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Filed Pursuant to Rule 497(c)
Registration File No.: 333-17217
EQ Advisors Trust(Service Mark)
PROSPECTUS DATED MAY 1, 2000
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This Prospectus describes the thirty-two (32) Portfolios** offered by EQ
Advisors Trust and the Class IA or 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.
DOMESTIC PORTFOLIOS
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EQ/Aggressive Stock*
Alliance Common Stock
Alliance Equity Index
Alliance Growth and Income
EQ/Alliance Premier Growth
Alliance Small Cap Growth
EQ/Alliance Technology
Calvert Socially Responsible
Capital Guardian Research
Capital Guardian U.S. Equity
EQ/Evergreen
MFS Emerging Growth Companies
MFS Growth with Income
MFS Research
Mercury Basic Value Equity*
EQ/Putnam Growth & Income Value
T. Rowe Price Equity Income
Warburg Pincus Small Company Value
INTERNATIONAL STOCK PORTFOLIOS
------------------------------
Alliance Global
Alliance International
Morgan Stanley Emerging Markets Equity
T. Rowe Price International Stock
FIXED INCOME PORTFOLIOS
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Alliance High Yield
Alliance Intermediate Government Securities
Alliance Money Market
Alliance Quality Bond
BALANCED/HYBRID PORTFOLIOS
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EQ/Balanced*
Alliance Conservative Investors
Alliance Growth Investors
EQ/Evergreen Foundation
Mercury World Strategy*
EQ/Putnam Balanced
* Effective May 1, 2000, the name of the Alliance Aggressive Stock Portfolio
was changed to the "EQ/Aggressive Stock Portfolio," the Alliance Balanced
Portfolio was changed to the "EQ/Balanced Portfolio," the Merrill Lynch
Basic Value Equity Portfolio was changed to the "Mercury Basic Value Equity
Portfolio," and the Merrill Lynch World Strategy Portfolio was changed to
the "Mercury World Strategy Portfolio."
** All of these Portfolios may not be available in your variable life or
annuity product. Please consult your product prospectus to see which
Portfolios are available under your contract.
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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 1
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Overview
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EQ ADVISORS TRUST
This Prospectus tells you about the thirty-two (32) current Portfolios of EQ
Advisors Trust ("Trust") and the Class IA or Class IB shares offered by the
Trust on behalf of each Portfolio. The Trust is an open-end management
investment company. Each Portfolio is a separate series of the Trust with its
own investment objective, investment strategies and risks, which are described
in this Prospectus. Each of the current Portfolios of the Trust, except for
the Morgan Stanley Emerging Markets Equity Portfolio and the Mercury World
Strategy Portfolio, are diversified for purposes of the Investment Company Act
of 1940, as amended ("1940 Act").
The Trust's shares are currently sold only to insurance company separate
accounts in connection with variable life insurance contracts and variable
annuity certificates and contracts (the "Contract" or collectively, the
"Contracts") issued by The Equitable Life Assurance Society of the United
States ("Equitable") and Equitable of Colorado, Inc. ("EOC") 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.
Equitable currently serves as the Manager of the Trust. In such capacity,
Equitable currently has overall responsibility for the general management and
administration of the Trust.
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 new or additional Advisers for each of the Trust's
Portfolios; (ii) enter into new investment advisory agreements and materially
modify existing investment advisory agreements; and (iii) terminate and
replace the Advisers.
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Table of contents
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<TABLE>
<S> <C>
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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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DOMESTIC PORTFOLIOS 18
EQ/Aggressive Stock 18
Alliance Common Stock 21
Alliance Equity Index 24
Alliance Growth and Income 27
EQ/Alliance Premier Growth 30
Alliance Small Cap Growth 32
EQ/Alliance Technology 35
Calvert Socially Responsible 37
Capital Guardian Research 39
Capital Guardian U.S. Equity 41
EQ/Evergreen 43
MFS Emerging Growth Companies 45
MFS Growth with Income 47
MFS Research 49
Mercury Basic Value Equity 51
EQ/Putnam Growth & Income Value 54
T. Rowe Price Equity Income 56
Warburg Pincus Small Company Value 59
INTERNATIONAL STOCK PORTFOLIOS 61
Alliance Global 61
Alliance International 64
Morgan Stanley Emerging Markets Equity 68
T. Rowe Price International Stock 72
FIXED INCOME PORTFOLIOS 75
Alliance High Yield 75
Alliance Intermediate Government Securities 79
Alliance Money Market 83
Alliance Quality Bond 86
BALANCED/HYBRID PORTFOLIOS 89
EQ/Balanced 89
Alliance Conservative Investors 94
Alliance Growth Investors 98
EQ/Evergreen Foundation 101
Mercury World Strategy 103
EQ/Putnam Balanced 106
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3
MORE INFORMATION ON PRINCIPAL RISKS 109
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4
MANAGEMENT OF THE TRUST 115
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The Trust 115
The Manager 115
Expense Limitation Agreement 117
The Advisers 118
The Administrator 119
The Transfer Agent 119
Brokerage Practices 119
Brokerage Transactions with Affiliates 119
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5
FUND DISTRIBUTION ARRANGEMENTS 120
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6
PURCHASE AND REDEMPTION 121
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7
HOW ASSETS ARE VALUED 122
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8
TAX INFORMATION 123
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9
FINANCIAL HIGHLIGHTS 124
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10
PRIOR PERFORMANCE OF EACH ADVISER 157
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</TABLE>
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1
Summary information concerning EQ Advisors Trust
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The following chart highlights the thirty-two (32) 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 109.
<TABLE>
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EQ ADVISORS TRUST DOMESTIC PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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EQ/AGGRESSIVE STOCK Seeks to achieve long-term growth of capital
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ALLIANCE COMMON STOCK Seeks to achieve long-term growth of capital and increased
income
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ALLIANCE EQUITY INDEX Seeks a total return before expenses that approximates the
total return performance of the S&P 500 Index, including
reinvestment of dividends, at a risk level consistent with
that of the S&P 500 Index
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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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EQ/ALLIANCE PREMIER GROWTH Seeks long-term growth of capital by primarily investing in
equity securities of a limited number of large, carefully
selected, high quality United States companies that are
judged, by the Adviser, likely to achieve superior earnings
growth
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ALLIANCE SMALL CAP GROWTH Seeks to achieve long-term growth of capital
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EQ/ALLIANCE TECHNOLOGY Seeks to achieve growth of capital. Current income is
incidental to the Portfolio's objective
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CALVERT SOCIALLY RESPONSIBLE Seeks long-term capital appreciation
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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 (including preferred General investment, foreign securities, leveraging,
stocks or convertible debt) and fixed income securities derivatives, convertible securities, small-cap and mid-cap
(including junk bonds), foreign securities, derivatives, and company, junk bond, securities lending, and fixed income
securities lending risks
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Securities in the S&P 500 Index, derivatives, and securities General investment, index-fund, derivatives, leveraging,
lending and securities lending risks
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Stocks and securities convertible into stocks (including junk General investment, convertible securities, leveraging,
bonds) derivatives, foreign securities, junk bond, and fixed income
risks
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Equity securities of a limited number of large, high-quality General investment, focused portfolio, growth investing,
companies that are likely to offer superior earnings growth convertible securities, derivatives, and foreign securities
risks
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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, portfolio turnover and foreign securities
securities are temporarily undervalued, companies in risks
special situations (e.g., change in management, new
products or changes in customer demand) and less widely
known companies)
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Securities of companies in various industries that are General investment, sector, growth investing, small-cap
expected to benefit from technological advances and and mid-cap companies, derivatives, foreign securities,
improvements with potential for capital appreciation and fixed income, and securities lending risks
growth of capital, including well-known, established
companies or new or unseasoned companies
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Common stocks of medium to large U.S. companies that General investment, growth investing, mid-cap company,
meet both investment and social criteria liquidity, and derivatives risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST DOMESTIC PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
CAPITAL GUARDIAN RESEARCH Seeks long-term growth of capital
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CAPITAL GUARDIAN U.S. EQUITY Seeks long-term growth of capital
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EQ/EVERGREEN Seeks long-term capital growth
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MFS EMERGING GROWTH COMPANIES Seeks to provide long-term capital growth
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MFS GROWTH WITH INCOME Seeks to provide reasonable current income and long-term
growth of capital and income
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MFS RESEARCH Seeks to provide long-term growth of capital and future
income
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MERCURY BASIC VALUE EQUITY Seeks capital appreciation and secondarily, income by
investing in securities, primarily equities, that the Adviser
believes are undervalued and therefore represent basic
investment value
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EQ/PUTNAM GROWTH & INCOME VALUE Seeks capital growth. Current income is a secondary
objective
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T. ROWE PRICE EQUITY INCOME Seeks to provide substantial dividend income and also
capital appreciation by investing primarily in
dividend-paying common stocks of established companies
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WARBURG PINCUS SMALL COMPANY VALUE Seeks long-term capital appreciation
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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 primarily of United States issuers and General investment, growth investing, convertible
securities whose principal markets are in the United States securities, and foreign securities risks
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Equity securities primarily of United States companies with General investment, growth investing, convertible
market capitalization greater than $1 billion at the time of securities, and foreign securities risks
purchase
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Common stocks of large U.S. companies that the Adviser General investment, mid-cap company, fixed income,
believes have anticipated earnings ranging from steady to growth investing, portfolio turnover, and value investing
accelerated growth and are undervalued risks
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Equity securities of emerging growth companies with the General investment, small-cap and mid-cap company,
potential to become major enterprises or that are major foreign securities, and growth investing risks
enterprises whose rates of earnings growth are expected to
accelerate
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Equity securities (common stock, preferred stock, General investment, mid-cap company, foreign securities,
convertible securities, warrants and depositary receipts) and growth investing risks
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Common stock or securities convertible into common stock General investment, small-cap and mid-cap company,
of companies with better than average prospects for foreign securities, fixed income, and growth investing risks
long-term growth
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Equity securities that the Adviser believes are undervalued General investment, small-cap and mid-cap company,
value investing, and foreign securities risks
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Common stocks (plus convertible bonds, convertible General investment, derivatives, foreign securities, value
preferred stocks, preferred stocks and debt securities) investing, and fixed income risks
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Dividend-paying common stocks of established companies General investment, value investing, foreign securities, and
fixed income risks
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Equity securities of U.S. small-cap companies General investment, small-cap and mid-cap company,
portfolio turnover, foreign securities, fixed income, and
value investing risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST INTERNATIONAL STOCK 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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MORGAN STANLEY EMERGING MARKETS EQUITY Seeks long-term capital appreciation by investing primarily
in equity securities of issuers in emerging countries
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T. ROWE PRICE INTERNATIONAL STOCK Seeks long-term growth of capital through investment
primarily in common stocks of established non-U.S.
companies
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</TABLE>
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<TABLE>
<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,
enterprises (including other mutual funds investing in portfolio turnover, and fixed income risks
foreign securities), debt securities, derivatives, and
securities lending)
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Equity securities of emerging market country companies General investment, foreign securities, convertible
securities, liquidity, derivatives, portfolio turnover,
non-diversification, and fixed income risks
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Common stocks of established foreign companies General investment, foreign securities, liquidity, and
derivatives risks
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST FIXED INCOME PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
ALLIANCE HIGH YIELD Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective,
capital appreciation
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ALLIANCE 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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ALLIANCE QUALITY BOND Seeks to achieve high current income consistent with
preservation of capital by investing primarily in investment
grade fixed income securities
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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 BB/Ba or below 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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Investment-grade debt securities rated at least BBB/Baa or General investment, fixed income, convertible securities,
unrated securities of comparable quality at the time of leveraging, derivatives, securities lending, and foreign
purchase, convertible debt securities, preferred stock, securities risks
dividend-paying common stocks, foreign securities, the
purchase or sale of securities on a when-issued,
delayed-delivery or forward commitment basis, derivatives,
and securities lending
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</TABLE>
------------------------- EQ Advisors Trust
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<TABLE>
<CAPTION>
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EQ ADVISORS TRUST BALANCED/HYBRID PORTFOLIOS
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PORTFOLIO INVESTMENT OBJECTIVE(S)
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<S> <C>
EQ/BALANCED Seeks to achieve a high return through both appreciation
of capital and current income
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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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EQ/EVERGREEN FOUNDATION Seeks to provide, in order of priority, reasonable income,
conservation of capital and capital appreciation
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MERCURY WORLD STRATEGY Seeks high total investment return by investing primarily in
a portfolio of equity and fixed income securities, including
convertible securities, of U.S. and foreign issuers
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EQ/PUTNAM BALANCED Seeks to provide a balanced investment composed of a
well-diversified portfolio of stocks and bonds that will
produce both capital growth and current income
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</TABLE>
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<TABLE>
<CAPTION>
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PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
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<S> <C>
Debt and equity securities, money market instruments, General investment, asset allocation, fixed income,
foreign securities, derivatives, and securities lending derivatives, leveraging, liquidity, securities lending,
portfolio turnover, and foreign securities risks
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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, portfolio turnover, 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, portfolio turnover, and foreign securities risks
lending
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Common stocks, preferred stocks, securities convertible General investment, convertible securities, portfolio
into or exchangeable for common stocks, corporate debt turnover, and fixed income risks
obligations, U.S. Government securities and short-term
debt instruments
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Equity and fixed income securities of U.S. and foreign General investment, foreign securities, fixed income,
companies derivatives, non-diversification, liquidity, and portfolio
turnover risks
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Well-diversified portfolio of stocks and bonds, and General investment, fixed income, derivatives, portfolio
negotiable instruments turnover and foreign securities risks
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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.
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. 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 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.
THE CREDIT SUISSE FIRST BOSTON GLOBAL HIGH YIELD INDEX ("CSFB Index") has been
maintained since January 1986 and has several modules representing different
sectors of the high yield market, including a cash paying module, a pay-in-kind
module, and a default module. The CSFB Index is priced weekly and can be sorted
by industry, rating, seniority, liquidity, country of issue, price, yield and
spread.
THE LEHMAN AGGREGATE BOND INDEX ("Lehman Aggregate Bond") is an index comprised
of investment grade fixed income securities, including U.S. Treasury,
mortgage-backed, corporate and "Yankee" bonds (U.S. dollar-denominated bonds
issued outside the United States).
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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 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, Australasia and the Far East.
MSCI EAFE Index returns assume dividends reinvested net of withholding taxes and
do not reflect any fees or expenses.
THE MORGAN STANLEY CAPITAL INTERNATIONAL EMERGING MARKETS FREE INDEX ("MSCI
EMF") is a market capitalization weighted equity index composed of companies
that are representative of the market structure of the following 25 countries:
Argentina, Brazil Free, Chile, China Free, Colombia, Czech Republic, Greece,
Hungary, India, Indonesia Free, Israel, Jordan, Korea, Mexico Free, Pakistan,
Peru, Philippines Free, Poland, Russia, South Africa, Sri Lanka, Taiwan,
Thailand Free, Turkey and Venezuela. "Free" MSCI indices excludes those shares
not purchasable by foreign investors.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX ("MSCI World") is an
arithmetic, market value-weighted average of the performance of over 1,300
securities listed on the stock exchanges of twenty foreign countries and the
United States.
THE RUSSELL 2000 INDEX ("Russell 2000") is an unmanaged index which tracks the
performance of 2,000 publicly-traded U.S. stocks. It is often used to indicate
the performance of smaller company stocks. It is compiled by the Frank Russell
Company.
THE RUSSELL 2000 GROWTH INDEX ("Russell 2000 Growth") is an unmanaged index
which measures the performance of those companies in the Russell 2000 Index with
higher price-to-book ratios and higher forecasted growth than other companies in
the Russell 2000 Index. It is compiled by the Frank Russell Company.
THE RUSSELL 2000 VALUE INDEX ("Russell 2000 Value") is an unmanaged index which
measures the performance of those Russell 2000 companies with lower
price-to-book ratios and lower forecasted growth values. It is compiled by the
Frank Russell Company.
SB WORLD (SALOMON BROTHERS NON-U.S.-DOLLAR WORLD GOVERNMENT BOND INDEX) This
index measures total-return performance of government bonds with a maturity of
one year or more in 12 countries other than the United States. The index weights
bonds based on market capitalization, so that large debt-issuing countries such
as Japan and Germany have larger representations than do smaller issuing
countries.
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500") is an
unmanaged weighted index containing common stocks of 500 industrial,
transportation, utility and financial companies, regarded as generally
representative of the larger capitalization portion of the United States stock
market. The S&P 500 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 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.
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.
THE LIPPER AVERAGES are contained in Lipper's survey of the performance of funds
underlying a large universe of variable life and annuity contracts, where
performance averages are based on net asset values which reflect the deduction
of investment management fees and direct operating expenses, and, for funds with
Rule 12b-1 plans, asset-based sales charges. This survey is published by Lipper
Analytical Services, Inc., a firm recognized for its reporting of performance of
actively managed funds. Performance data shown for the portfolios does not
reflect the deduction of any insurance-related expenses (which are assessed at
the contract-level).
"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. We believe
that these indices reflect more closely the market sectors in which certain
Portfolios invest.
50% S&P 400 MIDCAP INDEX/50% RUSSELL 2000 INDEX is made up of 50% of the S&P 400
Index, which 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; and 50% of the Russell 2000 Index, which is an
unmanaged index which tracks the performance of 2,000 publicly-traded U.S.
stocks.
50% (OR 60%) S&P 500 INDEX/50% (OR 40%) LEHMAN GOV'T/CORP. INDEX is made up of
50% (or 60%) of the S&P 500 Index, which is an unmanaged weighted index
containing common stocks of 500 industrial, transportation, utility and
financial companies, regarded as generally representative of the larger
capitalization portion of the United States stock market, and 50% (or 40%) of
the Lehman Government/Corporate Index, which represents an unmanaged group of
securities widely regarded by investors as representative of the bond market.
60% S&P 500 INDEX/40% LEHMAN AGGREGATE BOND INDEX is made up of 60% of the S&P
500 Index, which is an unmanaged weighted index containing common stocks of 500
industrial, transportation, utility and financial companies, regarded as
generally representative of the larger capitalization portion of the United
States stock market, and 40% of the Lehman Aggregate Bond Index, which is an
index comprised of investment grade fixed income securities, including U.S.
Treasury, mortgage-backed, corporate and "Yankee" bonds (U.S. dollar-denominated
bonds issued outside the United States).
75% S&P 500 INDEX/25% VALUE LINE CONVERTIBLE INDEX is made up of 75% of the S&P
500 Index, which is an unmanaged weighted index containing common stocks of 500
industrial, transportation, utility and financial companies, regarded as
generally representative of the larger capitalization portion of the United
States stock market, and 25% of the Value Line Convertible Index, which is
comprised of 585 of the most actively traded convertible bonds and preferred
stocks on an unweighted basis.
70% S&P 500 INDEX/30% LEHMAN GOV'T/CORP. INDEX is made up of 70% of the S&P 500
Index, which is an unmanaged weighted index containing common stocks of 500
industrial, transportation, utility and financial companies, regarded as
generally representative of the larger capitalization portion of the United
States stock
<PAGE>
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17
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market, and 30% of the Lehman Government/Corporate Index, which represents an
unmanaged group of securities widely regarded by investors as representative of
the bond market.
70% LEHMAN TREASURY/30% S&P 500 INDEX is made up of 70% of the Lehman Treasury
Bond Index, which 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, and 30% of the S&P 500 Index, which is an
unmanaged weighted index containing common stocks of 500 industrial,
transportation, utility and financial companies, regarded as generally
representative of the larger capitalization portion of the United States stock
market.
MERCURY WORLD STRATEGY COMPOSITE MARKET BENCHMARK is made up of 36% of the S&P
500 Index, which is an unmanaged weighted index containing common stocks of 500
industrial, transportation, utility and financial companies, regarded as
generally representative of the larger capitalization portion of the United
States stock market; 24% of the MSCI EAFE Index, which is a market
capitalization weighted equity index composed of a sample of companies
representative of the market structure of Europe, Australasia and the Far East;
21% of the Salomon Brothers U.S. Treasury Bond 1 year; and 14% Salomon Brothers
World Government ex U.S., and 5% U.S. Treasury Bill.
NASDAQ COMPOSITE INDEX - the Nasdaq Composite Index measures all Nasdaq domestic
and non-U.S. based common stocks listed on The Nasdaq Stock Market. The Index is
market-value weighted. This means that each company's security affects the Index
in proportion to its market value. The market value, the last sale price
multiplied by total shares outstanding, is calculated throughout the trading
day, and is related to the total value of the Index.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS
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18
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EQ/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 appreciation 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), companies stocks whose growth prospects
are not recognized by the market and less widely known companies.
The Portfolio may also invest up to 25% of its total assets in foreign
securities and may also make use of various other investment strategies, (e.g.,
investments in debt securities, making secured loans of its 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 of
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:
MULTIPLE-ADVISER RISK: The EQ/Aggressive Stock Portfolio employs multiple
Advisers. Each of the Advisers independently chooses and maintains a portfolio
of common stocks for the Portfolio and each is responsible for investing a
specific allocated portion of the Portfolio's assets. Because each Adviser will
be managing its allocated portion of the Portfolio independently from the other
Advisers, the same security may be held in two different portions of the
Portfolio, or may be acquired for one portion of the Portfolio at a time when
the Adviser of another portion deems it appropriate to dispose of the security
from that other portion. Similarly, under some market conditions, one Adviser
may believe that temporary, defensive investments in short-term instruments or
cash are appropriate when the other Adviser or Advisers believe continued
exposure to the equity markets is appropriate for their portions of the
Portfolio. Because each Adviser directs the trading for its own portion of the
Portfolio, and does not aggregate its transactions with those of the other
Advisers, the Portfolio may incur higher brokerage costs than would be the case
if a single Adviser were managing the entire Portfolio.
GROWTH INVESTING RISK: Certain of the Advisers for this Portfolio may use 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:
<PAGE>
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19
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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 or 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.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; 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 principally the performance of its
predecessor registered investment company (HRT/Alliance Aggressive Stock
Portfolio) managed by Alliance 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 were transferred to the Portfolio on October 18, 1999.
Following that transfer, the performance shown (for the period October 19, 1999
through December 31, 1999) is that of the Portfolio. For these purposes, the
performance results of the Portfolio and its predecessor registered investment
company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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20
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- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 8.2%
1991 86.9%
1992 -3.2%
1993 16.8%
1994 3.8%
1995 31.4%
1996 22.2%
1997 10.9%
1998 0.3%
1999 18.84%
Best quarter (% and time period) Worst quarter (% and time period)
40.10% (1991 1st Quarter) (27.19)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
EQ/Aggressive Stock Portfolio
- Class IA Shares 18.84% 16.29% 16.68%
- --------------------------------------------------------------------------------
50% S&P 400 MidCap
Index/50% Russell
2000*,** 18.09% 19.92% 15.41%
- --------------------------------------------------------------------------------
S&P 400 MidCap Index* 14.72% 23.05% 17.32%
- --------------------------------------------------------------------------------
Lipper MidCap Growth Funds
Average*,** 46.25% 22.54% 16.19%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
In accordance with the Multi-Manager Order, the Manager may, among other things,
select new or additional Advisers for the Portfolio and may allocate and
re-allocate the Portfolio's assets among Advisers. Currently, Alliance Capital
Management, L.P. and Massachusetts Financial Services Company have been selected
by the Manager to serve as Advisers for this Portfolio. It is anticipated that
additional Advisers may be added in the future.
The Manager initially allocated the assets of the Portfolio and will allocate
all daily cash inflows (share purchases) and outflows (redemptions and expense
items) among the Advisers, subject to the oversight of the Board. The Manager
intends, on a periodic basis, to review the asset allocation in the Portfolio.
The Manager does not intend, but reserves the right, subject to the oversight of
the Board, to reallocate assets from one Adviser to another when it would be in
the best interest of the Portfolio and its shareholders to do so. In some
instances, the effect of the reallocation will be to shift assets from a better
performing Adviser to other Adviser(s).
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance was the exclusive 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>
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS was added as an Adviser to the Portfolio as of May 1, 2000. MFS is
America's oldest mutual fund organization. MFS and its predecessor organizations
have a history of money management dating from 1924 and the founding of the
first mutual fund in the United States, Massachusetts Investors Trust. MFS is a
subsidiary of Sun Life of Canada (United States) Financial Services Holdings
Inc., which, in turn, is an indirect wholly-owned subsidiary of Sun Life
Assurance Company of Canada.
The Portfolio Managers are TONI Y. SHIMURA, a Senior Vice President of MFS,
who has been employed by MFS as a portfolio manager since 1995; and JOHN W.
BALLEN, Chief Investment Officer and President of MFS, who provides general
oversight in the management of the Portfolio.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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21
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ALLIANCE COMMON STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of 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 Standard & Poor's ("S&P")
or Ba or lower by Moody's Investor Service, Inc. ("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 RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; 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.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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22
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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 or technologies of such
companies may be at a relatively early stage of development or not fully tested.
FIXED INCOME RISK: 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 nationally recognized statistical rating organization ("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 principally 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 were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these
<PAGE>
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23
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purposes, the performance results of the Portfolio and its predecessor
registered investment company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 -8.1%
1991 37.9%
1992 3.2%
1993 24.8%
1994 -2.1%
1995 32.5%
1996 24.3%
1997 29.4%
1998 29.4%
1999 25.19%
Best quarter (% and time period) Worst quarter (% and time period)
28.42% (1998 4th Quarter) (20.22)% (1990 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Common Stock Portfolio
- Class IA Shares 25.19% 28.11% 18.61%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 28.56% 18.21%
- --------------------------------------------------------------------------------
Lipper Growth Equity Mutual
Funds Average* 31.48% 26.45% 17.79%
- --------------------------------------------------------------------------------
* 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.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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24
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ALLIANCE EQUITY INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks a total return before expenses that approximates the
total return performance of the S&P 500 Index, including reinvestment of
dividends, at a risk level consistent with that of the S&P 500 Index.
THE INVESTMENT STRATEGY
The Adviser will not utilize customary economic, financial or market analyses or
other traditional investment techniques in managing the Portfolio. Rather, the
Adviser will use proprietary modeling techniques to construct a portfolio that
it believes will, in the aggregate, approximate the performance results of the
S&P 500 Index.
The Adviser will first select from the largest capitalization securities in the
S&P 500 on a capitalization-weighted basis. Generally, the largest
capitalization securities reasonably track the S&P 500 because the S&P 500 is
significantly influenced by a small number of securities. However, in the
Adviser's view, selecting securities on the basis of their capitalization alone
would distort the Portfolio's industry diversification, and therefore economic
events could potentially have a dramatically different impact on the performance
of the Portfolio from that of the S&P 500. Recognizing this fact, the modeling
techniques also consider industry diversification when selecting investments for
the Portfolio. The Adviser also seeks to diversify the Portfolio's assets with
respect to market capitalization. As a result, the Portfolio will include
securities of smaller and medium-sized capitalization companies in the S&P 500.
Cash may be accumulated in the Portfolio until it reaches approximately 1% of
the value of the Portfolio at which time such cash will be invested in common
stocks as described above. Accumulation of cash increases tracking error. The
Portfolio will, however, remain substantially fully invested in common stocks
even when common stock prices are generally falling. Similarly, adverse
performance of a stock will ordinarily not result in its elimination from the
Portfolio.
- --------------------------------------------------------------------------------
For more information on the S&P 500, see the preceding section "The Benchmarks."
The Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's
Corporation ("S&P") and S&P makes no guarantee as to the accuracy and/or
completeness of the S&P 500 or any data included therein.
- --------------------------------------------------------------------------------
In order to reduce brokerage costs, maintain liquidity to meet shareholder
redemptions or minimize tracking error when the Portfolio holds cash, the
Portfolio may from time to time buy and hold futures contracts on the S&P 500
Index and options on such futures contracts. The contract value of futures
contracts purchased by the Portfolio plus the contract value of futures
contracts underlying call options purchased by the Portfolio will not exceed 20%
of the Portfolio's total assets. The Portfolio may seek to increase income by
lending its portfolio securities with a value of up to 50% of its total assets
to brokers-dealers.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
INDEX-FUND RISK: The Portfolio is not actively managed and invests in securities
included in the index regardless of their investment merit. Therefore, the
Portfolio cannot modify its investment strategies to respond to changes in the
economy and may be particularly susceptible to a general decline in the U.S. or
global stock market segment relating to the index. Although the Portfolio's
modeling techniques are intended to produce performance that approximates that
of the S&P 500 (before expenses), there can be no assurance that these
techniques will reduce "tracking error" (i.e., the difference between the
Portfolio's investment results (before expenses) and the S&P 500's). Tracking
error may arise as a result of brokerage costs, fees
<PAGE>
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25
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and operating expenses and a lack of correlation between the Portfolio's
investments and the S&P 500.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
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 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 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 principally the performance of its
predecessor registered investment company (HRT/Alliance Equity Index Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Equity
Index Portfolio) whose inception date is March 1, 1994. The assets of the
predecessor were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1995 36.5%
1996 22.4%
1997 32.6%
1998 28.1%
1999 20.38%
Best quarter (% and time period) Worst quarter (% and time period)
21.13% (1998 4th Quarter) (9.97)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Equity Index Portfolio
- Class IA Shares 20.38% 27.84% 23.63%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 28.56% 24.14%
- --------------------------------------------------------------------------------
Lipper S&P 500 Index Funds
Average* 20.48% 28.07% 25.07%
- --------------------------------------------------------------------------------
* 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
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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26
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traded limited partnership, is indirectly majority-owned by Equitable. Alliance
manages investment companies, endowment funds, insurance companies, foreign
entities, qualified and non-tax qualified corporate funds, public and private
pension and profit-sharing plans, foundations and tax-exempt organizations.
JUDITH A. DEVIVO has been responsible for the day-to-day management of the
Portfolio and its predecessor since its inception. Ms. DeVivo, a Vice President
of Alliance, has been associated with Alliance since 1970.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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27
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ALLIANCE GROWTH AND INCOME PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide a high total return through a combination
of current income and capital appreciation by investing primarily in
income-producing common stocks and securities convertible into common stocks.
THE INVESTMENT STRATEGY
The Portfolio seeks to maintain a portfolio yield above that of issuers
comprising the S&P 500 and to achieve (in the long run) a rate of growth in
Portfolio income that exceeds the rate of inflation. The Portfolio will
generally invest in common stocks of "blue chip" issuers, i.e., those:
o that have a total market capitalization of at least $1 billion;
o that pay periodic dividends; and
o whose common stock is in the highest four issuer ratings for S&P (i.e., A+,
A, B 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 RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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28
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securities, that portion of the Portfolio's performance will be affected by
changes in interest rates, the credit risk of the issuer, the duration or
maturity of the Portfolio's fixed income holdings, and adverse market or
economic conditions. When interest rates rise, the value of the Portfolio's
fixed income securities, particularly those with longer durations or maturities,
will go down. When interest rates fall, the reverse is true. In addition, to the
extent that the Portfolio invests in investment-grade securities which are rated
BBB by S&P or an equivalent rating by any other NRSRO, it will be exposed to
greater risk than if it invested in higher-rated obligations because BBB-rated
securities are regarded as having only an adequate capacity to pay principal and
interest, are considered to lack outstanding investment characteristics, and may
be speculative.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk bonds"
or lower-rated securities rated BB or lower by S&P or an equivalent rating by
any other NRSRO or unrated securities of similar quality. Therefore, credit risk
is particularly significant for this Portfolio. Junk bonds have speculative
elements or are predominantly speculative credit risks. This Portfolio may also
be subject to greater credit risk because it may invest in debt securities
issued in connection with corporate restructurings by highly leveraged issuers
or in debt securities not current in the payment of interest or principal, or in
default.
