<PAGE>
Filed Pursuant to Rule: 424B3
Registration File No.: 333-51033
Members Retirement Program
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PROSPECTUS [GRAPHIC OMITTED]
OCTOBER 18, 1999
GROWTH EQUITY FUND [GRAPHIC OMITTED]
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AGGRESSIVE EQUITY FUND [GRAPHIC OMITTED]
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BALANCED FUND [GRAPHIC OMITTED]
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GLOBAL FUND [GRAPHIC OMITTED]
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CONSERVATIVE INVESTORS FUND [GRAPHIC OMITTED]
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GROWTH INVESTORS FUND [GRAPHIC OMITTED]
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MFS RESEARCH FUND [GRAPHIC OMITTED]
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WARBURG PINCUS
SMALL COMPANY VALUE FUND [GRAPHIC OMITTED]
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T. ROWE PRICE
EQUITY INCOME FUND [GRAPHIC OMITTED]
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MERRILL LYNCH
WORLD STRATEGY FUND [GRAPHIC OMITTED]
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BT EQUITY 500
INDEX FUND [GRAPHIC OMITTED]
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GUARANTEED RATE ACCOUNTS [GRAPHIC OMITTED]
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MONEY MARKET GUARANTEE ACCOUNT [GRAPHIC OMITTED]
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<PAGE>
Members Retirement Program
PROSPECTUS DATED OCTOBER 18, 1999
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Please read this prospectus and keep it for future reference. It contains
important information you should know before participating or taking any other
action under the Program.
ABOUT THE MEMBERS RETIREMENT PROGRAM
The Program provides members of certain groups and other eligible persons
several plans for the accumulation of retirement savings on a tax-deferred
basis. Fourteen investment options -- eleven "investment funds" and three
"guaranteed options" are available under the plans. The investment funds and
guaranteed options comprise the "investment options" covered by this prospectus.
The investment funds, below, are offered by THE EQUITABLE LIFE ASSURANCE SOCIETY
OF THE UNITED STATES.
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INVESTMENT FUNDS
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o Alliance Growth Equity Fund o MFS Research Fund
o Alliance Aggressive Equity o Warburg Pincus Small
Fund Company Value Fund
o Alliance Balanced Fund o T. Rowe Price Equity Income
Fund
o Alliance Global Fund
o Merrill Lynch World Strategy
o Alliance Conservative Investors Fund
Fund
o BT Equity 500 Index Fund
o Alliance Growth Investors
Fund
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The Alliance Growth Equity, Alliance Aggressive Equity and Alliance Balanced
Funds are managed by Equitable Life.
The Alliance Global Fund, Alliance Conservative Investors Fund, Alliance Growth
Investors Fund, the MFS Research Fund, Warburg Pincus Small Company Value Fund,
T. Rowe Price Equity Income Fund, Merrill Lynch World Strategy Fund and BT
Equity 500 Index Fund each invest in shares of a corresponding portfolio
(portfolio) of EQ Advisors Trust. You should also read the attached prospectus
for EQ Advisors Trust and keep it for future reference.
Guaranteed Options. The guaranteed options we offer include a 3-year Guaranteed
Rate Account and 5-year Guaranteed Rate Account, and the Money Market Guarantee
Account.
We have filed registration statements relating to this offering with the
Securities and Exchange Commission. A Statement of Additional Information
("SAI"), dated October 18, 1999, which is part of the registration statements,
is available free of charge upon request by writing to us or calling us
toll-free. The SAI has been incorporated by reference into this prospectus. The
table of contents for the SAI and a request form to obtain the SAI appear at the
end of this prospectus. You may also obtain a copy of this prospectus and the
SAI through the SEC
Web site at http://www.sec.gov.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE SECURITIES ARE NOT
INSURED BY THE FDIC OR ANY OTHER AGENCY. THEY ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF ANY BANK AND ARE NOT BANK GUARANTEED. THEY ARE SUBJECT TO
INVESTMENT RISKS AND POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
Contents of this prospectus
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1
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MEMBERS RETIREMENT PROGRAM
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Index of key words and phrases 3
The Program at a glance -- key features 4
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1 FEE TABLE 6
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Program expense charge and investment fund operating
expenses 6
Example 8
Condensed financial information 8
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2 PROGRAM INVESTMENT OPTIONS 9
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Investment options -- the Funds 9
The EQ Advisors Trust 12
Investment options -- The Guaranteed Options 16
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3 HOW WE VALUE YOUR ACCOUNT BALANCE IN
THE INVESTMENT FUNDS 18
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When we use the words "we," "us" and "our," we mean Equitable Life. Please see
the index of key words and phrases used in this prospectus. The index will refer
you to the page where particular terms are defined or explained.
When we address the reader of this prospectus with words such as "you" and
"your," we generally mean the individual participant in one or more of the plans
available in the Program unless otherwise explained. For example, "The Program"
section of the prospectus is primarily directed at the employer.
<PAGE>
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2
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4 TRANSFERS AND ACCESS TO YOUR ACCOUNT 19
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Transfers among investment options 19
Our account investment management system 19
Participant loans 19
Choosing benefit payment options 19
Spousal consent 20
Benefits payable after the death of the participant 20
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5 THE PROGRAM 21
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Summary of plan choices 21
Getting started 22
How to make Program contributions 22
Allocating Program contributions 22
Distributions from the investment options 23
Rules applicable to participant distributions 23
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6 PERFORMANCE INFORMATION 25
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Annual percentage change fund unit values 27
Average annual percentage change in unit fund values 28
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7 CHARGES AND EXPENSES 29
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Charges based on amounts invested in the Program 29
Plan and transaction expenses 30
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8 TAX INFORMATION 31
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Income taxation of distribution to qualified plan
participants 31
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9 MORE INFORMATION 33
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About Program changes or termination 33
IRS Disqualification 33
About the separate accounts 33
About our Year 2000 progress 33
About legal proceedings 34
About our independent accountants 34
Reports we provide and available information 34
Acceptance 34
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APPENDIX I: CONDENSED FINANCIAL
INFORMATION A-1
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TABLE OF CONTENTS OF STATEMENT OF
ADDITIONAL INFORMATION S-1
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About Equitable Life fold-out
How to Reach Us back cover
Investment Option Characteristics fold-out
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<PAGE>
Members Retirement Program
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3
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INDEX OF KEY WORDS AND PHRASES
Below is an index of key words and phrases used in this prospectus. The index
will refer you to the page where particular terms are defined or explained. This
index should help you locate more information on the terms used in this
prospectus.
PAGE
AIM System 19
beneficiary 20
benefit payment options 19
business day 19
Contributions 22
eligible rollover distributions 31
Equitable Life fold out
group annuity contract 21
GRAs 16
guaranteed options 16
individually designed plan 21
IRA 31
investment funds front cover
investment options 9
The EQ Advisors Trust 12
Master Trust 21
Money Market Guarantee Account 16
Pooled Trust 21
Program 21
Self Directed Prototype Plan 21
separate accounts 33
Corresponding portfolios front cover
unit value 18
unit 18
3-year GRA 16
5-year GRA 16
<PAGE>
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4
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THE PROGRAM AT A GLANCE - KEY FEATURES
EMPLOYER CHOICE OF RETIREMENT PLANS
Our Members Retirement Plan is a defined contribution master plan that can be
adopted as a profit-sharing plan (401(k), SIMPLE 401(k) and safe harbor 401(k)
features are available) and a defined contribution pension plan, or both. The
Plan is designed to comply with the requirements of Section 404(c) of the
Employee Retirement Income Security Act of 1974 ("ERISA"). The Program's
investment options are the only investment choices under the Members Retirement
Plan.
Our Self-Directed Prototype Plan gives added flexibility in choosing your
investments.
Our Pooled Trust for Individually Designed Plans allows you to use the
investment options in the Program through our Pooled Trust.
PLAN FEATURES
MEMBERS RETIREMENT PLAN:
o The Program investment options are the only investment choices.
o Plan-level and participant-level recordkeeping, benefit payments, tax
withholding and reporting provided.
o Use of our Master Trust.
o No minimum amount must be invested.
SELF-DIRECTED PROTOTYPE PLAN:
o You may combine Program investment options with individual stock and bond
investments.
o Employers must adopt our Pooled Trust for investment use only, and a minimum
of $25,000 must be maintained in the Trust.
o Recordkeeping services provided only for plan assets in Pooled Trust.
o Third party recordkeeping services can be arranged through us.
o Brokerage services can be arranged through us.
INVESTMENT ONLY:
o Our Pooled Trust is used for investment only.
o Recordkeeping services provided for plan assets in Pooled Trust.
CONTRIBUTIONS
o Can be allocated to any one option or divided among them.
o Must be made by check or money order payable to Equitable Life.
o Must be sent along with a Contribution Remittance Form.
o Are credited on the day of receipt if accompanied by properly completed
forms.
TRANSFERS AMONG INVESTMENT OPTIONS
o Generally, amounts may be transferred among the investment options at any
time.
o Transfers may be made by telephone on our AIM System.
o There is no charge for transfers and no tax liability.
o Transfers from the Guaranteed Rate Accounts may not be made prior to
maturity.
CHARGES AND EXPENSES
o Program expense charge assessed against combined value of Program assets.
o Investment management and accounting fees and other expenses charged on an
investment fund-by-fund basis, as applicable.
o Plan and transaction charges vary by type of plan adopted, or by specific
transaction.
o Indirectly, charges of underlying investment vehicles for investment
management, 12b-1 fees and other expenses.
<PAGE>
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5
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<TABLE>
<CAPTION>
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MEMBERS POOLED TRUST FOR
RETIREMENT INDIVIDUALLY SELF-DIRECTED
PLAN DESIGNED PLANS PROTOTYPE PLAN
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<S> <C> <C> <C>
WHO SELECTS INVESTMENTS? Participant. Participant or Trustee, Participant or Trustee,
as specified under your as specified under your
Plan. Plan.
ARE LOANS AVAILABLE? Yes, if permitted under Yes, if permitted under Yes, if permitted under
your Plan. your Plan. your Plan.
WHEN ARE YOU ELIGIBLE FOR DISTRIBUTIONS? Upon retirement, Benefits depend upon Upon retirement,
death, disability or the terms of your Plan. death, disability or
termination of termination of
employment. employment.
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</TABLE>
PROFESSIONAL INVESTMENT MANAGEMENT
These professional investment managers advise or sponsor the different Funds:
o Alliance Capital Management L.P.
o Massachusetts Financial Services Company
o T. Rowe Price Associates, Inc.
o Warburg Pincus Asset Management, Inc.
o Merrill Lynch Asset Management, L.P.
o Bankers Trust Company
GUARANTEED OPTIONS
The three guaranteed options include two Guaranteed Rate Accounts and a Money
Market Guarantee Account.
TAX ADVANTAGES
o On earnings
o No tax on investment earnings until withdrawn.
o On transfer
o No tax on internal transfers.
Because you are buying a contract to fund a retirement plan that already
provides tax deferral under Federal income tax rules, you should do so for the
contract's features and benefits other than tax deferral. The tax deferral of
the contract does not provide additional benefits.
BENEFIT PAYMENT OPTIONS
o Lump sum.
o Installments on a time certain or dollar certain basis.
o Variety of annuity benefit payout options as available under your employer's
plan.
o Fixed or variable annuity options available.
ADDITIONAL FEATURES
o Toll-free number available for transfers and account information.
o Participant loans (if elected by your employer; some restrictions apply).
o Regular statements of account.
o Retirement Program Specialist and Account Executive support.
o Daily valuation of accounts.
o 5500 reporting.
o For Members Retirement Plan, automatic updates for law changes.
<PAGE>
1 Fee table
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6
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The fee tables and discussion below will help you understand the various charges
and expenses you will bear under the Program. The tables reflect charges: (1)
you will directly incur, including Program and investment fund fees and charges,
and (2) fees and expenses of EQ Advisors Trust, and its portfolios, you will
indirectly incur. If you annuitize your account, charges for premium or other
applicable taxes and other fees may apply.
WHEN YOU PURCHASE OR REDEEM UNITS OF ANY OF THE INVESTMENT FUNDS YOU WILL PAY NO
SALES LOAD, NO DEFERRED SALES CHARGE, NO SURRENDER FEES AND NO TRANSFER OR
EXCHANGE FEES.
PROGRAM EXPENSE CHARGE AND INVESTMENT FUND OPERATING EXPENSES
The Program expense charge and operating expenses of the investment funds are
paid out of each investment fund's assets. Certain investment funds pay us a
management fee that varies based on their respective assets. The Program expense
charge is based on the level of assets under the Program. Each investment fund
also incurs other expenses for services such as printing, mailing, legal, and
similar items. All of these operating expenses are reflected in each investment
fund's unit value. See "How We Value Your Account."
The tables that follow summarize the charges, at annual percentage rates, that
apply to the investment funds. They do not include other charges which are
specific to the various plans, such as enrollment fees or record maintenance and
report fees. See "Charges and Expenses," for more details. The expenses shown
are based on the actual experience of the investment funds during the year ended
December 31, 1998, and reflect currently applicable fees except as noted.
ALLIANCE GROWTH EQUITY, AGGRESSIVE EQUITY AND BALANCED FUNDS
<TABLE>
<CAPTION>
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PROGRAM
MANAGEMENT EXPENSE
FEE CHARGE OTHER TOTAL
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<S> <C> <C> <C> <C>
Alliance Growth Equity Fund 0.50% 1.00% 0.18%(1) 1.68%
Alliance Aggressive Equity Fund 0.65% 1.00% 0.19%(1) 1.84%
Alliance Balanced Fund 0.50% 1.00% 0.15%(1) 1.65%
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<CAPTION>
ALLIANCE GLOBAL, CONSERVATIVE INVESTORS AND GROWTH INVESTORS FUNDS
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PROGRAM
MANAGEMENT EXPENSE
FEE CHARGE OTHER(2) TOTAL
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<S> <C> <C> <C> <C>
Alliance Global Fund 0.20%(3) 1.00% 0.20%(1) 1.40%
EQ Advisors Trust 0.64 - 0.08 0.72
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TOTAL 0.84% 1.00% 0.28% 2.12%
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Alliance Conservative Investors Fund 0.20%(3) 1.00% 0.18%(1) 1.38%
EQ Advisors Trust 0.48% - 0.06% 0.54%
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TOTAL 0.68% 1.00% 0.24% 1.92%
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Alliance Growth Investors Fund 0.20%(3) 1.00% 0.20%(1) 1.40%
EQ Advisors Trust 0.51 - 0.05 0.56
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TOTAL 0.71% 1.00% 0.25% 1.96%
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</TABLE>
<PAGE>
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7
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MFS RESEARCH, WARBURG PINCUS SMALL COMPANY VALUE, T. ROWE PRICE EQUITY INCOME,
MERRILL LYNCH WORLD STRATEGY AND BT EQUITY 500 INDEX FUNDS
<TABLE>
<CAPTION>
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TRUST RELATED EXPENSES
INVESTMENT
MGMT.
&
ADVISORY 12B1 TOTAL(5)
FEE OTHER(5) FEE(4) AS LIMITED
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<S> <C> <C> <C> <C>
MFS Research Fund 0.55% 0.05% 0.25% 0.85%
Warburg Pincus Small Company Value Fund 0.65% 0.10% 0.25% 1.00%
T. Rowe Price Equity Income Fund 0.55% 0.05% 0.25% 0.85%
Merrill Lynch World Strategy Fund 0.70% 0.25% 0.25% 1.20%
BT Equity 500 Index Fund 0.25% 0.05% 0.25% 0.55%
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<CAPTION>
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TOTAL
PROGRAM RELATED EXPENSES EXPENSES
PROGRAM
EXPENSE TOTAL AS
CHARGE OTHER(1) LIMITED TOTAL
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<S> <C> <C> <C> <C>
MFS Research Fund 1.00% 0.40 %(6) 1.40% 2.25%
Warburg Pincus Small Company Value Fund 1.00% 0.39 %(6) 1.39% 2.39%
T. Rowe Price Equity Income Fund 1.00% 0.38 %(6) 1.38% 2.23%
Merrill Lynch World Strategy Fund 1.00% 0.40 %(6) 1.40% 2.60%
BT Equity 500 Index Fund 1.00% 0.14% 1.14% 1.69%
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</TABLE>
(1) Reflects the amount deducted for the daily accrual of direct expenses. See
"How We Determine the Unit Value" in the SAI.
(2) On October 18, 1999, the Funds' corresponding portfolios became part of EQ
Advisors Trust. The "Other" expenses for these portfolios have been
restated to reflect the estimated expenses that could have been incurred
had these portfolios been portfolios of EQ Advisors Trust for the year
ended December 31, 1998. The restated expenses reflect an increase of
0.01%.
(3) The Alliance Global, Alliance Conservative Investors and Alliance Growth
Investors Funds invest through Equitable Life's Separate Account No. 51 in
corresponding portfolios of EQ Advisors Trust. This charge represents only
financial accounting expenses for Separate Account No. 51.
(4) The Class IB shares of EQ Advisors Trust are subject to fees imposed under
distribution plans (herein, the "Rule 12b-1 Plans") adopted by EQ Advisors
Trust pursuant to Rule 12b-1 under the Investment Company Act of 1940, as
amended. The Rule 12b-1 Plan provides that EQ Trust, on behalf of each
portfolio, may pay annually up to 0.25% of the average daily net assets of
a portfolio attributable to its Class IB shares in respect of activities
primarily intended to result in the sale of the Class IB shares.
(5) The maximum management fee for each EQ Advisors Trust portfolio cannot be
increased without a vote of that portfolio's shareholders. The amounts
shown as "Other Expenses" will fluctuate from year to year depending on
actual expenses, however, Equitable Life, EQ Advisors Trust's manager, has
entered into an expense limitation agreement with respect to each
portfolio, ("Expense Limitation Agreement") pursuant to which Equitable
Life has agreed to waive or limit its fees and assume other expenses. Under
the Expense Limitation Agreement, total annual operating expenses of each
portfolio (other than interest, taxes, brokerage commissions, capitalized
expenditures, extraordinary expenses and 12b-1 fees) are limited to the
respective average daily net assets of each portfolio as follows: 0.60% for
MFS Research, 0.75% for Warburg Pincus Small Company Value, 0.60% for T.
Rowe Price Equity Income, 0.95% for Merrill Lynch World Strategy and 0.30%
for BT Equity 500 Index.
Absent the expense limitation, "Other Expenses" for 1998 on an annualized
basis for each of the portfolios were as follows: 0.25% for MFS Research,
0.27% for Warburg Pincus Small Company Value; 0.24% for T. Rowe Price
Equity Income; 0.66% for Merrill Lynch World Strategy and 0.33% for BT
Equity 500 Index.
Each portfolio may at a later date make a reimbursement to Equitable Life
for any of the management fees waived or limited and other expenses assumed
and paid by Equitable Life pursuant to the Expense Limitation Agreement
provided that, among other things, such portfolio has reached sufficient
size to permit such reimbursement to be made and provided that the
portfolio's current annual operating expenses do not exceed the operating
expense limit determined for such portfolio. See the EQ Advisors Trust
prospectus for more information.
(6) The amounts shown also reflect expenses of $19,329 which were initially
paid by us in connection with the organization of the MFS Research, Warburg
Pincus Small Company Value, T. Rowe Price Equity Income and Merrill Lynch
World Strategy Funds. These expenses are being reimbursed by these Funds
(equally amortized over the four EQ Advisors Trust Funds) over a five year
period that ends December 31, 2002.
<PAGE>
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8
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EXAMPLE
A $1,000 investment in each Fund listed below would be subject to the expenses
indicated, assuming a 5% annual return. Applicable expenses are the same whether
or not you withdraw all or part of your Account Balance at the end of each time
period shown (1).
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1 YEAR 3 YEARS 5 YEAR S 10 YEARS
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Alliance Growth Equity $ 17.93 $ 55.51 $ 95.50 $ 207.08
Alliance Aggressive Equity 19.54 60.41 103.76 224.03
Alliance Balanced 17.63 54.59 93.94 203.87
Alliance Global 22.37 68.93 118.06 252.98
Alliance Conservative Investors 20.35 62.85 107.87 232.39
Alliance Growth Investors 20.75 64.07 109.91 236.54
MFS Research 23.67 72.86 124.62 266.13
Warburg Pincus Small Company Value 25.08 77.08 131.64 280.08
T. Rowe Price Equity Income 23.47 72.26 123.61 264.11
Merrill Lynch World Strategy 27.18 83.37 142.08 300.61
BT Equity 500 Index 18.03 55.82 96.02 208.15
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(1) These calculations include all asset based charges plus a component for
record maintenance and report fees and enrollment fees. The component is
computed by aggregating such fees and dividing by the average assets for
the same period. See "Members Retirement Plan (Pension and Profit Sharing),
Prototype Self Directed Plan and Investment Only Fees" in this prospectus.
If you elect an annuity payout option under which we deduct a $350 annuitization
fee: Assuming an annuity payout option could be issued, the expenses shown in
the above example would, in each case, be increased by $4.43 based on the
average amount applied to annuity payout options in 1998.
CONDENSED FINANCIAL INFORMATION
Please see APPENDIX I at the end of this prospectus for condensed financial
information concerning (i) the Alliance Growth Equity Fund (Separate Account No.
4 (Pooled)), the Alliance Aggressive Equity Fund (Separate Account No. 3
(Pooled)), and the Alliance Balanced Fund (Separate Account No. 10 (Pooled));
(ii) unit value information for the Alliance Global, Alliance Conservative
Investors, and Alliance Growth Investors Funds (Separate Account No. 51
(Pooled)); and (iii) unit value information for the MFS Research, Warburg Pincus
Small Company Value, T. Rowe Price Equity Income, Merrill Lynch World Strategy
and BT Equity 500 Index Funds (Separate Account No. 66 (Pooled)).
FINANCIAL STATEMENTS OF INVESTMENT FUNDS
Each of the investment funds is, or is part of, one of our separate accounts as
described in "About the Separate Accounts" under "More Information." The
financial statements of the Pooled Separate Accounts, Alliance Growth Equity
(Separate Account No. 4), Alliance Aggressive Equity (Separate Account No. 3)
and Alliance Balanced (Separate Account No. 10), Separate Account No. 51 and
Separate Account No. 66 as well as the financial statements of Equitable Life
are included in the SAI. The financial statements for EQ Advisors Trust are in
the SAI for EQ Advisors Trust.
<PAGE>
2 Program Investment Options
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9
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INVESTMENT OPTIONS
We offer FOURTEEN INVESTMENT OPTIONS under the Program: Eleven investment funds
we call the "Funds" and the other three are Guaranteed Options.
THE FUNDS
Each Fund has a different investment objective. The Funds try to meet their
investment objectives by investing either in a portfolio of securities or by
holding mutual fund shares. We cannot assure you that any of the Funds will meet
their investment objectives.
THE ALLIANCE GROWTH EQUITY FUND
OBJECTIVE
The Alliance Growth Equity Fund seeks to achieve long-term growth of capital by
investing in the securities of companies that we believe will share in the
growth of our nation's economy -- and those of other leading industrialized
countries -- over a long period. The Fund maintains its own portfolio of
securities.
INVESTMENT STRATEGIES
The Alliance Growth Equity Fund invests primarily in common stocks. The Fund
generally invests in securities of intermediate and large sized companies, but
may invest in stocks of companies of any size. At times the Fund may invest its
equity holdings in a relatively small number of issuers, provided that no
investment causes more than 10% of the Growth Equity Fund's assets to be
invested in the securities of one issuer.
The Alliance Growth Equity Fund also may invest smaller amounts in other
equity-type securities, such as convertible preferred stocks or convertible debt
instruments. The Fund also may invest in non-equity investments, including
non-participating and non-convertible preferred stocks, bonds and debentures.
The Fund's non-equity investments could be substantial if we believe that the
Fund will not meet its investment objectives by buying common stock and other
equity-type securities. The Fund also may invest up to 10% of its total assets
in restricted securities (securities not freely traded) and up to 15% of its
total assets in foreign securities (securities of established foreign companies
without substantial business in the United States.)
As a defensive strategy, the Alliance Growth Equity Fund may make temporary
investments in government obligations, short-term commercial paper and other
money market instruments, either directly or through our Separate Account No.
2A, which invests in such securities. The Fund would not be pursuing its
investment objective when using this temporary defensive strategy.
RISKS OF INVESTMENT STRATEGIES
See "Risks of Investing in the Funds," below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance Growth
Equity Fund specifically.
THE ALLIANCE AGGRESSIVE EQUITY FUND
OBJECTIVES
The Alliance Aggressive Equity Fund seeks to achieve long-term capital growth,
consistent with investment quality, by investing primarily in securities of
medium and smaller sized companies (with capitalization generally between $100
million and $5.0 billion) that we believe have greater growth potential than
larger companies. The Fund maintains its own portfolio of securities.
INVESTMENT STRATEGIES
The Alliance Aggressive Equity Fund invests primarily in common stocks of medium
and smaller sized companies. The Fund may also invest in securities not
generally defined as growth stocks, but with unusual value or earnings
potential. For example, the Fund may seek opportunities for capital growth by
investing in companies (a) believed to be in cyclical industries; (b) whose
securities are temporarily undervalued; (c) in special situations; (d) that are
younger but not widely known; or (e) doing business in countries whose economies
are expanding. The Fund may also invest in foreign companies without substantial
business in the
<PAGE>
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10
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United States. The Fund may invest in other equity-type investments, and may at
times be less diversified than a traditional equity portfolio.
The Fund may also invest in short-term debt securities such as corporate notes,
and temporarily invest in money market investments, including our Separate
Account No. 2A. Additionally, the Fund may invest up to 10% of its total assets
in restricted securities.
RISKS OF INVESTMENT STRATEGIES
See "Risks of Investing in the Funds", below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance
Aggressive Equity Fund specifically. Note, however, that due to the Alliance
Aggressive Equity Fund's aggressive investment policies and less diversified
investments, this Fund provides greater growth potential and greater risk than
the Alliance Growth Equity and Alliance Balanced Funds. As a result, you should
consider limiting the amount allocated to this Fund, particularly as you near
retirement.
THE ALLIANCE BALANCED FUND
OBJECTIVES
The Alliance Balanced Fund seeks both appreciation of capital and current income
by investing in a diversified portfolio of common stocks, other equity-type
securities and longer-term fixed income securities. The Fund also seeks current
income by investing in publicly traded debt securities and short-term money
market instruments. The Fund maintains its own portfolio of securities.
INVESTMENT STRATEGIES
The Alliance Balanced Fund varies the portion of its assets invested in each
type of security in accordance with our evaluation of economic conditions, the
general level of common stock prices, anticipated interest rates and other
relevant considerations, including our assessment of the risks associated with
each investment medium.
In general, the Fund invests the greatest portion of it's assets in equity
securities. During each of the past ten years, the Fund invested between 43% and
86% of its assets in equity securities, including equity-type securities such as
convertible preferred stocks or convertible debt instruments.
