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Form 497 EQ PREMIER VIP TRUST

August 10, 2022 3:38 PM EDT

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EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

 

1290 Avenue of the Americas

New York, New York 10104

 

August 19, 2022

 

Dear Contractholder:

 

Enclosed is a notice and Combined Proxy Statement and Prospectus relating to a Joint Special Meeting of Shareholders of each of the following Portfolios:

 

    1290 VT Low Volatility Global Equity Portfolio (“Low Volatility Global Equity Portfolio”)

 

    EQ/Franklin Growth Allocation Portfolio (“Franklin Growth Allocation Portfolio”)

 

    EQ/First Trust Moderate Growth Allocation Portfolio (“First Trust Moderate Growth Allocation Portfolio”)

 

    EQ/AXA Investment Managers Moderate Allocation Portfolio (“AXA IM Moderate Allocation Portfolio”)

 

    EQ/Invesco International Growth Portfolio (“Invesco International Growth Portfolio”)

 

    EQ/Franklin Strategic Income Portfolio (“Franklin Strategic Income Portfolio”)

 

(each, an “Acquired Portfolio” and together, the “Acquired Portfolios”).

 

The Acquired Portfolios are series of EQ Advisors Trust (“EQ Trust”). The Joint Special Meeting of Shareholders of the Acquired Portfolios is scheduled to be held at EQ Trust’s offices, 1290 Avenue of the Americas, New York, New York 10104, on September 28, 2022, at 10:00 a.m., Eastern time. At the Meeting, the shareholders of the Acquired Portfolios who are entitled to vote at the Meeting, with shareholders of each Acquired Portfolio voting separately, will be asked to approve the proposals described below.

 

The Board of Trustees (the “Board”) of EQ Trust has called the Meeting to request shareholder approval of the reorganization of each Acquired Portfolio into a corresponding series of EQ Trust or EQ Premier VIP Trust (“VIP Trust,” and together with EQ Trust, the “Trusts”) (each, an “Acquiring Portfolio” and together, the “Acquiring Portfolios”) (each, a “Reorganization”) as set forth below:

 

    the Low Volatility Global Equity Portfolio into the EQ/Common Stock Index Portfolio (“Common Stock Index Portfolio”), a series of EQ Trust

 

    the Franklin Growth Allocation Portfolio into the EQ/JPMorgan Growth Allocation Portfolio (“JPMorgan Growth Allocation Portfolio”), a series of EQ Trust

 

    the First Trust Moderate Growth Allocation Portfolio into the EQ/Invesco Moderate Growth Allocation Portfolio (“Invesco Moderate Growth Allocation Portfolio”), a series of EQ Trust

 

    the AXA IM Moderate Allocation Portfolio into the 1290 VT Moderate Growth Allocation Portfolio, a series of EQ Trust

 

    the Invesco International Growth Portfolio into the EQ/MFS International Growth Portfolio (“MFS International Growth Portfolio”), a series of EQ Trust

 

    the Franklin Strategic Income Portfolio into the EQ/Core Plus Bond Portfolio (“Core Plus Bond Portfolio”), a series of VIP Trust

 

As an owner of a variable life insurance policy and/or a variable annuity contract or certificate (a “Contract”) that participates in an Acquired Portfolio through the investment divisions of a separate account or accounts established by Equitable Financial Life Insurance Company (“Equitable Financial”) or another

 

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insurance company (each, an “Insurance Company), you (a “Contractholder”) are entitled to instruct the Insurance Company that issued your Contract how to vote the Acquired Portfolio shares related to your interest in those accounts as of the close of business on June 30, 2022. The Insurance Company that issued your Contract is the record owner of the Acquired Portfolio shares related to your interest in those accounts and may be referred to as a “shareholder.” The attached Notice of Joint Special Meeting of Shareholders and Combined Proxy Statement and Prospectus describe the matters to be considered at the Meeting. You should read the Combined Proxy Statement and Prospectus prior to completing your voting instruction card.

 

The Board of EQ Trust has approved the proposals and recommends that you vote “FOR” the proposal(s) relating to the Acquired Portfolio(s) in which you own shares. Although the Board has determined that a vote “FOR” each proposal is in your best interest, the final decision is yours.

 

Each Acquired Portfolio and each Acquiring Portfolio is managed by Equitable Investment Management Group, LLC. Each Acquired Portfolio (other than the Low Volatility Global Equity Portfolio) and each Acquiring Portfolio (other than the 1290 VT Moderate Growth Allocation Portfolio) is sub-advised by one or more investment sub-advisers. In each case, if the Reorganization involving an Acquired Portfolio is approved and implemented, each Contractholder that invests indirectly in the Acquired Portfolio will automatically become a Contractholder that invests indirectly in the corresponding Acquiring Portfolio.

 

You are cordially invited to attend the Meeting. Since it is important that your vote be represented whether or not you are able to attend, you are urged to consider these matters and to exercise your voting instructions by completing, dating, and signing the enclosed voting instruction card and returning it in the accompanying return envelope at your earliest convenience or by relaying your voting instructions via telephone or the Internet by following the enclosed instructions. For further information on how to instruct an Insurance Company, please see the Contractholder Voting Instructions included herein. We hope that you will be able to attend the Meeting, and if you wish, you may provide voting instructions in person, even though you may have already returned a voting instruction card or submitted your voting instructions via telephone or the Internet. Please respond promptly in order to save additional costs of proxy solicitation and in order to make sure you are represented.

 

Very truly yours,
Steven M. Joenk
Equitable Financial Life Insurance Company

 

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EQ ADVISORS TRUST

1290 VT Low Volatility Global Equity Portfolio

EQ/Franklin Growth Allocation Portfolio

EQ/First Trust Moderate Growth Allocation Portfolio

EQ/AXA Investment Managers Moderate Allocation Portfolio

EQ/Invesco International Growth Portfolio

EQ/Franklin Strategic Income Portfolio

 

1290 Avenue of the Americas

New York, New York 10104

 

 

 

NOTICE OF JOINT SPECIAL MEETING OF SHAREHOLDERS

TO BE HELD ON

SEPTEMBER 28, 2022

 

 

 

To the Shareholders:

 

NOTICE IS HEREBY GIVEN that a Joint Special Meeting of Shareholders of each of the following Portfolios, each of which is a series of EQ Advisors Trust (“EQ Trust”), will be held on September 28, 2022, at 10:00 a.m., Eastern time, at the offices of EQ Trust, located at 1290 Avenue of the Americas, New York, New York 10104 (the “Meeting”):

 

    1290 VT Low Volatility Global Equity Portfolio (“Low Volatility Global Equity Portfolio”)

 

    EQ/Franklin Growth Allocation Portfolio (“Franklin Growth Allocation Portfolio”)

 

    EQ/First Trust Moderate Growth Allocation Portfolio (“First Trust Moderate Growth Allocation Portfolio”)

 

    EQ/AXA Investment Managers Moderate Allocation Portfolio (“AXA IM Moderate Allocation Portfolio”)

 

    EQ/Invesco International Growth Portfolio (“Invesco International Growth Portfolio”)

 

    EQ/Franklin Strategic Income Portfolio (“Franklin Strategic Income Portfolio”)

 

(each, an “Acquired Portfolio” and together, the “Acquired Portfolios”).

 

The Meeting will be held to act on the following proposals:

 

For shareholders of the Low Volatility Global Equity Portfolio only:

 

  1.   To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the Low Volatility Global Equity Portfolio, a series of EQ Trust, into the EQ/Common Stock Index Portfolio, a series of EQ Trust.

 

For shareholders of the Franklin Growth Allocation Portfolio only:

 

  2.   To approve the Plan of Reorganization and Termination with respect to the reorganization of the Franklin Growth Allocation Portfolio, a series of EQ Trust, into the EQ/JPMorgan Growth Allocation Portfolio, a series of EQ Trust.

 

For shareholders of the First Trust Moderate Growth Allocation Portfolio only:

 

  3.   To approve the Plan of Reorganization and Termination with respect to the reorganization of the First Trust Moderate Growth Allocation Portfolio, a series of EQ Trust, into the EQ/Invesco Moderate Growth Allocation Portfolio, a series of EQ Trust.

 

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For shareholders of the AXA IM Moderate Allocation Portfolio only:

 

  4.   To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the AXA IM Moderate Allocation Portfolio, a series of EQ Trust, into the 1290 VT Moderate Growth Allocation Portfolio, a series of EQ Trust.

 

For shareholders of the Invesco International Growth Portfolio only:

 

  5.   To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the Invesco International Growth Portfolio, a series of EQ Trust, into the EQ/MFS International Growth Portfolio, a series of EQ Trust.

 

For shareholders of the Franklin Strategic Income Portfolio only:

 

  6.   To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the Franklin Strategic Income Portfolio, a series of EQ Trust, into the EQ/Core Plus Bond Portfolio, a series of EQ Premier VIP Trust (“VIP Trust”).

 

The Board of Trustees of EQ Trust unanimously recommends that you vote in favor of the relevant proposal(s).

 

Please note that owners of variable life insurance policies and/or variable annuity contracts or certificates (the “Contractholders”) issued by Equitable Financial Life Insurance Company or another insurance company (each, an “Insurance Company) who have invested in shares of an Acquired Portfolio through the investment divisions of a separate account or accounts of an Insurance Company will be given the opportunity to provide the applicable Insurance Company with voting instructions on the above proposals.

 

You should read the Combined Proxy Statement and Prospectus attached to this notice prior to completing your proxy or voting instruction card. The record date for determining the number of shares outstanding, the shareholders entitled to vote, and the Contractholders entitled to provide voting instructions at the Meeting and any adjournments or postponements thereof has been fixed as the close of business on June 30, 2022. If you attend the Meeting, you may vote or provide your voting instructions in person.

 

The Special Meeting of Shareholders of each Acquired Portfolio is a separate meeting, but these Special Meetings of Shareholders are being held jointly and are referred to herein together as the “Meeting,” and each such Special Meeting of Shareholders has a separate quorum requirement.

 

YOUR VOTE IS IMPORTANT

 

Please return your proxy card or voting instruction card promptly.

 

Regardless of whether you plan to attend the Meeting, you should vote or provide voting instructions by promptly completing, dating, and signing the enclosed proxy or voting instruction card and returning it in the enclosed postage-paid envelope. You also can vote or provide voting instructions through the Internet or by telephone using the 16-digit control number that appears on the enclosed proxy or voting instruction card and following the simple instructions. If you are present at the Meeting, you may change your vote or voting instructions, if desired, at that time. The Board of Trustees of EQ Trust recommends that you vote or provide voting instructions to vote “FOR” each relevant proposal.

 

By order of the Board of Trustees of EQ Trust,

 

William MacGregor,

Secretary

 

Dated: August 19, 2022

New York, New York

 

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EQUITABLE FINANCIAL LIFE INSURANCE COMPANY

 

CONTRACTHOLDER VOTING INSTRUCTIONS

REGARDING A JOINT SPECIAL MEETING OF SHAREHOLDERS OF

 

1290 VT LOW VOLATILITY GLOBAL EQUITY PORTFOLIO

EQ/FRANKLIN GROWTH ALLOCATION PORTFOLIO

EQ/FIRST TRUST MODERATE GROWTH ALLOCATION PORTFOLIO

EQ/AXA INVESTMENT MANAGERS MODERATE ALLOCATION PORTFOLIO

EQ/INVESCO INTERNATIONAL GROWTH PORTFOLIO

EQ/FRANKLIN STRATEGIC INCOME PORTFOLIO,

EACH A SERIES OF EQ ADVISORS TRUST

 

TO BE HELD ON SEPTEMBER 28, 2022

 

Dated: August 5, 2022

 

GENERAL

 

These Contractholder Voting Instructions are being furnished by Equitable Financial Life Insurance Company (“Equitable Financial”) or another insurance company (each, an “Insurance Company” and together, the “Insurance Companies”) to owners of its variable life insurance policies or variable annuity contracts or certificates (the “Contracts”) (the “Contractholders”) who, as of June 30, 2022 (the “Record Date”), had net premiums or contributions allocated to the investment divisions of its separate account or accounts (the “Separate Accounts”) that are invested in shares of one or more of the following Portfolios, each of which is a series of EQ Advisors Trust (“EQ Trust”):

 

    1290 VT Low Volatility Global Equity Portfolio (“Low Volatility Global Equity Portfolio”)

 

    EQ/Franklin Growth Allocation Portfolio (“Franklin Growth Allocation Portfolio”)

 

    EQ/First Trust Moderate Growth Allocation Portfolio (“First Trust Moderate Growth Allocation Portfolio”)

 

    EQ/AXA Investment Managers Moderate Allocation Portfolio (“AXA IM Moderate Allocation Portfolio”)

 

    EQ/Invesco International Growth Portfolio (“Invesco International Growth Portfolio”)

 

    EQ/Franklin Strategic Income Portfolio (“Franklin Strategic Income Portfolio”)

 

(each, an “Acquired Portfolio” and together, the “Acquired Portfolios”).

