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Filed Pursuant to Rule 497(e)
Registration File No.: 2-94996
THE HUDSON RIVER TRUST
1345 Avenue of the Americas -- New York, New York 10105
STATEMENT OF ADDITIONAL INFORMATION
MAY 1, 1998
(AS AMENDED JULY 1, 1998)
This Statement of Additional Information is not a prospectus. It should be read
in conjunction with The Hudson River Trust ("Trust") Prospectus dated May 1,
1998 relating to Class IB shares and retained for future reference. This
Statement of Additional Information relates to the Trust's Class IB shares. A
separate Statement of Additional Information relates to the Trust's Class IA
shares.
A copy of the Prospectus to which this Statement of Additional Information
relates is available at no charge by writing the Trust at the above address.
TABLE OF CONTENTS
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General Information and History ..................................... 2
Investment Restrictions of the Portfolios ........................... 4
Description of Certain Securities in Which the Portfolios May Invest 7
Management of the Trust ............................................. 20
Investment Advisory and Other Services .............................. 25
Brokerage Allocation ................................................ 27
Trust Expenses and Other Charges .................................... 29
Purchase and Pricing of Securities .................................. 29
Certain Tax Considerations .......................................... 31
Portfolio Performance ............................................... 32
Other Services ...................................................... 35
Financial Statements ................................................ 39
Appendix A--Description of Commercial Paper Ratings ................. A-1
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HRT-SAI (5/98) Copyright 1998. The Hudson River Trust. All rights reserved.
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GENERAL INFORMATION AND HISTORY
THE TRUST
The Hudson River Trust is an open-end management investment company--a type of
company commonly known as a "mutual fund." It is registered as such under the
Investment Company Act of 1940, as amended ("Investment Company Act").
Originally organized as a Maryland corporation, the Trust's operations
commenced on March 22, 1985. On July 10, 1987, the Trust was reorganized as a
Massachusetts business trust. Shares of each Portfolio are divided into two
classes: Class IA shares and Class IB shares. Class IA shares are offered at
net asset value pursuant to a separate Statement of Additional Information and
a related prospectus and are not subject to fees imposed under any distribution
plan. Class IB shares are offered at net asset pursuant to this Statement of
Additional Information and a related prospectus and are subject to distribution
fees imposed under a distribution plan (the "Distribution Plan") adopted
pursuant to Rule 12b-1 under the Investment Company Act. Prior to October 1,
1996, the Trust offered only Class IA shares.
The two classes of shares are offered under the Trust's multiple class
distribution system approved by the Trust's Board of Trustees on June 7, 1996
and are designed to allow promotion of insurance products that invest in the
Trust through alternative distribution channels. Under the Trust's multi-class
system, shares of each class of a Portfolio represent an equal pro rata
interest in the assets of that Portfolio and, generally, have identical voting,
dividend, liquidation, and other rights, other than with respect to the payment
of distribution fees under the Distribution Plan.
The Trust continuously offers its shares exclusively to separate accounts of
insurance companies in connection with variable life insurance contracts and
variable annuity certificates and contracts (collectively, "Contracts"). Class
IB shares are sold only to an insurance company separate account of The
Equitable Life Assurance Society of the United States ("Equitable"). Currently,
the Trust's shareholders of Class IA shares are a separate account of
Equitable, a separate account of Integrity Life Insurance Company, a separate
account of American Franklin Life Insurance Company, a separate account of
Transamerica Occidental Life Insurance Company and a separate account of SAFECO
Life Insurance Company, all of which are insurance companies unaffiliated with
Equitable. The Trust may offer its shares to separate accounts of other
insurance companies, regardless of whether they are affiliated with Equitable.
As of March 31, 1998, Equitable owned approximately 99.7% of the Trust's
outstanding Class IA shares and all of the Trust's outstanding class IB shares
and, as a result, may be deemed to control the Trust.
As a "series" investment company, the Trust issues separate series of shares of
beneficial interest, each of which represents a separate portfolio
("Portfolio") of investments. Each Portfolio resembles a separate fund issuing
a separate class of stock. The Alliance Common Stock and Alliance Money Market
Portfolios are the successors to Separate Accounts I and II of Equitable
Variable Life Insurance Company, formerly a wholly owned subsidiary of
Equitable that was merged into Equitable as of January 1, 1997 ("Equitable
Variable"). (See "Description of Reorganization and Other Matters.") The
Alliance Balanced and Alliance Aggressive Stock Portfolios received their
initial funding on January 27, 1986 from Equitable Variable. The Alliance High
Yield Portfolio received its initial funding on January 2, 1987. The Alliance
Global Portfolio received its initial funding on August 27, 1987. The Alliance
Conservative Investors and Alliance Growth Investors Portfolios received their
initial funding on October 2, 1989. The Alliance Intermediate Government
Securities Portfolio received its initial funding on April 1, 1991. The
Alliance Quality Bond and Alliance Growth and Income Portfolios received their
initial funding on October 1, 1993. The Alliance Equity Index Portfolio
received its initial funding on March 1, 1994. The Alliance International
Portfolio received its initial funding on April 3, 1995. The Alliance Small Cap
Portfolio received its initial funding on May 1, 1997.
Because of current Federal securities law requirements, the Trust expects that
its shareholders will offer to owners of the Contracts ("Contractowners") the
opportunity to instruct them as to how shares allocable to their Contracts will
be voted with respect to certain matters, such as approval of investment
advisory agreements. As of March 31, 1998, to the Trust's knowledge, no
Contractowners other than those set forth below owned Contracts entitling such
persons to give voting instructions regarding more than 5% of either class of
the outstanding shares of a Portfolio.
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CLASS IA
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ALLIANCE INTERMEDIATE
ALLIANCE QUALITY ALLIANCE GLOBAL GOVERNMENT SECURITIES
BOND PORTFOLIO PORTFOLIO PORTFOLIO
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UNITS % OF UNITS % OF UNITS % OF
OWNED PORTFOLIO OWNED PORTFOLIO OWNED PORTFOLIO
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Boston Safe Deposit and Trust Co.* ......... 11,980,306 53.1
Equitable Realty Assets Corp. .............. 3,890,112 5.5
PNC Bank, N.A.** ........................... 860,079 6.0
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* Boston Safe Deposit and Trust Co., successor Trustee and Master Trust
Agreement for SBC Communications, Inc.'s Deferred Compensation Plans and
Other Executive Benefit Plans.
** PNC Bank, N.A. under Ashland Inc. Executive and Director Retirement Benefit
Security Trust.
The principal addresses of Boston Safe Deposit and Trust Co., Equitable Realty
Assets Corp. and PNC Bank, N.A. are 175 East Houston Street, San Antonio,
Texas, 9000 Central Park Avenue, Atlanta, Georgia, and 1000 Ashland Drive,
Ashland, Kentucky, respectively.
Were such a substantial Contractowner's funds withdrawn from the Trust or
transferred to a different Portfolio at the Contractowner's request, the Trust
could be forced to sell portfolio securities at disadvantageous prices.
LEGAL CONSIDERATIONS
Under Massachusetts law, annual election of Trustees is not required, and, in
the normal course, the Trust does not expect to hold annual meetings of
shareholders. There will normally be no meetings of shareholders for the
purpose of electing Trustees unless and until such time as less than a majority
of the Trustees holding office have been elected by shareholders, at which time
the Trustees then in office will call a shareholders' meeting for the election
of Trustees. The Trust has agreed to be bound by the procedures set forth in
Section 16(c) of the Investment Company Act, and accordingly, shareholders of
record of not less than two-thirds of the outstanding shares of the Trust
(including both Class IA and Class IB shares) may remove a Trustee by a vote
cast in person or by proxy at a meeting called for that purpose.
Except as set forth above, the Trustees shall continue to hold office and may
appoint successor Trustees. Voting rights are not cumulative, so that the
holders of more than 50% of the shares voting in the election of Trustees can,
if they choose to do so, elect all the Trustees of the Trust, in which event
the holders of the remaining shares will be unable to elect any person as a
Trustee. Amendments to the Declaration of Trust of the Trust generally require
the affirmative vote of a majority of the outstanding shares of the Trust.
The shares of each Portfolio, when issued, will be fully paid and
non-assessable by the Trust and will have no preference, preemptive,
conversion, exchange or similar rights.
Under Massachusetts law, in certain circumstances shareholders may be held
personally liable as partners for the obligations of a business trust such as
the Trust. The shareholders of the Trust are the insurance companies whose
separate accounts invest in it. The Trust's Declaration of Trust contains
provisions designed to protect shareholders from such liability to the extent
of the Trust's assets. As a result, the risk of personal liability for the
insurance company shareholders is remote.
The Declaration of Trust further provides that the Trustees will not be liable
for errors of judgment or mistakes of fact or law, but nothing in the
Declaration of Trust protects a Trustee against any liability to which he or
she would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the conduct of
his or her office. The Declaration of Trust permits the Trust to purchase and
maintain on behalf of the Trustees insurance against certain liabilities.
DESCRIPTION OF REORGANIZATION AND OTHER MATTERS
The following transactions, referred to as the Reorganization, were effected
simultaneously on March 22, 1985, pursuant to an Agreement and Plan of
Reorganization dated November 20, 1984, entered into by Equitable Variable,
Separate Accounts I and II, and The Hudson River Fund, Inc. (the "Fund"), the
predecessor of the Trust.
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Equitable Variable divided Separate Account I into two divisions, a Common
Stock Division and a Money Market Division. Separate Account II was combined
with Separate Account I (the "Continuing Separate Account"). Rather than
investing directly, the Common Stock Division and the Money Market Division of
the Continuing Separate Account invested in shares of the Fund, which, in turn,
invested in diversified portfolios of common stock or money market investments.
In order for the Fund to commence operations, all the investment assets of
Separate Accounts I and II (together with any related liabilities) were
transferred to the Common Stock and Money Market Portfolios of the Fund,
respectively, in exchange for shares in those Portfolios having an equivalent
aggregate net asset value.
On September 30, 1987, all of the Fund's assets and liabilities were
transferred to the Trust, pursuant to an Agreement and Plan of Reorganization
(the "Plan") between the Fund and the Trust. The Plan was proposed to
shareholders in order to permit greater operating flexibility and efficiencies.
The Plan provided for changes of domicile (from Maryland to Massachusetts) and
of form of organization (from a corporation to a business trust). However, in
all other material respects the Trust was identical to the Fund immediately
prior to the execution of the Plan.
At a meeting held on April 9, 1997, the shareholders of the Trust approved the
amendment and restatement of the Trust's Agreement and Declaration of Trust. On
April 16, 1997 the Agreement and Declaration of Trust was amended and restated,
and filed with the office of the Secretary of the Commonwealth of
Massachusetts.
INVESTMENT RESTRICTIONS OF THE PORTFOLIOS
FUNDAMENTAL RESTRICTIONS
The following restrictions apply to all of the Portfolios and are fundamental.
Unless permitted by law, they will not be changed for any Portfolio without a
vote of that Portfolio's shareholders.
None of the Portfolios will:
o underwrite securities issued by other persons except to the extent
that, in connection with the disposition of its portfolio investments,
it may be deemed to be an underwriter under certain Federal securities
laws;
o make short sales of securities, except when it has, by reason of
ownership of other securities, the right to obtain securities of
equivalent kind and amount that will be held so long as it is in a
short position;
o issue senior securities;
o purchase real estate or mortgages; however, the Portfolios may, as
appropriate and consistent with their investment policies and other
investment restrictions, buy securities of issuers which engage in
real estate operations and securities which are secured by interests
in real estate (including partnership interests and shares of real
estate investment trusts), and may hold and sell real estate acquired
as a result of ownership of such securities;
o purchase any security on margin or borrow money, except that this
restriction shall not apply to borrowing from banks for temporary
purposes, to the pledging of assets to banks in order to transfer
funds for various purposes as required without interfering with the
orderly liquidation of securities in a Portfolio (but not for
leveraging purposes), to margin payments or pledges in connection with
options, futures contracts, options on futures contracts, forward
contracts or options on foreign currencies or, with respect to the
Alliance Quality Bond Portfolio, to transactions in interest rate
swaps, caps and floors; or
o make loans (including lending cash or securities), except that this
restriction shall not apply to the Alliance High Yield and Alliance
Intermediate Government Securities Portfolios. Additionally, each of
the other Portfolios may make loans of portfolio securities not
exceeding 50% of the value of that Portfolio's total assets. This
restriction does not prevent a Portfolio from purchasing debt
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obligations in which a Portfolio may invest consistent with its
investment policies, or from buying government obligations, short-term
commercial paper, or publicly-traded debt, including bonds, notes,
debentures, certificates of deposit, and equipment trust certificates,
nor does this restriction apply to loans made under insurance policies
or through entry into repurchase agreements to the extent they may be
viewed as loans.
Each Portfolio, except as noted below, elects not to "concentrate" investments
in an industry, as that concept is defined under applicable Federal securities
laws. In general, this means that no Portfolio will make an investment in an
industry if that investment would make the Portfolio's holdings in that
industry exceed 25% of the Portfolio's assets. However, this restriction does
not apply to investments by the Alliance Money Market Portfolio in certificates
of deposit or securities issued and guaranteed by domestic banks. Furthermore,
the U.S. Government, its agencies and instrumentalities are not considered
members of any industry. Each Portfolio intends to be "diversified," as that
term is defined under the Investment Company Act. In general, this means that
no Portfolio will make an investment unless, when considering all its other
investments, 75% of the value of the Portfolio's assets would consist of cash,
cash items, U.S. Government securities, securities of other investment
companies and other securities. For the purposes of this restriction, "other
securities" are limited for any one issuer to not more than 5% of the value of
the Portfolio's total assets and to not more than 10% of the issuer's
outstanding voting securities. As a matter of operating policy, each Portfolio
will not consider repurchase agreements to be subject to the above-stated 5%
limitation if the collateral underlying the repurchase agreements consists
exclusively of U.S. Government securities and such repurchase agreements are
fully collateralized.
Further, as a matter of operating policy, the Alliance Money Market Portfolio
will invest no more than 5% of the value of its total assets in securities of
any one issuer, other than U.S. Government securities, except that the Alliance
Money Market Portfolio may invest up to 25% of its total assets in First Tier
Securities (as defined in Rule 2a-7 under the Investment Company Act) of a
single issuer for a period of up to three business days after the purchase of
such security. Further, as a matter of operating policy, the Alliance Money
Market Portfolio will not invest more than (i) the greater of 1% of its total
assets or $1,000,000 in Second Tier Securities (as defined in Rule 2a-7 under
the Investment Company Act) of a single issuer and (ii) 5% of its total assets,
at the time a Second Tier Security is acquired, in Second Tier Securities.
These policies of the Portfolios with respect to concentration and
diversification will not be changed for any Portfolio without a vote of that
Portfolio's shareholders, unless permitted by law.
NON-FUNDAMENTAL RESTRICTIONS
The following investment restrictions apply to all of the Portfolios, but are
not fundamental. They may be changed for any Portfolio without a vote of that
Portfolio's shareholders.
None of the Portfolios will:
o invest more than 15% of its net assets in securities restricted as to
disposition under Federal securities laws, or securities otherwise
considered illiquid or not readily marketable, including repurchase
agreements having a maturity of more than seven days; however, this
restriction will not apply to securities sold pursuant to Rule 144A
under the Securities Act of 1933, so long as such securities meet
liquidity guidelines to be established by the Trust's Board of
Trustees;
o trade in foreign exchange (except transactions incidental to the
settlement of purchases or sales of securities for a Portfolio);
however, the Alliance Global and Alliance International Portfolios may
trade in foreign exchange without limitation in connection with their
foreign currency hedging strategies; and the Alliance High Yield,
Alliance Quality Bond, Alliance Growth and Income, Alliance
Conservative Investors, Alliance Balanced, Alliance Common Stock,
Alliance Aggressive Stock, Alliance Growth Investors and Alliance
Small Cap Growth Portfolios may trade in foreign exchange in
connection with their foreign currency hedging strategies, provided
the amount of foreign exchange underlying such a Portfolio's currency
hedging transactions does not exceed 10% of such Portfolio's assets;
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o acquire securities of any company that is a securities broker or
dealer, a securities underwriter, an investment adviser of an
investment company, or an investment adviser registered under the
Investment Advisers Act of 1940 (other than any such company that
derives no more than 15% of its gross revenues from securities related
activities), except that the Portfolios (other than the Alliance Money
Market Portfolio) may purchase bank, trust company, and bank holding
company stock, and except that each of the Portfolios may invest, in
accordance with Rule 12d3-1 under the Investment Company Act, up to 5%
of its total assets in any such company provided that it owns no more
than 5% of the outstanding equity securities of any class plus 10% of
the outstanding debt securities of such company; or
o make an investment in order to exercise control or management over a
company.
In addition, none of the Portfolios will invest more than 5% of its assets in
the securities of any one investment company, own more than 3% of any one
investment company's outstanding voting securities, or have total holdings of
investment company securities in excess of 10% of the value of the Portfolio's
assets.
ADDITIONAL INVESTMENT RESTRICTION APPLICABLE TO THE ALLIANCE COMMON STOCK,
ALLIANCE BALANCED, ALLIANCE AGGRESSIVE STOCK AND ALLIANCE CONSERVATIVE
INVESTORS PORTFOLIOS
The Alliance Common Stock, Alliance Balanced, Alliance Aggressive Stock and
Alliance Conservative Investors Portfolios will operate under the general
investment restrictions described above. In addition, they will not:
o acquire securities of investment companies not registered under the
Investment Company Act.
ADDITIONAL INVESTMENT RESTRICTIONS APPLICABLE TO THE ALLIANCE MONEY MARKET
PORTFOLIO
The Alliance Money Market Portfolio will operate under the general investment
restrictions described above. In addition, it will not:
o invest more than 10% of its assets in securities restricted as to
disposition under Federal securities laws, or securities otherwise
considered illiquid or not readily marketable, including repurchase
agreements having a maturity of more than seven days; however, this
restriction will not apply to securities sold pursuant to Rule 144A
under the Securities Act of 1933, so long as such securities meet
liquidity guidelines to be established by the Trust's Board of
Trustees;
o purchase oil and gas interests;
o purchase or write puts or calls (options); or
o purchase equity securities, voting securities other than securities of
registered investment companies with investment policies not
substantially broader than those of the Portfolio (subject to the
above percentage limitations) or local or state government securities.
The Alliance Money Market Portfolio will invest only in funds whose investment
policies are similar to or narrower than those of the Portfolio. It is expected
that such investments would be made in funds designed for institutional
investors such as the Portfolio and would be used for amounts which might
otherwise be left uninvested because they do not meet the minimums necessary
for other permitted investments or to take advantage of higher yields available
at that time in such funds.
ADDITIONAL INVESTMENT RESTRICTION APPLICABLE TO THE ALLIANCE HIGH YIELD AND
ALLIANCE GROWTH INVESTORS PORTFOLIOS
The Alliance High Yield and Alliance Growth Investors Portfolios will operate
under the general investment restrictions described above. In addition, each
will not:
o invest more than 10% of its total assets in (i) fixed income
securities which are rated lower than B3 by Moody's Investors Service,
Inc. ("Moody's") or B- by Standard & Poor's ("S&P") or are unrated,
and (ii) money market instruments of any entity which has an
outstanding issue of
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unsecured debt that is rated lower than B3 by Moody's or B- by S&P, or
is unrated; however this restriction will not apply to (A) fixed
income securities which, in the opinion of the Trust's investment
adviser, have similar characteristics to securities which are rated B3
or higher by Moody's or B- or higher by S&P, or (B) money market
instruments of any entity that has an unsecured issue of outstanding
debt which, in the opinion of the Trust's investment adviser, has
similar characteristics to securities which are so rated.
DESCRIPTION OF CERTAIN SECURITIES IN WHICH THE PORTFOLIOS MAY INVEST
REPURCHASE AGREEMENTS
All of the Portfolios, except the Alliance Equity Index Portfolio, may enter
into repurchase agreements. Under a repurchase agreement, underlying debt
instruments are acquired for a relatively short period (usually not more than
one week and never more than a year) subject to an obligation of the seller to
repurchase and the Portfolio to resell the debt instruments at a fixed price
and time, thereby determining the yield during the Portfolio's holding period.
Repurchase agreements may exhibit the characteristics of loans by the
Portfolio. During the term of the repurchase agreement, the Portfolio retains
the security subject to the repurchase agreement as collateral securing the
seller's repurchase obligation, continually monitors on a daily basis the
market value of the security subject to the agreement and requires the seller
to deposit with the Portfolio collateral equal to any amount by which the
market value of the security subject to the repurchase agreement falls below
the resale amount provided under the repurchase agreement. A Portfolio enters
into repurchase agreements with respect to U.S. Government obligations,
certificates of deposit, or bankers' acceptances with registered
broker-dealers, U.S. Government securities dealers or domestic banks whose
creditworthiness is determined to be satisfactory by the Trust's investment
adviser, Alliance Capital Management L.P. ("Alliance"), pursuant to guidelines
adopted by the Board of Trustees. Generally, a Portfolio does not invest in
repurchase agreements maturing in more than seven days. The staff of the
Securities and Exchange Commission ("SEC") currently takes the position that
repurchase agreements maturing in more than seven days are illiquid securities.
No Portfolio will enter into a repurchase agreement maturing in more than seven
days if as a result more than 15% (10%, in the case of the Alliance Money
Market Portfolio) of the Portfolio's net assets would be invested in "illiquid
securities."
If a seller under a repurchase agreement were to default on the agreement and
be unable to repurchase the security subject to the agreement, the Portfolio
would look to the collateral underlying the seller's repurchase agreement,
including the security subject to the repurchase agreement, for satisfaction of
the seller's obligation to the Portfolio. In the event a repurchase agreement
is considered a loan and the seller defaults, the Portfolio might incur a loss
if the value of the collateral declines and may incur disposition costs in
liquidating the collateral. In addition, if bankruptcy proceedings are
commenced with respect to the seller, realization on the collateral may be
delayed or limited and a loss may be incurred.
FORWARD COMMITMENTS AND WHEN-ISSUED AND DELAYED DELIVERY SECURITIES
The Portfolios may enter into forward commitments for the purchase or sale of
securities and may purchase or sell securities on a "when-issued" or "delayed
delivery" basis. Forward commitments and when-issued or delayed delivery
transactions arise when securities are purchased by a Portfolio with payment
and delivery taking place in the future in order to secure what Alliance
considers to be an advantageous price or yield to the Portfolio at the time of
entering into the transaction. However, the price of or yield on a comparable
security available when delivery takes place may vary from the price of or
yield on the security at the time that the forward commitment or when-issued or
delayed delivery transaction was entered into. Agreements for such purchases
might be entered into, for example, when a Portfolio anticipates a decline in
interest rates and is able to obtain a more advantageous price or yield by
committing currently to purchase securities to be issued later. When a
Portfolio purchases securities on a forward commitment, when-issued or delayed
delivery basis, it does not pay for the securities until they are received, and
the Portfolio is required to create a segregated account with the Trust's
custodian and to maintain in that account liquid assets in an amount equal to
or greater than, on a daily basis, the amount of the Portfolio's forward
commitments, when-issued or delayed delivery commitments.
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A Portfolio will only enter into forward commitments and make commitments to
purchase securities on a when-issued or delayed delivery basis with the
intention of actually acquiring the securities. However, the Portfolio may sell
these securities before the settlement date if it is deemed advisable as a
matter of investment strategy. Forward commitments and when-issued and delayed
delivery transactions are generally expected to settle within three months from
the date the transactions are entered into, although a Portfolio may close out
its position prior to the settlement date by entering into a matching sale
transaction.
Although none of the Portfolios intends to make such purchases for speculative
purposes, purchases of securities on such bases may involve more risk than
other types of purchases. For example, by committing to purchase securities in
the future, a Portfolio subjects itself to a risk of loss on such commitments
as well as on its portfolio securities. Also, a Portfolio may have to sell
assets have been set aside in order to meet redemptions. In addition, if a
Portfolio determines it is advisable as a matter of investment strategy to sell
the forward commitment or when-issued or delayed delivery securities before
delivery, that Portfolio may incur a gain or loss because of market
fluctuations since the time the commitment to purchase such securities was
made. Any such gain or loss would be treated as a capital gain or loss and
would be treated for tax purposes as such. When the time comes to pay for the
securities to be purchased under a forward commitment or on a when-issued or
delayed delivery basis, a Portfolio will meet its obligations from the then
available cash flow or the sale of securities, or, although it would not
normally expect to do so, from the sale of the forward commitment or
when-issued or delayed delivery securities themselves (which may have a value
greater or less than a Portfolio's payment obligation).
WARRANTS
All the Portfolios, except the Alliance Money Market Portfolio, may purchase
warrants and similar rights, which are rights to purchase securities at
specific prices valid for a specific period of time. Their prices do not
necessarily move in parallel with the prices of the underlying securities, and
warrantholders receive no dividends and have no voting rights or rights with
respect to the assets of an issuer. Warrants cease to have value if not
exercised prior to the expiration date.
FOREIGN SECURITIES
Each Portfolio, except the Alliance Intermediate Government Securities and
Alliance Equity Index Portfolios, may invest in foreign securities. Each of the
Alliance Common Stock, Alliance Balanced, Alliance Quality Bond, Alliance
Aggressive Stock and Alliance Small Cap Growth Portfolios has the discretion to
invest a portion of its assets in foreign securities. Generally, this amount
will not exceed 20% of each Portfolio's total assets. The Alliance Money Market
Portfolio may invest up to 20% of its assets in foreign money market
instruments denominated in U.S. dollars. The Alliance Conservative Investors
Portfolio may invest up to 15% of its assets in foreign securities, the
Alliance Growth Investors Portfolio may invest up to 30% of its assets in
foreign securities, and the Alliance Growth and Income Portfolio may invest up
to 25% of its assets in foreign securities. The Alliance High Yield Portfolio
may purchase foreign securities, provided the value of issues denominated in
foreign currencies shall not exceed 20% of the Portfolio's total assets and the
value of issues denominated in U.S. dollars shall not exceed 25% of the
Portfolio's total assets.
No percentage limitation applies to investments in foreign securities by the
Global Portfolio or the International Portfolio.
Foreign securities involve currency risks. The value of a foreign security
denominated in a foreign currency changes with fluctuations in exchange rates.
Fluctuations in exchange rates may also affect the earning power and asset
value of the foreign entity issuing a security, even one denominated in U.S.
dollars. Dividend and interest payments will be repatriated based on the
exchange rate at the time of disbursement, and restrictions on capital flows
may be imposed.
Foreign securities may be subject to foreign government taxes which reduce
their attractiveness. Other risks of investing in such securities include
political or economic instability in the country involved, the difficulty of
predicting international trade patterns and the possibility of imposition of
exchange controls.
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The prices of such securities may be more volatile than those of domestic
securities. In addition, there may be less publicly available information about
a foreign issuer than about a domestic issuer. Foreign issuers generally are
not subject to uniform accounting, auditing and financial reporting standards
comparable to those applicable to domestic issuers. There is generally less
regulation of stock exchanges, brokers, banks and listed companies abroad than
in the United States, and settlements may be slower and may be subject to
failure. With respect to certain foreign countries, there is a possibility of
expropriation of assets or nationalization, imposition of withholding taxes on
dividend or interest payments, difficulty in obtaining and enforcing judgments
against foreign entities or diplomatic developments which could affect
investment in these countries. Losses and other expenses may be incurred in
converting between various currencies in connection with purchases and sales of
foreign securities.
For many foreign securities, there are U.S. dollar-denominated American
Depository Receipts (ADRs) which are traded in the United States on exchanges
or over-the-counter, are issued by domestic banks or trust companies and for
which market quotations are readily available. ADRs do not lessen the foreign
exchange risk inherent in investing in the securities of foreign issuers.
However, by investing in ADRs rather than directly in stock of foreign issuers,
the Portfolios will avoid currency risks which might occur during the
settlement period for either purchases or sales. A Portfolio may purchase
foreign securities directly, as well as through ADRs.
MORTGAGE-BACKED SECURITIES
Government National Mortgage Association ("GNMA") certificates are
mortgage-backed securities representing part ownership of a pool of mortgage
loans. These loans, issued by lenders such as mortgage bankers, commercial
banks and savings and loan associations, are either insured by the Federal
Housing Administration or the Farmer's Home Administration or guaranteed by the
Veterans Administration. A "pool" or group of such mortgages is assembled and
after being approved by GNMA, is offered to investors through securities
dealers. Once approved by GNMA, the timely payment of interest and principal on
each mortgage is guaranteed by GNMA and backed by the full faith and credit of
the U.S. Treasury. GNMA certificates differ from bonds in that principal is
paid back monthly by the borrower over the term of the loan rather than
returned in a lump sum at maturity. GNMA certificates are called "pass-through"
securities because both interest and principal payments (including prepayments)
are passed through to the holder of the certificate.
In addition to GNMA certificates, a Portfolio (other than the Alliance Equity
Index Portfolio) may invest in mortgage-backed securities issued by the Federal
National Mortgage Association ("FNMA") and by the Federal Home Loan Mortgage
Corporation ("FHLMC"). FNMA, a federally chartered and privately-owned
corporation, issues mortgage-backed pass-through securities which are
guaranteed as to timely payment of principal and interest by FNMA. FHLMC, a
corporate instrumentality of the United States whose stock is owned by the
Federal Home Loan Banks, issues participation certificates which represent an
interest in mortgages from FHLMC's portfolio. FHLMC guarantees the timely
payment of interest and the ultimate collection of principal. Securities
guaranteed by FNMA and FHLMC are not backed by the full faith and credit of the
United States. If other fixed or variable rate pass-through mortgage-backed
securities issued by the U.S. Government or its agencies or instrumentalities
are developed in the future, the Portfolios reserve the right to invest in
them.
The Portfolios (other than the Alliance Equity Index Portfolio) may also invest
in other types of mortgage-backed securities issued by governmental or
non-governmental entities, such as banks and other mortgage lenders. These
other instruments include collateralized mortgage obligations ("CMOs"),
mortgage pass-through bonds and mortgage-backed bonds. Non-governmental
securities may offer a higher yield but may also be subject to greater price
fluctuation and risk than governmental securities.
CMOs are obligations fully collateralized directly or indirectly by a pool of
mortgages on which payments of principal and interest are passed through to the
holders of the CMOs on the same schedule as they are received, although not
necessarily on a pro rata basis. In reliance on an SEC interpretation,
investments in certain qualifying CMOs, including CMOs that have elected to be
treated as Real Estate Mortgage Investment Conduits ("REMICs"), are not subject
to the Investment Company Act's limitation on acquiring interests in other
investment companies. In order to be able to rely on the SEC's interpretation,
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the CMOs and REMICs must be unmanaged, fixed-asset issuers that (i) invest
primarily in mortgage-backed securities, (ii) do not issue redeemable
securities, (iii) operate under general exemptive orders exempting them from
all provisions of the Investment Company Act, and (iv) are not registered or
regulated under the Investment Company Act as investment companies. To the
extent that a Portfolio selects CMOs or REMICs that do not meet the above
requirements, the Portfolio may not invest more than 10% of its assets in all
such entities and may not acquire more than 3% of the voting securities of any
single such entity. Mortgage-backed bonds are general obligations of the issuer
fully collateralized directly or indirectly by a pool of mortgages. The
mortgages serve as collateral for the issuer's payment obligations on the
mortgage-backed bonds but interest and principal payments on the mortgages are
not passed through directly (as with GNMA, FNMA and FHLMC pass-through
securities) or on a modified basis (as with CMOs). Accordingly, a change in the
rate of prepayments on the pool of mortgages could change the effective
maturity of a CMO but not the effective maturity of a mortgage-backed bond
(although, like many bonds, mortgage-backed bonds may be callable by the issuer
prior to maturity). It is expected that governmental, government-related, or
private entities may create mortgage loan pools and other mortgage-backed
securities offering mortgage pass-through and mortgage-collateralized
investments in addition to those described above.
Commercial banks, savings and loan institutions, private mortgage insurance
companies, mortgage bankers, and other secondary market issuers also create
pass-through pools of conventional residential mortgage loans. In addition,
such issuers may be the originators and/or servicers of the underlying mortgage
loans as well as the guarantors of the mortgage-backed securities. Pools
created by non-governmental issuers generally offer a higher rate of interest
than government and government-related pools because of the absence of direct
or indirect government or agency guarantors. Timely payment of interest and
principal with respect to these pools may be supported by various forms of
insurance or guarantees, including individual loan, title, pool and hazard
insurance, and letters of credit. The insurance, guarantees, and
creditworthiness of the issuers thereof will be considered in determining
whether a mortgage-backed security meets a Portfolio's investment quality
standards. There is no assurance that the private insurers or guarantors can
meet their obligations under the insurance policies or guarantee arrangements.
Each Portfolio (other than the Alliance Equity Index Portfolio) may buy
mortgage-backed securities without insurance or guarantees, if the investment
adviser determines that the securities meet the Portfolio's quality standards.
Alliance will, consistent with each Portfolio's investment objectives,
policies, and quality standards, consider making investments in new types of
mortgage-backed securities as such securities are developed and offered to
investors.
Prepayment of mortgages underlying mortgage-backed securities may reduce their
current yield and total return. During periods of declining interest rates,
such prepayments can be expected to accelerate and the Portfolios would be
required to reinvest the proceeds at the lower interest rates then available.
In addition, prepayments of mortgages which underlie securities purchased at a
premium could result in capital losses because the premium may not have been
fully amortized at the time the obligation is repaid. The Portfolios do not
intend to invest in these securities unless the Trust's adviser believes that
the potential benefits outweigh the risks.
ASSET-BACKED SECURITIES
The Portfolios (other than the Alliance Equity Index Portfolio) may purchase
asset-backed securities (unrelated to first mortgage loans) that represent
fractional interests in pools of retail installment loans, both secured (such
as Certificates for Automobile Receivables) and unsecured, leases or revolving
credit receivables, both secured and unsecured (such as Credit Card Receivable
Securities). These assets are generally held by a special purpose trust and
payments of principal and interest or interest only are passed through or paid
through monthly or quarterly to certificate holders and may be guaranteed up to
certain amounts by letters of credit issued by a financial institution
affiliated or unaffiliated with the trustee or originator of the trust.
Underlying retail installment loans, leases or revolving credit receivables are
subject to prepayment, which may reduce the overall return to certificate
holders. Certificate holders may also experience delays
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in payment on the certificates if the full amounts due on underlying retail
installment loans, leases or revolving credit receivables are not realized by
the Trust because of unanticipated legal or administrative costs of enforcing
the contracts, retail installment loans, leases or revolving credit receivables
or because of depreciation or damage to the collateral (usually automobiles)
securing certain contracts, retail installment loans, leases or revolving
credit receivables or other factors. If consistent with its investment
objective and policies, a Portfolio may invest in other asset-backed securities
that may be developed in the future.
SECURITIES ISSUED OR GUARANTEED BY THE U.S. GOVERNMENT OR ITS AGENCIES OR
INSTRUMENTALITIES
These securities include issues of the U.S. Treasury, such as bills,
certificates of indebtedness, notes and bonds, and issues of agencies and
instrumentalities established under the authority of an act of Congress.
Such agencies and instrumentalities include, but are not limited to, the
National Bank for Cooperatives, each of the Federal Financing Banks, FHLMC, the
Farm Credit Banks, Federal Land Banks, FNMA, Tennessee Valley Authority, Farm
Credit System, Farm Credit System Financial Assistance Corporation,
Inter-American Development Bank, Maritime Administration, Resolution Trust
Corporation, Federal Agricultural Mortgage Corporation, Small Business
Administration, U.S. Postal Service and Washington Metropolitan Transit
Authority.
Issues of the U.S. Treasury are direct obligations of the U.S. Government and
are backed by the full faith and credit of the United States. Issues of
agencies, such as GNMA, are guaranteed by the U.S. Treasury, and issues of
other agencies and instrumentalities, such as FNMA, are supported by the
issuing agency's or instrumentality's right to borrow from the U.S. Treasury,
at the discretion of the U.S. Treasury, or are supported by the issuing
agency's or instrumentality's own credit.
CERTIFICATES OF DEPOSIT, BANKERS' ACCEPTANCES AND BANK TIME DEPOSITS
Certificates of deposit are receipts issued by a bank in exchange for the
deposit of funds. The issuer agrees to pay the amount deposited plus interest
to the bearer of the receipt on the date specified on the certificate. The
certificate usually can be traded in the secondary market prior to maturity.
Bankers' acceptances typically arise from short-term credit arrangements
designed to enable businesses to obtain funds to finance commercial
transactions. Generally, an acceptance is a time draft drawn on a bank by an
exporter or an importer to obtain a stated amount of funds to pay for specific
merchandise. The draft is then "accepted" by a bank that, in effect,
unconditionally guarantees to pay the face value of the instrument on its
maturity date. The acceptance may then be held by the accepting bank as an
earning asset or it may be sold in the secondary market at the going rate of
discount for a specific maturity. Although maturities for acceptances can be as
long as 270 days, most maturities are six months or less.
Bank time deposits are funds kept on deposit with a bank for a stated period of
time in an interest bearing account. At present, bank time deposits maturing in
more than seven days are not considered by management of the Trust to be
readily marketable and therefore are subject to the 15% limit on illiquid
securities.
COMMERCIAL PAPER, MASTER DEMAND NOTES AND FLOATING RATE NOTES
Commercial paper consists of short-term (usually from 1 to 270 days) unsecured
promissory notes issued by corporations in order to finance their current
operations.
Variable amount master demand notes are obligations that permit the investment
of fluctuating amounts by a Portfolio at varying rates of interest pursuant to
direct arrangements between the Portfolio, as lender, and the borrower. These
notes permit daily changes in the amounts borrowed. The Portfolio has the right
to increase the amount under the note at any time up to the full amount
provided by the note agreement, or to decrease the amount, and the borrower may
repay up to the full amount of the note without penalty. Because variable
amount master notes are direct lending arrangements between the lender and
borrower, and not generally backed by bank letters of credit, it is not
generally contemplated that such instruments will be traded, and there is no
secondary market for these notes, although they are redeemable (and thus
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immediately repayable by the borrower) at face value, plus accrued interest, at
any time. Therefore, the Portfolio's right to redeem depends on the ability of
the borrower to pay principal and interest on demand. Variable amount master
demand notes are valued at their face amount (par) because of their one-day
demand feature. In connection with master demand note arrangements, the
Portfolio considers earning power, cash flow, and other liquidity ratios of the
issuer. Master demand notes, as such, are not typically rated by credit rating
agencies.
Floating or variable rate notes are generally medium- to long-term debt
securities, but may include short-term debt securities, issued by entities such
as commercial banks, corporations or sovereign borrowers. They are interest
bearing securities on which the coupon is adjusted periodically to reflect
money market conditions. The period at the end of which the adjustment occurs
is often called the interest reset period. The Portfolios will buy only notes
with an interest reset period of six months or less. There is an active
secondary market for floating or variable rate notes.
EURODOLLAR SECURITIES
Negotiable certificates of deposit and time deposits of foreign branches of
U.S. or foreign banks payable in U.S. dollars are known as Eurodollar deposits.
Eurodollar securities also include bonds underwritten by an international
syndicate and sold "at issue" to non-U.S. investors. Such securities are not
registered with the SEC or issued domestically and are primarily traded in
foreign markets. Certain risks applicable to foreign securities apply to
Eurodollar instruments. Investment risks from these securities include future
political and economic developments, possible foreign withholding taxes on
interest, possible seizure of foreign deposits, or the possible establishment
of exchange controls affecting payment on these securities. See "Foreign
Securities," above, for additional information about foreign securities. In
addition to those risks, foreign branches of U.S. and foreign banks are subject
to government regulation which may limit both the amount and 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 industry. U.S. banks are required to maintain reserves, are
limited in how much they can loan 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 U.S. and foreign banks. In addition,
foreign countries have accounting and reporting principles that differ from
those in the United States.
HIGH YIELD DEBT SECURITIES
The Alliance High Yield Portfolio, as described in the Prospectus, intends to
invest primarily in debt securities offering high current income. The Alliance
Growth Investors Portfolio may invest up to 15% of its total assets in such
high yield debt securities, and the Alliance Growth and Income Portfolio may
invest up to 30% of its total assets in high yield convertible securities. High
yield securities may be medium and lower quality securities rated, for example,
BB or B by one of the nationally recognized statistical rating organizations
("NRSROs") or may be unrated but of similar investment quality as determined by
Alliance. These securities are also known as "junk bonds." The market values of
such high yield securities tend to reflect individual corporate developments to
a greater extent than higher rated securities, which react primarily to
fluctuations in the general level of interest rates. Such medium and lower
rated securities also tend to be more sensitive to real or perceived adverse
economic conditions than higher rated securities.
Companies that issue high yield securities are often highly leveraged and may
not have available to them more traditional methods of financing. Therefore,
the risks associated with acquiring the securities of such issuers generally
are greater than is the case with higher rated securities. For example, during
an economic downturn or a sustained period of rising interest rates, highly
leveraged issuers of high yield securities may experience "financial stress"
and may not have sufficient revenues to meet their payment obligations. Such an
issuer's ability to service its obligations may also be adversely affected by
specific corporate developments, the issuer's inability to meet specific
projected business forecasts, or the unavailability of additional financing.
Risk of loss due to default by the issuer is also significantly greater for the
holders of high yield securities because such securities are generally
unsecured and are generally subordinated to the debts of other creditors of the
issuer.
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The Alliance High Yield, Alliance Growth and Income and Alliance Growth
Investors Portfolios may have difficulty disposing of certain high yield
securities, particularly those perceived to have a high credit risk, because
there may be a thin trading market for such securities. Because not all dealers
maintain markets in all high yield securities, there is no established retail
secondary market for certain of these securities, and the Portfolios anticipate
that such securities could be sold only to a limited number of dealers or
institutional investors. Moreover, to the extent a secondary trading market for
high yield securities exists, it may be less liquid than the secondary market
for higher rated securities. The lack of a highly liquid secondary market for
certain high yield securities may have an adverse impact on the market price
for such securities and each Portfolio's ability to dispose of particular
issues when necessary to meet the Portfolio's liquidity needs or in response to
a specific economic event such as a deterioration in the creditworthiness of
the issuer. Adverse publicity and investor perceptions, whether or not based on
fundamental analysis, may decrease the values and liquidity of high yield
securities, especially in a thinly traded market. The lack of a liquid
secondary market for certain securities may also make it more difficult for the
Portfolios to obtain accurate market quotations for purposes of valuing certain
of its high yield portfolio securities. Market quotations are generally
available on many high yield issues only from a limited number of dealers and
may not necessarily represent firm bids of such dealers or prices for actual
sales.
In addition, the market for high yield securities, at its current size, has not
weathered a major economic recession, and one cannot be certain what effect
such a recession might have on such securities. It is possible that a recession
could severely disrupt the market for such medium and lower quality securities
and may have an adverse impact on the value of such securities. In addition, it
is possible that an economic downturn could adversely affect the ability of the
issuers of such securities to repay principal and pay interest on such
securities.
From time to time, proposals have been discussed regarding new legislation
designed to limit the use of certain high yield securities by issuers in
connection with leveraged buy-outs, mergers and acquisitions, or to limit the
deductibility of interest payments on such securities. Such proposals if
enacted into law could: (i) reduce the market for such securities generally;
(ii) negatively affect the financial condition of issuers of high yield
securities by removing or reducing a source of future financing; and (iii)
negatively affect the value of specific high yield securities and the high
yield market in general.
Factors adversely impacting the market value of high yield securities may
adversely impact each Portfolio's net asset value. In addition, each Portfolio
may incur additional expenses to the extent it is required to seek recovery
upon a default in the payment of principal or interest on its portfolio
securities. The Portfolios will not rely primarily on ratings of NRSROs, but
rather will rely on Alliance's judgment, analysis and experience in evaluating
the creditworthiness of an issuer. In evaluating such securities, Alliance will
take into consideration, among other things, the issuer's financial resources
and quality of management, its sensitivity to economic conditions and trends,
its operating history and regulatory matters.
TRANSACTIONS IN OPTIONS, FUTURES AND FORWARD CONTRACTS
To the extent provided below, the Portfolios may enter into transactions in
options, futures and forward contracts on a variety of instruments and indexes,
in order to protect against declines in the value of portfolio securities and
increases in the cost of securities to be acquired and, in the case of options
written on securities or indexes of securities, to increase a Portfolio's
return. All the Portfolios, except the Alliance Money Market Portfolio, are
authorized to engage in futures transactions. In general, the Portfolios will
limit their use of futures contracts and options on futures contracts so that
either (i) the contracts or options thereon are for "bona fide hedging"
purposes as defined under regulations of the Commodity Futures Trading
Commission ("CFTC") or (2) if for other purposes, no more than 5% of the
liquidation value of each Portfolio's total assets will be used for initial
margin or option premiums required to establish non-hedging positions. These
instruments will be used for hedging purposes and not for speculation or to
leverage the Portfolios.
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OPTIONS ON SECURITIES
Writing Call Options. Each Portfolio, other than the Alliance Money Market and
Alliance Equity Index Portfolios, may write (sell) covered call options on its
portfolio securities in an attempt to enhance investment performance. A call
option is a contract which gives the purchaser of the option (in return for a
premium paid) the right to buy, and the writer of the option (in return for a
premium received) the obligation to sell, the underlying security at the
exercise price at any time prior to the expiration of the option, regardless of
the market price of the security during the option period. A covered call
option is, for example, a call option written on a security that is owned by
the writer (or on a security convertible into such a security without
additional consideration) throughout the option period.
A Portfolio will write covered call options both to reduce the risks associated
with certain of its investments and to increase total investment return through
the receipt of premiums. In return for the premium income, the Portfolio will
give up the opportunity to profit from an increase in the market price of the
underlying security above the exercise price so long as its obligations under
the contract continue, except insofar as the premium represents a profit.
Moreover, in writing the call option, the Portfolio will retain the risk of
loss should the price of the security decline. The premium is intended to
offset that loss in whole or in part. Unlike the situation in which the
Portfolio owns securities not subject to a call option, the Portfolio, in
writing call options, must assume that the call may be exercised at any time
prior to the expiration of its obligation as a writer, and that in such
circumstances the net proceeds realized from the sale of the underlying
securities pursuant to the call may be substantially below the prevailing
market price.
A Portfolio may terminate its obligation under an option it has written by
buying an identical option. Such a transaction is called a "closing purchase
transaction." The Portfolio will realize a gain or loss from a closing purchase
transaction if the amount paid to purchase a call option is less or more than
the amount received from the sale of the corresponding call option. When an
underlying security is sold from the Portfolio's securities portfolio, the
Portfolio will effect a closing purchase transaction so as to close out any
existing covered call option on that underlying security. A closing purchase
transaction for exchange-traded options may be made only on a national
securities exchange (exchange). There is no assurance that a liquid secondary
market on an exchange will exist for any particular option, or at any
particular time, and for some options, such as over-the-counter options, no
secondary market on an exchange may exist. If the Portfolio is unable to effect
a closing purchase transaction, the Portfolio will not sell the underlying
security until the option expires or the Portfolio delivers the underlying
security upon exercise.
Writing Put Options. The writer of a put option becomes obligated to purchase
the underlying security at a specified price during the option period if the
buyer elects to exercise the option before its expiration date. A Portfolio
which writes a put option will be required to "cover" it, for example, by
depositing and maintaining in a segregated account with its custodian liquid
securities having a value equal to or greater than the exercise price of the
option.
The Portfolios, except the Alliance Money Market and Alliance Equity Index
Portfolios, may write put options either to earn additional income in the form
of option premiums (anticipating that the price of the underlying security will
remain stable or rise during the option period and the option will therefore
not be exercised) or to acquire the underlying security at a net cost below the
current value (e.g., the option is exercised because of a decline in the price
of the underlying security, but the amount paid by the Portfolio, offset by the
option premium, is less than the current price). The risk of either strategy is
that the price of the underlying security may decline by an amount greater than
the premium received. The premium which a Portfolio receives from writing a put
option will reflect, among other things, the current market price of the
underlying security, the relationship of the exercise price to that market
price, the historical price volatility of the underlying security, the option
period, supply and demand and interest rates.
A Portfolio may effect a closing purchase transaction to realize a profit on an
outstanding put option or to prevent an outstanding put option from being
exercised. If a Portfolio is able to enter into a closing purchase transaction,
the Portfolio will realize a profit (or loss) from that transaction if the cost
of the
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transaction is less (or more) than the premium received from the writing of the
option. After writing a put option, a Portfolio may incur a loss equal to the
difference between the exercise price of the option and the sum of the market
value of the underlying security plus the premiums received from the sale of
the option.
Purchasing Options. The Portfolios, except the Alliance Money Market and
Alliance Equity Index Portfolios, may purchase put options and call options.
The Portfolios may purchase put options on securities to protect their holdings
against a substantial decline in market value. The Portfolio will continue to
receive interest or dividend income on the security. The Portfolios may also
purchase call options on securities to protect against substantial increases in
prices of securities the Portfolios intend to purchase pending their ability to
invest in an orderly manner in those securities. The Portfolios may sell put or
call options they have previously purchased, which could result in a net gain
or loss depending on whether the amount received on the sale is more or less
than the premium and other transaction costs paid on the put or call option
which was purchased.
SECURITIES INDEX OPTIONS
The Portfolios, except the Alliance Money Market and Alliance Equity Index
Portfolios, may write covered put and call options and purchase call and put
options on securities indexes for the purpose of hedging against the risk of
unfavorable price movements adversely affecting the value of a Portfolio's
securities or securities it intends to purchase. Each Portfolio writes only
"covered" options. A call option on a securities index is considered covered,
for example, if, so long as the Portfolio is obligated as the writer of the
call, it holds securities the price changes of which are, in the opinion of
Alliance, expected to replicate substantially the movement of the index or
indexes upon which the options written by the Portfolio are based. A put on a
securities index written by a Portfolio will be considered covered if, so long
as it is obligated as the writer of the put, the Portfolio segregates with its
custodian liquid assets having a value equal to or greater than the exercise
price of the option. Unlike a stock option, which gives the holder the right to
purchase or sell a specified stock at a specified price, an option on a
securities index gives the holder the right to receive a cash "exercise
settlement amount" equal to (i) the difference between the exercise price of
the option and the value of the underlying stock index on the exercise date,
multiplied by (ii) a fixed "index multiplier."
A securities index fluctuates with changes in the market values of the
securities included in the index. For example, some securities index options
are based on a broad market index such as the S&P 500 or the New York Stock
Exchange ("NYSE") Composite Index, or a narrower market index such as the S&P
100. Indexes may also be based on an industry or market segment such as the
AMEX Oil and Gas Index or the Computer and Business Equipment Index. Options on
stock indexes are currently traded on the following exchanges among others: The
Chicago Board Options Exchange; NYSE; and American Stock Exchange.
The effectiveness of hedging through the purchase of securities index options
will depend upon the extent to which price movements in the portion of the
securities portfolio being hedged correlate with price movements in the
selected securities index. Perfect correlation is not possible because the
securities held or to be acquired by a Portfolio will not exactly match the
composition of the securities indexes on which options are written. The
principal risk of purchasing securities index options is that the premium and
transaction costs paid by a Portfolio in purchasing an option will be lost if
the changes (increase in the case of a call, decrease in the case of a put) in
the level of the index do not exceed the cost of the option.
The principal risk of writing securities index options is that price changes in
the hedged securities will not correlate with price changes in the options, and
thus the Portfolio could bear a loss on the options that would be only
partially offset (or not offset at all) by the increased value or reduced cost
of the hedged securities. Moreover, in the event the Portfolio were unable to
close an option it had written, it might be unable to sell the securities used
as cover.
OVER-THE-COUNTER OPTIONS
Options traded in the over-the-counter market may not be as actively traded as
those traded on an exchange. Accordingly, it may be more difficult to value
such options. In addition, it may be difficult to
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enter into closing transactions with respect to options traded
over-the-counter. The Portfolios will engage in such transactions only with
firms of sufficient credit, in the opinion of Alliance, so as to minimize these
risks. Such options and the securities used as "cover" for such options may be
considered illiquid securities.
The Portfolios may enter into contracts (or amend existing contracts) with
primary dealer(s) with whom they write over-the-counter options. The contracts
will provide that each Portfolio has the absolute right to repurchase an option
it writes at any time at a repurchase price which represents the fair market
value, as determined in good faith through negotiation between the parties, but
which in no event will exceed a price determined pursuant to a formula
contained in the contract. Although the specific details of the formula may
vary between contracts with different primary dealers, the formula will
generally be based on a multiple of the premium received by each Portfolio for
writing the option, plus the amount, if any, of the option's intrinsic value
(i.e., the amount the option is "in-the-money"). The formula will also include
a factor to account for the difference between the price of the security and
the strike price of the option if the option is written "out-of-the-money."
Although the Portfolios have established standards of creditworthiness for
these primary dealers, the Portfolios may still be subject to the risk that
firms participating in such transactions will fail to meet their obligations.
With respect to agreements concerning the over-the-counter options a Portfolio
has written, the Portfolio will treat as illiquid only securities equal in
amount to the formula price described above less the amount by which the option
is "in-the-money," i.e., the amount by which the price of the option exceeds
the exercise price.
FUTURES TRANSACTIONS
All the Portfolios, except the Alliance Money Market Portfolio, may trade in
certain futures contracts. A futures contract is a bilateral agreement to buy
or sell a security (or deliver a cash settlement price, in the case of a
contract relating to an index or otherwise not calling for physical delivery at
the end of trading in the contracts) for a set price in the future. No purchase
price is paid or received when the contract is entered into. Instead, a good
faith deposit known as initial margin is made with the broker and subsequent
daily payments known as variation margin are made to and by the broker
reflecting changes in the value of the security or level of the index. Futures
contracts are designated by boards of trade which have been designated
"contracts markets" by the Commodity Futures Trading Commission ("CFTC").
Purchases or sales of securities index futures contracts may be used to attempt
to protect a Portfolio's current or intended investments from broad
fluctuations in securities prices, and interest rate and foreign currency
futures contracts may be purchased or sold to attempt to hedge against the
effects of interest or exchange rate changes on a Portfolio's current or
intended investments in fixed income or foreign securities. All the Portfolios,
except the Alliance Money Market, Alliance Equity Index and Alliance
Intermediate Government Securities Portfolios, may trade in foreign currency
futures contracts. In the event that an anticipated decrease in the value of
portfolio securities occurs as a result of a general stock market decline, a
general increase in interest rates or a decline in the dollar value of foreign
currencies in which portfolio securities are denominated, the adverse effects
of such changes may be offset, in whole or in part, by gains on the sale of
futures contracts. In addition, the increased cost of portfolio securities to
be acquired, caused by a general rise in the dollar value of foreign currencies
or by a rise in stock prices or a decline in interest rates, may be offset, in
whole or in part, by gains on futures contracts purchased by a Portfolio. In
order to achieve desired asset mix parameters, the Alliance Conservative
Investors and Alliance Growth Investors Portfolios may use futures contracts
and related options transactions to establish a position in an asset class as a
temporary substitute for purchasing individual securities, which may be
subsequently purchased in orderly fashion. Similarly, these transactions may
enable the Alliance Conservative Investors and Alliance Growth Investors
Portfolios to reduce a position in an asset class as a temporary substitute for
selling individual securities, in order to effect an orderly sale. In the case
of the Alliance Equity Index Portfolio, futures contracts and related options
on the S&P 500 Index may be purchased in order to reduce brokerage costs,
maintain liquidity to meet shareholder redemptions or minimize tracking error.
A Portfolio will incur brokerage fees when it purchases and sells futures
contracts, and it will be required to maintain margin deposits. (See "Risks of
Transactions in Options, Futures Contracts and Forward Currency Contracts,"
below.) Positions taken in the futures markets are not normally held until
delivery or cash settlement is required, but are instead liquidated through
16
<PAGE>
offsetting transactions which may result in a gain or a loss. While futures
positions taken by a Portfolio will usually be liquidated in this manner, the
Portfolio may instead make or take delivery of underlying securities whenever
it appears economically advantageous to the Portfolio to do so. A clearing
organization associated with the exchange on which futures are traded assumes
responsibility for closing out transactions and guarantees that, as between the
clearing members of an exchange, the sale and purchase obligations will be
performed with regard to all positions that remain open at the termination of
the contract.
SECURITIES INDEX FUTURES CONTRACTS
A securities index futures contract does not require the physical delivery of
securities, but merely provides for profits and losses resulting from changes
in the market value of the contract to be credited or debited at the close of
each trading day to the respective accounts of the parties to the contract. On
the contract's expiration date a final cash settlement occurs and the futures
positions are simply closed out. Changes in the market value of a particular
index futures contract reflect changes in the specified index of securities on
which the futures contract is based.
By establishing an appropriate "short" position in index futures, a Portfolio
may seek to protect the value of its portfolio against an overall decline in
the market for such securities. Alternatively, in anticipation of a generally
rising market, a Portfolio can seek to avoid losing the benefit of apparently
low current prices by establishing a "long" position in securities index
futures and later liquidating that position as particular securities are
acquired. To the extent that these hedging strategies are successful, the
Portfolio will be affected to a lesser degree by adverse overall market price
movements than would otherwise be the case.
OPTIONS ON FUTURES CONTRACTS
Each of the Portfolios, other than the Alliance Money Market Portfolio, may
also purchase and write exchange-traded call and put options on futures
contracts is authorized to enter into. These options are traded on exchanges
that are licensed and regulated by the CFTC for the purpose of options trading.
A call option on a futures contract gives the purchaser the right, in return
for the premium paid, to purchase a futures contract (assume a "long" position)
at a specified exercise price at any time before the option expires. A put
option gives the purchaser the right, in return for the premium paid, to sell a
futures contract (assume a "short" position), for a specified exercise price,
at any time before the option expires. The Portfolios will write only options
on futures contracts which are "covered." A Portfolio will be considered
"covered" with respect to a put option it has written if, so long as it is
obligated as a writer of the put, the Portfolio segregates with its custodian
liquid assets at all times equal to or greater than the aggregate exercise
price of the puts it has written (less any related margin deposited with the
futures broker). A Portfolio will be considered "covered" with respect to a
call option it has written on a debt security future if, so long as it is
obligated as a writer of the call, the Portfolio owns the security deliverable
under the futures contract. A Portfolio will be considered "covered" with
respect to a call it has written on a securities index future if so long as the
Portfolio is obligated as the writer of the call, the Portfolio owns a
portfolio of securities the price changes of which are, in the opinion of
Alliance, expected to replicate substantially the movement of the index upon
which the futures contract is based.
Upon the exercise of a call, the writer of the option is obligated to sell the
futures contract (to deliver a "long" position to the option holder) at the
option exercise price, which will presumably be lower than the current market
price of the contract in the futures market. Upon exercise of a put, the writer
of the option is obligated to purchase the futures contract (deliver a "short"
position to the option holder) at the option exercise price, which will
presumably be higher than the current market price of the contract in the
futures market. When the holder of an option exercises it and assumes a long
futures position, in the case of a call, or a short futures position, in the
case of a put, its gain will be credited to its futures margin account, while
the loss suffered by the writer of the option will be debited to its futures
margin account and must be immediately paid by the writer. However, as with the
trading of futures, most participants in the options markets do not seek to
realize their gains or losses by exercise of their option rights. Instead, the
holder of an option will usually realize a gain or loss by buying or selling an
offsetting option at a market price that will reflect an increase or a decrease
from the premium originally paid.
17
<PAGE>
Options on futures contracts can be used by a Portfolio to hedge substantially
the same risks as might be addressed by the direct purchase or sale of the
underlying futures contracts. If the Portfolio purchases an option on a futures
contract, it may obtain benefits similar to those that would result if it held
the futures position itself. Purchases of options on futures contracts may
present less risk in hedging than the purchase and sale of the underlying
futures contracts since the potential loss is limited to the amount of the
premium plus related transaction costs.
The purchase of put options on futures contracts is a means of hedging a
portfolio of securities against a general decline in market prices. The
purchase of a call option on a futures contract represents a means of hedging
against a market advance when a Portfolio is not fully invested.
If a Portfolio writes options on futures contracts, the Portfolio will receive
a premium but will assume a risk of adverse movement in the price of the
underlying futures contract comparable to that involved in holding a futures
position. If the option is not exercised, the Portfolio will realize a gain in
the amount of the premium, which may partially offset unfavorable changes in
the value of securities held in or to be acquired for the Portfolio. If the
option is exercised, the Portfolio will incur a loss in the option transaction,
which will be reduced by the amount of the premium it has received, but which
will offset any favorable changes in the value of its portfolio securities or,
in the case of a put, lower prices of securities it intends to acquire.
The writing of a call option on a futures contract constitutes a partial hedge
against declining prices of the underlying securities. If the futures price at
expiration is below the exercise price, the Portfolio will retain the full
amount of the option premium, which provides a partial hedge against any
decline that may have occurred in the value of the Portfolio's holdings of
securities. The writing of a put option on a futures contract is analogous to
the purchase of a futures contract in that it hedges against an increase in the
price of securities the Portfolio intends to acquire. However, the hedge is
limited to the amount of premium received for writing the put.
While the holder or writer of an option on a futures contract may normally
terminate its position by selling or purchasing an offsetting option of the
same series, a Portfolio's ability to establish and close out options positions
at fairly established prices will be subject to the existence of a liquid
market. The Portfolios will not purchase or write options on futures contracts
unless, in Alliance's opinion, the market for such options has sufficient
liquidity that the risks associated with such options transactions are not at
unacceptable levels.
LIMITATIONS ON PURCHASE AND SALE OF FUTURES CONTRACTS AND OPTIONS ON FUTURES
CONTRACTS
The Portfolios will not engage in transactions in futures contracts and related
options for speculation. All the Portfolios, except the Alliance Money Market
Portfolio, may enter into futures contracts and buy and sell related options as
described above. The Portfolios will not purchase or sell futures contracts or
related options unless either (1) the futures contracts or options thereon are
purchased for "bona fide hedging" purposes (as that term is defined under the
CFTC regulations) or (2) if purchased for other purposes, the sum of the
amounts of initial margin deposits on a Portfolio's existing futures and
premiums required to establish non-hedging positions would not exceed 5% of the
liquidation value of the Portfolio's total assets. In instances involving the
purchase of futures contracts or the writing of put options thereon by a
Portfolio, an amount equal to the cost of such futures contracts or options
written (less any related margin deposits) will be deposited in a segregated
account with its custodian, thereby insuring that the use of such futures
contracts and options is unleveraged. In instances involving the sale of
futures contracts or the writing of call options thereon by a Portfolio, the
securities underlying such futures contracts or options will at all times be
maintained by the Portfolio or, in the case of index futures and related
options, the Portfolio will own securities the price changes of which are, in
the opinion of Alliance, expected to replicate substantially the movement of
the index upon which the futures contract or option is based.
Positions in futures contracts may be closed out only on an exchange or a board
of trade which provides the market for such futures. Although the Portfolios
intend to purchase or sell futures only on exchanges or boards of trade where
there appears to be an active market, there is no guarantee that such will
exist for any particular contract or at any particular time. If there is not a
liquid market at a particular time,
18
<PAGE>
it may not be possible to close a futures position at such time, and, in the
event of adverse price movements, a Portfolio would continue to be required to
make daily cash payments of maintenance margin. However, in the event futures
positions are used to hedge portfolio securities, the securities will not be
sold until the futures positions can be liquidated.
FOREIGN CURRENCY OPTIONS, FOREIGN CURRENCY FUTURES CONTRACTS AND OPTIONS ON
FUTURES
The Portfolios, other than the Alliance Money Market, Alliance Intermediate
Government Securities and Alliance Equity Index Portfolios, may purchase or
sell exchange-traded or over-the-counter foreign currency options, foreign
currency futures contracts and related options on foreign currency futures
contracts as a hedge against possible variations in foreign exchange rates. The
Portfolios will write options on foreign currencies or on foreign currency
futures contracts only if they are "covered." A put option on a foreign
currency or on a foreign currency futures contract written by a Portfolio will
be considered "covered" if, so long as the Portfolio is obligated as the writer
of the put, it segregates with the Portfolio's custodian liquid assets equal at
all times to the aggregate exercise price of the put. A call option on a
foreign currency or on a foreign currency futures contract written by the
Portfolio will be considered "covered" only if the Portfolio owns short term
debt securities with a value equal to the face amount of the option contract
and denominated in the currency upon which the call is written. Option
transactions may be effected to hedge the currency risk on non-U.S.
dollar-denominated securities owned by a Portfolio, sold by a Portfolio but not
yet delivered, or anticipated to be purchased by a Portfolio. As an
illustration, a Portfolio may use such techniques to hedge the stated value in
U.S. dollars of an investment in a Japanese yen-denominated security. In these
circumstances, a Portfolio may purchase a foreign currency put option enabling
it to sell a specified amount of yen for dollars at a specified price by a
future date. To the extent the hedge is successful, a loss in the value of the
dollar relative to the yen will tend to be offset by an increase in the value
of the put option. As in the case of other types of options, however, the
writing of an option on foreign currency will constitute only a partial hedge,
up to the amount of the premium received, and the Portfolio could be required
to purchase or sell foreign currencies at disadvantageous exchange rates,
thereby incurring losses. Although the purchase of an option on foreign
currency may constitute an effective hedge against fluctuations in exchange
rates in the event of exchange rate movements adverse to the Portfolio's
position, it may forfeit the entire amount of the premium plus related
transaction costs.
Certain differences exist between foreign currency hedging instruments. Foreign
currency options provide the holder the right to buy or to sell a currency at a
fixed price on or before a future date. Listed options are third-party
contracts (performance is guaranteed by an exchange or clearing corporation)
which are issued by a clearing corporation, traded on an exchange and have
standardized prices and expiration dates. Over-the-counter options are
two-party contracts and have negotiated prices and expiration dates. See
"Over-the-Counter Options," above. A futures contract on a foreign currency is
an agreement between two parties to buy and sell a specified amount of the
currency for a set price on a future date. Futures contracts and listed options
on futures contracts are traded on boards of trade or futures exchanges.
Options traded in the over-the-counter market may not be as actively traded as
those on an exchange, thus it may be more difficult to value such options. In
addition, it may be difficult to enter into closing transactions with respect
to options traded over-the-counter.
A Portfolio will not speculate in foreign currency options, futures or related
options. Accordingly, a Portfolio will not hedge a currency substantially in
excess of the market value of the securities denominated in that currency which
it owns or the expected acquisition price of securities which it anticipates
purchasing.
Hedging against a decline in the value of a currency does not eliminate
fluctuations in the prices of portfolio securities or prevent losses if the
prices of such securities decline. These hedging transactions also preclude the
opportunity for gain if the value of the hedged currency should rise. Whether a
currency hedge benefits a Portfolio will depend on Alliance's ability to
predict future foreign currency exchange rates.
19
<PAGE>
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
When a Portfolio invests in foreign securities, the securities are usually
denominated in a foreign currency, and the Portfolio may temporarily hold
foreign currency in connection with such investments. As a result, the value of
the Portfolio's assets will be subject to fluctuations based on changes in the
relative value of the foreign currency and the U.S. dollar. To control the
effects of this exchange risk, all of the Portfolios, except the Alliance Money
Market, Alliance Equity Index and Alliance Intermediate Government Securities
Portfolios, may enter into forward foreign currency exchange contracts
("forward currency contracts"), which are agreements to purchase or sell
foreign currencies at a specified future date and price. Forward currency
contracts are usually used to fix the U.S. dollar value of securities a
Portfolio has agreed to buy or sell ("transaction hedging"). The Portfolios may
also use forward currency contracts to hedge the U.S. dollar value of
securities it already owns ("position hedging"). The Portfolios will not
speculate in forward currency contracts.
In general, forward currency contracts are not regulated by any governmental
authority guaranteed by a third party or traded on an exchange. Accordingly,
each party to a forward currency contract is dependent upon the
creditworthiness and good faith of the other. The Portfolios will only enter
forward currency contracts with counterparties that, in the opinion of
Alliance, do not present undue credit risk.
RISKS OF TRANSACTIONS IN OPTIONS, FUTURES CONTRACTS AND FORWARD CURRENCY
CONTRACTS
Although the Portfolios will enter into transactions in futures contracts,
options on securities and securities indexes, options on futures contracts,
forward currency contracts and certain currency options as described above for
hedging purposes, and transactions in options on securities and securities
indexes to generate option premium income, their use involves certain risks. A
lack of correlation between the index or instrument underlying an option or
futures contract and the assets or liabilities being hedged, or unexpected
adverse price movements, could render a Portfolio's hedging strategy
unsuccessful and could result in losses. Moreover, when an option has been
written, in the event of a decline, the underlying position is only hedged to
the extent of the amount of premium received. Over-the-counter transactions in
options on foreign currencies and options on securities and securities indexes
also involve a lack of an organized exchange trading environment, making them
less liquid and making it more difficult to value than if they were exchange
traded.
In addition, there can be no assurance that a liquid secondary market will
exist for any futures contract or option purchased or sold. Accordingly, a
Portfolio may be required to maintain a position until exercise or expiration,
which could result in losses. If, in the event of an adverse movement, the
Portfolio could not close a futures position, it would be required to continue
to make daily cash payments of variation margin. If a Portfolio could not close
an option position, an option holder would be able to realize profits or limit
losses only by exercising the option, and an option writer would remain
obligated until exercise or expiration. Finally, if a broker or clearing member
of an options or futures clearing corporation were to become insolvent, the
Portfolios could experience delays and might not be able to trade or exercise
options or futures purchased through that broker. In addition, the Portfolios
could have some or all of their positions closed out without their consent. If
substantial and widespread, these insolvencies could ultimately impair the
ability of the clearing corporations themselves. While the principal purpose of
hedging is to limit or offset the effects of adverse market movements, the
attendant expense may cause the Portfolios' returns to be less than if hedging
had not taken place. The overall effectiveness of hedging therefore depends on
Alliance's accuracy in predicting future changes in interest rate levels and/or
securities price movements, as well as on the expense of hedging.
MANAGEMENT OF THE TRUST
As of March 31, 1998, the Trustees and officers of the Trust owned Contracts
entitling them to provide voting instructions in the aggregate with respect to
less than one percent of the Trust's shares of beneficial interest.
20
<PAGE>
THE TRUSTEES
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- --------------------- -------------------------------------------
<S> <C>
*John D. Carifa (53) ................... President, Chief Operating Officer and a Director of Alli-
Alliance Capital Management L.P. ance Capital Management Corporation ("ACMC"); Chair-
1345 Avenue of the Americas man and Chief Executive Officer of Alliance's Mutual
New York, NY 10105 Fund Division. Currently a Director and Trustee of all
other registered investment companies (the "Alliance Mu-
tual Funds") sponsored by Alliance, and Director of Fron-
tier Trust Company, a subsidiary of Equitable.
Richard W. Couper (75) ................ President Emeritus of the Woodrow Wilson National Fellow-
The Burke Library ship Foundation and President Emeritus of the New York
Hamilton College Public Library.
