitable Investment Plan for Employees,
Managers and Agents ("Equitable Plan"). The prospectus is designed to help you
make informed decisions about the Portfolios that are available under your
Contract or under the Equitable Plan. You will find information about your
Contract and how it works in the accompanying prospectus for the Contracts if
you are a Contractholder or participant under a Contract.
EQ Financial Consultants, Inc. ("EQFC") currently serves as the Manager of the
Trust. In such capacity, EQFC currently has overall responsibility for the
general management and administration of the Trust. The Board of Trustees of the
Trust have approved a transfer to Equitable, the indirect corporate parent of
EQFC, of the Trust's Investment Management Agreement with EQFC. This transfer is
expected to be completed in September 1999. Upon completion of the transfer,
Equitable will serve as the Manager of the Trust. However, until completion of
the transfer, EQFC will continue to serve in that capacity.
Each of the Portfolios has its own investment adviser ("Adviser"). Information
about the Advisers for each Portfolio is contained in the description concerning
that Portfolio in the section entitled "About the Investment Portfolios." The
Manager has the ultimate responsibility to oversee each of the Advisers and to
recommend their hiring, termination and replacement. Subject to approval by the
Board of Trustees, the Manager has been granted relief by the Securities and
Exchange Commission ("SEC") ("Multi-Manager Order") that enables the Manager
without obtaining shareholder approval to: (i) select Advisers for each of the
Trust's Portfolios; (ii) enter into and materially modify existing investment
advisory agreements; and (iii) terminate and replace the Advisers.
The Manager and certain non-affiliated insurance companies and certain of their
separate accounts (collectively, "Applicants") have filed applications
requesting that the SEC approve the substitution of: (i) Class IA shares of
certain Portfolios for Class IA shares of corresponding portfolios of The Hudson
River Trust ("HRT"); and (ii) Class IB shares of certain Portfolios for Class IB
shares of corresponding HRT portfolios ("Substitution Application"). Alliance
Capital Management L.P. ("Alliance") serves as Adviser for each Portfolio to be
substituted for the corresponding HRT portfolio. Applicants have included, as a
term of the Substitution Application, that with respect to those Portfolios for
which Alliance serves as Adviser, the Manager will not: (i) terminate Alliance
and select a new Adviser for those Portfolios or (ii) materially modify the
existing investment advisory agreement without first either obtaining approval
of shareholders for such actions or obtaining approval of shareholders to
utilize the Multi-Manager Order.
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Table of contents
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1
SUMMARY INFORMATION CONCERNING EQ
ADVISORS TRUST 4
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2
ABOUT THE INVESTMENT PORTFOLIOS 14
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FIXED INCOME PORTFOLIOS 17
Alliance High Yield Portfolio 17
Alliance Intermediate Government Securities
Portfolio 21
Alliance Money Market Portfolio 25
DOMESTIC EQUITY PORTFOLIOS 28
Alliance Common Stock Portfolio 28
Alliance Growth and Income Portfolio 31
GLOBAL/INTERNATIONAL PORTFOLIOS 34
Alliance Global Portfolio 34
Alliance International Portfolio 37
AGGRESSIVE EQUITY PORTFOLIOS 40
Alliance Aggressive Stock Portfolio 40
Alliance Small Cap Growth Portfolio 43
ASSET ALLOCATION PORTFOLIOS 46
Alliance Conservative Investors Portfolio 47
Alliance Growth Investors Portfolio 51
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3
MORE INFORMATION ON PRINCIPAL RISKS 54
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4
MANAGEMENT OF THE TRUST 60
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The Trust 60
The Manager 60
The Advisers 61
The Administrator 61
The Transfer Agent 62
Brokerage Practices 62
Brokerage Transactions with Affiliates 62
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5
FUND DISTRIBUTION ARRANGEMENTS 63
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6
PURCHASE AND REDEMPTION 64
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7
HOW ASSETS ARE VALUED 65
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8
TAX INFORMATION 66
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9
FINANCIAL HIGHLIGHTS 67
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1
Summary information concerning EQ Advisors Trust
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The following chart highlights the eleven (11) 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 54.
<TABLE>
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EQ ADVISORS TRUST FIXED INCOME PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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ALLIANCE HIGH YIELD Seeks to achieve a high return by maximizing current income and, to the
extent consistent with that objective, capital appreciation
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES Seeks to achieve high current income consistent with relative stability of
principal through investment primarily in debt securities issued or
guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities
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ALLIANCE MONEY MARKET Seeks to obtain a high level of current income, preserve its assets and
maintain liquidity
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
High yield debt securities rated below BBB/Baa or unrated General investment, fixed income, leveraging, loan
securities of comparable quality ("junk bonds"), common participation and assignment, derivatives, liquidity, junk
stocks and other equity securities, foreign securities, bond, foreign securities, small-cap and mid-cap company,
derivatives, and securities lending and securities lending risks
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Securities issued or guaranteed by the U.S. Government, General investment, fixed income, leveraging, derivatives,
including repurchase agreements and forward and securities lending risks
commitments related to U.S. Government securities, debt
securities of non-governmental issuers that own
mortgages, short sales, the purchase or sale of securities
on a when-issued or delayed delivery basis, derivatives,
and securities lending
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High quality U.S. dollar-denominated money market General investment, money market, leveraging, foreign
instruments (including foreign securities) and securities securities, and securities lending risks
lending
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</TABLE>
----------------------EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE COMMON STOCK Seeks to achieve long-term growth of its capital and increased income
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ALLIANCE GROWTH AND INCOME Seeks to provide a high total return through a combination of current
income and capital appreciation by investing primarily in income-producing
common stocks and securities convertible into common stocks
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Stocks and other equity securities (including preferred General investment, foreign securities, leveraging,
stocks or convertible debt) and fixed income securities derivatives, convertible securities, small-cap and mid-cap
(including junk bonds), foreign securities, derivatives, company, junk bond, securities lending, and fixed income
and securities lending risks
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Stock and security convertible into stock (including junk General investment, convertible securities, leveraging,
bonds) derivatives, foreign securities, junk bond, and fixed income
risks
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</TABLE>
-------------------------------EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST GLOBAL/INTERNATIONAL PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE GLOBAL Seeks long-term growth of capital
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ALLIANCE INTERNATIONAL Seeks to achieve long-term growth of capital by investing primarily in a
diversified portfolio of equity securities selected principally to permit
participation in non-U.S. companies with prospects for growth
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Equity securities of U.S. and established foreign companies General investment, foreign securities, liquidity, derivatives,
(including shares of other mutual funds investing in foreign securities lending, and fixed income risks
securities), debt securities, derivatives, and securities
lending
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Equity securities of non-U.S. companies (including those in General investment, foreign securities, liquidity, growth
emerging markets securities) or foreign government investing, leveraging, derivatives, securities lending, and
enterprises (including other mutual funds investing in fixed income risks
foreign securities), debt securities, derivatives, and
securities lending)
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</TABLE>
-----------------------EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST AGGRESSIVE EQUITY PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE AGGRESSIVE STOCK Seeks to achieve long-term growth of capital
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ALLIANCE SMALL CAP GROWTH Seeks to achieve long-term growth of capital
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Stocks and other equity securities of small and General investment, small-cap and mid-cap company,
medium-sized companies (including securities of growth investing, leveraging, derivatives, liquidity,
companies in cyclical industries, companies whose securities lending, and foreign securities risks
securities are temporarily undervalued, companies in
special situations (e.g., change in management, new
products or changes in customer demand) and less widely
known companies)
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Stocks and other equity securities of smaller companies General investment, small-cap and mid-cap company,
and undervalued securities (including securities of growth investing, leveraging, derivatives, liquidity,
companies in cyclical industries, companies whose securities lending, and foreign securities risks
securities are temporarily undervalued, companies in
special situations (e.g., change in management, new
products or changes in customer demand) and less widely
known companies)
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</TABLE>
-------------------------EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST ASSET ALLOCATION PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE CONSERVATIVE INVESTORS Seeks to achieve a high total return without, in the opinion
of the Adviser, undue risk to principal
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ALLIANCE GROWTH INVESTORS Seeks to achieve the highest total return consistent with
the Adviser's determination of reasonable risk
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Investment grade debt securities and equity securities of General investment, asset allocation, fixed income,
U.S. and foreign issuers, derivatives, and securities lending derivatives, convertible securities, liquidity, leveraging,
securities lending, and foreign securities risks
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Equity securities (including foreign stocks, preferred stocks, General investment, asset allocation, fixed income,
convertible securities, securities of small and medium-sized leveraging, derivatives, liquidity, convertible securities,
companies) and debt securities (including foreign debt small-cap and mid-cap company, securities lending, junk
securities and junk bonds), derivatives, and securities bond, and foreign securities risks
lending
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</TABLE>
----------------------EQ Advisors Trust
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2
About the investment portfolios
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This section of the Prospectus provides a more complete description of the
principal investment objectives, strategies, and risks of each of the
Portfolios. Of course, there can be no assurance that any Portfolio will achieve
its investment objective.
Please note that:
o A fuller description of each of the principal risks is included in the
section "More Information on Principal Risks," which follows the description
of each Portfolio in this section of the Prospectus.
o Additional information concerning each Portfolio's strategies, investments,
and risks can also be found in the Trust's Statement of Additional
Information.
GENERAL INVESTMENT RISKS
Each of the Portfolios is subject to the following risks:
ASSET CLASS RISK: The returns from the types of securities in which a Portfolio
invests may underperform returns from the various general securities markets or
different asset classes.
MARKET RISK: You could lose money over short periods due to fluctuation in a
Portfolio's share price in reaction to stock or bond market movements, and over
longer periods during extended market downturns.
SECURITY SELECTION RISK: There is the possibility that the specific securities
selected by a Portfolio's Adviser will underperform other funds in the same
asset class or benchmarks that are representative of the general performance of
the asset class.
YEAR 2000 RISK: A Portfolio could be adversely affected if the computer systems
used by the Trust, Adviser, other service providers, or persons with whom they
deal, do not properly process and calculate date-related information and data
dated on and after January 1, 2000 ("Year 2000 Problem"). The extent of such
impact cannot be predicted and there can be no assurances that the Year 2000
Problem will not have an adverse effect on the issuers whose securities are
held by a Portfolio. This risk is greater for Portfolios that make foreign
investments, particularly in emerging market countries.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
THE BENCHMARKS
The performance of each of the Trust's Portfolios as shown on the following
pages compares each Portfolio's performance to that of a broad-based securities
market index, an index of funds with similar investment objectives and/or a
blended index. The performance shown below is from each Portfolio's predecessor
registered investment company managed by the Adviser using the same investment
objectives and strategies as the Portfolio. Each of the Portfolios' annualized
rates of return are net of: (i) its investment management fees; and (ii) its
other expenses. These rates are not representative of the actual return you
would receive under your Equitable Contract.
Broad-based securities indices are unmanaged and are not subject to fees and
expenses typically associated with managed investment company portfolios.
Broad-based securities indices are also not subject to contract and
insurance-related expenses and charges. Investments cannot be made directly in
a broad-based securities index. Comparisons with these benchmarks, therefore,
are of limited use. They are included because they are widely known and may
help you to understand the universe of securities from which each Portfolio is
likely to select its holdings. "Blended" performance numbers (e.g., 50% S&P
400/50% Russell 2000 or 60% S&P 500/40% Lehman Gov't/Corp) assume a static mix
of the two indices.
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THE LEHMAN GOVERNMENT/CORPORATE BOND INDEX ("Lehman Gov't/Corp") represents an
unmanaged group of securities widely regarded by investors as representative of
the bond market.
THE LEHMAN INTERMEDIATE GOVERNMENT BOND INDEX ("Lehman Intermediate Government
Bonds") represents an unmanaged group of securities consisting of all U.S.
Treasury and agency securities with remaining maturities of from one to ten
years and issue amounts of at least $100 million outstanding.
THE LEHMAN TREASURY BOND INDEX ("Lehman Treasury") represents an unmanaged
group of securities consisting of all currently offered public obligations of
the U.S. Treasury intended for distribution in the domestic market.
THE LIPPER AVERAGES are contained in Lipper's survey of the performance of a
large number of mutual funds. This survey is published by Lipper Analytical
Services, Inc., a firm recognized for its reporting of performance of actively
managed funds. According to Lipper, performance data are presented net of
investment management fees and direct operating expenses, and, for funds with
Rule 12b-1 plans, asset-based sales charges. Performance data for funds which
assess sales charges in other ways do not reflect deductions for sales charges.
Performance data shown for the Portfolios does not reflect deduction for sales
charges (which are assessed at the contract level). This means that to the
extent that asset-based sales charges deducted by some funds have lowered the
Lipper averages, the performance data shown for the Portfolios appears
relatively more favorable than the performance data for the Lipper averages.
THE MERRILL LYNCH HIGH YIELD MASTER INDEX ("ML Master") represents an unmanaged
group of securities widely regarded by investors as representative of the high
yield bond market.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EAFE INDEX ("MSCI EAFE") is a market
capitalization weighted equity index composed of a sample of companies
representative of the market structure of Europe, Australia and the Far East.
MSCI EAFE Index returns assume dividends reinvested net of withholding tax and
do not reflect any fees or expenses.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX ("MSCI World") is an
arithmetic, market value-weighted average of the performance of over 1,300
securities listed on the stock exchanges of twenty foreign countries and the
United States.
THE RUSSELL 2000 GROWTH INDEX ("Russell 2000 Growth") consists of that half of
the 2,000 smallest of the 3,000 largest capitalization U.S. companies that has
higher price-to-book ratios and higher forecasted growth. It is compiled by the
Frank Russell Company.
THE RUSSELL 2000 INDEX ("Russell 2000") is an unmanaged index (with no defined
investment objective) of 2000 small-cap stocks and reflects reinvestment of
dividends. It is compiled by the Frank Russell Company.
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500") is an
unmanaged index containing common stock of 500 industrial, transportation,
utility and financial companies, regarded as generally representative of the
larger capitalization portion of the United States stock market. The S&P 500
returns reflect the reinvestment of dividends, if any, but do not reflect fees,
brokerage commissions or other expenses of investing.
THE STANDARD & POOR'S MIDCAP 400 INDEX ("S&P 400 MidCap") is an unmanaged
weighted index of 400 domestic stocks chosen for market size (median market
capitalization of about $610 million), liquidity, and industry group
representation. The S&P 400 returns reflect the reinvestment of dividends, if
any, but do not reflect fees, brokerage commissions or other expenses of
investing.
-----------------EQ Advisors Trust
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THE VALUE LINE CONVERTIBLE INDEX ("Value Line Convertible") is comprised of 585
of the most actively traded convertible bonds and preferred stocks on an
unweighted basis.
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FIXED INCOME PORTFOLIOS
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ALLIANCE HIGH YIELD PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective, capital
appreciation.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in diversified mix of high yield, fixed income
securities (so-called "junk bonds"), which generally involve greater volatility
of price and risk of principal and income than high quality fixed income
securities. Junk bonds generally have a higher current yield but are rated
either in the lower categories by NRSROs (i.e., rated Baa or lower by Moody's
or BBB or lower by S&P) or are unrated securities of comparable quality.
The Portfolio will attempt to maximize current income by taking advantage of
market developments, yield disparities and variations in the creditworthiness
of issuers. Substantially all of the Portfolio's investments will be income
producing.
The Portfolio may also make use of various other investment strategies,
including investments in common stocks and other equity-type securities (such
as convertible debt securities) and secured loans of its portfolio securities
without limitation in order to enhance its current return and to reduce
fluctuations in net asset value. The Portfolio may also use derivatives,
including: writing covered call and put options; purchasing call and put
options on individual fixed income securities, securities indexes and foreign
currencies; and purchasing and selling stock index, interest rate and foreign
currency futures contracts and options thereon. The Portfolio may also invest
in participations and assignments of loans originally made by institutional
lenders or lending syndicates.