 

EQ Trust is a Delaware statutory trust that is registered with the Securities and Exchange Commission (the “SEC”) as an open-end management investment company.

 

Each Insurance Company will offer Contractholders the opportunity to instruct it, as the record owner of all of the shares of beneficial interest in an Acquired Portfolio (the “Shares”) held by its Separate Accounts, as to how it should vote on the respective reorganization proposals (the “Proposals”) that will be considered at the Joint Special Meeting of Shareholders of the Acquired Portfolios referred to in the preceding Notice and at any adjournments or postponements (the “Meeting”). The enclosed Combined Proxy Statement and Prospectus, which you should read and retain for future reference, sets forth concisely information about the proposed reorganization involving each Acquired Portfolio and the corresponding acquiring series of EQ Trust or EQ Premier VIP Trust (“VIP Trust,” and together with EQ Trust, the “Trusts”) that a Contractholder should know before completing the enclosed voting instruction card.

 

Equitable Financial is a wholly owned subsidiary of Equitable Holdings, Inc. (“Equitable Holdings”), which is a publicly-owned company. The principal offices of Equitable Financial and Equitable Holdings are located at 1290 Avenue of the Americas, New York, New York 10104.

 

These Contractholder Voting Instructions and the accompanying voting instruction card, together with the enclosed proxy materials, are being mailed to Contractholders on or about August 19, 2022.

 

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HOW TO INSTRUCT AN INSURANCE COMPANY

 

To instruct an Insurance Company as to how to vote the Shares held in the investment divisions of its Separate Accounts, Contractholders are asked to promptly complete their voting instructions on the enclosed voting instruction card(s), sign and date the voting instruction card(s), and mail the voting instruction card(s) in the accompanying postage-paid envelope. Contractholders also may provide voting instructions by telephone at 1-800-690-6903 or by Internet at our website at www.proxyvote.com.

 

If a voting instruction card is not marked to indicate voting instructions but is signed and timely returned, it will be treated as an instruction to vote the Shares “FOR” the applicable Proposal.

 

The number of Shares held in the investment division of a Separate Account corresponding to the Acquired Portfolio for which a Contractholder may provide voting instructions was determined as of the Record Date by dividing (i) a Contract’s account value allocable to that investment division by (ii) the net asset value of one Share of the Acquired Portfolio. Each whole Share of an Acquired Portfolio is entitled to one vote as to each matter with respect to which it is entitled to vote and each fractional Share is entitled to a proportionate fractional vote. At any time prior to an Insurance Company’s voting at the Meeting, a Contractholder may revoke his or her voting instructions with respect to that investment division by providing the Insurance Company with a properly executed written revocation of such voting instructions, by properly executing later-dated voting instructions by a voting instruction card, telephone or the Internet, or by appearing and providing voting instructions in person at the Meeting.

 

HOW AN INSURANCE COMPANY WILL VOTE

 

An Insurance Company will vote the Shares for which it receives timely voting instructions from Contractholders in accordance with those instructions. Shares in each investment division of a Separate Account for which an Insurance Company receives a voting instruction card that is signed and timely returned but is not marked to indicate voting instructions will be treated as an instruction to vote the Shares “FOR” a Proposal. Shares in each investment division of a Separate Account for which an Insurance Company receives no timely voting instructions from Contractholders, or that are attributable to amounts retained by an Insurance Company as surplus or seed money, will be voted by the applicable Insurance Company either “FOR” or “AGAINST” a Proposal, or as an abstention, in the same proportion as the Shares for which Contractholders have provided voting instructions to the Insurance Company. As a result of such proportional voting by an Insurance Company, it is possible that a small number of Contractholders could determine whether a Proposal is approved.

 

OTHER MATTERS

 

The Insurance Companies are not aware of any matters, other than the specified Proposals, to be acted on at the Meeting. If any other matters come before the Meeting, an Insurance Company will vote the Shares upon such matters in its discretion. Voting instruction cards may be solicited by directors, officers and employees of Equitable Investment Management Group, LLC, the investment adviser of the Trusts, or its affiliates as well as officers and agents of EQ Trust. The principal solicitation will be by mail, but voting instructions may also be solicited by telephone, fax, personal interview, the Internet or other permissible means.

 

The Special Meeting of Shareholders of each Acquired Portfolio is a separate meeting, but these Special Meetings of Shareholders are being held jointly and are referred to herein together as the “Meeting,” and each such Special Meeting of Shareholders has a separate quorum requirement. If the quorum necessary to transact business at the Meeting is not established with respect to an Acquired Portfolio, or the vote required to approve a Proposal is not obtained at the Meeting, the persons named as proxies may propose one or more adjournments or postponements of the Meeting in accordance with applicable law to permit further solicitation of voting instructions. The persons named as proxies will vote in their discretion on any such adjournment or postponement.

 

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It is important that your Contract be represented. Please promptly mark your voting instructions on the enclosed voting instruction card; then sign and date the voting instruction card and mail it in the accompanying postage-paid envelope. You may also provide your voting instructions by telephone at 1-800-690-6903 or by Internet at our website at www.proxyvote.com.

 

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COMBINED PROXY STATEMENT

for

 

1290 VT Low Volatility Global Equity Portfolio

EQ/Franklin Growth Allocation Portfolio

EQ/First Trust Moderate Growth Allocation Portfolio

EQ/AXA Investment Managers Moderate Allocation Portfolio

EQ/Invesco International Growth Portfolio

EQ/Franklin Strategic Income Portfolio,

each a series of EQ Advisors Trust (“EQ Trust”)

 

and

PROSPECTUS

for

 

EQ/Common Stock Index Portfolio

EQ/JPMorgan Growth Allocation Portfolio

EQ/Invesco Moderate Growth Allocation Portfolio

1290 VT Moderate Growth Allocation Portfolio

EQ/MFS International Growth Portfolio,

each a series of EQ Trust

EQ/Core Plus Bond Portfolio,

a series of EQ Premier VIP Trust (“VIP Trust”)

 

Dated August 5, 2022

 

1290 Avenue of the Americas

New York, New York 10104

1-877-222-2144

 

 

This Combined Proxy Statement and Prospectus (the “Combined Proxy Statement/Prospectus”) is being furnished to owners (the “Contractholders”) of variable life insurance policies and/or variable annuity contracts or certificates (the “Contracts”) issued by Equitable Financial Life Insurance Company (“Equitable Financial”) or another insurance company (each, an “Insurance Company” and together, the “Insurance Companies”) who, as of June 30, 2022, had net premiums or contributions allocated to the investment divisions of an Insurance Company’s separate account or accounts (the “Separate Accounts”) that are invested in shares of beneficial interest in one or more the following Portfolios, each of which is a series of EQ Trust:

 

    1290 VT Low Volatility Global Equity Portfolio (“Low Volatility Global Equity Portfolio”)

 

    EQ/Franklin Growth Allocation Portfolio (“Franklin Growth Allocation Portfolio”)

 

    EQ/First Trust Moderate Growth Allocation Portfolio (“First Trust Moderate Growth Allocation Portfolio”)

 

    EQ/AXA Investment Managers Moderate Allocation Portfolio (“AXA IM Moderate Allocation Portfolio”)

 

    EQ/Invesco International Growth Portfolio (“Invesco International Growth Portfolio”)

 

    EQ/Franklin Strategic Income Portfolio (“Franklin Strategic Income Portfolio”)

 

(each, an “Acquired Portfolio” and together, the “Acquired Portfolios”).

 

For a free copy of the related Statement of Additional Information dated August 5, 2022, please call 1-877-222-2144 or write EQ Trust or VIP Trust (together, the “Trusts”) at the address above.

 

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS COMBINED PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

 

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This Combined Proxy Statement/Prospectus relates to the solicitation by the Board of Trustees (the “Board”) of EQ Trust of proxies to be used at the Joint Special Meeting of Shareholders of the Acquired Portfolios to be held at 1290 Avenue of the Americas, New York, New York 10104, on September 28, 2022, at 10:00 a.m., Eastern time, or any adjournment or postponement thereof (the “Meeting”).

 

Each Trust is an open-end management investment company registered with the Securities and Exchange Commission (the “SEC”).

 

Contractholders are being provided the opportunity to instruct the applicable Insurance Company to approve or disapprove the proposals contained in this Combined Proxy Statement/Prospectus (each, a “Proposal”) in connection with the solicitation by the Board of EQ Trust of proxies for the Meeting. This Combined Proxy Statement/Prospectus also is being furnished to the Insurance Companies as the record owners of shares and to other shareholders (including retirement plan participants) that were invested in the Acquired Portfolios as of June 30, 2022.

 

The shareholders of each Acquired Portfolio will vote separately on its reorganization. The Proposals described in this Combined Proxy Statement/Prospectus are as follows:

 

   
Proposals  

Shareholders Entitled to

Vote on the Proposal

1. To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the Low Volatility Global Equity Portfolio, a series of EQ Trust, into the EQ/Common Stock Index Portfolio, a series of EQ Trust.   Shareholders of the Low Volatility Global Equity Portfolio.
2. To approve the Plan of Reorganization and Termination with respect to the reorganization of the Franklin Growth Allocation Portfolio, a series of EQ Trust, into the EQ/JPMorgan Growth Allocation Portfolio, a series of EQ Trust.  

Shareholders of the Franklin

Growth Allocation Portfolio.

3. To approve the Plan of Reorganization and Termination with respect to the reorganization of the First Trust Moderate Growth Allocation Portfolio, a series of EQ Trust, into the EQ/Invesco Moderate Growth Allocation Portfolio, a series of EQ Trust.   Shareholders of the First Trust Moderate Growth Allocation Portfolio.
4. To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the AXA IM Moderate Allocation Portfolio, a series of EQ Trust, into the 1290 VT Moderate Growth Allocation Portfolio, a series of EQ Trust.   Shareholders of the AXA IM Moderate Allocation Portfolio.
5. To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the Invesco International Growth Portfolio, a series of EQ Trust, into the EQ/MFS International Growth Portfolio, a series of EQ Trust.   Shareholders of the Invesco International Growth Portfolio.
6. To approve the Agreement and Plan of Reorganization and Termination with respect to the reorganization of the Franklin Strategic Income Portfolio, a series of EQ Trust, into the EQ/Core Plus Bond Portfolio, a series of VIP Trust.   Shareholders of the Franklin Strategic Income Portfolio.
7. To transact other business that may properly come before the Meeting or any adjournments thereof.  

Shareholders of each Acquired

Portfolio, as applicable.

 

Each reorganization referred to in Proposals 1-6 above is referred to herein as a “Reorganization” and together as the “Reorganizations.” Each of the EQ/Common Stock Index Portfolio (“Common Stock Index Portfolio”), EQ/JPMorgan Growth Allocation Portfolio (“JPMorgan Growth Allocation Portfolio”), EQ/Invesco Moderate Growth Allocation Portfolio (“Invesco Moderate Growth Allocation Portfolio”), 1290 VT Moderate Growth Allocation Portfolio, EQ/MFS International Growth Portfolio (“MFS International Growth Portfolio”) and EQ/Core Plus Bond Portfolio (“Core Plus Bond Portfolio”) is referred to herein as an “Acquiring Portfolio” and together as the “Acquiring Portfolios.”

 

This Combined Proxy Statement/Prospectus, which you should read and retain for future reference, contains important information regarding the Proposals that you should know before voting or providing voting instructions.

 

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Additional information about each Trust has been filed with the SEC and is available, without charge, upon oral or written request. Distribution of this Combined Proxy Statement/Prospectus and proxy or voting instruction card to the Insurance Companies and other shareholders and to Contractholders is scheduled to begin on or about August 19, 2022. This Combined Proxy Statement/Prospectus and a proxy or voting instruction card also will be available at www.proxyvote.com on or about August 19, 2022. It is expected that one or more representatives of each Insurance Company will attend the Meeting in person or by proxy and will vote shares held by the Insurance Company and its affiliates in accordance with voting instructions received from its Contractholders and in accordance with voting procedures established by EQ Trust.