P.O. Box 345
Clinton, NY 13323-0345
William H. Foulk, Jr. (65) ............ Investment adviser and independent consultant. Former
2 Hekma Road Senior Manager of Barrett Associates, Inc. (investment
Greenwich, CT 06831 adviser), from May 1986 to November 1994.
Brenton W. Harries (70) ............... Director of Enhance Reinsurance Co. since December
14 Point Road 1986. Mr. Harries was also President and Chief Executive
Wilton Point, Officer, Global Electronic Markets Company from August
South Norwalk, CT 06854 1985 to October 1986.
Howard E. Hassler (Chairman) (68)...... Currently a consultant specializing in retailing, finance and
P.O. Box 967 real estate. Former Chairman and Chief Executive Officer
New York, NY 10150 of Brooks Fashion Stores, Inc. (specialty clothing stores);
Former Chairman, President and Chief Operating Officer
of Allied Stores Corporation (department and specialty
stores), 1987; Executive Vice President and Director, Al-
lied Stores Corporation from June 1984 to June 1987.
William L. Mannion (67) ............... Retired. Former Group Senior Vice President of Opera-
45 Bonnie Way tions of American Ultramar Limited until December, 1986;
Allendale, NJ 07401 President and Chief Executive Officer of Tittston Petro-
leum, Inc., from January 1978 to July 1985; Director of the
East Jersey Railroad and the Bayonne Terminal Ware-
house from July 1978 to May 1983.
Clifford L. Michel (58) ............... Partner of the law firm of Cahill Gordon & Reindel since
St. Bernard's Road January 1972. President, Chief Executive Officer and Di-
Gladstone, NJ 07934 rector of Wenonah Development Company (investment
holding company) since 1976. Director since 1987 and
Member of the Human Resources, Environmental and
Safety, and Executive Committees since 1987 of Placer
Dome Inc. (mining). Director, Faber-Castell Corporation
from 1988-1994 (writing instruments). President of Board
of Trustees of St. Mark's School from 1988 to 1993. Chair-
man of the Board of Trustees of Morristown Memorial
Hospital (and Memorial Health Foundation) from 1991 to
1996. Director, Vice Chairman and Treasurer of Atlantic
Health Systems, Inc. and Atlantic Hospital since 1996.
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
NAME, ADDRESS AND AGE PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- --------------------- -------------------------------------------
<S> <C>
*Peter D. Noris (42) ............. Executive Vice President (since May 1995) and Chief Invest-
The Equitable Life Assurance ment Officer of Equitable (since July 1995); Executive Vice
Society of the United States President, The Equitable Companies Incorporated ("Equi-
787 Seventh Avenue table Companies") (since May 1995); Director of ACMC,
New York, NY 10019 the general partner of Alliance, since July 1995. Prior
thereto, Vice President of Salomon Brothers Inc., from
1992 to 1995. Principal of Morgan Stanley & Co. Inc., from
1984 to 1992.
Donald J. Robinson (63) ......... Senior Partner of the law firm of Orrick, Herrington &
666 Fifth Avenue Sutcliffe from July 1987 to December 1994; Member of the
New York, NY 10019 Executive Committee of the firm from January to Decem-
ber 1994; Senior Counsel of the firm since January 1995.
Trustee of the Museum of the City of New York from 1977
to 1995.
</TABLE>
*Trustees Carifa and Noris are "interested persons" (as defined in the
Investment Company Act) of the Trust. Mr. Carifa is deemed an "interested
person" of the Trust by virtue of his positions as a director and officer and
director of ACMC and Alliance, respectively. Mr. Noris is deemed an "interested
person" of the Trust by virtue of his positions as an officer of Equitable and
a director of ACMC.
Trustees Couper, Harries and Robinson are trustees (but not "interested
persons") of The Alliance Portfolios, a mutual fund advised by Alliance.
Trustee Robinson is also a director or trustee (but not an "interested person")
of 37 other mutual funds advised by Alliance. Trustee Michel is a director or
trustee (but not an "interested person") of 40 other mutual funds advised by
Alliance. Trustee Hassler is a director (but not an "interested person") of
Alliance Real Estate Investment Fund, Inc., a mutual fund advised by Alliance.
COMMITTEES OF THE BOARD
The Trust has a standing audit committee consisting of Trustees Mannion,
Couper, Foulk, Harries, Hassler, Michel and Robinson. The audit committee's
function is to recommend to the Board of Trustees a firm of independent
auditors to conduct the annual audit of the Trust's financial statements;
review with such firm the outline, scope and results of this annual audit; and
review the performance and fees charged by the independent auditors for
professional services. In addition, the committee meets with the independent
auditors and representatives of management to review accounting activities and
areas of financial reporting and control.
The Trust has a nominating committee consisting of Trustees Hassler, Couper and
Robinson. This committee considers individuals for nomination as Trustees of
the Trust.
The Trust has a valuation committee consisting of Trustees Harries, Mannion and
Noris. This committee determines the value of any of the Trust's securities and
assets for which market quotations are not readily available or for which
valuation cannot otherwise be provided.
The Trust has a compensation committee consisting of Trustees Robinson, Hassler
and Mannion. The compensation committee's function is to review the Trustees'
compensation arrangements.
The Trust has a conflicts committee consisting of Trustees Hassler, Michel and
Robinson. The conflicts committee's function is to take any action necessary to
resolve conflicts among shareholders.
22
<PAGE>
TRUSTEE COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------
TOTAL
PENSION OR COMPENSATION FROM
AGGREGATE RETIREMENT THE ALLIANCE FUND
COMPENSATION BENEFITS ACCRUED ESTIMATED ANNUAL COMPLEX,
FROM THE AS PART OF TRUST BENEFITS UPON INCLUDING THE
TRUSTEE TRUST EXPENSES RETIREMENT TRUST(1)
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
John D. Carifa $ -0- $-0- $-0- $ -0-
Richard W. Couper $65,0002 $-0- $-0- $ 94,000
William H. Foulk, Jr.(3) $ -0- $-0- $-0- $176,250
Brenton W. Harries $ 73,000 $-0- $-0- $102,000
Howard E. Hassler $ 91,000 $-0- $-0- $ 94,500
William L. Mannion $ 76,000(2) $-0- $-0- $ 76,000
Clifford L. Michel $ 57,000 $-0- $-0- $194,500
Peter D. Noris $ -0- $-0- $-0- $ -0-
Donald J. Robinson $ 69,000(2) $-0- $-0- $235,500
- ----------------------------------------------------------------------------------------------------------
</TABLE>
- ----------
1 As of December 31, 1997, there were 119 investment companies in the Alliance
Fund Complex.
2 Completely deferred. The total amounts of deferred compensation (including
interest) payable by the Trust to Messrs. Couper, Mannion and Robinson as of
December 31, 1997 were $13,027, $320,769, and $255,073, respectively.
3 Appointed as Trustee on December 5, 1997.
COMPENSATION OF TRUSTEES
Each Trustee, other than those who are "interested persons" of the Trust (as
defined in the Investment Company Act), receives from the Trust an annual fee
of $29,000, plus an additional fee of $4,000 per board meeting and $2,000 per
committee meeting attended. The meeting fee paid to the Trustee acting as
chairman of the meeting is increased by 50%. The Chairman of the Board receives
an additional annual retainer of $7,000. Trustees receive $1,000 for each day
spent performing special services requested by the Chairman or the President of
the Trust, and reimbursement for expenses in connection with the performance of
regular and special services.
During the year ended December 31, 1997 the Trust paid total retainer and
meeting fees of $496,000 (including deferrals of $210,000).
A deferred compensation plan for the benefit of the Trustees has been adopted
by the Trust. Under the plan each Trustee may defer payment of all or part of
the fees payable for such Trustee's services. Each Trustee may defer payment of
such fees until his retirement as a Trustee or until the earlier attainment of
a specified age. Fees deferred under the plan, together with accrued interest
thereon, will be disbursed to a participating Trustee in monthly installments
over a five- to twenty-year period elected by such Trustee.
23
<PAGE>
THE TRUST'S OFFICERS
No officer of the Trust receives any compensation paid by the Trust. Each
officer of the Trust is an employee of Alliance or Equitable. The Trust's
principal executive officers are:
<TABLE>
<CAPTION>
NAME AND AGE POSITION WITH TRUST PRINCIPAL OCCUPATION DURING LAST FIVE YEARS
- ------------ ------------------- -------------------------------------------
<S> <C> <C>
Mark D. Gersten (47) Treasurer and Chief Financial Senior Vice President, Alliance Fund
Officer Services, Inc. ("AFS"), with which he
has been associated since prior to 1992.
Thomas R. Manley (46) Controller and Chief Vice President, ACMC (May 1996 to
Accounting Officer present); Assistant Vice President,
ACMC (July 1993 to May 1996);
Assistant Vice President, Equitable
Capital Management Corporation
("ECMC") (March 1991 to July 1993).
Bruce W. Calvert (51) Vice President Vice Chairman and Chief Investment
Officer of ACMC, with which he has
been associated since prior to 1992.
Kathleen A. Corbet (38) Vice President Executive Vice President, ACMC
(February 1997 to present); Senior Vice
President, ACMC (July 1993 to
February 1997); Executive Vice
President, ECMC (June 1992 to July
1993).
Jerome S. Golden (53) Vice President Executive Vice President of Equitable
(January 1998 to present); rejoined
Equitable in 1994 as President of the
Income Management Group;
previously President of Golden
Financial Group, which he founded in
1987.
Nelson R. Jantzen (53) Vice President Senior Vice President, ACMC (July
1993 to present); Executive Vice
President, ECMC (June 1992 to July
1993).
Wayne D. Lyski (56) Vice President Executive Vice President, ACMC, with
which he has been associated since
prior to 1992.
Robin K. Murray (42) Vice President Vice President, Equitable (April 1994
to present); associated with Equitable
since prior to 1992.
Alden M. Stewart (52) Vice President Executive Vice President, ACMC (July
1993 to present); associated with
ECMC since prior to 1992.
Edmund P. Bergan, Jr. (47) Secretary Senior Vice President and General
Counsel, Alliance Fund Distributors,
Inc. ("AFD"), with which he has been
associated since prior to 1992.
</TABLE>
24
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
GENERAL INFORMATION
Alliance, an investment adviser registered with the SEC under the Investment
Advisers Act of 1940, has served as the investment adviser to the Trust since
July 22, 1993. Alliance is a major international investment adviser that serves
its clients, who primarily are major corporate employee benefit funds, public
employee retirement systems, investment companies, foundations and endowment
funds, with a staff of approximately 1,500 employees operating out of domestic
offices and the overseas offices of subsidiaries in Australia, Bahrain, Canada,
France, India, Japan, Luxembourg, Singapore, Spain, Turkey and the United
Kingdom, and affiliate offices located in Austria, Brazil, Hong Kong, India,
Poland and South Africa. Alliance's principal executive officer is Dave H.
Williams, its Chairman and Chief Executive Officer.
Alliance is a publicly-traded Delaware limited partnership whose limited
partnership interests, represented by units, are listed on the New York Stock
Exchange. As of December 31, 1997, ACMC and Equitable Capital Management
Corporation, each a wholly-owned direct or indirect subsidiary of Equitable,
owned in the aggregate approximately 57% of the issued and outstanding units
representing assignments of beneficial ownership of limited partnership
interests in the Adviser ("Units"), and approximately 33% and 10% of the Units
were owned by the public and employees of the Adviser and its subsidiaries,
respectively, calculated. ACMC, the sole general partner of, and the owner of a
1% general partnership interest in, Alliance, is a wholly-owned subsidiary of
Equitable Investment Corporation ("EIC"), which in turn is wholly-owned by
Equitable Holding Corporation ("EHC"), a wholly-owned subsidiary of Equitable.
The principal offices of Alliance are located at 1345 Avenue of the Americas,
New York, New York 10105.
Equitable, which is a New York life insurance company and one of the largest
life insurance companies in the United States, is a wholly-owned subsidiary of
The Equitable Companies Incorporated ("The Equitable Companies"), a
publicly-owned holding company. The principal offices of The Equitable
Companies and Equitable are located at 787 Seventh Avenue, New York, New York
10019 and 1290 Avenue of the Americas, New York, New York 10019, respectively.
AXA--UAP, a French insurance holding company, currently owns approximately 59%
of the outstanding voting shares of common stock of The Equitable Companies. As
a majority shareholder of The Equitable Companies, AXA is able to exercise
significant influence over the operations and capital structure of The
Equitable Companies, Equitable and their subsidiaries. AXA--UAP is the holding
company for an international group of insurance and related financial services
companies. AXA-UAP's insurance operations include activities in life insurance,
property and casualty insurance and reinsurance. The insurance operations are
diverse geographically, with activities principally in Western Europe, North
America and the Asia/Pacific area. AXA-UAP is also engaged in assets
management, investment banking, securities trading, brokerage, real estate and
other financial services activities principally in the United States, as well
as in Western Europe and the Asia/Pacific area.
Based on information provided by AXA-UAP, as of September 30, 1997 more
than 25% of the voting power of AXA-UAP was controlled directly and indirectly
by FINAXA, a French holding company. As of September 30, 1997 more than 25% of
the voting power of FINAXA was controlled directly and indirectly by four
French mutual insurance companies (the "Mutuelles AXA"), one of which, AXA
Assurances I.A.R.D. Mutuelle, itself controlled directly and indirectly more
than 25% of the voting power of FINAXA. Acting as a group, the Mutuelles AXA
control AXA-UAP and FINAXA.
ADVISORY AGREEMENT
The Investment Advisory Agreement terminates automatically in the event of its
assignment or, with respect to any Portfolio, upon 60 days' notice given by the
Trust's Board of Trustees, by Alliance or by majority vote (as defined in the
Investment Company Act and the rules thereunder) of the Portfolio's shares.
Otherwise, the term of the Investment Advisory Agreement on behalf of each
Portfolio is two years, but the Agreement will remain in effect from year to
year with respect to any Portfolio so long as its continuance is approved at
least annually by a majority of the non-interested members of the Board of
Trustees, and by (i) a majority vote (as defined in the Investment Company Act
and the rules thereunder) of the Portfolio's shareholders or (ii) the Board of
Trustees.
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The advisory fee payable by the Trust is at the following annual percentages of
the value of each Portfolio's daily average net assets:
<TABLE>
<CAPTION>
DAILY AVERAGE NET ASSETS
-----------------------------------------------------------------------------
FIRST NEXT NEXT NEXT
$750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
-------------- -------------- ------------ -------------- -----------
<S> <C> <C> <C> <C> <C>
Alliance Conservative Investors ......... .475% .425% .375% .350% .325%
Alliance Balanced ....................... .450% .400% .350% .325% .300%
Alliance Growth Investors ............... .550% .500% .450% .425% .400%
Alliance Common Stock ................... .475% .425% .375% .355% .345%*
Alliance Global ......................... .675% .600% .550% .530% .520%
Alliance Aggressive Stock ............... .625% .575% .525% .500% .475%
Alliance Small Cap Growth ............... .900% .850% .825% .800% .775%
Alliance Money Market ................... .350% .325% .300% .280% .270%
Alliance Intermediate Government
Securities ............................. .500% .475% .450% .430% .420%
Alliance High Yield ..................... .600% .575% .550% .530% .520%
Alliance Growth and Income .............. .550% .525% .500% .480% .470%
Alliance Quality Bond ................... .525% .500% .475% .455% .445%
Alliance Equity Index ................... .325% .300% .275% .255% .245%
Alliance International .................. .900% .825% .800% .780% .770%
</TABLE>
- ----------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
Because of undertakings made by Equitable Variable in connection with the
Reorganization, Equitable reimburses the Alliance Common Stock and Alliance
Money Market Divisions of its Continuing Separate Account to offset completely
the effect on such divisions of the portion of the Trust's advisory fees
applicable to such divisions which exceed a .25% effective annual rate. In
addition, Equitable reimburses the Alliance High Yield, Alliance Aggressive
Stock and Alliance Balanced Divisions of its Separate Account I for the portion
of the Trust's advisory fees applicable to those divisions which exceeds a .25%
effective annual rate. Because of expense limits in the variable annuity
contracts funded by its Separate Account A, Equitable reimburses the Alliance
Common Stock, Alliance Money Market and Alliance Balanced Division of that
separate account for the portion of the Trust's advisory fees applicable to
those divisions which exceeds a .26% effective rate, and the Alliance
Aggressive Stock Division for the portion that exceeds a .41% effective rate.
Policies sold by insurers other than Equitable and newer policy designs of
Equitable bear the advisory fees without adjustment. For a discussion of the
Reorganization, see "General Information," above.
In 1997, the Trust paid advisory fees of $83,421,824 to Alliance. In 1996, the
Trust paid advisory fees of $59,901,466 to Alliance. In 1995, the Trust paid
advisory fees of $40,636,168 to Alliance.
SPECIFIC SERVICES PERFORMED
Alliance performs the following services for or on behalf of the Trust pursuant
to the Investment Advisory Agreement.
Subject to the approval and supervision of the Board of Trustees, Alliance
exercises overall responsibility for the investment and reinvestment of the
Trust's assets. Alliance manages each Portfolio and is responsible for the
investment operations of the Trust and the composition of each Portfolio,
including the purchase, retention and disposition of the investments,
securities and cash contained therein, in accordance with each Portfolio's
investment objectives and policies as stated in the Trust's Agreement and
Declaration of Trust, By-laws, Prospectus and Statement of Additional
Information from time to time in effect. In connection therewith, Alliance
provides investment research and supervision of the Trust's
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<PAGE>
investments and conducts a continuous program of investment evaluation and, if
appropriate, sales and reinvestment of the Trust's assets. Alliance furnishes
to the Trust such statistical information, with respect to the investments
which the Trust may hold or contemplate purchasing, as the Trust may reasonably
request. On Alliance's own initiative, it apprises the Trust of important
developments materially affecting each Portfolio and furnishes the Trust from
time to time such information as it may believe appropriate for this purpose.
In addition, Alliance furnishes to the Board of Trustees such periodic and
special reports as the Board may reasonably request. Alliance also implements
all purchases and sales of investments for each Portfolio in a manner
consistent with such investment policies, as from time to time amended.
Alliance, on behalf of the Trust, arranges for the placement of orders and
other execution of transactions for each Portfolio.
At the Trust's request, Alliance provides, without charge, personnel, who may
be the Trust's officers, to render such clerical, administrative and other
services, other than investor services or accounting services, to the Trust and
also furnishes to the Trust, without charge, such office facilities, which may
be Alliance's own offices, as may be required to perform its investment
advisory and portfolio management services. The Trust may also hire its own
employees and contract for services to be performed by third parties.
Pursuant to the terms of the Investment Advisory Agreement, Alliance has
contracted with Equitable for the provision of certain administrative services
to the Trust.
Alliance also performs investment advisory services for certain of Equitable's
separate and advisory accounts and for other clients, including mutual funds
registered as investment companies under the Investment Company Act, some of
which fund Contracts issued by Equitable and certain other unaffiliated
insurance companies. There are occasions on which transactions for the Trust
may be executed as part of concurrent authorizations to purchase or sell the
same security for Equitable's general account or for other accounts or
investment companies managed by Equitable or Alliance. These concurrent
authorizations potentially can be either advantageous or disadvantageous to the
Trust. When these concurrent authorizations occur, the objective is to allocate
the executions and related brokerage charges among the accounts or mutual funds
in an equitable manner.
ACCOUNTING SERVICES
Under an Accounting Services Agreement dated as of June 30, 1997, Alliance
has agreed to provide, or arrange for the provision of, certain investment
accounting services, including calculation of net asset values, preparation of
financial statements for each Portfolio, and such other accounting services as
the Trust may from time to time reasonably request, in exchange for
reimbursement by the Trust of costs and expenses incurred in providing, or
arranging for the provision of, such services. For the period July 18, 1997
through December 31, 1997. Alliance was reimbursed for $377,128 of costs and
expenses incurred in arranging for the provision of accounting services.
BROKERAGE ALLOCATION
SELECTION OF BROKERS
Pursuant to the Investment Advisory Agreement, Alliance, on behalf of the
Trust, arranges for the placement of orders and other transactions for each
Portfolio.
BROKERAGE COMMISSIONS
The Portfolios are charged for securities brokers' commissions, transfer taxes
and similar fees relating to securities transactions. Alliance seeks to obtain
the best price and execution on all orders placed for the Portfolios,
considering all the circumstances except to the extent it may be permitted to
pay higher commissions as described below.
It is expected that securities will ordinarily be purchased in the primary
markets, whether over-the-counter or listed, and that listed securities may be
purchased in the over-the-counter market if that market is deemed the primary
market.
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Transactions on stock exchanges involve the payment of brokerage commissions.
In transactions on stock exchanges in the United States, these commissions are
negotiated, whereas on many foreign stock exchanges these commissions are
fixed. However, brokerage commission rates in certain countries in which the
Portfolios may invest may be discounted for certain large domestic and foreign
investors such as the Portfolios. A number of foreign banks and brokers will be
used for execution of each Portfolio's portfolio transactions. In the case of
securities traded in the foreign and domestic over-the-counter markets, there
is generally no stated commission, but the price usually includes an
undisclosed com-mission or mark-up. In underwritten offerings, the price
generally includes a disclosed fixed commission or discount.
Alliance may, in the allocation of brokerage business, take into consideration
research and other brokerage services provided by brokers and dealers to
Equitable or Alliance. The research services include economic, market, industry
and company research material. Based upon an assessment of the value of
research and other brokerage services provided, proposed allocations of
brokerage for commission transactions are periodically prepared internally. In
limited cases, certain brokers have been advised informally that, although the
Trust is under no legal obligation, an attempt will be made to meet the
internally proposed level of allocated brokerage business to the broker for
brokerage and research services over a period of time.
Commissions charged by brokers which provide research services may be somewhat
higher than commissions charged by brokers which do not provide them. As
permitted by Section 28(e) of the Securities Exchange Act of 1934 and by
policies adopted by the Trustees, Alliance may cause the Trust to pay a
broker-dealer which provides brokerage and research services to Alliance an
amount of commission for effecting a securities transaction for the Trust in
excess of the commission another broker-dealer would have charged for effecting
that transaction.
Alliance does not engage brokers whose commissions it believes to be
unreasonable in relation to services provided. The overall reasonableness of
commissions paid will be evaluated by rating brokers on such general factors as
execution capabilities, quality of research (that is, quantity and quality of
information provided, diversity of sources utilized, nature and frequency of
communication, professional experience, analytical ability and professional
stature of the broker) and financial standing, as well as the net results of
specific transactions, taking into account such factors as price, promptness,
size of order and difficulty of execution. The research services obtained will,
in general, be used by Alliance for the benefit of all accounts for which it
makes investment decisions. The receipt of research services from brokers will
tend to reduce Alliance's expenses in managing the Portfolios other than the
Alliance Money Market Portfolio. This has been taken into account when setting
the amount paid for managing those Portfolios. Although orders may be given by
the Alliance Money Market Portfolio to brokers or dealers which provide
research services to Alliance, the fact that the investment adviser may benefit
from such research has not been considered when setting the amount paid for
managing that Portfolio. This is because Alliance Money Market Portfolio
transactions will generally be with issuers or market makers where no
commissions are charged. In 1995 the Trust paid an aggregate of $21,329,056 in
brokerage commissions of which $18,468,344 was paid to brokers relating to
transactions aggregating $8,928,306,482 which were directed to them in part for
research services provided by them. In 1996 the Trust paid an aggregate of
$27,895,553 in brokerage commissions of which $25,576,822 was paid to brokers
relating to transactions aggregating $12,956,909,742 which were directed to
them in part for research services provided by them. In 1997 the Trust paid an
aggregate of $30,333,516 in brokerage commissions of which $14,164,169 was paid
to brokers relating to transactions aggregating $15,241,230,017 which were
directed to them in part for research services provided by them.
BROKERAGE TRANSACTIONS WITH AFFILIATES
To the extent permitted by law, the Trust may engage in brokerage transactions
with its affiliate, Donaldson, Lufkin & Jenrette, Inc. ("DLJ"), with brokers
who are DLJ affiliates, or with unaffiliated brokers who trade or clear through
DLJ. The Investment Company Act generally prohibits the Trust from engaging in
securities transactions with DLJ or its affiliates, as principal, unless
pursuant to an exemptive order from the SEC. The Trust may apply for such
exemptive relief. The Trust has adopted procedures,
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<PAGE>
prescribed by the Investment Company Act, which are reasonably designed to
provide that any commissions or other remuneration it pays to DLJ or its
affiliates do not exceed the usual and customary broker's commission. In
addition, the Trust will adhere to the requirements under the Securities
Exchange Act of 1934 governing floor trading. Also, due to securities law
limitations, the Trust will limit purchases of securities in a public offering,
if such securities are underwritten by DLJ or its affiliates. During the year
ended December 31, 1995, the Trust paid no brokerage commissions to DLJ, during
the fiscal year ended December 31, 1996, the Trust paid $2,500 to Autranet,
Inc., an affiliate of DLJ, and during the fiscal year ended December 31, 1997,
the Trust paid $29,805 to DLJ, in accordance with the procedures described
above.
TRUST EXPENSES AND OTHER CHARGES
Pursuant to the Trust's Investment Advisory Agreement, the Trust is obligated
to pay all of its operating expenses not specifically assumed by Alliance. A
daily adjustment will be made in the values under certain Contracts outstanding
and offered by Equitable when the management separate accounts of Equitable and
Equitable Variable were reorganized into unit investment trust form to offset
completely the impact of any such expense on values under such Contracts.
Contracts sold by insurers other than Equitable and Equitable Variable and new
policy designs of Equitable bear such expenses without adjustment. Although
Equitable does not expect the Trust to incur any federal income or excise tax
liability (see "Dividends, Distributions and Taxes" in the Prospectus),
Equitable reserves the right to exclude any such taxes from such adjustments.
The expenses borne by the Trust include or could include taxes; brokerage
commissions; interest charges; securities lending fees; fees and expenses of
the registration or qualification of a Portfolio's securities under federal or
state securities laws; fees of the Portfolio's custodian, transfer agent,
independent accountants, and legal counsel; all expenses of shareholders' and
trustees' meetings; all expenses of the preparation, typesetting, printing and
mailing to existing shareholders of prospectuses, prospectus supplements,
statements of additional information, proxy statements, and annual and
semi-annual reports; any proxy solicitor's fees and expenses; costs of fidelity
bonds and Trustees' liability insurance premiums as well as extraordinary
expenses such as indemnification payments or damages awarded in litigation or
settlements made; any membership fees of the Investment Company Institute and
similar organizations; costs of maintaining the Trust's corporate existence and
the compensation of Trustees who are not directors, officers, or employees of
Alliance or its affiliates.
PURCHASE AND PRICING OF SECURITIES
As stated in the Prospectus, the Trust will offer and sell its shares at each
Portfolio's per share net asset value, which will be determined in the manner
set forth below.
The net asset value of the shares of each Portfolio of the Trust will be
determined once daily, immediately after the declaration of dividends, if any,
at the close of business on each business day. The net asset value per share of
each Portfolio will be computed by dividing the sum of the investments held by
that Portfolio, plus any cash or other assets, minus all liabilities, by the
total number of outstanding shares of that Portfolio at such time. All expenses
borne by the Trust, including the investment advisory fee payable to Alliance,
will be accrued daily.
The net asset value per share of any series (i.e., Portfolio) will be
determined and computed as follows, in accordance with generally accepted
accounting principles, and consistent with the Investment Company Act:
o The assets belonging to each series will include (a) all consideration
received by the Trust for the issue or sale of shares of that
particular series, together with all assets in which such
consideration is invested or reinvested, (b) all income, earnings,
profits, and proceeds thereof, including any proceeds derived from the
sale, exchange or liquidation of such assets, (c) any funds or
payments derived from any reinvestment of such proceeds in whatever
form the same may be and (d)
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General Items, if any, allocated to that series. General Items
includes any assets, income, earnings, profits, and proceeds thereof,
funds, or payments which are not readily identifiable as belonging to
any particular series. General Items will be allocated as the Trust's
Board of Trustees considers fair and equitable.
o The liabilities belonging to each series will include (a) the
liabilities of the Trust in respect of that series, (b) all expenses,
costs, charges and reserves attributable to that series, and (c) any
general liabilities, expenses, costs, charges or reserves of the Trust
which are not readily identifiable as belonging to any particular
series which have been allocated as the Trust's Board of Trustees
considers fair and equitable.
The value of each Portfolio will be determined at the close of business on each
"business day," i.e., each day in which the degree of trading in the Portfolio
might materially affect the net asset value of such Portfolio. Normally, this
would be each day that the NYSE is open and would include some Federal
holidays. For stocks and options, the close of trading is the 4:00 p.m. and
4:15 p.m. (Eastern time) close respectively of the NYSE and the Options Price
Reporting Authority; for bonds the close of trading is the close of business in
New York City, and for foreign securities it is the close of business in the
applicable foreign country with exchange rates determined at 2:00 p.m. New York
City time.
Values are determined according to generally accepted accounting practices and
all laws and regulations that apply. The assets of each Portfolio are valued as
follows:
o Stocks listed on national securities exchanges and certain
over-the-counter issues traded on the NASDAQ national market system
are valued at the last sale price, or, if there is no sale, at the
latest available bid price. Other unlisted stocks are valued at their
last sale price or, if there is no reported sale during the day, at a
bid price estimated by a broker.
o Foreign securities not traded directly, or in American Depositary
Receipt or similar form in the United States, are valued at
representative quoted prices in the currency of the country of origin.
Foreign currency is converted into its U.S. dollar equivalent at
current exchange rates.
o U.S. Treasury securities and other obligations issued or guaranteed by
the U.S. Government, its agencies or instrumentalities, are valued at
representative quoted prices.
o Long-term corporate bonds may be valued on the basis of prices
provided by a pricing service when such prices are believed to reflect
the fair market value of such securities. The prices provided by a
pricing service take into account many factors, including
institutional size, trading in similar groups of securities and any
developments related to specific securities; however, when such prices
are not available, such bonds are valued at a bid price estimated by a
broker.
o Short-term debt securities held by Portfolios other than the Money
Market Portfolio which mature in 60 days or less are valued at
amortized cost, which approximates market value. Short-term debt
securities held by such Portfolios which mature in more than 60 days
are valued at representative quoted prices. Securities held by the
Money Market Portfolio are valued at prices based on equivalent yields
or yield spreads.
o Convertible preferred stocks listed on national securities exchanges
are valued as of their last sale price or, if there is no sale, at the
latest available bid price.
o Convertible bonds, and unlisted convertible preferred stocks, are
valued at bid prices obtained from one or more of the major dealers in
such bonds or stocks. Where there is a discrepancy between dealers,
values may be adjusted based on recent premium spreads to the
underlying common stocks.
o Mortgage backed and asset backed securities are valued at prices
obtained from a bond pricing service where available, or at a bid
price obtained from one or more of the major dealers in such
securities. If a quoted price is unavailable, an equivalent yield or
yield spread quotes will be obtained from a broker and converted to a
price.
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o Purchased options, including options on futures, are valued at their
last bid price. Written options are valued at their last asked price.
o Futures contracts are valued as of their last sale price or, if there
is no sale, at the latest available bid price.
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
using its best judgment.
The market value of a put or call option will usually reflect, among other
factors, the market price of the underlying security.
When the Trust writes a call option, an amount equal to the premium received by
the Trust is included in the Trust's financial statements as an asset and an
equivalent liability. The amount of the liability is subsequently
marked-to-market to reflect the current market value of the option written.
When an option expires on its stipulated expiration date or the Trust enters
into a closing purchase or sale transaction, the Trust realizes a gain (or
loss) without regard to any unrealized gain or loss on the underlying security,
and the liability related to such option is extinguished. When an option is
exercised, the Trust realizes a gain or loss from the sale of the underlying
security, and the proceeds of sale are increased by the premium originally
received, or reduced by the price paid for the option.
Alliance may, from time to time, under the general supervision of the Board of
Trustees or its valuation committee, utilize the services of one or more
pricing services for assistance in valuing the assets of the Trust. Alliance
will continuously monitor the performance of such pricing services.
CERTAIN TAX CONSIDERATIONS
Each Portfolio is treated for Federal income tax purposes as a separate
taxpayer. The Trust intends that each Portfolio shall qualify each year and
elect to be treated as a regulated investment company under Subchapter M of the
Internal Revenue Code of 1986, as amended (the "Code").
As a regulated investment company, each Portfolio will not be subject to
federal income or excise tax on any of its net investment income or net
realized capital gains which are timely distributed to shareholders under the
Code. Under present law, as a Massachusetts business trust doing business in
New York, a Portfolio will also not be subject to any excise or income taxes in
Massachusetts or New York on such amounts. A number of technical rules are
prescribed for computing net investment income and net capital gains. For
example, dividends are generally treated as received on the ex-dividend date.
Also, certain foreign currency losses and capital losses arising after October
31 of a given year may be treated as if they arise on the first day of the next
taxable year.
Portfolios investing in foreign securities or currencies may be subject to
foreign taxes which could reduce the investment performance of such Portfolios.
To qualify for treatment as a regulated investment company, a Portfolio must,
among other things, derive in each taxable year at least 90% of its gross
income from dividends, interest, payments with respect to securities loans,
gains from the sale or other disposition of stock or securities or foreign
currencies, or other income derived with respect to its business of investing.
This 30% rule may be inapplicable in the context of certain abnormal
redemptions of Portfolio shares. For purposes of this test, gross income is
determined without regard to losses from the sale or other disposition of stock
or securities. In addition, the Secretary of the Treasury has regulatory
authority to exclude from qualifying income described above foreign currency
gains which are not "directly related" to a regulated investment company's
"principal business of investing" in stock, securities or related options or
futures. The Secretary of the Treasury has not to date exercised this
authority.
A Portfolio, in general, must also (a) diversify its holdings so that, at
the close of each quarter of its taxable year, (i) at least 50% of the market
value of its total assets consists of cash and cash items (including
receivables), U.S. Government securities, securities of other regulated
investment companies, and other securities limited generally with respect to
any one issuer to not more than 5% of the value of
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its total assets and not more than 10% of the outstanding voting securities of
such issuer, and (ii) not more than 25% of the value of its total assets is
invested in the securities (other than U.S. Government securities or securities
of other regulated investment companies) of any issuer or two or more issuers
which the Fund controls and which are engaged in the same, similar, or related
trades or businesses, and (b) distribute with respect to each taxable year at
least 90% of the sum or its taxable net investment income, its net tax-exempt
income, and the excess, if any, of net short-term capital gains over net
long-term capital losses for such year.
Generally, in order to avoid a 4% nondeductible excise tax, each Portfolio of
the Trust must distribute to its shareholders during the calendar year the
following amounts:
o 98% of the Portfolio's ordinary income for the calendar year;
o 98% of the Portfolio's capital gain net income (all capital gains,
both long-term and short-term, minus all such capital losses),
computed as if the Portfolio were on a taxable year ending October 31
of the year in question and beginning the previous November 1; and
o any undistributed ordinary income or capital gain net income for the
prior year.
The excise tax is inapplicable to any regulated investment company whose sole
shareholders are either tax-exempt pension trusts or separate accounts of life
insurance companies funding variable contracts. Although each Portfolio
believes that it is not subject to the excise tax, the Portfolios intend to
make the distributions required to avoid the imposition of such a tax.
Because the Trust is used to fund non-qualified Contracts, each Portfolio must
meet the diversification requirements imposed by the Code or these policies
will fail to qualify as life insurance and annuities. In general, for a
Portfolio to meet the investment diversification requirements of Subchapter L
of the Code, Treasury regulations require that no more than 55% of the total
value of the assets of the Portfolio may be represented by any one investment,
no more than 70% by two investments, no more than 80% by three investments and
no more than 90% by four investments. Generally, for purposes of the
regulations, all securities of the same issuer are treated as a single
investment. In the context of U.S. Government securities (including any
security that is issued, guaranteed or insured by the United States or an
instrumentality of the United States) each U.S. Government agency or
instrumentality is treated as a separate issuer. Compliance with the
regulations is tested on the last day of each calendar year quarter. There is a
30-day period after the end of each calendar year quarter in which to cure any
non-compliance.
PORTFOLIO PERFORMANCE
Investment operations commenced with respect to Class IB shares of the Alliance
Aggressive Stock, Alliance Common Stock, Alliance Growth Investors, Alliance
Global, Alliance High Yield and Alliance Money Market Portfolios on October 2,
1996. Returns shown for Class IB shares of these Portfolios for periods prior
to October 2, 1996 and returns shown for Class IB shares of other Portfolios
are derived from the historical performance of Class IA shares, adjusted to
reflect the 12b-1 fees, currently paid at an annual rate of 0.25% of average
net assets, applicable to Class IB shares.(1) Class IA shares are not subject
to any 12b-1 fees.
At any time in the future, yields and total returns may be higher or lower than
past yields or returns and there can be no assurance that any historical
results will continue. All returns assume reinvestment of distributions at net
asset value and represent past performance; they do not guarantee future
results. Investment return and principal value will fluctuate so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Returns and yields shown do not reflect insurance company charges and
fees applicable to the Contracts.
- ---------------------
(1) With respect to the Alliance Small Cap Growth Portfolio, the 12b-1 fee is
paid at an annual rate not to exceed the lesser of (a) 0.25% of the average
daily net assets of the Portfolio attributable to Class IB shares and (b)
an amount that, when added to certain other expenses of the Class IB
shares, would result in the ratio of such expenses to average daily net
assets attributable to Class IB shares equalling 1.20%.
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ALLIANCE MONEY MARKET PORTFOLIO YIELD
The Alliance Money Market Portfolio calculates yield information for seven-day
periods. The seven-day current yield calculation is based on a hypothetical
shareholder account with one share at the beginning of the period. To determine
the seven-day rate of return, the net change in the share value is computed by
subtracting the share value at the beginning of the period from the share value
(exclusive of capital changes) at the end of the period. The net change is
divided by the share value at the beginning of the period to obtain the base
period rate of return. This seven-day base period return is then multiplied by
365/7 to produce an annualized current yield figure carried to the nearest
one-hundredth of one percent.
Realized capital gains or losses and unrealized appreciation or depreciation of
the Portfolio are excluded from this calculation. The net change in share
values also reflects all accrued expenses of the Alliance Money Market
Portfolio as well as the value of additional shares purchased with dividends
from the original shares and any additional shares.
The effective yield is obtained by adjusting the current yield to give effect
to the compounding nature of the Alliance Money Market Portfolio's investments,
as follows: The unannualized base period return is compounded by adding one to
the base period return, raising the sum to a power equal to 365 divided by 7,
and subtracting one from the result--i.e., effective yield = [(base period
return +1)365/7] - 1.
Alliance Money Market Portfolio yields will fluctuate daily. Accordingly,
yields for any given period are not necessarily representative of future
results. Yield is a function of the type and quality of the instruments in the
Alliance Money Market Portfolio, maturities and rates of return on investments,
among other factors. In addition, the value of shares of the Alliance Money
Market Portfolio will fluctuate and not remain constant.
The Alliance Money Market Portfolio yield may be compared with yields of other
investments. However, it should not be compared to the return on fixed rate
investments which guarantee rates of interest for specified periods. The yield
also should not be compared to the yield of money market funds made available
to the general public because their yields usually are calculated on the basis
of a constant $1 price per share and they pay out earnings in dividends which
accrue on a daily basis. Investment income of the Alliance Money Market
Portfolio, including any realized gains as well as accrued interest, is not
paid out in dividends but is reflected in the share value. The Alliance Money
Market Portfolio yield also does not reflect insurance company charges and fees
applicable to Contracts.
The seven-day current yield for Class IB shares of the Alliance Money Market
Portfolio was 5.10% for the period ended December 31, 1997. The effective yield
for that period was 5.23%.
ALLIANCE QUALITY BOND, ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES AND ALLIANCE
HIGH YIELD PORTFOLIO YIELDS
Yields of the Alliance Quality Bond, Alliance Intermediate Government
Securities and Alliance High Yield Portfolios will be computed by annualizing
net investment income, as determined by the SEC's formula, calculated on a per
share basis for a recent 30-day period and dividing that amount by a Portfolio
share's net asset value (reduced by any undeclared earned income expected to be
paid shortly as a dividend) on the last trading day of that period. Net
investment income will reflect amortization of any market value premium or
discount of fixed income securities (except for obligations backed by mortgages
or other assets) over such period and may include recognition of a pro rata
portion of the stated dividend rate of dividend paying portfolio securities.
The Portfolios' yields will vary from time to time depending upon market
conditions, the compostition of each Portfolio's portfolio and operating
expenses of the Trust allocated to each Portfolio. Yield should also be
considered relative to changes in the value of a Portfolio's shares and to the
relative risks associated with the investment objectives and policies of the
Portfolios. These yields do not reflect insurance company charges and fees
applicable to the Contracts.
The 30-day yields for Class IB shares of the Alliance Intermediate Government
Securities and Alliance High Yield Portfolio for the period ended December 31,
1997 were 5.31% and 10.07%, respectively.
33
<PAGE>
TOTAL RETURN CALCULATIONS
Each Portfolio may provide average annual total return information calculated
according to a formula prescribed by the SEC. According to that formula,
average annual total return figures represent the average annual compounded
rate of return for the stated period. Average annual total return quotations
reflect the percentage change between the beginning value of a static account
in the Portfolio and the ending value of that account measured by the then
current net asset value of that Portfolio assuming that all dividends and
capital gains distributions during the stated period were invested in shares of
the Portfolio when paid. Total return is calculated by finding the average
annual compounded rates of return of a hypothetical investment that would
equate the initial amount invested to the ending redeemable value of such
investment, according to the following formula:
T = (ERV/P)1/n - 1
where T equals average annual total return; where ERV, the ending redeemable
value, is the value at the end of the applicable period of a hypothetical
$1,000 investment made at the beginning of the applicable period; where P
equals a hypothetical initial investment of $1,000; and where n equals the
number of years. These total returns do not reflect insurance company charges
and fees applicable to the Contracts.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Common Stock Portfolio for one year, five years and ten years
were 29.40%, 20.81%, and 17.74%, respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Intermediate Government Securities Portfolio for one year, five
years, and since the Portfolio's inception (on April 1, 1991) were 7.01%,
5.68%, and 6.74%, respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance High Yield Portfolio for one year, five years, and ten years
were 18.19%, 15.63%, and 12.54%, respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Global Portfolio for one year, five years and ten years were
11.38%, 15.89%, and 13.49%, respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Aggressive Stock Portfolio for one year, five years and ten
years were 10.66%, 14.66%, and 18.74%, respectively.
The average annual total returns through December 31, 1997 for the Alliance
Conservative Investors Portfolio for one year, five years, and since the
Portfolio's inception (on October 2, 1989) were 12.97%, 8.53%, and 9.25%,
respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Growth Investors Portfolio for one year, five years and since
the Portfolio's inception (on October 2, 1989) were 16.58%, 12.92%, and 15.45%,
respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Growth and Income Portfolio for one year and since the
Portfolio's inception (on October 1, 1993) were 26.61% and 15.64%,
respectively.
The average annual total returns through December 31, 1997 for Class IB shares
of the Alliance Equity Index Portfolio for one year and since the Portfolio's
inception (on March 1, 1994) were 32.26% and 23.13%, respectively.
The average annual total returns through December 31, 1997 for the Alliance
International Portfolio for one year and since the Portfolio's inception (April
3, 1995) were (3.23)% and 6.12%, respectively.
The total return through December 31, 1997 for the Alliance Small Cap Growth
Portfolio since the Portfolio's inception (May 1, 1997) was 26.57%.
Each Portfolio, from time to time, also may advertise its cumulative total
return figures. Cumulative total return is the compound rate of return on a
hypothetical initial investment of $1,000 for a specified period. Cumulative
total return quotations reflect changes in the price of a Portfolio's shares
and assume
34
<PAGE>
that all dividends and capital gains distributions during the period were
reinvested in shares of that Portfolio. Cumulative total return is calculated
by finding the compound rates of return of a hypothetical investment over such
period, according to the following formula (cumulative total return is then
expressed as a percentage):
C = (ERV/P) - 1
Where:
C = Cumulative Total Return
P = a hypothetical initial investment of $1,000
ERV = ending redeemable value; ERV is the value, at the end of the applicable
period, of a hypothetical $1,000 investment made at the beginning of the
applicable period.
The cumulative total returns, since the inception of each Portfolio through
December 31, 1997, for Class IB shares of the Alliance Common Stock, Alliance
Intermediate Government Securities, Alliance High Yield, Alliance Balanced,
Alliance Global, Alliance Aggressive Stock, Alliance Conservative Investors,
Alliance Growth Investors, Alliance Quality Bond, Alliance Growth and Income,
Alliance Equity Index, Alliance International, and Alliance Small Cap Growth
Portfolios were 2,302.90%, 55.30%, 240.42%, 206.46%, 630.91%, 107.51%, 227.07%,
85.41%, 121.90%, 17.74% and 26.57%, respectively.
OTHER SERVICES
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 1177 Avenue of the Americas, New York, New York 10036,
serves as the Trust's independent accountant. The financial statements of the
Alliance Common Stock, Alliance Money Market, Alliance Balanced, Alliance
Aggressive Stock, Alliance High Yield, Alliance Global, Alliance Conservative
Investors, Alliance Growth Investors, Alliance Intermediate Government
Securities, Alliance Quality Bond, Alliance Growth and Income, Alliance
International, Alliance Equity Index and Alliance Small Cap Growth Portfolios
for the year ended December 31, 1997, which are included in this SAI, have been
audited by Price Waterhouse LLP, the Trust's independent accountant for such
periods, as stated in their report appearing herein, and have been so included
in reliance upon such report given upon the authority of such firm as experts
in accounting and auditing.
CUSTODIAN
The Chase Manhattan Bank, whose principal address is One Chase Manhattan Plaza,
New York, New York 10081, has been designated the Custodian of the Trust's
portfolio securities and other assets.
TRANSFER AGENT
Equitable serves as the transfer agent and dividend disbursing agent for the
Trust. For the year ended December 31, 1997, Equitable received no compensation
for providing such services for the Trust.
UNDERWRITER
The Trust has distribution agreements (the "Class IB Underwriting Agreements")
with each of Equitable Distributors, Inc. ("EDI") and EQ Financial Consultants,
Inc. ("EQ Financial") (each a "Class IB Distributor") with respect to the Class
IB shares. Both EDI and EQ Financial are indirect wholly-owned subsidiaries of
Equitable and affiliates of Alliance. The address for EDI is 787 Seventh
Avenue, New York, New York 10019. The address for EQ Financial is 1290 Avenue
of the Americas, New York, New York 10104.
The Class IB Underwriting Agreements became effective on July 1, 1998. The
Class IB Underwriting Agreement with EDI replaced an earlier substantially
identical agreement (the "First Underwriting Agreement") that was amended to
reflect the addition of EQ Financial as a Class IB Distributor.
35
<PAGE>
The Class IB Underwriting Agreements will remain in effect until July 1, 1999,
and from year to year thereafter only if their continuance is approved annually
by (1) a majority of the Trustees who are not parties to such agreement or
"interested persons" (as defined in the Investment Company Act) of the Trust or
a Portfolio and who have no direct or indirect financial interest in the
operation of the distribution plan adopted under Rule 12b-1 of the Investment
Company Act (the "Distribution Plan") or any such related agreement (the
"Independent Trustees") and (2) either by vote of a majority of the Trustees or
a majority of the outstanding voting securities of the Trust.
Each Class IB Distributor will pay for printing and distributing prospectuses
or reports prepared for its use in connection with its offering of the Class IB
shares to prospective investors and preparing, printing and mailing any other
literature or advertising in connection with its offering of the Class IB
shares to prospective investors. Each Class IB Distributor will pay all fees
and expenses in connection with its qualification and registration as a broker
or dealer under Federal and state laws and of any activity which is primarily
intended to result in the sale of Class IB shares issued by the Trust, unless
the Distribution Plan in effect for Class IB shares provides that the Trust or
another entity shall bear some or all of such expenses.
As agent, each Class IB Distributor may offer shares of each Portfolio on a
continuous basis to the separate accounts of insurance companies offering the
Contracts in all states in which the Portfolio or the Trust may from time to
time be registered or where permitted by applicable law. The Class IB
Underwriting Agreements provide that each Class IB Distributor accepts orders
for shares at net asset value without sales commission or load being charged.
Neither Class IB Distributor has made any firm commitment to acquire shares of
any Portfolio.
A description of the Distribution Plan and related services and fees thereunder
is provided in the prospectus. On June 7, 1996, the Board of Trustees of the
Trust unanimously approved the Distribution Plan. In connection with its
consideration of the Distribution Plan, the Board of Trustees was furnished
with drafts of the Distribution Plan and the related materials, including
information related to the advantages and disadvantages of Rule 12b-1 plans
currently being used in the mutual fund industry generally and with other
competing funding vehicles for variable annuity and variable life contracts.
Legal counsel for the Independent Trustees provided additional information,
summarized the provisions of the proposed Distribution Plan and discussed the
legal and regulatory considerations in adopting such Distribution Plan.
The Board considered various factors in connection with its decision as to
whether to approve the Distribution Plan, including (a) the nature and causes
of the circumstances which make implementation of the Distribution Plan
necessary and appropriate; (b) the way in which the Distribution Plan would
address those circumstances, including the nature and potential amount of
expenditures; (c) the nature of the anticipated benefits; (d) the possible
benefits of the Distribution Plan to any other person relative to those of the
Trust; (e) the effect of the Distribution Plan on existing owners of variable
annuity contracts and variable life insurance policies; (f) the merits of
possible alternative plans or pricing structures; (g) competitive conditions in
the variable products industry; and (h) the relationship of the Distribution
Plan to other distribution efforts of the Trust.
Based upon its review of the foregoing factors and the materials presented to
it, and in light of its fiduciary duties under relevant state law and the
Investment Company Act, the Board determined, in the exercise of its business
judgment, that the Distribution Plan is reasonably likely to benefit the Trust
and the shareholders of its Portfolios.
The Distribution Plan and any Rule 12b-1 related agreement that is entered into
by the Trust or a Class IB Distributor in connection with the Distribution Plan
will continue in effect for a period of more than one year only so long as its
continuance is specifically approved at least annually by a vote of a majority
of the Trust's Board of Trustees, and of a majority of the Independent
Trustees, cast in person at a meeting called for the purpose of voting on the
Distribution Plan, or the Rule 12b-1 related agreement, as applicable. In
addition, the Distribution Plan and any Rule 12b-1 related agreement may be
terminated as to Class IB shares of a Portfolio at any time, and in the case of
any Rule 12b-1 related agreement, upon 60 days' written notice, without
penalty, by vote of a majority of the outstanding Class IB shares of that
36
<PAGE>
Portfolio or by vote of a majority of the Independent Trustees. The
Distribution Plan also provides that it may not be amended to increase
materially the amount (to more than .50% of average daily net assets annually)
that may be spent for distribution of Class IB shares of a Portfolio without
the approval of Class IB shareholders of that Portfolio. The Trustees currently
limit payments under the Distribution Plan to .25% of a Portfolio's aggregate
average daily net assets attributable to the Class IB shares. The Distribution
Plan provides that a portion of the distribution services fee in an amount not
to exceed .25% of the aggregate average daily net assets of a Portfolio
attributable to Class IB shares constitutes a service fee that the Class IB
Distributor will use for personal service and/or the maintenance of shareholder
accounts. The Distribution Plan also provides that Alliance may use its own
resources, which may include management fees received by Alliance from the
Trust or other investment companies which it manages and Alliance's past
profits, to finance the distribution of the Portfolios' shares.
The Class IB Underwriting Agreements provide that each Class IB Distributor
will receive fees, from each Portfolio other than the Alliance Small Cap Growth
Portfolio, at the annual rate of 0.25% of the average annual net assets of such
Portfolio attributable to Class IB shares for which such Class IB Distributor
provides services and/or assumes expenses under the Distribution Plan. With
respect to the Alliance Small Cap Growth Portfolio, this amount shall not
exceed the lesser of (a) 0.25% of the average daily net assets of the Portfolio
attributable to Class IB shares for which each Class IB Distributor provides
services and/or assumes expenses under the Distribution Plan and (b) an amount
that, when added to certain other expenses of the Class IB shares, would result
in a ratio of expenses to average daily net assets attributable to Class IB
shares for which such Class IB Distributor provides services and/or assumes
expenses under the Distribution Plan equaling 1.20%.
For services rendered by EDI in connection with the distribution of Class IB
shares pursuant to the Distribution Plan, EDI received $75,004 with respect to
the Class IB shares of the Alliance Aggressive Stock Portfolio, $196,197 with
respect to the Class IB shares of the Alliance Common Stock Portfolio, $43,043
with respect to the Class IB shares of the Alliance Growth Investors Portfolio,
$35,117 with respect to the Class IB shares of the Alliance Global Portfolio,
$50,330 with respect to the Class IB shares of the Alliance High Yield
Portfolio, $99,710 with respect to the Class IB shares of the Alliance Money
Market Portfolio, $2,784 with respect to the Class IB shares of the Alliance
Intermediate Government Securities Portfolio, $3,118 with respect to the Class
IB shares of the Alliance Conservative Investors Portfolio, $108 with respect
to the Class IB shares of the Alliance Equity Index Portfolio, $2,877 with
respect to the Class IB shares of the Alliance International Portfolio, $22,465
with respect to the Class IB shares of the Alliance Small Cap Growth Portfolio,
and $21,823 with respect to the Class IB shares of the Alliance Growth and
Income Portfolio for the year ended December 31, 1997.
EDI has informed the Trust that expenses incurred by the Trust and costs
allocated to it in connection with activities primarily intended to result in
the sale of Class IB shares were as follows for the year ended December 31,
1997:
37
<PAGE>
AMOUNT OF EXPENSE AND ALLOCATED COST
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
CATEGORY OF EXPENSE AGGRESSIVE STOCK COMMON STOCK GROWTH INVESTORS GLOBAL HIGH YIELD MONEY MARKET
- ---------------------------- ------------------ -------------- ------------------ ---------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Advertising/Marketing ...... $ 1,629 $ 3,325 $ 1,034 $ 881 $ 757 $ 1,548
Printing and Mailing of
Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders .............. 13,940 40,053 8,006 6,481 9,393 18,630
Compensation to
Underwriters .............. 0 0 0 0 0 0
Compensation to Dealers.....
Compensation to Sales
Personnel ................. 0 0 0 0 0 0
Interest, Carrying or
Other Financing
Charges ................... 0 0 0 0 0 0
Other (includes personnel
cost of those home
office employees
involved in the
distribution effort and
the travel-related
expenses incurred by the
marketing personnel
conducting seminars) ...... 59,435 152,819 34,003 27,755 40,180 79,532
</TABLE>
AMOUNT OF EXPENSE AND ALLOCATED COST
<TABLE>
<CAPTION>
ALLIANCE
INTERMEDIATE ALLIANCE ALLIANCE ALLIANCE ALLIANCE
GOVERNMENT CONSERVATIVE EQUITY ALLIANCE SMALL CAP GROWTH &
CATEGORY OF EXPENSE SECURITIES INVESTORS INDEX INTERNATIONAL GROWTH INCOME
- ---------------------------- -------------- -------------- ---------- --------------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Advertising/Marketing ...... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
Printing and Mailing of
Prospectuses and
Semi-Annual and
Annual Reports to
Other than Current
Shareholders .............. 569 635 22 562 4,218 4,341
Compensation to
Underwriters .............. 0 0 0 0 0 0
Compensation to Dealers.....
Compensation to Sales
Personnel ................. 0 0 0 0 0 0
Interest, Carrying or
Other Financing
Charges ................... 0 0 0 0 0 0
Other (includes personnel
cost of those home
office employees
involved in the
distribution effort and
the travel-related
expenses incurred by the
marketing personnel
conducting seminars) ...... 2,215 2,483 86 2,315 18,034 17,482
</TABLE>
38
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
INTERMEDIATE ALLIANCE
ALLIANCE GOVERNMENT ALLIANCE ALLIANCE GROWTH AND
MONEY MARKET SECURITIES QUALITY BOND HIGH YIELD INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
------------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Investments at value (Notes 1 and 4) ........... $ 551,218,667 $114,937,264 $199,082,370 $ 409,444,270 $584,091,770
Cash ........................................... 250,597 150,271 1,850,749 3,867,754 136,662
Receivable for securities sold ................. -- 8,514,530 -- -- --
Collateral held for securities loaned
(Note 1) ...................................... -- 14,877,570 20,317,896 -- 83,697,400
Receivable from Separate Accounts for Trust
shares sold ................................... 20,699,118 216,925 202,284 3,871,282 4,484,564
Unrealized appreciation of forward currency
contracts (Notes 1 and 4) ..................... -- -- 230,830 -- --
Dividends, interest and other receivables ...... 2,952,078 1,470,759 2,012,816 9,027,978 1,310,011
------------- ------------ ------------ ------------- ------------
Total assets ................................. 575,120,460 140,167,319 223,696,945 426,211,284 673,720,407
------------- ------------ ------------ ------------- ------------
LIABILITIES:
Options written at value (Premiums received:
Alliance Common Stock Portfolio--$103,560,700)
(Notes 1 and 4)................................ -- -- -- -- --
Payable to custodian ........................... -- -- -- -- --
Payable for securities purchased ............... -- 5,013,423 -- 4,100,000 1,517,259
Payable for collateral received on securities
loaned ........................................ -- 14,877,570 20,317,896 -- 83,697,400
Payable to Separate Accounts for Trust shares
redeemed ...................................... 1,207,497 27,928 17,806 16,591 397,040
Variation margin payable on futures contracts .. -- -- -- -- --
Distribution fees payable ...................... 24,848 988 -- 12,299 6,670
Investment advisory fees payable ............... 175,017 52,732 95,141 220,448 280,754
Trustees' fees payable ......................... 29,067 6,308 6,466 8,897 7,871
Accrued expenses ............................... 48,581 22,474 26,158 42,171 57,520
------------- ------------ ------------ ------------- ------------
Total liabilities ............................ 1,485,010 20,001,423 20,463,467 4,400,406 85,964,514
------------- ------------ ------------ ------------- ------------
NET ASSETS ..................................... $ 573,635,450 $120,165,896 $203,233,478 $ 421,810,878 $587,755,893
============= ============ ============ ============= ============
Investments at cost ............................ $ 551,106,796 $113,600,359 $197,176,185 $ 401,820,273 $511,226,533
============= ============ ============ ============= ============
COMPONENTS OF NET ASSETS (NOTE 1):
Paid in capital ............................... $ 573,354,238 $127,643,383 $201,320,004 $ 412,006,119 $507,451,775
Accumulated undistributed (overdistributed)
net investment income ........................ 149,936 17,556 321,561 29,459 (7,871)
Accumulated undistributed net realized gain
(loss) ....................................... 19,405 (8,831,948) (541,234) 2,151,303 7,446,752
Unrealized appreciation/depreciation on
investments and foreign currency denominated
assets and liabilities ....................... 111,871 1,336,905 2,133,147 7,623,997 72,865,237
------------- ------------ ------------ ------------- ------------
NET ASSETS ..................................... $ 573,635,450 $120,165,896 $203,233,478 $ 421,810,878 $587,755,893
============= ============ ============ ============= ============
CLASS IA SHARES:
Net Assets ..................................... $ 449,959,833 $115,114,412 $203,233,478 $ 355,473,286 $555,058,953
============= ============ ============ ============= ============
Shares outstanding (Note 5) .................... 44,192,317 12,190,330 20,863,418 34,161,761 36,099,131
============= ============ ============ ============= ============
Net asset value, offering and redemption
price per share (Note 1) ...................... $ 10.18 $ 9.44 $ 9.74 $ 10.41 $ 15.38
============= ============ ============ ============= ============
CLASS IB SHARES:
Net Assets ..................................... $ 123,675,617 $ 5,051,484 $ 66,337,592 $ 32,696,940
============= ============ ============= ============
Shares outstanding (Note 5) .................... 12,163,496 535,399 6,386,424 2,128,126
============= ============ ============= ============
Net asset value, offering and redemption
price per share (Note 1) ...................... $ 10.17 $ 9.43 $ 10.39 $ 15.36
============= ============ ============= ============
</TABLE>
See Notes to Financial Statements.
39
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE COMMON ALLIANCE ALLIANCE
EQUITY INDEX STOCK GLOBAL INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------- ------------------- ------------------- ---------------
<S> <C> <C> <C>
$ 938,556,102 $ 9,725,410,132 $ 1,221,659,645 $ 182,951,529
99,549 -- 16,893,430 8,347,523
-- 60,067,219 8,205,868 2,023,708
109,536,553 662,838,280 113,847,792 15,052,581
4,552,195 29,633,785 1,766,152 223,944
-- -- 6,004,608 2,059,365
1,147,581 14,458,000 1,735,003 355,921
--------------- ---------------- --------------- -------------
1,053,891,980 10,492,407,416 1,370,112,498 211,014,571
--------------- ---------------- --------------- -------------
-- 118,604,155 -- --
-- 580,406 -- --
-- 142,569,172 28,420,108 1,563,213
109,536,553 662,838,280 113,847,792 15,052,581
231,453 3,076,771 1,327,331 176,950
2,300 -- -- --
24 47,055 8,949 704
264,547 3,091,113 709,265 158,485
13,621 306,186 29,678 3,984
102,458 520,545 382,380 161,478
--------------- ---------------- --------------- -------------
110,150,956 931,633,683 144,725,503 17,117,395
--------------- ---------------- --------------- -------------
$ 943,741,024 $ 9,560,773,733 $ 1,225,386,995 $ 193,897,176
=============== ================ =============== =============
$ 717,317,746 $ 7,039,048,426 $ 1,077,021,016 $ 195,035,943
=============== ================ =============== =============
$ 722,427,560 $ 6,704,717,648 $ 1,067,798,356 $ 210,004,133
(17,221) 8,941,474 451,087 (1,256,432)
(46,439) 175,796,508 7,714,386 (4,700,245)
221,377,124 2,671,318,103 149,423,166 (10,150,280)
--------------- ---------------- --------------- -------------
$ 943,741,024 $ 9,560,773,733 $ 1,225,386,995 $ 193,897,176
=============== ================ =============== =============
$ 943,630,904 $ 9,331,993,502 $ 1,203,866,924 $ 190,610,696
=============== ================ =============== =============
47,791,119 431,744,475 69,624,563 18,568,973
=============== ================ =============== =============
$ 19.74 $ 21.61 $ 17.29 $ 10.27
=============== ================ =============== =============
$ 110,120 $ 228,780,231 $ 21,520,071 $ 3,286,480
=============== ================ =============== =============
5,580 10,601,628 1,246,147 320,403
=============== ================ =============== =============
$ 19.73 $ 21.58 $ 17.27 $ 10.26
=============== ================ =============== =============
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
ALLIANCE AGGRESSIVE SMALL CAP CONSERVATIVE ALLIANCE GROWTH
EQUITY INDEX STOCK GROWTH INVESTORS BALANCED INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ----------------- ----------------- --------------- ----------------- ------------------- -----------------
<S> <C> <C> <C> <C> <C>
$ 938,556,102 $4,484,945,342 $153,853,714 $ 311,255,843 $ 1,711,741,713 $1,657,357,208
99,549 181,729 380,306 39,071 1,336,861 2,638,254
-- 211,128,536 1,370,099 105,731 1,446,489 1,856,156
109,536,553 612,639,016 -- 29,663,095 239,139,139 159,509,187
4,552,195 6,208,417 403,968 325,132 529,990 2,830,011
-- -- -- 139,774 1,492,018 2,702,688
1,147,581 595,158 23,205 2,089,310 10,724,098 5,770,157
--------------- -------------- ------------ ------------- --------------- --------------
1,053,891,980 5,315,698,198 156,031,292 343,617,956 1,966,410,308 1,832,663,661
--------------- -------------- ------------ ------------- --------------- --------------
-- -- -- -- -- --
-- -- -- -- -- --
-- 26,255,439 7,702,919 113,315 2,125,059 5,464,664
109,536,553 612,639,016 -- 29,663,095 239,139,139 159,509,187
231,453 10,893,069 7,192,631 73,102 94,151 461,205
2,300 -- -- -- -- --
24 15,377 8,682 1,107 -- 7,599
264,547 2,231,578 105,191 133,055 641,386 768,784
13,621 148,899 461 12,365 82,699 44,658
102,458 257,517 21,956 81,003 239,345 288,849
--------------- -------------- ------------ ------------- --------------- --------------
110,150,956 652,440,895 15,031,840 30,077,042 242,321,779 166,544,946
--------------- -------------- ------------ ------------- --------------- --------------
$ 943,741,024 $4,663,257,303 $140,999,452 $ 313,540,914 $ 1,724,088,529 $1,666,118,715
=============== ============== ============ ============= =============== ==============
$ 717,317,746 $4,067,187,001 $153,110,020 $ 291,515,613 $ 1,529,925,684 $1,482,735,753
=============== ============== ============ ============= =============== ==============
$ 722,427,560 $4,116,687,538 $141,856,917 $ 289,318,998 $ 1,515,099,274 $1,462,182,116
(17,221) (113,631) (461) 35,314 84,008 (1,463,848)
(46,439) 128,925,055 (1,600,698) 4,312,256 25,622,052 28,847,706
221,377,124 417,758,341 743,694 19,874,346 183,283,195 176,552,741
--------------- -------------- ------------ ------------- --------------- --------------
$ 943,741,024 $4,663,257,303 $140,999,452 $ 313,540,914 $ 1,724,088,529 $1,666,118,715
=============== ============== ============ ============= =============== ==============
$ 943,630,904 $4,589,771,586 $ 94,675,696 $ 307,846,822 $ 1,724,088,529 $1,630,388,457
=============== ============== ============ ============= =============== ==============
47,791,119 126,731,100 7,666,635 25,886,381 98,055,256 87,899,970
=============== ============== ============ ============= =============== ==============
$ 19.74 $ 36.22 $ 12.35 $ 11.89 $ 17.58 $ 18.55
=============== ============== ============ ============= =============== ==============
$ 110,120 $ 73,485,717 $ 46,323,756 $ 5,694,092 $ 35,730,258
=============== ============== ============ ============= ==============
5,580 2,034,175 3,752,576 479,176 1,928,937
=============== ============== ============ ============= ==============
$ 19.73 $ 36.13 $ 12.34 $ 11.88 $ 18.52
=============== ============== ============ ============= ==============
</TABLE>
40
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF OPERATIONS
Year Ended December 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
INTERMEDIATE ALLIANCE
ALLIANCE GOVERNMENT ALLIANCE ALLIANCE GROWTH AND
MONEY MARKET SECURITIES QUALITY BOND HIGH YIELD INCOME
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
INVESTMENT INCOME:
Income** (Note 1):
Dividends (including $2,161,224 and
$7,600,919 from affiliated companies for the
Alliance Common Stock and Alliance
Aggressive Stock Portfolios, respectively) ..... $ -- $ -- $ -- $ -- $ 5,855,617
Interest ......................................... 26,575,962 6,319,864 12,027,150 31,369,008 528,528
----------- ---------- ----------- ----------- -----------
Total income ................................... 26,575,962 6,319,864 12,027,150 31,369,008 6,384,145
----------- ---------- ----------- ----------- -----------
Expenses (Notes 1, 2 and 3):
Investment advisory fee .......................... 1,701,504 512,659 946,523 1,759,520 2,241,190
Custodian fees ................................... 34,909 27,311 29,438 37,074 50,640
Distribution fees--Class IB ...................... 99,712 2,784 -- 50,330 21,822
Printing and mailing expenses .................... 53,828 10,017 20,484 30,911 40,407
Professional fees ................................ 13,247 2,878 4,137 6,541 8,851
Proxy ............................................ 18,723 4,003 7,831 8,578 9,482
SEC registration fees ............................ 2,598 472 472 945 2,126
Trustees' fees ................................... 12,946 2,812 4,882 7,918 10,507
Miscellaneous .................................... 7,936 2,178 3,718 4,003 4,378
----------- ---------- ----------- ----------- -----------
Total expenses ................................. 1,945,403 565,114 1,017,485 1,905,820 2,389,403
----------- ---------- ----------- ----------- -----------
NET INVESTMENT INCOME .............................. 24,630,559 5,754,750 11,009,665 29,463,188 3,994,742
----------- ---------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)
(NOTES 1 AND 4):
Realized Gain (Loss):
On securities (including $60,278,736 and
$73,433,264 from affiliated companies for
the Alliance Common Stock and Alliance
Aggressive Stock Portfolios, respectively) ..... 57,662 1,026,388 4,637,643 19,038,590 40,626,845
On options written ............................... -- -- -- -- --
On foreign currency transactions ................. -- -- 479,412 -- --
On futures contracts ............................. -- (31,130) -- -- --
----------- ---------- ----------- ----------- -----------
Realized gain (loss)--net ......................... 57,662 995,258 5,117,055 19,038,590 40,626,845
----------- ---------- ----------- ----------- -----------
Change in Unrealized
Appreciation/Depreciation:
On securities .................................... (45,650) 715,736 (370,670) 2,081,485 45,313,202
On options written ............................... -- -- -- -- --
On foreign currency transactions ................. -- -- 79,202 -- --
On futures contracts ............................. -- -- -- -- --
----------- ---------- ----------- ----------- -----------
Unrealized appreciation/depreciation--net ......... (45,650) 715,736 (291,468) 2,081,485 45,313,202
----------- ---------- ----------- ----------- -----------
REALIZED AND UNREALIZED GAIN (LOSS)--NET ........... 12,012 1,710,994 4,825,587 21,120,075 85,940,047
----------- ---------- ----------- ----------- -----------
NET INCREASE IN NET ASSETS FROM OPERATIONS ......... $24,642,571 $7,465,744 $15,835,252 $50,583,263 $89,934,789
=========== ========== =========== =========== ===========
</TABLE>
- ----------
* For the period from May 1, 1997 (commencement of operations) to December
31, 1997.
** Net of foreign taxes withheld on dividends of $10,061, $28,990, $241,270,
$1,461,466, $402,959, $60,774, $545,351 and $589,252 for the Alliance
Growth and Income, Alliance Equity Index, Alliance Common Stock, Alliance
Global, Alliance International, Alliance Conservative Investors, Alliance
Balanced and Alliance Growth Investors Portfolios, respectively, and on
interest of $2,017, $398, $337 and $352 for the Alliance Global, Alliance
International, Alliance Balanced and Alliance Growth Investors
Portfolios, respectively.
See Notes to Financial Statements.