The Fund's investment in non-money market debt securities consists primarily of
(a) publicly-traded securities issued or guaranteed by the United States
Government or its agencies or instrumentalities and (b) corporate fixed income
securities, including, but not limited to, bank obligations, notes, asset-backed
securities, mortgage pass-through obligations, collateralized mortgage
obligations, zero coupon bonds, and preferred stock. The Fund may also buy debt
securities with equity features such as conversion or exchange rights, warrants
for the acquisition of stock, or participations based on revenues, sales or
profits. The Fund only invests in investment grade non-money market debt
securities, i.e., those rated, at the time of acquisition, BBB or higher by
Standard & Poor's Corporation (S&P) or Baa or higher by Moody's Investors
Services, Inc. (Moody's) or, if unrated, are of comparable investment quality.
The average maturity of the debt securities held by the Fund varies according to
market conditions and the stage of interest rate cycles. The Fund may realize
gains on debt securities when such action is considered advantageous in light of
existing market conditions.
The Fund also may invest (a) up to 10% of its total assets in restricted
securities; (b) in foreign companies without substantial business in the United
States; (c) in repurchase agreements; and (d) in money market securities, either
directly or through our Separate Account No. 2A. The Fund may also purchase and
sell securities on a when-issued or delayed delivery basis.
Finally, the Fund may (a) invest in put and call options and (b) trade in stock
index or interest rate futures, and foreign currency forward contracts, for
hedging purposes only. In option transactions, the economic benefit will be
offset by the cost of the option, while any loss would be limited to such cost.
The Fund also enters into hedging transactions. These transactions are
undertaken only when any required regulatory procedures have been completed and
when
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economic and market conditions indicate that such transactions would serve the
best interests of the Fund.
RISKS OF INVESTMENT STRATEGIES
See "Risks of Investing in the Funds", below, for information on the risks
associated with an investment in the Funds generally, and in the Alliance
Balanced Fund specifically.
INVESTMENT MANAGER
We manage the Alliance Growth Equity, Alliance Aggressive Equity and Alliance
Balanced Funds. We currently use the personnel and facilities of Alliance
Capital Management L.P. ("Alliance") for portfolio management, securities
selection and transaction services. We are the indirect majority-owners of
Alliance, a publicly-traded limited partnership. We and Alliance are each
registered investment advisers under the Investment Advisers Act of 1940.
Alliance acts as investment adviser to various separate accounts of Equitable
Life and other affiliated insurance companies. Alliance also provides investment
management and advisory services to mutual funds, 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. As of December 31, 1998, Alliance had total assets under
management of $286 billion. Alliance's main office is located at 1345 Avenue of
the Americas, New York, New York 10105.
The Investment Committee of our Board of Directors must authorize or approve the
securities held in the Alliance Growth Equity, Alliance Aggressive Equity and
Alliance Balanced Funds. Subject to the Investment Committee's broad supervisory
authority, our investment officers and managers have complete discretion over
the assets of these Funds and have been given discretion as to sales and, within
specified limits, purchases of stocks, other equity securities and certain debt
securities. When an investment opportunity arises that is consistent with the
objectives of more than one account, we allocate investment opportunities among
accounts in an impartial manner based on certain factors such as investment
objective and current investment and cash positions.
We, together with Equitable Life's parent company, own 72.2% of the outstanding
common stock of Donaldson, Lufkin & Jenrette, Inc. (DLJ). A DLJ subsidiary,
Donaldson, Lufkin & Jenrette Securities Corporation, is one of the nation's
largest investment banking and securities firms. Another DLJ subsidiary,
Autranet, Inc., is a securities broker that markets independently originated
research to institutions. Through the Pershing Division of Donaldson, Lufkin &
Jenrette Securities Corporation, DLJ supplies correspondent services, including
order execution, securities clearance and other centralized financial services,
to numerous independent regional securities firms and banks.
To the extent permitted by law and consistent with the Fund transaction
practices discussed in the prospectus, and subject to the consent of Fund
contractholders, the Funds may engage in securities and other transactions with
the above entities or may invest in shares of the investment companies with
which those entities have affiliations. In 1998, there were no such transactions
through DLJ subsidiaries.
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EQ ADVISORS TRUST
EQ Advisors Trust is a registered open-end management investment company that
offers a selection of professionally managed investment portfolios. EQ Advisors
Trust commenced operations on May 1, 1997. As a "series" type of mutual fund,
the Trust issues shares of beneficial interest that are currently divided among
the Trust's portfolios. Each portfolio is a separate series of the Trust with
its own objective and policies. EQ Advisors Trust does not impose sales charges
or "loads" for buying and selling their shares.
Equitable Life serves as the investment manager of EQ Advisors Trust. As such,
Equitable Life oversees the activities of the investment advisers with respect
to EQ Advisors Trust and is responsible for retaining or discontinuing the
services of those advisers. (Prior to September, 1999 EQ Financial Consultants,
Inc. served as investment manager to EQ Advisors Trust.)
EQ/Advisors Trust commenced operations on May 1, 1997. Prior to October 18, 1999
the Alliance portfolios were part of The Hudson River Trust. On October 18, 1999
these portfolios became corresponding portfolios of EQ Advisors Trust and any
predecessors that it may have had.
Pursuant to a service agreement, Chase Global Funds Services Company assists
Equitable Life in the performance of its administrative responsibilities to the
EQ Advisors Trust with other necessary administrative, fund accounting and
compliance services.
The Alliance Global, Alliance Conservative Investors, Alliance Growth Investors,
MFS Research, Warburg Pincus Small Company Value, T. Rowe Price Equity Income,
Merrill Lynch World Strategy and BT Equity 500 Index Funds invest in
corresponding portfolios of the EQ Advisors Trust. The investment results you
will experience in any one of those investment funds will depend on the
investment performance of the corresponding portfolios. The table below shows
the names of the corresponding portfolios, their investment objectives, and
their advisers.
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PORTFOLIO
INVESTMENT -------------------------------------------------
FUND NAME OBJECTIVE ADVISER
- ------------------------------------------------------------------
Alliance Alliance Long-term Alliance
Global Fund Global growth of
portfolio capital
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Alliance Alliance High total Alliance
Conservative Conservative return
Investors Investors without
Fund portfolio undue risk
to principal
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Alliance Alliance High total Alliance
Growth Growth return
Investors Investors consistent
Fund portfolio with
reasonable
risk
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T. Rowe Price T. Rowe Substantial T. Rowe Price
Equity Price Equity dividend Associates, Inc.
Income Fund Income income and
portfolio capital
appreciation
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MFS MFS Long-term Massachusetts
Research Research growth of Financial Services
Fund portfolio capital and Company
future
income
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Warburg Warburg Long-term Warburg Pincus
Pincus Small Pincus Small capital Asset
Company Company appreciation Management, Inc.
Value Fund Value
portfolio
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Merrill Lynch Merrill High total Merrill Lynch
World Lynch World investment Asset
Strategy Fund Strategy return Management, L.P.
portfolio
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BT Equity BT Equity Replicate Bankers Trust
500 Index 500 Index the total Company
Fund portfolio return of
the S&P
500 Index
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PLEASE REFER TO THE PROSPECTUS AND SAI OF EQ ADVISORS TRUST FOR A MORE DETAILED
DISCUSSION OF INVESTMENT OBJECTIVES AND STRATEGIES, ADVISERS, RISK FACTORS AND
OTHER INFORMATION CONCERNING THE TRUST AND ITS PORTFOLIOS.
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RISKS OF INVESTING IN THE FUNDS
All of the Funds invest in securities of one type or another. You should be
aware that any investment in securities carries with it a risk of loss, and you
could lose money investing in the Funds. The different investment objectives and
policies of each Fund may affect the return of each Fund and the risks
associated with an investment in that Fund.
Additionally, market and financial risks are inherent in any securities
investment. By market risks, we mean factors which do not necessarily relate to
a particular issuer, but affect the way markets, and securities within those
markets, perform. Market risks can be described in terms of volatility, that is,
the range and frequency of market value changes. Market risks include such
things as changes in interest rates, general economic conditions and investor
perceptions regarding the value of debt and equity securities. By financial
risks we mean factors associated with a particular issuer which may affect the
price of its securities, such as its competitive posture, its earnings and its
ability to meet its debt obligations.
The risk factors associated with an investment in the Alliance Growth Equity,
Alliance Aggressive Equity and Alliance Balanced Funds are described below. See
the SAI for additional information regarding certain investment techniques used
by these Funds. See the EQ Advisors Trust prospectus for risks and factors and
investment techniques associated with an investment in the Alliance Global,
Alliance Conservative Investors, Alliance Growth Investors, MFS Research,
Warburg Pincus Small Company Value, T. Rowe Price Equity Income, Merrill Lynch
World Strategy and BT Equity 500 Index Funds.
Important factors associated with an investment in the Alliance Growth Equity,
Alliance Aggressive Equity and Alliance Balanced Funds are discussed below.
COMMON STOCK. Investing in common stocks and related securities involves the
risk that the value of the stocks or related securities purchased will
fluctuate. These fluctuations could occur for a single company, an industry, a
sector of the economy, or the stock market as a whole. These fluctuations could
cause the value of the Fund's investments -- and, therefore, the value of the
Fund's units -- to fluctuate.
SECURITIES OF MEDIUM AND SMALLER SIZED COMPANIES. The Alliance Aggressive Equity
Fund invests primarily in the securities of medium and smaller sized companies,
although the Alliance Growth Equity and Alliance Balanced Funds may also make
these investments. The securities of small and medium sized, less mature, lesser
known companies involves greater risks than those normally associated with
larger, more mature, well-known companies. Therefore, consistent earnings may
not be as likely in small companies as in large companies.
The Funds also run a risk of increased and more rapid fluctuations in the value
of its investments in securities of small or medium sized companies. This is due
to the greater business risks of small size and limited product lines, markets,
distribution channels, and financial and managerial resources. Historically, the
price of small (less than $2 billion) and medium (between $2 and $10 billion)
capitalization stocks and stocks of recently organized companies have fluctuated
more than the larger capitalization stocks and the overall stock market. One
reason is that small- and medium-sized companies have less certain prospects for
growth, a lower degree of liquidity in the markets for their stocks, and greater
sensitivity to changing economic conditions.
NON-EQUITY SECURITIES. Investing in non-equity securities, such as bonds and
debentures, involves the risk that the value of these securities held by the
Alliance Growth Equity, Alliance Aggressive Equity and Alliance Balanced Funds
- -- and, therefore, the value of the Fund's units -- will fluctuate with changes
in interest rates (interest rate risk) and the perceived ability of the issuer
to make interest or principal payments on time (credit risk). Moreover,
convertible securities, such as convertible preferred stocks or convertible debt
instruments, contain both debt and equity features, and may lose significant
value in periods of extreme market volatility.
FOREIGN INVESTING. Investing in securities of foreign companies that may not do
substantial business in the
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United States involves additional risks, including risk of loss from changes in
the political or economic climate of the countries in which these companies do
business. Foreign currency fluctuations, exchange controls or financial
instability could cause the value of the Alliance Growth Equity, Aggressive
Equity and Balanced Funds' foreign investments to fluctuate. Additionally,
foreign accounting, auditing and disclosure standards may differ from domestic
standards, and there may be less regulation in foreign countries of stock
exchanges, brokers, banks, and listed companies than in the United States. As a
result, the Fund's foreign investments may be less liquid and their prices may
be subject to greater fluctuations than comparable investments in securities of
U.S. issuers.
RESTRICTED SECURITIES. Investing in restricted securities involves additional
risks because these securities generally (1) are less liquid than non-restricted
securities and (2) lack readily available market quotations. Accordingly, the
Alliance Growth Equity, Alliance Aggressive Equity and Alliance Balanced Funds
may be unable to quickly sell its restricted security holdings at fair market
value.
The following discussion describes investment risks unique to either the
Alliance Growth Equity Fund, Alliance Aggressive Equity Fund or the Alliance
Balanced Fund.
INVESTMENT CONCENTRATION. Concentrating the Alliance Growth Equity Fund's equity
holdings in the stocks of a few companies increases the risk of loss, because a
decline in the value of one of these stocks would have a greater impact on the
Fund. As of December 31, 1998, the Fund held 27.4% of its net assets in the
stocks of four issuers. See Separate Account No. 4 (Pooled) Statement of
Investments and Net Assets in the SAI.
AGGRESSIVE INVESTMENT POLICIES. Due to the Alliance Aggressive Equity Fund's
aggressive investment policies and less diversified investments, this Fund
provides greater growth potential and greater risk than the Alliance Growth
Equity and Alliance Balanced Funds. As a result, you should consider limiting
the amount allocated to this Fund, particularly as you near retirement.
ASSET ALLOCATION POLICIES. The Alliance Balanced Fund varies the portion of it's
assets invested in equity and non-equity securities with our evaluation of
various factors. The Fund is subject to the risk that we may incorrectly predict
changes in the relative values of the stock and bond markets.
DEBT SECURITIES SUBJECT TO PREPAYMENT RISKS. Mortgage pass-through securities
and certain collateralized mortgage obligations, asset-backed securities and
other debt instruments in which the Alliance Balanced Fund may invest are
subject to prepayments prior to their stated maturity. The Fund, however, is
unable to accurately predict the rate at which prepayments will be made, as that
rate may be affected, among other things, by changes in generally prevailing
market interest rates. If prepayments occur, the Fund suffers the risk that it
will not be able to reinvest the proceeds at as high a rate of interest as it
had previously been receiving. Also, the Fund will incur a loss to the extent
that prepayments are made for an amount that is less than the value at which the
security was then being carried by the fund. Moreover, securities that may be
prepaid tend to increase in value less during times of declining interest rates,
and to decrease in value more during times of increasing interest rates, than do
securities that are not subject to prepayment.
WHEN-ISSUED AND DELAYED DELIVERY SECURITIES. The Alliance Balanced Fund may
purchase and sell securities on a when-issued or delayed delivery basis. In
these transactions, securities are purchased or sold by a Fund with payment and
delivery taking place in the future in order to secure what is considered to be
an advantageous price or yield to the Fund at the time of entering into the
transaction. However, the market value of such securities at the time of
settlement may be more or less than the purchase price then payable. The Fund
will sell on a forward settlement basis only securities it owns or has the right
to acquire.
DEBT INSTRUMENTS ISSUED BY SCHEDULE B BANKS. The Alliance Balanced Fund may
invest in debt instruments issued by Schedule B Banks, which are foreign
branches of United States banks. Schedule B Banks are not required to
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maintain the same financial reserves which are required of United States banks,
but Schedule B Bank certificates of deposit are fully guaranteed by the U.S.
parent of the issuing bank. Debt instruments issued by Schedule B Banks may
include certificates of deposit and time deposits of London branches of United
States banks ("Eurodollars"). Eurodollar investments are subject to the types of
risks associated with foreign securities. London branches of the United States
banks have extensive government regulation which may limit both the amount and
the type of loans and interest rates. In addition, the banking industry's
profitability is closely linked to prevailing money market conditions for
financing lending operations. Both general economic conditions and credit risks
play an important part in the operations of the banking industry. United States
banks are required to maintain reserves, are limited in how much they can loan
to a single borrower and are subject to other regulations to promote financial
soundness. Not all of these laws and regulations apply to foreign branches of
United States banks.
HEDGING TRANSACTIONS. The Alliance Balanced Fund may engage in hedging
transactions which are designed to protect against anticipated adverse price
movements in securities owned or intended to be purchased by the Fund. When
interest rates go up, the market value of outstanding debt securities declines
and vice versa. In recent years the volatility of the market for debt securities
has increased significantly, and market prices of longer-term obligations have
been subject to wide fluctuations, particularly as contrasted with those of
short-term instruments. The Fund will take certain risks into consideration when
determining which, if any, options or financial futures contracts it will use.
If the price movements of hedged portfolio securities are in fact favorable to
the Fund, the hedging transactions will tend to reduce and may eliminate the
economic benefit to the Fund which otherwise would result. Also, the price
movements of options and futures used for hedging purposes may not correlate as
anticipated with price movements of the securities being hedged. This can make a
hedge transaction less effective than anticipated and could result in a loss.
The options and futures markets can sometimes become illiquid and the exchanges
on which such instruments are traded may impose trading halts or delays on the
exercise of options and liquidation of futures positions in certain
circumstances. This could in some cases operate to the Fund's detriment.
ADDITIONAL INFORMATION ABOUT THE FUNDS
CHANGE OF INVESTMENT OBJECTIVES
We can change the investment objectives of the Alliance Growth Equity, Alliance
Aggressive Equity and Alliance Balanced Funds if the New York State Insurance
Department approves the change.
The investment objectives of the Alliance Global, Alliance Conservative
Investors and Alliance Growth Investors portfolios can only be changed by a
majority vote of shareholders of those portfolios. See "Voting Rights." The
investment objectives of the MFS Research, Warburg Pincus Small Company Value,
T. Rowe Price Equity Income, Merrill Lynch World Strategy and BT Equity 500
Index Funds of the EQ Advisors Trust may be changed by the Board of Trustees of
the EQ Advisors Trust without the approval of shareholders.
VOTING RIGHTS
No voting rights apply to any of the separate accounts or to the Guaranteed
Options. We do, however, have the right to vote shares of the EQ Advisors Trust
held by the funds.
If EQ Advisors Trust holds a meeting of shareholders, we will vote the shares of
the EQ Advisors Trust allocated to the Alliance Global, Alliance Conservative
Investors, Alliance Growth Investors, MFS Research, Warburg Pincus Small Company
Value, T. Rowe Price Equity Income, Merrill Lynch World Strategy and BT Equity
500 Index Funds in accordance with instructions received from employers,
participants or trustees, as the case may be. Shares will be voted in proportion
to the voter's interest in the Funds holding the shares as of the record date
for the shareholders meeting. We will vote the shares for which no instructions
have been received in the same proportion as we vote shares for which we have
received instructions. Employers, participants or trustees will receive: (1)
periodic reports relating to the
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EQ Advisors Trust and (2) proxy materials, together with a voting instruction
form, in connection with shareholder meetings.
Currently, we control EQ Advisors Trust. The Trust's shares are held by other
separate accounts of ours and by separate accounts of insurance companies
unaffiliated with us. We generally will vote shares held by these separate
accounts which will generally be voted according to the instructions of the
owners of insurance policies and contracts funded through those separate
accounts, thus diluting the effect of your voting instructions.
THE GUARANTEED OPTIONS
We offer three different Guaranteed Options:
o two Guaranteed Rate Accounts (GRAs), and
o our Money Market Guarantee Account.
We guarantee the amount of your contributions to the Guaranteed Options and the
interest credited. Contributions to the Guaranteed Options become part of our
general account, which supports all of our insurance and annuity guarantees as
well as our general obligations. The general account, as part of our insurance
and annuity operations, is subject to regulation and supervision by the
Insurance Department of the State of New York and to insurance laws and
regulations of all jurisdictions in which we are authorized to do business.
Your investment in a Guaranteed Option is not regulated by the Securities and
Exchange Commission, and the following discussion about the Guaranteed Options
has not been reviewed by the staff of the SEC. The discussion, however, is
subject to certain generally applicable provisions of the federal securities
laws relating to the accuracy and completeness of the statements made.
GUARANTEED RATE ACCOUNTS
We offer a GRA that matures in three years (3-year GRA) or a GRA that matures in
five years (5-year GRA). Your contributions to the GRAs earn the guaranteed
interest rate then in effect when your contribution is credited. The interest
rate is expressed as an effective annual rate, reflecting daily compounding and
the deduction of applicable asset-based fees. See "Charges and Expenses."
You can make new contributions or transfer amounts from other investment options
to a GRA at the current guaranteed rate at any time. New guaranteed rates are
offered each Wednesday and are available for a seven-day period. You may call
the AIM System to obtain our current GRA rates. You earn interest from the day
after your contribution or transfer is credited through the maturity date of the
GRA. See "Maturing GRAs" in the SAI for more information. The amount of your
contribution and interest that is guaranteed is subject to any penalties
applicable upon premature withdrawal. See "Premature Withdrawals and Transfers
from a GRA" in the SAI.
PREMATURE WITHDRAWALS AND TRANSFERS
o You may not transfer from one GRA to another or from a GRA to another
investment option except at maturity.
o You may transfer other amounts at any time to a GRA at the current guaranteed
rate.
o Withdrawals may be made from a GRA before maturity if: you are disabled; you
attain age 70 1/2; you die; or you are not self-employed and your employment
is terminated.
o You may not remove GRA funds before maturity to take a loan, hardship or
other in-service withdrawal, as a result of a trustee-to-trustee transfer, or
to receive benefits from a terminated plan.
o Certain other withdrawals prior to maturity are permitted, but may be subject
to penalty. See "Procedures for Withdrawals, Distributions and Transfers from
a GRA" in the SAI.
MONEY MARKET GUARANTEE ACCOUNT
All contributions to the Money Market Guarantee Account earn the same rate of
interest. The rate changes monthly and is expressed as an effective annual rate,
reflecting daily compounding and the deduction of applicable asset-based fees
and charges. The rate will approximate current market
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rates for money market mutual funds minus these fees. You may call the AIM
System to obtain the current monthly rate. On January 1 each year we set an
annual minimum rate for this Account. The minimum guaranteed interest rate for
1999 is 2.5% (before fees).
Contributions may be made at any time and will earn the current rate from the
day after the contribution is credited through the end of the month or, if
earlier, the day of transfer or withdrawal. Your balance in the Money Market
Guarantee Account at the end of the month automatically begins receiving
interest at the new rate until transferred or withdrawn.
DISTRIBUTIONS, WITHDRAWALS, AND TRANSFERS. You may effect distributions,
withdrawals and transfers, without penalty, at any time permitted under your
plan. We do not impose penalties on distributions, withdrawals or transfers.
<PAGE>
3 How we value your account balance in the funds
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When you invest in a Fund, your contribution or transfer is used to purchase
"units" of that Fund. The unit value on any day reflects the value of the Fund's
investments for the day and the charges and expenses we deduct from the Fund. We
calculate the number of units you purchase by dividing the amount you invest by
the unit value of the Fund as of the close of business on the day we receive
your contribution or transfer instruction.
On any given day, your account value in any Fund equals the number of the Fund's
units credited to your account, multiplied by that day's value for one Fund
unit. In order to take deductions from any Fund, we cancel units having a value
equal to the amount we need to deduct. Otherwise, the number of your Fund units
of any Fund does not change unless you make additional contributions, make a
withdrawal, effect a transfer, or request some other transaction that involves
moving assets into or out of that Fund option.
For a description of how Fund unit values are computed, see "How We Compute Unit
Values for the Funds" in the SAI.
<PAGE>
4 Transfers and access to your account
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TRANSFERS AMONG INVESTMENT OPTIONS
You may transfer some or all of your amounts among the investment options if you
participate in the Members Retirement Plan. Participants in other plans may make
transfers as allowed by the plan.
No transfers from the GRAs to other investment options are permitted prior to
maturity. Transfers to the GRAs, and to or from the Money Market Guarantee
Account and the Alliance Growth Equity, Alliance Aggressive Equity and Alliance
Balanced Funds, are permitted at any time. Transfers from remaining Funds are
permitted at any time except if there is any delay in redemptions from the
corresponding portfolio of EQ Advisors Trust.
OUR ACCOUNT INVESTMENT MANAGEMENT SYSTEM
Participants may use our automated AIM System to transfer between investment
options, obtain account information, change the allocation of future
contributions and maturing GRAs and hear investment performance information. To
use the AIM System, you must have a touch-tone telephone. We assign a personal
security code ("PSC") number to you after we receive your completed enrollment
form.
We have established procedures to reasonably confirm the genuineness of
instructions communicated to us by telephone when using the AIM System. The
procedures require personal identification information, including your PSC
number, prior to acting on telephone instructions, and providing written
confirmation of the transfers. Thus, we will not be liable for following
telephone instructions we reasonably believe to be genuine.
A transfer request will be effective on the business day we receive the request.
We will confirm all transfers in writing.
- --------------------------------------------------------------------------------
A business day is any day on which both the New York Stock Exchange and we are
open, and generally ends at 4:00 p.m. Eastern Time. We may, however, close due
to emergency conditions.
- --------------------------------------------------------------------------------
PARTICIPANT LOANS
Participant loans are available if the employer plan permits them. Participants
must apply for a plan loan through the employer.
Loans are subject to restrictions under Federal tax laws and ERISA. Loan
packages containing all necessary forms, along with an explanation of how
interest rates are set, are available from our Account Executives. A loan may
not be taken from the Guaranteed Rate Accounts prior to maturity. If a
participant is married, written spousal consent will be required for a loan.
If you are a sole proprietor, 10% or more partner, or a shareholder-employee of
an S Corporation who owns more than 5% of the shares (or a family member of any
of the above as defined under Federal income tax laws), you presently may not
borrow from your vested account balance without first obtaining a prohibited
transaction exemption from the Department of Labor. Participants should consult
with their attorneys or tax advisors regarding the advisability and procedures
for obtaining such an exemption.
Generally, the loan amount will be transferred from the investment options into
a loan account. The participant must repay the amount borrowed with interest as
required by federal income tax rules. If you fail to repay the loan when due,
the amount of the unpaid balance may be taxable and subject to additional
penalty taxes. Interest paid on a retirement plan loan is not deductible.
CHOOSING BENEFIT PAYMENT OPTIONS
The Program offers a variety of benefit payment options. If you are a
participant in a self-directed or individually-designed plan, ask your employer
for details. Once you are eligible, your plan may allow you a choice of one or
more of the following forms of distribution:
o Qualified Joint and Survivor Annuity
o Joint and Survivor Annuity Options, some with optional Period Certain
o Lump Sum Payment
o Installment Payments
o Life Annuity
o Life Annuity -- Period Certain
o Cash Refund Annuity
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All of these options can be either fixed or variable except for the Cash Refund
Annuity and the Qualified Joint and Survivor Annuity which are fixed options
only.
- --------------------------------------------------------------------------------
The amount of each payment in a fixed option remains the same. Variable option
payments change to reflect the investment performance of the Alliance Growth
Equity Fund.
- --------------------------------------------------------------------------------
See "Types of Benefits" in the SAI for detailed information regarding each of
the benefit payout options, and "Procedures for Withdrawals, Distributions and
Transfers" in the SAI.
We provide the fixed and variable annuity options. Payments under variable
annuity options reflect investment performance of the Alliance Growth Equity
Fund.
The minimum amount that can be used to purchase any type of annuity is $5,000.
In most cases an annuity administrative charge of $350 will be deducted from the
amount used to purchase an annuity. If we give any group pension client with a
qualified plan a better annuity purchase rate than those currently guaranteed
under the Program, we will also make those rates available to Program
participants. The annuity administrative charge may be greater than $350 in that
case.
SPOUSAL CONSENT
If a participant is married and has an account balance greater than $5,000,
federal law generally requires payment of a Qualified Joint and Survivor Annuity
payable to the participant for life and then to the surviving spouse for life,
unless you and your spouse have properly waived that form of payment in advance.
