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ALLIANCE CAPITAL
THE HUDSON RIVER TRUST
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Annual Report
December 31, 1998
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ALLIANCE CAPITAL/HUDSON RIVER TRUST
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NOTES ON PERFORMANCE
Performance for each Alliance Portfolio is shown together with comparative
benchmarks, including both unmanaged market indices and universes of managed
portfolios. The Portfolios' annualized net rates of return are based on the
percentage change in the net asset value of Class 1A shares with dividends and
capital gains reinvested. Returns are net of investment management fees and
expenses of the Trust. Total returns for Class 1B shares will differ due to
different expenses. These rates are not representative of the actual return you
would receive under a policy. No policyowner can invest directly in the Trust.
Changes in policy values depend not only on the investment performance of the
Trust, but also on the insurance and administrative charges, applicable sales
charges and the mortality and expense risk charge applicable under a policy.
These policy charges effectively reduce the dollar amount of any net gains and
increase the dollar amount of any net losses. All performance shown is
annualized, unless otherwise noted.
THE BENCHMARKS
Market indices are not subject to any charges for investment advisory fees
typically associated with a managed portfolio. Comparisons with these
benchmarks, therefore, are of limited use. We include them because they are
widely known and may help you to understand the universe of securities from
which each Portfolio is likely to select its holdings.
Portfolio Inception Dates and Comparative Benchmarks:
Alliance Money Market: July 13, 1981; Salomon Brothers Three-Month T-Bill Index
(3-Month T-Bill).
Alliance Intermediate Government Securities: April 1, 1991; Lehman Intermediate
Government Bond Index (Lehman Intermediate Gov't).
Alliance Quality Bond: October 1, 1993; Lehman Aggregate Bond Index (Lehman
Aggregate).
Alliance High Yield: January 2, 1987; Merrill Lynch High Yield Master Index
(Merrill Lynch High Yield).
Alliance Growth & Income: October 1, 1993; 25% Value Line Convertibles Index and
75% Standard & Poor's 500 Index (25% Value Line Conv./75% S&P 500).
Alliance Equity Index: March 1, 1994; S&P 500.
Alliance Common Stock: January 13, 1976; S&P 500.
Alliance Global: August 27, 1987; Morgan Stanley Capital International World
Index (MSCI World).
Alliance International: April 3, 1995; Morgan Stanley Capital International
Europe, Australia, Far East Index (MSCI EAFE).
Alliance Aggressive Stock: January 27, 1986; 50% Russell 2000/50% S&P Mid Cap.
Alliance Small Cap Growth: May 1, 1997; Russell 2000 Growth.
Alliance Conservative Investors: October 2, 1989; 70% Lehman Treasury Bond
Composite Index and 30% S&P 500 (70% Lehman Treas./30% S&P 500).
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ALLIANCE CAPITAL/HUDSON RIVER TRUST
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BENCHMARKS, CONTINUED
Alliance Balanced: January 27, 1986; 50% Lehman Government/Corporate Bond Index
and 50% S&P 500 (50% Lehman Corp./50% S&P 500).
Alliance Growth Investors: October 2, 1989; 30% Lehman Government/Corporate Bond
Index and 70% S&P 500 (30% Lehman Corp./70% S&P 500).
The S&P 500 benchmark includes reinvested dividends. The Lipper Mutual Funds
Survey (Lipper) records the performance of over 7000 mutual funds. According to
Lipper Analytical Services, Inc., the data are presented net of investment
management fees, direct operating expenses, and, for funds with Rule 12b-1
plans, asset-based sales charges. Lipper data provides a more accurate picture
of Trust performance relative to other funds than the market indices.
GROWTH OF A $10,000 INVESTMENT
The charts shown on each portfolio page illustrates the total value of an
assumed investment Class 1A shares of each portfolio of the Hudson River Trust.
The periods illustrated are from the inception dates shown for each Portfolio
through December 31, 1998 unless noted otherwise. The results assume the
reinvestment of dividends and capital gains. Results should not be considered
representative of future gains or losses.
The total value shown reflects management fees and operating expenses of the
Portfolio only. They have not been adjusted for charges and expenses associated
with life insurance policies or annuity contracts. Rates of return on insurance
policies and annuity contracts will be lower because of the deduction of
contract-related charges.
Information on these pages constitutes part of the annual report of The Hudson
River Trust and is not intended for separate use.
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ALLIANCE MONEY MARKET PORTFOLIO
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Events during the final quarter of 1998 made us aware of how sensitive financial
markets can be towards international developments. We also witnessed how swift
Federal Reserve initiative can reassure or even correct markets woes. In the
wake of Russian bond defaults and the restructuring of the major hedge fund,
Long Term Capital Management, on top of the already existing Asian crisis,
credit spreads continued to widen as we entered the fourth quarter. In addition,
bond issuance declined and liquidity (or lack of liquidity) greatly concerned
the Federal Reserve. A series of three interest rate easings by the Fed
commencing in September reduced the Fed funds target level from a rate of 5.50%
to a rate of 4.75% by mid-November. The decisive response by the Fed prompted a
narrowing of credit and liquidity spreads and demonstrated to financial markets
that Fed officials would intervene to avoid intervals of extreme volatility.
Domestically, our economy remained strong through the end of the year, mainly
against a backdrop of continued inflation checks. Highlighting these checks, one
would have to look at a further collapse in oil prices as a main theme. Oil
prices were 30% lower in 1998 than in 1997. The finished goods Producer Price
Index (PPI) declined in the fourth quarter and was down 0.7% from November 1997
to November 1998. The October and November data pointed to a strong pace of
consumer spending in the fourth quarter, which would support a strong quarter of
real GDP growth.
With an awareness of how September and October funding pressures were playing
havoc on money markets, the Fed was anxious to prevent any future ugliness going
into year-end. First we saw a reduction in the Fed funds target level as was
previously discussed. Additionally, the Fed pumped new money into the system
throughout December, less concerned with adding too much in the way of reserves,
rather than not enough. These actions, combined with an influx of new assets to
the money-market mutual fund industry throughout the quarter, aided to subside
year-end funding pressures. As these developments unfolded, we elected to make
use of a short-term yield curve we felt would become flat by year-end (a steeper
yield curve reflects lower prices). Therefore, a major portion of our longer
term investing (60 days or longer) took place in late November and early
December (in order to lock in rates at the higher yield level). Our typical
strategy of avoiding January maturities is designed so that the Money Market
Portfolio may enjoy higher yields without the worries of re-investment at a
significantly lower rate.
We believe the economy should retain its forward momentum in the early stages of
1999. Some of the forces suppressing inflation through last year should remain
in effect in the beginning of the year, mainly lower energy costs and falling
commodity prices. Our expectation is that the Fed will hold off on its easing
process through the first quarter of 1999. What is less clear is to speculate on
whether economic growth will slow down later in the spring. Without any
convincing indications that interest rates will move any time soon, we
anticipate investing the bulk of our cash no further than quarter to quarter.
Raymond Papera, Portfolio Manager
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INVESTMENT OBJECTIVE
High level of current income, while preserving its assets and maintaining
liquidity.
INVESTMENT POLICY
Primarily high-quality U.S. dollar denominated money market instruments.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $1.1 billion
Number of Issues ........................................... 42
Average Maturity ........................................... 68 days
ASSET MIX DISTRIBUTION (BY MATURITY)
1-30 days .................................................. 4.7%
31-60 days ................................................. 16.7%
61-90 days ................................................. 30.3%
91+ days ................................................... 48.3%
ASSET MIX DISTRIBUTION (BY ISSUER)
Banker's Acceptance ........................................ 3.4%
Time Deposits .............................................. 1.6%
U.S. Government Agency ..................................... 9.8%
Bank Notes ................................................. 6.1%
Variable Rate Securities ................................... 20.6%
Certificates of Deposit .................................... 6.7%
Commercial Paper ........................................... 51.8%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS 10 YRS INCEPT.
ALLIANCE
MONEY MARKET 5.34% 5.36% 5.17% 5.58% 7.06%
Lipper Money Market 4.84 4.87 4.77 5.20 6.77
3-Month T-Bill 5.05 5.18 5.11 5.44 6.76
The Alliance Money Market Portfolio started operations on July 13, 1981.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested Ten Years Ago on December 31, 1988)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO
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The U.S. bond market posted solid returns in 1998. During the first half of the
year, interest rates remained relatively stable, and investor demand for
yield-oriented securities, corporate bonds as well as mortgage-backed
securities, was high. Despite strong U.S. economic growth, inflation remained
low, further increasing demand in the bond market. During the third quarter,
global markets suffered from heightened concerns about global recession as the
financial and economic turmoil in Asia spread to Russia and Latin America. The
resulting "flight to quality" spurred a rally in the U.S. Treasury market and
other "safe haven" government bond markets outside the U.S. while negatively
impacting returns in the corporate, mortgage and high-yield bond sectors.
The Alliance Intermediate Government Securities Portfolio posted strong positive
returns for the year ended December 31, 1998. However, the Portfolio
underperformed its unmanaged benchmark, the Lehman Brothers Intermediate
Government Bond Index, mostly as a result of its mortgage sector allocation.
Record low interest rates kept prepayment rates high throughout the year,
hurting the performance of mortgage-related securities. The Portfolio's U.S.
Treasury holdings, however, helped its performance as the sector benefited from
the "flight to quality" in the third quarter.
Looking forward into 1999, we believe the risk of global recession has
diminished after the recent wave of official interest-rate cuts around the
world. However, global growth will continue to slow and inflation will remain
subdued as the consequences of excess productive capacity are felt around the
world. U.S. economic activity is expected to moderate from the robust rate of
the fourth quarter, with growth estimates centered around 2.5% for 1999. We
believe further interest-rate reductions by the Federal Reserve are likely, but
not imminent. U.S. interest rates, as well as inflation, should remain low and
the U.S. Treasury market should continue to provide a "safe haven" during times
of volatility. We expect the mortgage-backed sector should provide benefits due
to their attractive valuations and slower prepayment levels as mortgage rates
have risen and we enter a period of slower refinancing.
Jeffrey S. Phlegar, Portfolio Manager
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INVESTMENT OBJECTIVE
High current income consistent with relative stability of principal
INVESTMENT POLICY
Primarily debt securities issued or guaranteed by the U.S. Government, its
agencies and instrumentalities. Each investment will have a final maturity of
not more than 10 years or a duration not exceeding that of a 10-year Treasury
note.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $184.3 million
Number of Issues ........................................... 29
Average Quality (excluding net cash) ....................... Govt.
Average Duration (including net cash) ...................... 3.26 years
ASSET MIX DISTRIBUTION (BY DURATION)
0-1 year ................................................... (13.2)%
1-3 years .................................................. 70.0%
3-5 years .................................................. 32.6%
5-7 years .................................................. 7.8%
Over 7 years ............................................ 2.8%
ASSET MIX DISTRIBUTION (BY ISSUER)
Treasury ................................................... 54.3%
Agencies ................................................... 8.1%
Mortgage-Backed Securities ................................. 23.9%
Asset-Backed Securities .................................... 5.8%
CMOs ....................................................... 7.9%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS INCEPT.
ALLIANCE
INTERMEDIATE GOV'T. SEC. 7.74% 6.26% 5.39% 7.10%
Lipper Int. Gov't. Funds Average 7.68 6.21 5.91 7.25
Lehman Intermediate Government 8.49 6.74 6.45 7.60
The Alliance Intermediate Government Securities Portfolio started operations on
April 1, 1991.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
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ALLIANCE QUALITY BOND PORTFOLIO
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The Quality Bond Portfolio posted strong positive returns for the year ended
December 31, 1998, and matched the performance of its unmanaged benchmark, the
Lehman Brothers Aggregate Bond Index. Throughout much of the year, the
Portfolio's holdings were defensively focused on the U.S. government sector. The
financial turmoil in the third quarter helped the Treasury holdings outperform
the credit sensitive, corporate and mortgage-backed securities in the Portfolio.
Within the corporate sector, the Portfolio held mostly high-quality stable names
such as Chase Manhattan, Time Warner, WorldCom and Turner Broadcasting. The
Portfolio also utilized 15- and 30-year mortgage-backed securities with coupons
between 6.5% and 8.0%.
During the first half of 1998, interest rates remained relatively stable and
investor demand for yield-oriented securities, corporate bonds as well as
mortgage-backed securities, was high. Low inflation further increased demand in
the bond market despite strong U.S. economic growth. As financial and economic
turmoil in Asia spread to other emerging markets, during the third quarter
global markets suffered from heightened concerns about recession. The consequent
"flight to quality" spurred a rally in the U.S. Treasury market, and other "safe
haven" government bond markets outside the U.S., while negatively impacting
returns in the corporate and mortgage bond sectors.
After the recent wave of official interest rate cuts around the world, we
believe the risk of global recession has diminished. As the consequences of
excess productive capacity are felt around the world, however, global growth
will continue to slow and inflation will remain subdued. In our view, further
interest rate reductions by the Federal Reserve are likely, but not imminent.
U.S. interest rates, as well as inflation, should remain low and the U.S.
Treasury market should continue to provide a "safe haven" during times of
volatility.
Matthew Bloom, Portfolio Manager
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INVESTMENT OBJECTIVE
High current income consistent with preservation of capital.
INVESTMENT POLICY
Primarily investment grade fixed income securities.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $322.4 million
Number of Issues ........................................... 40
Average Quality (excluding net cash) ....................... AA+
Average Duration (including net cash) ...................... 4.8 years
ASSET MIX DISTRIBUTION (BY DURATION)
0-1 year ................................................... 3.1%
1-2 years .................................................. 13.7%
2-4 years .................................................. 46.4%
4-7 years .................................................. 13.5%
7-10 years ................................................. 8.0%
Over 10 years .............................................. 15.3%
ASSET MIX DISTRIBUTION (BY ISSUER)
Government Bonds ........................................... 44.5%
Domestic Corporates ........................................ 17.8%
Yankee ..................................................... 0.3%
Mortgage-Backed Securities ................................. 34.3%
Short-Term & Cash .......................................... 3.1%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS INCEPT.
ALLIANCE QUALITY BOND 8.69% 7.72% 6.78 6.34%
Lipper Corporate Debt A-Rated 7.47 6.38 6.54 6.21
Lehman Aggregate 8.69 7.29 7.27 6.92
The Alliance Quality Bond Portfolio started operations on October 1, 1993.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
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ALLIANCE HIGH YIELD PORTFOLIO
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During 1998, the U.S. bond market posted solid returns. Interest rates remained
relatively stable and investor demand for yield-oriented securities, corporate
bonds and mortgage-backed securities was high from January through July. Demand
in the bond market increased despite strong U.S. economic growth and low
inflation. During the third quarter, global markets suffered from heightened
concerns about recession. This occurred as the financial and economic turmoil in
Asia spread to Russia and Latin America. A rally in the U.S. Treasury market and
other "safe haven" government bond markets outside the U.S. was spurred by a
"flight to quality" which resulted from the economic turmoil. However, returns
in the corporate, high yield and mortgage bond sectors were negatively impacted.
In the fourth quarter, the Federal Reserve cut interest rates helping restore
confidence in the financial markets. The equity markets returned to record highs
reached in July, while credit markets stabilized. However, the high-yield market
recovered only about one half of the depreciation suffered in the third quarter.
The Alliance High Yield Portfolio posted negative returns for the year ended
December 31, 1998, and underperformed its unmanaged benchmark, the Merrill Lynch
Master High Yield Index. Our focus on single B's (as rated by Standard & Poor's)
and zero coupon securities hurt our performance, as these high-yield securities
dramatically underperformed other high-yield securities. After the third quarter
market turmoil, we selectively picked solid credits which we thought were
undervalued. We were particularly interested in the communications sector, which
benefited from strong earnings and merger activity in 1998. The utility sector
also provided some attractive investments, as this sector benefits from its
"safe haven" reputation during times of market volatility.
We believe the risk of global recession has diminished after the recent wave of
official interest rate cuts around the world. As we move into 1999, we believe
that global growth should continue to slow and inflation will remain subdued as
a result of excess productivity which will be felt around the world. Fourth
quarter growth in the U.S. was robust. However, we estimate 1999 U.S. economic
activity to moderate to approximately 2.5%. We continue to view the high-yield
sector favorably. Currently, the average high-yield index is yielding about 6.0%
- - 7.0% over Treasuries, which offers tremendous value. The combination of
moderate growth and low inflation will help high-yield spreads to continue
contracting throughout 1999. However, the importance of issuer selection will
increase as the domestic economy slows and turmoil in global markets causes
short term price volatility. We will be focusing more on single B rated credits
with hard assets, contributed equity from the sponsor, or a large market
capitalization. We are attempting to pare down the CCC rated securities as well
as some of the deferred interest securities in the Portfolio. Media,
telecommunications and the cable sectors will still represent the largest
sectors within the Portfolio. Credit selection will play a pivotal role in 1999
as default rates should slowly rise to about 3.0% - 3.25%. Even though 1998 was
extremely volatile and most high-yield funds generated negative returns, we
continue to find very compelling reasons to invest in the high-yield market in
1999.
Wayne Tappe, Portfolio Manager
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INVESTMENT OBJECTIVE
High return by maximizing current income and, to the extent consistent with that
objective, capital appreciation.
INVESTMENT POLICY
Primarily 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.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $612.4 million
Number of Issues ........................................... 137
Average Quality (excluding net cash) ....................... B
Average Duration (including net cash) ...................... 4.6 years
ASSET MIX DISTRIBUTION (BY QUALITY)
AAA-BBB .................................................... 6.9%
BB-B ....................................................... 88.6%
CCC and below .............................................. 4.5%
ASSET MIX DISTRIBUTION (BY ISSUER)
Corporate Bonds ............................................ 83.8%
Foreign Bonds .............................................. 7.6%
Short-Term & Cash .......................................... 8.6%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS 10 YRS INCEPT.
ALLIANCE
HIGH YIELD (5.15)% 11.36% 9.99% 11.17% 10.49%
Lipper High Yield (0.44) 8.21 7.37 9.34 8.97
ML Master High Yield 3.66 9.11 9.01 11.08 10.72
The Alliance High Yield Portfolio started operations on January 2, 1987.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested Ten Years Ago on December 31, 1988)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
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ALLIANCE GROWTH & INCOME PORTFOLIO
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Due to the financial crises in Japan and the emerging markets, the past 12
months have been characterized by extremes in the performance of various
financial instruments. Among the extremes has been the performance of value
stocks, in which price tends to be low relative to earnings or book value,
versus growth stocks, for which current business expectations foster higher
prices for a given level of earnings. Over the last year, the S&P 500 Stock
Index returned 28.58%, but if separated into growth and value components, the
growth segment's appreciation of nearly 43% dwarfed the value portion's return
of 15%.
The Growth & Income Portfolio intentionally maintains a value bias versus the
S&P 500, but nevertheless slightly outperformed its unmanaged benchmark, a
composite composed of 75% S&P 500 and 25% Value Line Convertibles. The Portfolio
returned 20.86% for the 12-month period ended December 31, 1998, while its
composite benchmark returned 20.10%. The Portfolio also outperformed its peer
group average, the Lipper Growth and Income Fund Average, during 1999.
The emerging markets crisis reached a peak in August with the Russian debt
default. The potential for financial turmoil that followed led the Federal
Reserve to lower interest rates three times since September. We hope that this
is the catalyst for value stocks to improve their performance as confidence
returns to the markets and demand for investments broadens out beyond a small
group of large capitalization stocks.
The Portfolio has been consistent in its portfolio characteristics of
maintaining a defensive dividend yield and price to earnings ratio, a fully
invested posture, and a high degree of sector and industry diversification. We
continue to seek the stocks of companies with primarily secular growth potential
combined with reasonable valuations. Finally, we rely on Alliance Capital's
internal research capabilities in selecting stocks that we expect will deliver
superior performance.
W. Theodore Kuck and Paul Rissman, Portfolio Managers
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INVESTMENT OBJECTIVE
High return through a combination of current income and capital appreciation.
INVESTMENT POLICY
Primarily income-producing common stocks and securities convertible into common
stocks.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $998.3 million
Number of Issues ........................................... 133
LARGEST EQUITY HOLDINGS
Bristol-Myers Squibb Co. ................................... Drugs
Household International, Inc. .............................. Financial Services
BankAmerica Corp. .......................................... Banks
United Technologies Corp. .................................. Machinery
MCIWorldCom, Inc. .......................................... Telecommunications
Chase Manhattan Corp. ...................................... Banks
Solectron Corp. ............................................ Electronics
AT&T Corp. ................................................. Telephone
USX-Marathon Group, Inc. ................................... Oil - Domestic
Tenet Healthcare Corp. ..................................... Hospitals
ASSET MIX DISTRIBUTION
Common Stock ............................................... 82.8%
Preferred Stock ............................................ 4.7%
Bonds (Convertible) ........................................ 8.4%
Bonds (Non-Convertible) .................................... 1.1%
Short-Term & Cash .......................................... 3.0%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS INCEPT.
ALLIANCE GROWTH & INCOME 20.86% 22.58% 17.84 16.86%
Lipper Growth & Income 15.61 21.25 18.35 17.89
25% Value Line Con./75% S%P 500 20.10 23.99 21.07 20.48
The Alliance Growth & Income Portfolio started operations on October 1, 1993.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
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ALLIANCE EQUITY INDEX PORTFOLIO
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The Alliance Equity Index Portfolio returned an impressive 28.07% for the year
ending December 1998, performing in-line with the S&P 500 Stock Index, which
returned 28.58%. The Portfolio experienced increased trading activity during the
year as a result of accelerated participant cash flows and ever-increasing
corporate reorganization activity. The Alliance Equity Index Portfolio is the
only passively managed portfolio within The Hudson River Trust. Using a
stratified sampling technique, the Portfolio is constructed to track the
investment results of the S&P 500 Stock Index. For the current period under
review, the Portfolio was able to accomplish this goal.
During the fourth quarter of the year, the S&P 500 underwent a number of
changes, consisting of both additions and deletions.
The companies added to the S&P 500 were: AES Corp., PeopleSoft, Staples, Coca
Cola Enterprises, CitiGroup, Wells Fargo (new), New Century Energy, Safeway,
Danaher, Sprint PCS Group, Carnival Corp., Solectron, Compuware Corp., Firstar
Corp. New Wis., and America OnLine.
The companies deleted from the S&P 500 were: U.S. Surgical, First Chicago
BanCorp., General Signal, Travelers Corp, Citicorp., Wells Fargo, Norwest,
Chrysler, Stone Container, Armco, General Re, Pennzoil, SunAmerica Inc., Amoco
Corp., and Venator Group.
The U.S. equity markets produced unprecedented positive returns in each of the
past four years with the S&P 500 Index performing at 28.6% for year ending
December 31, 1998. Over the past four years, the Index has appreciated in excess
of 180% due to continued strength of the U.S. economy without any evidence of
inflation, solid corporate profits and low unemployment. Given the strong
historical performance of the S & P 500 Index, we believe that a reasonable
projection of total return for 1999 is 5%-12%.
Judith A. DeVivo, Portfolio Manager
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INVESTMENT OBJECTIVE
Total return before expenses that approximates the total return performance of
the Standard & Poor's 500 Index ("the Index"), including reinvestment of
dividends, at a risk level consistent with that of the Index.
INVESTMENT POLICY
Selected securities in the Index which the adviser believes will, in the
aggregate, approximate the performance results of the Index.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $1.7 billion
Number of Issues ........................................... 431
LARGEST EQUITY HOLDINGS
Microsoft Corp. .............................. Office Equipment Services
General Electric Co. ......................... Electrical Equipment
Intel Corp. .................................. Electronics
Wal-Mart Stores, Inc. ........................ Retail - General
Exxon Corp. .................................. Oil - International
Merck & Co., Inc. ............................ Drugs
IBM Corp. .................................... Office Equipment
Coca-Cola Co. ................................ Beverages
Pfizer, Inc. ................................. Drugs
Lucent Technologies, Inc. .................... Telecommunications
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS INCEPT.
ALLIANCE EQUITY INDEX 28.07% 27.61% 24.31%
Lipper S&P 500 Index Avg. 28.05 27.67 24.31
S&P 500 28.58 28.23 24.79
The Alliance Equity Index Portfolio started operations on March 1, 1994.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
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ALLIANCE COMMON STOCK PORTFOLIO
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The U.S. markets moved steadily higher in the first half of 1998, but then
experienced a turbulent second half. The 1997 collapse of Asian markets and
economies seemed to have little effect on the U.S. economy or stock market until
late summer 1998. In the third quarter of 1998, worsening economic conditions in
Asia began to put pressure on Western markets. When Russia defaulted on its
foreign debt, sentiment turned bleakly pessimistic with talk of worldwide
recession and uncontrolled deflation. From its July peak to its October low, the
U. S. market dropped about 20%, with many stocks faring far worse.
With its concentration in financial stocks and the volatile technology sector,
the value of the Common Stock Portfolio's shares fell sharply. With the U. S.
economy performing well, and with inflation and interest rates low, we did not
believe that there would necessarily be a recession. Furthermore, we thought
that if there were a recession it would likely be a modest one. In September and
October it seemed to us that the market was experiencing some financial panic
rather than the beginning of a bear market. We used this market weakness to
expand our positions in the technology sector, with particular emphasis on
communications.
These purchases proved to be quite timely. When the Federal Reserve began to cut
interest rates, and made it clear that it would continue to do so if the economy
and markets weakened further, the stock market began a rapid recovery. As it
became apparent that the U. S. economy was continuing to grow, the recovery
gained momentum and in a remarkably short time, new all-time market highs were
attained. The Portfolio performed strongly in this recovery and by year end had
gained 29.4%, outpacing the S&P 500 return of 28.6%, for the 1998 calendar year.
Conditions appear favorable for continued gains entering 1999. However,
valuations have reached uncomfortably high levels and the market is taking on an
increasingly speculative tone, especially with respect to on-line trading of
Internet-related stocks. We remain optimistic about long-term prospects for the
U. S. economy and markets, but caution that 1999 could be another year of
considerable volatility.
Tyler Smith, Portfolio Manager
================================================================================
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT POLICY
Primarily common stock and other equity-type instruments.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................ $12.9 billion
Number of Issues .......................................... 104
LARGEST EQUITY HOLDINGS
MCIWorldCom, Inc.+ ........................................ Telecommunications
IBMCorp ................................................... Office Equipment
American International Group, Inc. ........................ Insurance
Mannesman ADR(AG) ......................................... Telecommunications
Cisco Systems, Inc.+ ...................................... Electronics
Citigroup, Inc.+ .......................................... Banks
Tele-Communications TCI + ................................. Telecommunications
Network Associates, Inc. + ................................ Electronics
MBNACorp .................................................. Financial Services
Cendant Corp.+ ............................................ Leisure
+ Net of written options
ASSET MIX DISTRIBUTION
Common Stock .............................................. 96.3%
Preferred Stock ........................................... 0.1%
Bonds (Convertible) ....................................... 0.1%
Short-Term & Cash ......................................... 3.5%
Annualized Total Return, As of December 31, 1998
SINCE
ALLIANCE 1 YEAR 3 YRS 5 YRS 10 YRS 20 YRS INCEPT.
COMMON
STOCK 29.39% 27.67% 21.95% 18.65% 18.61% 16.39%
Lipper Growth 22.86 22.23 18.63 16.72 16.30 16.01
S&P 500 28.58 28.23 24.06 19.21 17.76 15.98
The Alliance Common Stock Portfolio started operations on January 13, 1976.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested Ten Years Ago on December 31, 1988)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE GLOBAL PORTFOLIO
================================================================================
The Alliance Global Portfolio's rate of return for 1998 was 21.80% compared to
its benchmark, the MSCI World Index, which returned 24.34%. The S&P 500 rose
28.58% for the year, closely matching the 28.91% rise in European markets as
measured by the MSCI Europe Index. The MSCI Japan Index, on a U.S. dollar basis,
rose 5.25% in 1998, aided by a 15% appreciation in the yen against the dollar.
The MSCI Emerging Markets Free Index fell 25.34% in 1998, as investor sentiment
soured on all emerging markets in Southeast Asia, Latin America and Central
Europe /Russia.
With lower rates and continuing economic strength, the U.S. market barreled
ahead after a brief setback in August and September. Technology stocks led the
market out of its doldrums in the fall, and the Portfolio benefited from an
overweight position in this sector.
European equity markets were aided by coordinated global interest rate easings
by the European central banks, and financial services companies rebounded from
lows due to credit crunch concerns. Telecommunication companies hit new highs
with news of spectacular mobile phone subscriber growth and of numerous
strategic mergers. The Portfolio's holdings in European financials and
telecommunications helped boost its international returns.
However, the Japanese market experienced several rounds of altering investor
sentiment. The unexpected increase in the yen hurt export-related stocks. As a
result, the Portfolio's holdings in such blue chip stocks as Sony, Nintendo Co.
Ltd. and Honda Motor Co. Ltd. suffered in performance with the significant
appreciation in the country's currency and contributed to the Portfolio's
underperformance relative to its benchmark. Even though the Portfolio's weight
in Japan is close to that of the MSCI World Index, these specific stocks
negatively impacted the Portfolio's performance. The Portfolio's positions in
Japanese domestic-related stocks (which are not as currency sensitive) have been
increased at the expense of the export-related names.
We believe the European markets remain attractive in the current environment of
declining rates. The introduction of the Euro has thus far been smooth and this
new European cooperation should benefit all of the countries in the European
Monetary Union. We believe that as European enterprises work to become more
globally competitive, shareholders should reap the rewards. In the U.S., we
remain overweight in financials and technology stocks.
Sandra L. Yeager, Portfolio Manager
================================================================================
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT POLICY
Primarily equity securities of non-United States companies as well as United
States issuers.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $1.4 billion
Number of Issues ........................................... 141
Number of Countries Represented ............................ 18
LARGEST EQUITY HOLDINGS
Cisco Systems, Inc. ........................................ Electronics
MCI WorldCom, Inc. ......................................... Telecommunications
Solectron Corp. ............................................ Electronics
Nokia Corp. ................................................ Telecommunications
Citigroup, Inc. ............................................ Banks
DISTRIBUTION OF INVESTMENTS BY COUNTRY
Canada ..................................................... 0.5%
Japan ...................................................... 10.0%
Latin America .............................................. 0.5%
United Kingdom ............................................. 8.4%
Scandinavia ................................................ 3.8%
New Zealand & Australia .................................... 0.4%
United States .............................................. 50.0%
Other European Countries ................................... 19.1%
Cash & Equivalents (net) ................................... 7.3%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS 10 YRS INCEPT.
ALLIANCE
GLOBAL 21.80% 15.95% 14.28% 14.81% 12.55%
Lipper Global 14.34 14.67 11.98 11.21 9.64
MSCI World 24.34 17.77 15.68 10.66 9.55
The Alliance Global Portfolio started operations on August 27, 1987.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested Ten Years Ago on December 31, 1988)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE INTERNATIONAL PORTFOLIO
================================================================================
The Alliance International Portfolio returned 10.57%, trailing its unmanaged
benchmark, the MSCI EAFE Index, for the year ended December 31, 1998 due in most
part to over exposure to smaller capitalization stocks. The MSCI EAFE Index rose
20.00% as a result of strength in the European markets. Asian markets were down
for the year with the exception of Australia, Japan, Thailand and South Korea.
The MSCI Europe Index rose 28.91% for the year. The MSCI Japan Index rose 5.25%,
aided by a 15% yen appreciation. Large capitalization shares significantly
outperformed smaller cap issues.
The Portfolio's European holdings remained concentrated in growth stocks. In the
financial services sector, the Portfolio's holdings rebounded from lows due to
credit crunch concerns this summer. The Portfolio's telecommunication companies
hit new highs with news of spectacular mobile phone subscriber growth and of
numerous strategic mergers.
In Japan, the Portfolio's holdings represent primarily export-related companies.
These stocks performed well earlier in the year, but suffered with the
unexpected appreciation in the yen in October. On the margin, we have added to
domestic names (which are not as sensitive to currency fluctuations) and have
reduced export-related names.
We believe the European markets remain attractive in the current environment of
declining rates. The introduction of the Euro has thus far been smooth and this
European cooperation should benefit all of the countries in the European
Monetary Union. We believe that as European enterprises work to be more globally
competitive, shareholders should reap the rewards.
Sandra L. Yeager, Portfolio Manager
================================================================================
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT POLICY
Primarily equity securities selected principally to permit participation in
non-United States companies with prospects for growth.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $212.3 million
Number of Issues ........................................... 356
Number of Countries Represented ............................ 35
LARGEST EQUITY HOLDINGS
SEAT Pagine Gialle SPA ..................................... Publishing
Swisscom AG - Reg .......................................... Utility
Telecel-Comm. Pessoais SA .................................. Telecommunications
Tabacalera SA .............................................. Tobacco
Mettler Toledo International ............................... Office Equipment
DISTRIBUTION OF INVESTMENTS BY COUNTRY
Canada ..................................................... 1.0%
Japan ...................................................... 17.1%
Southeast Asia ............................................. 2.4%
Latin America .............................................. 2.4%
United Kingdom ............................................. 20.0%
Scandinavia ................................................ 9.2%
New Zealand & Australia .................................... 2.3%
Other European Countries ................................... 37.8%
Cash & Equivalents (net) ................................... 7.8%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YEARS INCEPT.
ALLIANCE INTERNATIONAL 10.57% 5.61 7.49%
Lipper International 13.02 9.94 10.74
MSCI EAFE 20.00 9.00 9.68
The Alliance International Portfolio started operations on April 3, 1995.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
================================================================================
1998 was a year characterized by the continuing surge in large-cap stocks with
small- and mid-cap stocks trailing considerably. During 1998, the S&P 500 Stock
Index and the S&P Midcap 400 Index gained 28.6%, and 18.3%, respectively, but
the Russell 2000 Index declined 2.6 %.
The Aggressive Stock Portfolio strives to invest in the best quality growth
names in the small-cap and mid-cap sectors. We look for growth characteristics
in both growth and cyclical industries. We do not believe that the S&P 500 can
continue its tremendous outperformance going forward. Based on virtually any
historical measure taken, these mega-cap stocks have reached virtually all-time
high valuations relative to their growth rates and fundamental outlook. We
strongly believe that small- and mid-cap stocks will offer investors a potential
for greater return when these values are finally recognized in the marketplace.
When this event takes place, we believe the Portfolio should be positioned to
perform relatively well.
In 1998, the Portfolio had a very strong first quarter, but gave some gains back
during the second quarter. During the first half of 1998, the Portfolio gained
9.23%, while its benchmark, a 50%/50% composite of the S&P Midcap 400 and the
Russell 2000 indices, was up 6.79%. However, the Portfolio's entire
underperformance for calendar1998 occurred during the third quarter and first
eight days of the fourth quarter. From July 1 through October 8, the Portfolio
declined 38.9 %, versus the benchmark return of -27.6%. Interestingly, our
underperformance coincided with the interim bottoming of the stock market. From
October 8 through December 31, the Portfolio advanced 50.67%, versus the
benchmark's gain of 39.43%.
We believe that there were three major reasons for the Portfolio's relative
underperformance during 1998. First, growth stocks with cyclical exposure did
not perform well during the third quarter. Many investors feared that there
would be recession in 1999 and, subsequently, their earnings outlook
deteriorated. Specifically, the airline sector and the rental car sector, two
fundamentally strong industries showing tremendous profitability, lost almost
two years of stock performance during this one quarter alone. Investors had
shifted out of such stocks and into stocks that had more positive momentum
(price and volume trends).
Second, we underestimated the amount of momentum that was evident as investors
bought and sold stocks. In many cases, valuations took longer to be realized
when we decided to buy, and conversely, the stocks that we sold were carried to
higher valuations as momentum investors were willing to pay higher prices than
we thought these stocks justified.
Third, while we like to think of ourselves as leading edge investors looking for
that next great idea, we were unwilling to take a huge overweighting in the
technology sector and more specifically, we avoided investing in Internet
stocks. America Online (AOL), which used to be in the S&P Midcap 400 Index, was
by far the largest single weighting in the index. Thus, not owning AOL for the
duration of 1998 affected our relative performance. In our opinion, Internet
stocks were overpriced when 1998 began, and are even more overpriced as we enter
1999. We believe that when investors start looking at fundamentals and
valuations, and not hype and momentum, prices will be reflected accordingly.
We have addressed in the Portfolio the issues cited above, and we are extremely
positive about the Portfolio as we enter the new year. We firmly believe that
when the turn for small- and mid-cap stocks does occur, we will be extremely
well positioned to fully participate.
Alden Stewart and Randall Haase, Portfolio Managers
================================================================================
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT POLICY
Primarily common stocks and other equity-type securities issued by medium- and
other smaller-sized companies with strong growth potential.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $4.5 billion
Number of Issues ........................................... 79
LARGEST EQUITY HOLDINGS
Comcast Corp. (Class A) ............................ Cable Broadcasting
CNAFinancial Corp. ................................. Insurance
HealthSouth Corp. .................................. Hospital Supplies
Premier Parks, Inc. ................................ Leisure
Mohawk Industries, Inc. ............................ Apparel, Textile
Continental Airlines, Inc. (Class B) ............... Airlines
Republic Industries, Inc. .......................... Automotive Retailing
Tiffany & Co ....................................... Retail
Royal Caribbean Cruises Ltd. ....................... Leisure
USA Networks, Inc. ................................. Cable Broadcasting
ASSET MIX DISTRIBUTION
Common Stock ............................................... 96.5%
Short-Term & Cash .......................................... 3.5%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS 10 YRS INCEPT.
ALLIANCE
AGGRESSIVE STOCK 0.29 10.78 11.47 18.90 17.81
Lipper Mid-Cap Growth 12.16 16.33 14.87 15.44 13.69
50% Russell 2000/ 8.28 17.77 15.56 16.49 14.78
50% S&P 400 Mid-Cap
The Alliance Aggressive Stock Portfolio started operations on January 27, 1986.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(INVESTED TEN YEARS AGO ON DECEMBER 31, 1988)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE SMALL CAP GROWTH PORTFOLIO
================================================================================
The Small Cap Growth Portfolio posted returns of -4.28% for the 12-month period
ended December 31, 1998, while its benchmark, the Russell 2000 Growth Index
returned 1.23% for the same time frame. While small cap stocks did not perform
well for the year overall, they did begin to rebound during the fourth quarter
of 1998. However, even a strong October rally was not enough to turn the sector
around significantly. The rally stalled beginning in November, most likely as a
result of investors selling their small cap stocks at the end of the year for
tax planning purposes.
However, there continues to be compelling reasons for owning small cap stocks.
Traditionally, small cap stocks have higher price/earnings ratios, reflecting
their higher growth potential. Yet the estimated price/earnings ratio for
companies in the Russell 2000 Index next year is 19.5 times relative to the 24.8
times for the S&P 500 Stock Index, despite the fact that these small cap company
stocks have higher expected growth rates. Also important is that, given the
volatility of the international economy, small cap stocks are expected to be
less vulnerable to international problems because they tend to have most of
their business in the U.S. Notably, performance results have improved
significantly since the October 8 low with the Russell 2000 up 36.0% as compared
to 28.1% for the S&P 500.
All economic sectors of the Russell 2000 Index were positive during the fourth
quarter, except for energy. Technology, health care and consumer services were
top performing areas of the Index. Your Portfolio was overweighted in each of
the top performing areas as compared to the Russell 2000. Looking at the top 10
holdings in your Portfolio, all had strong double-digit returns for the quarter,
except for Data Processing Resources Corp. which was flat and Metamor Worldwide
Inc., which declined. Both companies provide information technology staffing.
Within the technology area, strong fourth quarter performance came from Comverse
Technology, Inc., maker of enhanced telecommunications systems and Flextronics
International, a world leading provider of contract electronics manufacturing
for communication, computer, consumer electronics and medical device industries.
Health care related companies, Medicis Pharmaceutical Corp. and MedImmune, Inc.
both increased. Within consumer services, entertainment based companies, Premier
Parks Inc. and SFX Entertainment, both had outstanding quarters.
Since 1926, returns on small cap company stocks have averaged 12% a year,
outperforming the 10% return achieved by larger-cap companies. Since 1994,
however, the Russell 2000 has lagged behind the S&P 500. Accordingly, it would
appear that small caps are historically undervalued by a wide margin. Going
forward, we strongly believe that small-cap stocks will offer investors the
potential for greater returns when these values are finally recognized in the
marketplace.
================================================================================
INVESTMENT OBJECTIVE
Long-term growth of capital.
INVESTMENT POLICY
Primarily U.S. common stocks and other equity-type securities of smaller
companies with favorable growth prospects.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ................................................. $310.6 million
Number of Issues ........................................... 110
LARGEST EQUITY HOLDINGS
Mohawk Industries, Inc. ....................... Apparel, Textile
Medicis Pharmaceutical (Class A) .............. Drugs
Ha-Lo Industries, Inc. ........................ Professional Services
Metamor Worldwide, Inc. ....................... Information Tech. Staffing
Carematrix Corp. .............................. Professional Services
Comverse Technology, Inc. ..................... Office Equipment
Premier Parks, Inc. ........................... Leisure
Jones Pharmaceuticals, Inc. ................... Drugs
Data Processing Resources ..................... Professional Services
Building One Services Corp. ................... Professional Services
ASSET MIX DISTRIBUTION
Common Stock ............................................... 93.0%
Short-Term & Cash .......................................... 7.0%
Annualized Total Return, As of December 31, 1998
SINCE INCEPTION
1 YEAR (Unannualized)
ALLIANCE SMALL CAP GROWTH (4.28) 12.27%
Lipper Small Company Growth Funds Avg (0.33) 16.72
Russell 2000 Growth 1.23 16.58
The Alliance Small Cap Growth Portfolio started operations on May 1, 1997.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
================================================================================
Developments in global fixed income markets dominated economic policy actions in
both the developed and developing world during 1998. As the year began,
expectations for economic and profit growth began to rise as it appeared that
the U.S. and Europe were not going to be significantly affected by the collapse
in the Asian economies. Both bond and equity markets were buttressed by benign
inflation, and the economy continued to surprise most investors on the upside.
In late summer, however, the Russian government was unable to bring stability to
its fixed-income and currency markets, prompting a unilateral default on some of
its sovereign debt. This disturbance spread to other developing markets that
were vulnerable to the flight of capital, such as Brazil. Credit markets almost
stopped functioning and yield spreads on high-risk fixed-income instruments
widened to new record levels. These unprecedented conditions - namely a
breakdown of historical relationships - forced one super-sized hedge fund, Long
Term Capital Management, to the brink of liquidation. Federal Reserve officials
encouraged the hedge fund's creditors to provide additional equity capital in
order to diffuse the risks of liquidation. Demonstrating the linkages among
markets of different asset classes, equities tumbled around the world. The
NASDAQ industrial fell 27% during the two months of July and August.
The Fed followed up in its intervention with three consecutive 25 basis point
cuts in short-term interest rates (from 5.50% to 4.75%). Other central banks
quickly followed. These moves seem to have restored investors' confidence and
markets rebounded sharply for the balance of the year.
Equity markets turned in another year of exceptional performance. Supporting
these historical above-average returns was the recognition that the U.S. economy
could grow at rates exceeding 3%; unemployment would drop to levels not seen in
25 years; and profitability in many of our leading industries would reach high
levels without triggering inflationary pressures.
The Conservative Investors Portfolio returned 13.9% for the 1998 calendar year.
This compared with a 28.6% return for the S&P 500 Stock Index and a 10.0% return
for the Lehman Brothers Treasury Index. A 30%/70% weighting of these indices,
respectively, produced a 15.6% return for 1998. One of the dominant
characteristics of U.S. equity markets of the last few years has been the
record-breaking performance gap favoring a handful of large-capitalization
companies that dominate the indices. For example, the largest 20 companies
outperformed the average S&P 500 stock by 27% last year. This concentration of
performance made it difficult for broadly diversified portfolios to match the
index. That said, your Portfolio underperformed the 30%/70% respective
combination of the S&P 500 and the Lehman Brothers Treasury Index, because the
Portfolio is not as relatively concentrated in the large-capitalization stocks
which dominated the indices. In our opinion, the performance gap will begin to
close in 1999, as the prospects for a resumption of global growth becomes
visible. We have maintained an above-benchmark cash position of 14.2% at
year-end to reflect our judgement that the market is at very high valuation
levels. We will use this reserve as future buying opportunities present
themselves.
Robert G. Heisterberg, Portfolio Manager
================================================================================
INVESTMENT OBJECTIVE
High total return without, in the adviser's opinion, undue risk to principal.
INVESTMENT POLICY
A diversified mix of publicly traded fixed-income and equity securities; asset
mix and security selection are primarily based upon factors expected to reduce
risk.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets .............................................. $388.1 million
Number of U.S. Equity Issues ............................ 118
Average Quality (excluding net cash) .................... AA+
Average Duration (including net cash) ................... 12.7 years
LARGEST EQUITY HOLDINGS
Philip Morris Cos., Inc. ............................... Tobacco
Cisco Systems, Inc. .................................... Electronics
General Electric Co. ................................... Electrical Equipment
Citigroup, Inc. ........................................ Banks
CBSCorp ................................................ Broadcasting
ASSET MIX DISTRIBUTION
Domestic Common Stock .................................. 28.6%
Foreign Common Stock ................................... 4.6%
Foreign Preferred Stock ................................ 0.2%
Bonds (Non-Convertible) ................................ 52.4%
Short-Term & Cash ...................................... 14.2%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS INCEPT.
ALLIANCE
CONSERVATIVE INVESTORS 13.88% 10.71% 9.40% 9.99%
Lipper Flexible Portfolio 14.20 15.62 14.31 12.55
70% Lehman Treas./30% S&P 500 15.59 14.45 13.37 12.08
The Alliance Conservative Investors Portfolio started operations on October 2,
1989.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE BALANCED PORTFOLIO
================================================================================
1998 was another exceptional year in the global capital markets. All of the
larger markets in the developed world, with the exception of Japan, produced
very rewarding results. This was the case for both the equity and fixed income
markets - the two asset classes represented in the Balanced Portfolio. Once
again, the U.S. stock market led the way, generating returns in excess of 20% as
measured by the S&P 500 Stock Index for four consecutive years in a row.
The major factors that created such a favorable investment environment included
stronger-than-expected economic growth, better productivity, and wage behavior
that kept inflationary pressures from developing. This positive mix of strong
growth and benign inflation was accompanied by a reversal from a federal fiscal
deficit to a surplus and a resumption in the rate of real wage growth.
There were, however, some disruptions in these favorable trends during the
course of the year. Developing markets in Asia continued to struggle - first to
achieve stability and then to begin economic recovery. The vulnerability of the
currency and capital markets in the developing world to swings in investor
sentiment periodically upset capital markets in the developed world. Russia was
unable to implement effective economic policies to stabilize its debt and
currency markets and unilaterally defaulted on a portion of its sovereign debt.
The so-called "contagion effect" that now characterizes developing markets meant
other vulnerable economies, such as Brazil, came under investor scrutiny. Credit
markets were paralyzed and there was a marked and unprecedented widening in
interest rate spreads on lower quality securities. Long Term Capital Management,
a super-sized hedge fund with highly leveraged positions, had to be rescued by
its creditors at the urging of the Federal Reserve. The Fed intervened because
there was concern about the possible effects on the capital markets from a
forced liquidation. The Board soon followed up on its intervention with three
consecutive 25 basis point cuts in short-term interest rates (from 5.50% to
4.75%). Consequently, other central bankers quickly followed suit. As a result
of this intervention, investor confidence was restored and the markets recovered
smartly by year-end.
The Portfolio benefited from the strong performance of both equity and
fixed-income markets, returning 18.11% for the year. The S&P 500 returned 28.58%
while the Lehman Government/Corporate Bond Index returned 9.47%. A 50/50 mix of
these two indices combined to produce a benchmark return of 19.02%. We have
maintained a cash reserve position of 5.6% at year-end in order to take
advantage of any buying opportunities that might present themselves in an equity
market that appears to be highly valued.
Robert G. Heisterberg, Portfolio Manager
================================================================================
INVESTMENT OBJECTIVE
High return through a combination of current income and capital appreciation.
INVESTMENT POLICY
Primarily common stocks, publicly traded debt securities and high-quality money
market instruments.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ............................................. $1.9 billion
Number of U.S. Equity Issues ........................... 176
Average Quality (excluding net cash) ................... AA+
Average Duration (including net cash) .................. 12.6 years
LARGEST EQUITY HOLDINGS
Cisco Systems, Inc. .................................... Electronics
Philip Morris Cos., Inc. ............................... Tobacco
Solectron Corp.+ ....................................... Electronics
General Electric Co. ................................... Electrical Equipment
Dell Computer Corp. .................................... Office Equipment
+ Includes convertible securities
ASSET MIX DISTRIBUTION
Domestic Common Stock .................................. 41.7%
Domestic Preferred Stock ............................... 1.0%
Foreign Common Stock ................................... 8.9%
Foreign Preferred Stock ................................ 0.4%
Bonds (Convertibles) ................................... 2.9%
Bonds (Non-Convertibles) .............................. 39.5%
Short-Term & Cash ...................................... 5.6%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
1 YEAR 3 YRS 5 YRS 10 YRS INCEPT.
ALLIANCE BALANCED 18.11% 14.92% 10.82% 12.51% 12.73%
Lipper Balanced 13.48 15.79 13.84 12.97 12.32
50% Lehman Corp./ 19.02 18.70 16.88 15.21 14.64
50% S&P 500
The Alliance Balanced Portfolio started operations on January 27, 1986.
Growth of $10,000 investment as of December 31, 1998
(INVESTED TEN YEARS AGO ON DECEMBER 31, 1988)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
================================================================================
ALLIANCE GROWTH INVESTORS PORTFOLIO
================================================================================
For the fourth year in a row, capital markets performed in an extraordinary
manner. This celebration of well above historical average returns was confined
to developed markets, with the exception of Japan.
This exceptional performance reflected a mixture of events. The strong U.S.
economic recovery extended into its eighth year - a post-war record. Inflation
remained benign not withstanding historically tight labor market conditions.
U.S. budget deficits disappeared and turned into surpluses. Productivity gains
continued to surprise forecasters, interest rates hit new lows and profitability
measures in the information content and processing industries exceeded even the
most optimistic expectations.
On the other hand, developing market economies continued to struggle. The series
of currency and economic crises that began in Thailand and spread to other Asian
countries served to heighten investor awareness of the risks inherent in
developing markets. Russia's default on some of its sovereign debt in late
summer of 1998 caused global financial markets to freeze-up, driving risk premia
on all but the most liquid U.S. Treasuries to record highs. Fixed-income and
credit markets almost stopped functioning as a major-sized hedge fund was
threatened with potential liquidation. The Federal Reserve intervened with the
hedge fund's creditors in order to avoid destabilizing the market and then
followed quickly with three consecutive 25 basis point cuts in short-term
interest rates. Other central banks followed. Markets recovered smartly to close
the year higher.
The Growth Investors Portfolio returned 19.1% for the 1998 calendar year. This
compared with a 28.6% return for the S&P 500 Stock Index and a 9.5% gain for the
Lehman Brothers (LB) Government/Corporate Bond Index. A 70%/30% weighting of
these indices, respectively, combined to produce a 22.8% return. The dominant
feature of the domestic equity market during the year was the record-breaking
performance gap between a handful of many large-capitalization companies that
dominate the indexes. For example, the largest 20 outperformed the average S&P
500 stock by 27% last year - the greatest skewing of the last 30 years. That
said, your Portfolio underperformed the 70%/30% respective combination of the
S&P 500 and the Lehman Brothers Government/Corporate Bond Index, mainly because
the Portfolio is not as relatively concentrated in the large-capitalization
stocks which dominated the indexes. In our opinion, this gap will close as the
outlook for global growth improves in the second half of 1999. Cash positions
remain above benchmark, at 11.0%, as a reserve for future buying opportunities
in the market.
Robert G. Heisterberg, Portfolio Manager
================================================================================
INVESTMENT OBJECTIVE
High total return consistent with the adviser's determination of reasonable
risk.
INVESTMENT POLICY
A diversified mix of publicly traded fixed-income and equity securities; asset
mix and security selection based upon factors expected to increase possibility
of high long-term return.
PORTFOLIO SUMMARY, AS OF DECEMBER 31, 1998
Net Assets ............................................... $2.0 billion
Number of U.S. Equity Issues ............................. 179
Average Quality (excluding net cash) ..................... AA+
Average Duration (including net cash) .................... 14.1 years
LARGEST EQUITY HOLDINGS
CBSCorp .................................................. Broadcasting
America Online, Inc.+ .................................... Telecommunications
Cisco Systems, Inc. ...................................... Electronics
Philip Morris Cos., Inc. ................................. Tobacco
Solectron Corp.+ ......................................... Electronics
+ Includes convertibles
ASSET MIX DISTRIBUTION
Domestic Common Stock .................................... 53.7%
Domestic Preferred Stock ................................. 0.8%
Foreign Common Stock ..................................... 11.9%
Foreign Preferred Stock .................................. 0.3%
Bonds (Convertibles) ..................................... 2.3%
Bonds (Non-Convertibles) ................................. 20.0%
Short-Term & Cash ........................................ 11.0%
ANNUALIZED TOTAL RETURN, AS OF DECEMBER 31, 1998
SINCE
ALLIANCE 1 YEAR 3 YRS 5 YRS INCEPT.
GROWTH INVESTORS 19.13% 16.17% 13.92% 16.09%
Lipper Flexible Portfolio 14.20 15.62 14.31 12.55
30% Lehman Corp./70% S&P 500 22.85 22.69 19.96 15.55
The Alliance Growth Investors Portfolio started operations on October 2, 1989.
GROWTH OF $10,000 INVESTMENT AS OF DECEMBER 31, 1998
(Invested at Inception)
[THE FOLLOWING TABLE WAS REPRESENTED BY A LINE CHART IN THE PRINTED MATERIAL.]
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1998
<TABLE>
<CAPTION>
ALLIANCE
INTERMEDIATE
ALLIANCE GOVERNMENT
MONEY MARKET SECURITIES
PORTFOLIO PORTFOLIO
----------------- ----------------
<S> <C> <C>
ASSETS:
Investments at value (Notes 1 and 4) ........................ $1,065,899,953 $225,870,317
Cash ........................................................ 156,695 60,518
Receivable for securities sold .............................. -- 14,125,951
Collateral held for securities loaned (Note 1) .............. -- 18,552,820
Receivable from Separate Accounts for Trust shares sold ..... 37,773,076 423,626
Unrealized appreciation of forward currency contracts
(Notes 1 and 4) ............................................ -- --
Variation margin receivable on futures contracts ............ -- 3,720
Dividends, interest and other receivables ................... 6,829,093 1,986,194
-------------- ------------
Total assets .............................................. 1,110,658,817 261,023,146
-------------- ------------
LIABILITIES:
Options written at value (Premiums received: Alliance
Common Stock Portfolio--$195,807,516) (Notes 1 and 4) ...... -- --
Payable for securities purchased ............................ -- 57,907,115
Payable for collateral received on securities loaned ........ -- 18,552,820
Payable to Separate Accounts for Trust shares redeemed ...... 172,164 176,688
Unrealized depreciation of forward currency contracts
(Notes 1 and 4) ............................................ -- --
Distribution fees payable ................................... 75,249 6,178
Investment advisory fees payable ............................ 303,228 76,809
Trustees' fees payable ...................................... 36,067 7,500
Accrued expenses ............................................ 42,501 14,870
-------------- ------------
Total liabilities ......................................... 629,209 76,741,980
-------------- ------------
NET ASSETS .................................................. $1,110,029,608 $184,281,166
============== ============
Investments at cost ......................................... $1,065,207,929 $224,425,951
============== ============
COMPONENTS OF NET ASSETS (NOTE 1):
Paid in capital ............................................ $1,109,363,876 $188,629,615
Accumulated undistributed (overdistributed) net
investment income ......................................... (30,306) 41,806
Accumulated undistributed net realized gain (loss) ......... 4,014 (5,835,966)
Unrealized appreciation/depreciation on investments and
foreign currency denominated assets and liabilities ....... 692,024 1,445,711
-------------- ------------
NET ASSETS .................................................. $1,110,029,608 $184,281,166
============== ============
CLASS IA SHARES:
Net Assets .................................................. $ 723,311,188 $153,383,440
============== ============
Shares outstanding (Note 5) ................................. 70,743,797 15,858,517
============== ============
Net asset value, offering and redemption price per share
(Note 1) ................................................... $ 10.22 $ 9.67
============== ============
CLASS IB SHARES:
Net Assets .................................................. $ 386,718,420 $ 30,897,726
============== ============
Shares outstanding (Note 5) ................................. 37,888,260 3,198,848
============== ============
Net asset value, offering and redemption price per share
(Note 1) ................................................... $ 10.21 $ 9.66
============== ============
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE GROWTH AND
QUALITY BOND HIGH YIELD INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- --------------- ------------------
<S> <C> <C> <C>
ASSETS:
Investments at value (Notes 1 and 4) ........................ $325,048,927 $ 598,993,487 $ 995,416,319
Cash ........................................................ 160,618 2,432,944 262,852
Receivable for securities sold .............................. -- -- 462,755
Collateral held for securities loaned (Note 1) .............. 50,432,523 -- 73,317,420
Receivable from Separate Accounts for Trust shares sold ..... 310,428 1,036,384 2,717,842
Unrealized appreciation of forward currency contracts
(Notes 1 and 4) ............................................ -- -- --
Variation margin receivable on futures contracts ............ -- -- --
Dividends, interest and other receivables ................... 3,596,596 16,422,349 1,664,593
------------ ------------- ----------------
Total assets .............................................. 379,549,092 618,885,164 1,073,841,781
------------ ------------- ----------------
LIABILITIES:
Options written at value (Premiums received: Alliance
Common Stock Portfolio--$195,807,516) (Notes 1 and 4) ...... -- -- --
Payable for securities purchased ............................ 6,519,516 6,000,000 1,314,393
Payable for collateral received on securities loaned ........ 50,432,523 -- 73,317,420
Payable to Separate Accounts for Trust shares redeemed ...... 3,045 111,360 385,084
Unrealized depreciation of forward currency contracts
(Notes 1 and 4) ............................................ -- -- --
Distribution fees payable ................................... -- 42,967 23,059
Investment advisory fees payable ............................ 141,509 327,459 431,187
Trustees' fees payable ...................................... 8,503 13,346 14,207
Accrued expenses ............................................ 15,457 39,613 54,371
------------ ------------- ----------------
Total liabilities ......................................... 57,120,553 6,534,745 75,539,721
------------ ------------- ----------------
NET ASSETS .................................................. $322,428,539 $ 612,350,419 $ 998,302,060
============ ============= ================
Investments at cost ......................................... $322,156,171 $ 663,283,133 $ 853,358,652
============ ============= ================
COMPONENTS OF NET ASSETS (NOTE 1):
Paid in capital ............................................ $319,600,973 $ 712,370,036 $ 848,265,567
Accumulated undistributed (overdistributed) net
investment income ......................................... 397,762 (123,847) 181,017
Accumulated undistributed net realized gain (loss) ......... (462,878) (35,606,124) 7,797,809
Unrealized appreciation/depreciation on investments and
foreign currency denominated assets and liabilities ....... 2,892,682 (64,289,646) 142,057,667
------------ ------------- ----------------
NET ASSETS .................................................. $322,428,539 $ 612,350,419 $ 998,302,060
============ ============= ================
CLASS IA SHARES:
Net Assets .................................................. $322,418,134 $ 405,307,990 $ 877,744,459
============ ============= ================
Shares outstanding (Note 5) ................................. 32,773,456 46,554,081 51,671,674
============ ============= ================
Net asset value, offering and redemption price per share
(Note 1) ................................................... $ 9.84 $ 8.71 $ 16.99
============ ============= ================
CLASS IB SHARES:
Net Assets .................................................. $ 10,405 $ 207,042,429 $ 120,557,601
============ ============= ================
Shares outstanding (Note 5) ................................. 1,057 23,834,821 7,111,672
============ ============= ================
Net asset value, offering and redemption price per share
(Note 1) ................................................... $ 9.84 $ 8.69 $ 16.95
============ ============= ================
</TABLE>
See Notes to Financial Statements.