41
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
EQUITY INDEX COMMON STOCK GLOBAL INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------- ----------------- -------------- ---------------
<S> <C> <C> <C>
$ 11,411,812 $ 68,591,236 $ 12,928,478 $ 2,632,662
789,772 18,865,438 6,100,385 1,090,065
------------ -------------- ------------ -------------
12,201,584 87,456,674 19,028,863 3,722,727
------------ -------------- ------------ -------------
2,197,395 29,420,651 7,017,899 1,762,245
122,477 252,696 669,018 309,149
107 196,198 30,918 2,877
66,090 886,522 127,631 19,754
15,908 245,582 33,973 3,642
16,561 297,204 43,819 5,710
3,779 -- 5,432 1,181
17,440 218,844 31,329 5,409
6,832 123,238 18,082 2,796
------------ -------------- ------------ -------------
2,446,589 31,640,935 7,978,101 2,112,763
------------ -------------- ------------ -------------
9,754,995 55,815,739 11,050,762 1,609,964
------------ -------------- ------------ -------------
2,229,446 948,337,540 89,619,727 6,320,591
-- 35,412,804 -- --
(3,600) (35,211) 12,151,769 2,073,635
1,334,820 -- -- --
------------ -------------- ------------ -------------
3,560,666 983,715,133 101,771,496 8,394,226
------------ -------------- ------------ -------------
158,811,684 1,059,002,503 11,374,979 (17,028,354)
-- (12,783,605) -- --
10,468 (108) 2,687,736 1,688,166
297,300 -- -- --
------------ -------------- ------------ -------------
159,119,452 1,046,218,790 14,062,715 (15,340,188)
------------ -------------- ------------ -------------
162,680,118 2,029,933,923 115,834,211 (6,945,962)
------------ -------------- ------------ -------------
$172,435,113 $2,085,749,662 $126,884,973 $ (5,335,998)
============ ============== ============ =============
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
AGGRESSIVE SMALL CAP CONSERVATIVE ALLIANCE GROWTH
STOCK GROWTH INVESTORS BALANCED INVESTORS
PORTFOLIO PORTFOLIO* PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------- ------------ -------------- --------------- --------------
<C> <C> <C> <C> <C>
$ 17,775,006 $ 138,366 $ 1,057,328 $ 9,530,794 $ 10,909,405
10,411,701 273,322 12,801,311 52,969,301 30,543,074
------------- ---------- ----------- ------------ ------------
28,186,707 411,688 13,858,639 62,500,095 41,452,479
------------- ---------- ----------- ------------ ------------
22,471,593 349,889 1,458,313 6,677,983 7,843,703
156,983 18,251 125,580 354,061 433,193
75,004 22,465 3,118 -- 43,043
488,080 2,554 34,433 199,288 165,800
136,125 615 8,111 54,912 44,950
174,004 -- 13,373 77,187 57,542
-- -- 472 -- 6,141
121,089 696 8,523 46,548 41,008
64,056 860 5,612 30,053 22,804
------------- ---------- ----------- ------------ ------------
23,686,934 395,330 1,657,535 7,440,032 8,658,184
------------- ---------- ----------- ------------ ------------
4,499,773 16,358 12,201,104 55,060,063 32,794,295
------------- ---------- ----------- ------------ ------------
523,431,192 1,627,719 14,280,979 113,673,484 118,407,140
-- -- -- -- --
-- -- (294,655) (652,446) 3,578,951
-- -- -- -- --
------------- ---------- ----------- ------------ ------------
523,431,192 1,627,719 13,986,324 113,021,038 121,986,091
------------- ---------- ----------- ------------ ------------
(75,825,667) 743,694 10,033,377 64,409,755 77,338,868
-- -- -- -- --
-- -- 133,673 1,464,013 1,411,017
-- -- -- -- --
------------- ---------- ----------- ------------ ------------
(75,825,667) 743,694 10,167,050 65,873,768 78,749,885
------------- ---------- ----------- ------------ ------------
447,605,525 2,371,413 24,153,374 178,894,806 200,735,976
------------- ---------- ----------- ------------ ------------
$ 452,105,298 $2,387,771 $36,354,478 $233,954,869 $233,530,271
============= ========== =========== ============ ============
</TABLE>
42
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE GOVERNMENT
MONEY MARKET PORTFOLIO SECURITIES PORTFOLIO
--------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income .................................. $ 24,630,559 $ 19,055,993 $ 5,754,750 $ 4,575,583
Realized gain (loss)--net .............................. 57,662 -- 995,258 (453,637)
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net ........................... (45,650) (7,886) 715,736 (1,025,808)
-------------- -------------- ------------- -------------
Net increase in net assets from operations ............. 24,642,571 19,048,107 7,465,744 3,096,138
-------------- -------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income .................. (21,721,933) (19,050,946) (5,646,086) (4,575,583)
Dividends in excess of net investment income .......... -- (25,232) -- (19,617)
Distributions from realized gains ..................... (30,365) -- -- --
Tax return of capital distributions ................... -- -- -- --
-------------- -------------- ------------- -------------
Total Class IA dividends and distributions ............. (21,752,298) (19,076,178) (5,646,086) (4,595,200)
-------------- -------------- ------------- -------------
Class IB:
Dividends from net investment income .................. (2,801,881) (5,047) (90,108) --
Dividends in excess of net investment income .......... -- (29,384) -- --
Distributions from realized gains ..................... (7,892) -- -- --
Distributions in excess of realized gains ............. -- -- -- --
-------------- -------------- ------------- -------------
Total Class IB dividends and distributions ............. (2,809,773) (34,431) (90,108) --
-------------- -------------- ------------- -------------
Decrease in net assets from dividends and
distributions ......................................... (24,562,071) (19,110,609) (5,736,194) (4,595,200)
-------------- -------------- ------------- -------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold ........................................... 902,735,892 508,537,942 40,498,885 36,879,548
Shares issued in reinvestment of dividends and
distributions ....................................... 21,752,298 19,076,178 5,646,086 4,595,200
Shares redeemed ....................................... (938,706,582) (450,848,823) (21,146,992) (23,371,086)
-------------- -------------- ------------- -------------
Total Class IA transactions ............................ (14,218,392) 76,765,297 24,997,979 18,103,662
-------------- -------------- ------------- -------------
Class IB:
Shares sold ........................................... 158,089,618 3,624,653 5,061,316 --
Shares issued in reinvestment of dividends and
distributions ....................................... 2,809,773 34,431 90,108 --
Shares redeemed ....................................... (39,732,243) (446,631) (97,482) --
-------------- -------------- ------------- -------------
Total Class IB transactions ............................ 121,167,148 3,212,453 5,053,942 --
-------------- -------------- ------------- -------------
Net increase (decrease) in net assets derived from
share transactions .................................... 106,948,756 79,977,750 30,051,921 18,103,662
-------------- -------------- ------------- -------------
INCREASE (DECREASE) IN NET ASSETS ....................... 107,029,256 79,915,248 31,781,471 16,604,600
NET ASSETS, BEGINNING OF PERIOD ......................... 466,606,194 386,690,946 88,384,425 71,779,825
-------------- -------------- ------------- -------------
NET ASSETS, END OF PERIOD* .............................. $ 573,635,450 $ 466,606,194 $ 120,165,896 $ 88,384,425
============== ============== ============= =============
</TABLE>
- ----------
* Including accumulated undistributed (overdistributed) net investment
income of $149,936 and $43,191 for the Alliance Money Market Portfolio;
$17,556 and $3,160 for the Alliance Intermediate Government Securities
Portfolio; $321,561 and $(220,079) for the Alliance Quality Bond
Portfolio; $29,459 and $23,927 for the Alliance High Yield Portfolio;
$(7,871) and $11,797 for the Alliance Growth and Income Portfolio;
$(17,221) and $(5,276) for the Alliance Equity Index Portfolio, as of
December 31, 1997 and December 31, 1996, respectively.
See Notes to Financial Statements.
43
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
QUALITY BOND PORTFOLIO HIGH YIELD PORTFOLIO
- --------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
- ---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C>
$ 11,009,665 $ 10,285,868 $ 29,463,188 $ 15,471,581
5,117,055 871,659 19,038,590 12,420,138
(291,468) (1,749,535) 2,081,485 3,447,403
- -------------- ------------- ------------- -------------
15,835,252 9,407,992 50,583,263 31,339,122
- -------------- ------------- ------------- -------------
(11,132,504) (10,285,868) (26,828,709) (15,469,541)
-- (326,079) -- (432,568)
-- -- (13,814,454) (11,348,200)
-- -- -- --
- -------------- ------------- ------------- -------------
(11,132,504) (10,611,947) (40,643,163) (27,250,309)
- -------------- ------------- ------------- -------------
-- -- (2,657,724) (2,040)
-- -- -- (15,935)
-- -- (2,518,666) (908)
-- -- -- (18,516)
- -------------- ------------- ------------- -------------
-- -- (5,176,390) (37,399)
- -------------- ------------- ------------- -------------
(11,132,504) (10,611,947) (45,819,553) (27,287,708)
- -------------- ------------- ------------- -------------
49,175,799 27,205,153 161,350,185 71,897,677
11,132,504 10,611,947 40,643,163 27,250,309
(16,801,045) (39,032,520) (52,652,236) (21,997,075)
- -------------- ------------- ------------- -------------
43,507,258 (1,215,420) 149,341,112 77,150,911
- -------------- ------------- ------------- -------------
-- -- 63,018,257 677,158
-- -- 5,176,390 37,399
-- -- (534,056) --
- -------------- ------------- ------------- -------------
-- -- 67,660,591 714,557
- -------------- ------------- ------------- -------------
43,507,258 (1,215,420) 217,001,703 77,865,468
- -------------- ------------- ------------- -------------
48,210,006 (2,419,375) 221,765,413 81,916,882
155,023,472 157,442,847 200,045,465 118,128,583
- -------------- ------------- ------------- -------------
$ 203,233,478 $ 155,023,472 $ 421,810,878 $ 200,045,465
============== ============= ============= =============
<CAPTION>
ALLIANCE
GROWTH AND INCOME ALLIANCE
PORTFOLIO EQUITY INDEX PORTFOLIO
- ------------------------------- --------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
- --------------- --------------- ---------------- ---------------
<C> <C> <C> <C>
$ 3,994,742 $ 3,051,998 $ 9,754,995 $ 5,656,346
40,626,845 12,181,263 3,560,666 15,194,950
45,313,202 16,443,384 159,119,452 41,228,418
------------- ------------- ------------- -------------
89,934,789 31,676,645 172,435,113 62,079,714
------------- ------------- ------------- -------------
(3,997,147) (3,050,479) (10,027,043) (5,656,346)
-- -- -- (4,427)
(31,316,552) (11,682,352) (3,323,415) (15,093,505)
-- -- -- (7,525)
------------- ------------- ------------- -------------
(35,313,699) (14,732,831) (13,350,458) (20,761,803)
------------- ------------- ------------- -------------
(65,287) -- (648) --
-- -- -- --
(1,815,517) -- (392) --
-- -- -- --
------------- ------------- ------------- -------------
(1,880,804) -- (1,040) --
------------- ------------- ------------- -------------
(37,194,503) (14,732,831) (13,351,498) (20,761,803)
------------- ------------- ------------- -------------
251,418,234 111,512,120 450,997,869 230,679,439
35,313,699 14,732,831 13,350,458 20,761,803
(17,464,089) (9,161,198) (66,043,438) (72,295,253)
------------- ------------- ------------- -------------
269,267,844 117,083,753 398,304,889 179,145,989
------------- ------------- ------------- -------------
31,791,055 -- 137,857 --
1,880,804 -- 1,040 --
(4,484) -- (35,558) --
------------- ------------- ------------- -------------
33,667,375 -- 103,339 --
------------- ------------- ------------- -------------
302,935,219 117,083,753 398,408,228 179,145,989
------------- ------------- ------------- -------------
355,675,505 134,027,567 557,491,843 220,463,900
232,080,388 98,052,821 386,249,181 165,785,281
------------- ------------- ------------- -------------
$ 587,755,893 $ 232,080,388 $ 943,741,024 $ 386,249,181
============= ============= ============= =============
</TABLE>
44
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
COMMON STOCK PORTFOLIO GLOBAL PORTFOLIO
------------------------------------ -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
----------------- ------------------ -------------- -------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ..................................... $ 55,815,739 $ 48,811,771 $ 11,050,762 $ 10,849,353
Realized gain--net ........................................ 983,715,133 587,208,099 101,771,496 44,997,037
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net .............................. 1,046,218,790 636,307,007 14,062,715 60,383,165
-------------- -------------- -------------- -------------
Net increase (decrease) in net assets from operations ..... 2,085,749,662 1,272,326,877 126,884,973 116,229,555
-------------- -------------- -------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income ..................... (43,806,963) (44,580,327) (23,003,562) (10,849,259)
Dividends in excess of net investment income ............. -- -- -- (4,499,020)
Distributions from realized gains ........................ (700,688,717) (587,198,121) (76,503,591) (42,474,239)
Distributions in excess of realized gains ................ -- (71,434,343) -- --
Tax return of capital distributions ...................... -- (988,016) -- (220,411)
-------------- -------------- -------------- -------------
Total Class IA dividends and distributions ................ (744,495,680) (704,200,807) (99,507,153) (58,042,929)
-------------- -------------- -------------- -------------
Class IB:
Dividends from net investment income ..................... (241,911) (326) (319,694) (94)
Dividends in excess of net investment income ............. -- (4,564) -- (2,076)
Distributions from realized gains ........................ (16,923,582) (9,978) (1,359,092) (1,502)
Distributions in excess of realized gains ................ -- (62,273) -- (4,502)
Tax return of capital distributions ...................... -- (108) -- (31)
-------------- -------------- -------------- -------------
Total Class IB dividends and distributions ................ (17,165,493) (77,249) (1,678,786) (8,205)
-------------- -------------- -------------- -------------
Decrease in net assets from dividends and
distributions ............................................ (761,661,173) (704,278,056) (101,185,939) (58,051,134)
-------------- -------------- -------------- -------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold .............................................. 1,034,152,489 756,034,799 241,147,160 255,537,439
Shares issued in reinvestment of dividends and
distributions .......................................... 744,495,680 704,200,807 99,507,153 58,042,929
Shares redeemed .......................................... (394,260,503) (282,642,349) (159,826,842) (60,861,388)
-------------- -------------- -------------- -------------
Total Class IA transactions ............................... 1,384,387,666 1,177,593,257 180,827,471 252,718,980
-------------- -------------- -------------- -------------
Class IB:
Shares sold .............................................. 209,141,659 1,237,252 21,767,932 285,485
Shares issued in reinvestment of dividends and
distributions .......................................... 17,165,493 77,249 1,678,786 8,205
Shares redeemed .......................................... (643,153) -- (1,917,712) --
-------------- -------------- -------------- -------------
Total Class IB transactions ............................... 225,663,999 1,314,501 21,529,006 293,690
-------------- -------------- -------------- -------------
Net increase in net assets derived from share
transactions ............................................. 1,610,051,665 1,178,907,758 202,356,477 253,012,670
-------------- -------------- -------------- -------------
INCREASE IN NET ASSETS ..................................... 2,934,140,154 1,746,956,579 228,055,511 311,191,091
NET ASSETS, BEGINNING OF PERIOD ............................ 6,626,633,579 4,879,677,000 997,331,484 686,140,393
-------------- -------------- -------------- -------------
NET ASSETS, END OF PERIOD* ................................. $9,560,773,733 $6,626,633,579 $1,225,386,995 $ 997,331,484
============== ============== ============== =============
</TABLE>
- ----------
* Including accumulated undistributed (overdistributed) net investment income
of $8,941,474 and $(194,316) for the Alliance Common Stock Portfolio;
$451,087 and $(3,212,284) for the Alliance Global Portfolio; $(1,256,432)
and $(614,431) for the Alliance International Portfolio; $(113,631) and
$(58,479) for the Alliance Aggressive Stock Portfolio; $35,314 and $9,815
for the Alliance Conservative Investors Portfolio, as of December 31, 1997
and December 31, 1996, respectively, and $(461) for the Alliance Small Cap
Growth Portfolio as of December 31, 1997.
** Commencement of Operations.
See Notes to Financial Statements.
45
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
ALLIANCE ALLIANCE SMALL CAP GROWTH CONSERVATIVE INVESTORS
INTERNATIONAL PORTFOLIO AGGRESSIVE STOCK PORTFOLIO PORTFOLIO PORTFOLIO
- -------------------------------- ------------------------------------- ------------------ ---------------------------------
YEAR ENDED YEAR ENDED MAY 1, 1997** TO YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996 1997 1997 1996
- ---------------- --------------- ------------------- ----------------- ------------------ ---------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
$ 1,609,964 $ 1,072,074 $ 4,499,773 $ 8,075,002 $ 16,358 $ 12,201,104 $ 12,360,795
8,394,226 3,051,749 523,431,192 651,846,275 1,627,719 13,986,324 6,689,821
(15,340,188) 4,245,403 (75,825,667) (19,577,800) 743,694 10,167,050 (4,721,182)
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
(5,335,998) 8,369,226 452,105,298 640,343,477 2,387,771 36,354,478 14,329,434
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
(5,505,067) (1,072,074) (6,323,032) (8,075,028) (16,325) (11,954,796) (12,360,795)
-- (972,982) -- (50,994) -- -- (44,557)
(9,560,102) (2,651,391) (381,316,889) (651,842,635) (2,163,100) (9,269,071) (6,689,821)
-- -- -- (1,362,771) -- -- (396,608)
-- -- -- -- -- -- --
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
(15,065,169) (4,696,447) (387,639,921) (661,331,428) (2,179,425) (21,223,867) (19,491,781)
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
(69,625) -- (8,975) -- (904) (74,433) --
-- -- -- (452) -- -- --
(161,535) -- (6,038,166) (3,630) (1,071,973) (163,419) --
-- -- -- (32,780) -- -- --
-- -- -- -- -- -- --
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
(231,160) -- (6,047,141) (36,862) (1,072,877) (237,852) --
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
(15,296,329) (4,696,447) (393,687,062) (661,368,290) (3,252,302) (21,461,719) (19,491,781)
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
204,985,168 141,011,557 1,331,662,733 1,093,061,087 154,901,196 34,060,741 50,046,532
15,065,169 4,696,447 387,639,921 661,331,428 2,179,425 21,223,868 19,491,781
(161,266,462) (26,157,811) (1,058,223,800) (568,654,477) (62,293,798) (44,876,250) (34,074,560)
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
58,783,875 119,550,193 661,078,854 1,185,738,038 94,786,823 10,408,359 35,463,753
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
3,841,704 -- 72,451,903 604,481 46,064,536 5,707,042 --
231,160 -- 6,047,141 36,862 1,072,877 237,851 --
(234,071) -- (608,248) -- (60,253) (107,498) --
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
3,838,793 -- 77,890,796 641,343 47,077,160 5,837,395 --
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
62,622,668 119,550,193 738,969,650 1,186,379,381 141,863,983 16,245,754 35,463,753
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
41,990,341 123,222,972 797,387,886 1,165,354,568 140,999,452 31,138,513 30,301,406
151,906,835 28,683,863 3,865,869,417 2,700,514,849 -- 282,402,401 252,100,995
- --------------- ------------- ---------------- -------------- ------------- ------------- -------------
$ 193,897,176 $ 151,906,835 $ 4,663,257,303 $3,865,869,417 $ 140,999,452 $ 313,540,914 $ 282,402,401
=============== ============= ================ ============== ============= ============= =============
</TABLE>
46
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
BALANCED PORTFOLIO GROWTH INVESTORS PORTFOLIO
------------------------------------ -----------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
------------------ ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ................................. $ 55,060,063 $ 49,871,322 $ 32,794,295 $ 25,706,114
Realized gain--net .................................... 113,021,038 128,392,470 121,986,091 131,200,343
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net .......................... 65,873,768 (3,420,061) 78,749,885 (20,549,143)
-------------- -------------- -------------- --------------
Net increase in net assets from operations ............ 233,954,869 174,843,731 233,530,271 136,357,314
-------------- -------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income ................. (54,844,131) (49,871,322) (37,426,355) (25,705,569)
Dividends in excess of net investment income ......... -- (241,952) -- (2,082,361)
Distributions from realized gains .................... (84,244,038) (128,392,470) (84,649,354) (131,199,726)
Distributions in excess of realized gains ............ -- (2,491,886) -- (570,518)
-------------- -------------- -------------- --------------
Total Class IA dividends and distributions ............ (139,088,169) (180,997,630) (122,075,709) (159,558,174)
-------------- -------------- -------------- --------------
Class IB:
Dividends from net investment income ................. -- -- (527,651) (545)
Dividends in excess of net investment income ......... -- -- -- (2,449)
Distributions from realized gains .................... -- -- (1,840,006) (617)
Distributions in excess of realized gains ............ -- -- -- (6,239)
-------------- -------------- -------------- --------------
Total Class IB dividends and distributions ............ -- -- (2,367,657) (9,850)
-------------- -------------- -------------- --------------
Decrease in net assets from dividends and
distributions ........................................ (139,088,169) (180,997,630) (124,443,366) (159,568,024)
-------------- -------------- -------------- --------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold .......................................... 64,626,322 64,030,181 177,931,189 297,495,728
Shares issued in reinvestment of dividends and
distributions ...................................... 139,088,169 180,997,630 122,075,709 159,558,174
Shares redeemed ...................................... (212,348,166) (124,160,136) (80,173,883) (28,339,916)
-------------- -------------- -------------- --------------
Total Class IA transactions ........................... (8,633,675) 120,867,675 219,833,015 428,713,986
-------------- -------------- -------------- --------------
Class IB:
Shares sold .......................................... -- -- 34,376,432 468,087
Shares issued in reinvestment of dividends and
distributions ...................................... -- -- 2,367,657 9,850
Shares redeemed ...................................... -- -- (1,660,277) (90)
-------------- -------------- -------------- --------------
Total Class IB transactions ........................... -- -- 35,083,812 477,847
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets derived from
share transactions ................................... (8,633,675) 120,867,675 254,916,827 429,191,833
-------------- -------------- -------------- --------------
INCREASE IN NET ASSETS ................................. 86,233,025 114,713,776 364,003,732 405,981,123
NET ASSETS, BEGINNING OF PERIOD ........................ 1,637,855,504 1,523,141,728 1,302,114,983 896,133,860
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD* ............................. $1,724,088,529 $1,637,855,504 $1,666,118,715 $1,302,114,983
============== ============== ============== ==============
</TABLE>
- ----------
* Including accumulated undistributed (overdistributed) net investment
income of $84,008 and $(190,700) for the Alliance Balanced Portfolio;
$(1,463,848) and $(1,135,946) for the Alliance Growth Investors
Portfolio, as of December 31, 1997 and December 31, 1996, respectively.
See Notes to Financial Statements.
47
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
==============================================================================================
EFFECTIVE
PRINCIPAL VALUE ANNUAL
AMOUNT (NOTE 1) YIELD*
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
BANKERS' ACCEPTANCES
Bank of California:
Due 01/21/98 .................................. $ 1,000,000 $ 996,905 5.67%
Due 01/26/98 .................................. 8,000,000 7,969,055 5.67
-----------
TOTAL BANKERS' ACCEPTANCES (1.6%) ............ 8,965,960
-----------
CERTIFICATES OF DEPOSIT
Barclays Bank
Due 08/25/98 .................................. 10,000,000 10,002,625 5.83
Credit Suisse First Boston
Due 03/16/98 .................................. 6,000,000 5,999,519 6.08
Morgan Guaranty Trust Co.
Due 03/19/98 .................................. 10,000,000 10,000,695 5.95
Swiss Bank Corp.
Due 01/30/98 .................................. 10,000,000 9,998,945 6.14
Westdeutsche Landesbank
Due 07/31/98 .................................. 5,000,000 4,999,725 5.78
-----------
TOTAL CERTIFICATES OF DEPOSIT (7.1%) ......... 41,001,509
-----------
COMMERCIAL PAPER
Abbey National North America Corp.
Due 03/02/98 .................................. 25,000,000 24,767,500 5.77
ASCC
Due 01/15/98 .................................. 11,000,000 10,975,831 5.90
Asset Backed Capital
Due 02/09/98 .................................. 12,500,000 12,424,709 5.57
Associates Corp. of North America
Due 01/02/98 .................................. 25,000,000 24,996,077 6.75
Clipper Receivables Corp.
Due 01/02/98 .................................. 25,000,000 24,996,043 6.85
CXC, Inc.
Due 02/09/98 .................................. 24,400,000 24,252,502 5.67
Dakota Funding, Inc.
Due 01/13/98 .................................. 2,000,000 1,996,233 6.06
Dresdner U.S. Finance, Inc.
Due 02/25/98 .................................. 20,000,000 19,829,500 5.79
Edison Asset Securitization
Due 02/11/98 .................................. 20,200,000 20,072,090 5.88
Falcon Asset Securitization
Due 02/25/98 .................................. 6,220,000 6,167,165 5.90
International Lease Finance Corp.
Due 01/02/98 .................................. 25,000,000 24,996,043 6.68
International Securitization
Due 03/05/98 .................................. 5,030,000 4,981,058 5.86
Koch Industries
Due 01/02/98 .................................. 25,000,000 24,996,078 6.75
Morgan Stanley Group, Inc.
Due 03/23/98 .................................. 24,200,000 23,896,169 5.82
National Citibank of Cleveland
Due 02/16/98 .................................. 25,000,000 24,833,375 5.29
National Rural Utilities Finance Corp.
Due 04/15/98 .................................. 20,000,000 19,676,834 5.83
Paccar Financial Corp.
Due 01/02/98 .................................. 12,000,000 11,998,117 6.75
Preferred Receivables Funding
Due 02/17/98 .................................. 5,050,000 5,013,211 5.89
SPARC EM Ltd.
Due 02/04/98 .................................. 25,000,000 24,868,723 5.78
</TABLE>
48
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
=======================================================================================================
EFFECTIVE
PRINCIPAL VALUE ANNUAL
AMOUNT (NOTE 1) YIELD*
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Suntrust Bank
Due 03/09/98 ......................................... $20,000,000 $ 19,793,044 5.79%
Texaco, Inc.
Due 03/12/98 ......................................... 25,000,000 24,728,750 5.81
Three River Funding
Due 01/20/98 ......................................... 5,313,000 5,297,410 6.17
------------
TOTAL COMMERCIAL PAPER (67.2%) ...................... 385,556,462
------------
CORPORATE NOTE (2.6%)
Beta Finance, Inc.
Due 01/30/98 ......................................... 15,000,000 15,012,369 4.60
------------
TIME DEPOSIT (2.7%)
Harris Trust & Savings Bank
Due 01/02/98 ......................................... 15,300,000 15,300,425 6.50
------------
U.S. GOVERNMENT AGENCIES (0.9%)
Federal Home Loan Mortgage Corp.
Due 02/12/98 ......................................... 5,400,000 5,367,492 5.64
------------
VARIABLE RATE SECURITIES
Bankers Trust
Due 02/17/98(a) ...................................... 20,000,000 20,002,558 5.94
CC (USA), Inc.
Due 10/27/98(a) ...................................... 20,000,000 20,002,392 6.04
Federal Farm Credit Bank
Due 10/01/98(a) ...................................... 20,000,000 20,000,252 5.63
Federal National Mortgage Association
Due 06/18/98(a) ...................................... 20,000,000 20,009,248 5.72
------------
TOTAL VARIABLE RATE SECURITIES (14.0%) .............. 80,014,450
------------
TOTAL INVESTMENTS IN SHORT-TERM DEBT SECURITIES (96.1%)
(Amortized Cost $551,106,796) ........................ 551,218,667
OTHER ASSETS LESS LIABILITIES (3.9%) .................. 22,416,783
------------
NET ASSETS (100.0%) ................................... $573,635,450
============
</TABLE>
- ----------
* Based on market values at the close of business on December 31, 1997.
(a) Coupon will fluctuate based upon an interest rate index. Stated due
date reflects final maturity of security.
See Notes to Financial Statements.
49
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
==========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
ASSET BACKED (4.6%)
The Money Store Home Equity
Trust:
Series 1997-C 6.355%, 10/15/03 $ 3,506,503 $3,502,681
Series 1997-I 6.42%, 04/15/06 ....... 1,997,075 1,997,695
------------
5,500,376
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS (6.7%)
Federal Home Loan Mortgage
Corp. Multi-Class Series 1434
7.0%, 08/15/21 ...................... 3,150,000 3,203,140
Federal National Mortgage
Association Series 1997-M8
6.94%, 01/25/22 ..................... 1,987,921 2,045,690
Residential Funding Mortgage
Securities, Inc. Series 1993-S11
7.25%, 03/25/23 ..................... 2,780,248 2,787,198
------------
8,036,028
------------
MORTGAGE RELATED (3.2%)
Federal Home Loan Mortgage
Corp. GOLD
9.5%, 01/01/20 ...................... 4,879 5,285
Federal National Mortgage
Association Series 1997-20
6.1485%, 03/25/27(a) ................ 3,815,421 3,802,296
------------
3,807,581
------------
U.S. GOVERNMENT & AGENCIES (74.7%)
Federal Farm Credit Corp.
6.29%, 08/24/04 ..................... 4,700,000 4,764,089
Federal Home Loan Bank:
5.5%, 01/10/01 ...................... 4,500,000 4,453,045
5.77%, 02/03/04 ..................... 6,430,000 6,352,551
</TABLE>
<TABLE>
<CAPTION>
===========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ---------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Mortgage
Corp.
6.24%, 10/06/04 ..................... $ 4,965,000 $5,027,936
Tennessee Valley Authority
6.5%, 08/20/01 ...................... 5,400,000 5,511,348
U.S Treasury:
6.0% Note, 08/15/99 ................. 12,000,000 12,060,000
5.625% Note, 11/30/99 ............... 3,650,000 3,646,580
6.0% Note, 08/15/00 ................. 13,200,000 13,294,882
5.75% Note, 11/15/00 ................ 2,500,000 2,504,687
6.125% Note, 12/31/01 ............... 5,750,000 5,827,269
6.25% Note, 06/30/02 ................ 11,000,000 11,223,443
11.875% Bond, 11/15/03 .............. 6,300,000 8,193,937
6.625% Note, 05/15/07 ............... 6,550,000 6,934,812
------------
89,794,579
------------
TOTAL LONG-TERM DEBT SECURITIES (89.2%)
(Amortized Cost $105,801,659)......... 107,138,564
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (6.5%)
Federal Home Loan Mortgage
Corp.
6.0%, 01/02/98 ...................... 7,800,000 7,798,700
------------
TOTAL SHORT-TERM DEBT SECURITIES (6.5%)
(Amortized Cost $7,798,700) .......... 7,798,700
------------
TOTAL INVESTMENTS (95.7%)
(Amortized Cost $113,600,359)........ 114,937,264
OTHER ASSETS LESS LIABILITIES (4.3%) 5,228,632
------------
NET ASSETS (100.0%) ................... $120,165,896
==============
</TABLE>
- ----------
(a) Adjustable rate mortgage; stated interest rate in effect at
December 31, 1997.
See Notes to Financial Statements.
50
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE QUALITY BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
=======================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
BASIC MATERIALS (2.8%)
CHEMICALS
Reliance Industries Ltd.
10.375%, 06/24/16+ ................ $ 5,500,000 $5,611,100
------------
CONSUMER NONCYCLICALS
MEDIA & CABLE
Tele-Communication, Inc.
9.80%, 02/01/12 ................... 6,530,000 8,118,161
Time Warner Entertainment Co.
8.375%, 03/15/23 .................. 5,700,000 6,504,726
Turner Broadcasting System, Inc.
8.375%, 07/01/13 .................. 2,000,000 2,244,040
------------
TOTAL CONSUMER NONCYCLICALS (8.3%) 16,866,927
------------
CREDIT SENSITIVE
BANKS (2.6%)
St. George Funding Co.
8.485%, 12/31/49+ (a) ............. 5,000,000 5,309,700
------------
FINANCIAL SERVICES (0.2%)
Goldman Sachs Group
7.2%, 11/01/06+ ................... 300,000 317,121
------------
FOREIGN GOVERNMENT (3.8%)
Government of Australia
10.0%, 10/15/07 ................... AU$9,250,000 7,756,812
------------
MORTGAGE RELATED (14.0%)
Federal Home Loan
Mortgage Corp.
7.0%, 09/01/11 .................... $ 6,917,372 7,023,298
Federal National Mortgage
Association:
6.5%, 05/01/11 .................... 11,686,519 11,693,823
6.5%, 08/01/11 .................... 1,921,889 1,923,090
7.0%, 05/01/26 .................... 7,722,172 7,775,262
------------
28,415,473
------------
</TABLE>
<TABLE>
<CAPTION>
======================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ----------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT AGENCIES (14.7%)
Federal Home Loan Bank
5.77%, 12/22/99 ................... $ 30,000,000 $29,970,960
-------------
U.S. GOVERNMENT (50.1%)
U.S. Treasury:
6.0% Note, 08/15/00 ............... 10,400,000 10,474,755
6.5% Note, 05/31/02 ............... 46,825,000 48,200,485
6.5% Note, 08/15/05 ............... 20,000,000 20,868,760
6.875% Note, 05/15/06 ............. 10,125,000 10,836,919
6.125% Bond, 11/15/27 ............. 11,050,000 11,353,875
-------------
101,734,794
-------------
TOTAL CREDIT SENSITIVE (85.4%) 173,504,860
-------------
TOTAL LONG-TERM DEBT SECURITIES (96.5%)
(Amortized Cost $194,076,702) . 195,982,887
-------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (1.5%)
Federal Home Loan
Mortgage Corp.
6.0%, 01/02/98 .................... 3,100,000 3,099,483
-------------
TOTAL SHORT-TERM DEBT SECURITIES (1.5%)
(Amortized Cost $3,099,483) ....... 3,099,483
-------------
TOTAL INVESTMENTS (98.0%)
(Amortized Cost $197,176,185)...... 199,082,370
OTHER ASSETS
LESS LIABILITIES (2.0%) ........... 4,151,108
-------------
NET ASSETS (100.0%) ................ $203,233,478
==============
</TABLE>
- ----------
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $11,237,921 or
5.5% of net assets.
(a) Coupon will increase periodically based upon a predetermined
schedule. Stated interest rate in effect at December 31, 1997.
See Notes to Financial Statements.
51
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
======================================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- --------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND OTHER INVESTMENTS:
BUSINESS SERVICES (0.0%)
PRINTING, PUBLISHING & BROADCASTING
Pegasus Communications Corp.
(Class A) * ......................... 3,384 $ 68,949
---------
CAPITAL GOODS (0.0%)
BUILDING & CONSTRUCTION
Capital Pacific Holdings, Inc.--
Warrants* ........................... 11,850 17,775
---------
CONSUMER CYCLICALS
RETAIL--GENERAL (0.0%)
Eye Care Centers of America--
Warrants*+ .......................... 5,000 20,000
Florists Transworld Corp.
(Class B)*+ ......................... 18,750 18,750
---------
TOTAL CONSUMER CYCLICALS (0.0%) 38,750
---------
CONSUMER NONCYCLICALS
HOSPITAL SUPPLIES & SERVICES (0.0%)
Wright Medical
Technology, Inc.--Warrants* ......... 618 61,645
---------
SOAPS & TOILETRIES (0.0%)
Renaissance Cosmetics--
Warrants* ........................... 2,000 19,500
---------
TOTAL CONSUMER NONCYCLICALS (0.0%) 81,145
---------
TECHNOLOGY
ELECTRONICS (0.0%)
Interactive Systems Corp.--
Warrants* ........................... 1,500 3,750
---------
TELECOMMUNICATIONS (0.1%)
Nextel Communications, Inc.
(Class A) * ......................... 10,845 281,970
Optel, Inc. * ......................... 10,000 0
Primus Telecommunications--
Warrants* ........................... 6,500,000 0
---------
281,970
---------
TOTAL TECHNOLOGY (0.1%) .............. 285,720
---------
TOTAL COMMON STOCKS AND
OTHER INVESTMENTS (0.1%)
(Cost $336,685) ..................... 492,339
---------
PRINCIPAL
AMOUNT
---------
LONG-TERM DEBT SECURITIES:
BASIC MATERIALS
CHEMICALS (1.4%)
Trans Resources, Inc.
11.875% Sr. Sub. Note
Series B, 07/01/02 .................. $5,500,000 5,775,000
---------
CHEMICALS--SPECIALTY (0.5%)
Koppers Industries, Inc.
9.875%, 12/01/07+ ................... 2,000,000 2,060,000
---------
METALS & MINING (9.8%)
AE1 Holding Co.
10.0%, 11/15/07+ .................... 8,500,000 8,755,000
Acme Metals, Inc.
10.875%, 12/15/07+ .................. 5,000,000 4,900,000
</TABLE>
<TABLE>
<CAPTION>
====================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- --------------------------------------------------------------------
<S> <C> <C>
Centaur Mining &
Exploration Ltd.
11.0%, 12/01/07+ ................. $4,000,000 $4,020,000
Glencore Nickel Proprietary Ltd.
9.0%, 12/01/14 + ................. 7,000,000 6,930,000
Great Lakes Carbon Corp.
10.0%, 01/01/06 .................. 2,500,000 2,675,000
Maxxam Group Holdings, Inc.
12.0%, 08/01/03 .................. 3,395,000 3,666,600
Park-Ohio Industries
9.25%, 12/01/07+ ................. 5,000,000 5,075,000
Westmin Resources Ltd.
11.0%, 03/15/07 .................. 5,000,000 5,475,000
----------
41,496,600
----------
PAPER (0.7%)
Bear Island Paper Co. LLC
10.0%, 12/01/07+ ................. 3,000,000 3,037,500
----------
TOTAL BASIC MATERIALS (12.4%) ..... 52,369,100
----------
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (10.0%)
American Banknote Corp.
11.25%, 12/01/07 ................. 3,000,000 3,007,500
American Lawyer Media
9.75%, 12/15/07+ ................. 2,000,000 2,030,000
Central European Media
Enterprises Ltd.
9.375%, 08/15/04 ................. 6,000,000 5,880,000
Dialog Corp. PLC
11.0%, 11/15/07+ ................. 5,000,000 5,212,500
Fox Kids Worldwide, Inc.
9.25%, 11/01/07+ ................. 7,000,000 6,790,000
Pen Tab Industries, Inc.
10.875%, 02/01/07 ................ 3,500,000 3,368,750
Radio One, Inc.
7.0%, 05/15/04(a) ................ 5,000,000 4,950,000
Supercanal Holdings SA
14.5%, 12/15/07 .................. 2,162,923 2,125,423
Telemundo Group, Inc.
7.0%, 02/15/06(a) ................ 8,235,000 8,646,750
----------
42,010,923
----------
PROFESSIONAL SERVICES (1.6%)
Scotsman Group, Inc.
8.625%, 12/15/07 ................. 4,000,000 4,000,000
T/SF Communications Corp.
10.375%, 11/01/07 ................ 3,000,000 2,985,000
----------
6,985,000
----------
TRUCKING, SHIPPING (1.2%)
Navigator Gas Transport
10.5%, 06/30/07+ ................. 4,850,000 5,116,750
----------
TOTAL BUSINESS SERVICES (12.8%) 54,112,673
----------
CAPITAL GOODS
AEROSPACE (1.0%)
Stellex Industries, Inc.
9.5%, 11/01/07+ .................. 4,000,000 4,040,000
----------
BUILDING & CONSTRUCTION (5.3%)
Airxcel, Inc.
11.0%, 11/15/07+ ................. 4,000,000 4,090,000
GS Superhighway Holdings
10.25%, 08/15/07+ ................ 10,000,000 8,750,000
</TABLE>
52
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
MMI Products, Inc.
11.25%, 04/15/07 .................. $ 4,000,000 $4,360,000
Werner Holdings Co., Inc.
10.0%, 11/15/07+ .................. 5,000,000 5,137,500
----------
22,337,500
----------
MACHINERY (1.6%)
High Voltage Engineering
10.5%, 08/15/04+ .................. 6,500,000 6,776,250
----------
TOTAL CAPITAL GOODS (7.9%) ......... 33,153,750
----------
CONSUMER CYCLICALS
AUTO RELATED (3.1%)
Advanced Accessory Systems
9.75%, 10/01/07+ .................. 2,700,000 2,662,875
Safety Components
International, Inc.
10.125%, 07/15/07 ................. 3,500,000 3,605,000
United Auto Group, Inc.
11.0%, 07/15/07+ .................. 7,000,000 6,895,000
----------
13,162,875
----------
HOUSEHOLD FURNITURE, APPLIANCES (1.0%)
Sealy Mattress Co.
9.875%, 12/15/07+ ................. 4,100,000 4,197,375
----------
LEISURE RELATED (5.8%)
Discovery Zone--Units
13.5%, 08/01/02 (b)+ .............. 3,500,000 3,648,750
Hedstrom Corp.
10.0%, 06/01/07+ .................. 6,000,000 6,052,500
Penn National Gaming, Inc.
10.625%, 12/15/04+ ................ 3,000,000 3,105,000
Riviera Holdings Corp.
10.0%, 08/15/04+ .................. 3,000,000 2,977,500
Trump Atlantic City Associates
11.25%, 05/01/06 .................. 4,500,000 4,443,750
Waterford Gaming LLC
12.75%, 11/15/03 .................. 4,000,000 4,400,000
----------
24,627,500
----------
RETAIL--GENERAL (0.6%)
Pantry, Inc.
12.0%, 11/15/00 ................... 2,150,000 2,316,625
----------
TOTAL CONSUMER CYCLICALS (10.5%) 44,304,375
----------
CONSUMER NONCYCLICALS
CONTAINERS (2.7%)
Anchor Glass
11.25%, 04/01/05+ ................. 4,000,000 4,300,000
MVE, Inc.
12.5%, 02/15/02 ................... 2,000,000 1,970,000
Riverwood International Corp.
10.625%, 08/01/07+ ................ 5,000,000 5,062,500
----------
11,332,500
----------
DRUGS (1.1%)
Schein Pharmaceutical
8.906%, 12/15/04+(c) .............. 5,000,000 4,887,500
----------
FOODS (4.8%)
Cuddy International Corp.
10.75%, 12/01/07+ ................. 4,000,000 4,025,000
Imperial Holly Corp.
9.75%, 12/15/07+ .................. 5,000,000 5,040,625
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Richmont Marketing Special
10.125%, 12/15/07+ ................ $ 3,000,000 $3,045,000
Specialty Foods Corp.
11.125%, 10/01/02 ................. 8,000,000 8,080,000
----------
20,190,625
----------
RETAIL--FOODS (0.5%)
Digiorgio Corp.
10.0%, 06/15/07 ................... 2,000,000 1,970,000
----------
TOTAL CONSUMER NONCYCLICALS (9.1%) 38,380,625
----------
CREDIT SENSITIVE
FINANCIAL SERVICES (2.9%)
Metris Companies, Inc.
10.0%, 11/01/04+ .................. 10,000,000 10,225,000
Wilshire Financial
Services Group
13.0%, 08/15/04 ................... 2,000,000 2,035,000
----------
TOTAL CREDIT SENSITIVE (2.9%) 12,260,000
----------
ENERGY
OIL--DOMESTIC (4.7%)
Transamerican Energy
11.5%, 06/15/02+ .................. 13,000,000 13,065,000
TransTexas Gas Corp.
13.75%, 12/31/01 .................. 5,829,000 6,513,908
----------
19,578,908
----------
OIL--INTERNATIONAL (1.9%)
Hurricane Hydrocarbons
11.75%, 11/01/04+ ................. 8,000,000 8,040,000
----------
OIL--SUPPLIES & CONSTRUCTION (1.5%)
Celestica International, Inc.
10.5%, 12/31/06 ................... 2,500,000 2,646,875
Deeptech International, Inc.
12.0%, 12/15/00 ................... 3,500,000 3,696,875
----------
6,343,750
----------
TOTAL ENERGY (8.1%) ............... 33,962,658
----------
TECHNOLOGY
ELECTRONICS (4.8%)
Details, Inc.
10.0%, 11/15/05+ .................. 4,000,000 4,110,000
Interactive Systems, Inc.
Zero Coupon, 08/01/03(d) .......... 1,500,000 525,000
International Logistics Ltd.
9.75%, 10/15/07+ .................. 6,000,000 5,940,000
Sullivan Graphics, Inc.
12.75%, 08/01/05 .................. 5,000,000 5,050,000
Unisys Corp.
11.75%, 10/15/04 .................. 4,000,000 4,580,000
----------
20,205,000
----------
TELECOMMUNICATIONS (20.7%)
American Telecasting, Inc.
Zero Coupon, 08/15/05(d) .......... 5,000,000 1,500,000
EchoStar Communications Corp.
12.5%, 07/01/02+ .................. 7,000,000 7,577,500
GST Telecommunications, Inc.
12.75%, 11/15/07 .................. 5,000,000 5,225,000
Ionica Group PLC
Zero Coupon, 05/01/07(d) .......... 13,000,000 5,200,000
</TABLE>
53
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
Iridium LLC/Capital Corp.
14.0%, 07/15/05 .................... $12,000,000 $13,110,000
Knology Holdings, Inc.
Zero Coupon, 10/15/07(d) ........... 15,000,000 8,062,500
Microcell
Telecommunications, Inc.
Zero Coupon, 06/01/06(d) ........... 10,000,000 6,750,000
Netia Holdings B.V.:
Zero Coupon, 11/01/07+(d) .......... 3,000,000 1,710,000
10.25%, 11/01/07+ ................... 5,000,000 4,800,000
Optel, Inc.
13.0%, 02/15/05 .................... 10,000,000 10,600,000
Orion Network Systems, Inc.
11.25%, 01/15/07 ................... 4,000,000 4,500,000
Primus Telecommunications
11.75%, 08/01/04 ................... 6,500,000 6,922,500
Winstar Equipment Corp.
12.5%, 03/15/04 .................... 10,000,000 11,150,000
------------
87,107,500
------------
TOTAL TECHNOLOGY (25.5%) ........... 107,312,500
------------
</TABLE>
<TABLE>
<CAPTION>
========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED
MISCELLANEOUS (0.7%)
Elgin National Industries
11.0%, 11/01/07+ ................... $ 3,000,000 $ 3,101,250
------------
TOTAL LONG-TERM DEBT SECURITIES (89.9%)
(Amortized Cost $371,488,588) 378,956,931
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan
Mortgage Corp.
6.0%, 01/02/98 .................... 30,000,000 29,995,000
------------
TOTAL SHORT-TERM DEBT SECURITIES (7.1%)
(Amortized Cost $29,995,000)......... 29,995,000
------------
TOTAL INVESTMENTS (97.1%)
(Cost/Amortized Cost
$401,820,273)....................... 409,444,270
OTHER ASSETS
LESS LIABILITIES (2.9%) ............. 12,366,608
------------
NET ASSETS (100.0%) .................. $421,810,878
=============
</TABLE>
- ----------
* Non-income producing.
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $197,227,625
or 46.8% of net assets.
(a) Coupon will increase periodically based upon a predetermined
schedule. Stated interest rate in effect at December 31, 1997.
(b) Consists of more than one class of securities traded together as a
unit; generally bonds with attached stocks or warrants.
(c) Coupon will fluctuate based upon an interest rate index. Stated
interest rate in effect at December 31, 1997.
(d) Debt security initially issued in zero coupon form which converts to
coupon form at a specific rate and date.
See Notes to Financial Statements.
54
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND
OTHER INVESTMENTS:
BASIC MATERIALS
CHEMICALS (1.6%)
Dupont (E.I.) de Nemours & Co. 158,000 $ 9,489,875
-----------
CHEMICALS--SPECIALTY (0.6%)
Praxair, Inc. ........................ 77,000 3,465,000
-----------
TOTAL BASIC MATERIALS (2.2%) ....... 12,954,875
-----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (2.6%)
USA Waste Services, Inc.* ............ 113,295 4,446,829
Waste Management, Inc. ............... 390,000 10,725,000
-----------
15,171,829
-----------
PRINTING, PUBLISHING &
BROADCASTING (3.3%)
Belo (A.H.) Corp. (Series A) ......... 96,000 5,388,000
Gannett Co. .......................... 82,000 5,068,625
New York Times Co. (Class A) ......... 41,000 2,711,125
Reuters Holdings PLC (ADR) ........... 93,000 6,161,250
-----------
19,329,000
-----------
TOTAL BUSINESS SERVICES (5.9%) 34,500,829
-----------
CAPITAL GOODS
AEROSPACE (0.6%)
General Dynamics Corp. ............... 42,000 3,630,375
-----------
ELECTRICAL EQUIPMENT (1.5%)
General Electric Co. ................. 121,000 8,878,375
-----------
MACHINERY (2.7%)
Allied Signal, Inc. .................. 72,000 2,803,500
Cooper Industries, Inc. .............. 85,000 4,165,000
Fluor Corp. .......................... 87,000 3,251,625
United Technologies Corp. ............ 77,100 5,613,844
-----------
15,833,969
-----------
TOTAL CAPITAL GOODS (4.8%) ......... 28,342,719
-----------
CONSUMER CYCLICALS
AIRLINES (1.7%)
Delta Air Lines, Inc. ................ 39,200 4,664,800
Northwest Airlines Corp.
(Class A)* ......................... 111,000 5,314,125
-----------
9,978,925
-----------
APPAREL, TEXTILE (0.5%)
Reebok International, Inc.* .......... 100,400 2,892,775
-----------
AUTOS & TRUCKS (1.3%)
Harley-Davidson, Inc. ................ 285,000 7,801,875
-----------
HOUSEHOLD FURNITURE,
APPLIANCES (0.7%)
Sunbeam Corp. ........................ 91,500 3,854,438
-----------
RETAIL--GENERAL (3.8%)
Dayton Hudson Corp. .................. 92,000 6,210,000
Federated Department Stores,
Inc. * ............................. 94,600 4,073,712
Home Depot, Inc. ..................... 124,800 7,347,600
Sears, Roebuck & Co. ................. 103,800 4,696,950
-----------
22,328,262
-----------
TOTAL CONSUMER CYCLICALS (8.0%) 46,856,275
-----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS
CONTAINERS (0.5%)
Sealed Air Corp.* .................... 44,000 $ 2,717,000
-----------
DRUGS (6.3%)
American Home Products Corp. ......... 67,000 5,125,507
Centocor, Inc.* ...................... 253,900 8,442,175
Genzyme Corp. (General
Division)* ......................... 70,000 1,942,500
Merck & Co., Inc. .................... 92,000 9,775,000
Schering Plough Corp. ................ 189,000 11,741,625
-----------
37,026,807
-----------
FOODS (3.4%)
Campbell Soup Co. .................... 215,000 12,496,875
Heinz (H.J.) Co. ..................... 93,000 4,725,562
Tyson Foods, Inc. .................... 135,200 2,771,600
-----------
19,994,037
-----------
HOSPITAL SUPPLIES & SERVICES (1.9%)
Baxter International, Inc. ........... 61,900 3,122,081
Becton, Dickinson & Co. .............. 46,000 2,300,000
PacifiCare Health Systems, Inc.
(Class B) * ........................ 115,000 6,023,125
-----------
11,445,206
-----------
SOAPS & TOILETRIES (1.7%)
Gillette Co. ......................... 100,000 10,043,750
-----------
TOBACCO (4.5%)
Philip Morris Cos., Inc. ............. 238,500 10,807,031
RJR Nabisco Holdings Corp. ........... 410,000 15,375,000
-----------
26,182,031
-----------
TOTAL CONSUMER NONCYCLICALS (18.3%)
107,408,831
-----------
CREDIT SENSITIVE
BANKS (6.8%)
Chase Manhattan Corp. ................ 151,000 16,534,500
Citicorp ............................. 97,800 12,365,587
First Chicago NBD Corp. .............. 12,825 1,070,887
First Union Corp. .................... 197,000 10,096,250
-----------
40,067,224
-----------
FINANCIAL SERVICES (4.5%)
Household International, Inc. ........ 57,000 7,271,062
MBNA Corp. ........................... 124,500 3,400,406
Morgan Stanley, Dean Witter,
Discover & Co. ..................... 185,000 10,938,125
PMI Group, Inc. ...................... 66,600 4,816,013
-----------
26,425,606
-----------
INSURANCE (5.4%)
American International Group,
Inc. ............................... 85,000 9,243,750
General Re Corp. ..................... 26,400 5,596,800
Hartford Financial Services
Group, Inc. ........................ 56,500 5,286,281
Hartford Life, Inc. (Class A) ........ 60,000 2,718,750
PennCorp Financial Group, Inc. ....... 93,000 3,318,938
Travelers Group, Inc. ................ 46,500 2,505,188
Travelers Property Casualty
Corp. (Class A) .................... 63,000 2,772,000
-----------
31,441,707
-----------
</TABLE>
55
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
REAL ESTATE (0.0%)
Security Capital Group--
Warrants * .......................... 2,513 $ 13,193
-----------
UTILITY--ELECTRIC (2.1%)
AES Corp.* ............................ 18,200 848,575
CMS Energy Corp. ...................... 53,000 2,335,312
FPL Group, Inc. ....................... 86,000 5,090,125
NIPSCO Industries, Inc. ............... 56,000 2,768,500
Pinnacle West Capital Corp. ........... 36,000 1,525,500
-----------
12,568,012
-----------
UTILITY--TELEPHONE (1.8%)
AT&T Corp. ............................ 85,300 5,224,625
Teleport Communications Group,
Inc. (Class A)* ..................... 99,700 5,471,038
-----------
10,695,663
-----------
TOTAL CREDIT SENSITIVE (20.6%) 121,211,405
-----------
ENERGY
OIL--DOMESTIC (4.7%)
Apache Corp. .......................... 210,000 7,363,125
Enron Oil & Gas Co. ................... 130,000 2,754,375
Murphy Oil Corp. ...................... 91,000 4,931,063
USX-Marathon Group .................... 325,000 10,968,750
Union Pacific Resources Group,
Inc. ................................ 68,800 1,668,400
-----------
27,685,713
-----------
OIL--INTERNATIONAL (4.0%)
Gulf Canada Resources Ltd.* ........... 345,000 2,415,000
Mobil Corp. ........................... 88,600 6,395,813
Texaco, Inc. .......................... 270,400 14,703,000
-----------
23,513,813
-----------
OIL--SUPPLIES & CONSTRUCTION (1.2%)
Dresser Industries, Inc. .............. 125,000 5,242,187
Transocean Offshore, Inc. ............. 41,800 2,014,238
-----------
7,256,425
-----------
RAILROADS (0.2%)
Canadian Pacific Ltd. ................. 39,000 1,062,750
-----------
TOTAL ENERGY (10.1%) ................ 59,518,701
-----------
TECHNOLOGY
ELECTRONICS (3.8%)
Altera Corp.* ......................... 34,800 1,152,750
Atmel Corp.* .......................... 319,000 5,921,437
Cisco Systems, Inc.* .................. 144,750 8,069,812
Solectron Corp.* ...................... 49,200 2,044,875
Xilinx, Inc.* ......................... 145,000 5,084,063
-----------
22,272,937
-----------
OFFICE EQUIPMENT (1.1%)
Compaq Computer Corp. ................. 42,250 2,384,484
Hewlett-Packard Co. ................... 71,000 4,437,500
-----------
6,821,984
-----------
OFFICE EQUIPMENT SERVICES (3.4%)
Electronic Data Systems Corp. ......... 139,200 6,116,100
First Data Corp. ...................... 467,000 13,659,750
-----------
19,775,850
-----------
TELECOMMUNICATIONS (3.1%)
Intermedia Communications,
Inc.* ............................... 370 22,478
MCI Communications Corp. .............. 330,000 14,128,125
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Scientific Atlanta, Inc. .............. 80,000 $ 1,340,000
WorldCom, Inc.* ....................... 89,900 2,719,475
-----------
18,210,078
-----------
TOTAL TECHNOLOGY (11.4%) ............ 67,080,849
-----------
DIVERSIFIED
MISCELLANEOUS (2.9%)
Tyco International Ltd. ............... 195,200 8,796,200
U.S. Industries, Inc. ................. 87,000 2,620,875
Viad Corp. ............................ 130,000 2,510,625
Whitman Corp. ......................... 109,000 2,840,813
-----------
TOTAL DIVERSIFIED (2.9%) ............ 16,768,513
-----------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (84.2%)
(Cost $428,916,307) ................. 494,642,997
-----------
PREFERRED STOCKS:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.2%)
Republic Industries, Inc.
6.5% Exch. Conv. .................... 51,500 1,210,250
-----------
TRUCKING, SHIPPING (0.2%)
CNF Trust I
5.0% Conv. Series A ................. 20,500 1,168,500
-----------
TOTAL BUSINESS SERVICES (0.4%)
2,378,750
-----------
CAPITAL GOODS (0.4%)
AEROSPACE
Loral Space & Communications
6.0% Conv. .......................... 39,200 2,410,800
-----------
CONSUMER CYCLICALS (0.3%)
AIRLINES
Continental Airlines Finance
Trust
8.5% Conv. .......................... 19,600 2,016,350
-----------
CREDIT SENSITIVE (0.3%)
UTILITY--ELECTRIC
AES Trust I
5.375% Conv. Series A ............... 25,200 1,808,100
-----------
ENERGY (0.2%)
OIL--DOMESTIC
Devon Financing Trust
$3.25 Conv. ......................... 12,500 915,625
-----------
TECHNOLOGY
TELECOMMUNICATIONS (1.8%)
Intermedia Communications, Inc.:
7.0% Conv.+ .......................... 29,400 1,205,400
7.0% Conv. Series D .................. 26,400 1,082,400
Mobile Telecommunications
$2.25 Conv. ......................... 30,850 1,033,475
Nextel Strypes Trust
7.25% Conv. ......................... 55,700 1,322,875
QualComm Financial Trust:
5.75% Conv. .......................... 18,300 856,669
5.75% Conv.+ ......................... 28,800 1,348,200
WorldCom, Inc.
8.0% Conv. .......................... 33,200 3,481,850
-----------
TOTAL TECHNOLOGY (1.8%) ............. 10,330,869
-----------
TOTAL PREFERRED STOCKS (3.4%)
(Cost $18,227,795) .................. 19,860,494
-----------
</TABLE>
56
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PROFESSIONAL SERVICES (0.4%)
Career Horizons, Inc.
7.0% Conv., 11/01/02 .............. $ 835,000 $1,736,800
Personnel Group of America:
5.75% Conv., 07/01/04 ............. 120,000 136,200
5.75% Conv., 07/01/04+ ............. 375,000 425,625
----------
TOTAL BUSINESS SERVICES (0.4%) 2,298,625
----------
CAPITAL GOODS
AEROSPACE (0.2%)
Orbital Sciences Corp.
5.0% Conv., 10/01/02+ ............. 660,000 843,150
----------
BUILDING & CONSTRUCTION (0.1%)
Halter Marine Group, Inc.
4.5% Conv., 09/15/04+ ............. 710,000 797,862
----------
MACHINERY (0.3%)
DII Group, Inc.
6.0% Conv., 10/15/02+ ............. 1,100,000 1,681,625
----------
TOTAL CAPITAL GOODS (0.6%) ........ 3,322,637
----------
CONSUMER CYCLICALS
FOOD SERVICES, LODGING (0.5%)
Cendant Corp.
4.75% Conv., 03/01/03 ............. 2,265,000 3,046,425
----------
RETAIL--GENERAL (0.3%)
U.S. Office Products Co.
5.5% Conv., 02/01/01 .............. 1,530,000 1,818,787
----------
TOTAL CONSUMER CYCLICALS (0.8%) 4,865,212
----------
CONSUMER NONCYCLICALS
DRUGS (0.7%)
MedImmune, Inc.:
7.0% Conv. Sub. Note,
07/01/03+ ......................... 380,000 864,025
7.0% Conv., 07/01/03 ............... 920,000 2,091,850
Quintiles Transnational Corp.:
4.25% Conv., 05/31/00+ ............ 580,000 651,775
4.25% Conv., 05/31/00 .............. 475,000 533,781
----------
4,141,431
----------
HOSPITAL SUPPLIES & SERVICES (0.5%)
FPA Medical Management, Inc.:
6.5% Conv., 12/15/01 .............. 1,060,000 1,081,200
6.5% Conv., 12/15/01+ .............. 465,000 474,300
RES-Care, Inc.
6.0% Conv., 12/01/04+ ............. 1,150,000 1,311,000
----------
2,866,500
----------
TOTAL CONSUMER NONCYCLICALS (1.2%) 7,007,931
----------
CREDIT SENSITIVE
FINANCIAL SERVICES (0.3%)
RAC Financial Group, Inc.:
7.25% Conv. Sub. Note,
08/15/03+ ......................... 365,000 879,650
7.25% Conv., 08/15/03 .............. 480,000 1,156,800
----------
2,036,450
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (0.3%)
Penn Treaty American Corp.:
6.25% Conv., 12/01/03 ............. $ 535,000 $ 689,481
6.25% Conv., 12/01/03+ ............. 660,000 850,575
----------
1,540,056
----------
TOTAL CREDIT SENSITIVE (0.6%) ..... 3,576,506
----------
ENERGY
COAL & GAS PIPELINES (0.3%)
Nabors Industries, Inc.
5.0% Conv., 05/15/06 .............. 1,110,000 2,009,100
----------
OIL--SUPPLIES & CONSTRUCTION (0.6%)
Diamond Offshore Drilling, Inc.
3.75% Conv. Sub. Note,
02/15/07 .......................... 1,120,000 1,482,600
Parker Drilling Co.
5.5% Conv. Sub. Note,
08/01/04 .......................... 1,035,000 1,076,400
Seacor Holdings, Inc.:
5.375% Conv., 11/15/06+ ........... 485,000 549,263
5.375% Conv., 11/15/06 ............. 345,000 390,713
----------
3,498,976
----------
TOTAL ENERGY (0.9%) ............... 5,508,076
----------
TECHNOLOGY
ELECTRONICS (4.0%)
Altera Corp.
5.75% Conv. Sub. Note,
06/15/02+ ......................... 1,680,000 2,305,800
Baan Co.:
4.5% Conv. Sub. Note,
12/15/01+ ......................... 845,000 1,294,962
4.5% Conv. Sub. Note,
12/15/01 .......................... 335,000 513,387
Cymer, Inc.
3.5% Conv., 08/06/04+(a) .......... 1,475,000 1,115,469
Integrated Process Equipment
6.25% Conv., 09/15/04+ ............ 2,195,000 1,819,106
Level One Communications
4.0% Conv., 09/01/04+ ............. 1,630,000 1,532,200
Photronics, Inc.
6.0% Conv., 06/01/04 .............. 2,055,000 2,355,544
Quantum Corp.
5.0% Conv., 03/01/03+ ............. 385,000 698,775
Sanmina Corp.
5.5% Conv., 08/15/02+ ............. 1,410,000 3,417,488
SCI Systems, Inc.
5.0% Conv., 05/01/06 .............. 1,795,000 3,343,188
Solectron Corp.
6.0% Conv., 03/01/06+ ............. 1,185,000 1,624,931
Wind River Systems, Inc.
5.0% Conv., 08/01/02+ ............. 1,420,000 1,519,400
Xilinx, Inc.
5.25% Conv., 11/01/02+ ............ 1,925,000 1,862,438
----------
23,402,688
----------
</TABLE>
57
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
=========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS (0.3%)
Comverse Technology, Inc.:
5.75% Conv., 10/01/06 ................ $ 665,000 $ 716,537
5.75% Conv. Sub. Note,
10/01/06+ ............................ 1,200,000 1,293,000
------------
2,009,537
------------
TOTAL TECHNOLOGY (4.3%) .............. 25,412,225
------------
TOTAL LONG-TERM DEBT SECURITIES (8.8%)
(Amortized Cost $46,485,364)........... 51,991,212
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (3.0%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ................... 17,600,000 17,597,067
------------
TOTAL SHORT-TERM DEBT SECURITIES (3.0%)
(Amortized Cost $17,597,067) 17,597,067
------------
TOTAL INVESTMENTS (99.4%)
(Cost/Amortized Cost
$511,226,533) ........................ 584,091,770
OTHER ASSETS
LESS LIABILITIES (0.6%) ............... 3,664,123
------------
NET ASSETS (100.0%) .................... $587,755,893
============
</TABLE>
- ----------
* Non-income producing.
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $30,366,019 or
5.2% of net assets.
(a) Coupon will increase periodically based upon a predetermined
schedule. Stated interest rate in effect at December 31, 1997.
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
58
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (2.2%)
Air Products & Chemicals, Inc. ....... 13,300 $1,093,925
Avery Dennison Corp. ................. 12,200 545,950
Dow Chemical Co. ..................... 28,300 2,872,450
Dupont (E.I.) de Nemours & Co. 140,600 8,444,787
Eastman Chemical Co. ................. 8,800 524,150
Ecolab, Inc. ......................... 8,900 493,394
FMC Corp.* ........................... 7,100 477,919
Goodrich (B.F.) Co. .................. 10,500 435,094
Grace (W.R.) & Co. ................... 8,800 707,850
Hercules, Inc. ....................... 12,000 600,750
Millipore Corp. ...................... 11,900 403,856
Monsanto Co. ......................... 73,300 3,078,600
Rohm & Haas Co. ...................... 7,700 737,275
Union Carbide Corp. .................. 15,000 644,063
----------
21,060,063
----------
CHEMICALS--SPECIALTY (0.5%)
Great Lakes Chemical Corp. ........... 10,100 453,237
Morton International, Inc. ........... 15,700 539,688
Praxair, Inc. ........................ 19,600 882,000
Raychem Corp. ........................ 10,200 439,238
Sigma-Aldrich Corp. .................. 11,900 473,025
Southern Co. ......................... 85,000 2,199,375
----------
4,986,563
----------
METALS & MINING (0.7%)
Alcan Aluminium Ltd. ................. 13,400 370,175
Alcan Aluminium Ltd. (Canada) 14,800 407,933
Aluminum Co. of America .............. 21,600 1,520,100
Barrick Gold Corp. ................... 52,900 985,263
Engelhard Corp. ...................... 25,650 445,669
Freeport-McMoRan Copper &
Gold, Inc. (Class B) ............... 30,000 472,500
Inco Ltd. ............................ 26,000 442,000
Newmont Mining Corp. ................. 19,407 570,081
Phelps Dodge Corp. ................... 7,500 466,875
Placer Dome, Inc. .................... 47,800 606,463
Reynolds Metals Co. .................. 8,500 510,000
----------
6,797,059
----------
PAPER (1.0%)
Champion International Corp. ......... 11,400 516,562
Fort James Corp. ..................... 22,500 860,625
Georgia Pacific Group ................ 11,100 674,325
International Paper Co. .............. 36,025 1,553,578
Kimberly Clark Corp. ................. 67,244 3,315,970
Mead Corp. ........................... 16,200 453,600
Stone Container Corp.* ............... 30,200 315,213
Temple Inland, Inc. .................. 7,700 402,806
Union Camp Corp. ..................... 8,400 450,975
Westvaco Corp. ....................... 14,800 465,275
Willamette Industries, Inc. .......... 13,400 431,313
----------
9,440,242
----------
STEEL (0.2%)
Allegheny Teledyne, Inc. ............. 20,200 522,675
Nucor Corp. .......................... 9,800 473,463
Worthington Industries, Inc. ......... 21,500 354,750
----------
1,350,888
----------
TOTAL BASIC MATERIALS (4.6%) ....... 43,634,815
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.4%)
Browning-Ferris Industries, Inc. ..... 24,300 $ 899,100
Johnson Controls, Inc. ............... 9,600 458,400
Thermo Electron Corp.* ............... 17,600 783,200
Waste Management, Inc. ............... 55,600 1,529,000
----------
3,669,700
----------
PRINTING, PUBLISHING &
BROADCASTING (2.2%)
CBS Corp. ............................ 2,100 61,819
Clear Channel Communications,
Inc.* .............................. 12,000 953,250
Comcast Corp. (Class A) SPL .......... 41,800 1,319,313
Deluxe Corp. ......................... 13,200 455,400
Donnelley (R.R.) & Sons Co. .......... 18,000 670,500
Dow Jones & Co., Inc. ................ 11,800 633,512
Dun & Bradstreet Corp. ............... 20,200 624,937
Gannett Co. .......................... 34,800 2,151,075
King World Productions, Inc. ......... 7,900 456,225
Knight-Ridder, Inc. .................. 10,700 556,400
McGraw-Hill Companies, Inc. .......... 12,100 895,400
New York Times Co. (Class A) ......... 11,300 747,213
Tele-Communications, Inc.
(Series A)* ........................ 62,128 1,735,701
Time Warner, Inc. .................... 68,700 4,259,400
Times Mirror Co. (Class A) ........... 11,300 694,950
Tribune Co. .......................... 14,700 915,075
U.S. West Media Group* ............... 74,500 2,151,188
Viacom, Inc. (Class A)* .............. 1,000 40,875
Viacom, Inc. (Class B)* .............. 42,300 1,752,806
----------
21,075,039
----------
PROFESSIONAL SERVICES (0.5%)
Block (H&R), Inc. .................... 12,800 573,600
Cognizant Corp. ...................... 19,500 868,969
Interpublic Group Cos., Inc. ......... 14,800 737,225
Omnicom Group ........................ 19,600 830,550
Safety-Kleen Corp. ................... 15,600 428,025
Service Corp. International .......... 29,600 1,093,374
----------
4,531,743
----------
TRUCKING, SHIPPING (0.2%)
Federal Express Corp.* ............... 13,500 824,344
Laidlaw, Inc. ........................ 35,200 479,600
Ryder System, Inc. ................... 12,900 422,475
----------
1,726,419
----------
TOTAL BUSINESS SERVICES (3.3%)...... 31,002,901
----------
CAPITAL GOODS
AEROSPACE (1.5%)
Boeing Co. ........................... 122,274 5,983,784
General Dynamics Corp. ............... 7,400 639,637
Lockheed Martin Corp. ................ 23,704 2,334,844
Northrop Grumman Corp. ............... 7,800 897,000
Raytheon Co. (Class A) ............... 32 1,578
Raytheon Co. (Class B) ............... 41,700 2,105,850
Rockwell International Corp. ......... 24,800 1,295,800
TRW, Inc. ............................ 14,400 768,600
----------
14,027,093
----------
</TABLE>
59
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
BUILDING MATERIALS & FOREST
PRODUCTS (0.6%)
Armstrong World Industries, Inc........ 6,100 $ 455,975
Crane Co. ............................. 10,600 459,775
Louisiana Pacific Corp. ............... 22,800 433,200
Masco Corp. ........................... 19,400 986,975
Owens Corning ......................... 11,300 385,613
PPG Industries, Inc. .................. 21,700 1,239,613
Sherwin Williams Co. .................. 18,600 516,150
Weyerhaeuser Co. ...................... 23,700 1,162,781
----------
5,640,082
----------
ELECTRICAL EQUIPMENT (3.8%)
Emerson Electric Co. .................. 54,700 3,087,131
General Electric Co. .................. 401,200 29,438,050
Grainger (W.W.), Inc. ................. 6,100 592,844
Thomas & Betts Corp. .................. 9,600 453,600
Westinghouse Electric Corp. ........... 84,900 2,499,244
----------
36,070,869
----------
MACHINERY (1.7%)
Allied Signal, Inc. ................... 69,800 2,717,837
Case Corp. ............................ 9,200 556,025
Caterpillar, Inc. ..................... 46,400 2,253,300
Cooper Industries, Inc. ............... 14,700 720,300
Cummins Engine Company, Inc. .......... 7,000 413,438
Deere & Co. ........................... 31,100 1,813,519
Dover Corp. ........................... 26,800 968,150
Fluor Corp. ........................... 10,900 407,387
Harnischfeger Industries, Inc. ........ 13,000 459,062
Illinois Tool Works, Inc. ............. 30,700 1,845,837
Ingersoll Rand Co. .................... 19,950 807,975
Pall Corp. ............................ 20,500 424,094
Parker-Hannifin Corp. ................. 13,150 603,256
United Technologies Corp. ............. 28,700 2,089,719
----------
16,079,899
----------
TOTAL CAPITAL GOODS (7.6%) .......... 71,817,943
----------
CONSUMER CYCLICALS
AIRLINES (0.4%)
AMR Corp.* ............................ 11,300 1,452,050
Delta Air Lines, Inc. ................. 8,600 1,023,400
Southwest Airlines Co. ................ 25,050 616,856
US Airways Group, Inc.* ............... 11,000 687,500
----------
3,779,806
----------
APPAREL, TEXTILE (0.4%)
Fruit of the Loom, Inc.