Please see "Spousal Consent Requirements" under "Types of Benefits" in the SAI.
Certain self-directed prototypes and individually designed plans are not subject
to these requirements.
BENEFITS PAYABLE AFTER THE DEATH OF A PARTICIPANT
o If you die before the entire benefit due you has been paid, the remainder of
your benefits will be paid to your beneficiary.
o If you die before you are required to begin receiving benefits, the law
requires your entire benefit to be distributed no more than five years after
your death. There are exceptions -- (1) A beneficiary who is not your spouse
may elect payments over his/her life or a fixed period which does not exceed
the beneficiary's life expectancy, provided payments begin within one year of
your death. (2) If your benefit is payable to your spouse, your spouse may
elect to receive benefits over his/her life or a period certain which does
not exceed his or her life expectancy beginning any time up to the date you
would have attained age 70 1/2 or, if later, one year after your death, or
(3) Your spouse may be able to roll over all or part of the death benefit to
a traditional (not Roth) individual retirement arrangement.
o If at your death you were already receiving annuity benefits, your
beneficiary will receive the survivor benefits, if any, under the form of the
annuity selected. If an annuity benefit was not selected, your beneficiary
can continue to receive benefits based on the payment option you selected or
can select a different payment option so long as payments are made at least
as rapidly as with the payment option you originally selected.
o To designate a beneficiary or to change an earlier designation, have your
employer send us your completed beneficiary designation form. Your spouse
must consent in writing to a designation of any non-spouse beneficiary, as
explained in "Procedures for Withdrawals, Distributions and Transfers --
Spousal Consent Requirements" in the SAI.
Under the Members Retirement Plan, on the day we receive proof of your death, we
automatically transfer your Account Balance in the Funds to the Money Market
Guarantee Account unless your beneficiary instructs otherwise. All amounts are
held until your beneficiary requests a distribution or transfer. Our Account
Executives can explain these and other requirements affecting death benefits.
<PAGE>
5 The Program
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The Members Retirement Program consists of several types of retirement plans and
two retirement plan Trusts, the Master Trust and the Pooled Trust. Each of the
Trusts invests exclusively in the group annuity contracts described in this
prospectus. The Program is sponsored by Equitable Life. The Program had 10,238
participants and approximately $200 million in assets at December 31, 1998.
This section explains the Program in further detail. It is intended for
employers who wish to enroll in the Program, but contains information of
interest to participants as well. You should, of course, understand the
provisions of your plan and the Participation Agreement that define the scope of
the Program in more specific terms. References to "you" and "your" in this
section are to you in your capacity as an employer.
Our Retirement Program Specialists are available to answer your questions about
joining the Program. Please contact us by using the telephone number or
addresses listed under "How To Reach Us -- Information on Joining the Program"
on the back cover of the prospectus.
SUMMARY OF PLAN CHOICES
You have a choice of three retirement plan arrangements under the Program. You
can:
o Choose, the MEMBERS RETIREMENT PLAN -- which automatically gives you a full
range of services from Equitable Life. These include your choice of the
Program investment options, plan-level and participant-level recordkeeping,
benefit payments and tax withholding and reporting. Under the Members
Retirement Plan employers adopt our Master Trust and your only investment
choices are from the Investment Options.
- --------------------------------------------------------------------------------
The Members Retirement Plan is a defined contribution master plan that can be
adopted as a profit sharing plan (including optional 401(k), SIMPLE 401(k) and
safe harbor 401(k) features), a defined contribution pension plan, or both.
- --------------------------------------------------------------------------------
o Choose the SELF-DIRECTED PROTOTYPE PLAN -- which gives you added flexibility
in choosing investments. This is a defined contribution prototype plan which
can be used to combine the Program investment options with your own
individual investments such as stocks and bonds. With this plan you must
adopt our Pooled Trust and maintain a minimum balance of $25,000 at all
times.
You must arrange separately for plan level accounting and brokerage services.
We provide recordkeeping services only for plan assets held in the Pooled
Trust. You can use any plan recordkeeper or you can arrange through us to
hire Trustar Retirement Services at a special rate. You can also arrange
through us brokerage services from our affiliate, DLJ Direct, at special
rates or use the services of any other broker.
- --------------------------------------------------------------------------------
The Pooled Trust is an investment vehicle used with individually designed
qualified retirement plans. It can be used for both defined contribution and
defined benefit plans. We provide recordkeeping services for plan assets held in
the Pooled Trust.
- --------------------------------------------------------------------------------
o Maintain our POOLED TRUST FOR INDIVIDUALLY DESIGNED PLANS -- and use our
Pooled Trust for investment options in the Program and your own individual
investments. The Pooled Trust is for investment only and can be used for both
defined benefit and defined contribution plans. We provide participant-level
or plan-level recordkeeping services for plan assets in the Pooled Trust.
Choosing the right plan depends on your own set of circumstances. We recommend
that you review all plan, trust, participation and related agreements with your
legal and tax counsel.
<PAGE>
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GETTING STARTED
If you choose the Members Retirement Plan, you as the employer or trustee must
complete a Participation Agreement.
If you choose the Self-Directed Prototype Plan, you must complete the Prototype
Plan adoption agreement as well as a Participation Agreement in order to use the
Pooled Trust.
As an employer, you are responsible for the administration of the plan you
choose. If you have a Self-Directed Prototype Plan, you are also responsible for
appointing a plan trustee. Please see "Your Responsibilities as Employer" in the
SAI.
HOW TO MAKE PROGRAM CONTRIBUTIONS
Contributions must be in the form of a check drawn on a bank in the U.S.
clearing through the Federal Reserve System, in U.S. dollars, and made payable
to Equitable Life. All contribution checks should be sent to Equitable Life at
the address shown "For Contribution Checks Only" in the "Information Once You
Join the Program" section under "How to Reach Us" in this prospectus. Third
party checks are not acceptable, except for rollover contributions, tax-free
exchanges or trustee checks that involve no refund. All checks are subject to
collection. We reserve the right to reject a payment if it is received in an
unacceptable form.
All contributions must be accompanied by a Contribution Remittance form which
designates the amount to be allocated to each participant by contribution type.
Contributions are normally credited on the business day that we receive them,
provided the remittance form is properly completed. Contributions are only
accepted from the employer. Employees may not send contributions directly to the
Program.
There is no minimum amount which must be contributed for investment if you adopt
the Members Retirement Plan, or if you have your own individually designed plan
that uses the Pooled Trust. If you adopt our self-directed prototype plan, you
must, as indicated above, keep at least $25,000 in the Pooled Trust at all
times.
ALLOCATING PROGRAM CONTRIBUTIONS
Under the Members Retirement Plan participants make all of the investment
decisions.
Investment decisions in the Self-Directed Prototype Plan and individually
designed plans are made either by the participant or by the plan trustees
depending on the terms of the plan.
Participants may allocate contributions among any number of Program investment
options. Allocation instructions can be changed at any time. You may allocate
employer contributions in different percentages than your employee
contributions. The allocation percentages you elect for employer contributions
will automatically apply to 401(k) qualified non-elective contributions,
qualified matching contributions and matching contributions. The allocation
percentages you elect for employee contributions will automatically apply to
both your post-tax employee contributions and your 401(k) salary deferral
contributions.
IF WE DO NOT RECEIVE ADEQUATE INSTRUCTIONS, WE WILL ALLOCATE YOUR CONTRIBUTIONS
TO THE MONEY MARKET GUARANTEE ACCOUNT UNTIL WE ARE PROPERLY INSTRUCTED
OTHERWISE.
WHEN TRANSACTION REQUESTS ARE EFFECTIVE. Contributions, as well as transfer
requests and allocation changes (not including GRA maturity allocation changes
discussed in the SAI), are effective on the business day they are received.
Distribution requests are also effective on the business day they are received
unless, as in the Members Retirement Plan, there are plan provisions to the
contrary. Transaction requests received after the end of a business day will be
credited the next business day. Processing of any transaction may be delayed if
a properly completed form is not received.
Trustee-to-trustee transfers of plan assets are effective the business day after
we receive all items we require, including check and instructions, and the new
or amended plan opinion letter.
<PAGE>
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DISTRIBUTIONS FROM THE INVESTMENT OPTIONS
Keep in mind two sets of rules when considering distributions or withdrawals
from the Program. The first are rules and procedures that apply to the
investment options, exclusive of the provisions of your plan. We discuss those
in this section. The second are rules specific to your plan. We discuss those
"Rules Applicable to Participant Distributions" below. Certain plan
distributions may be subject to Federal income tax, and penalty taxes. See "Tax
Information."
AMOUNTS IN THE FUNDS AND MONEY MARKET GUARANTEE ACCOUNT. These are generally
available for distribution at any time, subject to the provisions of your plan.
Distributions from the Money Market Guarantee Account and the Alliance Growth
Equity, Alliance Aggressive Equity and Alliance Balanced Funds are permitted at
any time. Distributions from remaining Funds are permitted at any time except if
there is any delay in redemptions from the corresponding portfolio of EQ
Advisors Trust, as applicable.
GUARANTEED RATE ACCOUNTS. Withdrawals generally may not be taken from GRAs prior
to maturity. See "Guaranteed Rate Accounts."
Payments or withdrawals and application of proceeds to an annuity ordinarily
will be made promptly upon request in accordance with plan provisions. However,
we can defer payments, applications and withdrawals for any period during which
the New York Stock Exchange is closed for trading, sales of securities are
restricted or determination of the fair market value of assets is not reasonably
practicable because of an emergency.
IF YOUR PLAN IS AN EMPLOYER OR TRUSTEE-DIRECTED PLAN, YOU AS THE EMPLOYER ARE
RESPONSIBLE FOR ENSURING THAT THERE IS SUFFICIENT CASH AVAILABLE TO PAY
BENEFITS.
RULES APPLICABLE TO PARTICIPANT DISTRIBUTIONS
In addition to our own procedures, distribution and benefit payment options
under a tax qualified retirement plan are subject to complicated legal
requirements. A general explanation of the federal income tax treatment of
distributions and benefit payment options is provided in "Tax Information" in
this prospectus and the SAI. You should discuss your options with a qualified
financial advisor. Our Account Executives also can be of assistance.
In general, under the Members Retirement Plan or our Self-Directed Prototype
Plan, participants are eligible for benefits upon retirement, death or
disability, or upon termination of employment with a vested benefit.
Participants in an individually designed plan are eligible for retirement
benefits depending on the terms of their plan. See "Benefit Payment Options"
under "Transfers and Access to Your Money," and "Tax Information" for more
details. For participants who own more than 5% of the business, benefits must
begin no later than April 1 of the year after the participant reaches age
70 1/2. For all other participants, distribution must begin by April 1 of the
later of the year after attaining age 70 1/2 or retirement from the employer
sponsoring the plan.
o You may withdraw all or part of your Account Balance under the Members
Retirement Plan attributable to post-tax employee contributions at any time,
provided that you withdraw at least $300 at a time (or, if less, your entire
post-tax Account Balance).
o If you are married, your spouse must generally consent in writing before you
can make any type of withdrawal except to purchase a Qualified Joint or a
Survivor Annuity. Self-employed persons may generally not receive a
distribution prior to age 59 1/2.
<PAGE>
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24
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o Employees may generally not receive a distribution prior to separation from
service.
o Hardship withdrawals before age 59 1/2 may be permitted under 401(k) and
certain other profit sharing plans.
Under an individually designed plan and our self-directed plan, the availability
of pre-retirement withdrawals depends on the terms of the plan. We suggest that
you ask your employer what types of withdrawals are available under your plan.
See "Procedures for Withdrawals, Distributions and Transfers" in the SAI for a
more detailed discussion of these general rules.
Generally you may not make withdrawals from the Guaranteed Rate Accounts prior
to maturity. See "The Guaranteed Rate Accounts."
<PAGE>
6 Performance information
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25
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The investment performance of the Funds reflects changes in unit values
experienced over time. The unit value calculations for the Funds include all
earnings, including dividends and realized and unrealized capital gains. Unlike
the typical mutual fund, the Funds reinvest, rather than distribute, their
earnings.
The following tables show the annual percentage change in Fund unit values, and
the average annual percentage change in Fund unit values, for the periods ended
December 31, 1998. You may compare the performance results for each Fund with
the data presented for certain unmanaged market indices, or "benchmarks."
Performance data for the benchmarks do not reflect any deductions for investment
advisory, brokerage or other expenses of the type typically associated with an
actively managed investment fund. This overstates their rates of return and
limits the usefulness of the benchmarks in assessing the performance of the
Funds. The benchmark results have been adjusted to reflect reinvestment of
dividends and interest for greater comparability. The benchmarks are:
o Standard and Poor's 500 Index ("S&P 500") -- a weighted index of the
securities of 500 companies widely regarded by investors as representative of
the stock market.
o Standard & Poor's MidCap 400 (Total Return) Index (S&P MidCap TR) -- a
market-weighted index with each stock affecting the index in proportion to
its market value. It consists of 400 domestic stocks chosen for market size
(median market capitalization falls in the $200 million to $5 billion range),
liquidity, and industry group representation.
o Lehman Aggregate Index -- a bond index which includes fixed rate debt issues
rated investment grade or higher by Moody's Investors Service, Standard and
Poor's Corporation, or Fitch Investor's Service, in that order. All issues
have at least one year to maturity and an outstanding par value of at least
$100 million for U.S. Government issues and $50 million for all others.
o Lehman Government/Corporate Bond Index (Lehman) -- an index widely regarded
by investors as representative of the bond market.
o Lehman Treasury Bond Index (Lehman Treasury) -- a bond index which includes
all public obligations of the U.S. Treasury (excluding foreign targeted
issues).
o Morgan Stanley Capital International World Index (MSCI World) - an
arithmetical average weighted by market value of the performance of 1,520
companies listed on the stock exchanges of the United States, Europe, Canada,
Australia, New Zealand and the Far East.
o Consumer Price Index (Urban Consumers -- not seasonally adjusted)(CPI) -- an
index of inflation.
The annual percentage change in unit values represents the percentage increase
or decrease in unit values from the beginning of one year to the end of that
year. The average annual rates of return are time-weighted, assume an investment
at the beginning of each period, and include the reinvestment of investment
income.
Historical results are presented for all Funds for the periods during which the
Funds were available under the Program. Hypothetical results also were
calculated for prior periods for the Alliance Global, Alliance Conservative
Investors and Alliance Growth Investors Funds. These became available under the
Program on July 1, 1993. The performance figures prior to that date for these
Funds reflect (1) hypothetical performance based on the actual performance of
the Alliance Global, Alliance Conservative Investors and Alliance Growth
Investors portfolios, respectively, from the date each commenced operations and
(2) the deduction of the Program Expense Charge, the financial accounting fee
and the daily accrual of direct expenses attributable to the Alliance Growth
Equity Fund. After July 1, 1993, they reflect actual performance and, for 1993,
annualized actual expenses. See: "Deductions and Charges".
See the attached EQ Advisors Trust prospectus for historical performance
information regarding all portfolios. Such
<PAGE>
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26
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information does not reflect the Program Expense Charge that would reduce the
results shown in the EQ Advisors Trust prospectus.
EQ Advisors Trust commenced operations on May 1, 1997. For periods prior to
October 18, 1999 the Alliance Global, Alliance Conservative Investors and
Alliance Growth Investors portfolios were part of The Hudson River Trust. On
October 18, 1999, these portfolios became corresponding portfolios of EQ
Advisors Trust and any predecessors that it may have had.
The MFS Research, Warburg Pincus Small Company Value, T. Rowe Price Equity
Income and Merrill Lynch World Strategy Funds became available under the Program
on August 1, 1997. The BT Equity 500 Index Fund became available on July 1,
1998. The BT Equity 500 Index portfolio commenced operations on December 31,
1997.
THE PERFORMANCE SHOWN DOES NOT REFLECT ANY RECORD MAINTENANCE AND REPORT OR
ENROLLMENT FEES. NO PROVISIONS HAVE BEEN MADE FOR THE EFFECT OF TAXES ON INCOME
AND GAINS OR UPON DISTRIBUTION. PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE
PERFORMANCE.
<PAGE>
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27
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ANNUAL PERCENT CHANGES IN FUND UNIT VALUES*
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
ANNUAL PERIOD ENDING LAST BUSINESS DAY OF
- ------------------------------------------------------------------------------------------
FUND 1989 1990 1991 1992 1993
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Equity 43.0% -12.3% 50.4% 0.1% 18.0%
Alliance Aggressive Equity 45.2 7.5 85.1 -4.2 13.1
Alliance Balanced 24.9 -1.9 39.7 -3.9 10.8
Alliance Global 25.4 -7.4 29.1 -1.9 30.8
Alliance Conservative Investors 1.7 5.0 18.4 4.3 9.4
Alliance Growth Investors 2.6 9.4 47.3 3.5 13.9
MFS Research - - - - -
Merrill Lynch World Strategy - - - - -
T. Rowe Price Equity Income - - - - -
Warburg Pincus Small Co. Value - - - - -
- ------------------------------------------------------------------------------------------
COMPARATIVE INDICES
- ------------------------------------------------------------------------------------------
S&P 500 31.7% -3.1% 30.5% 7.6% 10.1%
S&P Midcap TR 35.6 -5.1 50.1 11.9 13.9
S&P 500/Lehman Aggregate 23.1 2.9 23.2 7.5 9.9
(50%/50%)
MSCI World 16.6 -17.0 18.3 -5.2 22.5
S&P 500/Lehman Treasury (30%/70%) 19.6 5.1 19.8 7.3 10.5
S&P 500/Lehman (70%/30%) 26.5 0.3 26.2 7.6 10.3
CPI 4.6 6.2 3.0 2.9 2.7
Russell 2000 Value 12.4 -21.8 41.7 29.1 23.8
- ------------------------------------------------------------------------------------------
<CAPTION>
- ------------------------------------------------------------------------------------------
ANNUAL PERIOD ENDING LAST BUSINESS DAY OF
- ------------------------------------------------------------------------------------------
FUND 1994 1995 1996 1997 1998
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Alliance Growth Equity -2.8% 30.3% 16.4% 25.5% -3.8%
Alliance Aggressive Equity -5.1 29.6 20.9 10.6 -14.5
Alliance Balanced -9.2 18.9 10.0 12.1 18.0
Alliance Global 3.6 16.8 12.9 10.1 20.1
Alliance Conservative Investors -5.9 18.3 3.7 11.7 12.3
Alliance Growth Investors -4.8 24.2 11.0 15.2 17.5
MFS Research - - - - 22.4
Merrill Lynch World Strategy - - - - 5.3
T. Rowe Price Equity Income - - - - 7.6
Warburg Pincus Small Co. Value - - - - -11.3
- ------------------------------------------------------------------------------------------
COMPARATIVE INDICES
- ------------------------------------------------------------------------------------------
S&P 500 1.3% 37.6% 23.0% 33.4% 28.6%
S&P Midcap TR -3.6 30.9 19.2 32.3 19.1
S&P 500/Lehman Aggregate -0.8 28.0 13.3 21.5 18.6
(50%/50%)
MSCI World 5.1 20.7 13.5 15.8 24.3
S&P 500/Lehman Treasury (30%/70%) -2.0 24.1 8.8 16.7 15.6
S&P 500/Lehman (70%/30%) -0.1 32.1 16.9 26.3 22.9
CPI 2.7 2.9 3.3 1.9 1.6
Russell 2000 Value -1.6 25.7 21.4 31.8 -6.5
- ------------------------------------------------------------------------------------------
</TABLE>
* Hypothetical performance shown in bold.
<PAGE>
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28
- --------------------------------------------------------------------------------
AVERAGE ANNUAL PERCENTAGE
CHANGE IN FUND UNIT VALUES --
YEARS ENDING DECEMBER 31, 1998*
- --------------------------------------------------------------------------------
FUND 10 YEARS 5 YEARS 3 YEARS 1 YEAR
- --------------------------------------------------------------------------------
Alliance Growth Equity 14.7% 12.2% 12.0% -3.8%
Alliance Aggressive Equity 16.0 7.0 4.6 -14.5
Alliance Balanced 11.1 9.5 13.3 18.0
Alliance Global 13.3 12.6 14.3 20.1
Alliance Conservative Investors - 7.7 9.2 12.3
Alliance Growth Investors - 12.2 14.5 17.5
MFS Research - - - 22.4
Merrill Lynch World Strategy - - - 5.3
T. Rowe Price Equity Income - - - 7.6
Warburg Pincus Small Co. Value - - - -11.3
- --------------------------------------------------------------------------------
COMPARATIVE INDICES
- --------------------------------------------------------------------------------
S&P 500 19.2% 24.1% 28.2% 28.6%
S&P Midcap TR 19.3 18.8 23.4 19.1
S&P 500/Lehman Aggregate (50%/50%) 15.2 16.9 18.7 18.6
MSCI World 10.7 15.7 17.8 24.3
S&P 500/Lehman Treasury (30%/70%) 13.1 13.4 14.5 15.6
S&P 500/Lehman (70%/30%) 17.0 20.0 22.7 22.9
CPI 3.1 2.4 2.2 1.6
Russell 2000 Value 14.0 13.1 14.4 -6.5
- --------------------------------------------------------------------------------
* Hypothetical performance shown in bold.
PAST PERFORMANCE IS NOT AN INDICATION OF FUTURE PERFORMANCE. NO PROVISIONS HAVE
BEEN MADE FOR THE EFFECT OF TAXES ON INCOME AND GAINS OR UPON DISTRIBUTION.
<PAGE>
7 Charges and expenses
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29
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You will incur two general types of charges under the Program:
(1) Charges imposed on amounts invested in the Program -- these apply to all
amounts invested in the Program (including installment payout option
payments), and do not vary by plan. These are, in general, reflected as
reductions in the unit values of the Funds or as reductions from the rates
credited to the Guaranteed Options.
(1) Plan and transaction charges -- these vary by plan or are charged for
specific transactions, and are typically stated in a dollar amount. Unless
otherwise noted, these are deducted in fixed dollar amounts by reducing the
number of units in the appropriate Funds and the dollars in the Guaranteed
Options.
We deduct amounts for the 3-year or 5-year GRA from your most recent GRA.
We make no deduction from your contributions or withdrawals for sales expenses.
CHARGES BASED ON AMOUNTS INVESTED IN THE PROGRAM
PROGRAM EXPENSE CHARGE
We assess the Program expense charge as a daily charge at an annual rate of
1.00% of your account balance held in all the investment options. The purpose of
this charge is to cover the expenses that we incur in connection with the
Program.
We apply the Program expense charge toward the cost of maintenance of the
investment options, promotion of the Program, commissions, administrative costs,
such as enrollment and answering participant inquiries, and overhead expenses
such as salaries, rent, postage, telephone, travel, legal, actuarial and
accounting costs, office equipment and stationery. During 1998 we received
$1,933,379 under the Program expense charge then in effect.
INVESTMENT MANAGEMENT AND ACCOUNTING FEES
The computation of unit values for each of the Funds named below also reflects
fees charged for investment management and accounting. We receive fees for
investment management services for the Alliance Growth Equity, Alliance
Aggressive Equity and Alliance Balanced Funds. The investment management and
accounting fee covers the investment management and financial accounting
services we provide for these Funds, as well as a portion of our related
administrative costs. This fee is charged daily at an effective annual rate of
.50% of the net assets of the Alliance Growth Equity and Balanced Funds and an
effective annual rate of .65% for the Alliance Aggressive Equity Fund.
We receive fees for financial accounting services for the Alliance Global,
Alliance Conservative Investors and Alliance Growth Investors Funds. This fee is
charged daily at an effective annual rate of .20% of the net assets of these
Funds.
OTHER EXPENSES BORNE BY THE FUNDS
EQ ADVISORS TRUST ANNUAL EXPENSES. The Alliance Global, Alliance Conservative
Investors and Alliance Growth Investors Funds are indirectly subject to
investment advisory and other expenses charged against assets of the
corresponding portfolios of EQ Advisors Trust. The MFS Research, Warburg Pincus
Small Company Value, T. Rowe Price Equity Income, Merrill Lynch World Strategy
and BT Equity 500 Index Funds are indirectly subject to investment management
and advisory fees, 12b-1 fees and other expenses charged against assets of the
corresponding portfolios of the EQ Advisors Trust. These expenses are described
in the EQ Advisors Trust prospectus accompanying this prospectus.
OTHER EXPENSES. Certain costs and expenses are charged directly to the Funds.
These may include transfer taxes, SEC filing fees and certain related expenses
including printing of SEC filings, prospectuses and reports, proxy mailings,
other mailing costs, legal expenses and (for the Alliance Global,
<PAGE>
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30
- --------------------------------------------------------------------------------
Alliance Conservative Investors and Alliance Growth Investors Funds only)
custodians' fees and outside auditing expenses.
PLAN AND TRANSACTION EXPENSES
MEMBERS RETIREMENT PLAN, PROTOTYPE SELF-DIRECTED PLAN AND INVESTMENT ONLY FEES
RECORD MAINTENANCE AND REPORT FEE. At the end of each calendar quarter, we
deduct a record maintenance and report fee of $3.75 from your Account Balance.
We reserve the right to charge varying fees based on the requested special
mailings, reports and services given to your retirement plan.
ENROLLMENT FEE. We charge an employer a non-refundable enrollment fee of $25 for
each participant enrolled under its plan. If we do not maintain individual
participant records under an individually-designed plan, we instead charge the
employer $25 for each plan or trust. If the employer fails to pay these charges,
we may deduct the amount from subsequent contributions or from participants'
account balances.
PROTOTYPE SELF-DIRECTED PLAN FEES. Employers who participate in our Prototype
Self-Directed Plan incur additional fees not payable to us, such as brokerage
and administration fees.
INDIVIDUAL ANNUITY CHARGES
ANNUITY ADMINISTRATIVE CHARGE. If a participant elects an annuity payment
option, we deduct a $350 charge from the amount used to purchase the annuity.
This charge reimburses us for administrative expenses associated with processing
the application for the annuity and issuing each month's annuity payment.
CHARGE FOR APPLICABLE TAXES. In certain jurisdictions, amounts used to purchase
an annuity are subject to charges for premium or other applicable taxes (rates
currently range up to 5%). Taxes depend, among other things, on your place of
residence, applicable laws and the form of annuity benefit you select. We will
deduct such charges based on your place of residence at the time the annuity
payments begin.
FEES PAID TO ASSOCIATIONS. We may pay associations a fee for enabling the
Program to be made available to their memberships. The fee may be based on the
number of employers whom we solicit, the number who participate in the Program,
and/or the value of Program assets. We make these payments without any
additional deduction or charge under the Program.
GENERAL INFORMATION ON FEES AND CHARGES
We will give you written notice of any change in the fees and charges. We may
also establish a separate fee schedule for requested non-routine administrative
services. During 1998 we received total fees and charges under the Program of
$3,137,479.