1
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
EQUITY INDEX COMMON STOCK GLOBAL INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ------------------- ------------------ ----------------- ---------------
<S> <C> <C> <C>
$ 1,679,332,205 $13,296,800,242 $1,419,326,019 $203,233,964
140,470 214,471 309,325 10,777,543
9,348,912 92,116,641 1,091,463 20,722
153,710,640 622,787,758 63,260,226 12,321,470
20,636,166 17,299,460 269,705 70,336
-- -- -- 75,536
83,800 -- -- --
1,603,274 7,284,427 939,223 301,159
--------------- --------------- -------------- ------------
1,864,855,467 14,036,502,999 1,485,195,961 226,800,730
--------------- --------------- -------------- ------------
-- 471,793,964 -- --
19,562,086 39,326,310 11,269,168 17,910
153,710,640 622,787,758 63,260,226 12,321,470
684,273 1,426,011 1,172,417 1,899,067
-- -- 285,209 --
86 161,709 9,517 1,517
421,150 3,765,950 735,321 159,323
24,007 390,720 44,494 5,653
97,829 729,759 216,836 85,822
--------------- --------------- -------------- ------------
174,500,071 1,140,382,181 76,993,188 14,490,762
--------------- --------------- -------------- ------------
$ 1,690,355,396 $12,896,120,818 $1,408,202,773 $212,309,968
=============== =============== ============== ============
$ 1,166,232,720 $ 8,864,774,533 $1,144,032,492 $198,762,962
=============== =============== ============== ============
$ 1,162,949,176 $ 8,800,675,491 $1,103,126,360 $208,394,898
533,199 4,587,455 (4,115,630) (487,521)
13,268,212 (65,181,631) 35,234,038 (426,552)
513,604,809 4,156,039,503 273,958,005 4,829,143
--------------- --------------- -------------- ------------
$ 1,690,355,396 $12,896,120,818 $1,408,202,773 $212,309,968
=============== =============== ============== ============
$ 1,689,912,599 $12,061,977,279 $1,360,220,279 $204,767,192
=============== =============== ============== ============
67,609,949 495,266,616 69,913,136 18,395,534
=============== =============== ============== ============
$ 25.00 $ 24.35 $ 19.46 $ 11.13
=============== =============== ============== ============
$ 442,797 $ 834,143,539 $ 47,982,494 $ 7,542,776
=============== =============== ============== ============
17,729 34,331,593 2,471,743 678,688
=============== =============== ============== ============
$ 24.98 $ 24.30 $ 19.41 $ 11.11
=============== =============== ============== ============
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
AGGRESSIVE SMALL CAP CONSERVATIVE ALLIANCE GROWTH
STOCK GROWTH INVESTORS BALANCED INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
----------------- --------------- ---------------- ------------------- -----------------
<S> <C> <C> <C> <C>
$4,635,521,062 $ 322,743,835 $388,825,890 $ 1,941,246,382 $2,052,290,564
1,564,793 111,473 275,295 726,080 1,007,053
25,481,238 829,212 1,089,556 8,231,609 9,868,736
386,886,300 -- 53,351,626 350,884,795 216,907,649
777,266 1,454,081 732,466 100,554 2,675,398
-- -- 6,714 62,470 125,003
-- -- -- -- --
2,519,122 249,532 2,301,561 9,976,240 5,916,946
-------------- ------------- ------------ --------------- --------------
5,052,749,781 325,388,133 446,583,108 2,311,228,130 2,288,791,349
-------------- ------------- ------------ --------------- --------------
-- -- -- -- --
140,296,740 912,578 4,908,702 21,775,641 15,554,866
386,886,300 -- 53,351,626 350,884,795 216,907,649
22,444,883 13,592,725 14,831 1,208,349 87,969
-- -- -- -- --
29,435 21,404 6,339 -- 17,938
1,927,987 215,106 151,811 653,213 869,690
183,493 2,244 15,337 96,460 57,846
291,908 29,731 40,423 170,011 194,872
-------------- ------------- ------------ --------------- --------------
552,060,746 14,773,788 58,489,069 374,788,469 233,690,830
-------------- ------------- ------------ --------------- --------------
$4,500,689,035 $ 310,614,345 $388,094,039 $ 1,936,439,661 $2,055,100,519
============== ============= ============ =============== ==============
$4,308,145,162 $ 310,712,161 $355,180,851 $ 1,658,268,429 $1,737,873,064
============== ============= ============ =============== ==============
$4,176,552,382 $ 321,191,652 $352,564,451 $ 1,633,744,309 $1,729,488,471
(148,225) (2,244) (38,513) 4,480,474 (1,007,460)
(3,091,022) (22,606,737) 1,923,818 15,152,087 12,852,211
327,375,900 12,031,674 33,644,283 283,062,791 313,767,297
-------------- ------------- ------------ --------------- --------------
$4,500,689,035 $ 310,614,345 $388,094,039 $ 1,936,439,661 $2,055,100,519
============== ============= ============ =============== ==============
$4,346,906,699 $ 198,360,184 $355,441,101 $ 1,936,429,168 $1,963,074,010
============== ============= ============ =============== ==============
127,297,449 16,776,844 28,849,374 104,635,096 98,785,840
============== ============= ============ =============== ==============
$ 34.15 $ 11.82 $ 12.32 $ 18.51 $ 19.87
============== ============= ============ =============== ==============
$ 153,782,336 $ 112,254,161 $ 32,652,938 $ 10,493 $ 92,026,509
============== ============= ============ =============== ==============
4,521,093 9,521,607 2,653,554 567 4,639,271
============== ============= ============ =============== ==============
$ 34.01 $ 11.79 $ 12.31 $ 18.51 $ 19.84
============== ============= ============ =============== ==============
</TABLE>
2
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF OPERATIONS
Year Ended December 31, 1998
<TABLE>
<CAPTION>
ALLIANCE
INTERMEDIATE
ALLIANCE GOVERNMENT
MONEY MARKET SECURITIES
PORTFOLIO PORTFOLIO
-------------- ----------------
<S> <C> <C>
INVESTMENT INCOME:
Income* (Note 1):
Dividends (including $2,547,697 from affiliated
companies for the Alliance Aggressive
Stock Portfolio) ................................... $ -- $ --
Interest ............................................. 42,041,562 8,675,579
------------ ------------
Total income ....................................... 42,041,562 8,675,579
------------ ------------
Expenses (Notes 1, 2 and 3):
Investment advisory fee .............................. 2,658,991 754,880
Custodian fees ....................................... 76,032 47,209
Distribution fees--Class IB .......................... 547,381 36,926
Printing and mailing expenses ........................ 85,776 18,721
Professional fees .................................... 16,590 2,078
SEC registration fees ................................ 6,268 970
Trustees' fees ....................................... 8,733 1,937
Miscellaneous ........................................ 9,080 2,642
------------ ------------
Total expenses ..................................... 3,408,851 865,363
------------ ------------
NET INVESTMENT INCOME (LOSS) ........................... 38,632,711 7,810,216
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)
(NOTES 1 AND 4):
Realized Gain (Loss):
On securities (including $35,519,339 and
$44,849,765 from affiliated companies for
the Alliance Common Stock and Alliance
Aggressive Stock Portfolios, respectively) ......... 15,569 3,010,499
On options written ................................... -- --
On foreign currency transactions ..................... -- --
On futures contracts ................................. -- (12,959)
------------ ------------
Realized gain (loss)--net ............................. 15,569 2,997,540
------------ ------------
Change in Unrealized
Appreciation/Depreciation:
On securities ........................................ 580,153 107,461
On options written ................................... -- --
On foreign currency transactions ..................... -- --
On futures contracts ................................. -- 1,345
------------ ------------
Unrealized appreciation/depreciation--net ............. 580,153 108,806
------------ ------------
REALIZED AND UNREALIZED GAIN (LOSS)--NET ............... 595,722 3,106,346
------------ ------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS ............................................ $ 39,228,433 $ 10,916,562
============ ============
<CAPTION>
ALLIANCE
ALLIANCE ALLIANCE GROWTH AND
QUALITY BOND HIGH YIELD INCOME
PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ------------------ ----------------
<S> <C> <C> <C>
INVESTMENT INCOME:
Income* (Note 1):
Dividends (including $2,547,697 from affiliated
companies for the Alliance Aggressive
Stock Portfolio) ................................... $ -- $ 84,000 $ 7,456,643
Interest ............................................. 15,657,760 63,140,419 --
------------ -------------- -------------
Total income ....................................... 15,657,760 63,224,419 7,456,643
------------ -------------- -------------
Expenses (Notes 1, 2 and 3):
Investment advisory fee .............................. 1,359,652 3,344,586 4,268,249
Custodian fees ....................................... 62,688 82,719 90,371
Distribution fees--Class IB .......................... 12 361,364 174,743
Printing and mailing expenses ........................ 30,553 68,011 92,740
Professional fees .................................... 5,008 13,086 18,520
SEC registration fees ................................ 567 726 4,228
Trustees' fees ....................................... 3,134 7,149 9,966
Miscellaneous ........................................ 3,925 6,928 10,524
------------ -------------- -------------
Total expenses ..................................... 1,465,539 3,884,569 4,669,341
------------ -------------- -------------
NET INVESTMENT INCOME (LOSS) ........................... 14,192,221 59,339,850 2,787,302
------------ -------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)
(NOTES 1 AND 4):
Realized Gain (Loss):
On securities (including $35,519,339 and
$44,849,765 from affiliated companies for
the Alliance Common Stock and Alliance
Aggressive Stock Portfolios, respectively) ......... 6,541,551 (25,614,101) 80,187,460
On options written ................................... -- -- --
On foreign currency transactions ..................... 80,060 -- --
On futures contracts ................................. -- -- --
------------ -------------- -------------
Realized gain (loss)--net ............................. 6,621,611 (25,614,101) 80,187,460
------------ -------------- -------------
Change in Unrealized
Appreciation/Depreciation:
On securities ........................................ 986,571 (71,913,643) 69,192,430
On options written ................................... -- -- --
On foreign currency transactions ..................... (227,036) -- --
On futures contracts ................................. -- -- --
------------ -------------- -------------
Unrealized appreciation/depreciation--net ............. 759,535 (71,913,643) 69,192,430
------------ -------------- -------------
REALIZED AND UNREALIZED GAIN (LOSS)--NET ............... 7,381,146 (97,527,744) 149,379,890
------------ -------------- -------------
NET INCREASE (DECREASE) IN NET ASSETS FROM
OPERATIONS ............................................ $ 21,573,367 $ (38,187,894) $ 152,167,192
============ ============== =============
</TABLE>
- ----------
* Net of foreign taxes withheld on dividends of $360, $209,666, $1,167,939,
$406,672, $40,153, $391,775 and $543,189 for the 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 $14,125 for the Alliance
Quality Bond Portfolio.
See Notes to Financial Statements.
3
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
EQUITY INDEX COMMON STOCK GLOBAL INTERNATIONAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
- ---------------- ----------------- ---------------- ---------------
<S> <C> <C> <C>
$ 19,122,386 $ 86,203,386 $ 14,752,313 $ 3,232,148
1,370,159 37,378,241 4,127,993 701,461
------------ -------------- ------------ ------------
20,492,545 123,581,627 18,880,306 3,933,609
------------ -------------- ------------ ------------
4,095,868 39,648,849 8,440,656 1,890,781
161,194 531,065 676,973 304,614
595 1,190,015 82,139 13,284
151,860 1,458,485 185,784 29,246
31,445 313,626 37,967 4,237
7,155 -- 3,564 688
16,269 151,037 19,227 3,064
16,871 363,559 19,270 3,409
------------ -------------- ------------ ------------
4,481,257 43,656,636 9,465,580 2,249,323
------------ -------------- ------------ ------------
16,011,288 79,924,991 9,414,726 1,684,286
------------ -------------- ------------ ------------
13,596,678 938,938,753 116,842,536 4,835,896
-- 355,441,915 -- --
3,951 (801,351) 1,385,818 134,432
213,923 -- -- --
------------ -------------- ------------ ------------
13,814,552 1,293,579,317 118,228,354 4,970,328
------------ -------------- ------------ ------------
291,861,129 1,745,664,003 130,654,898 16,555,416
-- (260,942,993) -- --
(10,468) 390 (6,120,059) (1,575,993)
377,024 -- -- --
------------ -------------- ------------ ------------
292,227,685 1,484,721,400 124,534,839 14,979,423
------------ -------------- ------------ ------------
306,042,237 2,778,300,717 242,763,193 19,949,751
------------ -------------- ------------ ------------
$322,053,525 $2,858,225,708 $252,177,919 $ 21,634,037
============ ============== ============ ============
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE ALLIANCE
AGGRESSIVE SMALL CAP CONSERVATIVE ALLIANCE GROWTH
STOCK GROWTH INVESTORS BALANCED INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
---------------- ---------------- -------------- --------------- ----------------
<S> <C> <C> <C> <C>
$ 23,762,346 $ 1,255,376 $ 1,028,458 $ 9,448,238 $ 12,646,223
12,833,136 1,182,824 14,407,215 53,093,665 35,821,551
-------------- ------------- ----------- ------------ ------------
36,595,482 2,438,200 15,435,673 62,541,903 48,467,774
-------------- ------------- ----------- ------------ ------------
24,448,459 2,113,891 1,623,816 7,463,502 9,325,669
194,188 106,894 114,505 338,569 407,934
280,406 190,087 40,388 12 148,242
696,284 25,924 47,977 258,776 249,382
148,245 6,319 8,400 54,261 51,701
-- 731 202 -- 4,222
72,226 2,852 4,719 26,130 25,707
61,000 3,514 5,159 26,093 25,248
-------------- ------------- ----------- ------------ ------------
25,900,808 2,450,212 1,845,166 8,167,343 10,238,105
-------------- ------------- ----------- ------------ ------------
10,694,674 (12,012) 13,590,507 54,374,560 38,229,669
-------------- ------------- ----------- ------------ ------------
94,437,250 (21,147,657) 18,206,279 150,711,878 149,734,057
-- -- -- -- --
-- -- (311,424) (1,063,146) (2,223,786)
-- -- -- -- --
-------------- ------------- ----------- ------------ ------------
94,437,250 (21,147,657) 17,894,855 149,648,732 147,510,271
-------------- ------------- ----------- ------------ ------------
(90,382,441) 11,287,980 13,904,809 101,161,924 139,796,045
-- -- -- -- --
-- -- (134,872) (1,382,328) (2,581,489)
-- -- -- -- --
-------------- ------------- ----------- ------------ ------------
(90,382,441) 11,287,980 13,769,937 99,779,596 137,214,556
-------------- ------------- ----------- ------------ ------------
4,054,809 (9,859,677) 31,664,792 249,428,328 284,724,827
------------- ------------- ----------- ------------ ------------
14,749,483 $ (9,871,689) $45,255,299 $303,802,888 $322,954,496
============= ============= =========== ============ ============
</TABLE>
4
<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,
1998 1997 1998 1997
------------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income ..................................... $ 38,632,711 $ 24,630,559 $ 7,810,216 $ 5,754,750
Realized gain (loss)--net ................................. 15,569 57,662 2,997,540 995,258
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net .............................. 580,153 (45,650) 108,806 715,736
---------------- -------------- ------------- -------------
Net increase (decrease) in net assets from operations ..... 39,228,433 24,642,571 10,916,562 7,465,744
---------------- -------------- ------------- -------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income ..................... (27,368,048) (21,721,933) (6,948,505) (5,646,086)
Distributions from realized gains ........................ (21,660) (30,365) -- --
---------------- -------------- ------------- -------------
Total Class IA dividends and distributions ................ (27,389,708) (21,752,298) (6,948,505) (5,646,086)
---------------- -------------- ------------- -------------
Class IB:
Dividends from net investment income ..................... (11,444,905) (2,801,881) (839,019) (90,108)
Distributions from realized gains ........................ (9,300) (7,892) -- --
---------------- -------------- ------------- -------------
Total Class IB dividends and distributions ................ (11,454,205) (2,809,773) (839,019) (90,108)
---------------- -------------- ------------- -------------
Decrease in net assets from dividends and
distributions ............................................ (38,843,913) (24,562,071) (7,787,524) (5,736,194)
---------------- -------------- ------------- -------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold .............................................. 1,395,774,350 902,735,892 70,532,629 40,498,885
Shares issued in reinvestment of dividends and
distributions .......................................... 27,389,708 21,752,298 6,948,505 5,646,086
Shares redeemed .......................................... (1,150,845,557) (938,706,582) (42,186,626) (21,146,992)
---------------- -------------- ------------- -------------
Total Class IA transactions ............................... 272,318,501 (14,218,392) 35,294,508 24,997,979
---------------- -------------- ------------- -------------
Class IB:
Shares sold .............................................. 412,735,045 158,089,618 26,363,094 5,061,316
Shares issued in reinvestment of dividends and
distributions .......................................... 11,454,205 2,809,773 839,019 90,108
Shares redeemed .......................................... (160,498,113) (39,732,243) (1,510,389) (97,482)
---------------- -------------- ------------- -------------
Total Class IB transactions ............................... 263,691,137 121,167,148 25,691,724 5,053,942
---------------- -------------- ------------- -------------
Net increase in net assets derived from share
transactions ............................................. 536,009,638 106,948,756 60,986,232 30,051,921
---------------- -------------- ------------- -------------
INCREASE IN NET ASSETS ..................................... 536,394,158 107,029,256 64,115,270 31,781,471
NET ASSETS, BEGINNING OF PERIOD ............................ 573,635,450 466,606,194 120,165,896 88,384,425
---------------- -------------- ------------- -------------
NET ASSETS, END OF PERIOD* ................................. $ 1,110,029,608 $ 573,635,450 $ 184,281,166 $ 120,165,896
================ ============== ============= =============
</TABLE>
- ----------
* Including accumulated undistributed (overdistributed) net investment
income of $(30,306) and $149,936 for the Alliance Money Market Portfolio;
$41,806 and $17,556 for the Alliance Intermediate Government Securities
Portfolio; $397,762 and $321,561 for the Alliance Quality Bond Portfolio;
$(123,847) and $29,459 for the Alliance High Yield Portfolio; $181,017
and $(7,871) for the Alliance Growth and Income Portfolio; $533,199 and
$(17,221) for the Alliance Equity Index Portfolio, as of December 31,
1998 and December 31, 1997, respectively.
See Notes to Financial Statements.
5
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
QUALITY BOND PORTFOLIO HIGH YIELD PORTFOLIO
- --------------------------------- ----------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- ---------------- ---------------- ----------------- ----------------
<S> <C> <C> <C>
$ 14,192,221 $ 11,009,665 $ 59,339,850 $ 29,463,188
6,621,611 5,117,055 (25,614,101) 19,038,590
759,535 (291,468) (71,913,643) 2,081,485
- -------------- ------------- --------------- -------------
21,573,367 15,835,252 (38,187,894) 50,583,263
- -------------- ------------- --------------- -------------
(14,217,744) (11,132,504) (42,986,540) (26,828,709)
(6,441,066) -- (8,030,526) (13,814,454)
- -------------- ------------- --------------- -------------
(20,658,810) (11,132,504) (51,017,066) (40,643,163)
- -------------- ------------- --------------- -------------
(256) -- (16,704,168) (2,657,724)
(209) -- (3,915,248) (2,518,666)
- -------------- ------------- --------------- -------------
(465) -- (20,619,416) (5,176,390)
- -------------- ------------- --------------- -------------
(20,659,275) (11,132,504) (71,636,482) (45,819,553)
- -------------- ------------- --------------- -------------
121,204,490 49,175,799 192,696,791 161,350,185
20,658,810 11,132,504 51,017,066 40,643,163
(23,592,796) (16,801,045) (118,180,171) (52,652,236)
- -------------- ------------- --------------- -------------
118,270,504 43,507,258 125,533,686 149,341,112
- -------------- ------------- --------------- -------------
10,000 -- 160,113,817 63,018,257
465 -- 20,619,416 5,176,390
-- -- (5,903,002) (534,056)
- -------------- ------------- --------------- -------------
10,465 -- 174,830,231 67,660,591
- -------------- ------------- --------------- -------------
118,280,969 43,507,258 300,363,917 217,001,703
- -------------- ------------- --------------- -------------
119,195,061 48,210,006 190,539,541 221,765,413
203,233,478 155,023,472 421,810,878 200,045,465
- -------------- ------------- --------------- -------------
$ 322,428,539 $ 203,233,478 $ 612,350,419 $ 421,810,878
============== ============= =============== =============
<CAPTION>
ALLIANCE
GROWTH AND INCOME ALLIANCE
PORTFOLIO EQUITY INDEX PORTFOLIO
------------------------------- -----------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
--------------- --------------- ------------------ ----------------
<S> <C> <C> <C>
$ 2,787,302 $ 3,994,742 $ 16,011,288 $ 9,754,995
80,187,460 40,626,845 13,814,552 3,560,666
69,192,430 45,313,202 292,227,685 159,119,452
------------- ------------- -------------- -------------
152,167,192 89,934,789 322,053,525 172,435,113
------------- ------------- -------------- -------------
(2,436,074) (3,997,147) (15,462,444) (10,027,043)
(70,415,789) (31,316,552) (495,835) (3,323,415)
------------- ------------- -------------- -------------
(72,851,863) (35,313,699) (15,958,279) (13,350,458)
------------- ------------- -------------- -------------
(162,340) (65,287) (2,375) (648)
(9,420,614) (1,815,517) (115) (392)
------------- ------------- -------------- -------------
(9,582,954) (1,880,804) (2,490) (1,040)
------------- ------------- -------------- -------------
(82,434,817) (37,194,503) (15,960,769) (13,351,498)
------------- ------------- -------------- -------------
251,966,056 251,418,234 593,669,442 450,997,869
72,851,863 35,313,699 15,958,279 13,350,458
(65,846,350) (17,464,089) (169,374,643) (66,043,438)
------------- ------------- -------------- -------------
258,971,569 269,267,844 440,253,078 398,304,889
------------- ------------- -------------- -------------
75,779,471 31,791,055 289,964 137,857
9,582,954 1,880,804 2,490 1,040
(3,520,202) (4,484) (23,916) (35,558)
------------- ------------- -------------- -------------
81,842,223 33,667,375 268,538 103,339
------------- ------------- -------------- -------------
340,813,792 302,935,219 440,521,616 398,408,228
------------- ------------- -------------- -------------
410,546,167 355,675,505 746,614,372 557,491,843
587,755,893 232,080,388 943,741,024 386,249,181
------------- ------------- -------------- -------------
$ 998,302,060 $ 587,755,893 $1,690,355,396 $ 943,741,024
============= ============= ============== =============
</TABLE>
6
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF CHANGES IN NET ASSETS (Continued)
<TABLE>
<CAPTION>
ALLIANCE
COMMON STOCK PORTFOLIO
-------------------------------------
YEAR ENDED
DECEMBER 31,
1998 1997
------------------- -----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) .............................. $ 79,924,991 $ 55,815,739
Realized gain (loss)--net ................................. 1,293,579,317 983,715,133
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net .............................. 1,484,721,400 1,046,218,790
---------------- --------------
Net increase (decrease) in net assets from operations ..... 2,858,225,708 2,085,749,662
---------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income ..................... (66,892,105) (43,806,963)
Distributions from realized gains ........................ (1,453,774,524) (700,688,717)
---------------- --------------
Total Class IA dividends and distributions ................ (1,520,666,629) (744,495,680)
---------------- --------------
Class IB:
Dividends from net investment income ..................... (1,845,494) (241,911)
Distributions from realized gains ........................ (96,324,343) (16,923,582)
---------------- --------------
Total Class IB dividends and distributions ................ (98,169,837) (17,165,493)
---------------- --------------
Decrease in net assets from dividends and
distributions ............................................ (1,618,836,466) (761,661,173)
---------------- --------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold .............................................. 1,061,850,530 1,034,152,489
Shares issued in reinvestment of dividends and
distributions .......................................... 1,520,666,629 744,495,680
Shares redeemed .......................................... (1,054,408,083) (394,260,503)
---------------- --------------
Total Class IA transactions ............................... 1,528,109,076 1,384,387,666
---------------- --------------
Class IB:
Shares sold .............................................. 475,955,734 209,141,659
Shares issued in reinvestment of dividends and
distributions .......................................... 98,169,837 17,165,493
Shares redeemed .......................................... (6,276,804) (643,153)
---------------- --------------
Total Class IB transactions ............................... 567,848,767 225,663,999
---------------- --------------
Net increase in net assets derived from share
transactions ............................................. 2,095,957,843 1,610,051,665
---------------- --------------
INCREASE (DECREASE) IN NET ASSETS .......................... 3,335,347,085 2,934,140,154
NET ASSETS, BEGINNING OF PERIOD ............................ 9,560,773,733 6,626,633,579
---------------- --------------
NET ASSETS, END OF PERIOD* ................................. $ 12,896,120,818 $9,560,773,733
================ ==============
<CAPTION>
ALLIANCE
GLOBAL PORTFOLIO
-------------------------------------
YEAR ENDED
DECEMBER 31,
1998 1997
------------------ ------------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income (loss) .............................. $ 9,414,726 $ 11,050,762
Realized gain (loss)--net ................................. 118,228,354 101,771,496
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net .............................. 124,534,839 14,062,715
-------------- --------------
Net increase (decrease) in net assets from operations ..... 252,177,919 126,884,973
-------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income ..................... (15,151,207) (23,003,562)
Distributions from realized gains ........................ (86,201,793) (76,503,591)
-------------- --------------
Total Class IA dividends and distributions ................ (101,353,000) (99,507,153)
-------------- --------------
Class IB:
Dividends from net investment income ..................... (363,521) (319,694)
Distributions from realized gains ........................ (2,973,624) (1,359,092)
-------------- --------------
Total Class IB dividends and distributions ................ (3,337,145) (1,678,786)
-------------- --------------
Decrease in net assets from dividends and
distributions ............................................ (104,690,145) (101,185,939)
-------------- --------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold .............................................. 155,109,252 241,147,160
Shares issued in reinvestment of dividends and
distributions .......................................... 101,353,000 99,507,153
Shares redeemed .......................................... (244,390,306) (159,826,842)
-------------- --------------
Total Class IA transactions ............................... 12,071,946 180,827,471
-------------- --------------
Class IB:
Shares sold .............................................. 22,632,466 21,767,932
Shares issued in reinvestment of dividends and
distributions .......................................... 3,337,145 1,678,786
Shares redeemed .......................................... (2,713,553) (1,917,712)
-------------- --------------
Total Class IB transactions ............................... 23,256,058 21,529,006
-------------- --------------
Net increase in net assets derived from share
transactions ............................................. 35,328,004 202,356,477
-------------- --------------
INCREASE (DECREASE) IN NET ASSETS .......................... 182,815,778 228,055,511
NET ASSETS, BEGINNING OF PERIOD ............................ 1,225,386,995 997,331,484
-------------- --------------
NET ASSETS, END OF PERIOD* ................................. $1,408,202,773 $1,225,386,995
============== ==============
</TABLE>
- ----------
* Including accumulated undistributed (overdistributed) net investment income
of $4,587,455 and $8,941,474 for the Alliance Common Stock Portfolio;
$(4,115,630) and $451,087 for the Alliance Global Portfolio; $(487,521) and
$(1,256,432) for the Alliance International Portfolio; $(148,225) and
$(113,631) for the Alliance Aggressive Stock Portfolio; $(2,244) and $(461)
for the Alliance Small Cap Growth Portfolio; $(38,513) and $35,314 for the
Alliance Conservative Investors Portfolio, as of December 31, 1998 and
December 31, 1997, respectively.
** Commencement of operations.
See Notes to Financial Statements.
7
<PAGE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
INTERNATIONAL PORTFOLIO AGGRESSIVE STOCK PORTFOLIO
- ----------------------------------- ---------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
- ----------------- ----------------- ------------------- -------------------
<S> <C> <C> <C>
$ 1,684,286 $ 1,609,964 $ 10,694,674 $ 4,499,773
4,970,328 8,394,226 94,437,250 523,431,192
14,979,423 (15,340,188) (90,382,441) (75,825,667)
- ---------------- --------------- ----------------- -----------------
21,634,037 (5,335,998) 14,749,483 452,105,298
- ---------------- --------------- ----------------- -----------------
(3,728,549) (5,505,067) (19,956,153) (6,323,032)
(39,070) (9,560,102) (209,908,935) (381,316,889)
- ---------------- --------------- ----------------- -----------------
(3,767,619) (15,065,169) (229,865,088) (387,639,921)
- ---------------- --------------- ----------------- -----------------
(100,012) (69,625) (496,396) (8,975)
(1,254) (161,535) (6,821,111) (6,038,166)
- ---------------- --------------- ----------------- -----------------
(101,266) (231,160) (7,317,507) (6,047,141)
- ---------------- --------------- ----------------- -----------------
(3,868,885) (15,296,329) (237,182,595) (393,687,062)
- ---------------- --------------- ----------------- -----------------
451,931,751 204,985,168 1,200,293,864 1,331,662,733
3,767,619 15,065,169 229,865,088 387,639,921
(459,041,931) (161,266,462) (1,458,834,640) (1,058,223,800)
- ---------------- --------------- ----------------- -----------------
(3,342,561) 58,783,875 (28,675,688) 661,078,854
- ---------------- --------------- ----------------- -----------------
6,597,093 3,841,704 85,624,198 72,451,903
101,266 231,160 7,317,507 6,047,141
(2,708,158) (234,071) (4,401,173) (608,248)
- ---------------- --------------- ----------------- -----------------
3,990,201 3,838,793 88,540,532 77,890,796
- ---------------- --------------- ----------------- -----------------
647,640 62,622,668 59,864,844 738,969,650
- ---------------- --------------- ----------------- -----------------
18,412,792 41,990,341 (162,568,268) 797,387,886
193,897,176 151,906,835 4,663,257,303 3,865,869,417
- ---------------- --------------- ----------------- -----------------
$ 212,309,968 $ 193,897,176 $ 4,500,689,035 $ 4,663,257,303
================ =============== ================= =================
<CAPTION>
ALLIANCE ALLIANCE
SMALL CAP GROWTH CONSERVATIVE INVESTORS
PORTFOLIO PORTFOLIO
----------------------------------- ---------------------------------
YEAR ENDED MAY 1, 1997** YEAR ENDED
DECEMBER 31, TO DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C>
$ (12,012) $ 16,358 $ 13,590,507 $ 12,201,104
(21,147,657) 1,627,719 17,894,855 13,986,324
11,287,980 743,694 13,769,937 10,167,050
--------------- ------------- ------------- -------------
(9,871,689) 2,387,771 45,255,299 36,354,478
--------------- ------------- ------------- -------------
(16,814) (16,325) (12,787,640) (11,954,796)
-- (2,163,100) (18,882,918) (9,269,071)
--------------- ------------- ------------- -------------
(16,814) (2,179,425) (31,670,558) (21,223,867)
--------------- ------------- ------------- -------------
-- (904) (702,882) (74,433)
-- (1,071,973) (1,574,187) (163,419)
--------------- ------------- ------------- -------------
-- (1,072,877) (2,277,069) (237,852)
--------------- ------------- ------------- -------------
(16,814) (3,252,302) (33,947,627) (21,461,719)
--------------- ------------- ------------- -------------
625,198,674 154,901,196 44,384,823 34,060,741
16,814 2,179,425 31,670,558 21,223,868
(515,462,936) (62,293,798) (39,710,758) (44,876,250)
--------------- ------------- ------------- -------------
109,752,552 94,786,823 36,344,623 10,408,359
--------------- ------------- ------------- -------------
72,962,781 46,064,536 25,242,172 5,707,042
-- 1,072,877 2,277,069 237,851
(3,211,937) (60,253) (618,411) (107,498)
--------------- ------------- ------------- -------------
69,750,844 47,077,160 26,900,830 5,837,395
--------------- ------------- ------------- -------------
179,503,396 141,863,983 63,245,453 16,245,754
--------------- ------------- ------------- -------------
169,614,893 140,999,452 74,553,125 31,138,513
140,999,452 -- 313,540,914 282,402,401
--------------- ------------- ------------- -------------
$ 310,614,345 $ 140,999,452 $ 388,094,039 $ 313,540,914
=============== ============= ============= =============
</TABLE>
8
<PAGE>
THE HUDSON RIVER TRUST
STATEMENTS OF CHANGES IN NET ASSETS (Concluded)
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
BALANCED PORTFOLIO GROWTH INVESTORS PORTFOLIO
------------------------------------- -------------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS:
Net investment income .............................. $ 54,374,560 $ 55,060,063 $ 38,229,669 $ 32,794,295
Realized gain--net ................................. 149,648,732 113,021,038 147,510,271 121,986,091
Change in unrealized appreciation/depreciation of
investments and foreign currency denominated
assets and liabilities--net ....................... 99,779,596 65,873,768 137,214,556 78,749,885
-------------- -------------- -------------- --------------
Net increase in net assets from operations ......... 303,802,888 233,954,869 322,954,496 233,530,271
-------------- -------------- -------------- --------------
DIVIDENDS AND DISTRIBUTIONS TO SHAREHOLDERS (NOTE 1):
Class IA:
Dividends from net investment income .............. (48,802,014) (54,844,131) (36,481,422) (37,426,355)
Distributions from realized gains ................. (161,293,799) (84,244,038) (156,501,489) (84,649,354)
-------------- -------------- -------------- --------------
Total Class IA dividends and distributions ......... (210,095,813) (139,088,169) (192,982,911) (122,075,709)
-------------- -------------- -------------- --------------
Class IB:
Dividends from net investment income .............. (106) -- (1,186,181) (527,651)
Distributions from realized gains ................. (872) -- (7,045,472) (1,840,006)
-------------- -------------- -------------- --------------
Total Class IB dividends and distributions ......... (978) -- (8,231,653) (2,367,657)
-------------- -------------- -------------- --------------
Decrease in net assets from dividends and
distributions ..................................... (210,096,791) (139,088,169) (201,214,564) (124,443,366)
-------------- -------------- -------------- --------------
SHARE TRANSACTIONS (NOTES 1 AND 5):
Class IA:
Shares sold ....................................... 90,787,180 64,626,322 120,550,111 177,931,189
Shares issued in reinvestment of dividends and
distributions ................................... 210,095,813 139,088,169 192,982,911 122,075,709
Shares redeemed ................................... (182,248,936) (212,348,166) (99,572,371) (80,173,883)
-------------- -------------- -------------- --------------
Total Class IA transactions ........................ 118,634,057 (8,633,675) 213,960,651 219,833,015
-------------- -------------- -------------- --------------
Class IB:
Shares sold ....................................... 10,000 -- 50,028,647 34,376,432
Shares issued in reinvestment of dividends and
distributions ................................... 978 -- 8,231,653 2,367,657
Shares redeemed ................................... -- -- (4,979,079) (1,660,277)
-------------- -------------- -------------- --------------
Total Class IB transactions ........................ 10,978 -- 53,281,221 35,083,812
-------------- -------------- -------------- --------------
Net increase (decrease) in net assets derived from
share transactions ................................ 118,645,035 (8,633,675) 267,241,872 254,916,827
-------------- -------------- -------------- --------------
INCREASE IN NET ASSETS .............................. 212,351,132 86,233,025 388,981,804 364,003,732
NET ASSETS, BEGINNING OF PERIOD ..................... 1,724,088,529 1,637,855,504 1,666,118,715 1,302,114,983
-------------- -------------- -------------- --------------
NET ASSETS, END OF PERIOD* .......................... $1,936,439,661 $1,724,088,529 $2,055,100,519 $1,666,118,715
============== ============== ============== ==============
</TABLE>
- ----------
* Including accumulated undistributed (overdistributed) net investment
income of $4,480,474 and $84,008 for the Alliance Balanced Portfolio;
$(1,007,460) and $(1,463,848) for the Alliance Growth Investors
Portfolio, as of December 31, 1998 and December 31, 1997, respectively.
See Notes to Financial Statements.
9
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
EFFECTIVE
PRINCIPAL VALUE ANNUAL
AMOUNT (NOTE 1) YIELD*
-------------- -------------- ----------
<S> <C> <C> <C>
SHORT-TERM DEBT SECURITIES:
BANK NOTES
Abbey National Treasury Services
Due 01/20/99 .................................. $29,400,000 $29,406,356 5.79%
First Union Bank
Due 04/01/99 .................................. 35,000,000 35,027,541 5.19
-----------
TOTAL BANK NOTES (5.8%) ...................... 64,433,897
-----------
BANKERS' ACCEPTANCES
First National Bank Chicago
Due 06/07/99 .................................. 12,000,000 11,732,053 4.92
Wachovia Bank and Trust Co. NA
Due 03/01/99 .................................. 25,000,000 25,012,313 5.17
-----------
TOTAL BANKERS' ACCEPTANCES (3.3%) ............ 36,744,366
-----------
CERTIFICATES OF DEPOSIT
FCC National Bank
Due 03/17/99 ................................. 20,000,000 20,013,962 5.21
Rabobank Nederland N.V.:
Due 02/02/99 .................................. 14,000,000 14,005,127 5.77
Due 04/27/99 .................................. 3,500,000 3,507,967 5.82
Royal Bank of Canada, New York
Due 02/24/99 .................................. 9,000,000 9,005,611 5.77
Swiss Bank Corp.
Due 03/24/99 .................................. 25,000,000 25,032,335 5.69
-----------
TOTAL CERTIFICATES OF DEPOSIT (6.5%) ......... 71,565,002
-----------
COMMERCIAL PAPER
Allianz of America Financial, Inc.
Due 02/23/99+ ................................. 35,000,000 34,755,241 5.16
American General Corp.
Due 03/15/99 .................................. 25,000,000 24,760,215 5.19
Associates Corp. of North America
Due 03/29/99 .................................. 35,000,000 34,599,919 5.09
Bank of America
Due 04/15/99 .................................. 35,000,000 34,522,754 5.12
Banque Caisse
Due 06/07/99 .................................. 35,000,000 34,279,543 4.98
Cargill Finance Corp.
Due 03/05/99 .................................. 2,343,000 2,323,606 5.09
CC (USA) Corp.
Due 02/26/99 .................................. 25,000,000 24,815,278 5.11
Ford Motor Credit Co.
Due 06/10/99 .................................. 35,000,000 34,265,777 4.96
General Electric Capital Corp.
Due 04/30/99 .................................. 15,000,000 14,765,966 5.14
General Motors Acceptance Corp.
Due 02/16/99 .................................. 25,000,000 24,848,263 5.27
Koch Industries
Due 01/04/99+ ................................. 50,000,000 49,979,414 5.05
Morgan Stanley Group, Inc.
Due 03/24/99 .................................. 35,000,000 34,622,914 5.26
Motorola, Inc.
Due 03/19/99 .................................. 33,700,000 33,359,057 5.10
National City Corp.
Due 05/10/99 .................................. 25,500,000 25,068,708 5.04
National Rural Utilities Finance Corp.
Due 03/17/99 .................................. 13,000,000 12,871,895 5.08
Prudential Funding Corp.
Due 02/18/99 .................................. 25,000,000 24,841,665 5.27
</TABLE>
10
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE MONEY MARKET PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
EFFECTIVE
PRINCIPAL VALUE ANNUAL
AMOUNT (NOTE 1) YIELD*
-------------- ---------------- ----------
<S> <C> <C> <C>
Republic National Bank, New York
Due 03/15/99 ......................................... $35,000,000 $ 34,664,300 5.10%
Southwestern Bell Corp.
Due 01/21/99 ......................................... 20,000,000 19,947,000 5.70
Suntrust Bank
Due 01/29/99 ......................................... 20,000,000 19,925,800 5.54
Wells Fargo Bank
Due 03/15/99 ......................................... 33,000,000 32,679,468 5.15
--------------
TOTAL COMMERCIAL PAPER (49.7%) ...................... 551,896,783
--------------
TIME DEPOSIT (1.5%)
Canadian Imperial Bank
Due 01/04/99 ......................................... 16,700,000 16,700,693 5.25
--------------
U.S. GOVERNMENT AGENCIES
Federal Farm Credit Bank
Due 03/01/99 ......................................... 35,000,000 35,030,820 4.90
Federal Home Loan Mortgage Corp.
Due 02/26/99 ......................................... 35,000,000 34,763,166 5.04
Federal National Mortgage Association
Due 03/03/99 ......................................... 35,000,000 34,740,241 5.05
--------------
TOTAL U.S. GOVERNMENT AGENCIES (9.4%) ............... 104,534,227
--------------
VARIABLE RATE SECURITIES
Asset Backed Capital Financial
Due 07/22/99(a)+ ..................................... 25,000,000 25,006,520 5.69
Credit Suisse First Boston
Due 04/14/99(a)+ ..................................... 30,000,000 30,003,339 5.44
Federal Home Loan Bank
Due 08/12/99(a) ...................................... 25,000,000 25,001,883 5.33
General Electric Capital Corp., Series 1
Due 06/04/99(a) ...................................... 25,000,000 25,000,860 5.55
Royal Bank of Canada, New York
Due 08/25/99(a) ...................................... 20,000,000 20,001,762 5.26
Sigma Finance
Due 08/23/99(a)+ ..................................... 25,000,000 25,002,295 5.20
SMM Trust, Series 1998-B
Due 03/05/99(a)+ ..................................... 15,000,000 15,000,846 5.62
Student Loan Marketing Association
Due 11/09/99(a) ...................................... 35,000,000 35,003,808 5.44
Wachovia Bank and Trust Co. NA
Due 02/19/99(a) ...................................... 20,000,000 20,003,672 5.49
--------------
TOTAL VARIABLE RATE SECURITIES (19.8%) .............. 220,024,985
--------------
TOTAL INVESTMENTS IN SHORT-TERM DEBT SECURITIES (96.0%)
(Amortized Cost $1,065,207,929)....................... 1,065,899,953
OTHER ASSETS
LESS LIABILITIES (4.0%) .............................. 44,129,655
--------------
NET ASSETS (100.0%) ................................... $1,110,029,608
==============
</TABLE>
- ----------
* Based on market values at the close of business on December 31, 1998.
+ 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, 1998, these securities amounted to $179,747,655
or 16.2% of net assets.
(a) Coupon will fluctuate based upon an interest rate index. Stated due date
reflects final maturity of security.
See Notes to Financial Statements.
11
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------------- ----------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
COLLATERALIZED MORTGAGE OBLIGATIONS (1.8%)
Allied Capital Commercial
Mortgage Trust
6.31%, 09/25/03 .................. $ 3,295,480 $ 3,306,289
------------
MORTGAGE RELATED (47.8%)
Amresco Residential Securities
Mortgage Loan Trust
5.94%, 03/25/15 .................. 4,500,000 4,443,750
Countrywide Home Equity Loan
Trust
5.94%, 10/15/24 .................. 2,909,095 2,858,186
Federal Farm Credit Bank
6.29%, 08/25/04 .................. 4,700,000 4,935,752
Federal Home Loan Bank
5.77%, 02/03/04 .................. 6,430,000 6,574,675
Federal Home Loan Mortgage
Corp. GOLD
9.5%, 01/01/20 ................... 4,799 5,111
Federal National Mortgage
Association:
7.0%, 12/01/07 ................... 481,358 491,587
7.0%, 08/01/10 ................... 608,157 621,080
7.0%, 10/01/10 ................... 452,382 461,995
7.0%, 12/01/10 ................... 433,401 442,610
7.0%, 01/01/11 ................... 557,138 568,978
7.0%, 04/01/11 ................... 478,522 488,691
7.0%, 05/01/11 ................... 459,080 468,835
7.0%, 06/01/11 ................... 611,489 624,483
7.0%, 07/01/11 ................... 588,025 600,521
7.0%, 10/01/11 ................... 1,062,324 1,084,898
7.0%, 05/01/12 ................... 1,078,657 1,101,578
7.0%, 06/01/12 ................... 1,066,769 1,089,437
7.0%, 07/01/12 ................... 397,660 406,110
7.0%, 08/01/12 ................... 485,234 495,546
7.0%, 09/01/12 ................... 805,075 822,183
7.0%, 10/01/12 ................... 2,132,470 2,177,786
7.0%, 11/01/12 ................... 4,606,692 4,704,584
7.0%, 12/01/12 ................... 605,771 618,643
6.5%, 01/01/13 ................... 4,160,448 4,216,356
7.0%, 01/01/13 ................... 537,136 548,550
6.5%, 02/01/13 ................... 1,421,969 1,441,078
6.5%, 03/01/13 ................... 1,397,968 1,416,754
7.0%, 05/01/13 ................... 417,684 426,559
6.5%, 06/01/13 ................... 6,385,306 6,471,111
6.5%, 07/01/13 ................... 1,512,861 1,533,191
6.5%, 11/01/13 ................... 3,240,476 3,284,022
30 Year TBA GOLD
6.5%, 12/01/28 ................... 14,000,000 14,105,126
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------------- ----------------
<S> <C> <C>
Green Tree Home Improvement
Loan Trust
6.25%, 08/15/29 .................. $ 5,000,000 $ 5,034,400
Morgan Stanley Capital I, Series
1998-XL2, Class A2
6.17%, 10/03/08 .................. 4,000,000 4,047,520
Nomura Depositor Trust
5.936%, 01/15/03 ................. 3,249,674 3,166,904
Prudential Home Mortgage
Securities:
7.5%, 07/25/23 ................... 6,095,750 6,202,387
8.15%, 01/25/24 .................. 171,598 172,135
------------
88,153,112
------------
U.S. GOVERNMENT & AGENCIES (65.8%)
Tennessee Valley Authority
6.5%, 08/20/01 ................... 5,400,000 5,589,864
U.S. Treasury:
5.125% Note, 08/31/00 ............ 31,000,000 31,242,203
5.75% Note, 10/31/00 ............. 11,000,000 11,209,693
4.625% Note, 11/30/00 ............ 4,900,000 4,903,062
6.125% Note, 12/31/01 ............ 24,300,000 25,279,606
5.75% Note, 08/15/03 ............. 12,000,000 12,525,000
4.25% Note, 11/15/03 ............. 7,000,000 6,908,125
11.875% Bond, 11/15/03 ........... 6,300,000 8,219,534
6.625% Note, 05/15/07 ............ 9,000,000 10,122,192
4.75% Note, 11/15/08 ............. 5,100,000 5,139,846
------------
121,139,125
------------
TOTAL LONG-TERM DEBT SECURITIES (115.4%)
(Amortized Cost $211,154,160). 212,598,526
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan Bank
4.77%, due 01/20/99 ............. 10,000,000 9,973,083
Federal Home Loan Mortgage
Corp.
4.7%, due 01/04/99 .............. 3,300,000 3,298,708
------------
TOTAL U.S. GOVERNMENT AGENCIES (7.2%) 13,271,791
------------
TOTAL SHORT-TERM DEBT SECURITIES (7.2%)
(Amortized Cost $13,271,791)...... 13,271,791
------------
TOTAL INVESTMENTS (122.6%)
(Amortized Cost $224,425,951)..... 225,870,317
OTHER ASSETS
LESS LIABILITIES* (--22.6%) ..... (41,589,151)
------------
NET ASSETS (100.0%) ............... $184,281,166
============
</TABLE>
- ----------
<TABLE>
<CAPTION>
Financial Futures Contracts outstanding at December 31,
1998: UNREALIZED
EXPIRATION NUMBER ORIGINAL VALUE AT APPRECIATION
DESCRIPTION DATE OF CONTRACTS VALUE 12/31/98 (DEPRECIATION)
- ------------------------------------------ ------------ -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Long 2-Year U.S. Treasury Note ........... 3/99 78 $16,549,406 $16,498,219 $ (51,187)
Short 10-Year U.S. Treasury Note ......... 3/99 41 4,937,938 4,885,406 52,532
---------
$ 1,345
=========
</TABLE>
- ----------
* Includes $33,447 cash held as collateral on financial futures contracts.
See Notes to Financial Statements.
12
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE QUALITY BOND PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------- ---------------
<S> <C> <C>
LONG-TERM DEBT SECURITIES:
BASIC MATERIALS (0.3%)
CHEMICALS
Reliance Industries Ltd.
10.375%, 06/24/16+ ................ $ 1,100,000 $ 884,840
------------
CONSUMER NONCYCLICALS
MEDIA & CABLE
Time Warner Entertainment Co.
8.375%, 03/15/23 .................. 5,700,000 6,919,686
Turner Broadcasting System, Inc.
8.375%, 07/01/13 .................. 2,450,000 2,928,436
------------
TOTAL CONSUMER NONCYCLICALS (3.1%) 9,848,122
------------
CREDIT SENSITIVE
BANKS (1.4%)
Chase Manhattan Corp.
6.375%, 04/01/08 .................. 4,500,000 4,668,300
------------
FINANCIAL SERVICES (8.9%)
Associates Corp. of North America
5.75%, 11/01/03 ................... 5,500,000 5,549,335
General Motors Acceptance Corp.
6.375%, 12/01/01 .................. 13,000,000 13,317,200
Prudential Insurance Co.
8.3%, 07/01/25 .................... 8,000,000 9,714,600
------------
28,581,135
------------
UTILITY--ELECTRIC (1.9%)
Dominion Resources Capital
Trust I
7.83%, 12/01/27 ................... 5,925,000 6,210,881
------------
TOTAL CREDIT SENSITIVE (12.2%) 39,460,316
------------
ENERGY (2.5%)
COAL & GAS PIPELINES
Williams Companies, Inc.
6.125%, 02/01/01 .................. 8,055,000 8,065,794
------------
U.S. GOVERNMENT AGENCIES
MORTGAGE RELATED
Federal Home Loan Mortgage
Corp.:
7.0%, 09/01/11 .................... 5,315,128 5,431,396
7.5%, 04/01/28 .................... 3,928,833 4,033,195
Federal National Mortgage
Association:
5.25%, 01/15/03 ................... 17,790,000 17,912,217
6.5%, 06/01/11 .................... 9,410,648 9,537,109
6.5%, 09/01/11 .................... 1,545,779 1,566,552
7.0%, 02/01/13 .................... 4,173,433 4,264,727
6.5%, 05/01/13 .................... 4,691,984 4,755,035
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------- ---------------
<S> <C> <C>
7.0%, 05/01/26 .................... $ 1,541,579 $ 1,571,447
7.0%, 01/01/28 .................... 2,422,433 2,469,368
6.5%, 03/01/28 .................... 1,320,513 1,327,940
6.5%, 09/01/28 .................... 1,985,896 1,997,067
6.5%, 10/01/28 .................... 992,217 997,798
6.5%, 12/01/28 .................... 5,527,500 5,558,592
8.0% 30 Year TBA, 12/01/28 ........ 6,300,000 6,523,146
Government National Mortgage
Association:
7.0%, 11/15/26 .................... 9,297,570 9,509,647
7.0%, 07/15/27 .................... 2,649,152 2,709,580
7.0%, 02/15/28 .................... 8,206,492 8,393,681
6.5%, 03/15/28 .................... 3,539,241 3,573,536
6.5%, 04/15/28 .................... 2,774,749 2,801,636
6.5%, 05/15/28 .................... 369,392 372,972
7.0%, 12/15/28 .................... 15,075,000 15,418,861
------------
TOTAL U.S. GOVERNMENT AGENCIES (34.3%)
110,725,502
------------
U.S. GOVERNMENT
U.S. Treasury:
6.5% Note, 08/31/01 ............... 20,600,000 21,533,448
6.5% Note, 05/31/02 ............... 38,000,000 40,125,644
5.75% Note, 08/15/03 .............. 30,500,000 31,834,375
4.25% Note, 11/15/03 .............. 5,125,000 5,057,734
6.875% Note, 05/15/06 ............. 1,000,000 1,130,313
5.625% Note, 05/15/08 ............. 16,325,000 17,416,735
6.125% Bond, 11/15/27 ............. 14,300,000 16,016,000
5.25% Bond, 11/15/28 .............. 10,200,000 10,455,000
------------
TOTAL U.S. GOVERNMENT (44.5%)
143,569,249
------------
TOTAL LONG-TERM DEBT SECURITIES (96.9%)
(Amortized Cost $309,661,067)...... 312,553,823
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (3.9%)
Federal Home Loan
Mortgage Corp.
4.7%, due 01/04/99 ................ 12,500,000 12,495,104
------------
TOTAL SHORT-TERM DEBT SECURITIES (3.9%)
(Amortized Cost $12,495,104)....... 12,495,104
------------
TOTAL INVESTMENTS (100.8%)
(Amortized Cost $322,156,171)...... 325,048,927
OTHER ASSETS
LESS LIABILITIES (-0.8%) ......... (2,620,388)
------------
NET ASSETS (100.0%) ................ $322,428,539
=============
</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, 1998, these securities amounted to $884,840 or
0.3% of net assets.
See Notes to Financial Statements.
13
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -------------------
<S> <C> <C>
COMMON STOCKS AND
OTHER INVESTMENTS:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (0.0%)
Pegasus Communications Corp.
(Class A)* ........................... 3,384 $ 84,811
------------
TRUCKING, SHIPPING (0.0%)
Millenium SeaCarriers, Inc.--
Warrants (expire 07/15/05)* .......... 6,000 0
------------
TOTAL BUSINESS SERVICES (0.0%) 84,811
------------
CAPITAL GOODS (0.0%)
BUILDING & CONSTRUCTION
Capital Pacific Holdings,
Inc.--Warrants
(expire 05/01/02)* ................... 11,850 8,887
------------
CONSUMER CYCLICALS
LEISURE RELATED (0.0%)
Discovery Zone--Warrants
(expire 08/01/07)*+ .................. 3,500 4
------------
RETAIL--GENERAL (0.0%)
FTD Corp.*+ ............................ 37,500 18,750
V2 Music Holdings--Warrants
(expire 04/15/08)* ................... 8,000 0
------------
18,750
------------
TOTAL CONSUMER CYCLICALS (0.0%) 18,754
------------
CONSUMER NONCYCLICALS
HOSPITAL SUPPLIES & SERVICES (0.0%)
Wright Medical Technology, Inc.--
Warrants (expire 06/30/03)* .......... 618 6
------------
SOAPS & TOILETRIES (0.0%)
Renaissance Cosmetics, Inc.--
Warrants (expire 08/15/01)* .......... 2,000 2
------------
TOTAL CONSUMER NONCYCLICALS (0.0%) 8
------------
TECHNOLOGY
ELECTRONICS (0.0%)
Interactive Systems Corp.--
Warrants (expire 08/01/03)* .......... 1,500 187
------------
TELECOMMUNICATIONS (0.1%)
American Mobile Satellite
Corp.--Warrants
(expire 04/01/08)* ................... 6,900 26,772
DTI Holdings, Inc.--Warrants
(expire 03/01/08)* ................... 50,000 0
Firstworld Communications--
Warrants (expire 04/15/08)* .......... 7,000 0
Knology Holdings, Inc.--
Warrants (expire 10/15/07)* .......... 15,000 37,500
Long Distance International,
Inc.--Warrants
(expire 04/13/08)* ................... 5,000 0
Optel, Inc.* ........................... 10,000 350,000
Orion Network Systems, Inc.--
Warrants (expire 01/15/07)* .......... 4,000 44,000
PathNet, Inc.--Warrants
(expire 04/15/08)* ................... 5,000 0
Primus Telecommunications--
Warrants (expire 08/01/04)* .......... 6,500 81,250
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -------------------
<S> <C> <C>
Splitrock Services, Inc.--
Warrants (expire 07/15/08)* .......... 8,000 $ 0
Versatel Telecommunications--
Warrants (expire 05/15/08)* .......... 5,800 0
21st Century Telecom Group--
Warrants (expire 02/15/10)* .......... 4,000 0
------------
539,522
------------
TOTAL TECHNOLOGY (0.1%) .............. 539,709
------------
TOTAL COMMON STOCKS AND
OTHER INVESTMENTS (0.1%)
(Cost $118,420)....................... 652,169
------------
PREFERRED STOCKS:
CONSUMER NONCYCLICALS (0.3%)
HOSPITAL SUPPLIES & SERVICES
HH Acquisition Corp.