The Portfolio will not invest more than 10% of its total assets in:
(i) fixed income securities which are rated lower than B3 or B- or their
equivalents by one NRSRO or if unrated are of equivalent quality as determined
by the Adviser; and
(ii) money market instruments of any entity which has an outstanding issue of
unsecured debt that is rated lower than B3 or B- or their equivalents by an
NRSRO or if unrated is of equivalent quality as determined by the Adviser;
however, this restriction will not apply to:
o fixed income securities which the Adviser believes have similar
characteristics to securities which are rated B3 or higher by Moody's or B-
or higher by S&P, or
o money market instruments of any entity that has an unsecured issue of
outstanding debt which the Adviser believes has similar characteristics to
securities which are so rated.
In the event that any securities held by the Portfolio fall below those
ratings, the Portfolio will not be obligated to dispose of such securities and
may continue to hold such securities if the Adviser believes that such
investments are considered appropriate under the circumstances.
The Portfolio may also invest in fixed income securities that are providing
high current yields because of risks other than credit, such as prepayment
risks, in the case of mortgage-backed securities, or currency risks, in the
case of non-U.S. dollar denominated foreign securities.
When market or financial conditions warrant, the Portfolio may also make
temporary investments in high-quality U.S. dollar-denominated money market
instruments. Such investment strategies could result in the Portfolio not
achieving its investment objective.
THE PRINCIPAL RISKS
JUNK BOND RISK: The Portfolio invests primarily in "junk bonds" or lower-rated
securities rated BBB or lower by S&P or an equivalent rating by any other NRSRO
or unrated securities of similar quality. Junk bonds have speculative elements
or are predominantly speculative credit risks, therefore, credit risk is
particularly significant for this Portfolio. Although junk bonds generally have
higher yields than debt securities with higher credit ratings, they are
high-risk investments that may not pay interest or return principal as
scheduled. Junk bonds generally are also less liquid and experience more price
volatility than higher rated fixed income securities. This Portfolio may also
be subject to
----------------------EQ Advisors Trust
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FIXED INCOME PORTFOLIOS (CONTINUED)
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greater credit risk because it may invest in debt securities issued in
connection with corporate restructurings by highly leveraged issuers or in debt
securities not current in the payment of interest or principal, or in default.
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income
securities, therefore, the Portfolio's performance will be affected by changes
in interest rates, credit risks of the issuer, the duration and maturity of the
Portfolio's fixed income holdings, and adverse market and economic conditions.
Other risks that relate to the Portfolio's investment in fixed income
securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price and
total return) of the Portfolio's fixed income securities, particularly those
with longer durations or maturities, will go down. When interest rates fall,
the reverse is true.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the duration
of mortgage-backed securities to increase, making them even more susceptible to
interest rate changes. Falling interest rates may cause the value and yield of
mortgage-backed securities to fall. Falling interest rates also may encourage
borrowers to pay off their mortgages sooner than anticipated (pre-payment). The
Portfolio would need to reinvest the pre-paid funds at the newer, lower
interest rates.
LOAN PARTICIPATION AND ASSIGNMENT RISK: In addition to the risks associated
with fixed income investments generally, the Portfolio's investments in loan
participations and assignments are subject to the risk that the financial
institution acting as agent for all interests in a loan, might fail
financially. It is also possible that, under emerging legal theories of lender
liability, the Portfolio could be held liable as a co-lender.
SMALL CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known; held primarily by insiders or
institutional investors and may trade less frequently and in lower volume; such
companies are more likely to experience greater or more unexpected changes in
their earnings and growth prospects; such companies have limited financial
resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risk will tend to be compounded.
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LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which may
cause the Portfolio to lose money or be prevented from earning capital gains.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities without restriction. The risk in lending portfolio securities, as
with other extensions of secured credit, consist of possible delay in receiving
additional collateral, or in the recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one, five
and ten years and compares the Portfolio's performance to: (i) the returns of a
broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance High Yield Portfolio) managed by
the Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance High Yield
Portfolio) whose inception date is January 2, 1987. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
4.9% -1.4% 24.2% 12.1% 22.9% -3.0% 19.7% 22.6% 18.2% -5.4%
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
7.90% (1997 2nd Quarter) -11.03% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance High Yield Portfolio
- Class IB Shares -5.38% 9.74% 10.91%
- --------------------------------------------------------------------------------
ML Master** 3.66% 9.01% 11.08%
- --------------------------------------------------------------------------------
Lipper High Current Yield Bond
Funds Average** -0.44% 7.37% 9.34%
- --------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares adjusted
to reflect the 12b-1 fees paid by Class IB shares. The average annual total
return for the Class IB shares since the Class IB inception date was 6.63%.
The return for the ML Master for the comparable period (which dates from
month-end of the Class IB inception date) was 9.06%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
-----------------------EQ Advisors Trust
<PAGE>
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20
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FIXED INCOME PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
WAYNE C. TAPPE has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1995. Mr. Tappe, a Senior Vice President
of Alliance, has been associated with Alliance since 1987.
<PAGE>
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21
- --------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve high current income consistent with
relative stability of principal through investment primarily in debt securities
issued or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in U.S. Government Securities. The Portfolio
may also invest in repurchase agreements and forward commitments related to
U.S. Government Securities and may also purchase debt securities of
non-government issuers that own mortgages.
Duration is a measure of the weighted average maturity of the bonds held by
the Portfolio and can be used by the Adviser as a measure of the sensitivity
of the market value of the Portfolio to changes in interest rates. Generally,
the longer the duration of the Portfolio, the more sensitive its market value
will be to changes in interest rates.
In some cases, the Adviser's calculation of duration will be based on certain
assumptions (including assumptions regarding prepayment rates, in the
mortgage-backed or asset-backed securities, and foreign and domestic interest
rates). As of December 31, 1998, the Adviser considered the duration of a
10-year Treasury bond to be 4.68 years. The Portfolio's investments will
generally have a final maturity of not more than ten years or a duration not
exceeding that of a 10-year Treasury note.
The Portfolio buys and sells securities with a view to maximizing current
return without, in the opinion of the Adviser, undue risk to principal.
Potential capital gains resulting from possible changes in interest rates will
not be a major consideration. The Portfolio may take full advantage of a wide
range of maturities of U.S. Government Securities and may adjust the
dollar-weighted average maturity of its portfolio from time to time, depending
on the Adviser's assessment of relative yields on securities of different
maturities and the expected effect of future changes in interest rates on the
market value of the securities held by the Portfolio. The Portfolio may also
invest a substantial portion of its assets in money market instruments.
In order to enhance its current return, to reduce fluctuations in net asset
value, and to hedge against changes in interest rates, the Portfolio may write
covered call and put options on U.S. Government Securities and may purchase
call and put options on U.S. Government Securities. The Portfolio may also
enter into interest rate futures contracts with respect to U.S. Government
Securities, and may write and purchase options thereon. The Portfolio may also
make secured loans of its portfolio securities without limitation and enter
into repurchase agreement with respect to U.S. Government Securities with
commercial banks and registered broker-dealers.
The Portfolio may also make use of various other investment strategies,
including covered short sales, and the purchase or sale of securities on a
when-issued, delayed delivery or forward commitment basis.
Under normal market conditions, the Portfolio will invest at least 65%, and
expects to invest at least 80%, of its total assets in U.S. Government
Securities and repurchase agreements and forward commitments relating to U.S.
Government Securities. U.S. Government Securities include:
o U.S. Treasury Bills: Direct obligations of the U.S. Treasury which are
issued in maturities of one year or less.
o U.S. Treasury Notes: Direct obligations of the U.S. Treasury issued in
maturities which vary between one and ten years, with interest payable every
six months.
----------------------EQ Advisors Trust
<PAGE>
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22
- --------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
o U.S. Treasury Bonds: Direct obligations of the U.S. Treasury which are
issued in maturities more than ten years from the date of issue, with
interest payable every six months.
o "Ginnie Maes": Debt securities issued by a mortgage banker or other
mortgagee and represent an interest in a pool of mortgages insured by the
Federal Housing Administration or the Farmer's Home Administration or
guaranteed by the Veteran's Administration. The Government National Mortgage
Association ("GNMA") guarantees the timely payment of principal and
interest. Ginnie Maes, although not direct obligations of the U.S.
Government, are guaranteed by the U.S. Treasury.
o "Fannie Maes": The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders that
purchases residential mortgages from a list of approved seller/servicers.
Pass-through securities issued by FNMA are guaranteed as to timely payment
of principal and interest by FNMA and supported by FNMA's right to borrow
from the U.S. Treasury, at the discretion of the U.S. Treasury. Fannie Maes
are not backed by the full faith and credit of the U.S. Government.
o "Freddie Macs": The Federal Home Loan Mortgage Corporation ("FHLMC"), a
corporate instrumentality of the U.S. Government, issues participation
certificates ("PCs") which represent an interest in residential mortgages
from FHLMC's National Portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal, but PCs are not backed by the
full faith and credit of the U.S. Government.
o Governmental Collateralized Mortgage Obligations: These are securities
issued by a U.S. Government instrumentality or agency which are backed by a
portfolio of mortgages or mortgage-backed securities held under an
indenture.
o "Sallie Maes": The Student Loan Marketing Association ("SLMA") is a
government-sponsored corporation owned entirely by private stockholders that
provides liquidity for banks and other institutions engaged in the
Guaranteed Student Loan Program. These loans are either directly guaranteed
by the U.S. Treasury or guaranteed by state agencies and reinsured by the
U.S. Government. SLMA issues both short term notes and longer term public
bonds to finance its activities.
The Portfolio may also invest in "zero coupon" U.S. Government Securities which
have been stripped of their unmatured interest coupons and receipts or in
certificates representing undivided interests in such stripped U.S. Government
Securities and coupons. These securities tend to be more volatile than other
types of U.S. Government Securities.
Guarantees of the Portfolio's U.S. Government Securities guarantee only the
payment of principal at maturity and interest when due on the guaranteed
securities, and do not guarantee the securities' yield or value or the yield
or value of the Portfolio's shares.
The Portfolio may also purchase collateralized mortgage obligations ("CMOs")
issued by non-governmental issuers and securities issued by a real estate
mortgage investment conduits ("REMICs"), but only if they are collateralized by
U.S. Government Securities. However, CMOs issued by entities other than U.S.
Government agencies and instrumentalities and securities issued by REMICs are
not considered U.S. Government Securities for purposes of the Portfolio meeting
its policy of investing at least 65% of its total assets in U.S.
Government Securities.
THE PRINCIPAL RISKS
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income
securities, therefore, the Portfolio's performance will be affected by changes
in interest rates, the duration and maturity of the Portfolio's fixed income
holdings, and adverse market and economic conditions. Other risks that relate
to the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed
<PAGE>
- ----
23
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
income securities, particularly those with longer durations or maturities,
will go down. When interest rates fall, the reverse is true.
INVESTMENT-GRADE SECURITIES RISK: With respect to fixed income investments of
the Portfolio, other than U.S. Government Securities, rated BBB by S&P or an
equivalent rating by any other nationally recognized statistical rating
organization ("NRSRO"), the Portfolio could lose money if the issuer or
guarantor of a debt security or counterparty to a Portfolio's transaction is
unable or unwilling to make timely principal and/or interest payments, or to
honor its financial obligations. Investment grade securities which are rated
BBB by S&P, or an equivalent rating by any other NRSRO, are somewhat riskier
than higher rated obligations because they are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the duration
of mortgage-backed securities to increase, making them even more susceptible to
interest rate changes. Falling interest rates may cause the value and yield of
mortgage-backed securities to fall. Falling interest rates also may encourage
borrowers to pay off their mortgages sooner than anticipated (pre-payment). The
Portfolio would need to reinvest the pre-paid funds at the newer, lower
interest rates.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities without restriction. The risk in lending portfolio securities, as
with other extensions of secured credit, consist of possible delay in receiving
additional collateral, or in the recovery of the securities or possible loss of
rights in the collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last seven calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one year,
five years and since inception and compares the Portfolio's performance to: (i)
the returns of a broad-based index and (ii) the returns of an index of funds
with similar investment objectives. Past performance is not an indication of
future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Intermediate Government Securities
Portfolio) managed by the Adviser using the same investment objectives and
strategy as the Portfolio. For these purposes, the Portfolio is considered to
be the successor entity to the predecessor registered investment company
(HRT/Alliance Intermediate Government Securities Portfolio) whose inception
date is April 1, 1991. The assets of the predecessor will be transferred to the
Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
----------------------------EQ Advisors Trust
<PAGE>
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24
- --------------------------------------------------------------------------------
FIXED INCOME PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
5.4% 10.3% -4.6% 13.1% 3.5% 7.0% 7.5%
- ---- ---- ---- ---- ---- ---- ----
1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
5.25% (1991 3rd Quarter) -3.03% (1994 1st Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Intermediate
Government Securities
Portfolio - Class IB Shares 7.48% 5.13% 6.83%
- --------------------------------------------------------------------------------
Lehman Intermediate
Government Bonds** 8.49% 6.45% 7.60%
- --------------------------------------------------------------------------------
Lipper Intermediate Government
Funds Average** 7.68% 5.91% 7.25%
- --------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (May 2, 1997),
performance information shown is the performance of Class IA shares adjusted
to reflect the 12b-1 fees paid by Class IB shares. The average annual total
return for the Class IB shares since the Class IB inception date was 8.01%.
The return for Lehman Intermediate Government Bonds for the comparable
period (which dates from month-end of the Class IB inception date) was
9.08%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
JEFFREY S. PHLEGAR has been responsible for the day-to-day management of the
Portfolio and its predecessor since January 1999. Mr. Phlegar, a Senior Vice
President of Alliance, has been associated with Alliance since 1998.
<PAGE>
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25
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to obtain a high level of current income, preserve
its assets and maintain liquidity.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified portfolio of high-quality U.S.
dollar-denominated money market instruments. The Portfolio will maintain a
dollar-weighted average portfolio maturity of 90 days or less.
The instruments in which the Portfolio invests include:
o marketable obligations of, or guaranteed as to the timely payment of
principal and interest by, the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities");
o certificates of deposit, bankers' acceptances, bank notes, time deposits and
interest bearing savings deposits issued or guaranteed by:
(a)domestic banks (including their foreign branches) or savings and
loan associations having total assets of more than $1 billion and which
are FDIC members in the case of banks, or insured by the FDIC, in the
case of savings and loan associations; or
(b)foreign banks (either by their foreign or U.S. branches) having
total assets of at least $5 billion and having an issue of either (i)
commercial paper rated at least A-1 by Standard & Poor's ("S&P") or
Prime-1 by Moody's Investors Service, Inc. ("Moody's") or (ii) long
term debt rated at least AA by S&P or Aa by Moody's;
o commercial paper (rated at least A-1 by S&P or Prime-1 by Moody's or, if not
rated, issued by domestic or foreign companies having outstanding debt
securities rated at least AA by S&P or Aa by Moody's) and participation
interests in loans extended by banks to such companies;
o mortgage-backed and asset-backed securities that have remaining maturities
of less than one year;
o corporate debt obligations with remaining maturities of less than one year,
rated at least AA by S&P or Aa by Moody's, as well as corporate debt
obligations rated at least A by S&P or Moody's, provided the corporation
also has outstanding an issue of commercial paper rated at least A-1 by S&P
or Prime-1 by Moody's;
o floating rate or master demand notes; and
o repurchase agreements covering U.S. Government securities.
If the Adviser believes a security held by the Portfolio is no longer deemed to
present minimal credit risk, the Portfolio will dispose of the security as soon
as practicable unless the Board of Trustees determines that such action would
not be in the best interest of the Portfolio.