FOREIGN SECURITIES RISK: 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 six 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 principally 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 were transferred to the Portfolio on October
18, 1999. Following that transfer, the performance shown (for the period October
19, 1999 through December 31, 1999) is that of the Portfolio. For these
purposes, the performance results of the Portfolio and its predecessor
registered investment company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not
<PAGE>
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29
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reflect any insurance and Contract-related fees and expenses, which would reduce
the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1994 -0.6%
1995 24.1%
1996 20.1%
1997 26.9%
1998 20.9%
1999 18.66%
Best quarter (% and time period) Worst quarter (% and time period)
26.28% (1998 4th Quarter) (15.03)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Growth and Income
Portfolio - Class IA Shares 18.66% 22.08% 17.15%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 28.56% 23.43%
- --------------------------------------------------------------------------------
75% S&P 500 Index/25%
Value Line Convertible*, ** 20.71% 25.01% 18.77%
- --------------------------------------------------------------------------------
Lipper Growth and Income Funds
Average* 14.51% 21.78% 17.57%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
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>
DOMESTIC PORTFOLIOS (CONTINUED)
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30
- --------------------------------------------------------------------------------
EQ/ALLIANCE PREMIER GROWTH PORTFOLIO
INVESTMENT OBJECTIVE: To achieve long-term growth of capital by primarily
investing in equity securities of a limited number of large, carefully selected,
high-quality United States companies that are judged, by the Adviser, likely to
achieve superior earnings growth.
THE INVESTMENT STRATEGY
The Portfolio invests primarily (at least 85% of its total assets) in equity
securities of United States companies. The Portfolio is diversified for purposes
of the 1940 Act, however it is still highly concentrated. The Portfolio focuses
on a relatively small number of intensively researched companies. The Adviser
selects the Portfolio's investments from a research universe of more than 600
companies that have strong management, superior industry positions, excellent
balance sheets and superior earnings growth prospects. An emphasis is placed on
identifying securities of companies whose substantially above-average
prospective earnings growth is not fully reflected in current market valuations.
Normally, the Portfolio invests in about 40-50 companies, with the 25 most
highly regarded of these companies usually constituting approximately 70% of the
Portfolio's net assets. In managing the Portfolio, the Adviser seeks to
capitalize on apparently unwarranted price fluctuations both to purchase or
increase positions on weakness and to sell or reduce overpriced holdings. The
Portfolio normally remains nearly fully invested and does not take significant
cash positions for market timing purposes. During market declines, while adding
to positions in favored stocks, the Portfolio becomes somewhat more aggressive,
gradually reducing the number of companies represented in its holdings.
Conversely, in rising markets, while reducing or eliminating fully valued
positions, the Portfolio becomes somewhat more conservative, gradually
increasing the number of companies represented in its holdings. Through this
approach, the Adviser seeks to gain positive returns in good markets while
providing some measure of protection in poor markets.
The Adviser expects the average market capitalization of companies represented
in the Portfolio normally to be in the range, or in excess, of the average
market capitalization of companies included in the S&P 500.
The Portfolio may invest up to 20% of its net assets in convertible securities
and 15% of its total assets in securities of foreign issuers.
The Portfolio may write covered exchange-traded call options on its securities
of up to 15% of its total assets, and purchase and sell exchange-traded call and
put options on common stocks written by others of up to, for all options, 10% of
its total assets.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
FOCUSED PORTFOLIO RISK: The Portfolio invests in the securities of a limited
number of companies. Consequently, the Portfolio may incur more risk because
changes in the value of a single security may have a more significant effect,
either positive or negative, on the Portfolio's net asset value.
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive to
changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities markets.
CONVERTIBLE SECURITIES RISK: Convertible securities enable the Portfolio to
benefit from increases in the market price of the underlying common stock and
provide higher yields than the underlying common stocks, but generally offer
lower yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates both in
<PAGE>
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31
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relation to changes in interest rates and changes in the value of the underlying
common stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is April 30, 1999. Therefore, no prior
performance is available.
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT L.P.: ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance's sole general partner is Alliance Capital
Management Corporation, which is an indirect wholly-owned subsidiary of
Equitable, one of the largest life insurance companies in the United States and
a wholly-owned subsidiary of The Equitable Companies Incorporated. Therefore,
the Manager and Alliance are affiliates of each other. Alliance, a Delaware
limited partnership, is a leading international investment manager.
ALFRED HARRISON is the Portfolio Manager and has been responsible for the
day-to-day management of the Portfolio since its inception. Mr. Harrison is Vice
Chairman of Alliance Capital Management Corporation and has been with Alliance
since 1978.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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32
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ALLIANCE SMALL CAP GROWTH PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in U.S. common stocks and other equity-type
securities issued by smaller companies with favorable growth prospects. The
Portfolio may at times invest in companies in cyclical industries, companies
whose securities are temporarily undervalued, companies in special situations
(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 small capitalization companies (currently
considered by the Adviser to mean companies with market capitalization at or
below $3 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 may 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 or 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
<PAGE>
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33
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risk that changes in value of the derivative may not correlate perfectly with
the relevant assets, rates and indices.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
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
and 1999, the Portfolio's first two years 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 principally 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 were transferred to the Portfolio on October 18,
1999. Following that transfer, the performance shown (for the period October 19,
1999 through December 31, 1999) is that of the Portfolio. For these purposes,
the performance results of the Portfolio and its predecessor registered
investment company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 -4.4%
1999 27.91%
Best quarter (% and time period) Worst quarter (% and time period)
28.30% (1999 4th Quarter) (28.07)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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34
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
Alliance Small Cap Growth Portfolio
- Class IA Shares 27.75% 17.83%
- --------------------------------------------------------------------------------
Russell 2000 Growth Index* 43.09% 25.88%
- --------------------------------------------------------------------------------
Lipper Small Company Growth Funds
Average* 38.28% 19.36%
- --------------------------------------------------------------------------------
* 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.
BRUCE ARONOW has been responsible for the day-to-day management of the Portfolio
since February 2000. Mr. Aronow is a Vice President of Alliance and has been
associated with Alliance since May 1999. Prior thereto, he had been associated
with Invesco since May 1998, and before that a Vice President of Chancellor LGT
Asset Management since 1996 and a Vice President of Chancellor Capital
Management since before 1995.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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35
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EQ/ALLIANCE TECHNOLOGY PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve long-term growth of capital. Current
income is incidental to the Portfolio's objective.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of companies expected to
benefit from technological advances and improvements (i.e., companies that use
technology extensively in the development of new or improved products or
processes). The Portfolio normally will have at least 80% of its assets invested
in the securities of these companies. The Portfolio invests for capital growth.
Within this framework, the Portfolio may invest in any company and industry and
in any type of security having the potential for capital appreciation, including
well-known, established companies or new or unseasoned companies.
Although current income is only an incidental consideration, the Portfolio may
seek income by writing listed call options. The Portfolio normally will have
substantially all its assets invested in equity securities, but it may also
invest in debt securities that offer an opportunity for price appreciation. The
Portfolio may invest in both listed and unlisted U.S. securities and may invest
up to 10% of its total assets in foreign securities, including depositary
receipts.
The Portfolio also may:
o write covered call options on its portfolio securities of up to 15% of its
total assets and may purchase exchanged-listed call and put options,
including exchange-traded index put options of up to, for all options, 10%
of its total assets;
o invest up to 10% of its total assets in warrants; and
o make loans of its portfolio securities of up to 33.3% of its total assets.
When market or financial conditions warrant, the Portfolio may invest for
temporary or defensive purposes, without limit, in preferred stocks or in
investment grade corporate fixed income securities, U.S. Government securities,
high quality money market instruments, including, prime commercial paper and
other types of short-term fixed income securities. These temporary investments
may also include short-term foreign-currency denominated securities of the type
mentioned above issued by foreign governmental entities, companies, and
supranational organizations. 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:
SECTOR RISK: As noted above, the Portfolio invests primarily in companies in the
technology sector. Therefore, market or economic factors affecting those types
of companies could have a major effect on the value of a Fund's investments and,
therefore, its net asset value. Many technology stocks, especially those of
smaller, less seasoned companies, tend to be more volatile than the overall
market.
GROWTH INVESTING RISK: 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 new or
unseasoned 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
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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36
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products or 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 (such as its use of
call and put options) can significantly increase the Portfolio's exposure to
market risk or the credit risk of a 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: To the extent that the Portfolio invests in foreign
securities, including depositary receipts its 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.
FIXED INCOME SECURITIES RISK: 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
securities which are rated BBB by S&P or an equivalent rating by any other
nationally recognized statistical rating organization, 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: 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 inception date for this Portfolio is May 1, 2000. Therefore, no prior
performance information is available.
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 since the
Portfolio commenced its 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.
PETER ANASTOS and GERALD MALONE are principally responsible for the day-to-day
management of the Portfolio. Mr. Anastos, Senior Vice President of Alliance, has
been associated with Alliance since 1992. Mr. Malone, a Senior Vice President of
Alliance, has been associated with Alliance since 1992.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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37
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CALVERT SOCIALLY RESPONSIBLE PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term capital appreciation
THE INVESTMENT STRATEGY
The portfolio invests primarily in common stocks of medium to large U.S.
companies that meet both investment and social criteria. Brown Capital (and
Calvert) use a tandem investment process to select potential investments for the
Portfolio. Brown Capital creates a universe of potential investments from which
it and Calvert will ultimately select portfolio securities. Once Brown Capital
identifies a potential investment, Calvert promptly socially screens each
potential investment to assure that it meets Calvert's social criteria. During
that process, Brown Capital continues to evaluate each potential investment
based on whether that investment will satisfy Brown Capital's investment
criteria. The criteria of both Brown Capital and Calvert must be satisfied
before a security will be purchased for the Portfolio.
- --------------------------------------------------------------------------------
For purposes of this Portfolio, companies having market capitalizations greater
than $1 billion are considered medium to large companies.
- --------------------------------------------------------------------------------
INVESTMENT CRITERIA: Brown Capital's investment process balances the growth
potential of investments with the price or value of the investment in order to
identify stocks that offer above average growth potential at reasonable prices.
Brown Capital evaluates each stock in terms of its growth potential, the return
on risk-free investments, and the specific risk features of the company to
determine the reasonable price for the stock.
The Portfolio may invest up to 15% of its net assets in illiquid securities,
which are securities that cannot be readily sold because there is no active
market for them.
The Portfolio may invest in derivative instruments, such as foreign currency
contracts (up to 5% of its total assets), options on securities and indices (up
to 5% of its total assets), and futures contracts (up to 5% of its net assets).
When market or financial conditions warrant, the Portfolio may invest a
substantial portion of its assets in short-term obligations for temporary or
defensive purposes. If such action is taken, it will detract from achievement of
the Portfolio's investment objective during such periods.
SOCIAL CRITERIA: Calvert analyzes investments from a social activist
perspective. Calvert's philosophy is that long-term rewards to investors will
come from those organizations whose products, services and methods enhance the
human condition and the traditional American values of individual initiative,
equity of opportunity and cooperative effort. These criteria represent standards
of behavior which few, if any, organizations totally satisfy. As a matter of
practice, evaluation of a particular organization in the context of these
criteria will involve subjective judgment by Calvert.
The Portfolio seeks to invest in companies that:
o deliver safe products and services in ways that sustain our natural
environment. For example, the Portfolio looks for companies that produce
energy from renewable resources, while avoiding consistent polluters;
o manage with participation throughout the organization in defining and
achieving objectives. For example, the Portfolio looks for companies that
offer employee stock ownership or profit-sharing plans;
o negotiate fairly with their workers, provide an environment supportive of
their wellness, do not discriminate on the basis of race, gender, religion,
age, disability, ethnic origin, or sexual orientation, do not consistently
violate regulations of the U.S. Equal Employment Opportunity Commission,
and provide opportunities for women, disadvantaged minorities, and others
for whom equal opportunities have often been denied. For example, the
Portfolio considers both unionized and non-union firms with good labor
relations; and
o foster awareness of a commitment to human goals, such as creativity,
productivity, self-respect and responsibility, within the organization and
the world, and continually recreates a context within which these goals can
be realized. For example, the Portfolio looks for companies with an above
average commitment to community affairs and charitable giving.
------------------------- EQ Advisors Trust
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DOMESTIC PORTFOLIOS (CONTINUED)
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38
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The Portfolio will not invest in companies that Calvert determines to be
significantly engaged in:
o production of or the manufacture of equipment to produce nuclear energy;
o business activities in support of repressive regimes;
o manufacture of weapon systems;
o manufacture of alcoholic beverages or tobacco products;
o operation of gambling casinos; or
o a pattern and practice of violating the rights of indigenous people. We
urge companies to end negative stereotypes of Native Americans and other
indigenous peoples. For example, the Portfolio objects to the unauthorized
use of names and images that portray Native Americans in a negative light,
and supports the promotion of positive portrayals of all individuals and
ethnic groups.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive to
changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities markets.
MID-CAP COMPANY RISK: The Portfolio's investments in mid-cap companies may be
subject to more abrupt or erratic movements in price than are those of larger,
more established companies because: the securities of such companies are less
well-known and may trade less frequently and in lower volume; such companies are
more likely to experience greater or more unexpected changes in their earnings
and growth prospects; and the products or technologies of such companies may be
at a relatively early stage of development or not fully tested.
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.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is August 30, 1999. Therefore, no prior
performance information is available.
WHO MANAGES THE PORTFOLIO
CALVERT ASSET MANAGEMENT COMPANY, INC. ("Calvert"), 4550 Montgomery Avenue,
Suite 1000N, Bethesda, Maryland 20814, a subsidiary of Calvert Group Ltd., which
is a subsidiary of Ameritas Acacia Mutual Holding Company. Calvert has been the
Adviser to the Portfolio since it commenced operations. It has been managing
mutual funds since 1976. Calvert is the investment adviser for over 25 mutual
fund portfolios, including the first and largest family of socially screened
funds. Calvert provides the social investment research and screening of the
Portfolio's investments. As of December 31, 1999, Calvert had $6.5 billion in
assets under management.
BROWN CAPITAL MANAGEMENT, INC. ("Brown Capital"), 1201 North Calvert Street,
Baltimore, Maryland 21201. Brown Capital initially identifies potential
investments for the Portfolio, which are then promptly screened by Calvert using
the Portfolio's social criteria.
EDDIE C. BROWN, founder and President of Brown Capital, heads the management
team for the Portfolio. He has over 24 years of investment management
experience, and has held positions with T. Rowe Price Associates, Inc. and
Irwing Management Company. Mr. Brown is a frequent panelist on "Wall Street Week
with Louis Rukeyser" and is a member of the Wall Street Week Hall of Fame.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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39
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CAPITAL GUARDIAN RESEARCH PORTFOLIO
INVESTMENT OBJECTIVE: To achieve long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of United States issuers
and securities whose principal markets are in the United States, including
American Depositary Receipts and other United States registered foreign
securities. The Portfolio invests primarily in common stocks (or securities
convertible or exchangeable into common stocks) of companies with market
capitalization greater than $1 billion at the time of purchase.
The Portfolio may invest up to 15% of its total assets, at the time of purchase,
in securities of issuers domiciled outside the United States and not included in
the S&P 500 (i.e., foreign securities).
When market or financial conditions warrant, the Portfolio may invest a
substantial portion of its assets in high-quality debt securities, including
short-term obligations for temporary or defensive purposes. If such action is
taken, it will detract from achievement of the Portfolio's investment objective
during such periods.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: This Portfolio uses a growth oriented approach to stock
selection. The price of growth stocks may be more sensitive to changes in
current or expected earnings than the prices of other stocks. The price of
growth stocks is also subject to the risk that the stock price of one or more
companies will fall or will fail to appreciate as anticipated by the Adviser,
regardless of movements in the securities markets.
CONVERTIBLE SECURITIES RISK: Convertible securities enable the Portfolio to
benefit from increases in the market price of the underlying common stock and
provide higher yields than the underlying common stocks, but generally offer
lower yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates both in relation to changes in interest rates
and changes in the value of the underlying common stock.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is April 30, 1999. Therefore, no prior
performance is available.
WHO MANAGES THE PORTFOLIO
CAPITAL GUARDIAN TRUST COMPANY: ("Capital Guardian"), 333 South Hope Street, Los
Angeles, CA 90071. Capital Guardian is a wholly-owned subsidiary of Capital
Group International, Inc., which itself is a wholly owned subsidiary of The
Capital Group Companies, Inc. Capital Guardian has been providing investment
management services since 1968 and manages approximately $123 billion as of
December 31, 1999.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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40
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The Portfolio is managed by a group of investment research professionals, led by
the Research Portfolio Coordinator, each of whom has investment discretion over
a segment of the total Portfolio. The size of each segment will vary over time
and may be based upon: (1) the level of conviction of specific research
professionals as to their designated sectors; (2) industry weights within the
relevant benchmark for the Portfolio; and (3) the judgment of the Research
Portfolio Coordinator in assessing the level of conviction of research
professionals compared to industry weights within the relevant benchmark.
Sectors may be overweighted relative to their benchmark weighting if there is a
substantial number of stocks that are judged to be attractive based on the
research professionals research in that sector, or may be underweighted if there
are relatively fewer stocks viewed to be attractive in the sector. The Research
Portfolio Coordinator also coordinates the cash holdings of the Portfolio.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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41
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CAPITAL GUARDIAN U.S. EQUITY PORTFOLIO
INVESTMENT OBJECTIVE: To achieve long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio strives to accomplish its investment objectives through constant
supervision, careful securities selection and broad diversification.
The Portfolio invests primarily in equity securities of United States companies
with market capitalization greater than $1 billion at the time of purchase. In
selecting securities for investment, the Adviser focuses primarily on the
potential of capital appreciation.
The Portfolio may invest up to 15% of its total assets in securities of issuers
domiciled outside the United States and not included in the S&P 500 (i.e.,
foreign securities). These securities may include American Depositary Receipts.
When market or financial conditions warrant, the Portfolio may invest a
substantial portion of its assets in high-quality debt securities, including
short-term obligations for temporary or defensive purposes. If such action is
taken, it will detract from achievement of the Portfolio's investment objective
during such periods.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: This Portfolio uses a growth oriented approach to stock
selection. The price of growth stocks may be more sensitive to changes in
current or expected earnings than the prices of other stocks. The price of
growth stocks is also subject to the risk that the stock price of one or more
companies will fall or will fail to appreciate as anticipated by the Adviser,
regardless of movements in the securities markets.
CONVERTIBLE SECURITIES RISK: Convertible securities enable the Portfolio to
benefit from increases in the market price of the underlying common stock and
provide higher yields than the underlying common stocks, but generally offer
lower yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates both in relation to changes in interest rates
and changes in the value of the underlying common stock.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The inception date for this Portfolio is April 30, 1999. Therefore, no prior
performance is available.
WHO MANAGES THE PORTFOLIO
CAPITAL GUARDIAN TRUST COMPANY: ("Capital Guardian"), 333 South Hope Street, Los
Angeles, CA 90071. Capital Guardian is a wholly-owned subsidiary of Capital
Group International, Inc., which itself is a wholly owned subsidiary of The
Capital Group Companies, Inc. Capital Guardian has been providing investment
management services since 1968 and manages approximately $123 billion as of
December 31, 1999.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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42
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Capital Guardian uses a multiple portfolio manager system under which the
Portfolio is divided into several segments. Each segment is individually managed
with the portfolio manager free to decide on company and industry selections as
well as valuation and transaction assessment. An additional portion of the
Portfolio is managed by a group of investment research analysts.
The individual portfolio managers of each segment of the Portfolio, other than
that managed by the group of research analysts, are as follows:
DONNALISA P. BARNUM. Donnalisa Barnum is a Senior Vice President and a portfolio
manager for Capital Guardian. She joined the Capital Guardian organization in
1986.
MICHAEL R. ERICKSON. Michael Erickson is a Senior Vice President and portfolio
manager for Capital Guardian and a Senior Vice President and Director for
Capital International Limited. He joined the Capital Guardian organization in
1987.
DAVID I. FISHER. David Fisher is Chairman of the Board of Capital Group
International, Inc. and Capital Guardian. He joined the Capital Guardian
organization in 1969.
THEODORE R. SAMUELS. Theodore Samuels is a Senior Vice President and a Director
for Capital Guardian, as well as a Director of Capital International Research,
Inc. He joined the Capital Guardian organization in 1981.
EUGENE P. STEIN. Eugene Stein is Executive Vice President, a Director, a
portfolio manager, and Chairman of the Investment Committee for Capital
Guardian. He joined the Capital Guardian organization in 1972.
TERRY BERKEMEIER. Terry Berkemeier is a Vice President of Capital International
Research, Inc. with U.S. equity portfolio management responsibility in Capital
Guardian Trust Company and research responsibilities for the global metals and
mining industries. He joined the Capital Guardian organization in 1992.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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43
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EQ/EVERGREEN PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term capital growth.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in the common stocks of large U.S. companies.
The Adviser selects stocks using a "growth-at-a-reasonable-price" method. This
style of diversified equity management is best defined as a blend between growth
and value stocks. "Growth" stocks are stocks of companies which the Adviser
believes have anticipated earnings ranging from steady to accelerated growth.
"Value" stocks are stocks of companies that the Adviser believes are
undervalued.
The Portfolio also may invest in preferred stocks and convertible securities.
When market or financial conditions warrant, the Portfolio may invest, without
limits, in 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:
MID-CAP COMPANY RISK: The Portfolio's investments in mid-cap companies may be
subject to more abrupt or erratic movements in price than are those of larger,
more established companies because: the securities of such companies are less
well-known and may trade less frequently and in lower volume; such companies are
more likely to experience greater or more unexpected changes in their earnings
and growth prospects; and the products or technologies of such companies may be
at a relatively early stage of development or not fully tested.
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.
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a value
stock's intrinsic value may never be fully recognized or realized by the market,
or its price may go down. There is also the risk that a stock judged to be
undervalued may actually be appropriately priced.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
FIXED INCOME RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1999,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total
------------------------- EQ Advisors Trust
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DOMESTIC PORTFOLIOS (CONTINUED)
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44
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returns for the Portfolio for one year and since inception. The table also
compares the Portfolio's performance to the returns of a broad-based index. Both
the bar chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for
this Portfolio is December 31, 1998.
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CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1999 9.70%
Best quarter: Worst quarter:
12.63% (1999 4th Quarter) (8.54)% (1999 3rd Quarter)
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AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
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EQ/Evergreen Portfolio 9.70% 9.70%
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S&P 500 Index*, ** 21.03% 21.03%
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Russell 2000 Index* 21.26% 21.26%
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* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
EVERGREEN ASSET MANAGEMENT CORP.: ("Evergreen"), 1311 Mamaroneck Avenue, White
Plains, New York 10605. Evergreen has been the Adviser to the Portfolio since it
commenced operations. Evergreen is a registered investment adviser and a
wholly-owned subsidiary of First Union Corporation. Evergreen offers a broad
range of financial services to individuals and businesses throughout the United
States.
JEAN LEDFORD and RICHARD WELSH became co-managers of the Portfolio in August
1999. Jean Ledford, CFA, became President and Chief Executive Officer of
Evergreen in August 1999. From February 1997 until she joined Evergreen, Ms.
Ledford worked as a portfolio manager at American Century Investments ("American
Century"). From 1980 until she joined American Century, Ms. Ledford was the
investment director at the State of Wisconsin Investment Board.
Mr. Welsh joined Evergreen as Senior Vice President and portfolio manager in
August 1999. Prior to joining Evergreen, he worked for five years as a portfolio
manager and analyst at American Century.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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MFS EMERGING GROWTH COMPANIES PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide long-term capital growth.
THE INVESTMENT STRATEGY
The Portfolio invests, under normal market conditions, primarily (at least 65%
of its total assets) in common stocks and related securities, such as preferred
stock, convertible securities and depositary receipts of emerging growth
companies. Emerging growth companies that the Adviser believes are either:
o early in their life cycle but have the potential to become major
enterprises; or
o are major enterprises whose rates of earnings growth are expected to
accelerate because of special factors such as rejuvenated management, new
products, changes in customer demand or basic changes in the economic
environment.
For purposes of this Portfolio, emerging growth companies may be of any size and
the Adviser would expect these companies to have products, technologies,
management, markets and opportunities that will facilitate earnings growth over
time that is well above the growth rate of the overall economy and rate of
inflation. The Portfolio's investments may include securities traded in the
over-the-counter markets.
The Adviser uses a "bottom-up" investment style in managing the Portfolio. This
means the securities are selected based upon fundamental analysis (such as an
analysis of earnings, cash flows, competitive position and management's
abilities) performed by the Adviser.
In addition, up to 25% of the Portfolio's assets may be invested in foreign
securities, including those in emerging markets, or in cash and cash
equivalents.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal strategies for temporary or defensive purposes.
Such investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
The Portfolio may engage in active and frequent trading to achieve its principal
investment strategies. Frequent trading increases transaction costs, which could
detract from the Portfolio's performance.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive to
changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap and
mid-cap companies may be subject to more abrupt or erratic movements in price
than are those of larger, more established companies because: the securities of
such companies are less well-known and may trade less frequently and in lower
volume; such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; and the products or technologies
of such companies may be at a relatively early stage of development or not fully
tested.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In
------------------------- EQ Advisors Trust
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DOMESTIC PORTFOLIOS (CONTINUED)
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46
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addition, the value of foreign investments can be adversely affected by:
unfavorable currency exchange rates (relative to the U.S. dollar for securities
denominated in foreign currencies); inadequate or inaccurate information about
foreign companies; higher transaction, brokerage and custody costs; adverse
changes in foreign economic and tax policies; and foreign government
instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for the
Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 34.57%
1999 73.62%
Best quarter: Worst quarter:
53.01% (1999 4th Quarter) (12.69)% (1998 3rd Quarter)
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AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
MFS Emerging Growth Companies
- --------------------------------------------------------------------------------
Portfolio 73.62% 48.20%
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Russell 2000 Index* 21.26% 16.99%
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* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. MFS is America's oldest mutual fund organization. MFS and its
predecessor organizations have a history of money management dating from 1924
and the founding of the first mutual fund in the United States, Massachusetts
Investors Trust. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
The Portfolio Managers are TONI Y. SHIMURA, a Senior Vice President of MFS, who
has been employed by MFS as a portfolio manager for the Portfolio since 1995 and
JOHN W. BALLEN, Chief Investment Officer and President of MFS, who provides
general oversight in the management of the Portfolio.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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47
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MFS GROWTH WITH INCOME PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide reasonable current income and long-term
growth of capital and income.
- --------------------------------------------------------------------------------
For purposes of this Portfolio, the words "reasonable current income" mean
moderate income.
- --------------------------------------------------------------------------------
THE INVESTMENT STRATEGY
The Portfolio invests, under normal market conditions, primarily (at least 65%
of its total assets) in equity securities, including common stocks, preferred
stocks, convertible securities, warrants and depositary receipts for those
securities. Equity securities may be listed on a securities exchange or traded
in the over-the-counter markets. While the Portfolio may invest in companies of
any size, the Portfolio generally focuses on companies with larger market
capitalizations that the Adviser believes have sustainable growth prospects and
attractive valuations based on current and expected earnings or cash flow. The
Portfolio will also seek to provide income equal to approximately 90% of the
dividend yield on the Standard & Poor's 500 Index.
The Adviser uses a "bottom-up" investment style in managing the Portfolio. This
means that securities are selected based upon fundamental analysis (such as an
analysis of earnings, cash flows, competitive position and management's
abilities) performed by the Adviser's large group of equity research analysts.
The Portfolio may invest up to 25% of its net assets in foreign securities,
including those in emerging markets and depository receipts, through which it
may have exposure to foreign currencies.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal strategies for temporary or defensive purposes.
Such investment strategies are inconsistent with the Portfolio's investment
objective and could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive to
changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap and
mid-cap companies may be subject to more abrupt or erratic movements in price
than are those of larger, more established companies because: the securities of
such companies are less well-known and may trade less frequently and in lower
volume; such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; and the products or technologies
of such companies may be at a relatively early stage of development or not fully
tested.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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48
- --------------------------------------------------------------------------------
custody costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1999,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results and if reflected the results would be reduced. The inception
date for this Portfolio is December 31, 1998.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1999 8.76%
Best quarter: Worst quarter:
10.87% (1999 4th Quarter) (8.23)% (1999 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
MFS Growth with Income 8.76% 8.76%
S&P 500 Index* 21.03% 21.03%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. MFS is America's oldest mutual fund organization. MFS and its
predecessor organizations have a history of money management dating from 1924
and the founding of the first mutual fund in the United States, Massachusetts
Investors Trust. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
The Portfolio Managers are JOHN D. LAUPHEIMER, JR., Senior Vice President of
MFS, who has been employed as a portfolio manager by MFS since 1981; and
MITCHELL D. DYNAN, a Senior Vice President of MFS, who has been employed as a
portfolio manager by MFS since 1986.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
- ------
49
- --------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide long-term growth of capital and future
income.
THE INVESTMENT STRATEGY
The Portfolio invests, at least 80% of its total assets in equity securities,
such as common stocks, securities convertible into common stocks, preferred
stocks and depositary receipts of companies believed by the Adviser to have:
o favorable prospects for long-term growth;
o attractive valuations based on current and expected earnings or cash flow;
o dominant or growing market share; and
o superior management.
The Portfolio may invest in securities of companies of any size. The Portfolio's
investments may include securities traded on securities exchanges or in the
over-the-counter markets.
The Portfolio may invest up to 20% of its net assets in foreign equity
securities, including those of emerging markets. The Portfolio may invest in
foreign equity securities, through which it may have exposure to foreign
currencies.
When adverse market, financial or political conditions warrant, the Portfolio
may depart from its principal investment strategies for temporary or defensive
purposes. Such investment strategies are inconsistent with the Portfolio's
investment objectives and could result in the Portfolio not achieving its
investment objective.
The Portfolio may invest up to 10% of its assets in high yielding debt
securities rated below investment grade ("junk bonds").
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
GROWTH INVESTING RISK: As noted above, this Portfolio uses a growth oriented
approach to stock selection. The price of growth stocks may be more sensitive to
changes in current or expected earnings than the prices of other stocks. The
price of growth stocks is also subject to the risk that the stock price of one
or more companies will fall or will fail to appreciate as anticipated by the
Adviser, regardless of movements in the securities market.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap and
mid-cap companies may be subject to more abrupt or erratic movements in price
than are those of larger, more established companies because: the securities of
such companies are less well-known and may trade less frequently and in lower
volume; such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; and the products or technologies
of such companies may be at a relatively early stage of development or not fully
tested.
FIXED INCOME RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative. The risk that an issuer or
guarantor of a fixed income security or counterparty to the Portfolio's fixed
income transaction is unable to meets its financial obligations is particularly
significant for this Portfolio because this Portfolio invests a
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
- ------
50
- --------------------------------------------------------------------------------
portion of its assets in "junk bonds" (i.e., securities rated below investment
grade). Junk bonds are issued by companies with questionable credit strength
and, consequently, are considered to be speculative in nature and may be subject
to greater market fluctuations than investment grade fixed-income securities.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for the
Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 24.11%
1999 23.12%
Best quarter: Worst quarter:
21.36% (1998 4th Quarter) (14.24)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
MFS Research Portfolio 23.12% 23.93%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 27.36%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MASSACHUSETTS FINANCIAL SERVICES COMPANY ("MFS"), 500 Boylston Street, Boston,
MA 02116. MFS has been the Adviser to the Portfolio since it commenced
operations. MFS is America's oldest mutual fund organization. MFS and its
predecessor organizations have a history of money management dating from 1924
and the founding of the first mutual fund in the United States, Massachusetts
Investors Trust. MFS is a subsidiary of Sun Life of Canada (United States)
Financial Services Holdings Inc., which, in turn, is an indirect wholly-owned
subsidiary of Sun Life Assurance Company of Canada.