(Class A)* .......................... 18,900 484,312
Liz Claiborne, Inc. ................... 10,000 418,125
National Service Industries, Inc. ..... 9,000 446,063
Nike, Inc. (Class B) .................. 37,800 1,483,650
VF Corp. .............................. 16,500 757,969
----------
3,590,119
----------
AUTO RELATED (0.5%)
Cooper Tire & Rubber Co. .............. 16,600 404,625
Dana Corp. ............................ 12,400 589,000
Eaton Corp. ........................... 8,600 767,550
Echlin, Inc. .......................... 14,100 510,244
Genuine Parts Co. ..................... 19,700 668,569
Goodyear Tire & Rubber Co. ............ 16,700 1,062,537
Snap-On, Inc. ......................... 10,150 442,794
----------
4,445,319
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
AUTOS & TRUCKS (1.7%)
AutoZone, Inc.* ....................... 17,800 $ 516,200
Chrysler Corp. ........................ 82,500 2,902,969
Ford Motor Co. ........................ 146,100 7,113,244
General Motors Corp. .................. 89,200 5,407,750
Paccar, Inc. .......................... 10,400 546,000
----------
16,486,163
----------
FOOD SERVICES, LODGING (0.8%)
Harrah's Entertainment, Inc.* ......... 25,200 475,650
ITT Corp.* ............................ 13,300 1,102,237
Marriott International, Inc. .......... 14,900 1,031,825
McDonald's Corp. ...................... 85,100 4,063,525
Tricon Global Restaurants, Inc.*....... 17,020 494,644
Wendy's International, Inc. ........... 21,500 517,344
----------
7,685,225
----------
HOUSEHOLD FURNITURE,
APPLIANCES (0.3%)
Black & Decker Corp. .................. 12,400 484,375
Maytag Corp. .......................... 13,400 499,987
Newell Company ........................ 20,500 871,250
Rubbermaid, Inc. ...................... 16,600 415,000
Stanley Works ......................... 9,200 434,125
Whirlpool Corp. ....................... 8,500 467,500
----------
3,172,237
----------
LEISURE RELATED (1.7%)
American Greetings Corp.
(Class A) ........................... 12,300 481,237
Brunswick Corp. ....................... 17,100 518,344
Cendant Corp.* ........................ 97,551 3,353,307
Disney (Walt) Co. ..................... 82,400 8,162,750
Hasbro, Inc. .......................... 15,200 478,800
Hilton Hotels Corp. ................... 30,000 892,500
Mattel, Inc. .......................... 34,843 1,297,902
Mirage Resorts, Inc.* ................. 21,200 482,300
----------
15,667,140
----------
PHOTO & OPTICAL (0.3%)
Allergan, Inc. ........................ 13,900 466,519
Eastman Kodak Company ................. 35,800 2,177,087
Polaroid Corp. ........................ 9,900 482,006
----------
3,125,612
----------
RETAIL--GENERAL (4.1%)
Circuit City Stores--Circuit City
Group ............................... 14,000 497,875
Costco Cos., Inc.* .................... 26,300 1,173,637
CVS Corp. ............................. 21,300 1,364,531
Dayton Hudson Corp. ................... 27,000 1,822,500
Dillard's, Inc. (Class A) ............. 13,500 475,875
Federated Department Stores,
Inc.* ............................... 25,900 1,115,319
Gap, Inc. ............................. 49,800 1,764,787
Harcourt General, Inc. ................ 7,800 427,050
Home Depot, Inc. ...................... 90,400 5,322,300
K-Mart Corp.* ......................... 60,300 697,219
Limited, Inc. ......................... 32,800 836,400
Lowe's Cos., Inc. ..................... 21,500 1,025,281
May Department Stores Co. ............. 28,800 1,517,400
Nordstrom, Inc. ....................... 9,300 561,488
Penney (J.C.), Inc. ................... 30,800 1,857,625
Sears, Roebuck & Co. .................. 48,500 2,194,625
</TABLE>
60
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Tandy Corp. ....................... 13,000 $ 501,313
TJX Cos., Inc. .................... 19,700 677,188
Toys R Us, Inc.* .................. 35,300 1,109,744
Walgreen Co. ...................... 61,000 1,913,875
Wal-Mart Stores, Inc. ............. 280,500 11,062,219
Woolworth Corp.* .................. 22,100 450,288
-----------
38,368,539
-----------
TOTAL CONSUMER CYCLICALS (10.2%) 96,320,160
-----------
CONSUMER NONCYCLICALS
BEVERAGES (3.4%)
Anheuser Busch Companies, Inc. 61,100 2,688,400
Brown Forman Corp. (Class B) ...... 7,600 419,900
Coca-Cola Co. ..................... 303,900 20,247,337
Pepsico, Inc. ..................... 188,700 6,875,756
Seagram Ltd. ...................... 47,300 1,528,381
-----------
31,759,774
-----------
CONTAINERS (0.2%)
Bemis, Inc. ....................... 11,100 489,094
Crown Cork & Seal Co., Inc. ....... 12,900 646,612
Owens-Illinois, Inc.* ............. 14,600 553,888
-----------
1,689,594
-----------
DRUGS (7.3%)
ALZA Corp.* ....................... 16,900 537,631
American Home Products Corp. ...... 80,100 6,127,650
Amgen, Inc.* ...................... 32,800 1,775,300
Bristol-Meyers Squibb Co. ......... 123,200 11,657,800
Lilly (Eli) & Co. ................. 137,500 9,573,437
Merck & Co., Inc. ................. 148,500 15,778,125
Pfizer, Inc. ...................... 158,900 11,847,981
Pharmacia & Upjohn, Inc. .......... 62,690 2,296,021
Schering Plough Corp. ............. 90,100 5,597,463
Warner-Lambert Co. ................ 33,400 4,141,600
-----------
69,333,008
-----------
FOODS (2.6%)
Archer Daniels Midland Co. ........ 67,262 1,458,745
Campbell Soup Co. ................. 56,700 3,295,687
ConAgra, Inc. ..................... 58,300 1,912,969
CPC International, Inc. ........... 17,700 1,911,600
General Mills, Inc. ............... 19,700 1,411,012
Heinz (H.J.) Co. .................. 45,550 2,314,509
Hershey Foods Corp. ............... 17,200 1,065,325
Kellogg Co. ....................... 50,900 2,525,912
Pioneer Hi Bred International,
Inc. ............................ 8,100 868,725
Quaker Oats Co. ................... 16,900 891,475
Ralston--Ralston Purina Group ..... 12,800 1,189,600
Rite Aid Corp. .................... 15,200 892,050
Sara Lee Corp. .................... 59,200 3,333,700
Wrigley (Wm.), Jr. Co. ............ 14,300 1,137,744
-----------
24,209,053
-----------
HOSPITAL SUPPLIES & SERVICES (3.6%)
Abbott Laboratories ............... 95,100 6,234,994
Baxter International, Inc. ........ 34,500 1,740,094
Becton, Dickinson & Co. ........... 14,400 720,000
Biomet, Inc. ...................... 19,100 489,437
Boston Scientific Corp.* .......... 23,300 1,068,887
Cardinal Health, Inc. ............. 13,400 1,006,675
Columbia/HCA Healthcare Corp. 80,800 2,393,700
Guidant Corp. ..................... 17,800 1,108,050
</TABLE>
<TABLE>
<CAPTION>
=============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -----------------------------------------------------------------------------
<S> <C> <C>
Healthsouth Corp.* ................ 47,900 $ 1,329,225
Humana, Inc.* ..................... 20,200 419,150
Johnson and Johnson ............... 164,400 10,829,850
Mallinckrodt, Inc. ................ 11,900 452,200
Medtronic, Inc. ................... 57,800 3,023,663
Saint Jude Medical, Inc.* ......... 17,150 523,075
Tenet Healthcare Corp.* ........... 36,400 1,205,750
United Healthcare Corp. ........... 23,200 1,152,750
-----------
33,697,500
-----------
RETAIL--FOOD (0.6%)
Albertsons, Inc. .................. 30,400 1,440,200
American Stores Co. ............... 33,700 692,956
Giant Food, Inc. (Class A) ........ 13,900 468,256
Kroger Co.* ....................... 31,500 1,163,531
Supervalu, Inc. ................... 11,000 460,625
Sysco Corp. ....................... 21,500 979,594
Winn Dixie Stores, Inc. ........... 18,400 803,850
-----------
6,009,012
-----------
SOAPS & TOILETRIES (3.2%)
Avon Products, Inc. ............... 15,700 963,587
Clorox Co. ........................ 12,500 988,281
Colgate Palmolive Co. ............. 36,800 2,704,800
Gillette Co. ...................... 69,600 6,990,450
International Flavors &
Fragrances, Inc. ................ 13,000 669,500
Procter & Gamble Co. .............. 167,900 13,400,519
Unilever N.V. ..................... 79,600 4,970,025
-----------
30,687,162
-----------
TOBACCO (1.8%)
Fortune Brands, Inc. .............. 19,600 726,425
Loews Corp. ....................... 13,500 1,432,687
Philip Morris Cos., Inc. .......... 299,100 13,552,969
UST, Inc. ......................... 22,700 838,481
-----------
16,550,562
-----------
TOTAL CONSUMER NONCYCLICALS (22.7%)
213,935,665
-----------
CREDIT SENSITIVE
BANKS (8.3%)
Ahmanson (H.F.) & Co. ............. 12,000 803,250
Banc One Corp. .................... 71,900 3,905,069
Bank of New York Co., Inc. ........ 46,800 2,705,625
BankAmerica Corp. ................. 86,100 6,285,300
BankBoston Corp. .................. 18,000 1,690,875
Bankers Trust New York Corp. ...... 12,300 1,382,981
Barnett Banks, Inc. ............... 24,500 1,760,937
Chase Manhattan Corp. ............. 52,240 5,720,280
Citicorp .......................... 56,500 7,143,719
Comerica, Inc. .................... 13,000 1,173,250
CoreStates Financial Corp. ........ 25,000 2,001,562
Fifth Third Bancorp ............... 19,000 1,553,250
First Chicago NBD Corp. ........... 36,449 3,043,491
First Union Corp. ................. 77,000 3,946,250
Golden West Financial Corp. ....... 6,800 665,125
Huntington Bancshares, Inc. ....... 22,900 824,400
KeyCorp. .......................... 26,800 1,897,775
Mellon Bank Corp. ................. 31,000 1,879,375
Morgan (J.P.) & Co., Inc. ......... 22,100 2,494,538
National City Corp. ............... 26,400 1,735,800
NationsBank Corp. ................. 87,399 5,314,952
Norwest Corp. ..................... 92,000 3,553,500
</TABLE>
61
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===========================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- ---------------------------------------------------------------------------
<S> <C> <C>
PNC Bank Corp. ...................... 37,700 $ 2,151,256
Republic New York Corp. ............. 6,400 730,800
State Street Corp. .................. 19,200 1,117,200
Suntrust Banks, Inc. ................ 26,200 1,870,025
U.S. Bancorp. ....................... 30,026 3,361,035
Wachovia Corp. ...................... 25,000 2,028,125
Washington Mutual, Inc. ............. 30,800 1,965,425
Wells Fargo & Co. ................... 10,800 3,665,925
-----------
78,371,095
-----------
FINANCIAL SERVICES (2.5%)
American Express Co. ................ 57,700 5,149,725
Beneficial Corp. .................... 6,300 523,687
Country Wide Credit Industries,
Inc. .............................. 12,200 523,075
Equifax, Inc. ....................... 17,900 634,331
Fleet Financial Group, Inc. ......... 30,879 2,313,995
Green Tree Financial Corp. .......... 22,500 589,219
Household International, Inc. ....... 13,100 1,671,069
MBIA, Inc. .......................... 11,000 734,937
MBNA Corp. .......................... 61,687 1,684,826
Merrill Lynch & Co., Inc. ........... 40,800 2,975,850
Morgan Stanley, Dean Witter,
Discover & Co. .................... 72,205 4,269,121
Schwab (Charles) Corp. .............. 31,850 1,335,709
Synovus Financial Corp. ............. 21,000 687,750
Transamerica Corp. .................. 7,600 809,400
-----------
23,902,694
-----------
INSURANCE (4.8%)
Aetna, Inc. ......................... 18,443 1,301,384
Allstate Corp. ...................... 53,438 4,856,178
American General Corp. .............. 30,500 1,648,906
American International Group,
Inc. .............................. 86,225 9,376,969
Aon Corp. ........................... 20,550 1,204,744
Chubb Corp. ......................... 21,200 1,603,250
CIGNA Corp. ......................... 9,100 1,574,869
Cincinnati Financial Corp. .......... 6,800 957,100
Conseco, Inc. ....................... 22,500 1,022,344
General Re Corp. .................... 9,800 2,077,600
Hartford Financial Services
Group, Inc. ....................... 14,500 1,356,656
Jefferson-Pilot Corp. ............... 8,700 677,512
Lincoln National Corp. Industries 12,200 953,125
Marsh & McLennan Cos., Inc. ......... 20,700 1,543,444
MGIC Investment Corp. ............... 14,000 931,000
Progressive Corp. ................... 8,900 1,066,888
Providian Financial Corp. ........... 11,200 506,100
Safeco Corp. ........................ 17,100 833,625
Saint Paul Cos., Inc. ............... 10,300 845,244
SunAmerica, Inc. .................... 24,000 1,026,000
Torchmark Corp. ..................... 17,000 715,063
Travelers Group, Inc. ............... 140,857 7,588,671
UNUM Corp. .......................... 16,700 908,063
USF&G Corp. ......................... 21,800 480,963
-----------
45,055,698
-----------
MORTGAGE RELATED (1.2%)
Federal National Mortgage
Association ....................... 130,600 7,452,362
Federal Home Loan Mortgage
Corp. ............................. 85,500 3,585,656
-----------
11,038,018
-----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
UTILITY--ELECTRIC (2.4%)
American Electric Power, Inc. ....... 23,500 $ 1,213,187
Baltimore Gas & Electric Co. ........ 18,300 623,344
Carolina Power & Light Co. .......... 18,300 776,606
Central & South West Corp. .......... 25,600 692,800
CINergy Corp. ....................... 19,613 751,423
Consolidated Edison, Inc. ........... 29,200 1,197,200
Dominion Resources, Inc. ............ 23,100 983,194
DTE Energy Co. ...................... 17,500 607,031
Duke Energy Co. ..................... 44,630 2,471,386
Edison International ................ 49,300 1,340,344
Entergy Corp. ....................... 30,000 898,125
FirstEnergy Corp.* .................. 28,600 829,400
FPL Group, Inc. ..................... 22,600 1,337,637
GPU, Inc. ........................... 15,000 631,875
Houston Industries, Inc. ............ 35,400 944,737
Northern States Power Co. ........... 8,300 483,475
Pacificorp. ......................... 36,800 1,005,100
Peco Energy Co. ..................... 26,900 652,325
PG&E Corp. .......................... 54,400 1,655,800
PP&L Resources, Inc. ................ 20,000 478,750
Public Service Enterprise Group ..... 28,800 912,600
Texas Utilities Co. ................. 29,900 1,242,719
Unicom Corporation .................. 26,900 827,175
Union Electric Co. .................. 12,700 549,275
-----------
23,105,508
-----------
UTILITY--GAS (0.4%)
Columbia Gas System, Inc. ........... 6,900 542,081
Consolidated Natural Gas Co. ........ 11,500 695,750
ENRON Corp. ......................... 38,000 1,579,375
Nicor, Inc. ......................... 11,800 497,813
-----------
3,315,019
-----------
UTILITY--TELEPHONE (5.8%)
Alltel Corp. ........................ 22,500 923,906
Ameritech Corp. ..................... 67,900 5,465,950
AT&T Corp. .......................... 200,500 12,280,625
Bell Atlantic Corp. ................. 95,696 8,708,336
BellSouth Corp. ..................... 122,300 6,887,019
Frontier Corp. ...................... 18,500 445,156
GTE Corp. ........................... 117,900 6,160,275
SBC Communications, Inc. ............ 112,773 8,260,622
Sprint Corp. ........................ 53,100 3,112,988
U.S. West Communications
Group* ............................ 57,500 2,594,688
-----------
54,839,565
-----------
TOTAL CREDIT SENSITIVE (25.4%) 239,627,597
-----------
ENERGY
COAL & GAS PIPELINES (0.5%)
Burlington Resources, Inc. .......... 21,830 978,257
Coastal Corp. ....................... 12,800 792,800
Pacific Enterprises ................. 13,000 489,125
Sonat, Inc. ......................... 10,600 484,950
Tenneco, Inc. ....................... 20,300 801,850
Williams Cos., Inc. ................. 39,500 1,120,813
-----------
4,667,795
-----------
OIL--DOMESTIC (1.9%)
Amerada Hess Corp. .................. 10,900 598,137
Amoco Corp. ......................... 60,400 5,141,550
</TABLE>
62
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Anadarko Petroleum Corp. ............ 7,600 $ 461,225
Apache Corp. ........................ 12,200 427,762
Ashland, Inc. ....................... 8,300 445,606
Atlantic Richfield Co. .............. 39,400 3,156,925
Kerr McGee Corp. .................... 7,200 455,850
Occidental Petroleum Corp. .......... 39,000 1,143,188
Oryx Energy Co.* .................... 16,900 430,950
Pennzoil Co. ........................ 6,500 434,281
Phillips Petroleum Co. .............. 31,800 1,546,275
Sun Co., Inc. ....................... 11,500 483,719
Union Pacific Resources Group,
Inc. .............................. 30,608 742,244
Unocal Corp. ........................ 29,800 1,156,613
USX-Marathon Group .................. 34,700 1,171,125
USX-U.S. Steel Group ................ 13,500 421,875
-----------
18,217,325
-----------
OIL--INTERNATIONAL (5.3%)
Chevron Corp. ....................... 81,100 6,244,700
Exxon Corp. ......................... 304,700 18,643,831
Mobil Corp. ......................... 97,400 7,031,063
Royal Dutch Petroleum Co.
(ADR) ............................. 265,600 14,392,200
Texaco, Inc. ........................ 63,700 3,463,688
-----------
49,775,482
-----------
OIL--SUPPLIES & CONSTRUCTION (1.0%)
Baker Hughes, Inc. .................. 20,500 894,312
Dresser Industries, Inc. ............ 20,900 876,494
Halliburton Co. ..................... 29,800 1,547,737
Helmerich & Payne, Inc. ............. 7,000 475,125
Schlumberger Ltd. ................... 61,300 4,934,650
Western Atlas, Inc.* ................ 6,400 473,600
-----------
9,201,918
-----------
RAILROADS (0.7%)
Burlington Northern Santa Fe ........ 18,651 1,733,377
CSX Corp. ........................... 26,900 1,452,600
Norfolk Southern Corp. .............. 46,500 1,432,781
Union Pacific Corp. ................. 29,700 1,854,394
-----------
6,473,152
-----------
TOTAL ENERGY (9.4%) ............... 88,335,672
-----------
TECHNOLOGY
ELECTRONICS (4.2%)
Advanced Micro Devices, Inc.* ....... 25,100 450,231
AMP, Inc. ........................... 27,100 1,138,200
Applied Materials, Inc.* ............ 44,900 1,352,613
BB&T Corp. .......................... 17,100 1,095,469
Cisco Systems, Inc.* ................ 123,150 6,865,612
EMC Corp.* .......................... 60,800 1,668,200
Harris Corp. ........................ 10,300 472,512
Intel Corp. ......................... 201,300 14,141,325
ITT Industries, Inc. ................ 14,500 454,938
KLA-Tencor Corp.* ................... 13,400 517,575
LSI Logic Corp.* .................... 23,500 464,125
Micron Technology, Inc.* ............ 24,700 642,200
Motorola, Inc. ...................... 73,400 4,188,388
National Semiconductor Corp.* ....... 19,300 500,594
Parametric Technology Corp.* ........ 15,000 710,625
Perkin-Elmer Corp. .................. 7,200 511,650
Seagate Technology, Inc.* ........... 28,700 552,475
Siebel Systems, Inc.* ............... 27 1,129
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Texas Instruments, Inc. ............. 47,300 $ 2,128,500
3Com Corp.* ......................... 42,500 1,484,844
-----------
39,341,205
-----------
OFFICE EQUIPMENT (4.1%)
Bay Networks, Inc.* ................. 24,700 631,394
Ceridian Corp.* ..................... 10,800 494,775
Compaq Computer Corp. ............... 93,235 5,261,950
Dell Computer Corp.* ................ 40,800 3,427,200
Digital Equipment Corp.* ............ 18,300 677,100
Hewlett-Packard Co. ................. 128,200 8,012,500
Honeywell, Inc. ..................... 15,000 1,027,500
International Business Machines
Corp. ............................. 121,100 12,662,519
Pitney Bowes, Inc. .................. 17,800 1,600,888
Sun Microsystems, Inc.* ............. 45,500 1,814,313
Unisys Corp.* ....................... 36,100 500,888
Xerox Corp. ......................... 40,100 2,959,881
-----------
39,070,908
-----------
OFFICE EQUIPMENT SERVICES (3.4%)
Adobe Systems, Inc. ................. 12,700 523,875
Automatic Data Processing, Inc. ..... 35,900 2,203,362
Computer Associates
International, Inc. ............... 66,925 3,538,659
Computer Sciences Corp.* ............ 9,200 768,200
First Data Corp. .................... 54,400 1,591,200
HBO & Co. ........................... 23,500 1,128,000
Microsoft Corp.* .................... 146,800 18,973,900
Novell, Inc.* ....................... 59,600 447,000
Oracle Corp.* ....................... 120,787 2,695,060
Silicon Graphics, Inc.* ............. 34,500 429,094
-----------
32,298,350
-----------
TELECOMMUNICATIONS (2.3%)
AirTouch Communications, Inc.* 61,800 2,568,562
Andrew Corp.* ....................... 19,212 461,088
Cabletron Systems, Inc.* ............ 33,000 495,000
DSC Communications Corp.* ........... 19,800 475,200
Lucent Technologies, Inc. ........... 79,094 6,317,633
MCI Communications Corp. ............ 85,300 3,651,906
Northern Telecommunications
Ltd. .............................. 32,300 2,874,700
Tellabs, Inc.* ...................... 22,300 1,179,113
WorldCom, Inc.* ..................... 110,700 3,348,675
-----------
21,371,877
-----------
TOTAL TECHNOLOGY (14.0%) .......... 132,082,340
-----------
DIVERSIFIED
MISCELLANEOUS (1.1%)
Corning, Inc. ....................... 29,800 1,106,325
Ikon Office Solutions, Inc. ......... 16,500 464,062
Minnesota Mining &
Manufacturing Co. ................. 51,600 4,234,425
Textron, Inc. ....................... 19,600 1,225,000
Tyco International Ltd. ............. 65,686 2,959,975
Whitman Corp. ....................... 16,300 424,819
-----------
TOTAL DIVERSIFIED (1.1%) .......... 10,414,606
-----------
TOTAL COMMON STOCKS (98.3%)
(Cost $705,933,343) ............... 927,171,699
-----------
</TABLE>
63
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
======================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ----------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT & AGENCIES
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ................... $10,500,000 $ 10,498,250
U.S. Treasury
6.0%, due 01/08/98** ................. 900,000 886,153
------------
TOTAL U.S. GOVERNMENT & AGENCIES (1.2%) 11,384,403
------------
TOTAL SHORT-TERM DEBT SECURITIES (1.2%)
(Amortized Cost $11,384,403).......... 11,384,403
------------
TOTAL INVESTMENTS (99.5%)
(Cost/Amortized Cost
$717,317,746) ........................ 938,556,102
OTHER ASSETS
LESS LIABILITIES (0.5%) .............. 5,184,922
------------
NET ASSETS (100.0%) .................... $943,741,024
============
</TABLE>
- ----------
Financial Futures Contracts outstanding at December 31, 1997:
<TABLE>
<CAPTION>
EXPIRATION NUMBER ORIGINAL VALUE AT UNREALIZED
DESCRIPTION DATE OF CONTRACTS VALUE 12/31/97 APPRECIATION
- ----------------------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Long S&P 500 Index* ......... 3/98 46 $11,131,350 $11,259,650 $128,300
</TABLE>
- ----------
* Non-income producing.
** Security segregated as collateral on financial futures contracts.
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
64
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS (0.3%)
CHEMICALS
Monsanto Co. ........................... 725,000 $ 30,450,000
-------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.3%)
Waste Management, Inc. ................. 900,000 24,750,000
-------------
PRINTING, PUBLISHING &
BROADCASTING (5.1%)
CBS Corp. .............................. 595,000 17,515,313
Chris Craft Industries, Inc.
(Class B)*++ ......................... 1,226,156 64,143,286
Comcast Corp. (Class A) SPL ............ 1,011,800 31,934,937
Liberty Media Group (Class A)* 2,600,963 94,284,909
TCI Group (Class A)* (a) ............... 5,309,026 150,311,799
Time Warner, Inc. ...................... 178,900 11,091,800
U.S. West Media Group* ................. 265,000 7,651,875
Viacom, Inc. (Class B)* ................ 2,801,300 116,078,869
-------------
493,012,788
-------------
TOTAL BUSINESS SERVICES (5.4%) 517,762,788
-------------
CAPITAL GOODS
AEROSPACE (0.3%)
Loral Space &
Communications* (a) .................. 1,440,000 30,870,000
-------------
MACHINERY (0.1%)
UNOVA, Inc.* ........................... 288,800 4,747,150
-------------
TOTAL CAPITAL GOODS (0.4%) ........... 35,617,150
-------------
CONSUMER CYCLICALS
AIRLINES (1.9%)
AMR Corp.* ............................. 185,000 23,772,500
Delta Air Lines, Inc. .................. 769,300 91,546,700
Northwest Airlines Corp.
(Class A)* ........................... 498,300 23,856,112
UAL Corp.* ............................. 328,500 30,386,250
US Airways Group, Inc.* ................ 200,000 12,500,000
-------------
182,061,562
-------------
AUTO RELATED (1.5%)
Republic Industries, Inc.* (a) ......... 5,949,500 138,697,719
-------------
AUTOS & TRUCKS (1.2%)
AutoZone, Inc.* ........................ 2,590,300 75,118,700
Chrysler Corp. ......................... 1,223,800 43,062,462
-------------
118,181,162
-------------
FOOD SERVICES, LODGING (1.1%)
ITT Corp.* ............................. 1,294,500 107,281,688
-------------
LEISURE RELATED (6.2%)
Carnival Corp. (Class A) ............... 37,600 2,082,100
Cendant Corp.* (a) ..................... 17,123,600 588,623,750
-------------
590,705,850
-------------
RETAIL--GENERAL (3.0%)
Home Depot, Inc. ....................... 2,222,000 130,820,250
Limited, Inc. .......................... 2,100,500 53,562,750
Lowe's Cos., Inc. ...................... 511,400 24,387,387
Sears, Roebuck & Co. ................... 600,500 27,172,625
Wal-Mart Stores, Inc. .................. 1,278,000 50,401,125
-------------
286,344,137
-------------
TOTAL CONSUMER CYCLICALS (14.9%) 1,423,272,118
-------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS
DRUGS (3.6%)
Astra AB (A Shares) .................... 3,206,664 $ 55,531,720
Centocor, Inc.* ........................ 44,700 1,486,275
Merck & Co., Inc. ...................... 2,163,200 229,840,000
Schering Plough Corp. .................. 862,000 53,551,750
-------------
340,409,745
-------------
HOSPITAL SUPPLIES & SERVICES (2.9%)
Abbott Laboratories .................... 926,800 60,763,325
Boston Scientific Corp.* ............... 1,547,200 70,977,800
Medtronic, Inc. (a) .................... 2,425,300 126,873,506
United Healthcare Corp. (a) ............ 448,500 22,284,844
-------------
280,899,475
-------------
TOBACCO (5.1%)
Loews Corp. ............................ 2,068,500 219,519,562
Philip Morris Cos., Inc. (a) ........... 5,967,100 270,384,219
-------------
489,903,781
-------------
TOTAL CONSUMER NONCYCLICALS (11.6%)
1,111,213,001
-------------
CREDIT SENSITIVE
BANKS (3.7%)
Chase Manhattan Corp. .................. 1,762,868 193,034,046
First Union Corp. ...................... 2,010,000 103,012,500
NationsBank Corp. ...................... 965,000 58,684,062
-------------
354,730,608
-------------
FINANCIAL SERVICES (7.2%)
American Express Co. (a) ............... 2,850,400 254,398,200
Fleet Financial Group, Inc. ............ 192,100 14,395,494
Household International, Inc. .......... 180,800 23,063,300
MBNA Corp. (a) ......................... 9,762,525 266,638,964
Morgan Stanley, Dean Witter,
Discover & Co. ....................... 1,113,166 65,815,940
PMI Group, Inc. ........................ 823,700 59,563,806
-------------
683,875,704
-------------
INSURANCE (11.2%)
Allstate Corp. ......................... 1,346,647 122,376,546
American International Group,
Inc. ................................. 3,510,075 381,720,656
Hartford Financial Services
Group, Inc. .......................... 808,600 75,654,638
Progressive Corp. ...................... 599,900 71,913,012
Travelers Group, Inc. (a) .............. 7,853,498 423,107,178
-------------
1,074,772,030
-------------
MORTGAGE RELATED (0.3%)
Federal National Mortgage
Association .......................... 543,000 30,984,938
-------------
REAL ESTATE (1.7%)
CBL & Associates
Properties, Inc. ..................... 1,007,200 24,865,250
Macerich Co. ........................... 717,500 20,448,750
Manufactured Home
Communities, Inc. .................... 33,000 891,000
Regency Realty Corp. ................... 128,700 3,563,381
Simon Debartolo Group, Inc. ............ 1,443,000 47,168,063
Spieker Properties, Inc. ............... 1,373,400 58,884,525
Summit Properties, Inc. ................ 464,100 9,804,112
-------------
165,625,081
-------------
UTILITY--TELEPHONE (3.2%)
AT&T Corp. ............................. 500,000 30,625,000
BellSouth Corp. ........................ 10,824 609,527
</TABLE>
65
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Telecomunicacoes Brasileiras
S.A.--Telebras (ADR) ............... 422,300 $ 49,171,556
Teleport Communications Group,
Inc. (Class A)*++ (a) .............. 4,011,000 220,103,625
-------------
300,509,708
-------------
TOTAL CREDIT SENSITIVE (27.3%) 2,610,498,069
-------------
ENERGY
OIL--DOMESTIC (0.3%)
Union Pacific Resources
Group, Inc. ........................ 1,211,677 29,383,167
-------------
OIL--SUPPLIES & CONSTRUCTION (4.7%)
BJ Services Co.* (a) ................. 1,171,800 84,296,363
Baker Hughes, Inc. ................... 830,000 36,208,750
Dresser Industries, Inc. ............. 1,507,300 63,212,394
Halliburton Co. ...................... 2,428,700 126,140,606
Nabors Industries, Inc.* ............. 729,500 22,933,656
Rowan Cos., Inc.* .................... 200,000 6,100,000
Santa Fe International Corp. (a) ..... 286,900 11,673,244
Schlumberger Ltd. .................... 109,100 8,782,550
Transocean Offshore, Inc. ............ 1,400,000 67,462,500
Western Atlas, Inc.* ................. 338,800 25,071,200
-------------
451,881,263
-------------
RAILROADS (1.3%)
Canadian Pacific Ltd. ................ 2,673,300 72,847,425
Union Pacific Corp. .................. 728,371 45,477,664
-------------
118,325,089
-------------
TOTAL ENERGY (6.3%) ................ 599,589,519
-------------
TECHNOLOGY
ELECTRONICS (12.8%)
Altera Corp.* (a) .................... 300,000 9,937,500
Applied Magnetics Corp.* ............. 225,000 2,503,125
Cisco Systems, Inc.* (a) ............. 8,986,500 500,997,375
EMC Corp.* (a) ....................... 1,300,000 35,668,750
Intel Corp. (a) ...................... 1,750,000 122,937,500
National Semiconductor Corp.* ........ 1,450,000 37,609,375
Network Associates, Inc.* (a) ........ 1,550,000 81,956,250
Solectron Corp.* (a) ................. 600,000 24,937,500
Sterling Commerce, Inc.* (a) ......... 2,033,582 78,165,808
Teradyne, Inc.* (a) .................. 450,000 14,400,000
Texas Instruments, Inc. (a) .......... 2,640,000 118,800,000
3Com Corp.* (a) ...................... 5,610,900 196,030,819
-------------
1,223,944,002
-------------
OFFICE EQUIPMENT (2.6%)
Ceridian Corp.*++ .................... 3,815,000 174,774,688
Sterling Software, Inc.* ............. 586,200 24,034,200
Xerox Corp. (a) ...................... 659,500 48,679,344
-------------
247,488,232
-------------
OFFICE EQUIPMENT SERVICES (0.6%)
First Data Corp. (a) ................. 1,400,000 40,950,000
Fore Systems, Inc.* .................. 101,400 1,546,350
Oracle Corp.* (a) .................... 650,150 14,506,472
-------------
57,002,822
-------------
TELECOMMUNICATIONS (10.3%)
ADC Telecommunications,
Inc.* (a) .......................... 750,000 31,312,500
AirTouch Communications, Inc.* 894,600 37,181,812
Ascend Communications,
Inc.* (a) .......................... 250,000 6,125,000
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Cabletron Systems, Inc.* ............. 550,000 $ 8,250,000
DSC Communications Corp.* (a) 5,866,100 140,786,400
Lucent Technologies, Inc. (a) ........ 300,000 23,962,500
MCI Communications Corp. (a) ......... 3,567,300 152,725,031
Mannesmann AG (ADR) .................. 143,700 72,505,272
Nokia Corp. (ADR) .................... 200,000 14,000,000
TCI Ventures Group* (a) .............. 2,998,710 83,776,461
Tellabs, Inc.* ....................... 585,000 30,931,875
WorldCom, Inc.* (a) .................. 12,706,004 384,356,621
-------------
985,913,472
-------------
TOTAL TECHNOLOGY (26.3%) ........... 2,514,348,528
-------------
DIVERSIFIED
MISCELLANEOUS (1.0%)
Anixter International, Inc.* ......... 633,734 10,456,611
Tyco International Ltd. .............. 1,873,336 84,417,203
-------------
TOTAL DIVERSIFIED (1.0%) ........... 94,873,814
-------------
TOTAL COMMON STOCKS (93.5%)
(Cost $6,267,252,116)............... 8,937,624,987
-------------
PREFERRED STOCKS:
BUSINESS SERVICES (0.1%)
ENVIRONMENTAL CONTROL
Republic Industries, Inc.
6.5% Exch. Conv. ................... 470,400 11,054,400
-------------
TECHNOLOGY (0.5%)
TELECOMMUNICATIONS
WorldCom, Inc.
8.0% Conv. ......................... 487,000 51,074,125
-------------
TOTAL PREFERRED STOCKS (0.6%)
(Cost $46,139,690) ................. 62,128,525
-------------
PRINCIPAL
AMOUNT
-----------
SHORT-TERM DEBT SECURITIES:
CERTIFICATES OF DEPOSIT (0.3%)
Deutsche Bank
5.75%, due 01/20/98 ................ $25,000,000 24,997,471
-------------
COMMERCIAL PAPER
Associates Corp. of
North America
6.75%, due 01/02/98 ................ 40,000,000 39,992,500
Bank One Columbus
6.5%, due 01/02/98 ................. 12,000,000 11,997,833
Bank of New York
5.8%, due 01/30/98 ................. 25,000,000 24,883,195
Coca Cola Co.
6.5%, due 01/02/98 ................. 20,000,000 19,996,388
CXC, Inc.
6.75%, due 01/02/98 ................ 50,000,000 49,990,625
Edison Asset Securitization
5.84%, due 02/12/98 ................ 4,000,000 3,972,929
Florida Power Corp.
6.4%, due 01/02/98 ................. 20,000,000 19,996,444
International Lease
Finance Corp.
6.68%, due 01/02/98 ................ 700,000 699,870
Koch Industries
6.75%, due 01/02/98 ................ 70,000,000 69,986,908
Province of Quebec
5.68%, due 01/12/98 ................ 20,000,000 19,965,290
-------------
TOTAL COMMERCIAL PAPER (2.7%) 261,481,982
-------------
</TABLE>
66
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
TIME DEPOSITS
Bank of Montreal
4.875%, due 01/02/98 ............ $287,200,000 $ 287,200,000
Harris Trust & Savings Bank
6.5%, due 01/02/98 .............. 15,000,000 15,000,000
-------------
TOTAL TIME DEPOSITS (3.2%) ....... 302,200,000
-------------
U.S. GOVERNMENT AGENCIES (1.4%)
Federal Home Loan
Mortgage Corp.
6.0%, due 01/02/98 .............. 137,000,000 136,977,167
-------------
TOTAL SHORT-TERM DEBT SECURITIES (7.6%)
(Amortized Cost $725,656,620)..... 725,656,620
-------------
TOTAL INVESTMENTS (101.7%)
(Cost/Amortized Cost $7,039,048,426) 9,725,410,132
-------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF
CONTRACTS(B)
-------------
<S> <C> <C>
CALL OPTIONS WRITTEN*(c):
ADC Telecommunications, Inc.
January @ $37.0625 ......... 2,500 (1,295,000)
Altera Corp.
February @ $34.00........... 3,000 (681,000)
American Express Co.:
January @ $78.25 ........... 3,000 (3,426,000)
January @ $78.375 .......... 2,000 (2,272,000)
January @ $79.00 ........... 2,500 (2,600,000)
January @ $80.25 ........... 2,000 (1,956,000)
February @ $85.875 ......... 2,000 (1,084,000)
February @ $86.75 .......... 3,000 (1,668,000)
February @ $87.00 .......... 1,500 (810,000)
February @ $88.50 .......... 2,000 (780,000)
February @ $88.875 ......... 2,500 (880,000)
February @ $90.50 .......... 2,500 (830,000)
February @ $90.75 .......... 2,000 (606,000)
Ascend Communications, Inc.
January @ $33.75............ 2,500 (15,000)
BJ Services Co.:
January @ $73.50 ........... 2,000 (466,000)
February @ $69.00 .......... 2,000 (1,444,000)
March @ $66.22 ............. 500 (451,500)
March @ $67.61 ............. 1,100 (517,000)
Cendant Corp.:
January @ $30.50 ........... 1,500 (611,085)
January @ $31.50 ........... 5,000 (1,625,000)
February @ $32.375 ......... 5,000 (1,515,000)
February @ $32.42 .......... 3,000 (931,800)
February @ $33.125 ......... 3,000 (763,320)
March @ $32.625 ............ 7,500 (2,348,000)
Cisco Systems, Inc.:
February @ $53.125 ......... 3,000 (1,617,000)
February @ $53.75 .......... 7,500 (4,072,500)
February @ $89.25........... 4,500 (765,000)
DSC Communications Corp.:
January @ $20.00 ........... 3,000 (1,212,000)
January @ $24.00 ........... 2,500 (37,500)
January @ $26.625........... 2,500 (15,000)
EMC Corp.
January @ $29.125........... 2,000 (174,000)
</TABLE>
<TABLE>
<CAPTION>
================================================================
NUMBER OF VALUE
CONTRACTS(B) (NOTE 1)
- ----------------------------------------------------------------
<S> <C> <C>
First Data Corp.:
January @ $29.375 ........... 3,000 $ (327,000)
January @ $29.5625 .......... 2,500 (300,000)
February @ $25.50 ........... 3,000 (1,329,000)
February @ $28.5625 ......... 3,000 (510,000)
March @ $26.75 .............. 2,500 (935,000)
Intel Corp.:
January @ $70.25 ............ 3,000 (1,008,000)
January @ $74.375 ........... 1,500 (156,000)
January @ $76.625 ........... 3,000 (135,000)
January @ $77.00............. 2,000 (62,000)
January @ $78.00 ............ 2,000 (76,000)
March @ $70.50 .............. 1,000 (477,000)
Loral Space & Communications:
January @ $20.625 ........... 2,000 (268,000)
January @ $20.75 ............ 3,500 (406,000)
January @ $21.50 ............ 1,900 (112,100)
January @ $22.125 ........... 3,000 (30,000)
March @ $20.875 ............. 2,000 (322,000)
Lucent Technologies, Inc.
February @ $77.25 ........... 3,000 (2,028,300)
MBNA Corp.:
January @ $26.75 ............ 3,000 (324,000)
January @ $26.875 ........... 4,500 (495,000)
January @ $27.125 ........... 3,750 (210,000)
January @ $29.25 ............ 4,500 (189,000)
February @ $28.6875 ......... 2,500 (170,000)
February @ $29.00............ 3,000 (321,000)
MCI Communications Corp.:
January @ $36.4375 .......... 2,500 (1,670,000)
January @ $40.75 ............ 2,500 (642,500)
January @ $41.50............. 2,500 (577,500)
Medtronic, Inc.:
January @ $46.50 ............ 4,000 (2,376,000)
February @ $49.00 ........... 4,000 (1,936,000)
February @ $49.25 ........... 5,000 (2,377,200)
February @ $51.125 .......... 3,000 (910,230)
March @ $50.375 ............. 2,500 (1,037,500)
Network Associates, Inc.:
January @ $49.875 ........... 2,500 (1,287,500)
February @ $46.00 ........... 2,500 (2,042,500)
February @ $49.625 .......... 2,000 (1,162,000)
February @ $50.250 .......... 3,500 (2,194,500)
March @ $50.375 ............. 3,000 (1,911,000)
March @ $51.375 ............. 2,000 (1,174,000)
Oracle Corp.:
January @ $35.75 ............ 2,000 (30,000)
February @ $23.125 .......... 4,500 (624,000)
Philip Morris Cos., Inc.:
January @ $40.9375 .......... 2,500 (1,207,500)
January @ $41.125 ........... 2,000 (843,980)
January @ $41.25 ............ 2,000 (862,000)
January @ $41.50 ............ 3,000 (1,371,000)
January @ $41.625 ........... 2,500 (970,000)
January @ $41.78 ............ 2,000 (926,000)
February @ $43.875 .......... 3,500 (945,000)
February @ $44.50 ........... 2,500 (615,000)
February @ $45.00 ........... 3,000 (603,000)
February @ $45.25 ........... 3,500 (771,500)
February @ $45.4275 ......... 2,000 (528,000)
February @ $45.6875.......... 2,500 (352,500)
</TABLE>
67
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER OF VALUE
CONTRACTS(B) (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Republic Industries, Inc.:
January @ $26.9375 ................. 3,000 $ (6,660)
January @ $27.50 ................... 2,500 (137,500)
January @ $27.5625 ................. 3,000 (159,000)
January @ $30.875 .................. 2,500 (37,500)
February @ $24.875 ................. 1,500 (186,000)
February @ $25.00 .................. 2,000 (239,940)
February @ $25.125 ................. 2,000 (249,960)
February @ $26.5625 ................ 3,500 (273,805)
Santa Fe International Corp.
February @ $38.00 .................. 2,000 (910,000)
Solectron Corp.:
January @ $33.875 .................. 2,500 (1,950,000)
February @ $29.875 ................. 1,000 (1,201,000)
February @ $38.00 .................. 2,500 (1,347,500)
Sterling Commerce, Inc.:
January @ $37.375 .................. 2,000 (310,000)
March @ $37.125 .................... 1,300 (436,800)
March @ $37.875 .................... 700 (206,500)
March @ $38.1875 ................... 3,000 (822,000)
TCI Group (Class A):
January @ $23.75 ................... 2,500 (1,102,500)
February @ $26.375 ................. 2,000 (424,000)
February @ $28.625.................. 2,500 (297,500)
TCI Ventures Group:
February @ $27.375 ................. 4,500 (1,125,000)
March @ $28.875 .................... 2,625 (417,375)
March @ $29.375 .................... 875 (120,750)
Teradyne, Inc.
February @ $32.875 ................. 2,500 (702,500)
Teleport Communications Group,
Inc.:
January @ $46.625 .................. 2,000 (1,764,000)
January @ $48.75 ................... 900 (649,800)
January @ $48.875 .................. 2,000 (1,366,000)
January @ $49.00 ................... 2,500 (1,562,500)
January @ $49.50 ................... 2,500 (1,375,000)
January @ $49.625 .................. 1,100 (719,400)
January @ $49.905 .................. 1,300 (731,900)
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER OF VALUE
CONTRACTS(B) (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
January @ $50.3125 ................. 2,500 $ (1,230,000)
January @ $50.6875 ................. 700 (434,000)
February @ $48.875 ................. 1,500 (1,072,500)
February @ $53.00 .................. 2,000 (952,000)
February @ $55.00 .................. 6,000 (2,052,000)
February @ $57.75 .................. 1,500 (214,500)
March @ $55.75 ..................... 2,000 (630,000)
Texas Instruments, Inc.:
January @ $45.50 ................... 3,000 (708,000)
January @ $49.375 .................. 2,000 (94,000)
January @ $100.50 .................. 5,000 (65,000)
January @ $103.25 .................. 3,000 (39,000)
February @ $45.50................... 3,000 (987,000)
Travelers Group, Inc.:
January @ $53.50 ................... 2,500 (760,000)
January @ $74.25 ................... 3,000 (1,416,000)
February @ $56.50 .................. 2,500 (395,000)
February @ $57.00 .................. 2,500 (305,000)
United Healthcare Corp.:
January @ $52.9375 ................. 1,500 (57,000)
February @ $46.50 .................. 1,500 (799,500)
WorldCom, Inc.:
January @ $32.875 .................. 2,500 (37,500)
January @ $34.00 ................... 4,000 (144,000)
January @ $34.4375 ................. 3,000 (56,250)
January @ $36.75.................... 2,500 (30,000)
Xerox Corp.:
February @ $69.625 ................. 3,500 (2,310,000)
February @ $69.875 ................. 3,000 (1,644,000)
3Com Corp.:
January @ $32.0625 ................. 2,500 (982,500)
January @ $34.00 ................... 3,000 (750,000)
--------------
TOTAL CALL OPTIONS WRITTEN (--1.2%)
(Premiums Received $103,560,700) (118,604,155)
--------------
OTHER ASSETS
LESS LIABILITIES (--0.5%) ......... (46,032,244)
--------------
NET ASSETS (100.0%) ................. $9,560,773,733
</TABLE>
- ----------
* Non-income producing.
++ Affiliated company as defined under the Investment Company Act of 1940
(See Note 6).
(a) Partially pledged as collateral on outstanding written call options.
(b) One contract relates to 100 shares.
(c) Covered call option contracts written in connection with securities
held.
Glossary:
ADR -- American Depository Receipt
See Notes to Financial Statements.
68
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCK AND
OTHER INVESTMENTS:
BASIC MATERIALS
CHEMICALS (0.9%)
Akzo Nobel N.V. ..................... 10,000 $1,724,163
Bayer AG ............................ 40,000 1,484,199
GP Batteries International Ltd. ..... 820,000 2,135,950
GP Batteries International Ltd.--
Warrants* ......................... 12,500 17,250
Holliday Chemical Holdings PLC 30,000 113,388
Indo Gulf Fertilisers &
Chemicals Corp. Ltd. (GDR)+ 150,000 140,580
Ishihara Sangyo Kaisha Ltd.* ........ 326,000 362,292
Johnson Matthey PLC ................. 225,000 2,015,102
Royal Group Technologies Ltd.* 50,000 1,159,375
Sanyo Chemicals Industries Ltd. ..... 18,000 104,848
SKW Trostberg AG .................... 37,000 1,174,407
----------
10,431,554
----------
CHEMICALS--SPECIALTY (0.9%)
SGL Carbon AG+ ...................... 78,560 10,044,081
UCAR International, Inc.* ........... 40,000 1,597,500
----------
11,641,581
----------
METALS & MINING (0.3%)
Great Central Mines Ltd. ............ 391,580 420,906
Randgold Resources Ltd.
(GDR)*+ ........................... 181,800 954,450
Toho Titanium* ...................... 129,000 1,087,565
Westralian Sands Ltd. ............... 280,000 656,660
WMC Ltd. ............................ 200,000 697,050
----------
3,816,631
----------
PAPER (0.4%)
Asia Pacific Resources
International Ltd. (Class A)* ..... 70,000 131,250
Enso Oy (Series R) .................. 124,000 959,979
Fletcher Challenge Forest ........... 17,026 14,137
Grupo Industrial Durango
(ADR)* ............................ 66,000 940,500
Jefferson Smurfit Corp.* ............ 300,000 833,155
Mayr-Melnhof Karton AG+ ............. 20,000 1,076,832
Nippon Paper Industries Co. ......... 77,000 302,157
Oji Paper Co. Ltd. .................. 83,000 330,155
----------
4,588,165
----------
STEEL (0.2%)
Acerinox SA ......................... 2,002 296,588
Broken Hill Proprietary Co. Ltd. 150,000 1,392,472
Sumitomo Metal Industries ........... 730,000 934,355
----------
2,623,415
----------
TOTAL BASIC MATERIALS (2.7%) ...... 33,101,346
----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (1.4%)
B.U.S. Berzelius Umwelt-
Service AG ........................ 87,700 1,170,016
Daiseki Co. Ltd. .................... 19,300 199,693
Matsuda Sangyo Co. Ltd. ............. 23,000 138,908
Powerscreen International PLC ....... 640,000 6,425,494
Rentokil Initial PLC ................ 542,991 2,364,594
Tomra Systems ASA ................... 310,000 6,925,452
----------
17,224,157
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
PRINTING, PUBLISHING &
BROADCASTING (2.5%)
Carlton Communications PLC .......... 536,300 $4,142,129
De La Rue PLC ....................... 180,000 1,171,347
Elsevier N.V. ....................... 174,000 2,814,687
Flextech PLC* ....................... 69,000 597,555
Liberty Media Group (Class A)* 154,875 5,614,219
Mirror Group PLC .................... 200,000 640,889
Nippon Television Network
Corp. ............................. 5,790 1,699,613
Reader's Digest Association, Inc.
(Class A) ......................... 45,000 1,063,125
Reed International PLC .............. 200,000 2,004,831
Takara Printing Co. ................. 4,000 11,956
Tele-Communications, Inc.
(Class A)* ........................ 116,425 3,252,623
Television Broadcasts Ltd. .......... 265,000 755,775
Tokyo Broadcasting System, Inc. 121,000 1,530,178
TVI Televisao Independente* ......... 1,175 11,747
Ver Ned Uitgeversbedr Ver
Bezit N.V. ........................ 20,000 564,200
Viacom, Inc. (Class B)* ............. 109,300 4,529,119
----------
30,403,993
----------
PROFESSIONAL SERVICES (1.3%)
Alvern Norway ASA* .................. 258,529 612,562
Apcoa Parking AG+ ................... 19,580 1,436,705
Asatsu, Inc. ........................ 56,500 814,102
Brisa-Auto Estradas de
Portugal SA* ...................... 19,500 698,525
Content Beheer N.V.+ ................ 150,000 3,698,863
Meitec .............................. 163,000 4,584,863
Shandwick International PLC ......... 30,000 20,336
Unique International NV* ............ 82,500 1,757,700
WPP Group PLC ....................... 600,000 2,672,013
----------
16,295,669
----------
TRUCKING, SHIPPING (0.9%)
Brambles Industries Ltd. ............ 250,000 4,959,154
Cosco Pacific Ltd. .................. 300,000 243,902
Frontline Ltd.* ..................... 950,000 3,833,031
Irish Continental Group Ltd. ........ 140,000 1,713,050
Koninklijke Nedlloyd Groep N.V. 11,250 255,222
Yamato Transport Co. Ltd. ........... 8,000 107,300
----------
11,111,659
----------
TOTAL BUSINESS SERVICES (6.1%) 75,035,478
----------
CAPITAL GOODS
AEROSPACE (0.1%)
Loral Space & Communications* 62,000 1,329,125
----------
BUILDING & CONSTRUCTION (0.7%)
ABB AG .............................. 800 1,005,135
Bufete Industrial S.A. (ADR)* ....... 19,000 185,250
Daito Trust Construction Co.
Ltd. .............................. 49,900 304,812
Hitachi Plant Engineering &
Construction Co. .................. 83,000 185,116
Japan Industrial Land
Development ....................... 50,000 120,713
Kaneshita Construction .............. 120,000 542,633
MacMahon Holdings Ltd. .............. 1,895,200 592,620
Metacorp BHD ........................ 335,000 142,113
</TABLE>
69
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Mitsui Home Co. Ltd. ............... 92,000 $ 500,632
Nanno Construction Co. Ltd. ........ 53,000 42,652
Nippon Denwa Shisetsu .............. 58,000 222,265
Ohmoto Gumi Co. Ltd. ............... 61,000 261,813
Oriental Construction Co. .......... 41,500 181,299
Pacific Rim Infra Management
Enterprises Ltd.* ................ 716,500 23,578
Penta-Ocean Construction ........... 20,000 28,051
PS Corp. ........................... 109,700 416,183
Raito Kogyo Co. Ltd. ............... 90,800 393,194
Sacos Corp. ........................ 8,600 39,548
Sanyo Engineering &
Construction Co. ................. 21,000 75,647
Sho Bond Corp. ..................... 140,500 2,541,330
Suido Kiko Kaisha .................. 38,000 76,306
Toda Corp. ......................... 89,000 242,154
Wesco, Inc. ........................ 28,720 70,438
----------
8,193,482
----------
BUILDING MATERIALS & FOREST
PRODUCTS (0.8%)
BPB PLC ............................ 540,000 3,017,107
Fujikura Ltd. ...................... 335,000 2,218,356
Lafarge SA ......................... 25,750 1,689,570
Nichiha Corp. ...................... 186,700 1,141,879
Portland Valderrivas SA ............ 11,400 1,025,139
Sumitomo Forestry Co. .............. 24,000 116,804
----------
9,208,855
----------
ELECTRICAL EQUIPMENT (0.3%)
Alcatel Alsthom .................... 16,000 2,033,729
Mabuchi Motor Co. .................. 25,800 1,311,010
Vae Eisenbahnsysteme AG ............ 3,000 263,627
Yaskawa Electric Corp. ............. 27,000 67,254
Zucchini Spa ....................... 30,400 218,248
----------
3,893,868
----------
MACHINERY (1.8%)
Asahi Diamond Industry
Co. Ltd. ......................... 91,000 396,850
Cie Generale de Geophysique
SA (ADR)* ........................ 260,000 6,662,500
Construcciones y Auxiliar de
Ferrocarrites SA ................. 9,425 347,676
Danieli & Co. ...................... 32,200 221,159
Enshu* ............................. 74,000 92,447
Gildemeister Italiana Spa* ......... 45,725 155,346
IHC Caland N.V. .................... 52,000 2,697,902
Ishikawajima Harima Heavy
Industries Co. Ltd. .............. 239,000 357,195
Kalmar Industries AB+ .............. 60,000 967,267
Kawasaki Heavy Industries Ltd. ..... 277,000 428,848
Keyence Corp. ...................... 800 118,337
Mitsubishi Heavy Industries Ltd. 450,000 1,876,221
Namura Shipbuilding ................ 56,000 126,614
Nireco ............................. 24,000 88,293
Nitta Corp. ........................ 100,700 1,018,770
Nitto Kohki Co. Ltd. ............... 83,500 908,756
Rauma Oy ........................... 41,600 648,694
Siebe PLC .......................... 80,000 1,570,999
SMC Corp. .......................... 29,500 2,600,115
Sodick Co.* ........................ 369,000 1,057,720
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Thai Engine Manufacturing
Public Co. Ltd. .................. 87,000 $ 144,548
----------
22,486,257
----------
TOTAL CAPITAL GOODS (3.7%) ....... 45,111,587
----------
CONSUMER CYCLICALS
AIRLINES (2.7%)
Air Canada* ........................ 90,000 928,679
British Airways PLC ................ 150,000 1,380,376
Continental Airlines, Inc.
(Class B)* ....................... 169,000 8,133,125
Delta Air Lines, Inc. .............. 46,500 5,533,500
KLM ................................ 80,000 2,959,091
Lufthansa AG ....................... 207,500 3,898,663
Northwest Airlines Corp.
(Class A)* ....................... 42,300 2,025,112
Singapore Airlines Ltd. ............ 206,000 1,347,606
UAL Corp.* ......................... 28,200 2,608,500
US Airways Group, Inc.* ............ 28,000 1,750,000
Virgin Express Holdings PLC
(ADR)* ........................... 110,000 2,282,500
----------
32,847,152
----------
APPAREL, TEXTILE (0.2%)
Carli Gry International A/S ........ 30,000 1,685,664
Giordano International Ltd.* ....... 36,000 12,427
King Co. ........................... 55,000 52,692
Morishita Co. Ltd. ................. 5,000 13,413
PT Great River International ....... 3,150,000 257,727
----------
2,021,923
----------
AUTO RELATED (1.5%)
Asahi Glass Co. Ltd. ............... 48,000 228,090
Autoliv, Inc. ...................... 35,000 1,146,250
Bridgestone Metalpha Corp. ......... 6,000 22,303
FCC Co. Ltd. ....................... 13,000 137,498
Gerresheimer Glas AG ............... 12,000 168,098
LucasVarity PLC .................... 700,000 2,473,173
Michelin (CGDE), (Class B) ......... 45,000 2,265,515
Minebea Co. Ltd. ................... 214,000 2,296,225
NGK Spark Plug Co. ................. 132,000 748,649
Republic Industries, Inc.* ......... 367,000 8,555,687
Toyoda Gosei ....................... 11,000 39,793
----------
18,081,281
----------
AUTOS & TRUCKS (0.4%)
AutoZone, Inc.* .................... 161,700 4,689,300
Honda Motor Co. Ltd. ............... 6,000 220,272
Isuzu Motors Ltd. .................. 74,000 115,133
Seat Spa* .......................... 40,000 15,602
----------
5,040,307
----------
FOOD SERVICES, LODGING (1.9%)
AAPC Ltd. .......................... 1,500,000 615,619
Accor SA ........................... 25,000 4,648,168
Compass Group PLC .................. 540,000 6,646,509
International Fast Food Corp.* ..... 8,000 3,360
ITT Corp.* ......................... 80,400 6,663,150
Jurys Hotel Group PLC .............. 300,000 1,557,965
QPQ Corp.--Warrants* ............... 32,700 128
</TABLE>
70
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Restaurant Brands NZ Ltd.*+ ........ 220,100 $ 217,262
Sanyo Pax Co. Ltd. ................. 50,000 433,033
Scandic Hotels AB*+ ................ 1,100 26,877
Selecta Group* ..................... 11,200 1,503,047
Thistle Hotels PLC ................. 249,200 649,403
-----------
22,964,521
-----------
HOUSEHOLD FURNITURE, APPLIANCES (0.4%)
Hunter Douglas N.V. ................ 60,000 2,100,954
Industrie Natuzzi Spa (ADR) ........ 120,000 2,475,000
Moulinex* .......................... 20,527 507,164
Sanyo Electric Co. Ltd. ............ 162,000 422,150
-----------
5,505,268
-----------
LEISURE RELATED (5.1%)
Canal Plus ......................... 15,000 2,788,901
Capcom Co. Ltd. .................... 9,200 94,486
Carnival Corp. (Class A) ........... 5,500 304,562
Cendant Corp.* ..................... 1,058,100 36,372,187
Cinar Films, Inc. (Class B)* ....... 45,000 1,749,375
EMI Group PLC ...................... 200,000 1,669,597
H.I.S. Company Ltd. ................ 7,700 133,964
Hoyts Cinemas Group+ ............... 1,370,000 2,409,709
Imagineer Co. Ltd. ................. 40,400 315,831
KTM Motorradholding AG* ............ 17,780 898,044
Ladbroke Group PLC ................. 550,000 2,386,078
Mars Engineering Corp. ............. 30,600 168,860
NAMCO Ltd. ......................... 19,200 557,716
Nelvana Limited*+ .................. 130,000 2,500,962
Nintendo Co. Ltd. .................. 13,800 1,353,823
Nippon Broadcasting System ......... 60,000 2,372,868
Rank Group PLC ..................... 100,000 557,080
Tag Heuer International SA
(ADR)* ........................... 143,200 1,181,400
Toei Co. Ltd. ...................... 80,000 291,244
Tourism Holdings Ltd. .............. 600,000 411,100
@Entertainment, Inc.* .............. 404,700 4,502,287
-----------
63,020,074
-----------
PHOTO & OPTICAL (0.3%)
Luxottica Group (ADR) .............. 20,000 1,250,000
Noritsu Koki Co. Ltd. .............. 114,600 2,828,220
-----------
4,078,220
-----------
RETAIL--GENERAL (3.4%)
Aldeasa, SA* ....................... 76,568 1,623,332
BAA PLC ............................ 100,000 818,366
Carpetright PLC .................... 20,000 151,184
Centros Comerciales Pryca SA ....... 30,000 446,997
Dixons Group PLC ................... 450,000 4,518,265
Doshisha Co. ....................... 37,000 181,491
Eiden Sakakiya Co. Ltd. ............ 75,000 278,789
Gucci Group N.V. ................... 5,000 209,375
Homac Corp. ........................ 33,300 168,191
Home Centers Ltd.* ................. 142,800 1,570,800
Home Depot, Inc. ................... 155,600 9,160,950
Home Wide Corp. .................... 18,000 60,011
House of Fraser PLC ................ 550,000 1,816,673
Isetan Co. ......................... 214,000 893,888
Japan Airport Terminal Co. Ltd. 183,800 1,155,133
Kokuyo Co. Ltd. .................... 29,000 500,096
Limited, Inc. ...................... 321,300 8,193,150
MFI Furniture Group PLC ............ 100,000 198,018
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Paris Miki, Inc. ................... 101,900 $ 1,093,390
Sato Corp. ......................... 120,200 2,045,173
Smith (W.H.) Group PLC ............. 300,000 1,917,736
Sriwani Holdings BHD ............... 680,000 180,075
S.T. Dupont* ....................... 70,614 924,547
Swank International
Manufacturing Co.* ............... 1,000,000 108,401
Thorn PLC .......................... 428,570 1,112,748
Vendex International N.V. .......... 14,400 794,693
Warehouse Group Ltd. ............... 390,000 1,041,685
Xebio Co. .......................... 15,200 121,157
-----------
41,284,314
-----------
TOTAL CONSUMER CYCLICALS (15.9%) 194,843,060
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.1%)
Bass PLC ........................... 72,800 1,129,929
Diageo PLC ......................... 700,000 6,436,002
Hartwall Oy AB ..................... 9,000 742,990
Lion Nathan Ltd. ................... 31,500 70,601
Louis Dreyfus Citrus ............... 71,500 2,185,927
Panamerican Beverages, Inc. ........ 60,000 1,957,500
Quilmes Industrial Quins (ADR) 80,000 1,095,000
-----------
13,617,949
-----------
DRUGS (5.3%)
Astra AB (A Shares) ................ 90,000 1,558,584
Hafslund ASA (B Shares) ............ 80,000 381,272
Merck & Co., Inc. .................. 122,100 12,973,125
Novartis AG ........................ 1,358 2,203,670
Novartis AG (ADR) .................. 20,000 1,624,900
Novo-Nordisk A/S (B Shares) ........ 35,000 5,005,911
Orion-Yhtymae Oy (B Shares) ........ 182,000 4,807,969
Pfizer, Inc. ....................... 75,000 5,592,187
Roche Holdings AG
Genusscheine ..................... 450 4,469,189
Rohto Pharmaceutical Co. Ltd. ...... 4,000 25,752
Sankyo Co. Ltd. .................... 123,000 2,780,993
Santen Pharmaceutical Co. Ltd. ..... 312,000 3,586,894
Schering Plough Corp. .............. 51,000 3,168,375
Smith & Nephew PLC ................. 275,000 813,436
Smithkline Beecham PLC ............. 400,000 4,095,114
Taisho Pharmaceutical Co. .......... 44,000 1,122,974
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 215,000 4,613,911
Zeneca Group PLC ................... 180,000 6,321,135
-----------
65,145,391
-----------
FOODS (0.8%)
Avonmore Waterford Group
PLC .............................. 130,500 479,042
Fyffes PLC ......................... 3,400,000 5,079,392
Karlshamns AB*+ .................... 20,000 312,346
Nestle SA .......................... 1,000 1,498,802
Nutricia Verenigde Bedrijven
N.V.+ ............................ 25,000 758,267
Oie Sangyo Co. Ltd. ................ 4,000 16,555
Shriram Industrial Enterprises
Ltd. (GDR)*+ ..................... 165,000 330,000
Viscofan Envoltura ................. 60,000 1,506,400
-----------
9,980,804
-----------
</TABLE>
71
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
HOSPITAL SUPPLIES & SERVICES (1.5%)
Australian Hospital Care Ltd. ........ 636,000 $ 849,359
Boston Scientific Corp.* ............. 92,300 4,234,262
Cochlear Ltd. ........................ 20,000 65,145
Coloplast A/S B ...................... 1,200 92,821
EDAP TMS SA (ADR)* ................... 365,000 2,555,000
Medtronic, Inc. ...................... 176,500 9,233,156
NIC Corp. ............................ 9,000 48,975
Nichii Gakkan Co.* ................... 15,000 517,340
Quest Medical, Inc.* ................. 164,543 1,146,659
Scandinavian Mobility
International A/S .................. 10,000 91,945
-----------
18,834,662
-----------
RETAIL--FOOD (0.8%)
Daimon Co. Ltd. ...................... 27,800 55,398
Etablissements Economiques du
Casino Guichard-Perrachon SA 13,590 756,443
Familymart Co. ....................... 62,100 2,227,461
Kesko ................................ 60,000 948,825
Loblaw Companies Ltd. ................ 40,000 724,754
McBride PLC .......................... 350,000 1,018,027
Santa Isabel S.A. (ADR) .............. 32,000 560,000
Seven-Eleven Japan Co. Ltd. .......... 49,000 3,470,090
-----------
9,760,998
-----------
TOBACCO (3.7%)
Imperial Tobacco Group PLC ........... 341,000 2,146,205
Japan Tobacco, Inc. .................. 150 1,064,572
Loews Corp. .......................... 120,800 12,819,900
Philip Morris Cos., Inc. ............. 429,200 19,448,125
RJ Reynolds BHD ...................... 210,000 342,846
Seita ................................ 66,000 2,368,697
Swedish Match AB ..................... 1,100,000 3,671,331
Tabacalera SA--A ..................... 40,000 3,242,534
-----------
45,104,210
-----------
TOTAL CONSUMER NONCYCLICALS (13.2%) 162,444,014
-----------
CREDIT SENSITIVE
BANKS (4.2%)
Akita Bank ........................... 82,000 320,521
AMMB Holdings BHD .................... 30,000 19,668
Asahi Bank Ltd. ...................... 140,000 568,691
Banco Latinoamericano de
Exportaciones S.A. (E Shares) 60,000 2,482,500
Bank of Tokyo-Mitsubishi Ltd. ........ 250,000 3,448,937
Barclays Bank ........................ 80,000 2,127,093
BHW Holding AG* ...................... 25,000 409,961
BPI-SGPS SA* ......................... 24,000 583,537
Chase Manhattan Corp. ................ 126,488 13,850,436
Dai-Ichi Kangyo Bank ................. 326,000 1,923,893
Erste Bank Der
Oesterreichischen Sparkassen
AG* ................................ 37,400 1,863,856
First Union Corp. .................... 116,000 5,945,000
Forenings Sparbanken AB
(A Shares) ......................... 32,000 727,465
Grupo Financiero Banamex
Accival (B Shares)* ................ 150,000 448,511
Grupo Financiero Banorte
(Class B)* ......................... 178,750 311,815
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Grupo Financiero Banorte--
Rights (Class B)* .................. 178,750 $ 0
HSBC Holdings PLC (H.K.$) ............ 60,000 1,478,900
Mitsubishi Trust & Banking
Corp. .............................. 100,000 1,004,024
NationsBank Corp. .................... 57,000 3,466,312
Nordbanken Holding AB*+ .............. 309,000 1,747,390
Overseas-Chinese Bank ................ 44,000 256,438
Shizuoka Bank Ltd. ................... 70,000 751,102
Skandinaviska Enskilda Banken
(Series A) ......................... 126,830 1,605,362
Standard Chartered PLC ............... 150,000 1,602,222
Sumitomo Bank Ltd. ................... 291,000 3,323,165
Suncorp-Metway Ltd.* ................. 30,444 76,356
Toho Bank ............................ 119,000 474,267
Union Bank of Norway ................. 8,600 306,236
United Overseas Bank Ltd. ............ 160,000 889,682
-----------
52,013,340
-----------
FINANCIAL SERVICES (4.9%)
American Express Co. ................. 103,600 9,246,300
Americredit Corp.* ................... 206,700 5,723,006
Amvescap PLC ......................... 270,000 2,320,510
CIT Group, Inc.* ..................... 110,700 3,570,075
CMIC Finance & Securities
Public Co. Ltd. .................... 724,700 0
Credit Saison Co. .................... 215,550 5,319,571
Dexia France ......................... 10,000 1,158,096
Fleet Financial Group, Inc. .......... 53,700 4,024,144
Hong Leong Finance Ltd. .............. 160,000 172,227
JCG Holdings ......................... 142,000 60,930
MBNA Corp. ........................... 578,100 15,789,356
Morgan Stanley, Dean Witter,
Discover & Co. ..................... 71,800 4,245,175
Newcourt Credit Group, Inc.* ......... 84,000 2,803,500
Nichiei Co. Ltd. ..................... 9,700 1,033,378
Promise Co. Ltd. ..................... 10 555
PT Bunas Finance Indonesia ........... 800,000 47,273
Sanyo Shinpan Finance Co. Ltd. ....... 21,700 959,640
Takefuji Corp. ....................... 81,800 3,755,371
-----------
60,229,107
-----------
INSURANCE (6.0%)
Acceptance Insurance Cos., Inc.* 80,100 1,937,419
Aegon N.V. ........................... 40,000 3,560,772
American International
Group, Inc. ........................ 144,375 15,700,781
ASR Verzekeringsgroep N.V. ........... 90,000 4,895,815
Corporacion Mapfre Cia Inter
SA ................................. 140,000 3,712,504
Fairfax Financial Holdings Ltd.* ..... 4,000 895,449
Fortis Amev N.V. ..................... 82,381 3,591,587
ING Groep N.V. ....................... 90,000 3,790,595
Irish Life PLC ....................... 175,000 999,406
Koa Fire & Marine .................... 37,000 138,954
Mediolanum Spa+ ...................... 15,000 282,363
Norwich Union PLC* ................... 250,000 1,602,222
Pacific & Orient BHD ................. 220,000 100,681
Progressive Corp. .................... 19,500 2,337,562
QBE Insurance Group Ltd. ............. 15,651 70,424
Skandia Forsakrings AB ............... 30,000 1,415,005
</TABLE>
72
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Sumitomo Marine & Fire
Insurance Co. ..................... 25,000 $ 132,209
Travelers Group, Inc. ............... 424,699 22,880,659
20th Century Industries ............. 211,000 5,486,000
-----------
73,530,407
-----------
REAL ESTATE (2.8%)
Arden Realty, Inc. .................. 193,100 5,937,825
Castellum AB* ....................... 340,000 3,382,914
Cheung Kong Holdings ................ 126,000 825,203
Chubu Sekiwa Real Estate Ltd. ....... 16,000 83,878
City Developments Ltd. .............. 115,000 533,452
Daibiru Corp. ....................... 46,000 336,693
Entertainment Properties Trust ...... 136,000 2,635,000
JP Realty, Inc. ..................... 87,300 2,264,344
Macerich Co. ........................ 151,700 4,323,450
MEPC PLC ............................ 210,000 1,753,077
Mitsubishi Estate Co. ............... 61,000 663,882
Pernas International Hotels
Holdings BHD ...................... 640,000 177,709
Prentiss Properties Trust ........... 85,000 2,374,687
Sap Holdings BHD .................... 66,000 24,605
Singapore Land Ltd. ................. 300,000 660,125
Sino Land Co. ....................... 1,850,000 1,116,112
Spieker Properties, Inc. ............ 82,700 3,545,762
Sumitomo Realty &
Development Co. Ltd. .............. 364,000 2,092,355
Sun Communities, Inc. ............... 41,000 1,473,437
-----------
34,204,510
-----------
UTILITY--ELECTRIC (3.2%)
British Energy PLC .................. 1,350,000 9,384,090
Cia Paranaense de Energia-Copel
(ADR) ............................. 356,000 4,872,750
Electricidade de Portugal SA* ....... 127,005 2,404,849
Energy Group PLC .................... 50,000 552,150
Enersis S.A. (ADR) .................. 45,000 1,305,000
EVN AG .............................. 8,394 1,103,118
Gas Y Electridad SA (Series 2) ...... 5,000 361,011
Hidroelectrica del Cantabrico ....... 45,000 1,973,088
Iberdrola SA ........................ 270,000 3,553,331
Korea Electric Power (ADR) .......... 90,000 905,625
National Grid Group PLC ............. 1,000,000 4,749,150
National Power PLC .................. 420,000 4,141,127
Veba AG ............................. 50,000 3,404,764
-----------
38,710,053
-----------
UTILITY--GAS (0.3%)
General de Aguas d'Barcelona ........ 89,900 3,705,756
-----------
UTILITY--TELEPHONE (2.5%)
AT&T Corp. .......................... 32,000 1,960,000
Electric Lightwave, Inc.* ........... 205,000 3,049,375
Empresas Telex-Chile S.A.
