HUDSON RIVER TRUST, 497, 1999-05-06

HUDSON RIVER TRUST
497, 1999-05-06

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<PAGE>

Filed Pursuant to Rule 497(c)
Registration File No. 2-94996

The Hudson River Trust

PROSPECTUS DATED MAY 1, 1999

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1
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<TABLE>
<S> <C>
THE ASSET ALLOCATION SERIES
- ------------------------------------------------------------------------------
Alliance Conservative Investors Portfolio
Alliance Balanced Portfolio
Alliance Growth Investors Portfolio

THE EQUITY SERIES THE FIXED INCOME SERIES
- --------------------------------------- ---------------------------------
Alliance Growth and Income Portfolio Alliance Money Market Portfolio
Alliance Equity Index Portfolio Alliance Intermediate Government
Alliance Common Stock Portfolio Securities Portfolio
Alliance Global Portfolio Alliance Quality Bond Portfolio
Alliance International Portfolio Alliance High Yield Portfolio
Alliance Aggressive Stock Portfolio
Alliance Small Cap Growth Portfolio
</TABLE>

This Prospectus describes the Portfolios that are available as underlying
investments through your variable contract. For information about your variable
contract, including information about insurance-related expenses, see the
prospectus for your variable contract, which accompanies this Prospectus. This
Prospectus relates to the Class IB shares of each Portfolio. Another Prospectus
that relates to the Class IA shares of each Portfolio has been filed with the
Securities and Exchange Commission.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIME.

V.IA

<PAGE>

Contents of this prospectus

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3
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1
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RISK/RETURN SUMMARY 4
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2
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DESCRIPTION OF THE PORTFOLIOS 22
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The Asset Allocation Series 22
The Equity Series 25
The Fixed Income Series 30

3
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INVESTMENT TECHNIQUES 38
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4
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MANAGEMENT OF THE TRUST 45
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5
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DESCRIPTION OF THE TRUST'S SHARES 49
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6
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DIVIDENDS, DISTRIBUTIONS AND TAXES 51
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7
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FINANCIAL HIGHLIGHTS 52
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8
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APPENDIX A-DESCRIPTION OF BOND
RATINGS A-1
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9
--
APPENDIX B-PERFORMANCE INFORMATION B-1
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</TABLE>

<PAGE>

1
Risk/Return Summary

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4
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The following is a summary of certain key information about the Hudson River
Trust Portfolios. You will find additional information about each Portfolio,
including a detailed description of the risks of an investment in each
Portfolio, after this Summary.

This Summary identifies each Portfolio's investment objective, principal
investment strategies and principal risks. The summary of each Portfolio's
principal investment strategies is accompanied by a short discussion of some
of the Portfolio's principal risks. The principal risks of each Portfolio are
identified and more fully discussed beginning on page 18.

You can find more detailed descriptions of the Portfolios, including the risks
associated with investing in the Portfolios, further back in this Prospectus.
Please be sure to read this additional information BEFORE you invest. Each of
the Portfolios (except for the Alliance Money Market Portfolio) may at times
use certain types of investment derivatives such as options, futures, forwards
and swaps. The use of these techniques involves special risks that are
discussed in this Prospectus. This Risk/Return Summary includes a table for
each Portfolio showing its average annual returns and a bar chart showing its
annual returns. The table and bar chart provide an indication of the
historical risk of an investment in each Portfolio by showing:

o how the Portfolio's average annual returns for one, five, and 10 years (or
over the life of the Portfolio if the Portfolio is less than 10 years old)
compare to those of a broad based securities market index (you will find
more information on each referenced index in Appendix B); and

o changes in the Portfolio's performance from year to year over 10 years (or
over the life of the Portfolio if the Portfolio is less than 10 years
old).

A Portfolio's past performance, of course, does not
necessarily indicate how it will perform in the future.

Other important things for you to note:

o You may lose money by investing in the Portfolios.

o An investment in the Portfolios is not a deposit in a bank and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

<PAGE>

THE ASSET ALLOCATION SERIES
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5
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ALLIANCE CONSERVATIVE INVESTORS PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve a high total return without, in the opinion of
Alliance Capital Management L.P., the Portfolio's investment adviser
("Alliance"), undue risk to principal.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests varying portions of its assets in debt and equity
securities. Investment grade debt securities generally represent between 50%
and 90% of the Portfolio's holdings, with equity securities comprising the
remainder of the Portfolio's assets. The Portfolio may invest in foreign
securities and may also make use of various other investment strategies,
including securities lending. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are market risk,
management risk, credit risk, derivatives risk and leveraging risk. The
Portfolio is subject to credit risk through its investments in debt securities
and to foreign investment risk and currency risk through its investments in
foreign securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
6.2 19.6 5.5 10.5 -4.4 20.2 5.0 13.0 13.6

90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 7.59% for the
quarter ended 12/31/98, and the lowest was -3.27% for the quarter ended
3/31/94. For the quarter ended March 31, 1999, the Portfolio's return was
1.82%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives, the returns
of a blend of fixed income and equity securities indices and the returns of a
broad based equity securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One Past Five (October 2,
1998) Year Years 1989)
<S> <C> <C> <C>
Class IB Shares 13.60 9.13 9.71
Lipper Flexible 14.20 14.31 12.55
Portfolio Average
70% Lehman 15.59 13.37 12.08
Treasury/30% S&P
500
S&P 500 28.58 24.06 17.62
</TABLE>

For periods prior to the inception of Class IB shares (5/2/97), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 15.42%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 17.64%.

<PAGE>

THE ASSET ALLOCATION SERIES (CONTINUED)

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6
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ALLIANCE BALANCED PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve a high return through both appreciation of
capital and current income.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests varying portions of its assets in debt and equity
securities. The Portfolio's debt securities may have equity features such as
conversion or exchange rights, stock warrants or participations based on
revenues, rates or profits. There will be times when the Portfolio places
significantly greater emphasis on equity securities or debt securities, but
over time the Portfolio's holdings are expected, on average, to be equally
divided between debt securities and equity securities. The Portfolio may
invest in foreign securities and may also make use of various other investment
strategies, including securities lending. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are market risk,
management risk, credit risk, derivatives risk, liquidity risk and leveraging
risk. The Portfolio is subject to foreign investment risk and currency risk
through its investments in foreign securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25.6 0.0 41.0 -3.1 12.0 -8.3 19.5 11.4 14.8 17.8

89 90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 15.07% for
the quarter ended 12/31/91, and the lowest -8.35% was for the quarter ended
9/30/90. For the quarter ended March 31, 1999, the Portfolio's return was
2.79%.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for
periods ending
December 31, Past One Past Five Past Ten
1998) Year Years Years
<S> <C> <C> <C>
Class IB Shares 17.82 10.56 12.25
Lipper Balanced 13.48 13.84 12.97
Mutual Funds
Average
50% S&P 500/50% 19.02 16.88 15.21
Lehman Gov't Corp.
S&P 500 28.58 24.06 19.21
</TABLE>

For periods prior to the inception of Class IB shares (7/8/98), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. The average annual total return for Class IB since its
actual inception date was 4.92%. Index return for the comparable period (which
dates from month-end of the Class IB inception date) was 14.89%.

<PAGE>

THE ASSET ALLOCATION SERIES (CONTINUED)

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7
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ALLIANCE GROWTH INVESTORS PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve the highest total return consistent with
Alliance's determination of reasonable risk.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests varying portions of its assets in equity and debt
securities. Over time, the Portfolio's holdings, on average, are expected to
be allocated 70% to equity securities and 30% to debt securities. The
Portfolio's equity securities may include foreign stocks as well as preferred
stocks and convertible securities and may include securities of intermediate
and small-sized companies. The Portfolio's debt securities may include foreign
debt securities as well as lower quality, higher yielding debt securities
commonly known as "junk bonds." The Portfolio may also make use of various
other investment strategies, including securities lending. The Portfolio may
use derivatives.

Among the principal risks of investing in the Portfolio are market and
interest rate risk, management risk, credit risk, leveraging risk, derivatives
risk, smaller company risk, liquidity risk, foreign investment risk and
currency risk. The Portfolio is subject to heightened credit risk through its
investments in lower quality debt securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C>
10.4 48.7 4.7 15.0 -3.4 26.1 12.4 16.6 18.8

90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 18.10 for the
quarter ended 12/31/98, and the lowest was -10.66 for the quarter ended
9/30/90. For the quarter ended March 31, 1999, the Portfolio's return was
4.71%.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One Past Five (October 2,
1998) Year Years 1989)
<S> <C> <C> <C>
Class IB Shares 18.83 13.36 15.81
Lipper Flexible 14.20 14.31 12.55
Portfolio Average
70% S&P 500/30% 22.85 19.96 15.55
Lehman Gov't Corp.
S&P 500 28.58 24.06 17.62
</TABLE>

For periods prior to the inception of Class IB shares (10/1/96), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 17.94%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 25.17%.

---------------------------------------------- The Hudson River Trust
<PAGE>

THE EQUITY SERIES
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8
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ALLIANCE GROWTH AND INCOME PORTFOLIO

OBJECTIVE:

This Portfolio seeks to provide a high total return through a combination of
current income and capital appreciation by investing primarily in
income-producing common stocks and securities convertible into common stocks.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in stocks and securities convertible into
stocks, and may invest up to 30% of its total assets in high yield debt
securities that are convertible into stocks. The Portfolio may invest in
foreign securities and may also make use of various other investment
strategies. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are market risk,
management risk, leveraging risk, derivatives risk, smaller company risk,
foreign investment risk and currency risk. The Portfolio is subject to
heightened credit risk through its investments in high yield debt securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C>
- -0.8 23.8 19.8 26.6 20.6

94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 26.22% for
the quarter ended 12/31/98, and the lowest was -15.09% for the quarter ended
9/30/98. For the quarter ended March 31, 1999, the Portfolio's return was
2.78%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives, the returns
of a blend of convertible and equity securities indices and the returns of a
broad based equity securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One Past Five (October 1,
1998) Year Years 1993)
<S> <C> <C> <C>
Class IB Shares 20.56 17.57 16.56
Lipper Growth and 15.61 18.35 17.89
Income Funds
Average
75% S&P 20.10 21.07 20.48
500/25%Value Line
Convertible
S&P 500 28.58 24.06 23.32
</TABLE>

For periods prior to the inception of Class IB shares (5/2/97), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 26.25%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 25.94%.

<PAGE>

THE EQUITY SERIES (CONTINUED)

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9
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ALLIANCE EQUITY INDEX PORTFOLIO

OBJECTIVE:

This Portfolio seeks a total return before expenses that approximates the total
return performance of the Standard & Poor's (S&P) 500 Composite Stock Price
Index, including reinvestment of dividends, at a risk level consistent with
that of the Index.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

Through the use of proprietary models, the Portfolio attempts to track the
Index by investing in many of the Index's largest capitalization securities
while trying to maintain industry diversification by investing in some smaller
and medium-sized capitalization companies as well. The Portfolio may also make
use of various other investment strategies, including securities lending. The
Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are market risk,
credit risk, derivatives risk, leveraging risk and management risk. The
Portfolio is subject to smaller company risk through its investments in
smaller capitalization companies.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C>
36.2 22.1 32.3 27.7

95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 21.07% for
the quarter ended 12/31/98, and the lowest was -10.03% for the quarter ended
9/30/98. For the quarter ended March 31, 1999, the Portfolio's return was
4.84%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives and the
returns of a broad based equity securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One (March 1,
1998) Year 1994)
<S> <C> <C>
Class IB Shares 27.74 24.07
Lipper S&P 500 28.05 24.31
Index Funds
Average
S&P 500 28.58 24.79
</TABLE>

For periods prior to the inception of Class IB shares (5/2/97), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 30.61%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 31.38%.

---------------------------------------------- The Hudson River Trust

<PAGE>

THE EQUITY SERIES (CONTINUED)

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10
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ALLIANCE COMMON STOCK PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve long-term growth of its capital and increase
income.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in stock and other equity securities (such as
preferred stocks or convertible debt). The Portfolio may also make use of
various other investment strategies, including investment in foreign
securities, securities lending and investments in debt securities (including
high yield securities). The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are market risk,
credit risk, foreign investment risk, currency risk, leveraging risk,
derivatives risk, smaller company risk and management risk. The Portfolio is
subject to foreign investment risk and currency risk through its investments
in foreign securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
25.3 -8.4 37.6 3.0 24.6 -2.4 32.2 24.0 29.1 29.1

89 90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 28.36% for
the quarter ended 12/31/98, and the lowest was -20.28% for the quarter ended
9/30/90. For the quarter ended March 31, 1999, the Portfolio's return was
4.34%.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for
periods ending
December 31, Past One Past Five Past Ten
1998) Year Years Years
<S> <C> <C> <C>
Class IB Shares 29.06 21.67 18.38
Lipper Growth 22.86 18.63 16.72
Equity Mutual Funds
Average
S&P 500 28.58 24.06 19.21
</TABLE>

For periods prior to the inception of Class IB shares (10/1/96), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. The average annual total return for Class IB since its
actual inception date was 30.09%. Index return for the comparable period
(which dates from month-end of the Class IB inception date) was 31.69%.

<PAGE>

THE EQUITY SERIES (CONTINUED)

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11
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ALLIANCE GLOBAL PORTFOLIO

OBJECTIVE:

This Portfolio seeks long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in a diversified mix of equity securities of
U.S. and established foreign companies. The Portfolio may also make use of
various other investment strategies, including the purchase and sale of shares
of other mutual funds investing in foreign securities, investments in debt
securities and securities lending. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are foreign investment
risk, currency risk, market risk, credit risk, leveraging risk, derivatives
risk, liquidity risk and management risk.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
26.5 -6.3 30.2 -0.7 31.9 5.0 18.6 14.4 11.4 21.5

89 90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 26.53% for
the quarter ended 12/31/98, and the lowest was -17.05% for the quarter ended
9/30/98. For the quarter ended March 31, 1999, the Portfolio's return was
6.47%.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for
periods ending
December 31, Past One Past Five Past Ten
1998) Year Years Years
<S> <C> <C> <C>
Class IB Shares 21.50 14.01 14.55
Lipper Global 14.34 11.98 11.21
Mutual Funds
Average
MSCI World 24.34 15.68 10.66
</TABLE>

For periods prior to the inception of Class IB shares (10/1/96), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. The average annual total return for Class IB since its
actual inception date was 16.89%. Index return for the comparable period
(which dates from month-end of the Class IB inception date) was 20.40%.

---------------------------------------------- The Hudson River Trust

<PAGE>

THE EQUITY SERIES (CONTINUED)

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12
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ALLIANCE INTERNATIONAL PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve long-term growth of capital by investing
primarily in a diversified portfolio of equity securities selected principally
to permit participation in non-U.S. companies with prospects for growth.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio may invest anywhere in the world (including developing countries
or "emerging markets"), although it will not generally invest in the United
States. The Portfolio may purchase securities of developing countries, which
include, among others, Mexico, Brazil, Hong Kong, India, Poland, Turkey and
South Africa. The Portfolio may also make use of various other investment
strategies, including the purchase and sale of shares of other mutual funds
investing in foreign securities, investments in debt securities and securities
lending. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are foreign investment
risk, currency risk, market risk, credit risk, leveraging risk, derivatives
risk, liquidity risk and management risk.

YEARLY PERFORMANCE (%)

<S> <C> <C>
9.6 -3.2 10.3

96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 16.49% for
the quarter ended 12/31/98, and the lowest was 15.74% for the quarter ended
9/30/98. For the quarter ended March 31, 1999, the Portfolio's return was
2.98%.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One (April 3,
1998) Year 1995)
<S> <C> <C>
Class IB Shares 10.30 7.22
Lipper International 13.02 10.74
Mutual Funds
Average
MSCI EAFE 20.00 9.68
</TABLE>

For periods prior to the inception of Class IB shares (5/1/97), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 4.42%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 13.77%.

<PAGE>

THE EQUITY SERIES (CONTINUED)

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13
- --------------------------------------------------------------------------------

ALLIANCE AGGRESSIVE STOCK PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in stocks and other equity securities of small
and medium-sized companies. The Portfolio may also invest in securities of
companies in cyclical industries, companies whose securities are temporarily
undervalued, companies in special situations and less widely known companies.
The Portfolio may invest in foreign securities and may also make use of
various other investment strategies, including investments in debt securities
and securities lending. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are smaller company
risk, market risk, credit risk, leveraging risk, derivatives risk, liquidity
risk and management risk. The Portfolio is subject to foreign investment risk
and currency risk through its investments in foreign securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
43.2 7.9 86.6 -3.4 16.5 -4.1 31.4 22.1 10.7 0.1

89 90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 40.04% for
the quarter ended 3/31/91, and the lowest was -27.25% for the quarter ended
9/30/98. For the quarter ended March 31, 1999, the Portfolio's return was
-1.68%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives, the returns
of a blend of two securities indices and the returns of a broad based equity
securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for
periods ending
December 31, Past One Past Five Past Ten
1998) Year Years Years
<S> <C> <C> <C>
Class IB Shares 0.10 11.25 18.65
Lipper Small Mid 12.16 14.87 15.44
Cap Growth Funds
Average
50% S&P 400 8.28 15.56 16.49
Mid-Cap/50%
Russell 2000
S&P 400 Mid-Cap 19.11 18.84 19.29
</TABLE>

For periods prior to the inception of Class IB shares (10/1/96), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. The average annual total return for Class IB since its
actual inception date was 5.70%. Index return for the comparable period (which
dates from month-end of the Class IB inception date) was 18.11%.

---------------------------------------------- The Hudson River Trust

<PAGE>

THE EQUITY SERIES (CONTINUED)

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14
- --------------------------------------------------------------------------------

ALLIANCE SMALL CAP GROWTH PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve long-term growth of capital.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in stocks and other equity securities of
smaller companies. The Portfolio may at times invest in companies in cyclical
industries, companies whose securities are temporarily undervalued, companies
in special situations and less widely known companies. The Portfolio may
invest in foreign securities and may also make use of various other investment
strategies, including securities lending and investments in debt securities.
The Portfolio may use derivatives.

YEARLY PERFORMANCE (%)

- -4.4

98
Calendar Year End

During the periods shown above, the highest quarterly return was 22.92% for
the quarter ended 12/31/98, and the lowest was -28.13% for the quarter ended
9/30/98. For the quarter ended March 31, 1999, the Portfolio's return was
-10.01%.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One (May 1,
1998) Year 1997)
<S> <C> <C>
Class IB Shares (4.44) 12.06
Lipper Small (0.33) 16.72
Company Growth
Funds Average
Russell 2000 1.23 16.58
Growth
</TABLE>

Index returns are from the end of the month of inception.

<PAGE>

THE FIXED INCOME SERIES
- ----------
15
- --------------------------------------------------------------------------------

ALLIANCE MONEY MARKET PORTFOLIO

OBJECTIVE:

This Portfolio seeks to obtain a high level of current income, preserve its
assets and maintain liquidity.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests in high quality U.S. dollar denominated money market
instruments. Its investments are limited to those which, in the opinion of
Alliance, present minimal credit risk. The Portfolio will maintain a
dollar-weighted average portfolio maturity of 90 days or less. The Portfolio
may make use of various other investment strategies, including investments in
U.S. dollar denominated foreign money market instruments and securities
lending.

Among the principal risks of investing in the Portfolio are money market risk,
market risk, credit risk, leveraging risk and management risk. The Portfolio
is subject to foreign investment risk through its investments in foreign money
market instruments and is subject to credit risk through its involvement with
securities lending.

An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Although the
Portfolio seeks to preserve the value of your investment, it is possible to
lose money by investing in the Portfolio.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
8.9 8.0 5.9 3.3 2.7 3.8 5.5 5.1 5.2 5.1

89 90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 2.31% for the
quarter ended 6/30/89, and the lowest was 0.63% for the quarter ended
12/31/92. For the quarter ended March 31, 1999, the Portfolio's return was
1.09%. The Portfolio's 7-day yield for the quarter ended December 31, 1998 was
4.45%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives and the
returns on 3-month U.S. Treasury bills.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for
periods ending
December 31, Past One Past Five Past Ten
1998) Year Years Years
<S> <C> <C> <C>
Class IB Shares 5.08 4.91 5.33
Lipper Money 4.84 4.77 5.20
Market Mutual
Funds Average
3 Month Treasury 5.05 5.11 5.44
Bill
</TABLE>

For periods prior to the inception of Class IB shares (10/1/96), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. The average annual total return for Class IB since its
actual inception date was 5.13%. Index return for the comparable period (which
dates from month-end of the Class IB inception date) was 5.04%.

<PAGE>

THE FIXED INCOME SERIES (CONTINUED)

- ----------
16
- --------------------------------------------------------------------------------

ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve high current income consistent with relative
stability of principal through investment primarily in debt securities issued
or guaranteed as to principal and interest by the U.S. Government or its
agencies or instrumentalities.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in U.S. Government securities, which for these
purposes include repurchase agreements and forward commitments related to U.S.
Government securities. The Portfolio may also purchase debt securities of
non-government issuers that own mortgages. The Portfolio's investments will
generally have a final maturity of not more than ten years or a duration
(Alliance's measure of a debt instrument's sensitivity to interest rates) not
exceeding that of a 10-year Treasury note. The Portfolio may also make use of
various other investment strategies, including short sales, the purchase or
sale of securities on a when-issued, delayed delivery or forward commitment
basis, and repurchase agreements. The Portfolio uses derivatives.