 

The Statement of Additional Information dated August 5, 2022, relating to the Reorganizations of the Low Volatility Global Equity Portfolio, Franklin Growth Allocation Portfolio, First Trust Moderate Growth Allocation Portfolio, AXA IM Moderate Allocation Portfolio, Invesco International Growth Portfolio and Franklin Strategic Income Portfolio (File Nos. 333-265918 and 333-265919), which includes the financial statements for the fiscal year ended December 31, 2021, for the Acquired Portfolios and the Acquiring Portfolios, has been filed with the SEC and is incorporated by reference into this Combined Proxy Statement/Prospectus. The Prospectus of EQ Trust, dated May 1, 2022, as may be supplemented, with respect to the Low Volatility Global Equity Portfolio and the Prospectus of EQ Trust, dated May 1, 2022, as may be supplemented, with respect to the Franklin Growth Allocation Portfolio, First Trust Moderate Growth Allocation Portfolio, AXA IM Moderate Allocation Portfolio, Invesco International Growth Portfolio, and Franklin Strategic Income Portfolio have been filed with the SEC (File Nos. 333-17217 and 811-07953) and are incorporated by reference into this Combined Proxy Statement/Prospectus. For a free copy of any of these documents, please call 1-877-222-2144 or write the Trusts at the address above.

 

Each Trust is subject to the informational requirements of the Securities Exchange Act of 1934, as amended. Accordingly, each Trust must file certain reports and other information with the SEC. Reports and other information about each Trust are available on the EDGAR Database on the SEC’s Internet site at http://www.sec.gov, and copies of this information may be obtained, after paying a duplicating fee, by electronic request at the following email address: [email protected]

 

Copies of EQ Trust’s most recent annual and semi-annual reports, including financial statements, previously have been delivered to Contractholders. Contractholders may request additional copies of EQ Trust’s annual or semi-annual reports, free of charge, by writing to EQ Trust at 1290 Avenue of the Americas, New York, New York 10104 or by calling 1-877-522-5035.

 

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TABLE OF CONTENTS

 

SUMMARY

     6  

The Proposed Reorganizations

     6  

PROPOSAL 1: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE LOW VOLATILITY GLOBAL EQUITY PORTFOLIO, A SERIES OF EQ TRUST, INTO THE COMMON STOCK INDEX PORTFOLIO, A SERIES OF EQ TRUST.

     8  

Comparison of Principal Risk Factors

     12  

Comparative Fee and Expense Tables

     13  

Example of Portfolio Expenses

     14  

Portfolio Turnover

     14  

Comparison of Investment Objectives, Policies and Strategies

     15  

Comparative Performance Information

     17  

Capitalization

     18  

PROPOSAL 2: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE FRANKLIN GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST, INTO THE JPMORGAN GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST.

     19  

Comparison of Principal Risk Factors

     23  

Comparative Fee and Expense Tables

     24  

Example of Portfolio Expenses

     25  

Portfolio Turnover

     26  

Comparison of Investment Objectives, Policies and Strategies

     26  

Comparative Performance Information

     29  

Capitalization

     31  

PROPOSAL 3: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE FIRST TRUST MODERATE GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST, INTO THE INVESCO MODERATE GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST

     31  

Comparison of Principal Risk Factors

     36  

Comparative Fee and Expense Tables

     36  

Example of Portfolio Expenses

     37  

Portfolio Turnover

     38  

Comparison of Investment Objectives, Policies and Strategies

     38  

Comparative Performance Information

     41  

Capitalization

     42  

PROPOSAL 4: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE AXA IM MODERATE ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST, INTO THE 1290 VT MODERATE GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST

     43  

Comparison of Principal Risk Factors

     48  

Comparative Fee and Expense Tables

     48  

Example of Portfolio Expenses

     49  

Portfolio Turnover

     50  

Comparison of Investment Objectives, Policies and Strategies

     50  

Comparative Performance Information

     54  

Capitalization

     55  

PROPOSAL 5: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE INVESCO INTERNATIONAL GROWTH PORTFOLIO, A SERIES OF EQ TRUST, INTO THE MFS INTERNATIONAL GROWTH PORTFOLIO, A SERIES OF EQ TRUST.

     56  

 

4


Comparison of Principal Risk Factors

     60  

Comparative Fee and Expense Tables

     60  

Example of Portfolio Expenses

     61  

Portfolio Turnover

     62  

Comparison of Investment Objectives, Policies and Strategies

     62  

Comparative Performance Information

     64  

Capitalization

     65  

PROPOSAL 6: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE FRANKLIN STRATEGIC INCOME PORTFOLIO, A SERIES OF EQ TRUST, INTO THE CORE PLUS BOND PORTFOLIO, A SERIES OF VIP TRUST

     65  

Comparison of Principal Risk Factors

     70  

Comparative Fee and Expense Tables

     71  

Portfolio Turnover

     72  

Comparison of Investment Objectives, Policies and Strategies

     73  

Comparative Performance Information

     75  

Capitalization

     77  

ADDITIONAL INFORMATION ABOUT THE REORGANIZATIONS

     77  

Terms of the Reorganization Agreements

     77  

Board Considerations

     79  

Potential Benefits of the Reorganizations to EIM and its Affiliates

     81  

Descriptions of Risk Factors

     82  

Federal Income Tax Consequences of the Reorganizations

     97  

Description of the Securities to Be Issued

     99  

ADDITIONAL INFORMATION ABOUT THE PORTFOLIOS

     100  

Management of EQ Trust and VIP Trust

     100  

EQ Trust

     100  

VIP Trust

     101  

The Adviser

     101  

Advisory and Administrative Fees

     103  

The Sub-Advisers

     107  

Portfolio Services

     111  

Portfolio Distribution Arrangements

     111  

Payments to Broker-Dealers and Other Financial Intermediaries

     112  

Buying and Selling Shares

     112  

How Shares Are Priced

     115  

Dividends and Other Distributions

     116  

Federal Income Tax Considerations

     117  

Portfolio Holdings Disclosure

     117  

FINANCIAL HIGHLIGHTS

     117  

VOTING INFORMATION

     133  

Voting Rights

     133  

Required Shareholder Vote

     134  

Solicitation of Proxies and Voting Instructions

     134  

Adjournment or Postponement

     135  

Submission of Certain Shareholder Proposals

     135  

Other Matters

     135  

APPENDIX A.1 Form of Plan of Reorganization and Termination

     A-1  

APPENDIX A.2 Form of Agreement and Plan of Reorganization and Termination

     A-15  

APPENDIX B More Information on Strategies and Risk Factors

     B-1  

APPENDIX C Information Regarding the Underlying ETFs

     C-1  

APPENDIX D Security Ownership of Certain Beneficial Owners

     D-1  

 

5


SUMMARY

 

You should read this entire Combined Proxy Statement/Prospectus carefully. For additional information, you should consult the applicable Plan of Reorganization and Termination and/or Agreement and Plan of Reorganization and Termination (each, a “Reorganization Agreement” and together, the “Reorganization Agreements”), copies of the forms of which are attached hereto as Appendix A.1 and A.2, respectively.

 

The Proposed Reorganizations

 

This Combined Proxy Statement/Prospectus is soliciting shareholders with amounts invested in one or more Acquired Portfolios as of June 30, 2022, to approve the Reorganization Agreement (with respect to the Acquired Portfolio(s) in which they are invested), whereby each Acquired Portfolio will be reorganized into a corresponding Acquiring Portfolio, as described below. (Each Acquired Portfolio and each Acquiring Portfolio is sometimes referred to herein as a “Portfolio,” and together, the “Portfolios.”) Each Acquired Portfolio and each Acquiring Portfolio is managed by Equitable Investment Management Group, LLC (“EIM” or the “Adviser”).

 

Among the Acquired Portfolios’ shares, each of the Low Volatility Global Equity Portfolio, the Franklin Growth Allocation Portfolio, the First Trust Moderate Growth Allocation Portfolio, the Invesco International Growth Portfolio, and the Franklin Strategic Income Portfolio has Class IB shares; and the AXA IM Moderate Allocation Portfolio has Class IB and Class K shares (together, the “Acquired Portfolio Shares”).

 

Among the Acquiring Portfolios’ shares, each of the Common Stock Index Portfolio, the JPMorgan Growth Allocation Portfolio, the Invesco Moderate Growth Allocation Portfolio, and the MFS International Growth Portfolio has Class IB shares; the Core Plus Bond Portfolio has Class B shares; and the 1290 VT Moderate Growth Allocation Portfolio has Class IB and Class K shares (together, the “Acquiring Portfolio Shares”). The rights and preferences of each class of Acquiring Portfolio Shares are substantially similar in all material respects to the rights and preferences of the corresponding class of Acquired Portfolio Shares.

 

Each Reorganization Agreement provides, with respect to a Reorganization, for:

 

    the transfer of all the assets of the Acquired Portfolio to the corresponding Acquiring Portfolio in exchange solely for Acquiring Portfolio Shares having an aggregate net asset value equal to the Acquired Portfolio’s net assets and the Acquiring Portfolio’s assumption of all the liabilities of the Acquired Portfolio;

 

    the distribution to the shareholders (for the benefit of the Separate Accounts, as applicable, and thus the Contractholders) of those Acquiring Portfolio Shares (the shareholders of each Acquired Portfolio will receive shares of the same class or a corresponding class of the corresponding Acquiring Portfolio in accordance with the procedures provided for in the applicable Reorganization Agreement); and

 

    the complete termination of the Acquired Portfolio.

 

Management is proposing the Reorganizations because it believes that the Reorganizations will permit shareholders invested in the Acquired Portfolios, which have limited prospects for future growth and/or are relatively small and therefore have a limited ability to achieve economies of scale, to invest in the corresponding Acquiring Portfolios, which in each case will result in a larger combined portfolio that invests in a similar or substantially similar asset class or asset classes and has better prospects for attracting additional assets and lowering expenses.

 

Each Acquiring Portfolio, except for the MFS International Growth Portfolio and the Core Plus Bond Portfolio, currently is subject to a lower advisory fee schedule than its corresponding Acquired Portfolio. The maximum advisory fee for the Invesco International Growth Portfolio is equal to an annual rate of 0.71% of its average daily net assets, whereas the maximum advisory fee for the MFS International Growth Portfolio is equal to an annual rate of 0.85% of its average daily net assets. However, as discussed in Proposal 5, the MFS International Growth Portfolio currently has a lower expense limitation arrangement in place than that for the Invesco International Growth Portfolio, which would offset the increase in the advisory fee. The maximum advisory fee for the Franklin Strategic Income Portfolio is equal to an annual rate of 0.59% of its average daily net assets, whereas the maximum advisory

 

6


fee for the Core Plus Bond Portfolio is equal to an annual rate of 0.60% of its average daily net assets. However, as discussed in Proposal 6, if Proposal 6 is approved, the Core Plus Bond Portfolio would have the same contractual expense cap in place as that for the Franklin Strategic Income Portfolio.

 

For each proposed Reorganization, the total net annual operating expense ratio (that is, the total annual operating expense ratio after taking into account the applicable expense limitation arrangement) of each class of shares of the Acquiring Portfolio is expected to be the same as or lower than that of the corresponding class of shares of the Acquired Portfolio for the one year after the proposed Reorganization. There is no assurance that fees and expenses will not increase after April 30, 2024, when the expense limitation arrangement for each Acquiring Portfolio will terminate if it is not renewed by the Adviser and the Board of the relevant Trust. Each Acquiring Portfolio, except for the MFS International Growth Portfolio, currently has a lower total annual operating expense ratio than its corresponding Acquired Portfolio, regardless of whether an expense limitation arrangement is in effect. EIM has agreed to pay expenses of each Reorganization that exceed an Acquired Portfolio’s expense cap set forth in its expense limitation arrangement. The estimated Reorganization expenses (excluding portfolio transaction costs, which, unless otherwise noted, will be incurred indirectly by Contractholders both before and after the Reorganization) for each Acquired Portfolio are expected to exceed its expense cap and are expected to be paid by EIM.

 

For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. As further described in “Potential Benefits of the Reorganizations to EIM and its Affiliates” below, the Portfolios’ Adviser may realize benefits in connection with the Reorganizations, such as the reduction or elimination of its obligations to waive or reimburse fees and expenses if an Acquiring Portfolio is below its expense limit or has a lower expense ratio. For a detailed description of the EQ Trust Board’s reasons for proposing the Reorganizations, see “Additional Information about the Reorganizations — Board Considerations” below.