A committee of investment research analysts selects portfolio securities for the
Portfolio. This committee includes investment analysts employed not only by MFS,
but also by MFS International (U.K.) Limited, a wholly owned subsidiary of MFS.
The committee allocates the Portfolio's assets among various industries.
Individual analysts then select what they view as the securities best suited to
achieve the Portfolio's investment objective within their assigned industry
responsibility.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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51
- --------------------------------------------------------------------------------
MERCURY BASIC VALUE EQUITY PORTFOLIO
INVESTMENT OBJECTIVE: Seeks capital appreciation and secondarily, income by
investing in securities, primarily equities, that the Adviser of the Portfolio
believes are undervalued and therefore represent basic investment value.
THE INVESTMENT STRATEGY
The Portfolio chooses securities for capital appreciation that are expected to
increase in value. In selecting securities the Adviser emphasizes stocks that
are undervalued, are selling at a discount, or seem capable of recovering from
being temporarily out of favor. The Adviser places particular emphasis on
securities with statistical characteristics associated with undervaluation.
The Adviser follows a contrary opinion/out-of-favor investment style. The
Adviser believes that favorable changes in market prices are more likely to
occur when:
o stocks are out of favor;
o company earnings are depressed;
o price/earnings ratios are relatively low;
o investment expectations are limited; and/or
o there is no general interest in a security or industry.
On the other hand, the Adviser believes that negative developments are more
likely to occur when:
o investment expectations are high;
o stock prices are advancing or have advanced rapidly;
o price/earnings ratios have been inflated; and/or
o an industry or security continues to become popular among investors.
In other words, the Adviser believes that stocks with relatively high
price/earnings ratios are more vulnerable to price declines from unexpected
adverse developments. At the same time, stocks with relatively low
price/earnings ratios are more likely to benefit from favorable but generally
unanticipated events. Thus, the Portfolio may invest a large part of its net
assets in stocks that have weak research ratings.
The Portfolio invests primarily in common stocks of U.S. companies, but may buy
equity securities other than common stock and may also invest up to 10% of its
total assets in securities issued by foreign companies. The Portfolio may also
invest a substantial portion of its assets in companies with market
capitalizations below the largest companies. The Adviser believes that large
institutional investors may overlook these companies, making them undervalued.
The Portfolio has no minimum holding period for investments, and will buy or
sell securities whenever the Portfolio's management sees an appropriate
opportunity.
When market or financial conditions warrant, the Portfolio may invest in U.S.
Government and agency securities, money market securities and other fixed income
securities for temporary or defensive purposes. Such investment strategies are
inconsistent with the Portfolio's investment objectives and could result in the
Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a value
stock's intrinsic value may never be fully recognized or realized by the market,
or its price may go down. There is also the risk that a stock judged to be
undervalued may actually be appropriately priced.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap and
mid-cap companies may be subject to more abrupt or erratic movements in price
than are those of larger, more established companies because:
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
- ------
52
- --------------------------------------------------------------------------------
the securities of such companies are less well-known and may trade less
frequently and in lower volume; such companies are more likely to experience
greater or more unexpected changes in their earnings and growth prospects; and
the products or technologies of such companies may be at a relatively early
stage of development or not fully tested.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results and if reflected the
results would be reduced. The inception date for the Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 11.59%
1999 19.00%
Best quarter: Worst quarter:
13.57% (1999 2nd Quarter) (10.91)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
Mercury Basic Value Equity Portfolio 19.00% 17.93%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 27.36%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MERCURY ASSET MANAGEMENT US ("MERCURY"), A DIVISION OF FUND ASSET MANAGEMENT,
L.P. ("FAM"), 800 Scudders Mill Road, Plainsboro, NJ 08543. Mercury, or the
Portfolio's predecessor Adviser, Merrill Lynch Asset Management, L.P., ("MLAM")
has been the Adviser to the Portfolio since it commenced operations. FAM and
MLAM are both part of the Merrill Lynch Asset Management Group and each is an
indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc., a financial
services holding company. The general partner of FAM and MLAM is Princeton
Services, Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc. Mercury
and its affiliates act as the manager for more than 100 registered investment
companies. Mercury also offers portfolio management and portfolio analysis
services to individuals and institutions.
KEVIN RENDINO, and ROBERT J. MARTORELLI are co-Portfolio Managers of the
Portfolio. Mr. Rendino is a First Vice President of Mercury since 1997, has been
the
<PAGE>
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53
- --------------------------------------------------------------------------------
Portfolio Manager responsible for the day to day management of the Portfolio
since it commenced operations. Mr. Rendino was a Vice President of Mercury from
1993 to 1997. Mr. Martorelli is a Senior Vice President of Mercury and has been
a co-Portfolio Manager of the Portfolio since May 2000. Mr. Martorelli has been
a First Vice President of Mercury since 1997 and was Vice President from 1987 to
1997.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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54
- --------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO
INVESTMENT OBJECTIVE: Seeks capital growth. Current income is a secondary
objective.
THE INVESTMENT STRATEGY The Portfolio invests primarily in common stocks that
offer potential for capital growth and may invest in stocks that offer potential
for current income. In analyzing companies for investment, the Adviser tries to
identify common stocks of companies that are significantly undervalued compared
with their underlying assets or earnings potential and offer growth and current
income potential.
The Portfolio may also invest in corporate bonds, notes and debentures,
preferred stocks or convertible securities (both debt securities and preferred
stocks) or U.S. Government securities.
It may also invest a portion of its assets in debt securities rated below
investment grade (commonly referred to as "junk bonds"), zero-coupon bonds and
payment-in-kind bonds, and high quality U.S. and foreign dollar-denominated
money market securities. The Portfolio may invest up to 20% of its total assets
in foreign securities, including transactions involving futures contracts,
forward contracts and options and foreign currency exchange transactions.
There may be times when the Adviser will use additional investment strategies to
achieve the Portfolio's investment objectives. For example, the Portfolio may
engage in a variety of investment management practices such as buying and
selling derivatives, including stock index futures contracts and call and put
options.
When market or financial conditions warrant, the Portfolio may invest up to 100%
of its assets in debt securities, preferred stocks or other securities for
temporary or defensive purposes. Such investment strategies are inconsistent
with the Portfolio's investment objectives and could result in the Portfolio not
achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a value
stock's intrinsic value may never be fully recognized or realized by the market,
or its price may go down. There is also the risk that a stock judged to be
undervalued may actually be appropriately priced.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
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 RISK: 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
<PAGE>
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55
- --------------------------------------------------------------------------------
issuer, the duration or maturity of the Portfolio's fixed income holdings, and
adverse market or economic conditions. When interest rates rise, the value of
the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative. The risk that an issuer or
guarantor of a fixed income security or counterparty to the Portfolio's fixed
income transaction is unable to meets its financial obligations is particularly
significant for this Portfolio because this Portfolio invests a portion of its
assets in "junk bonds" (i.e., securities rated below investment grade). Junk
bonds are issued by companies with questionable credit strength and,
consequently, are considered to be speculative in nature and may be subject to
greater market fluctuations than investment grade fixed-income securities.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for the
Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 12.75%
1999 -1.27%
Best quarter: Worst quarter:
16.49% (1998 4th Quarter) (11.94)% (1999 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
EQ/Putnam Growth & Income Value
Portfolio (1.27)% 10.13%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 27.36%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC.: ("Putnam Management"), One Post Office
Square, Boston, MA 02109. Putnam Management has been the Adviser to the
Portfolio since the Portfolio commenced operations. Putnam Management has been
managing mutual funds since 1937. Putnam Management is a subsidiary of Putnam
Investments, Inc., which is itself a subsidiary of Marsh & McLennan Companies,
Inc.
DEBORAH KUENSTNER has been the Portfolio Manager responsible for the day-to-day
management of the Portfolio since January 2000. Ms. Kuenstner is Managing
Director, Chief Investment Officer of the Large Cap Value Equities Group and
joined Putnam in 1997 as Senior Vice President and Senior Portfolio Manager in
the International Core and Value Equity Group. Prior to joining Putnam, Ms.
Kuenstner was the Senior Portfolio Manager, International Equities of the DuPont
Pension Fund Investment from 1989 to 1997.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
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56
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide substantial dividend income and also
capital appreciation by investing primarily in dividend-paying common stocks of
established companies.
THE INVESTMENT STRATEGY
The Portfolio invests primarily (at least 65%) in dividend-paying common stocks
of well established companies paying above-average dividends.
The Adviser bases its investment decisions on three premises: (1) over time,
dividend income can account for a significant portion of the Portfolio's return;
(2) dividends are a more stable and predictable source of return; and (3) prices
of stocks that pay a high current income tend to be less volatile than those
paying below average dividends.
The Adviser uses a "value" approach in choosing securities. The Adviser's
in-house research team seeks companies that appear to be undervalued by various
measures and may be temporarily out of favor, but have good prospects for
capital appreciation and dividend growth. It looks for common stocks of
companies that have:
o established operating histories;
o above-average dividend yields relative to the S&P 500;
o low price to earnings ratios relative to the S&P 500;
o sound balance sheets and other positive financial characteristics; and
o low stock price relative to the company's asset value, cash flow or
business franchises.
- --------------------------------------------------------------------------------
Equity income investing involves finding common stocks that pay dividend income.
As an example, utility company stocks often provide dividend income while a
shareholder waits for the stock price to move. Dividends can help reduce the
Portfolio's volatility during turbulent markets and help offset losses when
stock prices are falling.
- --------------------------------------------------------------------------------
The Portfolio may invest up to 25% of its total assets in foreign securities.
These securities include non-dollar-denominated securities traded outside the
United States and dollar-denominated securities of foreign issuers traded in the
U.S. such as American Depositary Receipts. The Portfolio may also purchase
preferred stocks, convertible securities, warrants, futures, options, U.S.
Government securities, high-quality money market securities, as well as
investment grade debt securities and high yielding debt securities ("junk
bonds").
When market or financial conditions warrant, the Portfolio may invest without
limitation in high quality money market securities, and United States Government
debt securities for temporary or defensive purposes. Such investment strategies
are inconsistent with the Portfolio's investment objectives and could result in
the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. The Portfolio's emphasis on stocks
of established companies paying high dividends and its potential investments in
fixed income securities may limit its potential for appreciation in a broad
market advance. Such securities may also be hurt when interest rates rise
sharply. Also, a company may reduce or eliminate its dividend. Other principal
risks include:
<PAGE>
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57
- --------------------------------------------------------------------------------
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a value
stock's intrinsic value may never be fully recognized or realized by the market,
or its price may go down. There is also the risk that a stock judged to be
undervalued may actually be appropriately priced.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
FIXED INCOME RISK: 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. The risk that an issuer or guarantor of a fixed income security or
counterparty to the Portfolio's fixed income transaction is unable to meet its
financial obligations is particularly significant for this Portfolio because
this Portfolio may invest a portion of its assets in "junk bonds" (i.e.,
securities rated below investment grade). Junk bonds are issued by companies
with questionable credit strength and, consequently, are considered to be
speculative in nature and may be subject to greater market fluctuations than
investment grade fixed-income securities.
PORTFOLIO PERFORMANCE The bar chart below illustrates the Portfolio's annual
total return for 1998 and 1999, the Portfolio's first two years of operations,
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 Portfolio for one year and since inception. The
table also compares the Portfolio's performance to the returns of a broad-based
index. Both the bar chart and table assume reinvestment of dividends and
distributions. Past performance is not an indication of future performance. The
performance results presented below do not reflect any insurance and
Contract-related fees and expenses,which would reduce the perfomance results.
The inception date for the Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 9.11%
1999 3.54%
Best quarter: Worst quarter:
13.29% (1999 2nd Quarter) (8.56)% (1999 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
T. Rowe Price Equity Income Portfolio 3.54% 12.80%
- --------------------------------------------------------------------------------
S&P 500 Index* 21.03% 27.36%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
T. ROWE PRICE ASSOCIATES, INC. ("T. Rowe Price"), 100 East Pratt Street,
Baltimore, MD 21202. T. Rowe Price has
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
- ------
58
- --------------------------------------------------------------------------------
been the Adviser to the Portfolio since the Portfolio commenced operations. T.
Rowe Price serves as investment manager to a variety of individual and
institutional investor accounts, including limited partnerships and other mutual
funds.
Investment decisions with respect to the Portfolio are made by an Investment
Advisory Committee. BRIAN C. ROGERS has been the Committee Chairman since the
inception of the Portfolio and has day-to-day responsibility for managing the
Portfolio and works with the Committee in developing and executing the
Portfolio's investment program. Mr. Rogers joined T. Rowe Price in 1982 and has
been managing investments since 1983.
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
- ------
59
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term capital appreciation.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in equity securities of U.S. small-cap companies
with above-average growth potential that the Adviser believes to be undervalued.
Typically, such investments may include common stocks, preferred stocks,
convertible securities, warrants and rights of small-cap companies. Once 65% of
the Portfolio's assets are invested in small-cap companies, the Portfolio may
also invest in companies with a market capitalization of any size.
- --------------------------------------------------------------------------------
For purposes of this Portfolio, small-cap companies are companies having market
capitalizations within the range of capitalizations of companies represented in
the Russell 2000 Index.
- --------------------------------------------------------------------------------
In determining whether a company's stock is undervalued, the Adviser considers
all relevant factors which may include a company's:
o price/earnings ratio;
o price to book value ratio;
o price to cash flow ratio; and
o debt to capital ratio.
The Portfolio will invest primarily (at least 65% of its net assets) in the
securities of U.S. companies traded in the U.S. securities markets. The
Portfolio may invest to a lesser extent in foreign securities, investment grade
debt securities and high quality domestic and foreign short-term (one year or
less) and medium-term money-market securities.
When market or financial conditions warrant, the Portfolio may invest without
limitation in investment grade debt obligations and in domestic and foreign
obligations, including repurchase agreements for temporary or defensive
purposes. Such investment strategies are inconsistent with the Portfolio's
investment objectives and could result in the Portfolio not achieving its
investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a value
stock's intrinsic value may never be fully recognized or realized by the market,
or its price may go down. There is also the risk that a stock judged to be
undervalued may actually be appropriately priced.
SMALL-CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap and
mid-cap companies may be subject to more abrupt or erratic movements in price
than are those of larger, more established companies because: the securities of
such companies are less well-known and may trade less frequently and in lower
volume; such companies are more likely to experience greater or more unexpected
changes in their earnings and growth prospects; and the products or technologies
of such companies may be at a relatively early stage of development or not fully
tested.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate has been over 100% per
year. Higher portfolio turnover (e.g., over 100% per year) will cause the
Portfolio to incur additional transaction costs that could be passed through to
shareholders.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC PORTFOLIOS (CONTINUED)
- ------
60
- --------------------------------------------------------------------------------
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
FIXED INCOME RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities, which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE The bar chart below illustrates the Portfolio's annual
total return for 1998 and 1999, the Portfolio's first two years of operations,
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 Portfolio for one year and since inception. The
table also compares the Portfolio's performance to the returns of a broad-based
index. Both the bar chart and table assume reinvestment of dividends and
distributions. Past performance is not an indication of future performance. The
performance results presented below do not reflect any insurance and
Contract-related fees and expenses, which would reduce performance results. The
inception date for the Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 -10.02%
1999 1.80%
Best quarter: Worst quarter:
12.40% (1999 4th Quarter) (20.25)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
Warburg Pincus Small Company Value
Portfolio 1.80% 3.33%
- --------------------------------------------------------------------------------
Russell 2000 Value Index*, ** (1.49)% 7.06%
- --------------------------------------------------------------------------------
Russell 2000 Index* 21.26% 16.99%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
CREDIT SUISSE ASSET MANAGEMENT, LLC. ("CSAM"), 466 Lexington Avenue, New York,
New York 10017-3147. CSAM is the successor to Warburg Pincus Asset Management,
Inc., which served as the Adviser to the Portfolio since it commenced
operations. CSAM is a professional investment advisory firm that provides
investment services to investment companies, employee benefit plans, endowment
funds, foundations and other institutions and individuals. CSAM is indirectly
controlled by Credit Suisse Group. CSAM manages over $60 billion in assets in
the U.S., and together with its global affiliates, over $168 billion worldwide.
KYLE F. FREY is the Portfolio Manager and has been responsible for the
day-to-day management of the Portfolio since the Portfolio commenced operations.
Mr. Frey is a managing director of CSAM and has been with CSAM or its
predecessor since 1989.
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS
- ------
61
- --------------------------------------------------------------------------------
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 RISK: 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 may invest in securities issued by European
issuers. On January 1, 1999, 11 of the 15 member states of the European
Monetary Union ("EMU") introduced the "Euro" as a common currency.
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
- ------
62
- --------------------------------------------------------------------------------
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.
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 RISK: 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 principally 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
<PAGE>
- ------
63
- --------------------------------------------------------------------------------
predecessor were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 -6.1%
1991 30.5%
1992 -0.5%
1993 32.1%
1994 5.2%
1995 18.8%
1996 14.6%
1997 11.7%
1998 21.8%
1999 38.53%
Best quarter (% and time period) Worst quarter (% and time period)
26.59% (1998 4th Quarter) (16.99)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Global
Portfolio -
Class IA Shares 38.53% 20.74% 15.84%
- --------------------------------------------------------------------------------
Lipper Global
Mutual Funds
Average* 44.18% 19.42% 11.73%
- --------------------------------------------------------------------------------
MSCI World
Index* 24.93% 19.76% 11.42%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor registered investment company since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio's and its predecessor's investment program since 1998. Ms. Yeager, a
Senior Vice President of Alliance, has been associated with Alliance since 1990.
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
- ------
64
- --------------------------------------------------------------------------------
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 RISK: 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:
<PAGE>
- ------
65
- --------------------------------------------------------------------------------
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 may invest in securities issued by European
issuers. On January 1, 1999, 11 of the 15 member states of the European
Monetary Union ("EMU") introduced the "Euro" as a common currency. During a
three-year transitional period, the Euro will coexist with each
participating state's currency and, on July 1, 2002, the Euro is expected
to become the sole currency of the participating states. The introduction
of the Euro will result in the redenomination of European debt and equity
securities over a period of time, which may result in various legal and
accounting differences and/or tax treatments that otherwise would not
likely occur. During this period, the creation and implementation of
suitable clearing and settlement systems and other operational problems may
cause market disruptions that could adversely affect investments quoted in
the Euro.
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 RISK: 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.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover rate (e.g.,
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
- ------
66
- --------------------------------------------------------------------------------
over 100% per year) will cause the Portfolio to incur additional transaction
costs that could be passed through to shareholders.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risk will tend to be compounded.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last four calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past 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 principally 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 were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1996 9.8%
1997 -2.98%
1998 10.6%
1999 37.78%
Best quarter (% and time period) Worst quarter (% and time period)
25.87% (1999 4th Quarter) (15.72)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
Alliance International
Portfolio - Class IA
Shares 37.31% 13.16%
- --------------------------------------------------------------------------------
MSCI EAFE Index* 26.96% 13.11%
- --------------------------------------------------------------------------------
Lipper International Mutual
Funds Average* 42.88% 17.58%
- --------------------------------------------------------------------------------
* 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.
<PAGE>
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SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio and its predecessor since January 1999. Ms. Yeager, a Senior Vice
President of Alliance, has been associated with Alliance since 1990.
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
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MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term capital appreciation by investing
primarily in equity securities of issuers in emerging market countries.
THE INVESTMENT STRATEGY
The Portfolio is a non-diversified Portfolio that invests primarily in equity
securities of companies located in emerging market countries. Such equity
securities may include common stocks, preferred stocks, convertible securities,
depositary receipts, rights and warrants. The Adviser focuses on growth-oriented
companies in emerging market countries that it believes have strong developing
economies and increasingly sophisticated markets. The Portfolio generally
invests only in emerging market countries whose currencies are freely
convertible into United States dollars.
- --------------------------------------------------------------------------------
A Portfolio may be considered to be "non-diversified" for federal securities law
purposes because it invests in a limited number of securities. In all cases, the
Portfolio intends to be diversified for tax purposes so that it can qualify as a
regulated investment company.
- --------------------------------------------------------------------------------
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For purposes of this Portfolio, an emerging market country security is defined
as a security of an issuer having one or more of the following characteristics:
o Its principal securities trading market is in an emerging market
country;
o alone or on a consolidated basis, at least 50% of its revenues are
derived from goods produced, sales made or services performed in an
emerging market country; and
o it is organized under the laws of or has a principal office in an
emerging market country.
- --------------------------------------------------------------------------------
The Adviser's investment approach combines top-down country allocation with
bottom-up stock selection.
- --------------------------------------------------------------------------------
In a "top-down" approach, country allocations are made based on relative
economic, political and social fundamentals, stock valuations and investor
sentiment. In a "bottom-up" approach, securities are reviewed and chosen
individually.
- --------------------------------------------------------------------------------
The Portfolio may invest to a lesser extent in corporate or government-issued or
guaranteed debt securities of issuers in emerging market countries, including
debt securities that are rated or considered to be below investment grade ("junk
bonds"). The Portfolio also may, to a lesser extent, invest in equity or debt
securities (including "junk bonds") of corporate or governmental issuers located
in industrialized countries, foreign currency or investment funds and
supranational entities such as the World Bank. In addition, the Portfolio may
utilize forward foreign currency contracts, options and futures contracts and
swap transactions.
When market or financial conditions warrant, the Portfolio may invest in certain
short- and medium-term fixed income securities of issuers other than emerging
market issuers and may invest without limitation in high quality money market
instruments for temporary or defensive purposes. Such investment strategies are
inconsistent with the Portfolio's investment objectives and could result in the
Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests primarily in equity securities, therefore, its
performance may go up or down depending on general market conditions. Other
principal risks include:
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile and subject to less
government supervision than domestic markets. There
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may be difficulties enforcing contractual obligations, and it may take more time
for trades to clear and settle. In addition, foreign investments can be
adversely affected by: unfavorable currency exchange rates (relative to the U.S.
dollar for securities denominated in a foreign currencies); inadequate or
inaccurate information about foreign companies; higher transaction, brokerage
and custody costs; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging market 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 may invest in securities issued by European
issuers. On January 1, 1999, 11 of the 15 member states of the European
Monetary Union ("EMU") introduced the "Euro" as a common currency. During a
three-year transitional period, the Euro will coexist with each
participating state's currency and, on July 1, 2002, the Euro is expected
to become the sole currency of the participating states. The introduction
of the Euro will result in the redenomination of European debt and equity
securities over a period of time, which may result in various legal and
accounting differences and/or tax treatments that otherwise would not
likely occur. During this period, the creation and implementation of
suitable clearing and settlement systems and other operational problems may
cause market disruptions that could adversely affect investments quoted in
the Euro.
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.
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.
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.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate has been over 100% per
year. Higher portfolio turnover (e.g., over 100% per year) will cause the
Portfolio to incur additional transaction costs that could be passed through to
shareholders.
NON-DIVERSIFICATION RISK: Since a relatively high percentage of the Portfolio's
assets may be invested in the securities of a limited number of issuers, some of
which may be within the same industry, the securities of the Portfolio may be
more sensitive to changes in the market value of a single issuer or industry or
to risks associated with a single economic, political or regulatory event than a
diversified portfolio.
FIXED INCOME RISK: 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
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
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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, that are rated BBB by S&P or an equivalent rating
by any other NRSRO, it will be exposed to greater risk than higher-rated
obligations because BBB rated investment grade securities are regarded as having
only an adequate capacity to pay principal and interest and are considered to
lack outstanding investment characteristics. The risk that an issuer or
guarantor of a fixed income security or counterparty to the Portfolio's fixed
income transaction is unable to meets its financial obligations may be is
particularly significant for this Portfolio because this Portfolio may invest a
portion of its assets in "junk bonds" (i.e., securities rated below investment
grade). Junk bonds are issued by companies with questionable credit strength
and, consequently, are considered to be speculative in nature and may be subject
to greater market fluctuations than investment grade fixed-income securities.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for the
Portfolio is August 20, 1997.
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CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 -27.10%
1999 95.81%
Best quarter: Worst quarter:
49.70% (1999 4th Quarter) (22.14)% (1998 2nd Quarter)
- --------------------------------------------------------------------------------
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AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
Morgan Stanley Emerging Markets
- --------------------------------------------------------------------------------
Equity Portfolio 95.82% 5.76 %
- --------------------------------------------------------------------------------
MSCI Emerging Markets Free* 66.41% (0.88)%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MORGAN STANLEY ASSET MANAGEMENT ("MSAM"), 1221 Avenue of the Americas, New York,
NY 10020. MSAM has been the Adviser to the Portfolio since the Portfolio
commenced operations. MSAM conducts a worldwide investment management business,
providing a broad range of portfolio management services to customers in the
United States and abroad. MSAM serves as an investment adviser to numerous
open-end and closed-end investment companies. On December 1, 1998, Morgan
Stanley Asset Management Inc. changed its name to Morgan Stanley Dean Witter
Investment Management Inc. but continues to do business in certain instances
using the name Morgan Stanley Asset Management.
The Portfolio Managers, responsible for the day to day management of the
Portfolio since the Portfolio commenced
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operations, are: ROBERT MEYER, a Managing Director of MSAM and Morgan Stanley &
Co. Incorporated, who is head of MSAM's Emerging Markets Equity Group and who
joined MSAM in 1989; and ANDY SKOV, a Managing Director of MSAM and Morgan
Stanley & Co. Incorporated who joined MSAM in 1994.
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
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T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital through investment
primarily in common stocks of established non-United States companies.
THE INVESTMENT STRATEGY
The Portfolio invests substantially all of its assets in common stocks of
established companies outside of the United States. The Portfolio intends to
diversify broadly among countries throughout the world by having securities from
at least five different countries represented in the Portfolio. No more than 20%
of its assets will be invested in securities of any one country, except that up
to 35% can be invested in stocks of companies in Australia, Canada, France,
Japan, United Kingdom or Germany. In determining the appropriate distribution of
investments among various countries and geographic regions, the Adviser
ordinarily considers the following factors:
o prospects for relative economic growth between foreign countries;
o expected levels of inflation;
o government policies influencing business conditions;
o the outlook for currency relationships; and
o the range of individual investment opportunities available to international
investors.
Country allocation is driven largely by stock selection, though the Adviser may
limit investments in markets that appear to have poor overall prospects.
The Portfolio expects to invest substantially all of its assets in common stocks
of large and, to a lesser extent, medium-sized companies. Typically, however,
the Portfolio may also invest in a variety of other equity securities such as
preferred stocks, warrants and convertible securities as well as governmental
debt securities and investment grade debt securities. The Portfolio may also
invest in certain foreign investment funds, hybrid instruments and derivative
instruments in keeping with the Portfolio objective. Stock selection reflects a
growth style. In analyzing companies for investment, the Adviser uses a
"bottom-up" approach and looks for companies that have one or more of the
following characteristics:
o leading market position;
o attractive business niche;
o strong franchise or natural monopoly;
o technological leadership or proprietary advantages;
o seasoned management;
o earnings growth and cash flow sufficient to support growing dividends;
o healthy balance sheet with relatively low debt.
This means that the securities are selected based upon fundamental analysis
performed by the Adviser in an effort to identify companies capable of achieving
and sustaining above-average long-term earnings growth.
When market or financial conditions warrant, the Portfolio may invest without
limitation in high quality U.S. Government and corporate debt obligations for
temporary or defensive purposes. Such investment strategies are inconsistent
with the Portfolio's investment objectives and could result in the Portfolio not
achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Funds that invest overseas
generally carry more risk than funds that invest strictly in U.S. stocks. 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.
<PAGE>
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FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, foreign investments can be adversely affected by:
unfavorable currency exchange rates (relative to the U.S. dollar for securities
denominated in a foreign currencies); inadequate or inaccurate information about
foreign companies; higher transaction, brokerage and custody costs; adverse
changes in foreign economic and tax policies; and foreign government
instability, war or other adverse political or economic actions. Other specific
risks of investing in foreign securities include:
CURRENCY RISK: The risk that changes in currency exchange rates will
negatively affect securities denominated in, and/or receiving revenues in,
foreign currencies. Adverse changes in currency exchange rates (relative to
the U.S. dollar) may erode or reverse any potential gains from a
Portfolio's investment in securities denominated in a foreign currency or
may widen existing losses.
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, 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. Fund
performance will likely be negatively affected by portfolio exposure to
nations suffering severe inflation or currency devaluation.
EURO RISK: The Portfolio may invest in securities issued by European
issuers. On January 1, 1999, 11 of the 15 member states of the European
Monetary Union ("EMU") introduced the "Euro" as a common currency. During a
three-year transitional period, the Euro will coexist with each
participating state's currency and, on July 1, 2002, the Euro is expected
to become the sole currency of the participating states. The introduction
of the Euro will result in the redenomination of European debt and equity
securities over a period of time, which may result in various legal and
accounting differences and/or tax treatments that otherwise would not
likely occur. During this period, the creation and implementation of
suitable clearing and settlement systems and other operational problems may
cause market disruptions that could adversely affect investments quoted in
the Euro.
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.
GEOGRAPHIC RISK: The economies and financial markets of certain regions,
such as Latin America and Asia, can be highly interdependent and may
decline all at the same time.
FUTURES/OPTIONS RISK: To the extent the Portfolio uses futures and options, it
is exposed to additional volatility and potential losses.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
------------------------- EQ Advisors Trust
<PAGE>
INTERNATIONAL STOCK PORTFOLIOS (CONTINUED)
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LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which may
cause the Portfolio to lose money or be prevented from earning capital gains.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for the
Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 13.68%
1999 31.83%
Best quarter: Worst quarter:
24.01% (1999 4th Quarter) (13.68)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
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AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
T. Rowe Price International
Stock Portfolio Class IB Shares 31.92% 15.73%
- --------------------------------------------------------------------------------
MSCI EAFE Index* 26.96% 18.32%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ROWE PRICE-FLEMING INTERNATIONAL, INC. ("Price-Fleming"), 100 East Pratt Street,
Baltimore, MD 21202. Price-Fleming has been the Adviser to the Portfolio since
it commenced its operations. Price-Fleming was incorporated in Maryland in 1979
as a joint venture between T. Rowe Price and Robert Fleming Holdings Limited
("Flemings"). Flemings is a diversified investment organization that
participates in a global network of regional investment offices. The common
stock of Price-Fleming is 50% owned by a wholly owned subsidiary of T. Rowe
Price, 25% owned by a subsidiary of Flemings and 25% owned by a subsidiary of
Jardine Fleming Group Limited ("Jardine Fleming"). Flemings owns 10% of Jardine
Fleming.
Investment decisions with respect to the Portfolio are made by an Investment
Advisory Group. The Investment Advisory Group has day-to-day responsibility for
managing the Portfolio and developing and executing the Portfolio's investment
program.
<PAGE>
FIXED INCOME PORTFOLIOS
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ALLIANCE HIGH YIELD PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return by maximizing current
income and, to the extent consistent with that objective, capital appreciation.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a 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 Ba or lower by Moody's or
BB 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 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. 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 RISK: 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 RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; 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.