Among the principal risks of investing in the Portfolio are market risk,
credit risk, leveraging risk, derivatives risk and management risk.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C>
5.4 10.3 -4.6 13.1 3.5 7.0 7.5

92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 5.25% for the
quarter ended 9/30/91, and the lowest was -3.03% for the quarter ended
3/31/94. For the quarter ended March 31, 1999, the Portfolio's return was
-0.32%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives and the
returns of a broad based securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One Past Five (April 1,
1998) Year Years 1991)
<S> <C> <C> <C>
Class IB Shares 7.48 5.13 6.83
Lipper Intermediate 7.68 5.91 7.25
Government Funds
Average
Lehman 8.49 6.45 7.60
Intermediate
Government Bond
</TABLE>

For periods prior to the inception of Class IB shares (5/2/97), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 8.01%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 9.08%.

<PAGE>

THE FIXED INCOME SERIES (CONTINUED)

- ----------
17
- --------------------------------------------------------------------------------

ALLIANCE QUALITY BOND PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve high current income consistent with
preservation of capital by investing primarily in investment grade fixed income
securities.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

In addition to investment grade debt securities (securities rated at least BBB
by S&P or determined by Alliance to be of comparable quality), the Portfolio
may at times invest in convertible debt securities, preferred stock and
dividend-paying common stocks. The Portfolio may invest in foreign securities
and also make use of various other investment strategies, including zero
coupon securities, securities lending, the purchase or sale of securities on a
when-issued, delayed delivery or forward commitment basis and repurchase
agreements. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are market risk,
management risk, leveraging risk, derivatives risk and credit risk. The
Portfolio is subject to foreign investment risk and currency risk through its
investments in foreign securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C>
- -5.4 16.8 5.1 8.9 8.4

94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 6.13% for the
quarter ended 6/30/95, and the lowest was -4.09% for the quarter ended
3/31/94. For the quarter ended March 31, 1999, the Portfolio's return was
-0.88%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives and the
returns of a broad based securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for Since
periods ending Inception
December 31, Past One Past Five (October 1,
1998) Year Years 1993)
<S> <C> <C> <C>
Class IB Shares 8.43 6.52 6.05
Lipper Corporate 7.47 6.54 6.21
Debt Funds A Rated
Average
Lehman Aggregate 8.69 7.27 6.92
Bond
</TABLE>

For periods prior to the inception of Class IB shares (7/8/98), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. Index returns are from the end of the month of
inception of Class IA shares. The average annual total return for Class IB
since its actual inception date was 4.05%. Index return for the comparable
period (which dates from month-end of Class IB inception date) was 9.37%.

---------------------------------------------- The Hudson River Trust

<PAGE>

THE FIXED INCOME SERIES (CONTINUED)

- ----------
18
- --------------------------------------------------------------------------------

ALLIANCE HIGH YIELD PORTFOLIO

OBJECTIVE:

This Portfolio seeks to achieve a high return by maximizing current income and,
to the extent consistent with that objective, capital appreciation.

PRINCIPAL INVESTMENT STRATEGIES AND RISKS:

The Portfolio invests primarily in high yield debt securities (so-called "junk
bonds"). The Portfolio may also make use of various other investment
strategies, including investments in common stocks and other equity securities
and securities lending. The Portfolio may use derivatives.

Among the principal risks of investing in the Portfolio are credit risk,
market and interest rate risk, leveraging risk, derivatives risk, liquidity
risk, currency risk, foreign investment risk, smaller company risk and
management risk. Credit risk is particularly high for the Portfolio because of
its extensive investment in high yield debt securities.

YEARLY PERFORMANCE (%)

<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
4.9 -1.4 24.2 12.1 22.9 -3.0 19.7 22.6 18.2 -5.4

89 90 91 92 93 94 95 96 97 98

Calendar Year End
</TABLE>

During the periods shown above, the highest quarterly return was 7.90% for the
quarter ended 6/30/97, and the lowest was -11.03% for the quarter ended
9/30/98. For the period ended March 31, 1999, the Portfolio's return was
-0.83%.

The information below shows how the Portfolio's performance compares with the
returns of an index of funds with similar investment objectives and the
returns of a broad based securities market index.

PERFORMANCE TABLE

<TABLE>
<CAPTION>
Average Annual
Total Returns (for
periods ending
December 31, Past One Past Five Past Ten
1998) Year Years Years
<S> <C> <C> <C>
Class IB Shares (5.38) 9.74 10.91
Lipper High Current (0.44) 7.37 9.34
Yield Bond Funds
Average
ML Master 3.66 9.01 11.08
</TABLE>

For periods prior to the inception of Class IB shares (10/1/96), performance
information shown is the performance of Class IA adjusted to reflect the 12b-1
fees paid by Class IB. The average annual total return for Class IB since its
actual inception date was 6.63%. Index return for the comparable period (which
dates from month-end of the Class IB inception date) was 9.06%.

<PAGE>

SUMMARY OF PRINCIPAL RISKS
- ----------
19
- --------------------------------------------------------------------------------

The value of your investment in a Portfolio changes with the values of the
Portfolio's investments. Many factors can affect those values. This summary
describes the principal risks that may affect a particular Portfolio's
investments as a whole. The chart at the end of this section displays similar
information. Any Portfolio could be subject to additional principal risks
because the types of investments made by the Portfolios can change over time.
Investments mentioned in this summary and described in greater detail under
"Description of the Portfolios" or "Investment Techniques" appear in BOLD
TYPE. Those sections also include more information about the Portfolios, their
investments and the related risks.

o MARKET AND INTEREST RATE RISK. Each of the Portfolios is subject to market
risk, which is the general risk of unfavorable changes in the market value
of a Portfolio's securities. The Portfolios that invest in common stock,
preferred stock, convertible securities and other equity securities are
exposed to the risks of changes in the value of those securities based on
market fluctuations and business variables. These include the risks of
broader market declines as well as more company-specific risks, such as
poor management performance, inappropriate financial leverage, industry
problems and reduced demand for a particular company's products.

Interest rate risk is the risk that interest rates will rise causing a
portfolio's investments to decline in value. Portfolios that invest in
debt securities such as bonds, notes and ASSET-BACKED SECURITIES are
subject to this type of market risk. Debt securities are obligations of an
issuer to make fixed payments of principal and/or interest on future
dates. If the interest rate paid by an issuer on a particular debt
security is high relative to market interest rates, that security is
attractive to investors and valuable. Accordingly, if market interest
rates rise, your investment in a Portfolio that holds debt securities is
likely to become less valuable because its debt securities are likely to
drop in value.

Even the Alliance Intermediate Government Securities Portfolio is
subject to interest rate risk despite the fact that it generally invests a
substantial portion of its assets in the highest quality debt securities,
such as U.S. Government Securities. Interest rate risk is generally
greater, however, for Portfolios, such as the Alliance Growth Investors
Portfolio and the Alliance High Yield Portfolio, that invest in lower
rated securities or comparable unrated securities.

All the Portfolios, except the Alliance Equity Index Portfolio, may
invest in MORTGAGE-BACKED SECURITIES. Market risk generally is greater for
Portfolios that may invest to a material extent in MORTGAGE-RELATED or
other ASSET-BACKED SECURITIES that may be prepaid. These securities bear
greater market risk because they have variable maturities that tend to
lengthen when that is least desirable-when interest rates are rising.
Increased market risk is also likely for Portfolios that invest to a
material extent in debt securities paying no interest, such as ZERO
COUPON, principal-only and interest-only securities, or paying non-cash
interest in the form of other debt securities (pay-in-kind securities).

o CREDIT RISK. Credit risk is the risk that the issuer or the guarantor of a
debt security or the counterparty to a Portfolio's transaction will be
unable or unwilling to make timely principal and/or interest payments, or
otherwise to honor its obligations. Each of the Portfolios may be subject
to credit risk to the extent that it invests in debt securities or engages
in transactions, such as SECURITIES LOANS, which involve a promise by a
third party to honor an obligation to the Portfolio. Varying degrees of
credit risk, often reflected in credit ratings, apply to different third
parties and related transactions.

Credit risk is particularly significant for Portfolios, such as the
Alliance Growth Investors Portfolio and the Alliance High Yield Portfolio,
that invest a material portion of their assets in LOWER-RATED SECURITIES.
These debt securities and similar unrated securities (commonly known as
"junk bonds") have speculative elements or are

<PAGE>

SUMMARY OF PRINCIPAL RISKS (CONTINUED)

- ----------
20
- --------------------------------------------------------------------------------

predominantly speculative credit risks. Even debt securities that are
"investment grade" may have some speculative characteristics. Portfolios
such as the Alliance Growth Investors Portfolio and the Alliance High
Yield Portfolio may also be subject to greater credit risk because they
may invest in debt securities issued in connection with corporate
restructurings by highly leveraged issuers or in debt securities not
current in the payment of interest or principal, or in default. Portfolios
such as the Alliance Global Portfolio and the Alliance International
Portfolio that may invest in FOREIGN SECURITIES are also subject to
increased credit risk because of the difficulties of requiring foreign
entities, including issuers of sovereign debt, to honor their contractual
commitments, and because a number of foreign governments and other issuers
are already in default.

o CURRENCY RISK. Portfolios such as the Alliance Global Portfolio and the
Alliance International Portfolio that invest in securities denominated in,
and/or receiving revenues in, FOREIGN CURRENCIES will be subject to
currency risk. This is the risk that those currencies will decline in
value relative to the U.S. Dollar, or, in the case of hedging positions,
that the U.S. Dollar will decline in value relative to the currency
hedged. In either event, the dollar value of such investments would be
adversely affected.

o FOREIGN INVESTMENT RISK. Portfolios with foreign investments, such as the
Alliance Global Portfolio and the Alliance International Portfolio may
experience more rapid and extreme changes in value than Portfolios with
investments solely in securities of U.S. companies. This is because the
securities markets of many foreign countries are relatively small, with a
limited number of companies representing a small number of industries.

Additionally, FOREIGN SECURITIES issuers are usually not subject to
the same degree of regulation as U.S. issuers. Reporting, accounting and
auditing standards of foreign countries differ, in some cases
significantly, from U.S. standards. Also, nationalization, expropriation
or confiscatory taxation, currency blockage, political changes or
diplomatic developments could adversely affect a Portfolio's investments
in a foreign country. In the event of nationalization, expropriation or
other confiscation, a Portfolio could lose its entire investment.

o LEVERAGING RISK. When a Portfolio is borrowing money or otherwise
leveraging its portfolio, the value of an investment in that Portfolio
will be more volatile and all other risks will tend to be compounded. All
of the Portfolios may take on leveraging risk by investing collateral from
SECURITIES LOANS and by borrowing money to meet redemption requests.

o DERIVATIVES RISK. All the Portfolios, except the Alliance Money Market
Portfolio, may use DERIVATIVES, which are financial contracts whose value
depends on, or is derived from, the value of an underlying asset,
reference rate or index. Alliance will sometimes use DERIVATIVES as part
of a strategy designed to reduce other risks and sometimes will use
DERIVATIVES for leverage, which increases opportunities for gain but also
involves greater risk. In addition to other risks such as the credit risk
of the counterparty, DERIVATIVES involve the risk of mispricing or
improper valuation and the risk that changes in the value of a derivative
may not correlate perfectly with relevant assets, rates and indices.

o LIQUIDITY RISK. Liquidity risk exists when particular investments are
difficult to purchase or sell, possibly preventing a Portfolio from
selling out of these illiquid securities at an advantageous price.
Portfolios such as the Alliance Global Portfolio, the Alliance
International Portfolio, the Alliance Growth Investors Portfolio, the
Alliance Aggressive Stock Portfolio, the Alliance Small Cap Growth
Portfolio and the Alliance High Yield Portfolio are subject to liquidity
risk because foreign investments and securities involving substantial
market and/or credit risk tend to be harder to sell. In addition,
liquidity risk for the Alliance High Yield Portfolio tends to increase to
the extent

<PAGE>

SUMMARY OF PRINCIPAL RISKS (CONTINUED)

- -----
21
- --------------------------------------------------------------------------------

that it invests in LOAN PARTICIPATIONS AND ASSIGNMENTS, whose sale may be
restricted by law or by contract.

o SMALLER COMPANY RISK. Market risk and liquidity risk are particularly
pronounced for Portfolios, such as the Alliance Aggressive Stock Portfolio
and the Alliance Small Cap Growth Portfolio, that invest a significant
percentage of their assets in the stocks of companies with relatively
small market capitalizations. These companies may have limited product
lines, markets or financial resources or may depend on a few key
employees.

o MONEY MARKET RISK. While money market funds are designed to be relatively
low risk investments, they are not entirely free of risk. Despite the
short maturities and high credit quality of the Alliance Money Market
Portfolio's investments, increases in interest rates and deteriorations in
the credit quality of the instruments the Portfolio has purchased may
reduce the Portfolio's net asset value. In addition, the Portfolio is
still subject to the risk that the value of an investment may be eroded
over time by inflation.

o MANAGEMENT RISK. Each Portfolio is subject to management risk because it is
an actively managed investment portfolio. Alliance will apply its
investment techniques and risk analyses in making investment decisions for
the Portfolios, but there can be no guarantee that they will produce the
desired results. In some cases, certain investments may be unavailable or
Alliance may choose not to use them under market conditions when, in
retrospect, their use would have been beneficial to the Portfolios.

PRINCIPAL RISKS BY PORTFOLIO

The following chart summarizes the principal risks of each Portfolio. Risks not
marked for a particular Portfolio may, however, still apply to some extent to
that Portfolio at various times.

<TABLE>
<CAPTION>
Market
and
Interest Foreign
Alliance Rate Credit Currency Investment
Portfolio Risk Risk Risk Risk
<S> <C> <C> <C> <C>
Conservative Investors X X X X
Balanced X X X X
Growth Investors X X X X
Growth and Income X X X X
Equity Index X X
Common Stock X X X X
Global X X X X
International X X X X
Aggressive Stock X X X X
Small Cap Growth X X X X
Money Market X X X
Intermediate X X
Government Securities
Quality Bond X X X X
High Yield X X X X

<CAPTION>
Smaller Money
Alliance Leveraging Derivatives Liquidity Company Market Management
Portfolio Risk Risk Risk Risk Risk Risk
<S> <C> <C> <C> <C> <C> <C>
Conservative Investors X X X
Balanced X X X X
Growth Investors X X X X X
Growth and Income X X X X
Equity Index X X X X
Common Stock X X X X
Global X X X X
International X X X X
Aggressive Stock X X X X X
Small Cap Growth X X X X X
Money Market X X X
Intermediate X X X
Government Securities
Quality Bond X X X
High Yield X X X X X
</TABLE>

---------------------- The Hudson River Trust
<PAGE>

2
Description of the Portfolios

- ----------
22
- --------------------------------------------------------------------------------

This section of the Prospectus provides a more complete description of the
principal investment objectives, strategies, and risks of the Portfolios. Of
course, there can be no assurance that any portfolio will achieve its
investment objective.

Please note that:

o Additional discussion of the Portfolios' investments, including the risks
of the investments, can be found in the discussion under "Investment
Techniques" following this section.

o The description of the principal risks for a Portfolio may include risks
described in the "Summary of Risks" above. Additional information about
the risks of investing in a Portfolio can be found in the discussion below
under "Investment Techniques."

o Additional descriptions of each Portfolio's strategies, investments and
risks can be found in the Portfolios' Statement of Additional Information,
or SAI.

o Except as noted, (i) the Portfolios' investment objectives are
"fundamental" and cannot be changed without shareholder vote, and (ii) the
Portfolios' investment policies are not fundamental and thus can be
changed without a shareholder vote.

THE ASSET ALLOCATION SERIES

The Alliance Conservative Investors Portfolio, the Alliance Balanced Portfolio
and the Alliance Growth Investors Portfolio together are called the Asset
Allocation Series. These Portfolios invest in a variety of fixed income and
equity securities, each pursuant to a different asset allocation strategy, as
described below. The term "asset allocation" is used to describe the process
of shifting assets among discrete categories of investments in an effort to
reduce risk while producing desired return objectives. Portfolio management,
therefore, will consist not only of selecting specific securities but also of
setting, monitoring and changing, when necessary, the asset mix.

Each Portfolio has been designed with a view toward a different "investor
profile." The "conservative investor" has a relatively short-term investment
bias, either because of a limited tolerance for market volatility or a short
investment horizon. This investor is averse to taking risks that may result in
principal loss, even though such aversion may reduce the potential for higher
long-term gains and result in lower performance during periods of equity
market strength. Consequently, the asset mix for the Alliance Conservative
Investors Portfolio attempts to reduce volatility while providing modest
upside potential. The "growth investor" has a longer-term investment horizon
and is therefore willing to take more risks in an attempt to achieve long-term
growth of principal. This investor wishes, in effect, to be risk conscious
without being risk averse. The asset mix for the Alliance Growth Investors
Portfolio attempts to provide for upside potential without excessive
volatility.

The "balanced investor" is somewhat less aggressive than the growth investor
and has a medium- to long-term investment horizon. This investor is sensitive
to risk, but is willing to take on some risk in seeking high total return.
Consequently, the asset mix for the Alliance Balanced Portfolio attempts to
capture a sizable portion of the market's upside while diversifying risk among
asset classes.

Alliance has established an asset allocation committee (the "Committee"), all
the members of which are employees of Alliance, which is responsible for
setting and continually reviewing the asset mix ranges of each Portfolio.
Under normal market conditions, the Committee is expected to change allocation
ranges approximately three to five times per year. However, the Committee has
broad latitude to establish the frequency, as well as the magnitude, of
allocation changes within the guidelines established for each Portfolio.
During periods of severe market disruption, allocation ranges may change
frequently. It is also possible that in periods of stable and consistent
outlook no change

<PAGE>

- ----------
23
- --------------------------------------------------------------------------------

will be made. The Committee's decisions are based on a variety of factors,
including liquidity, portfolio size, tax consequences and general market
conditions, always within the context of the appropriate investor profile for
each Portfolio. Consequently, asset mix decisions for the Alliance
Conservative Investors Portfolio particularly emphasize risk assessment of
each asset class viewed over the shorter term, while decisions for the
Alliance Growth Investors Portfolio are principally based on the longer term
total return potential for each asset class.

When the Committee establishes a new allocation range for a Portfolio, it also
prescribes the length of time during which that Portfolio should achieve an
asset mix within the new range. To achieve a new asset mix, the Portfolios
look first to available cash flow. If it appears that cash flow will, in the
opinion of Alliance, be insufficient to achieve the desired asset mix, the
Portfolios will sell securities and reinvest the proceeds in the appropriate
asset class.

The Asset Allocation Series Portfolios are permitted to use a variety of
hedging techniques to attempt to control stock market, interest rate and
currency risks. Each of the Portfolios in the Asset Allocation Series may make
loans of up to 50% of its total portfolio securities. Each of the Portfolios
in the Asset Allocation Series may write covered call and put options and may
purchase call and put options on all the types of securities in which it may
invest, as well as securities indexes and foreign currencies. Each Portfolio
may also purchase and sell stock index, interest rate and foreign currency
futures contracts and options thereon, as well as forward foreign currency
exchange contracts. See "Investment Techniques-Forward Foreign Currency
Exchange Contracts," below.

RISK FACTORS. In addition to the risk factors associated with the securities
in which the Portfolios in the Asset Allocation Series may invest, these
Portfolios bear the risk that Alliance will not accurately assess and respond
to changing market conditions. While Alliance has established the Committee to
help it anticipate and respond positively to changes in market conditions,
there can be no assurance that this goal will be achieved. Furthermore, these
Portfolios may incur additional operating expenses during periods of
frequently changing asset mix ranges.

ALLIANCE CONSERVATIVE INVESTORS
PORTFOLIO-INVESTMENT POLICIES

The Alliance Conservative Investors Portfolio attempts to achieve its
investment objective by allocating varying portions of its assets to high
quality, publicly traded fixed income securities (including money market
instruments and cash) and publicly traded common stocks and other equity
securities of U.S. and non-U.S. issuers. All fixed income securities held by
the Portfolio will be of investment grade. This means that they will be in one
of the top four rating categories assigned by S&P or Moody's Investors
Service, Inc. ("Moody's"). The Portfolio may invest in the types of equity
securities in which the Alliance Common Stock Portfolio may invest, including
convertible securities. No more than 15% of the Portfolio's assets will be
invested in securities of non-U.S. issuers. See "Investment Techniques-Foreign
Securities and Currencies," below.

The Portfolio will at all times hold at least 40% of its assets in investment
grade fixed income securities, each having a duration, as determined by
Alliance, that is less than that of a 10-year Treasury bond (the "Fixed Income
Core"). Duration is a measure that relates the price volatility of a bond to
changes in interest rates. The duration of a bond is the weighted average term
to maturity, expressed in years, of the present value of all future cash
flows, including coupon payments and principal repayments. Thus, by
definition, duration is always less than or equal to full maturity. In some
cases, Alliance's calculation of duration will be based on certain assumptions
(including assumptions regarding prepayment rates, in the case of
mortgage-backed or asset-backed securities, and foreign and domestic interest
rates). As of December 31, 1998, the duration of a 10-year Treasury bond was
considered by Alliance to be 4.68 years.

---------------------------------------------- The Hudson River Trust

<PAGE>

- ----------
24
- --------------------------------------------------------------------------------

The Portfolio is generally expected to hold approximately 70% of its assets in
fixed income securities (including the Fixed Income Core) and 30% in equity
securities. Actual asset mixes will be adjusted in response to economic and
credit market cycles. The fixed income asset class will always comprise at
least 50%, but never more than 90%, of the Portfolio's total assets. The
equity class will always comprise at least 10%, but never more than 50%, of
the Portfolio's total assets.

ALLIANCE BALANCED PORTFOLIO-INVESTMENT POLICIES

The Alliance Balanced Portfolio attempts to achieve its objective by investing
varying portions of its assets in publicly-traded equity and debt securities
and money market instruments. The Alliance Balanced Portfolio attempts to
achieve long-term growth of capital by investing in common stock and other
equity-type instruments. It will try to achieve a competitive level of current
income and capital appreciation through investments in publicly traded debt
securities and a high level of current income through investments in money
market instruments.