Purchases of securities that are unrated must be ratified by the Board of
Trustees. Because the market value of debt obligations fluctuates as an inverse
function of changing interest rates, the Portfolio seeks to minimize the effect
of such fluctuations by investing only in instruments with a remaining maturity
of 397 calendar days or less at the time of investment, except for obligations
of the U.S. Government, which may have a remaining maturity of 762 calendar days
or less. Time deposits with maturities greater than seven days are considered to
be illiquid securities.
The Portfolio may make use of various other investment strategies, including
investing up to 20% of its total assets in U.S. dollar-denominated money market
instruments of foreign issuers and making secured loans of up to 50% of its
total portfolio securities.
THE PRINCIPAL RISKS
MONEY MARKET RISK: While money market funds are designed to be relatively low
risk investments, they are not entirely free of risk. Despite the short
maturities and high credit quality of the Portfolio's investments, increases in
interest rates and deteriorations in the credit quality of the instruments the
Portfolio has purchased may reduce the Portfolio's net asset value. In addition,
the Portfolio is still subject to the risk that the value of an investment may
be eroded over time by inflation. An investment in the Portfolio is not insured
or guaranteed by the Federal Deposit Insurance Corporation or any other
government agency.
------------------------EQ Advisors Trust
<PAGE>
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26
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FIXED INCOME PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
Although the Portfolio seeks to preserve the value of your investment, it is
possible to lose money by investing in the Portfolio.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risks will tend to be compounded.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: inadequate or inaccurate information about foreign
companies; higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional
collateral, or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one, five
and ten years and compares the Portfolio's performance to: (i) the returns on
three-month U.S. Treasury bills and (ii) the returns of an index of funds with
similar investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Money Market Portfolio) managed by
the Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance Money Market
Portfolio) whose inception date is July 13, 1981. The assets of the predecessor
will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN*
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
8.9% 8.0% 5.9% 3.3% 2.7% 3.8% 5.5% 5.1% 5.2% 5.1%
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
2.31% (1989 2nd Quarter) 0.63% (1992 4th Quarter)
The Portfolio's 7-day yield for the quarter ended December 31, 1998 was
4.45%.
- --------------------------------------------------------------------------------
<PAGE>
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27
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- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Money Market Portfolio
- Class IB Shares 5.08% 4.91% 5.33%
- --------------------------------------------------------------------------------
3-Month Treasury Bill 5.05% 5.11% 5.44%
- --------------------------------------------------------------------------------
Lipper Money Market Mutual
Fund Average** 4.84% 4.77% 5.20%
- --------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (October 10, 1996),
performance information shown is the performance of Class IA shares adjusted
to reflect the 12b-1 fees paid by Class IB shares. The average annual total
return for the Class IB shares since the Class IB inception date was 5.13%.
The return on a 3-month Treasury Bill for the comparable period (which dates
from month-end of the Class IB inception date) was 5.04%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
RAYMOND J. PAPERA has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1990. Mr. Papera, a Senior Vice President
of Alliance, has been associated with Alliance since 1990.
-------------------------EQ Advisors Trust
<PAGE>
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28
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of its capital and
increase income.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in common stocks and other equity-type
securities (such as preferred stocks or convertible debt) that the Adviser
believes will share in the growth of the nation's economy over a long period.
Most of the time, the Portfolio will invest primarily in common stocks that are
listed on national securities exchanges. Smaller amounts will be invested in
stocks that are traded over-the-counter and in other equity-type securities.
Current income is an incidental consideration. The Portfolio generally will not
invest more than 20% of its total assets in foreign securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives, including: writing covered call and put options,
buying call and put options on individual common stocks and other equity-type
securities, securities indexes, and foreign currencies. The Portfolio may also
purchase and sell stock index and foreign currency futures contracts and options
thereon.
When market or financial conditions warrant or it appears that the Portfolio's
investment objective will not be achieved by purchasing equity securities, the
Portfolio may invest a portion of its assets in debt securities, including
nonparticipating and nonconvertible preferred stocks, investment-grade debt
securities and junk bonds, e.g., rated BB or lower by S&P or Ba or lower by
Moody's. The Portfolio also may make temporary investments in high-quality U.S.
dollar-denominated money market instruments. Such investment strategies could
result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in foreign
economic and tax policies; and foreign government instability, war or other
adverse political or economic actions.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar quality.
The value of convertible securities fluctuates both in relation to changes in
interest rates and changes in the value of the underlying common stock.
<PAGE>
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29
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SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders or
institutional investors and may trade less frequently and in lower volume; such
companies are more likely to experience greater or more unexpected changes in
their earnings and growth prospects; such companies have limited financial
resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality. Junk bonds
have speculative elements or are predominantly speculative credit risks,
therefore, credit risk is particularly significant for this Portfolio. This
Portfolio may also be subject to greater credit risk because it may invest in
debt securities issued in connection with corporate restructurings by highly
leveraged issuers or in debt securities not current in the payment of interest
or principal, or in default.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional
collateral, or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one, five
and ten years and compares the Portfolio's performance to: (i) the returns of a
broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Common Stock Portfolio) managed by
the Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance Common Stock
Portfolio) whose inception date is June 16, 1975. The assets of the predecessor
will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
-----------------------EQ Advisors Trust
<PAGE>
- ----
30
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
25.3% -8.4% 37.6% 3.0% 24.6% -2.4% 32.2% 24.0% 29.1% 29.1%
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
28.36% (1998 4th Quarter) -20.28% (1990 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Common Stock Portfolio
- Class IB Shares 29.06% 21.67% 18.38%
- --------------------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 19.21%
- --------------------------------------------------------------------------------
Lipper Growth Equity Mutual
Funds Average** 22.86% 18.63% 16.72%
- --------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (October 1, 1998),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 30.09%. The return for the S&P 500 Index for the comparable
period (which dates from month-end of the Class IB inception date) was
31.69%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
TYLER J. SMITH has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1977. Mr. Smith, a Senior Vice President
of Alliance, has been associated with Alliance since 1970.
<PAGE>
- ----
31
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE GROWTH AND INCOME PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide a high total return through a
combination of current income and capital appreciation by investing primarily
in income-producing common stocks and securities convertible into common
stocks.
THE INVESTMENT STRATEGY
The Portfolio seeks to maintain a portfolio yield above that of issuers
comprising the S&P 500 and to achieve (in the long run) a rate of growth in
Portfolio income that exceeds the rate of inflation. The Portfolio will
generally invest in common stocks of "blue chip" issuers, i.e., those:
o that have a total market capitalization of at least $1 billion;
o that pay periodic dividends; and
o whose common stock is in the highest four issuer ratings for S&P (i.e., A+,
A, Ab or B+) or Moody's (i.e., high grade, investment grade, upper medium
grade or medium grade) or, if unrated, is determined to be of comparable
quality by the Adviser.
It is expected that on average the dividend rate of these issuers will exceed
the average rate of issuers constituting the S&P 500.
The Portfolio may also invest without limit in securities convertible into
common stocks, which include convertible bonds, convertible preferred stocks
and convertible warrants. The Portfolio may also invest up to 30% of its total
assets in high yield, high risk convertible securities rated at the time of
purchase below investment grade (i.e., rated BB or lower by S&P or Ba or lower
by Moody's or determined by the Adviser to be of comparable quality).
The Portfolio does not expect to invest more than 25% of its total assets in
foreign securities, although it may do so without limit. It may enter into
foreign currency futures contracts (and related options), forward foreign
currency exchange contracts and options on currencies for hedging purposes.
The Portfolio may also write covered call and put options on securities and
securities indexes for hedging purposes or to enhance its return and may
purchase call and put options on securities and securities indexes for hedging
purposes. The Portfolio may also purchase and sell securities index futures
contracts and may write and purchase options thereon for hedging purposes.
When market or financial conditions warrant, the Portfolio may invest in
certain money market instruments for temporary or defensive purposes. Such
investment strategies could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar quality.
The value of convertible securities fluctuates both in relation to changes in
interest rates and changes in the value of the underlying common stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income
-------------------------EQ Advisors Trust
<PAGE>
- ----
32
- --------------------------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- --------------------------------------------------------------------------------
securities, that portion of the Portfolio's performance will be affected by
changes in interest rates, the credit risk of the issuer, the duration or
maturity of the Portfolio's fixed income holdings, and adverse market or
economic conditions. When interest rates rise, the value of the Portfolio's
fixed income securities, particularly those with longer durations or
maturities, will go down. When interest rates fall, the reverse is true. In
addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality. Therefore,
credit risk is particularly significant for this Portfolio. Junk bonds have
speculative elements or are predominantly speculative credit risks. This
Portfolio may also be subject to greater credit risk because it may invest in
debt securities issued in connection with corporate restructurings by highly
leveraged issuers or in debt securities not current in the payment of interest
or principal, or in default.
FOREIGN SECURITIES RISKS: To the extent the Portfolio invests in foreign
securities, it is subject to risks not associated with investing in U.S.
securities, which can adversely affect the Portfolio's performance. Foreign
markets, particularly emerging markets, may be less liquid, more volatile, and
subject to less government supervision than domestic markets. There may be
difficulties enforcing contractual obligations, and it may take more time for
trades to clear and settle. In addition, the value of foreign investments can
be adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in foreign
economic and tax policies; and foreign government instability, war or other
adverse political or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last five calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one year,
five years and since inception and compares the Portfolio's performance to: (i)
the returns of a broad-based index; (ii) the returns of a "blended" index of
equity and fixed income securities; and (iii) the returns of an index of funds
with similar investment objectives. Past performance is not an indication of
future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Growth and Income Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance and
Growth Income Portfolio) whose inception date is October 1, 1993. The assets of
the predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
<PAGE>
- ----
33
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
[GRAPHIC OMITTED]
- -0.8% 23.8% 19.8% 26.6% 20.6%
- ---- ---- ---- ---- ----
1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
26.22% (1998 4th Quarter) -15.09% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Growth and Income
Portfolio - Class IB Shares 20.56% 17.57% 16.56%
- --------------------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 23.32%
- --------------------------------------------------------------------------------
75% S&P 500 Index/25%
Value Line Convertible** 20.10% 21.07% 20.48%
- --------------------------------------------------------------------------------
Lipper Growth and Income Funds
Average** 15.61% 18.35% 17.89%
- --------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (May 2, 1997),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 26.25%. The return for the S&P 500 Index for the comparable
period (which dates from month-end of the Class IB inception date) was
25.94%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
PAUL RISSMAN AND W. THEODORE KUCK have been the persons responsible for the
day-to-day management of the Portfolio, Mr. Rissman since 1996 and Mr. Kuck
since the Portfolio and its predecessor's inception. Mr. Rissman, a Senior
Vice President of Alliance, has been associated with Alliance since 1989. Mr.
Kuck, a Vice President of Alliance, has been associated with Alliance since
1971.
--------------------------EQ Advisors Trust
<PAGE>
- ----
34
- -------------------------------------------------------------------------------
GLOBAL/INTERNATIONAL PORTFOLIOS
- -------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified mix of equity securities of
U.S. and established foreign companies. The Adviser believes the equity
securities of these established non-U.S. companies have prospects for growth.
The Portfolio intends to make investments in several countries and to have
represented in the Portfolio business activities in not less than three
different countries (including the United States).
These non-U.S. companies may have operations in the United States, in their
country of incorporation or in other countries.
The Portfolio may invest in any type of security including, but not limited to,
common and preferred stock, as well as shares of mutual funds that invest in
foreign securities, bonds and other evidences of indebtedness, and other
securities of issuers wherever organized and governments and their political
subdivisions. Although no particular proportion of stocks, bonds or other
securities is required to be maintained, the Portfolio intends under normal
conditions to invest in equity securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives including: writing covered call and put options,
purchasing call and put options on individual equity securities, securities
indexes, and foreign currencies. The Portfolio may also purchase and sell stock
index, foreign currency and interest rate futures contracts and options on such
contracts, as well as forward foreign currency exchange contracts.
When market or financial conditions warrant, the Portfolio may at times invest
substantially all of its assets in securities issued by U.S. companies or in
cash or cash equivalents, including money market instruments issued by foreign
entities for temporary or defensive purposes. Such investment strategies could
result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: Investing in foreign securities involves risks not
associated with investing in U.S. securities that can adversely affect the
Portfolio's performance. Foreign markets, particularly emerging markets, may be
less liquid, more volatile and subject to less government supervision than
domestic markets. There may be difficulties enforcing contractual obligations,
and it may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political
systems, more restrictive foreign investment policies, smaller-sized
securities markets and low trading volumes. Such risks can make
investments illiquid and more volatile than investments in developed
countries and such securities may be subject to abrupt and severe price
declines.
EURO RISK: The Portfolio invests in securities issued by European
issuers that that may be adversely impacted by the recent introduction
of the "Euro" as a common currency in 11 European Monetary Union member
<PAGE>
- ----
35
- --------------------------------------------------------------------------------
states. The Euro may result in various legal and accounting differences,
tax treatments, the creation and implementation of suitable clearing and
settlement systems and other operational problems, that may cause market
disruptions that could adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements as are U.S. companies, which
could adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional
collateral, or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last ten calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one, five
and ten years and compares the Portfolio's performance to: (i) the returns of a
broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Global Portfolio) managed by the
Adviser using the same investment objectives and strategy as the Portfolio. For
these purposes, the Portfolio is considered to be the successor entity to the
predecessor registered investment company (HRT/Alliance Global Portfolio) whose
inception date is August 27, 1987. The assets of the predecessor will be
transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
----------------------EQ Advisors Trust
<PAGE>
----
36
-------------------------------------------------------------------------------
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -------------------------------------------------------------------------------
[GRAPHIC OMITTED]
26.5% -6.3% 30.2% -0.7% 31.9% 5.0% 18.6% 14.4% 11.4% 21.5%
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
26.53% (1998 4th Quarter) -17.05% (1998 3rd Quarter)
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- -------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- -------------------------------------------------------------------------------
Alliance Global
Portfolio -
Class IB Shares 21.50% 14.01% 14.55%
- -------------------------------------------------------------------------------
MSCI World
Index** 24.34% 15.68% 10.66%
- -------------------------------------------------------------------------------
Lipper Global
Mutual Funds
Average** 14.34% 11.98% 11.21%
- -------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 16.89%. The return for the MSCI World Index for the comparable
period (which dates from month-end of the Class IB inception date) was
20.40%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio's and its predecessor's investment program since 1998. Ms. Yeager, a
Senior Vice President of Alliance, has been associated with Alliance since
1990.
<PAGE>
- ----
37
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital by
investing primarily in a diversified portfolio of equity securities selected
principally to permit participation in non-U.S. companies with prospects for
growth.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified portfolio of equity securities
selected principally to permit participation in non-U.S. companies or foreign
governmental enterprises that the Adviser believes have prospects for growth.
The Portfolio may invest anywhere in the world (including developing countries
or "emerging markets"), although it will not generally invest in the United
States. The Portfolio may purchase securities of developing countries, which
include, among others, Mexico, Brazil, Hong Kong, India, Poland, Turkey and
South Africa.
These non-U.S. companies may have operations in the United States, in their
country of incorporation and/or in other countries.
The Portfolio intends to have represented in the Portfolio business activities
in not less than three different countries.
The Portfolio may also invest in any type of investment grade, fixed income
security including, but not limited to, preferred stock, convertible
securities, bonds, notes and other evidences of indebtedness of foreign
issuers, including obligations of foreign governments. Although no particular
proportion of stocks, bonds or other securities is required to be maintained,
the Portfolio intends under normal market conditions to invest primarily in
equity securities.
The Portfolio may also make use of various other investment strategies,
including the purchase and sale of shares of other mutual funds investing in
foreign securities and making loans of up to 50% of its portfolio securities.
The Portfolio may also use derivatives, including: writing covered call and put
options, purchasing purchase call and put options on individual equity
securities, securities indexes, and foreign currencies. The Portfolio may also
purchase and sell stock index, foreign currency and interest rate futures
contracts and options on such contracts, as well as forward foreign currency
exchange contracts.