 

A comparison of the investment objectives, policies, strategies and principal risks of each Acquired Portfolio and its corresponding Acquiring Portfolio is included in “Comparison of Investment Objectives, Policies and Strategies” and “Comparison of Principal Risk Factors” below.

 

Each Acquired Portfolio and its corresponding Acquiring Portfolio have identical purchase and redemption procedures, distribution procedures, and exchange rights. Each Portfolio offers its shares to Separate Accounts and certain other eligible investors. Shares of each Portfolio are purchased and redeemed at their net asset value without any sales load. You will not incur any sales loads or similar transaction charges as a result of a Reorganization. Each Portfolio has no minimum initial or subsequent investment requirements. Shares of each Portfolio are redeemable on any business day (normally any day on which the New York Stock Exchange is open) upon receipt of a request. All redemption requests will be processed and payment with respect thereto will normally be made within seven days after tender. Each Portfolio generally distributes most or all of its net investment income and net realized gains, if any, annually. Dividends and other distributions by each Portfolio are automatically reinvested at net asset value in shares of the distributing class of the Portfolio. For a more detailed description of the purchase and redemption procedures, distribution procedures, and exchange rights, please see “Additional Information about the Portfolios” below.

 

Subject to shareholder approval, the Reorganizations are expected to be effective at the close of business on November 4, 2022, or on a later date each Trust decides upon (the “Closing Date”). As a result of each Reorganization, each shareholder that owns shares of an Acquired Portfolio would become an owner of shares of the corresponding Acquiring Portfolio. Each such shareholder would hold, immediately after the Closing Date, shares of the same class or a corresponding class of the applicable Acquiring Portfolio (as shown in the table below) having an aggregate net asset value equal to the aggregate net asset value of shares of the class of the Acquired Portfolio that were held by the shareholder as of the Closing Date. Similarly, each Contractholder whose Contract values are invested in shares of an Acquired Portfolio would become an indirect owner of shares of the corresponding Acquiring Portfolio. Each such Contractholder would indirectly hold, immediately after the Closing Date, shares of the same class or a corresponding class of the applicable Acquiring Portfolio (as shown in the

 

7


table below) having an aggregate net asset value equal to the aggregate net asset value of shares of the class of the Acquired Portfolio that were indirectly held by the Contractholder as of the Closing Date.

 

Acquired Portfolio/Class of Shares

 

Acquiring Portfolio/Class of Shares

Low Volatility Global Equity Portfolio/Class IB   Common Stock Index Portfolio/Class IB
Franklin Growth Allocation Portfolio/Class IB   JPMorgan Growth Allocation Portfolio/Class IB
First Trust Moderate Growth Allocation Portfolio/Class IB   Invesco Moderate Growth Allocation Portfolio/Class IB
AXA IM Moderate Allocation Portfolio/Class IB   1290 VT Moderate Growth Allocation Portfolio/Class IB
AXA IM Moderate Allocation Portfolio/Class K*   1290 VT Moderate Growth Allocation Portfolio/Class K*
Invesco International Growth Portfolio/Class IB   MFS International Growth Portfolio/Class IB
Franklin Strategic Income Portfolio/Class IB**   Core Plus Bond Portfolio/Class B**

 

*   EIM is the sole shareholder of the AXA IM Moderate Allocation Portfolio’s Class K shares, which were issued to EIM in connection with EIM’s investment of seed capital. In connection with the Reorganization, EIM is expected to withdraw its seed capital. If the seed capital is withdrawn prior to the Closing Date, the AXA IM Moderate Allocation Portfolio’s Class K shares will cease operations and no Class K shares of the 1290 VT Moderate Growth Allocation Portfolio will be issued in connection with the Reorganization.
**   The rights and preferences of Class B shares of the Core Plus Bond Portfolio are substantially similar in all material respects to the rights and preferences of Class IB shares of the Franklin Strategic Income Portfolio. In addition, Class B shares of the Core Plus Bond Portfolio and Class IB shares of the Franklin Strategic Income Portfolio are each subject to a 0.25% Rule 12b-1 fee.

 

It is anticipated that the Reorganizations of the Low Volatility Global Equity Portfolio into the Common Stock Index Portfolio, the AXA IM Moderate Allocation Portfolio into the 1290 VT Moderate Growth Allocation Portfolio, the Invesco International Growth Portfolio into the MFS International Growth Portfolio, and the Franklin Strategic Income Portfolio into the Core Plus Bond Portfolio will not qualify, for federal income tax purposes, as tax-free reorganizations, and that the Reorganizations will be treated as taxable transactions. The Reorganizations of the Franklin Growth Allocation Portfolio into the JPMorgan Growth Allocation Portfolio and the First Trust Moderate Growth Allocation Portfolio into the Invesco Moderate Growth Allocation Portfolio are intended to qualify, for federal income tax purposes, as tax-free reorganizations, and the Acquired Portfolios will receive a legal opinion to that effect. Contractholders who had premiums or contributions allocated to the investment divisions of the Separate Accounts that are invested in Acquired Portfolio shares will not recognize any gain or loss as a result of the Reorganizations, whether such Reorganizations are taxable or tax-free, and the Trusts will receive a legal opinion to that effect. Please see “Additional Information about the Reorganizations — Federal Income Tax Consequences of the Reorganizations” below for further information.

 

The Board of each respective Trust has unanimously approved the applicable Reorganization Agreement with respect to each Acquired Portfolio and each Acquiring Portfolio, respectively. Accordingly, the Board of EQ Trust is submitting each Reorganization Agreement for approval by each Acquired Portfolio’s shareholders. In considering whether to approve the Proposals, you should review the discussion of the Proposals set forth below. In addition, you should review the information in this Combined Proxy Statement/Prospectus that relates to each Proposal and Reorganization Agreement generally. The Board of EQ Trust recommends that you vote “FOR” the relevant Proposal(s) to approve the Reorganization Agreement(s).

 

PROPOSAL 1: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE LOW VOLATILITY GLOBAL EQUITY PORTFOLIO, A SERIES OF EQ TRUST, INTO THE COMMON STOCK INDEX PORTFOLIO, A SERIES OF EQ TRUST.

 

This Proposal 1 requests your approval of a Reorganization Agreement pursuant to which the Low Volatility Global Equity Portfolio will be reorganized into the Common Stock Index Portfolio. In considering whether you should approve the Proposal, you should note that:

 

    The Portfolios have broadly similar investment objectives. The Low Volatility Global Equity Portfolio seeks long-term capital appreciation with lower absolute volatility than the broad equity markets. The Common Stock Index Portfolio seeks to achieve a total return before expenses that approximates the total return performance of the Russell 3000® Index, including reinvestment of dividends, at a risk level consistent with that of the Russell 3000 Index. Each Portfolio seeks capital appreciation as a primary component of its investment objective.

 

8


    Both Portfolios provide diversified exposure to equity securities. Each Portfolio normally invests (either directly or indirectly, as described below) at least 80% of its net assets in equity securities, and each Portfolio may invest in large-cap, mid-cap and small cap companies.

 

    There are, however, differences between the two Portfolios’ principal investment policies and strategies of which you should be aware. These are set forth immediately below. For a detailed comparison of the Portfolios’ investment policies and strategies, see “Comparison of Investment Objectives, Policies and Strategies” below.

 

    The Low Volatility Global Equity Portfolio operates under a “fund-of-funds” structure and invests in securities and other instruments indirectly, through investments in Underlying ETFs (as defined below). Under normal market conditions, the Low Volatility Global Equity Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in equity securities through investments in exchange-traded securities of other investment companies and investment vehicles (“Underlying ETFs”). The Low Volatility Global Equity Portfolio invests primarily in ETFs that, in turn, invest substantially all of their assets in equity securities that are believed to have lower absolute volatility than the markets in which the ETFs invest. The Low Volatility Global Equity Portfolio invests its assets in ETFs in accordance with weightings determined by the Adviser. The Low Volatility Global Equity Portfolio may invest in ETFs that invest in securities of companies of any size in developed and emerging markets throughout the world.

 

    Under normal market conditions, the Low Volatility Global Equity Portfolio expects to invest in ETFs such that no less than approximately 40% (or 30%, if market conditions are not deemed favorable by the Portfolio’s management) of the Portfolio’s net assets will be indirectly invested in foreign securities. Under normal market conditions, the Portfolio will allocate its assets among at least three countries (one of which may be the United States). Currently, the Portfolio intends to invest (through ETFs) approximately 50% of its assets in U.S. securities. Among U.S. securities, the Portfolio intends to maintain approximately 30% exposure to large-cap issuers and 20% to mid- and small-cap issuers. The Portfolio intends to invest (through ETFs) the remaining 50% of its assets in foreign securities, including maintaining approximately 15% exposure to securities of companies in emerging market countries. These percentages can deviate by up to 15% of the Portfolio’s assets. The Adviser may adjust these strategic asset allocations from time to time.

 

    The Adviser seeks to select a combination of Underlying ETFs that together provide the targeted geographic and market capitalization exposure for the Low Volatility Global Equity Portfolio, and to construct a diversified portfolio of ETFs that provides exposure to various methodologies used to reduce volatility. Individual ETF weights are based on a variety of factors, including the Underlying ETF’s exposure to the desired geographic region or market cap segment, investment objective(s), total return, portfolio holdings, volatility, expenses and liquidity.

 

    In general, each of the Underlying ETFs in which the Low Volatility Global Equity Portfolio invests is an index-based ETF designed so that its performance, before fees and expenses, will correspond closely with that of the index it tracks.

 

    In contrast to the Low Volatility Global Equity Portfolio, the Common Stock Index Portfolio invests in securities and other instruments directly and employs an indexing strategy. The Common Stock Index Portfolio generally invests at least 80% of its net assets, plus borrowings for investment purposes, in common stocks of companies represented in the Russell 3000® Index (the “Russell 3000”). The Russell 3000 is an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on total market capitalizations, which represents approximately 98% of the investable U.S. equity market.

 

   

The Common Stock Index Portfolio’s investments are selected by a stratified sampling construction process in which the Portfolio’s sub-adviser selects a subset of the 3,000

 

9


 

companies in the Russell 3000 based on the sub-adviser’s analysis of key risk factors and other characteristics. Such factors include industry weightings, market capitalizations, return variability, and yield.

 

    The Common Stock Index Portfolio may purchase or sell futures contracts in lieu of investing directly in equity securities themselves.

 

    Each Portfolio’s principal risks include market risk, equity risk, portfolio management risk, large-cap company risk, mid-cap and small-cap company risk, and securities lending risk. The Low Volatility Global Equity Portfolio is also subject to volatility risk, foreign securities risk, risks relating to investments in underlying ETFs, and micro-cap company risk as principal risks, which are not principal risks of the Common Stock Index Portfolio. The Low Volatility Global Equity Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks. The Common Stock Index Portfolio is also subject to index strategy risk, sector risk, and derivatives risk as principal risks, which are not principal risks of the Low Volatility Global Equity Portfolio. For a detailed comparison of the Portfolios’ principal risks, see “Comparison of Principal Risk Factors” below.

 

    EIM serves as the investment adviser for both Portfolios. EIM does not currently employ a sub-adviser for the Low Volatility Global Equity Portfolio. Subject to EIM’s oversight, AllianceBernstein L.P. (“AllianceBernstein” or the “Sub-Adviser”), an affiliate of EIM, currently serves as the sub-adviser to the Common Stock Index Portfolio. EIM will advise, and it is anticipated that AllianceBernstein will continue to sub-advise, the Common Stock Index Portfolio after the Reorganization. Equitable Investment Management, LLC serves as the administrator for both Portfolios.

 

    EIM is responsible for overseeing sub-advisers and recommending their hiring, termination and replacement to the Board of Trustees. EIM has been granted relief by the SEC to hire, terminate and replace sub-advisers and amend sub-advisory agreements subject to the approval of the Board of Trustees and without obtaining shareholder approval. However, EIM may not enter into a sub-advisory agreement on behalf of a Portfolio with an “affiliated person” of EIM, such as AllianceBernstein, unless the sub-advisory agreement, including compensation, is approved by the Portfolio’s shareholders. Such approval has previously been obtained with respect to the sub-advisory agreement, including compensation, between EIM and AllianceBernstein with respect to the Common Stock Index Portfolio. The relief does not extend to any increase in the advisory fee paid by a Portfolio to the Adviser; any such increase would be subject to shareholder approval. For a detailed description of the Adviser and the Sub-Adviser to the Common Stock Index Portfolio, please see “Additional Information about the Portfolios — The Adviser” and “ — The Sub-Advisers” below.