The portion of the Alliance Balanced Portfolio's assets invested in each type
of security will vary in accordance with economic conditions, the general
level of common stock prices, interest rates and other relevant
considerations, including the risks associated with each investment medium.
Although the Alliance Balanced Portfolio will seek to reduce the risks
associated with any one investment medium by utilizing a variety of
investments, performance will depend upon Alliance's ability to assess
accurately and react to changing market conditions.

The Alliance Balanced Portfolio will at all times hold at least 25% of its
assets in fixed income securities (including, for these purposes, that portion
of the value of securities convertible into common stock which is attributable
to the fixed income characteristics of those securities, as well as money
market instruments). The Portfolio's equity securities will always comprise at
least 25%, but never more than 75%, of the Portfolio's total assets.
Consequently, the Portfolio will have "Core Holdings" of at least 25% fixed
income securities and 25% equity securities. Over time, holdings by the
Portfolio are currently expected to average approximately 50% in fixed income
securities and approximately 50% in equity securities. Actual asset mixes will
be adjusted in response to economic and credit market cycles.

The equity securities invested in by the Alliance Balanced Portfolio will
consist of the types of securities in which the Alliance Common Stock
Portfolio may invest. The money market securities will consist of the types of
securities and credit quality in which the Alliance Money Market Portfolio may
invest. The debt securities will consist principally of bonds, notes,
debentures and equipment trust certificates. The Portfolio may also buy debt
securities with equity features such as conversion or exchange rights or
warrants for the acquisition of stock or participations based on revenues,
rates or profits. These debt securities will principally be investment grade
securities rated at least Baa by Moody's or BBB by S&P, or will be issued or
guaranteed by the U.S. Government, its agencies or instrumentalities. If such
Baa or BBB debt securities held by the Portfolio fall below those ratings, the
Portfolio will not be obligated to dispose of them and may continue to hold
them if Alliance considers them appropriate investments under the
circumstances. In addition, the Alliance Balanced Portfolio may at times hold
some of its assets in cash. The Portfolio may invest up to 20% of its total
assets in foreign securities. See "Investment Techniques-Foreign Securities
and Currencies," below. The Portfolio may make secured loans of up to 50% of
its total portfolio securities. See "Investment Techniques-Securities
Lending," below. The Alliance Balanced Portfolio may write covered call and
put options and may purchase call and put options on all the types of
securities in which it may invest, as well as securities indexes and foreign
currencies. The Alliance Balanced Portfolio may also purchase and sell stock
index, interest rate and foreign currency futures contracts and options
thereon. See "Investment Techniques-Options," "Investment

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Techniques-Futures" and "Investment Techniques-Risk Factors in Options and
Futures," below.

ALLIANCE GROWTH INVESTORS PORTFOLIO-INVESTMENT POLICIES

The Alliance Growth Investors Portfolio attempts to achieve its investment
objective by allocating varying portions of its assets to a number of asset
classes. Equity investments will include both exchange-traded and
over-the-counter common stocks and equity-type securities, which may include
preferred stock and convertible securities, and may include securities issued
by intermediate- and small-sized companies that, in the opinion of Alliance,
have favorable growth prospects. More risk is associated with investment in
intermediate and small-sized companies because they are often dependent on
limited product lines, financial resources or management groups. They may be
more vulnerable to competition from larger companies with greater resources
and to economic conditions affecting their market sector. Intermediate- and
small-sized companies may be new, without long business or management
histories, and perceived by the market as unproven. Their securities may be
held primarily by insiders or institutional investors, and may trade
infrequently or in limited volume. The prices of these stocks often fluctuate
more than those of larger, more established companies. Fixed income
investments will include investment grade fixed income securities (including
cash and money market instruments) as well as securities that have a high
current yield and that are either rated in the lower categories by nationally
recognized statistical rating organizations ("NRSROs") (i.e., Baa or lower by
Moody's or BBB or lower by S&P) or are unrated. For a discussion of the risks
associated with investment in these higher yielding securities, see
"Investment Techniques-Fixed Income Securities" and "Investment
Techniques-Risk Factors of Lower Rated Fixed Income Securities," below. For
the fiscal year ended December 31, 1998, approximately 22.3% of the Portfolio
was invested in fixed income securities. No more than 30% of the Portfolio's
assets will be invested in securities of non-U.S. issuers. See "Investment
Techniques-Foreign Securities and Currencies," below.

The Portfolio will at all times hold at least 40% of its assets in publicly
traded common stocks and other equity securities of the type purchased by the
Alliance Common Stock Portfolio (the "Equity Core"). The Portfolio is
generally expected to hold approximately 70% of its assets in equity
securities (including the Equity Core) and 30% in fixed income securities.
Actual asset mixes will be adjusted in response to economic and credit market
cycles. The fixed income asset class will always comprise at least 10%, but
never more than 60%, of the Portfolio's total assets. The equity class will
always comprise at least 40%, but never more than 90%, of the Portfolio's
total assets.

THE EQUITY SERIES

ALLIANCE GROWTH AND INCOME PORTFOLIO-INVESTMENT POLICIES

The Alliance Growth and Income Portfolio seeks to maintain a portfolio yield
above that of issuers comprising the S&P 500 Index and to achieve (in the long
run) a rate of growth in portfolio income that exceeds the rate of inflation.
The Alliance Growth and Income Portfolio will generally invest in common
stocks of "blue chip" issuers, i.e., those (1) which have a total market
capitalization of at least $1 billion, (2) which pay periodic dividends, and
(3) whose common stock is in the highest four issuer ratings for S&P (i.e.,
A+, A, A- or B+) or Moody's (i.e., High Grade, Investment Grade, Upper Medium
Grade or Medium Grade) or, if unrated, is determined to be of comparable
quality by Alliance. It is expected that on average the dividend rate of these
issuers will exceed the average rate of issuers constituting the S&P 500
Index.

The Alliance Growth and Income Portfolio may invest without limit in
securities convertible into common stocks, which include convertible bonds,
convertible preferred stocks and convertible warrants. The Alliance Growth and
Income Portfolio may invest up to 30% of its total assets in high

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yield, high risk convertible securities rated at the time of purchase below
investment grade (i.e., rated Ba or lower by Moody's or BB or lower by S&P or
determined by the Trust's investment adviser to be of comparable quality).
Convertible securities normally provide a yield that is higher than that of
the underlying stock but lower than that of a fixed income security without
the convertible feature. Also, the price of a convertible security will
normally vary to some degree with changes in the price of the underlying
common stock, although in some market conditions the higher yield tends to
make the convertible security less volatile than the underlying common stock.
In addition, the price of a convertible security will also vary to some degree
inversely with interest rates. For additional discussion of the risks
associated with investment in lower-rated securities, see "Investment
Techniques-Fixed Income Securities" and "Investment Techniques-Risk Factors of
Lower Rated Fixed Income Securities," below. For more information concerning
the bond ratings assigned by Moody's and S&P, see Appendix A.

The Alliance Growth and Income Portfolio does not expect to invest more than
25% of its total assets in foreign securities, although it may do so without
limit. It may enter into foreign currency futures contracts (and related
options), forward foreign currency exchange contracts and options on
currencies for hedging purposes. See "Investment Techniques-Forward Foreign
Currency Exchange Contracts," below.

The Alliance Growth and Income Portfolio may write covered call and put
options on securities and securities indexes for hedging purposes or to
enhance its return and may purchase call and put options on securities and
securities indexes for hedging purposes. The Alliance Growth and Income
Portfolio may also purchase and sell securities index futures contracts and
may write and purchase options thereon for hedging purposes. See "Investment
Techniques-Options," "Investment Techniques-Futures," and "Investment
Techniques-Risk Factors in Options and Futures," below.

For temporary defensive purposes, the Alliance Growth and Income Portfolio may
invest in certain money market instruments. See "Investment Techniques-Certain
Money Market Instruments," below.

ALLIANCE EQUITY INDEX PORTFOLIO-INVESTMENT POLICIES

The Alliance Equity Index Portfolio's investment objective is to seek a total
return before expenses that approximates the total return of the S&P 500
Composite Stock Price Index (the "Index"), including reinvestment of
dividends, at a risk level consistent with that of the Index. The Index is a
widely publicized index that tracks 500 companies traded on the New York and
American Stock Exchanges and in the over-the-counter market. It is weighted by
market value so that each company's stock influences the Index in proportion
to its market importance. While most issuers are among the 500 largest U.S.
companies in terms of aggregate market value, some other stocks are included
by S&P for purposes of diversification. The value of the Index may change over
time due to a variety of factors, including economic factors and events
affecting issuers included in the Index.

In managing the Alliance Equity Index Portfolio, the Trust's investment
adviser will not utilize customary economic, financial or market analyses or
other traditional investment techniques. Rather, the investment adviser will
use proprietary modeling techniques to construct a portfolio that it believes
will, in the aggregate, approximate the performance results of the Index. The
investment adviser will first select from the largest capitalization
securities in the Index on a capitalization-weighted basis. Generally, the
largest capitalization securities reasonably track the Index because the Index
is significantly influenced by a small number of securities. However,
selecting securities on the basis of their capitalization alone would distort
the Alliance Equity Index Portfolio's industry diversification, and therefore
economic events could potentially have a dramatically different impact on the
performance of the Alliance Equity Index Portfolio from that of the Index.
Recognizing this fact, the modeling techniques also consider industry

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diversification when selecting investments for the Alliance Equity Index
Portfolio. The investment adviser also seeks to diversify the Alliance Equity
Index Portfolio's assets with respect to market capitalization. As a result,
the Alliance Equity Index Portfolio will include securities of smaller and
medium-sized capitalization companies in the Index.

Although the modeling techniques are intended to produce a portfolio whose
performance approximates that of the Index (before expenses), there can be no
assurance that these techniques will reduce "tracking error" (i.e., the
difference between the Alliance Equity Index Portfolio's investment results
(before expenses) and the Index's). Tracking error may arise as a result of
brokerage costs, fees and operating expenses and a lack of correlation between
the Alliance Equity Index Portfolio's investments and the Index.

Cash may be accumulated in the Alliance Equity Index Portfolio until it
reaches approximately 1% of the value of the Alliance Equity Index Portfolio
at which time such cash will be invested in common stocks as described above.
Accumulation of cash increases tracking error. The Alliance Equity Index
Portfolio will, however, remain substantially fully invested in common stocks
even when common stock prices are generally falling. Also, adverse performance
of a stock will ordinarily not result in its elimination from the Alliance
Equity Index Portfolio.

In order to reduce brokerage costs, maintain liquidity to meet shareholder
redemptions or minimize tracking error when the Alliance Equity Index
Portfolio holds cash, the Alliance Equity Index Portfolio may from time to
time buy and hold futures contracts on the Index and options on such futures
contracts. See "Investment Techniques-Futures" and "Investment Techniques-Risk
Factors in Options and Futures," below. The contract value of futures
contracts purchased by the Alliance Equity Index Portfolio plus the contract
value of futures contracts underlying call options purchased by the Alliance
Equity Index Portfolio will not exceed 20% of the Alliance Equity Index
Portfolio's total assets.

The Alliance Equity Index Portfolio may seek to increase income by lending
securities with a value of up to 50% of its total assets to brokers-dealers.
See "Investment Techniques-Securities Lending," below.

ALLIANCE COMMON STOCK PORTFOLIO-INVESTMENT POLICIES

The Alliance Common Stock Portfolio attempts to achieve its investment
objective by investing primarily in common stocks and other equity-type
securities that Alliance believes will share in the growth of the nation's
economy over a long period.

Most of the time, the Alliance Common Stock Portfolio will invest primarily in
common stocks that are listed on national securities exchanges. Smaller
amounts will be invested in stocks that are traded over-the-counter and in
other equity-type securities (such as preferred stocks or convertible debt
instruments). Current income is an incidental consideration. The Alliance
Common Stock Portfolio generally will not invest more than 20% of its total
assets in foreign securities. See "Investment Techniques-Foreign Securities
and Currencies," below.

If, in light of economic conditions and the general level of common stock
prices, it appears that the Portfolio's investment objective will not be met
by using all its assets to buy equities, the Alliance Common Stock Portfolio
may also use part of its assets to make nonequity investments. These could
include buying securities such as nonparticipating and nonconvertible
preferred stocks and certain fixed income securities. Fixed income securities
will include investment grade bonds and debentures and money market
instruments, as well as securities that have a high current yield because they
are either rated in the lower categories by NRSROs (i.e., Baa or lower by
Moody's or BBB or lower by S&P) or are unrated. For a discussion of the risks
associated with investment in these higher yielding securities, see
"Investment Techniques-Fixed Income Securities" and "Investment
Techniques-Risk Factors of Lower Rated Fixed Income Securities," below. For
the fiscal year ended

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December 31, 1998, less than 1% of the average assets of the Portfolio were
invested in higher yielding securities.

The Alliance Common Stock Portfolio may make temporary investments in money
market instruments of the same type and credit quality as those in which the
Alliance Money Market Portfolio may invest. The Portfolio may make secured
loans of up to 50% of its total portfolio securities. See "Investment
Techniques-Securities Lending," below. The Alliance Common Stock Portfolio may
write covered call and put options and may buy call and put options on
individual common stocks and other equity-type securities, securities indexes,
and foreign currencies. The Portfolio may also purchase and sell stock index
and foreign currency futures contracts and options thereon. See "Investment
Techniques-Options," "Investment Techniques-Futures," and "Investment
Techniques-Risk Factors in Options and Futures," below.

ALLIANCE GLOBAL PORTFOLIO-INVESTMENT POLICIES

The Alliance Global Portfolio attempts to achieve its objective by investing
primarily in a diversified portfolio of equity securities selected principally
to permit participation in established non-U.S. companies that, in the opinion
of Alliance, have prospects for growth, as well as in securities issued by
U.S. companies. These non-U.S. companies may have operations in the United
States, in their country of incorporation or in other countries. The Alliance
Global Portfolio intends to diversify investments among several countries and
to have represented in the Portfolio business activities in not less than
three different countries (including the United States). For temporary or
defensive purposes, the Alliance Global Portfolio may at times invest
substantially all of its assets in securities issued by U.S. companies or in
cash or cash equivalents, including money market instruments issued by foreign
entities.

The Alliance Global Portfolio may invest in any type of security including,
but not limited to, shares, preferred or common, as well as shares of mutual
funds which invest in foreign securities, bonds and other evidences of
indebtedness, and other securities of issuers wherever organized and
governments and their political subdivisions. Although no particular
proportion of stocks, bonds or other securities is required to be maintained,
the Alliance Global Portfolio intends under normal conditions to invest in
equity securities. The Portfolio may make secured loans of up to 50% of its
total portfolio securities. See "Investment Techniques-Securities Lending,"
below. The Alliance Global Portfolio may write covered call and put options
and may purchase call and put options on individual equity securities,
securities indexes, and foreign currencies. The Alliance Global Portfolio may
also purchase and sell stock index, foreign currency and interest rate futures
contracts and options on such contracts, as well as forward foreign currency
exchange contracts. See "Investment Techniques-Options," "Investment
Techniques-Forward Foreign Currency Exchange Contracts," "Investment
Techniques-Futures," and "Investment Techniques-Risk Factors in Options and
Futures," below.

RISK FACTORS. For a discussion of the risks associated with investments in
foreign securities, see "Investment Techniques-Foreign Securities and
Currencies," below.

ALLIANCE INTERNATIONAL PORTFOLIO-INVESTMENT POLICIES

The Alliance International Portfolio attempts to achieve its objective by
investing primarily in a diversified portfolio of equity securities selected
principally to permit participation in non-U.S. companies or foreign
governmental enterprises that, in the opinion of Alliance, have prospects for
growth. These non-U.S. companies may have operations in the United States, in
their country of incorporation and/or in other countries. The Alliance
International Portfolio intends to have represented in the Portfolio business
activities in not less than three different countries and may invest anywhere
in the world, including Europe, Canada, Australia, Asia, Latin America and
Africa. The Alliance International Portfolio may purchase securities of
developing countries, which include, among others, Mexico, Brazil, Hong Kong,
India, Poland, Turkey and South Africa. The Alliance International Portfolio

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intends to diversify investments among several countries, although for
temporary defensive purposes, the Alliance International Portfolio may at
times invest substantially all of its assets in securities issued by a single
major developed country (e.g., the United States) or in cash or cash
equivalents, including money market instruments issued by that country.

The Alliance International Portfolio may invest in any type of investment
grade, fixed income security including, but not limited to, preferred stock,
convertible securities, bonds, notes and other evidences of indebtedness of
foreign issuers, including obligations of foreign governments. The Alliance
International Portfolio may also establish and maintain temporary cash
balances in U.S. and foreign short-term high-grade money market instruments
for defensive purposes or to take advantage of buying opportunities. Although
no particular proportion of stocks, bonds or other securities is required to
be maintained, the Alliance International Portfolio intends under normal
market conditions to invest primarily in equity securities. The Alliance
International Portfolio may make loans of up to 50% of its portfolio
securities. See "Investment Techniques-Securities Lending," below. The
Alliance International Portfolio may write covered call and put options and
may purchase call and put options on individual equity securities, securities
indexes, and foreign currencies. See "Investment Techniques-Options," below.
The Alliance International Portfolio may also purchase and sell stock index,
foreign currency and interest rate futures contracts and options on such
contracts, as well as forward foreign currency exchange contracts. See
"Investment Techniques-Forward Foreign Currency Exchange Contracts,"
"Investment Techniques-Futures," and "Investment Techniques-Risk Factors in
Options and Futures," below.

Risk Factors. For a discussion of the risks associated with investments in
foreign securities, see "Investment Techniques-Foreign Securities and
Currencies," below.

ALLIANCE AGGRESSIVE STOCK PORTFOLIO-
INVESTMENT POLICIES

The Alliance Aggressive Stock Portfolio attempts to achieve its objective by
investing primarily in common stocks and other equity-type securities issued
by intermediate- and small-sized companies that, in the opinion of Alliance,
have favorable growth prospects. The Alliance Aggressive Stock Portfolio may
also invest a portion of its assets in securities of companies in cyclical
industries, companies whose securities are temporarily undervalued, companies
in special situations and less widely known companies.

If, in light of economic conditions, it appears that the Alliance Aggressive
Stock Portfolio's objective will not be achieved primarily through investments
in common stocks, the Portfolio may also invest in other equity-type
securities (such as preferred stocks and convertible debt instruments) and
protective options. Under certain market conditions, the Alliance Aggressive
Stock Portfolio may also invest in corporate fixed income securities, which
will generally be investment grade, or invest part of its assets in cash or
cash equivalents for liquidity or defensive purposes, including money market
instruments rated at least Prime-1 by Moody's or A-1 by S&P. The Alliance
Aggressive Stock Portfolio may invest no more than 20% of its total assets in
foreign securities. See "Investment Techniques-Foreign Securities and
Currencies," below. The Portfolio may make secured loans of up to 50% of its
total portfolio securities. See "Investment Techniques-Securities Lending,"
below. The Alliance Aggressive Stock Portfolio may write covered call options
and may purchase call and put options on individual equity securities,
securities indexes and foreign currencies. The Alliance Aggressive Stock
Portfolio may also purchase and sell stock index and foreign currency futures
contracts and options thereon. See "Investment Techniques-Options,"
"Investment Techniques-Futures" and "Risk Factors in Options and Futures,"
below.

RISK FACTORS. More risk is associated with investment in intermediate- and
small-sized companies, because they are

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often dependent on limited product lines, financial resources or management
groups. They may be more vulnerable to competition from larger companies with
greater resources and to economic conditions affecting their market sector.
Intermediate- and small-sized companies may be new, without long business or
management histories, and perceived by the market as unproven. Their
securities may be held primarily by insiders or institutional investors, and
may trade infrequently or in limited volume. The prices of these stocks often
fluctuate more than those of larger more established companies.

ALLIANCE SMALL CAP GROWTH PORTFOLIO-
INVESTMENT POLICIES

The Alliance Small Cap Growth Portfolio pursues its objective by investing
primarily in U.S. common stocks and other equity-type securities issued by
smaller companies with favorable growth prospects. The Alliance Small Cap
Growth Portfolio may also invest a portion of its assets in securities of
companies in cyclical industries, companies whose securities are temporarily
undervalued, companies in special situations and less widely known companies.

The Alliance Small Cap Growth Portfolio may also invest in equity-type
securities other than common stocks (such as preferred stocks and convertible
debt instruments) and in protective options if it is Alliance's judgment that,
in light of economic conditions, such investments offer the Alliance Small Cap
Growth Portfolio better prospects for achieving its objective. Under certain
market conditions, the Small Cap Growth Portfolio may also invest in corporate
fixed income securities, which will generally be investment grade, or invest
part of its assets in cash or cash equivalents for liquidity or defensive
purposes, including money market instruments rated at least Prime-1 by Moody's
or A-1 by S&P. The Alliance Small Cap Growth Portfolio will not invest more
than 20% of its net asset value, measured at the time of investment, in
securities principally traded on foreign securities markets (other than
commercial paper). See "Investment Techniques-Foreign Securities and
Currencies," below. The Alliance Small Cap Growth Portfolio may make secured
loans of up to 50% of its total portfolio securities. See "Investment
Techniques-Securities Lending," below. The Alliance Small Cap Growth Portfolio
may write covered call options and may purchase call and put options on
individual equity securities, securities indexes and foreign currencies. The
Alliance Small Cap Growth Portfolio may also purchase and sell stock index and
foreign currency futures contracts and options thereon. See "Investment
Techniques-Forward Commitments and When-Issued and Delayed Delivery
Securities," "Investment Techniques-Options," "Investment Techniques-Futures,"
and "Investment Techniques-Risk Factors in Options and Futures," below.