(ADR) ............................. 70,000 275,625
Hellenic Telecommunication
Organization SA ................... 52,546 1,076,596
Koninklijke PTT Nederland NV+ 30,000 1,251,695
Magyar Tavkozlesi Rt (ADR)* ......... 218,000 5,668,000
Portugal Telecom SA ................. 31,680 1,469,966
PT Indonesian Satellite (ADR) ....... 40,000 772,500
Telecom Italia Spa .................. 40,000 255,512
Telefonica de Espana ................ 100,000 2,855,267
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Telephone & Data Systems, Inc. ...... 56,700 $ 2,640,094
Teleport Communications Group,
Inc. (Class A)* ................... 126,000 6,914,250
Videsh Sanchar Nigam Ltd.
(GDR)* ............................ 148,000 1,912,900
-----------
30,101,780
-----------
TOTAL CREDIT SENSITIVE (23.9%) 292,494,953
-----------
ENERGY
COAL & GAS PIPELINES (0.4%)
OMV AG .............................. 37,200 5,153,782
-----------
OIL--DOMESTIC (0.3%)
Union Pacific Resources Group,
Inc. .............................. 149,300 3,620,525
-----------
OIL--INTERNATIONAL (0.8%)
Canadian Occidental ................. 8,000 181,000
Elf Aquitaine ....................... 25,000 2,907,701
Orogen Minerals Ltd. ................ 310,000 605,847
Renaissance Energy Ltd.* ............ 80,000 1,650,985
Repsol SA ........................... 65,000 2,773,220
Southern Pacific Petroleum* ......... 850,000 1,522,762
-----------
9,641,515
-----------
OIL--SUPPLIES & CONSTRUCTION (5.6%)
Baker Hughes, Inc. .................. 50,000 2,181,250
BJ Services Co.* .................... 64,000 4,604,000
Bouygues Offshore SA (ADR) .......... 117,000 2,544,750
Canadian Fracmaster Ltd.
Installment Receipt*+ ............. 571,500 4,797,649
Coflexip (ADR) ...................... 65,000 3,607,500
Dresser Industries, Inc. ............ 220,100 9,230,444
Fugro N.V.* ......................... 80,000 2,438,291
Halliburton Co. ..................... 167,400 8,694,337
Nabors Industries, Inc.* ............ 320,600 10,078,862
Noble Drilling Corp.* ............... 179,000 5,481,875
Rowan Cos., Inc.* ................... 94,000 2,867,000
Santa Fe International Corp. ........ 84,500 3,438,094
Schlumberger Ltd. ................... 36,400 2,930,200
Transocean Offshore, Inc. ........... 112,000 5,397,000
Tubos de Acero de Mexico SA
(ADR)* ............................ 10,000 216,250
-----------
68,507,502
-----------
TOTAL ENERGY (7.1%) ............... 86,923,324
-----------
TECHNOLOGY
ELECTRONICS (6.4%)
Austria Mikro System
International ..................... 4,000 202,668
Cisco Systems, Inc.* ................ 559,950 31,217,213
EMC Corp.* .......................... 60,000 1,646,250
Enplas Corp. ........................ 56,000 755,394
Fujimi, Inc. ........................ 26,300 1,118,720
Hoya Corp. .......................... 76,000 2,388,197
Micronics Japan Co. Ltd. ............ 68,000 1,172,638
Navia ASA* .......................... 80,000 281,621
Network Associates, Inc.* ........... 116,000 6,133,500
Nikon Corp. ......................... 138,000 1,364,399
Rohm Co. Ltd. ....................... 25,000 2,548,381
Sankyo Engineering Co. .............. 1,000 3,066
Sanmina Corp.* ...................... 44,000 2,981,000
SCI Systems, Inc.* .................. 3,400 148,113
</TABLE>
73
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Solectron Corp.* ..................... 57,200 $ 2,377,375
Sterling Commerce, Inc.* ............. 252,660 9,711,619
TDK Corp. ............................ 59,000 4,449,588
Teradyne, Inc.* ...................... 44,000 1,408,000
Tokyo Cathode Laboratory Co.* 28,600 282,767
Tokyo Electron ....................... 10,000 320,368
TOWA Corp. ........................... 18,600 386,327
Yamaichi Electronics Co. Ltd. ........ 27,000 434,566
Yokogawa Electric Corp. .............. 353,000 2,180,632
3Com Corp.* .......................... 127,700 4,461,519
-------------
77,973,921
-------------
OFFICE EQUIPMENT (2.7%)
Canon, Inc. .......................... 38,000 885,380
Ceridian Corp.* ...................... 342,700 15,699,944
Ricoh Elemex Corp. ................... 30,000 218,433
Sterling Software, Inc.* ............. 383,600 15,727,600
-------------
32,531,357
-------------
OFFICE EQUIPMENT SERVICES (0.7%)
Data Communication System Co. 63,000 830,504
Fuji Soft ABC, Inc. .................. 50,910 1,744,148
INES Corp. ........................... 59,000 456,716
Misys (Jersey) Ltd.* ................. 34,285 1,036,669
Misys PLC ............................ 120,000 3,628,416
Nippon System Development ............ 44,000 903,775
Turbon International AG .............. 27,500 594,652
-------------
9,194,880
-------------
TELECOMMUNICATIONS (7.2%)
Brooks Fiber Properties, Inc.* ....... 139,500 7,672,500
Corecomm, Inc.* ...................... 7,600 76,950
DDI Corp. ............................ 384 1,015,367
DSC Communications Corp.* ............ 64,000 1,528,000
Energis PLC* ......................... 964,000 4,039,571
E.R.G. Limited ....................... 2,167,360 1,821,382
Filtronic Comtek PLC ................. 1,199,000 8,718,675
MCI Communications Corp. ............. 366,000 15,669,375
NetCom Systems AB
(B Shares)*+ ....................... 85,000 1,825,275
Nextel Communications, Inc.
(Class A)* ......................... 207,700 5,400,200
SK Telecom Co. Ltd. (ADR)* ........... 373,437 2,427,339
Tadiran Telecommunications Ltd. 130,000 1,803,750
Tele-Communications TCI
Ventures Group (Class A)* .......... 345,175 9,772,767
United States Cellular Corp.* ........ 38,600 1,196,600
Videsh Sanchar Nigam Ltd.
(GDR)*+ ............................ 12,000 167,160
Vodafone Group PLC ................... 700,000 5,049,874
WorldCom, Inc.* ...................... 681,404 20,612,471
-------------
88,797,256
-------------
TOTAL TECHNOLOGY (17.0%) ........... 208,497,414
-------------
DIVERSIFIED
MISCELLANEOUS (1.4%)
BTR PLC .............................. 170,000 514,026
Cie Generale de Eaux ................. 30,000 4,187,090
Corp Financiera Reunida SA* .......... 60,000 320,971
Crean (James) PLC--Units ............. 495,000 1,007,128
Hanson PLC ........................... 62,500 278,977
Indonesia Fund, Inc.* ................ 20,000 92,500
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
International UNP Holdings* .......... 450,000 $ 37,777
International UNP Holdings--
Warrants* .......................... 225,000 0
Lippo China Resources Ltd. ........... 2,000,000 294,232
Mitsubishi Corp. ..................... 42,000 331,558
Sime Darby BHD ....................... 800,000 769,251
Swire Pacific Ltd. (Class A) ......... 140,000 767,841
Taiwan Fund, Inc. .................... 15,000 247,500
Tomkins PLC .......................... 300,000 1,434,605
Tyco International Ltd. .............. 154,984 6,983,966
-------------
TOTAL DIVERSIFIED (1.4%) ........... 17,267,422
-------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (91.0%)
(Cost $973,440,400) ................ 1,115,718,598
-------------
PREFERRED STOCKS:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.1%)
Republic Industries, Inc.
6.5% Exch. Conv. ................... 50,000 1,175,000
-------------
PRINTING, PUBLISHING &
BROADCASTING (0.1%)
ProSieben Media AG* .................. 25,000 1,146,502
-------------
TOTAL BUSINESS SERVICES (0.2%) 2,321,502
-------------
CONSUMER CYCLICALS
LEISURE RELATED (0.1%)
Village Roadshow Ltd. ................ 440,000 904,628
-------------
RETAIL--GENERAL (0.0%)
Fielmann AG .......................... 6,000 130,076
-------------
TOTAL CONSUMER CYCLICALS (0.1%) 1,034,704
-------------
CONSUMER NONCYCLICALS
CONTAINERS (0.0%)
Dixie Toga SA* ....................... 228,000 116,447
-------------
HOSPITAL SUPPLIES & SERVICES (0.1%)
Fresenius AG ......................... 3,100 563,495
-------------
TOTAL CONSUMER NONCYCLICALS (0.1%) 679,942
-------------
TECHNOLOGY
TELECOMMUNICATIONS (0.4%)
Nokia Oyj (A Shares) ................. 44,000 3,123,859
WorldCom, Inc.
8.0% Conv. ......................... 22,000 2,310,000
-------------
TOTAL TECHNOLOGY (0.4%) ............ 5,433,859
-------------
TOTAL PREFERRED STOCKS (0.8%)
(Cost $6,622,322) ............... 9,470,007
-------------
PRINCIPAL
AMOUNT
----------
LONG-TERM DEBT SECURITIES:
CONSUMER NONCYCLICALS (0.1%)
FOODS
Burns, Philp & Co. Ltd.
5.5% Conv., 04/30/04 ............... $2,000,000 1,100,000
-------------
CREDIT SENSITIVE (0.0%)
BANKS
Grupo Financiero Banorte
Zero Coupon, 12/05/02 .............. 1,657 20,558
-------------
</TABLE>
74
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
=====================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ---------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY (0.1%)
ELECTRONICS
Altera Corp.
5.75% Conv. Sub. Note,
06/15/02+ ........................... $ 1,055,000 $ 1,447,988
--------------
DIVERSIFIED (0.0%)
MISCELLANEOUS
Brierley Investments Ltd.
9.0% Conv. Sub. Note, 06/30/98 27,900 18,144
--------------
TOTAL LONG-TERM DEBT SECURITIES (0.2%)
(Amortized Cost $3,073,944) .......... 2,586,690
--------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (7.7%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ................... 93,900,000 93,884,350
--------------
TOTAL SHORT-TERM DEBT SECURITIES (7.7%)
(Amortized Cost $93,884,350) ......... 93,884,350
--------------
TOTAL INVESTMENTS (99.7%)
(Cost/Amortized Cost $1,077,021,016) 1,221,659,645
OTHER ASSETS
LESS LIABILITIES (0.3%) ............. 3,727,350
--------------
NET ASSETS (100.0%) ................... $1,225,386,995
==============
</TABLE>
- ----------
* Non-income producing.
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $36,393,721 or
3.0% of net assets.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
75
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
ARGENTINA (0.1%)
Quilmes Industrial Quins (ADR) 15,000 $ 205,314
------------
AUSTRALIA
AAPC Ltd. ............................ 180,000 73,874
Aristocrat Leisure Ltd. .............. 10,000 19,870
Brambles Industries Ltd. ............. 60,000 1,190,197
Broken Hill Proprietary Co. Ltd. 30,000 278,494
Cochlear Ltd. ........................ 8,000 26,058
E.R.G. Limited ....................... 825,000 693,304
GIO Australia Holdings Ltd. .......... 200,000 511,127
Great Central Mines Ltd. ............. 60,000 64,493
Hoyts Cinemas Group + ................ 450,000 791,510
National Australia Bank Ltd. ......... 4,900 68,407
News Corp. Ltd. ...................... 5,900 32,555
Oil Search Ltd. ...................... 360,000 650,563
Orogen Minerals Ltd. (GDR) + ......... 50,000 977,600
QBE Insurance Group Ltd. ............. 82,064 369,251
QCT Resources Ltd. ................... 200,000 161,559
Southern Pacific Petroleum* .......... 250,000 447,871
Spectrum Network Systems Ltd.*+ 595,338 127,985
Suncorp-Metway Ltd.* ................. 297,321 745,704
Westralian Sands Ltd. ................ 11,472 26,904
WMC Ltd. ............................. 22,000 76,676
------------
TOTAL AUSTRALIA (3.8%) .............. 7,334,002
------------
AUSTRIA
Erste Bank Der Oesterreichischen
Sparkassen AG* ..................... 5,610 279,579
EVN AG ............................... 800 105,134
KTM Motorradholding AG* .............. 10,000 505,086
OMV AG ............................... 3,000 415,628
VA Technologie AG .................... 1,000 151,843
------------
TOTAL AUSTRIA (0.8%) ................ 1,457,270
------------
BELGIUM
Electrabel SA ........................ 250 57,826
Petrofina SA ......................... 110 40,600
Tractebel Investment
International Capital .............. 350 30,513
Tractebel Investment
International Capital-Warrants*..... 70 0
Virgin Express Holdings PLC
(ADR)* ............................. 50,000 1,037,500
------------
TOTAL BELGIUM (0.6%) ................ 1,166,439
------------
BRAZIL (0.8%)
Cia Paranaense de Energia-Copel
(ADR) .............................. 115,000 1,574,064
------------
CANADA
Canadian Fracmaster Ltd.*+ ........... 214,300 1,799,014
Cinar Films, Inc. (Class B)* ......... 8,000 307,000
Fairfax Financial Holdings Ltd.* ..... 1,000 223,862
Leitch Technology Corp.* ............. 20,000 601,630
Renaissance Energy Ltd.* ............. 25,000 515,933
Rofin--Sinar Technologies, Inc.* ..... 40,000 485,000
------------
TOTAL CANADA (2.0%) ................. 3,932,439
------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
CHILE
Enersis S.A. (ADR) ................... 1,000 $ 29,000
Santa Isabel S.A. (ADR) .............. 8,000 140,000
------------
TOTAL CHILE (0.1%) .................. 169,000
------------
DENMARK
Carli Gry International A/S .......... 15,600 876,545
Coloplast A/S B ...................... 6,000 464,105
Novo-Nordisk A/S (B Shares) .......... 5,000 715,130
Scandinavian Mobility
International A/S .................. 5,000 45,973
------------
TOTAL DENMARK (1.1%) ................ 2,101,753
------------
FINLAND
Hartwall Oy AB ....................... 12,200 1,007,164
KCI Konecranes International ......... 18,000 594,392
Kesko ................................ 20,000 316,275
Nokia Oyj (A Shares) ................. 3,000 210,000
Orion-Yhtyma Oy (B Shares) ........... 56,000 1,479,375
Rauma Oy ............................. 13,900 216,751
------------
TOTAL FINLAND (2.0%) ................ 3,823,957
------------
FRANCE
Accor SA ............................. 8,000 1,487,414
Alcatel Alsthom ...................... 3,500 444,878
Banque Nationale de Paris ............ 700 37,207
Bouygues Offshore SA (ADR) ........... 36,000 783,000
Canal Plus ........................... 3,000 557,780
Carrefour ............................ 225 117,388
Cie Financiere de Paribas A .......... 750 65,174
Cie Generale de Eaux ................. 7,000 976,988
Cie Generale de Geophysique
SA (ADR)* .......................... 80,000 2,050,000
Cie de St. Gobain .................... 250 35,515
Coflexip (ADR) ....................... 3,000 166,500
EDAP TMS SA (ADR)* ................... 123,000 861,000
Elf Aquitaine ........................ 7,000 814,156
Groupe Danone ........................ 500 89,308
Havas ................................ 350 25,181
Lafarge SA ........................... 6,130 402,216
L'Air Liquide ........................ 550 86,085
L'Oreal .............................. 495 193,690
Louis Dreyfus Citrus ................. 20,300 620,620
Michelin (CGDE), (Class B) ........... 7,000 352,413
Moulinex* ............................ 38,000 938,872
Peugeot SA ........................... 250 31,528
Pinault Printemps .................... 150 80,028
Schneider SA ......................... 800 43,439
Seita ................................ 18,000 646,008
Societe Generale ..................... 550 74,936
S.T. Dupont*+ ........................ 34,900 456,944
Suez Lyonnaise des Eaux .............. 400 44,264
------------
TOTAL FRANCE (6.4%) ................. 12,482,532
------------
GERMANY
Allianz AG ........................... 1,500 386,892
Apcoa Parking AG+ .................... 800 58,701
Bayer AG ............................. 4,500 166,972
B.U.S. Berzelius Umwelt-Service
AG ................................. 28,000 373,551
Daimler-Benz AG ...................... 2,000 141,193
</TABLE>
76
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Deutsche Bank AG ..................... 3,250 $ 227,271
Dresdner Bank AG ..................... 2,850 129,592
Gerresheimer Glas AG ................. 30,000 420,245
Linde AG ............................. 50 30,323
Lufthansa AG ......................... 54,500 1,023,986
Pfeiffer Vacuum Technology
(ADR)* ............................. 10,000 280,000
RWE AG ............................... 1,850 99,238
SAP AG ............................... 500 151,616
Schering AG .......................... 400 38,578
SGL Carbon AG+ ....................... 8,000 1,022,819
Siemens AG ........................... 2,500 150,782
SKW Trostberg AG ..................... 3,000 95,222
Thyssen AG ........................... 150 32,019
Turbon International AG .............. 3,000 64,871
Veba AG .............................. 5,150 350,691
Viag AG .............................. 150 82,131
-------------
TOTAL GERMANY (2.8%) ................ 5,326,693
-------------
GREECE
A.G. Petzetakis SA* .................. 200,000 1,077,237
Hellenic Telecommunication
Organization SA .................... 15,120 309,788
-------------
TOTAL GREECE (0.7%) ................. 1,387,025
-------------
HONG KONG
Aeon Credit Service (Asia) Co.
Ltd. ............................... 924,000 202,710
Cheung Kong Holdings ................. 50,000 327,462
Cosco Pacific Ltd. ................... 80,000 65,041
Giordano International Ltd.* ......... 200,000 69,041
Hang Seng Bank ....................... 5,000 48,232
HSBC Holdings PLC (H.K. $) ........... 14,000 345,077
Hutchison Whampoa .................... 12,000 75,261
JCG Holdings ......................... 250,000 107,272
Swire Pacific Ltd. (Class A) ......... 40,000 219,383
Television Broadcasts Ltd. ........... 86,000 245,270
-------------
TOTAL HONG KONG (0.9%) .............. 1,704,749
-------------
HUNGARY (0.9%)
Magyar Tavkozlesi Rt (ADR)* .......... 70,000 1,820,000
-------------
INDIA
Videsh Sanchar Nigam Ltd.
(GDR)* ............................. 45,000 581,625
Videsh Sanchar Nigam Ltd.
(GDR)*+ ............................ 2,000 27,860
-------------
TOTAL INDIA (0.3%) .................. 609,485
-------------
INDONESIA
Gulf Indonesia Resources Ltd.* ....... 51,200 1,126,400
PT Bunas Finance Indonesia ........... 200,000 11,818
PT Citatah ........................... 377,500 49,761
PT Great River International ......... 1,367,000 111,845
PT Indosat (ADR) ..................... 12,000 231,750
-------------
TOTAL INDONESIA (0.8%) .............. 1,531,574
-------------
IRELAND
Avonmore Waterford Group
PLC ................................ 464,000 1,703,261
Crean (James) PLC--Units ............. 60,000 122,076
Fyffes PLC ........................... 900,000 1,344,545
Irish Life PLC ....................... 200,000 1,136,049
Irish Continental Group PLC .......... 20,000 244,721
-------------
TOTAL IRELAND (2.3%) ................ 4,550,652
-------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
ISRAEL (0.1%)
Home Centers Ltd.* ................... 15,400 $ 169,400
-------------
ITALY
Assicurazioni Generali ............... 5,500 135,090
Banca Commerciale Italiana ........... 10,000 34,765
Danieli & Co. ........................ 24,800 170,334
Esaote Biomedica Spa ................. 64,000 169,497
Fiat Spa ............................. 22,000 63,985
Gildemeister Italiana Spa* ........... 42,875 145,664
Industrie Natuzzi Spa (ADR) .......... 20,000 412,500
Istituto Mobiliare Italiano .......... 2,500 29,678
Istituto Naz Delle Assicurazioni ..... 22,500 45,598
Mediaset Spa ......................... 140,000 687,733
Mediolanum Spa + ..................... 4,000 75,297
Parmalat Finanziaria Spa ............. 300,000 429,056
Telecom Italia Spa ................... 2,775 17,726
Zucchini Spa ......................... 70,000 502,544
-------------
TOTAL ITALY (1.5%) .................. 2,919,467
-------------
JAPAN
Aiful Corp.* ......................... 13,800 936,041
Akita Bank ........................... 23,000 89,902
Asahi Bank Ltd. ...................... 32,000 129,987
Asahi Diamond Industry Co.
Ltd. ............................... 24,000 104,664
Asahi Glass Co. Ltd. ................. 10,000 47,519
Asatsu, Inc. ......................... 17,200 247,833
Bank of Tokyo-Mitsubishi Ltd. ........ 70,000 965,702
Bridgestone Corp. .................... 4,000 86,760
Bridgestone Metalpha Corp. ........... 9,000 33,455
Canon, Inc. .......................... 13,000 302,893
Capcom Co. Ltd. ...................... 2,600 26,702
Credit Saison Co. .................... 63,000 1,554,781
Daibiru Corp. ........................ 14,000 102,472
Dai-Ichi Kangyo Bank ................. 86,000 507,530
Dai Nippon Printing Co. Ltd. ......... 3,000 56,333
Daiseki Co. Ltd. ..................... 6,400 66,220
Daito Trust Construction Co.
Ltd. ............................... 22,000 134,386
Daiwa House Industry Co. Ltd. ........ 2,000 10,577
Data Communication System Co. 21,000 276,835
DDI Corp. ............................ 115 304,081
Denso Corp. .......................... 4,000 72,044
Doshisha Co. ......................... 1,000 4,905
Eiden Sakakiya Co. Ltd. .............. 18,000 66,909
Enplas Corp. ......................... 19,000 256,294
Enshu* ............................... 34,000 42,476
Familymart Co. ....................... 19,000 681,510
Fanuc Ltd. ........................... 900 34,075
Fuji Bank Ltd. ....................... 11,000 44,514
Fuji Soft ABC, Inc. .................. 16,400 561,855
Fujikura Ltd. ........................ 104,000 688,684
Fujimi, Inc. ......................... 8,600 365,817
H.I.S. Company Ltd. .................. 1,100 19,138
Hitachi Ltd. ......................... 16,000 114,045
Hitachi Plant Engineering &
Construction Co. ................... 18,000 40,146
Homac Corp. .......................... 7,000 35,355
Home Wide Corp. ...................... 15,000 50,010
Honda Motor Co. Ltd. ................. 5,000 183,560
Hoya Corp. ........................... 24,000 754,167
Imagineer Co. Ltd. ................... 13,000 101,629
</TABLE>
77
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Industrial Bank of Japan ........... 9,000 $ 64,150
INES Corp. ......................... 20,000 154,819
Isetan Co. ......................... 63,000 263,154
Ishihara Sangyo Kaisha Ltd.* ....... 62,000 68,902
Ishikawajima Harima Heavy
Industries Co. Ltd. .............. 62,000 92,661
Ito Yokado Co. Ltd. ................ 2,000 101,935
Japan Airport Terminal Co. Ltd...... 53,000 333,091
Japan Industrial Land
Development ...................... 13,000 31,385
Japan Tobacco, Inc. ................ 45 319,372
Kaneshita Construction ............. 12,000 54,263
Kawasaki Heavy Industries Ltd. ..... 96,000 148,626
Kawasaki Steel Corp. ............... 10,000 13,642
Keyence Corp. ...................... 200 29,584
Kikuchi Co. Ltd.* .................. 10,000 30,274
King Co. ........................... 38,000 36,405
Kirin Brewery Co. .................. 4,000 29,124
Koa Fire & Marine .................. 10,000 37,555
Kokuyo Co. Ltd. .................... 13,000 224,181
Komatsu Ltd. ....................... 4,000 20,080
Kubota Corp. ....................... 6,000 15,819
Mabuchi Motor Co. .................. 8,600 437,003
Matsuda Sangyo Co. Ltd. ............ 8,000 48,316
Meitec ............................. 51,000 1,434,528
Micronics Japan Co. Ltd. ........... 18,000 310,404
Minebea Co. ........................ 70,000 751,102
Misawa Ceramic Corp. ............... 16,000 39,241
Mitsubishi Corp. ................... 14,000 110,519
Mitsubishi Estate Co. .............. 10,000 108,833
Mitsubishi Heavy Industries Ltd. 110,000 458,632
Mitsubishi Materials Corp. ......... 6,000 9,657
Mitsubishi Trust & Banking
Corp. ............................ 31,000 311,247
Mitsui & Co. ....................... 6,000 35,501
Mitsui Home Co. Ltd. ............... 24,000 130,600
NAMCO Ltd. ......................... 5,200 151,048
Namura Shipbuilding ................ 14,000 31,654
Nanno Construction Co. Ltd. ........ 15,000 12,071
NGK Spark Plug Co. ................. 40,000 226,863
NIC Corp. .......................... 42,000 228,550
Nichiei Co. Ltd. ................... 3,900 415,482
Nichiha Corp. ...................... 54,400 332,717
Nichii Gakkan Co.* ................. 14,000 482,851
Nikon Corp. ........................ 45,000 444,913
Nintendo Co. Ltd. .................. 4,000 392,412
Nippon Broadcasting System ......... 18,000 711,861
Nippon Denwa Shisetsu .............. 22,000 84,307
Nippon Paper Industries Co. ........ 20,000 78,482
Nippon Steel Corp. ................. 27,000 39,939
Nippon System Development .......... 12,000 246,484
Nippon Television Network
Corp. ............................ 1,800 528,377
Nireco ............................. 13,000 47,825
Nitta Corp. ........................ 31,000 313,623
Nitto Kohki Co. Ltd. ............... 25,200 274,259
Nomura Securities Co. .............. 8,000 106,687
Noritsu Koki Co. Ltd. .............. 34,600 853,895
Ohmoto Gumi Co. Ltd. ............... 10,000 42,920
Oie Sangyo Co. Ltd. ................ 13,000 53,803
Oji Paper Co. Ltd. ................. 14,000 55,689
Oriental Construction Co. .......... 9,000 39,318
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Paris Miki, Inc. ................... 31,000 $ 332,631
PS Corp. ........................... 18,900 71,703
Raito Kogyo Co. Ltd. ............... 40,000 173,213
Ricoh Elemex Corp. ................. 9,000 65,530
Rohm Co. Ltd. ...................... 8,000 815,482
Sankyo Co. Ltd. .................... 38,000 859,168
Santen Pharmaceutical Co. Ltd. ..... 88,000 1,011,688
Sanyo Chemicals Industries Ltd...... 9,000 52,424
Sanyo Electric Co. Ltd. ............ 44,000 114,658
Sanyo Engineering &
Construction Co. ................. 22,000 79,249
Sanyo Pax Co. Ltd. ................. 24,000 207,856
Sanyo Shinpan Finance Co. Ltd. ..... 6,200 274,183
Sato Corp. ......................... 38,500 655,068
Sekisui House Ltd. ................. 3,000 19,291
Seven-Eleven Japan Co. Ltd. ........ 14,200 1,005,618
Shimizu Corp. ...................... 3,000 6,944
Shizuoka Bank Ltd. ................. 23,000 246,791
Sho Bond Corp. ..................... 42,500 768,730
Sodick Co.* ........................ 100,000 286,645
Sony Corp. ......................... 1,000 88,906
SMC Corp. .......................... 9,100 802,069
Suido Kiko Kaisha .................. 8,000 16,064
Sumitomo Bank Ltd. ................. 90,000 1,027,783
Sumitomo Forestry Co. .............. 10,000 48,668
Sumitomo Metal Industries .......... 212,000 271,347
Sumitomo Realty &
Development Co. Ltd. ............. 109,000 626,557
Taisei Corp. ....................... 4,000 6,561
Taisho Pharmaceutical Co. .......... 20,000 510,443
Takara Printing Co. ................ 12,000 35,869
Takefuji Corp. ..................... 26,060 1,196,393
Takihyo Co. Ltd. ................... 14,000 61,161
TDK Corp. .......................... 18,000 1,357,501
Toda Corp. ......................... 14,000 38,092
Toei Co. Ltd. ...................... 26,000 94,654
Toho Bank .......................... 40,000 159,418
Toho Titanium* ..................... 38,000 320,368
Tokio Marine & Fire Insurance
Co. .............................. 6,000 68,059
Tokyo Broadcasting System, Inc. 35,000 442,614
Tokyo Cathode Laboratory Co.*....... 19,700 194,773
Tokyo Electric Power Co. ........... 7,000 127,687
Tokyo Electron ..................... 1,000 32,037
Toso Co. Ltd. ...................... 18,000 82,085
TOWA Corp. ......................... 5,300 110,082
Toyoda Gosei ....................... 20,000 72,351
Wesco, Inc. ........................ 6,200 15,206
Xebio Co. Ltd. ..................... 3,200 25,507
Yamaichi Electronics Co. Ltd. ...... 22,000 354,091
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 68,000 1,459,283
Yamato Transport Co. Ltd. .......... 6,000 80,475
Yaskawa Electric Corp. ............. 10,000 24,909
Yokogawa Electric Corp. ............ 96,000 593,033
------------
TOTAL JAPAN (20.6%) ............... 39,943,359
------------
MALAYSIA
AMMB Holdings BHD .................. 50,000 32,781
Arab Malaysian Finance BHD ......... 140,000 28,076
Guinness Anchor BHD ................ 30,000 37,023
Hong Leong Bank BHD ................ 140,000 92,146
</TABLE>
78
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
IOI Corp. BHD ....................... 100,000 $ 32,395
Kim Hin Industry BHD ................ 12,000 2,113
Kumpulan Guthrie BHD ................ 33,000 21,211
Lingkaran Trans Kota Holdings
BHD* .............................. 130,000 82,890
Magnum Corp. BHD .................... 74,000 44,520
Malayan Banking BHD ................. 24,000 69,726
Mancon BHD .......................... 76,666 27,793
Metacorp BHD ........................ 120,000 50,906
Pacific & Orient BHD ................ 80,000 36,611
Pernas International Hotels
Holdings BHD ...................... 462,000 128,284
Resorts World BHD ................... 20,000 33,680
RJ Reynolds BHD ..................... 70,000 114,282
Sap Holdings BHD .................... 36,000 13,421
Sime Darby BHD ...................... 150,000 144,234
Sriwani Holdings BHD ................ 180,000 47,667
Star Publications BHD ............... 25,000 28,538
Talam Corp. BHD ..................... 315,000 74,508
Tanjong PLC ......................... 100,000 165,831
UMW Holdings BHD .................... 150,000 113,768
------------
TOTAL MALAYSIA (0.7%) .............. 1,422,404
------------
MEXICO
Bufete Industrial S.A.* ............. 10,000 97,500
Elamex S.A. de C.V.* ................ 32,600 244,500
Grupo Electra S.A. de C.V. .......... 500,000 882,134
Grupo Financiero Banamex
Accival (B Shares)* ............... 50,000 149,504
Grupo Industrial Saltillo SA
(B Shares) ........................ 236,000 898,908
Industrias CH S.A. (B Shares)* ...... 120,000 714,640
Kimberly-Clark de Mexico S.A.
de C.V. ........................... 30,000 710,757
Panamerican Beverages, Inc. ......... 10,000 326,250
Sanluis Corporacion S.A. de C.V.* 28,000 227,543
------------
TOTAL MEXICO (2.2%) ................ 4,251,736
------------
NETHERLANDS
ABN Amro Holding N.V. ............... 5,824 113,455
Aegon N.V. .......................... 8,000 712,154
Akzo Nobel N.V. ..................... 3,000 517,249
ASR Verzekeringsgroep N.V. .......... 21,400 1,164,116
Content Beheer N.V. + ............... 30,000 739,773
Elsevier N.V. ....................... 16,955 274,270
Fortis Amev N.V. .................... 10,000 435,973
Fugro N.V.* ......................... 30,000 914,359
Gucci Group N.V. .................... 2,000 83,750
Heineken N.V. ....................... 233 40,564
Hunter Douglas N.V. ................. 6,000 210,095
IHC Caland N.V. ..................... 4,000 207,531
ING Groep N.V. ...................... 28,000 1,179,296
KLM ................................. 1,700 62,881
Koninklijke Nedlloyd Groep N.V.+ 2,250 51,044
Kon. PTT Nederland + ................ 8,000 333,785
Nutricia Verenigde Bedrijven
N.V.+ ............................. 19,000 576,283
Royal Dutch Petroleum ............... 9,948 546,057
Unilever N.V. CVA ................... 2,968 182,970
Unique International N.V. ........... 30,000 639,164
Vedior N.V. CVA ..................... 70,000 1,260,079
Vendex International N.V. ........... 3,600 198,673
------------
TOTAL NETHERLANDS (5.4%) ........... 10,443,521
------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
NEW ZEALAND
Air New Zealand Ltd. (B Shares) 109,000 $ 218,353
Restaurant Brands NZ Ltd.*+ ......... 312,500 308,470
Sky City Ltd. ....................... 35,300 119,907
Tourism Holdings Ltd. ............... 15,000 10,277
Warehouse Group Ltd. ................ 110,000 293,809
------------
TOTAL NEW ZEALAND (0.5%) ........... 950,816
------------
NORWAY
Alvern Norway ASA* .................. 120,000 284,329
Choice Hotels Scandinavia
ASA*+ ............................. 472,500 1,599,353
Frontline Ltd.* ..................... 300,000 1,210,431
Hafslund ASA ........................ 5,000 23,830
Navia ASA* .......................... 94,000 330,905
Norsk Hydro ASA ..................... 1,100 53,542
Tomra Systems ASA ................... 58,000 1,295,730
Union Bank of Norway ................ 12,000 427,306
------------
TOTAL NORWAY (2.7%) ................ 5,225,426
------------
PANAMA (0.4%)
Banco Latinoamericano de
Exportaciones S.A.
(E Shares) ........................ 20,000 827,500
------------
PERU (0.7%)
Telefonica del Peru S.A. (ADR) ...... 54,000 1,258,875
------------
POLAND (0.7%)
@Entertainment, Inc.* ............... 117,000 1,301,625
------------
PORTUGAL
BPI-SGPS SA* ........................ 20,000 486,281
Brisa-Auto Estradas de Portugal
SA* ............................... 5,600 200,602
Electricidade de Portugal SA* ....... 38,105 721,521
Portugal Telecom SA ................. 8,710 404,148
Telecel Comunicacoes Pessoais
SA* ............................... 13,290 1,416,011
------------
TOTAL PORTUGAL (1.7%) .............. 3,228,563
------------
SINGAPORE
City Developments Ltd. .............. 50,000 231,936
GP Batteries International Ltd. ..... 140,000 364,674
Great Eastern Life Assurance Co. 7,000 42,046
Keppel Fels Ltd. .................... 88,000 245,971
Singapore Airlines Ltd. ............. 50,000 327,089
Singapore Land Ltd. ................. 93,000 204,639
United Overseas Bank Ltd. ........... 40,000 222,420
------------
TOTAL SINGAPORE (0.8%) ............. 1,638,775
------------
SOUTH KOREA (0.2%)
SK Telecom Co. Ltd. (ADR)* .......... 65,776 427,544
------------
SPAIN
Aldeasa SA* ......................... 24,745 524,623
Aguas de Barcelona .................. 6,060 249,798
Banco Bilbao Vizcaya SA ............. 4,881 157,948
Banco de Valencia ................... 30,000 648,835
Banco Santander SA .................. 3,468 115,867
Catalana Occidente SA + ............. 15,600 794,591
Catalana Occidente SA ............... 5,400 275,051
Construcciones y Auxiliar de
Ferrocarriles SA .................. 500 18,444
Corp Financiera Reunida SA* ......... 100,000 534,952
Corporacion Mapfre Cia Inter SA 36,000 954,644
</TABLE>
79
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Endesa SA .......................... 4,488 $ 79,685
Gas Y Electridad SA (Series 2) ..... 14,000 1,010,830
Hidroelectrica del Cantabrico ...... 10,000 438,464
Iberdrola SA ....................... 35,668 469,408
Portland Valderrivas SA ............ 3,800 341,713
Repsol SA .......................... 4,392 187,384
Tabacalera SA-A .................... 12,200 988,973
Telefonica de Espana ............... 26,528 757,445
-----------
TOTAL SPAIN (4.4%) ................ 8,548,655
-----------
SWEDEN
Astra AB (A Shares) ................ 20,000 346,352
Castellum AB* ...................... 79,000 786,030
Dahl International AB + ............ 32,000 471,542
Ericsson LM (B Shares) ............. 6,400 240,608
Forenings Sparbanken AB
(A Shares) ....................... 10,000 227,333
Kalmar Industries AB + ............. 10,000 161,211
Karlshamns AB*+ .................... 38,000 593,458
NetCom Systems AB (B Shares)* ...... 25,650 550,804
Scandic Hotels AB*+ ................ 73,600 1,798,310
Skandia Forsakrings AB ............. 11,000 518,835
Skandinaviska Enskilda Banken
(Series A) ....................... 95,120 1,203,990
Swedish Match AB ................... 254,700 850,080
-----------
TOTAL SWEDEN (4.0%) ............... 7,748,553
-----------
SWITZERLAND
ABB AG ............................. 200 251,284
Ciba Specialty Chemicals AG* ....... 8,600 1,024,581
Credit Suisse Group ................ 1,250 193,427
Nestle SA .......................... 300 449,641
Novartis AG ........................ 542 879,521
Roche Holding AG Genusscheine 80 794,522
Schweizerische
Rueckversicherungs-Gesellschaft 120 224,471
Selecta Group* ..................... 10,400 1,395,687
Tag Heuer International SA
(ADR)* ........................... 35,000 288,750
Union Bank of Switzerland .......... 120 173,530
-----------
TOTAL SWITZERLAND (2.9%) .......... 5,675,414
-----------
THAILAND
CMIC Finance & Securities Public
Co. Ltd. ......................... 51,000 0
Nation Multimedia Group
Public Co. Ltd. .................. 130,000 34,424
Thai Engine Manufacturing
Public Co. Ltd. .................. 70,000 117,757
-----------
TOTAL THAILAND (0.1%) ............. 152,181
-----------
UNITED KINGDOM
Amvescap PLC ....................... 80,000 687,559
Barclays PLC ....................... 24,000 638,128
Bass PLC ........................... 14,200 220,398
BG PLC ............................. 22,077 99,406
BG PLC `B'* ........................ 25,021 11,924
BOC Group PLC ...................... 2,591 42,621
Boots Co. PLC ...................... 5,806 83,627
BPB PLC ............................ 70,000 391,106
British Aerospace .................. 2,120 60,444
British Airport Authority PLC ...... 30,000 245,510
British Airways PLC ................ 38,000 349,695
</TABLE>
<TABLE>
<CAPTION>
=============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -----------------------------------------------------------------------------
<S> <C> <C>
British Energy PLC ................. 240,000 $ 1,668,283
British Petroleum Co. PLC .......... 29,367 386,071
British Sky Broadcasting Group
PLC .............................. 8,097 60,675
British Telecommunications PLC 35,150 276,392
BTR PLC ............................ 21,470 64,918
Cable & Wireless PLC ............... 12,409 109,096
Cadbury Schweppes PLC .............. 5,961 60,097
Carlton Communications PLC ......... 167,300 1,292,147
Carpetright PLC .................... 50,000 377,960
Commercial Union PLC ............... 2,801 39,079
Compass Group PLC .................. 170,000 2,092,419
De La Rue PLC ...................... 10,000 65,075
Diageo PLC ......................... 105,307 968,223
Dixons Group PLC ................... 120,000 1,204,871
EMI Group PLC ...................... 50,000 417,399
Energis PLC* ....................... 275,000 1,152,367
Energy Group PLC ................... 4,456 49,208
Filtronic Comtek PLC ............... 180,000 1,308,892
Flextech PLC* ...................... 46,000 398,370
General Accident PLC ............... 2,904 50,346
General Electric Co. PLC ........... 13,890 90,047
GKN PLC ............................ 2,089 42,808
Glaxo Wellcome PLC ................. 23,220 549,468
Granada Group PLC .................. 3,225 49,287
Great Universal Stores PLC ......... 3,970 50,038
HSBC Holdings PLC .................. 10,000 246,824
Hanson PLC ......................... 5,571 24,867
Harvey Nichols PLC ................. 70,000 218,559
Holliday Chemical Holdings PLC 400,000 1,511,840
House of Fraser PLC ................ 140,000 462,426
Imperial Chemical Industries
PLC .............................. 3,109 48,587
Imperial Tobacco Group PLC ......... 125,000 786,732
Jefferson Smurfit Group PLC ........ 200,000 555,437
Johnson Matthey PLC ................ 55,000 492,580
Kingfisher PLC ..................... 4,084 56,911
Ladbroke Group PLC ................. 150,000 650,749
Land Securities PLC ................ 3,207 51,120
Legal & General Group PLC .......... 7,475 65,349
Lloyds TSB Group PLC ............... 34,379 444,617
LucasVarity PLC .................... 160,000 565,297
Marks & Spencer PLC ................ 17,109 168,411
McBride PLC ........................ 20,000 58,173
MEPC PLC ........................... 70,000 584,359
Mirror Group PLC ................... 40,000 128,178
Misys (Jersey) Ltd.* ............... 3,428 103,652
Misys PLC .......................... 12,000 362,842
National Grid Group PLC ............ 260,000 1,234,779
National Power PLC ................. 100,000 985,983
Norwich Union PLC* ................. 80,000 512,711
Peninsular & Oriental Steam
Navigation Co. ................... 3,314 37,713
Powerscreen International PLC ...... 40,000 401,593
Prudential Corp. PLC ............... 8,019 96,724
Randgold Resources Ltd.
(GDR)*+ .......................... 30,300 159,075
Rank Group PLC ..................... 12,574 70,047
Reed International PLC ............. 60,000 601,449
Rentokil Initial PLC ............... 162,900 709,390
Rio Tinto PLC ...................... 5,510 67,819
Shandwick International PLC ........ 80,000 54,229
</TABLE>
80
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
=================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -----------------------------------------------------------------
<S> <C> <C>
Smith & Nephew PLC ............. 55,000 $ 162,687
Smith (W.H.) Group PLC ......... 60,000 383,547
Smithkline Beecham PLC ......... 90,000 921,401
Tesco PLC ...................... 12,625 102,696
Thistle Hotels PLC ............. 94,000 244,959
Thorn PLC ...................... 102,857 267,060
Tomkins PLC .................... 25,000 119,550
Unilever PLC ................... 19,628 168,047
Vodafone Group PLC ............. 100,000 721,411
WPP Group PLC .................. 55,000 244,935
Zeneca Group PLC ............... 10,336 362,974
------------
TOTAL UNITED KINGDOM (16.4%) 31,872,243
------------
TOTAL COMMON STOCKS
AND OTHER INVESTMENTS (92.4%)
(Cost $191,125,818)........... 179,183,005
------------
PREFERRED STOCKS:
AUSTRALIA (0.2%)
Village Roadshow Ltd. .......... 160,000 328,956
------------
BRAZIL (0.0%)
Dixie Toga SA .................. 59,000 30,133
------------
FINLAND (0.2%)
Nokia Oyj (A Shares) ........... 4,000 283,987
------------
GERMANY
Fielmann AG .................... 4,000 86,717
Fresenius AG ................... 1,200 218,127
ProSieben Media AG* ............ 7,000 321,021
------------
TOTAL GERMANY (0.3%) .......... 625,865
------------
TOTAL PREFERRED STOCKS (0.7%)
(Cost $1,410,542) ............ 1,268,941
------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (1.3%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ................ $2,500,000 $ 2,499,583
------------
TOTAL SHORT-TERM DEBT SECURITIES (1.3%)
(Amortized Cost $2,499,583)......... 2,499,583
------------
TOTAL INVESTMENTS (94.4%)
(Cost/Amortized Cost $195,035,943) 182,951,529
OTHER ASSETS
LESS LIABILITIES (5.6%) ........... 10,945,647
------------
NET ASSETS (100.0%) ................. $193,897,176
============
</TABLE>
===============================================================================
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Equity Investments
<TABLE>
<S> <C>
Basic Materials ................ 5.1%
Business Services .............. 8.9
Capital Goods .................. 8.1
Consumer Cyclicals ............. 19.3
Consumer Non-Cyclicals ......... 15.3
Credit Sensitive ............... 26.8
Diversified .................... 1.8
Energy ......................... 5.6
Technology ..................... 9.1
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $12,924,625 or
6.7% of net assets.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
81
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
BASIC MATERIALS
CHEMICALS--SPECIALTY (4.2%)
Crompton & Knowles Corp.+ ................ 5,200,000 $ 137,800,000
Cytec Industries, Inc.* .................. 1,275,000 59,845,312
-------------
197,645,312
-------------
METALS & MINING (1.5%)
Newmont Mining Corp. ..................... 2,300,000 67,562,500
-------------
STEEL (0.9%)
AK Steel Holding Corp. ................... 419,600 7,421,675
Ispat International NV
(New York Registered Shares)* .......... 1,500,000 32,437,500
-------------
39,859,175
-------------
TOTAL BASIC MATERIALS (6.6%) ........... 305,066,987
-------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (2.4%)
USA Waste Services, Inc.* ................ 223,800 8,784,150
U.S. Filter Corp.* ....................... 3,491,900 104,538,756
-------------
113,322,906
-------------
PRINTING, PUBLISHING &
BROADCASTING (3.7%)
Comcast Corp. (Class A) SPL .............. 5,500,000 173,593,750
-------------
PROFESSIONAL SERVICES (1.6%)
Cambridge Technology Partners,
Inc.* .................................. 428,900 17,852,962
Corrections Corp. of America* ............ 1,100,000 40,768,750
TeleTech Holdings, Inc.* ................. 1,197,600 13,622,721
-------------
72,244,433
-------------
TOTAL BUSINESS SERVICES (7.7%) ......... 359,161,089
-------------
CONSUMER CYCLICALS
AIRLINES (10.1%)
Continental Airlines, Inc.
(Class B)*+ ............................ 4,438,200 213,588,375
Delta Air Lines, Inc. .................... 1,500,000 178,500,000
Northwest Airlines Corp.
(Class A)* ............................. 1,634,500 78,251,687
-------------
470,340,062
-------------
APPAREL, TEXTILE (6.1%)
Jones Apparel Group, Inc.* ............... 2,339,200 100,585,600
Mohawk Industries, Inc.* ................. 3,150,000 69,103,125
Tommy Hilfiger Corp.*+ ................... 1,939,500 68,124,937
UNIFI, Inc. .............................. 1,200,000 48,825,000
-------------
286,638,662
-------------
AUTO RELATED (7.6%)
Circuit City Stores, Inc.--CarMax
Group*+ ................................ 6,260,700 56,346,300
Republic Industries, Inc.* ............... 12,700,000 296,068,750
-------------
352,415,050
-------------
AUTOS & TRUCKS (0.7%)
Harley-Davidson, Inc. .................... 1,200,000 32,850,000
-------------
FOOD SERVICES, LODGING (6.4%)
Extended Stay America, Inc.* ............. 1,886,100 23,458,369
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Florida Panthers Holdings, Inc.* ......... 1,685,300 $ 29,071,425
Host Marriott Corp.* ..................... 2,053,600 40,301,900
ITT Corp.* ............................... 2,300,000 190,612,500
Starbucks Corp.* ......................... 95,000 3,645,625
Suburban Lodges of America, Inc.*+ 904,000 12,034,500
-------------
299,124,319
-------------
HOUSEHOLD FURNITURE,
APPLIANCES (1.0%)
Industrie Natuzzi Spa (ADR) .............. 2,240,700 46,214,438
-------------
LEISURE RELATED (1.8%)
Callaway Golf Company .................... 1,254,800 35,840,225
Promus Hotel Corp.* ...................... 1,120,000 47,040,000
-------------
82,880,225
-------------
RETAIL--GENERAL (2.9%)
Pep Boys-Manny, Moe & Jack ............... 1,096,600 26,181,325
PETsMART, Inc.* .......................... 1,435,200 10,405,200
Proffitt's, Inc.* ........................ 400,000 11,375,000
Tiffany & Co. ............................ 1,563,300 56,376,506
U.S. Office Products Co.* ................ 1,507,000 29,574,875
-------------
133,912,906
-------------
TOTAL CONSUMER CYCLICALS (36.6%) 1,704,375,662
-------------
CONSUMER NONCYCLICALS
DRUGS (6.2%)
Centocor, Inc.*+ ......................... 5,036,500 167,463,625
Genzyme Corp. (General Division)* 2,375,000 65,906,250
MedImmune, Inc.*+ ........................ 1,339,800 57,443,925
-------------
290,813,800
-------------
HOSPITAL SUPPLIES &
SERVICES (0.7%)
Sun Healthcare Group, Inc.* .............. 1,649,900 31,966,813
-------------
SOAPS & TOILETRIES (0.9%)
Estee Lauder Companies
(Class A) .............................. 828,900 42,636,544
-------------
TOTAL CONSUMER NONCYCLICALS (7.8%) 365,417,157
-------------
CREDIT SENSITIVE
BANKS (0.8%)
GreenPoint Financial Corp. ............... 527,100 38,247,694
-------------
FINANCIAL SERVICES (4.0%)
Edwards (A.G.), Inc. .................... 1,050,000 41,737,500
Green Tree Financial Corp. ............... 1,822,400 47,724,100
Newcourt Credit Group, Inc. .............. 1,000,000 33,375,000
Paine Webber Group, Inc. ................. 1,200,000 41,475,000
PMI Group, Inc. .......................... 290,000 20,970,625
-------------
185,282,225
-------------
INSURANCE (4.6%)
AFLAC, Inc. .............................. 500,000 25,562,500
CNA Financial Corp.* ..................... 1,493,700 190,820,175
-------------
216,382,675
-------------
REAL ESTATE (2.1%)
Security Capital Group, Inc.
(Class B)*+ ............................ 1,184,900 38,509,250
Vornado Realty Trust ..................... 1,310,346 61,504,383
-------------
100,013,633
-------------
</TABLE>
82
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
UTILITY--TELEPHONE (2.9%)
Telephone & Data Systems, Inc.+ .......... 2,863,300 $133,322,406
--------------
TOTAL CREDIT SENSITIVE (14.4%) . ...... 673,248,633
--------------
ENERGY
OIL--DOMESTIC (1.7%)
Ultramar Diamond Shamrock Corp. 1,090,200 34,750,125
Valero Energy Corp. ...................... 1,450,000 45,584,375
--------------
80,334,500
--------------
OIL--SUPPLIES &
CONSTRUCTION (6.6%)
Diamond Offshore Drilling, Inc. .......... 4,000,000 192,500,000
Rowan Cos., Inc.* ........................ 3,700,000 112,850,000
--------------
305,350,000
--------------
RAILROADS (1.7%)
Kansas City Southern Industries, Inc. 1,600,000 50,800,000
Wisconsin Central Transport Corp.* ....... 1,300,000 30,387,500
--------------
81,187,500
--------------
TOTAL ENERGY (10.0%) ................... 466,872,000
--------------
TECHNOLOGY
ELECTRONICS (7.7%)
Altera Corp.* ............................ 1,197,500 39,667,188
Atmel Corp.* ............................. 1,347,000 25,003,688
KLA-Tencor Corp.* ........................ 660,900 25,527,263
Network Associates, Inc.* ................ 1,548,100 81,855,787
Parametric Technology Corp.* ............. 785,100 37,194,113
Sterling Commerce, Inc.* ................. 1,674,800 64,375,125
Teradyne, Inc.* .......................... 1,016,100 32,515,200
Xilinx, Inc.* ............................ 1,477,200 51,794,325
--------------
357,932,689
--------------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
OFFICE EQUIPMENT SERVICES (1.5%)
Comverse Technology, Inc.*+ .............. 1,859,500 $ 72,520,500
--------------
TELECOMMUNICATIONS (3.1%)
ADC Telecommunications, Inc.* ............ 796,700 33,262,225
American Satellite Network --
Warrants* .............................. 49,450 0
Millicom International Cellular SA* 2,378,400 89,487,300
U.S. Cellular Corp.* ..................... 658,300 20,407,300
--------------
143,156,825
--------------
TOTAL TECHNOLOGY (12.3%) ............... 573,610,014
--------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (95.4%)
(Cost $4,029,993,201) .................. 4,447,751,542
--------------
PRINCIPAL
AMOUNT
----------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (0.8%)
Federal Home Loan Mortgage Corp.
6.0%, due 01/02/98 ..................... $37,200,000 37,193,800
--------------
TOTAL SHORT-TERM DEBT SECURITIES (0.8%)
(Amortized Cost $37,193,800)............ 37,193,800
--------------
TOTAL INVESTMENTS (96.2%)
(Cost/Amortized Cost $4,067,187,001) 4,484,945,342
OTHER ASSETS
LESS LIABILITIES (3.8%) ................ 178,311,961
--------------
NET ASSETS (100.0%) ...................... $4,663,257,303
===============
</TABLE>
- ----------
* Non-income producing.
+ Affiliated company as defined under the Investment Company Act of 1940
(See Note 6).
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
83
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS--SPECIALTY (3.7%)
Crompton & Knowles Corp. ............ 140,200 $3,715,300
Cytec Industries, Inc.* ............. 32,000 1,502,000
----------
5,217,300
----------
METALS & MINING (1.6%)
Century Aluminum Co. ................ 18,500 249,750
Gibraltar Steel Corp.* .............. 45,600 900,600
Kaiser Aluminum Corp.* .............. 119,700 1,054,856
----------
2,205,206
----------
STEEL (0.7%)
WHX Corp.* .......................... 87,300 1,036,687
----------
TOTAL BASIC MATERIALS (6.0%) ...... 8,459,193
----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (3.5%)
American Disposal Services,
Inc.* ............................. 35,400 1,292,100
Philip Services Corp.* .............. 70,200 1,009,125
Superior Services, Inc.* ............ 52,900 1,527,487
U.S. Filter Corp.* .................. 34,800 1,041,825
----------
4,870,537
----------
PRINTING, PUBLISHING &
BROADCASTING (5.7%)
Applied Graphics Technologies,
Inc.* ............................. 24,800 1,320,600
Mail-Well, Inc.* .................... 19,600 793,800
Sinclair Broadcast Group, Inc.* ..... 66,600 3,105,225
Westwood One, Inc.* ................. 17,900 664,537
Young Broadcasting Corp.
(Class A)* ........................ 56,600 2,193,250
----------
8,077,412
----------
PROFESSIONAL SERVICES (11.0%)
Carematrix Corp.* ................... 77,700 2,233,875
Consolidation Capital Corp.* ........ 52,800 1,072,500
CORESTAFF, Inc.* .................... 72,500 1,921,250
Cornell Corrections, Inc.* .......... 56,000 1,162,000
Data Processing Resources
Corp.* ............................ 73,600 1,876,800
Equity Corp. International* ......... 56,400 1,304,250
Ha-Lo Industries, Inc.* ............. 138,800 3,608,800
Snyder Communications, Inc.* ........ 43,700 1,595,050
TeleTech Holdings, Inc.* ............ 61,100 695,013
----------
15,469,538
----------
TRUCKING, SHIPPING (3.0%)
C.H. Robinson Worldwide, Inc. ....... 61,700 1,380,537
Knightsbridge Tankers Ltd. .......... 53,400 1,511,887
OMI Corp.* .......................... 150,000 1,378,125
----------
4,270,549
----------
TOTAL BUSINESS SERVICES (23.2%) 32,688,036
----------
CAPITAL GOODS
AEROSPACE (0.9%)
DONCASTERS PLC (ADR)* ............... 56,300 1,189,337
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
BUILDING MATERIALS & FOREST
PRODUCTS (2.0%)
Buckeye Technologies, Inc.* ......... 31,500 $1,456,875
Hughes Supply, Inc. ................. 40,750 1,423,703
----------
2,880,578
----------
TOTAL CAPITAL GOODS (2.9%) ........ 4,069,915
----------
CONSUMER CYCLICALS
AIRLINES (2.9%)
Alaska Air Group, Inc.* ............. 45,200 1,751,500
Atlantic Coast Airlines, Inc.* ...... 75,500 2,397,125
----------
4,148,625
----------
APPAREL, TEXTILE (5.1%)
Mohawk Industries, Inc.* ............ 143,300 3,143,644
Nautica Enterprises, Inc.* .......... 80,700 1,876,275
Tommy Hilfiger Corp.* ............... 21,200 744,650
Wolverine World Wide, Inc. .......... 61,000 1,380,125
----------
7,144,694
----------
AUTO RELATED (5.8%)
Avis Rent A Car, Inc.* .............. 47,300 1,510,644
Budget Group, Inc. (Class A)* ....... 106,300 3,673,994
Dollar Thrifty Automotive
Group, Inc.* ...................... 67,500 1,383,750
Federal-Mogul Corp. ................. 38,800 1,571,400
----------
8,139,788
----------
AUTOS & TRUCKS (1.4%)
Cross-Continent Auto Retailers,
Inc.* ............................. 107,700 901,987
Miller Industries, Inc.* ............ 105,700 1,136,275
----------
2,038,262
----------
FOOD SERVICES, LODGING (4.3%)
American General Hospitality
Corp. ............................. 51,000 1,364,250
Innkeepers USA Trust ................ 89,700 1,390,350
Interstate Hotels Co.* .............. 31,500 1,104,469
Prime Hospitality Corp.* ............ 62,000 1,263,250
The Cheesecake Factory* ............. 30,100 918,050
----------
6,040,369
----------
HOUSEHOLD FURNITURE,
APPLIANCES (1.9%)
Furniture Brands
International, Inc.* .............. 82,200 1,685,100
Industrie Natuzzi Spa (ADR) ......... 49,700 1,025,063
----------
2,710,163
----------
LEISURE RELATED (0.4%)
Bally Total Fitness Holding
Corp.* ............................ 22,500 492,187
----------
RETAIL--GENERAL (4.0%)
Abercrombie & Fitch Co.
(Class A)* ........................ 44,800 1,400,000
Brylane, Inc.* ...................... 29,300 1,443,025
Central Garden & Pet Co.* ........... 45,200 1,186,500
Pacific Sunwear of California* ...... 56,350 1,665,847
----------
5,695,372
----------
TOTAL CONSUMER CYCLICALS (25.8%) 36,409,460
----------
</TABLE>
84
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER NONCYCLICALS
CONTAINERS (1.8%)
Ivex Packaging Corp.* ................ 66,500 $ 1,596,000
Silgan Holdings, Inc.* ............... 29,500 958,750
-----------
2,554,750
-----------
DRUGS (4.9%)
Creative BioMolecules, Inc.* ......... 124,800 920,400
Geltex Pharmaceuticals, Inc.* ........ 58,200 1,542,300
Inhale Therapeutic Systems* .......... 2,200 57,200
Jones Medical Industries, Inc. ....... 61,000 2,333,250
Medicis Pharmaceutical Corp.
(Class A)* ......................... 19,800 1,012,275
MedImmune, Inc.* ..................... 24,400 1,046,150
-----------
6,911,575
-----------
HOSPITAL SUPPLIES & SERVICES (3.1%)
Mid Atlantic Medical Services,
Inc.* .............................. 74,100 944,775
National Surgery Centers, Inc.* ...... 71,850 1,886,063
NovaCare, Inc.* ...................... 102,600 1,340,213
Novoste Corp.* ....................... 9,500 213,750
-----------
4,384,801
-----------
RETAIL--FOOD (1.0%)
United Natural Foods, Inc.* .......... 55,500 1,443,000
-----------
TOTAL CONSUMER NONCYCLICALS (10.8%) 15,294,126
-----------
CREDIT SENSITIVE
BANKS (0.7%)
Friedman, Billings, Ramsey
Group, Inc.* ....................... 54,400 975,800
-----------
FINANCIAL SERVICES (2.8%)
Affiliated Managers Group, Inc.* 46,300 1,342,700
FIRSTPLUS Financial Group,
Inc.* .............................. 41,900 1,607,913
Healthcare Financial Partners,
Inc.* .............................. 29,200 1,036,600
-----------
3,987,213
-----------
REAL ESTATE (2.2%)
Glenborough Realty Trust, Inc. ....... 64,400 1,907,850
Macerich Co. ......................... 38,900 1,108,650
-----------
3,016,500
-----------
UTILITY--ELECTRIC (0.2%)
Calpine Corp.* ....................... 22,300 331,712
-----------
TOTAL CREDIT SENSITIVE (5.9%) ...... 8,311,225
-----------
ENERGY
OIL--DOMESTIC (1.2%)
Basin Exploration, Inc.* ............. 61,000 1,082,750
Costilla Energy, Inc.* ............... 62,400 678,600
-----------
1,761,350
-----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
OIL--SUPPLIES & CONSTRUCTION (2.0%)
Oceaneering International, Inc.* ..... 46,900 $ 926,275
Parker Drilling Co.* ................. 150,800 1,837,875
-----------
2,764,150
-----------
RAILROADS (0.7%)
Genesee & Wyoming, Inc.
(Class A)* ......................... 45,300 1,058,888
-----------
TOTAL ENERGY (3.9%) ................ 5,584,388
-----------
TECHNOLOGY
ELECTRONICS (5.6%)
Check Point Software
Technologies Ltd.* ................. 8,700 354,525
Excite, Inc.* ........................ 12,000 360,000
Hadco Corp.* ......................... 27,500 1,244,375
Harbinger Corp.* ..................... 16,600 466,875
Information Management
Resources, Inc.* ................... 21,000 787,500
Insight Enterprises, Inc.* ........... 7,200 264,600
Lycos, Inc.* ......................... 30,800 1,274,350
MetaCreations Corp.* ................. 64,700 719,788
PMC-Sierra, Inc.* .................... 47,600 1,475,600
3D Labs, Inc. Ltd.* .................. 38,900 904,425
-----------
7,852,038
-----------
OFFICE EQUIPMENT (2.7%)
Discreet Logic, Inc.* ................ 70,400 1,544,400
Platinum Technology, Inc.* ........... 38,400 1,084,800
Sterling Software, Inc.* ............. 29,800 1,221,800
-----------
3,851,000
-----------
OFFICE EQUIPMENT SERVICES (3.8%)
Comverse Technology, Inc.* ........... 88,600 3,455,400
ENCAD, Inc.* ......................... 25,300 695,750
Oak Technology, Inc.* ................ 125,800 817,700
Saville Systems Ireland PLC
(ADR)* ............................. 8,200 340,300
-----------
5,309,150
-----------
TELECOMMUNICATIONS (6.9%)
ACC Corp.* ........................... 59,300 2,994,650
Comnet Cellular, Inc.* ............... 3,200 113,800
ICG Communications, Inc.* ............ 81,200 2,212,700
Level One Communications,
Inc.* .............................. 32,700 923,775
MetroNet Communications Corp.
(Class B)* ......................... 51,500 894,812
Millicom International Cellular
SA* ................................ 38,500 1,448,563
Mobile Telecommunication
Technologies Corp.* ................ 51,800 1,139,600
-----------
9,727,900
-----------
TOTAL TECHNOLOGY (19.0%) ........... 26,740,088
-----------
TOTAL COMMON STOCKS (97.5%)
(Cost $136,812,737)................. 137,556,431
-----------
</TABLE>
85
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (11.6%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 .................... $16,300,000 $ 16,297,283
-------------
TOTAL SHORT-TERM DEBT SECURITIES (11.6%)
(Amortized Cost $16,297,283)........... 16,297,283
-------------
TOTAL INVESTMENTS (109.1%)
(Cost/Amortized Cost $153,110,020) 153,853,714
OTHER ASSETS
LESS LIABILITIES (- 9.1%) ............ (12,854,262)
-------------
NET ASSETS (100.0%) .................... $ 140,999,452
=============
</TABLE>
- ----------
* Non-income producing.
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
86
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND
OTHER INVESTMENTS:
BASIC MATERIALS
CHEMICALS (0.2%)
Akzo Nobel N.V. ..................... 600 $ 103,450
Bayer AG ............................ 4,535 168,271
Ciba Specialty Chemicals AG* ........ 900 107,224
Hitachi Chemical Co. Ltd. ........... 15,000 89,097
Holliday Chemical Holdings PLC 23,700 89,577
Kuraray Co. Ltd. .................... 10,000 82,774
Nippon Chemi-Con Corp. .............. 6,000 13,934
Toagosei Co. Ltd. ................... 15,000 21,153
---------
675,480
---------
CHEMICALS--SPECIALTY (0.1%)
Cytec Industries, Inc.* ............. 4,800 225,300
NGK Insulators ...................... 10,000 88,905
---------
314,205
---------
METALS & MINING (0.0%)
Bethlehem Steel Corp.* .............. 15,000 129,375
Toho Titanium* ...................... 1,000 8,431
---------
137,806
---------
PAPER (0.1%)
Jefferson Smurfit Corp.* ............ 8,000 113,000
KNP BT (Kon) N.V. ................... 6,000 138,190
Nippon Paper Industries Co. ......... 2,000 7,847
Stone Container Corp.* .............. 5,800 60,538
UMP-Kymmene Oy ...................... 2,810 56,190
---------
375,765
---------
STEEL (0.1%)
Koninklijke Hoogovens N.V. .......... 2,000 81,967
NatSteel Ltd. ....................... 25,000 33,898
Pohang Iron & Steel Co. Ltd.
(ADR) ............................. 2,000 34,875
Rautaruukki Oy ...................... 8,095 65,343
Usinor Sacilor ...................... 5,280 76,237
---------
292,320
---------
TOTAL BASIC MATERIALS (0.5%) ...... 1,795,576
---------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.5%)
USA Waste Services, Inc.* ........... 21,500 843,875
Waste Management, Inc. .............. 23,400 643,500
---------
1,487,375
---------
PRINTING, PUBLISHING &
BROADCASTING (1.0%)
Carlton Communications PLC .......... 15,500 119,715
CBS Corp. ........................... 17,000 500,438
Liberty Media Group (Class A)* 29,020 1,051,975
New Straits Times Press BHD ......... 8,000 9,914
New York Times Co. (Class A) ........ 12,160 804,080
Nippon Television Network Corp.
100 29,354
Reader's Digest Association, Inc.
(Class A) ......................... 5,000 118,125
Television Broadcasts Ltd. .......... 1,000 2,852
Time Warner, Inc. ................... 6,200 384,400
Tokyo Broadcasting System, Inc. 1,000 12,645
United News & Media PLC ............. 10,812 123,128
---------
3,156,626
---------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
PROFESSIONAL SERVICES (0.0%)
Asatsu, Inc. ........................ 600 $ 8,645
Brisa-Auto Estradas de Portugal
SA* ............................... 300 10,747
Meitec .............................. 1,800 50,630
---------
70,022
---------
TRUCKING, SHIPPING (0.3%)
Bergesen Dy AS (A Shares) ........... 5,380 126,745
Frontline Ltd.* ..................... 20,000 80,695
Knightsbridge Tankers Ltd. .......... 6,800 192,525
OMI Corp.* .......................... 49,500 454,780
---------
854,745
---------
TOTAL BUSINESS SERVICES (1.8%)
5,568,768
---------
CAPITAL GOODS
AEROSPACE (0.1%)
British Aerospace ................... 5,357 152,735
---------
BUILDING & CONSTRUCTION (0.2%)
Beazer Group PLC .................... 21,000 55,560
Bouygues ............................ 1,203 136,321
Daito Trust Construction Co.