<PAGE>
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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 principally 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 were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 -1.1%
1991 24.5%
1992 12.3%
1993 23.2%
1994 -2.8%
1995 19.9%
1996 23.0%
1997 18.5%
1998 -5.2%
1999 -3.35%
Best quarter (% and time period) Worst quarter (% and time period)
8.00% (1997 2nd Quarter) (10.97)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance High Yield Portfolio
- Class IA Shares (3.35)% 9.86% 10.23%
- --------------------------------------------------------------------------------
CSFB Index*,** 3.28% 9.07% 11.06%
- --------------------------------------------------------------------------------
ML Master* 1.57% 9.61% 10.79%
- --------------------------------------------------------------------------------
Lipper High Current Yield Bond
Funds Average* 3.83% 9.48% 10.15%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
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,
------------------------- EQ Advisors Trust
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FIXED INCOME PORTFOLIOS (CONTINUED)
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qualified and non-tax qualified corporate funds, public and private pension and
profit-sharing plans, foundations and tax-exempt organizations.
NELSON JANTZEN has been responsible for the day-to-day management of the
Portfolio since January 2000. Mr. Jantzen is a Senior Vice President and
Portfolio Manager in the Global High Yield Group and is responsible for the
management of domestic high yield securities. Mr. Jantzen joined Alliance in
1993.
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve high current income consistent with
relative stability of principal through investment primarily in debt securities
issued or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in U.S. Government securities. The Portfolio may
also invest in repurchase agreements and forward commitments related to U.S.
Government securities and may also purchase debt securities of non-government
issuers that own mortgages.
- --------------------------------------------------------------------------------
Duration is a measure of the weighted average maturity of the bonds held by the
Portfolio and can be used by the Adviser as a measure of the sensitivity of the
market value of the Portfolio to changes in interest rates. Generally, the
longer the duration of the Portfolio, the more sensitive its market value will
be to changes in interest rates.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
In some cases, the Adviser's calculation of duration will be based on certain
assumptions (including assumptions regarding prepayment rates, in the
mortgage-backed or asset-backed securities, and foreign and domestic interest
rates). As of December 31, 1999, the Adviser considered the duration of a
10-year Treasury bond to be 7.3 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
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FIXED INCOME PORTFOLIOS (CONTINUED)
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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 Farmers Home Administration or
guaranteed by the Veterans 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 RISK: 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:
ASSET-BACKED SECURITIES RISK: The Portfolio's investments in asset-backed
securities represent interests
<PAGE>
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81
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in pools of consumer loans such as credit card receivables, automobile loans and
leases, leases on equipment such as computers, and other financial instruments
and are subject to certain additional risks. Rising interest rates tend to
extend the duration of asset-backed securities, making them more sensitive to
changes in interest rates. As a result, in a period of rising interest rates,
the Portfolio may exhibit additional volatility. When interest rates are
declining, there are usually more prepayments of loans which will shorten the
life of these securities. Prepayments also vary based on among other factors,
general economic conditions and other demographic conditions. The reinvestment
of cash received from prepayments will, therefore, usually be at a lower
interest rate than the original investment, lowering the Portfolio's yield.
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price and
total return) of the Portfolio's fixed income securities, particularly those
with longer durations or maturities, will go down. When interest rates fall, the
reverse is true.
INVESTMENT GRADE SECURITIES RISK: With respect to fixed income investments of
the Portfolio, other than U.S. Government securities, rated BBB by S&P or an
equivalent rating by any other nationally recognized statistical rating
organization ("NRSRO"), the Portfolio could lose money if the issuer or
guarantor of a debt security or counterparty to a Portfolio's transaction is
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 eight 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
------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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82
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with similar investment objectives. Past performance is not an indication of
future performance.
The Portfolio's performance shown below is principally 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 were transferred
to the Portfolio on October 18, 1999. Following that transfer, the performance
shown (for the period October 19, 1999 through December 31, 1999) is that of the
Portfolio. For these purposes, the performance results of the Portfolio and its
predecessor registered investment company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1992 5.5%
1993 10.6%
1994 -4.4%
1995 13.3%
1996 3.8%
1997 7.3%
1998 7.7%
1999 0.14%
Best quarter (% and time period) Worst quarter (% and time period)
5.31% (1991 3rd Quarter) (2.96)% (1994 1st Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Intermediate
Government Securities
Portfolio - Class IA Shares 0.02% 6.34% 6.26%
- --------------------------------------------------------------------------------
Lehman Intermediate
Government Bonds* 0.49% 6.93% 6.76%
- --------------------------------------------------------------------------------
Lipper Intermediate Government
Funds Average* (2.13)% 6.94% 6.84%
- --------------------------------------------------------------------------------
* 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 for more than five
years.
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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83
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ALLIANCE MONEY MARKET PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to obtain a high level of current income, preserve
its assets and maintain liquidity.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified portfolio of high-quality U.S.
dollar-denominated money market instruments. The Portfolio will maintain a
dollar-weighted average portfolio maturity of 90 days or less.
The instruments in which the Portfolio invests include:
o marketable obligations of, or guaranteed as to the timely payment of
principal and interest by, the U.S. Government, its agencies or
instrumentalities ("U.S. Government Securities");
o certificates of deposit, bankers' acceptances, bank notes, time deposits
and interest bearing savings deposits issued or guaranteed by:
(a) domestic banks (including their foreign branches) or savings and
loan associations having total assets of more than $1 billion and
which are FDIC members in the case of banks, or insured by the FDIC,
in the case of savings and loan associations; or
(b) foreign banks (either by their foreign or U.S. branches) having
total assets of at least $5 billion and having an issue of either (i)
commercial paper rated at least A-1 by S&P or Prime-1 by 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>
FIXED INCOME PORTFOLIOS (CONTINUED)
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Although the Portfolio seeks to preserve the value of your investment, it is
possible to lose money by investing in the Portfolio.
ASSET-BACKED SECURITIES RISK: The Portfolio's investments in asset-backed
securities represent interests in pools of consumer loans such as credit card
receivables, automobile loans and leases, leases on equipment such as computers,
and other financial instruments and are subject to certain additional risks.
Rising interest rates tend to extend the duration of asset-backed securities,
making them more sensitive to changes in interest rates. As a result, in a
period of rising interest rates, the Portfolio may exhibit additional
volatility. When interest rates are declining, there are usually more
prepayments of loans which will shorten the life of these securities.
Prepayments also vary based on among other factors, general economic conditions
and other demographic conditions. The reinvestment of cash received from
prepayments will, therefore, usually be at a lower interest rate than the
original investment, lowering the Portfolio's yield.
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 RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: 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 principally 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 were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not
<PAGE>
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85
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reflect any insurance and Contract-related fees and expenses, which would reduce
the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN*
- --------------------------------------------------------------------------------
1990 8.2%
1991 6.2%
1992 3.6%
1993 3.0%
1994 4.0%
1995 5.7%
1996 5.3%
1997 5.4%
1998 5.3%
1999 4.96%
Best quarter (% and time period) Worst quarter (% and time period)
2.08% (1990 4th Quarter) .46% (2000 1st Quarter)
The Portfolio's 7-day yield for the quarter ended December 31, 1999 was 5.30%.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Money Market Portfolio
- Class IA Shares 4.96% 5.36% 5.16%
- --------------------------------------------------------------------------------
3-Month Treasury Bill 4.74% 5.20% 5.06%
- --------------------------------------------------------------------------------
Lipper Money Market Mutual
Fund Average* 4.75% 5.13% 4.87%
- --------------------------------------------------------------------------------
* 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>
FIXED INCOME PORTFOLIOS (CONTINUED)
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ALLIANCE QUALITY BOND PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve high current income consistent with
preservation of capital by investing primarily in investment grade fixed income
securities.
THE INVESTMENT STRATEGY
The Portfolio expects to invest in readily marketable securities with relatively
attractive yields that the Adviser believes do not involve undue risk.
The Portfolio will follow a policy of investing at least 65% of its total assets
in securities which are rated at the time of purchase at least Baa by Moody's or
BBB by S&P, or in unrated fixed income securities that the Adviser determines to
be of comparable quality.
In the event that the credit rating of a security held by the Portfolio falls
below investment grade (or, in the case of unrated securities, the Adviser
determines that the quality of such security has deteriorated below investment
grade), the Portfolio will not be obligated to dispose of such security and may
continue to hold the obligation if the Adviser believes such an investment is
appropriate in the circumstances. The Portfolio will also seek to maintain an
average aggregate quality rating of its portfolio securities of at least A
(Moody's and S&P).
The Portfolio has complete flexibility as to the types of securities in which it
will invest and the relative proportions thereof. In this regard, the Portfolio
plans to vary the proportions of its holdings of long- and short-term fixed
income securities (including debt securities, convertible debt securities and
U.S. Government obligations), preferred stocks and dividend-paying common stocks
in order to reflect the Adviser's assessment of prospective cyclical changes
even if such action may adversely affect current income.
The Portfolio may also invest in foreign securities, although it will not invest
more than 20% of its total assets in securities denominated in currencies other
than the U.S. dollar. The Portfolio may enter into foreign currency futures
contracts (and related options), forward foreign currency exchange contracts and
options on foreign currencies for hedging purposes.
The Portfolio may also make use of various other investment strategies,
including zero coupon pay-in-kind securities, collateralized mortgage
obligations, securities lending with a value of up to 50% of its total assets,
the purchase or sale of securities on a when-issued, delayed delivery or forward
commitment basis and repurchase agreements. The Portfolio may also use
derivatives, including: purchasing put and call options and writing covered put
and call options on securities it may purchase. The Portfolio also intends to
write covered call options for cross-hedging purposes, which are designed to
provide a hedge against a decline in value of another security which the
Portfolio owns or has the right to acquire.
The Portfolio may seek to protect the value of its investments from interest
rate fluctuations by entering into various hedging transactions, such as
interest rate swaps and the purchase or sale of interest rate caps and floors.
When market or financial conditions warrant, the Portfolio may invest in certain
money market instruments for temporary or defensive purposes. Such investments
could result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
FIXED INCOME RISK: 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.
<PAGE>
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INVESTMENT GRADE SECURITIES RISK: The Portfolio could lose money if the
issuer or guarantor of a debt security or counterparty to a Portfolio's
transaction is unable or unwilling to make timely principal and/or interest
payments, or to honor its financial obligations. Investment grade
securities which are rated BBB or S&P or an equivalent rating by any other
nationally recognized statistical rating organization, are somewhat riskier
than higher rated obligations because they are regarded as having only an
adequate capacity to pay principal and interest, are considered to lack
outstanding investment characteristics, and may be speculative.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the
duration of mortgage-backed securities to increase, making them even more
susceptible to interest rate changes. Falling interest rates may cause the
value and yield of mortgage-backed securities to fall. Falling interest
rates also may encourage borrowers to pay off their mortgages sooner than
anticipated (pre-payment). The Portfolio would need to reinvest the prepaid
funds at the newer, lower interest rates.
ZERO COUPON AND PAY-IN-KIND SECURITIES RISK: A zero coupon or pay-in-kind
security pays no interest in cash to its holder during its life.
Accordingly, zero coupon securities usually trade at a deep discount from
their face or par value and, together with pay-in-kind securities, will be
subject to greater fluctuations in market value in response to changing
interest rates than debt obligations of comparable maturities that make
current distributions of interest in cash.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying common
stock and provide higher yields than the underlying common stocks, but generally
offer lower yields than nonconvertible securities of similar quality. The value
of convertible securities fluctuates both in relation to changes in interest
rates and changes in the value of the underlying common stock.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional collateral,
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
LEVERAGING RISK: When the Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in the Portfolio will be more volatile and
all other risk will tend to be compounded.
------------------------- EQ Advisors Trust
<PAGE>
FIXED INCOME PORTFOLIOS (CONTINUED)
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88
- --------------------------------------------------------------------------------
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last six calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one and five years and
compares the Portfolio's performance to: (i) the returns of a broad-based index
and (ii) the returns of an index of funds with similar investment objectives.
Past performance is not an indication of future performance.
The Portfolio's performance shown below is principally the performance of its
predecessor registered investment company (HRT/Alliance Quality Bond Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Quality
Bond Portfolio) whose inception date is October 1, 1993. The assets of the
predecessor were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
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
- --------------------------------------------------------------------------------
1994 -5.1%
1995 17.0%
1996 5.4%
1997 9.1%
1998 8.7%
1999 -2.00%
Best quarter (% and time period) Worst quarter (% and time period)
6.19% (1995 2nd Quarter) (4.04)% (1994 1st Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Quality Bond Portfolio
- Class IA Shares (2.00)% 7.47% 4.96%
- --------------------------------------------------------------------------------
Lehman Aggregate Bonds* (0.82)% 7.73% 5.64%
- --------------------------------------------------------------------------------
Lipper Corporate Debt Funds
BBB Rated Average* (1.62)% 7.83% 5.32%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor registered investment company since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
MATTHEW BLOOM has been responsible for the day-to-day management of the
Portfolio and its predecessor since 1995. Mr. Bloom, a Senior Vice President of
Alliance, has been associated with Alliance since 1989.
<PAGE>
BALANCED/HYBRID PORTFOLIOS
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89
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EQ/BALANCED PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high return through both appreciation
of capital and current income.
THE INVESTMENT STRATEGY
The Portfolio invests varying portions of its assets primarily in
publicly-traded equity and debt securities and money market instruments
depending on economic conditions, the general level of common stock prices,
interest rates and other relevant considerations, including the risks associated
with each investment medium.
The Portfolio attempts to achieve long-term growth of capital by investing in
common stock and other equity-type instruments. It will try to achieve a
competitive level of current income and capital appreciation through investments
in publicly traded debt securities and a high level of current income through
investments primarily in high-quality U.S. dollar denominated money market
instruments.
The Portfolio's investments in common stocks will primarily consist of common
stocks that are listed on national securities exchanges. Smaller amounts will be
invested in stocks that are traded over-the-counter and in other equity-type
securities. The Portfolio may also invest up to 20% of its total assets in
securities of issuers domiciled outside the United States and not included in
the S&P 500 (i.e., foreign securities).
The Portfolio at all times will hold at least 25% of its total assets in fixed
income securities (including, for these purposes, that portion of the value of
securities convertible into common stock which is attributable to the fixed
income characteristics of those securities, as well as money market
instruments). The Portfolio's equity securities will always comprise at least
25%, but never more than 75%, of the Portfolio's total assets. Consequently, the
Portfolio will have a minimum or "core holdings" of at least 25% fixed income
securities and 25% equity securities. Over time, holdings are expected to
average approximately 50% in fixed income securities and approximately 50% in
equity securities. Asset mixes will periodically be rebalanced by the Manager to
maintain the expected asset mix.
The Portfolio may also invest up to 20% of its total assets in foreign
securities (which may include American depositary receipts and other depositary
arrangements) and may also make use of various other investment strategies,
including using up to 50% of its total portfolio assets for securities lending
purposes. The Portfolio may also use derivatives, including: writing covered
call and put options, purchasing call and put options on all the types of
securities in which it may invest, as well as securities indexes and foreign
currencies. The Portfolio may also purchase and sell stock index, interest rate
and foreign currency futures contracts and options thereon.
The debt securities will consist principally of bonds, notes, debentures and
equipment trust certificates, as well as debt securities with equity features
such as conversion or exchange rights or warrants for the acquisition of stock
or participations based on revenues, rates or profits. These debt securities
will principally be investment grade securities rated at least Baa by Moody's or
BBB by S&P, or will be U.S. Government Securities. If such Baa or BBB debt
securities held by the Portfolio fall below those ratings, the Portfolio will
not be obligated to dispose of them and may continue to hold them if an Adviser
considers them appropriate investments under the circumstances. In addition, the
Portfolio may at times hold some of its assets in cash.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
MULTIPLE-ADVISER RISK: The EQ/Balanced Portfolio employs multiple Advisers. Each
of the Advisers independently chooses and maintains a portfolio of common stocks
for the Portfolio and each is responsible for investing a specific allocated
portion of the Portfolio's assets. Because each Adviser will be managing its
allocated portion of the Portfolio independently from the other
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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90
- --------------------------------------------------------------------------------
Advisers, the same security may be held in two different portions of the
Portfolio, or may be acquired for one portion of the Portfolio at a time when
the Adviser of another portion deems it appropriate to dispose of the security
from that other portion. Similarly, under some market conditions, one Adviser
may believe that temporary, defensive investments in short-term instruments or
cash are appropriate when the other Adviser or Advisers believe continued
exposure to the equity markets is appropriate for their portions of the
Portfolio. Because each Adviser directs the trading for its own portion of the
Portfolio, and does not aggregate its transactions with those of the other
Advisers, the Portfolio may incur higher brokerage costs than would be the case
if a single Adviser were managing the entire Portfolio.
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
actual allocation of the Portfolio's assets between debt and equity securities
may adversely affect the Portfolio's value between the Manager's periodic
rebalancing.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which may
cause the Portfolio to lose money or be prevented from earning capital gains.
FIXED INCOME RISK: This Portfolio invests at least 25% of its total assets in
fixed income securities, therefore, the Portfolio's performance will be affected
by changes in interest rates, credit risks of the issuer, the duration and
maturity of the Portfolio's fixed income holdings, and adverse market and
economic conditions. Other risks that relate to the Portfolio's investment in
fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest
rates fall, the reverse is true.
INVESTMENT GRADE SECURITIES RISK: The Portfolio could lose money if the
issuer or guarantor of a debt security or counterparty to a Portfolio's
transaction is unable or unwilling to make timely principal and/or interest
payments, or to honor its financial obligations. Investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, are somewhat riskier than higher rated obligations because they are
regarded as having only an adequate capacity to pay principal and interest,
are considered to lack outstanding investment characteristics, and may be
speculative.
<PAGE>
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91
- --------------------------------------------------------------------------------
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 TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional collateral,
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last ten calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one, five and ten
years and compares the Portfolio's performance to: (i) the returns of a
broad-based index; (ii) the returns of a "blended" index of equity and fixed
income securities; and (iii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is principally the performance of its
predecessor registered investment company (HRT/Alliance/Balanced Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/EQ/Balanced
Portfolio) whose inception date is January 27, 1986. The assets of the
predecessor were transferred to the Portfolio on October 18, 1999. Following
that transfer, the performance shown (for the period October 19, 1999 through
December 31, 1999) is that of the Portfolio. For these purposes, the performance
results of the Portfolio and its predecessor registered investment company have
been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 0.3%
1991 41.3%
1992 -2.8%
1993 12.3%
1994 -8.0%
1995 19.8%
1996 11.7%
1997 15.1%
1998 18.1%
1999 17.79%
Best quarter (% and time period) Worst quarter (% and time period)
13.76% (1998 4th Quarter) (7.77)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
EQ/Balanced Portfolio - Class
IA Shares 17.79% 16.44% 11.77%
- --------------------------------------------------------------------------------
50% S&P 500 Index/50%
Lehman Gov't/Corp.*,** 9.07% 17.93% 13.04%
- --------------------------------------------------------------------------------
S&P 500* 21.03% 28.56% 18.21%
- --------------------------------------------------------------------------------
Lipper Flex. Port. Funds
Average* 12.07% 17.11% 12.94%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
<PAGE>
WHO MANAGES THE PORTFOLIO
In accordance with the Multi-Manager Order, the Manager may, among other things,
select new or additional Advisers for the Portfolio and may allocate and
re-allocate the Portfolio's assets among Advisers. Currently, Alliance Capital
Management, L.P., Capital Guardian Trust Company, Prudential Investments Fund
Management LLC and Jennison Associates, LLC have been selected by the Manager to
serve
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
- ------
92
- --------------------------------------------------------------------------------
as Advisers for this Portfolio. It is anticipated that additional advisers may
be added in the future.
The Manager initially allocated the assets of the Portfolio and will allocate
all daily cash inflows (share purchases) and outflows (redemptions and expense
items) among the Advisers, subject to the oversight of the Board. The Manager
intends, on a periodic basis, to review the asset allocation in the Portfolio.
The Manager does not intend, but reserves the right, subject to the oversight of
the Board, to reallocate assets from one Adviser to another when it would be in
the best interest of the Portfolio and its shareholders to do so. In some
instances, the effect of the reallocation will be to shift assets from a better
performing Adviser to other Adviser(s).
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance was the exclusive 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.
The portfolio manager responsible for that portion of the Portfolio's total
assets that will be advised by Alliance as an Adviser is as follows:
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.
CAPITAL GUARDIAN TRUST COMPANY. ("Capital Guardian"), 333 South Hope Street, Los
Angeles, CA 90071 Capital Guardian was added as an Adviser to the Portfolio as
of May 1, 2000. Capital Guardian is a wholly-owned subsidiary of Capital Group
International, Inc., which itself is a wholly owned subsidiary of The Capital
Group Companies, Inc. Capital Guardian has been providing investment management
services since 1968 and manages approximately $123 billion as of December 31,
1999.
Capital Guardian uses a multiple portfolio manager system under which assets of
the Portfolio for which Capital Guardian serves as Adviser are divided into
several segments. Each segment is individually managed with the portfolio
manager free to decide on company and industry selections as well as valuation
and transaction assessment. An additional portion of the Portfolio's total
assets allocated to Capital Guardian as Adviser is managed by a group of
investment research analysts.
The individual portfolio managers of each segment of the Portfolio's total
assets that will be advised by Capital Guardian as an Adviser, other than that
managed by the group of research analysts, are as follows:
DONNALISA P. BARNUM. Donnalisa Barnum is a Senior Vice President and a
portfolio manager for Capital Guardian. She joined the Capital Guardian
organization in 1986.
MICHAEL R. ERICKSON. Michael Erickson is a Senior Vice President and
portfolio manager for Capital Guardian and a Senior Vice President and
Director for Capital International Limited. He joined the Capital Guardian
organization in 1987.
DAVID I. FISHER. David Fisher is Chairman of the Board of Capital Group
International, Inc. and Capital Guardian. He joined the Capital Guardian
organization in 1969.
THEODORE R. SAMUELS. Theodore Samuels is a Senior Vice President and a
Director for Capital Guardian, as well as a Director of Capital
International Research, Inc. He joined the Capital Guardian organization in
1981.
EUGENE P. STEIN. Eugene Stein is Executive Vice President, a Director, a
portfolio manager, and Chairman
<PAGE>
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93
- --------------------------------------------------------------------------------
of the Investment Committee for Capital Guardian. He joined the Capital
Guardian organization in 1972.
TERRY BERKEMEIER. Terry Berkemeier is a Vice President of Capital
International Research, Inc. with U.S. equity portfolio management
responsibility in Capital Guardian Trust Company and research
responsibilities for the global metals and mining industries. He joined the
Capital Guardian organization in 1992.
PRUDENTIAL INVESTMENTS FUND MANAGEMENT LLC ("PIFM"), Gateway Center Three, 100
Mulberry Street, Newark, New Jersey 07102 was added as an Adviser to the
Portfolio as of May 1, 2000. PIFM and its predecessors have served as manager or
administrator to investment companies since 1987. As of October 31, 1999, PIFM
served as either the manager or administrator to various investment companies,
with aggregate assets of approximately $72 billion.
JENNISON ASSOCIATES LLC ("Jennison"), 466 Lexington Avenue, New York, New York
10017 was added as an Adviser to the Portfolio as of May 1, 2000. PIFM
supervises Jennison. Jennison has served as an investment adviser to investment
companies since 1990 and manages approximately $48.4 billion in assets as of
September 30, 1999.
The individual portfolio managers for that portion of the Portfolio's total
assets that will be advised by PIFM as an Adviser and Jennison are as follows:
MICHAEL A. DEBALSO. Michael A. DeBalso is a Director, Executive Vice
President, Director of Equity Research and Equity Portfolio Manager of
Jennison. Mr. DeBalso joined Jennison in 1972.
KATHLEEN A. MCCARRAGHER. Ms. McCarragher is a Director, Executive Vice
President, Domestic Growth Equity Investment Strategist and Equity
Portfolio Manager of Jennison. Ms. McCarragher joined Jennison in 1998.
From 1992-1998, she was a Managing Director and Director of Large Cap
Growth Equities at Weiss, Peck & Greer.
PIFM and Jennison are wholly-owned subsidiaries of The Prudential Insurance
Company of America.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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94
- --------------------------------------------------------------------------------
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, 1999, the Adviser considered the duration of a
10-year Treasury bond to be 7.3 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). 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 RISK: 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
<PAGE>
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95
- --------------------------------------------------------------------------------
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 RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; 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.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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96
- --------------------------------------------------------------------------------
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
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 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 principally 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 were transferred to the Portfolio on
October 18, 1999. Following that transfer, the performance shown (for the period
October 19, 1999 through December 31, 1999) is that of the Portfolio. For these
purposes, the performance results of the Portfolio and its predecessor
registered investment company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 6.3%
1991 19.8%
1992 5.6%
1993 10.8%
1994 -4.1%
1995 20.4%
1996 5.2%
1997 13.3%
1998 13.9%
1999 9.87%
Best quarter (% and time period) Worst quarter (% and time period)
- --------------------------------------------------------------------------------
7.65% (1998 4th Quarter) (2.05)% (1994 1st Quarter)
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Conservative
Investors Portfolio -
Class IA Shares 10.14% 12.47% 9.94%
- --------------------------------------------------------------------------------
70% Lehman Treasury/30%
S&P 500 Index*,** 4.19% 13.60% 10.75%
- --------------------------------------------------------------------------------
S&P 500* 21.03% 28.56% 18.21%
- --------------------------------------------------------------------------------
Lipper Income Average* 4.65% 14.57% 10.84%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
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
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since February 12, 1996. Mr. Heisterberg, a Senior Vice President of Alliance
and Global Economic Policy Analysis, has been associated with Alliance since
1977.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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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 RISK: 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
<PAGE>
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restructurings by highly leveraged issuers or in debt securities not
current in the payment of interest or principal, or in default.
LEVERAGING RISK: When the Portfolio 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 RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
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 year, five years
and ten years and compares the
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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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 principally 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 were transferred to the Portfolio on October
18, 1999. Following that transfer, the performance shown (for the period October
19, 1999 through December 31, 1999) is that of the Portfolio. For these
purposes, the performance results of the Portfolio and its predecessor
registered investment company have been linked.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1990 10.7%
1991 48.8%
1992 4.9%
1993 15.3%
1994 -3.2%
1995 26.4%
1996 12.6%
1997 16.9%
1998 19.1%
1999 26.58%
Best quarter (% and time period) Worst quarter (% and time period)
18.16% (1998 4th Quarter) (10.60)% (1990 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
ONE YEAR FIVE YEARS TEN YEARS
- --------------------------------------------------------------------------------
Alliance Growth Investors
Portfolio - Class IA Shares 26.58% 20.19% 17.08%
- --------------------------------------------------------------------------------
70% S&P 500 Index/30%
Lehman Gov't/Corp.*,** 13.77% 22.15% 15.13%
- --------------------------------------------------------------------------------
S&P 500* 21.03% 28.56% 18.21%
- --------------------------------------------------------------------------------
Lipper Flexible Portfolio
Average* 12.07% 17.11% 12.94%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor registered investment company since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of the
Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a Senior
Vice President of Alliance and Global Economic Policy Analysis, has been
associated with Alliance since 1977.
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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101
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EQ/EVERGREEN FOUNDATION PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide, in order of priority, reasonable income,
conservation of capital and capital appreciation.
- --------------------------------------------------------------------------------
For purposes of this Portfolio, the words "reasonable income" mean moderate
income.
- --------------------------------------------------------------------------------
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a combination of common stocks, preferred
stocks, securities that are convertible into or exchangeable for common stocks,
investment grade corporate debt securities, securities of or guaranteed by the
U.S. Government, its agencies or instrumentalities, and short-term debt
instruments, such as high quality commercial paper, and obligations of
FDIC-member banks. Investments in common stocks focus on those that pay
dividends and have the potential for capital appreciation. Common stocks are
selected based on a combination of financial strength and estimated growth
potential. Bonds are selected based on the Adviser's projections of interest
rates, varying amounts and maturities in order to achieve capital protection
and, when possible, capital appreciation. The asset allocation of the Portfolio
will vary in accordance with changing economic and market conditions.
Under normal market conditions, at least 25% of the Portfolio's net assets will
be invested in fixed income securities. In selecting debt securities, the
Adviser will emphasize securities that the Adviser believes will not be subject
to significant fluctuations in value. The corporate debt obligations purchased
by the Portfolio will be rated A or higher by S&P and Moody's. The Fund is not
managed with a targeted maturity.
When market or financial conditions warrant, the Portfolio may invest 100% of
its assets in short-term obligations for temporary or defensive purposes. Such
investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
FIXED INCOME RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
Nationally Recognized Statistical Rating Organization ("NRSRO"), it will be
exposed to greater risk than higher-rated obligations because BBB rated
investment grade securities are regarded as having only an adequate capacity to
pay principal and interest, are considered to lack outstanding investment
characteristics, and may be speculative.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying common
stocks, but generally offer lower yields than unconvertible securities of
similar quality. Convertible securities fluctuate both in relation to changes in
interest rates and changes in the value of the underlying common stock.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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102
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PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1999,
the Portfolio's first full year of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception. The table also compares the Portfolio's performance to the
returns of a broad-based index. Both the bar chart and table assume reinvestment
of dividends and distributions. Past performance is not an indication of future
performance. The performance results presented below do not reflect any
insurance and Contract-related fees and expenses, which would reduce the
performance results. The inception date for this Portfolio is December 31, 1998.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1999 7.38%
Best quarter: Worst quarter:
10.70% (1999 4th Quarter) (7.27)% (1999 4th Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
EQ/Evergreen Foundation Portfolio 7.38% 7.38%
- --------------------------------------------------------------------------------
60% S&P 500/40% Lehman Aggregate
Bond*,** 11.15% 11.15%
- --------------------------------------------------------------------------------
S&P 500* 21.03% 21.03%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
EVERGREEN ASSET MANAGEMENT CORP. ("Evergreen"), 1311 Mamaroneck Avenue, White
Plains, New York 10605. Evergreen has been the Adviser to the Portfolio since it
commenced operations. Evergreen is a registered investment adviser and a
wholly-owned subsidiary of First Union Corporation. Evergreen offers a broad
range of financial services to individuals and businesses throughout the United
States.
JEAN LEDFORD and RICHARD WELSH became co-managers of the Portfolio in August
1999. Jean Ledford, CFA, became President and Chief Executive Officer of
Evergreen in August 1999. From February 1997 until she joined Evergreen, Ms.
Ledford worked as a portfolio manager at American Century Investments ("American
Century"). From 1980 until she joined American Century, Ms. Ledford was the
investment director at the State of Wisconsin Investment Board.
Mr. Welsh joined Evergreen as Senior Vice President and portfolio manager in
August 1999. Prior to joining Evergreen, he worked for five years as a portfolio
manager and analyst at American Century.
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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103
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MERCURY WORLD STRATEGY PORTFOLIO
INVESTMENT OBJECTIVE: Seeks high total investment return by investing primarily
in a portfolio of equity and fixed income securities, including convertible
securities, of U.S. and foreign issuers.
- --------------------------------------------------------------------------------
For purposes of this Portfolio, "total investment return" consists of interest,
dividends, discount accruals and capital changes, including changes in the value
of non-dollar denominated securities and other assets and liabilities resulting
from currency fluctuations.
- --------------------------------------------------------------------------------
THE INVESTMENT STRATEGY
The Portfolio is a non-diversified Portfolio that invests in both equity
securities and fixed income securities. The Portfolio may invest entirely in
equity securities, entirely in fixed income securities, or partly in equity
securities and partly in fixed income securities.