<PAGE>
8 Tax information
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31
- --------------------------------------------------------------------------------
In this section, we briefly outline current federal income tax rules relating to
adoption of the Program, contributions to the Program and distributions to
participants under qualified retirement plans. Certain other information about
qualified retirement plans appears here and in the SAI. We do not discuss the
effect, if any, of state tax laws that may apply. For tax advice, we suggest
that you consult your tax advisor.
The United States Congress has in the past considered and may in the future
consider proposals for legislation that, if enacted, could change the tax
treatment of qualified retirement plans. In addition, the Treasury Department
may amend existing regulations, issue new regulations, or adopt new
interpretations of existing laws. State tax laws or, if you are not a United
States resident, foreign tax laws, may affect the tax consequences to you or the
beneficiary. These laws may change from time to time without notice and, as a
result, the tax consequences may also change. There is no way of predicting
whether, when or in what form any such change would be adopted.
Any such change could have retroactive effects regardless of the date of
enactment. We suggest you consult your legal or tax adviser.
Because you are buying a contract to fund a retirement plan that already
provides tax deferral under Federal income tax rules, you should do so for the
contract's features and benefits other than tax deferral. The tax deferral of
the contract does not provide additional benefits.
INCOME TAXATION OF DISTRIBUTIONS TO QUALIFIED PLAN PARTICIPANTS
In this section, the word "you" refers to the plan participant.
Amounts distributed to a participant from a qualified plan are generally subject
to federal income tax as ordinary income when benefits are distributed to you or
your beneficiary. Generally speaking, only your post-tax contributions, if any,
are not taxed when distributed.
LUMP SUM DISTRIBUTIONS. If we distribute your benefits to you in a lump sum
after you have participated in the plan for at least five taxable years, you may
be able to use five-year averaging. Under this method, you calculate the tax on
the lump sum distribution separately from taxes on any other income you may have
during the year. You calculate the tax at ordinary income tax rates in the year
of the distribution, but as if it were your only income in each of five years.
The tax payable is the sum of the five years' calculations. To qualify for
five-year averaging, the distribution must consist of your entire balance in the
plan and must occur in one taxable year after you have attained age 59 1/2.
Five-year averaging is available only for one lump sum distribution.
If you were born before 1936, you may elect to have special rules apply to one
lump sum distribution. You may elect either ten-year averaging using 1986 rates
or five-year averaging using then current rates. In addition, you may elect
separately to have the portion of your distribution attributable to pre-1974
contributions taxed at a flat 20% rate.
Effective January 1, 2000, you may no longer use five year averaging on lump sum
distributions.
ELIGIBLE ROLLOVER DISTRIBUTIONS. Many types of distributions from qualified
plans are "eligible rollover distributions" that can be transferred directly to
another qualified plan or traditional individual retirement arrangement ("IRA"),
or rolled over to another plan or IRA within 60 days of the receipt of the
distribution. If a distribution is an "eligible rollover distribution," 20%
mandatory federal income tax withholding will apply unless the distribution is
directly transferred to a qualified plan or IRA. See "Eligible Rollover
Distributions and Federal Income Tax Withholding" in the SAI for a more detailed
discussion.
ANNUITY OR INSTALLMENT PAYMENTS. Each payment you receive is ordinary income for
tax purposes, except where you have a "cost basis" in the benefit. Your cost
basis is equal to the amount of your post-tax employee contributions, plus any
employer contributions you had to include in gross income in prior years. You
may exclude from gross income a portion of each annuity or installment payment
you receive. If you (and your survivor) continue to receive payments after you
have received your cost basis in the contract, all amounts will be taxable.
<PAGE>
- -------
32
- --------------------------------------------------------------------------------
IN SERVICE WITHDRAWALS. Some plans allow in-service withdrawals of after-tax
contributions. The portion of each withdrawal attributable to cost basis is not
taxable. The portion of each withdrawal attributable to earnings is taxable.
Withdrawals are taxable only after they exceed your cost basis if (a) they are
attributable to your pre-January 1, 1987 contributions under (b) plans that
permitted those withdrawals as of May 5, 1986. Amounts that you include in gross
income under this rule may also be subject to the additional 10% penalty tax on
premature distributions described below. In addition, 20% mandatory federal
income tax withholding may also apply.
PREMATURE DISTRIBUTIONS. You may be liable for an additional 10% penalty tax on
all taxable amounts distributed before age 591|M/2 unless the distribution falls
within a specified exception or is rolled over into an IRA or other qualified
plan.
The exceptions to the penalty tax include (a) distributions made on account of
your death or disability, (b) distributions beginning after separation from
service in the form of a life annuity or installments over your life expectancy
(or the joint lives or life expectancies of you and your beneficiary), (c)
distributions due to separation from active service after age 55 and (d)
distributions you use to pay deductible medical expenses.
WITHHOLDING. In almost all cases, 20% mandatory income tax withholding will
apply to all "eligible rollover distributions" that are not directly transferred
to a qualified plan or IRA. If a distribution is not an eligible rollover
distribution, the recipient may elect out of withholding. The rate of
withholding depends on the type of distribution. See "Eligible Rollover
Distributions and Federal Income Tax Withholding" in the SAI. Under the Members
Retirement Plan, we will withhold the tax and send you the remaining amount.
Under an individually designed plan or our prototype self-directed plan we will
pay the full amount of the distribution to the plan's trustee. The trustee is
then responsible for withholding federal income tax upon distributions to you or
your beneficiary.
OTHER TAX CONSEQUENCES
Federal estate and gift and state and local estate, inheritance, and other tax
consequences of participation in the Program depend on the residence and the
circumstances of each participant or beneficiary. For complete information on
federal, state, local and other tax considerations, you should consult a
qualified tax advisor.
<PAGE>
9 More information
- -------
33
- --------------------------------------------------------------------------------
ABOUT PROGRAM CHANGES OR TERMINATIONS
AMENDMENTS. The group annuity contract has been amended in the past and we and
the Trustees may agree to amendments in the future. No future change can affect
annuity benefits in the course of payment. If certain conditions are met, we
may: (1) terminate the offer of any of the investment options and (2) offer new
investment options with different terms.
TERMINATION. We may terminate the contract at any time. If the contract is
terminated, we will not accept any further contributions. We will continue to
hold amounts allocated to the Guaranteed Rate Accounts until maturity. Amounts
already invested in the investment options may remain in the Program and you may
also elect payment of benefits through us.
IRS DISQUALIFICATION
If your plan is found not to qualify under the Internal Revenue Code, we may:
(1) return the plan's assets to the employer (in our capacity as the plan
administrator) or (2) prevent plan participants from investing in the separate
accounts.
ABOUT THE SEPARATE ACCOUNTS
Each Investment Fund is one, or part of one, of our separate accounts. We
established the separate accounts under special provisions of the New York
Insurance Law. These provisions prevent creditors from any other business we
conduct from reaching the assets we hold in our investment funds for owners of
our variable annuity contracts, including our group annuity contracts. The
results of each separate account's operations are accounted for without regard
to Equitable Life's, or any other separate account's, operating results. We are
the legal owner of all of the assets in the separate accounts and may withdraw
any amounts we have in the separate accounts that exceed our reserves and other
liabilities under variable annuity contracts.
The separate accounts that we call the Alliance Growth Equity, Alliance
Aggressive Equity, and Alliance Balanced Funds commenced operations in 1968,
1969, and 1979 respectively. The separate account which holds the Alliance
Global, Alliance Conservative Investors and Alliance Growth Investors Funds was
established in 1993. The separate account which holds the MFS Research, Warburg
Pincus Small Company Value, T. Rowe Price Equity Income, Merrill Lynch World
Strategy and BT Equity 500 Index Funds was established in 1997. Because of
exclusionary provisions, none of the Funds are subject to regulation under the
Investment Company Act of 1940. Separate Account Nos. 51 and 66, however,
purchase Class IA shares and Class IB shares of EQ Advisors Trust, respectively.
EQ Advisors Trust is registered as an open-end management investment company
under the 1940 Act.
ABOUT OUR YEAR 2000 PROGRESS
Equitable Life relies upon various computer systems in order to administer your
certificate and operate the investment options. Some of these systems belong to
service providers who are not affiliated with Equitable Life.
In 1995, Equitable Life began addressing the question of whether its computer
systems would recognize the year 2000 before, on, or after January 1, 2000, and
Equitable Life has identified those of its systems critical to business
operations that were not year 2000 compliant. Equitable Life has completed the
work of modifying or replacing non-compliant systems and has confirmed, through
testing, that its systems are year 2000 compliant. Equitable Life has contacted
third-party vendors and service providers to seek confirmation that they are
acting to address the year 2000 issue with the goal of avoiding any material
adverse effect on services provided to contract owners and on operations of the
investment options. All third-party vendors and service providers considered
critical to Equitable Life's business, and substantially all vendors and service
providers considered non-critical, have provided us confirmation of their year
2000 compliance or a satisfactory plan for compliance. If confirmation is not
received from any of the remaining non-critical vendors or service providers,
the vendor or service provider will be replaced, eliminated or the subject of
contingency plans. Additionally, Equitable Life has
<PAGE>
- -------
34
- --------------------------------------------------------------------------------
supplemented its existing business continuity and disaster recovery plans to
cover certain categories of contingencies that could arise as a result of year
2000 related failures.
There are many risks associated with year 2000 issues, including the risk that
Equitable Life's computer systems will not operate as intended. Additionally,
there can be no assurance that the system of third parties will be year 2000
compliant. Any significant unresolved difficulty related to the year 2000
compliance initiatives could result in an interruption in, or a failure of,
normal business operations and, accordingly, could have a material adverse
effect on our ability to administer your contract and operate the investment
options.
To the fullest extent permitted by law, the foregoing year 2000 discussion is a
"Year 2000 Readiness Disclosure" within the meaning of The Year 2000 Information
and Readiness Disclosure Act (P.L. 105-271)(1998).
ABOUT LEGAL PROCEEDINGS
Equitable Life and its affiliates are parties to various legal proceedings. In
our view, none of these proceedings is likely to have a material adverse effect
upon the separate accounts, our ability to meet our obligations under the
Program, or the distribution of group annuity contract interests under the
Program.
ABOUT OUR INDEPENDENT ACCOUNTANTS
The following financial statements included in the SAI as well as the following
condensed financial information included in the prospectus have been so included
in reliance on the reports of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in auditing and
accounting.
o The financial statements for Separate Account Nos. 3, 4, 10, and 51 as of
December 31, 1998 and for each of the two years in the period then ended.
o The financial statements for Separate Account No. 66 as of December 31, 1998
and for the periods then ended.
o The financial statements for Equitable Life as of December 31, 1998 and 1997
and for each of the three years in the period ended December 31, 1998.
o The condensed financial information for Separate Account Nos. 3, 4, 10, and
51 for each of the six years in the period ended December 31, 1998.
o The condensed financial information for Separate Account No. 66 for each of
the periods ended December 31, 1998.
ABOUT THE TRUSTEE
As trustee, Chase Manhattan Bank serves as a party to the group annuity
contract. It has no responsibility for the administration of the Program or for
any distributions or duties under the group annuity contract.
REPORTS WE PROVIDE AND AVAILABLE INFORMATION
We send reports annually to employers showing the aggregate Account Balances of
all participants and information necessary to complete annual IRS filings.
As permitted by the SEC's rules, we omitted certain portions of the registration
statement filed with the SEC from this prospectus and the SAI. You may obtain
the omitted information by: (1) requesting a copy of the registration statement
from the SEC's principal office in Washington, D.C., and paying prescribed fees,
or (2) by accessing the EDGAR Database at the SEC's web site at
http://www.sec.gov.
ACCEPTANCE
The employer or plan sponsor, as the case may be: (1) is solely responsible for
determining whether the Program is a suitable funding vehicle and (2) should
carefully read the prospectus and other materials before entering into a
Participation Agreement.
<PAGE>
Appendix I: Condensed financial information
- -------
A-1
- --------------------------------------------------------------------------------
These selected per unit data and ratios for the years ended December 31, 1998
through 1993 have been audited by PricewaterhouseCoopers LLP, independent
accountants, as stated in their reports included in the SAI. For years prior to
1993, the condensed financial information was audited by other independent
accountants. The financial statements of each of the Funds as well as the
consolidated financial statements of Equitable Life are contained in the SAI.
Information is provided for the period that each Fund has been available under
the Program, but not longer than ten years.
SEPARATE ACCOUNT NO. 4 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
ALLIANCE GROWTH EQUITY FUND -- INCOME, EXPENSES AND CAPITAL CHANGES PER UNIT
OUTSTANDING THROUGHOUT THE YEARS INDICATED AND OTHER SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------
1998 1997 1996 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income $ 1.59 $ 1.53 $ 1.37 $ 1.84
Expenses (Note A) (5.01) (4.55) (3.82) (3.25)
Net income (loss) (3.42) (3.02) (2.45) (1.41)
Net realized and unrealized gain
(loss) on investments (Note B) (8.33) 65.28 36.80 50.16
Net increase (decrease) in Alliance Growth Equity
Fund Unit Value (11.75) 62.26 34.35 48.75
Alliance Growth Equity Fund Unit Value
(Note C):
Beginning of year 306.51 244.25 209.90 161.15
End of year 294.76 306.51 244.25 209.90
Ratio of expenses to average net assets
attributable to the Program 1.68% 1.65% 1.68% 1.74%
Ratio of net income (loss) to average net assets
attributable to the Program (1.15)% (1.10)% (1.08)% (0.76)%
Number of Alliance Growth Equity Fund Units
outstanding at end of year (000's) 228 241 228 214
Portfolio turnover rate (Note D) 71% 62% 105% 108%
- ----------------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------
1994 1993* 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income $ 1.79 $ 1.75 $ 1.51 $ 1.37 $ 1.92 $ 1.70
Expenses (Note A) (2.76) (2.54) (2.22) (2.00) (1.56) (1.59)
Net income (loss) ( .97) ( .79) ( .71) ( .63) .36 .11
Net realized and unrealized gain
(loss) on investments (Note B) (3.76) 26.16 .77 47.67 (13.52) 31.92
Net increase (decrease) in Alliance Growth Equity
Fund Unit Value (4.73) 25.37 .06 47.04 (13.16) 32.03
Alliance Growth Equity Fund Unit Value
(Note C):
Beginning of year 165.88 140.51 140.45 93.41 106.57 74.54
End of year 161.15 165.88 140.51 140.45 93.41 106.57
Ratio of expenses to average net assets
attributable to the Program 1.72% 1.69% 1.65% 1.68% 1.64% 1.74%
Ratio of net income (loss) to average net assets
attributable to the Program (0.60)% (0.52)% (0.53)% (0.54)% 0.38% 0.11%
Number of Alliance Growth Equity Fund Units
outstanding at end of year (000's) 219 208 212 189 47 48
Portfolio turnover rate (Note D) 91% 82% 68% 66% 93% 113%
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes following these tables.
<PAGE>
- -------
A-2
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 3 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
ALLIANCE AGGRESSIVE EQUITY FUND -- INCOME, EXPENSES AND CAPITAL CHANGES PER UNIT
OUTSTANDING THROUGHOUT THE YEARS INDICATED AND OTHER SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1998 1997 1996 1995
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income $ .34 $ .26 $ .33 $ .24
Expenses (Note A) (.97) (.97) (.86) (.69)
Net investment income (loss) (.63) (.71) (.53) (.45)
Net realized and unrealized gain (loss) on
investments (Note B) (7.48) 6.08 9.25 9.98
Net increase (decrease) in Alliance Aggressive
Equity Fund Unit Value (8.11) 5.37 8.72 9.53
Alliance Aggressive Equity Fund Unit Value
(Note C):
Beginning of year 55.83 50.46 41.74 32.21
End of year 47.72 55.83 50.46 41.74
Ratio of expenses to average net assets
attributable to the Program 1.84% 1.82% 1.80% 1.86%
Ratio of net investment income (loss) to average
net assets attributable to the Program (1.20)% (1.33)% (1.12)% (1.21)%
Number of Alliance Aggressive Equity Fund Units
outstanding at end of year (000's) 490 508 395 328
Portfolio turnover rate (Note D) 195% 176% 118% 137%
- -----------------------------------------------------------------------------------------------------
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------
1994 1993* 1992 1991 1990 1989
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income $ .18 $ .26 $ .31 $ .29 $ .28 $ .29
Expenses (Note A) (.60) (.57) (.50) (.41) (.27) (.24)
Net investment income (loss) (.42) (.31) (.19) (.12) .01 .05
Net realized and unrealized gain (loss) on
investments (Note B) (1.32) 4.25 (1.13) 14.52 1.17 4.85
Net increase (decrease) in Alliance Aggressive
Equity Fund Unit Value (1.74) 3.94 (1.32) 14.40 1.18 4.90
Alliance Aggressive Equity Fund Unit Value
(Note C):
Beginning of year 33.95 30.01 31.33 16.93 15.75 10.85
End of year 32.21 33.95 30.01 31.33 16.93 15.75
Ratio of expenses to average net assets
attributable to the Program 1.86% 1.84% 1.74% 1.59% 1.65% 1.74%
Ratio of net investment income (loss) to average
net assets attributable to the Program (1.31)% (1.02)% (0.66)% (0.48)% 0.07% 0.35%
Number of Alliance Aggressive Equity Fund Units
outstanding at end of year (000's) 283 249 229 150 13 5
Portfolio turnover rate (Note D) 94% 83% 71% 63% 48% 92%
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
See notes following these tables.
<PAGE>
- -----
A-3
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 10 (POOLED)
OF THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES
ALLIANCE BALANCED FUND -- INCOME, EXPENSES AND CAPITAL CHANGES PER UNIT
OUTSTANDING THROUGHOUT THE YEARS INDICATED AND OTHER SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------
1998 1997 1996 1995
- ------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Income $ 1.30 $ 1.21 $ 1.00 $ .89
Expenses (Note A) (.58) (.52) (.48) (.43)
Net investment income .72 .69 .52 .46
Net realized and unrealized gain (loss) on
investments (Note B) 5.14 2.83 2.11 3.74
Net increase (decrease) in Alliance Balanced
Fund Unit Value 5.86 3.52 2.63 4.20
Alliance Balanced Fund Unit Value (Note C):
Beginning of year 32.54 29.02 26.39 22.19
End of year 38.40 32.54 29.02 26.39
Ratio of expenses to average net assets
attributable to the Program 1.65% 1.68% 1.73% 1.79%
Ratio of net investment income to average net
assets attributable to the Program 2.04% 2.25% 1.91% 1.90%
Number of Alliance Balanced Fund Units
outstanding at end of year (000's) 473 454 476 458
Portfolio turnover rate (Note D) 89% 165% 177% 170%
- ------------------------------------------------------------------------------------------
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1994 1993* 1992 1991 1990 1989
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income $ .74 $ .77 $ .79 $ .80 $ .94 $ .93
Expenses (Note A) (.40) (.39) (.35) (.32) (.27) (.25)
Net investment income .34 .38 .44 .48 .67 .68
Net realized and unrealized gain (loss) on
investments (Note B) (2.60) 2.00 (1.34) 6.04 (.98) 2.66
Net increase (decrease) in Alliance Balanced
Fund Unit Value (2.26) 2.38 (.90) 6.52 (.31) 3.34
Alliance Balanced Fund Unit Value (Note C):
Beginning of year 24.45 22.07 22.97 16.45 16.76 13.42
End of year 22.19 24.45 22.07 22.97 16.45 16.76
Ratio of expenses to average net assets
attributable to the Program 1.72 1.70% 1.65% 1.67% 1.66% 1.73%
Ratio of net investment income to average net
assets attributable to the Program 1.51% 1.61% 2.03% 2.47% 4.12% 4.38%
Number of Alliance Balanced Fund Units
outstanding at end of year (000's) 446 419 364 284 27 16
Portfolio turnover rate (Note D) 107% 102% 90% 114% 199% 175%
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
* Prior to July 22, 1993, Equitable Life Capital Management Corporation
(Equitable Life Capital) served as the investment adviser to the Fund. On
July 22, 1993, Alliance Capital Management L.P. acquired the business and
substantially all of the assets of Equitable Life Capital and became the
investment adviser to the Fund.
A. Enrollment fees are not included above and did not affect the Alliance
Growth Equity, Alliance Aggressive Equity or Alliance Balanced Fund Unit
Values. Enrollment fees were generally deducted from contributions to the
Program.
B. See Note 2 to Financial Statements of Separate Account Nos. 3 (Pooled), 4
(Pooled) and 10 (Pooled), which may be found in the SAI.
C. The value for an Alliance Growth Equity Fund Unit was established at $10.00
on January 1, 1968 under the National Association of Realtors Members
Retirement Program (NAR Program). The NAR Program was merged into the
Members Retirement Program on December 27, 1984. The values for an Alliance
Aggressive Equity and an Alliance Balanced Fund Unit were established at
$10.00 on May 1, 1985, the date on which the Funds were first made
available under the Program.
D. The portfolio turnover rate includes all long-term U.S. Government
securities, but excludes all short-term U.S. Government securities and all
other securities whose maturities at the time of acquisition were one year
or less. Represents the annual portfolio turnover rate for the entire
separate account.
Income, expenses, gains and losses shown above pertain only to participants'
accumulations attributable to the Program. Other plans also participate in the
Alliance Growth Equity, Alliance Aggressive Equity and Alliance Balanced Funds
and may have operating results and other supplementary data different from
those shown above.
<PAGE>
- -------
A-4
- --------------------------------------------------------------------------------
SEPARATE ACCOUNT NO. 51 (POOLED) UNIT VALUES
Unit values and number of units outstanding for these Funds, are shown below:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------
FOR THE YEARS ENDING DECEMBER 31,
----------------------------------------------------------------------- INCEPTION
1993 1994 1995 1996 1997 1998 DATE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Global Fund 7/1/93
Unit Value $ 11.05 $ 11.45 $ 13.38 $ 15.11 $ 16.63 $ 19.97
Number of units outstanding (000's) 144 314 399 615 617 549
Alliance Conservative Investors Fund 7/1/93
Unit Value $ 10.22 $ 9.62 $ 11.39 $ 11.81 $ 13.19 $ 14.82
Number of units outstanding (000's) 206 185 224 848 738 333
Alliance Growth Investors Fund 7/1/93
Unit Value $ 10.49 $ 9.98 $ 12.40 $ 13.76 $ 15.85 $ 18.63
Number of units outstanding (000's) 148 208 242 290 333 357
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
SEPARATE ACCOUNT NO. 66 (POOLED) UNIT VALUES
Unit values and number of units outstanding for these Funds, are shown below:
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
FOR THE YEARS ENDING
DECEMBER 31,
---------------------- INCEPTION
1997 1998 DATE
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
MFS Research Fund 8/1/97
Unit Value $ 10.34 $ 12.65
Number of units outstanding (000's) 75 184
Warburg Pincus Small Company Value Fund 8/1/97
Unit Value $ 10.62 $ 9.42
Number of units outstanding (000's) 176 217
T. Rowe Price Equity Income Fund 8/1/97
Unit Value $ 11.02 $ 11.85
Number of units outstanding (000's) 199 315
Merrill Lynch World Strategy Fund 8/1/97
Unit Value $ 9.47 $ 9.98
Number of units outstanding (000's) 38 63
BT Equity 500 Index Fund 7/1/98
Unit Value -- $ 11.28
Number of units outstanding (000's) -- 159
- --------------------------------------------------------------------------------
</TABLE>
<PAGE>
Statement of additional information
- -------
S-1
- --------------------------------------------------------------------------------
TABLE OF CONTENTS
PAGE
Funding of the Program ................................. SAI-2
Your Responsibilities as Employer ...................... SAI-2
Procedures for Withdrawals, Distributions
and Transfers ....................................... SAI-2
Types of Benefits ...................................... SAI-6
Provisions of the Members Retirement Plan .............. SAI-9
Investment Restrictions Applicable to the Alliance
Growth Equity, Alliance Aggressive Equity and
Alliance Balanced Funds ............................. SAI-13
How We Determine the Unit Value for the Funds .......... SAI-15
How We Value the Assets of the Funds ................... SAI-16
Fund Transactions ...................................... SAI-17
Investment Management and Accounting Fee ............... SAI-19
Underwriter ............................................ SAI-19
Our Management ......................................... SAI-20
Financial Statements ................................... SAI-22
CLIP AND MAIL TO US TO RECEIVE A
STATEMENT OF ADDITIONAL INFORMATION
To: The Equitable Life Assurance Society
of the United States
Box 2486 G.P.O.
New York, NY 10116
Please send me a copy of the Statement of Additional Information for the Members
Retirement Program Prospectus dated May 1, 1999.
- ------------------------------------------------
Name
- ------------------------------------------------
Address
- ------------------------------------------------
- ------------------------------------------------
Copyright 1999 by The Equitable Life Assurance Society of the United States. All
rights reserved.
<PAGE>
EQ Advisors Trust
PROSPECTUS DATED AUGUST 30, 1999
- -------
1
- --------------------------------------------------------------------------------
This Prospectus describes the eight (8) Portfolios offered by EQ Advisors Trust
that you can choose as investment alternatives. Each Portfolio has its own
investment objective and strategies that are designed to meet different
investment goals. This Prospectus contains information you should know before
investing. Please read this Prospectus carefully before investing and keep it
for future reference. The Portfolios followed by an asterisk (*) below will not
be available for investment until October 18, 1999.
DOMESTIC EQUITY PORTFOLIOS AGGRESSIVE EQUITY PORTFOLIO
-------------------------- ---------------------------
BT Equity 500 Index Warburg Pincus Small Company Value
MFS Research
T. Rowe Price Equity Income
GLOBAL/INTERNATIONAL PORTFOLIO ASSET ALLOCATION PORTFOLIOS
- ------------------------------ ---------------------------
Alliance Global* Alliance Conservative Investors*
Alliance Growth Investors*
Merrill Lynch World Strategy
- -------------------------------------------------------------------------------
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 END
<PAGE>
Overview
- -------
2
- --------------------------------------------------------------------------------
EQ ADVISORS TRUST
This Prospectus tells you about the eight (8) current Portfolios of the EQ
Advisors Trust ("Trust") and the Class IA shares 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
Merrill Lynch World Strategy Portfolio, is diversified for purposes of the
Investment Company Act of 1940, as amended ("1940 Act").
The Trust's shares are currently sold only to insurance company separate
accounts in connection with variable life insurance contracts and variable
annuity certificates and contracts (the "Contract" or collectively, the
"Contracts") issued by The Equitable Life Assurance Society of the United States
("Equitable") and Equitable of Colorado, Inc. ("EOC"), as well as insurance
companies that are not affiliated with Equitable or EOC ("non-affiliated
insurance companies") and to The Equitable Investment Plan for Employees,
Managers and Agents ("Equitable Plan"). The prospectus is designed to help you
make informed decisions about the Portfolios that are available under your
Contract or under the Equitable Plan. You will find information about your
Contract and how it works in the accompanying prospectus for the Contracts if
you are a Contractholder or participant under a Contract.