Ltd. .............................. 6,000 36,651
GTM Entrepose ....................... 1,116 75,098
Makita Corp. ........................ 8,000 76,643
National House Industrial Co. ....... 7,000 48,017
Sho Bond Corp. ..................... 1,200 21,705
Societe Technip ..................... 1,075 113,421
Toda Corp. ......................... 15,000 40,812
---------
604,228
---------
BUILDING MATERIALS & FOREST
PRODUCTS (0.3%)
BPB PLC ............................. 11,300 63,135
Fujikura Ltd. ....................... 3,000 19,865
Holderbank Financiere Glaris
AG ................................ 155 126,505
Martin Marietta Materials, Inc. ..... 10,200 372,937
Matsushita Electric Works Ltd. ...... 11,000 95,267
Nichiha Corp. ....................... 1,600 9,785
Rugby Group PLC ..................... 58,160 129,981
---------
817,475
---------
ELECTRICAL EQUIPMENT (0.8%)
Daikin Industries Ltd. .............. 14,000 52,792
General Electric Co. ................ 28,400 2,083,850
Johnson Electric Holdings Ltd. ...... 28,800 82,880
Legrand SA .......................... 425 84,667
Mabuchi Motor Co. ................... 200 10,163
Sumitomo Electric Industries ........ 7,000 95,497
---------
2,409,849
---------
MACHINERY (1.0%)
Allied Signal, Inc. ................. 18,800 732,025
Coltec Industries, Inc.* ............ 11,000 255,063
Cie Generale de Geophysique
SA (ADR)* ......................... 6,565 168,228
Fujitec Co. Ltd. .................... 9,000 49,665
Ishikawajima Harima Heavy
Industries Co. Ltd. ............... 10,000 14,945
KSB AG .............................. 300 65,872
Legris Industries SA ................ 1,990 69,105
</TABLE>
87
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Mitsubishi Heavy Industries Ltd. 8,000 $ 33,355
Nitta Corp. ........................... 1,000 10,117
Nitto Kohki Co. Ltd. .................. 1,000 10,883
Rauma Oy .............................. 139 2,167
Schindler Holding AG
Participating Certificate ........... 102 106,295
Schindler Holding AG Registered 50 53,714
Siebe PLC ............................. 6,000 117,825
SMC Corp. ............................. 300 26,442
Stork N.V. ............................ 2,000 69,045
TI Group PLC .......................... 14,014 106,856
United Technologies Corp. ............. 17,200 1,252,375
Valmet Oy* ............................ 3,600 49,665
----------
3,193,642
----------
TOTAL CAPITAL GOODS (2.4%) .......... 7,177,929
----------
CONSUMER CYCLICALS
AIRLINES (0.1%)
Lufthansa AG .......................... 2,000 37,577
Singapore Airlines Ltd. ............... 1,000 6,542
Virgin Express Holdings PLC
(ADR)* .............................. 11,500 238,625
----------
282,744
----------
APPAREL, TEXTILES (0.1%)
Cone Mills Corp.* ..................... 12,000 93,000
Onward Kashiyama Co. Ltd. ............. 8,000 92,585
----------
185,585
----------
AUTO RELATED (0.3%)
Continential AG ....................... 5,500 123,822
Minebea Co. Ltd. ...................... 2,000 21,460
NGK Spark Plug Co. .................... 6,000 34,030
Republic Industries, Inc.* ............ 25,600 596,800
Sumitomo Rubber Industries,
Inc. ................................ 13,000 54,899
Toyoda Automatic Loom Works
Ltd. ................................ 7,000 128,760
----------
959,771
----------
AUTOS & TRUCKS (0.3%)
Bajaj Auto Ltd. (GDR) ................. 750 14,813
Harley-Davidson, Inc. ................. 28,200 771,975
UMW Holdings BHD ...................... 5,000 3,792
Volkswagen AG ......................... 100 55,866
----------
846,446
----------
FOOD SERVICES, LODGING (0.4%)
Accor SA .............................. 200 37,185
Choice Hotels Scandinavia ASA*+ 13,500 45,696
Compass Group PLC ..................... 16,100 198,164
Host Marriott Corp.* .................. 16,200 317,925
ITT Corp.* ............................ 6,500 538,688
John Q Hammons Hotels, Inc.
(Class A)* .......................... 14,800 133,200
----------
1,270,858
----------
HOUSEHOLD FURNITURE, APPLIANCES (0.6%)
Hunter Douglas N.V. ................... 2,500 87,540
Industrie Natuzzi Spa (ADR) ........... 500 10,313
Moulinex* ............................. 2,000 49,414
Pioneer Electric Corp. ................ 6,000 92,432
Sony Corp. ............................ 1,500 133,359
Sunbeam Corp. ......................... 38,200 1,609,175
----------
1,982,233
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
LEISURE RELATED (0.8%)
Berjaya Sports Toto BHD ............... 16,000 $ 40,931
Carnival Corp. (Class A) .............. 13,900 769,713
Cendant Corp.* ........................ 12,100 415,938
Cyrk, Inc.* ........................... 6,000 58,125
Disney (Walt) Co. ..................... 7,646 757,432
EMI Group PLC ......................... 1,000 8,348
Granada Group PLC ..................... 9,900 151,299
Ladbroke Group PLC .................... 31,084 134,852
NAMCO Ltd. ............................ 200 5,810
Nintendo Co. Ltd. ..................... 400 39,241
Nippon Broadcasting System ............ 1,000 39,548
Toei Co. Ltd. ......................... 1,000 3,641
----------
2,424,878
----------
PHOTO & OPTICAL (0.0%)
Fuji Photo Film Co. ................... 3,000 114,965
Noritsu Koki Co. Ltd. ................. 1,200 29,615
----------
144,580
----------
RETAIL--GENERAL (1.4%)
Aldeasa SA* ........................... 2,000 42,402
Boots Co. PLC ......................... 8,400 120,990
British Airport Authority PLC ......... 17,300 141,577
Dayton Hudson Corp. ................... 19,500 1,316,250
Dickson Concepts International
Ltd. ................................ 18,000 26,249
Fingerhut Companies, Inc. ............. 8,000 171,000
Home Depot, Inc. ...................... 20,800 1,224,600
Kingfisher PLC ........................ 8,641 120,414
Kohls Corp.* .......................... 13,000 885,625
Kokuyo Co. Ltd. ....................... 2,000 34,489
Limited, Inc. ......................... 7,000 178,500
Paris Miki, Inc. ...................... 1,000 10,730
Sato Corp. ............................ 1,200 20,418
Smith (W.H.) Group PLC ................ 2,000 12,785
Vendex International N.V. ............. 1,200 66,224
----------
4,372,253
----------
TOTAL CONSUMER CYCLICALS (4.0%) 12,469,348
----------
CONSUMER NONCYCLICALS
BEVERAGES (0.6%)
Bass PLC .............................. 2,600 40,355
Coca-Cola Co. ......................... 22,580 1,504,393
Diageo PLC ............................ 6,000 55,166
Scottish & Newcastle PLC .............. 11,000 134,759
Whitbread PLC ......................... 11,000 161,060
----------
1,895,733
----------
CONTAINERS (0.5%)
Owens-Illinois, Inc.* ................. 5,000 189,688
Schmalbach Lubeca AG .................. 880 146,752
Sealed Air Corp.* ..................... 20,600 1,272,050
----------
1,608,490
----------
DRUGS (1.7%)
Astra AB (A Shares) ................... 3,500 60,612
Centocor, Inc.* ....................... 28,795 957,434
Daiichi Pharmaceutical Co. ............ 8,000 90,132
Geltex Pharmaceuticals, Inc.* ......... 3,072 81,408
Merck KGAA ............................ 2,100 70,625
Merck & Co., Inc. ..................... 11,434 1,214,863
</TABLE>
88
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Novartis AG ........................ 180 $ 292,092
Orion-Yhtyma Oy (B Shares) ......... 4,500 118,878
Pfizer, Inc. ....................... 22,291 1,662,073
Rohto Pharmaceutical Co. Ltd. ...... 2,000 12,876
Sankyo Co. Ltd. .................... 1,000 22,610
Santen Pharmaceutical Co. Ltd. ..... 3,000 34,489
Schering Plough Corp. .............. 9,700 602,613
Taisho Pharmaceutical Co. .......... 1,000 25,522
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 2,000 42,920
----------
5,289,147
----------
FOODS (0.7%)
Campbell Soup Co. .................. 17,700 1,028,813
Huhtamaki Oy Series I .............. 1,300 53,660
Nestle SA .......................... 131 196,343
Orkla ASA .......................... 930 79,957
Parmalat Finanziaria Spa ........... 59,650 85,311
Rite Aid Corp. ..................... 6,000 352,125
Tyson Foods, Inc. .................. 27,000 553,500
----------
2,349,709
----------
HOSPITAL SUPPLIES & SERVICES (0.7%)
Columbia/HCA Healthcare Corp. 7,500 222,188
Medtronic, Inc. .................... 24,812 1,297,978
PT Tempo Scan Pacific .............. 23,000 1,777
United Healthcare Corp. ............ 11,000 546,563
----------
2,068,506
----------
RETAIL--FOOD (0.2%)
Delhaize-Le Lion SA ................ 980 49,726
Familymart Co. ..................... 4,100 147,063
Promodes ........................... 250 103,722
Santa Isabel S.A. (ADR) ............ 1,000 17,500
Seven-Eleven Japan Co. Ltd. ........ 1,000 70,818
Woolworths Ltd. .................... 61,026 203,945
----------
592,774
----------
SOAPS & TOILETRIES (0.8%)
Avon Products, Inc. ................ 15,880 974,635
Gillette Co. ....................... 16,305 1,637,633
----------
2,612,268
----------
TOBACCO (1.0%)
Imperial Tobacco Group PLC ......... 1,700 10,700
Japan Tobacco, Inc. ................ 21 149,040
Philip Morris Cos., Inc. ........... 58,000 2,628,125
Seita .............................. 2,600 93,312
Swedish Match AB ................... 4,500 15,019
Tabacalera SA--A ................... 1,400 113,489
----------
3,009,685
----------
TOTAL CONSUMER NONCYCLICALS (6.2%) 19,426,312
----------
CREDIT SENSITIVE
BANKS (1.4%)
Allied Irish Bank .................. 26,000 248,113
AMMB Holdings BHD .................. 9,000 5,901
BPI-SGPS SA* ....................... 1,000 24,314
Banco Bilbao Vizcaya SA ............ 6,000 194,158
Banco Santander SA ................. 2,970 99,227
Bangkok Bank Public Co. Ltd. ....... 2,000 4,984
Bank of Tokyo-Mitsubishi Ltd. ...... 2,000 27,591
Banque Nationale de Paris .......... 1,500 79,729
</TABLE>
<TABLE>
<CAPTION>
============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- ----------------------------------------------------------------------------
<S> <C> <C>
Chase Manhattan Corp. .............. 12,800 $1,401,600
Cie Bancaire SA .................... 7 1,134
Citicorp ........................... 9,200 1,163,225
Credito Italiano Spa ............... 48,000 148,016
Dao Heng Bank Group Ltd. ........... 3,000 7,491
Den Norske Bank ASA ................ 24,000 113,082
Erste Bank Der Oesterreichischen
Sparkassen AG* ................... 750 37,377
Forenings Sparbanken AB
(A Shares) ....................... 4,000 90,933
Istituto Mobiliare Italiano ........ 9,400 111,588
Long-Term Credit Bank of Japan 22,000 35,240
Philippine Commercial
International Bank ............... 1,000 2,840
PT Bank Dagang Nasional
Indonesia Tbk .................... 136,000 8,655
Seventy-Seven Bank Co. Ltd. ........ 11,000 78,406
Shizuoka Bank Ltd. ................. 1,000 10,730
Skandinaviska Enskilda Banken
(Series A) ....................... 4,440 56,200
Societe Generale ................... 1,058 144,149
State Bank of India (GDR)+ ......... 2,700 49,140
Suncorp-Metway Ltd.* ............... 11,149 27,963
Thai Farmers Bank Public
Co.--Warrants* ................... 375 40
Toho Bank .......................... 1,000 3,985
Wing Hang Bank Ltd. ................ 18,000 50,871
Yamaguchi Bank ..................... 7,000 85,840
----------
4,312,522
----------
FINANCIAL SERVICES (2.2%)
Aiful Corp.* ....................... 400 27,132
Associates First Capital Corp. ..... 5,000 355,625
Beneficial Corp. ................... 6,250 519,531
Credit Saison Co. .................. 2,000 49,358
Fleet Financial Group, Inc. ........ 4,700 352,206
Green Tree Financial Corp. ......... 23,800 623,263
MBNA Corp. ......................... 57,825 1,579,345
Merrill Lynch & Co., Inc. .......... 8,900 649,144
Morgan Stanley, Dean Witter,
Discover & Co. ................... 38,100 2,252,663
Newcourt Credit Group, Inc.* ....... 2,500 83,438
Nichiei Co. Ltd. ................... 100 10,653
Peregrine Investment Holdings
Ltd. ............................. 52,000 36,908
PMI Group, Inc. .................... 1,700 122,931
Sanyo Shinpan Finance Co. Ltd. ..... 200 8,845
Takefuji Corp. ..................... 600 27,546
Worms Et Compagnie ................. 200 14,788
----------
6,713,376
----------
INSURANCE (1.6%)
ASR Verzekeringsgroep N.V. ......... 1,100 59,838
Assurances Generale de France ...... 4,618 244,692
Catalana Occidente SA .............. 1,000 50,935
Corpacion Mapfre Cia Inter SA ...... 1,200 31,821
Fortis Amev N.V. ................... 4,438 193,485
General Accident PLC ............... 4,700 81,483
ING Groep N.V. ..................... 5,500 231,647
Irish Life PLC ..................... 20,000 113,605
MGIC Investment Corp. .............. 6,000 399,000
</TABLE>
89
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
PennCorp Financial Group, Inc. ...... 16,700 $ 595,981
Providian Financial Corp. ........... 8,000 361,500
QBE Insurance Group Ltd. ............ 21,500 96,740
Royal & Sun Alliance Insurance
Group PLC ......................... 9,651 97,219
Travelers Group, Inc. ............... 39,249 2,114,540
Trygg-Hansa AB (B Shares) ........... 3,800 116,777
United Assurance Group PLC .......... 8,100 69,882
Willis Corroon Group PLC
(ADR) ............................. 6,000 73,875
Zurich Versicherungs ................ 246 117,231
----------
5,050,251
----------
REAL ESTATE (0.4%)
Boston Properties, Inc. ............. 9,000 297,563
City Developments Ltd. .............. 1,000 4,639
Daibiru Corp. ....................... 1,000 7,319
Glenborough Realty Trust, Inc. ...... 10,000 296,250
Spieker Properties, Inc. ............ 10,000 428,750
Sumitomo Realty &
Development Co. Ltd. .............. 1,000 5,748
Unibail SA .......................... 950 94,866
Vornado Realty Trust ................ 2,500 117,344
----------
1,252,479
----------
UTILITY--ELECTRIC (0.4%)
AES Corp.* .......................... 13,700 638,763
Cia Paranaense de Energia-Copel
(ADR) ............................. 7,000 95,813
Energy Group PLC .................... 6,550 72,332
Hong Kong Electric Holdings
Ltd. .............................. 20,000 76,010
Malakoff BHD ........................ 10,000 20,825
Manila Electric Co. ................. 1,860 6,154
National Grid Group PLC ............. 1,000 4,749
Powergen PLC ........................ 11,400 148,371
Veba AG ............................. 3,500 238,333
----------
1,301,350
----------
UTILITY--GAS (0.1%)
Anglian Water PLC ................... 14,080 192,043
Scottish Power PLC .................. 25,500 225,445
----------
417,488
----------
UTILITY--TELEPHONE (0.8%)
British Telecommunications PLC....... 20,100 158,051
Cable & Wireless PLC ................ 12,300 108,138
Philippine Long Distance
Telephone Co. ..................... 1,000 21,728
Telecom Italia Spa .................. 35,500 226,767
Telefonica de Espana ................ 6,600 188,448
Telekom Malaysia BHD ................ 16,500 48,785
Telephone & Data Systems, Inc. ...... 7,500 349,219
Teleport Communications Group,
Inc. (Class A)* ................... 23,700 1,300,538
----------
2,401,674
----------
TOTAL CREDIT SENSITIVE (6.9%) ..... 21,449,140
----------
ENERGY
COAL & GAS PIPELINES (0.0%)
BG PLC .............................. 18,529 83,431
BG PLC `B'* ......................... 21,000 10,008
OMV AG .............................. 300 41,563
----------
135,002
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
OIL--DOMESTIC (0.8%)
Apache Corp. ........................ 15,100 $ 529,444
Murphy Oil Corp. .................... 5,000 270,938
Tom Brown, Inc.* .................... 7,500 144,375
Union Pacific Resources Group,
Inc. .............................. 20,100 487,425
USX-Marathon Group .................. 33,800 1,140,750
----------
2,572,932
----------
OIL--INTERNATIONAL (0.6%)
British Petroleum Co. PLC ........... 11,100 145,925
Elf Aquitaine ....................... 2,110 245,410
Gulf Canada Resources Ltd.* ......... 112,700 788,900
Gulf Indonesia Resources Ltd.* ...... 3,500 77,000
Orogen Minerals Ltd. ................ 5,160 10,084
Repsol SA ........................... 1,410 60,158
Shell Transport & Trading Co.
PLC ............................... 20,100 145,334
Total SA--B ......................... 2,881 313,542
----------
1,786,353
----------
OIL--SUPPLIES & CONSTRUCTION (1.9%)
Baker Hughes, Inc. .................. 10,250 447,156
BJ Services Co.* .................... 9,000 647,438
Canadian Fracmaster Ltd. ............ 5,900 86,677
Canadian Fracmaster Ltd.
Installment Receipt*+ ............. 13,500 113,330
Dresser Industries, Inc. ............ 12,000 503,250
Fugro N.V.* ......................... 2,000 60,957
Halliburton Co. ..................... 24,900 1,293,244
Nabors Industries, Inc.* ............ 43,000 1,351,813
Noble Drilling Corp.* ............... 43,400 1,329,125
Parker Drilling Co.* ................ 9,000 109,688
----------
5,942,678
----------
TOTAL ENERGY (3.3%) ............... 10,436,965
----------
TECHNOLOGY
ELECTRONICS (1.4%)
Altera Corp.* ....................... 11,100 367,688
Applied Materials, Inc.* ............ 17,600 530,200
Cisco Systems, Inc.* ................ 42,600 2,374,950
Fujimi, Inc. ........................ 300 12,761
Hoya Corp. .......................... 1,000 31,424
Leitch Technology Corp.* ............ 1,000 30,081
Micronics Japan Co. Ltd. ............ 1,000 17,245
National Semiconductor Corp.* ....... 20,900 542,094
Nikon Corp. ......................... 1,000 9,887
Rohm Co. Ltd. ....................... 1,000 101,935
Sankyo Engineering Co. .............. 1,000 3,066
SMH AG .............................. 540 72,838
Sterling Commerce, Inc.* ............ 5,000 192,188
TDK Corp. ........................... 1,000 75,417
Tokyo Cathode Laboratory Co.* 1,000 9,887
TOWA Corp. .......................... 100 2,077
Varitronix International Ltd. ....... 55,000 94,399
Yamaichi Electronics Co. Ltd. ....... 1,000 16,095
Yokogawa Electric Corp. ............. 2,000 12,355
----------
4,496,587
----------
OFFICE EQUIPMENT (1.1%)
Barco N.V. .......................... 469 86,076
Ceridian Corp.* ..................... 11,000 503,938
Compaq Computer Corp. ............... 22,300 1,258,556
</TABLE>
90
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Dell Computer Corp.* ................. 14,100 $1,184,400
Policy Management Systems
Corp.* ............................. 6,300 438,244
----------
3,471,214
----------
OFFICE EQUIPMENT SERVICES (0.2%)
Data Communication System Co. 1,000 13,183
First Data Corp. ..................... 14,600 427,050
Fuji Soft ABC, Inc. .................. 600 20,556
INES Corp. ........................... 1,000 7,741
Nippon System Development ............ 600 12,324
Oracle Corp.* ........................ 13,450 300,103
----------
780,957
----------
TELECOMMUNICATIONS (1.8%)
ADC Telecommunications, Inc.* 25,000 1,043,750
Asia Satellite
Telecommunications
Holdings Ltd. ...................... 18,000 30,778
DDI Corp. ............................ 25 66,105
DSC Communications Corp.* ............ 4,000 96,000
Energis PLC* ......................... 22,000 92,189
Lucent Technologies, Inc. ............ 9,500 758,813
MCI Communications Corp. ............. 8,500 363,906
Nextel Communications, Inc.
(Class A)* ......................... 10,900 283,400
PT Indosat ........................... 45,000 83,455
PT Telekomunikasi Indonesia .......... 33,000 17,550
SK Telecom Co. Ltd. (ADR)* ........... 9,754 63,402
Tele-Communications TCI
Ventures Group (Class A)* .......... 12,000 339,750
Tellabs, Inc.* ....................... 9,100 481,163
Videsh Sanchar Nigam Ltd.
(GDR) .............................. 1,700 21,973
Videsh Sanchar Nigam Ltd.
(GDR)+* ............................ 2,000 27,860
Vodafone Group PLC ................... 15,000 108,212
WorldCom, Inc.* ...................... 53,525 1,619,131
----------
5,497,437
----------
TOTAL TECHNOLOGY (4.5%) ............ 14,246,195
----------
DIVERSIFIED
MISCELLANEOUS (1.0%)
BTR PLC .............................. 20,000 60,474
Cie Generale de Eaux ................. 943 131,614
Citic Pacific Ltd. ................... 7,000 27,823
First Pacific Co. .................... 42,734 20,680
Montedison Spa ....................... 126,000 113,179
Smith (Howard) Ltd. .................. 4,000 33,198
Swire Pacific Ltd. (Class A) ......... 7,000 38,392
Tomkins PLC .......................... 9,000 43,038
Tyco International Ltd. .............. 41,222 1,857,566
U.S. Industries, Inc. ................ 30,750 926,344
----------
TOTAL DIVERSIFIED (1.0%) ........... 3,252,308
----------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (30.6%)
(Cost $78,384,870).................. 95,822,541
----------
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
PREFERRED STOCKS:
BASIC MATERIALS (0.0%)
CHEMICALS
Henkel KGAA .......................... 1,694 $ 105,937
----------
BUSINESS SERVICES (0.0%)
PRINTING, PUBLISHING &
BROADCASTING
ProSieben Media AG* .................. 500 22,930
----------
CONSUMER CYCLICALS (0.0%)
RETAIL--GENERAL
Hornbach Holding AG .................. 920 63,415
----------
TECHNOLOGY (0.1%)
TELECOMMUNICATIONS
Nokia Oyj (A Shares) ................. 1,500 106,495
----------
TOTAL PREFERRED STOCKS (0.1%)
(Cost $217,889)..................... 298,777
----------
PRINCIPAL
AMOUNT
---------
LONG-TERM DEBT SECURITIES:
CONSUMER NONCYCLICALS (2.0%)
MEDIA & CABLE
Time Warner Entertainment Co.
8.375%, 03/15/23 ................... $5,625,000 6,419,137
----------
CREDIT SENSITIVE
BANKS (2.6%)
Chase Manhattan Corp.
8.625%, 05/01/02 ................... 5,500,000 5,979,160
St. George Bank Ltd.
7.15%, 10/15/05+ ................... 2,000,000 2,060,440
Sumitomo Bank International
0.75% Conv., 05/31/01 ............. Yen 11,000,000 88,312
----------
8,127,912
----------
FINANCIAL SERVICES (1.9%)
Ford Motor Credit Co.
6.125%, 01/09/06 ................... $6,000,000 5,859,180
----------
FOREIGN GOVERNMENT (0.8%)
Province of Quebec
7.5%, 07/15/23 ..................... 2,500,000 2,686,375
----------
MORTGAGE RELATED (11.4%)
Federal National Mortgage
Association:
6.0%, 11/01/10 ..................... 14,295,932 14,063,622
6.5%, 01/01/11 ..................... 3,346,139 3,348,230
7.0%, 05/01/26 ..................... 8,403,540 8,461,315
7.0%, 09/01/27 ..................... 8,995,060 9,056,901
Premier Auto Trust
7.15%, 02/04/99 .................... 875,160 875,974
----------
35,806,042
----------
U.S. GOVERNMENT (33.1%)
U.S. Treasury:
6.125% Note, 08/31/98 .............. 2,400,000 2,408,250
6.375% Note, 05/15/99 .............. 19,100,000 19,273,103
6.0% Note, 08/15/00 ................ 17,000,000 17,122,195
</TABLE>
91
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
=================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------
<S> <C> <C>
6.25% Note, 04/30/01 .......... $15,600,000 $ 15,843,750
6.5% Note, 08/31/01 ........... 7,100,000 7,275,285
6.5% Note, 05/31/02 ........... 14,560,000 14,987,700
6.875% Note, 05/15/06 ......... 7,430,000 7,952,425
6.125% Bond, 11/15/27 ......... 18,310,000 18,813,525
------------
103,676,233
------------
UTILITY--ELECTRIC (2.2%)
Consolidated Edison
6.45%, 12/01/07 ............... 6,750,000 6,767,280
------------
TOTAL CREDIT SENSITIVE (52.0%) 162,923,022
------------
TOTAL LONG-TERM DEBT SECURITIES (54.0%)
(Amortized Cost $167,120,488) 169,342,159
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (14.6%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ............ 45,800,000 45,792,366
------------
TOTAL SHORT-TERM DEBT SECURITIES (14.6%)
(Amortized Cost $45,792,366) .. 45,792,366
------------
TOTAL INVESTMENTS (99.3%)
(Cost/Amortized Cost $291,515,613) 311,255,843
OTHER ASSETS
LESS LIABILITIES (0.7%) ....... 2,285,071
------------
NET ASSETS (100.0%) ............. $313,540,914
------------
</TABLE>
<TABLE>
<S> <C>
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
As a Percentage of Total Investments
Australia .................................. 0.1%
Canada ..................................... 0.1
France ..................................... 0.6
Germany .................................... 0.3
Japan ...................................... 1.1
Netherlands ................................ 0.4
Scandinavia ................................ 0.7
Southeast Asia ............................. 0.2
Switzerland ................................ 0.3
United Kingdom ............................. 1.4
United States** ............................ 94.3
Other European Countries ................... 0.5
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Includes Short-Term Debt Securities of 14.7%.
+ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $2,296,466 or
0.7% of net assets.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
92
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
====================================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- ------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
BASIC MATERIALS
CHEMICALS (0.4%)
Akzo Nobel N.V. ......................... 5,000 $ 862,082
Bayer AG ................................ 40,500 1,502,752
Ciba Specialty Chemicals AG* ............ 9,100 1,084,149
Hitachi Chemical Co. Ltd. ............... 159,000 944,434
Holliday Chemical Holdings PLC 214,000 808,834
Kuraray Co. Ltd. ........................ 96,000 794,635
Nippon Chemi-Con Corp. .................. 62,000 143,982
Toagosei Co. Ltd. ....................... 158,000 222,817
----------
6,363,685
----------
CHEMICALS--SPECIALTY (0.0%)
NGK Insulators .......................... 92,000 817,934
----------
METALS & MINING (0.1%)
Bethlehem Steel Corp.* .................. 135,000 1,164,375
Nord Resources Corp.* ................... 27,939 50,639
Randgold Resources Ltd.
(GDR)+* ............................... 30,300 159,075
Toho Titanium* .......................... 11,000 92,738
----------
1,466,827
----------
PAPER (0.2%)
Jefferson Smurfit Corp.* ................ 39,600 559,350
KNP BT (Kon) N.V. ....................... 53,000 1,220,674
Nippon Paper Industries Co. ............. 10,000 39,241
Stone Container Corp.* .................. 57,900 604,331
UPM-Kymmene Oy .......................... 25,320 506,312
----------
2,929,908
----------
STEEL (0.1%)
Koninklijke Hoogovens N.V. .............. 20,000 819,668
NatSteel Ltd. ........................... 220,000 298,305
Pohang Iron & Steel Co. Ltd.
(ADR) ................................. 15,000 261,562
Rautaruukki Oy .......................... 72,872 588,222
Usinor Sacilor .......................... 47,000 678,624
----------
2,646,381
----------
TOTAL BASIC MATERIALS (0.8%) .......... 14,224,735
----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.8%)
USA Waste Services, Inc.* ............... 162,900 6,393,825
U.S. Filter Corp.* ...................... 45,000 1,347,187
Waste Management, Inc. .................. 217,200 5,973,000
----------
13,714,012
----------
PRINTING, PUBLISHING &
BROADCASTING (1.7%)
Cablevision Systems Corp.
(Class A)* ............................ 43,500 4,165,125
Carlton Communications PLC .............. 134,500 1,038,815
CBS Corp. ............................... 167,500 4,930,781
Liberty Media Group (Class A)* 218,700 7,927,875
New Straits Times Press BHD ............. 65,000 80,550
New York Times Co. (Class A) ............ 87,840 5,808,420
Nippon Television Network
Corp. ................................. 600 176,126
Reader's Digest Association, Inc.
(Class A) ............................. 40,000 945,000
</TABLE>
<TABLE>
<CAPTION>
===================================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -----------------------------------------------------------------------------------
<S> <C> <C>
Reed International PLC .................. 5,000 $ 50,121
Television Broadcasts Ltd. .............. 10,000 28,520
Time Warner, Inc. ....................... 58,100 3,602,200
Tokyo Broadcasting System, Inc. 7,000 88,523
United News & Media PLC ................. 95,571 1,088,372
----------
29,930,428
----------
PROFESSIONAL SERVICES (0.0%)
Asatsu, Inc. ............................ 3,000 43,227
Brisa-Auto Estradas de Portugal
SA* ................................... 2,800 100,301
Meitec .................................. 11,000 309,408
----------
452,936
----------
TRUCKING, SHIPPING (0.4%)
Bergesen Dy AS (A Shares) ............... 47,300 1,114,327
Frontline Ltd.* ......................... 140,000 564,868
Knightsbridge Tankers Ltd. .............. 64,500 1,826,156
OMI Corp.* .............................. 313,200 2,877,525
----------
6,382,876
----------
TOTAL BUSINESS SERVICES (2.9%) 50,480,252
----------
CAPITAL GOODS
AEROSPACE (0.1%)
British Aerospace ....................... 50,710 1,445,810
----------
BUILDING & CONSTRUCTION (0.3%)
Beazer Group PLC ........................ 187,000 494,750
Bouygues ................................ 10,708 1,213,401
Daito Trust Construction Co.
Ltd. .................................. 65,000 397,049
GTM Entrepose ........................... 9,953 669,762
Makita Corp. ............................ 89,000 852,654
National House Industrial Co. ........... 53,000 363,556
Sho Bond Corp. .......................... 10,000 180,878
Suido Kiko Kaisha ....................... 1,000 2,008
Societe Technip ......................... 10,350 1,092,008
Toda Corp. .............................. 143,000 389,078
----------
5,655,144
----------
BUILDING MATERIALS &
FOREST PRODUCTS (0.5%)
BPB PLC ................................. 103,100 576,044
Fujikura Ltd. ........................... 34,000 225,147
Holderbank Financiere Glaris
AG .................................... 1,385 1,130,380
Martin Marietta Materials, Inc. ......... 110,000 4,021,875
Matsushita Electric Works Ltd. .......... 104,000 900,709
Nichiha Corp. ........................... 14,600 89,295
Rugby Group PLC ......................... 447,460 1,000,026
----------
7,943,476
----------
ELECTRICAL EQUIPMENT (1.3%)
Daikin Industries Ltd. .................. 140,000 527,917
General Electric Co. .................... 231,000 16,949,625
Johnson Electric Holdings Ltd. .......... 258,000 742,470
Legrand SA .............................. 3,800 757,032
Mabuchi Motor Co. ....................... 1,700 86,384
Pioneer Electric Corp. .................. 66,000 1,016,746
Sony Corp. .............................. 16,500 1,466,948
Sumitomo Electric Industries ............ 56,000 763,978
----------
22,311,100
----------
</TABLE>
93
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
MACHINERY (1.6%)
Allied Signal, Inc. .................. 152,400 $ 5,934,075
Cie Generale de Geophysique
SA (ADR)* .......................... 56,108 1,437,768
Coltec Industries, Inc.* ............. 115,000 2,666,562
Fujitec Co. Ltd. ..................... 96,000 529,757
Ishikawajima Harima Heavy
Industries Co. Ltd. ................ 130,000 194,290
KSB AG ............................... 2,600 570,889
Legris Industries SA ................. 17,300 600,764
Mitsubishi Heavy Industries Ltd. 80,000 333,550
Nitta Corp. .......................... 8,000 80,935
Nitto Kohki Co. Ltd. ................. 4,000 43,533
Rauma Oy ............................. 1,234 19,243
Schindler Holding AG
Participating Certificate .......... 915 953,530
Schindler Holding AG
Registered ......................... 450 483,430
Siebe PLC ............................ 50,000 981,874
SMC Corp. ............................ 2,000 176,279
Stork N.V. ........................... 18,000 621,409
TI Group PLC ......................... 123,795 943,928
United Technologies Corp. ............ 158,100 11,511,656
Valmet Oy* ........................... 31,000 427,669
-----------
28,511,141
-----------
TOTAL CAPITAL GOODS (3.8%) ......... 65,866,671
-----------
CONSUMER CYCLICALS
AIRLINES (0.0%)
Lufthansa AG ......................... 21,000 394,563
Singapore Airlines Ltd. .............. 12,000 78,501
Virgin Express Holdings PLC
(ADR)* ............................. 10,400 215,800
-----------
688,864
-----------
APPAREL, TEXTILE (0.1%)
Liz Claiborne, Inc. .................. 30,000 1,254,375
Onward Kashiyama Co. Ltd. ............ 79,000 914,275
-----------
2,168,650
-----------
AUTO RELATED (0.5%)
Continental AG ....................... 55,000 1,238,222
Minebea Co. Ltd. ..................... 14,000 150,220
NGK Spark Plug Co. ................... 69,000 391,339
Republic Industries, Inc.* ........... 219,700 5,121,756
Sumitomo Rubber Industries,
Inc. ............................... 129,000 544,771
Toyoda Automatic Loom Works
Ltd. ............................... 70,000 1,287,603
-----------
8,733,911
-----------
AUTOS & TRUCKS (0.4%)
Bajaj Auto Ltd. (GDR) ................ 7,500 148,125
Harley-Davidson, Inc. ................ 234,000 6,405,750
Honda Motor Co. Ltd. ................. 1,000 36,712
UMW Holdings BHD ..................... 188,000 142,589
Volkswagen AG ........................ 1,000 558,659
-----------
7,291,835
-----------
FOOD SERVICES, LODGING (0.9%)
Accor SA ............................. 1,400 260,297
Choice Hotels Scandinavia ASA*+ 108,000 365,566
Compass Group PLC .................... 144,200 1,774,864
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Host Marriott Corp.* ................. 138,200 $ 2,712,175
ITT Corp.* ........................... 101,000 8,370,375
John Q Hammons Hotels, Inc.
(Class A)* ......................... 191,800 1,726,200
-----------
15,209,477
-----------
HOUSEHOLD FURNITURE,
APPLIANCES (0.8%)
Hunter Douglas N.V. .................. 22,000 770,350
Moulinex* ............................ 17,000 420,022
Sunbeam Corp. ........................ 295,500 12,447,937
-----------
13,638,309
-----------
LEISURE RELATED (1.4%)
Berjaya Sports Toto BHD .............. 140,000 358,144
Carnival Corp. (Class A) ............. 116,500 6,451,187
Cendant Corp.* ....................... 125,300 4,307,187
Cyrk, Inc.* .......................... 220,600 2,137,063
Disney (Walt) Co. .................... 63,100 6,250,844
EMI Group PLC ........................ 12,000 100,176
Granada Group PLC .................... 88,900 1,358,635
Hoyts Cinemas Group+ ................. 45,000 79,151
Ladbroke Group PLC ................... 279,118 1,210,904
NAMCO Ltd. ........................... 1,000 29,048
Nintendo Co. Ltd. .................... 1,000 98,103
Nippon Broadcasting System ........... 5,000 197,739
Toei Co. Ltd. ........................ 8,000 29,124
@Entertainment, Inc.* ................ 57,500 639,687
-----------
23,246,992
-----------
PHOTO & OPTICAL (0.1%)
Fuji Photo Film Co. .................. 26,000 996,359
Noritsu Koki Co. Ltd. ................ 11,200 276,405
-----------
1,272,764
-----------
RETAIL--GENERAL (2.1%)
Aldeasa SA* .......................... 16,494 349,692
Boots Co. PLC ........................ 74,700 1,075,946
BAA PLC .............................. 154,200 1,261,920
Dayton Hudson Corp. .................. 157,000 10,597,500
Dickson Concepts International
Ltd. ............................... 161,000 234,779
Fingerhut Companies, Inc. ............ 105,500 2,255,062
Home Depot, Inc. ..................... 163,300 9,614,287
Kingfisher PLC ....................... 76,163 1,061,348
Kohl's Corp.* ........................ 93,000 6,335,625
Kokuyo Co. Ltd. ...................... 25,000 431,117
Limited, Inc. ........................ 100,000 2,550,000
Paris Miki, Inc. ..................... 3,800 40,774
Sato Corp. ........................... 8,800 149,730
Smith (W.H.) Group PLC ............... 25,000 159,811
Vendex International N.V. ............ 11,000 607,057
-----------
36,724,648
-----------
TOTAL CONSUMER CYCLICALS (6.3%) 108,975,450
-----------
CONSUMER NONCYCLICALS
BEVERAGES (0.9%)
Bass PLC ............................. 26,400 409,755
Coca-Cola Co. ........................ 183,120 12,200,370
Diageo PLC ........................... 58,000 533,269
Scottish & Newcastle PLC ............. 100,000 1,225,083
Whitbread PLC ........................ 92,500 1,354,370
-----------
15,722,847
-----------
</TABLE>
94
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
CONTAINERS (0.8%)
Owens-Illinois, Inc.* .............. 50,000 $ 1,896,875
Schmalbach Lubeca AG ............... 8,300 1,384,141
Sealed Air Corp.* .................. 164,500 10,157,875
-----------
13,438,891
-----------
DRUGS (2.5%)
Astra AB (A Shares) ................ 30,000 519,528
Centocor, Inc.* .................... 237,503 7,896,975
Daiichi Pharmaceutical Co. ......... 79,000 890,056
Merck KGAA ......................... 18,700 628,895
Merck & Co., Inc. .................. 92,160 9,792,000
Novartis AG ........................ 1,800 2,920,917
Orion-Yhtyma Oy (B Shares) ......... 37,800 998,578
Pfizer, Inc. ....................... 182,112 13,578,726
Rohto Pharmaceutical Co. Ltd. ...... 9,000 57,942
Sankyo Co. Ltd. .................... 6,000 135,658
Santen Pharmaceutical Co. Ltd. ..... 22,000 252,922
Schering Plough Corp. .............. 80,000 4,970,000
SmithKline Beecham PLC ............. 10,000 102,378
Taisho Pharmaceutical Co. .......... 4,000 102,089
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 21,000 450,661
-----------
43,297,325
-----------
FOODS (1.1%)
Campbell Soup Co. .................. 136,335 7,924,472
Huhtamaki Oy Series I .............. 11,550 476,752
Nestle SA .......................... 1,150 1,723,622
Orkla ASA `A' ...................... 8,300 713,599
Parmalat Finanziaria Spa ........... 503,700 720,385
Rite Aid Corp. ..................... 40,000 2,347,500
Tyson Foods, Inc. .................. 225,000 4,612,500
-----------
18,518,830
-----------
HOSPITAL SUPPLIES & SERVICES (1.0%)
Columbia/HCA Healthcare Corp. 90,000 2,666,250
Medtronic, Inc. .................... 202,906 10,614,520
PT Tempo Scan Pacific .............. 206,000 15,918
United Healthcare Corp. ............ 90,000 4,471,875
-----------
17,768,563
-----------
RETAIL--FOOD (0.4%)
Delhaize-Le Lion SA ................ 8,800 446,520
Familymart Co. ..................... 88,500 3,174,401
Promodes ........................... 2,200 912,752
Santa Isabel S.A. (ADR) ............ 3,000 52,500
Seven-Eleven Japan Co. Ltd. ........ 4,000 283,273
Woolworths Ltd. .................... 569,991 1,904,871
-----------
6,774,317
-----------
SOAPS & TOILETRIES (1.2%)
Avon Products, Inc. ................ 125,720 7,716,065
Gillette Corp. ..................... 130,310 13,088,011
-----------
20,804,076
-----------
TOBACCO (1.5%)
Imperial Tobacco Group PLC ......... 11,600 73,009
Japan Tobacco, Inc. ................ 197 1,398,138
Philip Morris Cos., Inc. ........... 467,900 21,201,719
Seita .............................. 29,200 1,047,969
Swedish Match AB ................... 54,700 182,565
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Tabacalera SA--A ................... 11,000 $ 891,697
-----------
24,795,097
-----------
TOTAL CONSUMER NONCYCLICALS (9.4%) 161,119,946
-----------
CREDIT SENSITIVE
BANKS (2.1%)
Allied Irish Bank .................. 225,000 2,147,134
AMMB Holdings BHD .................. 78,000 51,138
Banco Bilbao Vizcaya SA ............ 54,900 1,776,547
BPI-SGPS SA* ....................... 12,000 291,769
Banco Santander SA ................. 29,100 972,228
Bangkok Bank Public Ltd. ........... 20,000 49,844
Bank of Tokyo-Mitsubishi Ltd. ...... 15,000 206,936
Banque Nationale de Paris .......... 13,700 728,193
Chase Manhattan Corp. .............. 101,300 11,092,350
Citicorp ........................... 75,700 9,571,319
Credito Italiano Spa ............... 500,000 1,541,832
Dao Heng Bank Group Ltd. ........... 30,000 74,913
Den Norske Bank ASA ................ 201,000 947,061
Erste Bank Der
Oesterreichischen Sparkassen
AG* .............................. 3,740 186,386
Forenings Sparbanken AB
(A Shares) ....................... 40,000 909,331
Istituto Mobiliare Italiano ........ 84,700 1,005,483
Long-Term Credit Bank of Japan 230,000 368,423
Philippine Commercial
International Bank ............... 5,000 14,198
PT Bank Dagang Nasional
Indonesia Tbk .................... 1,230,000 78,273
Seventy-Seven Bank Ltd. ............ 123,000 876,720
Shizuoka Bank Ltd. ................. 4,000 42,920
Skandinaviska Enskilda Banken
(Series A) ....................... 25,370 321,123
Societe Generale ................... 9,028 1,230,034
State Bank of India (GDR)+ ......... 27,000 491,400
Sumitomo Bank Ltd. ................. 8,000 91,358
Suncorp-Metway Ltd.* ............... 74,330 186,425
Thai Farmers Bank Public
Co.--Warrants* ................... 2,875 173
Toho Bank .......................... 10,000 39,854
United Overseas Bank Ltd. .......... 4,000 22,242
Wing Hang Bank Ltd. ................ 161,000 455,014
Yamaguchi Bank ..................... 70,000 858,402
-----------
36,629,023
-----------
FINANCIAL SERVICES (3.2%)
Aiful Corp.* ....................... 2,400 162,790
Associates First Capital Corp. ..... 43,000 3,058,375
Beneficial Corp. ................... 50,800 4,222,750
Credit Saison Co. .................. 14,400 355,378
Fleet Financial Group, Inc. ........ 46,300 3,469,606
Green Tree Financial Corp. ......... 153,400 4,017,162
MBNA Corp. ......................... 481,125 13,140,727
Merrill Lynch & Co., Inc. .......... 72,400 5,280,675
Morgan Stanley, Dean Witter,
Discover & Co. ................... 305,700 18,074,513
Newcourt Credit Group Inc.* ........ 25,000 834,375
Nichiei Co. Ltd. ................... 500 53,267
Peregrine Investment Holdings
Ltd. ............................. 472,000 335,011
PMI Group, Inc. .................... 14,600 1,055,763
</TABLE>
95
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Sanyo Shinpan Finance Co. Ltd. ......... 1,200 $ 53,068
Takefuji Corp. ......................... 5,000 229,546
Worms Et Compagnie ..................... 2,500 184,847
-----------
54,527,853
-----------
INSURANCE (3.0%)
ASR Verzekeringsgroep N.V. ............. 10,000 543,979
Assurances Generales de France 37,995 2,013,227
Catalana Occidente SA .................. 1,030 52,463
Corporacion Mapfre Cia Inter
SA ................................... 14,000 371,250
Fortis Amev N.V. ....................... 37,281 1,625,350
General Accident PLC ................... 42,200 731,616
ING Groep N.V. ......................... 50,000 2,105,886
Irish Life PLC ......................... 100,000 568,025
Life Re Corp. .......................... 140,500 9,158,844
MGIC Investment Corp. .................. 67,000 4,455,500
PennCorp Financial Group, Inc. ......... 135,700 4,842,794
Providian Financial Corp. .............. 65,000 2,937,188
QBE Insurance Group Ltd. ............... 201,250 905,536
Royal & Sun Alliance Insurance
Group PLC ............................ 100,936 1,016,774
Travelers Group, Inc. .................. 320,199 17,250,721
Trygg-Hansa AB (B Shares) .............. 3,600 110,631
United Assurance Group PLC ............. 71,600 617,718
Willis Corroon Group PLC
(ADR) ................................ 87,800 1,081,037
Zurich Versicherungs ................... 2,130 1,015,050
-----------
51,403,589
-----------
REAL ESTATE (0.5%)
Boston Properties, Inc. ................ 84,200 2,783,863
City Developments Ltd. ................. 8,000 37,110
Daibiru Corp. .......................... 4,000 29,278
Glenborough Realty Trust, Inc. ......... 70,000 2,073,750
Spieker Properties, Inc. ............... 40,000 1,715,000
Sumitomo Realty &
Development Co. Ltd. ................. 16,000 91,972
Unibail SA ............................. 7,880 786,887
Vornado Realty Trust ................... 20,000 938,750
-----------
8,456,610
-----------
UTILITY--ELECTRIC (0.7%)
AES Corp.* ............................. 113,800 5,305,925
Cia Paranaense de Energia-Copel
(ADR) ................................ 54,000 739,125
Energy Group PLC ....................... 58,840 649,770
Hong Kong Electric Holdings
Ltd. ................................. 179,000 680,288
Malakoff BHD ........................... 90,000 187,428
Manila Electric Co. .................... 16,620 54,990
National Grid Group PLC ................ 20,000 94,983
Powergen PLC ........................... 108,000 1,405,617
Veba AG ................................ 35,000 2,383,335
-----------
11,501,461
-----------
UTILITY--GAS (0.2%)
Anglian Water PLC ...................... 128,600 1,754,030
Scottish Power PLC ..................... 220,000 1,945,015
-----------
3,699,045
-----------
</TABLE>
<TABLE>
<CAPTION>
==================================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- ----------------------------------------------------------------------------------
<S> <C> <C>
UTILITY--TELEPHONE (1.1%)
British Telecommunications PLC.......... 186,600 $ 1,467,275
Cable & Wireless PLC ................... 109,200 960,051
Philippine Long Distance
Telephone Co. ........................ 10,000 217,284
Telecom Italia Spa ..................... 311,550 1,990,116
Telefonica de Espana ................... 57,000 1,627,502
Telekom Malaysia BHD ................... 150,000 443,502
Telephone & Data Systems, Inc. ......... 39,700 1,848,531
Teleport Communications Group,
Inc. (Class A)* ...................... 193,400 10,612,825
-----------
19,167,086
-----------
TOTAL CREDIT SENSITIVE (10.8%) 185,384,667
-----------
ENERGY
COAL & GAS PIPELINES (0.1%)
BG PLC ................................. 164,117 738,963
BG PLC-`B'* ............................ 186,000 88,640
OMV AG ................................. 1,400 193,960
-----------
1,021,563
-----------
OIL--DOMESTIC (1.5%)
Apache Corp. ........................... 130,400 4,572,150
Louis Dreyfus Natural Gas
Corp.* ............................... 245,400 4,585,913
Murphy Oil Corp. ....................... 40,000 2,167,500
Tom Brown, Inc.* ....................... 121,000 2,329,250
Union Pacific Resources Group,
Inc. ................................. 176,800 4,287,400
USX-Marathon Group ..................... 259,700 8,764,875
-----------
26,707,088
-----------
OIL--INTERNATIONAL (1.1%)
AO Tatneft (ADR) ....................... 29,000 4,132,500
British Petroleum Co. PLC .............. 98,700 1,297,553
Elf Aquitaine .......................... 18,800 2,186,591
Gulf Canada Resources Ltd.* ............ 916,000 6,412,000
Gulf Indonesia Resources Ltd.* ......... 30,700 675,400
Petroleo Brasileiro S.A. (ADR) ......... 15,000 350,799
Repsol SA .............................. 13,950 595,176
Shell Transport & Trading Co.
PLC .................................. 178,950 1,293,905
Total SA--B ............................ 26,234 2,855,075
-----------
19,798,999
-----------
OIL--SUPPLIES & CONSTRUCTION (2.8%)
Baker Hughes, Inc. ..................... 90,000 3,926,250
BJ Services Co.* ....................... 30,000 2,158,125
Canadian Fracmaster Ltd. ............... 47,100 691,944
Canadian Fracmaster Ltd.
Installment Receipt*+ ................ 133,800 1,123,229
Dresser Industries, Inc. ............... 133,900 5,615,431
Fugro N.V.* ............................ 10,000 304,786
Halliburton Co. ........................ 186,400 9,681,150
Nabors Industries, Inc.* ............... 362,900 11,408,669
Noble Drilling Corp.* .................. 383,700 11,750,813
Parker Drilling Co.* ................... 92,300 1,124,906
-----------
47,785,303
-----------
TOTAL ENERGY (5.5%) .................. 95,312,953
-----------
</TABLE>
96
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY
ELECTRONICS (2.1%)
Altera Corp.* ..................... 91,000 $ 3,014,375
Applied Materials, Inc.* .......... 153,600 4,627,200
Cisco Systems, Inc.* .............. 339,000 18,899,250
Fujimi, Inc. ...................... 2,000 85,074
Hoya Corp. ........................ 8,000 251,389
Leitch Technology Corp.* .......... 10,000 300,815
Micronics Japan Co. Ltd. .......... 7,000 120,713
National Semiconductor Corp.* ..... 182,000 4,720,625
Nikon Corp. ....................... 10,000 98,870
Rohm Co. Ltd. ..................... 2,000 203,870
Sankyo Engineering Co. ............ 6,000 18,394
SMH AG ............................ 4,850 654,194
Sterling Commerce, Inc.* .......... 40,000 1,537,500
TDK Corp. ......................... 5,000 377,084
Tokyo Cathode Laboratory Co.*...... 5,400 53,390
TOWA Corp. ........................ 800 16,616
Varitronix International Ltd. ..... 469,000 804,968
Yokogawa Electric Corp. ........... 12,000 74,129
-----------
35,858,456
-----------
OFFICE EQUIPMENT (1.6%)
Barco N.V. ........................ 4,314 791,752
Canon, Inc. ....................... 2,000 46,599
Ceridian Corp.* ................... 101,300 4,640,806
Compaq Computer Corp. ............. 180,125 10,165,805
Dell Computer Corp.* .............. 105,800 8,887,200
Policy Management Systems
Corp.* .......................... 44,900 3,123,356
-----------
27,655,518
-----------
OFFICE EQUIPMENT SERVICES (0.4%)
Data Communication System Co. 6,000 79,096
First Data Corp. .................. 127,600 3,732,300
Fuji Soft ABC, Inc. ............... 4,200 143,890
INES Corp. ........................ 6,000 46,446
Nippon System Development ......... 3,200 65,729
Oracle Corp.* ..................... 105,500 2,353,969
-----------
6,421,430
-----------
TELECOMMUNICATIONS (2.8%)
ADC Telecommunications, Inc.* 205,700 8,587,975
Asia Satellite
Telecommunications Holdings
Ltd. ............................ 120,000 205,188
DDI Corp. ......................... 240 634,604
DSC Communications Corp.* ......... 40,000 960,000
Energis PLC* ...................... 165,000 691,420
Intermedia Communications,
Inc.* ........................... 363 22,052
Lucent Technologies, Inc. ......... 107,000 8,546,625
MCI Communications Corp. .......... 80,000 3,425,000
Nextel Communications, Inc.
(Class A)* ...................... 69,500 1,807,000
PT Indosat ........................ 419,000 777,055
PT Telekomunikasi Indonesia ....... 309,000 164,332
SK Telecom Co. Ltd. (ADR)* ........ 85,655 556,756
Tele-Communications TCI
Ventures Group (Class A)* ....... 100,000 2,831,250
Tellabs, Inc.* .................... 113,500 6,001,313
Videsh Sanchar Nigam Ltd.
(GDR)+* ......................... 28,400 395,612
</TABLE>
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Vodafone Group PLC ................ 160,000 $ 1,154,257
WorldCom, Inc.* ................... 383,850 11,611,463
-----------
48,371,902
-----------
TOTAL TECHNOLOGY (6.9%) ......... 118,307,306
-----------
DIVERSIFIED
MISCELLANEOUS (1.4%)
BTR PLC ........................... 180,000 544,262
Cie Generale des Eaux ............. 8,259 1,152,706
Citic Pacific Ltd. ................ 60,000 238,482
First Pacific Co. ................. 397,685 192,453
Montedison Spa .................... 1,113,000 999,750
Smith (Howard) Ltd. ............... 35,000 290,481
Swire Pacific Ltd. (Class A) ...... 57,000 312,621
Tomkins PLC ....................... 160,000 765,123
Tyco International Ltd. ........... 343,518 15,479,780
U.S. Industries, Inc. ............. 161,400 4,862,175
-----------
TOTAL DIVERSIFIED (1.4%) ........ 24,837,833
-----------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (47.8%)
(Cost $666,960,804) ............. 824,509,813
-----------
PREFERRED STOCKS:
BASIC MATERIALS (0.1%)
CHEMICALS
Henkel KGAA ....................... 15,180 949,304
-----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.1%)
Republic Industries, Inc.
6.5% Exch. Conv. ................ 46,100 1,083,350
-----------
PRINTING, PUBLISHING &
BROADCASTING (0.0%)
ProSieben Media AG* ............... 5,000 229,300
-----------
TRUCKING, SHIPPING (0.0%)
CNF Trust I
5.0% Conv. Series A ............. 19,000 1,083,000
-----------
TOTAL BUSINESS SERVICES (0.1%) 2,395,650
-----------
CAPITAL GOODS (0.1%)
AEROSPACE
Loral Space & Communications
6.0% Conv. ...................... 37,700 2,318,550
-----------
CONSUMER CYCLICALS
AIRLINES (0.1%)
Continental Airlines Finance
Trust
8.5% Conv. ...................... 18,100 1,862,037
-----------
RETAIL--GENERAL (0.0%)
Hornbach Holding AG ............... 8,010 552,122
-----------
TOTAL CONSUMER CYCLICALS (0.1%) 2,414,159
-----------
CREDIT SENSITIVE (0.1%)
UTILITY--ELECTRIC
AES Trust I
5.375% Conv. Series A ........... 23,000 1,650,250
-----------
ENERGY (0.1%)
OIL--DOMESTIC
Devon Financing Trust
$3.25 Conv. ..................... 11,600 849,700
-----------
</TABLE>
97
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
===============================================================================
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
TECHNOLOGY
TELECOMMUNICATIONS (0.6%)
Intermedia Communications, Inc.:
7.0% Conv. Series D ................. 20,500 $ 840,500
7.0% Conv.+ ......................... 28,900 1,184,900
Mobile Telecommunications
$2.25 Conv. ........................ 28,000 938,000
Nextel Strypes Trust
7.25% Conv. ........................ 54,400 1,292,000
Nokia Oyj (A Shares) ................. 14,100 1,001,055
QualComm Financial Trust:
5.75% Conv. ........................ 6,400 299,600
5.75% Conv.+ ........................ 36,800 1,722,700
WorldCom, Inc.
8.0% Conv. ......................... 30,700 3,219,663
----------
TOTAL TECHNOLOGY (0.6%) ............ 10,498,418
----------
TOTAL PREFERRED STOCKS (1.2%)
(Cost $17,920,454).................. 21,076,031
----------
PRINCIPAL
AMOUNT
---------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PROFESSIONAL SERVICES (0.1%)
Career Horizons, Inc.
7.0% Conv., 11/01/02 ............... $ 710,000 1,476,800
Personnel Group of America:
5.75% Conv., 07/01/04 .............. 110,000 124,850
5.75% Conv., 07/01/04+ .............. 370,000 419,950
----------
TOTAL BUSINESS SERVICES (0.1%) 2,021,600
----------
CAPITAL GOODS
AEROSPACE (0.1%)
Orbital Sciences Corp.
5.0% Conv., 10/01/02+ .............. 590,000 753,725
----------
BUILDING & CONSTRUCTION (0.0%)
Halter Marine Group, Inc.
4.5% Conv., 09/15/04+ .............. 670,000 752,912
----------
MACHINERY (0.1%)
DII Group, Inc.
6.0% Conv., 10/15/02+ .............. 1,005,000 1,536,444
----------
TOTAL CAPITAL GOODS (0.2%) ......... 3,043,081
----------
CONSUMER CYCLICALS
FOOD SERVICES, LODGING (0.2%)
Cendant Corp.
4.75% Conv., 03/01/03 .............. 2,050,000 2,757,250
----------
RETAIL--GENERAL (0.1%)
U.S. Office Products Co.
5.5% Conv., 02/01/01 ............... 1,455,000 1,729,631
----------
TOTAL CONSUMER CYCLICALS (0.3%) 4,486,881
----------
CONSUMER NONCYCLICALS
DRUGS (0.2%)
MedImmune, Inc.:
7.0% Conv., 07/01/03 ................ 615,000 1,398,356
7.0% Conv. Sub., 07/01/03+ .......... 500,000 1,136,875
</TABLE>
<TABLE>
<CAPTION>
========================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------
<S> <C> <C>
Quintiles Transnational Corp.:
4.25% Conv., 05/31/00 .............. $ 370,000 $ 415,787
4.25% Conv., 05/31/00+ .............. 580,000 651,775
-----------
3,602,793
-----------
HOSPITAL SUPPLIES &
SERVICES (0.2%)
FPA Medical Management, Inc.:
6.5% Conv., 12/15/01 ............... 810,000 826,200
6.5% Conv., 12/15/01+ ............... 540,000 550,800
RES-Care, Inc.
6.0% Conv., 12/01/04+ .............. 1,095,000 1,248,300
-----------
2,625,300
-----------
MEDIA & CABLE (1.9%)
Time Warner Entertainment Co.
8.375%, 03/15/23 ................... 23,580,000 26,909,024
Turner Broadcasting System, Inc.
8.375%, 07/01/13 ................... 5,530,000 6,204,771
-----------
33,113,795
-----------
TOTAL CONSUMER NONCYCLICALS (2.3%) 39,341,888
-----------
CREDIT SENSITIVE
BANKS (1.6%)
ABN Amro Bank NV
7.125%, 06/18/07 ................... 25,375,000 26,528,801
Sumitomo Bank International
0.75% Conv., 05/31/01 ........... Yen 101,000,000 810,864
-----------
27,339,665
-----------
FINANCIAL SERVICES (0.7%)
Commercial Credit Co.
6.125%, 12/01/05 ................... $ 10,000,000 9,810,400
RAC Financial Group, Inc.:
7.25% Conv., 08/15/03 ............... 195,000 469,950
7.25% Conv. Sub., 08/15/03+ ......... 625,000 1,506,250
-----------
11,786,600
-----------
INSURANCE (1.5%)
John Hancock Mutual Life
Insurance Co.
7.375%, 02/15/24+ .................. 23,750,000 24,918,262
Penn Treaty American Corp.:
6.25% Conv., 12/01/03 ............... 330,000 425,287
6.25% Conv., 12/01/03+ .............. 905,000 1,166,319
-----------
26,509,868
-----------
MORTGAGE RELATED (7.2%)
Federal Home Loan Mortgage
Corp.:
7.0%, 09/01/11 ..................... 25,507,811 25,898,412
7.0%, 01/01/12 ...................... 5,527,207 5,611,845
Federal National Mortgage
Association:
6.5%, 09/01/11 ..................... 16,671,267 16,718,113
6.5%, 06/01/11 ...................... 40,495,952 40,749,052
7.0%, 05/01/26 ...................... 26,800,480 27,051,601
7.0%, 09/01/27 ...................... 8,695,225 8,757,657
-----------
124,786,680
-----------
</TABLE>
98
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
====================================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------------------
<S> <C> <C>
U.S. GOVERNMENT (28.9%)
U.S. Treasury:
6.125% Note, 08/31/98 .................... $15,000,000 $ 15,051,570
6.375% Note, 05/15/99 .................... 52,000,000 52,471,276
6.75% Note, 04/30/00 ..................... 21,600,000 22,092,761
6.0% Note, 08/15/00 ...................... 68,850,000 69,344,894
6.25% Note, 04/30/01 ..................... 43,000,000 43,671,875
6.5% Note, 08/31/01 ...................... 81,600,000 83,614,541
6.5% Note, 05/31/02 ...................... 86,335,000 88,871,091
5.75% Note, 08/15/03 ..................... 21,700,000 21,720,355
6.875% Note, 05/15/06 .................... 41,085,000 43,973,810
6.125% Bond, 11/15/27 .................... 55,405,000 56,928,637
--------------
497,740,810
--------------
TOTAL CREDIT SENSITIVE (39.9%) 688,163,623
--------------
ENERGY
COAL & GAS PIPELINES (0.1%)
Nabors Industries, Inc.
5.0% Conv., 05/15/06 .................... 1,125,000 2,036,250
--------------
GAS (0.4%)
RAS Laffan Liquid Natural Gas
8.294%, 03/15/14+ ....................... 7,730,000 7,273,976
--------------
OIL--SUPPLIES &
CONSTRUCTION (0.2%)
Diamond Offshore Drilling, Inc.
3.75% Conv. Sub. Note,
02/15/07 ................................ 1,090,000 1,442,887
Parker Drilling Corp.
5.5% Conv. Sub., 08/01/04 ............... 960,000 1,029,000
Seacor Holdings, Inc.:
5.375% Conv., 11/15/06 .................. 90,000 101,925
5.375% Conv., 11/15/06+ .................. 755,000 855,037
--------------
3,428,849
--------------
TOTAL ENERGY (0.7%) ..................... 12,739,075
--------------
TECHNOLOGY
ELECTRONICS (1.3%)
Altera Corp.
5.75% Conv. Sub. Note,
06/15/02+ ............................... 1,465,000 2,010,712
Baan Co.:
4.5% Conv. Sub. Note,
12/15/01+ ............................... 805,000 1,233,662
4.5% Conv. Sub. Note,
12/15/01 ................................ 230,000 352,475
Cymer, Inc.
3.5% Conv., 08/06/04+(a) ................ 1,420,000 1,073,875
Integrated Process Equipment
6.25% Conv., 09/15/04+ .................. 2,110,000 1,748,663
Level One Communications:
4.0% Conv., 09/01/04 ..................... 360,000 338,400
4.0% Conv., 09/01/04+ .................... 1,140,000 1,071,600
Photronics, Inc.
6.0% Conv., 06/01/04 .................... 1,870,000 2,143,488
Quantum Corp.
5.0% Conv., 03/01/03+ ................... 355,000 644,325
Sanmina Corp.
5.5% Conv., 08/15/02+ ................... 1,345,000 3,259,944
SCI Systems, Inc.
5.0% Conv., 05/01/06+ ................... 1,670,000 3,110,375
</TABLE>
<TABLE>
<CAPTION>
====================================================================================
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ------------------------------------------------------------------------------------
<S> <C> <C>
Solectron Corp.
6.0% Conv., 03/01/06+ ................... $ 1,070,000 $ 1,467,238
Wind River Systems, Inc.
5.0% Conv., 08/01/02+ ................... 1,390,000 1,487,300
Xilinx, Inc.
5.25% Conv., 11/01/02+ .................. 1,865,000 1,804,388
--------------
21,746,445
--------------
TELECOMMUNICATIONS (0.1%)
Comverse Technology, Inc.:
5.75% Conv., 10/01/06 ................... 185,000 199,338
5.75% Conv. Sub., 10/01/06+ .............. 1,605,000 1,729,388
--------------
1,928,726
--------------
TOTAL TECHNOLOGY (1.4%) ................. 23,675,171
--------------
TOTAL LONG-TERM DEBT SECURITIES (44.9%)
(Cost $752,359,876)...................... 773,471,319
--------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (5.4%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ...................... 92,700,000 92,684,550
--------------
TOTAL SHORT-TERM DEBT SECURITIES (5.4%)
(Cost $92,684,550)........................ 92,684,550
--------------
TOTAL INVESTMENTS (99.3%)
(Cost/Amortized Cost $1,529,925,684) 1,711,741,713
OTHER ASSETS
LESS LIABILITIES (0.7%) ................. 12,346,816
--------------
NET ASSETS (100.0%) ....................... $1,724,088,529
==============
</TABLE>
99
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<S> <C>
===============================================
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
As a Percentage of Total Investments
Australia ........................ 0.2%
Canada ........................... 0.1
France ........................... 1.1
Germany .......................... 0.6
Japan ............................ 1.8
Netherlands ...................... 0.6
Scandinavia ...................... 0.6
Southeast Asia ................... 0.4
Spain ............................ 0.4
Switzerland ...................... 0.6
United Kingdom ................... 2.3
United States** .................. 90.8
Other European Countries ......... 0.5
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Includes Short-Term Debt Securities of 5.4%.
+ Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $68,953,728 or
4.0% of net assets.
(a) Coupon will increase periodically based upon a predetermined
schedule. Stated interest rate in effect at December 31, 1997.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
100
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
BASIC MATERIALS
CHEMICALS (0.2%)
AGA AB (A Shares) ................... 3,400 $ 46,890
Akzo Nobel N.V. ..................... 4,000 689,665
Asahi Chemical Industry Co. ......... 27,000 91,466
Bayer AG ............................ 25,400 942,466
BOC Group PLC ....................... 6,825 112,268
GP Batteries International Ltd. ..... 180,000 468,867
GP Batteries International Ltd.--
Warrants* ......................... 5,750 4,719
Imperial Chemical Industries
PLC ............................... 18,212 284,614
Indo Gulf Fertilisers &
Chemicals Corp. Ltd. (GDR)+ 50,000 40,000
Ishihara Sangyo Kaisha Ltd.* ........ 90,000 100,019
Johnson Matthey PLC ................. 25,000 223,900
Kuraray Co. Ltd. .................... 6,000 49,665
L'Air Liquide ....................... 2,035 318,513
Linde AG ............................ 150 90,970
Mitsui Chemicals, Inc.* ............. 9,000 17,521
Royal Group Technologies Ltd.* 10,000 231,875
Sanyo Chemicals Industries Ltd. ..... 9,000 52,424
Solvay Et Cie Societe Anonyme ....... 1,200 75,463
Sumitomo Chemical Co. Ltd. .......... 28,000 64,380
Toray Industries, Inc. .............. 29,000 130,025
UBE Industries Ltd. ................. 14,000 17,812
----------
4,053,522
----------
CHEMICALS--SPECIALTY (0.5%)
Cytec Industries, Inc.* ............. 57,900 2,717,681
Kyowa Hakko Kogyo Co. ............... 8,000 34,643
NGK Insulators ...................... 6,000 53,344
SGL Carbon AG+ ...................... 15,000 1,917,785
Solutia, Inc. ....................... 113,000 3,015,687
UCAR International, Inc.* ........... 5,000 199,688
----------
7,938,828
----------
METALS & MINING (0.2%)
Alusuisse Lonza Holding AG .......... 90 86,457
Bethlehem Steel Corp.* .............. 330,000 2,846,250
Degussa AG .......................... 2,500 123,683
Granges AB* ......................... 550 8,624
Great Central Mines Ltd. ............ 75,000 80,617
Gwalia Consolidated Ltd.* ........... 88,300 46,594
Japan Energy Corp. .................. 19,000 17,911
Mitsubishi Materials Corp. .......... 24,000 38,628
Randgold Resources Ltd.
(GDR)*+ ........................... 7,600 39,900
Rio Tinto Ltd. ...................... 5,800 67,645
Rio Tinto PLC ....................... 27,615 339,895
Sumitomo Metal Mining Co. ........... 10,000 32,956
Toho Titanium* ...................... 48,000 404,675
WMC Ltd. ............................ 40,700 141,850
----------
4,275,685
----------
PAPER (0.2%)
Amcor Ltd. .......................... 8,900 39,136
Asia Pacific Resources
International Ltd. (Class A)* ..... 5,000 9,375
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Asia Pacific Resources
International Ltd.
(Class A)--Warrants* .............. 5,000 $ 625
Enso Oy (Series R) .................. 30,000 232,253
Fletcher Challenge Forest ........... 4,256 3,534
Grupo Industrial Durango
(ADR)* ............................ 12,000 171,000
Jefferson Smurfit Corp.* ............ 79,300 1,120,113
Nippon Paper Industries Co. ......... 2,000 7,848
Oji Paper Co. Ltd. .................. 22,000 87,511
Stone Container Corp.* .............. 123,000 1,283,812
Svenska Cellulosa (Series B) ........ 3,200 71,940
UPM-Kymmene Oy ...................... 3,292 65,829
----------
3,092,976
----------
STEEL (0.1%)
Broken Hill Proprietary Co. Ltd. 50,000 464,157
Kawasaki Steel Corp. ................ 54,000 73,669
Nippon Steel Corp. .................. 217,000 320,989
NKK Corp. ........................... 85,000 67,752
Sumitomo Metal Industries ........... 268,000 343,024
Thyssen AG .......................... 450 96,056
Usinor Sacilor ...................... 3,500 50,536
----------
1,416,183
----------
TOTAL BASIC MATERIALS (1.2%) ...... 20,777,194
----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (1.4%)
B.U.S. Berzelius Umwelt-Service
AG ................................ 22,000 293,505
Daiseki Co. Ltd. .................... 7,600 78,636
Matsuda Sangyo Co. Ltd. ............. 12,000 72,474
Powerscreen International PLC ....... 75,000 752,988
Rentokil Initial PLC ................ 177,200 771,663
Tomra Systems ASA ................... 102,660 2,293,441
United States Filter Corp.* ......... 75,000 2,245,312
USA Waste Services, Inc.* ........... 177,000 6,947,250
Waste Management, Inc. .............. 390,500 10,738,750
----------
24,194,019
----------
PRINTING, PUBLISHING &
BROADCASTING (2.8%)
British Sky Broadcasting Group
PLC ............................... 50,476 378,240
Cablevision Systems Corp.
(Class A)* ........................ 53,500 5,122,625
Carlton Communications PLC .......... 200,900 1,551,657
CBS Corp. ........................... 291,250 8,573,672
Dai Nippon Printing Co. Ltd. ........ 19,000 356,773
Elsevier N.V. ....................... 66,445 1,074,838
Havas ............................... 200 14,389
Liberty Media Group (Class A)* 301,150 10,916,688
Mediaset Spa ........................ 140,000 687,733
Mirror Group PLC .................... 70,000 224,311
New York Times Co. (Class A) ........ 100,300 6,632,337
News Corp. Ltd. ..................... 59,900 330,515
Nippon Television Network
Corp. ............................. 2,000 587,086
Pegasus Communications Corp.