For temporary or defensive purposes, when market or financial conditions
warrant, the Portfolio may at times invest substantially all of its assets in
securities issued by a single major developed country (e.g., the United States)
or in cash or cash equivalents, including money market instruments issued by
that country. In addition, the Portfolio may establish and maintain temporary
cash balances in U.S. and foreign short-term high-grade money market
instruments for defensive purposes or to take advantage of buying
opportunities. Such investments could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: Investing in foreign securities involves risks not
associated with investing in U.S. securities that can adversely affect the
Portfolio's performance. Foreign markets, particularly emerging markets, may be
less liquid, more volatile and subject to less government supervision than
domestic markets. There may be difficulties enforcing contractual obligations,
and it may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
----------------------EQ Advisors Trust
<PAGE>
- ----
38
- -------------------------------------------------------------------------------
GLOBAL/INTERNATIONAL PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political
systems, more restrictive foreign investment policies, smaller-sized
securities markets and low trading volumes. Such risks can make
investments illiquid and more volatile than investments in developed
countries and such securities may be subject to abrupt and severe price
declines.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the recent introduction of the
"Euro" as a common currency in 11 European Monetary Union member states.
The Euro may result in various legal and accounting differences, tax
treatments, the creation and implementation of suitable clearing and
settlement systems and other operational problems, that may cause market
disruptions that could adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to
other regulatory practices and requirements as are U.S. companies, which
could adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional collateral,
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last three calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below
<PAGE>
- ----
39
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
shows the Portfolio's average annual total returns for the past one year and
since inception and compares the Portfolio's performance to: (i) the returns of
a broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance International Portfolio) managed by
the Adviser using the same investment objectives and strategy as the Portfolio.
For these purposes, the Portfolio is considered to be the successor entity to
the predecessor registered investment company (HRT/Alliance International
Portfolio) whose inception date is April 3, 1995. The assets of the predecessor
will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- -------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -------------------------------------------------------------------------------
[GRAPHIC OMITTED]
9.6% -3.2% 10.3%
- ---- ---- ----
1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
16.49% (1998 4th Quarter) -15.74% (1998 3rd Quarter)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------------------------
Alliance International
Portfolio - Class IB
Shares 10.30% 7.22%
- -------------------------------------------------------------------------------
MSCI EAFE Index** 20.00% 9.68%
- -------------------------------------------------------------------------------
Lipper International Mutual
Funds Average** 13.02% 10.74%
- -------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (May 1, 1997),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 4.42%. The return for the MSCI EAFE Index for the comparable
period (which dates from month-end of the Class IB inception date) was
13.77%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio and its predecessor since January 1999. Ms. Yeager, a Senior Vice
President of Alliance, has been associated with Alliance since 1990.
------------------------EQ Advisors Trust
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40
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AGGRESSIVE EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in common stocks and other equity securities of
small and medium-sized companies that, in the opinion of the Adviser, have
favorable growth prospects. The Portfolio may also invest in securities of
companies in cyclical industries, companies whose securities are temporarily
undervalued, companies in special situations (e.g., change in management, new
products or changes in customer demand) and less widely known companies.
The Portfolio may also invest up to 20% of its total assets in foreign
securities and may also make use of various other investment strategies,
including investments in debt securities and making secured loans of up to 50%
of its total portfolio securities. The Portfolio may also use derivatives,
including: writing covered call options and purchasing call and put options on
individual equity securities, securities indexes and foreign currencies. The
Portfolio may also purchase and sell stock index and foreign currency futures
contracts and options thereon.
When market or financial conditions warrant, or it appears that the Portfolio's
investment objective will not be achieved primarily through investments in
common stocks, the Portfolio may invest in other equity-type securities (such
as preferred stocks and convertible debt instruments) and options for hedging
purposes. The Portfolio may also make temporary investments in corporate fixed
income securities, which will generally be investment grade, or invest part its
assets in cash or cash equivalents, including high-quality money market
instruments for liquidity or defensive purposes. Such investments could result
in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders or
institutional investors and may trade less frequently and in lower volume; such
companies are more likely to experience greater or more unexpected changes in
their earnings and growth prospects; such companies have limited financial
resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
<PAGE>
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41
- --------------------------------------------------------------------------------
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last ten calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one, five and ten
years and compares the Portfolio's performance to: (i) the returns of a
broad-based index; (ii) the returns of a "blended" index of two broad-based
indices; and (iii) the returns of an index of funds with similar investment
objectives. Past performance is not an indication of future performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Aggressive Stock Portfolio) managed
by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Aggressive
Stock Portfolio) whose inception date is January 27, 1986. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- -------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -------------------------------------------------------------------------------
[GRPAHIC OMITTED]
43.2% 7.9% 86.6% -3.4% 16.5% -4.1% 31.4% 22.1% 10.7% 0.1%
- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
40.04% (1991 1st Quarter) -27.25% (1998 3rd Quarter)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- -------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- -------------------------------------------------------------------------------
Alliance Aggressive Stock
Portfolio - Class IB Shares 0.10% 11.25% 18.65%
- -------------------------------------------------------------------------------
S&P 400 MidCap Index** 19.11% 18.84% 19.29%
- -------------------------------------------------------------------------------
50% S&P 400 MidCap
Index/50% Russell 2000** 8.28% 15.56% 16.49%
- -------------------------------------------------------------------------------
Lipper MidCap Growth Funds
Average** 12.16% 14.87% 15.44%
- -------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 5.70%. The return for the S&P 400 MidCap Index for the comparable
period (which dates from month-end of the Class IB inception date) was
18.11%.
** For more information on this index, see the preceding section "The
Benchmarks."
------------------------------EQ Advisors Trust
<PAGE>
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42
- -------------------------------------------------------------------------------
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ALDEN M. STEWART AND RANDALL E. HAASE have been the persons principally
responsible for the day-to-day management of the Portfolio and its predecessor
since 1993. Mr. Stewart, an Executive Vice President of Alliance, has been
associated with Alliance since 1970. Mr. Haase, a Senior Vice President of
Alliance, has been associated with Alliance since 1988.
<PAGE>
- ----
43
- -------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term
growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in U.S. common stocks and other equity-type
securities issued by smaller companies with favorable growth prospects. The
Portfolio may at times invest in companies in cyclical industries, companies
whose securities are temporarily undervalued, companies in special situations
(e.g., change in management, new products or changes in customer demand) and
less widely known companies.
Under normal market conditions, the Portfolio intends to invest at least 65% of
its total assets in securities of smaller capitalization companies (currently
considered by the Adviser to mean companies with market capitalization at or
below $2 billion).
The Portfolio may invest in foreign securities and may also make use of various
other investment strategies, including making secured loans of up to 50% of its
total portfolio securities. The Portfolio may also use derivatives including:
writing covered call options and purchasing call and put options on individual
equity securities, securities indexes and foreign currencies. The Portfolio may
also purchase and sell stock index and foreign currency futures contracts and
options thereon.
The Portfolio will invest up to 20% of its net asset value, measured at the
time of investment, in securities principally traded on foreign securities
markets (other than commercial paper).
When market or financial conditions warrant, the Portfolio may invest in other
equity-type securities (such as preferred stocks and convertible debt
instruments) and investment-grade corporate fixed income securities. For
temporary or defensive purposes, the Portfolio may invest without limitation in
cash or cash equivalents or high-quality money market instruments. Such
investments could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders or
institutional investors and may trade less frequently and in lower volume; such
companies are more likely to experience greater or more unexpected changes in
their earnings and growth prospects; such companies have limited financial
resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the
---------------------------EQ Advisors Trust
<PAGE>
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44
- -------------------------------------------------------------------------------
AGGRESSIVE EQUITY PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
risk that changes in value of the derivative may not correlate perfectly with
the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in foreign
economic and tax policies; and foreign government instability, war or other
adverse political or economic actions.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for 1998,
the Portfolio's first full year of existence and some of the risks of investing
in the Portfolio by showing yearly changes in the Portfolio's performance. The
table below shows the Portfolio's average annual total returns for one year and
since inception and compares the Portfolio's performance to: (i) the returns of
a broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Small Cap Growth Portfolio) managed
by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Small Cap
Growth Portfolio) whose inception date is May 1, 1997. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and
distributions. The performance results do not reflect any insurance and
Contract-related fees and expenses, which would reduce the performance results.
- -------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -------------------------------------------------------------------------------
[GRAPHIC OMITTED]
-4.4%
----
1998
Best quarter (% and time period) Worst quarter (% and time period)
22.92 (1998 4th Quarter) -28.13% (1998 3rd Quarter)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------------------------
Alliance Small Cap Growth Portfolio -
Class IB Shares -4.44% 12.06%
- -------------------------------------------------------------------------------
Russell 2000 Growth Index* 1.23% 16.58%
- -------------------------------------------------------------------------------
Lipper Small Company Growth Funds
Average* -0.33% 16.72%
- -------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks." Index returns are from the end of the month of inception.
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor
commenced operations. Alliance, a publicly
<PAGE>
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45
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
traded limited partnership, is indirectly majority-owned by Equitable. Alliance
manages investment companies, endowment funds, insurance companies, foreign
entities, qualified and non-tax qualified corporate funds, public and private
pension and profit-sharing plans, foundations and tax-exempt organizations.
MARK J. CUNNEEN has been responsible for the day-to-day management of
Portfolio and its predecessor since January 1999. Mr. Cunneen, a Senior Vice
President of Alliance, has been associated with Alliance since January 1999.
Prior to joining Alliance, Mr. Cunneen had been associated with INVESCO since
May 1998, and before that with Chancellor LGT Asset Management, Inc.
("Chancellor") since 1992. Mr. Cunneen had been the head of Chancellor's Small
Cap Equity Group since 1997.
----------------------------EQ Advisors Trust
<PAGE>
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46
- -------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIOS
- -------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIOS
The Alliance Conservative Investors Portfolio and the Alliance Growth Investors
Portfolio together are called the Asset Allocation Portfolios. These Portfolios
invest in a variety of fixed income and equity securities, each pursuant to a
different asset allocation strategy, as described below. The term "asset
allocation" is used to describe the process of shifting assets among discrete
categories of investments in an effort to reduce risk while producing desired
return objectives. Portfolio management, therefore, will consist not only of
selecting specific securities but also of setting, monitoring and changing,
when necessary, the asset mix.
Each Portfolio has been designed with a view toward a different "investor
profile." The "conservative investor"' has a relatively short-term investment
bias, either because of a limited tolerance for market volatility or a short
investment horizon. This investor is averse to taking risks that may result in
principal loss, even though such aversion may reduce the potential for higher
long-term gains and result in lower performance during periods of equity market
strength. Consequently, the asset mix for the Alliance Conservative Investors
Portfolio attempts to reduce volatility while providing modest upside
potential. The "growth investor" has a longer-term investment horizon and is
therefore willing to take more risks in an attempt to achieve long-term growth
of principal. This investor wishes, in effect, to be risk conscious without
being risk averse. The asset mix for the Alliance Growth Investors Portfolio
attempts to provide for upside potential without excessive volatility.
The Adviser has established an asset allocation committee (the "Committee"),
all the members of which are employees of the Adviser, which is responsible for
setting and continually reviewing the asset mix ranges of each Portfolio. Under
normal market conditions, the Committee is expected to change allocation ranges
approximately three to five times per year. However, the Committee has broad
latitude to establish the frequency, as well as the magnitude, of allocation
changes within the guidelines established for each Portfolio. During periods of
severe market disruption, allocation ranges may change frequently. It is also
possible that in periods of stable and consistent outlook no change will be
made. The Committee's decisions are based on a variety of factors, including
liquidity, portfolio size, tax consequences and general market conditions,
always within the context of the appropriate investor profile for each
Portfolio. Consequently, asset mix decisions for the Alliance Conservative
Investors Portfolio particularly emphasize risk assessment of each asset class
viewed over the shorter term, while decisions for the Alliance Growth Investors
Portfolio are principally based on the longer term total return potential for
each asset class.
When the Committee establishes a new allocation range for a Portfolio, it also
prescribes the length of time during which that Portfolio should achieve an
asset mix within the new range. To achieve a new asset mix, the Portfolios look
first to available cash flow. If the Adviser believes that cash flow will be
insufficient to achieve the desired asset mix, the Portfolios will sell
securities and reinvest the proceeds in the appropriate asset class.
The Asset Allocation Portfolios are permitted to use a variety of hedging
techniques to attempt to control stock market, interest rate and currency
risks. Each of the Portfolios in the Asset Allocation Portfolios may make loans
of up to 50% of its total portfolio securities. Each of the Portfolios in the
Asset Allocation Portfolios may write covered call and put options and may
purchase call and put options on all the types of securities in which it may
invest, as well as securities indexes and foreign currencies. Each Portfolio
may also purchase and sell stock index, interest rate and foreign currency
futures contracts and options thereon, as well as forward foreign currency
exchange contracts.
<PAGE>
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47
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high total return without, in the
opinion of the Adviser, undue risk to principal.
THE INVESTMENT STRATEGY
The Portfolio invests varying portions of its assets in high quality,
publicly-traded fixed income securities (including money market instruments and
cash) and publicly-traded common stocks and other equity securities of U.S. and
non-U.S. issuers.
The Portfolio will at all times hold at least 40% of its assets in investment
grade fixed income securities, each having a duration, as determined by the
Adviser, that is less than that of a 10-year Treasury bond (the "fixed income
core"). The Portfolio is generally expected to hold approximately 70% of its
assets in fixed income securities (including the fixed income core) and 30% in
equity securities. Actual asset mixes will be adjusted in response to economic
and credit market cycles. The fixed income asset class will always comprise at
least 50%, but never more than 90%, of the Portfolio's total assets. The equity
class will always comprise at least 10%, but never more than 50%, of the
Portfolio's total assets.
Duration is a measure of the weighted average maturity of the bonds held by
the Portfolio and can be used by the Adviser as a measure of the sensitivity
of the market value of the Portfolio to changes in interest rates. Generally,
the longer the duration of the Portfolio, the more sensitive its market value
will be to changes in interest rates.
In some cases, the Adviser's calculation of duration will be based on certain
assumptions (including assumptions regarding prepayment rates, in the
mortgage-backed or asset-backed securities, and foreign and domestic interest
rates). As of December 31, 1998, the Adviser considered the duration of a
10-year Treasury bond to be 4.68 years. The Portfolio's investments will
generally have a final maturity of not more than ten years or a duration not
exceeding that of a 10-year Treasury note.
All debt securities held by the Portfolio will be of investment grade (i.e.,
rated at least BBB by S&P or Baa by Moody's) or unrated securities of
comparable quality as determined by the Adviser. The equity securities invested
in by the Portfolio will consist primarily of common stocks, including
convertible securities, common stocks that are listed on national securities
exchanges. The Portfolio may also invest in stocks that are traded
over-the-counter and in other equity-type securities. No more than 15% of the
Portfolio's assets will be invested in securities of non-U.S. issuers.
The Portfolio may also make use of various other investment strategies and
derivatives. Up to 50% of its total assets may be used for securities lending
purposes.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
ASSET ALLOCATION RISK: In addition to the risks associated with the securities
in which the Portfolio invests, the Portfolio is subject to the risk that the
Adviser's allocation of the Portfolio's assets between debt and equity
securities may adversely affect the Portfolio's value.
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income
securities, therefore, the Portfolio's performance will be affected by changes
in interest rates,
---------------------EQ Advisors Trust
<PAGE>
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48
- -------------------------------------------------------------------------------
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
credit risks of the issuer, the duration and maturity of the Portfolio's fixed
income holdings, and adverse market and economic conditions. Other risks that
relate to the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price and
total return) of the Portfolio's fixed income securities, particularly those
with longer durations or maturities, will go down. When interest rates fall,
the reverse is true.