EQ Financial Consultants, Inc. ("EQFC") currently serves as the Manager of the
Trust. In such capacity, EQFC currently has overall responsibility for the
general management and administration of the Trust. The Board of Trustees of the
Trust has approved a transfer to Equitable, the indirect corporate parent of
EQFC, of the Trust's Investment Management Agreement with EQFC. This transfer is
expected to be completed in September 1999. Upon completion of the transfer,
Equitable will serve as the Manager of the Trust. However, until completion of
the transfer, EQFC will continue to serve in that capacity.
Each of the Portfolios has its own investment adviser ("Adviser"). Information
about the Adviser for each Portfolio is contained in the description concerning
that Portfolio in the section entitled "About the Investment Portfolios." The
Manager has the ultimate responsibility to oversee each of the Advisers and to
recommend their hiring, termination and replacement. Subject to approval by the
Board of Trustees, the Manager has been granted relief by the Securities and
Exchange Commission ("SEC") ("Multi-Manager Order") that enables the Manager
without obtaining shareholder approval to: (i) select Advisers for each of the
Trust's Portfolios; (ii) enter into and materially modify existing investment
advisory agreements; and (iii) terminate and replace the Advisers.
The Manager and certain non-affiliated insurance companies and certain of their
separate accounts (collectively, "Applicants") have filed applications
requesting that the SEC approve the substitution of: (i) Class IA shares of
certain Portfolios for Class IA shares of corresponding portfolios of The Hudson
River Trust ("HRT"); and (ii) Class IB shares of certain Portfolios for Class IB
shares of corresponding HRT portfolios ("Substitution Application"). Alliance
Capital Management, L.P. ("Alliance") serves as Adviser for each Portfolio to be
substituted for the corresponding HRT portfolio. Applicants have included, as a
term of each application, that with respect to those Portfolios for which
Alliance serves as Adviser, the Manager will not: (i) terminate Alliance and
select a new Adviser for those Portfolios or (ii) materially modify the existing
investment advisory agreement without first either obtaining approval of
shareholders for such actions or obtaining approval of shareholders to utilize
the Multi-Manager Order.
<PAGE>
Table of contents
- -------
3
- --------------------------------------------------------------------------------
- -------------------------------------------------------------
1 SUMMARY INFORMATION CONCERNING EQ
ADVISORS TRUST 4
- -------------------------------------------------------------
- -------------------------------------------------------------
2 ABOUT THE INVESTMENT PORTFOLIOS 12
- -------------------------------------------------------------
DOMESTIC EQUITY PORTFOLIOS 14
BT Equity 500 Index Portfolio 14
MFS Research Portfolio 16
T. Rowe Price Equity Income Portfolio 19
GLOBAL/INTERNATIONAL PORTFOLIO 21
Alliance Global Portfolio 21
AGGRESSIVE EQUITY PORTFOLIO 24
Warburg Pincus Small Company Value Portfolio 24
ASSET ALLOCATION PORTFOLIOS 26
Alliance Conservative Investors Portfolio 27
Alliance Growth Investors Portfolio 30
Merrill Lynch World Strategy Portfolio 33
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3 MORE INFORMATION ON PRINCIPAL RISKS 36
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4 MANAGEMENT OF THE TRUST 42
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The Trust 42
The Manager 42
Expense Limitation Agreement 43
The Advisers 44
The Administrator 44
The Transfer Agent 45
Brokerage Practices 45
Brokerage Transactions with Affiliates 45
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5 FUND DISTRIBUTION ARRANGEMENTS 46
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6 PURCHASE AND REDEMPTION 47
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7 HOW ASSETS ARE VALUED 48
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8 TAX INFORMATION 49
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9 PRIOR PERFORMANCE OF EACH ADVISER 50
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10 FINANCIAL HIGHLIGHTS 52
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<PAGE>
1
Summary information concerning EQ Advisors Trust
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4
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The following chart highlights the eight (8) Portfolios described in this
Prospectus that you can choose as investment alternatives under your Contracts
offered by Equitable or EOC and non-affiliated insurance companies. The chart
and accompanying information identify each Portfolio's investment objective(s),
principal investment strategies, and principal risks. "More Information on
Principal Risks", which more fully describes each of the principal risks, is
provided beginning on page 36.
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EQ ADVISORS TRUST DOMESTIC EQUITY PORTFOLIOS
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OBJECTIVE(S)
- --------------------------------------------------------------------------------
BT EQUITY 500 INDEX Seeks to replicate as closely as possible
(before deduction of Portfolio expenses) the
total return of the S&P 500 Index
- --------------------------------------------------------------------------------
MFS RESEARCH Seeks to provide long-term growth of capital and
future income
- --------------------------------------------------------------------------------
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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<PAGE>
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5
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<TABLE>
<CAPTION>
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- ---------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C>
Common stocks of companies in the S&P 500 Index General investment, index-fund, and fixed income risks
- ---------------------------------------------------------------------------------------------------------------------------
Common stock or securities convertible into common stock General investment, mid-cap company, foreign securities,
of companies with better than average prospects for fixed income, and growth investing risks
long-term growth
- ---------------------------------------------------------------------------------------------------------------------------
Dividend-paying common stocks of established companies General investment, value investing, foreign securities, and
fixed income risks
- ---------------------------------------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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6
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EQ ADVISORS TRUST GLOBAL/INTERNATIONAL PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OBJECTIVE(S)
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL Seeks long-term growth of capital
- --------------------------------------------------------------------------------
<PAGE>
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7
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
- -----------------------------------------------------------------------------------------------------------------------------------
<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
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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8
- --------------------------------------------------------------------------------
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EQ ADVISORS TRUST AGGRESSIVE EQUITY PORTFOLIO
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OBJECTIVE(S)
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE Seeks long-term capital appreciation
- --------------------------------------------------------------------------------
<PAGE>
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9
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<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
- -------------------------------------------------------------------------------------------------------------
<S> <C>
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
- -------------------------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
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10
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EQ ADVISORS TRUST ASSET ALLOCATION PORTFOLIOS
- --------------------------------------------------------------------------------
PORTFOLIO INVESTMENT OBJECTIVE(S)
- --------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS Seeks to achieve a high total return
without, in the opinion of the Adviser,
undue risk to principal
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS Seeks to achieve the highest total return
consistent with the Adviser's determination
of reasonable risk
- --------------------------------------------------------------------------------
MERRILL LYNCH 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
- --------------------------------------------------------------------------------
<PAGE>
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11
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<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------------------
PRINCIPAL INVESTMENT STRATEGIES PRINCIPAL RISKS
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investment grade debt securities and equity securities of General investment, asset allocation, fixed income,
U.S. and foreign issuers, derivatives, and securities lending derivatives, convertible securities, liquidity, leveraging,
securities lending, and foreign securities risks
- ---------------------------------------------------------------------------------------------------------------------------------
Equity securities (including foreign stocks, preferred stocks, General investment, asset allocation, fixed income,
convertible securities, securities of small and medium-sized leveraging, derivatives, liquidity, convertible securities,
companies) and debt securities (including foreign debt small-cap and mid-cap company, securities lending, junk
securities and junk bonds), derivatives, and securities bond, and foreign securities risks
lending
- ---------------------------------------------------------------------------------------------------------------------------------
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
- ---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
2 About the investment portfolios
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12
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This section of the Prospectus provides a more complete description of the
principal investment objectives, strategies, and risks of each of the
Portfolios. Of course, there can be no assurance that any Portfolio will achieve
its investment objective.
Please note that:
o A fuller description of each of the principal risks is included in the
section "More Information on Principal Risks," which follows the description
of each Portfolio in this section of the Prospectus.
o Additional information concerning each Portfolio's strategies, investments,
and risks can also be found in the Trust's Statement of Additional
Information.
GENERAL INVESTMENT RISKS
Each of the Portfolios is subject to the following risks:
ASSET CLASS RISK: The returns from the types of securities in which a Portfolio
invests may underperform returns from the various general securities markets or
different asset classes.
MARKET RISK: You could lose money over short periods due to fluctuation in a
Portfolio's share price in reaction to stock or bond market movements, and over
longer periods during extended market downturns.
SECURITY SELECTION RISK: There is the possibility that the specific securities
selected by a Portfolio's Adviser will underperform other funds in the same
asset class or benchmarks that are representative of the general performance of
the asset class.
YEAR 2000 RISK: A Portfolio could be adversely affected if the computer systems
used by the Trust, Adviser, other service providers, or persons with whom they
deal, do not properly process and calculate date-related information and data
dated on and after January 1, 2000 ("Year 2000 Problem"). The extent of such
impact cannot be predicted and there can be no assurances that the Year 2000
Problem will not have an adverse effect on the issuers whose securities are held
by a Portfolio. This risk is greater for Portfolios that make foreign
investments, particularly in emerging market countries.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
THE BENCHMARKS
The performance of each of the Trust's Portfolios as shown on the following
pages compares each Portfolio's performance to that of a broad-based securities
market index, an index of funds with similar investment objectives and/or a
blended index. The performance shown below is from each Portfolio's predecessor
registered investment company managed by the Adviser using the same investment
objectives and strategies as the Portfolio. Each of the Portfolios' annualized
rates of return are net of: (i) its investment management fees; and (ii) its
other expenses. These rates are not representative of the actual return you
would receive under your Equitable Contract.
Broad-based securities indices are unmanaged and are not subject to fees and
expenses typically associated with managed investment company portfolios.
Broad-based securities indices are also not subject to contract and
insurance-related expenses and charges. Investments cannot be made directly in a
broad-based securities index. Comparisons with these benchmarks, therefore, are
of limited use. They are included because they are widely known and may help you
to understand the universe of securities from which each Portfolio is likely to
select its holdings. "Blended" performance numbers (e.g., 50% S&P 400/50%
Russell 2000 or 60% S&P 500/40% Lehman Gov't/Corp) assume a static mix of the
two indices.
THE COMPOSITE MARKET BENCHMARK is made up of 36% S&P 500, 24% MSCI EAFE Index,
21% Salomon Brothers
<PAGE>
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13
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U.S. Treasury Bond 1 year and, 14% Salomon Brothers World Government ex U.S.,
and 5% U.S. Treasury Bill.
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 TREASURY BOND INDEX ("Lehman Treasury") represents an unmanaged group
of securities consisting of all currently offered public obligations of the U.S.
Treasury intended for distribution in the domestic market.
THE LIPPER AVERAGES are contained in Lipper's survey of the performance of a
large number of mutual funds. This survey is published by Lipper Analytical
Services, Inc., a firm recognized for its reporting of performance of actively
managed funds. According to Lipper, performance data are presented net of
investment management fees and direct operating expenses. Performance data for
funds which assess sales charges in other ways do not reflect deductions for
sales charges. Performance data shown for the Portfolios does not reflect
deduction for sales charges (which are assessed at the contract level). This
means that to the extent that asset-based sales charges deducted by some funds
have lowered the Lipper averages, the performance data shown for the Portfolios
appears relatively more favorable than the performance data for the Lipper
averages.
THE MORGAN STANLEY CAPITAL INTERNATIONAL WORLD INDEX ("MSCI World") is an
arithmetic, market value-weighted average of the performance of over 1,300
securities listed on the stock exchanges of twenty foreign countries and the
United States.
THE RUSSELL 2000 INDEX ("Russell 2000") is an unmanaged index (with no defined
investment objective) of 2000 small-cap stocks and reflects reinvestment of
dividends. It is compiled by the Frank Russell Company.
THE STANDARD & POOR'S 500 COMPOSITE STOCK PRICE INDEX ("S&P 500") is an
unmanaged index containing common stock of 500 industrial, transportation,
utility and financial companies, regarded as generally representative of the
larger capitalization portion of the United States stock market. The S&P 500
returns reflect the reinvestment of dividends, if any, but do not reflect fees,
brokerage commissions or other expenses of investing.
------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS
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14
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BT EQUITY 500 INDEX PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to replicate as closely as possible (before
deduction of Portfolio expenses) the total return of the S&P 500.
THE INVESTMENT STRATEGY
The Portfolio invests in equity securities of companies included in the S&P 500.
The Adviser seeks to match the risk and return characteristics of the S&P 500 by
investing in a statistically selected sample of the securities found in the S&P
500, using a process known as "optimization". This process selects stocks for
the Portfolio so that industry weightings, market capitalizations and
fundamental characteristics (price to book ratios, price to earnings ratios,
debt to asset ratios and dividend yields) closely match those of the securities
included in the S&P 500. This approach helps to increase the Portfolio's
liquidity and reduce costs. The securities held by the Portfolio are weighted to
make the Portfolio's total investment characteristics similar to those of the
S&P 500 as a whole.
The Adviser generally will seek to match the composition of the S&P 500 but
usually will not invest the Portfolio's stock portfolio to mirror the S&P 500
exactly. Because of the difficulty and cost of executing relatively small stock
transactions, the Portfolio may not always be invested in the less heavily
weighted S&P 500 stocks, and may at times have its portfolio weighted
differently than the S&P 500, particularly if the Portfolio has a low level of
assets. In addition, the Portfolio may omit or remove any S&P 500 stock from the
Portfolio if, following objective criteria, the Adviser judges the stock to be
insufficiently liquid or believes the merit of the investment has been
substantially impaired by extraordinary events or financial conditions. The
Portfolio will not purchase the stock of Bankers Trust New York Corporation,
which is included in the S&P 500, and instead will overweight its holdings of
companies engaged in similar businesses.
For more information on the S&P 500, see the preceding section "The Benchmarks."
The Portfolio is not sponsored, endorsed, sold or promoted by Standard & Poor's
Corporation ("S&P") and S&P makes no guarantee as to the accuracy and/or
completeness of the S&P 500 or any data included therein.
Over time, the correlation between the performance of the Portfolio and the S&P
is expected to be 95% or higher before deduction of Portfolio expenses. The
Portfolio's ability to track the S&P 500 may be affected by, among others,
transaction costs, administration and other expenses incurred by the Portfolio,
changes in either the composition of the S&P 500 or the assets of the Portfolio,
and the timing and amount of Portfolio investor contributions and withdrawals,
if any. The Portfolio seeks securities to track the S&P 500, therefore, the
Adviser generally will not attempt to judge the merits of any particular
security as an investment.
The Portfolio may also invest up to 20% of its assets in short-term debt
securities and money market instruments to meet redemption requests or to
facilitate investment in the securities of the S&P 500. Securities index futures
contracts and related options, warrants and convertible securities may be used
for a number of reasons, including: to simulate full investment in the S&P 500
while retaining a cash balance for Portfolio management purposes; to facilitate
trading; to reduce transaction costs; or to seek higher investment returns when
a futures contract, option, warrant or convertible security is priced more
attractively than the underlying equity security or S&P 500. These instruments
are considered to be derivatives.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
<PAGE>
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15
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INDEX-FUND RISK: The Portfolio is not actively managed and invests in securities
included in the index regardless of their investment merit. Therefore, the
Portfolio cannot modify its investment strategies to respond to changes in the
economy and may be particularly susceptible to a general decline in the U.S. or
global stock market segment relating to the index.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
Nationally Recognized Statistical Rating Organization ("NRSRO"), it will be
exposed to greater risk than higher-rated obligations because BBB rated
investment grade securities are regarded as having only an adequate capacity to
pay principal and interest, are considered to lack outstanding investment
characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
the Portfolio's first year of existence. 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 Portfolio's inception date was January 1, 1998.
- -------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -------------------------------------------------------------
25.14%
- ----------
1998
Best quarter: Worst quarter:
21.26% (1998 4th Quarter) (10.03)% (1998 3rd Quarter)
- -------------------------------------------------------------
- -------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------
BT Equity 500 Index Portfolio 25.14% 25.14%
- -------------------------------------------------------------
S&P 500 Index* 28.58% 28.58%
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* For more information on this index, see the preceding
section "The Benchmarks."
WHO MANAGES THE PORTFOLIO
BANKERS TRUST COMPANY ("Bankers Trust"), 130 Liberty Street (One Bankers Trust
Plaza), New York, New York 10006. Bankers Trust has been the Adviser to the
Portfolio since it commenced operations. Bankers Trust is a wholly-owned
subsidiary of Bankers Trust Corporation. Bankers Trust conducts a variety of
general banking and trust activities and is a major wholesale supplier of
financial services, including investment management to the international and
domestic institutional markets. During 1999, Bankers Trust Corporation and a
wholly owned subsidiary of Deutsche Bank AG ("Deutsche Bank") expect to finalize
a merger in which Bankers Trust Corporation will be acquired by and become a
subsidiary of Deutsche Bank.
----------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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16
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MFS RESEARCH PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to provide long-term growth of capital and future
income.
THE INVESTMENT STRATEGY
The Portfolio invests primarily 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 in foreign equity securities, and may have exposure to
foreign currencies through its investment in these securities, its direct
holdings of foreign currencies or through its use of foreign currency exchange
contracts for the purchase or sale of a fixed quantity of foreign currency at a
future date.
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 RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
<PAGE>
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17
- --------------------------------------------------------------------------------
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.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; 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,
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 the Portfolio is May 1, 1997.
- -------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -------------------------------------------------------------
24.11%
- ----------
1998
Best quarter: Worst quarter:
21.36% (1998 4th Quarter) (17.35)% (1997 4th Quarter)
- -------------------------------------------------------------
- -------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------
MFS Research Portfolio 24.11% 24.41%
- -------------------------------------------------------------
S&P 500 Index* 28.58% 31.63%
- -------------------------------------------------------------
* 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
-------------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
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18
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what they view as the securities best suited to achieve the Portfolio's
investment objective within their assigned industry responsibility.
<PAGE>
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19
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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 in dividend-paying common stocks of established
companies that have favorable prospects for increasing dividend income and
capital appreciation. The Portfolio's yield as a result of that dividend income
is expected to be significantly above the average yield of the companies of the
S&P 500.
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 level tend to be less volatile than
those paying below average dividends.
The Adviser uses a "value" approach in choosing securities. 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
o low stock price relative to the company's asset value, earnings and cash
flow.
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 such as American Depositary
Receipts. The Portfolio may also purchase preferred stocks, convertible
securities, warrants, 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. 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 RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign
---------------------- EQ Advisors Trust
<PAGE>
DOMESTIC EQUITY PORTFOLIOS (CONTINUED)
- -------
20
- --------------------------------------------------------------------------------
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 RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative. 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,
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 the Portfolio is May 1, 1997.
- ------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- ------------------------------------------------------------------
9.11%
- ---------
1998
Best quarter: Worst quarter:
11.16% (1998 4th Quarter) (7.66)% (1998 3rd Quarter)
- ------------------------------------------------------------------
- ------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- ------------------------------------------------------------------
T. Rowe Price Equity Income Portfolio 9.11% 18.73%
- ------------------------------------------------------------------
S&P 500 Index* 28.58% 31.63%
- ------------------------------------------------------------------
* 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 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. Mr. Rogers joined T. Rowe Price in 1982 and has been managing
investments since 1983.
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIO
- -------
21
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO
INVESTMENT OBJECTIVE: Seeks long-term growth of capital.
THE INVESTMENT STRATEGY
The Portfolio invests primarily in a diversified mix of equity securities of
U.S. and established foreign companies. The Adviser believes the equity
securities of these established non-U.S. companies have prospects for growth.
The Portfolio intends to make investments in several countries and to have
represented in the Portfolio business activities in not less than three
different countries (including the United States).
These non-U.S. companies may have operations in the United States, in their
country of incorporation or in other countries.
The Portfolio may invest in any type of security including, but not limited to,
common and preferred stock, as well as shares of mutual funds that invest in
foreign securities, bonds and other evidences of indebtedness, and other
securities of issuers wherever organized and governments and their political
subdivisions. Although no particular proportion of stocks, bonds or other
securities is required to be maintained, the Portfolio intends under normal
conditions to invest in equity securities.
The Portfolio may also make use of various other investment strategies,
including making secured loans of up to 50% of its total assets. The Portfolio
may also use derivatives including: writing covered call and put options,
purchasing call and put options on individual equity securities, securities
indexes, and foreign currencies. The Portfolio may also purchase and sell stock
index, foreign currency and interest rate futures contracts and options on such
contracts, as well as forward foreign currency exchange contracts
When market or financial conditions warrant, the Portfolio may at times invest
substantially all of its assets in securities issued by U.S. companies or in
cash or cash equivalents, including money market instruments issued by foreign
entities for temporary or defensive purposes. Such investment strategies could
result in the Portfolio not achieving its investment objective.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
FOREIGN SECURITIES RISKS: Investing in foreign securities involves risks not
associated with investing in U.S. securities that can adversely affect the
Portfolio's performance. Foreign markets, particularly emerging markets, may be
less liquid, more volatile and subject to less government supervision than
domestic markets. There may be difficulties enforcing contractual obligations,
and it may take more time for trades to clear and settle. In addition, foreign
investments can be adversely affected by: unfavorable currency exchange rates
(relative to the U.S. dollar for securities denominated in a foreign
currencies); inadequate or inaccurate information about foreign companies;
higher transaction, brokerage and custody costs; expropriation or
nationalization; adverse changes in foreign economic and tax policies; and
foreign government instability, war or other adverse political or economic
actions. Other specific risks of investing in foreign securities include:
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging markets countries and/or their securities markets, such as less
diverse and less mature economic structures, less stable political systems,
more restrictive foreign investment policies, smaller-sized securities
markets and low trading volumes. Such risks can make investments illiquid and
more volatile than investments in developed countries and such securities may
be subject to abrupt and severe price declines.
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the recent introduction of the "Euro"
as a common currency in 11 European Monetary Union member
--------------------------- EQ Advisors Trust
<PAGE>
GLOBAL/INTERNATIONAL PORTFOLIO (CONTINUED)
- -------
22
- --------------------------------------------------------------------------------
states. The Euro may result in various legal and accounting differences, tax
treatments, the creation and implementation of suitable clearing and
settlement systems and other operational problems, that may cause market
disruptions that could adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which may
cause the Portfolio to lose money or be prevented from earning capital gains.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
Leveraging Risk. When the Portfolio is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional collateral,
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last ten calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one, five and ten
years and compares the Portfolio's performance to: (i) the returns of a
broad-based index and (ii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Global Portfolio) managed by the
Adviser using the same investment objectives and strategy as the Portfolio. For
these purposes, the Portfolio is considered to be the successor entity to the
predecessor registered investment company (HRT/Alliance Global Portfolio) whose
inception date is August 27, 1987. The assets of the predecessor will be
transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance.
<PAGE>
- -------
23
- --------------------------------------------------------------------------------
- ---------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- ---------------------------------------------------------------------------
26.7% -6.1% 30.5% -0.5% 32.1% 5.2% 18.8% 14.6% 11.7% 21.8%
- ---------------------------------------------------------------------------
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
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 21.80% 14.28% 14.81%
- ---------------------------------------------------------------------------
MSCI World Index* 24.34% 15.68% 10.66%
- ---------------------------------------------------------------------------
Lipper Global Mutual Funds
Average* 14.34% 11.98% 11.21%
- ---------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
SANDRA L. YEAGER has been responsible for the day-to-day management of the
Portfolio's and its predecessor's investment program since 1998. Ms. Yeager, a
Senior Vice President of Alliance, has been associated with Alliance since 1990.
------------------------- EQ Advisors Trust
<PAGE>
AGGRESSIVE EQUITY PORTFOLIO
- -------
24
- --------------------------------------------------------------------------------
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 and may result in higher taxable
gains that could be passed through to shareholders.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
<PAGE>
- -------
25
- --------------------------------------------------------------------------------
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 RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities, which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
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. In addition, holders of variable insurance contracts representing
interests in the Portfolio will be subject to charges and expenses relating to
such insurance contracts. The performance results presented below do not reflect
any insurance 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
- -------------------------------------------------------------------------
(10.20)%
- ---------------
1998
Best quarter: Worst quarter:
15.49% (1997 3rd Quarter) (20.25)% (1998 3rd Quarter)
- -------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -------------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -------------------------------------------------------------------------
Warburg Pincus Small Company Value
Portfolio (10.02)% 4.25%
- -------------------------------------------------------------------------
Russell 2000 Index* (2.54)% 14.53%
- -------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
WARBURG PINCUS ASSET MANAGEMENT, INC. ("WPAM"), 466 Lexington Avenue, New York,
New York 10017-3147. WPAM has been the Adviser to the Portfolio since it
commenced operations. WPAM is a professional investment advisory firm that
provides investment services to investment companies, employee benefit plans,
endowment funds, foundations and other institutions and individuals. WPAM is
indirectly controlled by Warburg, Pincus & Co., a New York partnership which has
no business other than being a holding company of WPAM and its affiliates.
During 1999, WPAM and Credit Suisse Group expect to finalize Credit Suisse
Group's acquisition of WPAM. WPAM will be combined with and into Credit Suisse
Group's global asset management subsidiary, Credit Suisse Asset Management, LLC.
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 WPAM and has been with WPAM since 1989.
--------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS
- -------
26
- --------------------------------------------------------------------------------
The Alliance Conservative Investors Portfolio and the Alliance Growth Investors
Portfolio together are called the Asset Allocation Portfolios. These Portfolios
invest in a variety of fixed income and equity securities, each pursuant to a
different asset allocation strategy, as described below. The term "asset
allocation" is used to describe the process of shifting assets among discrete
categories of investments in an effort to reduce risk while producing desired
return objectives. Portfolio management, therefore, will consist not only of
selecting specific securities but also of setting, monitoring and changing, when
necessary, the asset mix.
Each Portfolio has been designed with a view toward a different "investor
profile." The "conservative investor"' has a relatively short-term investment
bias, either because of a limited tolerance for market volatility or a short
investment horizon. This investor is averse to taking risks that may result in
principal loss, even though such aversion may reduce the potential for higher
long-term gains and result in lower performance during periods of equity market
strength. Consequently, the asset mix for the Alliance Conservative Investors
Portfolio attempts to reduce volatility while providing modest upside potential.
The "growth investor" has a longer-term investment horizon and is therefore
willing to take more risks in an attempt to achieve long-term growth of
principal. This investor wishes, in effect, to be risk conscious without being
risk averse. The asset mix for the Alliance Growth Investors Portfolio attempts
to provide for upside potential without excessive volatility.
The Adviser has established an asset allocation committee (the "Committee"), all
the members of which are employees of the Adviser, which is responsible for
setting and continually reviewing the asset mix ranges of each Portfolio. Under
normal market conditions, the Committee is expected to change allocation ranges
approximately three to five times per year. However, the Committee has broad
latitude to establish the frequency, as well as the magnitude, of allocation
changes within the guidelines established for each Portfolio. During periods of
severe market disruption, allocation ranges may change frequently. It is also
possible that in periods of stable and consistent outlook no change will be
made. The Committee's decisions are based on a variety of factors, including
liquidity, portfolio size, tax consequences and general market conditions,
always within the context of the appropriate investor profile for each
Portfolio. Consequently, asset mix decisions for the Alliance Conservative
Investors Portfolio particularly emphasize risk assessment of each asset class
viewed over the shorter term, while decisions for the Alliance Growth Investors
Portfolio are principally based on the longer term total return potential for
each asset class.