 

    The Low Volatility Global Equity Portfolio and the Common Stock Index Portfolio had net assets of approximately $4.6 million and $7.2 billion, respectively, as of March 31, 2022. Thus, if the Reorganization of the Low Volatility Global Equity Portfolio into the Common Stock Index Portfolio had been in effect on that date, the combined Portfolio would have had net assets of approximately $7.2 billion.

 

    As shown in the “Summary” above, the shareholders of Class IB of the Low Volatility Global Equity Portfolio will receive Class IB shares of the Common Stock Index Portfolio pursuant to the Reorganization. Shareholders will not pay any sales charges in connection with the Reorganization. Please see “Comparative Fee and Expense Tables,” “Additional Information about the Reorganizations” and “Additional Information about the Portfolios” below for more information.

 

   

It is estimated that the total annual operating expense ratios before and after taking into account the expense limitation arrangement (described below) for the Common Stock Index Portfolio’s Class IB shares for the fiscal year following the Reorganization will be 0.67% and 0.67%, respectively, which are lower than the total annual operating expense ratios (including acquired fund fees and expenses) before and

 

10


 

after taking into account the expense limitation arrangement (described below) for the Low Volatility Global Equity Portfolio’s Class IB shares for the fiscal year ended December 31, 2021, which were 1.55% and 0.90%, respectively. For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. There is no assurance that fees and expenses would not increase after April 30, 2024, when the expense limitation arrangement (described below) for the Common Stock Index Portfolio would terminate if it is not renewed by EIM and the Board of Trustees.

 

    The Common Stock Index Portfolio is subject to a lower advisory fee schedule. The maximum advisory fee for the Low Volatility Global Equity Portfolio is equal to an annual rate of 0.50% of its average daily net assets, whereas the maximum advisory fee for the Common Stock Index Portfolio is equal to an annual rate of 0.35% of its average daily net assets.

 

    The Portfolios are subject to the same administration fee schedule. Each Portfolio pays Equitable Investment Management, LLC, the administrator (the “Administrator”), its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $30,000. For purposes of calculating the asset-based administration fee, the assets of the Portfolios and multiple other “single-advised” portfolios of EQ Trust (together, the “Single-Advised Portfolios”) are aggregated. The Portfolios’ asset-based administration fee rates are as follows: 0.100% of the first $30 billion of the aggregate average daily net assets of the Single-Advised Portfolios; 0.0975% of the next $10 billion; 0.0950% of the next $5 billion; 0.0775% of the next $10 billion; 0.0750% of the next $30 billion; and 0.0725% thereafter. The asset-based administration fee is calculated and billed monthly. A complete list of the Single-Advised Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

    The Common Stock Index Portfolio is subject to a lower contractual expense cap, and the expense limitation arrangement for the Common Stock Index Portfolio extends one year beyond that for the Low Volatility Global Equity Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the Low Volatility Global Equity Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.90% for Class IB shares of the Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the Common Stock Index Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, acquired fund fees and expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.68% for Class IB shares of the Portfolio.

 

    Unlike the Low Volatility Global Equity Portfolio’s contractual expense cap, the Common Stock Index Portfolio’s contractual expense cap excludes acquired fund fees and expenses, meaning that any such expenses may cause the Common Stock Index Portfolio’s annual operating expenses to exceed its contractual expense cap. However, it is expected that the Common Stock Index Portfolio will invest in other investment companies only to a limited extent, if at all.

 

    The Class IB shares of the Portfolios are each subject to a Rule 12b-1 fee equal to an annual rate of 0.25% of the average daily net assets of the share class.

 

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    For a more detailed description of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below.

 

    The Class IB shares of the Common Stock Index Portfolio outperformed the Class IB shares of the Low Volatility Global Equity Portfolio for the one- and five-year periods ended December 31, 2021. Please see “Comparative Performance Information” below.

 

    Following the Reorganization, the combined Portfolio will be managed in accordance with the investment objective, policies and strategies of the Common Stock Index Portfolio. It is not expected that the Common Stock Index Portfolio will revise any of its investment policies following the Reorganization to reflect those of the Low Volatility Global Equity Portfolio. If the Reorganization is approved, all of the Low Volatility Global Equity Portfolio’s assets (“Transferred Assets”) on the Closing Date will be transferred to the Common Stock Index Portfolio. However, it is anticipated that immediately prior to the Closing Date, the Low Volatility Global Equity Portfolio will liquidate substantially all of its securities holdings (that is, the shares of the Underlying ETFs in which it invests) and hold cash. Therefore, it is anticipated that the Transferred Assets will consist of cash. The portion of the Low Volatility Global Equity Portfolio’s assets anticipated to be liquidated in connection with the Reorganization is based on EIM’s assessment of the compatibility of the Portfolio’s holdings with the Common Stock Index Portfolio’s portfolio composition, investment strategies and investment restrictions. The sale of portfolio holdings by the Low Volatility Global Equity Portfolio in connection with the Reorganization may result in the Low Volatility Global Equity Portfolio selling securities at a disadvantageous time and price and could result in its realizing gains (or losses) that would not otherwise have been realized and its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. The sale of all of the Low Volatility Global Equity Portfolio’s portfolio holdings is expected to result in portfolio transaction costs of approximately $671 (1.5 basis points). It is also expected that, over time, the Common Stock Index Portfolio will use the Transferred Assets to invest in securities, as well as other investments, consistent with its principal investment strategy. The purchase of portfolio securities by the Common Stock Index Portfolio following the Reorganization may result in the Common Stock Index Portfolio buying securities at a disadvantageous time and price and could result in its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. Such transaction costs could be significant, but EIM believes that such costs would be reasonable in relation to the anticipated benefits of the Reorganization. Contractholders will not recognize any gain or loss for federal income tax purposes as a result of the Reorganization.

 

    EIM has agreed to pay expenses of the Reorganization that exceed the Low Volatility Global Equity Portfolio’s expense limitation set forth in its expense limitation agreement. The Reorganization expenses for the Low Volatility Global Equity Portfolio, which are estimated to be $11,625 (excluding portfolio transaction costs, which will be incurred indirectly by Contractholders both before and after the Reorganization), exceed the expense limit and are expected to be paid by EIM.

 

Comparison of Principal Risk Factors

 

An investment in a Portfolio is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in a Portfolio. There can be no assurance that a Portfolio will achieve its investment objective.

 

The following table compares the principal risks of an investment in each Portfolio. For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). For an explanation of each risk, see “Additional Information about the Reorganizations — Descriptions of Risk Factors” below. The Low

 

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Volatility Global Equity Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks.

 

Risks

   Common Stock
Index Portfolio
    Low Volatility Global
Equity Portfolio
 

Derivatives Risk

     X    

Equity Risk

     X     X

Foreign Securities Risk

       X

Currency Risk

       X  

Emerging Markets Risk

       X  

Index Strategy Risk

     X  

Large-Cap Company Risk

     X     X  

Market Risk

     X     X

Micro-Cap Company Risk

       X  

Mid-Cap and Small-Cap Company Risk

     X       X  

Portfolio Management Risk

     X       X  

Risks Related to Investments in Underlying ETFs

       X

Sector Risk

     X    

Securities Lending Risk

     X       X  

Volatility Risk

       X

 

Comparative Fee and Expense Tables

 

The following tables show the fees and expenses of the Class IB Shares of the Low Volatility Global Equity Portfolio and the Class IB Shares of the Common Stock Index Portfolio and the estimated pro forma fees and expenses of the Class IB Shares of the Common Stock Index Portfolio after giving effect to the proposed Reorganization. Fees and expenses for each Portfolio are based on those incurred by the relevant class of its shares for the fiscal year ended December 31, 2021. The pro forma fees and expenses of the Common Stock Index Portfolio shares assume that the Reorganization was in effect for the year ended December 31, 2021. The tables below do not reflect any Contract-related fees and expenses, which would increase overall fees and expenses. See a Contract prospectus for a description of those fees and expenses.

 

Shareholder Fees

(fees paid directly from your investment)

 

Low Volatility Global Equity Portfolio

  

Common Stock Index Portfolio

  

Pro Forma Common Stock Index Portfolio
(assuming the
Reorganization is approved)

Not Applicable.

   Not Applicable.    Not Applicable.

 

Annual Operating Expenses

(expenses that you may pay each year as a percentage of the value of your investment)

 

     Low Volatility
Global Equity
Portfolio
    Common Stock
Index Portfolio
    Pro Forma Common Stock
Index Portfolio (assuming the
Reorganization is approved)
 
     Class IB     Class IB     Class IB  

Management Fee

     0.50     0.31     0.31

Distribution and/or Service Fees (12b-1 fees)

     0.25     0.25     0.25

Other Expenses

     0.58     0.12     0.11

Acquired Fund Fees and Expenses

     0.22     0.00     0.00

Total Annual Portfolio Operating Expenses

     1.55     0.68     0.67

Fee Waiver and/or Expense Reimbursement†

     (0.65 )%      (0.00 )%      (0.00 )% 

Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement

     0.90     0.68     0.67

 

 

Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of (1) the Low Volatility Global Equity Portfolio through April 30, 2023 (unless the Board of Trustees consents to an

 

13


 

earlier revision or termination of the arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.90% for Class IB shares of the Portfolio, and (2) the Common Stock Index Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, acquired fund fees and expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.68% for Class IB shares of the Portfolio. The expense limitation agreements may be terminated by EIM at any time after April 30, 2023 or April 30, 2024, as applicable. EIM may be reimbursed the amount of any such payments or waivers made after June 30, 2020, in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and a Portfolio’s expense ratio, after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower. If the Acquired Portfolio is reorganized, EIM will forgo the recoupment of any amounts waived or reimbursed with respect to the Acquired Portfolio prior to its Reorganization.

 

Example of Portfolio Expenses

 

This example is intended to help you compare the costs of investing in the Portfolios with the cost of investing in other investment options. The example assumes that:

 

    You invest $10,000 in a Portfolio for the time periods indicated;

 

    Your investment has a 5% return each year;

 

    The Portfolio’s operating expenses remain the same; and

 

    The expense limitation arrangement with respect to the Portfolio is not renewed.

 

This example does not reflect any Contract-related fees and expenses, including redemption fees (if any) at the Contract level. If such fees and expenses were reflected, the total expenses would be higher. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     1 Year      3 Years      5 Years      10 Years  

Low Volatility Global Equity Portfolio

           

Class IB

   $ 92      $ 426      $ 783      $ 1,790  

Common Stock Index Portfolio

           

Class IB

   $ 69      $ 218      $ 379      $ 847  

Pro Forma Common Stock Index Portfolio

(assuming the Reorganization is approved)

           

Class IB

   $ 68      $ 214      $ 373      $ 835  

 

Portfolio Turnover

 

Each Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Portfolio’s performance. During the fiscal year ended December 31, 2021, the portfolio turnover rates for each of the Low Volatility Global Equity Portfolio and the Common Stock Index Portfolio were 3% and 3%, respectively, of the average value of its portfolio.

 

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Comparison of Investment Objectives, Policies and Strategies

 

The following table compares the investment objectives and principal investment policies and strategies of the Low Volatility Global Equity Portfolio with those of the Common Stock Index Portfolio. The Board of EQ Trust may change the investment objective of a Portfolio without a vote of that Portfolio’s shareholders. For more detailed information about each Portfolio’s investment strategies and risks, see Appendix B.