Under current SEC guidelines, for so long as the Portfolio has the words
"Small Cap" in its name, it is required, under normal market conditions, to
invest at least 65% of its total assets in securities of smaller
capitalization companies (currently considered by Alliance to mean companies
with market capitalization at or below $2 billion).

RISK FACTORS. More risk is associated with investment in small-sized
companies, because they tend to be often dependent on limited product lines,
financial resources or management groups. They tend to be more vulnerable to
competition from larger companies with greater resources and to economic
conditions affecting their market sector. Small-sized companies may be new,
without long business or management histories, and perceived by the market as
unproven. Their securities may be held primarily by insiders or institutional
investors, and may trade infrequently or in limited volume. The prices of
these stocks often fluctuate more than those of larger, more established
companies.

THE FIXED INCOME SERIES

ALLIANCE MONEY MARKET PORTFOLIO-INVESTMENT POLICIES

The Alliance Money Market Portfolio attempts to achieve its objective by
investing primarily in a diversified portfolio of

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high-quality U.S. dollar-denominated money market instruments. The instruments
in which the Portfolio invests include: (1) marketable obligations of, or
guaranteed by, the U.S. Government, its agencies or instrumentalities
(collectively, the "U.S. Government"); (2) certificates of deposit, bankers'
acceptances, bank notes, time deposits and interest bearing savings deposits
issued or guaranteed by (a) domestic banks (including their foreign branches)
or savings and loan associations having total assets of more than $1 billion
and which are members of the Federal Deposit Insurance Corporation ("FDIC") in
the case of banks, or insured by the FDIC, in the case of savings and loan
associations or (b) foreign banks (either by their foreign or U.S. branches)
having total assets of at least $5 billion and having an issue of either
commercial paper rated at least A-1 by S&P or Prime-1 by Moody's or long term
debt rated at least AA by S&P or Aa by Moody's; (3) commercial paper (rated at
least A-1 by S&P or Prime-1 by Moody's or, if not rated, issued by domestic or
foreign companies having outstanding debt securities rated at least AA by S&P
or Aa by Moody's) and participation interests in loans extended by banks to
such companies; (4) mortgage-backed securities and asset-backed securities;
(5) corporate debt obligations with remaining maturities of less than one
year, rated at least AA by S&P or Aa by Moody's, as well as corporate debt
obligations rated at least A by S&P or Moody's, provided the corporation also
has outstanding an issue of commercial paper rated at least A-1 by S&P or
Prime-1 by Moody's; (6) floating rate or master demand notes; and (7)
repurchase agreements covering securities issued or guaranteed by the U.S.
Government (see "Investment Techniques-Repurchase Agreements," below). Time
deposits with maturities greater than seven days are considered to be illiquid
securities.

Investments by the Alliance Money Market Portfolio are limited to those which
present minimal credit risk. If a security held by the Alliance Money Market
Portfolio is no longer deemed to present minimal credit risk, the Alliance
Money Market Portfolio will dispose of the security as soon as practicable
unless the Trustees determine that such action would not be in the best
interest of the Portfolio. Purchases of securities that are unrated must be
ratified by the Trustees of the Trust. Because the market value of debt
obligations fluctuates as an inverse function of changing interest rates, the
Portfolio seeks to minimize the effect of such fluctuations by investing only
in instruments with a remaining maturity of 397 calendar days or less at the
time of investment, except for obligations of the U.S. Government, which may
have a remaining maturity of 762 calendar days or less. The Portfolio will
maintain a dollar-weighted average portfolio maturity of 90 days or less. The
Alliance Money Market Portfolio may invest up to 20% of its total assets in
U.S. dollar-denominated foreign money market instruments. See "Investment
Techniques-Foreign Securities and Currencies," below. The Portfolio may make
secured loans of up to 50% of its total portfolio securities. See "Investment
Techniques-Securities Lending," below.

ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO-INVESTMENT POLICIES

The Alliance Intermediate Government Securities Portfolio attempts to achieve
its investment objective by investing primarily in debt securities issued or
guaranteed as to the timely payment of principal and interest by the U.S.
Government or any of its agencies or instrumentalities ("U.S. Government
Securities"). The Alliance Intermediate Government Securities Portfolio may
also invest in repurchase agreements and forward commitments related to U.S.
Government Securities. The Portfolio may seek to enhance its current return
and may seek to hedge against changes in interest rates by engaging in
transactions involving related options, futures and options on futures.

The Alliance Intermediate Government Securities Portfolio expects that under
normal market conditions it will invest at least 80% of its total assets in
U.S. Government Securities and repurchase agreements and forward commitments
relating to U.S. Government Securities. U.S. Government Securities include,
without limitation, the following:

o U.S. Treasury Bills-Direct obligations of the U.S. Treasury

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which are issued in maturities of one year or less. No interest is paid on
Treasury Bills; instead, they are issued at a discount and repaid at full
face value when they mature. They are backed by the full faith and credit
of the U.S. Government.

o U.S. Treasury Notes-Direct obligations of the U.S. Treasury issued in
maturities which vary between one and ten years, with interest payable
every six months. They are backed by the full faith and credit of the U.S.
Government.

o U.S. Treasury Bonds-These direct obligations of the U.S. Treasury are
issued in maturities more than ten years from the date of issue, with
interest payable every six months. They are backed by the full faith and
credit of the U.S. Government.

o "Ginnie Maes"-Ginnie Maes are debt securities issued by a mortgage banker
or other mortgagee and represent an interest in a pool of mortgages
insured by the Federal Housing Administration or the Farmer's Home
Administration or guaranteed by the Veteran's Administration. The
Government National Mortgage Association ("GNMA") guarantees the timely
payment of principal and interest. Ginnie Maes, although not direct
obligations of the U.S. Government, are guaranteed by the U.S. Treasury.

o "Fannie Maes"-The Federal National Mortgage Association ("FNMA") is a
government-sponsored corporation owned entirely by private stockholders
that purchases residential mortgages from a list of approved
seller/servicers. Pass-through securities issued by FNMA are guaranteed as
to timely payment of principal and interest by FNMA and supported by
FNMA's right to borrow from the U.S. Treasury, at the discretion of the
U.S. Treasury. Fannie Maes are not backed by the full faith and credit of
the U.S. Government.

o "Freddie Macs"-The Federal Home Loan Mortgage Corporation ("FHLMC"), a
corporate instrumentality of the U.S. Government, issues participation
certificates ("PCs") which represent an interest in residential mortgages
from FHLMC's National Portfolio. FHLMC guarantees the timely payment of
interest and ultimate collection of principal, but PCs are not backed by
the full faith and credit of the U.S. Government.

o Governmental Collateralized Mortgage Obligations-These are securities
issued by a U.S. Government instrumentality or agency which are backed by
a portfolio of mortgages or mortgage-backed securities held under an
indenture. See "Other Investments," below.

o "Sallie Maes"-The Student Loan Marketing Association ("SLMA") is a
government-sponsored corporation owned entirely by private stockholders
that provides liquidity for banks and other institutions engaged in the
Guaranteed Student Loan Program. These loans are either directly
guaranteed by the U.S. Treasury or guaranteed by state agencies and
reinsured by the U.S. Government. SLMA issues both short term notes and
longer term public bonds to finance its activities.

The Portfolio may also invest in "zero coupon" U.S. Government Securities
which have been stripped of their unmatured interest coupons and receipts or
in certificates representing undivided interests in such stripped U.S.
Government Securities and coupons. These securities tend to be more volatile
than other types of U.S. Government Securities.

Guarantees of the Portfolio's securities by the U.S. Government or its
agencies or instrumentalities guarantee only the payment of principal at
maturity and interest when due on the guaranteed securities, and do not
guarantee the securities' yield or value or the yield or value of the Alliance
Intermediate Government Securities Portfolio's shares.

The Portfolio buys and sells securities with a view to maximizing current
return without, in the view of Alliance, undue risk to principal. Potential
capital gains resulting from possible changes in interest rates will not be a
major

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consideration. The Portfolio may take full advantage of a wide range of
maturities of U.S. Government Securities and may adjust the dollar-weighted
average maturity of its portfolio from time to time, depending on Alliance's
assessment of relative yields on securities of different maturities and the
expected effect of future changes in interest rates on the market value of the
securities held by the Portfolio. However, at all times, each instrument held
by the Portfolio will have either a final maturity of not more than ten years
or a duration, as determined by Alliance, not exceeding that of a 10-year
Treasury note. Duration is a measure that relates the price volatility of a
security to changes in interest rates. The duration of a security is the
weighted average term to maturity, expressed in years, of the present value of
all future cash flows, including coupon payments and principal repayments.
Thus, by definition, duration is always less than or equal to full maturity.
In some cases, Alliance's calculation of duration will be based on certain
assumptions (including assumptions regarding prepayment rates, in the
mortgage-backed or asset-backed securities, and foreign and domestic interest
rates). As of December 31, 1998, the duration of a 10-year Treasury bond was
considered by Alliance to be 4.68 years. The Portfolio may also invest a
substantial portion of its assets in money market instruments. See "Investment
Techniques-Certain Money Market Instruments," below.

It is a fundamental policy of the Alliance Intermediate Government Securities
Portfolio that under normal market conditions it will invest at least 65% of
its total assets in U.S. Government Securities and repurchase agreements and
forward commitments relating to U.S. Government Securities.

OTHER INVESTMENTS. The Alliance Intermediate Government Securities Portfolio
may also purchase collateralized mortgage obligations ("CMOs") issued by
non-governmental issuers and securities issued by a real estate mortgage
investment conduits ("REMICs"). See "Investment Techniques-Mortgage-Backed and
Asset-Backed Securities," below. The Alliance Intermediate Government
Securities Portfolio will purchase CMOs only if they are collateralized by
U.S. Government Securities. However, CMOs issued by entities other than U.S.
Government agencies or instrumentalities and securities issued by REMICs are
not considered U.S. Government Securities for purposes of the investment
policies of the Alliance Intermediate Government Securities Portfolio even
though the CMOs may be collateralized by U.S. Government Securities. Such
securities will generally be investment grade. In the event such securities
fall below investment grade, the Portfolio will not be obligated to dispose of
such securities and may continue to hold such securities if, in the opinion of
Alliance, such investment is appropriate under the circumstances.

In order to enhance its current return and to reduce fluctuations in net asset
value, the Portfolio may write call and put options on U.S. Government
Securities which are "covered" as described herein and may purchase call and
put options on U.S. Government Securities. The Portfolio may also enter into
interest rate futures contracts with respect to U.S. Government Securities,
and may write and purchase options thereon. See "Investment
Techniques-Options" and "Investment Techniques-Futures," below.

The Portfolio may also enter into forward commitments for the purchase of U.S.
Government Securities, purchase such securities on a when-issued or delayed
delivery basis, make secured loans of its portfolio securities without
limitation and enter into repurchase agreements with respect to U.S.
Government Securities with commercial banks and registered broker-dealers. See
"Investment Techniques-Forward Commitments and When-Issued and Delayed
Delivery Securities," below.

The Portfolio may make short sales involving either securities retained in the
Portfolio's portfolio or securities which the Portfolio has the absolute right
to acquire without additional consideration.

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SPECIAL CONSIDERATIONS. U.S. Government Securities are considered among the
safest of fixed income investments. As a result, however, their yields are
generally lower than the yields available from corporate debt securities. As
with other mutual funds, the value of the Portfolio's shares will fluctuate
with the value of its investments. The value of the Portfolio's investments
will change as the general level of interest rates fluctuates. During periods
of falling interest rates, the values of U.S. Government Securities generally
rise. Conversely, during periods of rising interest rates, the values of U.S.
Government Securities generally decline. In an effort to preserve the capital
of the Portfolio when interest rates are generally rising, the investment
adviser may shorten the average maturity of the U.S. Government Securities in
the Portfolio's portfolio. Because the principal values of U.S. Government
Securities with shorter maturities are less affected by rising interest rates,
a portfolio with a shorter average maturity will generally diminish less in
value during such periods than a portfolio of longer average maturity. Because
U.S. Government Securities with shorter maturities generally have a lower
yield to maturity, however, the Portfolio's current return based on its net
asset value will generally be lower as a result of such action than it would
have been had such action not been taken. Ginnie Maes and other
mortgage-backed or mortgage-related securities in which the Portfolio invests
may not be an effective means of "locking in" favorable long-term interest
rates since the Portfolio must reinvest scheduled and unscheduled principal
payments relating to such securities. At the time principal payments or
prepayments are received by the Portfolio and reinvested, prevailing interest
rates may be higher or lower than the Portfolio's current yield.

At times when the Portfolio has written call options, its ability to profit
from declining interest rates will be limited. Any resulting appreciation in
the value of the Portfolio would likely be partially or wholly offset by the
losses on call options written by the Portfolio. The termination of option
positions under such conditions would result in the realization of capital
losses, which would reduce the amounts available for distribution to
shareholders.

ALLIANCE QUALITY BOND PORTFOLIO-INVESTMENT POLICIES

The Alliance Quality Bond Portfolio expects to invest in readily marketable
securities with relatively attractive yields, but which do not, in the opinion
of Alliance, involve undue risk of loss of capital. The Alliance Quality Bond
Portfolio will follow a policy of investing at least 65% of its total assets
in securities which are rated at the time of purchase at least Baa by Moody's
or BBB by S&P, or in unrated fixed income securities determined by Alliance to
be of comparable quality. In the event that the credit rating of a security
held by the Alliance Quality Bond Portfolio falls below investment grade (or,
in the case of unrated securities, Alliance determines that the quality of
such security has deteriorated below investment grade), the Alliance Quality
Bond Portfolio will not be obligated to dispose of such security and may
continue to hold the obligation if, in the opinion of Alliance, such
investment is appropriate in the circumstances. The Alliance Quality Bond
Portfolio will also seek to maintain an average aggregate quality rating of
its portfolio securities of at least A (Moody's and S&P). For more information
concerning the bond ratings assigned by Moody's and S&P, see Appendix A.

The Alliance Quality Bond Portfolio has complete flexibility as to the types
of securities in which it will invest and the relative proportions thereof,
and the Alliance Quality Bond Portfolio plans to vary the proportions of its
holdings of long- and short-term fixed income securities (including debt
securities, convertible debt securities and U.S. Government obligations) and
preferred stocks in order to reflect Alliance's assessment of prospective
cyclical changes even if such action may adversely affect current income.

The Alliance Quality Bond Portfolio may invest in foreign securities. The
Alliance Quality Bond Portfolio will not invest more than 20% of its total
assets in securities denominated in currencies other than the U.S. dollar. See
"Investment Techniques-Foreign Securities and Currencies," below. The

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Alliance Quality Bond Portfolio may enter into foreign currency futures
contracts (and related options), forward foreign currency exchange contracts
and options on foreign currencies for hedging purposes. See "Investment
Techniques-Forward Foreign Currency Exchange Contracts," below.

For temporary defensive purposes, the Alliance Quality Bond Portfolio may
invest in certain money market instruments. See "Investment Techniques-Certain
Money Market Instruments," below.

The Alliance Quality Bond Portfolio may purchase put and call options and
write covered put and call options on securities it may purchase. The Alliance
Quality Bond Portfolio also intends to write covered call options for
cross-hedging purposes. A call option is for cross-hedging purposes if it is
designed to provide a hedge against a decline in value of another security
which the Portfolio owns or has the right to acquire. See "Investment
Techniques-Options," below.

INTEREST RATE TRANSACTIONS. The Alliance Quality Bond Portfolio may seek to
protect the value of its investments from interest rate fluctuations by
entering into various hedging transactions, such as interest rate swaps and
the purchase or sale of interest rate caps and floors. The Portfolio expects
to enter into these transactions primarily to preserve a return or spread on a
particular investment or portion of its portfolio. The Alliance Quality Bond
Portfolio may also enter into these transactions to protect against an
increase in the price of securities the Portfolio anticipates purchasing at a
later date. The Alliance Quality Bond Portfolio intends to use these
transactions as a hedge and not as a speculative investment. Interest rate
swaps involve the exchange by the Alliance Quality Bond Portfolio with another
party of their respective commitments to pay or receive interest, e.g., an
exchange of floating rate payments for fixed rate payments. The purchase of an
interest rate cap entitles the purchaser, to the extent that a specified index
exceeds a predetermined interest rate, to receive payments on a notional
principal amount from the party selling such interest rate cap. The purchase
of an interest rate floor entitles the purchaser, to the extent that a
specified index falls below a predetermined interest rate, to receive payments
of interest on a notional principal amount from the party selling such
interest rate floor.

The Alliance Quality Bond Portfolio may enter into interest rate swaps, caps
and floors on either an asset-based or liability-based basis depending on
whether it is hedging its assets or its liabilities, and will only enter into
such swaps, caps and floors on a net basis, i.e., the two payment streams are
netted out, with the Alliance Quality Bond Portfolio receiving or paying, as
the case may be, only the net amount of the two payments. The net amount of
the excess, if any, of the Alliance Quality Bond Portfolio's obligations over
its entitlements with respect to each interest rate swap, cap or floor will be
accrued on a daily basis and an amount of cash or liquid securities having an
aggregate net asset value at least equal to the accrued excess will be
maintained in a segregated account by the custodian. The Alliance Quality Bond
Portfolio will not enter into any interest rate swap, cap or floor transaction
unless the unsecured senior debt or the claims-paying ability of the other
party thereto is rated in the highest rating category of at least one NRSRO at
the time of entering into such transaction. If there is a default by the other
party to such a transaction, the Alliance Quality Bond Portfolio will have
contractual remedies pursuant to the agreements related to the transaction.
Caps and floors are relatively recent innovations which may be illiquid.

ZERO COUPON SECURITIES. To the extent consistent with its investment
objective, the Alliance Quality Bond Portfolio may invest in "zero coupon"
securities, which are debt securities that have been stripped of their
unmatured interest coupons, and receipts or certificates representing
interests in such stripped debt obligations and coupons. A zero coupon
security pays no interest to its holder during its life. Accordingly, such
securities usually trade at a deep discount from their face or par value and
will be subject to greater fluctuations in market value in response to
changing

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interest rates than debt obligations of comparable maturities that make
current distributions of interest. The Alliance Quality Bond Portfolio may
also invest in "pay-in-kind" debentures (i.e., debt obligations the interest
on which may be paid in the form of additional obligations of the same type
rather than cash) which have characteristics similar to zero coupon
securities.

The Alliance Quality Bond Portfolio may invest in collateralized mortgage
obligations or CMOs. See "Investment Techniques-Mortgage-Backed and
Asset-Backed Securities," below. The Portfolio may purchase and sell interest
rate futures contracts and options thereon and may make loans of securities
with a value of up to 50% of its total assets. See "Investment
Techniques-Futures," "Investment Techniques-Risk Factors in Options and
Futures" and "Investment Techniques-Securities Lending," below.

ALLIANCE HIGH YIELD PORTFOLIO-INVESTMENT POLICIES

The Alliance High Yield Portfolio attempts to achieve its objective by
investing primarily in a diversified mix of high yield, fixed income
securities, which generally involve greater volatility of price and risk of
principal and income than high quality fixed income securities.

Ordinarily, the Portfolio will invest a portion of its assets in fixed income
securities which have a high current yield and that are either rated in the
lower categories of NRSROs (i.e., rated Baa or lower by Moody's or BBB or
lower by S&P) or are unrated. The Portfolio may also make temporary
investments in money market instruments of the same type as the Alliance Money
Market Portfolio. The Portfolio will not invest more than 10% of its total
assets in (i) fixed income securities which are rated lower than B3 or B- or
their equivalents by one NRSRO or if unrated are of equivalent quality as
determined by Alliance, and (ii) money market instruments of any entity which
has an outstanding issue of unsecured debt that is rated lower than B3 or B-
or their equivalents by an NRSRO or if unrated is of equivalent quality as
determined by Alliance; however, this restriction will not apply to (i) fixed
income securities which, in the opinion of Alliance, have similar
characteristics to securities which are rated B3 or higher by Moody's or B- or
higher by S&P, or (ii) money market instruments of any entity that has an
unsecured issue of outstanding debt which, in the opinion of Alliance, has
similar characteristics to securities which are so rated. See Appendix A,
"Description of Bond Ratings," for a description of each rating category. In
the event that any securities held by the Alliance High Yield Portfolio fall
below those ratings, the Portfolio will not be obligated to dispose of such
securities and may continue to hold such securities if, in the opinion of
Alliance, such investment is considered appropriate under the circumstances.

For the fiscal year ended December 31, 1998, the approximate percentages of
the Portfolio's average assets invested in securities of each rating category,
determined on a dollar weighted basis, were as follows: 5.3% in securities
rated AAA or its equivalent, 2.3% of securities rated BBB or equivalent, 8.2%
in securities rated BB or its equivalent, 79.1% in securities rated B or its
equivalent and 5.1% in securities rated CCC or its equivalent. Of these
securities, 94% were rated by an NRSRO and 6% were unrated. All of the unrated
securities were considered by the investment adviser to be of comparable
quality to the Portfolio's investments rated by an NRSRO.

The Portfolio may also invest in fixed income securities which are providing
high current yields because of risks other than credit, such as prepayment
risks, in the case of mortgage-backed securities, or currency risks, in the
case of non-U.S. dollar denominated foreign securities. The Portfolio may also
be invested in common stocks and other equity-type securities (such as
convertible debt securities). See "Investment Techniques-Fixed Income
Securities" and "Investment Techniques-Risk Factors of Lower Rated Fixed
Income Securities," below.

The Alliance High Yield Portfolio will attempt to maximize current income by
taking advantage of market developments, yield disparities and variations in
the

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creditworthiness of issuers. Substantially all of the Portfolio's investments
will be income producing. The Portfolio will use various strategies in
attempting to achieve its objective. The Portfolio may make secured loans of
its portfolio securities without limitation. See "Investment
Techniques-Securities Lending," below. In order to enhance its current return
and to reduce fluctuations in net asset value, the Portfolio may write covered
call and put options and may purchase call and put options on individual fixed
income securities, securities indexes and foreign currencies. The Portfolio
may also purchase and sell stock index, interest rate and foreign currency
futures contracts and options thereon. See "Investment Techniques-Options,"
"Investment Techniques-Futures," and "Risk Factors in Options and Futures,"
below.