INVESTMENT-GRADE SECURITIES RISK: The Portfolio could lose money if the issuer
or guarantor of a debt security or counterparty to a Portfolio's transaction is
unable or unwilling to make timely principal and/or interest payments, or to
honor its financial obligations. Investment grade securities which are rated
BBB by S&P or an equivalent rating by any other NRSRO, are somewhat riskier
than higher rated obligations because they are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the duration
of mortgage-backed securities to increase, making them even more susceptible to
interest rate changes. Falling interest rates may cause the value and yield of
mortgage-backed securities to fall. Falling interest rates also may encourage
borrowers to pay off their mortgages sooner than anticipated (pre-payment). The
Portfolio would need to reinvest the pre-paid funds at the newer, lower
interest rates.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar quality.
The value of convertible securities fluctuates both in relation to changes in
interest rates and changes in the value of the underlying common stock.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional
collateral, or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like, which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
<PAGE>
- ----
49
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last nine calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one year, five years
and since inception and compares the Portfolio's performance to: (i) the returns
of a broad-based index; (ii) the returns of a "blended" index of fixed income
and equity securities; and (iii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Conservative Investors Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance
Conservative Investors Portfolio) whose inception date is October 2, 1989. The
assets of the predecessor will be transferred to the Portfolio on October 1,
1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN *
- --------------------------------------------------------------------------------
[GRPAHIC OMITTED]
6.2% 19.6% 5.5% 10.5% -4.4% 20.2% 5.0% 13.0% 13.6%
- ---- ---- ---- ---- ---- ---- ---- ---- ----
1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
- --------------------------------------------------------------------------------
7.59% (1998 4th Quarter) -3.27% (1994 1st Quarter)
- --------------------------------------------------------------------------------
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AVERAGE ANNUAL TOTAL RETURNS*
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SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Conservative
Investors Portfolio -
Class IB Shares 13.60% 9.13% 9.17%
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S&P 500 Index** 28.58% 24.06% 17.62%
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70% Lehman Treasury/30%
S&P 500 Index** 15.59% 13.37% 12.08%
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Lipper Flexible Portfolio
Average** 14.20% 14.31% 12.55%
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* For periods prior to the inception of Class IB Shares (May 2, 1997),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 15.42%. The return for the S&P 500 Index for the comparable period
(which dates from month-end of the Class IB inception date) was 17.64%.
** For more information on this index, see the preceding section "The
Benchmarks."
---------------------------EQ Advisors Trust
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ASSET ALLOCATION PORTFOLIOS (CONTINUED)
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WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas,
New York, New York 10105. Alliance has been the Adviser to the Portfolio and
its predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of
the Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a
Senior Vice President of Alliance and Global Economic Policy Analysis, has
been associated with Alliance since 1977.
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ALLIANCE GROWTH INVESTORS PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve the highest total return consistent
with the Adviser's determination of reasonable risk.
THE INVESTMENT STRATEGY
The Portfolio allocates varying portions of its assets to a number of asset
classes. The fixed income asset class will always comprise at least 10%, but
never more than 60%, of the Portfolio's total assets. The equity class will
always comprise at least 40%, but never more than 90%, of the Portfolio's total
assets. Over time, the Portfolio's holdings, on average, are expected to be
allocated 70% to equity securities and 30% to debt securities. Actual asset
mixes will be adjusted in response to economic and credit market cycles.
The Portfolio's investments in equity securities will include both
exchange-traded and over-the counter common stocks and other equity securities,
including foreign stocks, preferred stocks, convertible debt instruments, as
well as securities issued by small-and mid-sized companies that have favorable
growth prospects.
The Portfolio's debt securities may include foreign debt securities, investment
grade fixed income securities (including cash and money market instruments) as
well as lower quality, higher yielding debt securities (junk bonds). The
Portfolio may also make use of various other investment strategies and
derivatives. Up to 50% of its total assets may be used for securities lending
purposes. No more than 30% of the Portfolio's assets will be invested in
securities of foreign issuers.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up
or down depending on general market conditions. Other principal risks include:
ASSET ALLOCATION RISK: In addition to the risks associated with the securities
in which the Portfolio invests, the Portfolio is subject to the risk that the
Adviser's allocation of the Portfolio's assets between debt and equity
securities may adversely affect the Portfolio's value.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB- rated securities are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative. Other risks
that relate to the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price and
total return) of the Portfolio's fixed income securities, particularly those
with longer durations or maturities, will go down. When interest rates fall,
the reverse is true.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality. Therefore,
credit risk is particularly significant for this Portfolio. Junk bonds have
speculative elements or are predominantly speculative credit risks. This
Portfolio may also be subject to greater credit risk because it may invest in
debt securities issued in connection with corporate
--------------------------EQ Advisors Trust
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ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- -------------------------------------------------------------------------------
restructurings by highly leveraged issuers or in debt securities not current
in the payment of interest or principal, or in default.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SMALL CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap
and mid-cap companies may be subject to more abrupt or erratic movements in
price than are those of larger, more established companies because: the
securities of such companies are less well-known, held primarily by insiders or
institutional investors and may trade less frequently and in lower volume; such
companies are more likely to experience greater or more unexpected changes in
their earnings and growth prospects; such companies have limited financial
resources or may depend on a few key employees; and the products of
technologies of such companies may be at a relatively early stage of
development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying
common stock and provide higher yields than the underlying common stocks, but
generally offer lower yields than nonconvertible securities of similar quality.
The value of convertible securities fluctuates both in relation to changes in
interest rates and changes in the value of the underlying common stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to
clear and settle. In addition, the value of foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the
U.S. dollar for securities denominated in foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; expropriation or nationalization; adverse changes in foreign
economic and tax policies; and foreign government instability, war or other
adverse political or economic actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional
collateral, or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each
of the last nine calendar years and some of the risks of investing in the
Portfolio by showing yearly changes in the Portfolio's performance. The table
below shows the Portfolio's average annual total returns for the past one year,
five years and since inception and compares the Portfolio's performance to: (i)
the returns of a broad-based index; (ii) the returns of a "blended" index of
equity and fixed income securities; and (iii) the returns of an index of funds
with similar investment objectives. Past performance is not an indication of
future performance.
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The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Growth Investors Portfolio) managed
by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Growth
Investors Portfolio) whose inception date is October 2, 1989. The assets of the
predecessor will be transferred to the Portfolio on October 1, 1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN *
- --------------------------------------------------------------------------------
[GRPAHIC OMITTED]
10.4% 48.7% 4.7% 15.0% -3.4% 26.1% 12.4% 16.6% 18.8%
- ---- ---- ---- ---- ---- ---- ---- ---- ----
1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
18.10% (1998 4th Quarter) -10.66% (1990 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS*
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Growth Investors
Portfolio - Class IB Shares 18.83% 13.36% 15.81%
- --------------------------------------------------------------------------------
S&P 500 Index** 28.58% 24.06% 17.62%
- --------------------------------------------------------------------------------
70% S&P 500 Index/30%
Lehman Gov't/Corp.** 22.85% 19.96% 15.55%
- --------------------------------------------------------------------------------
Lipper Flexible Portfolio
Average* 14.20% 14.31% 12.55%
- --------------------------------------------------------------------------------
* For periods prior to the inception of Class IB Shares (October 1, 1996),
performance information shown is the performance of Class IA shares
adjusted to reflect the 12b-1 fees paid by Class IB shares. The average
annual total return for the Class IB shares since the Class IB inception
date was 17.94%. The return for the S&P 500 Index for the comparable period
(which dates from month-end of the Class IB inception date) was 25.17%.
** For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of the
Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a Senior
Vice President of Alliance and Global Economic Policy Analysis, has been
associated with Alliance since 1977.
---------------------------EQ Advisors Trust
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3
MORE INFORMATION ON PRINCIPAL RISKS
- -------------------------------------------------------------------------------
Risk is the chance that you will lose money on your investment or that it will
not earn as much as you expect. In general, the greater the risk, the more
money your investment can earn for you and the more you can lose. Like other
investment companies, the value of each Portfolio's shares may be affected by
the Portfolio's investment objective(s), principal investment strategies and
particular risk factors. Consequently, each Portfolio may be subject to
different principal risks. Some of the principal risks of investing in the
Portfolios are discussed below. However, other factors may also affect each
Portfolio's net asset value.
There is no guarantee that a Portfolio will achieve its investment objective(s)
or that it will not lose principal value.
GENERAL INVESTMENT RISKS: Each Portfolio is subject to
the following risks:
ASSET CLASS RISK: There is the possibility that the returns from the types of
securities in which a Portfolio invests will underperform returns from the
various general securities markets or different asset classes. Different types
of securities tend to go through cycles of outperformance and underperformance
in comparison to the general securities markets.
MARKET RISK: Each Portfolio's share price moves up and down over the short term
in reaction to stock or bond market movements. This means that you could lose
money over short periods, and perhaps over longer periods during extended
market downturns.
SECURITY SELECTION RISK: The Advisers for each Portfolio rely on the insights
of different specialists in making investment decisions based on each
Portfolio's particular investment objective(s) and investment strategies. There
is the possibility that the specific securities held by a Portfolio will
underperform other funds in the same asset class or benchmarks that are
representative of the general performance of the asset class because of the
Adviser's choice of portfolio securities.
YEAR 2000 RISK: Like other mutual funds, financial and business organizations
and individuals around the world, the Trust and its Portfolios could be
adversely affected if the computer systems used by the Advisers, other service
providers, or persons with whom they deal, do not properly process and
calculate date-related information and data dated on and after January 1, 2000.
This possibility is commonly known as the "Year 2000 Problem." Virtually all
operations of the Trust and its Portfolios are computer reliant. The Manager,
Advisers, administrator, transfer agent, distributors and custodian have
informed the Trust that they are actively taking steps to address the Year 2000
Problem with regard to their respective computer systems and the interfaces
between their respective computer systems. The Trust is also taking measures to
obtain assurances from necessary persons that comparable steps are being taken
by the key service providers to the Trust's Advisers, administrator, transfer
agent, distributors, and custodian. There can be no assurance that the Trust
and the Portfolios' key service providers will be Year 2000 compliant. If not
adequately addressed, the Year 2000 Problem could result in the inability of
the Trust to perform its mission critical functions, including trading and
settling trades of Portfolio securities, pricing of portfolio securities and
processing shareholder transactions, and the net asset value of its Portfolios'
shares may be materially affected.
In addition, because the Year 2000 Problem affects virtually all issuers, the
companies or entities in which the Portfolios may invest also could be
adversely impacted by the Year 2000 Problem. For example, issuers may incur
substantial costs to address the Year 2000 problem. The extent of such impact
cannot be predicted and there can be no assurances that the Year 2000 Problem
will not have an adverse effect on the issuers whose securities are held by the
Portfolios. The Advisers have assured the Trust that they consider such issues
in making investment decisions for the Portfolios. Furthermore, certain of the
Portfolios make international investments thereby exposing these Portfolios to
operations, custody and settlement processes outside the United States.
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In many countries outside the United States the Year 2000 Problem has not been
adequately addressed and concerns have been raised that capital flight, among
other issues, may be triggered by full disclosure of the Year 2000 Problem on
countries outside the United States. Additional information on the impact of the
Year 2000 Problem on emerging market countries is provided in this section,
under "FOREIGN SECURITIES RISKS-EMERGING MARKET RISK."
As indicated in "Summary Information Concerning EQ Advisors Trust" and "About
the Investment Portfolios," a particular Portfolio may also be subject to the
following risks:
CONVERTIBLE SECURITIES RISK: Convertible securities may include both convertible
debt and convertible preferred stock. Such securities may be converted into
shares of the underlying common stock at either a stated price or stated rate.
Therefore, convertible securities enable you to benefit from increases in the
market price of the underlying common stock. Convertible securities provide
higher yields than the underlying common stocks, but generally offer lower
yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates in relation to changes in interest rates and,
in addition, fluctuates in relation to the underlying common stock. Subsequent
to purchase by a Portfolio, convertible securities may cease to be rated or a
rating may be reduced below the minimum required for purchase by that Portfolio.
Each Adviser will consider such event in its determination of whether a
Portfolio should continue to hold the securities.
DERIVATIVES RISK: Derivatives are financial contracts whose value depends on, or
is derived from the value of an underlying asset, reference rate or index.
Derivatives include stock options, securities index options, currency options,
forward currency exchange contracts, futures contracts, swaps and options on
futures contracts. Certain Portfolios can use derivatives involving the U.S.
Government and foreign government securities and currencies. Investments in
derivatives can significantly increase your exposure to market risk, or credit
risk of the counterparty. Derivatives also involve the risk of mispricing or
improper valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that any of the Portfolios invest a
substantial amount of its assets in fixed income securities, a Portfolio may be
subject to the following risks:
CREDIT RISK: Credit risk is the risk that the issuer or guarantor of a
debt security or counterparty to a Portfolio's transactions will be
unable or unwilling to make timely principal and/or interest payments,
or otherwise will be unable or unwilling to honor its financial
obligations. Each of the Portfolios may be subject to credit risk to
the extent that it invests in debt securities or engages in
transactions, such as securities loans or repurchase agreements, which
involve a promise by a third party to honor an obligation to the
Portfolio.
Credit risk is particularly significant for the Portfolios, such as the
Alliance Growth Investors Portfolio and the Alliance High Yield
Portfolio, that invest a material portion of their assets in "JUNK
BONDS" or lower-rated securities (i.e., rated BB or lower by S&P or an
equivalent rating by any other NRSRO or unrated securities of similar
quality). These debt securities and similar unrated securities have
speculative elements or are predominantly speculative. Portfolios such
as the Alliance Growth Investors Portfolio and the Alliance High Yield
Portfolio may also be subject to greater credit risk because they may
invest in debt securities issued in connection with corporate
restructurings by highly leveraged issuers or in debt securities not
current in the payment of interest or principal, or in default.
INTEREST RATE RISK: The price of a bond or a fixed income security is
dependent upon interest rates. Therefore, the share price and total
return of a
-------------------------------EQ Advisors Trust
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Portfolio investing a significant portion of its assets in bonds or
fixed income securities will vary in response to changes in interest
rates. A rise in interest rates causes the value of a bond to decrease,
and vice versa. There is the possibility that the value of a Portfolio's
investment in bonds or fixed income securities may fall because bonds or
fixed income securities generally fall in value when interest rates
rise. The longer the term of a bond or fixed income instrument, the more
sensitive it will be to fluctuations in value from interest rate
changes. Changes in interest rates may have a significant effect on
Portfolios holding a significant portion of their assets in fixed income
securities with long term maturities.
MORTGAGE-BACKED SECURITIES RISK: In the case of mortgage-backed
securities, rising interest rates tend to extend the term to maturity
of the securities, making them even more susceptible to interest rate
changes. When interest rates drop, not only can the value of fixed
income securities drop, but the yield can drop, particularly where the
yield on the fixed income securities is tied to changes in interest
rates, such as adjustable mortgages. Also when interest rates drop, the
holdings of mortgage-backed securities by a Portfolio can reduce
returns if the owners of the underlying mortgages pay off their
mortgages sooner than anticipated since the funds prepaid will have to
be reinvested at the then lower prevailing rates. This is known as
prepayment risk. When interest rates rise, the holdings of
mortgage-backed securities by a Portfolio can reduce returns if the
owners of the underlying mortgages pay off their mortgages later than
anticipated. This is known as extension risk.
INVESTMENT GRADE SECURITIES RISK: Debt securities are rated by national
bond ratings agencies. Securities rated BBB by S&P or Baa by Moody's
are considered investment grade securities, but are somewhat riskier
than higher rated obligations because they are regarded as having only
an adequate capacity to pay principal and interest, and are considered
to lack outstanding investment characteristics and may be speculative.