 

Acquiring Portfolio

 

Acquired Portfolio

Common Stock Index Portfolio

 

Low Volatility Global Equity Portfolio

Investment Objective   Investment Objective
Seeks to achieve a total return before expenses that approximates the total return performance of the Russell 3000® Index, including reinvestment of dividends, at a risk level consistent with that of the Russell 3000 Index.   Seeks long-term capital appreciation with lower absolute volatility than the broad equity markets.
Principal Investment Strategies   Principal Investment Strategies
The Portfolio generally invests at least 80% of its net assets, plus borrowings for investment purposes, in common stocks of companies represented in the Russell 3000® Index (“Russell 3000”). The Russell 3000 is an unmanaged index that measures the performance of the 3,000 largest U.S. companies based on total market capitalizations, which represents approximately 98% of the investable U.S. equity market. The Portfolio may purchase or sell futures contracts in lieu of investing directly in equity securities themselves.   Under normal market conditions, the Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in equity securities. The Portfolio will invest in equity securities through investments in ETFs. The ETFs in which the Portfolio may invest are referred to herein as the “Underlying ETFs.” ETFs are investment companies or other investment vehicles whose shares are listed and traded on U.S. stock exchanges or otherwise traded in the over-the-counter market and may be purchased and sold throughout the trading day based on their market price. Generally, an ETF seeks to track a securities index or a basket of securities that an “index provider” (such as Standard & Poor’s, Dow Jones, Russell or Morgan Stanley Capital International (“MSCI”)) selects as representative of a market, market segment, industry sector, country or geographic region. An index-based ETF generally holds the same stocks or bonds as the index it seeks to track (or it may hold a representative sample of such securities). Accordingly, an index-based ETF is designed so that its performance, before fees and expenses, will correspond closely with that of the index it seeks to track. ETFs may also be actively managed.
No corresponding strategy.   The Portfolio invests primarily in ETFs that invest substantially all of their assets in equity securities that are believed to have lower absolute volatility than the markets in which the ETF invests. Volatility is one way to measure risk and, in this context, refers to the tendency of investments and markets to fluctuate over time. Stocks that exhibit lower absolute volatility may, over a market cycle, be able to earn investment returns comparable to market returns but with less volatility than the markets.
The Portfolio’s investments are selected by a stratified sampling construction process in which the Portfolio’s sub-adviser selects a subset of the 3,000 companies in the Russell 3000 based on the sub-adviser’s analysis of key risk factors and other characteristics. Such factors include industry weightings, market capitalizations, return variability, and yield. This strategy is commonly referred to as an indexing strategy.   No corresponding strategy.
No corresponding strategy.   The Portfolio may invest in ETFs that invest in securities of companies of any size in developed and emerging markets throughout the world. Under normal market conditions, the Portfolio expects to invest in ETFs such that no less than approximately 40% (or 30%, if market conditions are not deemed favorable by the Portfolio’s management) of the Portfolio’s net assets will be indirectly invested in foreign securities. Under normal market conditions, the Portfolio will allocate its assets among at least three countries (one of which may be the United States).

 

15


Acquiring Portfolio

 

Acquired Portfolio

Common Stock Index Portfolio

 

Low Volatility Global Equity Portfolio

No corresponding strategy.   The Portfolio invests its assets in ETFs in accordance with weightings determined by EIM, the Adviser. EIM uses a two-stage asset allocation process to create an investment portfolio of ETFs for the Portfolio.
No corresponding strategy.   The first stage involves a strategic asset allocation that is intended to achieve a desired risk/return profile for the Portfolio, while providing broad exposure to U.S. and foreign securities. In this stage, EIM decides what portion of the Portfolio’s assets should be invested in various geographic regions and market capitalization segments based on an evaluation of the potential return characteristics and risks of the particular asset classes in which the Portfolio may invest.
No corresponding strategy.   Currently, the Portfolio intends to invest (through ETFs) approximately 50% of its assets in U.S. securities. Among U.S. securities, the Portfolio intends to maintain approximately 30% exposure to large-cap issuers and 20% to mid- and small-cap issuers. The Portfolio intends to invest (through ETFs) the remaining 50% of its assets in foreign securities, including maintaining approximately 15% exposure to securities of companies in emerging market countries. These percentages can deviate by up to 15% of the Portfolio’s assets. The Adviser may adjust these strategic asset allocations from time to time.
No corresponding strategy.   The second stage of this process involves the selection of Underlying ETFs within each of the geographic regions and market capitalization segments identified as a result of the first stage of the investment process. The Adviser seeks to select a combination of Underlying ETFs that together provide the targeted geographic and market capitalization exposure for the Portfolio. In selecting the Underlying ETFs, the Adviser also seeks to construct a diversified portfolio of ETFs that provides exposure to various methodologies used to reduce volatility. Individual ETF weights are based on a variety of factors, including the Underlying ETF’s exposure to the desired geographic region or market cap segment, investment objective(s), total return, portfolio holdings, volatility, expenses and liquidity.
No corresponding strategy.   For purposes of complying with the Portfolio’s investment policies, the Adviser will identify Underlying ETFs in which to invest by reference to such Underlying ETFs’ investment policies at the time of investment. An Underlying ETF that changes its investment policies subsequent to the time of the Portfolio’s investment may continue to be considered an appropriate investment for purposes of the policy. The Adviser may add new Underlying ETFs or replace or eliminate existing Underlying ETFs without notice or shareholder approval. The Underlying ETFs have been selected to represent a reasonable spectrum of investment options for the Portfolio. The Adviser may sell the Portfolio’s holdings for a variety of reasons, including to invest in an Underlying ETF believed to offer superior investment opportunities. The Portfolio may hold cash or invest in short-term paper and other short-term investments (instead of allocating investments to an Underlying ETF) as deemed appropriate by the Adviser.
The Portfolio may lend its portfolio securities to earn additional income.   Same.

 

The Low Volatility Global Equity Portfolio and the Common Stock Index Portfolio have identical fundamental investment policies relating to borrowing, concentration, lending, underwriting, issuing senior securities, and investing in commodities and real estate. Fundamental investment policies may be changed only by a vote of a Portfolio’s shareholders. More detailed information about the fundamental investment policies is available in the Statement of Additional Information.

 

16


Comparative Performance Information

 

The bar charts and tables below provide some indication of the risks of investing in each Portfolio by showing changes in each Portfolio’s performance from year to year and by showing how the Low Volatility Global Equity Portfolio’s average annual total returns for the past one- and five-year and since inception periods through December 31, 2021, and the Common Stock Index Portfolio’s average annual total returns for the past one-, five- and ten-year periods through December 31, 2021, compared to the returns of a broad-based securities market index. The additional broad-based securities market index for the Low Volatility Global Equity Portfolio shows how the Portfolio’s performance compared with the returns of another index that has characteristics relevant to the Portfolio’s investment strategies. Past performance is not an indication of future performance.

 

After the close of business on January 12, 2022, operations for Class K shares of the Low Volatility Global Equity Portfolio ceased and shares were fully redeemed. Class K shares of the Low Volatility Global Equity Portfolio are not subject to the Reorganization.

 

The performance results do not reflect any Contract-related fees and expenses, which would reduce the performance results.

 

The Common Stock Index Portfolio will be the accounting survivor of the Reorganization. As such, the Common Stock Index Portfolio will continue to have the same performance history following the Reorganization as it had prior to the Reorganization.

 

Low Volatility Global Equity Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

10.03% (2019 1st Quarter)

  

Worst quarter (% and time period)

-20.64% (2020 1st Quarter)

 

Common Stock Index Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

21.68% (2020 2nd Quarter)

  

Worst quarter (% and time period)

-20.88% (2020 1st Quarter)

 

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Low Volatility Global Equity Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Five
Years
     Since
Inception

(10/28/2013)
 

Low Volatility Global Equity Portfolio — Class IB Shares

     15.38        9.30        7.66  

MSCI ACWI Minimum Volatility (Net) Index (reflects no deduction for fees, expenses, or taxes, except foreign withholding taxes)

     13.94        10.46        8.95  

MSCI ACWI (Net) Index (reflects no deduction for fees, expenses, or taxes, except foreign withholding taxes)

     18.54        14.40        10.18  

 

Common Stock Index Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Five
Years
     Ten
Years
 

Common Stock Index Portfolio — Class IB Shares

     24.93        17.20        15.53  

Russell 3000® Index (reflects no deduction for fees, expenses, or taxes)

     25.66        17.97        16.30  

 

Capitalization

 

The following table shows the capitalization of each Portfolio as of June 30, 2022, and of the Common Stock Index Portfolio on a pro forma combined basis as of June 30, 2022, after giving effect to the proposed Reorganization. Pro forma net assets may not total and net asset values per share may not recalculate due to rounding of net assets.

 

     Net Assets
(in millions)
     Net Asset Value
Per Share
     Shares
Outstanding
 

Common Stock Index Portfolio Class IA Shares†

   $ 4,295.5      $ 37.92        113,282,787  

Low Volatility Global Equity Portfolio Class IB Shares

   $ 4.4      $ 12.28        357,358  

Common Stock Index Portfolio Class IB Shares

   $ 1,595.3      $ 37.64        42,379,953  

Adjustments*

   $ 0.0           (238,599

Pro forma Common Stock Index Portfolio Class IB Shares (assuming the Reorganization is approved)

   $ 1,599.7      $ 37.64        42,498,712  

Total Pro forma Net Assets (assuming the Reorganization is approved)**

   $ 5,895.2        

 

 

*   The adjustments reflect the exchange of Low Volatility Global Equity Portfolio’s shares for Common Stock Index Portfolio’s shares.
**   Adjusted to reflect Reorganization costs and to reflect that Class K shares of the Low Volatility Global Equity Portfolio ceased operations as of January 12, 2022.
  Class IA Shares are not impacted by the Reorganization.

 

AFTER CAREFUL CONSIDERATION, THE BOARD OF EQ TRUST UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT WITH RESPECT TO THE LOW VOLATILITY GLOBAL EQUITY PORTFOLIO. ACCORDINGLY, THE BOARD OF EQ TRUST HAS SUBMITTED THE REORGANIZATION AGREEMENT FOR APPROVAL BY THE LOW VOLATILITY GLOBAL EQUITY PORTFOLIO’S SHAREHOLDERS. THE BOARD OF EQ TRUST RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 1.

 

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PROPOSAL 2: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE FRANKLIN GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST, INTO THE JPMORGAN GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST.

 

This Proposal 2 requests your approval of a Reorganization Agreement pursuant to which the Franklin Growth Allocation Portfolio will be reorganized into the JPMorgan Growth Allocation Portfolio. In considering whether you should approve the Proposal, you should note that:

 

    The Portfolios have substantially similar investment objectives. The Franklin Growth Allocation Portfolio seeks long-term capital appreciation while managing portfolio volatility. The JPMorgan Growth Allocation Portfolio seeks to achieve long-term capital appreciation with an emphasis on risk-adjusted returns and managing volatility in the Portfolio. Although the Portfolios’ investment objectives are stated differently, the investment objectives do not differ materially.

 

    Both Portfolios provide diversified exposure to equity securities and fixed income securities. Both Portfolios target a long-term asset allocation of approximately 65% of assets in equity securities and 35% of assets in fixed income securities. Both Portfolios are sub-advised by a single sub-adviser, and each Portfolio’s respective sub-adviser may rebalance its Portfolio’s assets to maintain the target allocations. Both Portfolios may invest in ETFs, large-, mid- and small-cap companies, foreign developed markets securities, and investment grade securities. In addition, each Portfolio’s respective sub-adviser implements a proprietary volatility management strategy that seeks to reduce the Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility. During such times, each Portfolio’s overall equity exposure may deviate significantly from its strategic asset allocation and could be substantially less than 65% of the Portfolio’s assets (and could be 0%). Both Portfolios also may invest in derivatives, including futures contracts and currency forwards, for a variety of purposes, including to implement the volatility management strategy.

 

    There are, however, differences between the two Portfolios’ principal investment policies and strategies of which you should be aware. These are set forth immediately below. For a detailed comparison of the Portfolios’ investment policies and strategies, see “Comparison of Investment Objectives, Policies and Strategies” below.

 

    The Franklin Growth Allocation Portfolio’s equity allocation will be invested in the following equity asset categories: U.S. Large Cap Equity, U.S. Mid Cap Equity, U.S. Small Cap Equity, and International Equity (excluding emerging markets). The Portfolio’s current target is to invest approximately the following percentages of its net assets in instruments that provide exposure to these equity asset categories: U.S. Large Cap Equity (34%), U.S. Mid Cap Equity (4%), U.S. Small Cap Equity (2%), and International Equity (25%). The sub-adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category. Securities in which the Portfolio may invest may be denominated in any currency.

 

    Substantially all of the Franklin Growth Allocation Portfolio’s fixed income allocation will be invested in ETFs and in instruments that provide exposure to the corporate debt asset category. In selecting the Portfolio’s investments in fixed income securities, the sub-adviser seeks to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years.