13.5% ................................ 2,000 1,739,783
------------
TECHNOLOGY (0.4%)
TELECOMMUNICATIONS
21st Century Telecom Group
13.75%* (b) .......................... 4,327 2,812,641
------------
TOTAL PREFERRED STOCKS (0.7%)
(Cost $5,999,750)..................... 4,552,424
------------
PRINCIPAL
AMOUNT
----------
LONG-TERM DEBT SECURITIES:
BASIC MATERIALS
CHEMICALS (3.3%)
Aqua Chemicals, Inc.
11.25%, 07/01/08+ .................... $6,500,000 6,240,000
Brunner Mond Group PLC
11.0%, 07/15/08+ ..................... 10,000,000 9,200,000
Geo Specialty Chemicals
10.125%, 08/01/08+ ................... 5,000,000 4,800,000
------------
20,240,000
------------
METALS & MINING (2.3%)
Golden Northwest Aluminum
12.0%, 12/15/06+ ..................... 6,000,000 6,030,000
Murrin Murrin Holdings
9.375%, 08/31/07 ..................... 2,500,000 2,200,000
P&L Coal Holdings Corp.
(Series B)
9.625%, 05/15/08 ..................... 6,100,000 6,161,000
------------
14,391,000
------------
PAPER (2.0%)
Doman Industries Ltd.
8.75%, 03/15/04 ...................... 4,300,000 3,397,000
Pen Tab Industries, Inc.
(Series B)
10.875%, 02/01/07 .................... 3,500,000 3,097,500
Stone Container Corp.
9.875%, 02/01/01 ..................... 5,500,000 5,568,750
------------
12,063,250
------------
TOTAL BASIC MATERIALS (7.6%) ......... 46,694,250
------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.2%)
ATC Group Services, Inc.
12.0%, 01/15/08 ...................... 5,500,000 990,000
------------
</TABLE>
14
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- -----------------
<S> <C> <C>
PRINTING, PUBLISHING &
BROADCASTING (3.0%)
Cellco Finance N.V.
15.0%, 08/01/05+ ................. $ 4,500,000 $3,870,000
Filtronic Comtek PLC
10.0%, 12/01/05 .................. 5,000,000 5,012,500
GOSS Graphic Systems, Inc.
12.0%, 10/15/06 .................. 4,650,000 2,464,500
Radio One, Inc. (Series B)
7.0%, 05/15/04 (c) ............... 5,000,000 5,000,000
Supercanal Holding SA
10.125%, 05/15/02+ ............... 1,738,812 1,738,812
----------
18,085,812
----------
PROFESSIONAL SERVICES (1.7%)
Employee Solutions, Inc.
(Series B)
10.0%, 10/15/04 .................. 3,250,000 2,437,500
Primark Corp.
9.25%, 12/15/08 .................. 4,000,000 4,020,000
T/SF Communications Corp.
Series B
10.375%, 11/01/07 ................ 4,000,000 4,030,000
----------
10,487,500
----------
TRUCKING, SHIPPING (2.8%)
Millenium SeaCarriers, Inc.
12.0%, 07/15/05(d)+ .............. 6,000,000 4,950,000
MTL, Inc.
10.0%, 06/15/06+ ................. 3,500,000 3,395,000
Navigator Gas Transport PLC
10.5%, 06/30/07+ ................. 2,000,000 1,850,000
Stena Line AB
10.625%, 06/01/08 ................ 8,000,000 7,200,000
----------
17,395,000
----------
TOTAL BUSINESS SERVICES (7.7%) 46,958,312
----------
CAPITAL GOODS
BUILDING & CONSTRUCTION (0.7%)
MMI Products, Inc. (Series B)
11.25%, 04/15/07 ................. 4,000,000 4,320,000
----------
ELECTRICAL EQUIPMENT (1.5%)
Elgar Holdings, Inc.
9.875%, 02/01/08 ................. 2,250,000 2,002,500
Trench Elec & Trench, Inc.
10.25%, 12/15/07 ................. 4,000,000 3,760,000
Wesco International, Inc.
(Series B)
Zero Coupon, 06/01/08 (a) ........ 5,000,000 3,062,500
----------
8,825,000
----------
MACHINERY (2.7%)
Generac Portable Products
11.25%, 07/01/06+ ................ 7,000,000 7,000,000
Penhall Acquisition Corp.
12.0%, 08/01/06+ ................. 5,000,000 4,700,000
Tokheim Corp.
12.5%, 10/01/05 .................. 5,000,000 5,000,000
----------
16,700,000
----------
TOTAL CAPITAL GOODS (4.9%) ....... 29,845,000
----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- -----------------
<S> <C> <C>
CONSUMER CYCLICALS
AIRLINES (2.1%)
Aircraft Service International
Group
11.0%, 08/15/05+ ................. $ 4,000,000 $3,960,000
Amtran, Inc.
9.625%, 12/15/05 ................. 3,500,000 3,500,000
Canadian Airlines Corp.
12.25%, 08/01/06 ................. 3,500,000 2,380,000
Trans World Airlines
11.375%, 03/01/06+ ............... 5,000,000 3,150,000
----------
12,990,000
----------
APPAREL, TEXTILE (1.3%)
AAI.Fostergrant, Inc. (Series B)
10.75%, 07/15/06 ................. 6,000,000 5,220,000
NTEX, Inc.
11.5%, 06/01/06 .................. 3,000,000 2,820,000
----------
8,040,000
----------
AUTOS & TRUCKS (1.0%)
Sonic Automotive, Inc. (Series B)
11.0%, 08/01/08 .................. 6,250,000 6,000,000
----------
FOOD SERVICES, LODGING (2.6%)
HMH Properties, Inc. (Series C)
8.45%, 12/01/08 .................. 1,000,000 1,000,000
NE Restaurant Co. Ltd.
10.75%, 07/15/08 ................. 9,000,000 9,045,000
Romacorp, Inc.
12.0%, 07/01/06+ ................. 6,000,000 5,970,000
----------
16,015,000
----------
HOUSEHOLD FURNITURE,
APPLIANCES (2.8%)
Home Interiors & Gifts, Inc.
10.125%, 06/01/08+ ............... 10,000,000 9,900,000
Salton/Maxim Housewares
10.75%, 12/15/05+ ................ 3,000,000 3,018,750
Sealy Mattress Co. (Series B)
9.875%, 12/15/07+ ................ 2,750,000 2,612,500
Spin Cycle, Inc.
Zero Coupon, 05/01/05 (a) (d)..... 4,000,000 1,840,000
----------
17,371,250
----------
LEISURE RELATED (3.7%)
Discovery Zone
13.5%, 08/01/02 .................. 3,500,000 700,000
Harrahs Operating Co., Inc.
7.875%, 12/05/05 ................. 10,000,000 10,000,000
Hedstrom Corp.
10.0%, 06/01/07 .................. 6,000,000 5,100,000
Silverleaf Resorts, Inc.
10.5%, 04/01/08 .................. 3,000,000 2,572,500
Waterford Gaming LLC
12.75%, 11/15/03 ................. 3,784,000 4,143,480
----------
22,515,980
----------
</TABLE>
15
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- -----------------
<S> <C> <C>
RETAIL--GENERAL (1.0%)
Pantry, Inc.
12.0%, 11/15/00 ................... $2,150,000 $ 2,246,750
V2 Music Holdings
Zero Coupon, 04/15/08 (a)+ ........ 8,000,000 3,680,000
-----------
5,926,750
-----------
TOTAL CONSUMER CYCLICALS (14.5%) 88,858,980
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.6%)
TM Group Holdings
11.0%, 05/15/08+ .................. 10,000,000 10,000,000
-----------
CONTAINERS (1.0%)
Anchor Glass Corp.
11.25%, 04/01/05 .................. 4,000,000 4,240,000
MVE, Inc.
12.5%, 02/15/02 ................... 2,000,000 1,980,000
-----------
6,220,000
-----------
FOODS (2.5%)
Grupo Azucarero Mexico SA
11.5%, 01/15/05 ................... 6,000,000 2,100,000
Imperial Holly Corp.
9.75%, 12/15/07 ................... 6,000,000 5,940,000
Specialty Foods Corp. (Series B)
11.125%, 10/01/02 ................. 8,000,000 7,360,000
-----------
15,400,000
-----------
MEDIA & CABLE (2.2%)
HMV Media Group PLC
10.25%, 05/15/08 .................. 3,300,000 3,168,000
Jones International
Networks Ltd.
11.75%, 07/01/05 .................. 5,000,000 4,000,000
Radio Unica Corp.
Zero Coupon, 08/01/06 (a)+ ........ 2,950,000 1,593,000
TVN Entertainment Corp.
14.0%, 08/01/08 (d) ............... 5,000,000 4,400,000
-----------
13,161,000
-----------
RETAIL--FOODS (0.9%)
Digiorgio Corp. (Series B)
10.0%, 06/15/07 ................... 6,000,000 5,460,000
-----------
TOTAL CONSUMER NONCYCLICALS (8.2%) 50,241,000
-----------
CREDIT SENSITIVE
BANKS (1.0%)
Tokai Bank
9.98%, 12/29/49 (c)+ .............. 7,000,000 5,950,000
-----------
FINANCIAL SERVICES (2.1%)
Bulong Operations Property Ltd.
12.5%, 12/15/08+ .................. 5,000,000 5,000,000
Metris Companies, Inc.
10.0%, 11/01/04 ................... 8,000,000 7,920,000
-----------
12,920,000
-----------
UTILITY--ELECTRIC (1.7%)
Cogentrix Energy, Inc.
8.75%, 10/15/08+ .................. 10,000,000 10,700,000
-----------
TOTAL CREDIT SENSITIVE (4.8%) ..... 29,570,000
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- -----------------
<S> <C> <C>
ENERGY
COAL & GAS PIPELINES (0.4%)
Chesapeake Energy Corp.
(Series B)
9.625%, 05/01/05 .................. $3,200,000 $ 2,464,000
-----------
OIL--DOMESTIC (3.4%)
Bayard Drilling Technologies,
Inc.
11.0%, 06/30/05 ................... 4,000,000 4,400,000
Doe Run Resources Corp.
(Series B)
11.25%, 03/15/05 .................. 4,000,000 3,080,000
Transamerican Energy (Series B)
11.5%, 06/15/02 ................... 13,000,000 3,770,000
Trans-Resources, Inc. (Series B)
10.75%, 03/15/08 .................. 5,000,000 4,950,000
TransTexas Gas Corp. (Series D)
13.75%, 12/31/01 .................. 5,829,000 4,663,200
-----------
20,863,200
-----------
OIL--INTERNATIONAL (1.4%)
Northern Offshore ASA
10.0%, 05/15/05+ .................. 6,500,000 3,380,000
Queen Sand Resources, Inc.
12.5%, 07/01/08 ................... 7,500,000 5,400,000
-----------
8,780,000
-----------
OIL--SUPPLIES & CONSTRUCTION (0.3%)
Celestica International, Inc.
10.5%, 12/31/06 ................... 1,623,000 1,769,070
-----------
RAILROADS (1.2%)
American Commercial Lines
10.25%, 06/30/08+ ................. 7,000,000 7,105,000
-----------
TOTAL ENERGY (6.7%)
40,981,270
-----------
TECHNOLOGY
ELECTRONICS (4.2%)
CHS Electronics, Inc.
9.875%, 04/15/05 .................. 10,000,000 9,650,000
Geologistics Corp.
9.75%, 10/15/07 ................... 4,000,000 3,200,000
Interactive Systems, Inc.
Zero Coupon, 08/01/03 (a) ......... 1,500,000 588,750
Splitrock Services, Inc. (Series B)
11.75%, 07/15/08 .................. 8,000,000 6,920,000
Sullivan Graphics, Inc.
12.75%, 08/01/05 .................. 5,000,000 5,075,000
-----------
25,433,750
-----------
OFFICE EQUIPMENT SERVICES (0.6%)
NationsRent, Inc.
10.375%, 12/15/08+ ................ 3,750,000 3,712,500
-----------
TELECOMMUNICATIONS (29.1%)
Allegiance Telecom, Inc.
12.875%, 05/15/08 ................. 2,500,000 2,450,000
AMSC Acquisition Co., Inc.
(Series B)
12.25%, 04/01/08 .................. 6,900,000 4,174,500
Dobson Wireline Co.
12.25%, 06/15/08 .................. 10,000,000 9,250,000
</TABLE>
16
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE HIGH YIELD PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ---------------
<S> <C> <C>
DTI Holdings, Inc. (Series B)
Zero Coupon, 03/01/08 (a) ........... $10,000,000 $2,550,000
EchoStar Communications Corp.
12.5%, 07/01/02 ..................... 7,000,000 8,050,000
Econophone, Inc.
13.5%, 07/15/07 ..................... 6,500,000 6,654,375
ESAT Telecommunications
Group PLC
11.875%, 12/01/08+ .................. 4,000,000 4,000,000
Esprit Telecom Group PLC
11.5%, 12/15/07 ..................... 7,500,000 7,650,000
Exodus Communications, Inc.
11.25%, 07/01/08 .................... 6,000,000 6,000,000
Firstworld Communications, Inc.
Zero Coupon, 04/15/08 (a) ........... 7,000,000 2,100,000
Hermes Europe Railtel BV
10.375%, 01/15/09+ .................. 6,000,000 6,060,000
Hyperion Telecommunications,
Inc. (Series B)
12.25%, 09/01/04 .................... 5,000,000 5,075,000
ICG Services, Inc.
Zero Coupon, 05/01/08 (a) ........... 10,000,000 5,000,000
ICO Global Communications,
Inc.
15.0%, 08/01/05 (d) ................. 8,000,000 5,840,000
Iridium LLC/Capital Corp.
(Series B)
14.0%, 07/15/05 ..................... 10,000,000 9,500,000
Knology Holdings, Inc.
Zero Coupon, 10/15/07 (a) ........... 11,000,000 5,417,500
Long Distance International, Inc.
12.25%, 04/15/08+ ................... 5,000,000 4,150,000
Nextel Communications, Inc.
12.0%, 11/01/08 ..................... 6,000,000 6,630,000
Northeast Optic Network, Inc.
12.75%, 08/15/08 .................... 3,000,000 2,940,000
NTL, Inc.
11.5%, 10/01/08+ .................... 8,235,000 8,996,738
Optel, Inc. (Series B)
13.0%, 02/15/05 ..................... 10,000,000 10,275,000
Orion Network Systems, Inc.
11.25%, 01/15/07 (d) ................ 4,000,000 3,920,000
Pathnet, Inc.
12.25%, 04/15/08 .................... 5,000,000 3,500,000
Price Communications Wire, Inc.
9.125%, 12/15/06+ ................... 5,000,000 5,025,000
Primus Telecommunications
11.75%, 08/01/04 (d) ................ 6,500,000 6,760,000
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ---------------
<S> <C> <C>
SBA Communications Corp.
Zero Coupon, 03/01/08 (a) ........... $ 9,000,000 $5,175,000
Startec Global Communications,
Inc.
12.0%, 05/15/08 (d) ................. 5,000,000 4,300,000
US Xchange LLC
15.0%, 07/01/08 ..................... 6,500,000 6,662,500
Versatel Telecommunications:
13.25%, 05/15/08 .................... 5,800,000 5,800,000
13.25%, 05/15/08 (d) ................ 4,200,000 4,263,000
WinStar Equipment Corp.
12.5%, 03/15/04 ..................... 10,000,000 10,050,000
------------
178,218,613
------------
TOTAL TECHNOLOGY (33.9%) ............ 207,364,863
------------
DIVERSIFIED
MISCELLANEOUS (2.3%)
Eagle Geophysical, Inc.
(Series B)
10.75%, 07/15/08 .................... 3,000,000 2,490,000
Elgin National Industries
(Series B)
11.0%, 11/01/07 ..................... 3,000,000 3,015,000
Samsonite Corp.
10.75%, 06/15/08 .................... 10,000,000 8,600,000
------------
TOTAL DIVERSIFIED (2.3%) ............ 14,105,000
------------
TOTAL LONG-TERM DEBT SECURITIES (90.6%)
(Amortized Cost $617,994,744) 554,618,675
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan
Mortgage Corp.:
4.7%, due 01/04/99 .................. 29,200,000 29,188,563
5.1%, due 01/14/99 .................. 10,000,000 9,981,656
------------
TOTAL U.S. GOVERNMENT AGENCIES (6.4%) 39,170,219
------------
TOTAL SHORT-TERM DEBT SECURITIES (6.4%)
(Amortized Cost $39,170,219)......... 39,170,219
------------
TOTAL INVESTMENTS (97.8%)
(Cost/Amortized Cost
$663,283,133) ....................... 598,993,487
OTHER ASSETS
LESS LIABILITIES (2.2%) ............. 13,356,932
------------
NET ASSETS (100.0%) ................... $612,350,419
==============
</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, 1998, these securities amounted to $161,756,054
or 26.4% of net assets.
(a) Debt security initially issued in zero coupon form which converts to
coupon form at a specified rate and date.
(b) Paid-in-kind preferred, quarterly stock payments.
(c) Coupon will increase periodically based upon a predetermined schedule.
Stated interest rate in effect at December 31, 1998.
(d) Consists of more than one class of securities traded together as a unit;
generally bonds with attached stocks or warrants.
See Notes to Financial Statements.
17
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (0.6%)
Dow Chemical Co. ................... 65,000 $ 5,910,938
-----------
CHEMICALS--SPECIALTY (0.3%)
Praxair, Inc. ...................... 77,000 2,714,250
-----------
TOTAL BASIC MATERIALS (0.9%) ..... 8,625,188
-----------
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (1.5%)
Belo (A.H.) Corp. (Series A) ....... 396,700 7,909,206
Donnelley (R.R.) & Sons Co. ........ 155,000 6,790,938
-----------
14,700,144
-----------
PROFESSIONAL SERVICES (0.1%)
Modis Professional Services, Inc.* 73,127 1,060,341
-----------
TOTAL BUSINESS SERVICES (1.6%) 15,760,485
-----------
CAPITAL GOODS (4.8%)
MACHINERY
AlliedSignal, Inc. ................. 302,000 13,382,375
Case Corp. ......................... 170,000 3,708,125
United Technologies Corp. .......... 285,700 31,069,875
-----------
TOTAL CAPITAL GOODS (4.8%) ....... 48,160,375
-----------
CONSUMER CYCLICALS
AIRLINES (0.6%)
Continental Airlines, Inc.
(Class B)* ....................... 4 131
Delta Air Lines, Inc. .............. 78,400 4,076,800
Northwest Airlines Corp.
(Class A)* ....................... 70,900 1,812,381
-----------
5,889,312
-----------
APPAREL, TEXTILE (1.0%)
Nautica Enterprises, Inc.* ......... 350,000 5,250,000
Tommy Hilfiger Corp.* .............. 77,000 4,620,000
-----------
9,870,000
-----------
LEISURE RELATED (3.2%)
Carnival Corp. (Class A) ........... 235,000 11,280,000
Harley-Davidson, Inc. .............. 285,000 13,501,875
Mirage Resorts, Inc.* .............. 115,000 1,717,812
Royal Caribbean Cruises Ltd. ....... 140,000 5,180,000
-----------
31,679,687
-----------
RETAIL--GENERAL (2.2%)
Dayton Hudson Corp. ................ 336,000 18,228,000
Federated Department Stores,
Inc.* ............................ 94,600 4,121,013
-----------
22,349,013
-----------
TOTAL CONSUMER CYCLICALS (7.0%) 69,788,012
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.2%)
Coca-Cola Co. ...................... 120,000 8,025,000
Coca-Cola Enterprises, Inc. ........ 125,000 4,468,750
-----------
12,493,750
-----------
DRUGS (5.1%)
Bristol-Myers Squibb Co. ........... 329,000 44,024,312
Genzyme Corp. (General
Division)* ....................... 140,000 6,965,000
Genzyme Corp. (Molecular
Oncology)* ....................... 15,134 49,186
-----------
51,038,498
-----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
FOODS (2.0%)
Campbell Soup Co. .................. 266,600 $14,663,000
Tyson Foods, Inc. (Class A) ........ 245,000 5,206,250
-----------
19,869,250
-----------
HOSPITAL SUPPLIES & SERVICES (3.6%)
Columbia/HCA Healthcare Corp. 305,000 7,548,750
PacifiCare Health Systems, Inc.
(Class B)* ....................... 97,400 7,743,300
Tenet Healthcare Corp.* ............ 785,000 20,606,250
-----------
35,898,300
-----------
SOAPS & TOILETRIES (2.1%)
Avon Products, Inc. ................ 202,000 8,938,500
Colgate Palmolive Co. .............. 57,000 5,293,875
Gillette Co. ....................... 135,000 6,522,188
-----------
20,754,563
-----------
TOBACCO (3.2%)
Philip Morris Cos., Inc. ........... 294,500 15,755,750
RJR Nabisco Holdings Corp. ......... 553,900 16,443,906
-----------
32,199,656
-----------
TOTAL CONSUMER NONCYCLICALS (17.2%) 172,254,017
-----------
CREDIT SENSITIVE
BANKS (8.7%)
Banc One Corp. ..................... 125,000 6,382,812
BankAmerica Corp. .................. 557,000 33,489,625
Chase Manhattan Corp. .............. 414,000 28,177,875
Citigroup, Inc. .................... 379,000 18,760,500
-----------
86,810,812
-----------
FINANCIAL SERVICES (5.9%)
Associates First Capital Corp.
(Class A) ........................ 176,000 7,458,000
Household International, Inc. ...... 1,044,000 41,368,500
MBNA Corp. ......................... 186,750 4,657,078
PMI Group, Inc. .................... 99,600 4,917,750
-----------
58,401,328
-----------
INSURANCE (0.6%)
PennCorp Financial Group, Inc. ..... 93,000 93,000
Travelers Property Casualty
Corp. (Class A) .................. 205,000 6,355,000
-----------
6,448,000
-----------
UTILITY--ELECTRIC (3.6%)
AES Corp.* ......................... 100,100 4,742,238
CMS Energy Corp. ................... 123,000 5,957,813
Consolidated Edison Inc. ........... 157,300 8,317,237
FPL Group, Inc. .................... 130,000 8,011,250
GPU, Inc. .......................... 86,000 3,800,125
Pinnacle West Capital Corp. ........ 128,400 5,440,950
-----------
36,269,613
-----------
UTILITY--TELEPHONE (2.4%)
AT&T Corp. ......................... 319,117 24,013,554
-----------
TOTAL CREDIT SENSITIVE (21.2%) 211,943,307
-----------
ENERGY
OIL--DOMESTIC (3.9%)
Apache Corp. ....................... 388,000 9,821,250
Murphy Oil Corp. ................... 171,000 7,053,750
Union Pacific Resources Group,
Inc. ............................. 183,800 1,665,687
USX-Marathon Group, Inc. ........... 696,000 20,967,000
-----------
39,507,687
-----------
</TABLE>
18
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
OIL--SUPPLIES & CONSTRUCTION (3.3%)
BJ Services Co.* ....................................................... 280,000 $ 4,375,000
Halliburton Co. ........................................................ 353,000 10,457,625
Noble Drilling Corp.* .................................................. 812,000 10,505,250
Transocean Offshore, Inc. .............................................. 272,800 7,314,450
-----------
32,652,325
-----------
RAILROADS (0.1%)
Canadian Pacific Ltd. .................................................. 39,000 736,125
-----------
TOTAL ENERGY (7.3%) .................................................. 72,896,137
-----------
TECHNOLOGY
ELECTRONICS (7.0%)
Altera Corp.* .......................................................... 244,900 14,908,288
Atmel Corp.* ........................................................... 404,500 6,193,906
Intel Corp. ............................................................ 70,000 8,299,375
Sanmina Corp.* ......................................................... 263,776 16,486,000
Solectron Corp.* ....................................................... 265,200 24,647,025
-----------
70,534,594
-----------
OFFICE EQUIPMENT (0.5%)
Compaq Computer Corp. .................................................. 116,500 4,885,719
-----------
OFFICE EQUIPMENT SERVICES (4.6%)
Electronic Data Sysytems Corp. ......................................... 397,200 19,959,300
First Data Corp. ....................................................... 467,000 14,798,062
Oracle Corp.* .......................................................... 258,000 11,126,250
-----------
45,883,612
-----------
TELECOMMUNICATIONS (6.9%)
AirTouch Communications, Inc.* 130,000 9,376,250
Ascend Communications, Inc.* ........................................... 160,000 10,520,000
Fore Systems, Inc.* .................................................... 355,000 6,500,938
MCI WorldCom, Inc.* .................................................... 417,382 29,947,158
MediaOne Group, Inc. ................................................... 120,000 7,980,000
Tellabs, Inc.* ......................................................... 64,000 4,388,000
WinStar Communications, Inc.* .......................................... 4,751 185,289
-----------
68,897,635
-----------
TOTAL TECHNOLOGY (19.0%) ............................................. 190,201,560
-----------
DIVERSIFIED
MISCELLANEOUS (3.8%)
Honeywell, Inc. ........................................................ 96,000 7,230,000
Tyco International Ltd. ................................................ 258,200 19,477,963
U.S. Industries, Inc. .................................................. 367,200 6,839,100
Viad Corp. ............................................................. 130,000 3,948,750
-----------
TOTAL DIVERSIFIED (3.8%) ............................................. 37,495,813
-----------
TOTAL COMMON STOCKS (82.8%)
(Cost $709,274,249)................................................... 827,124,894
-----------
PREFERRED STOCKS:
BUSINESS SERVICES (0.3%)
TRUCKING, SHIPPING
CNF Trust I
5.0% Conv. Series A ................................................... 50,000 2,843,750
-----------
CAPITAL GOODS (0.2%)
AEROSPACE
Loral Space & Communications
6.0% Conv. ........................................................... 30,700 1,617,506
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines Finance Trust
8.5% Conv. ........................................................... 6,500 $ 450,125
-----------
LEISURE RELATED (0.8%)
Royal Caribbean Cruises Ltd.
7.25% Series A ........................................................ 66,900 7,906,744
-----------
TOTAL CONSUMER CYCLICALS (0.8%) 8,356,869
-----------
CONSUMER NONCYCLICALS (0.1%)
DRUGS
Alkermes, Inc.
6.5% ................................................................. 12,100 535,425
-----------
CREDIT SENSITIVE (0.4%)
UTILITY--ELECTRIC
AES Trust I
5.375% Conv. Series A ................................................. 63,900 4,441,050
-----------
ENERGY (1.0%)
RAILROADS
Union Pacific Capital Trust
6.25% Conv.+ ......................................................... 206,000 9,476,000
-----------
TECHNOLOGY
ELECTRONICS (0.3%)
L&H Capital Trust I
4.75% Conv.+ ......................................................... 52,300 1,653,987
Times Mirror Co.
4.25% Conv. .......................................................... 21,800 1,215,350
-----------
2,869,337
-----------
TELECOMMUNICATIONS (1.6%)
AirTouch Communications, Inc.
4.25% Conv., Series C ................................................ 44,800 4,614,400
ICG Communications, Inc.
6.75% Conv.+ ......................................................... 25,600 1,363,200
Intermedia Communications,
Inc.:
7.0% Conv.+ .......................................................... 20,500 524,031
7.0% Conv. Series D .................................................. 52,200 1,334,363
IXC Communications, Inc.:
6.75% Conv. .......................................................... 7,200 238,500
6.75% Conv.+ ......................................................... 47,200 1,563,500
Nextel Strypes Trust
7.25% Conv. .......................................................... 131,700 2,699,850
WinStar Communications, Inc.
7.0% Conv. ........................................................... 84,200 3,999,500
-----------
16,337,344
-----------
TOTAL TECHNOLOGY (1.9%) .............................................. 19,206,681
-----------
TOTAL PREFERRED STOCKS (4.7%)
(Cost $49,972,763) ................................................... 46,477,281
-----------
PRINCIPAL
AMOUNT
-------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (0.8%)
Clear Channel Communications, Inc.
2.625% Conv., 04/01/03 ............................................... $1,315,000 1,402,119
Mail-Well, Inc.
5.0% Conv., 11/01/02 ................................................. 1,215,000 1,093,500
</TABLE>
19
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH & INCOME PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ---------------
<S> <C> <C>
P-Com, Inc.:
4.25% Conv., 11/01/02+ ............ $ 1,850,000 $ 869,500
4.25% Conv., 11/01/02 ............. 1,385,000 650,950
Tele-Communications, Inc.
4.5%, 02/15/06 .................... 3,530,000 3,794,750
------------
7,810,819
------------
PROFESSIONAL SERVICES (0.2%)
Personnel Group of America:
5.75% Conv., 07/01/04+ ............ 375,000 434,062
5.75% Conv., 07/01/04 ............. 1,350,000 1,562,625
------------
1,996,687
------------
TOTAL BUSINESS SERVICES (1.0%) 9,807,506
------------
CAPITAL GOODS
AEROSPACE (0.3%)
Orbital Sciences Corp.:
5.0% Conv., 10/01/02+ .............. 945,000 1,597,050
5.0% Conv., 10/01/02 ............... 550,000 929,500
------------
TOTAL CAPITAL GOODS (0.3%) ........ 2,526,550
------------
CONSUMER CYCLICALS (0.2%)
RETAIL--GENERAL
Office Depot, Inc.
Zero Coupon, 11/01/08 ............. 2,825,000 2,443,625
------------
CONSUMER NONCYCLICALS
DRUGS (1.4%)
MedImmune, Inc.:
7.0% Conv., 07/01/03 .............. 1,860,000 9,402,300
7.0% Conv. Sub. Note, 07/01/03+..... 245,000 1,238,475
Quintiles Transnational Corp.:
4.25% Conv., 05/31/00+ ............. 580,000 793,150
4.25% Conv., 05/31/00 .............. 1,530,000 2,092,275
------------
13,526,200
------------
HOSPITAL SUPPLIES & SERVICES (0.7%)
Alternative Living Services, Inc.
5.25% Conv., 12/15/02 .............. 1,935,000 2,467,125
FPA Medical Management, Inc.
6.5% Conv., 12/15/01(a) ............ 1,770,000 8,850
RES-Care, Inc.:
6.0% Conv., 12/01/04+ .............. 1,420,000 1,969,362
6.0% Conv., 12/01/04 ............... 660,000 915,338
Sunrise Assisted Living, Inc.
5.5% Conv., 06/15/02 ............... 1,100,000 1,641,750
------------
7,002,425
------------
TOTAL CONSUMER NONCYCLICALS (2.1%) 20,528,625
------------
TECHNOLOGY
ELECTRONICS (4.8%)
Amkor Technologies, Inc.
5.75% Conv., 05/01/03 ............. 4,855,000 4,806,450
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ---------------
<S> <C> <C>
America Online, Inc.
4.0% Conv., 11/15/02 .............. $ 1,445,000 $8,888,556
EMC Corp.
3.25% Conv., 03/15/02+ ............. 925,000 3,484,938
HNC Software, Inc.
4.75% Conv., 03/01/03 .............. 1,845,000 2,029,500
Hutchinson Technology, Inc.
6.0%, 03/15/05 ..................... 2,740,000 3,818,875
Level One Communications, Inc.:
4.0% Conv., 09/01/04+ .............. 2,180,000 3,177,350
Micron Technology, Inc.
7.0% Conv., 07/01/04 ............... 1,395,000 1,492,650
Network Associates, Inc.:
Zero Coupon, 02/13/18+ ............ 4,420,000 2,712,775
Zero Coupon, 02/13/18 ............. 190,000 116,613
Photronics, Inc.
6.0% Conv., 06/01/04 ............... 3,265,000 3,469,063
SCI Systems, Inc.
5.0% Conv., 05/01/06+ .............. 2,835,000 6,743,756
Solectron Corp.
6.0% Conv., 03/01/06+ ............. 2,805,000 7,720,762
------------
48,461,288
------------
TELECOMMUNICATIONS (1.1%)
Comverse Technology, Inc.:
5.75% Conv., 10/01/06 .............. 2,425,000 3,931,531
5.75% Conv. Sub. Note,
10/01/06+ ...................... 1,200,000 1,945,500
Global TeleSystems Group, Inc.
5.75% Conv., 07/01/10 ............. 4,420,000 4,994,600
------------
10,871,631
------------
TOTAL TECHNOLOGY (5.9%) ........... 59,332,919
------------
TOTAL LONG-TERM DEBT SECURITIES (9.5%)
(Amortized Cost $66,936,721) ....... 94,639,225
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan
Mortgage Corp.:
4.7%, due 01/04/99 ................. 17,200,000 17,193,263
5.1%, due 01/14/99 ................. 10,000,000 9,981,656
------------
TOTAL U.S. GOVERNMENT AGENCIES (2.7%)
27,174,919
------------
TOTAL SHORT-TERM DEBT SECURITIES (2.7%)
(Amortized Cost $27,174,919) ....... 27,174,919
------------
TOTAL INVESTMENTS (99.7%)
(Cost/Amortized Cost
$853,358,652) ..................... 995,416,319
OTHER ASSETS
LESS LIABILITIES (0.3%) ........... 2,885,741
------------
NET ASSETS (100.0%) ................. $998,302,060
==============
</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, 1998, these securities amounted to $47,267,398 or
4.7% of net assets.
(a) On July 15, 1998, this security defaulted on its interest payment.
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
20
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICALS (1.5%)
Air Products & Chemicals, Inc. ....... 38,000 $1,520,000
Avery Dennison Corp. ................. 19,100 860,694
Dow Chemical Co. ..................... 37,500 3,410,156
Dupont (E.I.) de Nemours & Co. 189,100 10,034,119
Eastman Chemical Co. ................. 13,100 586,225
Ecolab, Inc. ......................... 24,400 882,975
FMC Corp.* ........................... 13,500 756,000
Goodrich (B.F.) Co. .................. 22,900 821,538
Hercules, Inc. ....................... 26,600 728,175
Monsanto Co. ......................... 98,700 4,688,250
Rohm & Haas Co. ...................... 28,500 858,562
Union Carbide Corp. .................. 22,200 943,500
----------
26,090,194
----------
CHEMICALS--SPECIALTY (0.4%)
Morton International, Inc. ........... 29,700 727,650
Praxair, Inc. ........................ 24,400 860,100
Raychem Corp. ........................ 23,300 752,881
Sigma-Aldrich Corp. .................. 25,100 737,313
Southern Co. ......................... 116,100 3,374,156
----------
6,452,100
----------
METALS & MINING (0.5%)
Alcan Aluminum Ltd. .................. 6,600 178,612
Alcan Aluminum Ltd. (Canada) ......... 32,300 872,121
Aluminum Co. of America .............. 31,900 2,378,544
Barrick Gold Corp. ................... 73,300 1,429,350
Engelhard Corp. ...................... 32,900 641,550
Engelhard Corp.--Rights* ............. 32,900 0
Newmont Mining Corp. ................. 36,907 666,633
Phelps Dodge Corp. ................... 14,600 742,775
Placer Dome, Inc. .................... 65,800 756,700
Reynolds Metals Co. .................. 13,400 706,012
----------
8,372,297
----------
PAPER (0.9%)
Champion International Corp. ......... 22,000 891,000
Fort James Corp. ..................... 36,300 1,452,000
Georgia Pacific Group ................ 14,100 825,731
International Paper Co. .............. 48,825 2,187,970
Kimberly Clark Corp. ................. 89,844 4,896,498
Mead Corp. ........................... 27,200 797,300
Temple Inland, Inc. .................. 14,000 830,375
Union Camp Corp. ..................... 12,800 864,000
Westvaco Corp. ....................... 29,000 777,563
Willamette Industries, Inc. .......... 25,300 847,550
----------
14,369,987
----------
STEEL (0.1%)
Allegheny Teledyne, Inc. ............. 51,000 1,042,313
Nucor Corp. .......................... 23,100 999,075
----------
2,041,388
----------
TOTAL BASIC MATERIALS (3.4%) ........ 57,325,966
----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.4%)
Browning-Ferris Industries, Inc. ..... 28,200 801,938
Johnson Controls, Inc. ............... 13,700 808,300
Thermo Electron Corp.* ............... 49,700 841,794
Waste Management, Inc. ............... 94,884 4,423,966
----------
6,875,998
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
PRINTING, PUBLISHING &
BROADCASTING (2.9%)
CBS Corp. ............................ 116,900 $3,828,475
Clear Channel Communications,
Inc.* .............................. 41,400 2,256,300
Comcast Corp. (Class A) SPL .......... 60,500 3,550,594
Deluxe Corp. ......................... 21,500 786,094
Donnelley (R.R.) & Sons Co. .......... 23,200 1,016,450
Dow Jones & Co., Inc. ................ 17,000 818,125
Dun & Bradstreet Corp. ............... 28,300 893,219
Gannett Co. .......................... 47,500 3,063,750
Knight-Ridder, Inc. .................. 15,700 802,663
McGraw-Hill Companies, Inc. .......... 16,300 1,660,562
MediaOne Group, Inc.* ................ 101,800 4,784,600
New York Times Co. (Class A) ......... 30,600 1,061,437
Tele-Communications, Inc.
(Class A)* ......................... 87,428 4,835,861
Time Warner, Inc. .................... 200,200 12,424,912
Times Mirror Co. (Class A) ........... 14,100 789,600
Tribune Co. .......................... 20,300 1,339,800
Viacom, Inc. (Class B)* .............. 59,800 4,425,200
----------
48,337,642
----------
PROFESSIONAL SERVICES (0.3%)
Block (H&R), Inc. .................... 19,000 855,000
Interpublic Group Cos., Inc. ......... 22,200 1,770,450
Omnicom Group, Inc. .................. 27,700 1,606,600
Service Corp. International .......... 43,600 1,659,553
----------
5,891,603
----------
TRUCKING, SHIPPING (0.2%)
FDX Corp.* ........................... 23,200 2,064,800
Laidlaw, Inc. ........................ 71,100 715,444
----------
2,780,244
----------
TOTAL BUSINESS SERVICES (3.8%)....... 63,885,487
----------
CAPITAL GOODS
AEROSPACE (0.9%)
Boeing Co. ........................... 164,774 5,375,752
General Dynamics Corp. ............... 20,300 1,190,087
Lockheed Martin Corp. ................ 31,404 2,661,489
Northrop Grumman Corp. ............... 11,000 804,375
Northrop Grumman Corp.--
Rights (expire 10/31/08)* .......... 9,700 0
Raytheon Co. (Class B) ............... 54,800 2,918,100
Rockwell International Corp. ......... 30,800 1,495,725
TRW, Inc. ............................ 19,200 1,078,800
----------
15,524,328
----------
BUILDING & CONSTRUCTION (0.0%)
Centex Corp. ......................... 16,800 757,050
----------
BUILDING MATERIALS & FOREST
PRODUCTS (0.4%)
Armstrong World Industries, Inc. 11,500 693,594
Masco Corp. .......................... 54,100 1,555,375
PPG Industries, Inc. ................. 28,300 1,648,475
Sherwin Williams Co. ................. 24,800 728,500
Weyerhaeuser Co. ..................... 33,400 1,697,137
----------
6,323,081
----------
ELECTRICAL EQUIPMENT (3.7%)
Emerson Electric Co. ................. 72,600 4,392,317
General Electric Co. ................. 537,700 54,879,006
</TABLE>
21
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
General Instrument Corp.* ......... 27,900 $ 946,856
Grainger (W.W.), Inc. ............. 19,100 795,038
Thomas & Betts Corp. .............. 16,500 714,656
-----------
61,727,873
-----------
MACHINERY (1.3%)
AlliedSignal, Inc. ................ 93,000 4,121,062
Case Corp. ........................ 36,400 793,975
Caterpillar, Inc. ................. 59,000 2,714,000
Cooper Industries, Inc. ........... 18,600 886,988
Cummins Engine Company, Inc. ...... 19,700 699,350
Deere & Co. ....................... 38,400 1,272,000
Dover Corp. ....................... 37,100 1,358,788
Fluor Corp. ....................... 17,500 744,844
Illinois Tool Works, Inc. ......... 40,800 2,366,400
Ingersoll Rand Co. ................ 25,450 1,194,559
Pall Corp. ........................ 32,100 812,531
Parker-Hannifin Corp. ............. 24,950 817,113
United Technologies Corp. ......... 37,200 4,045,500
-----------
21,827,110
-----------
TOTAL CAPITAL GOODS (6.3%) ....... 106,159,442
-----------
CONSUMER CYCLICALS
AIRLINES (0.3%)
AMR Corp.* ........................ 30,100 1,787,187
Delta Air Lines, Inc. ............. 23,600 1,227,200
Southwest Airlines Co. ............ 54,525 1,223,405
US Airways Group, Inc.* ........... 13,300 691,600
-----------
4,929,392
-----------
APPAREL, TEXTILE (0.2%)
Liz Claiborne, Inc. ............... 24,500 773,281
Nike, Inc. (Class B) .............. 50,500 2,048,407
VF Corp. .......................... 18,400 862,500
-----------
3,684,188
-----------
AUTO RELATED (0.3%)
Dana Corp. ........................ 26,723 1,092,303
Danaher Corp. ..................... 24,500 1,330,656
Eaton Corp. ....................... 11,200 791,700
Genuine Parts Co. ................. 29,200 976,375
Goodyear Tire & Rubber Co. ........ 29,400 1,482,862
-----------
5,673,896
-----------
AUTOS & TRUCKS (1.2%)
AutoZone, Inc.* ................... 27,000 889,313
Ford Motor Co. .................... 199,200 11,690,550
General Motors Corp. .............. 107,600 7,700,125
Paccar, Inc. ...................... 19,800 814,275
-----------
21,094,263
-----------
FOOD SERVICES, LODGING (0.7%)
Harrah's Entertainment, Inc.* ..... 45,900 720,056
Marriott International, Inc.
(Class A) ....................... 39,750 1,152,750
McDonald's Corp. .................. 116,200 8,903,825
Tricon Global Restaurants, Inc.* 25,320 1,269,165
-----------
12,045,796
-----------
HOUSEHOLD FURNITURE, APPLIANCES (0.3%)
Black & Decker Corp. .............. 14,500 812,906
Maytag Corp. ...................... 14,500 902,625
Newell Company .................... 26,100 1,076,625
Rubbermaid, Inc. .................. 27,300 858,244
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Stanley Works ..................... 22,300 $ 618,825
Whirlpool Corp. ................... 13,600 753,100
-----------
5,022,325
-----------
LEISURE RELATED (1.3%)
American Greetings Corp.
(Class A) ....................... 19,200 788,400
Carnival Corp. (Class A) .......... 101,100 4,852,800
Cendant Corp.* .................... 139,650 2,662,078
Disney (Walt) Co. ................. 338,100 10,143,000
Hasbro, Inc. ...................... 20,800 751,400
Hilton Hotels Corp. ............... 36,300 694,238
Mattel, Inc. ...................... 49,643 1,132,481
Mirage Resorts, Inc.* ............. 54,000 806,625
-----------
21,831,022
-----------
PHOTO & OPTICAL (0.3%)
Allergan, Inc. .................... 13,400 867,650
Eastman Kodak Co. ................. 55,800 4,017,600
-----------
4,885,250
-----------
RETAIL--GENERAL (5.5%)
Circuit City Stores--Circuit City
Group ........................... 19,700 983,769
Costco Cos., Inc.* ................ 35,300 2,548,219
CVS Corp. ......................... 64,800 3,564,000
Dayton Hudson Corp. ............... 73,100 3,965,675
Dillard's, Inc. (Class A) ......... 28,500 808,688
Dollar General Corp. .............. 30,750 726,469
Federated Department Stores,
Inc.* ........................... 34,700 1,511,619
Fred Meyer, Inc.* ................. 25,000 1,506,250
Gap, Inc. ......................... 98,100 5,518,125
Harcourt General, Inc. ............ 14,900 792,494
Home Depot, Inc. .................. 244,700 14,972,581
K-Mart Corp.* ..................... 81,000 1,240,312
Kohl's Corp.* ..................... 26,300 1,615,806
Limited, Inc. ..................... 37,500 1,092,188
Lowe's Cos., Inc. ................. 58,600 2,999,587
May Department Stores Co. ......... 38,500 2,324,437
Nordstrom, Inc. ................... 24,400 846,375
Penney (J.C.), Inc. ............... 41,200 1,931,250
Sears, Roebuck & Co. .............. 65,300 2,775,250
Staples, Inc.* .................... 52,700 2,302,331
Tandy Corp. ....................... 20,500 844,344
TJX Cos., Inc. .................... 50,900 1,476,100
Toys R Us, Inc.* .................. 44,800 756,000
Wal-Mart Stores, Inc. ............. 371,800 30,278,462
Walgreen Co. ...................... 82,800 4,848,975
-----------
92,229,306
-----------
TOTAL CONSUMER CYCLICALS (10.1%) 171,395,438
-----------
CONSUMER NONCYCLICALS
BEVERAGES (2.9%)
Anheuser Busch Companies, Inc. 81,600 5,355,000
Brown Forman Corp. (Class B) ...... 11,200 847,700
Coca-Cola Co. ..................... 410,300 27,438,813
Coca-Cola Enterprises, Inc. ....... 67,300 2,405,975
Pepsico, Inc. ..................... 245,100 10,033,781
Seagram Ltd. ...................... 68,100 2,587,800
-----------
48,669,069
-----------
</TABLE>
22
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
CONTAINERS (0.1%)
Crown Cork & Seal Co., Inc. ...... 21,800 $ 671,713
Owens-Illinois, Inc.* ............ 26,200 802,375
Sealed Air Corp.* ................ 15,910 812,404
-----------
2,286,492
-----------
DRUGS (8.3%)
ALZA Corp.* ...................... 14,600 762,850
American Home Products Corp. ..... 219,100 12,338,069
Amgen, Inc.* ..................... 41,500 4,339,344
Bristol-Myers Squibb Co. ......... 165,600 22,159,350
Lilly (Eli) & Co. ................ 183,400 16,299,675
Merck & Co., Inc. ................ 198,300 29,286,431
Pfizer, Inc. ..................... 216,600 27,169,762
Pharmacia & Upjohn, Inc. ......... 83,990 4,755,934
Schering Plough Corp. ............ 244,500 13,508,625
Warner-Lambert Co. ............... 135,100 10,157,831
-----------
140,777,871
-----------
FOODS (1.9%)
Archer Daniels Midland Co. ....... 97,370 1,673,547
Bestfoods ........................ 47,800 2,545,350
Campbell Soup Co. ................ 74,700 4,108,500
ConAgra, Inc. .................... 80,600 2,538,900
General Mills, Inc. .............. 25,600 1,990,400
Heinz (H.J.) Co. ................. 60,250 3,411,656
Hershey Foods Corp. .............. 23,300 1,448,969
Kellogg Co. ...................... 67,200 2,293,200
Pioneer Hi Bred International,
Inc. ........................... 39,900 1,077,300
Quaker Oats Co. .................. 22,500 1,338,750
Ralston-Ralston Purina Group ..... 50,700 1,641,413
Rite Aid Corp. ................... 42,100 2,086,581
Sara Lee Corp. ................... 155,400 4,380,337
Wrigley (Wm.), Jr. Co. ........... 19,200 1,719,600
-----------
32,254,503
-----------
HOSPITAL SUPPLIES & SERVICES (3.6%)
Abbott Laboratories .............. 256,400 12,563,600
Baxter International, Inc. ....... 46,400 2,984,100
Becton, Dickinson & Co. .......... 40,900 1,745,919
Biomet, Inc. ..................... 22,800 917,700
Boston Scientific Corp.* ......... 61,400 1,646,287
Cardinal Health, Inc. ............ 33,250 2,522,844
Columbia/HCA Healthcare Corp. 107,500 2,660,625
Guidant Corp. .................... 24,900 2,745,225
HCR Manor Care, Inc.* ............ 23,800 699,125
Healthsouth Corp.* ............... 66,400 1,025,050
Humana, Inc.* .................... 41,000 730,313
IMS Health, Inc. ................. 27,100 2,044,356
Johnson and Johnson .............. 224,000 18,788,000
Medtronic, Inc. .................. 78,200 5,806,350
Saint Jude Medical, Inc.* ........ 26,749 740,613
Tenet Healthcare Corp.* .......... 51,100 1,341,375
United HealthCare Corp. .......... 31,600 1,360,775
-----------
60,322,257
-----------
RETAIL--FOOD (0.9%)
Albertsons, Inc. ................. 40,900 2,604,819
American Stores Co. .............. 44,700 1,651,106
Kroger Co.* ...................... 41,700 2,522,850
Safeway, Inc.* ................... 81,000 4,935,937
Supervalu, Inc. .................. 30,200 845,600
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Sysco Corp. ...................... 54,800 $ 1,503,575
Winn Dixie Stores, Inc. .......... 24,700 1,108,413
-----------
15,172,300
-----------
SOAPS & TOILETRIES (2.8%)
Avon Products, Inc. .............. 41,800 1,849,650
Clorox Co. ....................... 17,000 1,985,813
Colgate Palmolive Co. ............ 48,300 4,485,863
Gillette Co. ..................... 187,700 9,068,256
International Flavors &
Fragrances, Inc. ............... 18,700 826,306
Procter & Gamble Co. ............. 224,100 20,463,131
Unilever N.V. .................... 107,000 8,874,312
-----------
47,553,331
-----------
TOBACCO (1.6%)
Fortune Brands, Inc. ............. 28,300 894,988
Loews Corp. ...................... 18,500 1,817,625
Philip Morris Cos., Inc. ......... 400,700 21,437,450
RJR Nabisco Holdings Corp. ....... 51,500 1,528,906
UST, Inc. ........................ 30,400 1,060,200
-----------
26,739,169
-----------
TOTAL CONSUMER NONCYCLICALS (22.1%) 373,774,992
-----------
CREDIT SENSITIVE
BANKS (7.8%)
Banc One Corp. ................... 194,937 9,953,971
Bank of New York Co., Inc. ....... 124,400 5,007,100
BankAmerica Corp. ................ 289,189 17,387,489
BankBoston Corp. ................. 47,800 1,861,212
Bankers Trust New York Corp. ..... 15,500 1,324,281
Chase Manhattan Corp. ............ 142,580 9,704,351
Citigroup, Inc. .................. 380,207 18,820,246
Comerica, Inc. ................... 25,700 1,752,419
Fifth Third Bancorp .............. 44,550 3,176,972
First Union Corp. ................ 161,256 9,806,380
Firstar Corp. .................... 31,900 2,974,704
Golden West Financial Corp. ...... 9,000 825,188
Huntington Bancshares, Inc. ...... 34,350 1,032,647
KeyCorp. ......................... 72,600 2,323,200
Mellon Bank Corp. ................ 43,400 2,983,750
Mercantile Bancorp., Inc. ........ 25,100 1,157,738
Morgan (J.P.) & Co., Inc. ........ 29,400 3,088,837
National City Corp. .............. 54,900 3,980,250
Northern Trust Corp. ............. 18,100 1,580,356
PNC Bank Corp. ................... 50,200 2,717,075
Regions Financial Corp. .......... 35,300 1,423,031
Republic New York Corp. .......... 17,800 811,013
State Street Corp. ............... 26,200 1,822,538
Summit Bancorp. .................. 28,700 1,253,831
Suntrust Banks, Inc. ............. 34,800 2,662,200
U.S. Bancorp. .................... 123,678 4,390,569
Union Planters Corp. ............. 20,700 937,969
Wachovia Corp. ................... 33,900 2,964,131
Washington Mutual, Inc. .......... 97,842 3,736,341
Wells Fargo Co. .................. 269,100 10,747,181
-----------
132,206,970
-----------
FINANCIAL SERVICES (2.9%)
American Express Co. ............. 75,900 7,760,775
Associates First Capital Corp.
(Class A) ...................... 114,200 4,839,225
Bear Stearns Co., Inc. ........... 20,999 784,838
</TABLE>
23
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Capital One Financial Corp. ......... 10,900 $ 1,253,500
Countrywide Credit Industries,
Inc. .............................. 18,300 918,431
Equifax, Inc. ....................... 23,600 806,825
Fleet Financial Group, Inc. ......... 94,458 4,221,092
Franklin Resources, Inc. ............ 41,700 1,334,400
Household International, Inc. ....... 79,946 3,167,860
Lehman Brothers Holdings, Inc. ...... 19,200 846,000
MBIA, Inc. .......................... 16,400 1,075,225
MBNA Corp. .......................... 122,030 3,043,123
Merrill Lynch & Co., Inc. ........... 57,400 3,831,450
Morgan Stanley Dean Witter &
Co. ............................... 97,405 6,915,755
Schwab (Charles) Corp. .............. 65,025 3,653,592
SLM Holding Corp. ................... 26,600 1,276,800
Synovus Finacial Corp. .............. 43,450 1,059,094
Transamerica Corp. .................. 10,300 1,189,650
-----------
47,977,635
-----------
INSURANCE (3.3%)
Aetna, Inc. ......................... 23,843 1,874,656
Allstate Corp. ...................... 137,676 5,317,735
American General Corp. .............. 42,100 3,283,800
American International Group,
Inc. .............................. 174,487 16,859,806
Aon Corp. ........................... 27,850 1,542,194
Chubb Corp. ......................... 26,900 1,745,137
CIGNA Corp. ......................... 35,300 2,729,131
Cincinnati Financial Corp. .......... 27,100 992,538
Conseco, Inc. ....................... 50,746 1,550,925
Hartford Financial Services
Group, Inc. ....................... 38,500 2,112,687
Jefferson-Pilot Corp. ............... 17,450 1,308,750
Lincoln National Corp. Industries 16,100 1,317,181
Marsh & McLennan Cos., Inc. ......... 42,500 2,483,594
MGIC Investment Corp. ............... 21,200 844,025
Progressive Corp. ................... 11,800 1,998,625
Provident Companies, Inc. ........... 24,000 996,000
Providian Financial Corp. ........... 23,100 1,732,500
Safeco Corp. ........................ 23,300 1,000,444
Saint Paul Cos., Inc. ............... 38,364 1,333,149
SunAmerica, Inc. .................... 34,400 2,790,700
Torchmark Corp. ..................... 23,100 815,719
UNUM Corp. .......................... 22,800 1,330,950
-----------
55,960,246
-----------
MORTGAGE RELATED (1.2%)
Fannie Mae .......................... 172,400 12,757,600
Freddie Mac ......................... 112,900 7,274,994
-----------
20,032,594
-----------
UTILITY--ELECTRIC (2.2%)
AES Corp.* .......................... 28,600 1,354,925
Ameren Corp. ........................ 22,700 969,006
American Electric Power, Inc. ....... 31,800 1,496,587
Baltimore Gas & Electric Co. ........ 24,600 759,525
Carolina Power & Light Co. .......... 24,700 1,162,444
Central & South West Co. ............ 35,300 968,544
CINergy Corp. ....................... 25,813 887,322
Consolidated Edison Inc. ............ 38,700 2,046,262
Dominion Resources, Inc. ............ 32,700 1,528,725
DTE Energy Co. ...................... 23,700 1,016,137
Duke Energy Co. ..................... 59,730 3,826,453
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Edison International ................ 58,800 $ 1,639,050
Entergy Corp. ....................... 40,200 1,251,225
FirstEnergy Corp. ................... 38,700 1,260,169
FPL Group, Inc. ..................... 30,000 1,848,750
GPU, Inc. ........................... 20,900 923,519
Houston Industries, Inc. ............ 49,200 1,580,550
New Century Energies, Inc. .......... 17,800 867,750
Northern States Power Co. ........... 27,700 768,675
Pacificorp. ......................... 49,200 1,036,275
Peco Energy Corp. ................... 37,100 1,544,287
PG&E Corp. .......................... 63,500 2,000,250
PP&L Resources, Inc. ................ 28,500 794,438
Public Service Enterprise Group ..... 38,400 1,536,000
Sempra Energy ....................... 39,800 1,009,925
Texas Utilities Co. ................. 46,500 2,170,969
Unicom Corporation .................. 35,900 1,384,394
-----------
37,632,156
-----------
UTILITY--GAS (0.3%)
Columbia Gas System, Inc. ........... 13,800 796,950
Consolidated Natural Gas Co. ........ 15,900 858,600
ENRON Corp. ......................... 54,800 3,127,025
Nicor, Inc. ......................... 19,000 802,750
-----------
5,585,325
-----------
UTILITY--TELEPHONE (6.3%)
Alltel Corp. ........................ 45,300 2,709,506
Ameritech Corp. ..................... 183,500 11,629,313
AT&T Corp. .......................... 300,600 22,620,150
Bell Atlantic Corp. ................. 258,592 13,705,376
BellSouth Corp. ..................... 327,000 16,309,125
Frontier Corp. ...................... 28,300 962,200
GTE Corp. ........................... 160,400 10,426,000
SBC Communications, Inc. ............ 325,400 17,449,575
Sprint Corp. ........................ 69,800 5,871,925
US West, Inc. ....................... 81,033 5,236,758
-----------
106,919,928
-----------
TOTAL CREDIT SENSITIVE (24.0%)...... 406,314,854
-----------
ENERGY
COAL & GAS PIPELINES (0.4%)
Burlington Resources, Inc. .......... 27,730 993,081
Coastal Corp. ....................... 34,700 1,212,331
Sonat, Inc. ......................... 29,000 784,813
Tenneco, Inc. ....................... 26,800 912,875
Williams Cos., Inc. ................. 70,700 2,204,956
-----------
6,108,056
-----------
OIL--DOMESTIC (0.8%)
Amerada Hess Corp. .................. 14,900 741,275
Anadarko Petroleum Corp. ............ 21,400 660,725
Apache Corp. ........................ 26,400 668,250
Ashland, Inc. ....................... 14,900 720,787
Atlantic Richfield Co. .............. 52,600 3,432,150
Occidental Petroleum Corp. .......... 58,800 992,250
Phillips Petroleum Co. .............. 42,300 1,803,037
Sunoco, Inc. ........................ 25,100 905,169
Union Pacific Resources Group,
Inc. .............................. 84,508 765,854
Unocal Corp. ........................ 39,200 1,144,150
USX-Marathon Group, Inc. ............ 51,000 1,536,375
-----------
13,370,022
-----------
</TABLE>
24
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
OIL--INTERNATIONAL (4.2%)
Chevron Corp. ....................... 109,200 $ 9,056,775
Exxon Corp. ......................... 406,500 29,725,312
Mobil Corp. ......................... 130,500 11,369,813
Royal Dutch Petroleum Co.