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Investment Techniques

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The Portfolios have the flexibility to invest, within limits, in a variety of
instruments designed to enhance their investment capabilities. All of the
Portfolios, other than the Alliance Equity Index Portfolio, may make
investments in repurchase agreements, and all of the Portfolios may purchase
or sell securities on a when-issued, delayed delivery or forward commitment
basis. The Portfolios, other than the Alliance Money Market and the Alliance
Equity Index Portfolios, may write (i.e., sell) covered put and call options
and buy put and call options on securities and securities indexes. The
Portfolios, other than the Alliance Money Market, Alliance Equity Index and
Alliance Intermediate Government Securities Portfolios, may also write covered
put and call options and buy put and call options on foreign currencies. The
Alliance Balanced, Alliance Common Stock, Alliance Aggressive Stock, Alliance
Small Cap Growth, Alliance High Yield, Alliance Global, Alliance
International, Alliance Conservative Investors, Alliance Growth Investors,
Alliance Intermediate Government Securities, Alliance Quality Bond, Alliance
Growth and Income and Alliance Equity Index Portfolios may buy and sell
exchange-traded financial futures contracts, and options thereon. A brief
description of certain of these investment instruments and their risks appears
below. More detailed information is to be found in the SAI.

CERTAIN MONEY MARKET INSTRUMENTS

All of the Portfolios may invest in money market instruments, including
certificates of deposit, time deposits, bankers' acceptances, bank notes and
other short-term debt obligations issued by commercial banks or savings and
loan associations ("S&Ls"). Certificates of deposit are receipts from a bank
or an S&L for funds deposited for a specified period of time at a specified
rate of return. Time deposits in banks or S&Ls are generally similar to
certificates of deposit, but are uncertificated. Bankers' acceptances are time
drafts drawn on commercial banks by borrowers, usually in connection with
international commercial transactions.

The Portfolios, other than the Alliance Equity Index Portfolio, may also
invest in commercial paper, meaning short-term, unsecured promissory notes
issued by corporations to finance their short-term credit needs. In addition,
these Portfolios may invest in variable or floating rate notes. Variable and
floating rate notes provide for automatic establishment of a new interest rate
at fixed periodic intervals (e.g., daily or monthly) or whenever some
specified interest rate changes. The interest rate on variable or floating
rate securities is ordinarily determined by reference to some other objective
measure such as the U.S. Treasury bill rate. Many floating rate notes have put
or demand features which allow the holder to put the note back to the issuer
or the broker who sold it at certain specified times and upon notice. Floating
rate notes without such a put or demand feature, or in which the notice period
is greater than seven days, may be considered illiquid securities.

DERIVATIVES

o Futures

The Alliance High Yield, Alliance Global, Alliance International, Alliance
Conservative Investors, Alliance Growth Investors, Alliance Intermediate
Government Securities, Alliance Balanced and Alliance Quality Bond Portfolios
may each purchase and sell futures contracts and related options on debt
securities and on indexes of debt securities to hedge against anticipated
changes in interest rates that might otherwise have an adverse effect on the
value of their assets or assets they intend to acquire. In addition, each
Portfolio listed above (except the Alliance Intermediate Government Securities
and Alliance Quality Bond Portfolios) as well as the Alliance Common Stock,
Alliance Aggressive Stock, Alliance Small Cap Growth and Alliance Growth and
Income Portfolios may purchase and sell stock index futures contracts and
related options to hedge the equity portion of its assets or equity assets it
intends to acquire with regard to market risk (as distinguished from
stock-specific risk). In the case of the Alliance Equity Index Portfolio,
futures contracts and related options on the S&P 500 Index may be purchased in
order to reduce brokerage costs, maintain liquidity to meet

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shareholder redemptions or minimize tracking error. As described below under
"Foreign Securities and Currencies," the Alliance High Yield, Alliance Global,
Alliance International, Alliance Conservative Investors, Alliance Growth
Investors, Alliance Balanced, Alliance Common Stock, Alliance Aggressive
Stock, Alliance Small Cap Growth, Alliance Quality Bond and Alliance Growth
and Income Portfolios may each enter into futures contracts and related
options on foreign currencies in order to limit its exchange rate risk. All
futures contracts and related options will be traded on exchanges that are
licensed and regulated by the Commodity Futures Trading Commission ("CFTC").
All of the Portfolios, except the Alliance Money Market Portfolio, may enter
into futures contracts and buy and sell related options without limitation,
except as noted below. Pursuant to regulations of the CFTC which provide an
exemption from registration as a commodity pool operator, a Portfolio will not
purchase or sell futures contracts or options on futures contracts unless
either (i) the futures contracts or options thereon are for "bona fide
hedging" purposes (as that term is defined under the CFTC regulations) or (ii)
the sum of amounts of initial margin deposits and premiums required to
establish non-hedging positions would not exceed 5% of the Portfolio's
liquidation value. In addition, the contract value of futures contracts
purchased by the Alliance Equity Index Portfolio plus the contract value of
futures contracts underlying call options purchased by the Alliance Equity
Index Portfolio will not exceed 20% of the Alliance Equity Index Portfolio's
total assets. When a Portfolio purchases or sells a futures contract or writes
a put or call option on a futures contract, the Portfolio will segregate with
its custodian liquid assets (less any related margin deposits) equal to the
cost of the futures contract it intends to sell or purchase to insure that
such futures positions are not leveraged, or may otherwise cover such
positions.

o Options

The Portfolios, other than the Alliance Money Market and Alliance Equity Index
Portfolios, may write (sell) covered put and call options and buy put and call
options, including options relating to individual securities and securities
indexes. The Portfolios, other than the Alliance Money Market, Alliance
Intermediate Government Securities and Alliance Equity Index Portfolios, may
also write covered put and call options and buy put and call options on
foreign currencies.

A call option is a contract that gives to the holder the right to buy a
specified amount of the underlying security at a fixed or determinable price
(called the exercise or strike price) upon exercise of the option. A put
option is a contract that gives the holder the right to sell a specified
amount of the underlying security at a fixed or determinable price upon
exercise of the option. In the case of index options, exercises are settled
through the payment of cash rather than the delivery of property. A call
option on a security will be considered covered, for example, if the Portfolio
holds the security upon which the option is written. The Portfolios may write
call options on securities or securities indexes for the purpose of increasing
their return or to provide a partial hedge against a decline in the value of
their portfolio securities or both. The Portfolios may write put options on
securities or securities indexes in order to earn additional income or (in the
case of put options written on individual securities) to purchase the
underlying security at a price below the current market price. If a Portfolio
writes an option which expires unexercised or is closed out by the Portfolio
at a profit, it will retain all or part of the premium received for the
option, which will increase its gross income. If the option is exercised, the
Portfolio will be required to sell or purchase the underlying security at a
disadvantageous price, or, in the case of index options, deliver an amount of
cash, which loss may only be partially offset by the amount of premium
received. Each of the Portfolios noted above may also purchase put or call
options on securities and securities indexes in order to hedge against changes
in interest rates or stock prices which may adversely affect the prices of
securities that the Portfolio wants to purchase at a later date, to hedge its
existing investments against a decline in value, or to attempt to reduce the
risk of missing a market or

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industry segment advance. In the event that the expected changes in interest
rates or stock prices occur, the Portfolio may be able to offset the resulting
adverse effect on the Portfolio by exercising or selling the options
purchased. The premium paid for a put or call option plus any transaction
costs will reduce the benefit, if any, realized by the Portfolio upon exercise
or liquidation of the option. Unless the price of the underlying security or
level of the securities index changes by an amount in excess of the premium
paid, the option may expire without value to the Portfolio. See "Risk Factors
in Options and Futures," below.

Options purchased or written by the Portfolios may be traded on the national
securities exchanges or negotiated with a dealer. Options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, such options
are subject to the risk that the counterparty may fail to meet its obligations
to the Fund, and it may be difficult to enter into closing transactions with
respect to such options. Such options, and the securities used as "cover" for
such options, may be considered illiquid securities.

In instances in which a Portfolio has entered into agreements with primary
dealers with respect to the over-the-counter options it has written, and such
agreements would enable the Portfolio to have an absolute right to repurchase
at a pre-established formula price the over-the-counter option written by it,
the Portfolio would treat as illiquid securities only the amount equal to the
formula price described above less the amount by which the option is
"in-the-money," i.e., the amount by which the price of the option exceeds the
exercise price.

The Portfolios, except the Alliance Money Market, Alliance Intermediate
Government Securities and Alliance Equity Index Portfolios, may purchase put
and call options and write covered put and call options on foreign currencies
for the purpose of protecting against declines in the dollar value of
portfolio securities and against increases in the dollar cost of securities to
be acquired. Such investment strategies will be used as a hedge and not for
speculation. As in the case of other types of options, however, the writing of
an option on foreign currency will constitute only a partial hedge, up to the
amount of the premium received, and the Portfolio could be required to
purchase or sell foreign currencies at disadvantageous exchange rates, thereby
incurring losses. The purchase of an option on foreign currency may constitute
an effective hedge against fluctuations in exchange rates although, in the
event of rate movements adverse to the Portfolio's position, it may forfeit
the entire amount of the premium plus related transaction costs. Options on
foreign currencies may be traded on the national securities exchanges or in
the over-the-counter market. As described above, options traded in the
over-the-counter market may not be as actively traded as those on an exchange,
so it may be more difficult to value such options. In addition, such options
are subject to the risk that the counterparty may fail to meet its obligations
to the Fund, and it may be difficult to enter into closing transactions with
respect to options traded over-the-counter.

o Risk Factors in Options and Futures

To the extent a hedging transaction is effective, it will protect the value of
the securities or currencies which are hedged but may reduce or eliminate the
potential for gain. The effectiveness of a hedge depends, among other things,
on the correlation between the price movements of the hedging vehicle and the
hedged items, but these correlations generally are imperfect. A hedging
transaction may produce a loss as a result of such imperfect correlations or
for other reasons. The risks of trading futures contracts also include the
risks of inability to effect closing transactions or to do so at favorable
prices; consequently, losses from investing in futures contracts are
potentially unlimited. The risks of option trading include possible loss of
the entire premium on purchased options and inability to effect closing
transactions at favorable prices. The extent to which a Portfolio can benefit
from investments involving options and futures contracts may also be limited
by various tax rules. Favorable results from options and futures transactions
may depend on

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the investment adviser's ability to predict correctly the direction of
securities prices, interest rates and other economic factors.

FIXED INCOME SECURITIES

Fixed income securities include preferred and preference stocks and all types
of debt obligations of both domestic and foreign issuers (such as bonds,
debentures, notes, equipment lease certificates, equipment trust certificates,
conditional sales contracts, commercial paper, mortgage-backed securities and
obligations issued or guaranteed by the U.S. Government, its agencies or
instrumentalities).

Corporate debt securities may bear fixed, contingent or variable rates of
interest and may involve equity features, such as conversion or exchange
rights or warrants for the acquisition of stock of the same or a different
issuer or participation based on revenues, sales or profits or the purchase of
common stock in a unit transaction (where corporate debt securities and common
stock are offered as a unit).

FOREIGN SECURITIES AND CURRENCIES

All of the Portfolios, except the Alliance Intermediate Government Securities
and Alliance Equity Index Portfolios, may invest in foreign securities. For
these purposes, "foreign securities" are securities of foreign issuers that
are not traded in U.S. markets. Each of the Portfolios, except the Alliance
Intermediate Government Securities Portfolio, may invest in American
depositary receipts and securities of foreign issuers that are traded in U.S.
markets. These securities may involve certain of the risks described below for
foreign securities.

Investments in foreign securities may involve a higher degree of risk because
of limited publicly available information, non-uniform accounting, auditing
and financial standards, reduced levels of government regulation of foreign
securities markets, difficulties and delays in transaction settlements, lower
liquidity and greater volatility, withholding or confiscatory taxes, changes
in currency exchange rates, currency exchange control regulations and
restrictions on and the costs associated with the exchange of currencies and
expropriation, nationalization or other adverse political or economic
developments. It may also be more difficult to obtain and enforce a judgment
against a foreign issuer or enterprise and there may be difficulties in
effecting the repatriation of capital invested abroad. In addition, banking,
securities and other business operations abroad may not be subject to
regulation as rigorous as that applicable to similar activities in the United
States. Further, there may be restrictions on foreign investment in some
countries. Special tax considerations apply to foreign securities, and foreign
brokerage commissions and other fees are generally higher than in the United
States.

The Portfolios may buy and sell foreign currencies principally for the purpose
of preserving the value of foreign securities or in anticipation of purchasing
foreign securities.

FORWARD COMMITMENTS AND WHEN-ISSUED AND DELAYED DELIVERY SECURITIES

The Portfolios may enter into forward commitments for the purchase or sale of
securities and may purchase and sell securities on a when-issued or delayed
delivery basis. Forward commitments and when-issued or delayed delivery
transactions arise when securities are purchased or sold by a Portfolio with
payment and delivery taking place in the future in order to secure what
Alliance considers to be an advantageous price or yield to the Portfolio at
the time of entering into the transaction. However, the market value of such
securities may be more or less than the purchase price payable at settlement.
No payment or delivery is made by the Portfolio until it receives delivery or
payment from the other party to the transaction. When a Portfolio engages in
forward commitments or when-issued or delayed delivery transactions, the
Portfolio relies on the other party to consummate the transaction. Failure to
consummate the transaction may result in the Portfolio missing the opportunity
of obtaining an advantageous price or yield.

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Forward commitments and when-issued and delayed delivery transactions are
generally expected to settle within four months from the date the transactions
are entered into, although the Portfolio may close out its position prior to
the settlement date. The Portfolio will maintain, in a segregated account of
the Portfolio, liquid assets having a value equal to or greater than the
Portfolio's purchase commitments; the Portfolio will likewise segregate
securities sold under a forward commitment or on a delayed delivery basis. A
Portfolio will sell on a forward settlement basis only securities it owns or
has the right to acquire.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS

All the Portfolios, except the Alliance Money Market, Alliance Intermediate
Government Securities and Alliance Equity Index Portfolios, may enter into
contracts for the purchase or sale of a specific currency at a future date at
a price set at the time of the contract.

Generally, such forward contracts will be for a period of less than three
months. The Portfolios will enter into forward contracts for hedging purposes
only. These transactions will include forward purchases or sales of foreign
currencies for the purpose of protecting the U.S. dollar value of securities
denominated in a foreign currency or protecting the U.S. dollar equivalent of
interest or dividends to be paid on such securities. Forward contracts are
traded in the inter-bank market, and not on organized commodities or
securities exchanges.

LOAN ASSIGNMENTS AND PARTICIPATIONS

The Alliance High Yield Portfolio may invest in participations and assignments
of loans to corporate, governmental, or other borrowers originally made by
institutional lenders or lending syndicates. These investments are subject to
the same risks associated with fixed income securities generally. For example,
loans to foreign governments will involve a risk that the governmental
entities responsible for the repayment of the loan may be unable, or
unwilling, to pay interest and repay principal when due. In addition, loan
participations and assignments are often not rated and may also be less liquid
than other debt interests.

Even if the loans are secured, there is no assurance that the liquidation of
collateral from a secured loan would satisfy the borrower's obligation, or
that the collateral can be liquidated. Also, if a loan is foreclosed, the
Portfolio could become part owner of any collateral, and would bear the costs
and liabilities associated with owning and disposing of the collateral. In
addition, it is conceivable that under emerging legal theories of lender
liability, the Portfolio could be held liable as a co-lender.

A loan is often administered by a bank or other financial institution that
acts as agent for all holders. The agent administers the terms of the loan, as
specified in the loan agreement, and the Portfolio will generally have to rely
on the agent to apply appropriate credit remedies against a borrower.
Consequently, loan participations may also be adversely affected by the
insolvency of the lending bank or other intermediary.

MORTGAGE-BACKED AND ASSET-BACKED SECURITIES

The Portfolios, other than the Alliance Equity Index Portfolio, may invest in
mortgage-backed securities, which are mortgage loans made by banks, savings
and loan institutions and other lenders that are assembled into pools, that
are (i) issued by an agency of the U.S. Government (such as GNMA) whose
securities are guaranteed by the U.S. Treasury, (ii) issued by an
instrumentality of the U.S. Government (such as FNMA) whose securities are
supported by the instrumentality's right to borrow from the U.S. Treasury, at
the discretion of the U.S. Treasury, though not backed by the full faith and
credit of the U.S. Government itself, or (iii) collateralized by U.S. Treasury
obligations or U.S. Government agency securities. Interests in such pools are
described in this prospectus as mortgage-backed securities. The Portfolios,
other than the Equity Index

<PAGE>

- ----------
43
- --------------------------------------------------------------------------------

Portfolio, may invest in (i) mortgage-backed securities, including GNMA, FNMA
and FHLMC certificates, (ii) CMOs that are issued by non-governmental entities
and collateralized by U.S. Treasury obligations or by U.S. Government agency
or instrumentality securities, (iii) REMICs and (iv) other asset-backed
securities. Other asset-backed securities (unrelated to mortgage loans) may
include securities such as certificates for automobile receivables ("CARS")
and credit card receivable securities ("CARDS") as well as other asset-backed
securities that may be developed in the future.

The rate of return on mortgage-backed securities, such as GNMA, FNMA and FHLMC
certificates and CMOs, and, to a lesser extent, asset-backed securities may be
affected by early prepayment of principal on the underlying loans or
receivables. Prepayment rates vary widely and may be affected by changes in
market interest rates. It is not possible to predict with certainty the
average life of a particular mortgage pool or pool of loans or receivables.
Reinvestment of principal may occur at higher or lower rates than the original
yield. Therefore, the actual maturity and realized yield on mortgage-backed
securities and, to a lesser extent, asset-backed securities will vary based
upon the prepayment experience of the underlying pool of mortgages or pool of
loans or receivables.

The fixed rate mortgage-backed and asset-backed securities in which the
Alliance Money Market Portfolio invests will have remaining maturities of less
than one year. The Portfolios may also invest in floating or variable rate
mortgage-backed and asset-backed securities on the same terms as they may
invest in floating or variable rate notes, described below under "Certain
Money Market Instruments."

PORTFOLIO TURNOVER

Portfolio turnover rates are set forth under "Financial Highlights." These
rates of portfolio turnover may be greater than those of most other investment
companies. A high rate of portfolio turnover involves correspondingly greater
brokerage and other expenses than a lower rate, which must be borne by the
Portfolio.

REPURCHASE AGREEMENTS

In repurchase agreements, a Portfolio buys securities from a seller, usually a
bank or brokerage firm, with the understanding that the seller will repurchase
the securities at a higher price at a future date. During the term of the
repurchase agreement, the Portfolio's custodian retains the securities subject
to the repurchase agreement as collateral securing the seller's repurchase
obligation, continually monitors on a daily basis the market value of the
securities subject to the agreement and requires the seller to deposit with
the Portfolio's custodian collateral equal to any amount by which the market
value of the securities subject to the repurchase agreement falls below the
resale amount provided under the repurchase agreement. The creditworthiness of
sellers is determined by Alliance, subject to the direction of and review by
the Board of Trustees. Such transactions afford an opportunity for the
Portfolio to earn a fixed rate of return on available cash at minimal market
risk, although the Portfolio may be subject to various delays and risks of
loss if the seller is unable to meet its obligation to repurchase. The staff
of the SEC currently takes the position that repurchase agreements maturing in
more than seven days are illiquid securities. No Portfolio will enter into a
repurchase agreement if as a result more than 15% (10% in the case of the
Alliance Money Market Portfolio) of the Portfolio's net assets would be
invested in "illiquid securities."

RISK FACTORS OF LOWER RATED FIXED INCOME SECURITIES

Fixed income investments that have a high current yield and that are either
rated in the lower categories by NRSROs (i.e., Baa or lower by Moody's or BBB
or lower by S&P) or are unrated but of comparable quality are known as "junk
bonds" and are regarded as predominantly speculative with

---------------------------------------------- The Hudson River Trust

<PAGE>

- ----------
44
- --------------------------------------------------------------------------------

respect to the issuer's continuing ability to meet principal and interest
payments. Because investment in medium and lower quality bonds involves
greater investment risk, achievement of a Portfolio's investment objective
will be more dependent on Alliance's analysis than would be the case if that
Portfolio were investing in higher quality bonds. Medium and lower quality
bonds may be more susceptible to real or perceived adverse economic and
individual corporate developments than would investment grade bonds. For
example, a projected economic downturn or the possibility of an increase in
interest rates could cause a decline in high yield bond prices because such an
event might lessen the ability of highly leveraged high yield issuers to meet
their principal and interest payment obligations, meet projected business
goals or obtain additional financing. In addition, the secondary trading
market for medium and lower quality bonds may be less liquid than the market
for investment grade bonds. This potential lack of liquidity may make it more
difficult for the Portfolio to value accurately certain portfolio securities.
Further, as with many corporate bonds (including investment grade issues),
there is the risk that certain high yield bonds containing redemption or call
provisions may be called by the issuers of such bonds in a declining interest
rate market, and the relevant Portfolio would then have to replace such called
bonds with lower yielding bonds, thereby decreasing the net investment income
to the Portfolio. Prepayment of mortgages underlying mortgage-backed
securities, even though these securities will generally be rated in the higher
categories of NRSROs, may also reduce their current yield and total return.
However, Alliance intends to invest in these securities only when the
potential benefits to a Portfolio are deemed to outweigh the risks.