JUNK BONDS OR LOWER RATED SECURITIES RISK: Bonds rated below investment
grade by S&P and Moody's are speculative in nature, may be subject to
certain risks with respect to the issuing entity and to greater market
fluctuations than higher rated fixed income securities. They are
usually issued by companies without long track records of sales and
earnings, or by those companies with questionable credit strength.
These bonds are considered "below investment grade." The retail
secondary market for these "junk bonds" may be less liquid than that of
higher rated securities and adverse conditions could make it difficult
at times to sell certain securities or could result in lower prices
than those used in calculating the Portfolio's net asset value.
FOREIGN SECURITIES RISKS: A Portfolio's investments in foreign securities,
including depositary receipts, involve risks not associated with investing in
U.S. securities and can affect a Portfolio's performance. Foreign markets,
particularly emerging markets, may be less liquid, more volatile and subject to
less government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. The specific risks of investing in foreign securities, among others,
include:
CURRENCY RISK: The risk that changes in currency exchange rates will
negatively affect securities denominated in, and/or receiving revenues
in, foreign currencies. Adverse changes in currency exchange rates
(relative to the U.S. dollar) may erode or reverse any potential gains
from a Portfolio's investment in securities denominated in a foreign
currency or may widen existing losses.
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries
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and/or their securities markets. Generally, economic structures in these
countries are less diverse and mature than those in developed countries,
and their political systems are less stable. Investments in emerging
markets countries may be affected by national policies that restrict
foreign investment in certain issuers or industries. The small size of
their securities markets and low trading volumes can make investments
illiquid and more volatile than investments in developed countries and
such securities may be subject to abrupt and severe price declines. As a
result, a Portfolio investing in emerging markets countries may be
required to establish special custody or other arrangements before
investing.
The YEAR 2000 PROBLEM may also be especially acute in emerging market
countries. Many emerging market countries are currently lagging behind
more developed countries in their Year 2000 preparedness because they
lack the financial resources to undertake the necessary remedial
actions. A lack of Year 2000 preparedness may adversely affect the
health, security and economic well-being of emerging market countries
and could, obviously, adversely affect the value of a Portfolio's
investments in emerging market countries. More information on the Year
2000 Problem is provided in this section, under "GENERAL INVESTMENT
RISKS-YEAR 2000 RISK."
EURO RISK: Certain of the Portfolios invests in securities issued by
European issuers. On January 1, 1999, 11 of the 15 member states of the
European Monetary Union ("EMU") introduced the "Euro" as a common
currency. During a three-year transitional period, the Euro will
coexist with each participating state's currency and, on July 1, 2002,
the Euro is expected to become the sole currency of the participating
states. The introduction of the Euro will result in the redenomination
of European debt and equity securities over a period of time, which may
result in various legal and accounting differences and/or tax
treatments that otherwise would not likely occur. During this period,
the creation and implementation of suitable clearing and settlement
systems and other operational problems may cause market disruptions
that could adversely affect investments quoted in the Euro.
The consequences of the Euro conversion for foreign exchange rates,
interest rates and the value of European securities eligible for
purchase by the Portfolios are presently unclear and it is not possible
to predict the eventual impact of the Euro implementation plan on the
Portfolios. There are a number of significant risks associated with
EMU. Monetary and economic union on this scale has never been attempted
before. There is a significant degree of uncertainty as to whether
participating countries will remain committed to EMU in the face of
changing economic conditions. The conversion may adversely affect a
Portfolio if the Euro does not take effect as planned or if a
participating state withdraws from the EMU. Such actions may adversely
affect the value and/or increase the volatility of securities held by
the Portfolios.
POLITICAL/ECONOMIC RISK: Changes in economic and tax policies,
government instability, war or other political or economic actions or
factors may have an adverse effect on a Portfolio's foreign
investments.
REGULATORY RISK: Less information may be available about foreign
companies. In general, foreign companies are not subject to uniform
accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies.
TRANSACTION COSTS RISK: The costs of buying and selling foreign
securities, including tax, brokerage and custody costs, generally are
higher than those involving domestic transactions.
--------------------------EQ Advisors Trust
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GROWTH INVESTING RISK: Growth investing generally focuses on companies that,
due to their strong earnings and revenue potential, offer above-average
prospects for capital growth, with less emphasis on dividend income. Earnings
predictability and confidence in earnings forecasts are an important part of
the selection process. As a result, the price of growth stocks may be more
sensitive to changes in current or expected earnings than the prices of other
stocks. Advisers using this approach generally seek out companies experiencing
some or all of the following: high sales growth, high unit growth, high or
improving returns on assets and equity, and a strong balance sheet. Such
Advisers also prefer companies with a competitive advantage such as unique
management, marketing or research and development. Growth investing is also
subject to the risk that the stock price of one or more companies will fall or
will fail to appreciate as anticipated by the Advisers, regardless of movements
in the securities market.
LEVERAGING RISK: When a Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in that Portfolio will be more volatile
and all other risks will tend to be compounded. All of the Portfolios may take
on leveraging risk by investing in collateral from securities loans and by
borrowing money to meet redemption requests.
LIQUIDITY RISK: Certain securities held by a Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like. A
Portfolio may have to hold these securities longer than it would like and may
forego other investment opportunities. There is the possibility that a
Portfolio may lose money or be prevented from earning capital gains if it can
not sell a security at the time and price that is most beneficial to the
Portfolio. Portfolios that invest in privately-placed securities, high-yield
bonds, mortgage-backed securities or foreign or emerging markets securities,
which have all experienced periods of illiquidity, are subject to liquidity
risks. A particular Portfolio may be more susceptible to some of these risks
than others, as noted in the description of each Portfolio.
MONEY MARKET RISK: Although a money market fund is designed to be a relatively
low risk investment, it is not entirely free of risk. Despite the short
maturities and high credit quality of the Alliance Money Market Portfolio's
investments, increases in interest rates and deteriorations in the credit
quality of the instruments the Portfolio has purchased may reduce the
Portfolio's yield. In addition, the Portfolio is still subject to the risk that
the value of an investment may be eroded over time by inflation.
PORTFOLIO TURNOVER RISK: Consistent with their investment policies, the
Portfolios also will purchase and sell securities without regard to the effect
on portfolio turnover. Higher portfolio turnover (e.g., over 100% per year)
will cause a Portfolio to incur additional transaction costs and may result in
taxable gains being passed through to shareholders.
SECURITIES LENDING RISK: For purposes of realizing additional income, each
Portfolio may lend securities to broker-dealers approved by the Board of
Trustees. In addition, the Alliance High Yield and Alliance Intermediate
Government Securities Portfolios may each make secured loans of its portfolio
securities without restriction. Any such loan of portfolio securities will be
continuously secured by collateral at least equal to the value of the security
loaned. Such collateral will be in the form of cash, marketable securities
issued or guaranteed by the U.S. Government or its agencies, or a standby
letter of credit issued by qualified banks. The risks in lending portfolio
securities, as with other extensions of secured credit, consist of possible
delay in receiving additional collateral or in the recovery of the securities
or possible loss of rights in the collateral should the borrower fail
financially. Loans will only be made to firms deemed by the Adviser to be of
good standing and will not be made unless, in the judgment of the Adviser, the
consideration to be earned from such loans would justify the risk.
SMALL-CAP AND MID-CAP COMPANY RISK: A Portfolio's investments in small-cap and
mid-cap companies may involve greater risks than investments in larger, more
<PAGE>
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59
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
established issuers. Smaller companies may have narrower product lines, more
limited financial resources and more limited trading markets for their stock, as
compared with larger companies. Their securities may be less well-known and
trade less frequently and in more limited volume than the securities of larger,
more established companies. In addition, small-cap and mid-cap companies are
typically subject to greater changes in earnings and business prospects than
larger companies. Consequently, the prices of small company stocks tend to rise
and fall in value more frequently than the stocks of larger companies. Although
investing in small-cap and mid-cap companies offers potential for above-average
returns, the companies may not succeed and the value of their stock could
decline significantly.
VALUE INVESTING RISK: Value investing attempts to identify strong companies
selling at a discount from their perceived true worth. Advisers using this
approach generally select stocks at prices, in their view, that are temporarily
low relative to the company's earnings, assets, cash flow and dividends. Value
investing is subject to the risk that the stocks' intrinsic value may never be
fully recognized or realized by the market, or their prices may go down. In
addition, there is the risk that a stock judged to be undervalued may actually
be appropriately priced. Value investing generally emphasizes companies that,
considering their assets and earnings history, are attractively priced and may
provide dividend income.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
----------------------------EQ Advisors Trust
<PAGE>
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- ------------------------------------------------------------------------------
4
Management of the Trust
- ------------------------------------------------------------------------------
This section gives you information on the Trust, the Manager and the Advisers
for the Portfolios. More detailed information concerning each of the Advisers
and portfolio managers is included in the description for each Portfolio in the
section "About The Investment Portfolios."
THE TRUST
The Trust is organized as a Delaware business trust and is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company. The Trust issues shares of beneficial interest that are currently
divided among forty (40) Portfolios, each of which has authorized Class IA and
Class IB shares. Each Portfolio has its own objectives, investment strategies
and risks, which have been previously described in this prospectus.
THE MANAGER
EQ Financial Consultants, Inc. ("EQFC"), 1290 Avenue of the Americas, New York,
New York 10104, currently serves as the Manager of the Trust. The Board of
Trustees of the Trust has approved a transfer to Equitable of the Trust's
Investment Management Agreement with EQFC. This transfer is expected to be
completed in September 1999. Upon completion of the transfer, Equitable will
serve as the Manager of the Trust. However, until completion of the transfer,
EQFC will continue to serve in that capacity. Equitable, 1290 Avenue of the
Americas, New York, New York 10104, is the indirect corporate parent of EQFC.
Both EQFC and Equitable are investment advisers registered under the Investment
Advisers Act of 1940, as amended, and EQFC is a broker-dealer registered under
the Securities Exchange Act of 1934, as amended.
Subject to the supervision and direction of the Board of Trustees, the Manager
has overall responsibility for the general management and administration of the
Trust. In the exercise of that responsibility, the Manager, without obtaining
shareholder approval but subject to the review and approval by the Board of
Trustees, may: (i) select the Advisers for the Portfolios; (ii) enter into and
materially modify existing investment advisory agreements; and (iii) terminate
and replace the Advisers. The Manager also monitors each Adviser's investment
program and results, reviews brokerage matters, oversees compliance by the Trust
with various federal and state statutes, and carries out the directives of the
Board of Trustees. The Manager also supervises the provision of services by
third parties such as the Trust's custodian and administrator.
The Manager has filed an application ("Substitution Application") requesting
that the SEC approve the substitution of Class IA and Class IB shares of 14 new
Portfolios of the Trust for the same class of shares of corresponding portfolios
of The Hudson River Trust ("HRT"). Alliance Capital Management L.P. ("Alliance")
will serve as Adviser for each of those 14 new Portfolios. The Substitution
Application states that, with respect to those 14 new Portfolios advised by
Alliance, the Manager will not use the powers granted to it under the
Multi-Manager Order (i) to terminate Alliance and select a new Adviser for those
Portfolios or (ii) to materially modify the Investment Advisory Agreement
between the Manager and Alliance without first obtaining shareholder approval to
utilize the powers granted under the Multi-Manager Order or the approval of
shareholders to materially modify the Investment Advisory Agreement.
<PAGE>
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The eleven Portfolios listed in the table below did not commence operations
during 1998. The table below shows the annual rate of the management fees (as a
percentage of each Portfolio's average daily net assets) that the Manager is
entitled to receive in 1999 for managing each of these Portfolios.
ANNUAL RATE OF MANAGEMENT FEES
- --------------------------------------------------------------------------------
PORTFOLIOS ANNUAL RATE
- --------------------------------------------------------------------------------
Alliance Aggressive Stock (1) 0.54%
Alliance Common Stock (1) 0.36%
Alliance Conservative Investors (1) 0.48%
Alliance Global (1) 0.64%
Alliance Growth and Income (1) 0.55%
Alliance Growth Investors (1) 0.51%
Alliance High Yield (1) 0.60%
Alliance Intermediate Government 0.50%
Securities (1)
Alliance International (1) 0.90%
Alliance Money Market (1) 0.35%
Alliance Small Cap Growth (1) 0.90%
- --------------------------------------------------------------------------------
(1) The inception date for this Portfolio is October 1, 1999.
THE ADVISERS
Each Portfolio has an Adviser that furnishes an investment program for the
Portfolio pursuant to an investment advisory agreement with the Manager. Each
Adviser makes investment decisions on behalf of the Portfolio, places all orders
for the purchase and sale of investments for the Portfolio's account with
brokers or dealers selected by such Adviser and may perform certain limited
related administrative functions in connection therewith.
The Manager has received an exemptive order, the Multi-Manager Order, from the
SEC that permits the Manager, subject to board approval and without the approval
of shareholders to: (a) employ a new Adviser or Advisers for any Portfolio
pursuant to the terms of a new Advisory Agreement, in each case either as a
replacement for an existing Adviser or as an additional Adviser; (b) change the
terms of any Advisory Agreement; and (c) continue the employment of an existing
Adviser on the same advisory contract terms where a contract has been assigned
because of a change in control of the Adviser. In such circumstances,
shareholders would receive notice of such action, including the information
concerning the Adviser that normally is provided in the Prospectus.
The Manager and certain non-affiliated insurance companies and certain of their
separate accounts (collectively, "Applicants") have filed a Substitution
Application with the SEC. Applicants have included, as a term of the
Substitution Application, that with respect to those Portfolios for which
Alliance serves as Adviser, the Manager will not: (i) terminate Alliance and
select a new Adviser for those Portfolios or (ii) materially modify the existing
investment advisory agreement without first either obtaining approval of
shareholders for such actions or obtaining approval of shareholders to utilize
the Multi-Manager Order.
The Manager pays each Adviser a fee based on the Portfolio's average daily net
assets. No Portfolio is responsible for the fees paid to each of the Advisers.
THE ADMINISTRATOR
Pursuant to an agreement, Chase Global Funds Services Company ("Administrator")
assists the Manager in the performance of its administrative responsibilities to
the Trust and provides the Trust with other necessary administrative, fund
accounting and compliance services. In addition, the Administrator makes
available the office space, equipment, personnel and facilities required to
provide such services to the Trust. For these services, the Trust pays the
Administrator a monthly fee at the annual rate of .0525 of 1% of the total Trust
assets, plus $25,000 for each Portfolio, until the total Trust assets reach $2.0
billion, and when the total Trust assets exceed $2.0 billion: .0425 of 1% of the
next $0.5 billion of the total Trust assets; .035 of 1% of the next $2.0 billion
of the total Trust assets; .025 of 1% of
-------------------------EQ Advisors Trust
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the next $1.0 billion of the total Trust assets; .015 of 1% of the next $2.5
billion of the total Trust assets; .01 of 1% of the total Trust assets in excess
of $8.0 billion; provided, however, that the annual fee payable to Chase with
respect to any Portfolio which commenced operations after July 1, 1997 and whose
assets do not exceed $200 million shall be computed at the annual rate of .0525%
of 1% of the Portfolio's total assets plus $25,000.
THE TRANSFER AGENT
Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.
BROKERAGE PRACTICES
In selecting brokers and dealers, the Manager and each Adviser may consider
research and brokerage services furnished to either company and their
affiliates. Subject to seeking the most favorable net price and execution
available, the Manager and each Adviser may also consider sales of shares of the
Trust as a factor in the selection of brokers and dealers.
BROKERAGE TRANSACTIONS WITH AFFILIATES
To the extent permitted by law, the Trust may engage in securities and other
transactions with entities that may be affiliated with the Manager or the
Advisers. The 1940 Act generally prohibits the Trust from engaging in principal
securities transactions with an affiliate of the Manager or Advisers unless
pursuant to an exemptive order from the SEC. For these purposes, however, the
Trust has considered this issue and believes, based upon advice of counsel, that
a broker-dealer affiliate of an Adviser to one Portfolio should not be treated
as an affiliate of the Adviser to another Portfolio for which such Adviser does
not provide investment advice. The Trust has adopted procedures that are
reasonably designed to provide that any commission it pays to affiliates of the
Manager or Advisers does not exceed the usual and customary broker's commission.