(ADR) ............................. 357,900 17,134,462
Texaco, Inc. ........................ 88,800 4,695,300
-------------
71,981,662
-------------
OIL--SUPPLIES & CONSTRUCTION (0.4%)
Baker Hughes, Inc. .................. 51,100 903,831
Halliburton Co. ..................... 72,700 2,153,738
Schlumberger Ltd. ................... 88,800 4,095,900
-------------
7,153,469
-------------
RAILROADS (0.5%)
Burlington Northern Santa Fe ........ 76,853 2,593,789
CSX Corp. ........................... 35,500 1,473,250
Norfolk Southern Corp. .............. 59,500 1,885,406
Union Pacific Corp. ................. 40,200 1,811,513
-------------
7,763,958
-------------
TOTAL ENERGY (6.3%) ................ 106,377,167
-------------
TECHNOLOGY
ELECTRONICS (5.7%)
AMP, Inc. ........................... 36,382 1,894,138
Applied Materials, Inc.* ............ 59,300 2,531,369
BB&T Corp. .......................... 46,500 1,874,531
BMC Software, Inc.* ................. 33,600 1,497,300
Cisco Systems, Inc.* ................ 259,125 24,050,039
EMC Corp.* .......................... 83,100 7,063,500
Harris Corp. ........................ 20,700 758,137
Intel Corp. ......................... 279,100 33,090,794
ITT Industries, Inc. ................ 21,900 870,525
KLA-Tencor Corp.* ................... 20,900 906,537
LSI Logic Corp.* .................... 49,800 803,025
Micron Technology, Inc.* ............ 35,100 1,774,744
Motorola, Inc. ...................... 99,500 6,075,719
Parametric Technology Corp.* ........ 47,600 773,500
Perkin-Elmer Corp. .................. 8,400 819,525
Seagate Technology, Inc.* ........... 39,600 1,197,900
Solectron Corp.* .................... 20,000 1,858,752
Texas Instruments, Inc. ............. 64,300 5,501,669
3Com Corp.* ......................... 58,400 2,617,050
-------------
95,958,754
-------------
OFFICE EQUIPMENT (5.2%)
Apple Computer, Inc.* ............... 22,900 937,469
Ceridian Corp.* ..................... 13,200 921,525
Compaq Computer Corp. ............... 278,698 11,687,897
Compuware Corp.* .................... 28,700 2,242,188
Dell Computer Corp.* ................ 211,100 15,449,881
Hewlett-Packard Co. ................. 172,900 11,811,231
International Business Machines
Corp. ............................. 155,600 28,747,100
PeopleSoft, Inc.* ................... 37,500 710,156
Pitney Bowes, Inc. .................. 45,400 2,999,237
Sun Microsystems, Inc.* ............. 63,200 5,411,500
Unisys Corp.* ....................... 39,400 1,356,838
Xerox Corp. ......................... 54,800 6,466,400
-------------
88,741,422
-------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
OFFICE EQUIPMENT SERVICES (5.2%)
Adobe Systems, Inc. ................. 19,000 $ 888,250
Automatic Data Processing, Inc. ..... 49,900 4,001,356
Computer Associates
International, Inc. ............... 93,125 3,969,453
Computer Sciences Corp. ............. 25,800 1,662,487
Electronic Data Sysytems Corp. ...... 79,700 4,004,925
First Data Corp. .................... 72,900 2,310,019
Gateway 2000, Inc.* ................. 25,800 1,320,638
HBO & Co. ........................... 77,500 2,223,281
Microsoft Corp.* .................... 408,800 56,695,450
Novell, Inc.* ....................... 60,700 1,100,188
Oracle Corp.* ....................... 160,987 6,942,564
Paychex, Inc. ....................... 26,600 1,368,238
Silicon Graphics, Inc.* ............. 63,400 816,275
-------------
87,303,124
-------------
TELECOMMUNICATIONS (4.6%)
AirTouch Communications, Inc.* 95,600 6,895,150
America Online, Inc. ................ 78,000 12,481,170
Ascend Communications, Inc.* ........ 35,100 2,307,825
Lucent Technologies, Inc. ........... 218,688 24,055,680
MCI WorldCom, Inc.* ................. 293,301 21,044,354
Nextel Communications, Inc.
(Class A)* ........................ 46,300 1,093,838
Northern Telecommunications
Ltd. .............................. 108,420 5,434,552
Sprint Corp. (PCS Group)* ........... 74,500 1,722,813
Tellabs, Inc.* ...................... 31,400 2,152,862
-------------
77,188,244
-------------
TOTAL TECHNOLOGY (20.7%) ........... 349,191,544
-------------
DIVERSIFIED
MISCELLANEOUS (1.1%)
Corning, Inc. ....................... 38,500 1,732,500
Honeywell, Inc. ..................... 20,900 1,574,031
Minnesota Mining &
Manufacturing Co. ................. 67,500 4,800,938
Textron, Inc. ....................... 26,700 2,027,531
Tyco International Ltd. ............. 106,786 8,055,669
-------------
TOTAL DIVERSIFIED (1.1%) .......... 18,190,669
-------------
TOTAL COMMON STOCKS (97.8%)
(Cost $1,139,516,074) ............. 1,652,615,559
-------------
PRINCIPAL
AMOUNT
-------
SHORT-TERM DEBT
SECURITIES:
U.S. GOVERNMENT & AGENCIES
Federal Home Loan Bank
4.77%, due 01/20/99 ............... $10,000,000 9,973,083
Federal Home Loan Mortgage
Corp.
4.7%, due 01/04/99** .............. 200,000 199,922
Student Loan Marketing
Association
4.28%, due 01/04/99** ............. 14,700,000 14,694,757
</TABLE>
25
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE EQUITY INDEX PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------- ----------------
<S> <C> <C>
U.S. Treasury Bill
3.62%, due 01/07/99** ......... $1,850,000 $ 1,848,884
--------------
TOTAL U.S. GOVERNMENT &
AGENCIES (1.6%) ............ 26,716,646
--------------
TOTAL SHORT-TERM DEBT SECURITIES (1.6%)
(Amortized Cost $26,716,646) .. 26,716,646
--------------
TOTAL INVESTMENTS (99.4%)
(Cost/Amortized Cost
$1,166,232,720) ............ 1,679,332,205
OTHER ASSETS
LESS LIABILITIES (0.6%) ....... 11,023,191
--------------
NET ASSETS (100.0%) ............. $1,690,355,396
==============
</TABLE>
- ----------
Financial Futures Contracts outstanding at December 31, 1998:
<TABLE>
<CAPTION>
EXPIRATION NUMBER ORIGINAL VALUE AT UNREALIZED
DESCRIPTION DATE OF CONTRACTS VALUE 12/31/98 APPRECIATION
- ----------------------------- ------------ -------------- -------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
Long S&P 500 Index* ......... 3/99 85 $25,961,551 $26,466,875 $505,324
</TABLE>
- ----------
* Non-income producing.
** Security segregated as collateral on financial futures contracts.
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
26
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------------- --------------------
<S> <C> <C>
COMMON STOCKS:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (8.1%)
CBS Corp. (a) .......................... 7,210,000 $ 236,127,500
Chris Craft Industries, Inc.
(Class B)*+ .......................... 1,262,939 60,857,849
Comcast Corp. (Class A) SPL ............ 1,011,800 59,380,012
Liberty Media Group (Class A)* 4,251,444 195,832,139
MediaOne Group, Inc.* .................. 565,000 26,555,000
News Corp. Ltd. (ADR) .................. 2,930,200 77,467,162
Reuters Group PLC (ADR) ................ 1,111,880 70,465,395
Tele-Communications, Inc.
(Class A)* ........................... 1,148,710 63,538,022
Time Warner, Inc. ..................... 357,800 22,205,962
Viacom, Inc. (Class B) (a)* ............ 3,180,800 235,379,200
--------------
TOTAL BUSINESS SERVICES (8.1%). 1,047,808,241
--------------
CAPITAL GOODS
AEROSPACE (1.4%)
Loral Space &
Communications (a)* .................. 10,121,000 180,280,312
--------------
ELECTRICAL EQUIPMENT (0.6%)
Koninklijke Philips Electronics
N.V. (a) ............................. 1,173,000 79,397,437
--------------
TOTAL CAPITAL GOODS (2.0%) ............ 259,677,749
--------------
CONSUMER CYCLICALS
AIRLINES (1.0%)
AMR Corp.* ............................. 270,000 16,031,250
Delta Air Lines, Inc. ................. 1,924,600 100,079,200
Northwest Airlines Corp.
(Class A)* ........................... 445,800 11,395,762
--------------
127,506,212
--------------
AUTO RELATED (0.5%)
Republic Industries, Inc. (a)* ......... 4,649,500 68,580,125
--------------
FOOD SERVICES, LODGING (0.2%)
Starwood Hotels & Resorts .............. 1,094,151 24,823,551
--------------
LEISURE RELATED (3.0%)
Carnival Corp. (Class A) ............... 1,432,200 68,745,600
Cendant Corp. (a)* ..................... 16,373,600 312,121,750
Royal Caribbean Cruises Ltd. ........... 58,000 2,146,000
--------------
383,013,350
--------------
RETAIL--GENERAL (4.7%)
Home Depot, Inc. (a) ................... 4,444,000 271,917,250
Limited, Inc. ......................... 2,824,475 82,262,834
Lowe's Cos., Inc. ...................... 622,800 31,879,575
Office Depot, Inc.* .................... 1,100,000 40,631,250
Tandy Corp. (a) ........................ 3,110,800 128,126,075
Wal-Mart Stores, Inc. ................. 718,000 58,472,125
--------------
613,289,109
--------------
TOTAL CONSUMER CYCLICALS (9.4%) 1,217,212,347
--------------
CONSUMER NONCYCLICALS
DRUGS (5.0%)
Astra AB (A Shares) .................... 2,811,666 57,478,396
Bristol-Myers Squibb Co. (a) ........... 2,032,000 271,907,000
Merck & Co., Inc. (a) .................. 1,503,200 222,003,850
Schering Plough Corp. ................. 1,696,000 93,704,000
--------------
645,093,246
--------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------------- --------------------
<S> <C> <C>
HOSPITAL SUPPLIES & SERVICES (1.3%)
Abbott Laboratories .................... 1,568,600 $ 76,861,400
Columbia/HCA Healthcare Corp. 2,000,000 49,500,000
Medtronic, Inc. (a) .................... 557,800 41,416,650
--------------
167,778,050
--------------
TOBACCO (2.8%)
Loews Corp. ........................... 2,003,500 196,843,875
Philip Morris Cos., Inc. .............. 3,158,200 168,963,700
--------------
365,807,575
--------------
TOTAL CONSUMER NONCYCLICALS (9.1%)
1,178,678,871
--------------
CREDIT SENSITIVE
BANKS (8.6%)
BankAmerica Corp. ...................... 3,645,700 219,197,712
Bank of Tokyo-Mitsubishi Ltd. .......... 4,825,000 50,662,500
Chase Manhattan Corp. .................. 4,354,836 296,401,025
Citigroup, Inc. (a) .................... 8,343,798 413,017,976
First Union Corp. ...................... 2,205,000 134,091,562
--------------
1,113,370,775
--------------
FINANCIAL SERVICES (5.6%)
American Express Co. .................. 722,400 73,865,400
Associates First Capital Corp.
(Class A) ............................ 3,030,000 128,396,250
Fleet Financial Group, Inc. ........... 384,200 17,168,937
Household International, Inc. ......... 1,008,400 39,957,850
MBNA Corp. ............................. 12,551,287 312,997,720
Morgan Stanley Dean
Witter & Co. ........................ 1,103,166 78,324,786
Newcourt Credit Group, Inc. ........... 169,200 5,911,425
PMI Group, Inc. ....................... 1,217,200 60,099,250
--------------
716,721,618
--------------
INSURANCE (5.4%)
Allstate Corp. ........................ 643,294 24,847,231
American International Group,
Inc. ................................ 5,117,712 494,498,922
Hartford Financial Services
Group, Inc. ......................... 1,092,200 59,934,475
Progressive Corp. (a) .................. 549,900 93,139,312
Providian Financial Corp. ............. 225,000 16,875,000
UNUM Corp. ............................ 174,000 10,157,250
--------------
699,452,190
--------------
REAL ESTATE (1.1%)
CBL & Associates Properties,
Inc. ................................. 912,200 23,546,163
Macerich Co. .......................... 717,500 18,385,938
Simon Property Group, Inc. ............ 1,443,000 41,125,500
Spieker Properties, Inc. .............. 1,373,400 47,553,975
Summit Properties, Inc. ............... 464,100 8,005,725
--------------
138,617,301
--------------
UTILITY--TELEPHONE (1.9%)
AT&T Corp. ............................ 1,652,156 124,324,739
BellSouth Corp. ....................... 21,648 1,079,694
Telecomunicacoes Brasileiras
S.A.-Telebras (ADR) (a) .............. 1,600,000 116,300,000
--------------
241,704,433
--------------
TOTAL CREDIT SENSITIVE (22.6%) 2,909,866,317
--------------
</TABLE>
27
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------------- --------------------
<S> <C> <C>
ENERGY
OIL--DOMESTIC (1.6%)
Atlantic Richfield Co. ................................................ 2,975,200 $ 194,131,800
Union Pacific Resources Group,
Inc. ................................................................ 640,154 5,801,396
--------------
199,933,196
--------------
OIL--SUPPLIES & CONSTRUCTION (1.4%)
Baker Hughes, Inc. .................................................... 1,365,260 24,148,036
BJ Services Co. (a)* ................................................... 1,651,200 25,800,000
Halliburton Co. (a) .................................................... 2,800,000 82,950,000
Nabors Industries, Inc.* ............................................... 740,300 10,040,319
Transocean Offshore, Inc. ............................................. 1,365,800 36,620,513
--------------
179,558,868
--------------
RAILROADS (0.2%)
Canadian Pacific Ltd. ................................................. 1,352,800 25,534,100
--------------
TOTAL ENERGY (3.2%) ................................................... 405,026,164
--------------
TECHNOLOGY
ELECTRONICS (16.2%)
Cisco Systems, Inc. (a)* ............................................... 5,779,750 536,433,047
EMC Corp. (a)* ......................................................... 130,000 11,050,000
Ingram Micro, Inc. (Class A)*+ ......................................... 2,400,000 83,700,000
Intel Corp. (a) ........................................................ 1,550,000 183,771,875
National Semiconductor
Corp. (a)* ........................................................... 460,000 6,210,000
Network Associates, Inc. (a)* .......................................... 5,169,400 342,472,750
SCI Systems, Inc. (a)*+ ................................................ 3,576,000 206,514,000
Solectron Corp. (a)* ................................................... 1,650,000 153,346,875
Sterling Commerce, Inc.* ............................................... 2,878,582 129,536,190
Texas Instruments, Inc. (a) ............................................ 3,840,000 328,560,000
3Com Corp. (a)* ........................................................ 2,255,700 101,083,556
--------------
2,082,678,293
--------------
OFFICE EQUIPMENT (7.8%)
Ceridian Corp.*+ ....................................................... 3,815,000 266,334,688
Compaq Computer Corp. (a) .............................................. 2,775,000 116,376,563
International Business Machines
Corp. ............................................................... 3,200,000 591,200,000
Sterling Software, Inc.* ............................................... 1,172,400 31,728,075
--------------
1,005,639,326
--------------
OFFICE EQUIPMENT SERVICES (1.6%)
First Data Corp. (a) ................................................... 2,415,000 76,525,313
HBO & Co. ............................................................. 1,025,000 29,404,688
Microsoft Corp. (a)* ................................................... 750,000 104,015,625
--------------
209,945,626
--------------
TELECOMMUNICATIONS (18.5%)
ADC Telecommunications, Inc.* 1,415,000 49,171,250
AirTouch Communications,
Inc. (a)* ............................................................ 1,744,600 125,829,275
Alcatel S.A. (a) ....................................................... 1,288,597 31,490,077
Global TeleSystems Group, Inc.* 153,300 8,546,475
Lucent Technologies, Inc. (a) .......................................... 750,000 82,500,000
Mannesmann AG .......................................................... 2,423,245 280,276,312
Mannesmann AG (ADR) .................................................... 1,437,000 164,895,750
MCI WorldCom, Inc. (a)* ................................................ 15,866,815 1,138,443,976
Nextel Communications, Inc.
(Class A) (a)* ....................................................... 4,745,400 112,110,075
Nokia Oyj (A Shares) ................................................... 259,600 31,265,575
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------------- --------------------
<S> <C> <C>
Tele-Communications TCI
Ventures Group (Class A) (a)* ........................................ 15,137,552 $ 356,678,569
--------------
2,381,207,334
--------------
TOTAL TECHNOLOGY (44.1%) .............................................. 5,679,470,579
--------------
DIVERSIFIED (1.5%)
MISCELLANEOUS
Tyco International Ltd. ............................................... 2,623,336 197,897,910
--------------
TOTAL COMMON STOCKS (100.0%)
(Cost $8,464,832,387) ................................................. 12,895,638,178
--------------
PREFERRED STOCKS:
CONSUMER CYCLICALS (0.1%)
AUTO RELATED
Republic Industries, Inc.
6.5% Exch. Conv. .................................................... 470,400 7,173,600
--------------
TOTAL PREFERRED STOCKS (0.1%)
(Cost $11,561,746) .................................................... 7,173,600
--------------
PRINCIPAL
AMOUNT
----------
LONG-TERM DEBT SECURITIES:
TECHNOLOGY (0.1%)
TELECOMMUNICATIONS
Global TeleSystems Group, Inc.
5.75%, 07/01/10 ...................................................... $14,445,000 16,322,850
--------------
TOTAL LONG-TERM DEBT SECURITIES (0.1%)
(Cost $10,714,786) .................................................... 16,322,850
--------------
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER
Eastman Kodak Co.
5.1%, due 02/03/99 ................................................... 25,000,000 24,883,583
Equilon Enterprises
5.24%, due 02/18/99 .................................................. 3,000,000 2,979,200
General Motors Acceptance
Corp.
5.17%, due 01/27/99 .................................................. 8,000,000 7,970,244
Koch Industries
5.05%, due 01/04/99 .................................................. 10,000,000 9,995,792
PepsiCo, Inc.
5.24%, due 01/26/99 .................................................. 4,000,000 3,985,500
Pfizer Inc.
5.25%, due 02/12/99 .................................................. 12,250,000 12,175,398
Procter & Gamble
5.22%, due 01/27/99 .................................................. 4,000,000 3,984,978
Wood Street Funding
5.2%, due 01/04/99 ................................................... 5,400,000 5,397,660
--------------
TOTAL COMMERCIAL PAPER (0.6%)
71,372,355
--------------
TIME DEPOSITS
Canadian Imperial Bank
5.25%, due 01/04/99 .................................................. 58,800,000 58,800,000
Chase Manhattan Corp.
4.5%, due 01/04/99 ................................................... 92,700,000 92,700,000
First National Bank of Chicago
4.875%, due 01/04/99 ................................................. 135,900,000 135,900,000
--------------
TOTAL TIME DEPOSITS (2.2%) ............................................ 287,400,000
--------------
U.S. GOVERNMENT AGENCY (0.1%)
Student Loan Marketing
Association
4.28%, due 01/04/99 .................................................. 18,900,000 18,893,259
--------------
</TABLE>
28
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER OF VALUE
CONTRACTS (B) (NOTE 1)
--------------- --------------------
<S> <C> <C>
TOTAL SHORT-TERM DEBT SECURITIES (2.9%)
(Amortized Cost $377,665,614) $ 377,665,614
---------------
TOTAL INVESTMENTS (103.1%)
(Cost/Amortized Cost $8,864,774,533) 13,296,800,242
---------------
CALL OPTIONS WRITTEN* (c):
AirTouch Communications, Inc.:
January @ $56.625 ...................................................... 2,000 (3,170,000)
February @ $57.125 ..................................................... 1,000 (1,664,000)
February @ $57.75 ...................................................... 1,000 (1,470,000)
February @ $59.625 ..................................................... 2,500 (3,256,600)
February @ $60.50 ...................................................... 3,000 (3,678,000)
March @ $69.00.......................................................... 1,500 (942,000)
Alcatel S.A.:
January @ $21.00 ....................................................... 2,500 (880,000)
January @ $22.375 ...................................................... 2,500 (585,000)
February @ $26.00 ...................................................... 3,500 (415,500)
February @ $26.125 ..................................................... 2,000 (244,000)
March @ $24.125......................................................... 2,000 (478,000)
BJ Services Co.
February @ $15.75....................................................... 3,000 (435,000)
Bristol-Myers Squibb Co.
March @ $131.75......................................................... 1,500 (1,222,500)
CBS Corp.:
January @ $28.125 ...................................................... 2,500 (1,195,000)
January @ $28.50 ....................................................... 4,000 (1,778,500)
January @ $29.25 ....................................................... 2,000 (800,000)
January @ $29.50 ....................................................... 3,500 (1,306,000)
February @ $28.5 ....................................................... 3,000 (1,551,000)
February @ $29.875 ..................................................... 3,000 (1,014,000)
February @ $31.50 ...................................................... 2,500 (617,500)
March @ $31.625......................................................... 1,500 (492,000)
Cendant Corp.:
January @ $13.50 ....................................................... 3,000 (1,692,000)
January @ $13.625 ...................................................... 3,000 (1,644,000)
January @ $13.875 ...................................................... 6,500 (3,398,891)
January @ $14.00 ....................................................... 3,000 (1,542,000)
February @ $13.0625 .................................................... 3,000 (1,824,000)
February @ $15.125 ..................................................... 3,000 (1,326,000)
February @ $19.25 ...................................................... 3,000 (558,000)
February @ $19.50 ...................................................... 6,000 (926,118)
February @ $19.875...................................................... 2,500 (330,000)
Cisco Systems, Inc.:
January @ $64.25 ....................................................... 6,000 (17,166,000)
January @ $64.5625 ..................................................... 3,750 (10,612,500)
January @ $65.375 ...................................................... 2,500 (6,875,000)
January @ $65.9375 ..................................................... 1,500 (4,083,345)
January @ $67.00 ....................................................... 2,000 (5,212,000)
January @ $67.1250 ..................................................... 2,000 (5,168,622)
January @ $67.3125 ..................................................... 2,000 (5,172,000)
January @ $67.6875 ..................................................... 3,500 (8,834,000)
January @ $74.25 ....................................................... 3,000 (5,703,000)
January @ $75.625 ...................................................... 1,500 (2,668,500)
February @ $65.375 ..................................................... 3,000 (8,361,000)
February @ $66.125 ..................................................... 2,000 (5,458,000)
February @ $66.5625 .................................................... 2,000 (5,390,000)
February @ $72.125 ..................................................... 1,500 (3,297,000)
February @ $73.25 ...................................................... 1,500 (3,198,000)
February @ $75.375 ..................................................... 1,500 (2,777,790)
February @ $76.25 ...................................................... 1,000 (1,780,000)
February @ $77.00 ...................................................... 1,500 (2,526,000)
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF VALUE
CONTRACTS (B) (NOTE 1)
--------------- --------------------
<S> <C> <C>
February @ $78.00 ...................................................... 1,000 $ (1,680,000)
February @ $78.375 ..................................................... 2,000 (3,296,000)
February @ $81.375 ..................................................... 1,500 (2,154,000)
March @ $94.25 ......................................................... 4,000 (3,082,860)
March @ $95.250......................................................... 1,500 (1,129,500)
Citigroup, Inc.:
January @ $42.875 ...................................................... 2,000 (1,424,000)
January @ $43.6250 ..................................................... 3,000 (1,815,000)
January @ $43.875 ...................................................... 2,500 (1,600,000)
January @ $45.00 ....................................................... 3,000 (1,416,000)
January @ $45.375 ...................................................... 4,000 (1,984,000)
January @ $46.00........................................................ 3,000 (1,251,000)
Compaq Computer Corp.
February @ $40.125...................................................... 2,250 (1,003,500)
EMC Corp.
February @ $75.5625..................................................... 1,000 (1,177,000)
First Data Corp.
January @ $27.50........................................................ 2,000 (1,023,280)
Halliburton Co.:
January @ $31.375 ...................................................... 3,000 (345,000)
January @ $32.50 ....................................................... 3,000 (207,000)
January @ $37.625 ...................................................... 2,500 (15,000)
January @ $37.875 ...................................................... 2,500 (25,000)
February @ $30.875 ..................................................... 5,000 (937,688)
February @ $31.6250 .................................................... 1,500 (127,500)
February @ $31.750 ..................................................... 3,000 (407,580)
February @ $32.00 ...................................................... 3,000 (483,210)
February @ $32.1875 .................................................... 3,000 (414,000)
March @ $32.250......................................................... 1,500 (270,150)
Home Depot, Inc.:
March @ $59.625 ........................................................ 2,000 (890,000)
March @ $60.875......................................................... 1,500 (615,000)
Ingram Micro, Inc. (Class A):
January @ $43.50 ....................................................... 3,000 (27,000)
January @ $45.8125 ..................................................... 3,000 (738)
January @ $46.125 ...................................................... 1,500 (9,000)
January @ $46.500 ...................................................... 3,000 0
February @ $40.375 ..................................................... 2,500 (222,500)
February @ $42.125 ..................................................... 2,500 (83,005)
February @ $42.50 ...................................................... 3,000 (171,000)
February @ $43.25 ...................................................... 2,500 (46,570)
February @ $46.25....................................................... 3,000 (126,000)
Intel Corp.:
January @ $95.25 ....................................................... 2,500 (5,885,000)
January @ $96.875 ...................................................... 1,000 (2,195,860)
January @ $103.00 ...................................................... 1,500 (2,442,000)
January @ $105.875 ..................................................... 1,000 (1,419,000)
January @ $110.50 ...................................................... 1,000 (1,100,000)
February @ $114.875 .................................................... 1,500 (1,263,945)
March @ $123.75......................................................... 1,500 (952,500)
Koninklijke Philips Electronics N.V.:
February @ $60.25 ...................................................... 1,500 (1,413,000)
March @ $66.75.......................................................... 2,000 (1,186,000)
Loral Space & Communications:
February @ $17.5625 .................................................... 1,500 (270,000)
February @ $17.75 ...................................................... 3,000 (597,000)
February @ $18.00 ...................................................... 3,000 (534,000)
February @ $18.125 ..................................................... 3,000 (506,190)
February @ $19.625...................................................... 3,500 (311,500)
Lucent Technologies, Inc.:
January @ $89.6875 ..................................................... 3,000 (6,216,000)
February @ $87.625...................................................... 1,500 (3,433,500)
</TABLE>
29
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER OF VALUE
CONTRACTS (B) (NOTE 1)
--------------- --------------------
<S> <C> <C>
February @ $90.00 ........... 3,000 $ (6,222,000)
MCI WorldCom, Inc.:
January @ $53.78 ............ 3,500 (6,374,200)
January @ $55.00 ............ 2,500 (4,265,000)
January @ $55.8125 .......... 3,000 (4,863,000)
January @ $55.875 ........... 3,000 (4,794,000)
January @ $56.00 ............ 3,500 (5,582,500)
January @ $58.50 ............ 3,000 (4,065,000)
January @ $58.875 ........... 2,500 (3,283,325)
January @ $60.125 ........... 3,000 (3,629,700)
February @ $54.28 ........... 2,000 (3,572,000)
February @ $55.00 ........... 6,000 (10,281,000)
February @ $56.25 ........... 3,000 (4,832,880)
February @ $58.125 .......... 3,500 (5,001,500)
February @ $60.00 ........... 2,500 (3,157,500)
February @ $60.87 ........... 2,000 (2,316,000)
February @ $61.375 .......... 2,500 (2,940,000)
February @ $62.35 ........... 2,000 (2,016,000)
February @ $63.00 ........... 2,500 (2,500,000)
February @ $69.9375 ......... 4,000 (2,192,000)
February @ $70.0625 ......... 4,000 (2,200,000)
March @ $69.25 .............. 4,000 (2,201,160)
March @ $70.75 .............. 2,000 (1,024,000)
March @ $74.10............... 2,500 (805,000)
Medtronic, Inc.
January @ $62.375 ........... 2,000 (2,384,000)
Merck & Co., Inc.
February @ $155.375.......... 2,500 (725,000)
Microsoft Corp.:
January @ $109.375 .......... 4,000 (11,793,440)
January @ $111.00 ........... 1,500 (4,225,500)
January @ $112.625........... 2,000 (5,286,000)
National Semiconductor Corp.:
January @ $14.5625 .......... 2,000 (136,000)
February @ $13.75............ 2,500 (262,500)
Network Associates, Inc.:
January @ $45.5625 .......... 2,500 (5,205,000)
February @ $63.1022 ......... 1,950 (1,472,250)
February @ $63.4375.......... 550 (402,050)
Nextel Communications, Inc.
(Class A):
February @ $20.75 ........... 3,000 (1,198,440)
February @ $21.375 .......... 1,500 (517,500)
March @ $20.50 .............. 2,500 (1,055,000)
March @ $20.5516............. 3,000 (1,221,000)
Progressive Corp.
January @ $143.284 .......... 1,000 (2,618,000)
Republic Industries, Inc.:
January @ $17.50 ............ 5,500 (78,048)
January @ $17.6875 .......... 2,000 (510)
January @ $17.75............. 3,000 (27,000)
SCI Systems, Inc.:
January @ $40.125 ........... 1,500 (2,649,000)
January @ $40.75 ............ 3,000 (5,175,000)
January @ $41.50 ............ 3,000 (4,971,000)
January @ $41.6215 .......... 2,000 (3,240,000)
January @ $44.69 ............ 1,950 (2,578,655)
January @ $45.2309........... 1,050 (1,334,559)
Solectron Corp.:
January @ $65.375 ........... 1,000 (2,768,000)
February @ $68.00 ........... 1,000 (2,543,000)
February @ $73.7561 ......... 2,000 (4,036,800)
</TABLE>
<TABLE>
<CAPTION>
NUMBER OF VALUE
CONTRACTS (B) (NOTE 1)
--------------- --------------------
<S> <C> <C>
February @ $74.250 .......... 1,000 $ (1,990,000)
February @ $80.875 .......... 2,000 (3,048,000)
March @ $88.250 ............. 1,500 (1,489,500)
March @ $89.50............... 1,000 (1,009,000)
Tandy Corp.:
February @ $40.00 ........... 3,000 (978,000)
February @ $40.50 ........... 2,000 (622,000)
February @ $41.00 ........... 2,000 (487,620)
February @ $41.9981.......... 4,000 (1,096,000)
Tele-Communications TCI
Ventures Group (Class A):
January @ $19.25 ............ 2,000 (916,000)
January @ $19.6875 .......... 2,500 (1,035,000)
January @ $18.6875 .......... 3,000 (1,542,000)
February @ $20.4271 ......... 360 (132,120)
February @ $20.6198 ......... 1,200 (422,400)
Telecomunicacoes Brasileiras
S.A.-Telebras (ADR):
January @ $74.5 ............. 3,000 (228,000)
January @ $81.75 ............ 3,000 (94,818)
January @ $81.875 ........... 2,000 (450,000)
January @ $84.00 ............ 1,500 (236,516)
January @ $86.00 ............ 2,000 (167,116)
February @ $83.75 ........... 2,000 (414,000)
February @ $85.5625 ......... 1,500 (303,000)
February @ $93.00............ 1,000 (144,000)
Texas Instruments, Inc.:
January @ $62.625 ........... 2,000 (4,622,000)
January @ $63.25 ............ 2,000 (4,524,000)
January @ $63.625 ........... 3,500 (7,763,000)
January @ $64.00 ............ 2,000 (4,216,000)
January @ $68.5 ............. 2,000 (3,490,000)
January @ $75.00 ............ 1,000 (1,115,381)
January @ $78.0625 .......... 2,000 (1,906,000)
January @ $78.125 ........... 1,000 (928,000)
February @ $67.5625 ......... 1,500 (2,799,000)
February @ $68.25 ........... 2,000 (3,580,000)
February @ $69.125 .......... 1,500 (2,632,530)
February @ $72.750 .......... 2,000 (2,823,996)
February @ $76.125 .......... 2,500 (2,939,448)
February @ $77.00 ........... 2,000 (2,438,680)
February @ $77.375 .......... 2,000 (2,084,000)
February @ $78.5 ............ 3,500 (3,524,820)
February @ $84.75 ........... 2,000 (1,322,548)
February @ $88.75............ 1,000 (541,000)
Viacom, Inc. (Class B):
January @ $59.74 ............ 1,050 (1,510,950)
January @ $59.75 ............ 850 (1,223,150)
January @ $60.50 ............ 1,500 (2,064,000)
January @ $60.75 ............ 2,000 (2,678,000)
January @ $61.00 ............ 2,000 (2,640,000)
January @ $61.53 ............ 2,500 (3,205,000)
January @ $62.875 ........... 2,000 (2,252,000)
February @ $64.625 .......... 2,000 (2,012,000)
February @ $64.75 ........... 2,000 (2,042,000)
February @ $65.163 .......... 1,500 (1,461,000)
February @ $65.50 ........... 2,000 (1,892,000)
February @ $67.125 .......... 2,000 (1,550,000)
February @ $67.50 ........... 2,000 (1,588,280)
March @ $72.125.............. 1,500 (790,500)
</TABLE>
30
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE COMMON STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER OF VALUE
CONTRACTS (B) (NOTE 1)
--------------- --------------------
<S> <C> <C>
3Com Corp.:
January @ $33.75 ................ 2,500 $ (2,850,000)
January @ $34.8125 .............. 2,500 (2,512,790)
January @ $34.875 ............... 2,000 (2,052,000)
January @ $35.00 ................ 2,500 (2,487,842)
January @ $35.125 ............... 2,500 (2,472,500)
February @ $39.50 ............... 1,000 (668,000)
February @ $40.9375 ............. 2,500 (1,382,500)
March @ $47.625 ................. 1,500 (480,000)
---------------
TOTAL CALL OPTIONS WRITTEN (-3.7%)
(Premiums Received $195,807,516) (471,793,964)
---------------
OTHER ASSETS
LESS LIABILITIES (0.6%) ......... 71,114,540
---------------
NET ASSETS (100.0%) ............... $12,896,120,818
===============
</TABLE>
- ----------
* Non-income producing.
+ Affiliated company as defined under the Investment Company Act of 1940
(See Note 6).
(a) Fully or 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.
31
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
COMMON STOCKS AND
OTHER INVESTMENTS:
BASIC MATERIALS (1.0%)
CHEMICALS
Akzo Nobel N.V. ........................................................ 310,000 $14,114,170
-----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.7%)
Waste Management, Inc. ................................................. 223,050 10,399,706
-----------
PRINTING, PUBLISHING &
BROADCASTING (3.1%)
CBS Corp. .............................................................. 240,000 7,860,000
Liberty Media Group (Class A)* ......................................... 306,312 14,109,496
Reuters Group PLC ...................................................... 400,000 4,199,527
Reuters Group PLC (ADR) ................................................ 78,620 4,982,543
Scripps Co. (E.W.) (Class A) ........................................... 100,000 4,975,000
TVI Televisao Independente SA* 1,175 0
United News & Media PLC ................................................ 800,000 7,014,742
-----------
43,141,308
-----------
TRUCKING, SHIPPING (0.1%) ..............................................
Fukuyama Transporting Co., Ltd. 159,000 690,386
-----------
TOTAL BUSINESS SERVICES (3.9%) 54,231,400
-----------
CAPITAL GOODS
BUILDING & CONSTRUCTION (1.1%)
ABB AG ................................................................. 7,000 8,217,281
Daito Trust Construction
Co. Ltd. ............................................................. 846,600 7,344,452
-----------
15,561,733
-----------
BUILDING MATERIALS & FOREST
PRODUCTS (0.7%)
Lafarge SA ............................................................. 100,000 9,499,955
-----------
ELECTRICAL EQUIPMENT (0.6%)
Schneider SA ........................................................... 146,000 8,854,817
-----------
MACHINERY (1.6%)
AlliedSignal, Inc. ..................................................... 222,000 9,837,375
United Technologies Corp. .............................................. 120,000 13,050,000
-----------
22,887,375
-----------
TOTAL CAPITAL GOODS (4.0%) ............................................ 56,803,880
-----------
CONSUMER CYCLICALS
AIRLINES (1.2%)
British Airways PLC .................................................... 845,000 5,697,585
Continental Airlines, Inc.
(Class B)* ........................................................... 129,000 4,321,500
KLM .................................................................... 185,000 5,595,612
Northwest Airlines Corp.
(Class A)* ........................................................... 51,100 1,306,244
-----------
16,920,941
-----------
AUTO RELATED (0.4%)
Autoliv, Inc. .......................................................... 174,000 6,254,393
-----------
AUTOS & TRUCKS (1.2%)
Honda Motor Co. Ltd. ................................................... 202,000 6,640,850
Volkswagen AG .......................................................... 121,000 9,787,459
-----------
16,428,309
-----------
FOOD SERVICES, LODGING (0.5%)
Compass Group PLC ...................................................... 625,800 7,168,868
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
HOUSEHOLD FURNITURE, APPLIANCES (0.6%)
Sony Corp. ............................................................. 112,400 $ 8,197,182
-----------
LEISURE RELATED (3.0%)
Carnival Corp. (Class A) ............................................... 360,000 17,280,000
Harley-Davidson, Inc. .................................................. 312,400 14,799,950
Hoyts Cinemas Group+ ................................................... 1,370,000 1,150,068
Ladbroke Group PLC ..................................................... 1,250,000 5,022,711
Nintendo Co. Ltd. ...................................................... 34,100 3,308,773
-----------
41,561,502
-----------
PHOTO & OPTICAL (0.7%)
Fuji Photo Film Co. .................................................... 264,000 9,825,432
-----------
RETAIL--GENERAL (4.8%)
Dayton Hudson Corp. .................................................... 150,000 8,137,500
Dixons Group PLC ....................................................... 800,000 11,254,201
Home Depot, Inc. ....................................................... 331,200 20,265,300
Japan Airport Terminal Co. Ltd. 800 4,927
Koninklijke Ahold NV ................................................... 439,000 16,223,761
Wal-Mart Stores, Inc. .................................................. 150,000 12,215,625
-----------
68,101,314
-----------
TOTAL CONSUMER CYCLICALS (12.4%)
174,457,941
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.8%)
Coca-Cola Amatil, Ltd. ................................................. 1,135,000 4,228,457
Diageo PLC ............................................................. 1,804,800 20,539,803
-----------
24,768,260
-----------
DRUGS (8.6%)
Astra AB (A Shares) .................................................... 240,000 4,906,278
Bristol-Myers Squibb Co. ............................................... 194,000 25,959,625
Merck & Co., Inc. ...................................................... 74,100 10,943,644
Novartis AG ............................................................ 2,058 4,051,476
Novartis AG (ADR) ...................................................... 20,000 1,965,810
Orion-Yhtyma Oy (B Shares) ............................................. 182,000 4,368,899
Pfizer, Inc. ........................................................... 132,000 16,557,750
Sanofi SA .............................................................. 85,000 13,990,518
Santen Pharmaceutical Co. Ltd. ......................................... 600,000 11,537,439
Schering Plough Corp. .................................................. 192,000 10,608,000
Smithkline Beecham PLC ................................................. 200,000 2,795,248
Takeda Chemical Inds. .................................................. 71,000 2,736,819
Yamanouchi Pharmaceutical
Co. Ltd. ............................................................. 354,000 11,418,343
-----------
121,839,849
-----------
FOODS (1.7%)
Nestle SA .............................................................. 11,000 23,981,043
-----------
HOSPITAL SUPPLIES & SERVICES (0.2%)
Boston Scientific Corp.* ............................................... 83,300 2,233,481
-----------
RETAIL--FOOD (1.9%)
Familymart Co. ......................................................... 228,700 11,429,934
Kroger Co.* ............................................................ 250,000 15,125,000
Seven-Eleven Japan Co. Ltd. ............................................ 800 64,510
-----------
26,619,444
-----------
SOAPS & TOILETRIES (2.5%)
Avon Products, Inc. .................................................... 260,000 11,505,000
Gillette Co. ........................................................... 267,400 12,918,763
Kao Corp. .............................................................. 290,000 6,552,946
Shiseido Co., Ltd. ..................................................... 300,000 3,859,991
-----------
34,836,700
-----------
</TABLE>
32
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
TOBACCO (4.5%)
Japan Tobacco, Inc. ................ 1,040 $ 10,413,824
Philip Morris Cos., Inc. ........... 480,400 25,701,400
Seita .............................. 236,000 14,777,708
Tabacalera SA--A ................... 515,000 12,972,840
-------------
63,865,772
-------------
TOTAL CONSUMER NONCYCLICALS (21.2%) 298,144,549
-------------
CREDIT SENSITIVE
BANKS (9.8%)
Banco Bilbao Vizcaya SA ............ 460,000 7,201,661
Bank of Scotland ................... 1,340,000 15,985,824
Bank of Tokyo-Mitsubishi Ltd. ...... 500,000 5,183,872
BankAmerica Corp. .................. 297,100 17,863,137
Chase Manhattan Corp. .............. 318,976 21,710,304
Citigroup, Inc. .................... 549,699 27,210,100
ForeningsSparbanken AB ............. 398,700 10,342,093
Royal Bank of Scotland PLC ......... 697,000 11,133,074
Standard Chartered PLC ............. 297,900 3,452,254
Tokai Bank ......................... 1,180,000 5,583,695
UBS AG--Registered ................. 6,000 1,846,154
Unicredito Italiano Spa ............ 1,740,000 10,307,409
-------------
137,819,577
-------------
FINANCIAL SERVICES (5.5%)
Associates First Capital Corp.
(Class A) ........................ 438,000 18,560,250
CMIC Finance & Securities
Public Co. Ltd.* ................. 724,700 0
Credit Saison Co. .................. 354,450 8,747,393
Daiwa Securities Co. Ltd. .......... 1,750,000 5,985,822
MBNA Corp. ......................... 837,150 20,876,428
Morgan Stanley Dean Witter &
Co. .............................. 156,300 11,097,300
Newcourt Credit Group, Inc. ........ 200,000 6,961,613
Schwab (Charles) Corp. ............. 99,700 5,601,894
-------------
77,830,700
-------------
INSURANCE (4.3%)
American International
Group, Inc. ...................... 239,062 23,099,366
ING Groep N.V. ..................... 270,000 16,462,538
SunAmerica, Inc. ................... 47,000 3,812,875
Zurich Allied AG ................... 23,500 17,425,811
-------------
60,800,590
-------------
REAL ESTATE (0.0%)
Mandamus AB* ....................... 485 2,725
-------------
UTILITY--ELECTRIC (0.8%)
AES Corp.* ......................... 240,000 11,370,000
-------------
UTILITY--TELEPHONE (2.5%)
Hellenic Telecommunication
Organization SA .................. 5,838 155,399
Telecom Italia Spa ................. 1,670,000 14,240,702
Telecomunicacoes Brasileiras
S.A.-Telebras (ADR)* ............. 100,000 7,268,750
Telefonica de Espana ............... 300,000 13,319,730
Telefonica S.A.--Bonus Rights* ..... 6,000 5,319
-------------
34,989,900
-------------
TOTAL CREDIT SENSITIVE (22.9%) 322,813,492
-------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
ENERGY
OIL--INTERNATIONAL (1.7%)
ENI Spa ............................ 840,000 $ 5,486,544
Repsol SA .......................... 185,000 9,853,996
Total SA--B ........................ 85,000 8,607,210
-------------
23,947,750
-------------
OIL--SUPPLIES & CONSTRUCTION (1.2%)
BJ Services Co.* ................... 104,000 1,625,000
Halliburton Co. .................... 378,900 11,224,912
Noble Drilling Corp.* .............. 297,000 3,842,438
-------------
16,692,350
-------------
TOTAL ENERGY (2.9%) ............... 40,640,100
-------------
TECHNOLOGY
ELECTRONICS (7.7%)
Altera Corp.* ...................... 256,000 15,584,000
Cisco Systems, Inc.* ............... 400,425 37,164,445
Intel Corp. ........................ 32,000 3,794,000
Sanmina Corp.* ..................... 226,000 14,125,000
Solectron Corp.* ................... 338,200 31,431,463
TDK Corp. .......................... 69,000 6,316,083
-------------
108,414,991
-------------
OFFICE EQUIPMENT (3.3%)
Canon, Inc. ........................ 329,000 7,040,629
Compaq Computer Corp. .............. 457,000 19,165,438
Dell Computer Corp.* ............... 274,000 20,053,375
-------------
46,259,442
-------------
OFFICE EQUIPMENT SERVICES (2.1%)
Microsoft Corp.* ................... 180,000 24,963,750
Misys PLC .......................... 728,000 5,302,353
-------------
30,266,103
-------------
TELECOMMUNICATIONS (5.7%)
MCI WorldCom, Inc.* ................ 500,097 35,881,960
Northern Telecommunications
Ltd. ............................. 125,000 6,265,625
NTT Mobile Communication
Network, Inc. .................... 200 8,241,028
Tele-Communications TCI
Ventures Group (Class A)* ........ 885,350 20,861,059
Vodafone Group PLC ................. 540,000 8,769,092
-------------
80,018,764
-------------
TOTAL TECHNOLOGY (18.8%) .......... 264,959,300
-------------
DIVERSIFIED
MISCELLANEOUS (2.6%)
Tomkins PLC ........................ 2,000,000 9,433,962
Tyco International Ltd. ............ 254,984 19,235,356
U.S. Industries, Inc. .............. 395,000 7,356,875
-------------
TOTAL DIVERSIFIED (2.6%) .......... 36,026,193
-------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (89.7%)
(Cost $999,076,579)............... 1,262,191,025
-------------
</TABLE>
33
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GLOBAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------ -------------
<S> <C> <C>
PREFERRED STOCKS:
BUSINESS SERVICES (0.5%)
PRINTING, PUBLISHING &
BROADCASTING
ProSieben Media AG ................ 148,000 $ 7,086,949
-----------
CONSUMER CYCLICALS (0.4%)
RETAIL--GENERAL
Hornbach Holding AG ............... 87,449 5,221,227
-----------
CONSUMER NONCYCLICALS (0.2%)
SOAPS & TOILETRIES
Wella AG .......................... 3,130 2,629,463
-----------
TECHNOLOGY (1.9%)
TELECOMMUNICATIONS
Nokia Oyj (A Shares) .............. 228,000 27,723,355
-----------
TOTAL PREFERRED STOCKS (3.0%)
(Cost $30,478,415) ............... 42,660,994
-----------
PRINCIPAL
AMOUNT
---------
LONG-TERM DEBT SECURITIES:
CREDIT SENSITIVE (0.0%)
BANKS
Grupo Financiero Banorte
Zero Coupon, 12/05/02 ........... $ 165,700 16,741
-----------
TOTAL LONG-TERM DEBT SECURITIES (0.0%)
(Amortized Cost $20,239) ......... 16,741
-----------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ------------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan Bank
4.77%, due 01/20/99 ....... $30,000,000 $ 29,919,250
Federal Home Loan Mortgage
Corp.:
4.7%, due 01/04/99 ......... 64,600,000 64,574,698
5.1%, due 01/14/99 ......... 20,000,000 19,963,311
--------------
TOTAL U.S. GOVERNMENT AGENCIES (8.1%) 114,457,259
--------------
TOTAL SHORT-TERM DEBT SECURITIES (8.1%)
(Amortized Cost $114,457,259) 114,457,259
--------------
TOTAL INVESTMENTS (100.8%)
(Cost/Amortized Cost $1,144,032,492) 1,419,326,019
OTHER ASSETS
LESS LIABILITIES (-0.8%) .. (11,123,246)
--------------
NET ASSETS (100.0%) ......... $1,408,202,773
==============
</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, 1998, these securities amounted to $1,150,068 or
0.1% of net assets.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
34
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
AUSTRALIA
Brambles Industries Ltd. ............ 60,000 $1,461,406
Broken Hill Proprietary Co. Ltd. 30,000 220,939
E.R.G. Limited ...................... 1,000,000 625,004
Hoyts Cinemas Group+ ................ 450,000 377,760
Oil Search Ltd. ..................... 400,000 404,414
Orogen Minerals Ltd. (GDR)+ ......... 50,000 515,000
Powertel Ltd.* ...................... 450,000 281,252
QCT Resources Ltd. .................. 185,000 111,091
Southern Pacific Petroleum .......... 250,000 249,695
----------
TOTAL AUSTRALIA (2.0%) ............ 4,246,561
----------
AUSTRIA
Austria Tabakwerke AG ............... 24,400 1,870,760
Erste Bank Der Oesterreichischen
Sparkassen AG ..................... 5,470 292,732
KTM Motorradholding AG .............. 10,000 672,892
Mayr-Melnhof Karton AG+ ............. 18,000 841,244
OMV AG .............................. 3,000 282,717
----------
TOTAL AUSTRIA (1.9%) .............. 3,960,345
----------
BELGIUM
Mobistar SA* ........................ 8,000 401,504
Virgin Express Holdings PLC
(ADR)* ............................ 50,000 400,000
----------
TOTAL BELGIUM (0.4%) .............. 801,504
----------
BRAZIL (0.4%)
Cia Paranaense de Energia-Copel
(ADR) ............................. 115,000 819,375
----------
CANADA
Boardwalk Equities, Inc.* ........... 40,000 439,818
Fracmaster Ltd.+ .................... 214,300 627,424
National Bank of Canada ............. 50,000 806,766
Rofin-Sinar Technologies, Inc.* ..... 35,000 328,125
Talisman Energy, Inc.* .............. 20,000 350,683
----------
TOTAL CANADA (1.2%) ............... 2,552,816
----------
CHILE (0.0%)
Enersis S.A. (ADR) .................. 1,000 25,812
----------
DENMARK
Carli Gry International A/S ......... 20,000 1,206,693
Coloplast A/S B ..................... 7,000 831,707
Vestas Wind Systems A/S* ............ 5,300 283,966
----------
TOTAL DENMARK (1.1%) .............. 2,322,366
----------
FINLAND
Amer Group Ltd.* .................... 33,900 350,372
Fortum Oyj* ......................... 52,301 317,973
Helsinki Telephone Corp. ............ 30,500 1,812,432
Kesko ............................... 28,000 417,341
Nokia Oyj (A Shares) ................ 6,000 722,625
Orion-Yhtyma Oy (B Shares) .......... 56,000 1,344,277
Sampo Insurance Co. (A Shares) 25,000 948,725
----------
TOTAL FINLAND (2.8%) .............. 5,913,745
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
FRANCE
Accor SA ............................ 5,500 $1,190,625
Banque Nationale de Paris ........... 700 57,633
Bouygues Offshore SA (ADR) .......... 22,000 233,750
Canal Plus .......................... 3,000 818,499
Carrefour ........................... 1,000 754,808
Cie de St. Gobain ................... 250 35,289
Cie Generale de Geophysique
SA (ADR)* ......................... 68,000 739,500
Essilor International ............... 4,000 1,574,381
France Telecom SA ................... 20,000 1,588,693
Lafarge SA .......................... 7,000 664,997
Louis Dreyfus Citrus ................ 23,000 576,492
Michelin (CGDE), (Class B) .......... 7,000 279,900
Moulinex* ........................... 25,000 384,650
PSA Peugeot Citroen ................. 200 30,951
Sanofi SA ........................... 12,000 1,975,132
Schneider SA ........................ 11,000 667,144
Seita ............................... 18,000 1,127,113
Societe Generale .................... 3,000 485,732
Suez Lyonnaise des Eaux ............. 4,000 821,540
Total SA-B .......................... 5,480 554,912
Vivendi ............................. 7,540 1,955,989
----------
TOTAL FRANCE (7.8%) ............... 16,517,730
----------
GERMANY
Allianz AG .......................... 1,500 558,056
Apcoa Parking AG .................... 800 56,646
Bayer AG ............................ 4,500 188,884
B.U.S. Berzelius Umwelt-Service
AG ................................ 25,200 393,159
Deutsche Bank AG .................... 3,000 176,922
SGL Carbon AG+ ...................... 9,500 575,187
----------
TOTAL GERMANY (0.9%) .............. 1,948,854
----------
GREECE
A.G. Petzetakis SA* ................. 200,000 1,393,455
Hellenic Telecommunication
Organization SA ................... 17,138 456,197
----------
TOTAL GREECE (0.9%) ............... 1,849,652
----------
HONG KONG
Aeon Credit Service (Asia) Co.
Ltd. .............................. 658,000 135,893
Cheung Kong Holdings Ltd. ........... 50,000 359,805
Guangdong Kelon Electrical
Holdings Co. Ltd. ................. 800,000 712,511
HSBC Holdings PLC (H.K.$) ........... 9,200 229,191
JCG Holdings Ltd. ................... 250,000 80,674
VTech Holdings Ltd. ................. 50,000 218,142
----------
TOTAL HONG KONG (0.8%) ............ 1,736,216
----------
HUNGARY (0.8%)
Magyar Tavkozlesi Rt (ADR) .......... 60,000 1,788,750
----------
INDIA
Videsh Sanchar Nigam Ltd.
(GDR)+ ............................ 1,000 12,250
Videsh Sanchar Nigam Ltd.
(GDR) ............................. 51,000 573,750
----------
TOTAL INDIA (0.3%) ................ 586,000
----------
</TABLE>
35
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
INDONESIA
Gulf Indonesia Resources Ltd.* ..... 49,900 $ 324,350
PT Citatah ......................... 377,500 33,031
PT Great River International ....... 1,367,000 46,991
---------
TOTAL INDONESIA (0.2%) ........... 404,372
---------
IRELAND
Avonmore Waterford Group
PLC .............................. 200,000 624,665
Bank of Ireland .................... 75,000 1,667,634
Crean (James) PLC--Units ........... 60,000 75,852
Fyffes PLC ......................... 900,000 2,007,853
Green Property PLC ................. 140,000 791,243
Irish Continental Group PLC ........ 68,000 804,034
Irish Life PLC ..................... 200,000 1,890,120
Marlborough International PLC* 111,400 356,223
Smurfit (Jefferson) Group .......... 200,000 359,389
Unidare PLC ........................ 385,000 1,002,067
---------
TOTAL IRELAND (4.5%) ............. 9,579,080
---------
ISRAEL (0.1%)
Home Centers Ltd. .................. 15,400 165,550
---------
ITALY
Banca Commerciale Italiana ......... 10,000 68,945
Banca Nazionale del Lavoro
(BNL)* ........................... 14,000 39,117
Banca Nazionale del Lavoro
(BNL)* ........................... 180,000 538,313
Fiat Spa ........................... 22,000 76,371
Finmeccanica Spa* .................. 408,000 417,746
Gildemeister Italiana Spa .......... 46,300 168,287
Industrie Natuzzi Spa (ADR) ........ 20,000 497,500
Mediolanum Spa ..................... 200,000 1,481,705
Seat Pagine Gialle Spa* ............ 4,000,000 3,773,813
Telecom Italia Spa ................. 40,000 341,095
Telecom Italia Spa ................. 130,800 822,691
Unicredito Italiano Spa ............ 23,400 138,617
Unione Immobiliare Spa* ............ 22,500 11,730
Zucchini Spa ....................... 60,000 395,525
---------
TOTAL ITALY (4.1%) ............... 8,771,455
---------
JAPAN
Aiful Corp. ........................ 25,100 1,525,795
Aiwa Co. Ltd. ...................... 16,000 422,508
Akita Bank ......................... 21,000 89,880
Asahi Diamond Industry Co.
Ltd. ............................. 11,000 54,781
Bank of Tokyo-Mitsubishi Ltd. ...... 70,000 725,742
Canon, Inc. ........................ 14,000 299,601
Credit Saison Co. .................. 30,000 740,363
Dai-Ichi Kangyo Bank Ltd. .......... 54,000 288,064
Daibiru Corp. ...................... 14,000 89,322
Daito Trust Construction Co.