- --------------------------------------------------------------------------------
A Portfolio may be considered to be "non-diversified" for federal securities law
purposes because it invests in a limited number of securities. In all cases, the
Portfolio intends to be diversified for tax purposes so that it can qualify as a
regulated investment company.
- --------------------------------------------------------------------------------
The Portfolio will normally invest a significant portion of its assets in equity
securities of companies throughout the world. The equity securities in which the
Portfolio invests will primarily be common stocks of large companies.
There are no limits on the Portfolio's ability to invest in any country or
geographic region. The Portfolio can invest primarily in U.S. securities,
primarily in foreign securities, or partly in both. It normally invests in at
least three countries at any given time. The Portfolio may invest in companies
in emerging markets, but the Adviser anticipates that a substantially greater
portion of the Portfolio's equity investments will be in companies in developed
countries. At the present time, the Portfolio focuses on investments in Canada,
Western Europe, the Far East, and Latin America, as well as in the United
States. The Adviser will select the percentage of the Portfolio's assets that
will be invested in equity securities and fixed income securities, as well as
the geographic allocation of the Portfolio's investments, based on its view of
general economic and financial trends in various countries and industries, such
as inflation, commodity prices, the direction of interest and currency
movements, estimates of growth in industry output and profits, and government
fiscal policies. For example, if the Adviser believes that falling commodity
prices and decreasing estimates of industrial output globally signal low growth
and limited returns from equity securities, the Portfolio may emphasize fixed
income investments. Similarly, if the Adviser believes that low inflation, new
technologies and improvements in economic productivity in a country or region
signal a promising environment for equity securities in that country or region
the Portfolio may emphasize equity investments in that country or region.
The Portfolio may invest in fixed-income securities of any maturity, including
United States and foreign government securities and corporate debt securities.
The Portfolio will only invest in debt securities that are rated investment
grade by S&P or Moody's or unrated securities that are of comparable quality.
The Portfolio may also invest in securities denominated in currencies other than
the U.S. dollar. The Portfolio may also engage in currency transactions to hedge
against the risk of loss from changes in currency exchange rates. In addition,
the Portfolio may also employ a variety of instruments and techniques to enhance
income and to hedge against market and currency risk.
The Portfolio has no stated minimum holding period for investments, and will buy
or sell securities whenever the Adviser sees an appropriate opportunity.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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When market or financial conditions warrant, the Portfolio may invest up to 100%
of its assets in United States Government or Government agency securities, money
market securities, other fixed income securities, or cash for temporary or
defensive purposes. Such investment strategies are inconsistent with the
Portfolio's investment objective and could result in the Portfolio not achieving
its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying common
stocks, but generally offer lower yields than unconvertible securities of
similar quality. Convertible securities fluctuate both in relation to changes in
interest rates and changes in the value of the underlying common stock.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities 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; 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:
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.
FIXED INCOME RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
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.
NON-DIVERSIFICATION RISK: Since a relatively high percentage of the Portfolio's
assets may be invested in the securities of a limited number of issuers, some of
which may be within the same industry, the securities of the Portfolio may be
more sensitive to changes in the market value of a single issuer or industry or
to risks associated with a single economic, political or regulatory event than a
diversified portfolio.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the
<PAGE>
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105
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price the seller would like which may cause the Portfolio to lose money or be
prevented from earning capital gains.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate has been over 100% per
year. Higher portfolio turnover (e.g., over 100% per year) will cause the
Portfolio to incur additional transaction costs that could be passed through to
shareholders.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations, 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 Portfolio for one year and since inception. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce the performance results. The inception date for the
Portfolio is May 1, 1997.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
1998 6.81%
1999 21.35%
Best quarter: Worst quarter:
14.72% (1999 4th Quarter) (11.15)% (1998 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- --------------------------------------------------------------------------------
Mercury World Strategy Portfolio 21.35% 12.11%
- --------------------------------------------------------------------------------
Mercury World Strategy Composite
Market Benchmark Index*,** 13.07% 16.18%
- --------------------------------------------------------------------------------
S&P 500* 21.03% 27.36%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
MERCURY ASSET MANAGEMENT US ("MERCURY"), A DIVISION OF FUND ASSET MANAGEMENT,
L.P. ("FAM") 800 Scudders Mill Road, Plainsboro, New Jersey 08543. Mercury, or
the Portfolio's predecessor Adviser, Merrill Lynch Asset Management, L.P.,
("MLAM") has been the Adviser to the Portfolio since it commenced operations.
FAM and MLAM are both part of the Merrill Lynch Asset Management Group and each
is an indirect wholly-owned subsidiary of Merrill Lynch & Co., Inc., a financial
services holding company. The general partner of FAM and MLAM is Princeton
Services, Inc., a wholly-owned subsidiary of Merrill Lynch & Co., Inc. Mercury
and its affiliates act as the manager for more than 100 registered investment
companies. Mercury also offers portfolio management and portfolio analysis
services to individuals and institutions.
THOMAS R. ROBINSON is the Portfolio Manager primarily responsible for the
day-to-day management of the Portfolio since it commenced operations. Mr.
Robinson has served as a First Vice President of Mercury or its predecessor
since 1997 and as a Senior Portfolio Manager of Mercury or its predecessor since
1995.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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106
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EQ/PUTNAM BALANCED PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide a balanced investment composed of a
well-diversified portfolio of stocks and bonds that will produce both capital
growth and current income.
THE INVESTMENT STRATEGY
The Portfolio may invest in almost any type of security or negotiable
instrument, including common stocks, corporate bonds, cash and money market
securities. Although the proportion invested in each type of security is not
fixed, generally, no more than 75% of the Portfolio's assets will be invested in
common stocks, securities that are convertible into common stocks and other
equity securities.
The Portfolio uses a value-oriented approach by investing in stocks the Adviser
believes are currently selling below their true worth.
- --------------------------------------------------------------------------------
Value-investing attempts to identify strong companies selling at a discount from
their perceived true worth. The Adviser selects stocks for the Portfolio at
prices which in its view are temporarily low relative to the company's earnings,
assets, cash flow and dividends.
- --------------------------------------------------------------------------------
The Portfolio may also invest in debt securities, issued by the U.S. Government
or by private companies. Most of the Portfolio's debt securities will be
investment grade (rated at least BBB) and are generally intermediate- to
long-term (with maturities of more than three (3) years). The Portfolio may also
invest in lower-rated debt securities (called "junk bonds").
The Portfolio may also invest up to 20% of its total assets in foreign
securities and may purchase Eurodollar certificates of deposit (i.e., short-term
time deposits issued by European banks) without regard to this 20% limit.
When market or financial conditions warrant, the Portfolio may invest up to 100%
of its assets in short term obligations for temporary or defensive purposes.
Such investment strategies are inconsistent with the Portfolio's investment
objectives and could result in the Portfolio not achieving its investment
objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
VALUE INVESTING RISK: As noted above, the Portfolio uses a value-oriented
approach to stock selection. Value investing is subject to the risk that a value
stock's intrinsic value may never be fully recognized or realized by the market,
or its price may go down. There is also the risk that a stock judged to be
undervalued may actually be appropriately priced.
FIXED INCOME RISK: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative. The risk that an issuer or
guarantor of a fixed income security or counterparty to the Portfolio's fixed
income transaction is unable to meet its financial obligations is particularly
significant for this Portfolio because this Portfolio invests a
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portion of its assets in "junk bonds" (i.e., securities rated below investment
grade). Junk bonds are issued by companies with questionable credit strength
and, consequently, are considered to be speculative in nature and may be subject
to greater market fluctuations than investment grade fixed-income securities.
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.
PORTFOLIO TURNOVER RISK: The Portfolio's turnover rate was over 100% per year.
Higher portfolio turnover (e.g., over 100% per year) will cause the Portfolio to
incur additional transaction costs that could be passed through to shareholders.
FOREIGN SECURITIES RISK: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; adverse changes in foreign economic and tax policies; and foreign
government instability, war or other adverse political or economic actions.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998 and
1999, the Portfolio's first two years of operations. The table below shows the
Portfolio's average annual total returns for the Portfolio for one year and
since inception, and some of the risks of investing in the Portfolio by showing
yearly changes in the Portfolio's performance. The table also compares the
Portfolio's performance to the returns of a broad-based index. Both the bar
chart and table assume reinvestment of dividends and distributions. Past
performance is not an indication of future performance. The performance results
presented below do not reflect any insurance and Contract-related fees and
expenses, which would reduce performance results. The inception date for the
Portfolio is May 1, 1997.
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CALENDAR YEAR ANNUAL TOTAL RETURN
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1998 11.92%
1999 0.01%
Best quarter: Worst quarter:
9.33% (1999 4th Quarter) (7.21)% (1999 3rd Quarter)
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AVERAGE ANNUAL TOTAL RETURNS
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SINCE
ONE YEAR INCEPTION
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EQ/Putnam Balanced Portfolio 0.01% 9.69%
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60% S&P 500/40% Lehman Gov't/Corp.
Index*,** 11.39% 18.81%
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S&P 500* 21.03% 27.36%
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* For more information on this index, see the preceding section "The
Benchmarks."
** We believe that this index reflects more closely the market sectors in which
the Portfolio invests.
WHO MANAGES THE PORTFOLIO
PUTNAM INVESTMENT MANAGEMENT, INC. ("Putnam Management"), One Post Office
Square, Boston, MA 02109. Putnam Management has been the Adviser to the
Portfolio since it commenced operations. Putnam Management has been managing
mutual funds since 1937. Putnam Management is a subsidiary of Putnam
Investments, Inc., which is itself a subsidiary of Marsh & McLennan Companies,
Inc.
------------------------- EQ Advisors Trust
<PAGE>
BALANCED/HYBRID PORTFOLIOS (CONTINUED)
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DEBORAH KUENSTNER manages the team responsible for the day-to-day management of
the equities portion of the Portfolio since April 2000. Ms. Kuenstner is
Managing Director, Chief Investment Officer of the Large Cap Value Equities
Group and joined Putnam in 1997 as Senior Vice President and Senior Portfolio
Manager in the International Core and Value Equity Group. Prior to joining
Putnam, Ms. Kuenstner was the Senior Portfolio Manager, International Equities
of DuPont Pension Fund Investment from 1989 to 1997. JAMES M. PRUSKO, Senior
Vice President, manages the Core Fixed Income Team responsible for the
day-to-day management of the fixed income portion of the Portfolio. He has been
employed by Putnam Management as an investment professional since 1992.
<PAGE>
3
More information on principal risks
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Risk is the chance that you will lose money on your investment or that it will
not earn as much as you expect. In general, the greater the risk, the more money
your investment can earn for you and the more you can lose. Like other
investment companies, the value of each Portfolio's shares may be affected by
the Portfolio's investment objective(s), principal investment strategies and
particular risk factors. Consequently, each Portfolio may be subject to
different principal risks. Some of the principal risks of investing in the
Portfolios are discussed below. However, other factors may also affect each
Portfolio's net asset value.
There is no guarantee that a Portfolio will achieve its investment objective(s)
or that it will not lose principal value.
GENERAL INVESTMENT RISKS: Each Portfolio is subject to the following risks:
ASSET CLASS RISK: There is the possibility that the returns from the types of
securities in which a Portfolio invests will underperform returns from the
various general securities markets or different asset classes. Different types
of securities tend to go through cycles of outperformance and underperformance
in comparison to the general securities markets.
MARKET RISK: Each Portfolio's share price moves up and down over the short term
in reaction to stock or bond market movements. This means that you could lose
money over short periods, and perhaps over longer periods during extended market
downturns.
SECURITY SELECTION RISK: The Adviser(s) for each Portfolio rely on the insights
of different specialists in making investment decisions based on the 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.
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 RISK: 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:
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ASSET-BACKED SECURITIES RISK: The Portfolio's investments in asset-backed
securities represent interests in pools of consumer loans such as credit
card receivables, automobile loans and leases, leases on equipment such as
computers, and other financial instruments and are subject to certain
additional risks. Rising interest rates tend to extend the duration of
asset-backed securities, making them more sensitive to changes in interest
rates. As a result, in a period of rising interest rates, the Portfolio may
exhibit additional volatility. When interest rates are declining, there are
usually more prepayments of loans which will shorten the life of these
securities. Prepayments also vary based on among other factors, general
economic conditions and other demographic conditions. The reinvestment of
cash received from prepayments will, therefore, usually be at a lower
interest rate than the original investment, lowering the Portfolio's yield.
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 credit risks. 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 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,
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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.
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 RISK: 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 market countries and/or their securities markets. Generally,
economic structures in these countries are less diverse and mature than
those in developed countries, and their political systems are less stable.
Investments in emerging markets countries may be affected by national
policies that restrict foreign investment in certain issuers or industries.
The small size of their securities markets and low trading volumes can make
investments illiquid and more volatile than investments in developed
countries and such securities may be subject to abrupt and severe price
declines. As a result, a Portfolio investing in emerging market countries
may be required to establish special custody or other arrangements before
investing.
EURO RISK: Certain of the Portfolios may invest in securities issued by
European issuers. On January 1, 1999, 11 of the 15 member states of the
European Monetary Union ("EMU") introduced the "Euro" as a common currency.
During a three-year transitional period, the Euro will coexist with each
participating state's currency and, on July 1, 2002, the Euro is expected
to become the sole currency of the participating states. The introduction
of the Euro will result in the redenomination of European debt and equity
securities over a period of time, which may result in various legal and
accounting differences and/or tax treatments that otherwise would not
likely occur. During this period, the creation and implementation of
suitable clearing and settlement
------------------------- EQ Advisors Trust
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systems and other operational problems may cause market disruptions that
could adversely affect investments quoted in the Euro.
POLITICAL/ECONOMIC RISK: Changes in economic and tax policies, government
instability, war or other political or economic actions or factors may have
an adverse effect on a Portfolio's foreign investments.
REGULATORY RISK: Less information may be available about foreign companies.
In general, foreign companies are not subject to uniform accounting,
auditing and financial reporting standards or to other regulatory practices
and requirements as are U.S. companies.
TRANSACTION COSTS RISK: The costs of buying and selling foreign securities,
including tax, brokerage and custody costs, generally are higher than those
involving domestic transactions.
GROWTH INVESTING RISK: Growth investing generally focuses on companies that, due
to their strong earnings and revenue potential, offer above-average prospects
for capital growth, with less emphasis on dividend income. Earnings
predictability and confidence in earnings forecasts are an important part of the
selection process. As a result, the price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
Advisers using this approach generally seek out companies experiencing some or
all of the following: high sales growth, high unit growth, high or improving
returns on assets and equity, and a strong balance sheet. Such Advisers also
prefer companies with a competitive advantage such as unique management,
marketing or research and development. Growth investing is also subject to the
risk that the stock price of one or more companies will fall or will fail to
appreciate as anticipated by the Advisers, regardless of movements in the
securities market.
INDEX-FUND RISK: The Alliance Equity Index Portfolio is not actively managed
(which involves buying and selling of securities based upon economic, financial
and market analysis and investment judgment). Rather, the Alliance Equity Index
Portfolio utilizes proprietary modeling techniques to match the performance
results of the S&P 500 Index. Therefore, the Portfolio will invest in the
securities included in the relevant index or substantially identical securities
regardless of market trends. The Portfolio cannot modify its investment
strategies to respond to changes in the economy, which means it may be
particularly susceptible to a general decline in the U.S. or global stock market
segment relating to the relevant index.
LEVERAGING RISK: When a Portfolio borrows money or otherwise leverages its
portfolio, the value of an investment in that Portfolio will be more volatile
and all other risks will tend to be compounded. All of the Portfolios may take
on leveraging risk by investing in collateral from securities loans and by
borrowing money to meet redemption requests.
LIQUIDITY RISK: Certain securities held by a Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like. A
Portfolio may have to hold these securities longer than it would like and may
forego other investment opportunities. There is the possibility that a Portfolio
may lose money or be prevented from earning capital gains if it can not sell a
security at the time and price that is most beneficial to the Portfolio.
Portfolios that invest in privately-placed securities, high-yield bonds,
mortgage-backed securities or foreign or emerging market 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
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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.
MULTIPLE-ADVISER RISK: The EQ/Aggressive Stock and EQ/Balanced Portfolios employ
multiple Advisers. Each of the Advisers independently chooses and maintains a
portfolio of common stocks for the Portfolio and each is responsible for
investing a specific allocated portion of the Portfolio's assets. Because each
Adviser will be managing its allocated portion of the Portfolio independently
from the other Advisers, the same security may be held in two different portions
of the Portfolio, or may be acquired for one portion of the Portfolio at a time
when the Adviser of another portion deems it appropriate to dispose of the
security from that other portion. Similarly, under some market conditions, one
Adviser may believe that temporary, defensive investments in short-term
instruments or cash are appropriate when the other Adviser or Advisers believe
continued exposure to the equity markets is appropriate for their portions of
the Portfolio. Because each Adviser directs the trading for its own portion of
the Portfolio, and does not aggregate its transactions with those of the other
Advisers, the Portfolio may incur higher brokerage costs than would be the case
if a single Adviser were managing the entire Portfolio.
NON-DIVERSIFICATION RISK: The Morgan Stanley Emerging Markets Equity and Mercury
World Strategy Portfolios are classified as "non-diversified" investment
companies, which means that the proportion of each Portfolio's assets that may
be invested in the securities of a single issuer is not limited by the 1940 Act.
Since a relatively high percentage of each non-diversified Portfolio's assets
may be invested in the securities of a limited number of issuers, some of which
may be within the same industry, the securities of each Portfolio may be more
sensitive to changes in the market value of a single issuer or industry. The use
of such a focused investment strategy may increase the volatility of a
Portfolio's investment performance, as the Portfolio may be more susceptible to
risks associated with a single economic, political or regulatory event than a
diversified portfolio. If the securities in which the Portfolio invests perform
poorly, the Portfolio could incur greater losses than it would have had it been
invested in a greater number of securities. However to qualify as a regulated
investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code") and receive pass through tax treatment, each Portfolio at the close
of each fiscal quarter, may not have more than 25% of its total assets invested
in the securities of any one issuer (excluding U.S. Government obligations) and
with respect to 50% of its assets, (i) may not have more than 5% of its total
assets invested in the securities of any one issuer and (ii) may not own more
than 10% of the outstanding voting securities of any one issuer. Each
non-diversified Portfolio intends to qualify as a RIC.
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 that could be passed
through to shareholders.
SECTOR RISK: Market or economic factors affecting certain companies or
industries in a particular industry sector could have a major effect on the
value of a Portfolio's investments. Many technology stocks, especially those of
smaller less-seasoned companies, tend to be more volatile than the overall
market.
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
------------------------- EQ Advisors Trust
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extensions of secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially. Loans will only be made to
firms deemed by the Adviser to be of good standing and will not be made unless,
in the judgment of the Adviser, the consideration to be earned from such loans
would justify the risk.
SMALL-CAP AND MID-CAP COMPANY RISK: A Portfolio's investments in small-cap and
mid-cap companies may involve greater risks than investments in larger, more
established issuers. Smaller companies may have narrower product lines, more
limited financial resources and more limited trading markets for their stock, as
compared with larger companies. Their securities may be less well-known and
trade less frequently and in more limited volume than the securities of larger,
more established companies. In addition, small-cap and mid-cap companies are
typically subject to greater changes in earnings and business prospects than
larger companies. Consequently, the prices of small company stocks tend to rise
and fall in value more frequently than the stocks of larger companies. Although
investing in small-cap and mid-cap companies offers potential for above-average
returns, the companies may not succeed and the value of their stock could
decline significantly.
VALUE INVESTING RISK: Value investing attempts to identify strong companies
selling at a discount from their perceived true worth. Advisers using this
approach generally select stocks at prices, in their view, that are temporarily
low relative to the company's earnings, assets, cash flow and dividends. Value
investing is subject to the risk that the stocks' intrinsic value may never be
fully recognized or realized by the market, or their prices may go down. In
addition, there is the risk that a stock judged to be undervalued may actually
be appropriately priced. Value investing generally emphasizes companies that,
considering their assets and earnings history, are attractively priced and may
provide dividend income.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
<PAGE>
4
Management of the Trust
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This section gives you information on the Trust, the Manager and the Advisers
for the Portfolios. More detailed information concerning each of the Advisers
and portfolio managers is included in the description for each Portfolio in the
section "About The Investment Portfolios."
THE TRUST
The Trust is organized as a Delaware business trust and is registered with the
Securities and Exchange Commission ("SEC") as an open-end management investment
company. The Trust issues shares of beneficial interest that are currently
divided among forty-one (41) 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
The Equitable Life Assurance Society of the United States ("Equitable"), 1290
Avenue of the Americas, New York, New York 10104, currently serves as the
Manager of the Trust. EQ Financial Consultants, Inc. ("EQFC") previously served
as the Manager of the Trust, until September 17, 1999 when the Trust's
Investment Management Agreement was transferred to Equitable. Equitable is an
investment adviser registered under the Investment Advisers Act of 1940, as
amended, and a wholly-owned subsidiary of AXA Financial, Inc. ("AXA Financial"),
a subsidiary of AXA, a French insurance holding company.
Subject to the supervision and direction of the Board of Trustees, the Manager
has overall responsibility for the general management of the Trust. In the
exercise of that responsibility, and under the Multi-Manager Order, the Manager,
without obtaining shareholder approval but subject to the review and approval by
the Board of Trustees, may: (i) select new or additional Advisers for the
Portfolios; (ii) enter into new investment advisory agreements 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, 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.
The contractual management fee rates payable by the Trust are at the following
annual percentages of the value of each Portfolio's average daily net assets:
CONTRACTUAL FEE UNDER MANAGEMENT AGREEMENT (AS A PERCENTAGE OF AVERAGE DAILY NET
ASSETS)(FEE ON ALL ASSETS)
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INDEX PORTFOLIO
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Alliance Equity Index 0.250%
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CONTRACTUAL FEE UNDER MANAGEMENT AGREEMENT
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT
DEBT PORTFOLIOS $750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance High Yield 0.600% 0.575% 0.550% 0.530% 0.520%
Alliance Intermediate Government Securities 0.500% 0.475% 0.450% 0.430% 0.420%
Alliance Money Market 0.350% 0.325% 0.300% 0.280% 0.270%
Alliance Quality Bond 0.525% 0.500% 0.475% 0.455% 0.445%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
CONTRACTUAL FEE UNDER MANAGEMENT AGREEMENT
(AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
FIRST NEXT NEXT NEXT
EQUITY PORTFOLIOS $1 BILLION $1 BILLION $3 BILLION $5 BILLION THEREAFTER
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
EQ/Aggressive Stock 0.650% 0.600% 0.575% 0.550% 0.525%
EQ/Balanced 0.600% 0.550% 0.525% 0.500% 0.475%
Alliance Common Stock 0.550% 0.500% 0.475% 0.450% 0.425%
Alliance Conservative Investors 0.600% 0.550% 0.525% 0.500% 0.475%
Alliance Global 0.750% 0.700% 0.675% 0.650% 0.625%
Alliance Growth and Income 0.600% 0.550% 0.525% 0.500% 0.475%
Alliance Growth Investors 0.600% 0.550% 0.525% 0.500% 0.475%
Alliance International 0.850% 0.800% 0.775% 0.750% 0.725%
Alliance Small Cap Growth 0.750% 0.700% 0.675% 0.650% 0.625%
Calvert Socially Responsible 0.650% 0.600% 0.575% 0.550% 0.525%
Capital Guardian Research 0.650% 0.600% 0.575% 0.550% 0.525%
Capital Guardian U.S. Equity 0.650% 0.600% 0.575% 0.550% 0.525%
EQ/Alliance Premier Growth 0.900% 0.850% 0.825% 0.800% 0.775%
EQ/Alliance Technology 0.900% 0.850% 0.825% 0.800% 0.775%
EQ/Evergreen Foundation 0.600% 0.550% 0.525% 0.500% 0.475%
EQ/Evergreen 0.650% 0.600% 0.575% 0.550% 0.525%
EQ/Putnam Balanced 0.600% 0.550% 0.525% 0.500% 0.475%
EQ/Putnam Growth & Income Value 0.600% 0.550% 0.525% 0.500% 0.475%
Mercury Basic Value Equity 0.600% 0.550% 0.525% 0.500% 0.475%
Mercury World Strategy 0.700% 0.650% 0.625% 0.600% 0.575%
MFS Emerging Growth Companies 0.650% 0.600% 0.575% 0.550% 0.525%
MFS Growth with Income 0.600% 0.550% 0.525% 0.500% 0.475%
MFS Research 0.650% 0.600% 0.575% 0.550% 0.525%
Morgan Stanley Emerging Markets Equity 1.150% 1.100% 1.075% 1.050% 1.025%
T. Rowe Price Equity Income 0.600% 0.550% 0.525% 0.500% 0.475%
T. Rowe Price International Stock 0.850% 0.800% 0.775% 0.750% 0.725%
Warburg Pincus Small Company Value 0.750% 0.700% 0.675% 0.650% 0.625%
- --------------------------------------------------------------------------------------------------------
</TABLE>
For four Portfolios (i.e., T. Rowe Price International Stock, EQ/Putnam Growth
& Income Value, EQ/Putnam Balanced, and Warburg Pincus Small Cap Value
Portfolios) the Manager has agreed not to implement any increase in the
applicable management fee rates (as approved by shareholders) until July 31,
2001, unless the Board agrees that such a management fee increase should be put
into operation earlier.
<PAGE>
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- --------------------------------------------------------------------------------
The table below shows the annual rate of the management fees (as a percentage
of each Portfolio's average daily net assets) that the Manager (or the
predecessor Manager for certain of the Portfolios) received in 1999 for
managing each of the Portfolios and the rate of the management fees waived by
the Manager (or the predecessor Manager for certain of the Portfolios) in 1999
in accordance with the provisions of the Expense Limitation Agreement, as
defined directly below, between the Manager and the Trust with respect to
certain of the Portfolios.
MANAGEMENT FEES PAID BY THE PORTFOLIOS IN 1999*
- --------------------------------------------------------------
ANNUAL RATE OF
RATE FEES
PORTFOLIOS RECEIVED WAIVED
- --------------------------------------------------------------
EQ/Aggressive Stock 0.54% 0.00%
EQ/Balanced 0.41% 0.00%
Alliance Common Stock 0.36% 0.00%
Alliance Conservative Investors 0.48% 0.00%
Alliance Equity Index 0.30% 0.00%
Alliance Global 0.63% 0.00%
Alliance Growth & Income 0.54% 0.00%
Alliance Growth Investors 0.50% 0.00%
Alliance High Yield 0.60% 0.00%
Alliance Intermediate 0.50% 0.00%
Government Securities
Alliance International 0.90% 0.00%
Alliance Money Market 0.34% 0.00%
EQ/Alliance Premier Growth 0.90% 0.22%
Alliance Quality Bond 0.53% 0.00%
Alliance Small Cap Growth 0.90% 0.00%
Calvert Socially Responsible 0.65% 4.33%
Capital Guardian Research 0.65% 0.40%
Capital Guardian U.S. Equity 0.65% 0.28%
EQ/Evergreen 0.75% 1.81%
EQ/Evergreen Foundation 0.63% 0.99%
Mercury Basic Value 0.55% 0.11%
Mercury World Strategy 0.70% 0.20%
MFS Emerging Growth 0.55% 0.10%
Companies
MFS Growth with Income 0.55% 0.31%
MFS Research 0.55% 0.11%
Morgan Stanley Emerging 1.15% 0.64%
Markets Equity
EQ/Putnam Balanced 0.55% 0.17%
EQ/Putnam Growth & Income 0.55% 0.10%
Value
T. Rowe Price Equity Income 0.55% 0.15%
T. Rowe Price International 0.75% 0.09%
Warburg Pincus Small Company 0.65% 0.13%
Value
- --------------------------------------------------------------
* The EQ/Alliance Technology Portfolio is not included in the above table
because it had no operations during the fiscal year ended December 31, 1999.
EXPENSE LIMITATION AGREEMENT
In the interest of limiting until April 30, 2001 the expenses of each Portfolio
(except for the Portfolios for which Alliance serves as Investment Adviser,
other than EQ/Alliance Premier Growth Portfolio), the Manager has entered into
an amended and restated expense limitation agreement with the Trust with respect
to those Portfolios ("Expense Limitation Agreement"). Pursuant to that Expense
Limitation Agreement, the Manager has agreed to waive or limit its fees and to
assume other expenses so that the total annual operating expenses of each
Portfolio (other than interest, taxes, brokerage commissions, other expenditures
which are capitalized in accordance with generally accepted accounting
principles, other extraordinary expenses not incurred in the ordinary course of
each Portfolio's business and amounts payable pursuant to a plan adopted in
accordance with Rule 12b-1 under the 1940 Act), are limited to the following
respective expense ratios:
------------------------- EQ Advisors Trust
<PAGE>
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118
- --------------------------------------------------------------------------------
EXPENSE LIMITATION PROVISIONS
- --------------------------------------------------------------
TOTAL EXPENSES
LIMITED TO (% OF
PORTFOLIOS DAILY NET ASSETS)
- --------------------------------------------------------------
Calvert Socially Responsible 0.80%
Capital Guardian Research 0.70%
Capital Guardian U.S. Equity 0.70%
EQ/Alliance Technology 0.90%
EQ/Alliance Premier Growth 0.90%
EQ/Evergreen 0.70%
EQ/Evergreen Foundation 0.70%
EQ/Putnam Balanced 0.65%
EQ/Putnam Growth & Income Value 0.70%
Mercury Basic Value Equity 0.70%
Mercury World Strategy 0.95%
MFS Emerging Growth Companies 0.75%
MFS Growth with Income 0.70%
MFS Research 0.70%
Morgan Stanley Emerging Markets 1.50%
Equity
T. Rowe Price Equity Income 0.70%
T. Rowe Price International Stock 1.00%
Warburg Pincus Small Company Value 0.85%
- --------------------------------------------------------------
Each Portfolio may at a later date reimburse to the Manager the management fees
waived or limited and other expenses assumed and paid by the Manager pursuant to
the Expense Limitation Agreement provided such Portfolio has reached a
sufficient asset size to permit such reimbursement to be made without causing
the total annual expense ratio of each Portfolio to exceed the percentage limits
stated above. Consequently, no reimbursement by a Portfolio will be made unless:
(i) the Portfolio's assets exceed $100 million; (ii) the Portfolio's total
annual expense ratio is less than the respective percentages stated above; and
(iii) the payment of such reimbursement has been approved by the Trust's Board
of Trustees on a quarterly basis.
The total amount of reimbursement to which the Manager may be entitled will
equal, at any time, the sum of (i) all investment management fees previously
waived or reduced by the Manager and (ii) all other payments previously remitted
by the Manager to the Portfolio in accordance with the Expense Limitation
Agreement during any of the previous five (5) fiscal years, (or three (3) fiscal
years for certain Portfolios) less any reimbursement that the Portfolio has
previously paid to the Manager with respect to (a) such investment management
fees previously waived or reduced and (b) such other payments previously
remitted by the Manager to the Portfolio.