(Class A)* ........................ 1,128 22,983
Reader's Digest Association, Inc.
(Class A) ......................... 100,000 2,362,500
Reed International PLC .............. 80,000 $ 801,932
</TABLE>
101
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Star Publications BHD ............... 20,000 22,831
Takara Printing Co. ................. 11,000 32,880
Time Warner, Inc. ................... 103,000 6,386,000
Tokyo Broadcasting System, Inc. 45,000 569,075
Toppan Printing Co. ................. 7,000 91,205
Ver Ned Uitgeversbedr Ver Bezit
N.V. .............................. 6,000 169,260
----------
46,909,530
----------
PROFESSIONAL SERVICES (0.3%)
Adecco SA ........................... 275 79,742
Alvern Norway ASA* .................. 76,550 181,378
Apcoa Parking AG+ ................... 3,000 220,128
Asatsu, Inc. ........................ 22,400 322,759
Brisa-Auto Estradas de Portugal
SA* ............................... 7,000 250,753
Content Beheer N.V.+ ................ 53,000 1,306,932
Meitec .............................. 61,800 1,738,310
Secom Co. ........................... 2,000 127,841
WPP Group PLC ....................... 100,000 445,335
----------
4,673,178
----------
TRUCKING, SHIPPING (0.8%)
Brambles Industries Ltd. ............ 90,000 1,785,295
Frontline Ltd.* ..................... 400,000 1,613,908
Irish Continental Group PLC ......... 30,000 367,082
Knightsbridge Tankers Ltd. .......... 110,700 3,134,194
Mitsui O.S.K. Lines Ltd.* ........... 19,000 26,357
Nippon Express Co. Ltd. ............. 20,000 99,636
Nippon Yusen K.K. ................... 13,000 35,670
OMI Corp.* .......................... 652,900 5,998,519
Penninsular & Oriental Steam
Navigation Co. .................... 10,466 119,102
Yamato Transport Co. Ltd. ........... 8,000 107,300
----------
13,287,063
----------
TOTAL BUSINESS SERVICES (5.3%) 89,063,790
----------
CAPITAL GOODS
AEROSPACE (0.0%)
British Aerospace ................... 11,284 321,722
Rolls-Royce PLC ..................... 22,528 86,998
----------
408,720
----------
BUILDING & CONSTRUCTION (0.2%)
ABB AG .............................. 300 376,926
CSR Ltd. ............................ 16,900 57,249
Daito Trust Construction Co. ........ 17,200 105,065
Daiwa House Industry Co. Ltd. ....... 9,000 47,595
Hitachi Plant Engineering &
Construction Co. .................. 25,000 55,758
Hochtief AG ......................... 1,500 61,703
Japan Industrial Land
Development ....................... 19,000 45,871
Kaneshita Construction .............. 26,000 117,570
Kumagai Gumi Co. .................... 6,000 3,265
MacMahon Holdings Ltd. .............. 600,000 187,617
Mancon BHD .......................... 47,999 17,400
Metacorp BHD ........................ 10,000 4,242
Mitsui Home Co. Ltd. ................ 32,000 174,133
Nanno Construction Co. Ltd. ......... 26,000 20,924
Nawarat Patanakarn Public Co. ....... 80,000 3,323
Nippon Denwa Shisetsu ............... 30,000 114,965
Nishimatsu Construction Co. ......... 4,000 $ 12,569
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Obayashi Corp. ...................... 12,000 40,835
Ohmoto Gumi Co. Ltd. ................ 15,000 64,380
Oriental Construction Co. ........... 12,800 55,919
Pacific Rim Infra Management
Enterprises Ltd.* ................. 493,200 16,230
Penta-Ocean Construction ............ 5,000 7,013
PS Corp. ............................ 31,200 118,368
Sanyo Engineering &
Construction Co. .................. 18,000 64,840
Sekisui House Ltd. .................. 13,000 83,595
Shimizu Corp. ....................... 15,000 34,719
Sho Bond Corp. ...................... 54,000 976,739
Skanska AB (Series B) ............... 1,620 66,413
Suido Kiko Kaisha ................... 9,000 18,072
Taisei Corp. ........................ 20,000 32,803
Toda Corp. .......................... 30,000 81,625
United Engineers Malaysia BHD 11,000 9,163
Wesco, Inc. ......................... 10,800 26,488
YTL Corp. BHD ....................... 16,500 22,272
YTL Corp. BHD--Rights* .............. 1,650 0
----------
3,125,649
----------
BUILDING MATERIALS & FOREST
PRODUCTS (0.5%)
BPB PLC ............................. 90,000 502,851
Blue Circle Industries PLC .......... 13,338 74,851
Chichibu Onoda Cement Co. ........... 11,000 20,234
Cie de St. Gobain ................... 3,150 447,495
Dahl International AB+ .............. 45,000 663,107
Fujikura Ltd. ....................... 132,000 874,098
Furukawa Electric Co. ............... 13,000 55,696
Heidelberg Zement AG ................ 1,100 77,106
Holderbank Financiere Glaris
AG ................................ 80 65,293
Lafarge SA ......................... 6,850 449,458
Martin Marietta Materials, Inc. ..... 124,200 4,541,063
Nichiha Corp. ....................... 70,700 432,409
Portland Valderrivas SA ............. 4,900 440,630
Rexam PLC ........................... 13,121 64,470
RMC Group PLC ....................... 4,518 63,108
Sumitomo Forestry Co. ............... 7,000 34,068
Wolseley PLC ........................ 10,088 80,070
----------
8,886,007
----------
ELECTRICAL EQUIPMENT (1.3%)
Alcatel Alsthom ..................... 6,000 762,649
Daikin Industries Ltd. .............. 5,000 18,854
General Electric Co. ................ 255,000 18,710,625
General Electric Co. PLC ............ 61,328 397,579
Kinden Corp. ........................ 5,000 53,267
Mabuchi Motor Co. ................... 10,000 508,143
Schneider SA ........................ 2,250 122,173
Siemens AG .......................... 14,750 889,616
Sumitomo Electric Industries ........ 31,000 422,916
Yaskawa Electric Corp. .............. 14,000 34,873
----------
21,920,695
----------
MACHINERY (1.9%)
Allied Signal, Inc. ................. 163,200 6,354,600
Amada Co. Ltd. ...................... 5,000 18,586
Asahi Diamond Industry Co.
Ltd. .............................. 33,000 143,913
</TABLE>
102
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Cie Generale de Geophysique
SA (ADR)* ......................... 169,223 $4,336,339
Coltec Industries, Inc.* ............ 128,000 2,968,000
Construcciones y Auxiliar de
Ferrecarriles SA .................. 3,000 110,666
Ebara Corp. ......................... 5,000 52,884
Enshu* .............................. 51,000 63,713
Fanuc Co. ........................... 5,900 223,384
IHC Caland N.V. ..................... 10,000 518,827
Ishikawajima Harima Heavy
Industries Co. Ltd. ............... 82,000 122,552
Kalmar Industries AB+ ............... 16,050 258,744
Kawasaki Heavy Industries Ltd. ...... 112,000 173,397
Keyence Corp. ....................... 400 59,168
Komatsu Ltd. ........................ 29,000 145,583
Kubota Corp. ........................ 33,000 87,005
Mitsubishi Heavy Industries Ltd. 170,000 708,795
Namura Shipbuilding ................. 20,000 45,219
Nireco .............................. 11,000 40,468
Nitta Corp. ......................... 38,600 390,512
Nitto Kohki Co. Ltd. ................ 32,000 348,266
Rauma Oy ............................ 92 1,435
Rofin-Sinar Technologies, Inc.* ..... 20,000 242,500
SMC Corp. ........................... 11,200 987,162
Sodick Co.* ......................... 126,000 361,173
Thai Engine Manufacturing
Public Co. Ltd. ................... 100,000 166,148
United Technologies Corp. ........... 166,000 12,086,875
----------
31,015,914
----------
TOTAL CAPITAL GOODS (3.9%) ........ 65,356,985
----------
CONSUMER CYCLICALS
AIRLINES (0.2%)
British Airways PLC ................. 45,000 414,113
Cathay Pacific Airways .............. 41,000 33,333
Japan Air Lines Co.* ................ 24,000 65,300
KLM ................................. 13,700 506,744
Lufthansa AG ........................ 58,000 1,089,747
Quantas Airways Ltd. ................ 40,000 70,773
Singapore Airlines Ltd. ............. 70,000 457,925
Virgin Express Holdings PLC
(ADR)* ............................ 24,000 498,000
----------
3,135,935
----------
APPAREL, TEXTILES (0.3%)
Carli Gry International A/S ......... 20,000 1,123,776
King Co. ............................ 62,000 59,398
Liz Claiborne, Inc. ................. 70,000 2,926,875
PT Great River International ........ 1,709,000 139,827
Teijin Ltd. ......................... 18,000 37,663
----------
4,287,539
----------
AUTO RELATED (0.6%)
Asahi Glass Co. Ltd. ................ 29,000 137,804
Bridgestone Corp. ................... 22,000 477,179
Bridgestone Metalpha Corp. .......... 11,000 40,889
Denso Corp. ......................... 30,000 540,333
LucasVarity PLC ..................... 15,000 52,997
Michelin (CGDE), (Class B) .......... 8,000 402,758
Minebea Co. Ltd. ................... 78,000 836,942
NGK Spark Plug Co. .................. 48,000 272,236
Republic Industries, Inc.* .......... 261,900 6,105,544
Toyoda Gosei ........................ 32,000 $ 115,762
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------
<S> <C> <C>
8,982,444
----------
AUTOS & TRUCKS (0.5%)
Daimler-Benz AG ..................... 23,950 1,690,792
Fiat Spa ............................ 74,250 215,950
Harley-Davidson, Inc. ............... 249,000 6,816,375
Honda Motor Co. Ltd. ................ 3,000 110,136
Isuzu Motors Ltd. ................... 15,000 23,338
Perusahaan Otomobil Nasional ........ 9,000 8,793
Peugeot SA .......................... 700 88,278
----------
8,953,662
----------
FOOD SERVICES, LODGING (1.5%)
AAPC Ltd. ........................... 400,000 164,165
Accor SA ............................ 9,000 1,673,341
Compass Group PLC ................... 220,000 2,707,837
Fujita Kanko, Inc. .................. 3,000 32,190
Host Marriott Corp.* ................ 250,300 4,912,137
ITT Corp.* .......................... 185,100 15,340,162
QPQ Corp.--Warrants* ................ 16,400 64
Restaurant Brands NZ Ltd.*+ ......... 300,000 296,131
Sanyo Pax Co. Ltd. .................. 33,000 285,802
Takihyo Co. Ltd. .................... 24,000 104,848
----------
25,516,677
----------
HOUSEHOLD FURNITURE,
APPLIANCES (1.0%)
Elamex S.A. de C.V.* ................ 73,400 550,500
Electrolux B ........................ 1,100 76,336
Industrie Natuzzi Spa (ADR) ......... 30,000 618,750
Philips Electronics ................. 2,680 160,722
Sanyo Electric Co. Ltd. ............. 56,000 145,928
Sony Corp. .......................... 12,000 1,066,871
Sunbeam Corp. ....................... 320,600 13,505,275
Tostem Corp. ........................ 2,000 21,460
Toto Ltd. ........................... 5,000 31,960
----------
16,177,802
----------
LEISURE RELATED (1.9%)
Aristocrat Leisure Ltd. ............. 37,500 74,509
Capcom Co. Ltd. ..................... 3,900 40,054
Carnival Corp. (Class A) ............ 122,200 6,766,825
Cendant Corp.* ...................... 251,000 8,628,125
Cinar Films, Inc. (Class B)* ........ 14,000 544,250
Cyrk, Inc.* ......................... 296,100 2,868,469
Disney (Walt) Co. ................... 66,507 6,588,350
EMI Group PLC ....................... 30,001 250,445
Granada Group PLC ................... 25,587 391,039
Hoyts Cinemas Group+ ................ 500,000 879,456
Imagineer Co. Ltd. ................. 14,000 109,446
KTM Motorradholding AG* ............. 10,000 505,086
Mars Engineering Corp. .............. 4,100 22,625
NAMCO Ltd. .......................... 6,400 185,905
Nelvana Limited*+ ................... 18,000 346,287
Nintendo Co. Ltd. ................... 5,000 490,515
Nippon Broadcasting System .......... 24,000 949,147
Rank Group PLC ...................... 32,498 181,040
Resorts World BHD ................... 24,000 40,417
S.M.H. Porteur AG ................... 100 55,187
Sega Enterprises Ltd. ............... 2,000 36,176
</TABLE>
103
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Tag Heuer International SA
(ADR)* ............................ 50,200 $ 414,150
Toei Co. Ltd. ....................... 32,000 116,497
Toho Co. ............................ 400 42,614
Tokyo Dome Corp. .................... 3,000 19,958
Tourism Holdings Ltd. ............... 70,000 47,962
@Entertainment, Inc.* ............... 138,300 1,538,587
-----------
32,133,121
-----------
PHOTO & OPTICAL (0.1%)
Fuji Photo Film Co. ................. 16,000 613,144
Noritsu Koki Co. Ltd. ............... 43,400 1,071,071
-----------
1,684,215
-----------
RETAIL--GENERAL (2.9%)
Aldeasa SA* ......................... 30,823 653,484
Boots Co. PLC ....................... 35,540 511,903
British Airport Authority PLC ....... 40,000 327,346
Carrefour ........................... 1,225 639,113
Centros Comerciales Pryca SA ........ 4,000 59,600
Daiei, Inc. ......................... 14,000 57,942
Dayton Hudson Corp. ................. 169,700 11,454,750
Dixons Group PLC .................... 160,000 1,606,494
Doshisha Co. ........................ 7,000 34,336
Eiden Sakakiya Co. Ltd. ............. 25,000 92,930
Fingerhut Companies, Inc. ........... 145,000 3,099,375
Great Universal Stores PLC .......... 39,213 494,246
Harvey Nicholos PLC ................. 30,600 95,542
Hennes & Mauritz AB
(B Shares) ........................ 2,500 110,203
Homac Corp. ......................... 11,000 55,559
Home Depot, Inc. .................... 185,900 10,944,862
Home Wide Corp. ..................... 16,000 53,344
Isetan Co. .......................... 79,000 329,987
Japan Airport Terminal Co. Ltd. ..... 67,000 421,077
Karstadt AG ......................... 150 51,864
Kohls Corp.* ........................ 102,700 6,996,437
Kokuyo Co. Ltd. ..................... 12,000 206,936
Koninklijke Ahold N.V. .............. 5,367 140,021
Limited, Inc. ....................... 212,500 5,418,750
Marks & Spencer PLC ................. 90,055 886,447
Marui Co. Ltd. ...................... 7,000 108,910
Metro AG ............................ 2,280 80,860
Paris Miki, Inc. .................... 37,200 399,157
Pinault Printemps ................... 600 320,113
S.T. Dupont*+ ....................... 29,100 381,005
Sainsbury (J) PLC ................... 26,514 221,774
Sato Corp. .......................... 47,440 807,180
Smith (W.H.) Group PLC .............. 70,000 447,472
Sriwani Holdings BHD ................ 278,000 73,619
Swank International
Manufacturing Co.* ................ 300,000 32,520
Thistle Hotels PLC+ ................. 131,600 342,943
Warehouse Group Ltd. ................ 140,000 373,938
Xebio Co. Ltd. ...................... 5,800 46,231
-----------
48,378,270
-----------
TOTAL CONSUMER CYCLICALS (9.0%) 149,249,665
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.1%)
Asahi Breweries Ltd. ................ 8,000 116,497
Bass PLC ............................ 22,100 343,014
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Cadbury Schweppes PLC ............... 18,792 $ 189,455
Carlsberg `A' ....................... 900 48,648
Coca-Cola Co. ....................... 189,500 12,625,438
Coca-Cola Amatil Ltd. ............... 2,000 14,939
Diageo PLC .......................... 190,000 1,746,915
Heineken N.V. ....................... 801 139,449
Kirin Brewery Co. ................... 16,000 116,497
Louis Dreyfus Citrus ................ 42,440 1,297,493
Panamerican Beverages, Inc. ......... 18,000 587,250
Quilmes Industrial Quins (ADR) 22,000 301,125
-----------
17,526,720
-----------
CONTAINERS (0.9%)
Owens-Illinois, Inc.* ............... 70,000 2,655,625
Sealed Air Corp.* ................... 206,300 12,739,025
Toyo Seikan Kaisha .................. 3,000 42,767
-----------
15,437,417
-----------
DRUGS (3.5%)
Astra AB (A Shares) ................. 25,000 432,940
Centocor, Inc.* ..................... 260,602 8,665,017
Daiichi Pharmaceutical Co. .......... 5,000 56,333
Eisai Co. Ltd. ...................... 5,000 76,260
Geltex Pharmaceuticals, Inc.* ....... 22,700 601,550
Glaxo Wellcome PLC .................. 66,706 1,578,503
Hafslund ASA (B Shares) ............. 11,700 55,761
Merck & Co., Inc. ................... 94,700 10,061,875
Novartis AG ......................... 2,151 3,490,496
Novo-Nordisk A/S (B Shares) ......... 6,000 858,156
Orion-Yhtyma Oy (B Shares) .......... 71,000 1,875,636
Pfizer, Inc. ........................ 175,100 13,055,894
Roche Holding AG
Genusscheine ...................... 150 1,489,730
Rohto Pharmaceutical Co. Ltd. ....... 2,000 12,876
Sankyo Co. Ltd. ..................... 48,000 1,085,265
Santen Pharmaceutical Co. Ltd. ...... 110,000 1,264,610
Schering AG ......................... 1,250 120,556
Schering Plough Corp. ............... 110,000 6,833,750
Smithkline Beecham PLC .............. 317,338 3,248,839
Taisho Pharmaceutical Co. ........... 22,000 561,487
Yamanouchi Pharmaceutical Co.
Ltd. .............................. 86,000 1,845,564
Zeneca Group PLC .................... 30,000 1,053,522
-----------
58,324,620
-----------
FOODS (1.4%)
Ajinomoto Co., Inc. ................. 9,000 87,603
Campbell Soup Co. ................... 154,755 8,995,134
Fyffes PLC .......................... 1,100,000 1,643,333
Groupe Danone ....................... 2,100 375,093
Karlshamns AB*+ ..................... 66,000 1,030,743
Nestle SA ........................... 930 1,393,886
Nippon Meat Packers, Inc. ........... 4,000 54,570
Nissin Food Products Co. ............ 3,000 54,493
Nutricia Verenigde Bedrijven
N.V.+ ............................. 19,000 576,283
Oie Sangyo Co. Ltd. ................. 6,000 24,832
PT Sekar Bumi ....................... 238,000 7,573
Rite Aid Corp. ...................... 72,500 4,254,844
Shiram Industrial Enterprises
Ltd. (ADR)*+ ...................... 24,000 48,000
Tingyi Holdings Corp. ............... 480,000 62,563
Tyson Foods, Inc. ................... 237,000 4,858,500
</TABLE>
104
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Yamakazi Baking Co. ................ 4,000 $ 38,935
-----------
23,506,385
-----------
HOSPITAL SUPPLIES & SERVICES (1.3%)
Cochlear Ltd. ...................... 8,000 26,058
Columbia/HCA Healthcare Corp. 160,000 4,740,000
Medtronic, Inc. .................... 214,068 11,198,432
NIC Corp. .......................... 4,000 21,767
Scandinavian Mobility
International A/S ................ 8,000 73,556
United Healthcare Corp. ............ 100,000 4,968,750
-----------
21,028,563
-----------
RETAIL--FOOD (0.2%)
Daimon Co. Ltd. .................... 10,000 19,927
Familymart Co. ..................... 23,200 832,159
Ito Yokado Co. Ltd. ................ 14,000 713,547
Jusco Co. .......................... 9,000 126,921
McBride PLC ........................ 60,000 174,519
Santa Isabel S.A. (ADR) ............ 12,000 210,000
Seven-Eleven Japan Co. Ltd. ........ 18,600 1,317,218
Tesco PLC .......................... 71,199 579,158
-----------
3,973,449
-----------
SOAPS & TOILETRIES (1.6%)
Avon Products, Inc. ................ 141,600 8,690,700
BIC ................................ 1,200 87,590
Gillette Corp. ..................... 151,970 15,263,487
L'Oreal ............................ 2,455 960,625
Unilever PLC ....................... 102,420 876,881
Unilever N.V. CVA .................. 15,160 934,579
-----------
26,813,862
-----------
TOBACCO (1.5%)
Imperial Tobacco Group PLC ......... 127,000 799,320
Japan Tobacco, Inc. ................ 46 326,469
Philip Morris Cos., Inc. ........... 509,200 23,073,125
RJ Reynolds BHD .................... 80,000 130,608
Rothmans of Pall Mall BHD .......... 6,000 46,664
Swedish Match AB ................... 360,000 1,201,526
-----------
25,577,712
-----------
TOTAL CONSUMER NONCYCLICALS (11.5%) 192,188,728
-----------
CREDIT SENSITIVE
BANKS (2.6%)
ABN Amro Holding N.V. .............. 26,124 508,913
Akita Bank ......................... 29,000 113,355
Asahi Bank Ltd. .................... 49,000 199,042
Banca Commerciale Italiana ......... 35,000 121,679
Banco Bilbao Vizcaya SA ............ 19,392 627,519
Banco Latinoamericano de
Exportaciones S.A. (E Shares) 15,000 620,625
Banco Santander SA ................. 13,221 441,712
Bank Austria AG .................... 920 46,614
Bank of Tokyo-Mitsubishi Bank
Ltd. ............................. 88,000 1,214,026
Banque Nationale de Paris .......... 4,450 236,530
Barclays PLC ....................... 30,000 797,660
Chase Manhattan Corp. .............. 109,600 12,001,200
Cie Financiere de Paribas A ........ 2,750 238,972
Citicorp ........................... 82,700 10,456,381
Credit Suisse Group ................ 6,700 1,036,768
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Dai-Ichi Kangyo Bank ............... 110,000 $ 649,167
Deutsche Bank AG ................... 13,300 930,065
Dresdner Bank AG ................... 2,900 131,866
Forenings Sparbanken AB
(A Shares) ....................... 12,000 272,799
Fuji Bank Ltd. ..................... 63,000 254,945
Grupo Financiero Banorte
(Class B)* ....................... 22,500 39,082
Hang Seng Bank ..................... 58,000 559,492
HSBC Holdings PLC .................. 20,000 492,967
HSBC Holdings PLC (H.K.$) .......... 37,374 922,481
Instituto Mobiliare Italiano ....... 10,000 118,711
Lloyds TSB Group PLC ............... 167,866 2,170,978
Malayan Banking BHD ................ 29,000 84,252
Mediobanca Spa ..................... 10,000 78,519
Mitsubishi Trust & Banking
Corp. ............................ 42,000 421,690
National Australia Bank Ltd. ....... 55,400 773,414
Sakura Bank Ltd. ................... 82,000 234,420
Shizuoka Bank Ltd. ................. 31,000 332,631
Skandinaviska Enskilda Banken
(Series A) ....................... 103,120 1,305,251
Societe Generale ................... 2,400 326,992
Sumitomo Bank Ltd. ................. 114,000 1,301,859
Suncorp-Metway Ltd.* ............... 371,652 932,132
Svenska Handelbanken
(Series A) ....................... 3,100 107,174
Toho Bank .......................... 50,000 199,272
Union Bank of Switzerland .......... 850 1,229,168
United Overseas Bank Ltd. .......... 10,000 55,605
-----------
42,585,928
-----------
FINANCIAL SERVICES (5.1%)
Abbey National PLC ................. 14,314 256,628
Aiful Corp.* ....................... 8,900 603,679
Amvescap PLC ....................... 90,000 773,503
Associates First Capital Corp. ..... 61,600 4,381,300
Beneficial Corp. ................... 90,200 7,497,875
CMAC Investment Corp. .............. 100,000 6,037,500
CMIC Finance & Securities
Public Co. Ltd. .................. 200,000 0
Credit Saison Co. .................. 81,700 2,016,279
Daiwa Securities Co. Ltd. .......... 19,000 65,530
Fleet Financial Group, Inc. ........ 87,500 6,557,031
Green Tree Financial Corp. ......... 191,800 5,022,762
Groupe Bruxelles Lambert SA ........ 450 65,099
Hong Leong Finance Ltd. ............ 40,000 43,057
JCG Holdings Ltd. ................. 60,000 25,745
MBNA Corp. ......................... 524,175 14,316,530
Merrill Lynch & Co., Inc. .......... 108,900 7,942,894
Morgan Stanley, Dean Witter,
Discover & Co. ................... 389,100 23,005,538
Newcourt Credit Group, Inc.* ....... 57,200 1,909,050
Nichiei Co. Ltd. ................... 4,600 490,056
Nomura Securities Co. ............. 61,000 813,489
PMI Group, Inc. .................... 15,900 1,149,769
Sanyo Shinpan Finance Co. Ltd. ..... 8,000 353,784
Schroders PLC ...................... 3,875 121,816
Takefuji Corp. ..................... 32,160 1,476,439
-----------
84,925,353
-----------
</TABLE>
105
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
INSURANCE (4.0%)
Aegon N.V. ........................... 12,000 $1,068,232
Allianz AG ........................... 9,000 2,321,354
Assicurazioni Generali ............... 21,800 535,449
ASR Verzekeringsgroep N.V. ........... 22,900 1,245,713
Commercial Union PLC ................. 10,726 149,645
Corporacion Mapfre Cia Inter
SA ................................. 44,000 1,166,787
Fortis AG ............................ 740 154,387
Fortis Amev N.V. ..................... 17,000 741,154
General Accident PLC ................. 8,971 155,529
GIO Australia Holdings Ltd. .......... 200,000 511,127
ING Groep N.V. ....................... 30,000 1,263,532
Istituto Naz Delle Assicurazioni ..... 60,000 121,594
Koa Fire & Marine .................... 12,000 45,066
Legal & General Group PLC ............ 23,090 201,862
Life Re Corp. ........................ 240,000 15,645,000
MGIC Investment Corp. ................ 97,300 6,470,450
Mitsui Marine & Fire Insurance
Co. ................................ 13,000 66,358
Norwich Union PLC* ................... 90,000 576,800
Pacific & Orient BHD ................. 150,000 68,646
PennCorp Financial Group, Inc. ....... 144,600 5,160,412
Providian Financial Corp. ............ 128,500 5,806,594
Prudential Corp. PLC ................. 62,486 753,697
Royal & Sun Alliance Insurance
Group PLC .......................... 49,613 499,774
Schweizerische
Ruckversicherungs-Gesellschaft 640 1,197,179
Skandia Forsakrings AB ............... 2,500 117,917
Tokio Marine & Fire Insurance
Co. ................................ 34,000 385,668
Travelers Group, Inc. ................ 346,401 18,662,354
Willis Corroon Group PLC
(ADR) .............................. 131,800 1,622,787
----------
66,715,067
----------
REAL ESTATE (1.3%)
Boston Properties, Inc. .............. 171,200 5,660,300
British Land Co. PLC ................. 8,416 94,183
Castellum AB* ........................ 119,000 1,184,020
Cheung Kong Holdings ................. 59,000 386,405
City Developments Ltd. ............... 50,000 231,936
Daibiru Corp. ........................ 17,000 124,430
DBS Land ............................. 17,000 26,084
Diligentia AB* ....................... 800 10,680
Glenborough Realty Trust, Inc. ....... 165,000 4,888,125
Land Securities PLC .................. 9,978 159,050
Lend Lease Corp. Ltd. ................ 4,100 80,128
MEPC PLC ............................. 8,200 68,453
Mitsubishi Estate Co. ................ 14,000 152,366
Mitsui Fudosan ....................... 20,000 193,140
Nackebro Fastighets AB ............... 310 4,509
New World Development Co. ............ 48,000 166,009
Sap Holdings BHD ..................... 40,000 14,912
Singapore Land Ltd. .................. 80,000 176,033
Sino Land Co. ........................ 740,000 446,445
Spieker Properties, Inc. ............. 81,800 3,507,175
Sumitomo Realty &
Development Co. Ltd. ............... 137,000 787,507
Sun Hung Kai Properties .............. 48,000 334,495
Vornado Realty Trust ................. 54,900 2,576,869
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Wharf Holdings ....................... 17,000 $ 37,295
----------
21,310,549
----------
UTILITY--ELECTRIC (1.3%)
AES Corp.* ........................... 123,200 5,744,200
British Energy PLC ................... 400,000 2,780,471
China Light & Power Co. Ltd. ......... 36,000 199,768
Cia Paranaense de Energia-Copel
(ADR) .............................. 124,000 1,697,250
Edison Spa ........................... 15,000 90,729
Electrabel SA ........................ 1,290 298,380
Electricidade de Portugal SA* ........ 50,800 961,902
Endesa SA ............................ 34,256 608,221
Energis PLC* ......................... 415,000 1,739,027
Energy Group PLC ..................... 13,333 147,236
Enersis S.A. (ADR) ................... 6,000 174,000
Gas Y Electridad SA (Series 2) ....... 5,000 361,011
Hibroelectrica del Cantabrico ........ 12,000 526,157
Iberdrola SA ......................... 90,000 1,184,444
Kansai Electric Power Co., Inc. ...... 22,400 379,414
National Grid Group PLC .............. 180,000 854,846
National Power PLC ................... 120,560 1,188,701
Powergen PLC (ADR) ................... 1,250 66,406
RWE AG ............................... 8,600 461,325
Tenaga Nasional BHD .................. 85,000 181,386
Tohoku Electric Power Co., Inc. ...... 11,500 174,516
Tokyo Electric Power Co. ............. 28,000 510,749
Tractebel Investment
International Capital .............. 1,100 95,895
Tractebel Investment
International Capital--
Warrants* .......................... 220 0
Veba AG .............................. 15,000 1,021,429
Viag AG .............................. 500 273,771
----------
21,721,234
----------
UTILITY--GAS (0.0%)
Centrica PLC* ........................ 100,557 147,895
Thames Water ......................... 7,439 110,816
----------
258,711
----------
UTILITY--TELEPHONE (1.2%)
British Telecommunications PLC........ 181,984 1,430,979
Cable & Wireless PLC ................. 53,873 473,634
Empresas Telex-Chile S.A.
(ADR) .............................. 14,100 55,519
Hellenic Telecommunication
Organization SA .................... 18,272 374,368
Hellenic Telecommunication
Organization SA--Rights* ........... 17,000 0
Koninklijke Nedlloyd Groep
N.V.+ .............................. 10,000 417,232
Portugal Telecom SA .................. 5,670 263,090
Pt Indosat (ADR) ..................... 9,100 175,744
Singapore Telecommunications
Ltd. ............................... 66,000 123,247
Telecom Italia Spa ................... 54,165 345,994
Telefonica de Espana ................. 32,829 937,356
Telefonica del Peru S.A. (ADR) ....... 32,000 746,000
Telekom Malaysia BHD ................. 67,500 199,576
Telephone & Data Systems, Inc. ....... 62,100 2,891,531
Teleport Communications Group,
Inc. (Class A)* .................... 202,400 11,106,700
</TABLE>
106
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Videsh Sanchar Nigam Ltd.
(GDR)* ............................ 50,000 $ 646,250
-----------
20,187,220
-----------
TOTAL CREDIT SENSITIVE (15.5%) 257,704,062
-----------
ENERGY
COAL & GAS PIPELINES (0.1%)
BG PLC .............................. 125,808 566,471
BG PLC `B'* ......................... 142,583 67,949
OMV AG .............................. 6,000 831,255
-----------
1,465,675
-----------
OIL--DOMESTIC (2.3%)
Apache Corp. ........................ 199,100 6,980,944
Louis Dreyfus Natural Gas
Corp.* ............................ 164,700 3,077,831
Murphy Oil Corp. .................... 90,000 4,876,875
Tom Brown, Inc.* .................... 50,000 962,500
Union Pacific Resources Group,
Inc. .............................. 346,700 8,407,475
USX-Marathon Group .................. 391,200 13,203,000
-----------
37,508,625
-----------
OIL--INTERNATIONAL (1.5%)
AO Tatneft (ADR) .................... 37,000 5,272,500
British Petroleum Co. PLC ........... 149,481 1,965,142
Cosmo Oil Co. Ltd. .................. 11,000 16,693
Elf Aquitaine ....................... 15,200 1,767,882
Gulf Canada Resources Ltd.* ......... 1,352,400 9,466,800
Gulf Indonesia Resources Ltd.* ...... 52,500 1,155,000
Mitsubishi Oil Co. .................. 8,000 11,834
Nippon Oil Co. Ltd. ................. 22,000 56,823
Norsk Hydro ASA ..................... 2,100 102,216
Oil Search Ltd. ..................... 300,000 542,136
Petrofina SA ........................ 290 107,035
Petroleo Brasileiro S.A. (ADR) ...... 45,000 1,052,397
Repsol SA ........................... 12,748 543,892
Royal Dutch Petroleum Co. ........... 50,788 2,787,811
Total SA-B .......................... 900 97,948
-----------
24,946,109
-----------
OIL--SUPPLIES & CONSTRUCTION (4.8%)
Baker Hughes, Inc. .................. 204,250 8,910,406
BJ Services Co.* .................... 59,000 4,244,312
Bouygues Offshore SA (ADR) .......... 45,900 998,325
Canadian Fracmaster Ltd. ............ 117,800 1,730,596
Canadian Fracmaster Ltd.
Installment Receipts*+ ............ 347,500 2,917,206
Coflexip (ADR) ...................... 11,000 610,500
Diamond Offshore Drilling, Inc. ..... 60,000 2,887,500
Dresser Industries, Inc. ............ 294,000 12,329,625
Halliburton Co. ..................... 250,800 13,025,925
Nabors Industries, Inc.* ............ 475,000 14,932,813
Noble Drilling Corp.* ............... 499,200 15,288,000
Parker Drilling Corp.* .............. 185,500 2,260,781
-----------
80,135,989
-----------
RAILROADS (0.0%)
East Japan Railway Co. .............. 55 248,285
Odakyu Electric Railway Co. ......... 4,000 17,291
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- -------------------------------------------------------------------------------
<S> <C> <C>
Tobu Railway Co. Ltd. ............... 14,000 $ 43,778
Tokyu Corp. ......................... 17,000 65,668
-----------
375,022
-----------
TOTAL ENERGY (8.7%) ............... 144,431,420
-----------
TECHNOLOGY
ELECTRONICS (2.7%)
Altera Corp.* ....................... 108,100 3,580,812
Applied Materials, Inc.*+ ........... 164,800 4,964,600
Austria Mikro Systeme
International+ .................... 1,430 72,454
Cisco Systems, Inc.* ................ 362,550 20,212,163
Electrocomponents PLC ............... 8,375 62,345
Enplas Corp. ........................ 21,000 283,273
Fujimi, Inc. ........................ 10,200 433,876
Hitachi Ltd. ........................ 94,000 670,013
Hoya Corp. .......................... 30,000 942,709
Kyocera Corp. ....................... 1,000 45,373
Micronics Japan Co. Ltd. ............ 10,000 172,447
National Semiconductor Corp.* ....... 195,300 5,065,594
Nikon Corp. ......................... 52,000 514,121
Rohm Co. Ltd. ....................... 10,000 1,019,352
Sankyo Engineering Co. .............. 4,000 12,263
Sterling Commerce, Inc.* ............ 75,000 2,882,812
TDK Corp. ........................... 22,000 1,659,168
Teradyne, Inc.* ..................... 55,000 1,760,000
Tokyo Electron ...................... 2,300 73,685
TOWA Corp. .......................... 5,700 118,391
Yokogawa Electric Corp. ............. 121,000 747,469
-----------
45,292,920
-----------
OFFICE EQUIPMENT (2.3%)
Canon, Inc. ......................... 16,000 372,792
Ceridian Corp.* ..................... 250,400 11,471,450
Compaq Computer Corp. ............... 189,475 10,693,495
Dell Computer Corp.* ................ 116,000 9,744,000
Fujitsu General Co. ................. 28,000 300,440
Oce-Van De Grinten N.V. ............. 460 50,137
Policy Management Systems
Corp.* ............................ 86,300 6,003,244
Ricoh Elemex Corp. .................. 11,000 80,092
-----------
38,715,650
-----------
OFFICE EQUIPMENT SERVICES (0.6%)
Accugraph Corp. (Class A)* .......... 15,000 8,920
Data Communication System Co. 25,000 329,565
First Data Corp. .................... 136,030 3,978,877
Fuji Soft ABC, Inc. ................. 21,400 733,152
INES Corp. .......................... 22,000 170,301
Misys (Jersey) Ltd.* ................ 7,142 215,951
Misys PLC ........................... 25,000 755,920
Nippon System Development ........... 14,000 287,565
Oracle Corp.* ....................... 113,562 2,533,863
SAP AG .............................. 2,000 606,465
-----------
9,620,579
-----------
TELECOMMUNICATIONS (4.3%)
ADC Telecommunications, Inc.* 210,200 8,775,850
Corecomm, Inc.* ..................... 3,600 36,450
DDI Corp. ........................... 145 383,407
DSC Communications Corp.* ........... 127,500 3,060,000
E.R.G. Limited ...................... 792,578 666,058
</TABLE>
107
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- ---------------------------------------------------------------------------
<S> <C> <C>
Ericsson LM (B Shares) ............ 24,700 $ 928,595
Filtronic Comtek PLC .............. 300,000 2,181,487
Hong Kong Telecommunications 88,800 182,780
ICG Communications, Inc.* ......... 1,691 46,080
Intermedia Communications,
Inc.* ........................... 289 17,587
Lucent Technologies, Inc. ......... 116,000 9,265,500
Mannesmann AG ..................... 350 175,686
MCI Communications Corp. .......... 182,500 7,813,281
NetCom Systems AB
(B Shares)*+ .................... 31,650 679,646
Nextel Communications, Inc.
(Class A)* ...................... 148,600 3,863,600
SK Telecom Co. Ltd. (ADR)* ........ 131,552 855,085
Spectrum Network Systems
Ltd.*+ .......................... 440,000 94,590
Tadiran Telecommunications Ltd. 30,000 416,250
Tellabs, Inc.* .................... 127,000 6,715,125
Tele-Communications TCI
Ventures Group (Class A)* ....... 210,000 5,945,625
Videsh Sanchar Nigam Ltd.
(GDR)*+ ......................... 1,000 13,930
Vodafone Group PLC ................ 200,000 1,442,821
WorldCom, Inc.* ................... 564,430 17,074,008
-------------
70,633,441
-------------
TOTAL TECHNOLOGY (9.9%) ......... 164,262,590
-------------
DIVERSIFIED
MISCELLANEOUS (1.5%)
BTR PLC ........................... 90,000 272,131
Cie Generale de Eaux .............. 10,850 1,514,331
Crean (James) PLC--Units .......... 40,000 81,384
Damskibs AS (Class B) ............. 5 230,593
GKN PLC ........................... 5,325 109,120
Hanson PLC ........................ 16,666 74,391
Hutchison Whampoa ................. 123,000 771,428
Indonesia Fund, Inc.* ............. 2,200 10,175
Industrias CH S.A.
(B Shares)* ..................... 80,000 476,427
International UNP Holdings* ....... 143,000 12,005
International UNP
Holdings--Warrants* ............. 125,000 0
Lagardere S.C.A. .................. 2,100 69,436
Mitsubishi Corp. .................. 16,000 126,308
Mitsui & Co. ...................... 39,000 230,757
Montedison Spa .................... 74,000 66,470
Pilkington PLC .................... 17,397 36,450
Sime Darby BHD .................... 180,000 173,081
Smiths Industries ................. 5,559 77,466
Sophus Berendsen A/S `B' .......... 385 63,493
Suez Lyonnaise des Eaux ........... 1,000 110,659
Sumitomo Corp. .................... 22,000 123,089
Swire Pacific Ltd. (Class A) ...... 50,000 274,229
Tomkins PLC ....................... 70,000 334,741
Tyco International Ltd. ........... 337,962 15,229,413
Williams Holdings PLC ............. 10,569 58,705
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- ---------------------------------------------------------------------------
<S> <C> <C>
U.S. Industries, Inc. ............. 134,550 $ 4,053,319
-------------
TOTAL DIVERSIFIED (1.5%) ........ 24,579,601
-------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (66.5%)
(Cost $947,340,600) ............. 1,107,614,035
-------------
PREFERRED STOCKS:
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.1%)
Republic Industries, Inc.
6.5% Exch. Conv. ................ 36,700 862,450
-------------
PRINTING, PUBLISHING &
BROADCASTING (0.0%)
ProSieben Media AG* ............... 9,000 412,741
-------------
TRUCKING, SHIPPING (0.0%)
CNF Trust I
5.0% Conv. Series A ............. 15,000 855,000
-------------
TOTAL BUSINESS SERVICES (0.1%) 2,130,191
-------------
CAPITAL GOODS (0.1%)
AEROSPACE
Loral Space & Communications:
6.0% Conv. ...................... 15,700 959,663
6.0% Conv. ....................... 12,600 774,900
-------------
1,734,563
-------------
CONSUMER CYCLICALS
AIRLINES (0.1%)
Continental Airlines Finance
Trust 8.5% Conv. ................ 14,300 1,471,112
-------------
LEISURE RELATED (0.0%)
Village Roadshow Ltd. ............. 10,000 20,560
-------------
RETAIL--GENERAL (0.0%)
Fielmann AG ....................... 3,000 65,038
-------------
TOTAL CONSUMER CYCLICALS (0.1%) 1,556,710
-------------
CREDIT SENSITIVE (0.1%)
UTILITY--ELECTRIC
AES Trust I
5.375% Conv. Series A ........... 18,100 1,298,675
-------------
ENERGY (0.1%)
OIL--DOMESTIC
Devon Financing Trust
$3.25 Conv. ..................... 9,200 673,900
-------------
TECHNOLOGY
TELECOMMUNICATIONS (0.5%)
Intermedia Communications, Inc.:
7.0% Conv. Series D ............. 17,700 725,700
7.0% Conv.+ ..................... 23,000 943,000
Mobile Telecommunications
$2.25 Conv. ..................... 22,100 740,350
Nextel Strypes Trust
7.25% Conv. ..................... 40,700 966,625
Nokia Oyj (A Shares) .............. 19,092 1,355,471
QualComm Financial Trust:
5.75% Conv.+ .................... 29,400 1,376,288
5.75% Conv. ..................... 4,900 229,381
</TABLE>
108
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1997
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
- ------------------------------------------------------------------------------
<S> <C> <C>
WorldCom, Inc.
8.0% Conv. ......................... 23,000 $2,415,000
----------
TOTAL TECHNOLOGY (0.5%) ............ 8,751,815
----------
TOTAL PREFERRED STOCKS (1.0%)
(Cost $13,527,581) ................. 16,145,854
----------
PRINCIPAL
AMOUNT
---------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PROFESSIONAL SERVICES (0.1%)
Career Horizons, Inc.
7.0% Conv., 11/01/02 ............... $ 605,000 1,258,400
Personnel Group of America:
5.75% Conv., 07/01/04 .............. 65,000 73,775
5.75% Conv., 07/01/04+ ............. 295,000 334,825
----------
TOTAL BUSINESS SERVICES (0.1%) 1,667,000
----------
CAPITAL GOODS
AEROSPACE (0.0%)
Orbital Sciences Corp.
5.0% Conv., 10/01/02+ .............. 470,000 600,425
----------
BUILDING & CONSTRUCTION (0.0%)
Halter Marine Group, Inc.
4.5% Conv., 09/15/04+ .............. 540,000 606,825
----------
MACHINERY (0.1%)
DII Group, Inc.
6.0% Conv., 10/15/02+ .............. 800,000 1,223,000
----------
TOTAL CAPITAL GOODS (0.1%) ......... 2,430,250
----------
CONSUMER CYCLICALS
FOOD SERVICES, LODGING (0.1%)
Cendant Corp.
4.75% Conv., 03/01/03 .............. 1,620,000 2,178,900
----------
RETAIL--GENERAL (0.1%)
U.S. Office Products Co.
5.5% Conv., 02/01/01 ............... 1,160,000 1,378,950
----------
TOTAL CONSUMER CYCLICALS (0.2%) 3,557,850
----------
CONSUMER NONCYCLICALS
DRUGS (0.2%)
MedImmune, Inc.:
7.0% Conv. Sub., 07/01/03+ ......... 400,000 909,500
7.0% Conv., 07/01/03 ............... 535,000 1,216,456
Quintiles Transnational Corp.:
4.25% Conv., 05/31/00+ ............. 460,000 516,925
4.25% Conv., 05/31/00 .............. 300,000 337,125
----------
2,980,006
----------
HOSPITAL SUPPLIES & SERVICES (0.1%)
FPA Medical Management, Inc.:
6.5% Conv., 12/15/01+ .............. 630,000 642,600
6.5% Conv., 12/15/01 ............... 435,000 443,700
RES-Care, Inc.
6.0% Conv., 12/01/04 ............... 820,000 934,800
----------
2,021,100
----------
MEDIA & CABLE (0.6%)
Time Warner, Inc.
9.125%, 01/15/13 ................... 9,100,000 10,836,007
----------
TOTAL CONSUMER NONCYCLICALS (0.9%) 15,837,113
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- -----------------------------------------------------------------------
<S> <C> <C>
CREDIT SENSITIVE
BANKS (1.6%)
Deutsche Bank
6.7%, 12/13/06 ...................... $8,000,000 $ 8,110,160
Dime Capital Trust I
9.33%, 05/06/27 ..................... 7,600,000 8,596,816
Grupo Financiero Banorte
Zero Coupon, 12/05/02 ............... 208 2,581
St. George Bank Ltd.
7.15%, 10/15/05+ .................... 9,525,000 9,812,845
-----------
26,522,402
-----------
FINANCIAL SERVICES (1.1%)
Corp Andina de Fomento
7.25%, 03/01/07 ..................... 10,700,000 10,845,734
RAC Financial Group, Inc.:
7.25% Conv. Sub., 08/15/03+ ......... 505,000 1,217,050
7.25% Conv., 08/15/03 ............... 110,000 265,100
World Financial Property
6.95%, 09/01/13+ .................... 5,250,000 5,386,028
-----------
17,713,912
-----------
INSURANCE (0.1%)
Penn Treaty American Corp.:
6.25% Conv., 12/01/03+ .............. 735,000 947,231
6.25% Conv., 12/01/03 ................ 170,000 219,088
-----------
1,166,319
-----------
MORTGAGE RELATED (2.9%)
Federal Home Loan Mortgage
Corp.:
7.0%, 09/01/11 ....................... 9,079,051 9,218,079
7.0%, 01/01/12 ....................... 4,375,706 4,442,711
Federal National Mortgage
Association:
6.5%, 01/01/11 ....................... 833,640 834,161
6.0%, 04/01/11 ....................... 11,048,388 10,868,852
6.5%, 08/01/11 ....................... 8,045,115 8,050,143
7.0%, 05/01/26 ....................... 9,539,154 9,604,736
7.0%, 09/01/27 ....................... 3,498,078 3,522,127
7.0%, 08/01/26 ....................... 2,369,822 2,386,114
-----------
48,926,923
-----------
U.S. GOVERNMENT (12.9%)
U.S. Treasury:
6.125% Note, 08/31/98 ............... 4,375,000 4,390,041
6.375% Note, 05/15/99 ............... 25,925,000 26,159,958
6.0% Note, 08/15/00 ................. 31,150,000 31,373,906
6.25% Note, 04/30/01 ................ 26,500,000 26,914,063
6.5% Note, 08/31/01 ................. 37,400,000 38,323,331
6.5% Note, 05/31/02 ................. 37,600,000 38,704,500
6.875% Note, 05/15/06 ............... 13,605,000 14,561,608
6.125% Bond, 11/15/27 ............... 33,855,000 34,786,013
-----------
215,213,420
-----------
TOTAL CREDIT SENSITIVE (18.6%) 309,542,976
-----------
ENERGY
COAL & GAS PIPELINES (0.1%)
Nabors Industries, Inc.
5.0% Conv., 05/15/06 ................ 845,000 1,529,450
-----------
GAS (0.2%)
Ras Laffan Liquid Natural Gas
8.294%, 03/15/14+ ................... 3,500,000 3,293,521
-----------
</TABLE>
109
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1997
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ---------------------------------------------------------------------
<S> <C> <C>
OIL--SUPPLIES & CONSTRUCTION (0.2%)
Diamond Offshore Drilling, Inc.
3.75% Conv. Sub. Note,
02/15/07 .......................... $ 860,000 $ 1,138,425
Parker Drilling Corp.
5.5% Conv. Sub. Note, 08/01/04 760,000 814,625
Seacor Holdings, Inc.:
5.375% Conv., 11/15/06 ............ 605,000 685,162
5.375% Conv., 11/15/06+ ........... 70,000 79,275
-------------
2,717,487
-------------
TOTAL ENERGY (0.5%) ............... 7,540,458
-------------
TECHNOLOGY
ELECTRONICS (1.0%)
Altera Corp.
5.75% Conv. Sub. Note,
06/15/02+ ......................... 1,165,000 1,598,962
Baan Co.:
4.5% Conv. Sub. Note,
12/15/01+ .......................... 645,000 988,463
4.5% Conv. Sub. Note, 12/15/01 180,000 275,850
Cymer, Inc.
3.5%, 08/06/04+ (a) ............... 1,065,000 805,406
Integrated Process Equipment
6.25% Conv., 09/15/04+ ............ 1,585,000 1,313,569
Level One Communications:
4.0% Conv., 09/01/04+ ............. 910,000 855,400
4.0% Conv., 09/01/04 .............. 280,000 263,200
Photronics, Inc.
6.0% Conv., 06/01/04 .............. 1,485,000 1,702,181
Quantum Corp.
5.0% Conv., 03/01/03+ ............. 280,000 508,200
Sanmina Corp.
5.5% Conv., 08/15/02+ ............. 1,010,000 2,447,988
SCI Systems, Inc.
5.0% Conv., 05/01/06+ ............. 1,310,000 2,439,875
Solectron Corp.
6.0% Conv., 03/01/06+ ............. 855,000 1,172,419
Wind River Systems, Inc.
5.0% Conv., 08/01/02+ ............. 1,000,000 1,070,000
Xilinx, Inc.
5.25% Conv., 11/01/02+ ............ 1,400,000 1,354,500
-------------
16,796,013
-------------
TELECOMMUNICATIONS (0.1%)
Comverse Technology, Inc.:
5.75% Conv. Sub., 10/01/06+ ....... 1,295,000 1,395,362
5.75% Conv., 10/01/06 .............. 45,000 48,488
-------------
1,443,850
-------------
TOTAL TECHNOLOGY (1.1%) ........... 18,239,863
-------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
- ---------------------------------------------------------------------
<S> <C> <C>
DIVERSIFIED (0.0%)
MISCELLANEOUS
Brierley Investment Ltd.
9.0% Conv. Sub. Note,
06/30/98 .......................... $ 14,000 $ 9,105
--------------
TOTAL LONG-TERM DEBT SECURITIES (21.5%)
(Amortized Cost $347,094,868) 358,824,615
--------------
SHORT-TERM DEBT SECURITIES:
BANKERS' ACCEPTANCE (1.2%)
Suntrust Bank
5.73%, due 01/26/98 ............... 20,000,000 19,920,416
--------------
CERTIFICATES OF DEPOSIT (1.5%)
Deutsche Bank
5.75%, due 01/20/98 ............... 25,000,000 24,997,471
--------------
COMMERCIAL PAPER (0.9%)
Province of Quebec
5.68%, due 01/12/98 ............... 15,000,000 14,973,967
--------------
U.S. GOVERNMENT AGENCIES (6.9%)
Federal Home Loan Mortgage
Corp.
6.0%, due 01/02/98 ................ 114,900,000 114,880,850
--------------
TOTAL SHORT-TERM DEBT SECURITIES (10.5%)
(Amortized Cost $174,772,704) 174,772,704
--------------
TOTAL INVESTMENTS (99.5%)
(Cost/Amortized Cost $1,482,735,753) 1,657,357,208
OTHER ASSETS
LESS LIABILITIES (0.5%) ........... 8,761,507
--------------
NET ASSETS (100.0%) ................. $1,666,118,715
==============
</TABLE>
<TABLE>
<S> <C>
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
As a Percentage of Total Investments
Canada ........................... 0.3%
France ........................... 0.8
Germany .......................... 0.9
Japan ............................ 3.5
Netherlands ...................... 0.9
New Zealand & Australia .......... 0.5
Scandinavia ...................... 1.0
Southeast Asia ................... 0.4
Spain ............................ 0.5
Switzerland ...................... 0.6
United Kingdom ................... 3.1
United States ** ................. 86.8
Other European Countries ......... 0.7
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Includes Short-Term Debt Securities of 10.5%.
+ Security exempt from registration under 144A of the securities Act of
1933. These securities may only be resold to qualified institutional
buyers. At December 31, 1997, these securities amounted to $61,346,584 or
3.7% of net assets.
(a) Coupon will increase periodically based upon a predetermined
schedule. Stated interest rate in effect at December 31, 1997.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
110
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1997
1. Organization and Significant Accounting Policies
The Hudson River Trust (the "Trust") (successor to The Hudson River Fund,
Inc., a Maryland corporation organized in 1984) was formed as a Massachusetts
business trust on July 10, 1987 and is registered under the Investment Company
Act of 1940 (the "1940 Act"), as amended, as an open-end management investment
company. The Trust issues shares of beneficial interest currently divided among
fourteen Portfolios (the "Portfolios"): Alliance Money Market, Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance High Yield,
Alliance Growth and Income, Alliance Equity Index, Alliance Common Stock,
Alliance Global, Alliance International, Alliance Aggressive Stock, Alliance
Small Cap Growth, Alliance Conservative Investors, Alliance Balanced and
Alliance Growth Investors. Effective October 2, 1996, the Trust made available
a second class of shares, Class IB, for each of the Trust's Portfolios. In
connection with the Class IB shares offering, the existing class of shares was
redesignated Class IA. The Class IB shares are subject to distribution fees
imposed under a distribution plan (the "Distribution Plan") adopted pursuant to
Rule 12b-1 under the 1940 Act. Under the Trust's multiple class distribution
system, both classes of shares have identical voting, dividend, liquidation,
and other rights, other than the payment of distribution fees under the
Distribution Plan.
Class IA shares are offered to separate accounts of The Equitable Life
Assurance Society of the United States ("Equitable"), a wholly-owned subsidiary
of The Equitable Companies Incorporated, Equitable Variable Life Insurance
Company ("Equitable Variable"), a wholly-owned subsidiary of the Equitable, and
to separate accounts of other insurance companies unaffiliated with Equitable
and Equitable Variable. Effective January 1, 1997, Equitable Variable was
merged into Equitable. Class IB shares are offered to an insurance company
separate account of Equitable. Effective March 12, 1997, the Trust's Board of
Trustees approved the establishment of the Alliance Small Cap Growth Portfolio
at an initial share value of $10. The Portfolio commenced operations on May 1,
1997.
The investment objectives of each Portfolio are as follows:
Alliance Money Market Portfolio -- High level of current income, preserve
its assets and maintain liquidity. The Portfolio pursues this objective by
investing in primarily high quality U.S. dollar denominated money market
instruments.
Alliance Intermediate Government Securities Portfolio -- High current income
consistent with relative stability of principal through investment primarily in
debt securities issued or guaranteed as to principal and interest by the U.S.
Government or any of its agencies or instrumentalities.
Alliance Quality Bond Portfolio -- High current income consistent with
preservation of capital by investing primarily in investment grade fixed income
securities. The Portfolio reserves the right to invest in convertible debt
securities, preferred stocks and dividend-paying common stocks.
Alliance High Yield Portfolio -- High return by maximizing current income
and, to the extent consistent with that objective, capital appreciation. The
Portfolio pursues this objective by investing primarily in a diversified mix of
high yield, fixed income securities involving greater volatility of price and
risk of principal and income than high quality fixed income securities. The
medium and lower quality debt securities in which the Portfolio may invest are
known as "junk bonds."
Alliance Growth and Income Portfolio -- High total return through a
combination of current income and capital appreciation by investing primarily
in income-producing common stocks and securities convertible into common
stocks.
Alliance Equity Index Portfolio -- Total return before expenses that
approximates the total return performance of the Standard & Poor's Corporation
500 Index, including reinvestment of dividends, at a risk level consistent with
that of the Index.
Alliance Common Stock Portfolio -- Long-term growth of its capital and
increase income. The Portfolio pursues this objective by investing primarily in
common stock and other equity-type instruments.
111
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
Alliance Global Portfolio -- Long-term growth of capital. The Portfolio
pursues this objective by investing primarily in equity securities of
non-United States companies as well as United States issuers.
Alliance International Portfolio -- Long-term growth of capital by investing
primarily in a diversified portfolio of equity securities selected principally
to permit participation in non-United States companies with prospects for
growth.
Alliance Aggressive Stock Portfolio -- Long-term growth of capital. The
Portfolio pursues this objective by investing primarily in common stocks and
other equity-type securities issued by quality small and intermediate sized
companies with strong growth prospects.
Alliance Small Cap Growth Portfolio -- Long-term growth of capital. The
Portfolio pursues this objective by investing primarily in common stocks and
other equity-type securities issued by smaller-sized companies with strong
growth potential.
Alliance Conservative Investors Portfolio -- High total return without, in
the investment adviser's opinion, undue risk to principal. The Portfolio
pursues this objective by investing in a diversified mix of publicly traded
equity and debt securities.
Alliance Balanced Portfolio -- High return through both appreciation of
capital and current income. The Portfolio pursues this objective by investing
in a diversified portfolio of publicly traded equity and debt securities and
short-term money market instruments.
Alliance Growth Investors Portfolio -- Highest total return consistent with
the investment adviser's determination of reasonable risk. The Portfolio
pursues this objective by investing in a diversified mix of publicly traded
equity and fixed income securities, including at times common stocks issued by
intermediate and small-sized companies and at times fixed income securities
that are medium and lower quality debt securities known as "junk bonds."
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts and disclosures. Actual results
could differ from those estimates.
The following is a summary of the significant accounting policies of the
Trust:
Stocks listed on national securities exchanges and certain over-the-counter
issues traded on the NASDAQ national market system are valued at the last sale
price or, if there is no sale, at the latest available bid price. Other
unlisted stocks are valued at their last sale price or, if no reported sale
during the day, at a bid price estimated by a broker.
Convertible preferred stocks listed on national securities exchanges are
valued as of their last sale price or, if there is no sale, at the latest
available bid price.
Convertible bonds and unlisted convertible preferred stocks are valued at
bid prices obtained from one or more of the major dealers in such securities.
Where there is a discrepancy between dealers, values may be adjusted based on
recent premium spreads to the underlying common stocks.
Mortgage backed and asset backed securities are valued at prices obtained
from a bond pricing service where available, or at a bid price obtained from
one or more of the major dealers in such securities. If a quoted price is
unavailable, an equivalent yield or yield spread quotes will be obtained from a
broker and converted to a price.
Purchased options, including options on futures, are valued at their last
bid price. Written options are valued at their last asked price.
Long-term corporate bonds are valued at prices obtained from a bond pricing
service of a major dealer in bonds when such prices are available; however,
when such prices are not available, such bonds are valued at a bid price
estimated by a broker.
112
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
U.S. Treasury securities and other obligations issued or guaranteed by the
U.S. Government, its agencies or instrumentalities are valued at representative
quoted prices.
Foreign securities not traded directly, or in American Depository Receipt
(ADR) or similar form in the United States, are valued at representative quoted
prices in the currency of the country of origin.
Except for the Alliance Money Market Portfolio, short-term debt securities
which mature in 60 days or less are valued at amortized cost, which
approximates market value. Short-term debt securities which mature in more than
60 days are valued at representative quoted prices. Short-term debt securities
held in the Alliance Money Market Portfolio are valued at representative quoted
prices regardless of the length of maturity.
Futures and forward contracts are valued at their last sale price or, if
there is no sale, at the latest available bid price.
Other securities, including restricted securities, and assets for which
market quotations are not readily available or for which valuation cannot be
provided, are valued at "fair value" as determined in good faith by the
Valuation Committee of the Board of Trustees.
Securities transactions are recorded on the trade date net of brokerage
fees, commissions, and transfer fees.
Interest income (including amortization of premium and discount on
securities using the effective yield method) is accrued daily. Dividend income
is recorded on the ex-dividend date.
Realized gains and losses on the sale of investments are computed on the
basis of the identified cost of the related investments sold.
Expenses attributable to a single Portfolio are charged to that Portfolio.
Expenses of the Trust are charged to each Portfolio in proportion to net
assets.
The Board of Trustees has approved the lending of portfolio securities,
through its custodian bank, Chase Manhattan Bank, N.A. ("Chase"), acting as
lending agent, to certain broker-dealers in exchange for negotiated lenders'
fees. Any such loan of portfolio securities will be continuously secured by
collateral at least equal to the value of the securities loaned. All loans will
be collateralized in the form of cash or U.S. Government securities. Chase
invests the cash collateral in short-term investments and retains a portion of
the interest earned. Chase will indemnify the Portfolios for any loss resulting
from a borrower's failure to return a loaned security when due. The following
table shows the value of securities loaned and collateral received at December
31, 1997, and the security loan fees received, net of rebates paid, for the
year ended December 31, 1997. Such net fees are included in interest income in
the accompanying Statements of Operations.
<TABLE>
<CAPTION>
VALUE OF VALUE OF SECURITY LOAN
PORTFOLIO SECURITIES LOANED COLLATERAL RECEIVED* FEES RECEIVED
- --------- ----------------- -------------------- -------------
<S> <C> <C> <C>
Alliance Intermediate Government Securities ..... $ 32,201,367 $ 33,220,564 $ 39,876
Alliance Quality Bond ........................... 50,573,670 51,975,110 48,428
Alliance Growth and Income ...................... 82,082,344 83,758,200 44,878
Alliance Equity Index ........................... 111,251,919 113,256,053 53,477
Alliance Common Stock ........................... 662,769,145 672,888,280 585,669
Alliance Global ................................. 112,593,733 116,411,892 396,835
Alliance International .......................... 14,904,809 15,770,821 90,583
Alliance Aggressive Stock ....................... 630,594,623 636,513,616 1,807,252
Alliance Conservative Investors ................. 65,514,619 67,529,380 68,901
Alliance Balanced ............................... 292,916,191 301,012,558 437,345
Alliance Growth Investors ....................... 185,900,995 191,232,973 398,085
</TABLE>
- ----------
* Including U.S. Government securities valued at $18,342,994, $31,657,214,
$60,800, $3,719,500, $10,050,000, $2,564,100, $718,240, $23,874,600,
$37,866,285, $61,873,419 and $31,723,786 for the Alliance Intermediate
Government Securities, Alliance Quality Bond, Alliance Growth and Income,
Alliance Equity Index, Alliance Common Stock, Alliance Global, Alliance
International, Alliance Aggressive Stock, Alliance Conservative Investors,
Alliance Balanced and Alliance Growth Investors Portfolios, respectively.
113
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
The books and records of the Trust are kept in U.S. dollars. Foreign
currency amounts are translated into U.S. dollars at the bid price last quoted
by a composite list of major U.S. banks at the following dates:
(i) market value of investment securities, other assets and liabilities--at
the valuation date.
(ii) purchase and sales of investment securities, income and expenses--at
the date of such transactions.
The Portfolios do not isolate that portion of the results of operations
resulting from changes in foreign exchange rates on investments from the
fluctuations arising from changes in market prices of securities held. Such
fluctuations are included with the net realized and unrealized gain or loss
from investments.
Net currency gains or losses realized and unrealized as a result of
differences between interest or dividends and withholding taxes recorded on the
Portfolio's books and the U.S. dollar equivalent amount actually received or
paid are presented under foreign currency transactions in the realized and
unrealized gains and losses section of the Statements of Operations.
The Trust intends to comply with the requirements of the Internal Revenue
Code applicable to regulated investment companies and to distribute
substantially all of its net investment income and net realized capital gains
to shareholders of each Portfolio. Therefore, no federal income tax provision
is required. Dividends from net investment income are declared and distributed
quarterly; dividends from net realized short-term and long-term capital gains
are declared and distributed at least annually to the shareholders of the
Portfolios to which such gains are attributable. All dividends are reinvested
in additional full and fractional shares of the related Portfolios. All
dividends are distributed on a tax basis and as such, the amounts may differ
from financial statement investment income and realized capital gains.
Options Written:
All Portfolios (except for the Alliance Money Market and Alliance Equity
Index Portfolios) may write (sell) covered options as a hedge to provide
protection against adverse movements in the price of securities in the
portfolio or to enhance investment performance. When a Portfolio writes an
option, an amount equal to the premium received by the Portfolio is recorded as
a liability and is subsequently adjusted on a daily basis to the current market
price of the option written. Premiums received from writing options which
expire unexercised are realized as gains on the expiration date. In writing
options, a Portfolio must assume that the option may be exercised at any time
prior to the expiration of its obligation as a writer, and that in such
circumstances the net proceeds of the sale or cost of purchase of the
underlying securities pursuant to the call or put option may be substantially
below or above the prevailing market price. A Portfolio also has the additional
risk of not being able to enter into a closing purchase transaction if a liquid
secondary market does not exist and bears the risk of unfavorable changes in
the price of the financial instruments underlying the options.
Futures and Forward Contracts:
Futures and forward contracts are agreements to buy or sell a security for a
set price in the future. A Portfolio may buy or sell futures and forward
contracts for the purpose of protecting its portfolio securities against future
changes in interest rates which might adversely affect the value of the
Portfolio's securities or the price of securities that it intends to purchase
at a later date. Initial margin deposits are made upon entering into futures
contracts and can be either in cash or U.S. Treasury securities. During the
period the futures and forward contracts are open, changes in the market price
of the contract are recognized as unrealized gains or losses by
"marking-to-market" at the end of each trading day. Variation margin payments
on futures contracts are received or made, depending upon whether unrealized
gains or losses are incurred. When the contract is closed, the Portfolio
records a realized gain or loss equal to the difference between the proceeds
from (or cost of) the closing transactions and the Portfolio's basis in the
contract. Should interest rates move unexpectedly, the Portfolio may not
achieve the anticipated benefits of the futures and forward contracts and may
incur a loss. The use of futures and forward contracts transactions involves
the risk of imperfect correlation in movements in the price of futures and
forward contracts, interest rates and the underlying hedged assets.
114
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
Limitations on Market and Credit Risk:
Written options, futures and forward contracts involve elements of both
market and credit risk in excess of the amounts reflected in the Statements of
Assets and Liabilities. The risk involved in writing an option on a security is
that, if the option is exercised, the underlying security is then purchased or
sold by the Portfolio at the contract price, which could be disadvantageous
related to the market price. The contract amounts of these futures and forward
contracts reflect the extent of the Portfolio's exposure to off-balance sheet
risk. The Portfolio bears the market risk which arises from any changes in
security values. The credit risk for futures contracts is limited to failure of
the exchange or board of trade which acts as the counterparty to the
Portfolio's futures transactions. Forward contracts are done directly with the
counterparty and not through an exchange and can be terminated only by
agreement of both parties to the contract. There is no daily margin settlement
and the Portfolio is exposed to the risk of default by the counterparty.
Statement of Position 93-2:
For the year ended December 31, 1997, in conformity with Statement of
Position 93-2 Determination, Disclosure and Financial Statement Presentation of
Income, Capital Gain, and Return of Capital Distributions by Investment
Companies, the reclassification arising from current book/tax differences
resulted in increases (decreases) to the components of net assets as follows:
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
INTERMEDIATE ALLIANCE GROWTH ALLIANCE
GOVERNMENT QUALITY ALLIANCE AND EQUITY ALLIANCE ALLIANCE
SECURITIES BOND HIGH YIELD INCOME INDEX COMMON STOCK GLOBAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Undistributed (overdistributed) net
investment income ..................... $ (4,160) $ 664,479 $ 28,777 $ 48,024 $ 260,751 $ (2,631,075) $ 15,935,865
Accumulated net realized gain (loss) ... 4,160 (664,479) (28,777) (48,024) (260,751) 2,631,075 (15,935,865)
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
ALLIANCE AGGRESSIVE SMALL CAP CONSERVATIVE ALLIANCE GROWTH
INTERNATIONAL STOCK GROWTH INVESTORS BALANCED INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Paid-in capital .......................... $ -- $ -- $ (7,066) $ -- $ -- $ --
Undistributed (overdistributed) net
investment income ....................... 3,322,727 1,777,082 410 (146,376) 58,776 4,831,809
Accumulated net realized gain (loss) ..... (3,322,727) (1,777,082) 6,656 146,376 (58,776) (4,831,809)
</TABLE>
Net capital and net currency losses incurred after October 31 and within
the taxable year are deemed to arise on the first day of the Portfolio's next
taxable year. For the period from November 1, 1997 to December 31, 1997 certain
Portfolios incurred and elected to defer until January 1, 1998 for U.S. Federal
income tax purposes net capital and net currency losses of approximately:
<TABLE>
<CAPTION>
CAPITAL CURRENCY
PORTFOLIO LOSSES LOSSES
- --------- ------ ------
<S> <C> <C>
Alliance Equity Index ................... $ -- $ 3,600
Alliance Common Stock ................... -- 33,030
Alliance Global ......................... -- 433,526
Alliance International .................. 4,160,819 670,264
Alliance Small Cap Growth ............... 1,448,447 --
Alliance Conservative Investors ......... -- 37,085
Alliance Balanced ....................... -- 61,818
Alliance Growth Investors ............... -- 81,786
</TABLE>
115
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
2. Management of the Trust
Alliance Capital Management L.P. (Alliance), a publicly traded limited
partnership, indirectly majority-owned by Equitable, is the investment adviser.