Ltd. ............................. 42,100 365,227
Data Communication System Co. 16,700 341,103
DDI Corp. .......................... 78 290,297
Familymart Co. ..................... 15,100 754,665
Fanuc Ltd. ......................... 900 30,864
Fuji Photo Film Co. ................ 42,000 1,563,137
Fuji Soft ABC, Inc. ................ 14,000 713,336
Fujikura Ltd. ...................... 104,000 558,476
Fujimi, Inc. ....................... 17,300 600,939
Home Wide Corp. .................... 15,000 59,149
Honda Motor Co. Ltd. ............... 26,000 854,763
Ishihara Sangyo Kaisha Ltd.* ....... 10,000 16,393
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
Japan Airport Terminal Co. Ltd. 64,000 $ 394,152
Japan Tobacco, Inc. ................ 90 901,196
Kaneshita Construction ............. 12,000 65,928
Kao Corp. .......................... 76,000 1,717,324
Keyence Corp. ...................... 8,600 1,059,282
Kikuchi Co. Ltd. ................... 10,000 37,218
King Co. ........................... 32,000 42,534
Koa Fire & Marine Insurance
Co. Ltd. ......................... 8,000 24,883
Meitec Corp. ....................... 28,300 707,187
Mercian Corp. ...................... 53,000 216,509
Micronics Japan Co. Ltd. ........... 18,000 263,181
Minebea Co. Ltd. ................... 35,000 401,329
Mitsubishi Trust & Banking
Corp. ............................ 20,000 128,844
Mitsui Home Co. Ltd. ............... 16,000 73,726
Murata Manufacturing Co., Ltd. ..... 7,000 290,917
Nanno Construction Co. Ltd. ........ 12,000 13,398
NGK Spark Plug Co. ................. 24,000 244,785
Nichiei Co. Ltd. ................... 14,500 1,156,402
Nichiha Corp. ...................... 33,500 306,057
Nikon Corp. ........................ 56,000 545,857
Nintendo Co. Ltd. .................. 15,400 1,494,284
Nippon Broadcasting System ......... 18,000 720,957
Nippon Denwa Shisetsu .............. 4,000 13,824
Nippon Paper Industries Co. ........ 14,000 63,766
Nippon System Development .......... 33,200 1,029,685
Nippon Telegraph & Telephone
Corp. ............................ 206 1,591,777
Nippon Television Network
Corp. ............................ 820 241,967
Nireco ............................. 8,000 23,748
Nitta Corp. ........................ 31,000 176,907
Nitto Kohki Co. Ltd. ............... 18,700 154,107
Nomura Securities Co. .............. 8,000 69,827
Noritsu Koki Co. Ltd. .............. 9,700 210,589
Oie Sangyo Co. Ltd. ................ 13,000 55,295
Oriental Construction Co. .......... 1,800 6,922
Paris Miki, Inc. ................... 21,400 493,044
PS Corp. ........................... 18,900 72,016
Ricoh Elemex Corp. ................. 7,000 54,400
Rohm Co. Ltd. ...................... 12,000 1,094,196
Sankyo Co. Ltd. .................... 45,000 984,936
Santen Pharmaceutical Co. Ltd. ..... 48,000 922,995
Sanyo Engineering &
Construction Co. ................. 9,000 33,017
Sanyo Pax Co. Ltd. ................. 24,000 165,884
Sanyo Shinpan Finance Co. Ltd. ..... 4,600 167,125
Sato Corp. ......................... 44,900 795,747
Seven-Eleven Japan Co. Ltd. ........ 5,600 451,573
SHIMANO, INC. ...................... 33,000 852,415
Shizuoka Bank Ltd. ................. 36,000 445,016
SMC Corp. .......................... 8,400 671,405
Sodick Co.* ........................ 88,000 187,151
Sony Corp. ......................... 12,600 918,901
Sumitomo Metal Industries .......... 171,000 195,472
Sumitomo Realty &
Development Co. Ltd. ............. 104,000 338,219
Takefuji Corp. ..................... 60 4,386
Takihyo Co. Ltd. ................... 2,000 10,084
TDK Corp. .......................... 4,000 366,150
Toda Corp. ......................... 9,000 43,624
Toho Bank .......................... 39,000 161,737
Toho Titanium ...................... 37,000 203,607
</TABLE>
36
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
Tokyo Broadcasting System, Inc. 69,000 $ 772,238
Tokyo Cathode Laboratory Co. ........ 8,200 55,514
Toso Co. Ltd. ....................... 18,000 59,814
Yamaichi Electronics Co. Ltd. ....... 12,000 194,595
Yamanouchi Pharmaceutical Co.
Ltd. .............................. 17,000 548,339
Yokogawa Electric Corp. ............. 46,000 228,268
------------
TOTAL JAPAN (17.1%) ............... 36,320,637
------------
MALAYSIA**
Guinness Anchor BHD+ ................ 30,000 21,105
Kumpulan Guthrie BHD+ ............... 26,000 11,731
Lingkaran Trans Kota Holdings
BHD+ .............................. 130,000 76,133
Malayan Banking BHD+ ................ 48,000 68,066
Metacorp BHD+ ....................... 90,000 48,066
Pernas International Hotels
Holdings BHD+ ..................... 280,000 50,018
Resorts World BHD+ .................. 20,000 16,133
RJ Reynolds BHD+ .................... 60,000 47,514
Sime Darby BHD+ ..................... 134,000 107,595
Star Publications BHD+ .............. 25,000 24,862
Talam Corp. BHD+ .................... 200,000 39,411
Tanjong PLC+ ........................ 100,000 99,447
UMW Holdings BHD+ ................... 150,000 110,497
------------
TOTAL MALAYSIA (0.3%) ............. 720,578
------------
MEXICO
Elamex S.A. de C.V.* ................ 10,000 36,250
Fomento Economico Mexico
ADR ............................... 20,000 532,500
Grupo Electra, S.A. de C.V. ......... 500,000 251,566
Grupo Industrial Saltillo SA
(B Shares) ........................ 236,000 588,927
Grupo Televisa S.A. (GDR)* .......... 40,000 987,500
Industrias CH S.A. (B Shares)* ...... 120,000 213,861
Kimberly-Clark de Mexico, S.A.
de CV ............................. 30,000 473,976
Panamerican Beverages, Inc. ......... 8,000 174,500
Sanluis Corporacion S.A. de C.V. 28,000 40,453
------------
TOTAL MEXICO (1.6%) ............... 3,299,533
------------
NETHERLANDS
Aegon N.V. .......................... 13,000 1,596,358
Akzo Nobel N.V. ..................... 23,000 1,047,180
ASR Verzekeringsgroep N.V. .......... 21,400 1,937,270
Content Beheer N.V.+ ................ 30,000 512,807
Elsevier N.V. ....................... 40,000 560,200
Fortis Amev N.V. .................... 15,000 1,242,878
Fugro N.V. .......................... 30,000 702,913
Hagemeyer N.V. ...................... 12,000 438,362
Hunter Douglas N.V. ................. 6,000 198,733
IHC Caland N.V. ..................... 15,000 623,036
ING Groep N.V. ...................... 24,000 1,463,337
KLM ................................. 12,400 375,057
Koninklijke Ahold NV ................ 15,000 554,343
Koninklijke Nedlloyd Groep N.V. 2,250 30,553
Koninklijke Numico N.V.+ ............ 8,000 381,277
Koninklijke Philips Electronics
N.V. .............................. 10,000 670,962
Nutreco Holding N.V. ................ 20,000 788,114
Royal Dutch Petroleum Co. ........... 9,948 495,307
Unique International N.V. ........... 10,000 228,979
Vedior N.V. ......................... 30,000 591,086
------------
TOTAL NETHERLANDS (6.8%) .......... 14,438,752
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
NEW ZEALAND
Restaurant Brands New Zealand
Ltd.+ ............................. 312,500 $ 177,710
Warehouse Group Ltd. ................ 84,300 272,986
------------
TOTAL NEW ZEALAND (0.2%) .......... 450,696
------------
NORWAY
Choice Hotels Scandinavia ASA+ 472,500 665,169
Frontline Ltd.* ..................... 97,905 186,775
Frontline Ltd.--Warrants
(expire 05/11/01)* ................ 57,060 0
Navia ASA* .......................... 88,000 193,351
Norsk Hydro ASA ..................... 1,100 37,194
Schibsted ASA ....................... 25,000 315,760
Sparebanken NOR ..................... 12,000 233,663
------------
TOTAL NORWAY (0.8%) ............... 1,631,912
------------
PERU (0.3%)
Telefonica del Peru S.A. (ADR) ...... 54,000 685,125
------------
POLAND (0.4%)
Telekomunikacja Polska S.A.
(GDR)* ............................ 155,000 790,500
------------
PORTUGAL
BPI-SGPS, SA ........................ 21,400 726,563
Cia de Seguros Imperio SA* .......... 134,000 1,092,227
Electricidade de Portugal SA ........ 40,000 881,076
Telecel Comunicacoes Pessoais
SA+ ............................... 12,200 2,494,975
------------
TOTAL PORTUGAL (2.4%) ............. 5,194,841
------------
RUSSIA (0.2%)
Global TeleSystems Group, Inc.* 8,000 446,000
------------
SINGAPORE
City Developments Ltd. .............. 43,000 186,333
GP Batteries International Ltd. ..... 140,000 298,667
Great Eastern Life Assurance
Co. ............................... 7,000 38,182
Singapore Land Ltd. ................. 70,000 155,273
Singapore Press Holdings Ltd. ....... 30,000 325,454
United Overseas Bank Ltd. ........... 40,000 256,970
------------
TOTAL SINGAPORE (0.6%) ............ 1,260,879
------------
SOUTH KOREA (0.1%)
SK Telecom Co. Ltd. (ADR) ........... 30,000 305,625
------------
SPAIN
Aldeasa SA .......................... 32,000 1,256,403
Bancaria de Espana SA ............... 10,000 258,584
Banco Bilbao Vizcaya SA ............. 14,643 229,248
Banco Central Hispanoamericano
SA ................................ 42,000 497,959
Banco Central Hispanoamericano
SA ................................ 48,000 569,097
Banco Santander SA .................. 6,936 137,627
Catalana Occidente SA+ .............. 43,200 1,124,683
Corporacion Mapfre .................. 34,000 921,053
Gas Y Electridad SA (Series 2) ...... 14,000 1,388,967
Hidroelectrica del Cantabrico ....... 3,372 186,490
Portland Valderrivas SA ............. 10,800 440,754
Repsol SA ........................... 10,000 532,648
Sociedad General de Aguas
de Barcelona SA--Rights* .......... 6,060 0
Tabacalera SA--A .................... 90,000 2,267,098
Telefonica de Espana ................ 20,000 887,982
Telefonica S.A.--Bonus Rights* ...... 400 355
</TABLE>
37
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
TelePizza SA* ..................... 40,000 $ 379,961
------------
TOTAL SPAIN (5.2%) .............. 11,078,909
------------
SWEDEN
Asticus AB* ....................... 40,000 392,799
Astra AB (A Shares) ............... 20,001 408,877
Autoliv, Inc.+ .................... 13,700 492,443
Castellum AB ...................... 68,900 748,936
Dahl International AB+ ............ 30,000 296,452
Ericsson LM (ADR) ................. 12,800 305,148
ForeningsSparbanken AB ............ 40,000 1,037,581
Frontec AB (B Shares)* ............ 134,000 574,351
Karlshamns AB+ .................... 33,367 247,293
NetCom Systems AB
(B Shares)*+ .................... 6,000 244,573
Scandic Hotels AB+ ................ 30,000 1,104,283
Skandia Forsakrings AB ............ 24,000 367,600
Skandinaviska Enskilda Banken
(Series A) ...................... 84,700 894,525
Swedish Match AB .................. 300,000 1,093,166
------------
TOTAL SWEDEN (3.9%) ............. 8,208,027
------------
SWITZERLAND
Barry Callebaut AG ................ 6,800 1,546,919
Ciba Specialty Chemicals AG ....... 4,000 335,399
Gretag Imaging Group* ............. 14,000 1,204,521
Mettler-Toledo International,
Inc.* ........................... 76,500 2,146,781
Nestle SA ......................... 400 872,038
Novartis AG ....................... 380 748,086
Roche Holding AG
Genussscheine ................... 60 733,212
Swisscom AG* ...................... 6,000 2,515,494
Tag Heuer International SA
(ADR) ........................... 35,000 249,375
UBS AG-Registered ................. 1,000 307,692
------------
TOTAL SWITZERLAND (5.0%) ........ 10,659,517
------------
THAILAND
CMIC Finance & Securities
Public Co. Ltd.* ................ 51,000 0
Nation Multimedia Group Public
Co. Ltd.* ....................... 130,000 41,128
Thai Engine Manufacturing
Public Co. Ltd.* ................ 70,000 17,524
------------
TOTAL THAILAND (0.0%) ........... 58,652
------------
UNITED KINGDOM
Amvescap PLC ...................... 80,000 620,612
BAA PLC ........................... 13,300 155,235
Bank of Scotland .................. 70,000 835,080
Barclays PLC ...................... 36,000 776,280
BG PLC ............................ 22,077 139,308
Bodycote International PLC ........ 80,000 1,094,806
BPB PLC ........................... 100,000 378,107
British Aerospace PLC ............. 90,000 762,953
British Airways PLC ............... 38,000 256,223
British Energy PLC ................ 60,000 686,333
British Petroleum Co. PLC ......... 29,367 438,536
British Sky Broadcasting Group
PLC ............................. 8,097 61,500
British Telecommunications PLC 35,150 529,572
Cadbury Schweppes PLC ............. 5,961 101,661
CGU PLC ........................... 6,381 99,906
Compass Group PLC ................. 170,000 1,947,439
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
Cordiant Communications Group
PLC ............................. 200,000 $ 349,406
Diageo PLC ........................ 90,000 1,024,259
Dixons Group PLC .................. 100,000 1,406,775
EMI Group PLC ..................... 50,000 334,432
Energis PLC* ...................... 55,000 1,226,249
Filtronic Comtek PLC .............. 211,000 2,123,973
FKI PLC ........................... 150,000 334,432
Garban PLC* ....................... 2,590 9,868
GKN PLC ........................... 4,178 55,438
Glaxo Wellcome PLC ................ 23,220 798,958
Great Universal Stores PLC ........ 3,970 41,845
Harvey Nichols PLC+ ............... 40,000 93,175
House of Fraser PLC ............... 130,000 114,638
HSBC Holdings PLC ................. 10,000 252,903
Imperial Tobacco Group PLC ........ 30,000 321,454
Johnson Matthey PLC ............... 100,000 675,518
Kingfisher PLC .................... 8,168 88,404
Ladbroke Group PLC ................ 180,000 723,270
Land Securities PLC ............... 3,207 41,300
Legal & General Group PLC ......... 7,475 97,072
Lloyds TSB Group PLC .............. 34,379 489,069
LucasVarity PLC ................... 100,000 333,600
Marks & Spencer PLC ............... 17,109 117,354
MEPC PLC .......................... 57,826 384,852
Misys PLC ......................... 180,000 1,311,021
National Grid Group PLC ........... 100,000 798,226
National Power PLC ................ 70,000 603,308
Orange PLC* ....................... 120,000 1,394,629
Peninsular & Oriental Steam
Navigation Co. .................. 3,314 39,177
Powerscreen International PLC ..... 160,000 300,822
Prudential Corp. PLC .............. 8,019 121,082
Randgold Resources Ltd.
(GDR)*+ ......................... 30,300 75,750
Reed International PLC ............ 100,000 782,004
Rentokil Initial PLC .............. 140,000 1,055,206
Senior Engineering Group PLC ...... 180,000 344,415
Siebe PLC ......................... 120,000 473,196
Smith (W.H.) Group PLC ............ 54,000 428,571
Thistle Hotels PLC ................ 87,719 159,086
Thomson Travel Group PLC .......... 180,000 491,165
United News & Media PLC ........... 110,000 964,527
Vodafone Group PLC ................ 86,100 1,398,183
WPP Group PLC ..................... 200,000 1,217,098
Yule Catto & Company PLC .......... 162,079 660,699
------------
TOTAL UNITED KINGDOM (15.5%) 32,939,960
------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (90.6%)
(Cost $188,534,746) .............. 192,480,326
------------
PREFERRED STOCKS:
AUSTRALIA (0.1%)
Village Roadshow Ltd. ............. 145,000 181,252
------------
AUSTRIA (0.3%)
Bank Austria AG ................... 13,975 710,579
------------
FINLAND (0.7%)
Nokia Oyj (A Shares) .............. 12,000 1,459,124
------------
GERMANY (0.5%)
ProSieben Media AG ................ 21,000 1,005,581
------------
TOTAL PREFERRED STOCKS (1.6%)
(Cost $2,831,114) ................ 3,356,536
------------
</TABLE>
38
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE INTERNATIONAL PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------- ---------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES (3.5%)
Federal Home Loan Mortgage
Corp.
4.7%, due 01/04/99 .................. $7,400,000 $ 7,397,102
------------
TOTAL SHORT-TERM DEBT SECURITIES (3.5%)
(Amortized Cost $7,397,102) ......... 7,397,102
------------
TOTAL INVESTMENTS (95.7%)
(Cost/Amortized Cost
$198,762,962) ...................... 203,233,964
OTHER ASSETS
LESS LIABILITIES (4.3%) ............ 9,076,004
------------
NET ASSETS (100.0%) .................. $212,309,968
============
</TABLE>
- --------------------------------------
MARKET SECTOR DIVERSIFICATION
As a Percentage of Total Equity Investments
<TABLE>
<S> <C>
Basic Materials ................. 3.5%
Business Services ............... 9.3
Capital Goods ................... 7.6
Consumer Cyclicals .............. 17.6
Consumer Non-Cyclicals .......... 15.0
Credit Sensitive ................ 27.6
Diversified ..................... 1.9
Energy .......................... 3.0
Technology ...................... 14.5
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Fair value securities.
+ 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, 1998, these securities amounted to $11,580,033 or
5.5% of net assets.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
39
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------------- -------------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (10.3%)
CBS Corp. .............................................................. 1,860,300 $ 60,924,825
Comcast Corp. (Class A) SPL ............................................ 3,692,800 216,721,200
Infinity Broadcasting Corp.
(Class A)* ........................................................... 2,100,300 57,495,713
King World Productions, Inc.* .......................................... 1,020,000 30,026,250
USA Networks, Inc.* .................................................... 2,934,600 97,208,625
-------------
462,376,613
-------------
PROFESSIONAL SERVICES (1.3%)
Century Business Services, Inc.* ....................................... 1,579,600 22,706,750
Young & Rubicam Inc.* .................................................. 1,186,800 38,422,650
-------------
61,129,400
-------------
TRUCKING, SHIPPING (1.1%)
Teekay Shipping Corp.+ ................................................. 2,629,300 49,463,706
-------------
TOTAL BUSINESS SERVICES (12.7%) 572,969,719
-------------
CAPITAL GOODS (1.9%)
MACHINERY
United Rentals, Inc.* .................................................. 2,569,300 85,108,062
-------------
CONSUMER CYCLICALS
AIRLINES (4.4%)
Continental Airlines, Inc.
(Class B)*+ .......................................................... 4,431,900 148,468,650
Northwest Airlines Corp.
(Class A)* ........................................................... 1,966,500 50,268,656
-------------
198,737,306
-------------
APPAREL, TEXTILE (6.8%)
Mohawk Industries, Inc.*+ .............................................. 3,766,800 158,441,025
Tommy Hilfiger Corp.*+ ................................................. 1,597,300 95,838,000
UNIFI, Inc. ............................................................ 2,592,100 50,707,956
-------------
304,986,981
-------------
AUTO RELATED (6.3%)
Circuit City Stores, Inc.- CarMax
Group*+ .............................................................. 6,359,700 34,580,869
Federal-Mogul Corp. .................................................... 510,000 30,345,000
Hertz Corp. (Class A) .................................................. 1,709,700 78,005,063
Republic Industries, Inc.* ............................................. 9,491,100 139,993,725
-------------
282,924,657
-------------
FOOD SERVICES, LODGING (2.7%)
Extended Stay America, Inc.* ........................................... 2,040,000 21,420,000
Florida Panthers Holdings, Inc.*+ 2,501,200 23,292,425
MeriStar Hospitality Corp. ............................................. 2,032,300 37,724,569
Starbucks Corp.* ....................................................... 668,900 37,542,012
-------------
119,979,006
-------------
HOUSEHOLD FURNITURE,
APPLIANCES (1.7%)
Industrie Natuzzi Spa (ADR) ............................................ 3,047,600 75,809,050
-------------
LEISURE RELATED (6.5%)
Callaway Golf Co. ...................................................... 1,283,100 13,151,775
Mattel, Inc. ........................................................... 554,200 12,642,687
Premier Parks, Inc.*+ .................................................. 5,366,200 162,327,550
Royal Caribbean Cruises Ltd. ........................................... 2,872,700 106,289,900
-------------
294,411,912
-------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
------------------- -------------------
<S> <C> <C>
RETAIL--GENERAL (9.3%)
Bed Bath & Beyond Inc.* ................................................ 955,400 $ 32,603,025
Gucci Group N.V. (New York
Registered Shares) ................................................... 631,700 30,716,413
Ross Stores, Inc. ...................................................... 981,700 38,654,438
Saks Inc.* ............................................................. 2,402,100 75,816,281
Tiffany & Co.+ ......................................................... 2,550,900 132,327,937
TJX Cos., Inc. ......................................................... 1,646,100 47,736,900
Venator Group, Inc.*+ .................................................. 9,511,600 61,230,925
-------------
419,085,919
-------------
TOTAL CONSUMER CYCLICALS (37.7%)
1,695,934,831
-------------
CONSUMER NONCYCLICALS
DRUGS (1.1%)
MedImmune, Inc.*+ ...................................................... 476,500 47,381,969
-------------
HOSPITAL SUPPLIES & SERVICES (7.6%)
Biomet, Inc. ........................................................... 302,750 12,185,687
Columbia/HCA Healthcare Corp. 3,015,700 74,638,575
Guidant Corp. .......................................................... 314,500 34,673,625
Health Management Associates,
Inc. (Class A)* ...................................................... 1,346,200 29,111,575
HEALTHSOUTH Corp.* ..................................................... 10,919,700 168,572,869
St. Jude Medical, Inc.* ................................................ 872,800 24,165,650
-------------
343,347,981
-------------
RETAIL--FOOD (0.8%)
Whole Foods Market, Inc.* .............................................. 750,800 36,319,950
-------------
TOTAL CONSUMER NONCYCLICALS (9.5%)
427,049,900
-------------
CREDIT SENSITIVE
BANKS (1.4%)
GreenPoint Financial Corp. ............................................. 1,760,000 61,820,000
-------------
FINANCIAL SERVICES (4.9%)
Capital One Financial Corp. ............................................ 382,000 43,930,000
Edwards (A.G.), Inc. ................................................... 1,224,000 45,594,000
Merrill Lynch & Co., Inc. .............................................. 784,500 52,365,375
Newcourt Credit Group, Inc. ............................................ 1,020,000 35,636,250
Paine Webber Group, Inc. ............................................... 1,122,000 43,337,250
-------------
220,862,875
-------------
INSURANCE (6.4%)
Ace Ltd. ............................................................... 886,800 30,539,175
AFLAC, Inc. ............................................................ 1,122,000 49,368,000
CNA Financial Corp.* ................................................... 5,140,200 206,893,050
-------------
286,800,225
-------------
REAL ESTATE (4.7%)
Boston Properties, Inc. ................................................ 1,802,700 54,982,350
Crescent Real Estate Equities
Co. .................................................................. 1,956,700 45,004,100
Equity Office Properties Trust ......................................... 1,788,900 42,933,600
Vornado Realty Trust ................................................... 2,109,900 71,209,125
-------------
214,129,175
-------------
TOTAL CREDIT SENSITIVE (17.4%). 783,612,275
-------------
ENERGY
OIL--SUPPLIES & CONSTRUCTION (1.0%)
Diamond Offshore Drilling, Inc. ........................................ 1,919,700 45,472,894
-------------
RAILROADS (1.1%)
Kansas City Southern Industries,
Inc. ................................................................. 1,027,100 50,520,481
-------------
TOTAL ENERGY (2.1%) .................................................. 95,993,375
-------------
</TABLE>
40
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE AGGRESSIVE STOCK PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
----------- ----------------
<S> <C> <C>
TECHNOLOGY
ELECTRONICS (7.7%)
Altera Corp.* ..................... 705,000 $ 42,916,875
Citrix Systems, Inc.* ............. 307,900 29,885,544
Keane, Inc.* ...................... 567,500 22,664,531
Network Associates, Inc.* ......... 1,062,700 70,403,875
Parametric Technology Corp.* ...... 1,742,600 28,317,250
Sanmina Corp.* .................... 918,900 57,431,250
Seagate Technology, Inc.* ......... 557,500 16,864,375
Sterling Commerce, Inc.* .......... 846,300 38,083,500
Synopsys, Inc.* ................... 788,100 42,754,425
--------------
349,321,625
--------------
OFFICE EQUIPMENT SERVICES (2.0%)
Cadence Design Systems, Inc.* ..... 770,700 22,928,325
Comverse Technology, Inc.*+ ....... 930,300 66,051,300
--------------
88,979,625
--------------
TELECOMMUNICATIONS (5.5%)
Amdocs Ltd.* ...................... 832,500 14,256,563
American Satellite Network--
Warrants (expire 07/01/99)* ..... 49,450 0
Global TeleSystems Group, Inc.*. 1,016,300 56,658,725
Millicom International
Cellular SA*+ ................... 2,459,700 85,782,037
Nextel Communications, Inc.
(Class A)* ...................... 1,964,000 46,399,500
WinStar Communications, Inc.* ..... 1,105,600 43,118,400
--------------
246,215,225
--------------
TOTAL TECHNOLOGY (15.2%) ........ 684,516,475
--------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (96.5%)
(Cost $4,017,808,737) ........... 4,345,184,637
--------------
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ------------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
BANKERS' ACCEPTANCE (0.9%)
Chase Manhattan Corp.
5.11%, due 02/19/99 ............... $ 40,000,000 $ 39,723,967
--------------
COMMERCIAL PAPER
Household Finance Corp.
6.06%, due 01/08/99 ............... 30,000,000 29,964,708
Pfizer Inc.
5.25%, due 02/12/99 ............... 25,000,000 24,847,750
--------------
TOTAL COMMERCIAL PAPER (1.2%) 54,812,458
--------------
TIME DEPOSITS
Chase Manhattan Corp.
4.5%, due 01/04/99 ................ 95,800,000 95,800,000
First National Bank of Chicago
4.875%, due 01/04/99 .............. 100,000,000 100,000,000
--------------
TOTAL TIME DEPOSITS (4.4%) ........ 195,800,000
--------------
TOTAL SHORT-TERM DEBT SECURITIES (6.5%)
(Amortized Cost $290,336,425). 290,336,425
--------------
TOTAL INVESTMENTS (103.0%)
(Cost/Amortized Cost $4,308,145,162) 4,635,521,062
OTHER ASSETS
LESS LIABILITIES (--3.0%) ......... (134,832,027)
--------------
NET ASSETS (100.0%) ................. $4,500,689,035
==============
</TABLE>
<PAGE>
- ----------
* 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.
41
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
COMMON STOCKS:
BASIC MATERIALS
CHEMICAL--SPECIALTY (0.6%)
Crompton & Knowles Corp. ............ 87,200 $ 1,803,950
------------
METALS & MINING (1.6%)
Bethlehem Steel Corp.* .............. 303,900 2,545,162
Gibraltar Steel Corp.* .............. 111,300 2,532,075
------------
5,077,237
------------
STEEL (0.7%)
WHX Corp.* .......................... 211,800 2,131,238
------------
TOTAL BASIC MATERIALS (2.9%) ... ... 9,012,425
------------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.5%)
Superior Services, Inc.* ............ 76,400 1,532,775
------------
PRINTING, PUBLISHING &
BROADCASTING (2.6%)
Mail-Well, Inc.* .................... 76,000 869,250
Sinclair Broadcast Group, Inc.* ..... 202,700 3,965,319
Young Broadcasting, Inc.
(Class A)* ........................ 72,500 3,035,937
------------
7,870,506
------------
PROFESSIONAL SERVICES (18.7%)
Building One Services Corp.* ........ 212,900 4,444,287
Carematrix Corp.* ................... 210,400 6,443,500
Cornell Corrections, Inc.* .......... 156,500 2,973,500
Data Processing Resources
Corp.* ............................ 188,800 5,522,400
DoubleClick, Inc.* .................. 8,300 378,169
Equity Corp. International* ......... 102,400 2,720,000
Global Imaging Systems, Inc.* ....... 154,400 3,744,200
Ha-Lo Industries, Inc.* ............. 184,700 6,949,337
ITT Educational Services, Inc.* ..... 51,300 1,744,200
Metamor Worldwide, Inc.* ............ 274,100 6,852,500
Preview Travel, Inc.* ............... 88,900 1,639,094
Preview Travel, Inc.--Rights
(expire 10/28/08)* ................ 99,400 0
Sykes Enterprises, Inc.* ............ 114,200 3,483,100
Sylvan Learning Systems, Inc.* ...... 84,050 2,563,525
TeleTech Holdings, Inc.* ............ 247,400 2,535,850
Tier Technologies, Inc. (Class B)* 155,100 2,675,475
True North Communications,
Inc. .............................. 130,000 3,493,750
True North Communications, Inc.
--Rights (expire 11/30/08)* ....... 125,100 0
------------
58,162,887
------------
TRUCKING, SHIPPING (0.6%)
Knightsbridge Tankers Ltd. .......... 42,100 876,206
OMI Corp.* .......................... 328,600 1,067,950
------------
1,944,156
------------
TOTAL BUSINESS SERVICES (22.4%) 69,510,324
------------
CAPITAL GOODS
MACHINERY (1.3%)
PRI Automation, Inc.* ............... 13,700 356,200
Rental Service Corp.* ............... 53,000 831,437
United Rentals, Inc.* ............... 91,400 3,027,625
------------
TOTAL CAPITAL GOODS (1.3%) ..... ... 4,215,262
------------
CONSUMER CYCLICALS
AIRLINES (2.8%)
Alaska Air Group, Inc.* ............. 76,600 3,389,550
Atlantic Coast Airlines
Holdings* ......................... 129,000 3,225,000
Mesa Air Group, Inc.* ............... 259,000 2,023,438
------------
8,637,988
------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
APPAREL, TEXTILE (4.7%)
Mohawk Industries, Inc.* ............ 193,100 $ 8,122,269
Stage Stores, Inc.* ................. 209,100 1,960,312
Stage Stores, Inc.--Rights
(expire 11/10/08)* ................ 195,700 0
Tommy Hilfiger Corp.* ............... 56,600 3,396,000
Wolverine World Wide, Inc. .......... 94,500 1,252,125
------------
14,730,706
------------
AUTO RELATED (2.1%)
Avis Rent A Car, Inc.* .............. 81,200 1,964,025
Budget Group, Inc. (Class A)* ....... 195,000 3,095,625
Dollar Thrifty Automotive
Group, Inc.* ...................... 113,200 1,457,450
------------
6,517,100
------------
FOOD SERVICES, LODGING (3.1%)
CKE Restaurants, Inc. ............... 107,250 3,157,172
Innkeepers USA Trust ................ 250,900 2,963,756
MeriStar Hospitality Corp. .......... 189,853 3,524,147
------------
9,645,075
------------
HOUSEHOLD FURNITURE, APPLIANCES (2.2%)
Furniture Brands International,
Inc.* ............................. 144,100 3,926,725
Industrie Natuzzi Spa (ADR) ......... 123,000 3,059,625
------------
6,986,350
------------
LEISURE RELATED (5.1%)
Bally Total Fitness Holding
Corp.* ............................ 159,300 3,962,587
Interplay Entertainment Corp.* ...... 105,900 188,634
Premier Parks, Inc.* ................ 186,100 5,629,525
SFX Entertainment, Inc.
(Class A)* ........................ 78,600 4,313,175
THQ, Inc.* .......................... 59,650 1,670,200
------------
15,764,121
------------
RETAIL--GENERAL (5.6%)
American Eagle Outfitters, Inc.* 18,800 1,252,550
BJ's Wholesale Club, Inc.* .......... 60,900 2,820,431
Hines Horticulture, Inc.* ........... 58,700 520,963
Men's Wearhouse, Inc.* .............. 122,900 3,902,075
PETsMART, Inc.* ..................... 347,500 3,822,500
School Specialty, Inc.* ............. 139,600 2,983,950
Trans World Entertainment
Corp.* ............................ 105,900 2,018,719
------------
17,321,188
------------
TOTAL CONSUMER CYCLICALS (25.6%)
79,602,528
------------
CONSUMER NONCYCLICALS
DRUGS (7.7%)
Anesta Corp.* ....................... 51,700 1,376,513
Chattem, Inc.* ...................... 24,100 1,153,788
Creative BioMolecules, Inc.* ........ 372,200 1,372,488
Geltex Pharmaceuticals, Inc.* ....... 138,700 3,138,088
Jones Medical Industries, Inc. ...... 153,700 5,610,050
Medicis Pharmaceutical Corp.
(Class A)* ........................ 117,300 6,994,012
MedImmune, Inc.* .................... 41,900 4,166,431
------------
23,811,370
------------
HOSPITAL SUPPLIES & SERVICES (2.2%)
Apria Healthcare Group, Inc.* ....... 272,200 2,432,787
Coventry Health Care, Inc.* ......... 29,400 259,087
Mid Atlantic Medical Services,
Inc.* ............................. 140,700 1,380,619
PAREXEL International Corp.* ........ 117,400 2,935,000
------------
7,007,493
------------
TOTAL CONSUMER NONCYCLICALS (9.9%) 30,818,863
------------
</TABLE>
42
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE SMALL CAP GROWTH PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------- ---------------
<S> <C> <C>
CREDIT SENSITIVE
BANKS (0.7%)
Peoples Heritage Financial
Group, Inc. ....................... 107,300 $ 2,146,000
------------
FINANCIAL SERVICES (3.3%)
Affiliated Managers Group, Inc.* 43,100 1,287,613
Allied Capital Corp. ................ 141,400 2,447,987
Hambrecht & Quist Group* ............ 84,400 1,914,825
Healthcare Financial Partners,
Inc.* ............................. 81,400 3,245,825
Medaphis Corp.* ..................... 433,200 1,421,437
------------
10,317,687
------------
INSURANCE (2.1%)
Annuity and Life Re (Holdings)
Ltd. .............................. 129,400 3,493,800
Executive Risk, Inc. ................ 52,800 2,900,700
------------
6,394,500
------------
REAL ESTATE (1.9%)
Glenborough Realty Trust, Inc. ...... 155,000 3,158,125
Macerich Co. ........................ 106,200 2,721,375
------------
5,879,500
------------
TOTAL CREDIT SENSITIVE (8.0%) ...... 24,737,687
------------
ENERGY
COAL & GAS PIPELINES (0.5%)
Swift Energy Co.* ................... 180,800 1,333,400
------------
OIL--DOMESTIC (0.9%)
Oryx Energy Co.* .................... 212,900 2,860,844
------------
OIL--SUPPLIES & CONSTRUCTION (0.7%)
Oceaneering International, Inc.* .... 98,100 1,471,500
Parker Drilling Co.* ................ 232,400 740,775
------------
2,212,275
------------
TOTAL ENERGY (2.1%) ................ 6,406,519
------------
TECHNOLOGY
ELECTRONICS (6.6%)
Amkor Technologies, Inc.* ........... 149,900 1,620,794
Cypress Semiconductor Corp.* ........ 95,600 794,675
Flextronics International Ltd.* ..... 33,800 2,894,125
Harbinger Corp.* .................... 381,500 3,052,000
IDT Corp.* .......................... 85,800 1,319,175
Komag, Inc.* ........................ 152,500 1,582,188
Semtech Corp.* ...................... 85,600 3,070,900
SMART Modular Technologies,
Inc.* ............................. 62,600 1,737,150
Tekelec* ............................ 127,100 2,105,094
USWeb Corp.* ........................ 87,750 2,314,406
------------
20,490,507
------------
OFFICE EQUIPMENT (2.8%)
Discreet Logic, Inc.* ............... 96,100 1,813,888
Platinum Technology, Inc.* .......... 160,400 3,067,650
Sterling Software, Inc.* ............ 135,900 3,677,794
------------
8,559,332
------------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------- ---------------
<S> <C> <C>
OFFICE EQUIPMENT SERVICES (4.7%)
Comverse Technology, Inc.* .......... 85,600 $ 6,077,600
Hutchinson Technology, Inc.* ........ 55,800 1,987,875
Oak Technology, Inc.* ............... 299,200 1,047,200
Platinum Software Corp.* ............ 221,300 2,835,406
QuadraMed Corp.* .................... 85,500 1,752,750
Saville Systems PLC* ................ 53,800 1,022,200
------------
14,723,031
------------
TELECOMMUNICATIONS (6.1%)
GST Telecommunications, Inc.* ....... 204,300 1,340,719
ICG Communications, Inc.* ........... 142,800 3,070,200
Level One Communications,
Inc.* ............................. 58,800 2,087,400
MetroNet Communications Corp.
(Class B)* ........................ 101,600 3,403,600
Millicom International Cellular
SA* ............................... 71,500 2,493,562
RELTEC Corp.* ....................... 68,300 1,515,406
Sapient Corp.* ...................... 7,900 442,400
SkyTel Communications, Inc.* ........ 58,400 1,292,100
WinStar Communications, Inc.* ....... 83,100 3,240,900
------------
18,886,287
------------
TOTAL TECHNOLOGY (20.2%) ...... .... 62,659,157
------------
DIVERSIFIED (0.6%)
MISCELLANEOUS
Kroll-O'Gara Co.* ................... 48,400 1,908,775
------------
TOTAL COMMON STOCKS (93.0%)
(Cost $276,839,866) ................ 288,871,540
------------
PRINCIPAL
AMOUNT
--------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan Mortgage
Corp.:
4.7%, due 01/04/99 ................. $23,900,000 23,890,639
5.1%, due 01/14/99 ................. 10,000,000 9,981,656
------------
TOTAL U.S. GOVERNMENT
AGENCIES (10.9%) ................. 33,872,295
------------
TOTAL SHORT-TERM DEBT
SECURITIES (10.9%)
(Amortized Cost $33,872,295)........ 33,872,295
------------
TOTAL INVESTMENTS (103.9%)
(Cost/Amortized Cost
$310,712,161)...................... 322,743,835
OTHER ASSETS
LESS LIABILITIES (--3.9%) ......... (12,129,490)
------------
NET ASSETS (100.0%) ................. $310,614,345
============
</TABLE>
- ----------
* Non-income producing.
Glossary:
ADR--American Depository Receipt
See Notes to Financial Statements.
43
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<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. ..................... 2,500 $ 113,824
Bayer AG ............................ 4,000 167,896
Ciba Specialty Chemicals AG ......... 400 33,540
Georgia Gulf Corp. .................. 22,000 353,375
Hitachi Chemical Co. Ltd. ........... 15,000 112,982
Johnson Matthey PLC ................. 5,000 33,776
Nippon Chemi-Con Corp. .............. 6,000 19,566
Toagosei Co. Ltd. ................... 15,000 28,179
---------
863,138
---------
CHEMICALS--SPECIALTY (0.2%)
Great Lakes Chemical Corp. .......... 8,200 328,000
NGK Insulators ...................... 10,000 129,110
Solutia Inc. ........................ 10,000 223,750
---------
680,860
---------
METALS & MINING (0.1%)
Stillwater Mining Co.* .............. 7,000 287,000
Toho Titanium ....................... 1,000 5,503
---------
292,503
---------
PAPER (0.1%)
Buhrmann N.V. ....................... 4,800 85,883
Mayr-Melnhof Karton AG .............. 883 41,268
UPM-Kymmene Oyj ..................... 2,810 78,255
---------
205,406
---------
STEEL (0.0%)
Koninklijke Hoogovens N.V. .......... 2,000 55,381
NatSteel Ltd. ....................... 25,000 27,424
Pohang Iron & Steel Co. Ltd.
(ADR) ............................. 2,000 33,750
---------
116,555
---------
TOTAL BASIC MATERIALS (0.6%) ....... 2,158,462
---------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.5%)
Republic Services, Inc.
(Class A)* ........................ 25,500 470,156
Waste Management, Inc. .............. 35,245 1,643,298
---------
2,113,454
---------
PRINTING, PUBLISHING &
BROADCASTING (1.7%)
CBS Corp. ........................... 76,000 2,489,000
Comcast Corp. (Class A) SPL ......... 5,000 293,438
Fox Entertainment Group, Inc.
(Class A)* ........................ 14,600 367,737
Grupo Televisa S.A. (GDR)* .......... 2,800 69,125
Liberty Media Group (Class A)* 25,550 1,176,897
MediaOne Group, Inc.* ............... 10,000 470,000
New Straits Times Press BHD ......... 8,000 3,934
Reed International PLC .............. 6,000 46,920
Seat Pagine Gialle Spa* ............. 300,000 283,036
Tele-Communications, Inc.
(Class A)* ........................ 14,500 802,031
Tokyo Broadcasting System, Inc. 3,000 33,576
United News & Media PLC ............. 5,000 43,842
USA Networks, Inc.* ................. 1,500 49,688
Viacom, Inc. (Class B)* ............. 4,500 333,000
---------
6,462,224
---------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
PROFESSIONAL SERVICES (0.2%)
Cordiant Communications Group
PLC ............................... 20,000 $ 34,940
Marlborough International PLC* 5,700 18,227
Meitec Corp. ........................ 1,000 24,989
Nielsen Media Research, Inc. ........ 25,000 450,000
Vedior N.V. ......................... 690 13,595
WPP Group PLC ....................... 12,000 73,026
---------
614,777
---------
TRUCKING, SHIPPING (0.1%)
Bergesen Dy ASA (A Shares) .......... 5,380 64,412
Frontline Ltd.* ..................... 6,527 12,452
Frontline Ltd.--Warrants (expire
05/11/01)* ........................ 3,804 0
Irish Continental Group PLC ......... 4,000 47,296
Knightsbridge Tankers Ltd. .......... 6,800 141,525
OMI Corp.* .......................... 53,100 172,575
---------
438,260
---------
TOTAL BUSINESS SERVICES (2.5%) 9,628,715
---------
CAPITAL GOODS
AEROSPACE (0.1%)
British Aerospace PLC ............... 10,000 84,773
Loral Space & Communications* 7,000 124,687
Senior Engineering Group PLC ........ 16,000 30,615
---------
240,075
---------
BUILDING & CONSTRUCTION (0.1%)
ABB AG .............................. 40 46,956
Beazer Group PLC .................... 21,000 53,459
Bouygues ............................ 600 123,660
Daito Trust Construction Co.
Ltd. .............................. 200 1,735
Groupe GTM .......................... 1,116 115,803
National House Industrial Co.
Ltd. .............................. 7,000 59,610
Technip SA .......................... 1,075 101,163
Toda Corp. .......................... 1,000 4,847
---------
507,233
---------
BUILDING MATERIALS & FOREST
PRODUCTS (0.6%)
BPB PLC ............................. 12,000 45,373
Fujikura Ltd. ....................... 3,000 16,110
Holderbank Financiere Glarus
AG--B ............................. 120 142,267
Lafarge SA .......................... 800 76,000
Louisiana-Pacific Corp. ............. 25,000 457,812
Martin Marietta Materials, Inc. ..... 19,700 1,225,094
Matsushita Electric Works Ltd. ...... 11,000 112,583
Nichiha Corp. ....................... 1,100 10,050
Rugby Group PLC ..................... 58,160 89,995
Unidare PLC ......................... 30,000 78,083
---------
2,253,367
---------
ELECTRICAL EQUIPMENT (0.8%)
Daikin Industries Ltd. .............. 14,000 138,946
General Electric Co. ................ 26,000 2,653,625
Johnson Electric Holdings Ltd. ...... 52,000 133,570
Legrand SA .......................... 425 112,608
Schneider SA ........................ 1,000 60,649
Sumitomo Electric Industries ........ 7,000 78,839
---------
3,178,237
---------
</TABLE>
44
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
MACHINERY (0.8%)
AlliedSignal, Inc. .................. 14,300 $ 633,669
Bodycote International PLC .......... 5,000 68,426
FKI PLC ............................. 10,000 22,296
Fujitec Co. Ltd. .................... 9,000 58,059
IHC Caland N.V. ..................... 1,600 66,457
Keyence Corp. ....................... 100 12,317
KSB AG .............................. 300 50,945
Legris Industries SA ................ 1,990 97,515
Nitta Corp. ......................... 1,000 5,707
Nitto Kohki Co. Ltd. ................ 500 4,121
Schindler Holding AG
Participating Certificate ......... 102 163,617
Schindler Holding AG Registered 50 85,308
Siebe PLC ........................... 24,000 94,639
SMC Corp. ........................... 800 63,943
Stork N.V. .......................... 2,000 45,689
TI Group PLC ........................ 14,014 75,489
United Technologies Corp. ........... 15,700 1,707,375
Valmet Oyj .......................... 3,600 48,010
Vestas Wind Systems A/S* ............ 370 19,824
----------
3,323,406
----------
TOTAL CAPITAL GOODS (2.4%) ......... 9,502,318
----------
CONSUMER CYCLICALS
AIRLINES (0.0%)
KLM ................................. 1,600 48,395
Virgin Express Holdings PLC
(ADR)* ............................ 11,500 92,000
----------
140,395
----------
APPAREL, TEXTILE (0.0%)
Carli Gry International A/S+ ........ 400 24,134
Onward Kashiyama Co. Ltd. ........... 8,000 107,612
----------
131,746
----------
AUTO RELATED (0.1%)
Continental AG ...................... 5,500 152,805
Minebea Co. Ltd. .................... 3,000 34,399
NGK Spark Plug Co. .................. 2,000 20,399
Sumitomo Rubber Industries, Inc. 13,000 62,091
----------
269,694
----------
AUTOS & TRUCKS (0.0%)
Bajaj Auto Ltd. (GDR) ............... 750 11,344
Honda Motor Co. Ltd. ................ 2,000 65,751
Volkswagen AG ....................... 1,000 80,888
----------
157,983
----------
FOOD SERVICES, LODGING (0.1%)
Accor SA ............................ 300 64,943
Choice Hotels Scandinavia ASA+ 13,500 19,005
Compass Group PLC ................... 10,000 114,555
Sanyo Pax Co. Ltd. .................. 1,000 6,912
----------
205,415
----------
HOUSEHOLD FURNITURE, APPLIANCES (0.3%)
Aiwa Co. Ltd. ....................... 1,000 26,407
Fisher & Paykel Industries Ltd. ..... 10,000 36,069
Hunter Douglas N.V. ................. 2,182 72,272
Industrie Natuzzi Spa (ADR) ......... 500 12,437
Koninklijke Philips Electronics
N.V. .............................. 600 40,258
Rubbermaid, Inc. .................... 23,700 745,069
Sony Corp. .......................... 1,100 80,222
----------
1,012,734
----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
LEISURE RELATED (1.3%)
Amer Group Ltd.* .................... 2,000 $ 20,671
Berjaya Sports Toto BHD ............. 16,000 13,967
Canal Plus .......................... 200 54,567
Carnival Corp. (Class A) ............ 26,800 1,286,400
Cendant Corp.* ...................... 33,600 640,500
Cyrk, Inc.* ......................... 10,600 79,500
Disney (Walt) Co. ................... 11,600 348,000
Granada Group PLC ................... 9,900 175,015
Harley-Davidson, Inc. ............... 31,500 1,492,313
Ladbroke Group PLC .................. 25,000 100,454
MGM Grand, Inc.* .................... 17,000 461,125
Mirage Resorts, Inc.* ............... 19,000 283,812
Nintendo Co. Ltd. ................... 1,200 116,438
Nippon Broadcasting System .......... 1,000 40,053
SHIMANO, INC. ....................... 1,000 25,831
Thomson Travel Group PLC ............ 22,000 60,031
VTech Holdings Ltd. ................. 10,000 43,628
----------
5,242,305
----------
PHOTO & OPTICAL (0.1%)
Essilor International ............... 100 39,359
Fuji Photo Film Co. ................. 3,000 111,653
Gretag Imaging Group* ............... 1,000 86,037
----------
237,049
----------
RETAIL--GENERAL (2.0%)
Aldeasa SA .......................... 2,600 102,083
BAA PLC ............................. 12,939 151,022
Boots Co. PLC ....................... 8,400 143,047
Carrefour ........................... 50 37,740
Circuit City Stores-Circuit City
Group ............................. 22,400 1,118,600
Dixons Group PLC .................... 4,100 57,678
Genesis Direct, Inc.* ............... 9,000 70,312
Home Depot, Inc. .................... 13,500 826,031
Japan Airport Terminal Co. Ltd. 6,000 36,952
Kingfisher PLC ...................... 17,282 187,048
Kohl's Corp.* ....................... 17,800 1,093,588
Koninklijke Ahold NV ................ 1,000 36,956
Limited, Inc. ....................... 48,500 1,412,563
Paris Miki, Inc. .................... 1,100 25,343
Sato Corp. .......................... 2,000 35,445
Smith (W.H.) Group PLC .............. 1,800 14,286
Tandy Corp. ......................... 18,000 741,375
Wal-Mart Stores, Inc. ............... 19,000 1,547,312
----------
7,637,381
----------
TOTAL CONSUMER CYCLICALS (3.9%) 15,034,702
----------
CONSUMER NONCYCLICALS
BEVERAGES (0.6%)
Coca-Cola Co. ....................... 18,400 1,230,500
Coca-Cola Enterprises, Inc. ......... 27,500 983,125
Diageo PLC .......................... 6,000 68,284
Louis Dreyfus Citrus ................ 1,000 25,065
Mercian Corp. ....................... 4,000 16,340
Scottish & Newcastle PLC ............ 5,000 58,068
Whitbread PLC ....................... 5,000 64,016
----------
2,445,398
----------
CONTAINERS (0.0%)
Schmalbach Lubeca AG ................ 880 121,452
----------
</TABLE>
45
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
DRUGS (2.0%)
Bristol-Myers Squibb Co. ........... 12,500 $1,672,656
Daiichi Pharmaceutical Co. ......... 8,000 135,330
Dura Pharmaceuticals, Inc.* ........ 20,000 303,750
Forest Laboratories, Inc.
(Class A)* ....................... 8,500 452,094
Merck KGAA ......................... 2,100 94,509
Mylan Labs Inc. .................... 13,000 409,500
Novartis AG ........................ 40 78,746
Orion-Yhtyma Oy (B Shares) ......... 4,500 108,022
Pfizer, Inc. ....................... 14,000 1,756,125
Sankyo Co. Ltd. .................... 1,000 21,888
Sanofi SA .......................... 800 131,676
Santen Pharmaceutical Co. Ltd. ..... 5,000 96,145
Schering Plough Corp. .............. 40,600 2,243,150
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 2,000 64,510
----------
7,568,101
----------
FOODS (0.9%)
Barry Callebaut AG ................. 560 127,393
Campbell Soup Co. .................. 16,280 895,400
Huhtamaki Oy Series I .............. 1,300 49,461
Nestle SA .......................... 131 285,593
Nutreco Holding N.V. ............... 500 19,703
Orkla ASA .......................... 3,720 55,550
Parmalat Finanziaria Spa ........... 12,000 22,933
Rite Aid Corp. ..................... 20,500 1,016,031
Tyson Foods, Inc. (Class A) ........ 38,180 811,325
----------
3,283,389
----------
HOSPITAL SUPPLIES & SERVICES (1.2%)
Columbia/HCA Healthcare Corp. 63,500 1,571,625
Medtronic, Inc. .................... 25,000 1,856,250
PT Tempo Scan Pacific* ............. 23,000 1,222
Sun International Hotels Ltd.* ..... 10,000 454,375
Tenet Healthcare Corp.* ............ 26,100 685,125
----------
4,568,597
----------
RETAIL--FOOD (0.5%)
Delhaize-Le Lion SA ................ 980 86,179
Familymart Co. ..................... 1,500 74,967
Food Lion, Inc. (Class A) .......... 32,900 349,562
Kroger Co.* ........................ 23,700 1,433,850
----------
1,944,558
----------
SOAPS & TOILETRIES (0.7%)
Avon Products, Inc. ................ 30,560 1,352,280
Estee Lauder Companies
(Class A) ........................ 7,600 649,800
Gillette Co. ....................... 15,350 741,597
Kao Corp. .......................... 6,000 135,578
----------
2,879,255
----------
TOBACCO (1.0%)
Austria Tabakwerke AG .............. 2,300 176,342
Japan Tobacco, Inc. ................ 18 180,239
Philip Morris Cos., Inc. ........... 57,400 3,070,900
Seita .............................. 2,500 156,544
Swedish Match AB ................... 17,200 62,675
Tabacalera SA-A .................... 7,400 186,406
----------
3,833,106
----------
TOTAL CONSUMER NONCYCLICALS (6.9%) 26,643,856
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
CREDIT SENSITIVE
BANKS (2.1%)
Allied Irish Bank .................. 20,000 $ 356,727
Banca Nazionale del Lavoro
(BNL)* ........................... 19,900 59,513
Bancaria de Espana SA .............. 1,000 25,858
Banco Bilbao Vizcaya SA ............ 12,000 187,869
Banco Central Hispanoamericano
SA ............................... 6,000 71,137
Banco Santander SA ................. 5,940 117,864
Bangkok Bank Public Co. Ltd.* ...... 2,000 4,127
Bank Austria AG .................... 1,050 53,389
Bank of Ireland .................... 10,000 222,351
Bank of Tokyo-Mitsubishi Ltd. ...... 2,000 20,736
BankAmerica Corp. .................. 40,176 2,415,582
Banque Nationale de Paris .......... 1,500 123,499
Barclays PLC ....................... 2,000 43,127
Chase Manhattan Corp. .............. 6,000 408,375
Citigroup, Inc. .................... 51,600 2,554,200
Dao Heng Bank Group Ltd. ........... 3,000 9,274
Den Norske Bank ASA ................ 4,000 13,841
Erste Bank Der
Oesterreichischen Sparkassen
AG ............................... 740 39,602
ForeningsSparbanken AB ............. 1,800 46,691
Istituto Bancario San Paolo di
Torino Spa ....................... 9,823 173,469
National Bank of Canada ............ 3,000 48,406
Nordbanken Holding AB .............. 2,000 12,846
PT Bank Dagang Nasional
Indonesia Tbk* ................... 136,000 1,275
Seventy-Seven Bank Co. Ltd. ........ 11,000 110,146
Shizuoka Bank Ltd. ................. 3,000 37,085
Skandinaviska Enskilda Banken
(Series A) ....................... 5,400 57,030
Societe Generale ................... 300 48,573
State Bank of India (GDR)+ ......... 2,700 22,613
Suncorp-Metway Ltd. ................ 6,571 30,584
Thai Farmers Bank Public Co.--
Warrants (expire 09/15/02)* ...... 375 51
Toho Bank .......................... 1,000 4,147
Unicredito Italiano Spa ............ 17,400 103,074
Wells Fargo Co. .................... 17,800 710,887
Wing Hang Bank Ltd. ................ 18,000 44,842
Yamaguchi Bank ..................... 7,000 66,123
----------
8,244,913
----------
FINANCIAL SERVICES (1.8%)
Aiful Corp. ........................ 2,100 127,656
Associates First Capital Corp.
(Class A) ........................ 20,000 847,500
CMAC Investment Corp. .............. 11,300 519,094
Credit Saison Co. .................. 2,600 64,165
Daiwa Securities Co. Ltd. .......... 2,000 6,841
Garban PLC* ........................ 367 1,397
Household International, Inc. ...... 37,900 1,501,787
MBNA Corp. ......................... 79,200 1,975,050
Merrill Lynch & Co., Inc. .......... 8,100 540,675
Morgan Stanley Dean Witter &
Co. .............................. 16,100 1,143,100
Nichiei Co. Ltd. ................... 400 31,901
</TABLE>
46
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
Peregrine Investment Holdings
Ltd.* ................................................................ 52,000 $ 0
PMI Group, Inc. ........................................................ 6,200 306,125
Sanyo Shinpan Finance Co. Ltd. ......................................... 400 14,532
Worms Et Compagnie ..................................................... 200 11,629
----------
7,091,452
----------
INSURANCE (1.2%)
Aegon N.V. ............................................................. 400 49,119
ASR Verzekeringsgroep N.V. ............................................. 1,300 117,685
Catalana Occidente SA .................................................. 2,800 72,896
CGU PLC ................................................................ 5,795 90,731
Cia de Seguros Imperio, SA* ............................................ 9,000 73,359
Corporacion Mapfre ..................................................... 3,000 81,269
Everest Reinsurance Holdings,
Inc. ................................................................. 15,000 584,062
Fortis Amev N.V. ....................................................... 1,600 132,574
Gallagher (Arthur J.) & Co. ............................................ 10,000 441,250
ING Groep N.V. ......................................................... 3,000 182,917
Irish Life PLC ......................................................... 18,000 170,111
Kingsway Financial Services* ........................................... 2,000 15,615
Mediolanum Spa ......................................................... 10,000 74,085
Providian Financial Corp. .............................................. 15,750 1,181,250
Royal & Sun Alliance Insurance
Group PLC ............................................................ 9,651 78,803
Sampo Insurance Co. (A Shares) 2,000 75,898
SunAmerica, Inc. ....................................................... 14,500 1,176,313
Trygg-Hansa AB (B Shares)* ............................................. 3,800 114,529
United Assurance Group PLC ............................................. 8,100 73,450
----------
4,785,916
----------
MORTGAGE RELATED (0.1%)
Federal Home Loan Mortgage
Corp. ................................................................ 3,000 193,313
----------
REAL ESTATE (0.0%)
Boardwalk Equities, Inc.* .............................................. 3,000 32,986
Cheung Kong Holdings Ltd. .............................................. 4,000 28,785
Daibiru Corp. .......................................................... 1,000 6,380
Green Property PLC ..................................................... 10,000 56,517
Sumitomo Realty &
Development Co. Ltd. ................................................. 1,000 3,252
----------
127,920
----------
UTILITY--ELECTRIC (0.3%)
AES Corp.* ............................................................. 23,100 1,094,362
Cia Paranaense de Energia-Copel
(ADR) ................................................................ 7,000 49,875
Electricidade de Portugal SA ........................................... 500 11,013
Fortum Oyj* ............................................................ 4,964 30,180
Hong Kong Electric Holdings
Ltd. ................................................................. 20,000 60,667
----------
1,246,097
----------
UTILITY--GAS (0.1%)
Anglian Water PLC ...................................................... 4,667 64,446
Anglian Water PLC (B Shares)* .......................................... 5,000 4,077
Scottish Power PLC ..................................................... 10,000 102,742
----------
171,265
----------
UTILITY--TELEPHONE (0.6%)
British Telecommunications PLC 10,000 150,661
Cable & Wireless PLC ................................................... 10,000 122,958
France Telecom SA ...................................................... 500 39,717
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -----------------
<S> <C> <C>
Frontier Corp. ......................................................... 38,000 $1,292,000
Nippon Telegraph & Telephone
Corp. ................................................................ 18 139,087
Swisscom AG* ........................................................... 500 209,625
Telecom Italia Spa ..................................................... 13,100 82,395
Telecom Italia Spa ..................................................... 8,000 68,219
Telefonica de Espana ................................................... 4,000 177,596
Telefonica S.A.--Bonus Rights* ......................................... 80 71
Telekom Malaysia BHD ................................................... 4,000 7,366
Telekomunikacja Polska S.A.