THE ADVISERS
Each Portfolio has one or more Advisers that furnish an investment program for
the Portfolio (or portion thereof for which the entity serves as Adviser)
pursuant to an investment advisory agreement with the Manager. Each Adviser
makes investment decisions on behalf of the Portfolio (or portion thereof for
which the entity serves as Adviser), places all orders for the purchase and sale
of investments for the Portfolio's account with brokers or dealers selected by
such Adviser or the Manager 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 additional Advisers for any
Portfolio; (b) enter into new investment advisory agreements and materially
modify existing investment advisory agreements; and (c) terminate and replace
the Advisers without obtaining approval of the relevant Portfolio's
shareholders. However, the Manager may not enter into an investment advisory
agreement with an "affiliated person" of the Manager (as that term is defined in
Section 2(a)(3) of the 1940 Act ("Affiliated Adviser"), such as Alliance, unless
the investment advisory agreement with the Affiliated Adviser, including
compensation, is approved by the affected Portfolio's shareholders, including,
in instances in which the investment advisory agreement pertains to a newly
formed Portfolio, the Portfolio's initial
<PAGE>
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119
- --------------------------------------------------------------------------------
shareholder. In such circumstances, shareholders would receive notice of such
action, including the information concerning the Adviser that normally is
provided in an information statement under Schedule 14C of the Securities
Exchange Act of 1934, as amended ("1934 Act").
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, Equitable currently serves as the Administrator to the
Trust. As Administrator, Equitable provides the Trust with necessary
administrative, fund accounting and compliance services, and makes available the
office space, equipment, personnel and facilities required to provide such
services to the Trust.
Equitable may carry out its responsibilities either directly or through
sub-contracting with third party service providers. For these services, the
Trust pays Equitable $30,000 for each Portfolio, and a monthly fee at the annual
rate of 0.04 of 1% of the first $3 billion of total Trust assets, 0.03 of 1% of
the next $3 billion of the total Trust assets; 0.025 of 1% of the next $4
billion of the total Trust assets; and 0.0225% of 1% of the total Trust assets
in excess of $10 billion.
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 in accordance with Section 28(e) of the 1934
Act, the Manager and each Adviser may consider research and brokerage services
received by the Manager, the Advisers, the Trust or any Portfolio. 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. Finally, at the discretion of the Board, the
Trust may direct the Manager to cause Advisers to effect securities transactions
through broker-dealers in a manner that would help to generate resources to (i)
pay the cost of certain expenses which the Trust is required to pay or for which
the Trust is required to arrange payment or (ii) finance activities that are
primarily intended to result in the sale of Trust shares.
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 the 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 an Adviser to another Portfolio for which such Adviser does
not provide investment advice in whole or in part. The Trust has adopted
procedures that are reasonably designed to provide that any commission it pays
to affiliates of the Manager or Advisers does not exceed the usual and customary
broker's commission. The Trust has also adopted procedures permitting it to
purchase securities, under certain restrictions prescribed by a rule under the
1940 Act, in a public offering in which an affiliate of the Manager or Advisers
is an underwriter.
------------------------- EQ Advisors Trust
<PAGE>
5
Fund distribution arrangements
- ------
120
- --------------------------------------------------------------------------------
The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. AXA Advisors, LLC ("AXA Advisors") serves as one of
the distributors for the Class IA and Class IB shares of the Trust offered by
this Prospectus. Equitable Distributors, Inc. ("EDI") serves as the other
distributor for the Class IA and Class IB shares of the Trust. Both classes of
shares are offered and redeemed at their net asset value without any sales load.
AXA Advisors and EDI are affiliates of Equitable. Both AXA Advisors and EDI are
registered as broker-dealers under the 1934 Act and are members of the National
Association of Securities Dealers, Inc.
The Trust has adopted a Distribution Plan under Rule 12b-1 under the 1940 Act
for the Trust's Class IB shares. Under the Class IB Distribution Plan the Class
IB shares of the Trust pay each of the distributors an annual fee to compensate
them for promoting, selling and servicing shares of the Portfolios. The annual
fees equal 0.25% of each Portfolio's average daily net assets. Over time, the
fees will increase your cost of investing and may cost you more than other types
of charges.
<PAGE>
6
Purchase and redemption
- ------
121
- --------------------------------------------------------------------------------
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.
You should note that the Trust is not designed for professional "market timing"
organizations, or other organizations or individuals engaging in a market timing
strategy, making programmed transfers, frequent transfers or transfers that are
large in relation to the total assets of each of the Trust's Portfolios. Market
timing strategies are disruptive to the Trust's Portfolios. If we determine that
your transfer patterns among the Trust's Portfolios reflect a market timing
strategy, we reserve the right to take action including, but not limited to:
restricting the availability of transfers through telephone requests, facsimile
transmissions, automated telephone services, internet services or any electronic
transfer services. We may also refuse to act on transfer instructions of an
agent acting under a power of attorney who is acting on behalf of more than one
owner.
<PAGE>
7
How assets are valued
- ------
122
- --------------------------------------------------------------------------------
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, including depositary receipts, in
the United States are valued at representative quoted prices in the
currency in the country of origin. Foreign currency is converted into
United States dollar equivalents at current exchange rates. Because foreign
markets may be open at different times than the NYSE, the value of a
Portfolio's shares may change on days when shareholders are not able to buy
or sell them. If events materially affecting the values of the Portfolios'
foreign investments occur between the close of foreign markets and the
close of regular trading on the NYSE, these investments may be valued at
their fair value.
o Short-term debt securities in the Portfolios, other than the Alliance Money
Market Portfolio, which mature in 60 days or less are valued at amortized
cost, which approximates market value. Securities held in the Alliance
Money Market Portfolio are valued at prices based on equivalent yields or
yield spreads.
o Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided are valued in good
faith by the Valuation Committee of the Board of Trustees of the Trust
using its best judgment.
<PAGE>
8
Tax information
- ------
123
- --------------------------------------------------------------------------------
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 determining 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.
Equitable, in its capacity as Administrator therefore carefully monitors
compliance with all of the regulated investment company rules and variable
insurance contract investment diversification rules.
<PAGE>
9
Financial Highlights
- ------
124
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the financial
performance for the Trust's Class IA and Class IB shares since May 1, 1997.
With respect to the Portfolios that are advised by Alliance (other than
EQ/Alliance Premier Growth Portfolio and the EQ/Alliance Technology Stock
Portfolio) financial information in the table below is for the past five (5)
years (or, if shorter, the period of the Portfolio's operations). Since the
EQ/Alliance Technology Stock Portfolio will commence operations on May 1, 2000,
no information for that Portfolio is provided below. The information below for
the Class IA and Class IB shares has been derived from the financial statements
of the Trust, which have been audited by PricewaterhouseCoopers LLP,
independent public accountants. PricewaterhouseCoopers LLP's report on the
Trust's financial statements as of December 31, 1999 appears in the Trust's
Annual Report. The information should be read in conjunction with the financial
statements contained in the Trust's Annual Report which are incorporated by
reference into the Trust's Statement of Additional Information (SAI) and
available upon request.
EQ/AGGRESSIVE STOCK PORTFOLIO (FKA ALLIANCE AGGRESSIVE STOCK PORTFOLIO)(d)(e):
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $34.15 $36.22 $35.85 $35.68 $30.63
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ........... 0.12 0.09 0.04 0.09 0.10
Net realized and unrealized gain
(loss) on investments ................. 6.22 (0.28) 3.71 7.52 9.54
------ ------ ------ ------ ------
Total from investment operations........ 6.34 (0.19) 3.75 7.61 9.64
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ (0.12) (0.16) (0.05) (0.09) (0.10)
Dividends in excess of net
investment income ..................... -- -- -- -- --
Distributions from realized gains ...... (2.36) (1.72) (3.33) (7.33) (4.49)
Distributions in excess of realized
gains ................................. -- -- -- (0.02) --
Tax return of capital distributions .... -- -- -- -- --
------ ------ ------ ------ ------
Total dividends and distributions ...... (2.48) (1.88) (3.38) (7.44) (4.59)
------ ------ ------ ------ ------
Net asset value, end of period ........... $38.01 $34.15 $36.22 $35.85 $35.68
====== ====== ====== ====== ======
Total return ............................. 18.84% 0.29% 10.94% 22.20% 31.63%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $4,368,877 $4,346,907 $4,589,771 $3,865,256 $2,700,515
Ratio of expenses to average net
assets ................................. 0.56% 0.56% 0.54% 0.48% 0.49%
Ratio of net investment income (loss)
to average net assets .................. 0.33% 0.24% 0.11% 0.24% 0.28%
Portfolio turnover rate .................. 87% 105% 123% 108% 127%
<CAPTION>
CLASS IB
--------------------------------------------------------
OCTOBER 2,*
YEAR ENDED DECEMBER 31, 1996 TO
------------------------------------- DECEMBER 31,
1999 1998 1997 1996
------------ ------------ ----------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period ..... $34.01 $36.13 $35.83 $37.28
------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ........... 0.03 0.01 (0.11) (0.01)
Net realized and unrealized gain
(loss) on investments ................. 6.20 (0.29) 3.77 0.85
------ ------ ------ ------
Total from investment operations........ 6.23 (0.28) 3.66 0.84
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ (0.05) (0.12) (0.03) -
Dividends in excess of net
investment income ..................... - - - (0.02)
Distributions from realized gains ...... (2.36) (1.72) (3.33) (0.23)
Distributions in excess of realized
gains ................................. - - - (2.04)
Tax return of capital distributions .... - - - -
------ ------ ------ ------
Total dividends and distributions ...... (2.41) (1.84) (3.36) (2.29)
------ ------ ------ ------
Net asset value, end of period ........... $37.83 $34.01 $36.13 $35.83
====== ====== ====== ======
Total return ............................. 18.55% 0.05% 10.66% 2.32%(b)
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $233,265 $153,782 $73,486 $613
Ratio of expenses to average net
assets ................................. 0.81% 0.82% 0.81% 0.73%(a)
Ratio of net investment income (loss)
to average net assets .................. 0.07% 0.02% (0.28)% (0.10)%(a)
Portfolio turnover rate .................. 87% 105% 123% 108%
</TABLE>
<PAGE>
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125
- --------------------------------------------------------------------------------
EQ/BALANCED PORTFOLIO (FKA ALLIANCE BALANCED PORTFOLIO)(d)(e):
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ..... $18.51 $17.58 $16.64 $16.76 $14.87
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .................. 0.52 0.56 0.58 0.53 0.54
Net realized and unrealized gain
on investments and foreign
currency transactions ................. 2.69 2.54 1.86 1.31 2.36
------ ------ ------ ------ ------
Total from investment operations ....... 3.21 3.10 2.44 1.84 2.90
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ (0.56) (0.50) (0.59) (0.53) (0.54)
Dividends in excess of net
investment income ..................... -- -- -- -- --
Distributions from realized gains ...... (1.98) (1.67) (0.91) (1.40) (0.47)
Distributions in excess of realized
gains ................................. -- -- -- (0.03) --
Tax return of capital distributions .... -- -- -- -- --
------ ------ ------ ------ ------
Total dividends and distributions ...... (2.54) (2.17) (1.50) (1.96) (1.01)
------ ------ ------ ------ ------
Net asset value, end of period ........... $19.18 $18.51 $17.58 $16.64 $16.76
====== ====== ====== ====== ======
Total return ............................. 17.79% 18.11% 15.06% 11.68% 19.75%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $2,126,313 $1,936,429 $1,724,089 $1,637,856 $1,523,142
Ratio of expenses to average net
assets ................................. 0.44% 0.45% 0.45% 0.41% 0.40%
Ratio of net investment income to
average net assets ..................... 2.68% 3.00% 3.30% 3.15% 3.33%
Portfolio turnover rate .................. 107% 95% 146% 177% 186%
<CAPTION>
CLASS IB
-------------------------------------
JULY 8, 1998*
YEAR ENDED TO
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period ..... $18.51 $19.48
------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .................. 0.47 0.24
Net realized and unrealized gain
on investments and foreign
currency transactions ................. 2.69 0.66
------ ------
Total from investment operations ....... 3.16 0.90
------ ------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ (0.54) (0.20)
Dividends in excess of net
investment income ..................... -- --
Distributions from realized gains ...... (1.98) (1.67)
Distributions in excess of realized
gains ................................. -- --
Tax return of capital distributions .... -- --
------ ------
Total dividends and distributions ...... (2.52) (1.87)
------ ------
Net asset value, end of period ........... $19.15 $18.51
====== ======
Total return ............................. 17.50% 4.92%(b)
====== ======
<PAGE>
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $10,701 $10
Ratio of expenses to average net
assets ................................. 0.69% 0.70%(a)
Ratio of net investment income to
average net assets ..................... 2.43% 2.65%(a)
Portfolio turnover rate .................. 107% 95%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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- --------------------------------------------------------------------------------
ALLIANCE COMMON STOCK PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------------------
1999 1998 1997 1996 1995
------------------ ------------------ ---------------- ----------------- ----------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning
of period ................. $24.35 $21.61 $18.23 $16.48 $13.36
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income...... 0.17 0.18 0.14 0.15 0.20
Net realized and
unrealized gain on
investments and
foreign currency
transactions ............. 5.84 5.99 5.12 3.73 4.12
------ ------ ------ ------ ------
Total from investment
operations ............... 6.01 6.17 5.26 3.88 4.32
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ........ (0.16) (0.15) (0.11) (0.15) (0.20)
Dividends in excess of
net investment
income ................... -- -- -- -- (0.02)
Distributions from
realized gains ........... (4.03) (3.28) (1.77) (1.76) (0.95)
Distributions in excess
of realized gains ........ -- -- -- (0.22) (0.03)
Tax return of capital
distributions ............ -- -- -- -- --
------ ------ ------ ------ ------
Total dividends and
distributions ............ (4.19) (3.43) (1.88) (2.13) (1.20)
------ ------ ------ ------ ------
Net asset value, end of
period .................... $26.17 $24.35 $21.61 $18.23 $16.48
====== ====== ====== ====== ======
Total return ............... 25.19% 29.39% 29.40% 24.28% 32.45%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ................... $14,951,495 $12,061,977 $9,331,994 $6,625,390 $4,879,677
Ratio of expenses to
average net assets ........ 0.38% 0.39% 0.39% 0.38% 0.38%
Ratio of net investment
income to average net
assets .................... 0.65% 0.75% 0.69% 0.85% 1.27%
Portfolio turnover rate .... 57% 46% 52% 55% 61%
<CAPTION>
CLASS IB
--------------------------------------------------------------------
OCTOBER 2,*
YEAR ENDED DECEMBER 31, 1996 TO
------------------------------------------------ DECEMBER 31,
1999 1998 1997 1996
----------------- --------------- -------------- -------------------
<S> <C> <C> <C> <C>
Net asset value, beginning
of period ................. $24.30 $21.58 $18.22 $17.90
------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS: 0.10 0.10 0.10 0.02
Net investment income......
Net realized and
unrealized gain on
investments and
foreign currency
transactions ............. 5.82 6.00 5.11 1.52
------ ------ ------ ------
Total from investment
operations ............... 5.92 6.10 5.21 1.54
------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ........ (0.14) (0.10) (0.08) --
Dividends in excess of
net investment
income ................... -- -- -- (0.03)
Distributions from
realized gains ........... (4.03) (3.28) (1.77) (0.16)
Distributions in excess
of realized gains ........ -- -- -- (1.03)
Tax return of capital
distributions ............ -- -- -- --
------ ------ ------ ------
Total dividends and
distributions ............ (4.17) (3.38) (1.85) (1.22)
------ ------ ------ ------
Net asset value, end of
period .................... $26.05 $24.30 $21.58 $18.22
====== ====== ====== ======
Total return ............... 24.88% 29.06% 29.07% 8.49%(b)
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ................... $1,642,066 $834,144 $228,780 $1,244
Ratio of expenses to
average net assets ........ 0.63% 0.64% 0.64% 0.63%(a)
Ratio of net investment
income to average net
assets .................... 0.39% 0.44% 0.46% 0.61%(a)
Portfolio turnover rate .... 57% 46% 52% 55%
</TABLE>
<PAGE>
- ------
127
- --------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ........................ $12.32 $11.89 $11.29 $11.52 $10.15
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ......... 0.47 0.49 0.49 0.50 0.60
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 0.76 1.12 0.97 0.07 1.43
------ ------ ------ ------ ------
Total from investment
operations ................... 1.23 1.61 1.46 0.57 2.03
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............ (0.44) (0.48) (0.49) (0.51) (0.59)
Distributions from realized
gains ........................ (0.56) (0.70) (0.37) (0.27) (0.07)
Distributions in excess of
realized gains ............... -- -- -- (0.02) --
Tax return of capital
distributions ................ -- -- -- -- --
------ ------ ------ ------ ------
Total dividends and
distributions ................ (1.00) (1.18) (0.86) (0.80) (0.66)
------ ------ ------ ------ ------
Net asset value, end of
period ......................... $12.55 $12.32 $11.89 $11.29 $11.52
====== ====== ====== ====== ======
Total return .................... 10.14% 13.88% 13.25% 5.21% 20.40%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ....................... $394,489 $355,441 $307,847 $282,402 $252,101
Ratio of expenses to average
net assets .................... 0.53% 0.53% 0.57% 0.61% 0.59%
Ratio of net investment
income to average
net assets .................... 3.73% 3.99% 4.17% 4.48% 5.48%
Portfolio turnover rate ......... 111% 103% 206% 181% 287%
<CAPTION>
CLASS 1B
----------------------------------------
YEAR ENDED MAY 1, 1997*
DECEMBER 31, TO
----------------------- DECEMBER 31,
1999 1998 1997
----------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period ........................ $12.31 $11.88 $11.29
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ......... 0.44 0.46 0.31
Net realized and unrealized
gain on investments and
foreign currency
transactions ................. 0.75 1.12 1.01
------ ------ ------
Total from investment
operations ................... 1.19 1.58 1.32
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............ (0.43) (0.45) (0.36)
Distributions from realized
gains ........................ (0.56) (0.70) (0.37)
Distributions in excess of
realized gains ............... -- -- --
Tax return of capital
distributions ................ -- -- --
------ ------ ------
Total dividends and
distributions ................ (0.99) (1.15) (0.73)
------ ------ ------
Net asset value, end of
period ......................... $12.51 $12.31 $11.88
====== ====== ======
Total return .................... 9.87% 13.60% 11.84%(b)
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ....................... $81,555 $32,653 $5,694
Ratio of expenses to average
net assets .................... 0.78% 0.78% 0.80%(a)
Ratio of net investment
income to average
net assets .................... 3.48% 3.68% 3.82%(a)
Portfolio turnover rate ......... 111% 103% 206%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- ------
128
- --------------------------------------------------------------------------------
ALLIANCE EQUITY INDEX PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $25.00 $19.74 $15.16 $13.13 $ 9.87
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.28 0.27 0.26 0.27 0.26
Net realized and unrealized
gain on investments and
foreign currency
transactions ................... 4.78 5.25 4.64 2.65 3.32
------ ------ ------ ------ ------
Total from investment
operations ..................... 5.06 5.52 4.90 2.92 3.58
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income .............. (0.27) (0.25) (0.25) (0.25) (0.22)
Dividends in excess of net
investment income - ............ -- -- -- -- --
Distributions from realized
gains .......................... (0.22) (0.01) (0.07) (0.64) (0.09)
Distributions in excess of
realized gains ................. -- -- -- -- (0.01)
Tax return of capital
distributions .................. -- -- -- -- --
------ ------ ------ ------ ------
Total dividends and
distributions .................. (0.49) (0.26) (0.32) (0.89) (0.32)
------ ------ ------ ------ ------
Net asset value, end of period..... $29.57 $25.00 $19.74 $15.16 $13.13
====== ====== ====== ====== ======
Total return ...................... 20.38% 28.07% 32.58% 22.39% 36.48%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ......................... $2,618,539 $1,689,913 $943,631 $386,249 $165,785
Ratio of expenses to average
net assets ...................... 0.33% 0.34% 0.37% 0.39% 0.48%
Ratio of net investment
income to average net
assets .......................... 1.05% 1.23% 1.46% 1.91% 2.16%
Portfolio turnover rate ........... 5% 6% 3% 15% 9%
<CAPTION>
CLASS 1B
----------------------------------------
YEAR ENDED MAY 1, 1997*
DECEMBER 31, TO
----------------------- DECEMBER 31,
1999 1998 1997
----------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of
period .......................... $24.98 $19.73 $16.35
------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.21 0.22 0.14
Net realized and unrealized
gain on investments and
foreign currency
transactions ................... 4.78 5.24 3.48
------ ------ ------
Total from investment
operations ..................... 4.99 5.46 3.62
------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income .............. (0.25) (0.20) (0.17)
Dividends in excess of net
investment income - ............ -- -- --
Distributions from realized
gains .......................... (0.22) (0.01) (0.07)
Distributions in excess of
realized gains ................. -- -- --
Tax return of capital
distributions .................. -- -- --
------ ------ ------
Total dividends and
distributions .................. (0.47) (0.21) (0.24)
------ ------ ------
Net asset value, end of period..... $29.50 $24.98 $19.73
====== ====== ======
Total return ...................... 20.08% 27.74% 22.28%(b)
====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ......................... $20,931 $443 $110
Ratio of expenses to average
net assets ...................... 0.58% 0.59% 0.62%(a)
Ratio of net investment
income to average net
assets .......................... 0.78% 0.98% 1.10%(a)
Portfolio turnover rate ........... 5% 6% 3%
</TABLE>
<PAGE>
- ------
129
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- -------------- -------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $19.46 $17.29 $16.92 $15.74 $13.87
------ ------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.10 0.14 0.17 0.21 0.26
Net realized and unrealized
gain on investments and
foreign currency
transactions ................... 7.25 3.56 1.75 2.05 2.32
------ ------ ------ ------ ------
Total from investment
operations ..................... 7.35 3.70 1.92 2.26 2.58
------ ------ ------ ------ ------
LESS DISTRIBUTIONS:
Dividends from net
investment income .............. (0.02) (0.22) (0.36) (0.21) (0.25)
Dividends in excess of net
investment income .............. -- -- -- (0.08) -
Distributions from realized
gains .......................... (1.63) (1.31) (1.19) (0.79) (0.42)
Distributions in excess of
realized gains ................. -- -- -- -- (0.03)
Tax return of capital
distributions .................. -- -- -- -- (0.01)
------ ------ ------ ------ ------
Total dividends and
distributions .................. (1.65) (1.53) (1.55) (1.08) (0.71)
------ ------ ------ ------ ------
Net asset value, end of period..... $25.16 $19.46 $17.29 $16.92 $15.74
====== ====== ====== ====== ======
Total return ...................... 38.53% 21.80% 11.66% 14.60% 18.81%
====== ====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ......................... $1,869,185 $1,360,220 $1,203,867 $997,041 $686,140
Ratio of expenses to average
net assets ...................... 0.70% 0.71% 0.69% 0.60% 0.61%
Ratio of net investment
income to average net
assets .......................... 0.45% 0.72% 0.97% 1.28% 1.76%
Portfolio turnover rate ........... 93% 105% 57% 59% 67%
<CAPTION>
CLASS 1B
-----------------------------------------------------
OCTOBER 2,*
YEAR ENDED DECEMBER 31, 1996 TO
------------------------------------ DECEMBER 31,
1999 1998 1997 1996
------------ ----------- ----------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $19.41 $17.27 $16.91 $16.57
------ ------ ------ ------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.03 0.08 0.12 0.02
Net realized and unrealized
gain on investments and
foreign currency
transactions ................... 7.24 3.56 1.76 0.81
------ ------ ------ ------
Total from investment
operations ..................... 7.27 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 .......................... (1.63) (1.31) (1.19) (0.10)
Distributions in excess of
realized gains ................. -- -- -- (0.28)
Tax return of capital
distributions .................. -- -- -- --
------ ------ ------ ------
Total dividends and
distributions .................. (1.63) (1.50) (1.52) (0.49)
------ ------ ------ ------
Net asset value, end of period..... $25.05 $19.41 $17.27 $16.91
====== ====== ====== ======
Total return ...................... 38.17% 21.50% 11.38% 4.98%(b)
====== ====== ====== ======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ......................... $121,052 $47,982 $21,520 $290
Ratio of expenses to average
net assets ...................... 0.95% 0.96% 0.97% 0.86%(a)
Ratio of net investment
income to average net
assets .......................... 0.16% 0.41% 0.67% 0.48%(a)
Portfolio turnover rate ........... 93% 105% 57% 59%
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- ------
130
- --------------------------------------------------------------------------------
ALLIANCE GROWTH AND INCOME PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
-------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ........................... $ 16.99 $ 15.38 $ 13.01 $ 11.70 $ 9.70
---------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ............ 0.06 0.06 0.15 0.24 0.33
Net realized and unrealized
gain (loss) on investments....... 3.05 3.08 3.30 2.05 1.97
---------- ------- ------- ------- -------
Total from investment
operations ...................... 3.11 3.14 3.45 2.29 2.30
---------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............... (0.05) (0.05) (0.15) (0.23) (0.30)
Distributions from realized
gains ........................... (1.81) (1.48) (0.93) (0.75) -
Tax return of capital
distributions ................... - - - - -
----------- -------- -------- -------- -------
Total dividends and
distributions ................... (1.86) (1.53) (1.08) (0.98) (0.30)
----------- -------- -------- -------- -------
Net asset value, end of period ..... $ 18.24 $ 16.99 $ 15.38 $ 13.01 $ 11.70
----------- -------- -------- -------- -------
Total return ....................... 18.66% 20.86% 26.90% 20.09% 24.07%
=========== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) .......................... $ 1,241,619 $877,744 $555,059 $232,080 $98,053
Ratio of expenses to average net
assets ........................... 0.57% 0.58% 0.58% 0.58% 0.60%
Ratio of net investment income
to average net assets ............ 0.33% 0.38% 0.99% 1.94% 3.11%
Portfolio turnover rate ............ 70% 74% 79% 88% 65%
<CAPTION>
CLASS IB
--------------------------------------------
YEAR END DECEMBER 31, MAY 1, 1997*
------------------------- TO
1999 1998 DECEMBER 31, 1997
------------ ------------ ------------------
<S> <C> <C> <C>
Net asset value, beginning of
period ........................... $ 16.95 $ 15.36 $ 13.42
------- ------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ............ 0.01 0.03 0.05
Net realized and unrealized
gain (loss) on investments....... 3.04 3.07 2.91
------- ------- ---------
Total from investment
operations ...................... 3.05 3.10 2.96
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net
investment income ............... (0.03) (0.03) (0.09)
Distributions from realized
gains ........................... (1.81) (1.48) (0.93)
Tax return of capital
distributions ................... - - -
-------- -------- ---------
Total dividends and
distributions ................... (1.84) (1.51) (1.02)
-------- -------- ---------
Net asset value, end of period ..... $ 18.16 $ 16.95 $ 15.36
-------- -------- ---------
Total return ....................... 18.37% 20.56% 22.41%(b)
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) .......................... $261,663 $120,558 $ 32,697
Ratio of expenses to average net
assets ........................... 0.82% 0.83% 0.83%(a)
Ratio of net investment income
to average net assets ............ 0.06% 0.17% 0.43%(a)
Portfolio turnover rate ............ 70% 74% 79%
</TABLE>
<PAGE>
------
131
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------------
1999 1998 1997 1996 1996 1995
- ---------------------------------------- -------------- -------------- -------------------- -------------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................... $ 19.87 $ 18.55 $ 17.20 $ 17.68 $ 14.66
--------- --------- ---------- --------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ................ 0.37 0.41 0.41 0.40 0.57
Net realized and unrealized
gain on investments and
foreign currency
transactions ........................ 4.83 3.03 2.43 1.66 3.24
--------- --------- ---------- --------- --------
Total from investment
operations .......................... 5.20 3.44 2.84 2.06 3.81
--------- --------- ---------- --------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income .............................. (0.35) (0.41) (0.46) (0.40) (0.54)
Dividends in excess of net
investment income ................... - - - (0.03) (0.01)
Distributions from realized
gains ............................... (2.15) (1.71) (1.03) (2.10) (0.24)
Distributions in excess of
realized gains ...................... - - - (0.01) -
Tax return of capital
distributions ....................... - - - - -
---------- ---------- ---------- ---------- --------
Total dividends and
distributions ....................... (2.50) (2.12) (1.49) (2.54) (0.79)
---------- ---------- ---------- ---------- --------
Net asset value, end of period ......... $ 22.57 $ 19.87 $ 18.55 $ 17.20 $ 17.68
========== ========== ========== ========== ========
Total return ........................... 26.58% 19.13% 16.87% 12.61% 26.37%
========== ========== ========== ========== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)....... $2,495,787 $1,963,074 $1,630,389 $1,301,643 $896,134
Ratio of expenses to average net
assets ............................... 0.53% 0.55% 0.57% 0.57% 0.56%
Ratio of net investment income to
average net assets ................... 1.71% 2.10% 2.18% 2.31% 3.43%
Portfolio turnover rate ................ 98% 102% 121% 190% 107%
<CAPTION>
CLASS IB
----------------------------------------------------------------
YEAR ENDED DECEMBER 31, OCTOBER 2,*
-------------------------------------- 1996 TO
DECEMBER 31,
1999 1998 1997 1996
- ----------------------------------- -------------- -------------- -------------------- --------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period ............................ $ 19.84 $ 18.52 $ 17.19 $ 16.78
--------- --------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ................ 0.31 0.36 0.36 0.07
Net realized and unrealized
gain on investments and
foreign currency
transactions ......................... 4.82 3.03 2.43 0.71
--------- --------- ---------- ---------
Total from investment
operations .......................... 5.13 3.39 2.79 0.78
--------- --------- ---------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income .............................. (0.31) (0.36) (0.43) (0.02)
Dividends in excess of net
investment income ................... - - - (0.09)
Distributions from realized
gains ............................... (2.15) (1.71) (1.03) (0.02)
Distributions in excess of
realized gains ...................... - - - (0.24)
Tax return of capital
distributions ....................... - - - -
--------- --------- ---------- ---------
Total dividends and
distributions ....................... (2.46) (2.07) (1.46) (0.37)
--------- --------- ---------- ---------
Net asset value, end of period ......... $ 22.51 $ 19.84 $ 18.52 $ 17.19
========= ========= ========= ==========
Total return ........................... 26.27% 18.83% 16.58% 4.64%(b)
========= ========= ========= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's)....... $ 202,850 $92,027 $ 35,730 $ 472
Ratio of expenses to average net
assets ............................... 0.78% 0.80% 0.82% 0.84%(a)
Ratio of net investment income to
average net assets ................... 1.44% 1.85% 1.88% 1.69%(a)
Portfolio turnover rate ................ 98% 102% 121% 190%
</TABLE>
<PAGE>
- ------
132
- --------------------------------------------------------------------------------
ALLIANCE HIGH YIELD PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period ............................. $ 8.71 $ 10.41 $ 10.02 $ 9.64 $ 8.91
------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .............. 0.90 1.07 1.04 1.02 0.98
Net realized and unrealized
gain (loss) on investments......... (1.19) (1.56) 0.75 1.07 0.73
------- ------- ------- ------- -------
Total from investment
operations ........................ (0.29) (0.49) 1.79 2.09 1.71
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net
investment income ................. (0.96) (1.03) (0.97) (0.98) (0.94)
Dividends in excess of net
investment income ................. - - - (0.03) (0.04)
Distributions from realized
gains ............................. (0.01) (0.18) (0.43) (0.70) -
Distributions in excess of
realized gains .................... - - - - -
Return of capital distributions..... (0.02) - - - -
------- ------- -------- -------- --------
Total dividends and
distributions ..................... (0.99) (1.21) (1.40) (1.71) (0.98)
------- ------- -------- -------- --------
Net asset value, end of period ....... $ 7.43 $ 8.71 $ 10.41 $ 10.02 $ 9.64
======= ======= ======== ======== ========
Total return ......................... (3.35)% (5.15)% 18.48% 22.89% 19.92%
======= ======= ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ............................ $336,292 $405,308 $355,473 $199,360 $118,129
Ratio of expenses to average net
assets ............................. 0.63% 0.63% 0.62% 0.59% 0.60%
Ratio of net investment income
to average net assets .............. 10.53% 10.67% 9.82% 9.93% 10.34%
Portfolio turnover rate .............. 178% 181% 390% 485% 350%
<CAPTION>
CLASS IB
-------------------------------------------------------
OCTOBER 2,*
YEAR ENDED DECEMBER 31, 1996 TO
-------------------------------------- DECEMBER 31,
1999 1998 1997 1996
------------ ------------- ----------- ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of
period ............................. $ 8.69 $ 10.39 $ 10.01 $ 10.25
------- ------- ------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .............. 0.87 1.04 1.05 0.19
Net realized and unrealized
gain (loss) on investments......... (1.18) (1.56) 0.71 0.15
------- ------- ------- ----------
Total from investment
operations ........................ (0.31) (0.52) 1.76 0.34
------- ------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net
investment income ................. (0.95) (1.00) (0.95) (0.03)
Dividends in excess of net
investment income ................. - - - (0.25)
Distributions from realized
gains ............................. (0.01) (0.18) (0.43) (0.01)
Distributions in excess of
realized gains .................... - - - (0.29)
Return of capital distributions..... (0.02) - - -
------- ------- ------- ---------
Total dividends and
distributions ..................... (0.98) (1.18) (1.38) (0.58)
------- ------- ------- ----------
Net asset value, end of period ....... $ 7.40 $ 8.69 $ 10.39 $ 10.01
======= ======= ======= ==========
Total return ......................... (3.58)% (5.38)% 18.19% 3.32%(b)
======= ======= ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ............................ $230,290 $207,042 $66,338 $ 685
Ratio of expenses to average net
assets ............................. 0.88% 0.88% 0.88% 0.82%(a)
Ratio of net investment income
to average net assets .............. 10.25% 10.60% 9.76% 8.71%(a)
Portfolio turnover rate .............. 178% 181% 390% 485%
</TABLE>
<PAGE>
------
133
- --------------------------------------------------------------------------------
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ----------- -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period ............ $ 9.67 $ 9.44 $ 9.29 $ 9.47 $ 8.87
-------- ------- ------- ------ --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.50 0.50 0.53 0.54 0.58
Net realized and unrealized gain (loss) on
investments .................................. (0.49) 0.21 0.13 (0.19) 0.57
-------- ------- ------- ------- --------
Total from investment operations .............. 0.01 0.71 0.66 0.35 1.15
-------- ------- ------- ------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income. ......... (0.50) (0.48) (0.51) (0.53) (0.55)
-------- -------- -------- ------- ---------
Net asset value, end of period .................. $ 9.18 $ 9.67 $ 9.44 $ 9.29 $ 9.47
======== ======== ======== ======= =========
Total return .................................... 0.02 % 7.74 % 7.29 % 3.78 % 13.33 %
=========== ======== =========== ========= =============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $156,864 $153,383 $115,114 $88,384 $ 71,780
Ratio of expenses to average net assets ......... 0.55 % 0.55 % 0.55 % 0.56 % 0.57%
Ratio of net investment income to average
net assets .................................... 5.16 % 5.21 % 5.61 % 5.73 % 6.15%
Portfolio turnover rate ......................... 408 % 539 % 285% 318% 255%
<CAPTION>
CLASS IB
--------------------------------------------------
MAY 1, 1997*
YEAR ENDED DECEMBER 31, TO
------------------------------ DECEMBER 31,
1999 1998 1997
-------------- --------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period ............ $ 9.66 $ 9.43 $ 9.27
-------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.47 0.47 0.32
Net realized and unrealized gain (loss) on
investments .................................. (0.49) 0.22 0.22
-------- ---------- ---------
Total from investment operations .............. (0.02) 0.69 0.54
-------- ---------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income. ......... (0.49) (0.46) (0.38)
-------- ---------- ---------
Net asset value, end of period .................. $ 9.15 $ 9.66 $ 9.43
======== ========== =========
Total return .................................... (0.23)% 7.48% 5.83%(b)
======== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $ 45,911 $30,898 $ 5,052
Ratio of expenses to average net assets ......... 0.80% 0.80 % 0.81%(a)
Ratio of net investment income to average
net assets .................................... 4.91% 4.87 % 5.15%(a)
Portfolio turnover rate ......................... 408% 539 % 285%
</TABLE>
<PAGE>
- ------
134
Financial Highlights
- --------------------------------------------------------------------------------
ALLIANCE INTERNATIONAL PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31, APRIL 3, 1995*
--------------------------- TO
1999 1998 1997 1996 DECEMBER 31, 1995
------------------------- ------------- ------------ --------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 11.13 $ 10.27 $ 11.50 $ 10.87 $ 10.00
------- ------- ------- ------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.08 0.09 0.10 0.13 0.14
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ................... 4.07 0.97 (0.45) 0.94 0.98
------- ------- ------- ------- ---------
Total from investment
operations ..................... 4.15 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 .......................... (0.25) - (0.56) (0.25) (0.05)
Tax return of capital
distributions .................. - - - - -
-------- -------- ------- -------- ---------
Total dividends and
distributions .................. (0.25) (0.20) (0.88) (0.44) (0.25)
-------- -------- ------- -------- ---------