When the Committee establishes a new allocation range for a Portfolio, it also
prescribes the length of time during which that Portfolio should achieve an
asset mix within the new range. To achieve a new asset mix, the Portfolios look
first to available cash flow. If the Adviser believes that cash flow will be
insufficient to achieve the desired asset mix, the Portfolios will sell
securities and reinvest the proceeds in the appropriate asset class.
The Asset Allocation Portfolios are permitted to use a variety of hedging
techniques to attempt to control stock market, interest rate and currency risks.
Each of the Portfolios in the Asset Allocation may make loans of up to 50% of
its total portfolio securities. Each of the Portfolios in the Asset Allocation
Portfolios may write covered call and put options and may purchase call and put
options on all the types of securities in which it may invest, as well as
securities indexes and foreign currencies. Each Portfolio may also purchase and
sell stock index, interest rate and foreign currency futures contracts and
options thereon, as well as forward foreign currency exchange contracts.
<PAGE>
- -------
27
- --------------------------------------------------------------------------------
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
INVESTMENT OBJECTIVE: Seeks to achieve a high total return without, in the
opinion of the Adviser, undue risk to principal.
THE INVESTMENT STRATEGY
The Portfolio invests varying portions of its assets in high quality,
publicly-traded fixed income securities (including money market instruments and
cash) and publicly-traded common stocks and other equity securities of U.S. and
non-U.S. issuers.
The Portfolio will at all times hold at least 40% of its assets in investment
grade fixed income securities, each having a duration, as determined by the
Adviser, that is less than that of a 10-year Treasury bond (the "fixed income
core"). The Portfolio is generally expected to hold approximately 70% of its
assets in fixed income securities (including the fixed income core) and 30% in
equity securities. Actual asset mixes will be adjusted in response to economic
and credit market cycles. The fixed income asset class will always comprise at
least 50%, but never more than 90%, of the Portfolio's total assets. The equity
class will always comprise at least 10%, but never more than 50%, of the
Portfolio's total assets.
Duration is a measure of the weighted average maturity of the bonds held by the
Portfolio and can be used by the Adviser as a measure of the sensitivity of the
market value of the Portfolio to changes in interest rates. Generally, the
longer the duration of the Portfolio, the more sensitive its market value will
be to changes in interest rates.
In some cases, the Adviser's calculation of duration will be based on certain
assumptions (including assumptions regarding prepayment rates, in the
mortgage-backed or asset-backed securities, and foreign and domestic interest
rates). As of December 31, 1998, the Adviser considered the duration of a
10-year Treasury bond to be 4.68 years. The Portfolio's investments will
generally have a final maturity of not more than ten years or a duration not
exceeding that of a 10-year Treasury note.
All debt securities held by the Portfolio will be of investment grade (i.e.,
rated at least BBB by S&P or Baa by Moody's) or unrated securities of comparable
quality as determined by the Adviser. The equity securities invested in by the
Portfolio will consist primarily of common stocks, including convertible
securities, common stocks that are listed on national securities exchanges. The
Portfolio may also invest in stocks that are traded over-the-counter and in
other equity-type securities. No more than 15% of the Portfolio's assets will be
invested in securities of non-U.S. issuers.
The Portfolio may also make use of various other investment strategies, and
derivatives. Up to 50% of its total assets may be used for securities lending
purposes.
THE PRINCIPAL RISKS
This Portfolio invests in common stocks, therefore, its performance may go up or
down depending on general market conditions. Other principal risks include:
ASSET ALLOCATION RISK: In addition to the risks associated with the securities
in which the Portfolio invests, the Portfolio is subject to the risk that the
Adviser's allocation of the Portfolio's assets between debt and equity
securities may adversely affect the Portfolio's value.
FIXED INCOME RISKS: This Portfolio invests primarily in fixed income securities,
therefore, the Portfolio's performance will be affected by changes in interest
rates, credit risks of the issuer, the duration and maturity of the Portfolio's
fixed income holdings, and adverse market and
-------------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION PORTFOLIOS (CONTINUED)
- -------
28
- --------------------------------------------------------------------------------
economic conditions. Other risks that relate to the Portfolio's investment in
fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true.
INVESTMENT GRADE SECURITIES RISK: The Portfolio could lose money if the
issuer or guarantor of a debt security or counterparty to a Portfolio's
transaction is unable or unwilling to make timely principal and/or interest
payments, or to honor its financial obligations. Investment grade securities
which are rated BBB by S&P or an equivalent rating by any other NRSRO, are
somewhat riskier than higher rated obligations because they are regarded as
having only an adequate capacity to pay principal and interest, are
considered to lack outstanding investment characteristics, and may be
speculative.
MORTGAGE-BACKED SECURITIES RISK: Rising interest rates may cause the duration
of mortgage-backed securities to increase, making them even more susceptible
to interest rate changes. Falling interest rates may cause the value and
yield of mortgage-backed securities to fall. Falling interest rates also may
encourage borrowers to pay off their mortgages sooner than anticipated
(pre-payment). The Portfolio would need to reinvest the pre-paid funds at the
newer, lower interest rates.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying common
stock and provide higher yields than the underlying common stocks, but generally
offer lower yields than nonconvertible securities of similar quality. The value
of convertible securities fluctuates both in relation to changes in interest
rates and changes in the value of the underlying common stock.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional collateral,
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like, which
may cause the Portfolio to lose money or be prevented from earning capital
gains.
LEVERAGING RISK: When the Portfolio is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
<PAGE>
- -------
29
- --------------------------------------------------------------------------------
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last nine calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one year, five years
and since inception and compares the Portfolio's performance to: (i) the returns
of a broad-based index; (ii) the returns of a "blended" index of fixed income
and equity securities; and (iii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Conservative Investors Portfolio)
managed by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance
Conservative Investors Portfolio) whose inception date is October 2, 1989. The
assets of the predecessor will be transferred to the Portfolio on October 18,
1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- --------------------------------------------------------------------------------
6.35% 19.8% 5.6% 10.8% -4.1% 20.4% 5.2% 13.3% 13.9%
- ----------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
7.65% (1998 4th Quarter) -3.21% (1994 1st Quarter)
- ----------------------------------------------------------------------------
- ----------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- ----------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- ----------------------------------------------------------------------------
Alliance Conservative
Investors Portfolio --
Class IA Shares 13.88% 9.40% 9.99%
- ----------------------------------------------------------------------------
70% Lehman Treasury/30%
S&P 500 Index* 15.59% 13.37% 12.08%
- ----------------------------------------------------------------------------
S&P 500 Index* 28.58% 24.06% 17.62%
- ----------------------------------------------------------------------------
Lipper Flexible Portfolio
Average 14.20% 14.31% 12.55%
- ----------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of the
Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a Senior
Vice President of Alliance and Global Economic Policy Analysis, has been
associated with Alliance since 1977.
--------------------- EQ Advisors Trust
<PAGE>
ASSET ALLOCATION 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 RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment-grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than if it invested in higher-rated
obligations because BBB-rated securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative. Other risks that relate to
the Portfolio's investment in fixed income securities include:
INTEREST RATE RISK: When interest rates rise, the value (i.e., share price
and total return) of the Portfolio's fixed income securities, particularly
those with longer durations or maturities, will go down. When interest rates
fall, the reverse is true.
JUNK BOND RISK: The Portfolio may invest a portion of its assets in "junk
bonds" or lower-rated securities rated BB or lower by S&P or an equivalent
rating by any other NRSRO or unrated securities of similar quality.
Therefore, credit risk is particularly significant for this Portfolio. Junk
bonds have speculative elements or are predominantly speculative credit
risks. This Portfolio may also be subject to greater credit risk because it
may invest in debt securities issued in connection with corporate
<PAGE>
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31
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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 is borrowing money or otherwise leveraging
its portfolio, the value of an investment in the Portfolio will be more volatile
and all other risk will tend to be compounded.
SMALL CAP AND MID-CAP COMPANY RISK: The Portfolio's investments in small-cap and
mid-cap companies may be subject to more abrupt or erratic movements in price
than are those of larger, more established companies because: the securities of
such companies are less well-known, held primarily by insiders or institutional
investors and may trade less frequently and in lower volume; such companies are
more likely to experience greater or more unexpected changes in their earnings
and growth prospects; such companies have limited financial resources or may
depend on a few key employees; and the products of technologies of such
companies may be at a relatively early stage of development or not fully tested.
LIQUIDITY RISK: Certain securities held by the Portfolio may be difficult (or
impossible) to sell at the time and at the price the seller would like which may
cause the Portfolio to lose money or be prevented from earning capital gains.
CONVERTIBLE SECURITIES RISK: Convertible securities generally enable the
Portfolio to benefit from increases in the market price of the underlying common
stock and provide higher yields than the underlying common stocks, but generally
offer lower yields than nonconvertible securities of similar quality. The value
of convertible securities fluctuates both in relation to changes in interest
rates and changes in the value of the underlying common stock.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
FOREIGN SECURITIES RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities, which can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging markets, may be less liquid, more volatile, and subject to less
government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. In addition, the value of foreign investments can be adversely
affected by: unfavorable currency exchange rates (relative to the U.S. dollar
for securities denominated in foreign currencies); inadequate or inaccurate
information about foreign companies; higher transaction, brokerage and custody
costs; expropriation or nationalization; adverse changes in foreign economic and
tax policies; and foreign government instability, war or other adverse political
or economic actions.
SECURITIES LENDING RISK: This Portfolio may make secured loans of its portfolio
securities. The risks in lending portfolio securities, as with other extensions
of secured credit, consist of possible delay in receiving additional collateral,
or in the recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total returns for each of
the last nine calendar years and some of the risks of investing in the Portfolio
by showing yearly changes in the Portfolio's performance. The table below shows
the Portfolio's average annual total returns for the past one year, five years
and since inception and compares the Portfolio's performance to: (i) the returns
of a broad-based index; (ii) the returns of a "blended" index of equity and
fixed income securities; and (iii) the returns of an index of funds with similar
investment objectives. Past performance is not an indication of future
performance.
------------------------- EQ Advisors Trust
<PAGE>
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The Portfolio's performance shown below is the performance of its predecessor
registered investment company (HRT/Alliance Growth Investors Portfolio) managed
by the Adviser using the same investment objectives and strategy as the
Portfolio. For these purposes, the Portfolio is considered to be the successor
entity to the predecessor registered investment company (HRT/Alliance Growth
Investors Portfolio) whose inception date is October 2, 1989. The assets of the
predecessor will be transferred to the Portfolio on October 18, 1999.
Both the bar chart and table assume reinvestment of dividends and distributions.
The performance results do not reflect any insurance and Contract-related fees
and expenses, which would reduce the performance results.
- --------------------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
10.7% 48.8% 4.9% 15.3% -3.2% 26.4% 12.6% 16.9% 19.1%
- -------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996 1997 1998
Best quarter (% and time period) Worst quarter (% and time period)
18.16% (1998 4th Quarter) -10.60% (1990 3rd Quarter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- --------------------------------------------------------------------------------
SINCE
ONE YEAR FIVE YEARS INCEPTION
- --------------------------------------------------------------------------------
Alliance Growth Investors
Portfolio -- Class IA
Shares 19.13% 13.92% 16.09%
- --------------------------------------------------------------------------------
70% S&P 500 Index/30%
Lehman Gov't/Corp.* 22.85% 19.96% 15.55%
- --------------------------------------------------------------------------------
S&P 500 Index* 28.58% 24.06% 17.62%
- --------------------------------------------------------------------------------
Lipper Flexible Portfolio
Average* 14.20% 14.31% 12.55%
- --------------------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
ALLIANCE CAPITAL MANAGEMENT, L.P. ("Alliance"), 1345 Avenue of the Americas, New
York, New York 10105. Alliance has been the Adviser to the Portfolio and its
predecessor (registered investment company) since the predecessor commenced
operations. Alliance, a publicly traded limited partnership, is indirectly
majority-owned by Equitable. Alliance manages investment companies, endowment
funds, insurance companies, foreign entities, qualified and non-tax qualified
corporate funds, public and private pension and profit-sharing plans,
foundations and tax-exempt organizations.
ROBERT G. HEISTERBERG has been responsible for the day-to-day management of the
Portfolio and its predecessor since February 12, 1996. Mr. Heisterberg, a Senior
Vice President of Alliance and Global Economic Policy Analysis, has been
associated with Alliance since 1977.
<PAGE>
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33
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MERRILL LYNCH WORLD STRATEGY
PORTFOLIO
INVESTMENT OBJECTIVE: Seek 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>
ASSET ALLOCATION 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. 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 RISKS: The Portfolio's investments in foreign securities
involve risks not associated with investing in U.S. securities that can
adversely affect the Portfolio's performance. Foreign markets, particularly
emerging 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:
EURO RISK: The Portfolio invests in securities issued by European issuers
that that may be adversely impacted by the introduction of the "Euro" as a
common currency in 11 European Monetary Union member states. The Euro may
result in various legal and accounting differences, tax treatments, the
creation and implementation of suitable clearing and settlement systems and
other operational problems, that may cause market disruptions that could
adversely affect investments quoted in the Euro.
REGULATORY RISK: In general, foreign companies are also not subject to
uniform accounting, auditing and financial reporting standards or to other
regulatory practices and requirements as are U.S. companies, which could
adversely affect their value.
FIXED INCOME RISKS: To the extent that a substantial amount of the Portfolio's
assets are invested in fixed income securities, that portion of the Portfolio's
performance will be affected by changes in interest rates, the credit risk of
the issuer, the duration or maturity of the Portfolio's fixed income holdings,
and adverse market or economic conditions. When interest rates rise, the value
of the Portfolio's fixed income securities, particularly those with longer
durations or maturities, will go down. When interest rates fall, the reverse is
true. In addition, to the extent that the Portfolio invests in investment grade
securities which are rated BBB by S&P or an equivalent rating by any other
NRSRO, it will be exposed to greater risk than higher-rated obligations because
BBB rated investment grade securities are regarded as having only an adequate
capacity to pay principal and interest, are considered to lack outstanding
investment characteristics, and may be speculative.
DERIVATIVES RISK: The Portfolio's investments in derivatives can significantly
increase the Portfolio's exposure to market risk or credit risk of the
counterparty. Derivatives also involve the risk of mispricing or improper
valuation and the risk that changes in value of the derivative may not correlate
perfectly with the relevant assets, rates and indices.
<PAGE>
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35
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NON-DIVERSIFICATION RISK: Since a relatively high percentage of the Portfolio's
assets may be invested in the securities of a limited number of issuers, some of
which may be within the same industry, the securities of the Portfolio may be
more sensitive to changes in the market value of a single issuer or industry or
to risks associated with a single economic, political or regulatory event than a
diversified portfolio.
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 and may result in higher taxable
gains that could be passed through to shareholders.
PORTFOLIO PERFORMANCE
The bar chart below illustrates the Portfolio's annual total return for 1998,
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 the Portfolio is May 1, 1997.
- -----------------------------------------------------------------------
CALENDAR YEAR ANNUAL TOTAL RETURN
- -----------------------------------------------------------------------
6.81%
---------
1998
Best quarter: Worst quarter:
10.56% (1998 4th Quarter) (11.15)% (1998 3rd Quarter)
- -----------------------------------------------------------------------
- -----------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS
- -----------------------------------------------------------------------
SINCE
ONE YEAR INCEPTION
- -----------------------------------------------------------------------
Merrill Lynch World Strategy Portfolio 6.81% 6.91%
Composite Market Benchmark Index* (25.34)% (28.92)%
- -----------------------------------------------------------------------
* For more information on this index, see the preceding section "The
Benchmarks."
WHO MANAGES THE PORTFOLIO
MERRILL LYNCH ASSET MANAGEMENT, L.P. ("MLAM"), 800 Scudders Mill Road,
Plainsboro, New Jersey 08543. MLAM has been the Adviser to the Portfolio since
it commenced operations. MLAM is an indirect wholly-owned subsidiary of Merrill
Lynch & Co., Inc., a financial services holding company. MLAM and its affiliates
act as the manager for more than 100 registered investment companies. MLAM 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 MLAM since 1997 and as a Senior
Portfolio Manager of MLAM since 1995. Prior to 1995, Mr. Robinson served as
Manager of International Strategy for Merrill Lynch & Co. Global Securities
Research and Economics Group.
------------------------- EQ Advisors Trust
<PAGE>
3 More information on principal risks
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36
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Risk is the chance that you will lose money on your investment or that it will
not earn as much as you expect. In general, the greater the risk, the more money
your investment can earn for you and the more you can lose. Like other
investment companies, the value of each Portfolio's shares may be affected by
the Portfolio's investment objective(s), principal investment strategies and
particular risk factors. Consequently, each Portfolio may be subject to
different principal risks. Some of the principal risks of investing in the
Portfolios are discussed below. However, other factors may also affect each
Portfolio's net asset value.
There is no guarantee that a Portfolio will achieve its investment objective(s)
or that it will not lose principal value.
GENERAL INVESTMENT RISKS: Each Portfolio is subject to the following risks:
ASSET CLASS RISK: There is the possibility that the returns from the types of
securities in which a Portfolio invests will underperform returns from the
various general securities markets or different asset classes. Different types
of securities tend to go through cycles of outperformance and underperformance
in comparison to the general securities markets.
MARKET RISK: Each Portfolio's share price moves up and down over the short term
in reaction to stock or bond market movements. This means that you could lose
money over short periods, and perhaps over longer periods during extended market
downturns.
SECURITY SELECTION RISK: The Advisers for each Portfolio rely on the insights of
different specialists in making investment decisions based on each Portfolio's
particular investment objective(s) and investment strategies. There is the
possibility that the specific securities held by a Portfolio will underperform
other funds in the same asset class or benchmarks that are representative of the
general performance of the asset class because of the Adviser's choice of
portfolio securities.
YEAR 2000 RISK: Like other mutual funds, financial and business organizations
and individuals around the world, the Trust and its Portfolios could be
adversely affected if the computer systems used by the Advisers, other service
providers, or persons with whom they deal, do not properly process and calculate
date-related information and data dated on and after January 1, 2000. This
possibility is commonly known as the "Year 2000 Problem." Virtually all
operations of the Trust and its Portfolios are computer reliant. The Manager,
Advisers, administrator, transfer agent, distributors and custodian have
informed the Trust that they are actively taking steps to address the Year 2000
Problem with regard to their respective computer systems and the interfaces
between their respective computer systems. The Trust is also taking measures to
obtain assurances from necessary persons that comparable steps are being taken
by the key service providers to the Trust's Advisers, administrator, transfer
agent, distributors, and custodian. There can be no assurance that the Trust and
the Portfolios' key service providers will be Year 2000 compliant. If not
adequately addressed, the Year 2000 Problem could result in the inability of the
Trust to perform its mission critical functions, including trading and settling
trades of Portfolio securities, pricing of portfolio securities and processing
shareholder transactions, and the net asset value of its Portfolios' shares may
be materially affected.
In addition, because the Year 2000 Problem affects virtually all issuers, the
companies or entities in which the Portfolios may invest also could be adversely
impacted by the Year 2000 Problem. For example, issuers may incur substantial
costs to address the Year 2000 problem. The extent of such impact cannot be
predicted and there can be no assurances that the Year 2000 Problem will not
have an adverse effect on the issuers whose securities are held by the
Portfolios. The Advisers have assured the Trust that they consider such issues
in making investment decisions for the Portfolios. Furthermore, certain of the
Portfolios make international investments thereby exposing these Portfolios to
operations, custody and settlement processes outside the United States.
<PAGE>
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37
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In many countries outside the United States the Year 2000 Problem has not been
adequately addressed and concerns have been raised that capital flight, among
other issues, may be triggered by full disclosure of the Year 2000 Problem on
countries outside the United States. Additional information on the impact of the
Year 2000 Problem on emerging market countries is provided in this section,
under "FOREIGN SECURITIES RISKS--EMERGING MARKET RISK."
As indicated in "Summary Information Concerning EQ Advisors Trust" and "About
the Investment Portfolios," a particular Portfolio may also be subject to the
following risks:
CONVERTIBLE SECURITIES RISK: Convertible securities may include both convertible
debt and convertible preferred stock. Such securities may be converted into
shares of the underlying common stock at either a stated price or stated rate.
Therefore, convertible securities enable you to benefit from increases in the
market price of the underlying common stock. Convertible securities provide
higher yields than the underlying common stocks, but generally offer lower
yields than nonconvertible securities of similar quality. The value of
convertible securities fluctuates in relation to changes in interest rates and,
in addition, fluctuates in relation to the underlying common stock. Subsequent
to purchase by a Portfolio, convertible securities may cease to be rated or a
rating may be reduced below the minimum required for purchase by that Portfolio.
Each Adviser will consider such event in its determination of whether a
Portfolio should continue to hold the securities.
DERIVATIVES RISK: Derivatives are financial contracts whose value depends on, or
is derived from the value of an underlying asset, reference rate or index.
Derivatives include stock options, securities index options, currency options,
forward currency exchange contracts, futures contracts, swaps and options on
futures contracts. Certain Portfolios can use derivatives involving the U.S.
Government and foreign government securities and currencies. Investments in
derivatives can significantly increase your exposure to market risk, or credit
risk of the counterparty. Derivatives also involve the risk of mispricing or
improper valuation and the risk that changes in value of the derivative may not
correlate perfectly with the relevant assets, rates and indices.
FIXED INCOME RISKS: To the extent that any of the Portfolios invest a
substantial amount of its assets in fixed income securities, a Portfolio may be
subject to the following risks:
CREDIT RISK: Credit risk is the risk that the issuer or guarantor of a debt
security or counterparty to a Portfolio's transactions will be unable or
unwilling to make timely principal and/or interest payments, or otherwise
will be unable or unwilling to honor its financial obligations. Each of the
Portfolios may be subject to credit risk to the extent that it invests in
debt securities or engages in transactions, such as securities loans or
repurchase agreements, which involve a promise by a third party to honor an
obligation to the Portfolio.
Credit risk is particularly significant for the Portfolios, such as the
Alliance Growth Investors Portfolio, that invest a material portion of their
assets in "junk bonds" or lower-rated securities (i.e., rated BB or lower by
S&P or an equivalent rating by any other NRSRO or unrated securities of
similar quality). These debt securities and similar unrated securities have
speculative elements or are predominantly speculative. Portfolios such as the
Alliance Growth Investors Portfolio may also be subject to greater credit
risk because it may invest in debt securities issued in connection with
corporate restructurings by highly leveraged issuers or in debt securities
not current in the payment of interest or principal, or in default.
INTEREST RATE RISK: The price of a bond or a fixed income security is
dependent upon interest rates. Therefore, the share price and total return of
a Portfolio investing a significant portion of its assets in bonds or fixed
income securities will vary in response
---------------------------- EQ Advisors Trust
<PAGE>
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38
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to changes in interest rates. A rise in interest rates causes the value of a
bond to decrease, and vice versa. There is the possibility that the value of
a Portfolio's investment in bonds or fixed income securities may fall because
bonds or fixed income securities generally fall in value when interest rates
rise. The longer the term of a bond or fixed income instrument, the more
sensitive it will be to fluctuations in value from interest rate changes.
Changes in interest rates may have a significant effect on Portfolios holding
a significant portion of their assets in fixed income securities with long
term maturities.
MORTGAGE-BACKED SECURITIES RISK: In the case of mortgage-backed securities,
rising interest rates tend to extend the term to maturity of the securities,
making them even more susceptible to interest rate changes. When interest
rates drop, not only can the value of fixed income securities drop, but the
yield can drop, particularly where the yield on the fixed income securities
is tied to changes in interest rates, such as adjustable mortgages. Also when
interest rates drop, the holdings of mortgage-backed securities by a
Portfolio can reduce returns if the owners of the underlying mortgages pay
off their mortgages sooner than anticipated since the funds prepaid will have
to be reinvested at the then lower prevailing rates. This is known as
prepayment risk. When interest rates rise, the holdings of mortgage-backed
securities by a Portfolio can reduce returns if the owners of the underlying
mortgages pay off their mortgages later than anticipated. This is known as
extension risk.
INVESTMENT GRADE SECURITIES RISK: Debt securities are rated by national bond
ratings agencies. Securities rated BBB by S&P or Baa by Moody's are
considered investment grade securities, but are somewhat riskier than higher
rated obligations because they are regarded as having only an adequate
capacity to pay principal and interest, and are considered to lack
outstanding investment characteristics and may be speculative.
JUNK BONDS OR LOWER RATED SECURITIES RISK: Bonds rated below investment grade
by S&P and Moody's are speculative in nature, may be subject to certain risks
with respect to the issuing entity and to greater market fluctuations than
higher rated fixed income securities. They are usually issued by companies
without long track records of sales and earnings, or by those companies with
questionable credit strength. These bonds are considered "below investment
grade." The retail secondary market for these "junk bonds" may be less liquid
than that of higher rated securities and adverse conditions could make it
difficult at times to sell certain securities or could result in lower prices
than those used in calculating the Portfolio's net asset value.
FOREIGN SECURITIES RISKS: A Portfolio's investments in foreign securities,
including depositary receipts, involve risks not associated with investing in
U.S. securities and can affect a Portfolio's performance. Foreign markets,
particularly emerging markets, may be less liquid, more volatile and subject to
less government supervision than domestic markets. There may be difficulties
enforcing contractual obligations, and it may take more time for trades to clear
and settle. The specific risks of investing in foreign securities, among others,
include:
CURRENCY RISK: The risk that changes in currency exchange rates will
negatively affect securities denominated in, and/or receiving revenues in,
foreign currencies. Adverse changes in currency exchange rates (relative to
the U.S. dollar) may erode or reverse any potential gains from a Portfolio's
investment in securities denominated in a foreign currency or may widen
existing losses.
EMERGING MARKET RISK: There are greater risks involved in investing in
emerging market countries
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and/or their securities markets. Generally, economic structures in these
countries are less diverse and mature than those in developed countries, and
their political systems are less stable. Investments in emerging markets
countries may be affected by national policies that restrict foreign
investment in certain issuers or industries. The small size of their
securities markets and low trading volumes can make investments illiquid and
more volatile than investments in developed countries and such securities may
be subject to abrupt and severe price declines. As a result, a Portfolio
investing in emerging markets countries may be required to establish special
custody or other arrangements before investing.
The YEAR 2000 PROBLEM may also be especially acute in emerging market
countries. Many emerging market countries are currently lagging behind more
developed countries in their Year 2000 preparedness because they lack the
financial resources to undertake the necessary remedial actions. A lack of
Year 2000 preparedness may adversely affect the health, security and economic
well-being of emerging market countries and could, obviously, adversely
affect the value of a Portfolio's investments in emerging market countries.