(GDR)* ............................................................... 15,500 79,050
----------
2,368,745
----------
TOTAL CREDIT SENSITIVE (6.2%) ......................................... 24,229,621
----------
ENERGY
COAL & GAS PIPELINES (0.0%)
BG PLC ................................................................. 18,529 116,920
OMV AG ................................................................. 300 28,271
----------
145,191
----------
OIL--DOMESTIC (0.9%)
Atlantic Richfield Co. ................................................. 9,700 632,925
Kerr-McGee Corp. ....................................................... 22,000 841,500
Louis Dreyfus Natural Gas
Corp.* ............................................................... 30,000 427,500
Tom Brown, Inc.* ....................................................... 17,500 175,547
USX-Marathon Group, Inc. ............................................... 40,800 1,229,100
----------
3,306,572
----------
OIL--INTERNATIONAL (0.2%)
British Petroleum Co. PLC .............................................. 11,100 165,756
Gulf Indonesia Resources Ltd.* ......................................... 3,200 20,800
Oil Search Ltd. ........................................................ 550 556
Orogen Minerals Ltd. ................................................... 5,160 5,315
Repsol SA .............................................................. 1,410 75,103
Shell Transport & Trading Co.
PLC .................................................................. 20,100 123,489
Talisman Energy Inc.* .................................................. 1,000 17,534
Total SA--B ............................................................ 2,881 291,734
----------
700,287
----------
OIL--SUPPLIES & CONSTRUCTION (0.1%)
Fracmaster Ltd.+ ....................................................... 10,700 31,327
Fugro N.V. ............................................................. 2,000 46,861
Noble Drilling Corp.* .................................................. 34,500 446,344
----------
524,532
----------
TOTAL ENERGY (1.2%) ................................................... 4,676,582
----------
TECHNOLOGY
ELECTRONICS (2.6%)
Cisco Systems, Inc.* ................................................... 32,050 2,974,641
Disco Corp. ............................................................ 400 11,697
Fujimi, Inc. ........................................................... 700 24,316
Intel Corp. ............................................................ 15,000 1,778,437
Micron Technology, Inc.* ............................................... 12,500 632,031
Micronics Japan Co. Ltd. ............................................... 1,000 14,621
Motorola, Inc. ......................................................... 29,000 1,770,813
Nikon Corp. ............................................................ 5,000 48,737
Rohm Co. Ltd. .......................................................... 1,000 91,183
Solectron Corp.* ....................................................... 24,300 2,258,381
Sterling Commerce, Inc.* ............................................... 10,000 450,000
The Swatch Group AG .................................................... 540 81,010
----------
10,135,867
----------
</TABLE>
47
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
--------------------- -----------------
<S> <C> <C>
OFFICE EQUIPMENT (1.8%)
Barco N.V. .......................... 469 $ 131,597
Canon, Inc. ......................... 1,000 21,400
Ceridian Corp.* ..................... 25,500 1,780,219
Compaq Computer Corp. ............... 45,100 1,891,381
Dell Computer Corp.* ................ 33,800 2,473,737
Policy Management Systems
Corp.* ............................ 17,100 863,550
-----------
7,161,884
-----------
OFFICE EQUIPMENT SERVICES (1.9%)
Computer Sciences Corp. ............. 7,000 451,063
Data Communication System Co. 1,200 24,511
First Data Corp. .................... 40,800 1,292,850
Frontec AB (B Shares)* .............. 11,000 47,148
Fuji Soft ABC, Inc. ................. 800 40,762
HBO & Co. ........................... 46,254 1,326,912
Mettler-Toledo International,
Inc.* ............................. 5,700 159,956
Microsoft Corp.* .................... 15,200 2,108,050
Misys PLC ........................... 14,000 101,968
Nippon System Development ........... 2,400 74,435
Novell, Inc.* ....................... 89,100 1,614,937
-----------
7,242,592
-----------
TELECOMMUNICATIONS (2.5%)
AirTouch Communications, Inc.* 13,100 944,837
America Online, Inc. ................ 13,100 2,096,000
Asia Satellite
Telecommunications Holdings
Ltd. .............................. 18,000 32,063
Clearnet Communications, Inc.
(Class A)* ........................ 26,500 215,312
DDI Corp. ........................... 18 66,992
Energis PLC* ........................ 4,000 89,182
Esprit Telecom Group PLC
(ADR)* ............................ 7,800 364,650
Fore Systems, Inc.* ................. 33,100 606,144
Global TeleSystems Group, Inc.* 12,800 713,600
Helsinki Telephone Corp. ............ 2,300 136,675
Keppel Telecommunications &
Transportation Ltd. ............... 15,000 9,909
MCI WorldCom, Inc.* ................. 12,400 889,700
Mobistar SA* ........................ 800 40,150
NetCom Systems AB
(B Shares)*+ ...................... 400 16,305
Nextel Communications, Inc.
(Class A)* ........................ 28,800 680,400
NTL, Inc.* .......................... 13,600 767,550
Orange PLC* ......................... 9,000 104,597
PT Indosat .......................... 45,000 58,641
PT Telekomunikasi Indonesia ......... 33,000 11,137
SK Telecom Co. Ltd. (ADR) ........... 3,999 40,740
Tele-Communications TCI
Ventures Group (Class A)* ......... 73,000 1,720,062
Videsh Sanchar Nigam Ltd.
(GDR)+ ............................ 1,700 20,825
Videsh Sanchar Nigam Ltd.
(GDR) ............................. 2,000 22,500
Vodafone Group PLC .................. 7,300 118,545
-----------
9,766,516
-----------
TOTAL TECHNOLOGY (8.8%) ............ 34,306,859
-----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
--------------------- -----------------
<S> <C> <C>
DIVERSIFIED
MISCELLANEOUS (0.7%)
BTR PLC (B Shares) .................. 20,000 $ 11,481
Citic Pacific Ltd. .................. 7,000 15,089
First Pacific Co. ................... 42,734 20,409
Hagemeyer N.V. ...................... 2,000 73,060
Montedison Spa ...................... 70,000 92,924
Smith (Howard) Ltd. ................. 4,000 26,461
Suez Lyonnaise des Eaux ............. 400 82,154
Tyco International Ltd. ............. 30,900 2,331,019
Vivendi ............................. 950 246,444
-----------
TOTAL DIVERSIFIED (0.7%) ........... 2,899,041
-----------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (33.2%)
(Cost $98,734,816) ................ 129,080,156
-----------
PREFERRED STOCKS:
BASIC MATERIALS (0.1%)
CHEMICALS
Henkel KGAA ......................... 1,694 147,393
-----------
BUSINESS SERVICES (0.0%)
PRINTING, PUBLISHING &
BROADCASTING
ProSieben Media AG .................. 1,600 76,616
-----------
CONSUMER CYCLICALS (0.0%)
RETAIL--GENERAL
Hornbach Holding AG ................. 920 54,929
-----------
CONSUMER NONCYCLICALS (0.0%)
HOSPITAL SUPPLIES & SERVICES
Fresenius AG ........................ 200 42,004
-----------
TECHNOLOGY (0.1%)
TELECOMMUNICATIONS
Nokia Oyj (A Shares) ................ 3,000 364,781
-----------
TOTAL PREFERRED STOCKS (0.2%)
(Cost $316,410) ................... 685,723
-----------
PRINCIPAL
AMOUNT
-----------
LONG-TERM DEBT SECURITIES:
CONSUMER CYCLICALS (1.4%)
AUTO RELATED
Enterprise Rent-A-Car
6.8%, 02/15/08+ ................... $5,500,000 5,397,150
-----------
CONSUMER NONCYCLICALS (1.8%)
MEDIA & CABLE
Time Warner Entertainment Co.
8.375%, 03/15/23 .................. 5,625,000 6,828,638
-----------
CREDIT SENSITIVE
ASSET BACKED (2.7%)
Chase Credit Card Master Trust
6.0%, 08/15/05 .................... 5,000,000 5,068,750
First USA Credit Card Master
Trust Series 1998-9 (Class A)
5.28%, 09/18/06 ................... 5,200,000 5,200,000
-----------
10,268,750
-----------
BANKS (2.1%)
Chase Manhattan Corp.
8.625%, 05/01/02 .................. 5,500,000 6,001,545
St. George Bank Ltd.
7.15%, 10/15/05+ .................. 2,000,000 2,078,340
-----------
8,079,885
-----------
</TABLE>
48
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ---------------
<S> <C> <C>
FINANCIAL SERVICES (0.4%)
Household Finance Corp.
6.5%, 11/15/08 ................... $ 1,625,000 $ 1,687,160
------------
MORTGAGE RELATED (15.9%)
Federal Home Loan Mortgage
Corp.
7.5%, 04/01/28 ................... 2,603,868 2,673,035
Federal National Mortgage
Association:
6.0%, 11/01/10 ................... 11,910,909 11,925,797
6.5%, 01/01/11 ................... 2,692,031 2,728,206
7.0%, 04/01/12 ................... 6,029,997 6,158,134
7.0%, 05/01/26 ................... 1,677,600 1,710,104
7.0%, 09/01/27 ................... 1,902,729 1,939,595
6.5%, 03/01/28 ................... 1,956,316 1,967,320
7.0%, 05/01/28 ................... 2,266,822 2,310,742
6.5%, 09/01/28 ................... 2,234,133 2,246,700
6.5%, 10/01/28 ................... 1,984,434 1,995,596
8.0%, 12/01/28 ................... 4,100,000 4,245,222
Government National Mortgage
Association:
7.0%, 12/15/25 ................... 10,050,000 10,279,240
7.0%, 07/15/27 ................... 1,942,712 1,987,026
7.0%, 02/15/28 ................... 6,530,946 6,679,917
6.5%, 03/15/28 ................... 1,552,384 1,567,427
6.5%, 05/15/28 ................... 187,158 188,972
6.5%, 07/15/28 ................... 1,187,124 1,198,628
------------
61,801,661
------------
UTILITY--ELECTRIC (2.1%)
Consolidated Edison, Inc.
Series 97-B
6.45%, 12/01/07 .................. 4,350,000 4,624,006
Texas Utilities Co. (Series C)
6.375%, 01/01/08+ ................ 3,600,000 3,682,613
------------
8,306,619
------------
U.S. GOVERNMENT (25.2%)
U.S. Treasury:
6.0% Note, 08/15/00 .............. 26,350,000 26,893,469
6.25% Note, 04/30/01 ............. 15,600,000 16,150,883
6.5% Note, 08/31/01 .............. 7,100,000 7,421,722
6.5% Note, 05/31/02 .............. 8,360,000 8,827,642
5.75% Note, 08/15/03 ............. 760,000 793,607
4.25% Note, 11/15/03 ............. 7,325,000 7,228,859
6.875% Note, 05/15/06 ............ 7,530,000 8,511,257
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
-------------- ---------------
<S> <C> <C>
5.625% Note, 05/15/08 ............ $ 250,000 $ 266,719
6.125% Bond, 11/15/27 ............ 13,340,000 14,940,800
5.25% Bond, 11/15/28 ............. 6,610,000 6,775,250
------------
97,810,208
------------
TOTAL CREDIT SENSITIVE (48.4%) 187,954,283
------------
TECHNOLOGY (0.8%)
ELECTRONICS
Motorola, Inc.
6.5%, 11/15/28 ................... 3,000,000 3,030,690
------------
TOTAL LONG-TERM DEBT SECURITIES (52.4%)
(Amortized Cost $200,280,375) 203,210,761
------------
SHORT-TERM DEBT SECURITIES:
U.S. GOVERNMENT AGENCIES
Federal Home Loan Mortgage
Corp.:
4.7%, due 01/04/99 ............... 35,900,000 35,885,938
5.1%, due 01/14/99 ............... 20,000,000 19,963,312
------------
TOTAL U.S. GOVERNMENT AGENCIES (14.4%) 55,849,250
------------
TOTAL SHORT-TERM DEBT SECURITIES (14.4%)
(Amortized Cost $55,849,250) ..... 55,849,250
------------
TOTAL INVESTMENTS (100.2%)
(Cost/Amortized Cost $355,180,851) 388,825,890
OTHER ASSETS
LESS LIABILITIES (-0.2%) ......... (731,851)
------------
NET ASSETS (100.0%) ................ $388,094,039
==============
</TABLE>
<TABLE>
<S> <C>
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
As a Percentage of Total Investments
Canada ..................................... 0.1%
France ..................................... 0.5
Germany .................................... 0.3
Japan ...................................... 0.9
Netherlands ................................ 0.3
New Zealand & Australia .................... 0.6
Scandinavia ................................ 0.4
Southeast Asia ............................. 0.2
Switzerland ................................ 0.3
United Kingdom ............................. 1.0
United States** ............................ 94.2
Other European Countries ................... 1.2
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Includes Short-Term Debt Securities of 14.4%.
+ 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, 1998, these securities amounted to $11,292,312 or
2.9% of net assets.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
49
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<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. .................... 20,000 $ 910,592
Bayer AG ........................... 40,500 1,699,955
Ciba Specialty Chemicals AG ........ 3,000 251,549
Georgia Gulf Corp. ................. 136,000 2,184,500
Hitachi Chemical Co. Ltd. .......... 159,000 1,197,608
Johnson Matthey PLC ................ 40,000 270,207
Nippon Chemi-Con Corp. ............. 62,000 202,180
Toagosei Co. Ltd. .................. 158,000 296,819
Yule Catto & Company PLC ........... 70,000 285,348
----------
7,298,758
----------
CHEMICALS--SPECIALTY (0.3%)
Great Lakes Chemical Corp. ......... 63,500 2,540,000
NGK Insulators ..................... 92,000 1,187,807
Solutia Inc. ....................... 62,500 1,398,437
----------
5,126,244
----------
METALS & MINING (0.0%)
Nord Resources Corp.* .............. 27,939 27,939
Randgold Resources Ltd.
(GDR)* ........................... 30,300 75,750
Randgold Resources Ltd.
(GDR)--Rights* ................... 30,300 0
Toho Titanium ...................... 11,000 60,532
----------
164,221
----------
PAPER (0.1%)
Buhrmann N.V. ...................... 42,400 758,635
Mayr-Melnhof Karton AG+ ............ 6,756 315,747
Nippon Paper Industries Co. ........ 6,000 27,328
UPM-Kymmene Oyj .................... 25,320 705,133
----------
1,806,843
----------
STEEL (0.0%)
Koninklijke Hoogovens N.V. ......... 20,000 553,810
NatSteel Ltd. ...................... 220,000 241,333
Pohang Iron & Steel Co. Ltd.
(ADR) ............................ 15,000 253,125
----------
1,048,268
----------
TOTAL BASIC MATERIALS (0.8%) ..... 15,444,334
----------
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (0.8%)
Republic Services, Inc.
(Class A)* ....................... 203,500 3,752,031
Waste Management, Inc. ............. 256,730 11,970,036
----------
15,722,067
----------
PRINTING, PUBLISHING &
BROADCASTING (2.9%)
Cablevision Systems Corp.
(Class A)* ....................... 134,000 6,725,125
CBS Corp. .......................... 567,500 18,585,625
Comcast Corp. (Class A) SPL ........ 38,000 2,230,125
Fox Entertainment Group, Inc.
(Class A)* ....................... 103,200 2,599,350
Grupo Televisa S.A. (GDR)* ......... 30,000 740,625
Liberty Media Group (Class A)* 221,650 10,209,753
MediaOne Group, Inc.* .............. 69,000 3,243,000
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
New Straits Times Press BHD ........ 65,000 $ 31,961
Nippon Television Network
Corp. ............................ 960 283,279
Reed International PLC ............. 70,000 547,403
Seat Pagine Gialle Spa* ............ 2,650,000 2,500,151
Tele-Communications, Inc.
(Class A)* ....................... 96,000 5,310,000
Tokyo Broadcasting System, Inc. 22,000 246,221
United News & Media PLC ............ 60,000 526,106
USA Networks, Inc.* ................ 9,500 314,687
Viacom, Inc. (Class B)* ............ 32,600 2,412,400
----------
56,505,811
----------
PROFESSIONAL SERVICES (0.3%)
Cordiant Communications Group
PLC .............................. 200,000 349,406
Marlborough International PLC* 8,600 27,500
Meitec Corp. ....................... 20,000 499,779
Modis Professional Services, Inc.* 48,458 702,641
Nielsen Media Research, Inc. ....... 149,500 2,691,000
Vedior N.V. ........................ 7,104 139,969
WPP Group PLC ...................... 150,000 912,823
----------
5,323,118
----------
TRUCKING, SHIPPING (0.2%)
Bergesen Dy ASA (A Shares) ......... 47,300 566,303
Frontline Ltd.* .................... 45,689 87,162
Frontline Ltd.--Warrants
(expire 05/11/01)* ............... 26,628 0
Irish Continental Group PLC ........ 36,000 425,665
Knightsbridge Tankers Ltd. ......... 64,500 1,342,406
OMI Corp.* ......................... 335,000 1,088,750
----------
3,510,286
----------
TOTAL BUSINESS SERVICES (4.2%) 81,061,282
----------
CAPITAL GOODS
AEROSPACE (0.2%)
British Aerospace PLC .............. 100,000 847,726
Loral Space & Communications* 120,000 2,137,500
Senior Engineering Group PLC ....... 130,000 248,744
----------
3,233,970
----------
BUILDING & CONSTRUCTION (0.3%)
ABB AG ............................. 300 352,169
Beazer Group PLC ................... 187,000 476,041
Bouygues ........................... 10,708 2,206,926
Daito Trust Construction Co.
Ltd. ............................. 2,800 24,291
Groupe GTM ......................... 9,953 1,032,783
National House Industrial Co.
Ltd. ............................. 53,000 451,334
Technip SA ......................... 10,350 973,987
Toda Corp. ......................... 10,000 48,471
----------
5,566,002
----------
BUILDING MATERIALS & FOREST
PRODUCTS (0.7%)
BPB PLC ............................ 110,000 415,918
Fujikura Ltd. ...................... 34,000 182,579
Holderbank Financiere Glarus
AG--B ............................ 1,385 1,642,005
Lafarge SA ......................... 6,000 569,997
Louisiana-Pacific Corp. ............ 30,000 549,375
</TABLE>
50
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Martin Marietta Materials, Inc. ..... 120,000 $7,462,500
Matsushita Electric Works Ltd. ...... 104,000 1,064,422
Nichiha Corp. ....................... 9,700 88,619
Rugby Group PLC ..................... 447,460 692,386
Unidare PLC ......................... 85,500 222,537
Unidare PLC--Units .................. 4,500 11,713
----------
12,902,051
----------
ELECTRICAL EQUIPMENT (1.3%)
Daikin Industries Ltd. .............. 140,000 1,389,455
General Electric Co. ................ 209,900 21,422,919
Johnson Electric Holdings Ltd. ...... 500,000 1,284,327
Legrand SA .......................... 3,800 1,006,852
Schneider SA ........................ 10,000 606,494
Sumitomo Electric Industries ........ 56,000 630,713
----------
26,340,760
----------
MACHINERY (1.5%)
AlliedSignal, Inc. .................. 138,400 6,132,850
Bodycote International PLC .......... 30,000 410,552
FKI PLC ............................. 100,000 222,954
Fujitec Co. Ltd. .................... 96,000 619,300
IHC Caland N.V. ..................... 8,000 332,286
Keyence Corp. ....................... 1,300 160,124
KSB AG .............................. 2,600 441,524
Legris Industries SA ................ 17,300 847,745
Misumi Corp. ........................ 11,900 226,717
Mori Seiki Co. Ltd. ................. 8,000 90,740
Nitta Corp. ......................... 8,000 45,654
Nitto Kohki Co. Ltd. ................ 3,100 25,547
Pall Corp. .......................... 12,000 303,750
Schindler Holding AG
Participating Certificate ......... 915 1,467,736
Schindler Holding AG
Registered ........................ 450 767,772
Siebe PLC ........................... 220,000 867,525
SMC Corp. ........................... 6,000 479,575
Stork N.V. .......................... 18,000 411,204
TI Group PLC ........................ 123,795 666,844
United Technologies Corp. ........... 121,900 13,256,625
Valmet Oyj .......................... 31,000 413,418
Vestas Wind Systems A/S* ............ 4,000 214,314
----------
28,404,756
----------
TOTAL CAPITAL GOODS (4.0%) ........ 76,447,539
----------
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines, Inc.
(Class B)* ........................ 2 79
KLM ................................. 8,000 241,973
Virgin Express Holdings PLC
(ADR)* ............................ 10,400 83,200
----------
325,252
----------
APPAREL, TEXTILE (0.1%)
Carli Gry International A/S ......... 1,200 72,402
Onward Kashiyama Co. Ltd. ........... 79,000 1,062,667
----------
1,135,069
----------
AUTO RELATED (0.2%)
Continental AG ...................... 55,000 1,528,053
Minebea Co. Ltd. .................... 25,000 286,664
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
NGK Spark Plug Co. .................. 14,000 $ 142,791
Sumitomo Rubber Industries,
Inc. .............................. 129,000 616,136
----------
2,573,644
----------
AUTOS & TRUCKS (0.1%)
Bajaj Auto Ltd. (GDR) ............... 7,500 113,438
Honda Motor Co. Ltd. ................ 23,000 756,136
UMW Holdings BHD .................... 170,000 125,230
Volkswagen AG ....................... 6,000 485,329
----------
1,480,133
----------
FOOD SERVICES, LODGING (0.1%)
Accor SA ............................ 2,200 476,250
Choice Hotels Scandinavia ASA ....... 108,000 152,039
Compass Group PLC ................... 90,000 1,030,997
----------
1,659,286
----------
HOUSEHOLD FURNITURE,
APPLIANCES (0.4%)
Aiwa Co. Ltd. ....................... 15,000 396,101
Fisher & Paykel Industries Ltd. ..... 120,000 432,823
Hunter Douglas N.V. ................. 20,298 672,312
Koninklijke Philips Electronics
N.V. .............................. 8,000 536,770
Moulinex* ........................... 17,000 261,562
Rubbermaid, Inc. .................... 166,000 5,218,625
Sony Corp. .......................... 11,000 802,215
----------
8,320,408
----------
LEISURE RELATED (2.0%)
Amer Group Ltd.* .................... 25,000 258,387
Berjaya Sports Toto BHD ............. 140,000 122,210
Canal Plus .......................... 2,000 545,666
Carnival Corp. (Class A) ............ 179,100 8,596,800
Cendant Corp.* ...................... 185,300 3,532,281
Cyrk, Inc.* ......................... 220,600 1,654,500
Disney (Walt) Co. ................... 82,900 2,487,000
Granada Group PLC ................... 88,900 1,571,599
Harley-Davidson, Inc. ............... 230,500 10,919,938
Hoyts Cinemas Group ................. 30,000 25,184
Ladbroke Group PLC .................. 279,118 1,121,543
MGM Grand, Inc.* .................... 120,000 3,255,000
Mirage Resorts, Inc.* ............... 156,100 2,331,744
Nelvana Ltd.*+ ...................... 8,000 149,642
Nintendo Co. Ltd. ................... 13,700 1,329,331
Nippon Broadcasting System .......... 5,000 200,266
SHIMANO, INC. ....................... 18,000 464,953
Thomson Travel Group PLC ............ 150,000 409,304
VTech Holdings Ltd. ................. 50,000 218,142
----------
39,193,490
----------
PHOTO & OPTICAL (0.1%)
Essilor International ............... 500 196,798
Fuji Photo Film Co. ................. 37,000 1,377,049
Gretag Imaging Group* ............... 9,000 774,335
Noritsu Koki Co. Ltd. ............... 10,200 221,444
----------
2,569,626
----------
RETAIL--GENERAL (3.0%)
Aldeasa SA .......................... 22,000 863,777
BAA PLC ............................. 108,800 1,269,895
Boots Co. PLC ....................... 74,700 1,272,095
</TABLE>
51
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Carrefour .......................... 500 $ 377,404
Circuit City Stores-Circuit City
Group ............................ 159,300 7,955,044
Dixons Group PLC ................... 28,363 399,004
Genesis Direct, Inc.* .............. 94,400 737,500
Home Depot, Inc. ................... 107,900 6,602,131
Japan Airport Terminal Co. Ltd. 38,000 234,027
Kingfisher PLC ..................... 152,326 1,648,665
Kohl's Corp.* ...................... 137,800 8,466,087
Koninklijke Ahold NV ............... 10,000 369,562
Limited, Inc. ...................... 312,500 9,101,562
Paris Miki, Inc. ................... 4,400 101,374
Sato Corp. ......................... 16,000 283,562
Smith (W.H.) Group PLC ............. 22,500 178,571
Tandy Corp. ........................ 135,000 5,560,313
Wal-Mart Stores, Inc. .............. 156,400 12,736,825
-----------
58,157,398
-----------
TOTAL CONSUMER CYCLICALS (6.0%) 115,414,306
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.0%)
Coca-Cola Co. ...................... 129,600 8,667,000
Coca-Cola Enterprises, Inc. ........ 186,000 6,649,500
Diageo PLC ......................... 60,000 682,839
Fomento Economico Mexico
ADR .............................. 20,000 532,500
Louis Dreyfus Citrus ............... 1,000 25,065
Mercian Corp. ...................... 48,000 196,083
Scottish & Newcastle PLC ........... 100,000 1,161,359
Whitbread PLC ...................... 92,500 1,184,299
-----------
19,098,645
-----------
CONTAINERS (0.0%)
Schmalbach Lubeca AG ............... 8,300 1,145,515
-----------
DRUGS (2.5%)
Bristol-Myers Squibb Co. ........... 86,200 11,534,637
Daiichi Pharmaceutical Co. ......... 79,000 1,336,385
Forest Laboratories, Inc.
(Class A)* ....................... 45,000 2,393,438
Merck KGAA ......................... 18,700 841,584
Mylan Labs Inc. .................... 55,000 1,732,500
Novartis AG ........................ 300 590,594
Orion-Yhtyma Oy (B Shares) ......... 37,800 907,387
Pfizer, Inc. ....................... 79,500 9,972,281
Sankyo Co. Ltd. .................... 17,000 372,087
Sanofi SA .......................... 9,000 1,481,349
Santen Pharmaceutical Co. Ltd. ..... 42,000 807,621
Schering Plough Corp. .............. 285,200 15,757,300
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 16,000 516,083
-----------
48,243,246
-----------
FOODS (1.4%)
Avonmore Waterford Group
PLC .............................. 20,000 62,467
Barry Callebaut AG ................. 5,400 1,228,436
Campbell Soup Co. .................. 129,090 7,099,950
Huhtamaki Oy Series I .............. 11,550 439,443
Nestle SA .......................... 1,150 2,507,109
Nutreco Holding N.V. ............... 3,900 153,682
Orkla ASA .......................... 33,200 495,770
Parmalat Finanziaria Spa ........... 100,000 191,110
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Rite Aid Corp. ..................... 173,000 $ 8,574,313
Tyson Foods, Inc. (Class A) ........ 286,400 6,086,000
-----------
26,838,280
-----------
HOSPITAL SUPPLIES & SERVICES (1.7%)
Columbia/HCA Healthcare Corp. 421,700 10,437,075
Medtronic, Inc. .................... 184,300 13,684,275
PT Tempo Scan Pacific* ............. 206,000 10,944
Sun International Hotels Ltd.* ..... 71,600 3,253,325
Tenet Healthcare Corp.* ............ 182,700 4,795,875
-----------
32,181,494
-----------
RETAIL--FOOD (0.7%)
Delhaize-Le Lion SA ................ 8,800 773,850
Familymart Co. ..................... 12,900 644,714
Food Lion, Inc. (Class A) .......... 254,400 2,703,000
Kroger Co.* ........................ 159,000 9,619,500
Seven-Eleven Japan Co. Ltd. ........ 5,200 419,318
-----------
14,160,382
-----------
SOAPS & TOILETRIES (1.1%)
Avon Products, Inc. ................ 214,900 9,509,325
Estee Lauder Companies
(Class A) ........................ 53,225 4,550,737
Gillette Co. ....................... 106,700 5,154,944
Kao Corp. .......................... 66,000 1,491,360
-----------
20,706,366
-----------
TOBACCO (1.4%)
Austria Tabakwerke AG .............. 12,300 943,047
Japan Tobacco, Inc. ................ 150 1,501,994
Philip Morris Cos., Inc. ........... 407,400 21,795,900
Seita .............................. 27,700 1,734,502
Swedish Match AB ................... 111,801 407,389
Tabacalera SA--A ................... 70,000 1,763,299
-----------
28,146,131
-----------
TOTAL CONSUMER
NONCYCLICALS (9.8%) ........... 190,520,059
-----------
CREDIT SENSITIVE
BANKS (3.3%)
Allied Irish Bank .................. 225,000 4,013,178
Banca Nazionale del Lavoro
(BNL)* ........................... 20,000 55,881
Banca Nazionale del Lavoro
(BNL)* ........................... 170,000 508,406
Bancaria de Espana SA .............. 10,000 258,584
Banco Bilbao Vizcaya SA ............ 164,700 2,578,508
Banco Central Hispanoamericano
SA ............................... 60,000 711,371
Banco Santander SA ................. 58,200 1,154,827
Bangkok Bank Public Co. Ltd.* ...... 20,000 41,265
Bank Austria AG .................... 6,305 320,587
Bank of Ireland .................... 60,000 1,334,107
Bank of Tokyo-Mitsubishi Ltd. ...... 15,000 155,516
BankAmerica Corp. .................. 272,727 16,397,711
Banque Nationale de Paris .......... 13,700 1,127,961
Barclays PLC ....................... 18,000 388,140
BPI-SGPS, SA ....................... 12,800 434,580
Chase Manhattan Corp. .............. 38,300 2,606,794
Citigroup, Inc. .................... 368,000 18,216,000
Dao Heng Bank Group Ltd. ........... 30,000 92,743
</TABLE>
52
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Erste Bank Der
Oesterreichischen Sparkassen
AG ................................ 3,730 $ 199,614
ForeningsSparbanken AB .............. 17,300 448,754
Istituto Bancario San Paolo di
Torino Spa ........................ 88,511 1,563,061
National Bank of Canada ............. 30,000 484,060
Nordbanken Holding AB+ .............. 20,000 128,462
PT Bank Dagang Nasional
Indonesia Tbk* .................... 1,230,000 11,531
Seventy-Seven Bank Co. Ltd. ......... 123,000 1,231,635
Shizuoka Bank Ltd. .................. 25,000 309,038
Skandinaviska Enskilda Banken
(Series A) ........................ 56,000 591,421
Societe Generale .................... 6,000 971,464
State Bank of India (GDR) ........... 27,000 226,125
Suncorp-Metway Ltd. ................. 32,858 152,936
Thai Farmers Bank Public Co.--
Warrants (expire 09/15/02)* ....... 2,875 388
Toho Bank ........................... 10,000 41,471
Unicredito Italiano Spa ............. 340,500 2,017,053
United Overseas Bank Ltd. ........... 4,000 25,697
Wells Fargo Co. ..................... 118,100 4,716,619
Wing Hang Bank Ltd. ................. 161,000 401,084
Yamaguchi Bank ...................... 70,000 661,232
-----------
64,577,804
-----------
FINANCIAL SERVICES (2.8%)
Aiful Corp. ......................... 19,600 1,191,458
Associates First Capital Corp.
(Class A) ......................... 148,200 6,279,975
CMAC Investment Corp. ............... 65,900 3,027,281
Credit Saison Co. ................... 26,000 641,648
Daiwa Securities Co. Ltd. ........... 16,000 54,728
Garban PLC* ......................... 3,663 13,957
Household International, Inc. ....... 276,500 10,956,312
MBNA Corp. .......................... 657,375 16,393,289
Merrill Lynch & Co., Inc. ........... 65,800 4,392,150
Morgan Stanley Dean Witter &
Co. ............................... 111,400 7,909,400
Nichiei Co. Ltd. .................... 3,500 279,132
Peregrine Investment Holdings
Ltd.* ............................. 472,000 0
PMI Group, Inc. ..................... 48,600 2,399,625
Sanyo Shinpan Finance Co. Ltd. ...... 3,000 108,994
Worms Et Compagnie .................. 2,500 145,362
-----------
53,793,311
-----------
INSURANCE (1.8%)
Aegon N.V. .......................... 5,000 613,984
ASR Verzekeringsgroep N.V. .......... 12,000 1,086,320
Catalana Occidente SA ............... 2,060 53,631
CGU PLC ............................. 52,032 814,650
Cia de Seguros Imperio, SA* ......... 98,000 798,793
Corporacion Mapfre .................. 24,000 650,155
Everest Reinsurance Holdings,
Inc. .............................. 100,000 3,893,750
Fortis Amev N.V. .................... 18,000 1,491,453
Gallagher (Arthur J.) & Co. ......... 65,000 2,868,125
ING Groep N.V. ...................... 44,000 2,682,784
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Irish Life PLC ...................... 100,000 $ 945,060
Kingsway Financial Services* ........ 20,000 156,148
Mediolanum Spa ...................... 70,000 518,597
Providian Financial Corp. ........... 130,500 9,787,500
Royal & Sun Alliance Insurance
Group PLC ......................... 100,936 824,171
Sampo Insurance Co. (A Shares) 22,000 834,878
SunAmerica, Inc. .................... 89,000 7,220,125
Trygg-Hansa AB (B Shares)* .......... 3,600 108,501
United Assurance Group PLC .......... 71,600 649,263
-----------
35,997,888
-----------
MORTGAGE RELATED (0.1%)
Freddie Mac ......................... 20,000 1,288,750
-----------
REAL ESTATE (0.1%)
Boardwalk Equities, Inc.* ........... 26,000 285,882
Cheung Kong Holdings Ltd. ........... 40,000 287,844
City Developments Ltd. .............. 4,000 17,333
Daibiru Corp. ....................... 4,000 25,521
Green Property PLC .................. 120,000 678,208
Sumitomo Realty &
Development Co. Ltd. .............. 14,000 45,529
-----------
1,340,317
-----------
UTILITY--ELECTRIC (0.5%)
AES Corp.* .......................... 187,400 8,878,075
Cia Paranaense de Energia-Copel
(ADR) ............................. 54,000 384,750
Electricidade de Portugal SA ........ 5,000 110,134
Fortum Oyj* ......................... 44,938 273,209
Hong Kong Electric Holdings
Ltd. .............................. 179,000 542,967
-----------
10,189,135
-----------
UTILITY--GAS (0.2%)
Anglian Water PLC ................... 120,027 1,657,551
Anglian Water PLC (B Shares)* ....... 128,600 104,845
Scottish Power PLC .................. 220,000 2,260,324
-----------
4,022,720
-----------
UTILITY--TELEPHONE (1.0%)
British Telecommunications PLC 186,600 2,811,326
Cable & Wireless PLC ................ 90,000 1,106,619
Frontier Corp. ...................... 225,000 7,650,000
Nippon Telegraph & Telephone
Corp. ............................. 185 1,429,508
Swisscom AG* ........................ 5,000 2,096,245
Telecom Italia Spa .................. 84,000 716,299
Telecom Italia Spa .................. 110,800 696,898
Telefonica de Espana ................ 40,000 1,775,964
Telefonica S.A.--Bonus Rights* ...... 800 709
Telekom Malaysia BHD ................ 38,500 70,902
Telekomunikacja Polska S.A.
(GDR)* ............................ 155,000 790,500
-----------
19,144,970
-----------
TOTAL CREDIT SENSITIVE (9.8%) ..... 190,354,895
-----------
ENERGY
COAL & GAS PIPELINES (0.1%)
BG PLC .............................. 164,117 1,035,596
OMV AG .............................. 1,400 131,935
-----------
1,167,531
-----------
</TABLE>
53
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
OIL--DOMESTIC (1.0%)
Apache Corp. ....................... 30,000 $ 759,375
Atlantic Richfield Co. ............. 65,500 4,273,875
Louis Dreyfus Natural Gas
Corp.* ........................... 245,400 3,496,950
Tom Brown, Inc.* ................... 141,000 1,414,406
USX-Marathon Group, Inc. ........... 278,200 8,380,775
-----------
18,325,381
-----------
OIL--INTERNATIONAL (0.3%)
British Petroleum Co. PLC .......... 98,700 1,473,882
Gulf Indonesia Resources Ltd.* ..... 17,900 116,350
Oil Search Ltd. .................... 5,600 5,662
Repsol SA .......................... 13,950 743,044
Shell Transport & Trading Co.
PLC .............................. 178,950 1,099,419
Talisman Energy, Inc.* ............. 1,000 17,534
Total SA--B ........................ 26,234 2,656,489
-----------
6,112,380
-----------
OIL--SUPPLIES & CONSTRUCTION (0.2%)
Fracmaster Ltd. .................... 92,800 271,698
Fugro N.V. ......................... 10,000 234,304
Noble Drilling Corp.* .............. 292,100 3,779,044
Stolt Comex Seaway, S.A. (ADR)* 50,000 281,250
-----------
4,566,296
-----------
TOTAL ENERGY (1.6%) .............. 30,171,588
-----------
TECHNOLOGY
ELECTRONICS (4.3%)
Altera Corp.* ...................... 11,900 724,413
Cisco Systems, Inc.* ............... 258,500 23,992,031
Disco Corp. ........................ 4,000 116,970
Fujimi, Inc. ....................... 6,000 208,418
Intel Corp. ........................ 114,800 13,610,975
Micron Technology, Inc.* ........... 88,400 4,469,725
Micronics Japan Co. Ltd. ........... 7,000 102,348
Motorola, Inc. ..................... 189,500 11,571,344
Murata Manufacturing Co., Ltd. ..... 7,000 290,917
Nikon Corp. ........................ 60,000 584,847
Rohm Co. Ltd. ...................... 10,000 911,830
Sanmina Corp.* ..................... 88,400 5,525,000
Solectron Corp.* ................... 181,600 16,877,450
Sterling Commerce, Inc.* ........... 75,000 3,375,000
TDK Corp. .......................... 2,000 183,075
The Swatch Group AG ................ 4,850 727,588
Tokyo Cathode Laboratory Co. ....... 4,100 27,757
Yokogawa Electric Corp. ............ 12,000 59,548
-----------
83,359,236
-----------
OFFICE EQUIPMENT (2.9%)
Barco N.V. ......................... 4,314 1,210,466
Canon, Inc. ........................ 10,000 214,001
Ceridian Corp.* .................... 181,300 12,657,006
Compaq Computer Corp. .............. 361,300 15,152,019
Dell Computer Corp.* ............... 259,400 18,984,837
Policy Management Systems
Corp.* ........................... 157,300 7,943,650
-----------
56,161,979
-----------
OFFICE EQUIPMENT SERVICES (2.7%)
Computer Sciences Corp. ............ 48,000 3,093,000
Data Communication System Co. 11,700 238,977
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
First Data Corp. ................... 312,200 $ 9,892,837
Frontec AB (B Shares)* ............. 105,000 450,051
Fuji Soft ABC, Inc. ................ 11,900 606,336
HBO & Co. .......................... 330,923 9,493,354
Mettler-Toledo International,
Inc.* ............................ 45,900 1,288,069
Microsoft Corp.* ................... 108,500 15,047,594
Misys PLC .......................... 125,000 910,431
Nippon System Development .......... 29,000 899,424
Novell, Inc.* ...................... 573,400 10,392,875
-----------
52,312,948
-----------
TELECOMMUNICATIONS (3.4%)
AirTouch Communications, Inc.* 90,000 6,491,250
America Online, Inc. ............... 89,000 14,240,000
Asia Satellite Telecommunications
Holdings Ltd. .................... 120,000 213,753
Clearnet Communications, Inc.
(Class A)* ....................... 75,000 609,375
DDI Corp. .......................... 140 521,046
Energis PLC* ....................... 40,000 891,817
Esprit Telecom Group PLC
(ADR)* ........................... 65,100 3,043,425
Fore Systems, Inc.* ................ 270,900 4,960,856
Global TeleSystems Group, Inc.* 77,700 4,331,775
Helsinki Telephone Corp. ........... 18,300 1,087,459
Hyperion Telecommunications,
Inc. (Class A)* .................. 74,100 1,120,763
Keppel Telecommunications &
Transportation Ltd. .............. 193,000 127,497
MCI WorldCom, Inc.* ................ 134,860 9,676,205
Mobistar SA* ....................... 8,000 401,504
NetCom Systems AB (B Shares)* 4,000 163,049
Nextel Communications, Inc.
(Class A)* ....................... 121,900 2,879,888
NTL, Inc.* ......................... 62,600 3,532,988
Orange PLC* ........................ 94,000 1,092,459
PT Indosat ......................... 419,000 546,009
PT Telekomunikasi Indonesia ........ 309,000 104,288
SK Telecom Co. Ltd. (ADR) .......... 22,701 231,266
Tele-Communications TCI
Ventures Group (Class A)* ........ 363,000 8,553,187
Videsh Sanchar Nigam Ltd.
(GDR)+ ........................... 14,400 176,400
Videsh Sanchar Nigam Ltd.
(GDR) ............................ 14,000 157,500
Vodafone Group PLC ................. 80,000 1,299,125
-----------
66,452,884
-----------
TOTAL TECHNOLOGY (13.3%) ......... 258,287,047
-----------
DIVERSIFIED
MISCELLANEOUS (1.2%)
BTR PLC (B Shares) ................. 180,000 103,325
Citic Pacific Ltd. ................. 60,000 129,336
First Pacific Co. .................. 397,685 189,930
Hagemeyer N.V. ..................... 8,000 292,241
Montedison Spa ..................... 1,113,000 1,477,493
Smith (Howard) Ltd. ................ 35,000 231,533
Suez Lyonnaise des Eaux ............ 3,000 616,155
Tomkins PLC ........................ 37,500 176,887
Tyco International Ltd. ............ 243,700 18,384,119
Vivendi ............................ 8,400 2,179,086
-----------
TOTAL DIVERSIFIED (1.2%) ......... 23,780,105
-----------
</TABLE>
54
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (50.7%)
(Cost $733,680,790) ............... $981,481,155
------------
PREFERRED STOCKS:
BASIC MATERIALS (0.1%)
CHEMICALS
Henkel KGAA ......................... 15,180 1,320,792
------------
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (0.0%)
ProSieben Media AG .................. 15,000 718,272
------------
TRUCKING, SHIPPING (0.1%)
CNF Trust I
5.0% Conv. Series A ............... 30,600 1,740,375
------------
TOTAL BUSINESS SERVICES (0.1%) 2,458,647
------------
CAPITAL GOODS (0.0%)
AEROSPACE
Loral Space & Communications
6.0% Conv. ........................ 18,400 969,450
------------
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines Finance
Trust
8.5% Conv. ........................ 4,050 280,462
------------
LEISURE RELATED (0.2%)
Royal Caribbean Cruises Ltd.
7.25% Series A .................... 22,300 2,564,500
------------
RETAIL--GENERAL (0.0%)
Hornbach Holding AG ................. 8,010 478,245
------------
TOTAL CONSUMER CYCLICALS (0.2%) 3,323,207
------------
CONSUMER NONCYCLICALS (0.0%)
HOSPITAL SUPPLIES & SERVICES
Fresenius AG ........................ 1,000 210,021
------------
CREDIT SENSITIVE (0.1%)
UTILITY--ELECTRIC
AES Trust I
5.375% Conv. Series A ............. 39,700 2,759,150
------------
TECHNOLOGY
ELECTRONICS (0.1%)
L&H Capital Trust I
4.75% Conv.+ ...................... 30,800 974,050
Times Mirror Co. .................... 11,900 663,425
------------
1,637,475
------------
TELECOMMUNICATIONS (0.7%)
AirTouch Communications, Inc.
4.25% Conv., Series C ............. 22,700 2,338,100
ICG Communications, Inc.
6.75% Conv. ....................... 14,600 777,450
Intermedia Communications,
Inc.:
7.0% Conv.+ ....................... 21,400 547,038
7.0% Conv. Series D ............... 22,200 567,487
IXC Communications, Inc.:
6.75% Conv. ....................... 6,700 221,938
6.75% Conv.+ ...................... 28,800 954,000
Nextel Strypes Trust
7.25% Conv. ....................... 82,200 1,685,100
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Nokia Oyj (A Shares) ................ 28,200 $ 3,428,941
WinStar Communications, Inc.
7.0% Conv. ........................ 52,300 2,484,250
------------
13,004,304
------------
TOTAL TECHNOLOGY (0.8%) ........... 14,641,779
------------
TOTAL PREFERRED STOCKS (1.3%)
(Cost $23,282,369) ................ 25,683,046
------------
PRINCIPAL
AMOUNT
-----------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (0.2%)
Clear Channel
Communications, Inc.
2.625% Conv., 04/01/03 ............ $ 700,000 759,500
Mail-Well, Inc.
5.0% Conv., 11/01/02 .............. 780,000 702,000
P-Com, Inc.:
4.25% Conv., 11/01/02+ ............ 1,280,000 601,600
4.25% Conv., 11/01/02 ............. 680,000 319,600
Tele-Communications, Inc.
4.5%, 02/15/06 .................... 2,115,000 2,273,625
------------
4,656,325
------------
PROFESSIONAL SERVICES (0.1%)
Personnel Group of America:
5.75% Conv., 07/01/04+ ............ 370,000 428,275
5.75% Conv., 07/01/04 ............. 670,000 775,525
------------
1,203,800
------------
TOTAL BUSINESS SERVICES (0.3%)..... 5,860,125
------------
CAPITAL GOODS (0.1%)
AEROSPACE
Orbital Sciences Corp.:
5.0% Conv., 10/01/02+ ............. 690,000 1,166,100
5.0% Conv., 10/01/02 .............. 200,000 338,000
------------
1,504,100
------------
CONSUMER CYCLICALS (0.1%)
RETAIL--GENERAL
Office Depot, Inc.
Zero Coupon, 11/01/08 ............. 1,895,000 1,589,431
------------
CONSUMER NONCYCLICALS
DRUGS (0.5%)
MedImmune, Inc.:
7.0% Conv., 07/01/03 .............. 860,000 4,347,300
7.0% Conv. Sub. Note,
07/01/03+ ...................... 410,000 2,072,550
Quintiles Transnational Corp.:
4.25% Conv., 05/31/00+ ............ 580,000 793,150
4.25% Conv., 05/31/00 ............. 695,000 950,413
------------
8,163,413
------------
HOSPITAL SUPPLIES & SERVICES (0.2%)
Alternative Living Services Ltd.
5.25% Conv., 12/15/02 ............. 1,095,000 1,396,125
FPA Medical Management, Inc.
6.5% Conv., 12/15/01 (a)+ ......... 1,130,000 5,650
</TABLE>
55
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- ------------------
<S> <C> <C>
RES-Care, Inc.:
6.0% Conv., 12/01/04 ............ $ 145,000 $ 199,919
6.0% Conv., 12/01/04+ ........... 1,095,000 1,518,628
Sunrise Assisted Living, Inc.
5.5% Conv., 06/15/02 ............ 665,000 992,512
------------
4,112,834
------------
MEDIA & CABLE (1.8%)
Time Warner Entertainment Co.
8.375%, 03/15/23 ................ 23,580,000 28,625,649
Turner Broadcasting System, Inc.
8.375%, 07/01/13 ................ 5,530,000 6,609,898
------------
35,235,547
------------
TOTAL CONSUMER NONCYCLICALS (2.5%) 47,511,794
------------
CREDIT SENSITIVE
ASSET BACKED (0.8%)
Chase Credit Card Master Trust
6.0%, 08/15/05 .................. 15,000,000 15,206,250
------------
BANKS (0.8%)
Citicorp
6.375%, 11/15/08 ................ 15,000,000 15,525,450
------------
FINANCIAL SERVICES (1.1%)
Household Finance Corp.
6.5%, 11/15/08 .................. 20,100,000 20,868,865
------------
MORTGAGE RELATED (11.8%)
Federal Home Loan Mortgage
Corp.:
GOLD 7.0%, 09/01/11 ............. 19,599,534 20,028,274
7.0%, 01/01/12 .................. 4,132,014 4,222,402
7.5%, 04/01/28 .................. 9,986,462 10,251,733
Federal National Mortgage
Association:
6.5%, 06/01/11 .................. 32,609,640 33,068,131
6.5%, 09/01/11 .................. 13,408,739 13,597,266
7.0%, 05/01/26 .................. 5,350,185 5,458,848
7.0%, 09/01/27 .................. 1,839,305 1,876,091
7.0%, 01/01/28 .................. 8,310,140 8,471,149
6.5%, 03/01/28 .................. 5,868,948 5,901,961
6.5%, 07/01/28 .................. 421,186 423,555
6.5%, 09/01/28 .................. 5,957,688 5,991,200
6.5%, 10/01/28 .................. 5,917,730 5,951,017
8.0%, 12/01/28 .................. 15,600,000 16,152,552
Government National Mortgage
Association:
7.0%, 12/15/25 .................. 121,551 124,323
7.0%, 07/15/27 .................. 9,713,559 9,935,125
7.0%, 02/15/28 .................. 25,196,908 25,771,650
6.5%, 03/15/28 .................. 11,943,106 12,058,835
6.5%, 04/15/28 .................. 8,545,241 8,628,045
6.5%, 05/15/28 .................. 2,758,121 2,784,847
7.0%, 06/15/28 .................. 46,617 47,680
7.0%, 10/15/28 .................. 97,063 99,277
7.0%, 12/15/28 .................. 37,924,771 38,789,834
------------
229,633,795
------------
U.S. GOVERNMENT (20.9%)
U.S. Treasury:
6.0% Note, 08/15/00 ............. 38,495,000 39,288,959
6.25% Note, 04/30/01 ............ 44,000,000 45,553,772
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- ------------------
<S> <C> <C>
6.5% Note, 08/31/01 ............. $96,740,000 $101,123,580
6.5% Note, 05/31/02 ............. 51,000,000 53,852,838
5.75% Note, 08/15/03 ............ 30,945,000 32,298,844
4.25% Note, 11/15/03 ............ 20,195,000 19,929,941
6.875% Note, 05/15/06 ........... 30,435,000 34,401,076
6.125% Bond, 11/15/27 ........... 51,525,000 57,708,000
5.25% Bond, 11/15/28 ............ 19,935,000 20,433,375
------------
404,590,385
------------
UTILITY--ELECTRIC (1.4%)
Consolidated Edison, Inc.
Series 98-A
6.25%, 02/01/08 ................. 25,780,000 27,062,813
------------
TOTAL CREDIT SENSITIVE (36.8%) 712,887,558
------------
ENERGY (0.3%)
GAS
RAS Laffan Liquid Natural Gas
8.294%, 03/15/14+ ............... 7,730,000 6,371,530
------------
TECHNOLOGY
ELECTRONICS (2.0%)
Amkor Technologies, Inc.
5.75% Conv., 05/01/03 ........... 2,925,000 2,895,750
America Online, Inc.
4.0% Conv., 11/15/02 ............ 865,000 5,320,831
EMC Corp.
3.25% Conv., 03/15/02 ........... 525,000 1,977,937
HNC Software, Inc.
4.75% Conv., 03/01/03 ........... 1,095,000 1,204,500
Hutchinson Technology, Inc.:
6.0%, 03/15/05+ ................. 325,000 452,969
6.0%, 03/15/05 .................. 1,330,000 1,853,688
Level One Communications, Inc.:
4.0% Conv., 09/01/04+ ........... 790,000 1,151,425
4.0% Conv., 09/01/04 ............ 520,000 757,900
Micron Technology, Inc.
7.0% Conv., 07/01/04 ............ 845,000 904,150
Motorola, Inc.
6.5%, 11/15/28 .................. 9,290,000 9,385,037
Network Associates, Inc.:
Zero Coupon, 02/13/18+ .......... 2,610,000 1,601,888
Zero Coupon, 02/13/18 ........... 320,000 196,400
Photronics, Inc.
6.0% Conv., 06/01/04 ............ 1,995,000 2,119,687
SCI Systems, Inc.
5.0% Conv., 05/01/06+ ........... 1,720,000 4,091,450
Solectron Corp.
6.0% Conv., 03/01/06+ ........... 1,770,000 4,871,925
------------
38,785,537
------------
TELECOMMUNICATIONS (0.3%)
Comverse Technology, Inc.
5.75% Conv., 10/01/06+ .......... 1,605,000 2,602,106
5.75% Conv., 10/01/06 ........... 630,000 1,021,387
Global TeleSystems Group, Inc.
5.75% Conv., 07/01/10 ........... 2,665,000 3,011,450
------------
6,634,943
------------
TOTAL TECHNOLOGY (2.3%) ......... 45,420,480
------------
TOTAL LONG-TERM DEBT SECURITIES (42.4%)
(Amortized Cost $788,368,107) 821,145,018
------------
</TABLE>
56
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE BALANCED PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------- ------------------
<S> <C> <C>
SHORT-TERM DEBT SECURITIES:
COMMERCIAL PAPER
Commerzbank
5.2%, due 02/04/99 .................. $ 7,575,000 $ 7,537,798
Procter & Gamble Co.
5.15%, due 02/12/99 ................. 10,000,000 9,939,917
--------------
TOTAL COMMERCIAL PAPER (0.9%) 17,477,715
--------------
TIME DEPOSITS (1.5%)
Chase Manhattan Corp.
4.5%, due 01/04/99 .................. 28,800,000 28,800,000
--------------
U.S. GOVERNMENT AGENCIES
Federal Home Loan Mortgage
Corp.
4.7%, due 01/04/99 .................. 56,700,000 56,677,792
5.1%, due 01/14/99 .................. 10,000,000 9,981,656
--------------
TOTAL U.S. GOVERNMENT AGENCIES (3.4%) 66,659,448
--------------
TOTAL SHORT-TERM DEBT SECURITIES (5.8%)
(Amortized Cost $112,937,163) 112,937,163
--------------
TOTAL INVESTMENTS (100.2%)
(Cost/Amortized Cost $1,658,268,429) 1,941,246,382
OTHER ASSETS
LESS LIABILITIES (-0.2%) ............ (4,806,721)
--------------
NET ASSETS (100.0%) ................... $1,936,439,661
==============
</TABLE>
<TABLE>
<S> <C>
DISTRIBUTION OF INVESTMENTS BY GLOBAL REGION
As a Percentage of Total Investments
Canada ........................... 0.1%
France ........................... 1.0
Germany .......................... 0.5
Japan ............................ 1.9
Latin America .................... 0.1
Netherlands ...................... 0.6
Scandinavia ...................... 0.6
Southeast Asia ................... 0.3
Spain ............................ 0.5
Switzerland ...................... 0.6
United Kingdom ................... 2.2
United States** .................. 90.1
Other European Countries ......... 1.5
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Includes Short-Term Debt Securities of 5.8%.
+ 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, 1998, these securities amounted to $30,974,585 or
1.6% of net assets.
(a) On July 15, 1998, this security defaulted on its interest payment.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
57
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
COMMON STOCKS AND OTHER
INVESTMENTS:
BASIC MATERIALS
CHEMICALS (0.4%)
AGA AB (A Shares) ................... 3,400 $ 45,147
Akzo Nobel N.V. ..................... 28,000 1,274,828
Bayer AG ............................ 25,400 1,066,145
Georgia Gulf Corp. .................. 292,000 4,690,250
GP Batteries International Ltd. ..... 180,000 384,000
GP Batteries International Ltd.--
Warrants (expire 11/15/00)* ....... 5,750 2,736
Imperial Chemical Industries
PLC ............................... 15,000 130,029
Indo Gulf Corp. Ltd. (GDR)+ ......... 50,000 32,885
Ishihara Sangyo Kaisha Ltd.* ........ 14,000 22,951
Johnson Matthey PLC ................. 80,000 540,415
L'Air Liquide ....................... 1,500 275,069
Linde AG ............................ 100 60,606
Royal Group Technologies Ltd.* 10,000 221,535
Solvay SA ........................... 1,200 89,905
Sumitomo Chemical Co. Ltd. .......... 28,000 109,171
Toray Industries, Inc. .............. 29,000 151,617
UBE Industries Ltd. ................. 14,000 21,214
----------
9,118,503
----------
CHEMICALS--SPECIALTY (0.4%)
Great Lakes Chemical Corp. .......... 127,700 5,108,000
Kyowa Hakko Kogyo Co. ............... 8,000 39,557
NGK Insulators ...................... 6,000 77,466
SGL Carbon AG+ ...................... 15,000 908,191
Solutia Inc. ........................ 125,000 2,796,875
UCAR International, Inc.* ........... 5,000 89,062
----------
9,019,151
----------
METALS & MINING (0.0%)
Degussa AG .......................... 2,500 138,014
Granges AB .......................... 550 7,949
Japan Energy Corp. .................. 19,000 18,015
Randgold Resources Ltd.
(GDR)*+ ........................... 7,600 19,000
Rio Tinto Ltd. ...................... 5,800 68,787
Rio Tinto PLC ....................... 26,000 302,386
Toho Titanium ....................... 47,000 258,635
WMC Ltd. ............................ 40,700 122,699
----------
935,485
----------
PAPER (0.1%)
Amcor Ltd. .......................... 8,900 38,027
Enso Oyj (R Shares) ................. 30,000 268,291
Grupo Industrial Durango
(ADR)* ............................ 12,000 66,000
Mayr-Melnhof Karton AG .............. 20,000 934,715
Nippon Paper Industries Co. ......... 2,000 9,109
Svenka Cellulosa (Series B) ......... 3,200 69,963
UPM-Kymmene Oyj ..................... 3,292 91,678
----------
1,477,783
----------
STEEL (0.1%)
Broken Hill Proprietary Co. Ltd. 50,000 368,231
Nippon Steel Corp. .................. 170,000 308,817
NKK Corp. ........................... 85,000 57,997
Sumitomo Metal Industries ........... 224,000 256,057
----------
991,102
----------
TOTAL BASIC MATERIALS (1.0%) ...... 21,542,024
----------
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
BUSINESS SERVICES
ENVIRONMENTAL CONTROL (1.0%)
B.U.S. Berzelius Umwelt-Service
AG ................................ 21,600 $ 336,994
Matsuda Sangyo Co. Ltd. ............. 3,000 27,381
Powerscreen International PLC ....... 160,000 300,822
Rentokil Initial PLC ................ 160,000 1,205,950
Republic Services, Inc.