Net asset value, end of period .... $ 15.03 $ 11.13 $ 10.27 $ 11.50 $ 10.87
======== ======== ======= ======== =========
Total return ...................... 37.31 % 10.57 % (2.98)% 9.82% 11.29%(b)
========== ========== ======= ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ......................... $268,541 $204,767 $190,611 $151,907 $ 28,684
Ratio of expenses to average net
assets .......................... 1.08% 1.06% 1.08% 1.06% 1.03%(a)
Ratio of net investment income
to average net assets ........... 0.70% 0.81% 0.83% 1.10% 1.71%(a)
Portfolio turnover rate ........... 152% 59% 59% 48% 56%
<CAPTION>
CLASS IB
-----------------------------------------------
YEAR ENDED DECEMBER 31, MAY 1, 1997*
---------------------------- TO
1999 1998 DECEMBER 31, 1997
-------------- ------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of
period .......................... $ 11.11 $ 10.26 $ 11.39
--------- -------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ........... 0.04 0.05 0.02
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ................... 4.06 0.98 (0.31)
--------- -------- ----------
Total from investment
operations ..................... 4.10 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 .......................... (0.25) - (0.56)
Tax return of capital
distributions .................. - - -
---------- --------- ----------
Total dividends and
distributions .................. (0.25) (0.18) (0.84)
---------- --------- ----------
Net asset value, end of period .... $ 14.96 $ 11.11 $ 10.26
========== ========= ==========
Total return ...................... 36.90% 10.30 % (2.54)%(b)
========== ============ ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's) ......................... $ 18,977 $ 7,543 $ 3,286
Ratio of expenses to average net
assets .......................... 1.33% 1.31% 1.38%(a)
Ratio of net investment income
to average net assets ........... 0.36% 0.44% 0.20%(a)
Portfolio turnover rate ........... 152% 59% 59%
</TABLE>
<PAGE>
------
135
- --------------------------------------------------------------------------------
ALLIANCE MONEY MARKET PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1999 1998 1997 1996 1995
--------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.22 $ 10.18 $ 10.17 $ 10.16 $ 10.14
---------- --------- --------- ---------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ................ 0.51 0.53 0.54 0.54 0.57
Net realized and unrealized gain
(loss) on investments ............... - - - (0.01) -
----------- ---------- ---------- ----------- ----------
Total from investment operations...... 0.51 0.53 0.54 0.53 0.57
----------- ---------- ---------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment
income .............................. (0.45) (0.49) (0.53) (0.52) (0.55)
Dividends in excess of net
investment income ................... - - - - -
Dividends from realized gains ........ - - - - -
----------- ---------- ---------- ----------- ----------
Total dividends and distributions..... (0.45) (0.49) (0.53) (0.52) (0.55)
----------- ---------- ---------- ----------- ----------
Net asset value, end of period ......... $ 10.28 $ 10.22 $ 10.18 $ 10.17 $ 10.16
=========== ========== ========== =========== ==========
Total return ........................... 4.96% 5.34% 5.42% 5.33% 5.74%
=========== ========== ========== =========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...... $ 883,988 $ 723,311 $ 449,960 $ 463,422 $ 386,691
Ratio of expenses to average net
assets ............................... 0.37% 0.37% 0.39% 0.43% 0.44%
Ratio of net investment income to
average net assets ................... 4.91% 5.13% 5.28% 5.17% 5.53%
<CAPTION>
CLASS IB
------------------------------------------------------------------
OCTOBER 2,
YEAR ENDED DECEMBER 31, 1996* TO
------------------------------------------------ DECEMBER 31,
1999 1998 1997 1996
--------------- ---------------- --------------- -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period $ 10.21 $ 10.17 $ 10.16 $ 10.16
---------- ----------- ---------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ................ 0.49 0.49 0.52 0.11
Net realized and unrealized gain
(loss) on investments ............... (0.01) 0.02 - 0.01
----------- ----------- ----------- ---------
Total from investment operations...... 0.48 0.51 0.52 0.12
----------- ----------- ----------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income .............................. (0.44) (0.47) (0.51) (0.02)
Dividends in excess of net
investment income ................... - - - (0.10)
Dividends from realized gains ........ - - - -
----------- ------------ ----------- ---------
Total dividends and distributions..... (0.44) (0.47) (0.51) (0.12)
----------- ------------ ----------- ---------
Net asset value, end of period ......... $ 10.25 $ 10.21 $ 10.17 10.16
=========== ============ =========== =========
Total return ........................... 4.71% 5.08% 5.16% 1.29%(b)
=========== ============ =========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...... $ 559,713 $ 386,718 $ 123,675 $ 3,184
Ratio of expenses to average net
assets ............................... 0.62% 0.62% 0.63% 0.67%(a)
Ratio of net investment income to
average net assets ................... 4.68% 4.82% 5.02% 4.94%(a)
</TABLE>
<PAGE>
- ------
136
- --------------------------------------------------------------------------------
EQ/ALLIANCE PREMIER GROWTH PORTFOLIO
<TABLE>
<CAPTION>
CLASS IA CLASS IB
---------------------- ------------------------
MAY 1, 1999* MAY 1, 1999*
TO TO
DECEMBER 31, 1999 DECEMBER 31, 1999
---------------------- ------------------------
<S> <C> <C>
Net asset value, beginning of period .................................... $ 10.00 $ 10.00
----------- -----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................................. 0.02 0.01
Net realized and unrealized gain on investments
and foreign currency transactions .................................... 1.89 1.89
----------- -----------
Total from investment operations ...................................... 1.91 1.90
----------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment income .................................. (0.01) (0.01)
Dividends in excess of net investment income .......................... - -
Distributions from realized gains ..................................... (0.03) (0.03)
Distributions in excess of realized gains ............................. - -
Tax return of capital distributions ................................... - -
----------- -----------
Total dividends and distributions ..................................... (0.04) (0.04)
----------- -----------
Net asset value, end of period .......................................... $ 11.87 $ 11.86
=========== ===========
Total return ............................................................ 19.14%(b) 18.97%(b)
=========== ===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................................... $ 28,834 $ 451,323
Ratio of expenses to average net assets after waivers ................... 0.90%(a)(c) 1.15%(a)(c)
Ratio of expenses to average net assets before waivers (f) .............. 1.12%(a)(c) 1.37%(a)(c)
Ratio of net investment income to average net assets after waivers ...... 0.45%(a)(c) 0.20%(a)(c)
Ratio of net investment income to average net assets before waivers (f) . 0.23%(a)(c) (0.02)%(a)(c)
Portfolio turnover rate ................................................. 29% 29%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ........................... $ 0.01 $ 0.01
</TABLE>
<PAGE>
------
137
- --------------------------------------------------------------------------------
ALLIANCE QUALITY BOND PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period .............................. $ 9.84 $ 9.74 $ 9.49 $ 9.61 $ 8.72
-------- ------- ------- ------- -------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ............... 0.54 0.55 0.60 0.57 0.57
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ....................... (0.74) 0.28 0.24 (0.07) 0.88
-------- ------- ------- -------- -------
Total from investment
operations ......................... (0.20) 0.83 0.84 0.50 1.45
-------- ------- ------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................. (0.50) (0.53) (0.59) (0.60) (0.56)
Dividends in excess of net
investment income .................. - - - (0.02) -
Distributions from realized
gains .............................. (0.03) (0.20) - - -
Tax return of capital
distributions ...................... - - - - -
-------- -------- -------- -------- --------
Total dividends and
distributions ...................... (0.53) (0.73) (0.59) (0.62) (0.56)
-------- -------- -------- -------- --------
Net asset value, end of period........ $ 9.11 $ 9.84 $ 9.74 $ 9.49 $ 9.61
======== ======== ======== ======== ========
Total return .......................... (2.00)% 8.69% 9.14% 5.36% 17.02%
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ..... $329,895 $322,418 $203,233 $155,023 $157,443
Ratio of expenses to average net
assets .............................. 0.56% 0.57% 0.57% 0.59% 0.59%
Ratio of net investment income to
average net assets .................. 5.64 % 5.48% 6.19% 6.06% 6.13%
Portfolio turnover rate ............... 147% 194% 374% 431% 411%
<CAPTION>
CLASS 1B
-------------------------------
JULY 8, 1998*
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1999 1998
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of
period .............................. $ 9.84 $ 9.90
-------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income ............... 0.52 0.25
Net realized and unrealized
gain (loss) on investments
and foreign currency
transactions ....................... (0.75) 0.14
-------- ---------
Total from investment
operations ......................... (0.23) 0.39
-------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income ............................. (0.49) (0.25)
Dividends in excess of net
investment income .................. - -
Distributions from realized
gains .............................. (0.03) (0.20)
Tax return of capital
distributions ...................... - -
-------- ---------
Total dividends and
distributions ...................... (0.52) (0.45)
-------- ---------
Net asset value, end of period........ $ 9.09 $ 9.84
======== =========
Total return .......................... (2.25)% 4.05%(b)
======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ..... $ 1,094 $ 10
Ratio of expenses to average net
assets .............................. 0.81% 0.81%(a)
Ratio of net investment income to
average net assets .................. 5.39% 5.06%(a)
Portfolio turnover rate ............... 147% 194%
</TABLE>
<PAGE>
- ------
138
- --------------------------------------------------------------------------------
ALLIANCE SMALL CAP GROWTH PORTFOLIO(d)(e):
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------
YEAR ENDED DECEMBER 31, MAY 1, 1997*
-------------------------- TO
1999 1998 DECEMBER 31, 1997
------------ ------------- --------------------
<S> <C> <C> <C>
Net asset value, beginning of period ..... $ 11.82 $ 12.35 $ 10.00
-------- ------- ------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ........... (0.05) 0.01 0.01
Net realized and unrealized gain
(loss) on investments ................. 3.34 (0.54) 2.65
-------- ------- ------------
Total from investment operations ....... 3.29 (0.53) 2.66
-------- ------- ------------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ - - (0.01)
Dividends in excess of net
investment income ..................... - - -
Distributions from realized gains ...... - - (0.30)
Tax return of capital distributions .... - - -
-------- ------- ------------
Total dividends and distributions ...... - - (0.31)
-------- ------- ------------
Net asset value, end of period ........... $ 15.11 $ 11.82 $ 12.35
======== ======= ============
Total return ............................. 27.75 (4.28)% 26.74%(b)
=========== ======= ============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $241,000 $198,360 $ 94,676
Ratio of expenses to average net
assets ................................. 0.95% 0.96% 0.95% (a)
Ratio of net investment income (loss)
to average net assets .................. (0.40)% 0.08% 0.10% (a)
Portfolio turnover rate .................. 221% 94% 96%
<CAPTION>
CLASS IB
--------------------------------------------------
YEAR ENDED DECEMBER 31, MAY 1, 1997*
--------------------------- TO
1999 1998 DECEMBER 31, 1997
------------- ------------- ----------------------
<S> <C> <C> <C>
Net asset value, beginning of period ..... $ 11.79 $ 12.34 $ 10.00
--------- ------- ------------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ........... (0.08) (0.02) (0.01)
Net realized and unrealized gain
(loss) on investments ................. 3.32 (0.53) 2.65
--------- ------- ------------
Total from investment operations ....... 3.24 (0.55) 2.64
--------- ------- ------------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ - - -
Dividends in excess of net
investment income ..................... - - -
Distributions from realized gains ...... - - (0.30)
Tax return of capital distributions .... - - -
--------- ------- ------------
Total dividends and distributions ...... - - (0.30)
--------- ------- ------------
Net asset value, end of period ........... $ 15.03 $ 11.79 $ 12.34
========= ======= ------------
Total return ............................. 27.46 % (4.44)% 26.57%(b)
============= ======= ------------
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $162,331 $112,254 $ 46,324
Ratio of expenses to average net
assets ................................. 1.20% 1.20% 1.15% (a)
Ratio of net investment income (loss)
to average net assets .................. (0.65)% (0.17)% (0.12)% (a)
Portfolio turnover rate .................. 221% 94% 96%
</TABLE>
<PAGE>
------
139
- --------------------------------------------------------------------------------
CALVERT SOCIALLY RESPONSIBLE PORTFOLIO
<TABLE>
<CAPTION>
CLASS IB
-------------------
SEPTEMBER 1, 1999*
TO
DECEMBER 31, 1999
-------------------
<S> <C>
Net asset value, beginning of period ........................................ $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .............................................. (0.01)
Net realized and unrealized gain (loss) on investments .................... 0.83
-------
Total from investment operations .......................................... 0.82
-------
LESS DISTRIBUTIONS:
Distributions from realized gains ......................................... (0.06)
-------
Total dividends and distributions ......................................... (0.06)
-------
Net asset value, end of period .............................................. $ 10.76
=======
Total return ................................................................ 8.09%(b)
==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $2,622
Ratio of expenses to average net assets after waivers ....................... 1.05 %(a)
Ratio of expenses to average net assets before waivers (f) .................. 5.38 %(a)
Ratio of net investment income to average net assets after waivers .......... (0.19)%(a)
Ratio of net investment income to average net assets before waivers (f) ..... (4.52)%(a)
Portfolio turnover rate ..................................................... 45 %
</TABLE>
<PAGE>
- ------
140
- --------------------------------------------------------------------------------
CAPITAL GUARDIAN INTERNATIONAL PORTFOLIO
<TABLE>
<CAPTION>
CLASS IB
------------------
MAY 1, 1999*
TO
DECEMBER 31, 1999
------------------
<S> <C>
Net asset value, beginning of period ............................................ $ 10.00
----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................................................... -
Net realized and unrealized gain (loss) on investments and foreign currency 4.10
----------
transactions
Total from investment operations .............................................. 4.10
----------
LESS DISTRIBUTIONS:
Dividends from net investment income .......................................... -
----------
Total dividends and distributions ............................................. -
----------
Net asset value, end of period .................................................. $ 14.10
==========
Total return .................................................................... 41.00%(b)
==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................................... $ 52,049
Ratio of expenses to average net assets after waivers ........................... 1.20%(a)
Ratio of expenses to average net assets before waivers (f) ...................... 1.65%(a)
Ratio of net investment income to average net assets after waivers .............. 0.02%(a)
Ratio of net investment income to average net assets before waivers (f) ......... (0.43)%(a)
Portfolio turnover rate ......................................................... 28%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income .................................... $ 0.02
</TABLE>
<PAGE>
------
141
- --------------------------------------------------------------------------------
CAPITAL GUARDIAN RESEARCH PORTFOLIO
<TABLE>
<CAPTION>
CLASS IB
------------------
MAY 1, 1999*
TO
DECEMBER 31, 1999
------------------
<S> <C>
Net asset value, beginning of period ............................................ $ 10.00
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................................................... 0.02
Net realized and unrealized gain (loss) on investments
and foreign currency transactions ......................................... 0.69
---------
Total from investment operations .............................................. 0.71
---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......................................... (0.02)
Dividends in excess of net investment income .................................. -
---------
Total dividends and distributions ............................................. (0.02)
---------
Net asset value, end of period .................................................. $ 10.69
=========
Total return .................................................................... 7.10%(b)
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................................... $ 33,903
Ratio of expenses to average net assets after waivers ........................... 0.95%(a)
Ratio of expenses to average net assets before waivers (f) ...................... 1.35%(a)
Ratio of net investment income to average net assets after waivers .............. 0.37%(a)
Ratio of net investment income to average net assets before waivers (f) ......... (0.03)%(a)
Portfolio turnover rate ......................................................... 36%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ................................... $ 0.02
</TABLE>
<PAGE>
- ------
142
- --------------------------------------------------------------------------------
CAPITAL GUARDIAN U.S. EQUITY PORTFOLIO
<TABLE>
<CAPTION>
CLASS IB
------------------
MAY 1, 1999*
TO
DECEMBER 31, 1999
------------------
<S> <C>
Net asset value, beginning of period ................................... $ 10.00
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................................ 0.02
Net realized and unrealized gain on investments
and foreign currency transactions ................................ 0.35
--------
Total from investment operations ..................................... 0.37
--------
LESS DISTRIBUTIONS:
Dividends from net investment income ................................. (0.02)
Dividends in excess of net investment income ......................... -
Distributions from realized gains .................................... (0.02)
Distributions in excess of realized gains ............................ (0.01)
Tax return of capital distributions .................................. -
--------
Total dividends and distributions .................................... (0.05)
--------
Net asset value, end of period ......................................... $ 10.32
========
Total return ........................................................... 3.76%(b)
========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ...................................... $ 67,472
Ratio of expenses to average net assets after waivers .................. 0.95%(a)
Ratio of expenses to average net assets before waivers (f) ............. 1.23%(a)
Ratio of net investment income to average net assets after waivers ..... 0.63%(a)
Ratio of net investment income to average net assets before waivers (f) 0.35%(a)
Portfolio turnover rate ................................................ 50%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income .......................... $ 0.01
</TABLE>
<PAGE>
------
143
- --------------------------------------------------------------------------------
EQ/EVERGREEN PORTFOLIO:***
<TABLE>
<CAPTION>
CLASS IB
------------------
YEAR ENDED
DECEMBER 31, 1999
------------------
<S> <C>
Net asset value, beginning of period ...................................... $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................................... 0.04
Net realized and unrealized gain on investments
and foreign currency transactions ..................................... 0.93
-------
Total from investment operations ........................................ 0.97
-------
LESS DISTRIBUTIONS:
Dividends from net investment income .................................... (0.04)
Dividends in excess of net investment income ............................ -
Distributions from realized gains ....................................... -
Distributions in excess of realized gains ............................... -
Tax return of capital distributions ..................................... -
-------
Total dividends and distributions ....................................... (0.04)
-------
Net asset value, end of period ............................................ $ 10.93
=======
Total return .............................................................. 9.70%
=======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ......................................... $ 4,818
Ratio of expenses to average net assets after waivers ..................... 1.05%
Ratio of expenses to average net assets before waivers (f) ................ 2.86%
Ratio of net investment income to average net assets after waivers ........ 0.63%
Ratio of net investment income to average net assets before waivers (f) ... (1.18)%
Portfolio turnover rate ................................................... 148%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................. $ 0.11
</TABLE>
<PAGE>
- ------
144
- --------------------------------------------------------------------------------
EQ/EVERGREEN FOUNDATION PORTFOLIO:***
<TABLE>
<CAPTION>
CLASS IB
------------------
YEAR ENDED
DECEMBER 31, 1999
------------------
<S> <C>
Net asset value, beginning of period ..................................................... $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................................................. 0.12
Net realized and unrealized gain (loss) on investments and foreign currency 0.62
-------
transactions
Total from investment operations ....................................................... 0.74
-------
LESS DISTRIBUTIONS:
Dividends from net investment income ................................................... (0.12)
--------
Total dividends and distributions ...................................................... (0.12)
--------
Net asset value, end of period ........................................................... $ 10.62
--------
Total return ............................................................................. 7.38%
========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................................ 8,887
Ratio of expenses to average net assets after waivers and reimbursements ................. 0.95%
Ratio of expenses to average net assets before waivers and reimbursements (f) ............ 1.94%
Ratio of net investment income to average net assets after waivers and reimbursements .... 2.03%
Ratio of net investment income to average net assets before waivers and reimbursements 1.04%
(f)
Portfolio turnover rate .................................................................. 105%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................................ $ 0.06
</TABLE>
<PAGE>
------
145
- --------------------------------------------------------------------------------
MERCURY BASIC VALUE EQUITY PORTFOLIO (FKA MERRILL LYNCH BASIC VALUE EQUITY
PORTFOLIO):
<TABLE>
<CAPTION>
CLASS IB CLASS IB
------------------- --------------------------------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period .................................. $ 12.36 $ 11.58 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................................... 0.17 0.12 0.06
Net realized and unrealized gain on investments and foreign
currency transactions .............................................. 2.15 1.21 1.64
------- ------- -------
Total from investment operations .................................... 2.32 1.33 1.70
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ................................ (0.18) (0.12) (0.06)
Dividends in excess of net investment income ........................ - - -
Distributions from realized gains ................................... (0.74) (0.43) (0.05)
Distributions in excess of realized gains ........................... - - (0.01)
-------- -------- -------
Total dividends and distributions ................................... (0.92) (0.55) (0.12)
-------- -------- -------
Net asset value, end of period ........................................ $ 13.76 $ 12.36 $ 11.58
======== ======== =======
Total return .......................................................... 19.00% 11.59% 16.99%(b)
======== ================= ============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ..................................... $300,467 $174,104 $49,495
Ratio of expenses to average net assets after waivers ................. 0.85% 0.85% 0.85%(a)
Ratio of expenses to average net assets before waivers (f) ............ 0.96% 1.06% 1.89%(a)
Ratio of net investment income to average net assets after waivers .... 1.42% 1.41% 1.91%(a)
Ratio of net investment income to average net assets before waivers (f) 1.31% 1.20% 0.87%(a)
Portfolio turnover rate ............................................... 71% 83% 2%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ......................... $ 0.01 $ 0.02 $ 0.03
</TABLE>
<PAGE>
- ------
146
- --------------------------------------------------------------------------------
MERCURY WORLD STRATEGY PORTFOLIO (FKA MERRILL LYNCH WORLD STRATEGY
PORTFOLIO):
<TABLE>
<CAPTION>
CLASS IB CLASS IB
------------------- ------------------------------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 19
------------------- ------------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period ............................. $ 10.93 $ 10.31 $ 10.00
------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................................... 0.11 0.15 0.08
Net realized and unrealized gain on investments and
foreign currency transactions ............................... 2.22 0.55 0.39
------- ------- -------
Total from investment operations ............................... 2.33 0.70 0.47
------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ........................... (0.08) (0.04) (0.05)
Dividends in excess of net investment income ................... (0.03) (0.04) -
Distributions from realized gains .............................. (0.17) - -
Distributions in excess of realized gains ...................... - - (0.11)
------- ------- -------
Total dividends and distributions .............................. (0.28) (0.08) (0.16)
------- ------- -------
Net asset value, end of period ................................... $ 12.98 $ 10.93 $ 10.31
======= ======= =======
Total return ..................................................... 21.35% 6.81% 4.70%(b)
======= ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................................ $35,722 $30,631 $18,210
Ratio of expenses to average net assets
after waivers ............................................... 1.20% 1.20% 1.20%(a)
Ratio of expenses to average net assets
before waivers (f) .......................................... 1.40% 1.61% 3.05%(a)
Ratio of net investment income to average net assets
after waivers ............................................... 0.99% 1.63% 1.89%(a)
Ratio of net investment income to average net assets
before waivers (f) .......................................... 0.79% 1.22% 0.04%(a)
Portfolio turnover rate .......................................... 116% 115% 58%
Effect of voluntary expense limitation during the
period: (f)
Per share benefit to net investment income .................... $ 0.02 $ 0.04 $ 0.08
</TABLE>
<PAGE>
------
147
------------------------------------------------------------------------------
MFS EMERGING GROWTH COMPANIES PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------
NOVEMBER 24, 1998*
YEAR ENDED TO
DECEMBER 31, 1999 DECEMBER 31, 1998
------------------- ------------------------
<S> <C> <C>
Net asset value, beginning of period ..... $ 16.04 $ 14.18
--------- -----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ........... 0.01 -
Net realized and unrealized gain on
investments and foreign currency
transactions .......................... 11.83 1.86
--------- -----------
Total from investment operations ....... 11.84 1.86
--------- -----------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ - -
Dividends in excess of net
investment income ..................... - -
Distributions from realized gains ...... (0.48) -
Distributions in excess of realized
gains ................................. - -
--------- -----------
Total dividends and distributions ...... (0.48) -
--------- -----------
Net asset value, end of period ........... $ 27.40 $ 16.04
========= ===========
Total return ............................. 74.43% 13.12%(b)
========= ===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $ 46,248 $ 5,978
Ratio of expenses to average net
assets after waivers ................... 0.60%(c) 0.60%(a)(c)
Ratio of expenses to average net
assets before waivers (f) .............. 0.70%(c) 0.79%(a)(c)
Ratio of net investment income to
average net assets after waivers ....... 0.09%(c) (0.05)%(a)(c)
Ratio of net investment income to
average net assets before
waivers (f) ............................ (0.01)%(c) (0.24)%(a)(c)
Portfolio turnover rate .................. 184% 79%
Effect of voluntary expense
limitation during the period: (f)
Per share benefit to net
investment income .................... $ 0.01 $ -
<CAPTION>
CLASS IB
----------------------------------------------------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, 1999 DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period ..... $ 16.04 $ 11.92 $ 10.00
--------- ------- --------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income (loss) ........... (0.02) (0.03) 0.02
Net realized and unrealized gain on
investments and foreign currency
transactions .......................... 11.79 4.15 2.21
--------- ------- --------
Total from investment operations ....... 11.77 4.12 2.23
--------- ------- --------
LESS DISTRIBUTIONS:
Dividends from net investment
income ................................ - - (0.02)
Dividends in excess of net
investment income ..................... - - -
Distributions from realized gains ...... (0.48) - (0.18)
Distributions in excess of realized
gains ................................. - - (0.11)
--------- ------- --------
Total dividends and distributions ...... (0.48) - (0.31)
--------- ------- --------
Net asset value, end of period ........... $ 27.33 $ 16.04 $ 11.92
========= ======= ========
Total return ............................. 73.62% 34.57% 22.42%(b)
========= ======= ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........ $1,665,635 $461,307 $ 99,317
Ratio of expenses to average net
assets after waivers ................... 0.85%(c) 0.85%(c) 0.85%(a)
Ratio of expenses to average net
assets before waivers (f) .............. 0.95%(c) 1.04%(c) 1.82%(a)
Ratio of net investment income to
average net assets after waivers ....... (0.16)%(c) (0.30)%(c) 0.61%(a)
Ratio of net investment income to
average net assets before
waivers (f) ............................ (0.26)%(c) (0.49)%(c) (0.36)%(a)
Portfolio turnover rate .................. 184% 79% 116%
Effect of voluntary expense
limitation during the period: (f)
Per share benefit to net
investment income .................... $ 0.01 $ 0.02 $ 0.04
</TABLE>
<PAGE>
- ------
148
- --------------------------------------------------------------------------------
MFS GROWTH WITH INCOME PORTFOLIO:***
<TABLE>
<CAPTION>
CLASS IB
------------------
YEAR ENDED
DECEMBER 31, 1999
------------------
<S> <C>
Net asset value, beginning of period ............................................ $ 10.00
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................................................... 0.04
Net realized and unrealized gain (loss) on investments and foreign currency 0.84
-------
transactions
Total from investment operations .............................................. 0.88
-------
LESS DISTRIBUTIONS:
Dividends from net investment income ............................................ (0.04)
Dividends in excess of net investment income .................................... -
--------
Total dividends and distributions ............................................... (0.04)
--------
Net asset value, end of period .................................................. $ 10.84
========
Total return .................................................................... 8.76 %
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................................... $109,828
Ratio of expenses to average net assets after waivers ........................... 0.85%
Ratio of expenses to average net assets before waivers (f) ...................... 1.16%
Ratio of net investment income to average net assets after waivers .............. 0.80%
Ratio of net investment income to average net assets before waivers (f) ......... 0.49%
Portfolio turnover rate ......................................................... 64%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ................................... $ 0.01
</TABLE>
<PAGE>
------
149
- -------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IB
-------------------
YEAR ENDED
DECEMBER 31, 1999
-------------------
<S> <C>
Net asset value, beginning of period ........................................ $ 14.21
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.02
Net realized and unrealized gain on investments and foreign currency
transactions ............................................................. 3.24
-------
Total from investment operations .......................................... 3.26
-------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.02)
Dividends in excess of net investment income .............................. -
Distributions from realized gains ......................................... (0.39)
Distributions in excess of realized gains ................................. -
--------
Total dividends and distributions ......................................... (0.41)
--------
Net asset value, end of period .............................................. $ 17.06
========
Total return ................................................................ 23.12%
========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $685,270
Ratio of expenses to average net assets after waivers ....................... 0.85%
Ratio of expenses to average net assets before waivers (f) .................. 0.96%
Ratio of net investment income to average net assets after waivers .......... 0.12%
Ratio of net investment income to average net assets before waivers (f) ..... 0.01%
Portfolio turnover rate ..................................................... 91%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................... $ 0.01
<CAPTION>
CLASS IB
--------------------------------------
MAY 1, 1997*
YEAR ENDED TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ........................................ $ 11.48 $ 10.00
------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.04 0.02
Net realized and unrealized gain on investments and foreign currency
transactions ............................................................. 2.73 1.58
------- ----------
Total from investment operations .......................................... 2.77 1.60
------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.04) (0.02)
Dividends in excess of net investment income .............................. - -
Distributions from realized gains ......................................... - (0.01)
Distributions in excess of realized gains ................................. - (0.09)
-------- ----------
Total dividends and distributions ......................................... (0.04) (0.12)
-------- ----------
Net asset value, end of period .............................................. $ 14.21 $ 11.48
======== ==========
Total return ................................................................ 24.11% 16.07%(b)
======== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $407,619 $ 114,754
Ratio of expenses to average net assets after waivers ....................... 0.85% 0.85%(a)
Ratio of expenses to average net assets before waivers (f) .................. 1.05% 1.78%(a)
Ratio of net investment income to average net assets after waivers .......... 0.44% 0.65%(a)
Ratio of net investment income to average net assets before waivers (f) ..... 0.24% (0.28)%(a)
Portfolio turnover rate ..................................................... 73% 51%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................... $ 0.02 $ 0.03
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- ------
150
- --------------------------------------------------------------------------------
MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IB
-------------------
YEAR ENDED
DECEMBER 31, 1999
-------------------
<S> <C>
Net asset value, beginning of period ........................................ $ 5.79
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) .............................................. (0.01)
Net realized and unrealized gain (loss) on investments and foreign
currency transactions .................................................... 5.55
--------
Total from investment operations .......................................... 5.54
--------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... -
Distributions from realized gains ......................................... (0.11)
--------
Total dividends and distributions ......................................... (0.11)
--------
Net asset value, end of period .............................................. $ 11.22
========
Total return ................................................................ 95.82%
==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $191,581
Ratio of expenses to average net assets after waivers ....................... 1.75%
Ratio of expenses to average net assets before waivers (f) .................. 2.38%
Ratio of net investment income to average net assets after waivers .......... (0.18)%
Ratio of net investment income to average net assets before waivers (f) ..... (0.82)%
Portfolio turnover rate ..................................................... 138%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................... $ 0.02
<CAPTION>
CLASS IB
--------------------------------------
AUGUST 20, 1997*
YEAR ENDED TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ........................................ $ 7.96 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income/(loss) .............................................. 0.03 0.04
Net realized and unrealized gain (loss) on investments and foreign
currency transactions .................................................... (2.18) (2.06)
------- -------
Total from investment operations .......................................... (2.15) (2.02)
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.02) (0.02)
Distributions from realized gains ......................................... - -
------- -------
Total dividends and distributions ......................................... (0.02) (0.02)
------- -------
Net asset value, end of period .............................................. $ 5.79 $ 7.96
======= =======
Total return ................................................................ (27.10)% (20.16)%(b)
======== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $41,359 $ 21,433
Ratio of expenses to average net assets after waivers ....................... 1.75% 1.75%(a)
Ratio of expenses to average net assets before waivers (f) .................. 2.63% 2.61%(a)
Ratio of net investment income to average net assets after waivers .......... 0.73% 1.96%(a)
Ratio of net investment income to average net assets before waivers (f) ..... (0.09)% 1.10%(a)
Portfolio turnover rate ..................................................... 114% 25%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................... $ 0.03 $ 0.02
</TABLE>
<PAGE>
------
151
- -------------------------------------------------------------------------------
EQ/PUTNAM BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IB
-------------------
YEAR ENDED
DECEMBER 31, 1999
-------------------
<S> <C>
Net asset value, beginning of period ........................................ $ 12.16
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.32
Net realized and unrealized gain (loss) on investments and foreign
currency transactions .................................................... (0.32)
--------
Total from investment operations .......................................... -
--------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.32)
Dividends in excess of net investment income .............................. -
Distributions from realized gains ......................................... (0.28)
Distributions in excess of realized gains ................................. (0.12)
--------
Total dividends and distributions ......................................... (0.72)
--------
Net asset value, end of period .............................................. $ 11.44
========
Total return ................................................................ 0.01%
========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $104,977
Ratio of expenses to average net assets after waivers ....................... 0.90%
Ratio of expenses to average net assets before waivers (f) .................. 1.07%
Ratio of net investment income to average net assets after waivers .......... 2.85%
Ratio of net investment income to average net assets before waivers (f) ..... 2.68%
Portfolio turnover rate ..................................................... 140%
Effect of voluntary expense limitation during the period: (f) .............