More information on the Year 2000 Problem is provided in this section, under
"GENERAL INVESTMENT RISKS--YEAR 2000 RISK."
EURO RISK: Certain of the Portfolios invests in securities issued by European
issuers. On January 1, 1999, 11 of the 15 member states of the European
Monetary Union ("EMU") introduced the "Euro" as a common currency. During a
three-year transitional period, the Euro will coexist with each participating
state's currency and, on July 1, 2002, the Euro is expected to become the
sole currency of the participating states. The introduction of the Euro will
result in the redenomination of European debt and equity securities over a
period of time, which may result in various legal and accounting differences
and/or tax treatments that otherwise would not likely occur. During this
period, the creation and implementation of suitable clearing and settlement
systems and other operational problems may cause market disruptions that
could adversely affect investments quoted in the Euro.
The consequences of the Euro conversion for foreign exchange rates, interest
rates and the value of European securities eligible for purchase by the
Portfolios are presently unclear and it is not possible to predict the
eventual impact of the Euro implementation plan on the Portfolios. There are
a number of significant risks associated with EMU. Monetary and economic
union on this scale has never been attempted before. There is a significant
degree of uncertainty as to whether participating countries will remain
committed to EMU in the face of changing economic conditions. The conversion
may adversely affect a Portfolio if the Euro does not take effect as planned
or if a participating state withdraws from the EMU. Such actions may
adversely affect the value and/or increase the volatility of securities held
by the Portfolios.
POLITICAL/ECONOMIC RISK: Changes in economic and tax policies, government
instability, war or other political or economic actions or factors may have
an adverse effect on a Portfolio's foreign investments.
REGULATORY RISK: Less information may be available about foreign companies.
In general, foreign companies are not subject to uniform accounting, auditing
and financial reporting standards or to other regulatory practices and
requirements as are U.S. companies.
TRANSACTION COSTS RISK: The costs of buying and selling foreign securities,
including tax, brokerage and custody costs, generally are higher than those
involving domestic transactions.
----------------------------- EQ Advisors Trust
<PAGE>
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GROWTH INVESTING RISK: Growth investing generally focuses on companies that, due
to their strong earnings and revenue potential, offer above-average prospects
for capital growth, with less emphasis on dividend income. Earnings
predictability and confidence in earnings forecasts are an important part of the
selection process. As a result, the price of growth stocks may be more sensitive
to changes in current or expected earnings than the prices of other stocks.
Advisers using this approach generally seek out companies experiencing some or
all of the following: high sales growth, high unit growth, high or improving
returns on assets and equity, and a strong balance sheet. Such Advisers also
prefer companies with a competitive advantage such as unique management,
marketing or research and development. Growth investing is also subject to the
risk that the stock price of one or more companies will fall or will fail to
appreciate as anticipated by the Advisers, regardless of movements in the
securities market.
INDEX-FUND RISK: The BT Equity 500 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 BT Equity 500 Index
Portfolio utilizes a "passive" or "indexing" investment approach and attempts to
duplicate the investment performance of the particular index the Portfolio is
tracking (i.e., S&P 500 Index, Russell 2000 Index or MSCI EAFE Index) through
statistical procedures. Therefore, the Portfolio will invest in the securities
included in the relevant index or substantially identical securities regardless
of market trends. The Portfolio cannot modify its investment strategies to
respond to changes in the economy, which means it may be particularly
susceptible to a general decline in the U.S. 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 markets securities, which have
all experienced periods of illiquidity, are subject to liquidity risks. A
particular Portfolio may be more susceptible to some of these risks than others,
as noted in the description of each Portfolio.
MONEY MARKET RISK: Although a money market fund is designed to be a relatively
low risk investment, it is not entirely free of risk.
NON-DIVERSIFICATION RISK: The Merrill Lynch World Strategy Portfolio is
classified as a "non-diversified" investment company, which means that the
proportion of the 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 the 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 the 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 the 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
<PAGE>
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investment company ("RIC") under the Internal Revenue Code of 1986, as amended
(the "Code") and receive pass through tax treatment, the 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 and may result in
taxable gains being passed through to shareholders.
SECURITIES LENDING RISK: For purposes of realizing additional income, each
Portfolio may lend securities to broker-dealers approved by the Board of
Trustees. Any such loan of portfolio securities will be continuously secured by
collateral at least equal to the value of the security loaned. Such collateral
will be in the form of cash, marketable securities issued or guaranteed by the
U.S. Government or its agencies, or a standby letter of credit issued by
qualified banks. The risks in lending portfolio securities, as with other
extensions of secured credit, consist of possible delay in receiving additional
collateral or in the recovery of the securities or possible loss of rights in
the collateral should the borrower fail financially. Loans will only be made to
firms deemed by the Adviser to be of good standing and will not be made unless,
in the judgment of the Adviser, the consideration to be earned from such loans
would justify the risk.
SMALL-CAP AND MID-CAP COMPANY RISK: A Portfolio's investments in small-cap and
mid-cap companies may involve greater risks than investments in larger, more
established issuers. Smaller companies may have narrower product lines, more
limited financial resources and more limited trading markets for their stock, as
compared with larger companies. Their securities may be less well-known and
trade less frequently and in more limited volume than the securities of larger,
more established companies. In addition, small-cap and mid-cap companies are
typically subject to greater changes in earnings and business prospects than
larger companies. Consequently, the prices of small company stocks tend to rise
and fall in value more frequently than the stocks of larger companies. Although
investing in small-cap and mid-cap companies offers potential for above-average
returns, the companies may not succeed and the value of their stock could
decline significantly.
VALUE INVESTING RISK: Value investing attempts to identify strong companies
selling at a discount from their perceived true worth. Advisers using this
approach generally select stocks at prices, in their view, that are temporarily
low relative to the company's earnings, assets, cash flow and dividends. Value
investing is subject to the risk that the stocks' intrinsic value may never be
fully recognized or realized by the market, or their prices may go down. In
addition, there is the risk that a stock judged to be undervalued may actually
be appropriately priced. Value investing generally emphasizes companies that,
considering their assets and earnings history, are attractively priced and may
provide dividend income.
The Trust's Portfolios are not insured by the FDIC or any other government
agency. Each Portfolio is not a deposit or other obligation of any financial
institution or bank and is not guaranteed. Each Portfolio is subject to
investment risks and possible loss of principal invested.
------------------- EQ Advisors Trust
<PAGE>
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 (40) Portfolios, each of which has authorized Class IA and
Class IB shares. Each Portfolio has its own objectives, investment strategies
and risks, which have been previously described in this prospectus.
THE MANAGER
EQ Financial Consultants, Inc. ("EQFC"), 1290 Avenue of the Americas, New York,
New York 10104, currently serves as the Manager of the Trust. The Board of
Trustees of the Trust has approved a transfer to Equitable of the Trust's
Investment Management Agreement with EQFC. This transfer is expected to be
completed in September 1999. Upon completion of the transfer, Equitable will
serve as the Manager of the Trust. However, until completion of the transfer,
EQFC will continue to serve in that capacity. Equitable 1290 Avenue of the
Americas, New York, New York 10104, is the indirect corporate parent of EQFC.
Both EQFC and Equitable are investment advisers registered under the Investment
Advisers Act of 1940, as amended, and EQFC is a broker-dealer registered under
the Securities Exchange Act of 1934, as amended.
Subject to the supervision and direction of the Board of Trustees, the Manager
has overall responsibility for the general management and administration of the
Trust. In the exercise of that responsibility, the Manager, without obtaining
shareholder approval but subject to the review and approval by the Board of
Trustees, may: (i) select the Advisers for the Portfolios; (ii) enter into and
materially modify existing investment advisory agreements; and (iii) terminate
and replace the Advisers. The Manager also monitors each Adviser's investment
program and results, reviews brokerage matters, oversees compliance by the Trust
with various federal and state statutes, and carries out the directives of the
Board of Trustees. The Manager also supervises the provision of services by
third parties such as the Trust's custodian and administrator.
The Manager has filed an application ("Substitution Application") requesting
that the SEC approve the substitution of Class IA and Class IB shares of 14 new
Portfolios of the Trust for the same class of shares of corresponding portfolios
of The Hudson River Trust ("HRT"). Alliance Capital Management L.P. ("Alliance")
will serve as Adviser for each of those 14 new Portfolios. The Substitution
Application states that, with respect to those 14 new Portfolios advised by
Alliance, the Manager will not use the powers granted to it under the
Multi-Manager Order (i) to terminate Alliance and select a new Adviser for those
Portfolios or (ii) to materially modify the Investment Advisory Agreement
between the Manager and Alliance without first obtaining shareholders approval
to utilize the powers granted under the Multi-Manager Order or the approval of
shareholders to materially modify the Investment Advisory Agreement.
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The table below shows the annual rate of the management fees (as a percentage of
each Portfolio's average daily net assets) that the Manager received in 1998 for
managing each of the Portfolios and the rate of the management fees waived by
the Manager in 1998 in accordance with the provisions of the Expense Limitation
Agreement, as defined directly below, between the Manager and the Trust.
MANAGEMENT FEES PAID BY THE PORTFOLIOS TO EQ FINANCIAL CONSULTANTS, INC. IN 1998
- --------------------------------------------------------------
ANNUAL RATE OF
RATE FEES
PORTFOLIOS RECEIVED WAIVED
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BT Equity 500 Index 0.00% 0.25%
Merrill Lynch World Strategy 0.26% 0.44%
MFS Research 0.35% 0.20%
T. Rowe Price Equity Income 0.36% 0.19%
Warburg Pincus Small Company 0.47% 0.18%
Value
- --------------------------------------------------------------
The three (3) Portfolios listed in the table below did not commence operations
during 1998. The table below shows the annual rate of the management fees (as a
percentage of each Portfolio's average daily net assets) that the Manager is
entitled to receive in 1999 for managing each of these Portfolios. As explained
in the next section, the Portfolios listed below (except for the Portfolios for
which Alliance serves as Investment Adviser) are subject to an expense
limitation agreement between the Trust and Manager, which affects the rate of
management fees to be received by the Manager on behalf of each Portfolio.
ANNUAL RATE OF MANAGEMENT FEES
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PORTFOLIOS ANNUAL RATE
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Alliance Conservative Investors(1) 0.48%
Alliance Global(1) 0.64%
Alliance Growth Investors(1) 0.51%
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1 The inception date for this Portfolio is October 18, 1999.
EXPENSE LIMITATION AGREEMENT
In the interest of limiting expenses of each Portfolio (except for the
Portfolios for which Alliance serves as Investment Adviser), the Manager has
entered into an expense limitation agreement with the Trust with respect to each
Portfolio ("Expense Limitation Agreement"). Pursuant to that Expense Limitation
Agreement, the Manager has agreed to waive or limit its fees and to assume other
expenses so that the total annual operating expenses of each Portfolio other
than interest, taxes, brokerage commissions, other expenditures which are
capitalized in accordance with generally accepted accounting principles, other
extraordinary expenses not incurred in the ordinary course of each Portfolio's
business and amounts payable pursuant to a plan adopted in accordance with Rule
12b-1 under the 1940 Act, are limited to the following rates:
EXPENSE LIMITATION RATES
- --------------------------------------------------------------
AMOUNT EXPENSES
LIMITED TO (% OF
PORTFOLIOS DAILY NET ASSETS)
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BT Equity 500 Index 0.30%
Merrill Lynch World Strategy 0.95%
MFS Research 0.60%
T. Rowe Price Equity Income 0.60%
Warburg Pincus Small Company Value 0.75%
- --------------------------------------------------------------
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.
--------------------- EQ Advisors Trust
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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 during any of the previous five (5) fiscal
years, 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 an Adviser that furnishes an investment program for the
Portfolio pursuant to an investment advisory agreement with the Manager. Each
Adviser makes investment decisions on behalf of the Portfolio, places all orders
for the purchase and sale of investments for the Portfolio's account with
brokers or dealers selected by such Adviser and may perform certain limited
related administrative functions in connection therewith.
The Manager has received an exemptive order, the Multi-Manager Order, from the
SEC that permits the Manager, subject to board approval and without the approval
of shareholders to: (a) employ a new Adviser or Advisers for any Portfolio
pursuant to the terms of a new Advisory Agreement, in each case either as a
replacement for an existing Adviser or as an additional Adviser; (b) change the
terms of any Advisory Agreement; and (c) continue the employment of an existing
Adviser on the same advisory contract terms where a contract has been assigned
because of a change in control of the Adviser. In such circumstances,
shareholders would receive notice of such action, including the information
concerning the Adviser that normally is provided in the Prospectus.
The Manager and certain non-affiliated insurance companies (collectively,
"Applicants") have filed a Substitution Application with the SEC. Applicants
have included, as a term of the Substitution Application, that with respect to
those Portfolios for which Alliance serves as Adviser, the Manager will not: (i)
terminate Alliance and select a new Adviser for those Portfolios or (ii)
materially modify the existing investment advisory agreement without first
either obtaining approval of shareholders for such actions or obtaining approval
of shareholders to utilize the Multi-Manager Order.
The Manager pays each Adviser a fee based on the Portfolio's average daily net
assets. No Portfolio is responsible for the fees paid to each of the Advisers.
THE ADMINISTRATOR
Pursuant to an agreement, Chase Global Funds Services Company ("Administrator")
assists the Manager in the performance of its administrative responsibilities to
the Trust and provides the Trust with other necessary administrative, fund
accounting and compliance services. In addition, the Administrator makes
available the office space, equipment, personnel and facilities required to
provide such services to the Trust. For these services, the Trust pays the
Administrator a monthly fee at the annual rate of .0525 of 1% of the total Trust
assets, plus $25,000 for each Portfolio, until the total Trust assets reach $2.0
billion, and when the total Trust assets exceed $2.0 billion: .0425 of 1% of the
next $0.5 billion of the total Trust assets; .035 of 1% of the next $2.0 billion
of the total Trust assets; .025 of 1% of the next $1.0 billion of the total
Trust assets; .015 of 1% of the next $2.5 billion of the total Trust assets; .01
of 1% of the total Trust assets in excess of $8.0 billion; provided, however,
that the annual fee payable to Chase with respect to any Portfolio which
commenced operations after July 1, 1997 and whose assets do not exceed $200
million shall be computed at the annual rate of .0525% of 1% of the Portfolio's
total assets plus $25,000.
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THE TRANSFER AGENT
Equitable serves as the transfer agent and dividend disbursing agent of the
Trust and receives no compensation for serving in such capacity.
BROKERAGE PRACTICES
In selecting brokers and dealers, the Manager and each Adviser may consider
research and brokerage services furnished to either company and their
affiliates. Subject to seeking the most favorable net price and execution
available, the Manager and each Adviser may also consider sales of shares of the
Trust as a factor in the selection of brokers and dealers.
BROKERAGE TRANSACTIONS WITH AFFILIATES
To the extent permitted by law, the Trust may engage in securities and other
transactions with entities that may be affiliated with the Manager or the
Advisers. The 1940 Act generally prohibits the Trust from engaging in principal
securities transactions with an affiliate of the Manager or Advisers unless
pursuant to an exemptive order from the SEC. For these purposes, however, the
Trust has considered this issue and believes, based upon advice of counsel, that
a broker-dealer affiliate of an Adviser to one Portfolio should not be treated
as an affiliate of the Adviser to another Portfolio for which such Adviser does
not provide investment advice. The Trust has adopted procedures that are
reasonably designed to provide that any commission it pays to affiliates of the
Manager or Advisers does not exceed the usual and customary broker's commission.
The Trust has also adopted procedures permitting it to purchase securities,
under certain restrictions prescribed by a rule under the 1940 Act, in a public
offering in which an affiliate of the Manager or Advisers is an underwriter.
-------------------- EQ Advisors Trust
<PAGE>
5 Fund distribution arrangements
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The Trust offers two classes of shares on behalf of each Portfolio: Class IA
shares and Class IB shares. EQ Financial Consultants, Inc. ("EQFC") serves as
one of the distributors for the Class IB shares of the Trust offered by this
Prospectus as well as one of the distributors for the Class IA shares. Equitable
Distributors, Inc. ("EDI") serves as the other distributor for the Class IB
shares of the Trust as well as the Class IA shares. Both classes of shares are
offered and redeemed at their net asset value without any sales load. EQFC and
EDI are affiliates of Equitable. Both EQFC and EDI are registered as
broker-dealers under the Securities Exchange Act of 1934 and are members of the
National Association of Securities Dealers, Inc.
The Trust has adopted a Distribution Plan under Rule 12b-1 under the 1940 Act
for the Trust's Class IB shares. Under the Class IB Distribution Plan the Class
IB shares of the Trust pay each of the distributors an annual fee to compensate
them for promoting, selling and servicing shares of the Portfolios. The annual
fees equal 0.25% of each Portfolio's average daily net assets. Over time, the
fees will increase your cost of investing and may cost you more than other types
of charges.
<PAGE>
6 Purchase and redemption
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The price at which a purchase or redemption is effected is based on the next
calculation of net asset value after an order is placed by an insurance company
or qualified retirement plan investing in or redeeming from the Trust.
Net asset value per share is calculated for purchases and redemption of shares
of each Portfolio by dividing the value of total Portfolio assets, less
liabilities (including Trust expenses and class related expenses, which are
accrued daily), by the total number of outstanding shares of that Portfolio. The
net asset value per share of each Portfolio is determined each business day at
4:00 p.m. Eastern time. Net asset value per share is not calculated on days on
which the New York Stock Exchange ("NYSE") is closed for trading.
Portfolios that invest a significant portion of their assets in foreign
securities, may experience changes in their net asset value on days when a
shareholder may not purchase or redeem shares of that Portfolio because foreign
securities (other than depositary receipts) are valued at the close of business
in the applicable foreign country.
All shares are purchased and redeemed in accordance with the Trust's Amended and
Restated Declaration of Trust and By-Laws. Sales and redemptions of shares of
the same class by the same shareholder on the same day will be netted for each
Portfolio. All redemption requests will be processed and payment with respect
thereto will normally be made within seven days after tenders.
The Trust may suspend redemption, if permitted by the 1940 Act, for any period
during which the New York Stock Exchange is closed or during which trading is
restricted by the SEC or the SEC declares that an emergency exists. Redemption
may also be suspended during other periods permitted by the SEC for the
protection of the Trust's shareholders. If the Board of Trustees determines that
it would be detrimental to the best interest of the Trust's remaining
shareholders to make payment in cash, the Trust may pay redemption proceeds in
whole or in part by a distribution-in-kind of readily marketable securities.
<PAGE>
7 How assets are valued
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Values are determined according to accepted practices and all laws and
regulations that apply. The assets of each Portfolio are generally valued as
follows:
o Stocks and debt securities which mature in more than 60 days are valued on
the basis of market quotations.
o Foreign securities not traded directly, or in American Depository Receipts or
similar form, in the United States are valued at representative quoted prices
in the currency in the country of origin. Foreign currency is converted into
United States dollar equivalents at current exchange rates. Because foreign
markets may be open at different times than the NYSE, the value of a
Portfolio's shares may change on days when shareholders are not able to buy
or sell them. If events materially affecting the values of the Portfolios'
foreign investments occur between the close of foreign markets and the close
of regular trading on the NYSE, these investments may be valued at their fair
value.
o Short-term debt securities in the Portfolios, which mature in 60 days or less
are valued at amortized cost, which approximates market value.
o Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided are valued in good faith
by the Valuation Committee of the Board of Trustees of the Trust using its
best judgment.
<PAGE>
8 Tax information
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Each Portfolio of the Trust is a separate regulated investment company for
federal income tax purposes. Regulated investment companies are usually not
taxed at the entity (Portfolio) level. They pass through their income and gains
to their shareholders by paying dividends. Their shareholders include this
income on their respective tax returns. A Portfolio will be treated as a
regulated investment company if it meets specified federal income tax rules,
including types of investments, limits on investments, calculation of income,
and dividend payment requirements. Although the Trust intends that it and each
Portfolio will be operated to have no federal tax liability, if they have any
federal tax liability, that could hurt the investment performance of the
Portfolio in question. Also, any Portfolio investing in foreign securities or
holding foreign currencies could be subject to foreign taxes which could reduce
the investment performance of the Portfolio.
It is important for each Portfolio to maintain its federal income tax regulated
investment company status because the shareholders of the Portfolio that are
insurance company separate accounts will then be able to use a favorable federal
income tax investment diversification testing rule in figuring out whether the
Contracts indirectly funded by the Portfolio meet tax qualification rules for
variable insurance contracts. If a Portfolio fails to meet specified investment
diversification requirements, owners of non-pension plan Contracts funded
through the Trust could be taxed immediately on the accumulated investment
earnings under their Contracts and could lose any benefit of tax deferral. The
Administrator and the Manager therefore carefully monitor compliance with all of
the regulated investment company rules and variable insurance contract
investment diversification rules.
<PAGE>
9 Prior performance of each adviser
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The following table provides information concerning the historical performance
of another registered investment company (or series) or other institutional
private accounts managed by each Adviser that has investment objectives,
policies, strategies and risks substantially similar to those of the respective
Portfolio(s) of the Trust for which it serves as Adviser. The data is provided
to illustrate the past performance of each Adviser in managing a substantially
similar investment vehicle as measured against specified market indices. This
data does not represent the past performance of any of the Portfolios or the
future performance of any Portfolio or its Adviser. Consequently, potential
investors should not consider this performance data as an indication of the
future performance of any Portfolio of the Trust or of its Adviser and should
not confuse this performance data with performance data for each of the Trust's
Portfolios, which is shown for each Portfolio under the caption "ABOUT THE
INVESTMENT PORTFOLIOS."
Each Adviser's performance data shown below for other registered investment
companies (or series thereof) was calculated in accordance with standards
prescribed by the SEC for the calculation of average annual total return
information for registered investment companies. Average annual total return
reflects changes in share prices and reinvestment of dividends and distributions
and is net of fund expenses. In each such instance, the share prices and
investment returns will fluctuate, reflecting market conditions as well as
changes in company-specific fundamentals of portfolio securities.
The performance results for the registered investment companies presented below
are 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."
<PAGE>
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ANNUAL RATES OF RETURN OF OTHER FUNDS OR ACCOUNTS MANAGED BY ADVISERS
AS OF 12/31/98
The name of the other fund or account managed by the Adviser is shown in BOLD.
The name of the Trust Portfolio is shown in (parentheses). The name of the
benchmark is shown in italics.
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
1 5
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Year Years
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Benchmark
- -----------------------------------------------------------------------------------------------------------------------------
BT INSTITUTIONAL FUNDS - EQUITY 500 INDEX FUND - INSTITUTIONAL CLASS (BT EQUITY 500 INDEX PORTFOLIO)
28.75% 24.05%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index3 28.57% 24.06%
- -----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND (MERRILL LYNCH WORLD
STRATEGY PORTFOLIO)
8.88% 8.49%
- -----------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index5 20.33% 9.50%
- -----------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH FUND2, 6 (MFS RESEARCH PORTFOLIO)
22.92% 20.65%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index3 28.57% 24.06%
- -----------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME FUND (T. ROWE PRICE EQUITY INCOME PORTFOLIO)
9.23% 18.75%
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index3 28.57% 24.06%
- -----------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE FUND1 (WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO)
(14.88)% N/A
- -----------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index4 ( 2.54)% N/A
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
10 Since Inception
OTHER FUND OR ACCOUNT MANAGED BY ADVISER (EQAT Portfolio) Years Inception Date
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Benchmark
- -----------------------------------------------------------------------------------------------------------------------------
BT INSTITUTIONAL FUNDS - EQUITY 500 INDEX FUND - INSTITUTIONAL CLASS (BT EQUITY 500 INDEX PORTFOLIO)
N/A 21.56% 12/31/92
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index3 N/A 21.61%
- -----------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH VARIABLE SERIES FUNDS, INC. - MERRILL LYNCH GLOBAL STRATEGY FOCUS FUND (MERRILL LYNCH WORLD
STRATEGY PORTFOLIO)
N/A 9.57% 2/28/92
- -----------------------------------------------------------------------------------------------------------------------------
MSCI EAFE Index5 N/A 9.98%
- -----------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH FUND2, 6 (MFS RESEARCH PORTFOLIO)
18.44% 10/13/71
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index3 19.21%
- -----------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME FUND (T. ROWE PRICE EQUITY INCOME PORTFOLIO)
15.18% 10/31/85
- -----------------------------------------------------------------------------------------------------------------------------
S&P 500 Index3 19.21%
- -----------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE FUND1 (WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO)
N/A 16.51% 12/29/95
- -----------------------------------------------------------------------------------------------------------------------------
Russell 2000 Index4 N/A 11.58%
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Absent the waiver of fees in 1998 by the Warburg Pincus Small Company Value
Fund's investment adviser and co-administrator, management fees of the
Warburg Pincus Small Company Value Fund would equal 1.00%, other expenses
would equal 0.94% and total operating expenses would equal 2.19%. The
investment adviser and co-administrator of the Warburg Pincus Small Company
Value Fund are under no obligation to continue these waivers.
2 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.
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,
Australia and the Far East. The returns of the EAFE Index assume dividends
are reinvested net of withholding tax and do not reflect any fees or
operating expenses. The index is not available for actual investment.
6 The results for the MFS Research Fund (Class A shares) and the MFS Emerging
Growth Fund (Class B shares) do not reflect sales charges that may be imposed
on the such shares.
------------------------- EQ Advisors Trust
<PAGE>
10 Financial Highlights
- -------
52
- --------------------------------------------------------------------------------
The financial highlights table is intended to help you understand the Trust's
financial performance since May 1, 1997. The Trust began to offer Class IA
shares for the T. Rowe Price Equity Income, and Warburg Pincus Small Company
Value Portfolios on November 24, 1998. Except for those two Portfolios, the
financial information in the table below for the period May 1, 1997 to December
31, 1998 relates only to the Class IB shares. The financial information relating
to both the Class IA shares and the Class IB shares has been derived from the
audited financial statements of the Trust. These financial statements have been
audited by PricewaterhouseCoopers LLP, independent public accountants.