(Class A)* ........................ 221,100 4,076,531
Waste Management, Inc. .............. 312,895 14,588,729
----------
20,536,407
----------
PRINTING, PUBLISHING &
BROADCASTING (4.4%)
British Sky Broadcasting Group
PLC ............................... 50,476 383,386
Cablevision Systems Corp.
(Class A)* ........................ 254,000 12,747,625
CBS Corp. ........................... 955,250 31,284,437
Comcast Corp. (Class A) SPL ......... 74,500 4,372,219
Elsevier N.V. ....................... 66,445 930,563
Fox Entertainment Group, Inc.
(Class A)* ........................ 117,800 2,967,088
Grupo Televisa S.A. (GDR)* .......... 20,000 493,750
Liberty Media Group (Class A)* 294,024 13,543,480
MediaOne Group, Inc.* ............... 121,000 5,687,000
Nippon Television Network
Corp. ............................. 1,080 318,689
Reed International PLC .............. 100,000 782,004
Schibsted ASA ....................... 14,000 176,826
Seat Pagine Gialle Spa* ............. 4,900,000 4,622,921
Star Publications BHD ............... 20,000 19,890
Tele-Communications, Inc.
(Class A)* ........................ 109,300 6,045,656
Tokyo Broadcasting System, Inc. 87,000 973,691
Toppan Printing Co. ................. 7,000 85,600
United News & Media PLC ............. 90,000 789,158
USA Networks, Inc.* ................. 19,800 655,875
Viacom, Inc. (Class B)* ............. 55,300 4,092,200
----------
90,972,058
----------
PROFESSIONAL SERVICES (0.6%)
Adecco SA ........................... 275 125,720
Apcoa Parking AG .................... 3,000 212,421
Content Beheer N.V.+ ................ 40,000 683,742
Cordiant Communications Group
PLC ............................... 200,000 349,406
Marlborough International PLC* 93,600 299,304
Meitec Corp. ........................ 34,600 864,617
Modis Professional Services, Inc.* 39,647 574,882
Nielsen Media Research, Inc. ........ 360,900 6,496,200
WPP Group PLC ....................... 260,000 1,582,227
----------
11,188,519
----------
TRUCKING, SHIPPING (0.4%)
Brambles Industries Ltd. ............ 80,000 1,948,541
Frontline Ltd.* ..................... 130,540 249,034
Frontline Ltd.--Warrants
(expire 05/11/01)* ................ 76,080 0
Irish Continental Group PLC ......... 80,000 945,922
Knightsbridge Tankers Ltd. .......... 110,700 2,303,944
Mitsui O.S.K. Lines Ltd. ............ 19,000 30,642
Nippon Yusen K.K. ................... 13,000 41,125
</TABLE>
58
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
OMI Corp.* .......................... 677,900 $ 2,203,175
Peninsular & Oriental Steam
Navigation Co. .................... 10,466 123,725
-----------
7,846,108
-----------
TOTAL BUSINESS SERVICES (6.4%) 130,543,092
-----------
CAPITAL GOODS
AEROSPACE (0.2%)
British Aerospace PLC ............... 110,000 932,498
Loral Space &
Communications*+ .................. 220,000 3,918,750
Rolls-Royce ......................... 22,528 93,333
-----------
4,944,581
-----------
BUILDING & CONSTRUCTION (0.1%)
ABB AG .............................. 300 352,169
CSR Ltd. ............................ 16,900 41,318
Daito Trust Construction Co.
Ltd. .............................. 2,200 19,086
Hochtief AG ......................... 1,500 58,956
Japan Industrial Land
Development ....................... 10,000 18,786
Kaneshita Construction .............. 26,000 142,844
MacMahon Holdings Ltd. .............. 600,000 180,148
Mitsui Home Co. Ltd. ................ 20,000 92,158
Nanno Construction Co. Ltd. ......... 23,000 25,680
Nippon Denwa Shisetsu ............... 4,000 13,824
Nishimatsu Construction Co. ......... 4,000 23,394
Obayashi Corp. ...................... 12,000 57,634
Oriental Construction Co. ........... 1,900 7,307
PS Corp. ............................ 26,600 101,356
Sanyo Engineering &
Construction Co. .................. 9,000 33,017
Skanska AB (Series B) ............... 1,620 45,024
Toda Corp. .......................... 13,000 63,013
United Engineers Malaysia
BHD* .............................. 11,000 5,611
YTL Corp. BHD ....................... 16,500 15,011
-----------
1,296,336
-----------
BUILDING MATERIALS & FOREST
PRODUCTS (1.0%)
Blue Circle Industries PLC .......... 13,338 68,796
BPB PLC ............................. 130,000 491,539
Cie de St. Gobain ................... 3,150 444,646
Dahl International AB+ .............. 36,000 355,742
Fujikura Ltd. ....................... 132,000 708,835
Furukawa Electric Co. ............... 13,000 44,351
Heidelberg Zement AG ................ 1,100 86,469
Holderbank Financiere Glarus
AG--B ............................. 80 94,845
Lafarge SA .......................... 8,000 759,996
Louisana Pacific Corp. .............. 57,000 1,043,813
Martin Marietta Materials, Inc. ..... 241,200 14,999,625
Nichiha Corp. ....................... 40,700 371,836
Portland Valderrivas SA ............. 13,200 538,700
Rexam PLC ........................... 10,205 28,356
RMC Group PLC ....................... 4,518 61,867
Taiheiyo Cement Corp. ............... 11,000 27,585
Unidare PLC ......................... 434,300 1,130,384
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Unidare PLC--Units .................. 1,700 $ 4,425
Wolseley PLC ........................ 10,088 63,782
-----------
21,325,592
-----------
ELECTRICAL EQUIPMENT (1.3%)
Daikin Industries Ltd. .............. 5,000 49,623
General Electric Co. ................ 235,000 23,984,688
General Electric Co. PLC ............ 50,000 451,316
Kinden Corp. ........................ 5,000 76,119
Schneider SA ........................ 14,000 849,092
Sumitomo Electric Industries ........ 31,000 349,145
-----------
25,759,983
-----------
MACHINERY (1.4%)
AlliedSignal, Inc. .................. 141,800 6,283,512
Amada Co. Ltd. ...................... 5,000 24,236
Asahi Diamond Industry Co. Ltd. 15,000 74,701
Cie Generale de Geophysique
SA (ADR)* ......................... 84,000 913,500
Construcciones y Auxiliar de
Ferrocarrites SA .................. 3,000 91,824
Ebara Corp. ......................... 5,000 43,110
Fanuc Ltd. .......................... 5,900 202,331
IHC Caland N.V. ..................... 17,000 706,108
Kalmar Industries AB+ ............... 10,000 106,229
Keyence Corp. ....................... 10,200 1,256,358
Mori Seiki Co. Ltd. ................. 20,000 226,850
Namura Shipbuilding ................. 7,000 13,336
Nireco .............................. 9,000 26,717
Nitta Corp. ......................... 38,600 220,278
Nitto Kohki Co. Ltd. ................ 23,600 194,488
Pall Corp. .......................... 45,000 1,139,063
Rofin-Sinar Technologies, Inc.* ..... 18,000 168,750
Siebe PLC ........................... 140,000 552,061
SMC Corp. ........................... 10,900 871,227
Sodick Co.* ......................... 110,000 233,939
Thai Engine Manufacturing
Public Co. Ltd.* .................. 100,000 25,034
United Technologies Corp. ........... 133,700 14,539,875
Vestas Wind Systems A/S* ............ 6,450 345,581
-----------
28,259,108
-----------
TOTAL CAPITAL GOODS (4.0%) ........ 81,585,600
-----------
CONSUMER CYCLICALS
AIRLINES (0.0%)
British Airways PLC ................. 45,000 303,422
Cathay Pacific Airways .............. 41,000 40,750
Japan Air Lines Co.* ................ 24,000 63,376
KLM ................................. 14,000 423,452
Virgin Express Holdings PLC
(ADR)* ............................ 20,000 160,000
-----------
991,000
-----------
APPAREL, TEXTILE (0.1%)
Carli Gry International A/S ......... 20,000 1,206,693
King Co. ............................ 46,000 61,143
PT Great River International ........ 1,709,000 58,747
Teijin Ltd. ......................... 18,000 66,354
-----------
1,392,937
-----------
AUTO RELATED (0.2%)
Autoliv, Inc.+ ...................... 19,100 686,545
Bridgestone Corp. ................... 13,000 295,481
DaimlerChrysler AG* ................. 20,100 1,996,124
</TABLE>
59
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Michelin (CGDE), (Class B) ........ 8,000 $ 319,885
Minebea Co. Ltd. .................. 43,000 493,062
NGK Spark Plug Co. ................ 14,000 142,791
-----------
3,933,888
-----------
AUTOS & TRUCKS (0.1%)
Fiat Spa .......................... 74,250 257,753
Honda Motor Co. Ltd. .............. 33,000 1,084,892
Perusahaan Otomobil Nasional ...... 9,000 9,530
PSA Peugeot Citroen ............... 570 88,210
-----------
1,440,385
-----------
FOOD SERVICES, LODGING (0.2%)
Accor SA .......................... 7,000 1,515,341
Choice Hotels Scandinavia ASA ..... 100,000 140,777
Compass Group PLC ................. 150,000 1,718,329
Fujita Kanko, Inc. ................ 3,000 26,664
Restaurant Brands New Zealand
Ltd.+ ........................... 300,000 170,602
Sanyo Pax Co. Ltd. ................ 33,000 228,090
Thistle Hotels PLC+ ............... 114,035 206,811
-----------
4,006,614
-----------
HOUSEHOLD FURNITURE,
APPLIANCES (0.5%)
Aiwa Co. Ltd. ..................... 19,000 501,728
Elamex S.A. de C.V.* .............. 70,000 253,750
Electrolux AB (Series B) .......... 5,500 94,772
Guangdong Kelon Electrical
Holdings Co. Ltd. ............... 104,000 92,626
Industrie Natuzzi Spa (ADR) ....... 30,000 746,250
Koninklijke Philips Electronics
N.V. ............................ 12,000 805,155
Rubbermaid, Inc. .................. 189,600 5,960,550
Sony Corp. ........................ 16,000 1,166,859
Toto Ltd. ......................... 5,000 40,186
-----------
9,661,876
-----------
LEISURE RELATED (2.5%)
Brass Eagle, Inc.* ................ 22,000 338,250
Canal Plus ........................ 4,000 1,091,332
Carnival Corp. (Class A) .......... 210,300 10,094,400
Cendant Corp.* .................... 434,700 8,286,469
Cyrk, Inc.* ....................... 310,600 2,329,500
Disney (Walt) Co. ................. 93,500 2,805,000
EMI Group PLC ..................... 30,000 200,659
Granada Group PLC ................. 24,000 424,279
Harley-Davidson, Inc. ............. 242,300 11,478,962
Hoyts Cinemas Group+ .............. 500,000 419,733
KTM Motorradholding AG ............ 10,000 672,892
MGM Grand, Inc.* .................. 178,500 4,841,812
Mirage Resorts, Inc.* ............. 159,300 2,379,544
Nelvana Ltd.*+ .................... 18,000 330,839
Nintendo Co. Ltd. ................. 19,600 1,901,817
Nippon Broadcasting System ........ 24,000 961,276
Resorts World BHD ................. 24,000 19,359
Sega Enterprises Ltd. ............. 2,000 44,395
SHIMANO, INC. ..................... 38,000 981,568
Tag Heuer International SA
(ADR) ........................... 50,200 357,675
The Swatch Group AG ............... 100 61,976
Thomson Travel Group PLC .......... 220,000 600,313
Toho Co. .......................... 400 54,869
Tokyo Dome Corp. .................. 3,000 16,004
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Tourism Holdings Ltd.* ............ 70,000 $ 57,131
VTech Holdings Ltd. ............... 6,000 26,177
-----------
50,776,231
-----------
PHOTO & OPTICAL (0.2%)
Essilor International ............. 4,800 1,889,257
Fuji Photo Film Co. ............... 52,000 1,935,312
Gretag Imaging Group* ............. 16,000 1,376,595
Noritsu Koki Co. Ltd. ............. 14,100 306,114
-----------
5,507,278
-----------
RETAIL--GENERAL (4.0%)
Aldeasa SA ........................ 40,000 1,570,504
BAA PLC ........................... 40,000 466,873
Boots Co. PLC ..................... 32,000 544,940
Carrefour ......................... 650 490,625
Circuit City Stores-Circuit City
Group ........................... 181,300 9,053,669
Daiei, Inc. ....................... 14,000 38,086
Dixons Group PLC .................. 120,000 1,688,130
Doshisha Co. ...................... 6,000 30,731
Genesis Direct, Inc.* ............. 225,200 1,759,375
Great Universal Stores PLC ........ 39,213 413,321
Harvey Nichols PLC+ ............... 30,600 71,279
Hennes & Mauritz AB
(B Shares) ...................... 2,500 204,428
Home Depot, Inc. .................. 115,000 7,036,563
Home Wide Corp. ................... 16,000 63,093
Japan Airport Terminal Co. Ltd. 83,000 511,165
Karstadt AG ....................... 150 78,488
Kohl's Corp.* ..................... 149,300 9,172,619
Koninklijke Ahold NV .............. 22,000 813,036
Limited, Inc. ..................... 631,125 18,381,516
Marks & Spencer PLC ............... 90,055 617,703
Marui Co. Ltd. .................... 7,000 134,914
Metro AG .......................... 2,280 179,226
Paris Miki, Inc. .................. 28,300 652,016
Pinault Printemps ................. 2,900 554,110
S.T. Dupont*+ ..................... 10,000 107,523
Sato Corp. ........................ 54,700 969,428
Smith (W.H.) Group PLC ............ 63,000 500,000
Sriwani Holdings BHD .............. 170,000 38,508
Takihyo Co. Ltd. .................. 13,000 65,547
Tandy Corp. ....................... 267,500 11,017,656
Wal-Mart Stores, Inc. ............. 175,700 14,308,569
Warehouse Group Ltd. .............. 111,200 360,096
-----------
81,893,737
-----------
TOTAL CONSUMER CYCLICALS (7.8%) 159,603,946
-----------
CONSUMER NONCYCLICALS
BEVERAGES (1.1%)
Cadbury Schweppes PLC ............. 18,792 320,485
Carlsberg `A' ..................... 900 52,322
Coca-Cola Amatil Ltd. ............. 2,000 7,451
Coca-Cola Beverages PLC* .......... 2,000 3,678
Coca-Cola Co. ..................... 150,800 10,084,750
Coca-Cola Enterprises, Inc. ....... 216,200 7,729,150
Diageo PLC ........................ 140,000 1,593,291
Fomento Economico Mexico
ADR ............................. 20,000 532,500
Kirin Brewery Co. ................. 8,000 102,082
Louis Dreyfus Citrus .............. 38,000 952,464
</TABLE>
60
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Mercian Corp. ...................... 67,000 $ 273,700
Panamerican Beverages, Inc. ........ 16,000 349,000
-----------
22,000,873
-----------
CONTAINERS (0.0%)
Toyo Seikan Kaisha ................. 3,000 50,988
-----------
DRUGS (3.2%)
Bristol-Meyers Squibb Co. .......... 92,900 12,431,181
Daiichi Pharmaceutical Co. ......... 5,000 84,581
Eisai Co. Ltd. ..................... 5,000 97,475
Forest Laboratories, Inc.
(Class A)* ....................... 84,500 4,494,344
Glaxo Wellcome PLC ................. 66,706 2,295,232
Mylan Labs Inc. .................... 120,000 3,780,000
Novartis AG ........................ 500 984,324
Novo-Nordisk A/S (B Shares) ........ 5,000 659,910
Orion-Yhtyma Oy (B Shares) ......... 71,000 1,704,351
Pfizer, Inc. ....................... 118,000 14,801,625
Sankyo Co. Ltd. .................... 57,000 1,247,585
Sanofi SA .......................... 14,000 2,304,321
Santen Pharmaceutical Co. Ltd. ..... 59,000 1,134,515
Schering Plough Corp. .............. 338,600 18,707,650
Yamanouchi Pharmaceutical Co.
Ltd. ............................. 21,000 677,359
Zeneca Group PLC ................... 14,000 609,597
-----------
66,014,050
-----------
FOODS (1.8%)
Ajinomoto Co., Inc. ................ 9,000 95,702
Avonmore Waterford Group
PLC .............................. 100,000 312,333
Barry Callebaut AG ................. 8,500 1,933,649
Campbell Soup Co. .................. 141,560 7,785,800
Fyffes PLC ......................... 1,000,000 2,230,948
Groupe Danone ...................... 2,100 601,127
Karlshamns AB+ ..................... 52,533 389,338
Koninklijke Numico N.V.+ ........... 8,000 381,277
Nestle SA .......................... 930 2,027,488
Nippon Meat Packers, Inc. .......... 4,000 64,510
Nissin Food Products Co. ........... 3,000 75,631
Nutreco Holding N.V. ............... 26,000 1,024,549
Oie Sangyo Co. Ltd. ................ 6,000 25,521
Rite Aid Corp. ..................... 266,000 13,183,625
Shiram Industrial Enterprises
Ltd. (GDR)+ ...................... 28,800 28,800
Tingyi Holdings Corp. .............. 240,000 21,685
Tyson Foods, Inc. (Class A) ........ 327,350 6,956,188
Yamakazi Baking Co. ................ 4,000 52,211
-----------
37,190,382
-----------
HOSPITAL SUPPLIES & SERVICES (2.4%)
Columbia/HCA Healthcare Corp. 891,700 22,069,575
Medtronic, Inc. .................... 202,900 15,065,325
Sun International Hotels Ltd.* ..... 137,100 6,229,481
Tenet Healthcare Corp.* ............ 204,300 5,362,875
-----------
48,727,256
-----------
RETAIL--FOOD (0.9%)
Familymart Co. ..................... 19,000 949,579
Food Lion, Inc. (Class A) .......... 499,400 5,306,125
Jusco Co. .......................... 9,000 182,233
Kroger Co.* ........................ 197,500 11,948,750
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Seven-Eleven Japan Co. Ltd. ........ 7,900 $ 637,040
Tesco PLC .......................... 200,000 569,865
-----------
19,593,592
-----------
SOAPS & TOILETRIES (1.3%)
Avon Products, Inc. ................ 244,700 10,827,975
BIC ................................ 1,200 66,553
Estee Lauder Companies
(Class A) ........................ 60,900 5,206,950
Gillette Co. ....................... 122,050 5,896,541
Kao Corp. .......................... 95,000 2,146,655
L'Oreal ............................ 1,500 1,084,176
Unilever N.V. CVA .................. 14,000 1,196,549
Unilever PLC ....................... 90,000 1,009,284
-----------
27,434,683
-----------
TOBACCO (1.6%)
Austria Tabakwerke AG .............. 20,000 1,533,410
Imperial Tobacco Group PLC ......... 40,000 428,605
Japan Tobacco, Inc. ................ 110 1,101,462
Philip Morris Cos., Inc. ........... 464,200 24,834,700
RJ Reynolds BHD .................... 80,000 63,352
Rothmans of Pall Mall BHD .......... 6,000 24,751
Seita .............................. 7,401 463,431
Swedish Match AB ................... 335,900 1,223,982
Tabacalera SA--A ................... 110,000 2,770,898
-----------
32,444,591
-----------
TOTAL CONSUMER NONCYCLICALS (12.3%) 253,456,415
-----------
CREDIT SENSITIVE
BANKS (3.5%)
ABN Amro Holding N.V. .............. 22,000 462,751
Akita Bank ......................... 27,000 115,560
Banca Commerciale Italiana ......... 35,000 241,306
Banca Nazionale del Lavoro
(BNL)* ........................... 15,403 43,037
Banca Nazionale del Lavoro
(BNL)* ........................... 229,600 686,648
Bancaria de Espana SA .............. 20,000 517,169
Banco Bilbao Vizcaya SA ............ 58,176 910,791
Banco Central
Hispanoamericano SA .............. 110,000 1,304,180
Banco Latinoamericano de
Exportaciones S.A. ............... 15,000 249,375
Banco Santander SA ................. 26,442 524,672
Bank Austria AG .................... 11,475 583,463
Bank of Ireland .................... 90,000 2,001,160
Bank of Scotland ................... 80,000 954,378
Bank of Tokyo--Mitsubishi Ltd. ..... 88,000 912,361
BankAmerica Corp. .................. 319,483 19,208,891
Banque Nationale de Paris .......... 4,450 366,382
Barclays PLC ....................... 50,000 1,078,167
BPI-SGPS, SA ....................... 26,500 899,716
Chase Manhattan Corp. .............. 41,300 2,810,981
Citigroup, Inc. .................... 419,600 20,770,200
Credit Suisse Group ................ 6,000 940,576
Dai-Ichi Kangyo Bank Ltd. .......... 59,000 314,736
Deutsche Bank AG ................... 12,000 707,687
ForeningsSparbanken AB ............. 32,000 830,065
Hang Seng Bank ..................... 52,000 464,810
HSBC Holdings PLC .................. 20,000 505,807
HSBC Holdings PLC (H.K.$) .......... 12,000 298,945
</TABLE>
61
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Istituto Bancario San Paolo di
Torino Spa ........................ 10,000 $ 176,595
Lloyds TSB Group PLC ................ 167,866 2,388,031
Malayan Banking BHD ................. 58,000 82,247
Mediobanca Spa ...................... 10,000 138,796
Mitsubishi Trust & Banking
Corp. ............................. 28,000 180,381
National Bank of Canada ............. 50,000 806,766
Nordbanken Holding AB ............... 30,000 192,694
Sakura Bank Ltd. .................... 30,000 68,852
Shizuoka Bank Ltd. .................. 42,000 519,185
Skandinaviska Enskilda Banken
(Series A) ........................ 86,720 915,858
Societe Generale .................... 4,000 647,643
Svenska Handelbanken
(Series A) ........................ 3,100 130,958
Toho Bank ........................... 49,000 203,208
UBS AG--Registered .................. 2,000 615,385
Unicredito Italiano Spa ............. 24,200 143,356
United Overseas Bank Ltd. ........... 10,000 64,242
Wells Fargo Co. ..................... 130,900 5,227,819
----------
71,205,830
----------
FINANCIAL SERVICES (3.4%)
Abbey National PLC .................. 14,314 306,514
Aiful Corp. ......................... 30,500 1,854,054
Amvescap PLC ........................ 90,000 698,188
Associates First Capital Corp.
(Class A) ......................... 163,800 6,941,025
CMAC Investment Corp. ............... 232,900 10,698,844
CMIC Finance & Securities
Public Co. Ltd.* .................. 200,000 0
Credit Saison Co. ................... 25,600 631,777
Daiwa Securities Co. Ltd. ........... 19,000 64,989
Garban PLC* ......................... 3,250 12,383
Groupe Bruxelles Lambert SA ......... 450 91,119
Hong Leong Finance Ltd. ............. 40,000 76,606
Household International, Inc. ....... 310,800 12,315,450
JCG Holdings Ltd. ................... 60,000 19,362
MBNA Corp. .......................... 746,400 18,613,350
Merrill Lynch & Co., Inc. ........... 72,100 4,812,675
Morgan Stanley Dean Witter &
Co. ............................... 123,100 8,740,100
Nichiei Co. Ltd. .................... 17,300 1,379,708
Nomura Securities Co. ............... 61,000 532,432
PMI Group, Inc. ..................... 53,800 2,656,375
Sanyo Shinpan Finance Co. Ltd. ...... 5,400 196,190
Schroders PLC ....................... 5,812 106,082
Takefuji Corp. ...................... 60 4,386
----------
70,751,609
----------
INSURANCE (3.0%)
Aegon N.V. .......................... 16,000 1,964,748
Allianz AG .......................... 9,000 3,348,335
ASR Verzekeringsgroep N.V. .......... 22,900 2,073,060
Assicurazioni Generali .............. 24,000 1,001,512
CGU PLC ............................. 21,787 341,113
Cia de Seguros Imperio, SA* ......... 171,000 1,393,812
Corporacion Mapfre .................. 42,000 1,137,771
Everest Reinsurance Holdings,
Inc. .............................. 205,000 7,982,188
Fortis AG ........................... 740 266,503
Fortis Amev N.V. .................... 18,000 1,491,453
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Gallagher (Arthur J.) & Co. ......... 128,900 $5,687,713
GIO Australia Holdings Ltd. ......... 100,000 328,433
ING Groep N.V. ...................... 26,000 1,585,281
Koa Fire & Marine Insurance
Co. Ltd. .......................... 10,000 31,103
Legal & General Group PLC ........... 23,090 299,853
Mediolanum Spa ...................... 70,000 518,597
Mitsui Marine & Fire
Insurance Co. ..................... 13,000 68,542
Pacific & Orient BHD ................ 150,000 82,873
Providian Financial Corp. ........... 268,500 20,137,500
Prudential Corp. PLC ................ 62,486 943,497
Royal & Sun Alliance Insurance
Group PLC ......................... 49,613 405,104
Sampo Insurance Co. (A Shares) 32,000 1,214,368
Schweizerische
Rueckversicherungs-Gesellschaft 500 1,305,505
SunAmerica, Inc. .................... 103,600 8,404,550
Tokio Marine & Fire
Insurance Co. ..................... 30,000 358,883
----------
62,372,297
----------
REAL ESTATE (0.3%)
Asticus AB* ......................... 64,440 632,799
Boardwalk Equities, Inc.* ........... 40,000 439,818
British Land Co. PLC ................ 8,416 62,593
Castellum AB ........................ 98,000 1,065,250
Cheung Kong Holdings Ltd. ........... 70,000 503,727
City Developments Ltd. .............. 43,000 186,333
Daibiru Corp. ....................... 17,000 108,463
DBS Land ............................ 17,000 25,036
Diligentia AB ....................... 800 5,633
Drott AB (B Shares)* ................ 1,620 14,908
Green Property PLC .................. 160,000 904,277
Land Securities PLC ................. 9,978 128,498
Lend Lease Corp. Ltd. ............... 8,200 110,540
MEPC PLC ............................ 6,773 45,077
Mitsui Fudosan ...................... 20,000 151,529
Nackebro Fastighets AB* ............. 310 3,446
New World Development Co. ........... 48,000 120,817
Singapore Land Ltd. ................. 80,000 177,454
Sumitomo Realty &
Development Co. Ltd. .............. 137,000 445,538
Sun Hung Kai Properties ............. 48,000 350,060
Unione Immobiliare Spa* ............. 60,000 31,279
Wharf Holdings ...................... 17,000 24,796
Wharf Holdings--Warrants
(expire 12/31/99)* ................ 850 0
----------
5,537,871
----------
UTILITY--ELECTRIC (0.9%)
AES Corp.* .......................... 210,300 9,962,962
British Energy PLC .................. 80,000 915,111
Cia Paranaense de
Energia-Copel (ADR) ............... 124,000 883,500
CLP Holdings LTD .................... 36,000 179,367
Edison SPA .......................... 15,000 176,580
Electrabel SA ....................... 1,290 563,465
Electricidade de Portugal SA ........ 52,000 1,145,399
Enersis S.A. (ADR) .................. 6,000 154,875
Fortum Oyj* ......................... 64,751 393,666
Gas Y Electridad SA (Series 2) ...... 5,000 496,060
Hidroelectrica del Cantabrico ....... 2,302 127,313
Kansai Electric Power Co., Inc. ..... 22,400 491,272
</TABLE>
62
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
National Grid Group PLC ................................................ 140,000 $ 1,117,517
National Power PLC ..................................................... 86,000 741,207
Powergen PLC (ADR) ..................................................... 1,250 66,875
RWE AG ................................................................. 8,000 441,644
Tenaga Nasional BHD .................................................... 85,000 122,099
Tohoku Electric Power Co., Inc. ........................................ 11,500 203,810
-----------
18,182,722
-----------
UTILITY--GAS (0.0%)
Centrica PLC* .......................................................... 100,557 202,446
Thames Water PLC ....................................................... 6,819 130,476
-----------
332,922
-----------
UTILITY--TELEPHONE (1.5%)
British Telecommunications PLC 181,984 2,741,781
Cable & Wireless PLC ................................................... 30,000 368,873
France Telecom SA ...................................................... 5,000 397,173
Frontier Corp. ......................................................... 460,000 15,640,000
Hellenic Telecommunication
Organization SA ...................................................... 20,780 553,139
Nippon Telegraph & Telephone
Corp. ................................................................ 249 1,924,041
Singapore Telecommunications
Ltd. ................................................................. 66,000 100,800
Swisscom AG* ........................................................... 8,000 3,353,992
Telecom Italia Spa ..................................................... 50,000 426,368
Telecom Italia Spa ..................................................... 150,900 949,114
Telefonica de Espana ................................................... 24,000 1,065,578
Telefonica del Peru S.A. (ADR) ......................................... 32,000 406,000
Telefonica S.A.--Bonus Rights* ......................................... 480 425
Telekom Malaysia BHD ................................................... 56,000 103,131
Telekomunikacja Polska S.A.
(GDR)* ............................................................... 192,600 982,260
Videsh Sanchar Nigam Ltd.
(GDR) ................................................................ 60,000 675,000
-----------
29,687,675
-----------
TOTAL CREDIT SENSITIVE (12.6%) 258,070,926
-----------
ENERGY
COAL & GAS PIPELINES (0.1%)
BG PLC ................................................................. 125,808 793,862
OMV AG ................................................................. 6,000 565,434
-----------
1,359,296
-----------
OIL--DOMESTIC (1.2%)
Apache Corp. ........................................................... 89,000 2,252,812
Atlantic Richfield Co. ................................................. 112,800 7,360,200
Louis Dreyfus Natural Gas
Corp.* ............................................................... 274,700 3,914,475
Tom Brown, Inc.* ....................................................... 200,000 2,006,250
USX-Marathon Group, Inc. ............................................... 331,600 9,989,450
-----------
25,523,187
-----------
OIL--INTERNATIONAL (0.4%)
British Petroleum Co. PLC .............................................. 149,481 2,232,192
Cosmo Oil Co. Ltd. ..................................................... 11,000 16,668
Gulf Indonesia Resources Ltd.* ......................................... 52,500 341,250
Mitsubishi Oil Co.* .................................................... 8,000 14,107
Nippon Oil Co. Ltd. .................................................... 22,000 76,810
Norsk Hydro ASA ........................................................ 2,100 71,007
Oil Search Ltd. ........................................................ 402,200 406,638
Repsol SA .............................................................. 15,000 798,973
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Royal Dutch Petroleum Co. .............................................. 50,788 $ 2,528,717
Total S.A.--B .......................................................... 6,470 655,161
-----------
7,141,523
-----------
OIL--SUPPLIES & CONSTRUCTION (0.3%)
Bouygues Offshore SA (ADR) ............................................. 27,000 286,875
Fracmaster Ltd. ........................................................ 214,300 627,424
Noble Drilling Corp.* .................................................. 348,300 4,506,131
Stolt Comex Seaway, S.A.* .............................................. 21,600 145,800
Stolt Comex Seaway, S.A.
(ADR)* ............................................................... 271,950 1,495,725
-----------
7,061,955
-----------
RAILROADS (0.0%)
East Japan Railway Co. ................................................. 55 307,532
Tobu Railway Co. Ltd. .................................................. 14,000 40,939
Tokyu Corp. ............................................................ 17,000 44,741
-----------
393,212
-----------
TOTAL ENERGY (2.0%) .................................................. 41,479,173
-----------
TECHNOLOGY
ELECTRONICS (5.0%)
Altera Corp.* .......................................................... 10,000 608,750
Austria Mikro Systeme
International AG+ .................................................... 1,430 53,783
Cisco Systems, Inc.* ................................................... 280,475 26,031,592
Disco Corp. ............................................................ 3,500 102,348
Electrocomponents PLC .................................................. 8,375 56,156
Fujimi, Inc. ........................................................... 21,000 729,464
Intel Corp. ............................................................ 127,100 15,069,294
Micron Technology, Inc.* ............................................... 166,300 8,408,544
Micronics Japan Co. Ltd. ............................................... 10,000 146,212
Motorola, Inc. ......................................................... 283,000 17,280,687
Murata Manufacturing Co., Ltd. ......................................... 9,000 374,036
Nikon Corp. ............................................................ 68,000 662,827
Rohm Co. Ltd. .......................................................... 15,000 1,367,745
Sankyo Engineering Co. ................................................. 700 2,996
Sanmina Corp.* ......................................................... 73,070 4,566,875
Solectron Corp.* ....................................................... 216,900 20,158,144
Sterling Commerce, Inc.* ............................................... 139,500 6,277,500
TDK Corp. .............................................................. 4,000 366,150
Tokyo Electron ......................................................... 800 30,412
Yamaichi Electronics Co. Ltd. .......................................... 8,000 129,730
Yokogawa Electric Corp. ................................................ 59,000 292,778
-----------
102,716,023
-----------
OFFICE EQUIPMENT (3.8%)
Canon, Inc. ............................................................ 15,000 321,001
Ceridian Corp.* ........................................................ 343,400 23,973,613
Compaq Computer Corp. .................................................. 375,900 15,764,306
Dell Computer Corp.* ................................................... 297,600 21,780,600
Fujitsu Ltd. ........................................................... 28,000 373,416
Oce--Van De Grinten N.V. ............................................... 1,840 66,138
Policy Management Systems
Corp.* ............................................................... 309,600 15,634,800
Ricoh Elemex Corp. ..................................................... 9,000 69,942
-----------
77,983,816
-----------
OFFICE EQUIPMENT SERVICES (4.0%)
Computer Sciences Corp. ................................................ 83,000 5,348,313
Data Communication System Co. 19,800 404,422
First Data Corp. ....................................................... 482,600 15,292,388
</TABLE>
63
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Frontec AB (B Shares)* ................................................. 170,000 $ 728,654
Fuji Soft ABC, Inc. .................................................... 18,600 947,718
HBO & Co. .............................................................. 354,321 10,164,584
Intuit, Inc.* .......................................................... 50,000 3,625,000
Mettler--Toledo International,
Inc.* ................................................................ 95,500 2,679,969
Microsoft Corp.* ....................................................... 122,600 17,003,087
Misys PLC .............................................................. 220,000 1,602,359
Nippon System Development .............................................. 42,300 1,311,918
Novell, Inc.* .......................................................... 1,211,900 21,965,687
-------------
81,074,099
-------------
TELECOMMUNICATIONS (5.5%)
AirTouch Communications, Inc.* 190,000 13,703,750
America Online, Inc. ................................................... 160,800 25,728,000
Clearnet Communications, Inc.
(Class A)* ........................................................... 238,000 1,933,750
Corecomm Ltd.* ......................................................... 3,600 56,700
DDI Corp. .............................................................. 98 364,732
E.R.G. Limited ......................................................... 1,050,000 656,254
Energis PLC* ........................................................... 75,000 1,672,157
Ericsson LM (ADR) ...................................................... 49,400 1,177,680
Esprit Telecom Group PLC
(ADR)* ............................................................... 65,800 3,076,150
Filtronic Comtek PLC ................................................... 250,800 2,524,608
Fore Systems, Inc.* .................................................... 297,400 5,446,138
Global TeleSystems Group, Inc.* 132,900 7,409,175
Helsinki Telephone Corp. ............................................... 38,100 2,264,054
Hong Kong Telecommunications 88,800 155,312
Hyperion Telecommunications,
Inc. (Class A)* ...................................................... 173,000 2,616,625
Keppel Telecommunications &
Transportation Ltd. .................................................. 160,000 105,697
Mannesmann AG .......................................................... 3,500 404,816
MCI WorldCom, Inc.* .................................................... 140,300 10,066,525
Mobistar SA* ........................................................... 12,000 602,256
NetCom Systems AB (B Shares)* 8,000 326,097
Nextel Communications, Inc.
(Class A)* ........................................................... 281,300 6,645,713
NTL, Inc.* ............................................................. 135,200 7,630,350
Orange PLC* ............................................................ 150,000 1,743,286
Powertel Ltd.* ......................................................... 300,000 187,501
SK Telecom Co. Ltd. (ADR) .............................................. 50,000 509,375
Tele-Communications TCI
Ventures Group (Class A)* ............................................ 626,500 14,761,906
Vodafone Group PLC ..................................................... 106,700 1,732,708
WinStar Communications, Inc.* .......................................... 2,829 110,331
-------------
113,611,646
-------------
TOTAL TECHNOLOGY (18.3%) ............................................. 375,385,584
-------------
DIVERSIFIED
MISCELLANEOUS (1.2%)
Brierley Investments Ltd. .............................................. 14,000 3,170
Crean (James) PLC--Units ............................................... 40,000 50,568
Damskibs AS (Class B) .................................................. 25 174,798
GKN PLC ................................................................ 10,650 141,316
Industrias CH S.A. (B Shares)* ......................................... 80,000 142,574
Lagardere S.C.A. ....................................................... 2,100 89,230
Montedison Spa ......................................................... 74,000 98,234
Pilkington PLC ......................................................... 17,397 17,367
Ratin A/S-B ............................................................ 385 81,664
Sime Darby BHD ......................................................... 161,000 129,274
</TABLE>
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- ------------------
<S> <C> <C>
Smiths Industries PLC .................................................. 5,559 $ 79,313
Sophus Berendsen-B ..................................................... 385 13,369
Suez Lyonnaise des Eaux ................................................ 4,200 862,617
Tomkins PLC ............................................................ 37,500 176,887
Tyco International Ltd. ................................................ 273,100 20,601,981
Vivendi ................................................................ 10,930 2,835,406
Williams Holdings PLC .................................................. 9,756 55,393
-------------
TOTAL DIVERSIFIED (1.2%) ............................................. 25,553,161
-------------
TOTAL COMMON STOCKS AND OTHER
INVESTMENTS (65.6%)
(Cost $1,054,012,197) ................................................ 1,347,219,921
-------------
PREFERRED STOCKS:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (0.0%)
ProSieben Media AG ..................................................... 23,000 1,101,350
-------------
TRUCKING, SHIPPING (0.1%)
CNF Trust I
5.0% Conv. Series A .................................................. 25,400 1,444,625
-------------
TOTAL BUSINESS SERVICES (0.1%) 2,545,975
-------------
CAPITAL GOODS (0.1%)
AEROSPACE
Loral Space & Communications
6.0% Conv.+ .......................................................... 15,300 806,119
-------------
CONSUMER CYCLICALS
AIRLINES (0.0%)
Continental Airlines Finance
Trust 8.5% Conv. ..................................................... 3,350 231,987
-------------
LEISURE RELATED (0.1%)
Royal Caribbean Cruises Ltd.
7.25% Series A ....................................................... 18,500 2,127,500
Village Roadshow Ltd. .................................................. 10,000 12,500
-------------
2,140,000
-------------
TOTAL CONSUMER CYCLICALS (0.1%) 2,371,987
-------------
CONSUMER NONCYCLICALS
CONTAINERS (0.0%)
Sealed Air Corp.
$2.0 Conv. ........................................................... 10,300 534,312
-------------
HOSPITAL SUPPLIES & SERVICES (0.0%)
Fresenius AG ........................................................... 1,000 210,021
-------------
TOTAL CONSUMER NONCYCLICALS (0.0%) 744,333
-------------
CREDIT SENSITIVE (0.1%)
UTILITY--ELECTRIC
AES Trust I
5.375% Conv., Series A ............................................... 32,800 2,279,600
-------------
TECHNOLOGY
ELECTRONICS (0.1%)
L&H Capital Trust I
4.75% Conv.+ ......................................................... 25,900 819,088
Times Mirror Co. ....................................................... 11,700 652,275
-------------
1,471,363
-------------
TELECOMMUNICATIONS (0.6%)
AirTouch Communications, Inc.
4.25% Conv., Series C ................................................ 17,200 1,771,600
ICG Communications, Inc.
6.75% Conv. .......................................................... 11,800 628,350
</TABLE>
64
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
NUMBER VALUE
OF SHARES (NOTE 1)
-------------------- -------------
<S> <C> <C>
Intermedia Communications, Inc.:
7.0% Conv.+ ..................... 15,200 $ 388,550
7.0% Conv. Series D ............. 20,900 534,256
IXC Communications, Inc.:
6.75% Conv. ..................... 5,700 188,813
6.75% Conv.+ .................... 23,600 781,750
Nextel Strypes Trust ..............
7.25% Conv. ..................... 68,700 1,408,350
Nokia Oyj (A Shares) .............. 38,184 4,642,932
WinStar Communications, Inc.
7.0% Conv.+ ..................... 43,500 2,066,250
----------
12,410,851
----------
TOTAL TECHNOLOGY (0.7%) ......... 13,882,214
----------
TOTAL PREFERRED STOCKS (1.1%)
(Cost $19,329,055) .............. 22,630,228
----------
PRINCIPAL
AMOUNT
---------
LONG-TERM DEBT SECURITIES:
BUSINESS SERVICES
PRINTING, PUBLISHING &
BROADCASTING (0.2%)
Clear Channel Communications, Inc.
2.625% Conv., 04/01/03 .......... $ 680,000 737,800
Mail-Well, Inc. ...................
5.0% Conv., 11/01/02 ............ 640,000 576,000
P-Com, Inc.:
4.25% Conv., 11/01/02+ .......... 1,065,000 500,550
4.25% Conv., 11/01/02 ........... 560,000 263,200
Tele-Communications, Inc.
4.5%, 02/15/06 .................. 1,760,000 1,819,400
----------
3,896,950
----------
PROFESSIONAL SERVICES (0.0%)
Personnel Group of America:
5.75% Conv., 07/01/04+ .......... 295,000 341,462
5.75% Conv., 07/01/04 ........... 570,000 659,775
----------
1,001,237
----------
TOTAL BUSINESS SERVICES (0.2%) 4,898,187
----------
CAPITAL GOODS (0.1%)
AEROSPACE
Orbital Sciences Corp.:
5.0% Conv., 10/01/02+ ........... 545,000 921,050
5.0% Conv., 10/01/02 ............ 205,000 346,450
----------
1,267,500
----------
CONSUMER CYCLICALS
AUTO RELATED (0.3%)
Federal Mogul Corp.
7.75%, 07/01/06 ................. 6,775,000 6,924,863
----------
RETAIL--GENERAL (0.1%)
Office Depot, Inc.
Zero Coupon, 11/01/08 ........... 1,555,000 1,345,075
----------
TOTAL CONSUMER CYCLICALS (0.4%) 8,269,938
----------
CONSUMER NONCYCLICALS
DRUGS (0.3%)
MedImmune, Inc.
7.0% Conv., 07/01/03 ............ 775,000 3,917,625
7.0% Conv. Sub. Note, 07/01/03+ 280,000 1,415,400
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
------------- -------------
<S> <C> <C>
Quintiles Transnational Corp.:
4.25% Conv., 05/31/00+ ............. $ 460,000 $ 629,050
4.25% Conv., 05/31/00 .............. 590,000 806,825
----------
6,768,900
----------
HOSPITAL SUPPLIES & SERVICES (0.4%)
Alternative Living Services Ltd.
5.25% Conv., 12/15/02 .............. 905,000 1,153,875
Beckman Coulter, Inc.
7.45%, 03/04/08+ ................... 3,850,000 3,862,166
FPA Medical Management, Inc.
6.5% Conv., 12/15/01 (a)+ .......... 925,000 4,625
RES-Care, Inc.:
6.0% Conv., 12/01/04+ .............. 820,000 1,137,237
6.0% Conv., 12/01/04 ............... 250,000 346,719
Sunrise Assisted Living, Inc.
5.5% Conv., 06/15/02 ............... 545,000 813,413
----------
7,318,035
----------
MEDIA & CABLE (0.6%)
Time Warner, Inc.
9.125%, 01/15/13 ................... 10,250,000 12,976,090
----------
TOTAL CONSUMER NONCYCLICALS (1.3%) 27,063,025
----------
CREDIT SENSITIVE
ASSET BACKED (0.4%)
Chase Credit Card Master Trust
6.0%, 08/15/05 ..................... 8,000,000 8,110,000
----------
BANKS (1.3%)
Citicorp
6.375%, 11/15/08 ................... 10,470,000 10,861,578
Fuji Bank Ltd.
9.87%, 12/31/49+ ................... 7,000,000 5,110,000
Grupo Financiero Banorte
Zero Coupon, 12/05/02 .............. 20,800 2,102
St. George Bank Ltd.
7.15%, 10/15/05+ ................... 9,525,000 9,898,094
----------
25,871,774
----------
MORTGAGE RELATED (6.2%)
Federal Home Loan Mortgage
Corp.:
GOLD 7.0%, 09/01/11 ................ 6,976,105 7,128,708
7.0%, 01/01/12 ..................... 3,271,178 3,342,735
7.5%, 04/01/28 ..................... 5,214,962 5,353,487
Federal National Mortgage
Association:
6.5%, 01/01/11 ..................... 670,679 679,692
6.0%, 04/01/11 ..................... 9,545,134 9,557,065
6.5%, 09/01/11 ..................... 6,470,705 6,557,658
7.0%, 05/01/26 ..................... 1,904,303 1,941,199
7.0%, 08/01/26 ..................... 382,443 389,853
7.0%, 09/01/27 ..................... 739,951 754,287
7.0%, 01/01/28 ..................... 4,127,913 4,207,892
6.5%, 03/01/28 ..................... 2,836,658 2,852,614
6.5%, 09/01/28 ..................... 1,985,896 1,997,067
6.5%, 10/01/28 ..................... 2,976,651 2,993,394
8.0% 30 Year TBA, 12/01/28 ......... 8,300,000 8,593,986
Government National Mortgage
Association:
7.0%, 07/15/27 ..................... 3,532,203 3,612,773
</TABLE>
65
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Continued)
December 31, 1998
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- -----------------
<S> <C> <C>
7.5%, 09/15/27 ..................... $ 72 $ 74
7.0%, 02/15/28 ..................... 12,586,489 12,873,587
6.5%, 03/15/28 ..................... 17,417,945 17,586,725
7.0%, 05/15/28 ..................... 11,971,618 12,234,998
6.5%, 07/15/28 ..................... 4,451,714 4,494,851
7.0%, 12/15/28 ..................... 20,100,000 20,558,481
--------------
127,711,126
--------------
U.S. GOVERNMENT (10.0%)
U.S. Treasury:
6.0% Note, 08/15/00 ................ 28,025,000 28,603,016
6.25% Note, 04/30/01 ............... 43,910,000 45,460,594
6.5% Note, 08/31/01 ................ 22,775,000 23,807,004
6.5% Note, 05/31/02 ................ 35,050,000 37,010,627
5.75% Note, 08/15/03 ............... 1,550,000 1,617,812
4.25% Note, 11/15/03 ............... 21,765,000 21,479,334
5.625% Note, 05/15/08 .............. 5,800,000 6,187,875
6.125% Bond, 11/15/27 .............. 22,985,000 25,743,200
5.25% Bond, 11/15/28 ............... 14,620,000 14,985,500
--------------
204,894,962
--------------
UTILITY--ELECTRIC (0.3%)
Texas Utilities Co. (Series C)
6.375%, 01/01/08 ................... 6,900,000 7,058,341
--------------
TOTAL CREDIT SENSITIVE (18.2%) 373,646,203
--------------
ENERGY (0.1%)
GAS
RAS Laffan Liquid Natural Gas
8.294%, 03/15/14+ .................. 3,500,000 2,884,910
--------------
TECHNOLOGY
ELECTRONICS (1.7%)
Amkor Technologies, Inc.
5.75% Conv., 05/01/03 .............. 2,435,000 2,410,650
America Online, Inc.
4.0% Conv., 11/15/02 ............... 720,000 4,428,900
EMC Corp.
3.25% Conv., 03/15/02 .............. 435,000 1,638,862
HNC Software, Inc.
4.75% Conv., 03/01/03 .............. 920,000 1,012,000
Hutchinson Technology, Inc.:
6.0%, 03/15/05+ .................... 405,000 564,469
6.0%, 03/15/05 ..................... 970,000 1,351,938
Level One Communications:
4.0% Conv., 09/01/04+ .............. 670,000 976,525
4.0% Conv., 09/01/04 ............... 400,000 583,000
Micron Technology, Inc.
7.0% Conv., 07/01/04 ............... 700,000 749,000
Motorola, Inc.
6.5%, 11/15/28 ..................... 10,300,000 10,405,369
Network Associates, Inc.:
Zero Coupon, 02/13/18+ ............. 2,115,000 1,298,081
Zero Coupon, 02/13/18 .............. 315,000 193,331
Photronics, Inc.
6.0% Conv., 06/01/04 ............... 1,485,000 1,577,813
</TABLE>
<TABLE>
<CAPTION>
PRINCIPAL VALUE
AMOUNT (NOTE 1)
---------------------- -----------------
<S> <C> <C>
SCI Systems, Inc.
5.0% Conv., 05/01/06+ .............. $1,430,000 $ 3,401,612
Solectron Corp.
6.0% Conv., 03/01/06+ .............. 1,470,000 4,046,175
--------------
34,637,725
--------------
TELECOMMUNICATIONS (0.3%)
Comverse Technology, Inc.:
5.75% Conv., 10/01/06+ ............. 1,295,000 2,099,519
5.75% Conv., 10/01/06 .............. 555,000 899,795
Global TeleSystems Group, Inc.
5.75% Conv., 07/01/10 .............. 2,215,000 2,502,950
--------------
5,502,264
--------------
TOTAL TECHNOLOGY (2.0%) ............ 40,139,989
--------------
TOTAL LONG-TERM DEBT SECURITIES (22.3%)
(Amortized Cost $440,261,149) 458,169,752
--------------
SHORT-TERM DEBT SECURITIES:
BANKERS ACCEPTANCES (0.6%)
Chase Manhattan Corp.
5.07%, due 02/19/99 ................ 12,744,352 12,656,406
--------------
COMMERCIAL PAPER
National Rural Utilities Finance
Corp.
5.12%, due 02/16/99 ................ 10,000,000 9,934,577
Suntrust Bank
5.54%, due 01/29/99 ................ 15,000,000 14,935,601
--------------
TOTAL COMMERCIAL PAPER (1.2%) 24,870,178
--------------
TIME DEPOSITS
Chase Manhattan Corp.
4.5%, due 01/04/99 ................. 57,700,000 57,700,000
First National Bank Chikago
4.875%, due 01/04/99 ............... 60,000,000 59,999,999
--------------
TOTAL TIME DEPOSITS (5.7%) ......... 117,699,999
--------------
U.S. GOVERNMENT AGENCIES
Federal Home Loan Mortgage
Corp.:
4.7%, due 01/04/99 ................. 49,100,000 49,080,768
5.1%, due 01/14/99 ................. 20,000,000 19,963,312
--------------
TOTAL U.S. GOVERNMENT AGENCIES (3.4%) 69,044,080
--------------
TOTAL SHORT-TERM DEBT SECURITIES (10.9%)
(Amortized Cost $224,270,663) 224,270,663
--------------
TOTAL INVESTMENTS (99.9%)
(Cost/Amortized Cost $1,737,873,064) 2,052,290,564
OTHER ASSETS
LESS LIABILITIES (0.1%) ............ 2,809,955
--------------
NET ASSETS (100.0%) .................. $2,055,100,519
==============
</TABLE>
66
<PAGE>
THE HUDSON RIVER TRUST
ALLIANCE GROWTH INVESTORS PORTFOLIO
PORTFOLIO OF INVESTMENTS (Concluded)
December 31, 1998
<TABLE>
<CAPTION>
<S> <C>
DISTRIBUTION OF INVESTMENTS BY GLOBAL
REGION
As a Percentage of Total Investments
Canada ........................ 0.2%
France ........................ 1.0
Germany ....................... 0.5
Japan ......................... 2.4
Latin America ................. 0.2
Netherlands ................... 0.9
New Zealand & Australia ....... 0.7
Scandinavia ................... 1.1
Southeast Asia ................ 0.3
Spain ......................... 0.6
Switzerland ................... 0.7
United Kingdom ................ 2.7
United States** ............... 86.9
Other European Countries ...... 1.8
-----
100.0%
=====
</TABLE>
- ----------
* Non-income producing.
** Includes Short-Term Debt Securities of 10.9%.
+ 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, 1998, these securities amounted to $52,823,751 or
2.6% of net assets.
(a) On July 15, 1998, this security defaulted on its interest payment.
Glossary:
ADR--American Depository Receipt
GDR--Global Depository Receipt
See Notes to Financial Statements.
67
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS
December 31, 1998
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, and to separate accounts of other
insurance companies unaffiliated with Equitable. Class IB shares are offered to
separate accounts of Equitable.
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 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.
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.
68
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
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.
Over-the-counter written options are valued using prices provided by brokers.
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.
69
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
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 accretion of
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.
All income earned and expenses incurred by the Portfolios are borne on a
pro-rata basis by each outstanding class of shares, based on the proportionate
interest in each Portfolio represented by the net assets of such class.
Expenses of the Trust are charged to each Portfolio in proportion to net
assets.
Under a deferred compensation plan, the Trust owes several Trustees the
payment of all or part of the fees payable for their services. Such amounts are
reflected in the Statements of Assets and Liabilities.
The Board of Trustees has approved the lending of portfolio securities
through its custodian bank, Chase Manhattan Bank ("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 from 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, 1998, and the security loan fees received, net of rebates paid, for the
year ended December 31, 1998. 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 ......... $ 55,861,878 $ 57,413,825 $ 125,806
Alliance Quality Bond ............................... 83,075,859 85,255,743 288,741
Alliance Growth and Income .......................... 72,527,235 73,317,420 114,554
Alliance Equity Index ............................... 150,848,887 153,710,640 186,342
Alliance Common Stock ............................... 616,945,987 622,787,758 1,460,586
Alliance Global ..................................... 65,942,264 68,139,226 550,844
Alliance International .............................. 11,817,454 12,321,470 99,893
Alliance Aggressive Stock ........................... 383,627,804 386,886,300 1,985,589
Alliance Conservative Investors ..................... 86,716,143 89,252,161 282,914
Alliance Balanced ................................... 438,340,537 452,567,157 1,352,818
Alliance Growth Investors ........................... 265,482,794 272,153,386 1,093,954
</TABLE>
- ----------
* Including U.S. Government securities valued at $38,861,005, $34,823,220,
$4,879,000, $35,900,535, $101,682,362, and $55,245,737 for the Alliance
Intermediate Government Securities, Alliance Quality Bond, Alliance
Global, Alliance Conservative Investors, Alliance Balanced and Alliance
Growth Investors Portfolios, respectively.
70
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
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, dividends and foreign 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; distributions 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 and
distributions are reinvested in additional full and fractional shares of the
related Portfolios. All dividends and distributions 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.
71
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
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
relative 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 to
trade or exercise the futures contracts purchased through the exchange or board
of trade which acts as the counterparty to the Portfolio's futures
transactions. Forward contracts are entered into 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, 1998, 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
INTERMEDIATE ALLIANCE ALLIANCE
GOVERNMENT QUALITY ALLIANCE EQUITY ALLIANCE ALLIANCE
SECURITIES BOND HIGH YIELD INDEX COMMON STOCK GLOBAL
PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO PORTFOLIO
-------------- ------------- ------------- ----------- ----------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Undistributed (overdistributed) net
investment income ....................... $ 1,558 $ 101,980 $ 197,552 $ 3,951 $ (15,541,411) $ 1,533,285
Accumulated net realized gain (loss) ..... (1,558) (101,980) (197,552) (3,951) 15,541,411 (1,533,285)
</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 .......................... $ (2,256,875) $ -- $ (168,661) $ -- $ -- $ 64,483
Undistributed (overdistributed) net
investment income ....................... 2,913,186 9,723,281 27,043 (173,812) (1,175,974) (105,678)
Accumulated net realized gain (loss) ..... (656,311) (9,723,281) 141,618 173,812 1,175,974 41,195
</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, 1998 to December 31, 1998 certain
Portfolios incurred and elected to defer until January 1, 1999 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 Quality Bond ............. $ 1,114,087 $ --
Alliance High Yield ............... 35,405,973 --
Alliance Common Stock ............. 4,742,342 26,979
Alliance Global ................... -- 435,898
Alliance Small Cap Growth ......... 2,835,065 --
Alliance Balanced ................. -- 106,329
Alliance Growth Investors ......... -- 101,198
</TABLE>
72
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
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.
Under the terms of an Investment Advisory Agreement, Alliance receives fees
from each Portfolio at the following rates:
<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.
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
distribution agreements ("the Class IB Distribution Agreements") pursuant to
the Distribution Plans with each of Equitable Distributors, Inc. ("EDI") and EQ
Financial Consultants, Inc. ("EQ Financial") (each a "Class IB Distributor").
Both EDI and EQ Financial are indirect, wholly-owned subsidiaries of the
Equitable. The Class IB Distribution Agreements provide that each Class IB
Distributor receives payments from each Portfolio (except the Alliance Small
Cap Growth Portfolio) at a rate equal to 0.25% of the average daily 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%.
The Distribution Plans provide that EDI and EQ Financial will use the
payments received under the Class IB Distribution 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 the Class IB
Distributor's compensation is not directly tied to their expenses, the amount
of compensation received under the Class IB Distribution Agreements during any
year may be more or less than 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.