Per share benefit to net investment income ............................... $ 0.02
<CAPTION>
CLASS IB
--------------------------------------
MAY 1, 1997*
YEAR ENDED TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ........................................ $ 11.21 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.25 0.14
Net realized and unrealized gain (loss) on investments and foreign
currency transactions .................................................... 1.08 1.30
------- -------
Total from investment operations .......................................... 1.33 1.44
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.23) (0.13)
Dividends in excess of net investment income .............................. - (0.01)
Distributions from realized gains ......................................... (0.15) (0.09)
Distributions in excess of realized gains ................................. - -
------- -------
Total dividends and distributions ......................................... (0.38) (0.23)
------- -------
Net asset value, end of period .............................................. $ 12.16 $ 11.21
======= =======
Total return ................................................................ 11.92% 14.38%(b)
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $75,977 $ 25,854
Ratio of expenses to average net assets after waivers ....................... 0.90% 0.90%(a)
Ratio of expenses to average net assets before waivers (f) .................. 1.25% 2.55%(a)
Ratio of net investment income to average net assets after waivers .......... 2.88% 3.19%(a)
Ratio of net investment income to average net assets before waivers (f) ..... 2.53% 1.54%(a)
Portfolio turnover rate ..................................................... 135% 117%
Effect of voluntary expense limitation during the period: (f) .............
Per share benefit to net investment income ............................... $ 0.03 $ 0.07
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- ------
152
- -------------------------------------------------------------------------------
EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IB
-------------------
YEAR ENDED
DECEMBER 31, 1999
-------------------
<S> <C>
Net asset value, beginning of period ........................................ $ 12.77
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.16
Net realized and unrealized gain on investments and foreign currency
transactions ............................................................. (0.34)
-------
Total from investment operations .......................................... (0.18)
-------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.16)
Dividends in excess of net investment income .............................. -
Distributions from realized gains ......................................... (0.74)
Distributions in excess of realized gains ................................. (0.13)
-------
Total dividends and distributions ......................................... (1.03)
-------
Net asset value, end of period .............................................. $ 11.56
=======
Total return ................................................................ (1.27)%
=======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $544,271
Ratio of expenses to average net assets after waivers ....................... 0.85%
Ratio of expenses to average net assets before waivers (f) .................. 0.95%
Ratio of net investment income to average net assets after waivers .......... 1.29%
Ratio of net investment income to average net assets before waivers (f) ..... 1.19%
Portfolio turnover rate ..................................................... 77%
Effect of voluntary expense limitation during the period: (f) .............
Per share benefit to net investment income ............................... $ 0.01
<CAPTION>
CLASS IB
--------------------------------------
MAY 1, 1997*
YEAR ENDED TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ........................................ $ 11.52 $ 10.00
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.11 0.06
Net realized and unrealized gain on investments and foreign currency
transactions ............................................................. 1.35 1.56
------- -------
Total from investment operations .......................................... 1.46 1.62
------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.11) (0.06)
Dividends in excess of net investment income .............................. - -
Distributions from realized gains ......................................... - (0.01)
Distributions in excess of realized gains ................................. (0.10) (0.03)
-------- -------
Total dividends and distributions ......................................... (0.21) (0.10)
-------- -------
Net asset value, end of period .............................................. $ 12.77 $ 11.52
======== =======
Total return ................................................................ 12.75% 16.23%(b)
================= =============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $460,744 $150,260
Ratio of expenses to average net assets after waivers ....................... 0.85% 0.85%(a)
Ratio of expenses to average net assets before waivers (f) .................. 1.04% 1.75%(a)
Ratio of net investment income to average net assets after waivers .......... 1.30% 1.67%(a)
Ratio of net investment income to average net assets before waivers (f) ..... 1.11% 0.77%(a)
Portfolio turnover rate ..................................................... 74% 61%
Effect of voluntary expense limitation during the period: (f) .............
Per share benefit to net investment income ............................... $ 0.02 $ 0.03
</TABLE>
<PAGE>
------
153
------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-------------------------------------
NOVEMBER 24,
1998*
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1999 1998
-------------- ----------------------
<S> <C> <C>
Net asset value, beginning of period ..................... $ 12.67 $ 13.22
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.28 0.06
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 0.20 (0.09)+
------- --------
Total from investment operations ....................... 0.48 (0.03)
------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ................... (0.29) (0.24)
Distributions from realized gains ...................... (0.52) (0.28)
-------- --------
Total dividends and distributions ...................... (0.81) (0.52)
-------- --------
Net asset value, end of period ........................... $ 12.34 $ 12.67
======== ========
Total return ............................................. 3.80% (0.15)%(b)
======== ===========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................ $ 5,181 $2,415
Ratio of expenses to average net assets after waivers..... 0.60% 0.60%(a)(c)
Ratio of expenses to average net assets before
waivers (f) ............................................ 0.72% 0.79%(a)(c)
Ratio of net investment income to average net assets
after waivers .......................................... 2.15% 2.45%(a)(c)
Ratio of net investment income to average net assets
before waivers (f) ..................................... 2.03% 2.26%(a)(c)
Portfolio turnover rate .................................. 31% 17%
Effect of voluntary expense limitation during the
period: (f)
Per share benefit to net investment income ............ $ 0.02 $ 0.03
<CAPTION>
CLASS IB
--------------------------------------------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
-------------- ----------------- -----------------
<S> <C> <C> <C>
Net asset value, beginning of period ..................... $ 12.67 $ 12.08 $ 10.00
-------- --------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.24 0.22 0.10
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 0.20 0.87 2.11
-------- --------- -------
Total from investment operations ....................... 0.44 1.09 2.21
-------- --------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ................... (0.25) (0.22) (0.09)
Distributions from realized gains ...................... (0.52) (0.28) (0.04)
--------- --------- -------
Total dividends and distributions ...................... (0.77) (0.50) (0.13)
--------- --------- -------
Net asset value, end of period ........................... $ 12.34 $ 12.67 $ 12.08
========= ========= =======
Total return ............................................. 3.54% 9.11% 22.11 %(b)
========= ========= ============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................ $273,031 $ 242,001 $99,947
Ratio of expenses to average net assets after waivers..... 0.85% 0.85%(c) 0.85%(a)
Ratio of expenses to average net assets before
waivers (f) ............................................ 0.97% 1.04%(c) 1.74%(a)
Ratio of net investment income to average net assets
after waivers .......................................... 1.90% 2.20%(c) 2.49%(a)
Ratio of net investment income to average net assets
before waivers (f) ..................................... 1.78% 2.01%(c) 1.60%(a)
Portfolio turnover rate .................................. 31% 17% 9%
Effect of voluntary expense limitation during the
period: (f)
Per share benefit to net investment income ............ $ 0.02 $ 0.02 $ 0.03
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- ------
154
- ------------------------------------------------------------------------------
T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IB
-------------------
YEAR ENDED
DECEMBER 31, 1999
-------------------
<S> <C>
Net asset value, beginning of period ........................................ $ 11.10
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.06
Net realized and unrealized gain (loss) on investments and foreign
currency transactions .................................................... 3.46
-------
Total from investment operations .......................................... 3.52
-------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.05)
Dividends in excess of net investment income .............................. -
Distributions in excess of realized gains ................................. (0.15)
Tax return of capital distributions ....................................... -
--------
Total dividends and distributions ......................................... (0.20)
--------
Net asset value, end of period .............................................. $ 14.42
========
Total return ................................................................ 31.92%
========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $214,899
Ratio of expenses to average net assets after waivers ....................... 1.20%
Ratio of expenses to average net assets before waivers (f) .................. 1.29%
Ratio of net investment income to average net assets after waivers .......... 0.51%
Ratio of net investment income to average net assets before waivers (f) ..... 0.42%
Portfolio turnover rate ..................................................... 25%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................... $ 0.01
<CAPTION>
CLASS IB
--------------------------------------
MAY 1, 1997*
YEAR ENDED TO
DECEMBER 31, 1998 DECEMBER 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period ........................................ $ 9.85 $ 10.00
------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ..................................................... 0.06 0.02
Net realized and unrealized gain (loss) on investments and foreign
currency transactions .................................................... 1.28 (0.17)
------- ----------
Total from investment operations .......................................... 1.34 (0.15)
------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income ...................................... (0.07) -
Dividends in excess of net investment income .............................. (0.02) -
Distributions in excess of realized gains ................................. - -
Tax return of capital distributions ....................................... - -
-------- ----------
Total dividends and distributions ......................................... (0.09) -
-------- ----------
Net asset value, end of period .............................................. $ 11.10 $ 9.85
======== ==========
Total return ................................................................ 13.68% (1.49)%(b)
========= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................................... $134,653 $ 69,572
Ratio of expenses to average net assets after waivers ....................... 1.2% 1.20%(a)
Ratio of expenses to average net assets before waivers (f) .................. 1.40% 2.56%(a)
Ratio of net investment income to average net assets after waivers .......... 0.67% 0.45%(a)
Ratio of net investment income to average net assets before waivers (f) ..... 0.47% (0.91)%(a)
Portfolio turnover rate ..................................................... 22% 17%
Effect of voluntary expense limitation during the period: (f)
Per share benefit to net investment income ............................... $ 0.02 $ 0.05
</TABLE>
<PAGE>
------
155
------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------
NOVEMBER 24,
1998*
YEAR ENDED TO
DECEMBER 31, DECEMBER 31,
1999 1998
----------------- ----------------------
<S> <C> <C>
Net asset value, beginning of period ..................... $ 10.59 $ 10.40
-------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.03 0.03
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 0.19 0.23 +
-------- -------
Total from investment operations ....................... 0.22 0.26
-------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ................... (0.05) (0.06)
Distributions in excess of realized gains .............. - -
Return of capital distributions ........................ - (0.01)
-------- -------
Total dividends and distributions ...................... (0.05) (0.07)
-------- -------
Net asset value, end of period ........................... $ 10.76 $ 10.59
======== =======
Total return ............................................. 2.07% 2.63%(b)
======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................ $ 2,339 $ 747
Ratio of expenses to average net assets after waivers..... 0.75%(c) 0.75%(a)(c)
Ratio of expenses to average net assets before
waivers (f) ............................................ 0.84%(c) 0.92%(a)(c)
Ratio of net investment income to average net assets
after waivers .......................................... 0.40%(c) 0.72%(a)(c)
Ratio of net investment income to average net assets
before waivers (f) ..................................... 0.32%(c) 0.55%(a)(c)
Portfolio turnover rate .................................. 192% 111%
Effect of voluntary expense limitation during the
period: (f)
Per share benefit to net investment income ........... $ 0.01 $ 0.17
<CAPTION>
CLASS IB
-----------------------------------------------------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1999 1998 1997
------------------- ------------------- -------------------
<S> <C> <C> <C>
Net asset value, beginning of period ..................... $ 10.61 $ 11.85 $ 10.00
---------- ---------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.02 0.05 0.01
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 0.17 (1.24) 1.90
---------- ---------- ---------
Total from investment operations ....................... 0.19 (1.19) 1.91
---------- ---------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ................... (0.02) (0.04) (0.01)
Distributions in excess of realized gains .............. - - (0.05)
Return of capital distributions ........................ - (0.01) -
---------- ---------- ---------
Total dividends and distributions ...................... (0.02) (0.05) (0.06)
---------- ---------- ---------
Net asset value, end of period ........................... $ 10.78 $ 10.61 $ 11.85
========== ========== =========
Total return ............................................. 1.80% (10.02)% 19.15%(b)
========== ========== ===============
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........................ $149,618 $ 166,746 $120,880
Ratio of expenses to average net assets after waivers..... 1.00%(c) 1.00%(c) 1.00%(a)
Ratio of expenses to average net assets before
waivers (f) ............................................ 1.09%(c) 1.17%(c) 1.70%(a)
Ratio of net investment income to average net assets
after waivers .......................................... 0.21%(c) 0.47%(c) 0.26 %(a)
Ratio of net investment income to average net assets
before waivers (f) ..................................... 0.12%(c) 0.30%(c) (0.44)%(a)
Portfolio turnover rate .................................. 192% 111% 44%
Effect of voluntary expense limitation during the
period: (f)
Per share benefit to net investment income ........... $ 0.02 $ 0.02 $ 0.03
</TABLE>
- ----------
* Commencement of Operations
** Commenced operations on January 1, 1998.
*** Commenced operations on January 1, 1999.
+ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net gains on investments for that period
because of the timing of sales and repurchases of the Portfolio shares in
relation to fluctuating market value of the investments in the Portfolio.
(a) Annualized
(b) Total return is not annualized.
(c) Reflects overall Portfolio ratios for investment income and
non-class specific expense.
------------------------- EQ Advisors Trust
<PAGE>
- ------
156
- --------------------------------------------------------------------------------
(d) On October 18, 1999, this Portfolio received, through a substitution
transaction, the assets and liabilities of the Hudson River Trust
Portfolio that followed the same investment objectives as this
Portfolio. The information for each of the preceding periods is that
of the predecessor Hudson River Trust Portfolio. Information for the
year ended December 31, 1999 includes the results of operations of
the predecessor Hudson River Trust Portfolio from January 1, 1999
through October 17, 1999.
(e) Net investment income and capital changes per share are based on
monthly average shares outstanding.
(f) For further information concerning fee waivers see the section
entitled "Expense Limitation Agreement" in this Prospectus.
<PAGE>
10
Prior performance of each adviser
------
157
------------------------------------------------------------------------------
The following table provides information concerning the historical performance
of another registered investment company (or series) and/or other
institutional private accounts managed by each Adviser that have investment
objectives, policies, strategies and risks substantially similar to those of
the respective Portfolio(s) of the Trust for which it serves as Adviser. The
data is provided to illustrate the past performance of the Advisers in
managing substantially similar investment vehicles as measured against
specified market indices. This data does not represent the past performance of
any of the Portfolios or the future performance of any Portfolio or its
Adviser. Consequently, potential investors should not consider this
performance data as an indication of the future performance of any Portfolio
of the Trust or of its Adviser and should not confuse this performance data
with performance data for each of the Trust's Portfolios, which is shown for
each Portfolio under the caption "ABOUT THE INVESTMENT PORTFOLIOS."
Each Adviser's performance data shown below for other registered investment
companies (or series thereof) was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Average annual total return
reflects changes in share prices and reinvestment of dividends and
distributions and is net of fund expenses. In each such instance, the share
prices and investment returns will fluctuate, reflecting market conditions as
well as changes in company-specific fundamentals of portfolio securities.
The performance results for the registered investment companies presented
below are generally subject to somewhat lower fees and expenses than the
relevant Portfolios although in most instances the fees and expenses are
substantially similar. In addition, holders of Contracts representing
interests in the Portfolios below will be subject to charges and expenses
relating to such Contracts. The performance results presented below do not
reflect any insurance related expenses and would be reduced if such charges
were reflected.
The investment results presented below are unaudited. For more information on
the specified market indices used below, see the section "The Benchmarks."
ANNUAL RATES OF RETURN OF OTHER FUNDS OR ACCOUNTS MANAGED BY ADVISERS
AS OF 12/31/99
The name of the other fund or account managed by the Adviser is shown in BOLD.
The name of the Trust Portfolio is shown in (parentheses). The name of the
benchmark is shown in italics.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1 5 10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Year Years Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Benchmark
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE PREMIER GROWTH FUND, INC. - ADVISOR CLASS(9),(12) (EQ/ALLIANCE PREMIER GROWTH PORTFOLIO)
29.42% N/A N/A 38.65% 10/1/96
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% N/A N/A 21.60%
- -----------------------------------------------------------------------------------------------------------------------------
ALLIANCE TECHNOLOGY FUND - ADVISOR CLASS(12) (EQ/ALLIANCE TECHNOLOGY PORTFOLIO)
71.78% 38.52% 29.98% N/A 3/1/82
- -----------------------------------------------------------------------------------------------------------------------------
NASDAQ Composite Index 85.59% 40.17% 24.50% N/A
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL GUARDIAN U.S. EQUITY COMPOSITE(12) (CAPITAL GUARDIAN U.S. EQUITY PORTFOLIO)
23.83% 27.70% 17.97% N/A 12/31/66
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.56% 18.19% N/A
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- ------
158
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1 5
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Year Years
- ------------------------------------------------------------------------------------------ ------------- -----------
<S> <C> <C>
CAPITAL GUARDIAN U.S. EQUITY RESEARCH PORTFOLIO - DIVERSIFIED COMPOSITE(12) (CAPITAL GUARDIAN RESEARCH PORTFOLIO)
24.23% 29.43%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.56%
- -----------------------------------------------------------------------------------------------------------------------------
EVERGREEN FUND - CLASS Y SHARES(12) (EQ/EVERGREEN PORTFOLIO)
16.05% 21.21%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.56%
- -----------------------------------------------------------------------------------------------------------------------------
EVERGREEN FOUNDATION FUND - CLASS Y SHARES(12) (EQ/EVERGREEN FOUNDATION PORTFOLIO)
13.69% 18.32%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.56%
- -----------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS INVESTORS TRUST(2),(11) (MFS GROWTH WITH INCOME PORTFOLIO)
0.81% 23.42%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.55%
- -----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH BASIC VALUE FOCUS FUND(11) (MERCURY BASIC VALUE EQUITY PORTFOLIO)
21.12% 19.35%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.55%
- -----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND(11) (MERCURY WORLD
STRATEGY PORTFOLIO)
21.37% 13.11%
- -----------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index5 26.96% 12.83%
- -----------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH FUND(6),(12) (MFS EMERGING GROWTH COMPANIES PORTFOLIO)
41.45% 28.05%
- -----------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index4 21.26% 16.69%
- -----------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH FUND(10),(11) (MFS RESEARCH PORTFOLIO)
16.70% 24.43%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.56%
- -----------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY INSTITUTIONAL FUND, INC. - EMERGING MARKETS PORTFOLIO(7),(12) (MORGAN STANLEY EMERGING MARKETS
EQUITY PORTFOLIO)
105.14% 9.20%
- -----------------------------------------------------------------------------------------------------------------------------
IFC Global Total Return Composite Index8 62.69% 0.75%
- -----------------------------------------------------------------------------------------------------------------------------
THE GEORGE PUTNAM FUND OF BOSTON(10),(11) (EQ/PUTNAM BALANCED PORTFOLIO)
0.12% 15.18%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.56%
- -----------------------------------------------------------------------------------------------------------------------------
PUTNAM GROWTH & INCOME FUND II(10),(11) (EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO)
(0.91)% N/A
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% N/A
- -----------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME FUND11 (T. ROWE PRICE EQUITY INCOME PORTFOLIO)
3.82% 18.59%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 21.04% 28.51%
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Years Inception Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CAPITAL GUARDIAN U.S. EQUITY RESEARCH PORTFOLIO - DIVERSIFIED COMPOSITE(12) (CAPITAL GUARDIAN RESEARCH PORTFOLIO)
N/A 22.62% 3/31/93
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) N/A 21.58%
- ----------------------------------------------------------------------------------------------------------------------------------
EVERGREEN FUND - CLASS Y SHARES(12) (EQ/EVERGREEN PORTFOLIO)
14.17% N/A 10/15/71
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 18.19% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
EVERGREEN FOUNDATION FUND - CLASS Y SHARES(12) (EQ/EVERGREEN FOUNDATION PORTFOLIO)
N/A 16.57% 1/2/90
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) N/A 16.16%
- ---------------------------------------------------------------------------------------------------------------------------------
MASSACHUSETTS INVESTORS TRUST(2),(11) (MFS GROWTH WITH INCOME PORTFOLIO)
15.83% N/A 7/15/24
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 18.21% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH BASIC VALUE FOCUS FUND(11) (MERCURY BASIC VALUE EQUITY PORTFOLIO)
N/A 16.60% 7/1/93
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) N/A 22.46%(2)
- ----------------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND(11) (MERCURY WORLD STRATEGY PORTFOLIO)
N/A 11.00% 2/28/92
- ----------------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index(5) N/A 12.00%
- ---------------------------------------------------------------------------------------------------------------------------------
MFS EMERGING GROWTH FUND(6),(12) (MFS EMERGING GROWTH COMPANIES PORTFOLIO)
24.72% N/A 12/29/86
- ----------------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index4 13.40% N/A
- -----------------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH FUND(10),(11) (MFS RESEARCH PORTFOLIO)
17.53% N/A 10/13/71
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 18.21% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
MORGAN STANLEY INSTITUTIONAL FUND, INC. - EMERGING MARKETS PORTFOLI(7),(12) (MORGAN STANLEY EMERGING MARKETS EQUITY PORTFOLIO)
N/A 16.40% 9/25/92
- ----------------------------------------------------------------------------------------------------------------------------------
IFC Global Total Return Composite Index(8) N/A 7.73%
- ----------------------------------------------------------------------------------------------------------------------------------
THE GEORGE PUTNAM FUND OF BOSTON(10),(11) (EQ/PUTNAM BALANCED PORTFOLIO)
- ----------------------------------------------------------------------------------------------------------------------------------
11.39% N/A 11/5/37
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 18.21% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
PUTNAM GROWTH & INCOME FUND II(10),(11) (EQ/PUTNAM GROWTH & INCOME VALUE PORTFOLIO)
N/A 17.65% 1/5/95
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) N/A 28.58%
- ----------------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME FUND(11) (T. ROWE PRICE EQUITY INCOME PORTFOLIO)
14.14% 15.67% 10/31/85
- ----------------------------------------------------------------------------------------------------------------------------------
S&P 500 Index(3) 18.21% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
------
159
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
1 5 10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Year Years Years Inception Date
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
T. ROWE PRICE INTERNATIONAL STOCK FUND(11) (T. ROWE PRICE INTERNATIONAL STOCK PORTFOLIO)
34.60% 15.71% 11.38% 15.17% 5/9/80
- ----------------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index(5) 27.30% 13.15% 7.33% N/A
- ----------------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE FUND(12) (WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO)
7.55% N/A N/A 14.21% 12/29/95
- ----------------------------------------------------------------------------------------------------------------------------------
Russell 2000 Value Index(1) (1.49)% N/A N/A 10.19%
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 The Russell 2000 Value Index ("Russell 2000 Value") is an unmanaged index
which measures the performance of those Russell 2000 companies with lower
price-to-book ratios and lower forecasted growth values. It is compiled by
the Frank Russell Company.
2 Since inception percentage was calculated as of 6-30-93.
3 The S&P 500 Index ("S&P 500") is an unmanaged index containing common
stocks of 500 industrial, transportation, utility and financial companies,
regarded as generally representative of the larger capitalization portion
of the United States stock market. The S&P 500 reflects the reinvestment
of income dividends and capital gain distributions, if any, but does not
reflect fees, brokerage commissions, or other expenses of investing.
4 The Russell 2000 Index is an unmanaged index (with no defined investment
objective) composed of approximately 2,000 small-capitalization stocks and
includes reinvestments of dividends. The index does not include fees or
operating expenses and is not available for actual investment. It is
compiled by the Frank Russell Company.
5 The Morgan Stanley Capital International EAFE Index ("EAFE Index") is an
unmanaged capitalization-weighted measure of stock markets in Europe,
Australasia and the Far East. The returns of the EAFE Index assume
dividends are reinvested net of withholding tax and do not reflect any
fees or operating expenses. The index is not available for actual
investment.
6 The results for the MFS Emerging Growth Fund (Class B shares) do not
reflect sales charges that may be imposed on the such shares.
7 The Class B shares of the Morgan Stanley Institutional Fund, Inc. -
Emerging Markets Portfolio are subject to a Rule 12b-1 fee equal to 0.25%
of the Portfolio's assets. The expense ratio of Morgan Stanley
Institutional Fund, Inc. - Emerging Markets Portfolio has been capped at
1.75% since inception.
8 The IFC Global Total Return Composite Index is an unmanaged index of
common stocks and includes developing countries in Latin America, East and
South Asia, Europe, the Middle East and Africa. The Index assumes
dividends are reinvested.
9 Annualized performance for the Advisor Class shares. The Advisor Class
shares had a total expense ratio of 1.26% of its average daily net assets
for the year ended December 31, 1998. Other share classes have different
expenses and their performance will vary.
10 Performance for the Class A shares. The Class A shares are in many
instances subject to a front-end sales charge of up to 5.75%. Other share
classes have different expenses and their performance will vary.
11 The annual fees and expenses of the similar registered investment company
(or series thereof) (or composite) whose prior performance is shown in the
table above were less than that of the relevant Trust Portfolio.
Consequently, if the Trust Portfolio's annual fees and expenses were used
in the calculation of the performance of the similar registered investment
company (or composite) that performance would be reduced.
12 The annual fees and expenses of the similar registered investment company
(or series thereof) (or composite) whose prior performance is shown in the
table above were higher than that of the relevant Trust Portfolio.
Consequently, if the Trust Portfolio's annual fees and expenses were used
in the calculation of the performance of the similar registered investment
company (or composite) that performance would be increased.
------------------------- EQ Advisors Trust
<PAGE>
- ------
160
- --------------------------------------------------------------------------------
If you wish to know more, you will find additional information about the Trust
and its Portfolios in the following documents, which are available, free of
charge by calling our toll-free number at 1-800-528-0204:
ANNUAL AND SEMI-ANNUAL REPORTS
The Annual and Semi-Annual Reports include more information about the Trust's
performance and are available upon request free of charge. The reports usually
include performance information, a discussion of market conditions and the
investment strategies that affected the Portfolios' performance during the last
fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, dated May 1, 2000, 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. or by electronic request at [email protected] or by writing the SEC's
Public Reference Section, Washington, D.C. 20549-0102 You may have to pay a
duplicating fee. To find out more about the Public Reference Room, call the SEC
at 1-202-942-8090.
Investment Company Act File Number: 811-07953