 

   

In seeking to reduce the Franklin Growth Allocation Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility, the sub-adviser will implement a volatility management strategy. To implement this volatility management strategy, the sub-adviser’s analysis will emphasize short-term market movements while also considering market correlations over longer-term periods. When the expected market volatility increases to a certain level as determined by the sub-adviser based on its volatility management strategy, the Portfolio may reduce its exposure to equity investments by shorting equity index futures or by

 

19


 

investing up to 100% of its target equity allocation in cash or cash equivalents. Under normal market conditions, the Franklin Growth Allocation Portfolio seeks to maintain, over an extended period of years, an average annualized volatility in its daily equity returns of not more than 20%.

 

    The JPMorgan Growth Allocation Portfolio, under normal circumstances, invests primarily in a combination of ETFs, futures contracts, and individual equity and fixed income securities that provide exposure to global equity markets and U.S. Treasuries. The Sub-Adviser may decrease the JPMorgan Growth Allocation Portfolio’s equity exposure to 20% or less of net assets, and may increase the Portfolio’s fixed income exposure to 80% or more of net assets, based on a quantitatively-driven risk management framework, described below. However, under normal market conditions, the JPMorgan Growth Allocation Portfolio’s net allocation to equity or fixed income securities will not increase or decrease by more than 5% of net assets in a day.

 

    The JPMorgan Growth Allocation Portfolio’s equity allocation will be invested in the following equity asset classes: U.S. Large Cap Equity, U.S. Small Cap Equity, United Kingdom Equity, European Equity, and Japanese Equity. The Portfolio’s equity investments will be allocated among discrete portions of the Portfolio that will invest in securities included in the Standard & Poor’s 500 Composite Stock Index, the Russell 2000 Index, the FTSE 100 Index, the DJ EuroSTOXX 50 Index, and the TOPIX Index, respectively, and in ETFs and futures contracts that provide exposure to these indexes and substantially similar indexes. The Portfolio will invest in these securities and other instruments in a manner that is intended to track the performance (before fees and expenses) of the relevant index. The sub-adviser may allocate the Portfolio’s investments among these indices based on its assessment of risk in the equity markets relative to potential return.

 

    The JPMorgan Growth Allocation Portfolio’s fixed income allocation will be invested in the U.S. Treasuries asset class. The Portfolio’s fixed income investments will consist primarily of investments in securities included in the Bloomberg Intermediate U.S. Treasury Index and in ETFs and futures contracts that provide exposure to the index. The JPMorgan Growth Allocation Portfolio will invest in these securities and other instruments in a manner that is intended to track the performance (before fees and expenses) of the index. The Bloomberg Intermediate U.S. Treasury Index is a market-value weighted index that measures U.S. dollar-denominated, fixed rate, nominal debt issued by the U.S. Treasury with maturities of 1 to 9.9999 years to maturity.

 

    The JPMorgan Growth Allocation Portfolio uses a strategy that is commonly referred to as an indexing strategy. The Portfolio may use a replication technique or sampling approach to execute its indexing strategy.

 

    The sub-adviser for the JPMorgan Growth Allocation Portfolio uses a quantitatively-driven risk management framework to determine whether to decrease the Portfolio’s equity exposure and increase the Portfolio’s fixed income exposure. The risk management framework integrates quantitative momentum and volatility models and signals to make systematic adjustments to the Portfolio’s strategic long-term asset allocation in order to determine a risk managed asset allocation.

 

    The Portfolio’s sub-adviser uses momentum signals to identify adverse market environments. The sub-adviser believes that negative momentum indicates future periods of negative investment returns and increased volatility. When negative momentum deteriorates below a pre-set threshold determined by the sub-adviser based on its proprietary momentum-based model, the sub-adviser will reduce, sometimes significantly, the Portfolio’s exposure to the particular asset class exhibiting the negative momentum. To reduce the Portfolio’s exposure to a particular asset class, the Sub-Adviser will primarily use derivatives, but may also sell physical securities. The sub-adviser may reduce the Portfolio’s exposure to a particular asset class to 0% if the momentum indicator becomes sufficiently negative for that asset class. The sub-adviser will reestablish the Portfolio’s exposure to an asset class once the market environment improves and momentum strengthens to surpass a pre-set threshold determined by the sub-adviser based on its proprietary model.

 

20


    To implement volatility management, the Portfolio’s sub-adviser will monitor forecasted annualized volatility of the Portfolio’s returns, placing a greater weight on recent historic data. When the forecasted volatility is expected to exceed a pre-set threshold determined by the sub-adviser based on its proprietary volatility-based model, the sub-adviser will attempt to reduce the volatility below the threshold. To attempt to reduce the volatility, the Portfolio’s sub-adviser will primarily use derivatives, but may also sell physical securities. The sub-adviser may use these methods as often as daily to reduce the Portfolio’s expected volatility level. Due to market conditions or other factors, the actual or realized volatility of the Portfolio for any particular period of time may be materially above or below the pre-set threshold.

 

    Each Portfolio’s principal risks include market risk, asset allocation risk, volatility management risk, equity risk, investment grade securities risk, credit risk, interest rate risk, large-cap company risk, derivatives risk, leveraging risk, ETFs risk, portfolio management risk, cash management risk, foreign securities risk (including currency risk and geographic concentration risk), futures contract risk, liquidity risk, mid-cap and small-cap company risk, portfolio turnover risk, and redemption risk. The Franklin Growth Allocation Portfolio also is subject to short positions risk, convertible securities risk, new portfolio risk, preferred stock risk and securities lending risk as principal risks, which are not principal risks of the JPMorgan Growth Allocation Portfolio. The JPMorgan Growth Allocation Portfolio also is subject to U.S. government securities risk, index strategy risk and sector risk as principal risks, which are not principal risks of the Franklin Growth Allocation Portfolio. Each Portfolio is also subject to the risks associated with the ETFs’ investments; please see “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks. For a detailed comparison of the Portfolios’ principal risks, see “Comparison of Principal Risk Factors” below.

 

    EIM serves as the investment adviser for both Portfolios. Subject to EIM’s oversight, Franklin Advisers, Inc. currently serves as the sub-adviser to the Franklin Growth Allocation Portfolio. Subject to EIM’s oversight, J.P. Morgan Investment Management Inc. currently serves as the sub-adviser to the JPMorgan Growth Allocation Portfolio. EIM will advise, and it is anticipated that J.P. Morgan Investment Management Inc. will continue to sub-advise, the JPMorgan Growth Allocation Portfolio after the Reorganization. Equitable Investment Management, LLC serves as the administrator for both Portfolios.

 

    EIM is responsible for overseeing sub-advisers and recommending their hiring, termination and replacement to the Board of Trustees. EIM has been granted relief by the SEC to hire, terminate and replace sub-advisers and amend sub-advisory agreements subject to the approval of the Board of Trustees and without obtaining shareholder approval. However, EIM may not enter into a sub-advisory agreement on behalf of a Portfolio with an “affiliated person” of EIM unless the sub-advisory agreement, including compensation, is approved by the Portfolio’s shareholders. The relief does not extend to any increase in the advisory fee paid by a Portfolio to the Adviser; any such increase would be subject to shareholder approval. For a detailed description of the Adviser and the sub-advisers, please see “Additional Information about the Portfolios — The Adviser” and “ — The Sub-Advisers” below.

 

    The Franklin Growth Allocation Portfolio and the JPMorgan Growth Allocation Portfolio had net assets of approximately $71.8 million and $342.6 million, respectively, as of March 31, 2022. Thus, if the Reorganization of the Franklin Growth Allocation Portfolio into the JPMorgan Growth Allocation Portfolio had been in effect on that date, the combined Portfolio would have had net assets of approximately $414.4 million.

 

    As shown in the “Summary” above, the shareholders of Class IB shares of the Franklin Growth Allocation Portfolio will receive Class IB shares of the JPMorgan Growth Allocation Portfolio pursuant to the Reorganization. Shareholders will not pay any sales charges in connection with the Reorganization. Please see “Comparative Fee and Expense Tables,” “Additional Information about the Reorganizations” and “Additional Information about the Portfolios” below for more information.

 

21


    It is estimated that the total annual operating expense ratios (including acquired fund fees and expenses) before and after taking into account the expense limitation arrangement (described below) for the JPMorgan Growth Allocation Portfolio’s Class IB shares for the fiscal year following the Reorganization will be 1.22% and 1.20%, respectively, which are less than and equal to, respectively, the total annual operating expense ratios (including acquired fund fees and expenses) before and after taking into account the expense limitation arrangement (described below) for the Franklin Growth Allocation Portfolio’s Class IB shares for the fiscal year ended December 31, 2021, which were 1.38% and 1.20%, respectively. For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. There is no assurance that fees and expenses would not increase after April 30, 2024, when the expense limitation arrangement (described below) for the JPMorgan Growth Allocation Portfolio would terminate if it is not renewed by EIM and the Board of Trustees.

 

    The Portfolios are subject to the same advisory fee schedule. The maximum advisory fee for each Portfolio is equal to an annual rate of 0.80% of its average daily net assets.

 

    The Portfolios are subject to the same administration fee schedule. Each Portfolio pays Equitable Investment Management, LLC, the Administrator, its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $32,500. For purposes of calculating the asset-based administration fee, the assets of the Portfolios are aggregated with the assets of multiple other portfolios of EQ Trust and all the portfolios of VIP Trust (together, the “Aggregated Portfolios”). The Portfolios’ asset-based administration fee rates are as follows: 0.140% of the first $60 billion of the aggregate average daily net assets of the Aggregated Portfolios; 0.110% of the next $20 billion; 0.0875% of the next $20 billion; 0.0775% of the next $20 billion; 0.0750% of the next $20 billion; and 0.0725% thereafter. The asset-based administration fee is calculated and billed monthly. A complete list of the Aggregated Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

    The Portfolios are subject to the same contractual expense caps, but the expense limitation arrangement for the JPMorgan Growth Allocation Portfolio extends one year beyond that for the Franklin Growth Allocation Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ advisory, administrative or other fees to limit the expenses of the Franklin Growth Allocation Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement), so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ advisory, administrative or other fees to limit the expenses of the JPMorgan Growth Allocation Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement), so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio.

 

    The Class IB shares of the Portfolios are each subject to a Rule 12b-1 fee equal to an annual rate of 0.25% of the average daily net assets of the respective share classes.

 

    For a more detailed description of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below.

 

22


    The Class IB shares of the JPMorgan Growth Allocation Portfolio slightly outperformed the Class IB shares of the Franklin Growth Allocation Portfolio for the one-year period ended December 31, 2021. The Class IB shares of the JPMorgan Growth Allocation Portfolio underperformed the Class IB shares of the Franklin Growth Allocation Portfolio for the periods since the Portfolios’ inception (November 13, 2017 and February 1, 2019, respectively) through December 31, 2021. Please see “Comparative Performance Information” below.

 

    Following the Reorganization, the combined Portfolio will be managed in accordance with the investment objective, policies and strategies of the JPMorgan Growth Allocation Portfolio. It is not expected that the JPMorgan Growth Allocation Portfolio will revise any of its investment policies following the Reorganization to reflect those of the Franklin Growth Allocation Portfolio. EIM believes that, if the Reorganization is approved, a substantial portion of the holdings of the Franklin Growth Allocation Portfolio could be transferred to and held by the JPMorgan Growth Allocation Portfolio. As described below, however, it is expected that, if the Reorganization is approved, a significant portion of the holdings of the Franklin Growth Allocation Portfolio will be liquidated in an orderly manner in connection with the Reorganization, and the proceeds of these sales held in cash or temporary investments. The portion of the Franklin Growth Allocation Portfolio’s assets that will be liquidated in connection with the Reorganization will depend on market conditions and on the assessment by EIM of the compatibility of those holdings with the JPMorgan Growth Allocation Portfolio’s portfolio composition and investment strategies. The need for the Franklin Growth Allocation Portfolio to sell investments in connection with the Reorganization may result in its selling securities at a disadvantageous time and price and could result in its realizing gains (or losses) that would not otherwise have been realized and its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. The estimated percentage of the holdings of the Franklin Growth Allocation Portfolio that will be sold in connection with the Reorganization is 35%, based on EIM’s assessment of the compatibility of the Portfolio’s holdings with the JPMorgan Growth Allocation Portfolio’s portfolio composition, investment strategies and investment restrictions. The sale of the Franklin Growth Allocation Portfolio’s portfolio holdings is expected to result in portfolio transaction costs of approximately $2,850 (0.4 basis points). It is also expected that, over time, the JPMorgan Growth Allocation Portfolio will use the proceeds of these sales to invest in securities, as well as other investments, consistent with its principal investment strategy. The purchase of portfolio securities by the JPMorgan Growth Allocation Portfolio following the Reorganization may result in the JPMorgan Growth Allocation Portfolio buying securities at a disadvantageous time and price and could result in its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. Such transaction costs could be significant, but EIM believes that such costs would be reasonable in relation to the anticipated benefits of the Reorganization. Contractholders will not recognize any gain or loss for federal income tax purposes as a result of the Reorganization.