PricewaterhouseCoopers LLP's report on the Trust's financial statements as of
December 31, 1998 appears in the Trust's Annual Report. The information should
be read in conjunction with the financial statements contained in the Trust's
Annual Report which are incorporated by reference into the Trust's Statement of
Additional Information (SAI) and available upon request.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
NET
REALIZED
AND
UNREALIZED
GAIN (LOSS)
NET ASSET ON
VALUE, INVESTMENTS
BEGINNING NET AND FOREIGN
OF INVESTMENT CURRENCY
PERIOD INCOME TRANSACTIONS
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 $ 10.00 $ 0.06 $ 2.45
- --------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- --------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 $ 10.31 $ 0.15 $ 0.55
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.08 $ 0.39
- --------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 $ 11.48 $ 0.04 $ 2.73
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ 10.00 $ 0.02 $ 1.58
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 12.08 $ 0.22 $ 0.87
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 10.00 $ 0.10 $ 2.11
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 13.22 $ 0.06 $ (0.09)+
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 11.85 $ 0.05 $ (1.24)
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 10.00 $ 0.01 $ 1.90
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 10.40 $ 0.03 $ 0.23+
- --------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------------
DIVIDENDS IN
DIVIDENDS EXCESS OF DISTRIBUTIONS
TOTAL FROM FROM NET NET FROM
INVESTMENT INVESTMENT INVESTMENT REALIZED
OPERATIONS INCOME INCOME GAINS
- -------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- -------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 2.51 $ (0.06) - -
- -------------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- -------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- -------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 0.70 $ (0.04) $ (0.04) -
- -------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 0.47 $ (0.05) - -
- -------------------------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- -------------------------------------------------------------------------------------------------
Dec. 31, 1998 $ 2.77 $ (0.04) - -
- -------------------------------------------------------------------------------------------------
Dec. 31, 1997 $ 1.60 $ (0.02) - $(0.01)
- -------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- -------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ 1.09 $ (0.22) - $(0.28)
- -------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 2.21 $ (0.09) - $(0.04)
- -------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ (0.03) $ (0.24) - $(0.28)
- -------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- -------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 $ (1.19) $ (0.04) - -
- -------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ 1.91 $ (0.01) - -
- -------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 $ 0.26 $ (0.06) - -
- -------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -------
53
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
DISTRIBUTIONS TOTAL NET ASSET
IN EXCESS OF DIVIDENDS AND VALUE, END OF
REALIZED GAINS DISTRIBUTIONS PERIOD
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.06) $ 12.45
- --------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- --------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.08) $ 10.93
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ (0.11) $ (0.16) $ 10.31
- --------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- --------------------------------------------------------------------------------
Dec. 31, 1998 - $ (0.04) $ 14.21
- --------------------------------------------------------------------------------
Dec. 31, 1997 $ (0.09) $ (0.12) $ 11.48
- --------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - $ (0.50) $ 12.67
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 - $ (0.13) $ 12.08
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - $ (0.52) $ 12.67
- --------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1998 - $ (0.05) $ 10.61
- --------------------------------------------------------------------------------
Class IB Dec. 31, 1997 $ (0.05) $ (0.06) $ 11.85
- --------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 - $ (0.07) $ 10.59
- --------------------------------------------------------------------------------
<CAPTION>
- -------------------------------------------------------------------------------------------
RATIO OF
EXPENSES TO
NET ASSETS, AVERAGE NET
TOTAL RETURN END OF PERIOD ASSETS AFTER
(B) (000'S) WAIVERS (A)(C)
- -------------------------------------------------------------------------------------------
<S> <C> <C> <C>
BT EQUITY 500 INDEX PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 25.14% $224,247 0.55%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 - - -
- -------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 6.81% $ 30,631 1.20%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 4.70% $ 18,210 1.20%
- -------------------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- -------------------------------------------------------------------------------------------
Dec. 31, 1998 24.11% $407,619 0.85%
- -------------------------------------------------------------------------------------------
Dec. 31, 1997 16.07% $114,754 0.85%
- -------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 9.11% $242,001 0.85%(1)
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 22.11% $ 99,947 0.85%(a)
- -------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 (2.21)%(b) $ 2,415 0.60%(a)(1)
- -------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 (10.02)% $166,746 1.00%(1)
- -------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 19.15% $120,880 1.00%(a)
- -------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 2.63%(b) $ 747 0.75%(a)(1)
- -------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -------
54
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------------
RATIO OF NET RATIO OF NET
RATIO OF EXPENSES TO INVESTMENT INCOME TO INVESTMENT INCOME TO
AVERAGE NET ASSETS AVERAGE NET ASSETS AVERAGE NET ASSETS PORTFOLIO
BEFORE WAIVERS (A)(C) AFTER WAIVERS (A)(C) BEFORE WAIVERS (A)(C) TURNOVER RATE
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
**BT EQUITY 500 INDEX PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 0.83% 1.22% 0.94% 2%
- --------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 - - - -
- --------------------------------------------------------------------------------------------------------------------------
MERRILL LYNCH WORLD STRATEGY PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.61% 1.63% 1.22% 115%
- --------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 3.05% 1.89% 0.04% 58%
- --------------------------------------------------------------------------------------------------------------------------
MFS RESEARCH PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1998 1.05 % 0.44% 0.24% 73%
- --------------------------------------------------------------------------------------------------------------------------
Dec. 31, 1997 1.78% 0.65% (0.28)% 51%
- --------------------------------------------------------------------------------------------------------------------------
T. ROWE PRICE EQUITY INCOME PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.04%(1) 2.20%(1) 2.01%(1) 17%
- --------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 1.74%(a) 2.49%(a) 1.60%(a) 9%
- --------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 0.79%(a)(1) 2.45%(a)(1) 2.26%(a)(1) 17%
- --------------------------------------------------------------------------------------------------------------------------
WARBURG PINCUS SMALL COMPANY VALUE PORTFOLIO
- --------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1998 1.17%(1) 0.47%(1) 0.30%(1) 111%
- --------------------------------------------------------------------------------------------------------------------------
Class IB Dec. 31, 1997 1.70%(a) 0.26%(a) (0.44)%(a) 44%
- --------------------------------------------------------------------------------------------------------------------------
Class IA Nov. 24-Dec. 31, 1998 0.92%(a)(1) 0.72%(a)(1) 0.55%(a)(1) 111%
- --------------------------------------------------------------------------------------------------------------------------
</TABLE>
** Commencement of operations for the BT Equity 500 Index Portfolio was
January 1, 1998.
+ The amount shown for a share outstanding throughout the period does not
accord with the aggregate net gains on investments for that period because
of the timing of sales and repurchases of the Portfolio shares in relation
to fluctuating market value of the investments of the Portfolio.
(a) Annualized.
(b) Total return calculated for a period of less than one year is not
annualized.
(c) For further information concerning fee waivers, see the section entitled
"Expense Limitation Agreement" in the Prospectus.
(1) Reflects overall fund ratios for investment income and non-class specific
expense.
<PAGE>
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(A)
- -------
55
- --------------------------------------------------------------------------------
The financial highlights table below is intended to help you understand the
financial performance for three (3) of the Portfolios that are advised by
Alliance for the past five (5) years (or, if shorter, the period of the
Portfolio's operations). The financial information relating to both the Class A
shares and the Class IB shares for those three (3) Portfolios has been derived
from the audited financial statements of HRT for the year ended December 31,
1998. The Class IA shares and the Class IB shares of each HRT Portfolio listed
below will be substituted for Class IA and Class IB shares of the corresponding
Portfolio of the Trust and the assets and liabilities of the respective HRT
Portfolio will be transferred to its corresponding Portfolio of the Trust on or
about October 18, 1999. These financial statements have been audited by
PricewaterhouseCoopers LLP, independent accountants. PricewaterhouseCoopers
LLP's report on HRT's financial statements as of December 31, 1998 appears in
HRT's Annual Report. The information should be read in conjunction with the
financial statements contained in HRT's Annual Report which are incorporated by
reference into the Trust's Statement of Additional Information (SAI) and
available upon request.
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 11.89 $ 11.29 $ 11.52 $ 10.15 $ 11.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.49 0.49 0.50 0.60 0.55
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 0.97 0.07 1.43 (1.00)
------- ------- ------- ------- -------
Total from investment operations .............. 1.61 1.46 0.57 2.03 (0.45)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.48) (0.49) (0.51) (0.59) (0.52)
Distributions from realized gains ............. (0.70) (0.37) (0.27) (0.07) -
Distributions in excess of realized gains ..... - - (0.02) - -
------- ------- ------- ------- -------
Total dividends and distributions ............. (1.18) (0.86) (0.80) (0.66) (0.52)
------- ------- ------- ------- -------
Net asset value, end of period .................. $ 12.32 $ 11.89 $ 11.29 $ 11.52 $ 10.15
======= ======= ======= ======= =======
Total return (c) ................................ 13.88% 13.25% 5.21% 20.40% (4.10)%
======= ======= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $355,441 $307,847 $282,402 $252,101 $173,691
Ratio of expenses to average net assets ......... 0.53% 0.57% 0.61% 0.59% 0.59%
Ratio of net investment income to average
net assets .................................... 3.99% 4.17% 4.48% 5.48% 5.22%
Portfolio turnover rate ......................... 103% 206% 181% 287% 228%
- -------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 11.88 $ 11.29
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.46 0.31
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 1.01
------- ---------
Total from investment operations .............. 1.58 1.32
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.45) (0.36)
Distributions from realized gains ............. (0.70) (0.37)
Distributions in excess of realized gains ..... - -
------- ---------
Total dividends and distributions ............. (1.15) (0.73)
------- ---------
Net asset value, end of period .................. $ 12.31 $ 11.88
======= =========
Total return (c) ................................ 13.60% 11.84%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $32,653 $ 5,694
Ratio of expenses to average net assets ......... 0.78% 0.80%(d)
Ratio of net investment income to average
net assets .................................... 3.68% 3.82%(d)
Portfolio turnover rate ......................... 103% 206%
- --------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -------
56
- --------------------------------------------------------------------------------
ALLIANCE GLOBAL PORTFOLIO:
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
CLASS IA
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 17.29 $ 16.92 $ 15.74 $ 13.87 $ 13.62
--------- --------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.14 0.17 0.21 0.26 0.20
Net realized and unrealized gain on
investments and foreign currency
transactions ................................. 3.56 1.75 2.05 2.32 0.52
--------- --------- ------- ------- -------
Total from investment operations .............. 3.70 1.92 2.26 2.58 0.72
--------- --------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.22) (0.36) (0.21) (0.25) (0.17)
Dividends in excess of net investment
income ....................................... - - (0.08) - -
Distributions from realized gains ............. (1.31) (1.19) (0.79) (0.42) (0.28)
Distributions in excess of realized gains ..... - - - (0.03) (0.00)
Tax return of capital distributions ........... - - (0.00) (0.01) (0.02)
---------- ---------- -------- -------- --------
Total dividends and distributions ............. (1.53) (1.55) (1.08) (0.71) (0.47)
---------- ---------- -------- -------- --------
Net asset value, end of period .................. $ 19.46 $ 17.29 $ 16.92 $ 15.74 $ 13.87
========= ========= ======= ======= =======
Total return (c) ................................ 21.80% 11.66% 14.60% 18.81% 5.23%
========= ========= ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $1,360,220 $1,203,867 $997,041 $686,140 $421,698
Ratio of expenses to average net assets ......... 0.71% 0.69% 0.60% 0.61% 0.69%
Ratio of net investment income to average
net assets .................................... 0.72% 0.97% 1.28% 1.76% 1.41%
Portfolio turnover rate ......................... 105% 57% 59% 67% 71%
- ----------------------------------------------------------------------------------------------------------------------
<CAPTION>
- --------------------------------------------------------------------------------------------
CLASS IB
----------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 17.27 $ 16.91 $ 16.57
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.08 0.12 0.02
Net realized and unrealized gain on
investments and foreign currency
transactions ................................. 3.56 1.76 0.81
------- ------- ---------
Total from investment operations .............. 3.64 1.88 0.83
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.19) (0.33) -
Dividends in excess of net investment
income ....................................... - - (0.11)
Distributions from realized gains ............. (1.31) (1.19) (0.10)
Distributions in excess of realized gains ..... - - (0.28)
Tax return of capital distributions ........... - - (0.00)
------- ------- ---------
Total dividends and distributions ............. (1.50) (1.52) (0.49)
------- ------- ---------
Net asset value, end of period .................. $ 19.41 $ 17.27 $ 16.91
======= ======= =========
Total return (c) ................................ 21.50% 11.38% 4.98%
======= ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $47,982 $21,520 $ 290
Ratio of expenses to average net assets ......... 0.96% 0.97% 0.86%(d)
Ratio of net investment income to average
net assets .................................... 0.41% 0.67% 0.48%(d)
Portfolio turnover rate ......................... 105% 57% 59%
- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- -------
57
- --------------------------------------------------------------------------------
ALLIANCE GROWTH INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
CLASS IA
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 18.55 $ 17.20 $ 17.68 $ 14.66 $ 15.61
--------- --------- --------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.41 0.41 0.40 0.57 0.50
Net realized and unrealized gain (loss) on
on investments and foreign currency
transactions ................................. 3.03 2.43 1.66 3.24 (0.98)
--------- --------- --------- ------- -------
Total from investment operations .............. 3.44 2.84 2.06 3.81 (0.48)
--------- --------- --------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.41) (0.46) (0.40) (0.54) (0.46)
Dividends in excess of net investment
income ....................................... - - (0.03) (0.01) (0.01)
Distributions from realized gains ............. (1.71) (1.03) (2.10) (0.24) -
Distributions in excess of realized gains ..... - - (0.01) - -
---------- ---------- ---------- -------- -------
Total dividends and distributions ............. (2.12) (1.49) (2.54) (0.79) (0.47)
---------- ---------- ---------- -------- -------
Net asset value, end of period .................. $ 19.87 $ 18.55 $ 17.20 $ 17.68 $ 14.66
========= ========= ========= ======= =======
Total return (c) ................................ 19.13% 16.87% 12.61% 26.37% (3.15)%
========= ========= ========= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $1,963,074 $1,630,389 $1,301,643 $896,134 $492,478
Ratio of expenses to average net assets ......... 0.55% 0.57% 0.57% 0.56% 0.59%
Ratio of net investment income to average
net assets .................................... 2.10% 2.18% 2.31% 3.43% 3.32%
Portfolio turnover rate ......................... 102% 121% 190% 107% 131%
- -------------------------------------------------------------------------------------------------------------------------
<CAPTION>
- -----------------------------------------------------------------------------------------------
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value, beginning of
period (b) .................................... $ 18.52 $ 17.19 $ 16.78
------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.36 0.36 0.07
Net realized and unrealized gain (loss) on
on investments and foreign currency
transactions ................................. 3.03 2.43 0.71
------- ------- ----------
Total from investment operations .............. 3.39 2.79 0.78
------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.36) (0.43) (0.02)
Dividends in excess of net investment
income ....................................... - - (0.09)
Distributions from realized gains ............. (1.71) (1.03) (0.02)
Distributions in excess of realized gains ..... - - (0.24)
------- ------- ----------
Total dividends and distributions ............. (2.07) (1.46) (0.37)
------- ------- ----------
Net asset value, end of period .................. $ 19.84 $ 18.52 $ 17.19
======= ======= ==========
Total return (c) ................................ 18.83% 16.58% 4.64%
======= ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............... $92,027 $35,730 $ 472
Ratio of expenses to average net assets ......... 0.80% 0.82% 0.84%(d)
Ratio of net investment income to average
net assets .................................... 1.85% 1.88% 1.69%(d)
Portfolio turnover rate ......................... 102% 121% 190%
- -----------------------------------------------------------------------------------------------
</TABLE>
------------------------- EQ Advisors Trust
<PAGE>
- -------
58
- --------------------------------------------------------------------------------
- ----------
(a) Net investment income and capital changes per share are based upon monthly
average shares outstanding.
(b) Date as of which funds were first allocated to the Portfolios are as
follows:
Class IA:
Alliance Global Portfolio--August 27, 1987
Alliance Conservative Investors Portfolio--October 2, 1989
Alliance Growth Investors Portfolio--October 2, 1989
Class IB:
Alliance Global and Alliance Growth Investors Portfolios--October 2, 1996.
Alliance Conservative Investors Portfolio--May 1, 1997.
(c) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized.
(d) Annualized.
<PAGE>
- -------
59
- --------------------------------------------------------------------------------
If you wish to know more, you will find additional information about the Trust
and its Portfolios in the following documents:
ANNUAL REPORTS
The Annual Report includes more information about the Trust's performance and is
available upon request free of charge. The reports usually include performance
information, a discussion of market conditions and the investment strategies
that affected the Portfolios' performance during the last fiscal year.
STATEMENT OF ADDITIONAL INFORMATION (SAI)
The SAI, dated August 30, 1999, is incorporated into this Prospectus by
reference and is available upon request free of charge by calling our toll free
number at 1-800-528-0204.
You may visit the SEC's website at www.sec.gov to view the SAI and other
information about the Trust. You can also review and copy information about the
Trust, including the SAI, at the SEC's Public Reference Room in Washington, D.C.
You may have to pay a duplicating fee. To find out more about the Public
Reference Room, call the SEC at 800-SEC-0330.
Investment Company Act File Number: 811-07953
<PAGE>
Investment option characteristics
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
ALLIANCE
ALLIANCE GROWTH AGGRESSIVE ALLIANCE ALLIANCE
EQUITY FUND EQUITY FUND BALANCED FUND GLOBAL FUND
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
D ESIGNED FOR Long term growth of Long term growth of Competitive return Long term growth of
(OBJECTIVE) capital capital through a capital
combination of
growth of capital
and current income
---------------------------------------------------------------------------------------------------------
INVESTS PRIMARILY IN Common stocks and Common stocks and Common stocks and Equity securities of
other equity-type other equity-type other equity-type non-United States
securities generally securities issued by securities, publicly as well as United
issued by large and medium and smaller traded debt States companies
intermediate-sized sized companies securities and
companies with strong growth money market
potential instruments -- mix
determined by
portfolio manager
---------------------------------------------------------------------------------------------------------
RISK TO PRINCIPAL Average for a Greatest risk of all Somewhat lower Just below average
growth fund Alliance Funds than the Growth for a growth fund
Equity Fund
---------------------------------------------------------------------------------------------------------
PRIMARY GROWTH Capital appreciation Capital appreciation Capital Capital appreciation
POTENTIAL THROUGH and reinvested appreciation,
dividends reinvested dividends
and interest
---------------------------------------------------------------------------------------------------------
INCOME GUARANTEE No No No No
---------------------------------------------------------------------------------------------------------
VOLATILITY OF RETURN Somewhat more Highly volatile Generally lower Somewhat more
volatile than the than pure equity volatile than the
S&P 500 funds, but degree S&P 500
may vary depending
on market
conditions
---------------------------------------------------------------------------------------------------------
TRANSFERS TO OTHER Permitted daily Permitted daily Permitted daily Permitted daily
OPTIONS
---------------------------------------------------------------------------------------------------------
WITHDRAWAL PENALTIES No No No No
---------------------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
<CAPTION>
ALLIANCE ALLIANCE WARBURG PINCUS
CONSERVATIVE GROWTH INVESTORS MFS RESEARCH SMALL COMPANY
INVESTORS FUND FUND FUND VALUE FUND
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESIGNED FOR High total return High total return Long term growth of Long term capital
(OBJECTIVE) without undue risk consistent with capital and future appreciation
to principal reasonable risk income
---------------------------------------------------------------------------------------------------------
INVESTS PRIMARILY IN A diversified mix of A diversified mix of Common stocks or Portfolio of equity
publicly-traded publicly-traded securities securities of small
securities. Asset mix securities. Asset mix convertible into capitalization
generally consists of generally consists of common stock of companies that are
30% equity and 30% fixed income companies that considered relatively
70% fixed income and 70% equity possess better than undervalued
securities but will securities but will average prospects
vary depending on vary depending on for long-term
market conditions. market conditions. growth
---------------------------------------------------------------------------------------------------------
RISK TO PRINCIPAL Lowest risk of all Below average for a Average for a fund Greater than the
equity options growth fund with moderate S&P 500
growth
---------------------------------------------------------------------------------------------------------
PRIMARY GROWTH Capital Capital Capital appreciation Long-term capital
POTENTIAL THROUGH appreciation, appreciation, and income appreciation with
reinvested dividends reinvested dividends current income
and interest and interest
---------------------------------------------------------------------------------------------------------
INCOME GUARANTEE No No No No
---------------------------------------------------------------------------------------------------------
VOLATILITY OF RETURN Very low volatility Somewhat less Generally equal to More volatile than
volatile than the S&P 500 the S&P 500
S&P 500
---------------------------------------------------------------------------------------------------------
TRANSFERS TO OTHER Permitted daily Permitted daily Permitted daily Permitted daily
OPTIONS
---------------------------------------------------------------------------------------------------------
WITHDRAWAL PENALTIES No No No No
---------------------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
---------------------------------------------------------------------------------------------------------
<CAPTION>
T. ROWE PRICE MERRILL LYNCH BT EQUITY
EQUITY INCOME WORLD STRATEGY 500 INDEX GUARANTEED
FUND FUND FUND RATE ACCOUNTS
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
DESIGNED FOR Substantial dividend High total Replicate, as closely Principal and
(OBJECTIVE) income and capital investment return as possible (before interest guaranteed
appreciation deduction of --
expenses) the total interest rates reflect
return of the S&P maturities
500 Index
---------------------------------------------------------------------------------------------------------
INVESTS PRIMARILY IN Dividend -- Portfolio of equity The BT Equity 500 Contributions
paying common and fixed income Index Portfolio credited with fixed
stocks of securities, including invests in a rate of interest until
established convertible statistically selected the maturity date
companies securities of U.S. sample of the 500
and foreign issuers stocks in the
S&P 500.
---------------------------------------------------------------------------------------------------------
RISK TO PRINCIPAL Lower risk than a Greater risk than a Approximately equal Equitable Life
fund focusing on domestic bond fund. to the S&P 500 guarantees principal
growth stocks, but Investing in foreign index and interest
greater risk than a securities involves
bond fund. special
considerations.
---------------------------------------------------------------------------------------------------------
PRIMARY GROWTH Dividend income Capital appreciation Capital appreciation Interest income
POTENTIAL THROUGH and capital and reinvested and reinvested
appreciation dividends dividends
---------------------------------------------------------------------------------------------------------
INCOME GUARANTEE No No No Yes--subject to
withdrawal
penalties
VOLATILITY OF RETURN Somewhat more Somewhat more Generally equal to Equitable Life
volatile than the volatile than the the S&P 500 Index guarantees interest
S&P 500 S&P 500. Investing rate until the
in foreign securities maturity date
involves special
considerations.
---------------------------------------------------------------------------------------------------------
TRANSFERS TO OTHER Permitted daily Permitted daily Permitted daily Permitted only at
OPTIONS Prior maturity
---------------------------------------------------------------------------------------------------------
WITHDRAWAL PENALTIES No No No Prior to maturity,
withdrawals may
not be permitted or
may be subject to
penalty
---------------------------------------------------------------------------------------------------------
[GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED] [GRAPHIC OMITTED]
---------------------------------------------------------------------------------------------------------
<CAPTION>
MONEY
MARKET
GUARANTEE
ACCOUNT
----------------------------------------------
<S> <C>
DESIGNED FOR Principal and
(OBJECTIVE) interest guaranteed
-- short term rates
----------------------------------------------
INVESTS PRIMARILY IN Contributions
credited with
guaranteed current
rate of interest
----------------------------------------------
RISK TO PRINCIPAL Equitable Life
guarantees principal
and interest
----------------------------------------------
PRIMARY GROWTH Interest income
----------------------------------------------
POTENTIAL THROUGH
INCOME GUARANTEE Yes
----------------------------------------------
VOLATILITY OF RETURN Equitable Life
guarantees monthly
interest rate
----------------------------------------------
TRANSFERS TO OTHER Permitted daily
OPTIONS
----------------------------------------------
WITHDRAWAL PENALTIES No
----------------------------------------------
[GRAPHIC OMITTED]
----------------------------------------------
</TABLE>
The Funds each have different investment objectives and policies that can affect
the returns of each Fund and the market and financial risks to which each is
subject. The Funds involve a greater potential for growth but involve risks that
are not present with the Guaranteed Options. There is no assurance that any of
the investment objectives of the Funds will be achieved or that the risk to
principal or volatility of return will be as indicated.
<PAGE>
About Equitable Life
- --------------------------------------------------------------------------------
The Equitable Life Assurance Society of the United States ("Equitable Life") is
the issuer of a group annuity contract that funds the Program. Equitable Life
also makes forms of plans and trusts available, and offers recordkeeping and
participant services to facilitate the operation of the Program.
Equitable Life is a New York stock life insurance corporation and has been doing
business since 1859. Equitable Life is a wholly-owned subsidiary of AXA
Financial, Inc. The majority shareholder of AXA Financial, Inc. is AXA, a French
insurance holding company. As a majority shareholder, and under its other
arrangements with Equitable Life's parent, AXA exercises significant influence
over the operations and capital structure of Equitable Life and its parent.
Equitable Life's related companies, however, have no legal responsibility to pay
amounts that Equitable Life owes under the Certificates.
AXA Financial, Inc. and its consolidated subsidiaries managed approximately
$390.8 billion in assets as of June 30, 1999. For over 100 years Equitable Life
has been among the largest insurance companies in the United States. We are
licensed to sell life insurance and annuities in all fifty states, the District
of Columbia, Puerto Rico, and the U.S. Virgin Islands. Our home office is
located at 1290 Avenue of the Americas, New York, NY 10104.
<PAGE>
- --------------------------------------------------------------------------------
HOW TO REACH US.
You can reach us as indicated below to obtain:
o Copies of any plans, trusts, participation agreements, or enrollment or
other forms used in the Program.
o Unit values and other values under your plan,
o Any other information or materials that we provide in connection with the
Program.
Information on Joining the Program
BY PHONE:
1-800-523-1125 (Retirement Program Specialists available weekdays 9 AM to 5 PM
Eastern Time)
BY REGULAR MAIL:
The Members Retirement Program
c/o Equitable Life
Box 2011
Secaucus, NJ 07096
BY REGISTERED, CERTIFIED, OR OVERNIGHT DELIVERY:
The Members Retirement Program
c/o Equitable Life
200 Plaza Drive, Second Floor
Secaucus, NJ 07094
NO PERSON IS AUTHORIZED BY THE EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED
STATES TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS AND THE SAI, OR IN OTHER PRINTED OR WRITTEN
MATERIAL ISSUED BY EQUITABLE LIFE. YOU SHOULD NOT RELY ON ANY OTHER INFORMATION
OR REPRESENTATION.
Information Once You Join the Program
BY PHONE:
1-800-526-2701 (Account Executives available weekdays 9 AM to 5 PM Eastern
Time).
TOLL-FREE AIM SYSTEM:
By calling 1-800-526-2701 you may, with your assigned personal security code,
use our Automated Investment Management ("AIM") System to:
o Transfer between investment options and obtain account information.
o Change the allocation of future contributions and maturing guaranteed
options.
o Hear investment performance information, including investment fund unit
values and current guaranteed option interest rates.
The AIM System operates 24 hours a day. You may speak with our Account
Executives during regular business hours about any matters covered by the AIM
System.
BY REGULAR MAIL:
(correspondence):
The Members Retirement Program
Box 2468 G.P.O.
New York, NY 10116
FOR CONTRIBUTION CHECKS ONLY:
The Members Retirement Program
P.O. Box 1599
Newark, NJ 07101-9764
FOR REGISTERED, CERTIFIED, OR OVERNIGHT DELIVERY:
The Members Retirement Program
c/o Equitable Life
200 Plaza Drive, 2B-55
Secaucus, NJ 07094