SECURITIES LENDING

For purposes of realizing additional income, each Portfolio may lend
securities with a value of up to 50% of its total assets to broker-dealers
approved by the Board of Trustees. In addition, the Alliance High Yield and
Alliance Intermediate Government Securities Portfolios may each make secured
loans of its portfolio securities without restriction. Any such loan of
portfolio securities will be continuously secured by collateral at least equal
to the value of the security loaned. Such collateral will be in the form of
cash, marketable securities issued or guaranteed by the U.S. Government or its
agencies, or a standby letter of credit issued by qualified banks. The risks
in lending portfolio securities, as with other extensions of secured credit,
consist of possible delay in receiving additional collateral or in the
recovery of the securities or possible loss of rights in the collateral should
the borrower fail financially. Loans will only be made to firms deemed by
Alliance to be of good standing and will not be made unless, in the judgment
of Alliance, the consideration to be earned from such loans would justify the
risk.

<PAGE>

4
Management of the Trust

- -----
45
- --------------------------------------------------------------------------------

THE INVESTMENT ADVISER

Alliance, the main office of which is located at 1345 Avenue of the Americas,
New York, New York 10105, serves as investment adviser to the Trust pursuant
to an investment advisory agreement, relating to each of the Portfolios,
between the Trust and Alliance. Alliance, a publicly traded limited
partnership, is indirectly majority-owned by Equitable.

Alliance is an investment adviser registered under the Investment Advisers Act
of 1940 (the "Advisers Act"). Alliance, a leading international investment
adviser, acts as an investment adviser to various separate accounts and
general accounts of Equitable and other affiliated insurance companies.
Alliance also provides investment advisory and management services to other
investment companies and to endowment funds, insurance companies, foreign
entities, qualified and non-tax qualified corporate funds, public and private
pension and profit-sharing plans, foundations and tax-exempt organizations.

Alliance manages the day-to-day investment operations of the Trust and
exercises responsibility for the investment and reinvestment of the Trust's
assets. Alliance provides, without charge, personnel to the Trust to render
such clerical, administrative and other services, other than investor services
or accounting services, as the Trust may request.

The advisory fee payable by the Trust is at the following annual percentages
of the value of each Portfolio's daily average net assets:

<TABLE>
<CAPTION>
First Next Next Next
$750 Million $750 Million $1 Billion $2.5 Billion Thereafter
-------------- -------------- ------------ -------------- ------------
<S> <C> <C> <C> <C> <C>
Alliance International 0.900% 0.825% 0.800% 0.780% 0.770 %
- ---------------------------------------------- ----- ----- ----- ----- -----
Alliance Global 0.675% 0.600% 0.550% 0.530% 0.520 %
- ---------------------------------------------- ----- ----- ----- ----- -----
Alliance Aggressive Stock 0.625% 0.575% 0.525% 0.500% 0.475 %
- ---------------------------------------------- ----- ----- ----- ----- -----
Alliance Common Stock 0.475% 0.425% 0.375% 0.355% 0.345%*
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Growth and Income 0.550% 0.525% 0.500% 0.480% 0.470 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Small Cap Growth 0.900% 0.850% 0.825% 0.800% 0.775 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Growth Investors 0.550% 0.500% 0.450% 0.425% 0.400 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Balanced 0.450% 0.400% 0.350% 0.325% 0.300 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Conservative Investors 0.475% 0.425% 0.375% 0.350% 0.325 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance High Yield 0.600% 0.575% 0.550% 0.530% 0.520 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Quality Bond 0.525% 0.500% 0.475% 0.455% 0.445 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Intermediate Government Securities 0.500% 0.475% 0.450% 0.430% 0.420 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Equity Index 0.325% 0.300% 0.275% 0.255% 0.245 %
- ---------------------------------------------- ----- ----- ----- ----- ------
Alliance Money Market 0.350% 0.325% 0.300% 0.280% 0.270 %
- ---------------------------------------------- ----- ----- ----- ----- ------
</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.

<PAGE>

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46
- --------------------------------------------------------------------------------

For 1998, the Portfolios paid the following advisory fees (as a percentage
of each Portfolio's average daily net assets):

<TABLE>
<S> <C>
Alliance International 0.90%
- ------------------------------------------------------- ----
Alliance Global 0.64%
- ------------------------------------------------------- ----
Alliance Aggressive Stock 0.54%
- ------------------------------------------------------- ----
Alliance Common Stock 0.36%
- ------------------------------------------------------- ----
Alliance Growth and Income 0.55%
- ------------------------------------------------------- ----
Alliance Small Cap Growth 0.90%
- ------------------------------------------------------- ----
Alliance Growth Investors 0.51%
- ------------------------------------------------------- ----
Alliance Balanced 0.41%
- ------------------------------------------------------- ----
Alliance Conservative Investors 0.48%
- ------------------------------------------------------- ----
Alliance High Yield 0.60%
- ------------------------------------------------------- ----
Alliance Quality Bond 0.53%
- ------------------------------------------------------- ----
Alliance Intermediate Government Securities 0.50%
- ------------------------------------------------------- ----
Alliance Equity Index 0.31%
- ------------------------------------------------------- ----
Alliance Money Market 0.35%
- ------------------------------------------------------- ----
</TABLE>

THE PORTFOLIO MANAGERS

THE ASSET ALLOCATION SERIES

ALLIANCE CONSERVATIVE INVESTORS, ALLIANCE BALANCED AND ALLIANCE GROWTH
INVESTORS PORTFOLIOS

Robert G. Heisterberg has been the person principally responsible for the
Alliance Conservative Investors, Alliance Balanced and Alliance Growth
Investors Portfolios' investment programs since February 12, 1996. Mr.
Heisterberg, a Senior Vice President of Alliance and Global Economic Policy
Analysis, has been associated with Alliance since 1977.

THE EQUITY SERIES

ALLIANCE GROWTH AND INCOME PORTFOLIO

Paul Rissman and W. Theodore Kuck have been the persons principally
responsible for the Alliance Growth and Income Portfolio's investment program,
Mr. Rissman since 1996 and Mr. Kuck since the Portfolio's inception. Mr.
Rissman, a Senior Vice President of Alliance, has been associated with
Alliance since 1989. Mr. Kuck, a Vice President of Alliance, has been
associated with Alliance since 1971.*

ALLIANCE EQUITY INDEX PORTFOLIO

Judith A. DeVivo has been the person principally responsible for the Alliance
Equity Index Portfolio's investment program since its inception. Ms. DeVivo, a
Vice President of Alliance, has been associated with Alliance since 1970.

ALLIANCE COMMON STOCK PORTFOLIO

Tyler J. Smith has been the person principally responsible for the Alliance
Common Stock Portfolio's investment program since 1977. Mr. Smith, a Senior
Vice President of Alliance, has been associated with Alliance since 1970.*
---------------------------------
* Prior to July 22, 1993, with Equitable Capital Management Corporation
("Equitable Capital"). On that date Alliance acquired the business and
substantially all of the assets of Equitable Capital and became the
investment adviser to the Trust.

<PAGE>

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47
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ALLIANCE GLOBAL AND ALLIANCE INTERNATIONAL PORTFOLIOS

Sandra L. Yeager has been the person principally responsible for the Alliance
Global Portfolio's investment program since 1998. Ms. Yeager has also been the
person principally responsible for the Alliance International Portfolio's
investment program since January 1999. Ms. Yeager, a Senior Vice President of
Alliance Capital Management L.P. ("Alliance"), has been associated with
Alliance since 1990.

ALLIANCE AGGRESSIVE STOCK PORTFOLIO

Alden M. Stewart and Randall E. Haase have been the persons principally
responsible for the Alliance Aggressive Stock Portfolio's investment program
since 1993. Mr. Stewart, an Executive Vice President of Alliance, has been
associated with Alliance since 1970.* Mr. Haase, a Senior Vice President of
Alliance, has been associated with Alliance since 1988.*

ALLIANCE SMALL CAP GROWTH PORTFOLIO

Mark J. Cunneen has been the person principally responsible for the Alliance
Small Cap Growth Portfolio's investment program since January 1999. Mr.
Cunneen, a Senior Vice President of Alliance, has been associated with
Alliance since January 1999. Prior to joining Alliance, Mr. Cunneen had been
associated with INVESCO since May 1998, and before that with Chancellor LGT
Asset Management, Inc. ("Chancellor") since 1992. Mr. Cunneen had been the
head of Chancellor's Small Cap Equity Group since 1997.

THE FIXED INCOME SERIES

ALLIANCE MONEY MARKET PORTFOLIO

Raymond J. Papera has been the person principally responsible for the Alliance
Money Market Portfolio's investment program since 1990. Mr. Papera, a Senior
Vice President of Alliance, has been associated with Alliance since 1990.*

ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES PORTFOLIO

Jeffrey S. Phlegar has been the person principally responsible for the
Alliance Intermediate Government Securities Portfolio's investment program
since January 1999. Mr. Phlegar, a Senior Vice President of Alliance, has been
associated with Alliance since 1998.

ALLIANCE QUALITY BOND PORTFOLIO

Matthew Bloom has been the person principally responsible for the Alliance
Quality Bond Portfolio's investment program since 1995. Mr. Bloom, a Senior
Vice President of Alliance, has been associated with Alliance since 1989.

ALLIANCE HIGH YIELD PORTFOLIO

Wayne C. Tappe has been the person principally responsible for the Alliance
High Yield Portfolio's investment program since 1995. Mr. Tappe, a Senior Vice
President of Alliance, has been associated with Alliance since 1987.*
---------------------------------
* Prior to July 22, 1993, with Equitable Capital Management Corporation
("Equitable Capital"). On that date Alliance acquired the business and
substantially all of the assets of Equitable Capital and became the
investment adviser to the Trust.

---------------------------------------------- The Hudson River Trust
<PAGE>

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48
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YEAR 2000

Many computer software systems in use today cannot properly process
date-related information relating to periods from and after January 1, 2000.
Should any of the computer systems employed by the Trust's major service
providers fail to process this type of information properly, that could have a
negative impact on the Trust's operations and services that are provided to
the Trust's shareholders. Alliance has advised the Trust that it is reviewing
all of its computer systems with the goal of modifying or replacing such
systems prior to January 1, 2000, to the extent necessary to foreclose any
such negative impact. In addition, Alliance has been advised by the Trust's
custodian that it is also in the process of reviewing its systems with the
same goal. As of the date of this prospectus, the Trust and Alliance have no
reason to believe that these goals will not be achieved. Similarly, the values
of certain of the portfolio securities held by the Trust may be adversely
affected by the inability of the securities' issuers or of third parties to
process this type of information properly.

<PAGE>

5
Description of the Trust's Shares

- ----------
49
- --------------------------------------------------------------------------------

PURCHASE AND REDEMPTION

The Trust will offer and sell its shares without a sales charge, at each
Portfolio's net asset value per share. The price at which a purchase is
effected is based on the next calculation of net asset value after an order is
placed by an insurance company investing in the Trust. Net asset value per
share is calculated for purchases and redemption of shares of each Portfolio
by dividing the value of total Portfolio assets, less liabilities (including
Trust expenses, which are accrued daily), by the total number of shares of
that Portfolio outstanding. The net asset value per share of each Portfolio is
determined each business day at 4:00 p.m. Eastern time. Values are not
calculated on national business holidays.

All shares may be redeemed in accordance with the Trust's Agreement and
Declaration of Trust and By-Laws. Shares will be redeemed at their net asset
value. Sales and redemptions of shares of the same class by the same
shareholder on the same day will be netted. All redemption requests will be
processed and payment with respect thereto will be made within seven days
after tenders.

The Trust may also suspend redemption, if permitted by the Investment Company
Act, for any period during which the New York Stock Exchange is closed or
during which trading is restricted by the SEC or the SEC declares that an
emergency exists. Redemption may also be suspended during other periods
permitted by the SEC for the protection of the Trust's shareholders.

HOW ASSETS ARE VALUED

Values are determined according to accepted accounting practices and all laws
and regulations that apply. The assets of each Portfolio are generally valued
at the close of regular trading on the New York Stock Exchange as follows, as
further described in the SAI:

o Stocks and debt securities which mature in more than 60 days are valued on
the basis of market quotations.

o Foreign securities not traded directly, or in American Depositary Receipt
or similar form, in the United States are valued at representative quoted
prices in the currency of the country of origin. Foreign currency amounts
are translated into U.S. dollars at the bid price last quoted by a
composite list of major U.S. banks. Because foreign markets may be open at
different times than the New York Stock Exchange, the value of a
Portfolio's shares may change on days when shareholders are not able to
buy or sell them. If events materially affecting the values of the
Portfolio's foreign investments occur between the close of foreign markets
and the close of regular trading on the New York Stock Exchange, these
investments may be valued at their fair value.

o Short-term debt securities in the Portfolios other than the Alliance Money
Market Portfolio which mature in 60 days or less are valued at amortized
cost, which approximates market value. Securities held in the Alliance
Money Market Portfolio are valued at prices based on equivalent yields or
yield spreads.

o Other securities and assets for which market quotations are not readily
available or for which valuation cannot be provided are valued in good
faith by the Valuation Committee of the Board of Trustees using its best
judgment.

DISTRIBUTION PLAN

As explained in the SAI, the Trust has distribution agreements with each of
Equitable Distributors, Inc. ("EDI") and EQ Financial Consultants, Inc. ("EQ
Financial") (each a "Distributor" and, collectively, the "Distributors") with
respect to the Class IB shares. Both EDI and EQ Financial are indirect, wholly
owned subsidiaries of Equitable and affiliates of Alliance. The address for
EDI is 787 Seventh Avenue, New York, New York 10019. The address for EQ
Financial is 1290 Avenue of the Americas, New York, New York 10104.

The Trust has adopted a distribution plan (the "Distribution Plan") pursuant
to Rule 12b-1 under the Investment Company Act for the Class IB shares of the
Trust. Pursuant

<PAGE>

- ----------
50
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to the Distribution Plan, the Trust compensates each Distributor from assets
attributable to the Class IB shares for services rendered and expenses borne
in connection with activities primarily intended to result in the sale of
Class IB shares. It is anticipated that a portion of the amounts received by
the Distributors will be used to defray various costs incurred or paid by the
Distributors in connection with the printing and mailing of Trust
prospectuses, statements of additional information, any supplements thereto
and shareholder reports and holding seminars and sales meetings with wholesale
and retail sales personnel designed to promote the distribution of Class IB
shares. The Distributors may also use a portion of the amounts received to
provide compensation to financial intermediaries and third-party
broker-dealers for their services in connection with the distribution of Class
IB shares.

The Distribution Plan provides that the Trust, on behalf of each Portfolio,
may pay annually up to 0.50% of the average daily net assets of a Portfolio
attributable to its Class IB shares in respect of activities primarily
intended to result in the sale of Class IB shares. Under the distribution
agreement, however, payments to the Distributors for activities pursuant to
the Distribution Plan are limited to payments at an annual rate equal to 0.25%
of average daily net assets of each Portfolio, other than the Alliance Small
Cap Growth Portfolio, attributable to its Class IB shares. With respect to the
Alliance Small Cap Growth Portfolio, the Distributors will receive an annual
fee not to exceed the lesser of (a) 0.25% of the average daily net assets of
the Portfolio attributable to Class IB shares, and (b) an amount that, when
added to certain other expenses of the Class IB shares, would result in the
ratio of expenses to average daily net assets attributable to Class IB shares
equaling 1.20%. Under the terms of the Distribution Plan and the distribution
agreement, each Portfolio is authorized to make payments monthly to the
Distributors which may be used to pay or reimburse entities providing
distribution and shareholder servicing with respect to the Class IB shares for
such entities' fees or expenses incurred or paid in that regard.

The Distribution Plan is of a type known as a "compensation" plan because
payments are made for services rendered to the Trust with respect to Class IB
shares regardless of the level of expenditures by the Distributors. The
Trustees will, however, take into account such expenditures for purposes of
reviewing operations under the Distribution Plan and in connection with their
annual consideration of the Plan's renewal. The Distributors have indicated
that they expect their expenditures to include, without limitation: (a) the
printing and mailing of Trust prospectuses, statements of additional
information, any supplements thereto and shareholder reports for prospective
Contract owners with respect to the Class IB shares of the Trust; (b) those
relating to the development, preparation, printing and mailing of
advertisements, sales literature and other promotional materials describing
and/or relating to the Class IB shares of the Trust; (c) holding seminars and
sales meetings designed to promote the distribution of the Trust's Class IB
shares; (d) obtaining information and providing explanations to wholesale and
retail distributors of Contracts regarding Trust investment objectives and
policies and other information about the Trust and its Portfolios, including
the performance of the Portfolios; (e) training sales personnel regarding the
Class IB shares of the Trust; and (f) financing any other activity that a
Distributor determines is primarily intended to result in the sale of Class IB
shares.

Because these fees are paid out of the Fund's assets on an on-going basis,
over time these fees will increase the cost of your investment and may cost
you more than paying other types of sales charges.

<PAGE>

6
Dividends, Distributions and Taxes

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51
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All dividend distributions will be reinvested in full and fractional shares of
the Portfolio to which they relate.

Although the Trust intends that it and the Portfolios will be operated so that
they will have no federal income or excise tax liability, if any such
liability is nevertheless incurred, the investment performance of the
Portfolio or Portfolios incurring such liability will be adversely affected.
In addition, Portfolios investing in foreign securities and currencies may be
subject to foreign taxes which could reduce the investment performance of such
Portfolios.

In order for investors to receive the favorable tax treatment generally
available to holders of variable annuity and variable life contracts, the
separate accounts underlying such contracts, as well as the Portfolios in
which such accounts invest, must meet certain diversification requirements.
Each Portfolio intends to comply with these requirements. If a Portfolio does
not meet such requirements, income allocable to the variable annuity and
variable life contracts (other than "pension plan contracts"), including
accumulated investment earnings, would be immediately taxable to the holders
of such contracts.

A more complete discussion of this and other issues appears in the SAI.

For more information regarding the tax implications for owners of variable
contracts investing in the Trust, refer to the prospectuses for those
products.

<PAGE>

7
Financial Highlights

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52
- --------------------------------------------------------------------------------

The financial highlights table is intended to help you understand the
Portfolio's financial performance for the past 5 years (or, if shorter, the
period of the Portfolio's operations). Certain information reflects financial
results for a single Portfolio share. The total returns in the table represent
the rate that an investor would have earned (or lost) on an investment in the
Portfolio (assuming reinvestment of all dividends and distributions). This
information has been audited by PricewaterhouseCoopers LLP, the Trust's
independent accountants. The December 31, 1998 audited financial statements of
the Trust and the "Report of Independent Accountants" appear in the SAI. The
Trust's annual report, which contains additional performance information, is
available without charge upon request.

FINANCIAL HIGHLIGHTS
PER SHARE INCOME AND CAPITAL CHANGES
(FOR A CLASS IB SHARE OUTSTANDING THROUGHOUT THE PERIOD)(C)

ALLIANCE MONEY MARKET

<TABLE>
<CAPTION>
October 2,
Year Ended December 31, 1996 to
------------------------------- December 31,
1998 1997 1996
-------------- -------------- ----------------
<S> <C> <C> <C>
Net asset value, beginning of period(a) ...................... $ 10.17 $ 10.16 $ 10.16
--------- --------- -------
Income from investment operations:
Net investment income ....................................... 0.49 0.52 0.11
Net realized and unrealized gain 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(d) .............................................. 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%(b)
Ratio of net investment income to average net assets ......... 4.82% 5.02% 4.94%(b)
</TABLE>

Footnotes appear on page 66.

<PAGE>

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53
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ALLIANCE INTERMEDIATE GOVERNMENT SECURITIES

<TABLE>
<CAPTION>
May 1, 1997
Year Ended to
December 31, 1998 December 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period(a) ...................... $ 9.43 $9.27
-------- ------
Income from investment operations:
Net investment income ....................................... 0.47 0.32
Net realized and unrealized gain 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(d) .............................................. 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%(b)
Ratio of net investment income to average net assets ......... 4.87% 5.15%(b)
Portfolio turnover rate ...................................... 539% 285%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust

<PAGE>

- -----
54
- --------------------------------------------------------------------------------

ALLIANCE QUALITY BOND

<TABLE>
<CAPTION>
July 8, 1998
to
December 31, 1998
------------------
<S> <C>
Net asset value, beginning of period(a) ...................... $9.90
------
Income from investment operations:
Net investment income ....................................... 0.25
Net realized and unrealized gain on investments ............. 0.14
------
Total from investment operations ............................ 0.39
------
Less distributions:
Dividends from net investment income ........................ (0.25)
Distributions from realized gains ........................... (0.20)
------
Total dividends and distributions ........................... (0.45)
------
Net asset value, end of period ............................... $9.84
------
Total return(d) .............................................. 4.05%
-------------
Ratios/Supplemental Data:
Net assets, end of period (000's) ............................ $10
Ratio of expenses to average net assets ...................... 0.81%(b)
Ratio of net investment income to average net assets ......... 5.06%(b)
Portfolio turnover rate ...................................... 194%
</TABLE>

Footnotes appear on page 66.

<PAGE>

- -----
55
- --------------------------------------------------------------------------------

ALLIANCE HIGH YIELD

<TABLE>
<CAPTION>
Year Ended December 31, October 2, 1996
------------------------- to
1998 1997 December 31, 1996
------------- ----------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period(a) ..................... $ 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(d) ............................................. (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%(b)
Ratio of net investment income to average net assets ........ 10.60% 9.76% 8.71%(b)
Portfolio turnover rate ..................................... 181% 390% 485%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust
<PAGE>

- -----
56
- --------------------------------------------------------------------------------

ALLIANCE GROWTH AND INCOME

<TABLE>
<CAPTION>
May 1, 1997
Year Ended to
December 31, 1998 December 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period(a) ...................... $ 15.36 $13.42
--------- --------
Income from investment operations:
Net investment income ....................................... 0.03 0.05
Net realized and unrealized gain 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(d) .............................................. 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%(b)
Ratio of net investment income to average net assets ......... 0.17% 0.43%(b)
Portfolio turnover rate ...................................... 74% 79%
</TABLE>

Footnotes appear on page 66.