Prior to May 1, 1997, the investment advisory fees were as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
-----------------------------------------------
FIRST NEXT OVER
$350 MILLION $400 MILLION $750 MILLION
-------------- -------------- -------------
<S> <C> <C> <C>
Alliance Common Stock, Alliance Money Market and Alliance Balanced
Portfolios ............................................................. .40% .375% .35%
Alliance Aggressive Stock and Alliance Intermediate Government Securities
Portfolios ............................................................. .50% .475% .45%
Alliance High Yield, Alliance Global, Alliance Conservative Investors and
Alliance Growth Investors Portfolios ................................... .55% .525% .50%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
$500 MILLION $500 MILLION $1 BILLION
-------------- -------------- -----------
<S> <C> <C> <C>
Alliance Quality Bond and Alliance Growth and Income Portfolios ......... .55% .525% .50%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
$750 MILLION $750 MILLION $1.5 BILLION
-------------- -------------- -------------
<S> <C> <C> <C>
Alliance Equity Index Portfolio ......................................... .35% .30% .25%
</TABLE>
<TABLE>
<CAPTION>
FIRST NEXT OVER
$500 MILLION $1 BILLION $1.5 BILLION
-------------- ------------ -------------
<S> <C> <C> <C>
Alliance International Portfolio ........................................ .90% .85% .80%
</TABLE>
On December 13, 1996, the Trust's Board of Trustees approved a new
Investment Advisory Agreement with Alliance and subsequently extended the
agreement to the Alliance Small Cap Growth Portfolio on March 12, 1997. On
April 9, 1997, shareholders of each respective Portfolio, except for the
Alliance Small Cap Growth Portfolio which commenced operations on May 1, 1997,
approved a new Investment Advisory Agreement. Effective May 1, 1997, the
advisory fees payable under this agreement are as follows:
<TABLE>
<CAPTION>
AVERAGE DAILY NET ASSETS
---------------------------------------------------------------------
FIRST NEXT NEXT NEXT
PORTFOLIO $750 MILLION $750 MILLION $1 BILLION $2.5 BILLION THEREAFTER
- --------- ------------ ------------ ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Alliance Money Market ............................... .350% .325% .300% .280% .270%
Alliance Intermediate Government Securities ......... .500% .475% .450% .430% .420%
Alliance Quality Bond ............................... .525% .500% .475% .455% .445%
Alliance High Yield ................................. .600% .575% .550% .530% .520%
Alliance Growth and Income .......................... .550% .525% .500% .480% .470%
Alliance Equity Index ............................... .325% .300% .275% .255% .245%
Alliance Common Stock ............................... .475% .425% .375% .355% .345%*
Alliance Global ..................................... .675% .600% .550% .530% .520%
Alliance International .............................. .900% .825% .800% .780% .770%
Alliance Aggressive Stock ........................... .625% .575% .525% .500% .475%
Alliance Small Cap Growth ........................... .900% .850% .825% .800% .775%
Alliance Conservative Investors ..................... .475% .425% .375% .350% .325%
Alliance Balanced ................................... .450% .400% .350% .325% .300%
Alliance Growth Investors ........................... .550% .500% .450% .425% .400%
</TABLE>
- ----------
* On assets in excess of $10 billion, the management fee for the Alliance
Common Stock Portfolio is reduced to 0.335% of average daily net assets.
116
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
3. Distribution Plan
Each Portfolio's Distribution Plan permits the Portfolio to pay a
distribution fee of up to 0.50% of the average daily net assets attributable to
its Class IB shares. The Trust, on behalf of each Portfolio, has entered into a
Distribution Agreement (the "Agreements") pursuant to the Distribution Plans
with Equitable Distributors, Inc. ("EDI"), an indirect, wholly-owned subsidiary
of the Equitable, under which EDI receives payments at a rate equal to 0.25% of
the average daily net assets attributable to the Class IB shares of each
Portfolio except the Small Cap Growth Portfolio. The Small Cap Growth Portfolio
Agreement provides that EDI will receive an annual fee not to exceed the lesser
of (a) 0.25% of the average daily net assets of the Portfolio attributable to
Class IB shares and (b) an amount that, when added to certain other expenses of
the Class IB shares, would result in the ratio of expenses to average daily net
assets attributable to Class IB shares equaling 1.20%.
The Distribution Plans provide that EDI will use the payments received
under the Agreements for services rendered (and expenses borne) in connection
with activities primarily intended to result in the sale of the Trust's Class
IB shares. Since EDI's compensation is not directly tied to its expenses, the
amount of compensation received by it under the Agreements during any year may
be more or less than its actual expenses. For this reason, the Distribution
Plans are characterized by the staff of the Securities and Exchange Commission
as being of the "compensation" variety.
4. Investment Transactions
Investment security transactions, excluding short-term debt securities,
for the year ended December 31, 1997 were as follows:
<TABLE>
<CAPTION>
PURCHASES SALES
----------------------------------- ----------------------------------
STOCKS AND U.S. GOVERNMENT STOCKS AND U.S. GOVERNMENT
PORTFOLIO DEBT SECURITIES AND AGENCIES DEBT SECURITIES AND AGENCIES
- --------- --------------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Alliance Intermediate Government Securities ......... $ -- $ 289,263,347 $ -- $ 268,248,135
Alliance Quality Bond ............................... 163,237,234 495,861,466 171,665,271 442,101,550
Alliance High Yield ................................. 1,235,945,918 -- 1,073,614,879 --
Alliance Growth and Income .......................... 568,400,225 -- 306,859,124 --
Alliance Equity Index ............................... 414,309,473 -- 22,554,753 --
Alliance Common Stock ............................... 4,620,850,933 -- 4,082,534,069 --
Alliance Global ..................................... 706,451,901 -- 588,394,296 --
Alliance International .............................. 160,707,760 -- 101,610,156 --
Alliance Aggressive Stock ........................... 5,505,273,307 -- 5,142,936,366 --
Alliance Small Cap Growth * ......................... 192,773,234 -- 57,648,193 --
Alliance Conservative Investors ..................... 149,330,575 334,113,271 176,462,757 312,290,578
Alliance Balanced ................................... 1,025,160,528 1,195,953,420 1,208,802,299 1,029,716,011
Alliance Growth Investors ........................... 1,135,831,343 607,149,017 1,206,132,190 378,552,050
</TABLE>
- ----------
* For the period from May 1, 1997 (commencement of operations) to December 31,
1997.
No activity is shown for the Alliance Money Market Portfolio since it
trades exclusively in short-term debt securities.
117
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
Transactions in options written for the year ended December 31, 1997 are
summarized as follows:
<TABLE>
<CAPTION>
ALLIANCE
COMMON STOCK
PORTFOLIO
---------------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
------------- -----------------
<S> <C> <C>
Options outstanding--January 1, 1997 ........................ 161,200 $ 68,607,800
Options written ............................................. 1,794,950 623,448,846
Options terminated in closing purchase transactions ......... (910,000) (344,806,113)
Options expired ............................................. (306,750) (103,999,855)
Options exercised ........................................... (374,150) (139,689,978)
--------- --------------
Options outstanding--December 31, 1997 ...................... 365,250 $ 103,560,700
========= ==============
</TABLE>
The Portfolios (except for the Alliance Money Market, Alliance
Intermediate Government Securities and Alliance Equity Index Portfolios) may
enter into forward currency contracts in order to hedge their exposure to
changes in foreign currency exchange rates on their foreign securities
holdings. A forward contract is a commitment to purchase or sell a foreign
currency at a future date at a negotiated forward rate. The gain or loss
arising from the difference between the original contracts and the closing of
such contracts is included in realized gains or losses from foreign currency
transactions. At December 31, 1997, the Alliance Quality Bond, Alliance Global,
Alliance International, Alliance Conservative Investors, Alliance Balanced and
Alliance Growth Investors Portfolios had outstanding forward currency contracts
to buy/sell foreign currencies as follows:
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
ALLIANCE QUALITY BOND PORTFOLIO: (000'S) DATE VALUE (DEPRECIATION)
- -------------------------------- ------- ---- ----- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
Canadian Dollars, settling 02/17/98 .......... 661 $ 467,219 $ 463,327 $ (3,892)
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollar, settling 01/12/98 ......... 11,949 8,017,325 7,785,968 231,357
Canadian Dollar, settling 02/17/98 ........... 661 466,691 463,326 3,365
--------
$230,830
========
</TABLE>
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
ALLIANCE GLOBAL PORTFOLIO: (000'S) DATE VALUE (DEPRECIATION)
- -------------------------- ------- ---- ----- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
Deutsche Marks, settling 01/23/98 ........................ 44,000 $ 25,292,444 $ 24,492,886 $ (799,558)
Irish Punts, settling 01/05/98 ........................... 147 210,357 209,151 (1,206)
Japanese Yen, settling 02/27/98-04/14/98 ................. 2,170,000 16,783,366 16,778,541 (4,825)
Netherlands Guilders, settling 01/23/98 .................. 58,900 30,079,412 29,091,879 (987,533)
Swedish Krona, settling 01/02/98 ......................... 7,950 1,025,125 1,001,272 (23,853)
FOREIGN CURRENCY SALE CONTRACTS
British Pounds, settling 01/02/98 ........................ 700 1,167,348 1,150,313 17,035
Deutsche Marks, settling 01/02/98-01/23/98 ............... 44,160 25,102,287 24,581,827 520,460
Finnish Markka, settling 01/02/98 ........................ 2,200 409,112 403,599 5,513
French Franc, settling 01/02/98 .......................... 7,000 1,178,928 1,163,081 15,847
Japanese Yen, settling 02/27/98-04/14/98 ................. 13,270,000 109,655,596 103,021,611 6,633,985
Netherlands Guilders, settling 01/02/98-01/23/98 ......... 60,300 30,410,102 29,782,333 627,769
Norwegian Krone, settling 01/02/98 ....................... 480 65,964 64,990 974
----------
$6,004,608
==========
</TABLE>
118
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
ALLIANCE INTERNATIONAL PORTFOLIO: (000'S) DATE VALUE (DEPRECIATION)
- --------------------------------- ------- ---- ----- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
Deutsche Marks, settling 01/02/98-01/23/98 ............... 10,240 $ 5,885,470 $ 5,699,277 $ (186,193)
Japanese Yen, settling 02/27/98-04/14/98 ................. 872,000 6,789,467 6,751,775 (37,692)
Netherlands Guilders, settling 01/23/98 .................. 8,100 4,136,558 4,000,751 (135,807)
FOREIGN CURRENCY SALE CONTRACTS
Belgian Franc, settling 01/02/98 ......................... 1,600 43,688 43,184 504
Deutsche Marks, settling 01/02/98-01/23/98 ............... 10,410 5,907,722 5,793,777 113,945
Finnish Markka, settling 01/02/98 ........................ 1,300 241,748 238,490 3,258
Japanese Yen, settling 01/05/98-04/14/98 ................. 4,652,000 38,312,357 36,098,497 2,213,860
Netherlands Guilders, settling 01/02/98-01/23/98 ......... 8,460 4,265,786 4,178,296 87,490
----------
$2,059,365
==========
</TABLE>
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO: (000'S) DATE VALUE (DEPRECIATION)
- ------------------------------------------ ------- ---- ----- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
French Franc, settling 01/23/98-01/30/98 .......... 11,106 $1,870,275 $1,847,854 $ (22,421)
Deutsche Marks, settling 01/02/98 ................. 1,870 1,073,663 1,039,495 (34,168)
Japanese Yen, settling 02/27/98 ................... 56,000 432,305 432,825 520
Netherlands Guilders, settling 01/02/98 ........... 1,940 989,579 956,773 (32,806)
Norwegian Krone, settling 01/23/98 ................ 2,500 347,301 338,969 (8,332)
Spanish Peseta, settling 01/23/98 ................. 90,000 600,200 591,072 (9,128)
Swedish Krona, settling 01/02/98-01/23/98 ......... 2,756 359,907 347,254 (12,653)
FOREIGN CURRENCY SALE CONTRACTS
British Pounds, settling 01/07/98 ................. 28 45,244 45,461 (217)
Deutsche Marks, settling 01/02/98 ................. 1,870 1,048,059 1,039,495 8,564
French Franc, settling 01/23/98 ................... 11,000 1,859,663 1,830,216 29,447
Japanese Yen, settling 01/06/98-04/14/98 .......... 358,673 2,962,975 2,784,133 178,842
Netherlands Guilders, settling 01/02/98 ........... 1,940 964,910 956,772 8,138
Norwegian Krone, settling 01/23/98 ................ 2,500 348,058 338,969 9,089
Spanish Peseta, settling 01/23/98 ................. 90,000 602,208 591,072 11,136
Swedish Krona, settling 01/02/98-01/23/98 ......... 2,328 307,119 293,356 13,763
---------
$ 139,774
=========
</TABLE>
119
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
ALLIANCE BALANCED PORTFOLIO: (000'S) DATE VALUE (DEPRECIATION)
- ---------------------------- ------- ---- ----- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
French Franc, settling 01/23/98 ................... 99,000 $16,671,017 $16,471,943 $ (199,074)
Deutsche Marks, settling 01/02/98 ................. 17,300 9,932,824 9,616,721 (316,103)
Japanese Yen, settling 02/27/98-04/14/98 .......... 1,000,000 7,838,089 7,753,716 (84,373)
Netherlands Guilders, settling 01/02/98 ........... 17,600 8,977,622 8,679,999 (297,623)
Norwegian Krone, settling 01/23/98 ................ 22,000 3,056,252 2,982,930 (73,322)
Spanish Peseta, settling 01/23/98 ................. 800,000 5,335,112 5,253,975 (81,137)
Swedish Krona, settling 01/23/98 .................. 13,000 1,700,062 1,638,400 (61,662)
FOREIGN CURRENCY SALE CONTRACTS
British Pounds, settling 01/07/98 ................. 229 375,646 375,403 243
Deutsche Marks, settling 01/02/98 ................. 17,300 9,695,951 9,616,721 79,230
French Franc, settling 01/23/98-01/30/98 .......... 99,457 16,812,017 16,547,968 264,049
Japanese Yen, settling 01/05/98-04/14/98 .......... 3,988,798 32,900,946 30,969,984 1,930,962
Netherlands Guilders, settling 01/02/98 ........... 17,600 8,753,823 8,679,999 73,824
Norwegian Krone, settling 01/23/98 ................ 22,000 3,062,915 2,982,930 79,985
Spanish Peseta, settling 01/23/98 ................. 800,000 5,352,961 5,253,975 98,986
Swedish Krona, settling 01/05/98-01/23/98 ......... 13,795 1,816,583 1,738,550 78,033
----------
$1,492,018
==========
</TABLE>
<TABLE>
<CAPTION>
CONTRACT COST ON U.S. $ UNREALIZED
AMOUNT ORIGINATION CURRENT APPRECIATION
ALLIANCE GROWTH INVESTORS PORTFOLIO: (000'S) DATE VALUE (DEPRECIATION)
- ------------------------------------ ------- ---- ----- --------------
<S> <C> <C> <C> <C>
FOREIGN CURRENCY BUY CONTRACTS
British Pounds, settling 01/08/98 ........................ 65 $ 108,622 $ 107,420 $ (1,202)
French Franc, settling 01/30/98 .......................... 3,653 608,562 608,068 (494)
Deutsche Marks, settling 01/02/98-01/23/98 ............... 22,980 13,206,726 12,788,720 (418,006)
Japanese Yen, settling 01/05/98-04/14/98 ................. 1,168,671 9,067,606 9,040,016 (27,590)
Netherlands Guilders, settling 01/23/98 .................. 18,900 9,651,967 9,335,085 (316,882)
Swedish Krona, settling 01/02/98 ......................... 9,168 1,182,065 1,154,672 (27,393)
FOREIGN CURRENCY SALE CONTRACTS
Australian Dollars, settling 01/02/98 .................... 132 85,276 86,274 (998)
British Pounds, settling 01/06/98 ........................ 137 227,385 225,848 1,537
Canadian Dollars, settling 01/02/98 ...................... 54 36,927 37,579 (652)
Deutsche Marks, settling 01/02/98-01/23/98 ............... 22,980 13,029,701 12,788,720 240,981
French Franc, settling 01/30/98 .......................... 1,135 189,471 188,841 630
Indonesian Rupiah, settling 01/02/98-01/07/98 ............ 9,315 1,595 1,693 (98)
Japanese Yen, settling 01/05/98-04/14/98 ................. 6,217,997 51,324,595 48,270,138 3,054,457
Netherlands Guilders, settling 01/05/98-01/23/98 ......... 19,317 9,738,946 9,540,548 198,398
----------
$2,702,688
==========
</TABLE>
120
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
As of December 31, 1997, the gross unrealized appreciation (depreciation)
of investments based on the aggregate cost of investments for federal income
tax purposes was as follows:
<TABLE>
<CAPTION>
GROSS UNREALIZED
--------------------------------- NET UNREALIZED
COST OF APPRECIATION
PORTFOLIO INVESTMENTS APPRECIATION DEPRECIATION (DEPRECIATION)
- --------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C>
Alliance Money Market ............................... $ 551,106,796 $ 113,321 $ (1,450) $ 111,871
Alliance Intermediate Government Securities ......... 113,600,359 1,418,742 (81,837) 1,336,905
Alliance Quality Bond ............................... 198,044,047 1,526,456 (488,133) 1,038,323
Alliance High Yield ................................. 402,787,235 10,488,392 (3,831,357) 6,657,035
Alliance Growth and Income .......................... 511,230,453 85,982,551 (13,121,234) 72,861,317
Alliance Equity Index ............................... 717,468,668 230,719,482 (9,632,048) 221,087,434
Alliance Common Stock ............................... 7,105,768,791 2,818,811,560 (199,170,219) 2,619,641,341
Alliance Global ..................................... 1,080,321,370 279,910,104 (138,571,829) 141,338,275
Alliance International .............................. 196,445,985 26,360,668 (39,855,124) (13,494,456)
Alliance Aggressive Stock ........................... 4,074,878,825 759,226,094 (349,159,577) 410,066,517
Alliance Small Cap Growth ........................... 153,262,271 8,273,490 (7,682,047) 591,443
Alliance Conservative Investors ..................... 291,571,008 22,817,939 (3,133,104) 19,684,835
Alliance Balanced ................................... 1,533,148,635 209,288,194 (30,695,116) 178,593,078
Alliance Growth Investors ........................... 1,486,000,218 234,997,062 (63,640,072) 171,356,990
</TABLE>
During the year ended December 31, 1997, the Alliance Intermediate
Government Securities and Alliance Quality Bond Portfolios utilized available
capital loss carryforwards of $999,418 and $4,993,810, respectively.
The Alliance Intermediate Government Securities Portfolio had net capital
loss carryforwards of $8,831,948 (of which $8,349,809 expires in the year 2002
and $482,139 expires in the year 2004). To the extent the above losses are used
to offset future capital gains, it is probable that the gains so offset will
not be distributed to shareholders.
5. Capital Share Transactions
At December 31, 1997, there was an unlimited number of shares of
beneficial interest (Shares), without par value, available for issuance by the
Board of Trustees. Shares are divided into two classes, designated Class IA and
Class IB for each Portfolio.
Transactions in Shares were as follows:
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE
MONEY MARKET GOVERNMENT SECURITIES
PORTFOLIO PORTFOLIO
--------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ........... 88,164,162 49,765,857 4,317,481 3,938,806
Shares issued in
reinvestment of
dividends and
distributions ........ 2,138,588 1,878,824 605,567 496,768
---------- ---------- --------- ---------
Total shares issued ... 90,302,750 51,644,681 4,923,048 4,435,574
Shares redeemed ....... (91,686,416) (44,125,860) (2,249,794) (2,495,957)
----------- ----------- ---------- ----------
Net increase
(decrease) ........... (1,383,666) 7,518,821 2,673,254 1,939,617
=========== =========== ========== ==========
<CAPTION>
ALLIANCE ALLIANCE
QUALITY BOND HIGH YIELD
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ........... 5,108,456 2,872,392 15,273,062 7,067,122
Shares issued in
reinvestment of
dividends and
distributions ........ 1,161,537 1,135,383 3,903,981 2,737,878
--------- --------- ---------- ---------
Total shares issued ... 6,269,993 4,007,775 19,177,043 9,805,000
Shares redeemed ....... (1,749,691) (4,048,559) (4,915,625) (2,158,843)
---------- ---------- ---------- ----------
Net increase
(decrease) ........... 4,520,302 (40,784) 14,261,418 7,646,157
========== ========== ========== ==========
</TABLE>
121
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
GROWTH AND INCOME EQUITY INDEX
PORTFOLIO PORTFOLIO
------------------------------ -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
--------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold .............. 17,042,406 9,026,248 25,418,356 16,152,780
Shares issued in
reinvestment of
dividends and
distributions ........... 2,393,845 1,157,520 723,055 1,372,168
---------- --------- ---------- ----------
Total shares issued . 19,436,251 10,183,768 26,141,411 17,524,948
Shares redeemed .......... (1,171,007) (730,115) (3,834,705) (4,670,841)
---------- ---------- ---------- ----------
Net increase ............. 18,265,244 9,453,653 22,306,706 12,854,107
========== ========== ========== ==========
<CAPTION>
ALLIANCE ALLIANCE
COMMON STOCK GLOBAL
PORTFOLIO PORTFOLIO
--------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold .............. 50,744,225 43,446,898 13,465,598 15,536,853
Shares issued in
reinvestment of
dividends and
distributions ........... 35,866,900 39,581,929 5,883,409 3,493,773
---------- ---------- ---------- ----------
Total shares issued . 86,611,125 83,028,827 19,349,007 19,030,626
Shares redeemed .......... (18,396,632) (15,634,826) (8,663,149) (3,682,913)
----------- ----------- ---------- ----------
Net increase ............. 68,214,493 67,394,001 10,685,858 15,347,713
=========== =========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
INTERNATIONAL AGGRESSIVE STOCK
PORTFOLIO PORTFOLIO
-------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1997 1996 1997 1996
---------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ............. 17,702,398 12,450,977 34,847,127 28,813,436
Shares issued in
reinvestment of
dividends and
distributions .......... 1,469,420 409,789 11,233,155 18,391,950
---------- ---------- ---------- ----------
Total shares issued ..... 19,171,818 12,860,766 46,080,282 47,205,386
Shares redeemed ......... (13,816,916) (2,284,561) (27,155,091) (15,090,379)
----------- ---------- ----------- -----------
Net increase ............ 5,354,902 10,576,205 18,925,191 32,115,007
=========== ========== =========== ===========
<CAPTION>
ALLIANCE ALLIANCE
SMALL CAP GROWTH CONSERVATIVE INVESTORS
PORTFOLIO PORTFOLIO
------------------ -------------------------------
MAY 1, 1997* YEAR ENDED
TO DECEMBER 31,
DECEMBER 31, 1997 1997 1996
------------------ --------------- ---------------
<S> <C> <C> <C>
Class IA
- --------
Shares sold ............. 12,473,113 2,875,061 4,420,391
Shares issued in
reinvestment of
dividends and
distributions .......... 185,690 1,809,193 1,758,154
---------- --------- ---------
Total shares issued ..... 12,658,803 4,684,254 6,178,545
Shares redeemed ......... (4,992,168) (3,816,982) (3,042,720)
---------- ---------- ----------
Net increase ............ 7,666,635 867,272 3,135,825
========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
BALANCED GROWTH INVESTORS
PORTFOLIO PORTFOLIO
---------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
Class IA 1997 1996 1997 1996
- -------- ---------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Shares sold ..................... 3,662,533 3,826,284 9,706,135 17,024,570
Shares issued in
reinvestment of
dividends and
distributions .................. 8,034,691 11,161,085 6,731,864 9,635,249
--------- ---------- --------- ----------
Total shares issued ............. 11,697,224 14,987,369 16,437,999 26,659,819
Shares redeemed ................. (12,097,554) (7,431,615) (4,231,449) (1,643,924)
----------- ---------- ---------- ----------
Net increase (decrease) ......... (400,330) 7,555,754 12,206,550 25,015,895
=========== ========== ========== ==========
</TABLE>
- ----------
* Commencement of operations.
122
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1997
<TABLE>
<CAPTION>
ALLIANCE
MONEY MARKET
PORTFOLIO
----------------------------------
YEAR ENDED OCTOBER 2, 1996*
DECEMBER 31, TO
Class IB 1997 DECEMBER 31, 1996
- -------- -------------- -------------------
<S> <C> <C>
Shares sold ................. 15,458,380 353,450
Shares issued in
reinvestment of
dividends and
distributions .............. 276,519 3,389
---------- -------
Total shares issued ......... 15,734,899 356,839
Shares redeemed ............. (3,884,676) (43,566)
---------- -------
Net increase ................ 11,850,223 313,273
========== =======
<CAPTION>
ALLIANCE
INTERMEDIATE ALLIANCE
GOVERNMENT ALLIANCE GROWTH AND
SECURITIES HIGH YIELD INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ---------------------------------- ------------------
MAY 1, 1997* YEAR ENDED OCTOBER 2, 1996* MAY 1, 1997*
TO DECEMBER 31, TO TO
Class IB DECEMBER 31, 1997 1997 DECEMBER 31, 1996 DECEMBER 31, 1997
- -------- ------------------- -------------- ------------------- ------------------
<S> <C> <C> <C> <C>
Shares sold ................. 536,124 5,872,392 64,659 2,001,059
Shares issued in
reinvestment of
dividends and
distributions .............. 9,576 496,765 3,757 127,333
------- --------- ------ ---------
Total shares issued ......... 545,700 6,369,157 68,416 2,128,392
Shares redeemed ............. (10,301) (51,149) -- (266)
------- --------- ------ ---------
Net increase ................ 535,399 6,318,008 68,416 2,128,126
======= ========= ====== =========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
EQUITY INDEX COMMON STOCK
PORTFOLIO PORTFOLIO
------------------- ----------------------------------
MAY 1, 1997* YEAR ENDED OCTOBER 2, 1996*
TO DECEMBER 31, TO
Class IB DECEMBER 31, 1997 1997 DECEMBER 31, 1996
- -------- ------------------- -------------- -------------------
<S> <C> <C> <C>
Shares sold ................. 7,451 9,736,070 64,063
Shares issued in
reinvestment of
dividends and
distributions .............. 55 826,867 4,203
----- --------- ------
Total shares issued ......... 7,506 10,562,937 68,266
Shares redeemed ............. (1,926) (29,575) --
------ ---------- ------
Net increase ................ 5,580 10,533,362 68,266
====== ========== ======
<CAPTION>
ALLIANCE ALLIANCE
GLOBAL INTERNATIONAL
PORTFOLIO PORTFOLIO
---------------------------------- ------------------
YEAR ENDED OCTOBER 2, 1996* MAY 1, 1997*
DECEMBER 31, TO TO
Class IB 1997 DECEMBER 31, 1996 DECEMBER 31, 1997
- -------- -------------- ------------------- ------------------
<S> <C> <C> <C>
Shares sold ................. 1,232,644 16,657 317,031
Shares issued in
reinvestment of
dividends and
distributions .............. 99,584 486 22,868
--------- ------ -------
Total shares issued ......... 1,332,228 17,143 339,899
Shares redeemed ............. (103,224) --- (19,496)
--------- ------ -------
Net increase ................ 1,229,004 17,143 320,403
========= ====== =======
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
AGGRESSIVE STOCK
PORTFOLIO
----------------------------------
YEAR ENDED OCTOBER 2, 1996*
DECEMBER 31, TO
Class IB 1997 DECEMBER 31, 1996
- -------- -------------- -------------------
<S> <C> <C>
Shares sold ................ 1,856,882 16,059
Shares issued in
reinvestment of
dividends and
distributions ............. 175,796 1,035
--------- ------
Total shares issued ........ 2,032,678 17,094
Shares redeemed ............ (15,597) ---
--------- ------
Net increase ............... 2,017,081 17,094
========= ======
<CAPTION>
ALLIANCE
ALLIANCE CONSERVATIVE ALLIANCE
SMALL CAP GROWTH INVESTORS GROWTH INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO
------------------- ------------------- ---------------------------------
MAY 1, 1997* MAY 1, 1997* YEAR ENDED OCTOBER 2, 1996*
TO TO DECEMBER 31, TO
Class IB DECEMBER 31, 1997 DECEMBER 31, 1997 1997 DECEMBER 31, 1996
- -------- ------------------- ------------------- -------------- ------------------
<S> <C> <C> <C> <C>
Shares sold ................ 3,666,066 467,751 1,855,983 26,902
Shares issued in
reinvestment of
dividends and
distributions ............. 91,565 20,199 130,747 571
--------- ------- --------- ------
Total shares issued ........ 3,757,631 487,950 1,986,730 27,473
Shares redeemed ............ (5,055) (8,774) (85,261) (5)
--------- ------- --------- ------
Net increase ............... 3,752,576 479,176 1,901,469 27,468
========= ======= ========= ======
</TABLE>
- ----------
* Commencement of operations.
123
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Concluded)
December 31, 1997
6. Transactions with Affiliated Companies
An affiliated company is a company in which a Portfolio has ownership of
at least 5% of the voting securities. Investments in companies which were
affiliates during the year ended December 31, 1997 are summarized as follows:
<TABLE>
<CAPTION>
MARKET VALUE
DECEMBER 31, PURCHASES SALES
1996 AT COST AT COST
-------------- ----------- -----------
<S> <C> <C> <C>
ALLIANCE COMMON STOCK PORTFOLIO:
- --------------------------------
CBL & Associates Properties, Inc. (a) ........ $ 27,872,550 $ -- $ 1,365,000
Ceridian Corp ................................ 148,432,500 5,701,500 --
Chris Craft Industries, Inc. (Class B) ....... 49,849,843 -- --
CompUSA, Inc. (a) ............................ 65,331,750 60,013,001 131,193,635
Regency Realty Corp. (a) ..................... 16,372,125 -- 9,420,426
Teleport Communications Group, Inc.
(Class A) ................................... 610,000 216,341,430 50,817,405
--------------
$ 308,468,768
==============
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
- ------------------------------------
Aames Financial Corp. (a) .................... $ 39,907,350 $ -- $42,877,524
AK Steel Holding Corp. (a) ................... 52,554,637 73,027,066 115,247,008
Centocor, Inc. ............................... 66,044,550 153,361,306 1,564,875
Circuit City Stores, Inc.-CarMax Group -- 114,969,960 6,657,086
Comverse Technology, Inc. .................... -- 82,646,377 --
Continental Airlines, Inc. (Class B) ......... 47,587,125 95,672,700 --
Crompton & Knowles Corp. ..................... 65,534,700 34,325,930 614,460
DT Industries, Inc. (a) ...................... 20,366,500 22,230,101 42,269,251
Chancellor Media Corp. (Class A) (a) ......... 62,782,500 26,261,011 97,120,056
Harman International Industries, Inc. (a)..... 83,281,750 19,373,632 76,334,998
MedImmune, Inc. .............................. 17,205,700 389,200 84,900
Mohawk Industries, Inc. (a) .................. 27,068,800 19,900,747 --
National Steel Corp. (a) ..................... -- 28,264,493 28,264,495
Nine West Group, Inc. (a) .................... 144,356,100 17,605,733 133,671,638
Polymer Group, Inc. (a) ...................... 36,167,575 -- 46,201,328
Security Capital Group, Inc. (Class B) ....... -- 40,510,428 --
Suburban Lodges of America ................... 15,078,400 6,099,725 6,680,579
Telephone & Data Systems, Inc. ............... 104,508,750 56,919,636 70,807,836
Tommy Hilfiger Corp. ......................... 54,110,400 38,382,299 7,604,889
Ultramar Diamond Shamrock Corp. (a)........... 132,338,671 12,303,736 104,934,966
Xtra Corp. (a) ............................... 59,701,350 13,514,957 78,406,603
--------------
$1,028,594,858
==============
<CAPTION>
MARKET VALUE REALIZED
DECEMBER 31, DIVIDEND GAIN
1997 INCOME (LOSS)
-------------- ---------- -----------
<S> <C> <C> <C>
ALLIANCE COMMON STOCK PORTFOLIO:
- --------------------------------
CBL & Associates Properties, Inc. (a) ........ $ 24,865,250 $1,399,008 $ 345,043
Ceridian Corp ................................ 174,774,688 -- --
Chris Craft Industries, Inc. (Class B) ....... 64,143,286 -- --
CompUSA, Inc. (a) ............................ -- -- 25,854,610
Regency Realty Corp. (a) ..................... 3,563,381 762,216 3,605,448
Teleport Communications Group, Inc.
(Class A) ................................... 220,103,625 -- 30,473,635
-------------- ---------- -----------
$ 487,450,230 $2,161,224 $60,278,736
============== ========== ===========
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
- ------------------------------------
Aames Financial Corp. (a) .................... $ -- $ 48,335 $(9,329,592)
AK Steel Holding Corp. (a) ................... 7,421,675 1,719,840 1,150,485
Centocor, Inc. ............................... 167,463,625 -- 538,805
Circuit City Stores, Inc.-CarMax Group 56,346,300 -- (1,898,235)
Comverse Technology, Inc. .................... 72,520,500 -- 431,918
Continental Airlines, Inc. (Class B) ......... 213,588,375 -- --
Crompton & Knowles Corp. ..................... 137,800,000 261,900 292,418
DT Industries, Inc. (a) ...................... -- 29,924 (3,199,546)
Chancellor Media Corp. (Class A) (a) ......... -- -- 108,624,669
Harman International Industries, Inc. (a)..... -- 220,450 (15,768,300)
MedImmune, Inc. .............................. 57,443,925 -- 818,670
Mohawk Industries, Inc. (a) .................. 69,103,125 -- --
National Steel Corp. (a) ..................... -- -- 3,035,056
Nine West Group, Inc. (a) .................... -- -- 12,984,585
Polymer Group, Inc. (a) ...................... -- -- (22,064,281)
Security Capital Group, Inc. (Class B) ....... 38,509,250 -- --
Suburban Lodges of America ................... 12,034,500 -- 2,551,018
Telephone & Data Systems, Inc. ............... 133,322,406 629,885 (3,646,115)
Tommy Hilfiger Corp. ......................... 68,124,937 -- (1,608,315)
Ultramar Diamond Shamrock Corp. (a)........... 34,750,125 4,075,705 6,800,077
Xtra Corp. (a) ............................... -- 614,880 (6,280,053)
-------------- ---------- -----------
$1,068,428,743 $7,600,919 $73,433,264
============== ========== ===========
</TABLE>
- ----------
(a) Holdings represented less than 5% of outstanding shares at December
31, 1997, although ownership was above 5% for a period of time
during the year.
124
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS
December 31, 1997
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(C)
ALLIANCE MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1997 1996 1995 1994 1993*
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) ...... $ 10.17 $ 10.16 $ 10.14 $ 10.12 $ 10.11
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.54 0.54 0.57 0.41 0.30
Net realized and unrealized gain (loss) on
investments ................................. -- (0.01) -- -- --
-------- -------- -------- -------- --------
Total from investment operations ............. 0.54 0.53 0.57 0.41 0.30
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.53) (0.52) (0.55) (0.39) (0.29)
Dividends in excess of net investment
income ...................................... -- -- -- -- --
Distributions from realized gains ............ (0.00) -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ............ (0.53) (0.52) (0.55) (0.39) (0.29)
-------- -------- -------- -------- --------
Net asset value, end of period ................ $ 10.18 $ 10.17 $ 10.16 $ 10.14 $ 10.12
======== ======== ======== ======== ========
Total return (d) .............................. 5.42% 5.33% 5.74% 4.02% 3.00%
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $449,960 $463,422 $386,691 $325,391 $248,460
Ratio of expenses to average net assets ....... 0.39% 0.43% 0.44% 0.42% 0.42%
Ratio of net investment income to average
net assets ................................... 5.28% 5.17% 5.53% 4.01% 2.91%
<CAPTION>
CLASS IB
------------------------------
OCTOBER 2,
YEAR ENDED 1996 TO
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- ---------------
<S> <C> <C>
Net asset value, beginning of period (a) ...... $ 10.16 $ 10.16
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.52 0.11
Net realized and unrealized gain (loss) on
investments ................................. -- 0.01
-------- ---------
Total from investment operations ............. 0.52 0.12
-------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.51) (0.02)
Dividends in excess of net investment
income ...................................... -- (0.10)
Distributions from realized gains ............ (0.00) --
-------- ----------
Total dividends and distributions ............ (0.51) (0.12)
-------- ----------
Net asset value, end of period ................ $ 10.17 $ 10.16
======== ==========
Total return (d) .............................. 5.16% 1.29%
======== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $123,675 $ 3,184
Ratio of expenses to average net assets ....... 0.63% 0.67%(b)
Ratio of net investment income to average
net assets ................................... 5.02% 4.94%(b)
</TABLE>
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO(E):
<TABLE>
<CAPTION>
CLASS IA CLASS IB
------------------------------------------------------------- ----------------
MAY 1, 1997
YEAR ENDED DECEMBER 31, TO
------------------------------------------------------------- DECEMBER 31,
1997 1996 1995 1994 1993* 1997
------------ ----------- ----------- ----------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) ....... $ 9.29 $ 9.47 $ 8.87 $ 10.08 $ 10.53 $ 9.27
------- ------ ------ ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.53 0.54 0.58 0.65 0.59 0.32
Net realized and unrealized gain (loss) on
investments .................................. 0.13 (0.19) 0.57 (1.08) 0.51 0.22
------- ------- ------ ------- ------- --------
Total from investment operations .............. 0.66 0.35 1.15 (0.43) 1.10 0.54
------- ------- ------ ------- ------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.51) (0.53) (0.55) (0.78) (0.68) (0.38)
Distributions from realized gains ............. -- -- -- -- (0.87) --
-------- ------- ------- ------- -------- --------
Total dividends and distributions ............. (0.51) (0.53) (0.55) (0.78) (1.55) (0.38)
-------- ------- ------- ------- -------- --------
Net asset value, end of period ................. $ 9.44 $ 9.29 $ 9.47 $ 8.87 $ 10.08 $ 9.43
======== ======= ======= ======= ======== ========
Total return (d) ............................... 7.29% 3.78% 13.33% (4.37)% 10.58% 5.83%
======== ========= ========= ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $115,114 $88,384 $71,780 $48,518 $158,511 $ 5,052
Ratio of expenses to average net assets ........ 0.55% 0.56% 0.57% 0.56% 0.53% 0.81%(b)
Ratio of net investment income to average
net assets .................................... 5.61% 5.73% 6.15% 6.75% 5.43% 5.15%(b)
Portfolio turnover rate ........................ 285% 318% 255% 133% 254% 285%
</TABLE>
125
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1997
ALLIANCE QUALITY BOND PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------
1997 1996 1995 1994
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (a) .............................. $ 9.49 $ 9.61 $ 8.72 $ 9.82
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................................ 0.60 0.57 0.57 0.66
Net realized and unrealized gain (loss) on investments and foreign
currency transactions ............................................... 0.24 (0.07) 0.88 (1.16)
------- -------- ------- -------
Total from investment operations ..................................... 0.84 0.50 1.45 (0.50)
------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ................................. (0.59) (0.60) (0.56) (0.55)
Dividends in excess of net investment income ......................... -- (0.02) -- --
Distributions in excess of realized gains ............................ -- -- -- --
Tax return of capital distributions .................................. -- -- -- (0.05)
-------- -------- -------- -------
Total dividends and distributions .................................... (0.59) (0.62) (0.56) (0.60)
-------- -------- -------- -------
Net asset value, end of period ........................................ $ 9.74 $ 9.49 $ 9.61 $ 8.72
======== ======== ======== =======
Total return (d) ...................................................... 9.14% 5.36% 17.02% (5.10)%
======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ..................................... $203,233 $155,023 $157,443 $127,575
Ratio of expenses to average net assets ............................... 0.57% 0.59% 0.59% 0.59%
Ratio of net investment income to average net assets .................. 6.19% 6.06% 6.13% 7.17%
Portfolio turnover rate ............................................... 374% 431% 411% 222%
<CAPTION>
CLASS IA
------------------
OCTOBER 1, 1993
TO
DECEMBER 31, 1993
------------------
<S> <C>
Net asset value, beginning of period (a) .............................. $ 10.00
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ................................................ 0.11
Net realized and unrealized gain (loss) on investments and foreign
currency transactions ............................................... ( 0.16)
---------
Total from investment operations ..................................... ( 0.05)
---------
LESS DISTRIBUTIONS:
Dividends from net investment income ................................. ( 0.12)
Dividends in excess of net investment income ......................... --
Distributions in excess of realized gains ............................ ( 0.01)
Tax return of capital distributions .................................. --
---------
Total dividends and distributions .................................... ( 0.13)
---------
Net asset value, end of period ........................................ $ 9.82
=========
Total return (d) ...................................................... ( 0.51)%
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ..................................... $ 104,832
Ratio of expenses to average net assets ............................... 0.69%(b)
Ratio of net investment income to average net assets .................. 4.62%(b)
Portfolio turnover rate ............................................... 77%
</TABLE>
ALLIANCE HIGH YIELD PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1997 1996 1995 1994 1993*
------------ ------------ ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) ....... $ 10.02 $ 9.64 $ 8.91 $ 10.08 $ 9.15
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 1.04 1.02 0.98 0.89 0.94
Net realized and unrealized gain (loss) on
investments .................................. 0.75 1.07 0.73 ( 1.17) 1.10
------- ------- ------- ------- -------
Total from investment operations .............. 1.79 2.09 1.71 ( 0.28) 2.04
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.97) ( 0.98) (0.94) ( 0.88) ( 0.92)
Dividends in excess of net investment
income ....................................... -- ( 0.03) (0.04) ( 0.01) --
Distributions from realized gains ............. ( 0.43) ( 0.70) -- -- ( 0.19)
Distributions in excess of realized gains ..... -- -- -- -- --
-------- -------- -------- ------- -------
Total dividends and distributions ............. ( 1.40) ( 1.71) (0.98) ( 0.89) ( 1.11)
-------- -------- -------- ------- -------
Net asset value, end of period ................. $ 10.41 $ 10.02 $ 9.64 $ 8.91 $ 10.08
======== ======== ======== ======= =======
Total return (d) ............................... 18.48% 22.89% 19.92% ( 2.79)% 23.15%
======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $355,473 $199,360 $118,129 $73,895 $67,169
Ratio of expenses to average net assets ........ 0.62% 0.59% 0.60% 0.61% 0.63%
Ratio of net investment income to average
net assets .................................... 9.82% 9.93% 10.34% 9.23% 9.52%
Portfolio turnover rate ........................ 390% 485% 350% 248% 280%
<CAPTION>
CLASS IB
-------------------------------
OCTOBER 2,
YEAR ENDED 1996 TO
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (a) ....... $ 10.01 $ 10.25
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 1.05 0.19
Net realized and unrealized gain (loss) on
investments .................................. 0.71 0.15
------- ---------
Total from investment operations .............. 1.76 0.34
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.95) (0.03)
Dividends in excess of net investment
income ....................................... -- (0.25)
Distributions from realized gains ............. (0.43) (0.01)
Distributions in excess of realized gains ..... -- (0.29)
------- ---------
Total dividends and distributions ............. (1.38) (0.58)
------- ---------
Net asset value, end of period ................. $ 10.39 $ 10.01
======= =========
Total return (d) ............................... 18.19% 3.32%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $66,338 $ 685
Ratio of expenses to average net assets ........ 0.88% 0.82%(b)
Ratio of net investment income to average
net assets .................................... 9.76% 8.71%(b)
Portfolio turnover rate ........................ 390% 485%
</TABLE>
126
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1997
ALLIANCE GROWTH AND INCOME PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------
1997 1996 1995 1994
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (a) ........................ $ 13.01 $ 11.70 $ 9.70 $ 9.95
-------- -------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................................... 0.15 0.24 0.33 0.31
Net realized and unrealized gain (loss) on investments ......... 3.30 2.05 1.97 (0.36)
-------- -------- ------- -------
Total from investment operations ............................... 3.45 2.29 2.30 (0.05)
-------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ........................... (0.15) (0.23) (0.30) (0.20)
Dividends in excess of net investment income ................... -- -- -- --
Distributions from realized gains .............................. (0.93) (0.75) -- --
Tax return of capital distributions ............................ -- -- -- --
--------- --------- ------- -------
Total dividends and distributions .............................. (1.08) (0.98) (0.30) (0.20)
--------- --------- ------- -------
Net asset value, end of period .................................. $ 15.38 $ 13.01 $ 11.70 $ 9.70
========= ========= ======= =======
Total return (d) ................................................ 26.90% 20.09% 24.07% (0.58)%
========= ========= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................... $ 555,059 $ 232,080 $98,053 $31,522
Ratio of expenses to average net assets ......................... 0.58% 0.58% 0.60% 0.78%
Ratio of net investment income to average net assets ............ 0.99% 1.94% 3.11% 3.13%
Portfolio turnover rate ......................................... 79% 88% 65% 52%
Average commission rate paid (f) ................................ $ 0.0586 $ 0.0604 -- --
<CAPTION>
CLASS IA CLASS IB
------------------ ------------------
OCTOBER 1, 1993 MAY 1, 1997
TO TO
DECEMBER 31, 1993 DECEMBER 31, 1997
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period (a) ........................ $ 10.00 $ 13.42
--------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................................... 0.03 0.05
Net realized and unrealized gain (loss) on investments ......... (0.06) 2.91
--------- -------
Total from investment operations ............................... (0.03) 2.96
--------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ........................... (0.02) (0.09)
Dividends in excess of net investment income ................... (0.00) --
Distributions from realized gains .............................. -- (0.93)
Tax return of capital distributions ............................ (0.00) --
--------- ---------
Total dividends and distributions .............................. (0.02) (1.02)
--------- ---------
Net asset value, end of period .................................. $ 9.95 $ 15.36
========= =========
Total return (d) ................................................ (0.25)% 22.41%
========= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................... $ 1,456 $32,697
Ratio of expenses to average net assets ......................... 2.70%(b) 0.83%(b)
Ratio of net investment income to average net assets ............ 1.12%(b) 0.43%(b)
Portfolio turnover rate ......................................... 48% 79%
Average commission rate paid (f) ................................ -- $0.0586
</TABLE>
ALLIANCE EQUITY INDEX PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------
1997 1996 1995
-------- -------- --------
<S> <C> <C> <C>
Net asset value, beginning of period (a) ..................... $ 15.16 $ 13.13 $ 9.87
-------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................................... 0.26 0.27 0.26
Net realized and unrealized gain (loss) on investments and
foreign currency transactions .............................. 4.64 2.65 3.32
-------- -------- --------
Total from investment operations ............................ 4.90 2.92 3.58
-------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........................ (0.25) (0.25) (0.22)
Distributions from realized gains ........................... (0.07) (0.64) (0.09)
Distributions in excess of realized gains ................... -- -- (0.01)
-------- -------- --------
Total dividends and distributions ........................... (0.32) (0.89) (0.32)
-------- -------- --------
Net asset value, end of period ............................... $ 19.74 $ 15.16 $ 13.13
======== ======== ========
Total return (d) ............................................. 32.58% 22.39% 36.48%
======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................ $943,631 $386,249 $165,785
Ratio of expenses to average net assets ...................... 0.37% 0.39% 0.48%
Ratio of net investment income to average net assets ......... 1.46% 1.91% 2.16%
Portfolio turnover rate ...................................... 3% 15% 9%
Average commission rate paid (f) ............................. $ 0.0309 $ 0.0306 --
<CAPTION>
CLASS IA CLASS IB
------------------ ------------------
MARCH 1, 1994 MAY 1, 1997
TO TO
DECEMBER 31, 1994 DECEMBER 31, 1997
------------------ ------------------
<S> <C> <C>
Net asset value, beginning of period (a) ..................... $ 10.00 $ 16.35
--------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................................... 0.20 0.14
Net realized and unrealized gain (loss) on investments and
foreign currency transactions .............................. (0.09) 3.48
--------- --------
Total from investment operations ............................ 0.11 3.62
--------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........................ (0.20) (0.17)
Distributions from realized gains ........................... (0.03) (0.07)
Distributions in excess of realized gains ................... (0.01) --
--------- --------
Total dividends and distributions ........................... (0.24) (0.24)
--------- --------
Net asset value, end of period ............................... $ 9.87 $ 19.73
========= ========
Total return (d) ............................................. 1.08% 22.28%
========= ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............................ $ 36,748 $ 110
Ratio of expenses to average net assets ...................... 0.49%(b) 0.62%(b)
Ratio of net investment income to average net assets ......... 2.42%(b) 1.10%(b)
Portfolio turnover rate ...................................... 7% 3%
Average commission rate paid (f) ............................. -- $ 0.0309
</TABLE>
127
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1997
ALLIANCE COMMON STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993*
---------- ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) .... $ 18.23 $ 16.48 $ 13.36 $ 14.65 $ 13.49
---------- ---------- ----------- ----------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.14 0.15 0.20 0.20 0.23
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .............................. 5.12 3.73 4.12 (0.51) 3.10
---------- ---------- ----------- ----------- ----------
Total from investment operations ........... 5.26 3.88 4.32 (0.31) 3.33
---------- ---------- ----------- ----------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income........ (0.11) (0.15) (0.20) (0.19) (0.23)
Dividends in excess of net investment
income .................................... -- -- (0.02) (0.01) (0.00)
Distributions from realized gains .......... (1.77) (1.76) (0.95) (0.77) (1.94)
Distributions in excess of realized gains -- (0.22) (0.03) -- --
Tax return of capital distributions ........ -- -- -- (0.01) --
---------- ---------- ----------- ----------- ----------
Total dividends and distributions .......... (1.88) (2.13) (1.20) (0.98) (2.17)
---------- ---------- ----------- ----------- ----------
Net asset value, end of period .............. $ 21.61 $ 18.23 $ 16.48 $ 13.36 $ 14.65
========== ========== ========== ========== ==========
Total return (d) ............................ 29.40% 24.28% 32.45% (2.14)% 24.84%
========== ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........... $9,331,994 $6,625,390 $4,879,677 $3,466,245 $3,125,128
Ratio of expenses to average net assets ..... 0.39% 0.38% 0.38% 0.38% 0.38%
Ratio of net investment income to
average net assets ......................... 0.69% 0.85% 1.27% 1.40% 1.55%
Portfolio turnover rate ..................... 52% 55% 61% 52% 82%
Average commission rate paid (f) ............ $ 0.0579 $ 0.0565 -- -- --
<CAPTION>
CLASS IB
--------------------------------
OCTOBER 2,
YEAR ENDED 1996 TO
DECEMBER 31, DECEMBER 31,
1997 1996
------------- ------------------
<S> <C> <C>
Net asset value, beginning of period (a) .... $ 18.22 $ 17.90
--------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.10 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .............................. 5.11 1.52
--------- -------
Total from investment operations ........... 5.21 1.54
--------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income........ (0.08) (0.00)
Dividends in excess of net investment
income .................................... -- (0.03)
Distributions from realized gains .......... (1.77) (0.16)
Distributions in excess of realized gains -- (1.03)
Tax return of capital distributions ........ -- --
--------- -------
Total dividends and distributions .......... (1.85) (1.22)
--------- -------
Net asset value, end of period .............. $ 21.58 $ 18.22
========= =======
Total return (d) ............................ 29.07% 8.49%
========= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........... $ 228,780 $ 1,244
Ratio of expenses to average net assets ..... 0.64% 0.63%(b)
Ratio of net investment income to
average net assets ......................... 0.46% 0.61%(b)
Portfolio turnover rate ..................... 52% 55%
Average commission rate paid (f) ............ $ 0.0579 $0.0565
</TABLE>
ALLIANCE GLOBAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1997 1996 1995 1994 1993*
---------- --------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) .... 16.92 $ 15.74 $ 13.87 $ 13.62 $ 11.41
---------- --------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.17 0.21 0.26 0.20 0.08
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .............................. 1.75 2.05 2.32 0.52 3.58
---------- --------- -------- -------- --------
Total from investment operations ........... 1.92 2.26 2.58 0.72 3.66
---------- --------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income........ (0.36) (0.21) (0.25) (0.17) (0.15)
Dividends in excess of net investment
income .................................... -- (0.08) -- -- --
Distributions from realized gains .......... (1.19) (0.79) (0.42) (0.28) (1.30)
Distributions in excess of realized gains... -- -- (0.03) (0.00) (0.00)
Tax return of capital distributions ........ -- (0.00) (0.01) (0.02) --
---------- --------- -------- -------- --------
Total dividends and distributions .......... (1.55) (1.08) (0.71) (0.47) (1.45)
---------- --------- -------- -------- --------
Net asset value, end of period .............. $ 17.29 $ 16.92 $ 15.74 $ 13.87 $ 13.62
========== ========= ======== ======== ========
Total return (d) ............................ 11.66% 14.60% 18.81% 5.23% 32.09%
========== ========= ======== ========== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........... $1,203,867 $ 997,041 $686,140 $421,698 $141,257
Ratio of expenses to average net assets ..... 0.69% 0.60% 0.61% 0.69% 0.84%
Ratio of net investment income to
average net assets ......................... 0.97% 1.28% 1.76% 1.41% 0.62%
Portfolio turnover rate ..................... 57% 59% 67% 71% 150%
Average commission rate paid (f) ............ $ 0.0412 $ 0.0418 -- -- --
<CAPTION>
CLASS IB
--------------------------------
OCTOBER 2,
YEAR ENDED 1996 TO
DECEMBER 31, DECEMBER 31,
1997 1996
------------- ------------------
<S> <C> <C>
Net asset value, beginning of period (a) .... $ 16.91 $ 16.57
--------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.12 0.02
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .............................. 1.76 0.81
--------- -------
Total from investment operations ........... 1.88 0.83
--------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income........ (0.33) --
Dividends in excess of net investment
income .................................... -- (0.11)
Distributions from realized gains .......... (1.19) (0.10)
Distributions in excess of realized gains... -- (0.28)
Tax return of capital distributions ........ -- (0.00)
--------- -------
Total dividends and distributions .......... (1.52) (0.49)
--------- -------
Net asset value, end of period .............. $ 17.27 $ 16.91
========= =======
Total return (d) ............................ 11.38% 4.98%
========= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........... $ 21,520 $ 290
Ratio of expenses to average net assets ..... 0.97% 0.86%(b)
Ratio of net investment income to
average net assets ......................... 0.67% 0.48%(b)
Portfolio turnover rate ..................... 57% 59%
Average commission rate paid (f) ............ $ 0.0412 $0.0418
</TABLE>
128
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1997
ALLIANCE INTERNATIONAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA CLASS IB
--------------------------------------------- -----------------
YEAR ENDED DECEMBER 31, APRIL 3, 1995 MAY 1, 1997
-------------------------- TO TO
1997 1996 DECEMBER 31, 1995 DECEMBER 31, 1997
------------- ------------ ------------------ -----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (a) .......................... $ 11.50 $ 10.87 $ 10.00 $ 11.39
-------- ------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ............................................ 0.10 0.13 0.14 0.02
Net realized and unrealized gain (loss) on investments and foreign
currency transactions ........................................... (0.45) 0.94 0.98 (0.31)
-------- ------- ------- --------
Total from investment operations ................................. (0.35) 1.07 1.12 (0.29)
-------- ------- ------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ............................. (0.32) (0.10) (0.07) (0.28)
Dividends in excess of net investment income ..................... -- (0.09) (0.13) --
Distributions from realized gains ................................ (0.56) (0.25) (0.05) (0.56)
-------- ------- ------- --------
Total dividends and distributions ................................ (0.88) (0.44) (0.25) (0.84)
-------- ------- ------- --------
Net asset value, end of period .................................... $ 10.27 $ 11.50 $ 10.87 $ 10.26
======== ======== ======= ========
Total return (d) .................................................. (2.98)% 9.82% 11.29% (2.54)%
======== ======== ======= ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................................. $190,611 $151,907 $28,684 $ 3,286
Ratio of expenses to average net assets ........................... 1.08% 1.06% 1.03%(b) 1.38%(b)
Ratio of net investment income to average net assets .............. 0.83% 1.10% 1.71%(b) 0.20%(b)
Portfolio turnover rate ........................................... 59% 48% 56% 59%
Average commission rate paid (f) .................................. $ 0.0294 $ 0.0251 -- $ 0.0294
</TABLE>
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------
1997 1996 1995 1994 1993*
--------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a)... $ 35.85 $ 35.68 $ 30.63 $ 31.89 $ 29.81
--------- --------- ---------- ---------- ----------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .................... 0.04 0.09 0.10 0.04 0.09
Net realized and unrealized gain
(loss) on investments ................... 3.71 7.52 9.54 (1.26) 4.91
--------- --------- ---------- ---------- ----------
Total from investment operations.......... 3.75 7.61 9.64 (1.22) 5.00
--------- --------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment
income .................................. (0.05) (0.09) (0.10) (0.04) (0.09)
Dividends in excess of net
investment income ....................... -- (0.00) -- -- --
Distributions from realized gains ........ (3.33) (7.33) (4.49) -- (2.75)
Distributions in excess of realized
gains ................................... -- (0.02) -- -- (0.07)
Tax return of capital distributions....... -- -- -- (0.00) (0.01)
--------- --------- ---------- ---------- ----------
Total dividends and distributions ........ (3.38) (7.44) (4.59) (0.04) (2.92)
--------- --------- ---------- ---------- ----------
Net asset value, end of period ............ $ 36.22 $ 35.85 $ 35.68 $ 30.63 $ 31.89
========= ========== ========== ========== ==========
Total return (d) .......................... 10.94% 22.20% 31.63% (3.81)% 16.77%
========= ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ......... $4,589,771 $3,865,256 $2,700,515 $1,832,164 $1,557,332
Ratio of expenses to average net
assets ................................... 0.54% 0.48% 0.49% 0.49% 0.49%
Ratio of net investment income
(loss) to average net assets ............. 0.11% 0.24% 0.28% 0.12% 0.28%
Portfolio turnover rate ................... 123% 108% 127% 92% 89%
Average commission rate paid (f) .......... $ 0.0571 $ 0.0263 -- -- --
<CAPTION>
CLASS IB
---------------------------------
OCTOBER 2,
YEAR ENDED 1996 TO
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- ------------------
<S> <C> <C>
Net asset value, beginning of period (a)... $ 35.83 $ 37.28
------- ---------
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income .................... (0.11) (0.01)
Net realized and unrealized gain
(loss) on investments ................... 3.77 0.85
------- ---------
Total from investment operations.......... 3.66 0.84
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment
income .................................. (0.03) --
Dividends in excess of net
investment income ....................... -- (0.02)
Distributions from realized gains ........ (3.33) (0.23)
Distributions in excess of realized
gains ................................... -- (2.04)
Tax return of capital distributions....... -- --
------- ---------
Total dividends and distributions ........ (3.36) (2.29)
------- ---------
Net asset value, end of period ............ $ 36.13 $ 35.83
======= =========
Total return (d) .......................... 10.66% 2.32%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ......... $ 73,486 $ 613
Ratio of expenses to average net
assets ................................... 0.81% 0.73%(b)
Ratio of net investment income
(loss) to average net assets ............. (0.28)% (0.10)%(b)
Portfolio turnover rate ................... 123% 108%
Average commission rate paid (f) .......... $ 0.0571 $ 0.0263
</TABLE>
129
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1997
ALLIANCE SMALL CAP GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA CLASS IB
------------------- ------------------
MAY 1, 1997 MAY 1, 1997
TO TO
DECEMBER 31, 1997 DECEMBER 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period (a) ............................ $ 10.00 $ 10.00
-------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .............................................. 0.01 (0.01)
Net realized and unrealized gain on investments .................... 2.65 2.65
-------- ---------
Total from investment operations ................................... 2.66 2.64
-------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ............................... (0.01) (0.00)
Distributions from realized gains .................................. (0.30) (0.30)
-------- ---------
Total dividends and distributions .................................. (0.31) (0.30)
-------- ---------
Net asset value, end of period ...................................... $ 12.35 $ 12.34
======== =========
Total return (d) .................................................... 26.74% 26.57%
======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ................................... $ 94,676 $ 46,324
Ratio of expenses to average net assets ............................. 0.95%(b) 1.15%(b)
Ratio of net investment income (loss) to average net assets ......... 0.10%(b) (0.12)%(b)
Portfolio turnover rate ............................................. 96% 96%
Average commission rate paid ........................................ $ 0.0488 $ 0.0488
</TABLE>
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1997 1996 1995 1994 1993*
------------ ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) ................ $ 11.29 $ 11.52 $ 10.15 $ 11.12 $ 10.94
--------- --------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.49 0.50 0.60 0.55 0.52
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 0.97 0.07 1.43 (1.00) 0.65
--------- --------- -------- -------- -------
Total from investment operations ....................... 1.46 0.57 2.03 (0.45) 1.17
--------- --------- -------- -------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ................... (0.49) (0.51) (0.59) (0.52) (0.50)
Dividends in excess of net investment income ........... -- -- -- -- (0.00)
Distributions from realized gains ...................... (0.37) (0.27) (0.07) -- (0.49)
Distributions in excess of realized gains .............. -- (0.02) -- -- --
--------- --------- -------- -------- -------
Total dividends and distributions ...................... (0.86) (0.80) (0.66) (0.52) (0.99)
--------- --------- -------- -------- -------
Net asset value, end of period .......................... $ 11.89 $ 11.29 $ 11.52 $ 10.15 $ 11.12
========= ========= ======== ======== ========
Total return (d) ........................................ 13.25% 5.21% 20.40% (4.10)% 10.76%
========= ========= ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $ 307,847 $ 282,402 $252,101 $173,691 $114,418
Ratio of expenses to average net assets ................. 0.57% 0.61% 0.59% 0.59% 0.60%
Ratio of net investment income to average net assets..... 4.17% 4.48% 5.48% 5.22% 4.49%
Portfolio turnover rate ................................. 206% 181% 287% 228% 178%
Average commission rate paid (f) ........................ $ 0.0413 $ 0.0488 -- -- --
<CAPTION>
CLASS IB
------------------
MAY 1, 1997
TO
DECEMBER 31, 1997
------------------
<S> <C>
Net asset value, beginning of period (a) ................ $ 11.29
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .................................. 0.31
Net realized and unrealized gain (loss) on
investments and foreign currency transactions ......... 1.01
--------
Total from investment operations ....................... 1.32
--------
LESS DISTRIBUTIONS:
Dividends from net investment income ................... (0.36)
Dividends in excess of net investment income ........... --
Distributions from realized gains ...................... (0.37)
Distributions in excess of realized gains .............. --
--------
Total dividends and distributions ...................... (0.73)
--------
Net asset value, end of period .......................... $ 11.88
========
Total return (d) ........................................ 11.84%
========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ....................... $ 5,694
Ratio of expenses to average net assets ................. 0.80%(b)
Ratio of net investment income to average net assets..... 3.82%(b)
Portfolio turnover rate ................................. 206%
Average commission rate paid (f) ........................ $ 0.0413
</TABLE>
130
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1997
ALLIANCE BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1997 1996 1995 1994 1993*
-------------- -------------- -------------- --------------- --------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) .... $ 16.64 $ 16.76 $ 14.87 $ 16.67 $ 16.19
--------- ---------- ---------- ---------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ...................... 0.58 0.53 0.54 0.45 0.50
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions .............................. 1.86 1.31 2.36 (1.78) 1.46
--------- ---------- ---------- ---------- ----------
Total from investment operations ........... 2.44 1.84 2.90 (1.33) 1.96
--------- ---------- ---------- ---------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income........ (0.59) (0.53) (0.54) (0.44) (0.50)
Dividends in excess of net investment
income .................................... -- -- -- (0.03) --
Distributions from realized gains .......... (0.91) (1.40) (0.47) -- (0.95)
Distributions in excess of realized gains... -- (0.03) -- -- (0.03)
Tax return of capital distributions ........ -- -- -- (0.00) --
--------- ---------- ---------- ---------- ----------
Total dividends and distributions .......... (1.50) (1.96) (1.01) (0.47) (1.48)
--------- ---------- ---------- ---------- ----------
Net asset value, end of period .............. $ 17.58 $ 16.64 $ 16.76 $ 14.87 $ 16.67
========= ========== ========== ========== ==========
Total return (d) ............................ 15.06% 11.68% 19.75% (8.02)% 12.28%
========= ========== ========== ========== ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ........... $1,724,089 $1,637,856 $1,523,142 $1,329,820 $1,364,640
Ratio of expenses to average net assets ..... 0.45% 0.41% 0.40% 0.39% 0.39%
Ratio of net investment income to average
net assets ................................. 3.30% 3.15% 3.33% 2.87% 2.99%
Portfolio turnover rate ..................... 146% 177% 186% 115% 99%
Average commission rate paid (f) ............ $ 0.0409 $ 0.0516 -- -- --
</TABLE>
ALLIANCE GROWTH INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1997 1996 1995 1994 1993*
-------------- -------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (a) ....... $ 17.20 $ 17.68 $ 14.66 $ 15.61 $ 14.69
--------- ---------- -------- -------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.41 0.40 0.57 0.50 0.43
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ................................. 2.43 1.66 3.24 (0.98) 1.79
--------- ---------- -------- -------- --------
Total from investment operations .............. 2.84 2.06 3.81 (0.48) 2.22
--------- ---------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.46) (0.40) (0.54) (0.46) (0.42)
Dividends in excess of net investment
income ....................................... -- (0.03) (0.01) (0.01) --
Distributions from realized gains ............. (1.03) (2.10) (0.24) -- (0.88)
Distributions in excess of realized gains ..... -- (0.01) -- -- --
--------- ---------- -------- -------- --------
Total dividends and distributions ............. (1.49) (2.54) (0.79) (0.47) (1.30)
--------- ---------- -------- -------- --------
Net asset value, end of period ................. $ 18.55 $ 17.20 $ 17.68 $ 14.66 $ 15.61
========== ========== ======== ======== ========
Total return (d) ............................... 16.87% 12.61% 26.37% (3.15)% 15.26%
========== ========== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $1,630,389 $1,301,643 $896,134 $492,478 $278,467
Ratio of expenses to average net assets ........ 0.57% 0.57% 0.56% 0.59% 0.62%
Ratio of net investment income to average
net assets .................................... 2.18% 2.31% 3.43% 3.32% 2.71%
Portfolio turnover rate ........................ 121% 190% 107% 131% 118%
Average commission rate paid (f) ............... $ 0.0460 $ 0.0495 -- -- --
<CAPTION>
CLASS IB
-------------------------------
OCTOBER 2,
YEAR ENDED 1996 TO
DECEMBER 31, DECEMBER 31,
1997 1996
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (a) ....... $ 17.19 $ 16.78
--------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.36 0.07
Net realized and unrealized gain (loss)
on investments and foreign currency
transactions ................................. 2.43 0.71
--------- ---------
Total from investment operations .............. 2.79 0.78
--------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.43) (0.02)
Dividends in excess of net investment
income ....................................... -- (0.09)
Distributions from realized gains ............. (1.03) (0.02)
Distributions in excess of realized gains ..... -- (0.24)
--------- ---------
Total dividends and distributions ............. (1.46) (0.37)
--------- ---------
Net asset value, end of period ................. $ 18.52 $ 17.19
========= =========
Total return (d) ............................... 16.58% 4.64%
========= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $ 35,730 $ 472
Ratio of expenses to average net assets ........ 0.82% 0.84%(b)
Ratio of net investment income to average
net assets .................................... 1.88% 1.69%(b)
Portfolio turnover rate ........................ 121% 190%
Average commission rate paid (f) ............... $ 0.0460 $ 0.0495
</TABLE>
131
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Concluded)
December 31, 1997
* Prior to July 22, 1993, Equitable Capital Management Corporation
("Equitable Capital") served as the investment adviser to the Trust. On
July 22, 1993, Alliance Capital Management L.P. acquired the business and
substantially all of the assets of Equitable Capital and became the
investment adviser to the Trust.
(a) Date as of which funds were first allocated to the Portfolios are as
follows:
Class IA:
Alliance Common Stock Portfolio--June 16, 1975
Alliance Money Market Portfolio--July 13, 1981
Alliance Balanced Portfolio--January 27, 1986
Alliance Aggressive Stock Portfolio--January 27, 1986
Alliance High Yield Portfolio--January 2, 1987
Alliance Global Portfolio--August 27, 1987
Alliance Conservative Investors Portfolio--October 2, 1989
Alliance Growth Investors Portfolio--October 2, 1989
Alliance Intermediate Government Securities Portfolio--April 1, 1991
Alliance Quality Bond Portfolio--October 1, 1993
Alliance Growth and Income Portfolio--October 1, 1993
Alliance Equity Index Portfolio--March 1, 1994
Alliance International Portfolio--April 3, 1995
Alliance Small Cap Growth--May 1, 1997
Class IB:
Alliance Money Market, Alliance High Yield, Alliance Common Stock,
Alliance Global, Alliance Aggressive Stock and Alliance Growth Investors
Portfolios--October 2, 1996.
Alliance Intermediate Government Securities, Alliance Growth and Income,
Alliance Equity Index, Alliance International, Alliance Small Cap Growth
and Alliance Conservative Investors Portfolios--May 1, 1997.
(b) Annualized.
(c) Net investment income and capital changes per share are based upon
monthly average shares outstanding.
(d) 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.
(e) On February 22, 1994, shares of the Alliance Intermediate Government
Securities Portfolio of the Trust were substituted for shares of the
Trust's Alliance Short-Term World Income Portfolio.
(f) For fiscal years beginning on or after September 1, 1995, a portfolio is
required to disclose its average commission rate paid per share for
equity security trades on which commissions are charged.
132
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Trustees and Shareholders of
The Hudson River Trust
In our opinion, the accompanying statements of assets and liabilities,
including the portfolios of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of the Alliance Money
Market Portfolio, Alliance Intermediate Government Securities Portfolio,
Alliance Quality Bond Portfolio, Alliance High Yield Portfolio, Alliance Growth
and Income Portfolio, Alliance Equity Index Portfolio, Alliance Common Stock
Portfolio, Alliance Global Portfolio, Alliance International Portfolio,
Alliance Aggressive Stock Portfolio, Alliance Small Cap Growth Portfolio,
Alliance Conservative Investors Portfolio, Alliance Balanced Portfolio and
Alliance Growth Investors Portfolio (constituting the fourteen portfolios of
The Hudson River Trust, hereafter referred to as the "Trust") at December 31,
1997, the results of each of their operations for the year then ended, and the
changes in each of their net assets and the financial highlights for each of
the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Trust's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1997 by correspondence with the
custodian and brokers and the application of alternative auditing procedures
where confirmations from brokers were not received, provide a reasonable basis
for the opinion expressed above.
PRICE WATERHOUSE LLP
1177 Avenue of the Americas
New York, New York 10036
February 9, 1998
133
<PAGE>
APPENDIX A
DESCRIPTION OF COMMERCIAL PAPER RATINGS
A-1 AND PRIME-1 COMMERCIAL PAPER RATINGS
The rating A-1 (including A-1+) is the highest commercial paper rating assigned
by S&P. Commercial paper rated A-1 by S&P has the following characteristics:
o liquidity ratios are adequate to meet cash requirements;
o long-term senior debt is rated "A" or better;
o the issuer has access to at least two additional channels of
borrowing;
o basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances;
o typically, the issuer's industry is well established and the issuer
has a strong position within the industry; and
o the reliability and quality of management are unquestioned.
Relative strength or weakness of the above factors determines whether the
issuer's commercial paper is rated A-1, A-2 or A-3. Issues rated A-1 that are
determined by S&P to have overwhelming safety characteristics are designated
A-1+.
The rating Prime-1 is the highest commercial paper rating assigned by Moody's.
Among the factors considered by Moody's in assigning ratings are the following:
o evaluation of the management of the issuer;
o economic evaluation of the issuer's industry or industries and an
appraisal of speculative-type risks which may be inherent in certain
areas;
o evaluation of the issuer's products in relation to competition and
customer acceptance;
o liquidity;
o amount and quality of long-term debt;
o trend of earnings over a period of ten years;
o financial strength of parent company and the relationships which exist
with the issuer; and
o recognition by the management of obligations which may be present or
may arise as a result of public interest questions and preparations to
meet such obligations.
A-1