The Trust has also adopted procedures permitting it to purchase securities,
under certain restrictions prescribed by a rule under the 1940 Act, in a public
offering in which an affiliate of the Manager or Advisers is an underwriter.
<PAGE>
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5
Fund distribution arrangements
- ------------------------------------------------------------------------------
The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc., ("EQFC") serves as
one of the distributors for the Class IB shares of the Trust offered by this
Prospectus as well as one of the distributors for the Class IA shares.
Equitable Distributors, Inc. ("EDI") serves as the other distributor for the
Class IB shares of the Trust as well as the Class IA shares. Both classes of
shares are offered and redeemed at their net asset value without any sales
load. EQFC and EDI are affiliates of Equitable. EQFC and EDI are registered as
broker-dealers under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc.
The Trust has adopted a Distribution Plan under Rule 12b-1 under the 1940 Act
for the Trust's Class IB shares. Under the Class IB Distribution Plan the Class
IB shares of the Trust pay each of the distributors an annual fee to compensate
them for promoting, selling and servicing shares of the Portfolios. The annual
fees equal 0.25% of each Portfolio's average daily net assets. Over time, the
fees will increase your cost of investing and may cost you more than other
types of charges.
<PAGE>
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6
Purchase and redemption
- ------------------------------------------------------------------------------
The price at which a purchase or redemption is effected is based on the next
calculation of net asset value after an order is placed by an insurance company
or qualified retirement plan investing in or redeeming from the Trust.
Net asset value per share is calculated for purchases and redemption of shares
of each Portfolio by dividing the value of total Portfolio assets, less
liabilities (including Trust expenses and class related expenses, which are
accrued daily), by the total number of outstanding shares of that Portfolio.
The net asset value per share of each Portfolio is determined each business day
at 4:00 p.m. Eastern time. Net asset value per share is not calculated on days
on which the New York Stock Exchange ("NYSE") is closed for trading.
Portfolios that invest a significant portion of their assets in foreign
securities, may experience changes in their net asset value on days when a
shareholder may not purchase or redeem shares of that Portfolio because foreign
securities (other than depositary receipts) are valued at the close of business
in the applicable foreign country.
All shares are purchased and redeemed in accordance with the Trust's Amended
and Restated Declaration of Trust and By-Laws. Sales and redemptions of shares
of the same class by the same shareholder on the same day will be netted for
each Portfolio. All redemption requests will be processed and payment with
respect thereto will normally be made within seven days after tenders.
The Trust may suspend redemption, if permitted by the 1940 Act, for any period
during which the New York Stock Exchange is closed or during which trading is
restricted by the SEC or the SEC declares that an emergency exists. Redemption
may also be suspended during other periods permitted by the SEC for the
protection of the Trust's shareholders. If the Board of Trustees determines
that it would be detrimental to the best interest of the Trust's remaining
shareholders to make payment in cash, the Trust may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.
<PAGE>
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7
How assets are valued
- ------------------------------------------------------------------------------
Values are determined according to accepted practices and all laws and
regulations that apply. The assets of each Portfolio are generally valued as
follows:
o Stocks and debt securities which mature in more than 60 days are valued on
the basis of market quotations.
o Foreign securities not traded directly, or in American Depository Receipts
or similar form, in the United States are valued at representative quoted
prices in the currency in the country of origin. Foreign currency is
converted into United States dollar equivalents at current exchange rates.
Because foreign markets may be open at different times than the NYSE, the
value of a Portfolio's shares may change on days when shareholders are not
able to buy or sell them. If events materially affecting the values of the
Portfolios' foreign investments occur between the close of foreign markets
and the close of regular trading on the NYSE, these investments may be
valued at their fair value.
o Short-term debt securities in the Portfolios, other than the Alliance Money
Market Portfolio, which mature in 60 days or less are valued at amortized
cost, which approximates market value. Securities held in the Alliance Money
Market Portfolio are valued at prices based on equivalent yields or yield
spreads.
o Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided are valued in good faith
by the Valuation Committee of the Board of Trustees of the Trust using its
best judgment.
<PAGE>
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8
Tax information
- -----------------------------------------------------------------------------
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>
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9
Financial Highlights
The Hudson River Trust
December 31, 1998
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(A)
- ------------------------------------------------------------------------------
The financial highlights tables below are intended to help you understand the
financial performance for eleven (11) of the Portfolios that are advised by
Alliance for the past five (5) years (or, if shorter, the period of the
Portfolio's operations). The financial information relating to both the Class IA
shares and the Class IB shares for those eleven (11) Portfolios has been derived
from the audited financial statements of HRT for the year ended December 31,
1998. The Class IA shares and the Class IB shares of each HRT Portfolio listed
below will be substituted for Class IA and Class IB shares of the corresponding
Portfolio of the Trust and the assets and liabilities of the respective HRT
Portfolio will be transferred to its corresponding Portfolio of the Trust on or
about October 1, 1999. These financial statements have been audited by
PricewaterhouseCoopers LLP, independent accountants. PricewaterhouseCoopers
LLP's report on HRT's financial statements as of December 31, 1998 appears in
HRT's Annual Report. The information should be read in conjunction with the
financial statements contained in HRT's Annual Report which are incorporated by
reference into the Trust's Statement of Additional Information (SAI) and
available upon request.
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ..... $36.22 $35.85 $35.68 $30.63 $31.89
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ...................... 0.09 0.04 0.09 0.10 0.04
Net realized and unrealized gain (loss)
on investments ............................ (0.28) 3.71 7.52 9.54 (1.26)
------ ------ ------ ------ ------
Total from investment operations ........... (0.19) 3.75 7.61 9.64 (1.22)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.16) (0.05) (0.09) (0.10) (0.04)
Dividends in excess of net investment
income .................................... - - (0.00) - -
Distributions from realized gains .......... (1.72) (3.33) (7.33) (4.49) -
Distributions in excess of realized
gains ..................................... - - (0.02) - -
Tax return of capital distributions ........ - - - - (0.00)
------ ------ ------ ------ ------
Total dividends and distributions .......... (1.88) (3.38) (7.44) (4.59) (0.04)
------ ------ ------ ------ ------
Net asset value, end of period ............... $34.15 $36.22 $35.85 $35.68 $30.63
====== ====== ====== ====== ======
Total return (c) ............................. 0.29% 10.94% 22.20% 31.63% (3.81)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............ $4,346,907 $4,589,771 $3,865,256 $2,700,515 $1,832,164
Ratio of expenses to average net assets ...... 0.56% 0.54% 0.48% 0.49% 0.49%
Ratio of net investment income (loss) to
average net assets ......................... 0.24% 0.11% 0.24% 0.28% 0.12%
Portfolio turnover rate ...................... 105% 123% 108% 127% 92%
<CAPTION>
CLASS IB
-------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------ DECEMBER 31,
1998 1997 1996
------------ ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ..... $36.13 $35.83 $37.28
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ...................... 0.01 (0.11) (0.01)
Net realized and unrealized gain (loss)
on investments ............................ (0.29) 3.77 0.85
------ ------ ------
Total from investment operations ........... (0.28) 3.66 0.84
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income (0.12) (0.03) -
Dividends in excess of net investment
income .................................... - - (0.02)
Distributions from realized gains .......... (1.72) (3.33) (0.23)
Distributions in excess of realized
gains ..................................... - - (2.04)
Tax return of capital distributions ........ - - -
------ ------ ------
Total dividends and distributions .......... (1.84) (3.36) (2.29)
------ ------ ------
Net asset value, end of period ............... $34.01 $36.13 $35.83
====== ====== ======
Total return (c) ............................. 0.05% 10.66% 2.32%
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............ $153,782 $73,486 $613
Ratio of expenses to average net assets ...... 0.82% 0.81% 0.73%(d)
Ratio of net investment income (loss) to
average net assets ......................... 0.02% (0.28)% (0.10)%(d)
Portfolio turnover rate ...................... 105% 123% 108%
</TABLE>
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ALLIANCE COMMON STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........... $21.61 $18.23 $16.48 $13.36 $14.65
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.18 0.14 0.15 0.20 0.20
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .................................... 5.99 5.12 3.73 4.12 (0.51)
------ ------ ------ ------ ------
Total from investment operations ................. 6.17 5.26 3.88 4.32 (0.31)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.15) (0.11) (0.15) (0.20) (0.19)
Dividends in excess of net investment income ..... - - - (0.02) (0.01)
Distributions from realized gains ................ (3.28) (1.77) (1.76) (0.95) (0.77)
Distributions in excess of realized gains ........ - - (0.22) (0.03) -
Tax return of capital distributions .............. - - - - (0.01)
------ ------ ------ ------ ------
Total dividends and distributions ................ (3.43) (1.88) (2.13) (1.20) (0.98)
------ ------ ------ ------ ------
Net asset value, end of period ..................... $24.35 $21.61 $18.23 $16.48 $13.36
====== ====== ====== ====== ======
Total return (c) ................................... 29.39% 29.40% 24.28% 32.45% (2.14)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $12,061,977 $9,331,994 $6,625,390 $4,879,677 $3,466,245
Ratio of expenses to average net assets ............ 0.39% 0.39% 0.38% 0.38% 0.38%
Ratio of net investment income to average net
assets ........................................... 0.75% 0.69% 0.85% 1.27% 1.40%
Portfolio turnover rate ............................ 46% 52% 55% 61% 52%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ........... $21.58 $18.22 $17.90
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.10 0.10 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions .................................... 6.00 5.11 1.52
------ ------ ------
Total from investment operations ................. 6.10 5.21 1.54
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.10) (0.08) (0.00)
Dividends in excess of net investment income ..... - - (0.03)
Distributions from realized gains ................ (3.28) (1.77) (0.16)
Distributions in excess of realized gains ........ - - (1.03)
Tax return of capital distributions .............. - - -
------ ------ ------
Total dividends and distributions ................ (3.38) (1.85) (1.22)
------ ------ ------
Net asset value, end of period ..................... $24.30 $21.58 $18.22
====== ====== ======
Total return (c) ................................... 29.06% 29.07% 8.49%
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $834,144 $228,780 $1,244
Ratio of expenses to average net assets ............ 0.64% 0.64% 0.63%(d)
Ratio of net investment income to average net
assets ........................................... 0.44% 0.46% 0.61%(d)
Portfolio turnover rate ............................ 46% 52% 55%
</TABLE>
<PAGE>
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69
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ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........ $11.89 $11.29 $11.52 $10.15 $11.12
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.49 0.49 0.50 0.60 0.55
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 0.97 0.07 1.43 (1.00)
------ ------ ------ ------ ------
Total from investment operations .............. 1.61 1.46 0.57 2.03 (0.45)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.48) (0.49) (0.51) (0.59) (0.52)
Distributions from realized gains ............. (0.70) (0.37) (0.27) (0.07) -
Distributions in excess of realized gains ..... - - (0.02) - -
------ ------ ------ ------ ------
Total dividends and distributions ............. (1.18) (0.86) (0.80) (0.66) (0.52)
------ ------ ------ ------ ------
Net asset value, end of period .................. $12.32 $11.89 $11.29 $11.52 $10.15
====== ====== ====== ====== ======
Total return (c) ................................ 13.88% 13.25% 5.21% 20.40% ( 4.10)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $355,441 $307,847 $282,402 $252,101 $173,691
Ratio of expenses to average net assets ......... 0.53% 0.57% 0.61% 0.59% 0.59%
Ratio of net investment income to average net
assets ........................................ 3.99% 4.17% 4.48% 5.48% 5.22%
Portfolio turnover rate ......................... 103% 206% 181% 287% 228%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ........ $11.88 $11.29
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.46 0.31
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 1.01
------ ------
Total from investment operations .............. 1.58 1.32
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.45) (0.36)
Distributions from realized gains ............. (0.70) (0.37)
Distributions in excess of realized gains ..... - -
------ -------
Total dividends and distributions ............. (1.15) (0.73)
------ ------
Net asset value, end of period .................. $12.31 $11.88
====== ======
Total return (c) ................................ 13.60% 11.84%
====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $32,653 $5,694
Ratio of expenses to average net assets ......... 0.78% 0.80%(d)
Ratio of net investment income to average net
assets ........................................ 3.68% 3.82%(d)
Portfolio turnover rate ......................... 103% 206%
</TABLE>
-------------------------EQ Advisors Trust
<PAGE>
- -----
70
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ............ $17.29 $16.92 $15.74 $13.87 $13.62
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................. 0.14 0.17 0.21 0.26 0.20
Net realized and unrealized gain on investments
and foreign currency transactions ................ 3.56 1.75 2.05 2.32 0.52
------ ----- ------ ------ ------
Total from investment operations .................. 3.70 1.92 2.26 2.58 0.72
------ ----- ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .............. (0.22) (0.36) (0.21) (0.25) (0.17)
Dividends in excess of net investment income ...... - - (0.08) - -
Distributions from realized gains ................. (1.31) (1.19) (0.79) (0.42) (0.28)
Distributions in excess of realized gains ......... - - - (0.03) (0.00)
Tax return of capital distributions ............... - - (0.00) (0.01) (0.02)
------ ------ ------ ------ ------
Total dividends and distributions ................. (1.53) (1.55) (1.08) (0.71) (0.47)
------ ------ ------ ------ ------
Net asset value, end of period ...................... $19.46 $17.29 $16.92 $15.74 $13.87
====== ====== ====== ====== ======
Total return (c) .................................... 21.80% 11.66% 14.60% 18.81% 5.23%
====== ======= ====== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................... $1,360,220 $1,203,867 $997,041 $686,140 $421,698
Ratio of expenses to average net assets ............. 0.71% 0.69% 0.60% 0.61% 0.69%
Ratio of net investment income to average net
assets ............................................ 0.72% 0.97% 1.28% 1.76% 1.41%
Portfolio turnover rate ............................. 105% 57% 59% 67% 71%
<CAPTION>
CLASS IB
----------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ............ $17.27 $16.91 $16.57
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................. 0.08 0.12 0.02
Net realized and unrealized gain on investments
and foreign currency transactions ................ 3.56 1.76 0.81
----- ------- -----
Total from investment operations .................. 3.64 1.88 0.83
----- ------- -----
LESS DISTRIBUTIONS:
Dividends from net investment income .............. (0.19) (0.33) -
Dividends in excess of net investment income ...... - - (0.11)
Distributions from realized gains ................. (1.31) (1.19) (0.10)
Distributions in excess of realized gains ......... - - (0.28)
Tax return of capital distributions ............... - - (0.00)
------- ------- ------
Total dividends and distributions ................. (1.50) (1.52) (0.49)
------- ------- ------
Net asset value, end of period ...................... $19.41 $17.27 $16.91
======= ======= ======
Total return (c) .................................... 21.50% 11.38% 4.98%
======= ======= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................... $47,982 $21,520 $290
Ratio of expenses to average net assets ............. 0.96% 0.97% 0.86%(d)
Ratio of net investment income to average net
assets ............................................ 0.41% 0.67% 0.48%(d)
Portfolio turnover rate ............................. 105% 57% 59%
</TABLE>
<PAGE>
- -----
71
- --------------------------------------------------------------------------------
ALLIANCE GROWTH AND INCOME PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................ $15.38 $13.01 $11.70 $ 9.70 $9.95
------ ------ ------ ------ -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.06 0.15 0.24 0.33 0.31
Net realized and unrealized gain (loss) on
investments .......................................... 3.08 3.30 2.05 1.97 (0.36)
------ ------ ------ ------- -----
Total from investment operations ...................... 3.14 3.45 2.29 2.30 (0.05)