<PAGE>

- -----
57
- --------------------------------------------------------------------------------

ALLIANCE EQUITY INDEX

<TABLE>
<CAPTION>
May 1, 1997
Year Ended to
December 31, 1998 December 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period(a) ........................................... $ 19.73 $ 16.35
------- --------
Income from investment operations:
Net investment income ............................................................ 0.22 0.14
Net realized and unrealized gain on investments and foreign currency transactions 5.24 3.48
------- --------
Total from investment operations ................................................. 5.46 3.62
------- --------
Less distributions:
Dividends from net investment income ............................................. (0.20) (0.17)
Distributions from realized gains ................................................ (0.01) (0.07)
-------- --------
Total dividends and distributions ................................................ (0.21) (0.24)
-------- --------
Net asset value, end of period .................................................... $ 24.98 $ 19.73
-------- --------
Total return(d) ................................................................... 27.74% 22.28%
-------- --------
Ratios/Supplemental Data:
Net assets, end of period (000's) ................................................. $ 443 $ 110
Ratio of expenses to average net assets ........................................... 0.59% 0.62%(b)
Ratio of net investment income to average net assets .............................. 0.98% 1.10%(b)
Portfolio turnover rate ........................................................... 6% 3%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust

<PAGE>

- -----
58
- --------------------------------------------------------------------------------

ALLIANCE COMMON STOCK

<TABLE>
<CAPTION>
Year Ended December 31, October 2, 1996
------------------------------- to
1998 1997 December 31, 1996
-------------- -------------- ------------------
<S> <C> <C> <C>
Net asset value, beginning of period(a) ............................. $ 21.58 $ 18.22 $ 17.90
--------- --------- --------
Income from investment operations:
Net investment income .............................................. 0.10 0.10 0.02
Net realized and unrealized gain 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)
---------- ---------- --------
Total dividends and distributions .................................. (3.38) ( 1.85) (1.22)
---------- ---------- --------
Net asset value, end of period ...................................... $ 24.30 $ 21.58 $ 18.22
---------- ---------- --------
Total return(d) ..................................................... 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%(b)
Ratio of net investment income to average net assets ................ 0.44% 0.46% 0.61%(b)
Portfolio turnover rate ............................................. 46% 52% 55%
</TABLE>

Footnotes appear on page 66.

Financial Highlights

<PAGE>

- -----
59
- --------------------------------------------------------------------------------

ALLIANCE GLOBAL

<TABLE>
<CAPTION>
Year Ended December 31, October 2, 1996
--------------------------- to
1998 1997 December 31, 1996
------------ ------------ ------------------
<S> <C> <C> <C>
Net asset value, beginning of period(a) ............................. $ 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(d) ..................................................... 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%(b)
Ratio of net investment income to average net assets ................ 0.41% 0.67% 0.48%(b)
Portfolio turnover rate ............................................. 105% 57% 59%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust

<PAGE>

- -----
60
- --------------------------------------------------------------------------------

ALLIANCE INTERNATIONAL

<TABLE>
<CAPTION>
May 1, 1997
Year Ended to
December 31, 1998 December 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period(a) .................................... $ 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)
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(d) ............................................................ 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%(b)
Ratio of net investment income to average net assets ....................... 0.44% 0.20%(b)
Portfolio turnover rate .................................................... 59% 59%
</TABLE>

Footnotes appear on page 66.

<PAGE>

- -----
61
- --------------------------------------------------------------------------------

ALLIANCE AGGRESSIVE STOCK

<TABLE>
<CAPTION>
Year Ended December 31, October 2, 1996
----------------------------- to
1998 1997 December 31, 1996
-------------- ------------ ------------------
<S> <C> <C> <C>
Net asset value, beginning of period(a) ............................. $ 36.13 $35.83 $ 37.28
--------- ------- ---------
Income from investment operations:
Net investment income (loss) ....................................... 0.01 (0.11) (0.01)
Net realized and unrealized gain (loss) on investments and foreign
currency transactions ............................................. (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)
---------- ------- ---------
Total dividends and distributions .................................. (1.84) (3.36) (2.29)
---------- ------- ---------
Net asset value, end of period ...................................... $ 34.01 $36.13 $ 35.83
---------- ------- ---------
Total return(d) ..................................................... 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%(b)
Ratio of net investment income (loss) to average net assets ......... 0.02% (0.28)% (0.10)%(b)
Portfolio turnover rate ............................................. 105% 123% 108%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust

<PAGE>

FINANCIAL HIGHLIGHTS (CONTINUED)

- -----
62
- --------------------------------------------------------------------------------

ALLIANCE SMALL CAP GROWTH

<TABLE>
<CAPTION>
May 1, 1997
Year Ended to
December 31, 1998 December 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period(a) .................................... $ 12.34 $ 10.00
--------- ---------
Income from investment operations:
Net investment income (loss) .............................................. ( 0.02) ( 0.01)
Net realized and unrealized gain (loss) on investments and foreign currency
transactions ............................................................. ( 0.53) 2.65
--------- ---------
Total from investment operations .......................................... ( 0.55) 2.64
--------- ---------
Less distributions:
Distributions from realized gains ......................................... - ( 0.30)
--------- ---------
Net asset value, end of period ............................................. $ 11.79 $ 12.34
--------- ---------
Total return(d) ............................................................ ( 4.44)% 26.57%
--------- ---------
Ratios/Supplemental Data:
Net assets, end of period (000's) .......................................... $112,254 $ 46,324
Ratio of expenses to average net assets .................................... 1.20% 1.15%(b)
Ratio of net investment loss to average net assets ......................... ( 0.17)% ( 0.12)%(b)
Portfolio turnover rate .................................................... 94% 96%
</TABLE>

Footnotes appear on page 66.

<PAGE>

- -----
63
- --------------------------------------------------------------------------------

ALLIANCE CONSERVATIVE INVESTORS

<TABLE>
<CAPTION>
May 1, 1997
Year Ended to
December 31, 1998 December 31, 1997
------------------- ------------------
<S> <C> <C>
Net asset value, beginning of period(a) ............................. $ 11.88 $ 11.29
------- --------
Income from investment operations:
Net investment income .............................................. 0.46 0.31
Net realized and unrealized gain 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)
-------- --------
Total dividends and distributions .................................. (1.15) (0.73)
-------- --------
Net asset value, end of period ...................................... $ 12.31 $ 11.88
-------- --------
Total return(d) ..................................................... 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%(b)
Ratio of net investment income to average net assets ................ 3.68% 3.82%(b)
Portfolio turnover rate ............................................. 103% 206%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust

<PAGE>

- -----
64
- --------------------------------------------------------------------------------

ALLIANCE BALANCED

<TABLE>
<CAPTION>
July 8, 1998
to
December 31, 1998
------------------
<S> <C>
Net asset value, beginning of period(a) ........................................... $ 19.48
--------
Income from investment operations:
Net investment income ............................................................ 0.24
Net realized and unrealized gain on investments and foreign currency transactions 0.66
--------
Total from investment operations ................................................. 0.90
--------
Less distributions:
Dividends from net investment income ............................................. ( 0.20)
Distributions from realized gains ................................................ ( 1.67)
--------
Total dividends and distributions ................................................ ( 1.87)
--------
Net asset value, end of period .................................................... $ 18.51
--------
Total return(d) ................................................................... 4.92%
--------
Ratios/Supplemental Data:
Net assets, end of period (000's) ................................................. $ 10
Ratio of expenses to average net assets ........................................... 0.70%(b)
Ratio of net investment income to average net assets .............................. 2.65%(b)
Portfolio turnover rate ........................................................... 95%
</TABLE>

Footnotes appear on page 66.

<PAGE>

- -----
65
- --------------------------------------------------------------------------------

ALLIANCE GROWTH INVESTORS

<TABLE>
<CAPTION>
Year Ended December 31, October 2, 1996
--------------------------- to
1998 1997 December 31, 1996
------------ ------------ ------------------
<S> <C> <C> <C>
Net asset value, beginning of period(a) ...................... $ 18.52 $ 17.19 $ 16.78
------- ------- --------
Income from investment operations:
Net investment income ....................................... 0.36 0.36 0.07
Net realized and unrealized gain 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(d) .............................................. 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%(b)
Ratio of net investment income to average net assets ......... 1.85% 1.88% 1.69%(b)
Portfolio turnover rate ...................................... 102% 121% 190%
</TABLE>

Footnotes appear on page 66.

---------------------- The Hudson River Trust

<PAGE>

- -----
66
- --------------------------------------------------------------------------------

FOOTNOTES TO FINANCIAL HIGHLIGHTS

(a) Date as of which funds were first allocated to the Class IB shares of the
Portfolios are as follows: 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.

(b) Annualized.

(d) Total return is calculated assuming an initial investment made at the net
asset value at the beginning of the period, reinvestment of all dividends
and distributions at net asset value during the period, and redemption on
the last day of the period. Total return calculated for a period of less
than one year is not annualized.

<PAGE>

8
APPENDIX A

- ----------
A-1
- --------------------------------------------------------------------------------

DESCRIPTION OF BOND RATINGS

Bonds are considered to be "investment grade" if they are in one of the top
four ratings.

S&P's ratings are as follows:

o Bonds rated AAA have the highest rating assigned by S&P. Capacity to pay
interest and repay principal is extremely strong.

o Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the higher rated issues only in small degree.

o Bonds rated A have a strong capacity to pay interest and repay principal
although they are somewhat more susceptible to the adverse effects of
changes in circumstances and economic conditions than bonds in higher
rated categories.

o Bonds rated BBB are regarded as having an adequate capacity to pay interest
and repay principal. Whereas they normally exhibit adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal
for bonds in this category than in higher rated categories.

o Debt rated BB, B, CCC, CC or C is regarded, on balance, as predominantly
speculative with respect to the issuer's capacity to pay interest and
repay principal in accordance with the terms of the obligation. While such
debt will likely have some quality and protective characteristics, these
are outweighed by large uncertainties or major risk exposures to adverse
debt conditions.

o The rating C1 is reserved for income bonds on which no interest is being
paid.

o Debt rated D is in default and payment of interest and/or repayment of
principal is in arrears.

The ratings from AA to CCC may be modified by the addition of a plus (+) or
minus (-) sign to show relative standing within the major rating categories.

Moody's ratings are as follows:

o Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as
"gilt-edged." Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position
of such issues.

o Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high
grade bonds. They are rated lower than the best bonds because margins of
protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other
elements present which make the long term risks appear somewhat larger
than in Aaa securities.

o Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate but elements
may be present which suggest a susceptibility to impairment some time in
the future.

o Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments
and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.

>
<PAGE>

- ----------
A-2
- --------------------------------------------------------------------------------

o Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well assured. Often the protection of
interest and principal payments may be very moderate and thereby not well
safeguarded during both good and bad times over the future. Uncertainty of
position characterizes bonds in this class.

o Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance
of other terms of the contract over any long period of time may be small.

o Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to
principal or interest.

o Bonds which are rated Ca represent obligations which are speculative to a
high degree. Such issues are often in default or have other marked
shortcomings.

o Bonds which are rated C are the lowest class of bonds and issues so rated
can be regarded as having extremely poor prospects of ever attaining any
real investment standing.

Moody's applies modifiers to each rating classification from Aa through B to
indicate relative ranking within its rating categories. The modifier "1"
indicates that a security ranks in the higher end of its rating category; the
modifier "2" indicates a mid-range ranking; and the modifier "3" indicates
that the issue ranks in the lower end of its rating category.

>
<PAGE>

9
Appendix B

- ----------
B-1
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION

The following tables provide performance results for The Hudson River Trust
Portfolios (except for the Alliance Small Cap Growth Portfolio), net of
investment management fees and direct operating expenses of the Trust,
together with comparative benchmarks, including both unmanaged market indexes
and universes of managed portfolios. The unmanaged market indexes do not
reflect any asset-based charges for investment management or other expenses,
which are inapplicable to these benchmarks. The rates of return shown for the
Portfolios are not an estimate or guarantee of future investment performance
and do not take into account charges applicable to the Contracts or imposed at
the separate account level. The ultimate change in Contract values will depend
not only on the performance of the Portfolios at the underlying Trust level,
but also on the insurance and administrative charges, applicable sales
charges, and the mortality and expense risk charge applicable under such
Contracts. These Contract charges effectively reduce the dollar amount of any
net gains and increase the dollar amount of any net losses.

The Lipper averages are contained in Lipper's survey of the performance of a
large number of mutual funds. This survey is published by Lipper Analytical
Services, Inc., a firm recognized for its reporting of performance of actively
managed funds. According to Lipper, performance data are presented net of
investment management fees, direct operating expenses and, for funds with Rule
12b-1 plans, asset-based sales charges. Performance data for funds which
assess sales charges in other ways do not reflect deductions for sales
charges. Performance data shown for the Portfolios does not reflect deduction
for sales charges (which are assessed at the policy level). This means that to
the extent that asset-based sales charges deducted by some funds have lowered
the Lipper averages, the performance data shown for the Portfolios appears
relatively more favorable than the performance data for the Lipper averages.

The performance results presented below are based on Portfolio percent changes
in net asset values with dividends and capital gains reinvested. Similarly,
the market indexes have been adjusted, where necessary, to reflect the benefit
of reinvestment of income, dividends and capital gains. Cumulative rates of
return reflect performance over a stated period of time. Annualized rates of
return represent the rate of growth that would have produced the corresponding
cumulative return had performance been constant over the entire period.

From time to time the Trust and/or its shareholders may include in reports or
in advertising material descriptions of general economic and market conditions
affecting the Trust and/or its shareholders and may compare the performance of
the Trust's Portfolios with (1) that of other insurance company separate
accounts, if appropriate, or mutual funds included in the rankings prepared by
Lipper or similar investment services that monitor the performance of
insurance company separate accounts or mutual funds, (2) other appropriate
indices of investment securities and averages for peer universes of funds
which are described in this prospectus, or (3) data developed by the Trust
and/or its shareholders derived from such indices or averages.

Each Portfolio's performance may also be compared to the performance of other
mutual funds by Morningstar, Inc. which ranks mutual funds on the basis of
historical risk and total return. Morningstar rankings are calculated using
the mutual fund's average annual return for certain periods and a risk factor
that reflects the mutual fund's performance relative to three-month Treasury
bill monthly returns. Morningstar's rankings range from five stars (highest)
to one star (lowest) and represent Morningstar's assessment of the historical
risk level and total return of a mutual fund as a weighted average for 3-, 5-
and 10-year periods. If the fund scores in the top 10% of its class it
receives 5 stars; if it falls in the next 22.5% it receives 4 stars; a place
in the middle 35% earns it 3 stars; those in the next 22.5% receive 2 stars;
and the bottom 10% get 1 star.

<PAGE>

- ----------
B-2
- --------------------------------------------------------------------------------

The Lehman Treasury Bond Index ("Lehman Treasury") represents an unmanaged
group of securities consisting of all currently offered public obligations of
the U.S. Treasury intended for distribution in the domestic market.

The Standard and Poor's 500 Composite Stock Price Index ("S&P 500") represents
an unmanaged weighted index of 500 industrial, transportation, utility, and
financial companies, widely regarded by investors as representative of the
stock market.

The Lehman Government/Corporate Bond Index ("Lehman Gov't Corp.") represents
an unmanaged group of securities widely regarded by investors as
representative of the bond market.

The Value Line Convertible Index is comprised of 585 of the most actively
traded convertible bonds and preferred stocks on an unweighted basis.

The Morgan Stanley Capital International World Index ("MSCI World") is an
arithmetic, market value-weighted average of the performance of over 1,300
securities listed on the stock exchanges of twenty foreign countries and the
United States.

The Morgan Stanley Capital International EAFE Index ("MSCI EAFE") is a market
capitalization weighted equity index composed of a sample of companies
representative of the market structure of Europe, Australia and the Far East.

The Standard & Poor's MidCap 400 Index ("S&P 400") represents an unmanaged
weighted index of 400 domestic stocks chosen for market size (median market
capitalization of about $610 million), liquidity, and industry group
representation.

The Russell 2000 Index consists of the smallest 2,000 securities in the
Russell 3000 Index. (The Russell 3000 Index represents approximately 98% of
the investable U.S. equity market.) The Russell 2000 Index, widely regarded in
the industry as the premier measure of small capitalization stocks, represents
approximately 11% of the Russell 3000 Index total market capitalization. The
Russell 2000 Growth Index ("Russell 2000 Growth") consists of that half of the
2,000 smallest of the 3,000 largest capitalization U.S. companies that has
higher price-to-book ratios and higher forecasted growth.

The Lehman Intermediate Government Bond Index represents an unmanaged group of
securities consisting of all United States Treasury and agency securities with
remaining maturities of from one to ten years and issue amounts of at least
$100 million outstanding.

The Lehman Aggregate Bond Index is an index comprised of investment grade
fixed income securities, including U.S. Treasury, mortgage-backed, corporate
and "Yankee" bonds (U.S. dollar-denominated bonds issued outside the United
States).

The Merrill Lynch High Yield Master Index ("ML Master") represents an
unmanaged group of securities widely regarded by investors as representative
of the high yield bond market.

The "blended" performance numbers (e.g., 50% S&P 400/50% Russell 2000) in all
cases assume a static mix of the two indices.

The dates as of which funds were first allocated to the Portfolios are as
follows: the Alliance Common Stock Portfolio on June 16, 1975; the Alliance
Money Market Portfolio on July 13, 1981; the Alliance Balanced and Alliance
Aggressive Stock Portfolios on January 27, 1986; the Alliance High Yield
Portfolio on January 2, 1987; the Alliance Global Portfolio on August 27,
1987; the Alliance Conservative Investors and Alliance Growth Investors
Portfolios on October 2, 1989; the Alliance Intermediate Government Securities
Portfolio on April 1, 1991; the Alliance Quality Bond and Alliance Growth and
Income Portfolios on October 1, 1993; the Alliance Equity Index Portfolio on
March 1, 1994; the Alliance International Portfolio on April 3, 1995; and the
Alliance Small Cap Growth Portfolio on May 1, 1997. In the "Since Inception"
columns of Table I and Table II below, the performance of

<PAGE>

- ----------
B-3
- --------------------------------------------------------------------------------

each Portfolio and its comparative indices is measured from the date funds
were first allocated to the Portfolios, except as follows: for the Alliance
Common Stock Portfolio and its comparative indices, from January 13, 1976, the
date on which the unit value was established and variable contract owner
contributions were first accepted by the Alliance Common Stock Portfolio's
separate account predecessor; for the Lipper Money Market Funds Average, from
June 1, 1981; for the Lipper Balanced Funds and Small Company Growth Funds
Averages, from January 1, 1986; and for the Lipper Global Funds Average, from
August 28, 1987.

The Trust's Portfolios serve as the underlying investment vehicles for
variable contracts. Shares of these Portfolios cannot be purchased directly.
Shares of the Portfolios of the Trust are purchased by corresponding
investment divisions of insurance company separate accounts. Refer to the
attached variable contract prospectus for further information about your
variable contract including a description of all charges and expenses.

---------------------------------------------- The Hudson River Trust
>
<PAGE>

- -----
B-4
- --------------------------------------------------------------------------------

TABLE I

ANNUALIZED RATES OF RETURN
PERIODS ENDING DECEMBER 31, 1998

Like the tables on pages 5-18, this table provides the average annual returns
over the designated periods, but extends the information further into the past
for Portfolios that have been in operation for more than ten years. The figures
reflect the performance of each Portfolio's Class IB shares since the inception
of that class. For periods prior to the inception of Class IB, the figures are
based on the performance of the relevant Portfolio's Class IA shares, adjusted
to reflect the expenses and fees of Class IB.