73
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
4. Investment Transactions
Investment security transactions, excluding short-term debt securities,
for the year ended December 31, 1998 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 ......... $ -- $882,551,892 $ -- $779,886,556
Alliance Quality Bond ............................... 91,071,256 487,202,030 73,242,559 395,286,597
Alliance High Yield ................................. 1,184,293,260 -- 915,572,290 --
Alliance Growth and Income .......................... 815,755,393 -- 555,944,044 --
Alliance Equity Index ............................... 497,118,176 -- 77,132,186 --
Alliance Common Stock ............................... 5,990,877,057 -- 4,756,141,756 --
Alliance Global ..................................... 1,299,924,040 -- 1,373,918,299 --
Alliance International .............................. 113,329,137 -- 120,272,396 --
Alliance Aggressive Stock ........................... 4,602,143,779 -- 4,708,779,467 --
Alliance Small Cap Growth ........................... 361,639,388 -- 200,463,865 --
Alliance Conservative Investors ..................... 134,956,237 192,184,044 123,103,953 168,194,209
Alliance Balanced ................................... 896,747,240 684,949,864 963,577,848 656,749,490
Alliance Growth Investors ........................... 1,218,713,796 469,941,220 1,236,606,838 390,934,301
</TABLE>
No activity is shown for the Alliance Money Market Portfolio since it
trades exclusively in short-term debt securities.
Transactions in options written for the year ended December 31, 1998 are
summarized as follows:
<TABLE>
<CAPTION>
ALLIANCE
COMMON STOCK
PORTFOLIO
--------------------------------
NUMBER OF PREMIUMS
CONTRACTS RECEIVED
------------- ----------------
<S> <C> <C>
Options outstanding--January 1, 1998 ........................ 365,250 $ 103,560,700
Options written ............................................. 2,091,320 657,322,763
Options terminated in closing purchase transactions ......... (483,930) (141,155,763)
Options expired ............................................. (889,138) (253,614,377)
Options exercised ........................................... (590,542) (170,305,807)
--------- --------------
Options outstanding--December 31, 1998 ...................... 492,960 $ 195,807,516
========= ==============
</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, 1998, the 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:
74
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
<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
British Pounds, settling 01/05/99 ................ 261 $ 437,745 $ 434,102 $ (3,643)
Italian Lira, settling 01/05/99 .................. 702,045 423,531 424,581 1,050
Japanese Yen, settling 02/26/99 .................. 4,000,000 34,457,806 35,709,822 1,252,016
Swedish Krona, settling 01/05/99 ................. 1,203 149,128 148,646 (482)
FOREIGN CURRENCY SALE CONTRACTS
Japanese Yen, settling 01/04/99-02/26/99 ......... 4,011,590 34,278,391 35,812,541 (1,534,150)
------------
$ (285,209)
============
</TABLE>
<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
Japanese Yen, settling 01/04/99 ......... 1,505,000 $11,144,021 $13,336,287 $ 2,192,266
FOREIGN CURRENCY SALE CONTRACTS
Japanese Yen, settling 01/04/99 ......... 1,507,297 11,239,914 13,356,644 (2,116,730)
------------
$ 75,536
============
</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
Japanese Yen, settling 01/04/99 ............ 135,000 $ 999,630 $ 1,196,278 $ 196,648
FOREIGN CURRENCY SALE CONTRACTS
Japanese Yen, settling 01/04/99 ............ 135,329 1,009,259 1,199,193 (189,934)
----------
$ 6,714
==========
</TABLE>
<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
Japanese Yen, settling 01/04/99 ......... 1,230,000 $ 9,107,738 $10,899,424 $ 1,791,686
FOREIGN CURRENCY SALE CONTRACTS
Japanese Yen, settling 01/04/99 ......... 1,230,000 9,170,208 10,899,424 (1,729,216)
------------
$ 62,470
============
</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
Japanese Yen, settling 01/04/99 ......... 2,500,000 $18,511,662 $22,153,300 $ 3,641,638
FOREIGN CURRENCY SALE CONTRACTS
Japanese Yen, settling 01/04/99 ......... 2,504,474 18,676,316 22,192,951 (3,516,635)
------------
$ 125,003
============
</TABLE>
75
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
As of December 31, 1998, 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 ............................... $1,065,208,017 $ 708,247 $ (16,311) $ 691,936
Alliance Intermediate Government Securities ......... 224,677,249 1,973,900 (780,832) 1,193,068
Alliance Quality Bond ............................... 322,729,246 3,760,121 (1,440,440) 2,319,681
Alliance High Yield ................................. 664,097,119 6,466,990 (71,570,622) (65,103,632)
Alliance Growth and Income .......................... 853,361,062 198,202,793 (56,147,536) 142,055,257
Alliance Equity Index ............................... 1,166,648,275 539,339,959 (26,656,029) 512,683,930
Alliance Common Stock ............................... 8,870,134,823 4,918,784,136 (492,118,717) 4,426,665,419
Alliance Global ..................................... 1,148,236,463 326,834,020 (55,744,464) 271,089,556
Alliance International .............................. 199,595,845 40,766,037 (37,127,918) 3,638,119
Alliance Aggressive Stock ........................... 4,327,017,046 788,191,037 (479,687,021) 308,504,016
Alliance Small Cap Growth ........................... 314,017,957 39,536,445 (30,810,567) 8,725,878
Alliance Conservative Investors ..................... 355,277,161 39,068,741 (5,520,012) 33,548,729
Alliance Balanced ................................... 1,661,912,307 332,818,610 (53,484,535) 279,334,075
Alliance Growth Investors ........................... 1,740,591,203 395,786,484 (84,087,123) 311,699,361
</TABLE>
During the year ended December 31, 1998, the Alliance Intermediate
Government Securities Portfolio utilized available capital loss carryforwards
of $3,248,623.
The Alliance Intermediate Government Securities Portfolio and Alliance
Small Cap Growth Portfolio had net capital loss carryforwards of $5,583,325 (of
which $5,101,186 expires in the year 2002 and $482,139 expires in the year
2004) and $16,465,876 (all of which expires in the year 2006), respectively. 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, 1998, 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,
1998 1997 1998 1997
----------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ............. 136,020,103 88,164,162 7,332,095 4,317,481
Shares issued in
reinvestment of
dividends and
distributions .......... 2,682,886 2,138,588 724,448 605,567
----------- ---------- --------- ---------
Total shares issued ..... 138,702,989 90,302,750 8,056,543 4,923,048
Shares redeemed ......... (112,151,509) (91,686,416) (4,388,356) (2,249,794)
------------ ----------- ---------- ----------
Net increase (decrease) 26,551,480 (1,383,666) 3,668,187 2,673,254
============ =========== ========== ==========
<PAGE>
<CAPTION>
ALLIANCE ALLIANCE
QUALITY BOND HIGH YIELD
PORTFOLIO PORTFOLIO
------------------------------- --------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
--------------- --------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ............. 12,172,248 5,108,456 18,951,617 15,273,062
Shares issued in
reinvestment of
dividends and
distributions .......... 2,093,682 1,161,537 5,403,877 3,903,981
---------- --------- ---------- ----------
Total shares issued ..... 14,265,930 6,269,993 24,355,494 19,177,043
Shares redeemed ......... (2,355,892) (1,749,691) (11,963,174) (4,915,625)
---------- ---------- ----------- ----------
Net increase (decrease) 11,910,038 4,520,302 12,392,320 14,261,418
========== ========== =========== ==========
</TABLE>
76
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
GROWTH AND INCOME EQUITY INDEX
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ................ 15,163,368 17,042,406 26,611,092 25,418,356
Shares issued in
reinvestment of
dividends and
distributions ............. 4,401,644 2,393,845 694,933 723,055
---------- ---------- ---------- ----------
Total shares issued ........ 19,565,012 19,436,251 27,306,025 26,141,411
Shares redeemed ............ (3,992,469) (1,171,007) (7,487,195) (3,834,705)
---------- ---------- ---------- ----------
Net increase ............... 15,572,543 18,265,244 19,818,830 22,306,706
========== ========== ========== ==========
<CAPTION>
ALLIANCE ALLIANCE
COMMON STOCK GLOBAL
PORTFOLIO PORTFOLIO
--------------------------------- --------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
---------------- ---------------- ---------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ................ 43,379,931 50,744,225 8,066,603 13,465,598
Shares issued in
reinvestment of
dividends and
distributions ............. 63,907,193 35,866,900 5,362,782 5,883,409
---------- ---------- --------- ----------
Total shares issued ........ 107,287,124 86,611,125 13,429,385 19,349,007
Shares redeemed ............ (43,764,983) (18,396,632) (13,140,812) (8,663,149)
----------- ----------- ----------- ----------
Net increase ............... 63,522,141 68,214,493 288,573 10,685,858
=========== =========== =========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
INTERNATIONAL AGGRESSIVE STOCK
PORTFOLIO PORTFOLIO
--------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ................ 40,984,802 17,702,398 33,480,797 34,847,127
Shares issued in
reinvestment of
dividends and
distributions ............. 362,445 1,469,420 7,661,455 11,233,155
---------- ---------- ---------- ----------
Total shares issued ........ 41,347,247 19,171,818 41,142,252 46,080,282
Shares redeemed ............ (41,520,686) (13,816,916) (40,575,903) (27,155,091)
----------- ----------- ----------- -----------
Net increase (decrease) (173,439) 5,354,902 566,349 18,925,191
=========== =========== =========== ===========
<PAGE>
<CAPTION>
ALLIANCE ALLIANCE
SMALL CAP GROWTH CONSERVATIVE INVESTORS
PORTFOLIO PORTFOLIO
------------------------------- -------------------------------
MAY 1, 1997*
YEAR ENDED TO YEAR ENDED
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
---------------- -------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold ................ 52,458,409 12,473,113 3,583,057 2,875,061
Shares issued in
reinvestment of
dividends and
distributions ............. 1,203 185,690 2,581,375 1,809,193
---------- ---------- --------- ---------
Total shares issued ........ 52,459,612 12,658,803 6,164,432 4,684,254
Shares redeemed ............ (43,349,403) (4,992,168) (3,201,439) (3,816,982)
----------- ---------- ---------- ----------
Net increase (decrease) 9,110,209 7,666,635 2,962,993 867,272
=========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
BALANCED GROWTH INVESTORS
PORTFOLIO PORTFOLIO
---------------------------------- ---------------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
--------------- ---------------- --------------- ---------------
<S> <C> <C> <C> <C>
Class IA
- --------
Shares sold .......................... 4,836,054 3,662,533 6,034,474 9,706,135
Shares issued in reinvestment of
dividends and distributions ......... 11,476,087 8,034,691 9,929,342 6,731,864
---------- --------- --------- ---------
Total shares issued .................. 16,312,141 11,697,224 15,963,816 16,437,999
Shares redeemed ...................... (9,732,301) (12,097,554) (5,077,946) (4,231,449)
---------- ----------- ---------- ----------
Net increase (decrease) .............. 6,579,840 (400,330) 10,885,870 12,206,550
========== =========== ========== ==========
</TABLE>
- ----------
* Commencement of operations.
77
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
<TABLE>
<CAPTION>
ALLIANCE
ALLIANCE INTERMEDIATE
MONEY MARKET GOVERNMENT SECURITIES
PORTFOLIO PORTFOLIO
-------------------------------- -----------------------------
MAY 1, 1997*
YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
---------------- --------------- -------------- --------------
<S> <C> <C> <C> <C>
Class IB
- --------
Shares sold ................. 40,257,599 15,458,380 2,732,736 536,124
Shares issued in
reinvestment of
dividends and
distributions .............. 1,123,590 276,519 87,259 9,576
---------- ---------- --------- -------
Total shares issued ......... 41,381,189 15,734,899 2,819,995 545,700
Shares redeemed ............. (15,656,425) (3,884,676) (156,546) (10,301)
----------- ---------- --------- -------
Net increase ................ 25,724,764 11,850,223 2,663,449 535,399
=========== ========== ========= =======
<CAPTION>
ALLIANCE ALLIANCE
QUALITY BOND HIGH YIELD
PORTFOLIO PORTFOLIO
-------------- ---------------------------
JULY 8, 1998*
TO YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1998 1997
-------------- -------------- ------------
<S> <C> <C> <C>
Class IB
- --------
Shares sold ................. 1,010 15,829,829 5,872,392
Shares issued in
reinvestment of
dividends and
distributions .............. 47 2,231,229 496,765
----- ---------- ---------
Total shares issued ......... 1,057 18,061,058 6,369,157
Shares redeemed ............. -- (612,661) (51,149)
----- ---------- ---------
Net increase ................ 1,057 17,448,397 6,318,008
===== ========== =========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE
GROWTH AND INCOME EQUITY INDEX
PORTFOLIO PORTFOLIO
----------------------------- -----------------------------
MAY 1, 1997* MAY 1, 1997*
YEAR ENDED TO YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Class IB
- --------
Shares sold ............... 4,613,042 2,001,059 13,073 7,451
Shares issued in
reinvestment of
dividends and
distributions ............ 579,115 127,333 108 55
--------- --------- ------ -----
Total shares issued . ..... 5,192,157 2,128,392 13,181 7,506
Shares redeemed ........... (208,611) (266) (1,032) (1,926)
--------- --------- ------ ------
Net increase .............. 4,983,546 2,128,126 12,149 5,580
========= ========= ====== ======
<PAGE>
<CAPTION>
ALLIANCE ALLIANCE
COMMON STOCK GLOBAL
PORTFOLIO PORTFOLIO
----------------------------- --------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- -------------- ------------- ------------
<S> <C> <C> <C> <C>
Class IB
- --------
Shares sold ............... 19,886,395 9,736,070 1,194,769 1,232,644
Shares issued in
reinvestment of
dividends and
distributions ............ 4,121,858 826,867 176,642 99,584
---------- --------- --------- ---------
Total shares issued . ..... 24,008,253 10,562,937 1,371,411 1,332,228
Shares redeemed ........... (278,288) (29,575) (145,815) (103,224)
---------- ---------- --------- ---------
Net increase .............. 23,729,965 10,533,362 1,225,596 1,229,004
========== ========== ========= =========
</TABLE>
<TABLE>
<CAPTION>
ALLIANCE
INTERNATIONAL
PORTFOLIO
----------------------------------
YEAR ENDED MAY 1, 1997*
DECEMBER 31, TO
1998 DECEMBER 31, 1997
-------------- -------------------
<S> <C> <C>
Class IB
- --------
Shares sold . ...................... 592,943 317,031
Shares issued in reinvestment of
dividends and distributions ....... 9,904 22,868
------- -------
Total shares issued . . . .......... 602,847 339,899
Shares redeemed .................... (244,562) (19,496)
-------- -------
Net increase ....................... 358,285 320,403
======== =======
<CAPTION>
ALLIANCE ALLIANCE
AGGRESSIVE STOCK SMALL CAP GROWTH
PORTFOLIO PORTFOLIO
--------------------------- ---------------------------------
YEAR ENDED YEAR ENDED MAY 1, 1997*
DECEMBER 31, DECEMBER 31, TO
1998 1997 1998 DECEMBER 31, 1997
------------- ------------- -------------- ------------------
<S> <C> <C> <C> <C>
Class IB
- --------
Shares sold . ...................... 2,372,000 1,856,882 6,064,836 3,666,066
Shares issued in reinvestment of
dividends and distributions ....... 244,653 175,796 -- 91,565
--------- --------- --------- ---------
Total shares issued . . . .......... 2,616,653 2,032,678 6,064,836 3,757,631
Shares redeemed .................... (129,735) (15,597) (295,805) (5,055)
--------- --------- --------- ---------
Net increase ....................... 2,486,918 2,017,081 5,769,031 3,752,576
========= ========= ========= =========
</TABLE>
- ----------
* Commencement of operations.
78
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Continued)
December 31, 1998
<TABLE>
<CAPTION>
ALLIANCE ALLIANCE ALLIANCE
CONSERVATIVE INVESTORS BALANCED GROWTH INVESTORS
PORTFOLIO PORTFOLIO PORTFOLIO
----------------------------------- ------------------ ----------------------------
YEAR ENDED MAY 1, 1997* JULY 8, 1998* YEAR ENDED
DECEMBER 31, TO TO DECEMBER 31,
1998 DECEMBER 31, 1997 DECEMBER 31, 1998 1998 1997
-------------- ------------------ ------------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Class IB
- --------
Shares sold .......................... 2,038,248 467,751 513 2,539,628 1,855,983
Shares issued in reinvestment of
dividends and distributions ......... 185,980 20,199 54 424,011 130,747
--------- ------- --- --------- ---------
Total shares issued . ................ 2,224,228 487,950 567 2,963,639 1,986,730
Shares redeemed ...................... (49,850) (8,774) -- (253,305) (85,261)
--------- ------- --- --------- ---------
Net increase ......................... 2,174,378 479,176 567 2,710,334 1,901,469
========= ======= === ========= =========
</TABLE>
- ----------
* Commencement of operations.
6. Bank Borrowing
A number of open-end mutual funds managed by the Adviser, including the
Trust, participate in a $750 million revolving credit facility (the "Facility")
intended to provide short-term financing if necessary, subject to certain
restrictions, in connection with abnormal redemption activity. Commitment fees
related to the Facility are paid by the participating funds and are included in
miscellaneous expenses in the Statements of Operations. The Trust did not
utilize the Facility during the year ended December 31, 1998.
7. 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, 1998 are summarized as follows:
<TABLE>
<CAPTION>
MARKET VALUE MARKET VALUE REALIZED
DECEMBER 31, PURCHASES SALES DECEMBER 31, DIVIDEND GAIN
1997 AT COST AT COST 1998 INCOME (LOSS)
-------------- --------------- -------------- ---------------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C>
ALLIANCE COMMON STOCK PORTFOLIO:
Abercrombie & Fitch Co. (Class A) ........ $ -- $ 21,063,829 $17,113,683 $ -- $ -- $ 9,923,529
Ceridian Corp. ........................... 174,774,688 -- -- 266,334,688 -- --
Chris Craft Industries, Inc. (Class B) ... 64,143,286 -- -- 60,857,849 -- --
Ingram Micro, Inc. (Class A) ............. -- 105,907,470 -- 83,700,000 -- --
SCI Systems, Inc. ........................ -- 153,174,554 21,327,500 206,514,000 -- (2,309,999)
Teleport Communications Group, Inc.
(Class A) ............................... 220,103,625 -- 65,220,313 -- -- 27,905,809
------------ ------------- ---- ------------
$459,021,599 $ 617,406,537 $ -- $ 35,519,339
============ ============= ==== ============
</TABLE>
79
<PAGE>
THE HUDSON RIVER TRUST
NOTES TO FINANCIAL STATEMENTS--(Concluded)
December 31, 1998
<TABLE>
<CAPTION>
MARKET VALUE
DECEMBER 31, PURCHASES SALES
1997 AT COST AT COST
----------------- -------------- ---------------
<S> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
Abercrombie & Fitch Co. (Class A) .......... $ -- $ 76,324,173 $ 53,329,966
Capstar Hotel Co. .......................... -- 81,149,255 --
Centocor, Inc. ............................. 167,463,625 111,451,347 293,691,624
Circuit City Stores, Inc.- CarMax
Group ..................................... 56,346,300 1,107,635 947,745
Comverse Technology, Inc. (a) .............. 72,520,500 -- 5,393,586
Continental Airlines, Inc. (Class B) ....... 213,588,375 25,055,485 17,344,702
Crompton & Knowles Corp. ................... 137,800,000 -- 34,511,251
Dollar Thrifty Automotive Group, Inc. ...... -- 34,775,410 34,775,410
Florida Panthers Holdings, Inc. ............ 29,071,425 16,452,003 --
MedImmune, Inc. (a) ........................ 57,443,925 -- 767,822
Millicom International Cellular SA ......... 89,487,300 6,670,015 1,151,761
Mohawk Industries, Inc. .................... 69,103,125 19,664,861 797,972
Polo Ralph Lauren Corp. .................... -- 66,464,900 66,464,900
Premier Parks, Inc. ........................ -- 132,191,005 7,500,600
Security Capital Group, Inc. (Class B) ..... 38,509,250 17,676,525 620,958
Suburban Lodges of America ................. 12,034,500 -- 17,254,100
Teekay Shipping Corp. ...................... -- 64,163,180 --
Telephone & Data Systems, Inc. ............. 133,322,406 -- 39,868,179
Tiffany & Co. .............................. 56,376,506 48,968,141 7,673,342
Tommy Hilfiger Corp. (a) ................... 68,124,937 12,081,367 20,934,612
Venator Group, Inc. ........................ -- 144,426,311 --
--------------
$1,201,192,174
==============
<CAPTION>
MARKET VALUE REALIZED
DECEMBER 31, DIVIDEND GAIN
1998 INCOME (LOSS)
----------------- -------------- ----------------
<S> <C> <C> <C>
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
Abercrombie & Fitch Co. (Class A) .......... $ -- $ -- $ 8,556,912
Capstar Hotel Co. .......................... -- -- --
Centocor, Inc. ............................. -- -- 33,584,924
Circuit City Stores, Inc.- CarMax
Group ..................................... 34,580,869 -- (408,137)
Comverse Technology, Inc. (a) .............. 66,051,300 -- (1,196,176)
Continental Airlines, Inc. (Class B) ....... 148,468,650 -- 21,724,960
Crompton & Knowles Corp. ................... -- 260,000 2,103,108
Dollar Thrifty Automotive Group, Inc. ...... -- -- (17,798,105)
Florida Panthers Holdings, Inc. ............ 23,292,425 -- --
MedImmune, Inc. (a) ........................ 47,381,969 -- 1,245,585
Millicom International Cellular SA ......... 85,782,037 -- 3,053,727
Mohawk Industries, Inc. .................... 158,441,025 -- 1,312,171
Polo Ralph Lauren Corp. .................... -- -- (14,428,668)
Premier Parks, Inc. ........................ 162,327,550 -- (204,587)
Security Capital Group, Inc. (Class B) ..... -- -- (127,232)
Suburban Lodges of America ................. -- -- (3,412,315)
Teekay Shipping Corp. ...................... 49,463,706 946,000 --
Telephone & Data Systems, Inc. ............. -- 546,854 6,243,799
Tiffany & Co. .............................. 132,327,937 794,843 68,781
Tommy Hilfiger Corp. (a) ................... 95,838,000 -- 4,531,018
Venator Group, Inc. ........................ 61,230,925 -- --
-------------- ----------- --------------
$1,065,186,393 $ 2,547,697 $ 44,849,765
============== =========== ==============
</TABLE>
- ----------
(a) Holdings represented less than 5% of outstanding shares at December 31,
1998, although ownership was above 5% for a period of time during the year.
For the year ended December 31, 1998, the Aggressive Stock Portfolio incurred
brokerage commissions of $12,076,600. This amount includes $25,510 which was
paid to Donaldson, Lufkin & Jenrette Securities Corp. ("DLJ"), an affiliate of
the Adviser, of which $13,940 was paid to DLJ's Pershing Division.
80
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS
December 31, 1998
SELECTED DATA FOR A PORTFOLIO SHARE OUTSTANDING THROUGHOUT EACH PERIOD(a)
ALLIANCE MONEY MARKET PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ..... $ 10.18 $ 10.17 $ 10.16 $ 10.14 $ 10.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.53 0.54 0.54 0.57 0.41
Net realized and unrealized gain (loss) on
investments ................................ -- -- (0.01) -- --
-------- -------- -------- -------- --------
Total from investment operations ............ 0.53 0.54 0.53 0.57 0.41
-------- -------- -------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.49) (0.53) (0.52) (0.55) (0.39)
Dividends in excess of net investment
income ..................................... -- -- -- -- --
-------- -------- -------- -------- --------
Total dividends and distributions ........... (0.49) (0.53) (0.52) (0.55) (0.39)
-------- -------- -------- -------- --------
Net asset value, end of period ............... $ 10.22 $ 10.18 $ 10.17 $ 10.16 $ 10.14
======== ======== ======== ======== ========
Total return (c) ............................. 5.34% 5.42% 5.33% 5.74% 4.02%
======== ======== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............ $723,311 $449,960 $463,422 $386,691 $325,391
Ratio of expenses to average net assets ...... 0.37% 0.39% 0.43% 0.44% 0.42%
Ratio of net investment income to average
net assets .................................. 5.13% 5.28% 5.17% 5.53% 4.01%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ..... $ 10.17 $ 10.16 $ 10.16
------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ....................... 0.49 0.52 0.11
Net realized and unrealized gain (loss) on
investments ................................ 0.02 -- 0.01
------- -------- --------
Total from investment operations ............ 0.51 0.52 0.12
------- -------- --------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.47) (0.51) (0.02)
Dividends in excess of net investment
income ..................................... -- -- (0.10)
-------- -------- ---------
Total dividends and distributions ........... (0.47) (0.51) (0.12)
-------- -------- ---------
Net asset value, end of period ............... $ 10.21 $ 10.17 $ 10.16
======== ======== =========
Total return (c) ............................. 5.08% 5.16% 1.29%
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............ $386,718 $123,675 $ 3,184
Ratio of expenses to average net assets ...... 0.62% 0.63% 0.67%(d)
Ratio of net investment income to average
net assets .................................. 4.82% 5.02% 4.94%(d)
</TABLE>
<PAGE>
ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO(e):
<TABLE>
<CAPTION>
CLASS IA
-------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ...... $ 9.44 $ 9.29 $ 9.47 $ 8.87 $ 10.08
------- ------- ------ ------ -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.50 0.53 0.54 0.58 0.65
Net realized and unrealized gain (loss) on
investments ................................. 0.21 0.13 (0.19) 0.57 (1.08)
------- ------- ------- ------ -------
Total from investment operations ............. 0.71 0.66 0.35 1.15 (0.43)
------- ------- ------- ------ -------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.48) (0.51) (0.53) (0.55) (0.78)
-------- -------- ------- ------- -------
Net asset value, end of period ................ $ 9.67 $ 9.44 $ 9.29 $ 9.47 $ 8.87
======== ======== ======= ======= =======
Total return (c) .............................. 7.74% 7.29% 3.78% 13.33% (4.37)%
======== ======== ======= ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $153,383 $115,114 $88,384 $71,780 $48,518
Ratio of expenses to average net assets ....... 0.55% 0.55% 0.56% 0.57% 0.56%
Ratio of net investment income to average
net assets ................................... 5.21% 5.61% 5.73% 6.15% 6.75%
Portfolio turnover rate ....................... 539% 285% 318% 255% 133%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1, 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ...... $ 9.43 $ 9.27
------ ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.47 0.32
Net realized and unrealized gain (loss) on
investments ................................. 0.22 0.22
------ ---------
Total from investment operations ............. 0.69 0.54
------ ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.46) (0.38)
------- ---------
Net asset value, end of period ................ $ 9.66 $ 9.43
======= =========
Total return (c) .............................. 7.48% 5.83%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $30,898 $ 5,052
Ratio of expenses to average net assets ....... 0.80% 0.81%(d)
Ratio of net investment income to average
net assets ................................... 4.87% 5.15%(d)
Portfolio turnover rate ....................... 539% 285%
</TABLE>
81
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1998
ALLIANCE QUALITY BOND PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ...... $ 9.74 $ 9.49 $ 9.61 $ 8.72 $ 9.82
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.55 0.60 0.57 0.57 0.66
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................ 0.28 0.24 (0.07) 0.88 (1.16)
------- ------- -------- ------- -------
Total from investment operations ............. 0.83 0.84 0.50 1.45 (0.50)
------- ------- -------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.53) (0.59) (0.60) (0.56) (0.55)
Dividends in excess of net investment
income ...................................... -- -- (0.02) -- --
Distributions from realized gains ............ (0.20) -- -- -- --
Tax return of capital distributions .......... -- -- -- -- (0.05)
-------- -------- -------- -------- -------
Total dividends and distributions ............ (0.73) (0.59) (0.62) (0.56) (0.60)
-------- -------- -------- -------- -------
Net asset value, end of period ................ $ 9.84 $ 9.74 $ 9.49 $ 9.61 $ 8.72
======== ======== ======== ======== =======
Total return (c) .............................. 8.69% 9.14% 5.36% 17.02% (5.10)%
======== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $322,418 $203,233 $155,023 $157,443 $127,575
Ratio of expenses to average net assets ....... 0.57% 0.57% 0.59% 0.59% 0.59%
Ratio of net investment income to average
net assets ................................... 5.48% 6.19% 6.06% 6.13% 7.17%
Portfolio turnover rate ....................... 194% 374% 431% 411% 222%
<CAPTION>
CLASS IB
----------------
JULY 8, 1998
TO
DECEMBER 31,
1998
----------------
<S> <C>
Net asset value, beginning of period (b) ...... $ 9.90
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.25
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................ 0.14
---------
Total from investment operations ............. 0.39
---------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.25)
Dividends in excess of net investment
income ...................................... --
Distributions from realized gains ............ (0.20)
Tax return of capital distributions .......... --
---------
Total dividends and distributions ............ (0.45)
---------
Net asset value, end of period ................ $ 9.84
=========
Total return (c) .............................. 4.05%
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $ 10
Ratio of expenses to average net assets ....... 0.81%(d)
Ratio of net investment income to average
net assets ................................... 5.06%(d)
Portfolio turnover rate ....................... 194%
</TABLE>
<PAGE>
ALLIANCE HIGH YIELD PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------
1998 1997 1996 1995 1994
------------- ------------ ------------ ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 10.41 $ 10.02 $ 9.64 $ 8.91 $ 10.08
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 1.07 1.04 1.02 0.98 0.89
Net realized and unrealized gain (loss) on
investments .................................. ( 1.56) 0.75 1.07 0.73 ( 1.17)
------- ------- ------- ------- -------
Total from investment operations .............. ( 0.49) 1.79 2.09 1.71 ( 0.28)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 1.03) ( 0.97) ( 0.98) (0.94) ( 0.88)
Dividends in excess of net investment
income ....................................... -- -- ( 0.03) (0.04) ( 0.01)
Distributions from realized gains ............. ( 0.18) ( 0.43) ( 0.70) -- --
Distributions in excess of realized gains ..... -- -- -- -- --
------- -------- -------- -------- -------
Total dividends and distributions ............. ( 1.21) ( 1.40) ( 1.71) (0.98) ( 0.89)
------- -------- -------- -------- -------
Net asset value, end of period ................. $ 8.71 $ 10.41 $ 10.02 $ 9.64 $ 8.91
======= ======== ======== ======== =======
Total return (c) ............................... ( 5.15)% 18.48% 22.89% 19.92% ( 2.79)%
======= ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $405,308 $355,473 $199,360 $118,129 $73,895
Ratio of expenses to average net assets ........ 0.63% 0.62% 0.59% 0.60% 0.61%
Ratio of net investment income to average
net assets .................................... 10.67% 9.82% 9.93% 10.34% 9.23%
Portfolio turnover rate ........................ 181% 390% 485% 350% 248%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 10.39 $ 10.01 $ 10.25
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 1.04 1.05 0.19
Net realized and unrealized gain (loss) on
investments .................................. (1.56) 0.71 0.15
------- ------- ---------
Total from investment operations .............. (0.52) 1.76 0.34
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (1.00) (0.95) (0.03)
Dividends in excess of net investment
income ....................................... -- -- (0.25)
Distributions from realized gains ............. (0.18) (0.43) (0.01)
Distributions in excess of realized gains ..... -- -- (0.29)
------- ------- ---------
Total dividends and distributions ............. (1.18) (1.38) (0.58)
------- ------- ---------
Net asset value, end of period ................. $ 8.69 $ 10.39 $ 10.01
======= ======= =========
Total return (c) ............................... (5.38)% 18.19% 3.32%
======= ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $207,042 $66,338 $ 685
Ratio of expenses to average net assets ........ 0.88% 0.88% 0.82%(d)
Ratio of net investment income to average
net assets .................................... 10.60% 9.76% 8.71%(d)
Portfolio turnover rate ........................ 181% 390% 485%
</TABLE>
82
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1998
ALLIANCE GROWTH AND INCOME PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ----------- ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ...... $ 15.38 $ 13.01 $ 11.70 $ 9.70 $ 9.95
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.06 0.15 0.24 0.33 0.31
Net realized and unrealized gain (loss) on
investments ................................. 3.08 3.30 2.05 1.97 (0.36)
------- ------- ------- ------- -------
Total from investment operations ............. 3.14 3.45 2.29 2.30 (0.05)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.05) (0.15) (0.23) (0.30) (0.20)
Distributions from realized gains ............ (1.48) (0.93) (0.75) -- --
-------- -------- -------- ------- -------
Total dividends and distributions ............ (1.53) (1.08) (0.98) (0.30) (0.20)
-------- -------- -------- ------- -------
Net asset value, end of period ................ $ 16.99 $ 15.38 $ 13.01 $ 11.70 $ 9.70
======== ======== ======== ======= =======
Total return (c) .............................. 20.86% 26.90% 20.09% 24.07% (0.58)%
======== ======== ======== ======= =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $877,744 $555,059 $232,080 $98,053 $31,522
Ratio of expenses to average net assets ....... 0.58% 0.58% 0.58% 0.60% 0.78%
Ratio of net investment income to average
net assets ................................... 0.38% 0.99% 1.94% 3.11% 3.13%
Portfolio turnover rate ....................... 74% 79% 88% 65% 52%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1, 1997
ENDED TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ...... $ 15.36 $ 13.42
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.03 0.05
Net realized and unrealized gain (loss) on
investments ................................. 3.07 2.91
------- ---------
Total from investment operations ............. 3.10 2.96
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.03) (0.09)
Distributions from realized gains ............ (1.48) (0.93)
-------- ---------
Total dividends and distributions ............ (1.51) (1.02)
-------- ---------
Net asset value, end of period ................ $ 16.95 $ 15.36
======== =========
Total return (c) .............................. 20.56% 22.41%
======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $120,558 $ 32,697
Ratio of expenses to average net assets ....... 0.83% 0.83%(d)
Ratio of net investment income to average
net assets ................................... 0.17% 0.43%(d)
Portfolio turnover rate ....................... 74% 79%
</TABLE>
<PAGE>
ALLIANCE EQUITY INDEX PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------
1998 1997 1996 1995
-------------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 19.74 $ 15.16 $ 13.13 $ 9.87
--------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.27 0.26 0.27 0.26
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 5.25 4.64 2.65 3.32
--------- ------- ------- -------
Total from investment operations .............. 5.52 4.90 2.92 3.58
--------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.25) (0.25) (0.25) (0.22)
Distributions from realized gains ............. (0.01) (0.07) (0.64) (0.09)
Distributions in excess of realized gains ..... -- -- -- (0.01)
---------- -------- -------- --------
Total dividends and distributions ............. (0.26) (0.32) (0.89) (0.32)
---------- -------- -------- --------
Net asset value, end of period ................. $ 25.00 $ 19.74 $ 15.16 $ 13.13
========== ======== ======== ========
Total return (c) ............................... 28.07% 32.58% 22.39% 36.48%
========== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $1,689,913 $943,631 $386,249 $165,785
Ratio of expenses to average net assets ........ 0.34% 0.37% 0.39% 0.48%
Ratio of net investment income to average
net assets .................................... 1.23% 1.46% 1.91% 2.16%
Portfolio turnover rate ........................ 6% 3% 15% 9%
<CAPTION>
CLASS IA CLASS IB
------------------- ---------------------------------
YEAR
MARCH 1, 1994 ENDED MAY 1, 1997
TO DECEMBER 31, TO
DECEMBER 31, 1994 1998 DECEMBER 31, 1997
------------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 10.00 $ 19.73 $ 16.35
--------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.20 0.22 0.14
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. (0.09) 5.24 3.48
--------- ------- ---------
Total from investment operations .............. 0.11 5.46 3.62
--------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.20) (0.20) (0.17)
Distributions from realized gains ............. (0.03) (0.01) (0.07)
Distributions in excess of realized gains ..... (0.01) -- --
--------- -------- ---------
Total dividends and distributions ............. (0.24) (0.21) (0.24)
--------- -------- ---------
Net asset value, end of period ................. $ 9.87 $ 24.98 $ 19.73
========= ======== =========
Total return (c) ............................... 1.08% 27.74% 22.28%
========= ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $ 36,748 $ 443 $ 110
Ratio of expenses to average net assets ........ 0.49%(d) 0.59% 0.62%(d)
Ratio of net investment income to average
net assets .................................... 2.42%(d) 0.98% 1.10%(d)
Portfolio turnover rate ........................ 7% 6% 3%
</TABLE>
83
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1998
ALLIANCE COMMON STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
----------------------------------------------------------------------------
1998 1997 1996 1995 1994
--------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 21.61 $ 18.23 $ 16.48 $ 13.36 $ 14.65
---------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.18 0.14 0.15 0.20 0.20
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 5.99 5.12 3.73 4.12 (0.51)
---------- --------- --------- --------- ---------
Total from investment operations .............. 6.17 5.26 3.88 4.32 (0.31)
---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.15) (0.11) (0.15) (0.20) (0.19)
Dividends in excess of net investment
income ....................................... -- -- -- (0.02) (0.01)
Distributions from realized gains ............. (3.28) (1.77) (1.76) (0.95) (0.77)
Distributions in excess of realized gains ..... -- -- (0.22) (0.03) --
Tax return of capital distributions ........... -- -- -- -- (0.01)
----------- ---------- ---------- ---------- ---------
Total dividends and distributions ............. (3.43) (1.88) (2.13) (1.20) (0.98)
----------- ---------- ---------- ---------- ---------
Net asset value, end of period ................. $ 24.35 $ 21.61 $ 18.23 $ 16.48 $ 13.36
=========== ========== ========== ========== =========
Total return (c) ............................... 29.39% 29.40% 24.28% 32.45% (2.14)%
=========== ========== ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $12,061,977 $9,331,994 $6,625,390 $4,879,677 $3,466,245
Ratio of expenses to average net assets ........ 0.39% 0.39% 0.38% 0.38% 0.38%
Ratio of net investment income to average
net assets .................................... 0.75% 0.69% 0.85% 1.27% 1.40%
Portfolio turnover rate ........................ 46% 52% 55% 61% 52%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------- DECEMBER 31,
1998 1997 1996
------------ ------------ ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 21.58 $ 18.22 $ 17.90
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.10 0.10 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 6.00 5.11 1.52
------- ------- ---------
Total from investment operations .............. 6.10 5.21 1.54
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.10) (0.08) (0.00)
Dividends in excess of net investment
income ....................................... -- -- (0.03)
Distributions from realized gains ............. (3.28) (1.77) (0.16)
Distributions in excess of realized gains ..... -- -- (1.03)
Tax return of capital distributions ........... -- -- --
-------- -------- ---------
Total dividends and distributions ............. (3.38) (1.85) (1.22)
-------- -------- ---------
Net asset value, end of period ................. $ 24.30 $ 21.58 $ 18.22
======== ======== =========
Total return (c) ............................... 29.06% 29.07% 8.49%
======== ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $834,144 $228,780 $ 1,244
Ratio of expenses to average net assets ........ 0.64% 0.64% 0.63%(d)
Ratio of net investment income to average
net assets .................................... 0.44% 0.46% 0.61%(d)
Portfolio turnover rate ........................ 46% 52% 55%
</TABLE>
<PAGE>
ALLIANCE GLOBAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 17.29 $ 16.92 $ 15.74 $ 13.87 $ 13.62
--------- --------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.14 0.17 0.21 0.26 0.20
Net realized and unrealized gain on
investments and foreign currency
transactions ................................. 3.56 1.75 2.05 2.32 0.52
--------- --------- ------- ------- -------
Total from investment operations .............. 3.70 1.92 2.26 2.58 0.72
--------- --------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.22) (0.36) (0.21) (0.25) (0.17)
Dividends in excess of net investment
income ....................................... -- -- (0.08) -- --
Distributions from realized gains ............. (1.31) (1.19) (0.79) (0.42) (0.28)
Distributions in excess of realized gains ..... -- -- -- (0.03) (0.00)
Tax return of capital distributions ........... -- -- ( 0.00) (0.01) (0.02)
---------- ---------- -------- -------- --------
Total dividends and distributions ............. (1.53) (1.55) (1.08) (0.71) (0.47)
---------- ---------- -------- -------- --------
Net asset value, end of period ................. $ 19.46 $ 17.29 $ 16.92 $ 15.74 $ 13.87
========== ========== ======== ======== ========
Total return (c) ............................... 21.80% 11.66% 14.60% 18.81% 5.23%
========== ========== ======== ======== ========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $1,360,220 $1,203,867 $997,041 $686,140 $421,698
Ratio of expenses to average net assets ........ 0.71% 0.69% 0.60% 0.61% 0.69%
Ratio of net investment income to average
net assets .................................... 0.72% 0.97% 1.28% 1.76% 1.41%
Portfolio turnover rate ........................ 105% 57% 59% 67% 71%
<CAPTION>
CLASS IB
----------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 17.27 $ 16.91 $ 16.57
------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.08 0.12 0.02
Net realized and unrealized gain on
investments and foreign currency
transactions ................................. 3.56 1.76 0.81
------- ------- ---------
Total from investment operations .............. 3.64 1.88 0.83
------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.19) (0.33) --
Dividends in excess of net investment
income ....................................... -- -- (0.11)
Distributions from realized gains ............. (1.31) (1.19) (0.10)
Distributions in excess of realized gains ..... -- -- (0.28)
Tax return of capital distributions ........... -- -- (0.00)
------- ------- ---------
Total dividends and distributions ............. (1.50) (1.52) (0.49)
------- ------- ---------
Net asset value, end of period ................. $19.41 $17.27 $ 16.91
======= ======= =========
Total return (c) ............................... 21.50% 11.38% 4.98%
======= ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $47,982 $21,520 $ 290
Ratio of expenses to average net assets ........ 0.96% 0.97% 0.86%(d)
Ratio of net investment income to average
net assets .................................... 0.41% 0.67% 0.48%(d)
Portfolio turnover rate ........................ 105% 57% 59%
</TABLE>
84
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1998
ALLIANCE INTERNATIONAL PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
--------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------- APRIL 3,
1995 TO
DECEMBER 31,
1998 1997 1996 1995
------------ ------------- ------------ ----------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ...... $ 10.27 $ 11.50 $ 10.87 $ 10.00
------- ------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.09 0.10 0.13 0.14
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................ 0.97 (0.45) 0.94 0.98
------- ------- ------- ---------
Total from investment operations ............. 1.06 (0.35) 1.07 1.12
------- ------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ........ (0.20) (0.32) (0.10) (0.07)
Dividends in excess of net investment
income ...................................... -- -- (0.09) (0.13)
Distributions from realized gains ............ (0.00) (0.56) (0.25) (0.05)
-------- ------- -------- ---------
Total dividends and distributions ............ (0.20) (0.88) (0.44) (0.25)
-------- ------- -------- ---------
Net asset value, end of period ................ $ 11.13 $ 10.27 $ 11.50 $ 10.87
======== ======= ======== =========
Total return (c) .............................. 10.57% ( 2.98)% 9.82% 11.29%
======== ======= ======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $204,767 $190,611 $151,907 $ 28,684
Ratio of expenses to average net assets ....... 1.06% 1.08% 1.06% 1.03%(d)
Ratio of net investment income to average
net assets ................................... 0.81% 0.83% 1.10% 1.71%(d)
Portfolio turnover rate ....................... 59% 59% 48% 56%
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ...... $ 10.26 $ 11.39
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................ 0.05 0.02
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................ 0.98 (0.31)
------- ---------
Total from investment operations ............. 1.03 (0.29)
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income ......... (0.18) (0.28)
Dividends in excess of net investment
income ...................................... -- --
Distributions from realized gains ............ (0.00) (0.56)
-------- ---------
Total dividends and distributions ............ (0.18) (0.84)
-------- ---------
Net asset value, end of period ................ $ 11.11 $ 10.26
======== =========
Total return (c) .............................. 10.30% ( 2.54)%
======== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) ............. $ 7,543 $ 3,286
Ratio of expenses to average net assets ....... 1.31% 1.38%(d)
Ratio of net investment income to average
net assets ................................... 0.44% 0.20%(d)
Portfolio turnover rate ....................... 59% 59%
</TABLE>
<PAGE>
ALLIANCE AGGRESSIVE STOCK PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 36.22 $ 35.85 $ 35.68 $ 30.63 $ 31.89
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.09 0.04 0.09 0.10 0.04
Net realized and unrealized gain (loss) on
investments .................................. (0.28) 3.71 7.52 9.54 (1.26)
---------- --------- --------- --------- ---------
Total from investment operations .............. (0.19) 3.75 7.61 9.64 (1.22)
---------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.16) (0.05) (0.09) (0.10) (0.04)
Dividends in excess of net investment
income ....................................... -- -- (0.00) -- --
Distributions from realized gains ............. (1.72) (3.33) (7.33) (4.49) --
Distributions in excess of realized gains ..... -- -- (0.02) -- --
Tax return of capital distributions ........... -- -- -- -- (0.00)
---------- ---------- ---------- ---------- ---------
Total dividends and distributions ............. (1.88) (3.38) (7.44) (4.59) (0.04)
---------- ---------- ---------- ---------- ---------
Net asset value, end of period ................. $ 34.15 $ 36.22 $ 35.85 $ 35.68 $ 30.63
========== ========== ========== ========== =========
Total return (c) ............................... 0.29% 10.94% 22.20% 31.63% ( 3.81)%
========== ========== ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $4,346,907 $4,589,771 $3,865,256 $2,700,515 $1,832,164
Ratio of expenses to average net assets ........ 0.56% 0.54% 0.48% 0.49% 0.49%
Ratio of net investment income (loss) to
average net assets ............................ 0.24% 0.11% 0.24% 0.28% 0.12%
Portfolio turnover rate ........................ 105% 123% 108% 127% 92%
<CAPTION>
CLASS IB
-------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
------------------------ DECEMBER 31,
1998 1997 1996
------------ ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 36.13 $ 35.83 $ 37.28
------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.01 (0.11) (0.01)
Net realized and unrealized gain (loss) on
investments .................................. (0.29) 3.77 0.85
-------- ------- ----------
Total from investment operations .............. (0.28) 3.66 0.84
-------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... (0.12) (0.03) --
Dividends in excess of net investment
income ....................................... -- -- (0.02)
Distributions from realized gains ............. (1.72) (3.33) (0.23)
Distributions in excess of realized gains ..... -- -- (2.04)
Tax return of capital distributions ........... -- -- --
-------- ------- ----------
Total dividends and distributions ............. (1.84) (3.36) (2.29)
-------- ------- ----------
Net asset value, end of period ................. $ 34.01 $ 36.13 $ 35.83
======== ======= ==========
Total return (c) ............................... 0.05% 10.66% 2.32%
======== ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $153,782 $73,486 $ 613
Ratio of expenses to average net assets ........ 0.82% 0.81% 0.73%(d)
Ratio of net investment income (loss) to
average net assets ............................ 0.02% (0.28)% (0.10)%(d)
Portfolio turnover rate ........................ 105% 123% 108%
</TABLE>
85
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1998
ALLIANCE SMALL CAP GROWTH PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA CLASS IB
--------------------------------- -----------------------------------
YEAR MAY 1, YEAR MAY 1,
ENDED 1997 TO ENDED 1997 TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
1998 1997 1998 1997
-------------- ---------------- -------------- ------------------
<S> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 12.35 $ 10.00 $ 12.34 $ 10.00
------- -------- ------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (loss) .................. 0.01 0.01 ( 0.02) ( 0.01)
Net realized and unrealized gain (loss) on
investments .................................. ( 0.54) 2.65 ( 0.53) 2.65
------- -------- ------- ---------
Total from investment operations .............. ( 0.53) 2.66 ( 0.55) 2.64
------- -------- ------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... -- ( 0.01) -- --
Distributions from realized gains ............. -- ( 0.30) -- ( 0.30)
------- -------- ------- ---------
Total dividends and distributions ............. -- ( 0.31) -- ( 0.30)
------- -------- ------- ---------
Net asset value, end of period ................. $ 11.82 $ 12.35 $ 11.79 $ 12.34
======= ======== ======= =========
Total return (c) ............................... ( 4.28)% 26.74% ( 4.44)% 26.57%
======= ======== ======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $198,360 $ 94,676 $112,254 $ 46,324
Ratio of expenses to average net assets ........ 0.96% 0.95%(d) 1.20% 1.15%(d)
Ratio of net investment income (loss) to
average net assets ............................ 0.08% 0.10%(d) ( 0.17)% ( 0.12)%(d)
Portfolio turnover rate ........................ 94% 96% 94% 96%
</TABLE>
ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------
1998 1997 1996 1995 1994
------------ ------------ ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 11.89 $ 11.29 $ 11.52 $ 10.15 $ 11.12
------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.49 0.49 0.50 0.60 0.55
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 0.97 0.07 1.43 ( 1.00)
------- ------- ------- ------- -------
Total from investment operations .............. 1.61 1.46 0.57 2.03 ( 0.45)
------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.48) ( 0.49) ( 0.51) ( 0.59) ( 0.52)
Distributions from realized gains ............. ( 0.70) ( 0.37) ( 0.27) ( 0.07) --
Distributions in excess of realized gains ..... -- -- ( 0.02) -- --
-------- -------- -------- -------- -------
Total dividends and distributions ............. ( 1.18) ( 0.86) ( 0.80) ( 0.66) ( 0.52)
-------- -------- -------- -------- -------
Net asset value, end of period ................. $ 12.32 $ 11.89 $ 11.29 $ 11.52 $ 10.15
======== ======== ======== ======== =======
Total return (c) ............................... 13.88% 13.25% 5.21% 20.40% ( 4.10)%
======== ======== ======== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $355,441 $307,847 $282,402 $252,101 $173,691
Ratio of expenses to average net assets ........ 0.53% 0.57% 0.61% 0.59% 0.59%
Ratio of net investment income to average
net assets .................................... 3.99% 4.17% 4.48% 5.48% 5.22%
Portfolio turnover rate ........................ 103% 206% 181% 287% 228%
<PAGE>
<CAPTION>
CLASS IB
-------------------------------
YEAR MAY 1,
ENDED 1997 TO
DECEMBER 31, DECEMBER 31,
1998 1997
-------------- ----------------
<S> <C> <C>
Net asset value, beginning of period (b) ....... $ 11.88 $ 11.29
------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.46 0.31
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 1.12 1.01
------- ---------
Total from investment operations .............. 1.58 1.32
------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.45) ( 0.36)
Distributions from realized gains ............. ( 0.70) ( 0.37)
Distributions in excess of realized gains ..... -- --
------- ---------
Total dividends and distributions ............. ( 1.15) ( 0.73)
------- ---------
Net asset value, end of period ................. $ 12.31 $ 11.88
======= =========
Total return (c) ............................... 13.60% 11.84%
======= =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $32,653 $ 5,694
Ratio of expenses to average net assets ........ 0.78% 0.80%(d)
Ratio of net investment income to average
net assets .................................... 3.68% 3.82%(d)
Portfolio turnover rate ........................ 103% 206%
</TABLE>
86
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Continued)
December 31, 1998
ALLIANCE BALANCED PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
---------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 17.58 $ 16.64 $ 16.76 $ 14.87 $ 16.67
--------- --------- --------- --------- ---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.56 0.58 0.53 0.54 0.45
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 2.54 1.86 1.31 2.36 ( 1.78)
--------- --------- --------- --------- ---------
Total from investment operations .............. 3.10 2.44 1.84 2.90 ( 1.33)
--------- --------- --------- --------- ---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.50) ( 0.59) ( 0.53) ( 0.54) ( 0.44)
Dividends in excess of net investment
income ....................................... -- -- -- -- ( 0.03)
Distributions from realized gains ............. ( 1.67) ( 0.91) ( 1.40) ( 0.47) --
Distributions in excess of realized gains ..... -- -- ( 0.03) -- --
Tax return of capital distributions ........... -- -- -- -- ( 0.00)
---------- ---------- ---------- ---------- ---------
Total dividends and distributions ............. ( 2.17) ( 1.50) ( 1.96) ( 1.01) ( 0.47)
---------- ---------- ---------- ---------- ---------
Net asset value, end of period ................. $ 18.51 $ 17.58 $ 16.64 $ 16.76 $ 14.87
========== ========== ========== ========== =========
Total return (c) ............................... 18.11% 15.06% 11.68% 19.75% ( 8.02)%
========== ========== ========== ========== =========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $1,936,429 $1,724,089 $1,637,856 $1,523,142 $1,329,820
Ratio of expenses to average net assets ........ 0.45% 0.45% 0.41% 0.40% 0.39%
Ratio of net investment income to average
net assets .................................... 3.00% 3.30% 3.15% 3.33% 2.87%
Portfolio turnover rate ........................ 95% 146% 177% 186% 115%
<CAPTION>
CLASS IB
----------------
JULY 8, 1998
TO
DECEMBER 31,
1998
----------------
<S> <C>
Net asset value, beginning of period (b) ....... $ 19.48
---------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.24
Net realized and unrealized gain (loss) on
investments and foreign currency
transactions ................................. 0.66
---------
Total from investment operations .............. 0.90
---------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.20)
Dividends in excess of net investment
income ....................................... --
Distributions from realized gains ............. ( 1.67)
Distributions in excess of realized gains ..... --
Tax return of capital distributions ........... --
---------
Total dividends and distributions ............. ( 1.87)
---------
Net asset value, end of period ................. $ 18.51
=========
Total return (c) ............................... 4.92%
=========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $ 10
Ratio of expenses to average net assets ........ 0.70%(d)
Ratio of net investment income to average
net assets .................................... 2.65%(d)
Portfolio turnover rate ........................ 95%
</TABLE>
<PAGE>
ALLIANCE GROWTH INVESTORS PORTFOLIO:
<TABLE>
<CAPTION>
CLASS IA
-----------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-----------------------------------------------------------------------
1998 1997 1996 1995 1994
-------------- -------------- -------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 18.55 $ 17.20 $ 17.68 $ 14.66 $ 15.61
--------- --------- --------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.41 0.41 0.40 0.57 0.50
Net realized and unrealized gain (loss) on
on investments and foreign currency
transactions ................................. 3.03 2.43 1.66 3.24 ( 0.98)
--------- --------- --------- ------- -------
Total from investment operations .............. 3.44 2.84 2.06 3.81 ( 0.48)
--------- --------- --------- ------- -------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.41) ( 0.46) ( 0.40) ( 0.54) ( 0.46)
Dividends in excess of net investment
income ....................................... -- -- ( 0.03) ( 0.01) ( 0.01)
Distributions from realized gains ............. ( 1.71) ( 1.03) ( 2.10) ( 0.24) --
Distributions in excess of realized gains ..... -- -- ( 0.01) -- --
---------- ---------- ---------- -------- -------
Total dividends and distributions ............. ( 2.12) ( 1.49) ( 2.54) ( 0.79) ( 0.47)
---------- ---------- ---------- -------- -------
Net asset value, end of period ................. $ 19.87 $ 18.55 $ 17.20 $ 17.68 $ 14.66
========== ========== ========== ======== =======
Total return (c) ............................... 19.13% 16.87% 12.61% 26.37% ( 3.15)%
========== ========== ========== ======== =======
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $1,963,074 $1,630,389 $1,301,643 $896,134 $492,478
Ratio of expenses to average net assets ........ 0.55% 0.57% 0.57% 0.56% 0.59%
Ratio of net investment income to average
net assets .................................... 2.10% 2.18% 2.31% 3.43% 3.32%
Portfolio turnover rate ........................ 102% 121% 190% 107% 131%
<CAPTION>
CLASS IB
------------------------------------------
YEAR ENDED OCTOBER 2,
DECEMBER 31, 1996 TO
----------------------- DECEMBER 31,
1998 1997 1996
----------- ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period (b) ....... $ 18.52 $ 17.19 $ 16.78
------- ------- ----------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ......................... 0.36 0.36 0.07
Net realized and unrealized gain (loss) on
on investments and foreign currency
transactions ................................. 3.03 2.43 0.71
------- ------- ----------
Total from investment operations .............. 3.39 2.79 0.78
------- ------- ----------
LESS DISTRIBUTIONS:
Dividends from net investment income .......... ( 0.36) ( 0.43) ( 0.02)
Dividends in excess of net investment
income ....................................... -- -- ( 0.09)
Distributions from realized gains ............. ( 1.71) ( 1.03) ( 0.02)
Distributions in excess of realized gains ..... -- -- ( 0.24)
------- ------- ----------
Total dividends and distributions ............. ( 2.07) ( 1.46) ( 0.37)
------- ------- ----------
Net asset value, end of period ................. $ 19.84 $ 18.52 $ 17.19
======= ======= ==========
Total return (c) ............................... 18.83% 16.58% 4.64%
======= ======= ==========
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period (000's) .............. $92,027 $35,730 $ 472
Ratio of expenses to average net assets ........ 0.80% 0.82% 0.84% (d)
Ratio of net investment income to average
net assets .................................... 1.85% 1.88% 1.69% (d)
Portfolio turnover rate ........................ 102% 121% 190%
</TABLE>
87
<PAGE>
THE HUDSON RIVER TRUST
FINANCIAL HIGHLIGHTS--(Concluded)
December 31, 1998
- ---------
(a) Net investment income and capital changes per share are based upon
monthly average shares outstanding.
(b) Date as of which funds were first allocated to the Portfolios are as
follows:
Class IA:
Alliance Common Stock Portfolio--June 16, 1975
Alliance Money Market Portfolio--July 13, 1981
Alliance 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 Portfolio--May 1, 1997
Class IB:
Alliance Money Market, Alliance High Yield, Alliance Common Stock, Alliance
Global, Alliance Aggressive Stock and Alliance Growth Investors
Portfolios--October 2, 1996.
Alliance Intermediate Government Securities, Alliance Growth and Income,
Alliance Equity Index, Alliance International, Alliance Small Cap Growth and
Alliance Conservative Investors Portfolios--May 1, 1997.
Alliance Quality Bond and Alliance Balanced Portfolios--July 8, 1998.
(c) Total return is calculated assuming an initial investment made at
the net asset value at the beginning of the period, reinvestment of
all dividends and distributions at net asset value during the
period, and redemption on the last day of the period. Total return
calculated for a period of less than one year is not annualized.
(d) Annualized.
(e) On February 22, 1994, shares of the Alliance Intermediate Government
Securities Portfolio of the Trust were substituted for shares of the
Trust's Alliance Short-Term World Income Portfolio.
88
<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 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,
1998, 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, 1998 by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
1177 Avenue of the Americas
New York, New York 10036
February 8, 1999
89