------ ------ ------ ------- -----
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.05) (0.15) (0.23) (0.30) (0.20)
Distributions from realized gains ..................... (1.48) (0.93) (0.75) - -
------- ------- ------- ------- -----
Total dividends and distributions ..................... (1.53) (1.08) (0.98) (0.30) (0.20)
------- ------- ------- ------- -----
Net asset value, end of period .......................... $16.99 $15.38 $13.01 $11.70 $9.70
======= ======= ======= ======= =====
Total return (c) ........................................ 20.86% 26.90% 20.09% 24.07% (0.58)%
======= ======= ======= ======= =====
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $877,744 $555,059 $232,080 $98,053 $31,522
Ratio of expenses to average net assets ................. 0.58% 0.58% 0.58% 0.60% 0.78%
Ratio of net investment income to average net assets .... 0.38% 0.99% 1.94% 3.11% 3.13%
Portfolio turnover rate ................................. 74% 79% 88% 65% 52%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1, 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ................ $15.36 $13.42
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.03 0.05
Net realized and unrealized gain (loss) on
investments .......................................... 3.07 2.91
------ ------
Total from investment operations ...................... 3.10 2.96
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.03) (0.09)
Distributions from realized gains ..................... (1.48) (0.93)
------- ------
Total dividends and distributions ..................... (1.51) (1.02)
------- ------
Net asset value, end of period .......................... $16.95 $15.36
======= ======
Total return (c) ........................................ 20.56% 22.41%
======= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $120,558 $32,697
Ratio of expenses to average net assets ................. 0.83% 0.83%(d)
Ratio of net investment income to average net assets .... 0.17% 0.43%(d)
Portfolio turnover rate ................................. 74% 79%
</TABLE>
-------------------------EQ Advisors Trust
<PAGE>
- -----
72
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ........... $18.55 $17.20 $17.68 $14.66 $15.61
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.41 0.41 0.40 0.57 0.50
Net realized and unrealized gain (loss) on on
investments and foreign currency
transactions .................................... 3.03 2.43 1.66 3.24 (0.98)
------ ------ ------ ------ ------
Total from investment operations ................. 3.44 2.84 2.06 3.81 (0.48)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.41) (0.46) (0.40) (0.54) (0.46)
Dividends in excess of net investment income ..... - - (0.03) (0.01) (0.01)
Distributions from realized gains ................ (1.71) (1.03) (2.10) (0.24) -
Distributions in excess of realized gains ........ - - (0.01) - -
------ ------ ------ ------ ------
Total dividends and distributions ................ (2.12) (1.49) (2.54) (0.79) (0.47)
------ ------ ------ ------ ------
Net asset value, end of period ..................... $19.87 $18.55 $17.20 $17.68 $14.66
====== ====== ====== ====== ======
Total return (c) ................................... 19.13% 16.87% 12.61% 26.37% (3.15)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $1,963,074 $1,630,389 $1,301,643 $896,134 $492,478
Ratio of expenses to average net assets ............ 0.55% 0.57% 0.57% 0.56% 0.59%
Ratio of net investment income to average net
assets ........................................... 2.10% 2.18% 2.31% 3.43% 3.32%
Portfolio turnover rate ............................ 102% 121% 190% 107% 131%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ........... $18.52 $17.19 $16.78
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................ 0.36 0.36 0.07
Net realized and unrealized gain (loss) on on
investments and foreign currency
transactions .................................... 3.03 2.43 0.71
------- ------- ------
Total from investment operations ................. 3.39 2.79 0.78
------- ------- ------
LESS DISTRIBUTIONS:
Dividends from net investment income ............. (0.36) (0.43) (0.02)
Dividends in excess of net investment income ..... - - (0.09)
Distributions from realized gains ................ (1.71) (1.03) (0.02)
Distributions in excess of realized gains ........ - - (0.24)
------- ------- ------
Total dividends and distributions ................ (2.07) (1.46) (0.37)
------- ------- ------
Net asset value, end of period ..................... $19.84 $18.52 $17.19
======= ======= ======
Total return (c) ................................... 18.83% 16.58% 4.64%
======= ======= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .................. $92,027 $35,730 $472
Ratio of expenses to average net assets ............ 0.80% 0.82% 0.84% (d)
Ratio of net investment income to average net
assets ........................................... 1.85% 1.88% 1.69% (d)
Portfolio turnover rate ............................ 102% 121% 190%
</TABLE>
<PAGE>
- -----
73
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ............... $10.41 $10.02 $ 9.64 $ 8.91 $10.08
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................ 1.07 1.04 1.02 0.98 0.89
Net realized and unrealized gain (loss) on
investments ......................................... (1.56) 0.75 1.07 0.73 (1.17)
------ ------ ------ ------ ------
Total from investment operations ..................... (0.49) 1.79 2.09 1.71 (0.28)
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................. (1.03) (0.97) (0.98) (0.94) (0.88)
Dividends in excess of net investment income ......... - - (0.03) (0.04) (0.01)
Distributions from realized gains .................... (0.18) (0.43) (0.70) - -
Distributions in excess of realized gains ............ - - - - -
------ ------ ------ ------ ------
Total dividends and distributions .................... (1.21) (1.40) (1.71) (0.98) (0.89)
------ ------ ------ ------ ------
Net asset value, end of period ......................... $ 8.71 $10.41 $10.02 $ 9.64 $ 8.91
====== ====== ====== ====== ======
Total return (c) ....................................... (5.15)% 18.48% 22.89% 19.92% (2.79)%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...................... $405,308 $355,473 $199,360 $118,129 $73,895
Ratio of expenses to average net assets ................ 0.63% 0.62% 0.59% 0.60% 0.61%
Ratio of net investment income to average net assets ... 10.67% 9.82% 9.93% 10.34% 9.23%
Portfolio turnover rate ................................ 181% 390% 485% 350% 248%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ............... $10.39 $10.01 $10.25
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................ 1.04 1.05 0.19
Net realized and unrealized gain (loss) on
investments ......................................... (1.56) 0.71 0.15
------ ------ ------
Total from investment operations ..................... (0.52) 1.76 0.34
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ................. (1.00) (0.95) (0.03)
Dividends in excess of net investment income ......... - - (0.25)
Distributions from realized gains .................... (0.18) (0.43) (0.01)
Distributions in excess of realized gains ............ - - (0.29)
------ ------ ------
Total dividends and distributions .................... (1.18) (1.38) (0.58)
------ ------- ------
Net asset value, end of period ......................... $ 8.69 $10.39 $10.01
====== ====== ======
Total return (c) ....................................... (5.38)% 18.19% 3.32%
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...................... $207,042 $66,338 $685
Ratio of expenses to average net assets ................ 0.88% 0.88% 0.82%(d)
Ratio of net investment income to average net assets ... 10.60% 9.76% 8.71%(d)
Portfolio turnover rate ................................ 181% 390% 485%
</TABLE>
-------------------------EQ Advisors Trust
<PAGE>
- -----
74
- --------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO(E):
<TABLE>
<CAPTION>
CLASS IA
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................ $9.44 $9.29 $9.47 $ 8.87 $10.08
----- ----- ----- ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.50 0.53 0.54 0.58 0.65
Net realized and unrealized gain (loss) on
investments .......................................... 0.21 0.13 (0.19) 0.57 (1.08)
----- ----- ----- ------ ------
Total from investment operations ...................... 0.71 0.66 0.35 1.15 (0.43)
----- ----- ----- ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.48) (0.51) (0.53) (0.55) (0.78)
----- ----- ----- ------ ------
Net asset value, end of period .......................... $9.67 $9.44 $9.29 $ 9.47 $ 8.87
===== ===== ===== ====== ======
Total return (c) ........................................ 7.74% 7.29% 3.78% 13.33% (4.37)%
===== ===== ===== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $153,383 $115,114 $88,384 $71,780 $48,518
Ratio of expenses to average net assets ................. 0.55% 0.55% 0.56% 0.57% 0.56%
Ratio of net investment income to average net assets .... 5.21% 5.61% 5.73% 6.15% 6.75%
Portfolio turnover rate ................................. 539% 285% 318% 255% 133%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1, 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ................ $9.43 $9.27
----- -----
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.47 0.32
Net realized and unrealized gain (loss) on
investments .......................................... 0.22 0.22
----- -----
Total from investment operations ...................... 0.69 0.54
----- -----
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.46) (0.38)
----- -----
Net asset value, end of period .......................... $9.66 $9.43
===== =====
Total return (c) ........................................ 7.48% 5.83%
===== =====
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $30,898 $5,052
Ratio of expenses to average net assets ................. 0.80% 0.81%(d)
Ratio of net investment income to average net assets .... 4.87% 5.15%(d)
Portfolio turnover rate ................................. 539% 285%
</TABLE>
<PAGE>
- -----
75
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------- APRIL 3,
1995 TO
DECEMBER 31,
1998 1997 1996 1995
------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................ $10.27 $11.50 $10.87 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.09 0.10 0.13 0.14
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ 0.97 (0.45) 0.94 0.98
------ ------ ------ ------
Total from investment operations ...................... 1.06 (0.35) 1.07 1.12
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.20) (0.32) (0.10) (0.07)
Dividends in excess of net investment income .......... - - (0.09) (0.13)
Distributions from realized gains ..................... (0.00) (0.56) (0.25) (0.05)
------- ------ ------- ------
Total dividends and distributions ..................... (0.20) (0.88) (0.44) (0.25)
------- ------ ------- ------
Net asset value, end of period .......................... $11.13 $10.27 $11.50 $10.87
======= ====== ====== ======
Total return (c) ........................................ 10.57% (2.98)% 9.82% 11.29%
======= ====== ======= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $204,767 $190,611 $151,907 $28,684
Ratio of expenses to average net assets ................. 1.06% 1.08% 1.06% 1.03%(d)
Ratio of net investment income to average net assets .... 0.81% 0.83% 1.10% 1.71%(d)
Portfolio turnover rate ................................. 59% 59% 48% 56%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ................ $10.26 $11.39
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................. 0.05 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ........ 0.98 (0.31)
------ ------
Total from investment operations ...................... 1.03 (0.29)
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income .................. (0.18) (0.28)
Dividends in excess of net investment income .......... - -
Distributions from realized gains ..................... (0.00) (0.56)
------- ------
Total dividends and distributions ..................... (0.18) (0.84)
------- ------
Net asset value, end of period .......................... $11.11 $10.26
======= ======
Total return (c) ........................................ 10.30% (2.54)%
======= ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $7,543 $3,286
Ratio of expenses to average net assets ................. 1.31% 1.38%(d)
Ratio of net investment income to average net assets .... 0.44% 0.20%(d)
Portfolio turnover rate ................................. 59% 59%
</TABLE>
-------------------------EQ Advisors Trust
<PAGE>
- -----
76
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ......... $10.18 $10.17 $10.16 $10.14 $10.12
------ ------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................... 0.53 0.54 0.54 0.57 0.41
Net realized and unrealized gain (loss) on
investments ................................... - - (0.01) - -
------ ------ ------ ------ ------
Total from investment operations ............... 0.53 0.54 0.53 0.57 0.41
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ........... (0.49) (0.53) (0.52) (0.55) (0.39)
Dividends in excess of net investment income ... - - - - -
------ ------ ------ ------ ------
Total dividends and distributions .............. (0.49) (0.53) (0.52) (0.55) (0.39)
------ ------ ------ ------ ------
Net asset value, end of period ................... $10.22 $10.18 $10.17 $10.16 $10.14
====== ====== ====== ====== ======
Total return (c) ................................. 5.34% 5.42% 5.33% 5.74% 4.02%
====== ====== ====== ====== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................ $723,311 $449,960 $463,422 $386,691 $325,391
Ratio of expenses to average net assets .......... 0.37% 0.39% 0.43% 0.44% 0.42%
Ratio of net investment income to average net
assets ......................................... 5.13% 5.28% 5.17% 5.53% 4.01%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ......... $10.17 $10.16 $10.16
------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................... 0.49 0.52 0.11
Net realized and unrealized gain (loss) on
investments ................................... 0.02 - 0.01
------ ------ ------
Total from investment operations ............... 0.51 0.52 0.12
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ........... (0.47) (0.51) (0.02)
Dividends in excess of net investment income ... - - (0.10)
------ ------ ------
Total dividends and distributions .............. (0.47) (0.51) (0.12)
------ ------ ------
Net asset value, end of period ................... $10.21 $10.17 $10.16
====== ====== ======
Total return (c) ................................. 5.08% 5.16% 1.29%
======== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................ $386,718 $123,675 $3,184
Ratio of expenses to average net assets .......... 0.62% 0.63% 0.67%(d)
Ratio of net investment income to average net
assets ......................................... 4.82% 5.02% 4.94%(d)
</TABLE>
<PAGE>
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77
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA CLASS IB
------------------------------- ---------------------------------
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ................... $12.35 $10.00 $12.34 $10.00
------ ------ ------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) ............................. 0.01 0.01 (0.02) (0.01)
Net realized and unrealized gain (loss) on investments ... (0.54) 2.65 (0.53) 2.65
------ ------ ------ ------
Total from investment operations ......................... (0.53) 2.66 (0.55) 2.64
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment income ..................... - (0.01) - -
Distributions from realized gains ........................ - (0.30) - (0.30)
------ ------ ------ ------
Total dividends and distributions ........................ - (0.31) - (0.30)
------ ------ ------ ------
Net asset value, end of period ............................. $11.82 $12.35 $11.79 $12.34
====== ====== ====== ======
Total return (c) ........................................... (4.28)% 26.74% (4.44)% 26.57%
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .......................... $198,360 $94,676 $112,254 $46,324
Ratio of expenses to average net assets .................... 0.96% 0.95%(d) 1.20% 1.15%(d)
Ratio of net investment income (loss) to average net assets 0.08% 0.10%(d) (0.17)% (0.12)%(d)
Portfolio turnover rate .................................... 94% 96% 94% 96%
</TABLE>
-------------------------EQ Advisors Trust
<PAGE>
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(a) Net investment income and capital changes per share are based upon monthly
average shares outstanding.
(b) Date as of which funds were first allocated to the Portfolios are as
follows:
Class IA:
Alliance Common Stock Portfolio-June 16, 1975
Alliance Money Market Portfolio-July 13, 1981
Alliance Aggressive Stock Portfolio-January 27, 1986
Alliance High Yield Portfolio-January 2, 1987
Alliance Global Portfolio-August 27, 1987
Alliance Conservative Investors Portfolio-October 2, 1989
Alliance Growth Investors Portfolio-October 2, 1989
Alliance Intermediate Government Securities Portfolio-April 1, 1991
Alliance Growth and Income Portfolio-October 1, 1993
Alliance International Portfolio-April 3, 1995
Alliance Small Cap Growth Portfolio-May 1, 1997
Class IB:
Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance
Global, Alliance Aggressive Stock and Alliance Growth Investors
Portfolios-October 2, 1996. Alliance Intermediate Government Securities,
Alliance Growth and Income, Alliance International, Alliance Small Cap
Growth and Alliance Conservative Investors Portfolios-May 1, 1997.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized.
(d) Annualized.
(e) On February 22, 1994, shares of the Alliance Intermediate Government
Securities Portfolio of the Trust were substituted for shares of the
Trust's Alliance Short-Term World Income Portfolio.
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If you wish to know more, you will find additional information about the Trust
and its Portfolios in the following documents:
ANNUAL REPORTS
The Annual Report includes more information about the Trust's performance and is
available upon request free of charge. The reports usually include performance
information, a discussion of market conditions and the investment strategies
that affected the Portfolios' performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, dated August 30, 1999, is incorporated into this Prospectus by
reference and is available upon request free of charge by calling our toll free
number at 1-800-528-0204.
You may visit the SEC's website at www.sec.gov to view the SAI and other
information about the Trust. You can also review and copy information about the
Trust, including the SAI, at the SEC's Public Reference Room in Washington, D.C.
You may have to pay a duplicating fee. To find out more about the Public
Reference Room, call the SEC at 800-SEC-0330.
Investment Company Act File Number: 811-07953