<TABLE>
<CAPTION>
Since
PORTFOLIO/Benchmarks 1 Year 3 Years 5 Years 10 Years 15 Years 20 Years Inception
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
THE ASSET ALLOCATION SERIES
Alliance Conservative Investors ............... 13.60% 10.44% 9.13% - - - 9.71%
Lipper Flexible Portfolio Average ............. 14.20 15.62 14.31 - - - 12.55
70% Lehman Treasury/30% S&P 500 ............... 15.59 14.45 13.37 - - - 12.08
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Balanced ............................. 17.82 14.66 10.56 12.25% - - 12.49
Lipper Balanced Mutual Funds Average .......... 13.48 15.79 13.84 12.97 - - 12.32
50% S&P 500/50% Lehman Gov't Corp. ............ 19.02 18.70 16.88 15.21 - - 14.64
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Growth Investors ..................... 18.83 15.89 13.66 - - - 15.81
Lipper Flexible Portfolio Average ............. 14.20 15.62 14.31 - - - 12.55
70% S&P 500/30% Lehman Gov't Corp. ............ 22.85 22.69 19.96 - - - 15.55
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
THE EQUITY SERIES
Alliance Growth and Income .................... 20.56 22.30 17.57 - - - 16.56
Lipper Growth & Income Funds Average .......... 15.61 21.25 18.35 - - - 17.89
75% S&P 500/25% Value Line Convertible ........ 20.10 23.99 21.07 - - - 20.48
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Equity Index ......................... 27.74 27.31 - - - - 24.07
Lipper S&P 500 Index Funds Average ............ 28.05 27.67 - - - - 24.31
S&P 500 ....................................... 28.58 28.23 - - - - 24.79
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Common Stock ......................... 29.06 27.36 21.67 18.38 17.19% 18.35% 16.13
Lipper Growth Equity Mutual Funds Average ..... 22.86 22.23 18.63 16.72 14.65 16.30 16.01
S&P 500 ....................................... 28.58 28.23 24.06 19.21 17.90 17.76 15.98
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Global ............................... 21.50 15.67 14.01 14.55 - - 12.34
Lipper Global Mutual Funds Average ............ 14.34 14.67 11.98 11.21 - - 9.64
MSCI World .................................... 24.34 17.77 15.68 10.66 - - 9.55
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance International ........................ 10.30 5.36 - - - - 7.22
Lipper International Mutual Funds Average ..... 13.02 9.94 - - - - 10.74
MSCI EAFE ..................................... 20.00 9.00 - - - - 9.68
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Aggressive Stock ..................... 0.05 10.57 11.25 18.65 - - 17.57
Lipper Small Company Growth Funds Average ..... 12.16 16.33 14.87 15.44 - - 13.69
50% S&P 400/50% Russell 2000 .................. 8.28 17.77 15.56 16.49 - - 14.78
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Small Cap Growth ..................... (4.44) - - - - - 12.06
Lipper Small Company Growth Funds Average ..... (0.33) - - - - - 16.72
Russell 2000 Growth ........................... 1.23 - - - - - 16.58
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
THE FIXED INCOME SERIES
Alliance Money Market ......................... 5.08 5.11 4.91 5.33 6.10 - 6.82
Lipper Money Market Mutual Funds Average ...... 4.84 4.87 4.77 5.20 5.94 - 6.77
3 Month T-Bill ................................ 5.05 5.18 5.11 5.44 6.07 - 6.76
- ------------------------------------------------ ----------- ---------- ---------- ----------- ----------- ----------- ----------
</TABLE>

<PAGE>

- -----
B-5
- --------------------------------------------------------------------------------

---------------------- The Hudson River Trust
<PAGE>

- -----
B-6
- --------------------------------------------------------------------------------

TABLE II

CUMULATIVE RATES OF RETURN

PERIODS ENDING DECEMBER 31, 1998

This table represents the total (cumulative) return on an investment in each
Portfolio over the designated periods. The figures represent the performance of
each Portfolio's Class IB shares since the inception of that class. For periods
prior to the inception of Class IB, the figures are based on the performance of
the relevant Portfolio's Class IA shares, adjusted to reflect the expenses and
fees of Class IB.

<TABLE>
<CAPTION>
Portfolio/Benchmarks 1 Year 3 Years 5 Years
- ------------------------------------------------- ----------- ---------- ----------
<S> <C> <C> <C>
THE ASSET ALLOCATION SERIES
Alliance Conservative Investors ................ 13.60% 34.70% 54.80%
Lipper Flexible Portfolio Average .............. 14.20 55.28 97.15
70% Lehman Treasury/30% S&P 500 ................ 15.59 49.92 87.28
- ------------------------------------------------- ----- ------ ------
Alliance Balanced .............................. 17.82 50.73 65.23
Lipper Balanced Mutual Funds Average ........... 13.48 55.60 91.92
50% S&P 500/50% Lehman Gov't Corp. ............. 19.02 67.24 118.08
- ------------------------------------------------- ----- ------ ------
Alliance Growth Investors ...................... 18.83 55.65 89.66
Lipper Flexible Portfolio Average. ............. 14.20 55.28 97.15
70% S&P 500/30% Lehman Gov't Corp. ............. 22.85 84.68 148.41
- ------------------------------------------------- ----- ------ ------
THE EQUITY SERIES
Alliance Growth and Income ..................... 20.56 82.92 124.66
Lipper Growth & Income Funds Average ........... 15.61 79.05 133.95
75% S&P 500/25% Value Line Convertible ......... 20.10 90.62 160.09
- ------------------------------------------------- ----- ------ ------
Alliance Equity Index .......................... 27.74 106.35 -
Lipper S&P 500 Index Funds Average ............. 28.05 108.12 -
S&P 500 ........................................ 28.58 110.85 -
- ------------------------------------------------- ----- ------ ------
Alliance Common Stock .......................... 29.06 106.61 166.61
Lipper Growth Equity Mutual Funds Average ...... 22.86 84.52 138.97
S&P 500 ........................................ 28.58 110.85 193.91
- ------------------------------------------------- ----- ------ ------
Alliance Global ................................ 21.50 54.77 92.65
Lipper Global Mutual Funds Average ............. 14.34 51.58 77.94
MSCI World ..................................... 24.34 63.34 107.19
- ------------------------------------------------- ----- ------ ------
Alliance International ......................... 10.30 16.95 -
Lipper International Mutual Funds Average ...... 13.02 33.62 -
MSCI EAFE ...................................... 20.00 29.52 -
- ------------------------------------------------- ----- ------ ------
Alliance Aggressive Stock ...................... 0.05 35.19 70.39
Lipper Small Company Growth Funds Average ...... 12.16 58.64 102.73
50% S&P 400/50% Russell 2000 ................... 8.28 63.35 106.12
- ------------------------------------------------- ----- ------ ------
Alliance Small Cap Growth Portfolio ............ (4.44) - -
Lipper Small Company Growth Funds Average ...... (0.33) - -
Russell 2000 ................................... 1.23 - -
- ------------------------------------------------- ----- ------ ------
THE FIXED INCOME SERIES
Alliance Money Market .......................... 5.08 16.12 27.10
Lipper Money Market Mutual Funds Average ....... 4.84 15.34 26.25
3 Month T-Bill ................................. 5.05 16.35 28.27

<CAPTION>
Since
Portfolio/Benchmarks 10 Years 15 Years 20 Years Inception
- ------------------------------------------------- ----------- ----------- ------------- ------------
<S> <C> <C> <C> <C>
THE ASSET ALLOCATION SERIES
Alliance Conservative Investors ................ - - - 135.73%
Lipper Flexible Portfolio Average .............. - - - 202.48
70% Lehman Treasury/30% S&P 500 ................ - - - 187.40
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Balanced .............................. 217.72% - - 357.44
Lipper Balanced Mutual Funds Average ........... 240.69 - - 351.90
50% S&P 500/50% Lehman Gov't Corp. ............. 311.86 - - 485.45
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Growth Investors ...................... - - - 288.65
Lipper Flexible Portfolio Average. ............. - - - 202.48
70% S&P 500/30% Lehman Gov't Corp. ............. - - - 280.88
- ------------------------------------------------- ----------- ----------- ------------- ------------
THE EQUITY SERIES
Alliance Growth and Income ..................... - - - 123.54
Lipper Growth & Income Funds Average ........... - - - 139.10
75% S&P 500/25% Value Line Convertible ......... - - - 166.00
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Equity Index .......................... - - - 183.45
Lipper S&P 500 Index Funds Average ............. - - - 186.34
S&P 500 ........................................ - - - 192.17
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Common Stock .......................... 440.64 980.15% 2806.54% 3,001.18
Lipper Growth Equity Mutual Funds Average ...... 388.00 727.63 2185.68 3,490.04
S&P 500 ........................................ 479.62 1,081.76 2530.43 2,919.92
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Global ................................ 289.16 - - 272.35
Lipper Global Mutual Funds Average ............. 194.96 - - 188.08
MSCI World ..................................... 175.31 - - 181.57
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance International ......................... - - - 29.86
Lipper International Mutual Funds Average ...... - - - 47.74
MSCI EAFE ...................................... - - - 41.40
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Aggressive Stock ...................... 453.12 - - 710.24
Lipper Small Company Growth Funds Average ...... 334.88 - - 448.32
50% S&P 400/50% Russell 2000 ................... 360.30 - - 494.67
- ------------------------------------------------- ----------- ----------- ------------- ------------
Alliance Small Cap Growth Portfolio ............ - - - 12.06
Lipper Small Company Growth Funds Average ...... - - - 28.98
Russell 2000 ................................... - - - 29.23
- ------------------------------------------------- ----------- ----------- ------------- ------------
THE FIXED INCOME SERIES
Alliance Money Market .......................... 68.00 142.97 - 216.34
Lipper Money Market Mutual Funds Average ....... 66.09 137.69 - 214.68
3 Month T-Bill ................................. 69.88 142.02 - 214.45
- ------------------------------------------------- ----------- ----------- ------------- ------------
</TABLE>

<PAGE>

- -----
B-7
- --------------------------------------------------------------------------------

<TABLE>
<CAPTION>
Since
Portfolio/Benchmarks 1 Year 3 Years 5 Years 10 Years 15 Years 20 Years Inception
- ------------------------------------------------ --------- ---------- ---------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Alliance Intermediate Government Securities ... 7.48 26.74 28.43 - - - 66.92
Lipper Intermediate Government Funds Average .. 7.68 19.84 33.36 - - - 72.35
Lehman Intermediate Government Bond ........... 8.49 21.61 36.71 - - - 76.55
- ------------------------------------------------ --------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance Quality Bond ......................... 8.43 24.10 37.16 - - - 36.12
Lipper Corporate Debt Funds A Rated Average ... 7.47 20.42 37.37 - - - 37.26
Lehman Aggregate Bond ......................... 8.69 23.51 42.06 - - - 42.14
- ------------------------------------------------ --------- ---------- ---------- ----------- ----------- ----------- ----------
Alliance High Yield ........................... (5.38) 37.15 59.15 181.68 - - 222.11
Lipper High Current Yield Bond Funds Average .. (0.44) 26.80 43.00 145.62 - - 182.21
ML Master ..................................... 3.66 29.90 53.96 186.01 - - 239.69
- ------------------------------------------------ --------- ---------- ---------- ----------- ----------- ----------- ----------
</TABLE>

---------------------- The Hudson River Trust

<PAGE>

- -----
B-8
- --------------------------------------------------------------------------------

TABLE III

ANNUAL RATES OF RETURN

Like the bar charts on pages 5-18, this table represents the specific returns
for each year individually, but extends further into the past for Portfolios
that have been in operation for more than ten years. The figures represent the
performance of each Portfolio's Class IB shares since the inception of that
class. For periods prior to the inception of Class IB, the figures are based on
the performance of the relevant Portfolio's Class IA shares, adjusted to
reflect the expenses and fees of Class IB.

<TABLE>
<CAPTION>
Alliance Alliance Alliance Alliance Alliance
Year Ending Common Money Aggressive Alliance High Alliance Conserv.
December 31 Stock Market Stock Balanced Yield Global Investors
- --------------- ----------- ----------- ------------ ----------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
1976 ......... 9.2%*
1977 ......... -9.5
1978 ......... 8.0
1979 ......... 29.6
1980 ......... 49.8
1981 ......... -6.1 6.2%*
1982 ......... 17.3 12.8
1983 ......... 25.8 8.7
1984 ......... -2.2 10.6
1985 ......... 33.2 7.9
1986 ......... 17.1 6.4 35.6%* 28.8%*
1987 ......... 7.2 6.4 7.1 -1.1 4.4%* -13.5%*
1988 ......... 22.2 7.1 0.9 13.0 9.5 10.6
1989 ......... 25.3 8.9 43.2 25.6 4.9 26.5 2.8%*
1990 ......... -8.4 8.0 7.9 0.0 -1.4 -6.3 6.2
1991 ......... 37.6 5.9 86.6 41.0 24.2 30.2 19.6
1992 ......... 3.0 3.3 -3.4 -3.1 12.1 -0.7 5.5
1993 ......... 24.6 2.7 16.5 12.0 22.9 31.9 10.5
1994 ......... -2.4 3.8 -4.1 -8.3 -3.0 5.0 -4.4
1995 ......... 32.2 5.5 31.4 19.5 19.7 18.6 20.2
1996 ......... 24.0 5.1 22.1 11.4 22.6 14.4 5.0
1997 ......... 29.1 5.2 10.7 14.8 18.2 11.4 13.0
1998 ......... 29.1 5.1 0.1 17.8 -5.4 21.5 13.6

<CAPTION>
Alliance
Alliance Alliance Alliance Growth Alliance Alliance
Year Ending Growth Intermediate Quality and Equity Alliance Small Cap
December 31 Investors Govt. Securities Bond Income Index International Growth
- --------------- ----------- ------------------ ----------- ------------ ----------- --------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
1976 .........
1977 .........
1978 .........
1979 .........
1980 .........
1981 .........
1982 .........
1983 .........
1984 .........
1985 .........
1986 .........
1987 .........
1988 .........
1989 ......... 3.7%*
1990 ......... 10.4
1991 ......... 48.7 11.8%*
1992 ......... 4.7 5.4
1993 ......... 15.0 10.3 -0.8%* -0.5%*
1994 ......... -3.4 -4.6 -5.4 -0.8 0.8%*
1995 ......... 26.1 13.1 16.8 23.8 36.2 11.0%*
1996 ......... 12.4 3.5 5.1 19.8 22.1 9.6
1997 ......... 16.6 7.0 8.9 26.6 32.3 -3.2
1998 ......... 18.8 7.5 8.4 20.6 27.7 10.3 -4.4%
</TABLE>

* Unannualized from the inception date described in this Prospectus at pages
B-2 and B-3 through the end of the calendar year indicated.

>
<PAGE>

- ----------
B-9
- --------------------------------------------------------------------------------

PERFORMANCE OF PORTFOLIOS MANAGED SIMILARLY TO THE ALLIANCE SMALL CAP GROWTH
PORTFOLIO

In addition to managing the assets of the Alliance Small Cap Growth Portfolio,
Alliance manages six portfolios of discretionary tax-exempt accounts of
institutional clients managed as described below without significant
client-imposed restrictions ("Historical Portfolios"). These accounts have
substantially the same investment objectives and policies and are managed in
accordance with essentially the same investment strategies and techniques as
those of the Alliance Small Cap Growth Portfolio. The Historical Portfolios
are not subject to certain limitations, diversification requirements and other
restrictions to which the Alliance Small Cap Growth Portfolio, as a registered
investment company, is subject and which if applicable to the Historical
Portfolios, may have adversely affected the performance results of the
Historical Portfolios.

Set forth below is performance data provided by Alliance relating to the
Historical Portfolios for each of the fifteen full calendar years during which
Alliance has managed the Historical Portfolios. As of December 31, 1998, the
assets in the Historical Portfolios totaled approximately $1,291.5 million and
the average size of a Historical Portfolio was $53.8 million. Each Historical
Portfolio has a nearly identical composition of individual investment holdings
and related percentage weightings.

The performance data is net of all fees (including brokerage commissions)
charged to those accounts. The performance data is computed in accordance with
standards formulated by the Association of Investment Management and Research
and has not been adjusted to reflect any fees that will be payable by Alliance
Small Cap Growth Portfolio, which are higher than the fees imposed on the
Historical Portfolios and will result in a higher expense ratio and lower
returns for Alliance Small Cap Growth Portfolio. Expenses associated with the
distribution of Class IB shares of Alliance Small Cap Growth Portfolio in
accordance with the plan adopted by the Trustees pursuant to Rule 12b-1 under
the 1940 Act ("distribution fees") are also excluded. The performance data has
also not been adjusted for corporate or individual taxes, if any, payable by
the account owners.

Alliance has calculated the investment performance of the Historical
Portfolios on a trade-date basis. Dividends have been accrued on a daily basis
and cash flows weighted daily. Composite investment performance for all
portfolios has been determined on an asset weighted basis. New accounts are
included in the composite investment performance computations at the beginning
of the quarter following the initial contribution. The total returns set forth
below are calculated using a method that links the monthly return amounts for
the disclosed periods, resulting in a time-weighted rate of return.

As reflected below, the Historical Portfolios have over time performed
favorably when compared with the performance of recognized performance
indices. The Russell 2000 universe of securities is complied by Frank Russell
Company and consists of the 2000 smallest of the 3000 largest capitalization
U.S. companies. The Russell 2000 Index is segmented into two style indices,
based on the capitalization-weighted median book-to-price ratio of each of the
securities. At each reconstitution, the Russell 2000 constituents are ranked
by their book-to-price ratio. Once so ranked, the breakpoint for the two
styles is determined by the median market capitalization of the Russell 2000.
Thus, those securities falling within the top fifty percent of the cumulative
market capitalization (as ranked by descending book-to-price) become members
of the Russell 2000 Growth Index. The Russell 2000 Growth Index is,
accordingly, designed to include those Russell 2000 securities with a
greater-than-average growth orientation. In contrast with the securities in
the Russell 2000 Index, companies in the Growth Index tend to exhibit higher
price-to-book and price-earnings ratios, lower dividend yield and higher
forecasted growth values.

---------------------------------------------- The Hudson River Trust
>
<PAGE>

- ----------
B-10
- --------------------------------------------------------------------------------

To the extent Alliance Small Cap Growth Portfolio does not invest in U.S.
common stocks or utilizes investment techniques such as futures or options,
the Russell Indices may not be substantially comparable to Alliance Small Cap
Growth Portfolio. The Russell Indices are included to illustrate material
economic and market factors that existed during the time period shown. The
Russell Indices do not reflect the deduction of any fees. If Alliance Small
Cap Growth Portfolio were to purchase a portfolio of securities substantially
identical to the securities comprising the Russell Indices, Alliance Small Cap
Growth Portfolio's performance relative to the index would be reduced by
Alliance Small Cap Growth Portfolio's expenses, including brokerage
commissions, advisory fees, distribution fees, custodial fees, transfer agency
costs and other administrative expenses, as well as by the impact on Alliance
Small Cap Growth Portfolio's shareholders of sales charges and income taxes.

The Lipper Small Company Growth Fund Index is prepared by Lipper Analytical
Services, Inc. and represents a composite index of the investment performance
for the 30 largest small company growth mutual funds. The composite investment
performance of the Lipper Small Company Growth Fund Index reflects investment
management and administrative fees and other operating expenses paid by these
mutual funds and reinvested income dividends and capital gain distributions,
but excludes the impact of any income taxes and sales charges.

The following performance data is provided solely to illustrate Alliance's
performance in managing the Historical Portfolios as measured against certain
broad based market indices and against the composite performance of other
open-end growth mutual funds. Investors should not rely on the following
performance data of the Historical Portfolios as an indication of future
performance of Alliance Small Cap Growth Portfolio. The composite investment
performance for the periods presented may not be indicative of future rates of
return. Other methods of computing investment performance may produce
different results, and the results for different periods may vary.

>
<PAGE>

- -----
B-11
- --------------------------------------------------------------------------------

SCHEDULE OF COMPOSITE INVESTMENT PERFORMANCE-HISTORICAL PORTFOLIOS*

<TABLE>
<CAPTION>
Lipper
Russell Russell Small Co.
Historical 2000 2000 Growth
Portfolios Index Growth Index Fund Index
Total Return** Total Return Total Return Total Return
---------------- -------------- -------------- -------------
<S> <C> <C> <C> <C>
Year ended December 31:
1998 .................. ( 3.65)% ( 2.55)% 1.23% ( 0.85)%
1997 .................. 21.95 22.37 12.94 15.05
1996 .................. 36.65 16.50 11.26 14.37
1995 .................. 54.14 28.45 31.04 31.62
1994 .................. ( 3.54) ( 1.82) ( 2.43) ( 0.48)
1993 .................. 14.11 18.88 13.36 16.93
1992 .................. 2.99 18.41 7.77 11.18
1991 .................. 37.34 46.04 51.19 48.53
1990 .................. (22.69) (19.48) (17.41) (13.78)
1989 .................. 27.78 16.26 20.17 21.06
1988 .................. 27.45 25.02 20.37 20.34
1987 .................. ( 7.72) ( 8.80) (10.48) ( 5.48)
1986 .................. 15.08 5.68 3.58 6.04
1985 .................. 42.06 31.05 30.97 27.27
1984 .................. (11.74) ( 7.30) (15.83) ( 9.18)
1983 .................. 32.78 29.13 20.13 29.80
</TABLE>

- ----------
* Total return is a measure of investment performance that is based upon
the change in value of an investment from the beginning to the end of a
specified period and assumes reinvestment of all dividends and other
distributions. The basis of preparation of this data is described in the
preceding discussion.

The average annual total returns presented below are based upon the cumulative
total return as of December 31, 1998 and, for more than one year, assume a
steady compounded rate of return and are not year-by-year results, which
fluctuated over the periods as shown.

AVERAGE ANNUAL TOTAL RETURNS

<TABLE>
<CAPTION>
Lipper
Small Co.
Historical Russell 2000 Russell 2000 Growth
Portfolios Index Growth Index Fund Index
-------------- ---------------- ---------------- -------------
<S> <C> <C> <C> <C>
One year ...................... (3.65)% (2.55)% 1.23% (0.85)%
Three years ................... 17.10 11.58 8.35 9.26
Five years .................... 19.01 11.86 10.22 11.30
Ten years ..................... 14.30 12.92 11.54 13.16
Since January 1, 1983 ......... 14.34 12.27 9.71 12.11
</TABLE>

---------------------- The Hudson River Trust
>
<PAGE>

- --------------------------------------------------------------------------------

The Trust's statement of additional information ("SAI") dated May 1, 1999
contains additional information about the Portfolios. It is incorporated by
reference into this prospectus, which means that it is part of this prospectus
for legal purposes. You may obtain free copies of the SAI and the Trust's annual
and semi-annual reports, request other information about the Trust, or make
shareholder inquiries by writing to the Trust at the address below or by
telephoning 1-800-221-5672.

The SAI has been filed with the Commission. You may review and copy information
about the Trust, including the SAI, at the Commission's Public Reference Room
in Washington, D.C. You may call the Commission at 1-800-SEC-0330 for
information about the operation of the Public Reference Room. The Commission
maintains a World Wide Web site at http://www.sec.gov, which contains reports
and other information about the Trust. You may also obtain copies of these
materials, upon payment of a duplicating fee, by writing the Public Reference
Section of the Commission, Washington, D.C. 20549-6009.

Address correspondence to:

The Hudson River Trust
1345 Avenue of the Americas
New York, New York 10105
1-800-221-5672

Shareholder Services
1-800-221-5672

Investment Company Act File No. 811-4185