 

    EIM has agreed to pay expenses of the Reorganization that exceed the Franklin Growth Allocation Portfolio’s expense limitation set forth in its expense limitation agreement. The Reorganization expenses for the Franklin Growth Allocation Portfolio, which are estimated to be $70,248 (excluding portfolio transaction costs, which will be incurred indirectly by Contractholders both before and after the Reorganization), exceed the expense limit and are expected to be paid by EIM.

 

Comparison of Principal Risk Factors

 

An investment in a Portfolio is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in a Portfolio. There can be no assurance that a Portfolio will achieve its investment objective.

 

23


The following table compares the principal risks of an investment in each Portfolio. For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). For an explanation of each risk, see “Additional Information about the Reorganizations — Descriptions of Risk Factors” below. Each Portfolio is also subject to the risks associated with the underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks.

 

Risks

   JPMorgan Growth Allocation Portfolio     Franklin Growth Allocation Portfolio  

Asset Allocation Risk

     X     X

Cash Management Risk

     X     X  

Convertible Securities Risk

       X  

Credit Risk

     X       X

Derivatives Risk

     X     X

Equity Risk

     X     X

ETFs Risk

     X     X

Foreign Securities Risk

     X       X  

Currency Risk

     X       X  

European Economic Risk

     X    

Geographic Concentration Risk

     X       X  

Futures Contract Risk

     X       X  

Index Strategy Risk

     X    

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X       X

Large-Cap Company Risk

     X       X

Leveraging Risk

     X       X

Liquidity Risk

     X       X  

Market Risk

     X     X

Mid-Cap and Small-Cap Company Risk

     X       X  

New Portfolio Risk

       X  

Portfolio Management Risk

     X       X  

Portfolio Turnover Risk

     X       X  

Preferred Stock Risk

       X  

Redemption Risk

     X       X  

Sector Risk

     X    

Securities Lending Risk

       X  

Short Position Risk

       X

U.S. Government Securities Risk

     X  

Volatility Management Risk

     X     X

 

Comparative Fee and Expense Tables

 

The following tables show the fees and expenses of the Class IB Shares of the Franklin Growth Allocation Portfolio and the Class IB Shares of the JPMorgan Growth Allocation Portfolio and the estimated pro forma fees and expenses of the Class IB Shares of the JPMorgan Growth Allocation Portfolio after giving effect to the proposed Reorganization. Fees and expenses for each Portfolio are based on those incurred by the relevant class of its shares for the fiscal year ended December 31, 2021. The pro forma fees and expenses of the JPMorgan Growth Allocation Portfolio shares assume that the Reorganization was in effect for the year ended December 31, 2021. The tables below do not reflect any Contract-related fees and expenses, which would increase overall fees and expenses. See a Contract prospectus for a description of those fees and expenses.

 

Shareholder Fees

(fees paid directly from your investment)

 

Franklin Growth Allocation Portfolio   JPMorgan Growth Allocation Portfolio  

Pro Forma JPMorgan Growth Allocation Portfolio
(assuming the Reorganization is approved)

Not Applicable.   Not Applicable.   Not Applicable.

 

24


Annual Operating Expenses

(expenses that you may pay each year as a percentage of the value of your investment)

 

     Franklin Growth
Allocation Portfolio
    JPMorgan Growth
Allocation Portfolio
    Pro Forma JPMorgan
Growth Allocation
Portfolio (assuming the
Reorganization  is
approved)
     Class IB     Class IB     Class IB  

Management Fee

     0.80     0.80     0.80

Distribution and/or Service Fees (12b-1 fees)

     0.25     0.25     0.25

Other Expenses

     0.25     0.16     0.12

Acquired Fund Fees and Expenses

     0.08     0.05     0.05

Total Annual Portfolio Operating Expenses

     1.38     1.26     1.22

Fee Waiver and/or Expense Reimbursement†

     (0.18 )%      (0.06 )%      (0.02 )% 

Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement

     1.20     1.20     1.20

 

  Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of (1) the Franklin Growth Allocation Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio, and (2) the JPMorgan Growth Allocation Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio. The expense limitation agreements may be terminated by EIM at any time after April 30, 2023 or April 30, 2024, as applicable. EIM may be reimbursed the amount of any such payments or waivers made after June 30, 2020, in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and a Portfolio’s expense ratio, after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower. If the Acquired Portfolio is reorganized, EIM will forgo the recoupment of any amounts waived or reimbursed with respect to the Acquired Portfolio prior to its Reorganization.

 

Example of Portfolio Expenses

 

This example is intended to help you compare the costs of investing in the Portfolios with the cost of investing in other investment options. The example assumes that:

 

    You invest $10,000 in a Portfolio for the time periods indicated;

 

    Your investment has a 5% return each year;

 

    The Portfolio’s operating expenses remain the same; and

 

    The expense limitation arrangement with respect to the Portfolio is not renewed.

 

This example does not reflect any Contract-related fees and expenses, including redemption fees (if any) at the Contract level. If such fees and expenses were reflected, the total expenses would be higher. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     1 Year      3 Years      5 Years      10 Years  

Franklin Growth Allocation Portfolio

           

Class IB

   $ 122      $ 419      $ 738      $ 1,642  

JPMorgan Growth Allocation Portfolio

           

Class IB

   $ 122      $ 394      $ 686      $ 1,517  

Pro Forma JPMorgan Growth Allocation Portfolio

(assuming the Reorganization is approved)

           

Class IB

   $ 122      $ 383      $ 666      $ 1,474  

 

25


Portfolio Turnover

 

Each Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Portfolio’s performance. During the fiscal year ended December 31, 2021, the portfolio turnover rates for each of the Franklin Growth Allocation Portfolio and the JPMorgan Growth Allocation Portfolio were 38% and 7%, respectively, of the average value of its portfolio.

 

Comparison of Investment Objectives, Policies and Strategies

 

The following table compares the investment objectives and principal investment policies and strategies of the Franklin Growth Allocation Portfolio with those of the JPMorgan Growth Allocation Portfolio. The Board of EQ Trust may change the investment objective of a Portfolio without a vote of that Portfolio’s shareholders. For more detailed information about each Portfolio’s investment strategies and risks, see Appendix B.

 

Acquiring Portfolio  

Acquired Portfolio

JPMorgan Growth Allocation Portfolio  

Franklin Growth Allocation Portfolio

Investment Objective   Investment Objective
Seeks to achieve long-term capital appreciation with an emphasis on risk-adjusted returns and managing volatility in the Portfolio.   Seeks long-term capital appreciation while managing portfolio volatility.
Principal Investment Strategies   Principal Investment Strategies
Under normal market conditions, the Portfolio will invest primarily in a combination of ETFs, futures contracts, and individual equity and fixed income securities that provide exposure to global equity markets and U.S. Treasuries. Under normal market conditions, it is expected that the Portfolio’s strategic long-term asset allocation will be approximately 65% in equity securities (or financial instruments that provide investment exposure to such securities) and approximately 35% in fixed income securities (or financial instruments that provide investment exposure to such securities), including cash equivalents. The actual percentage allocations at any time may vary. In monitoring and strategically adjusting the Portfolio’s exposures and weightings among the various asset classes, the sub-adviser for the Portfolio draws on the quantitative analysis and qualitative insights produced by dedicated research and strategy teams that support the investment process. By adjusting investment exposure among the various equity and fixed income asset classes in the Portfolio, the Sub-Adviser will attempt to reduce overall portfolio volatility and mitigate the effects of extreme market environments, without sacrificing long-term returns. The Portfolio may gain or adjust exposure to each asset class either through transactions in individual securities or through other instruments, including derivatives.   Under normal market conditions, the Sub-Adviser will allocate the Portfolio’s assets to achieve targeted exposures among equity investments and fixed income investments. The Portfolio’s current target allocation for long-term investments is approximately 65% of its net assets in equity investments and approximately 35% of its net assets in fixed income investments. On a periodic basis, the Sub-Adviser may rebalance the Portfolio’s investments in response to changes in market value or other factors to maintain these target allocations. During periods before or after such rebalancing, the Portfolio may deviate from its target allocations.
The Portfolio’s equity allocation will be invested in the following equity asset classes: U.S. Large Cap Equity, U.S. Small Cap Equity, United Kingdom Equity, European Equity, and Japanese Equity. The Portfolio’s equity investments will be allocated among discrete portions of the Portfolio that will invest in securities included in the Standard & Poor’s 500 Composite Stock Index (“S&P 500 Index”), the Russell 2000 Index (“Russell 2000 Index”), the FTSE 100 Index, the DJ EuroSTOXX 50 Index, and the TOPIX Index, respectively, and in ETFs and futures contracts that provide exposure to these indexes and substantially similar indexes. The Portfolio will invest in these securities and other instruments in a manner that is intended to track the performance (before fees and expenses) of the relevant index. As of December 31, 2021, the market capitalization of companies in the S&P 500 Index, which consists of common stocks of 500 of the largest U.S. companies, ranged from $6.53 billion to $2.9 trillion; in the Russell 2000 Index, which tracks the performance of approximately 2000 of the smallest companies in the Russell 3000   The Portfolio’s equity allocation will be invested in the following equity asset categories: U.S. Large Cap Equity, U.S. Mid Cap Equity, U.S. Small Cap Equity, and International Equity (excluding emerging markets). The Portfolio’s current target is to invest approximately the following percentages of its net assets in instruments that provide exposure to these equity asset categories: U.S. Large Cap Equity (34%), U.S. Mid Cap Equity (4%), U.S. Small Cap Equity (2%), and International Equity (25%). The allocations among the equity asset categories may be changed by the Sub-Adviser without notice or shareholder approval. The Sub-Adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category. The Portfolio’s equity investments may include ETFs, common and preferred stocks, options, rights, warrants, convertible securities and other equity-related instruments, including, but not limited to, derivatives. Securities in which the Portfolio may invest may be denominated in any currency.

 

26


Acquiring Portfolio  

Acquired Portfolio

JPMorgan Growth Allocation Portfolio  

Franklin Growth Allocation Portfolio

Index, from $31.6 million to $32.9 billion; in the FTSE 100 Index, which represents the performance of the 100 largest UK-domiciled blue chip companies, from $6.0 billion to $181.9 billion; in the DJ EuroSTOXX 50 Index, which represents the performance of the 50 largest companies in 11 Eurozone countries, from $27.9 billion to $418.1 billion; and in the TOPIX Index, which comprises all companies listed on the First Section of the Tokyo Stock Exchange, from $15.6 million to $298.9 billion (approximately 2187 constituents). Each of these indexes is weighted by market capitalization. The Sub-Adviser may allocate the Portfolio’s investments among these indices based on its assessment of risk in the equity markets relative to potential return.  
The Portfolio’s fixed income allocation will be invested in the U.S. Treasuries asset class. The Portfolio’s fixed income investments will consist primarily of investments in securities included in the Bloomberg Intermediate U.S. Treasury Index and in ETFs and futures contracts that provide exposure to the index. The Portfolio will invest in these securities and other instruments in a manner that is intended to track the performance (before fees and expenses) of the index. The Bloomberg Intermediate U.S. Treasury Index is a market-value weighted index that measures U.S. dollar-denominated, fixed rate, nominal debt issued by the U.S. Treasury with maturities of 1 to 9.9999 years to maturity.   Substantially all of the Portfolio’s fixed income allocation will be invested in ETFs and in instruments that provide exposure to the corporate debt asset category. The Portfolio’s fixed income allocation will be invested primarily (either directly or indirectly through other investments) in U.S. dollar-denominated corporate debt securities that are rated investment grade at the time of purchase (i.e., at least Baa by Moody’s or BBB by S&P or Fitch), or if unrated, determined by the Adviser or Sub-Adviser to be of comparable quality. The Portfolio’s investments in fixed income securities may include fixed coupon bonds, step-up bonds, bonds with sinking funds, medium term notes, callable and putable bonds, and 144A bonds. The Portfolio may also purchase or sell futures contracts on fixed income securities and enter into swap contracts in lieu of investing directly in fixed income securities themselves. In selecting the Portfolio’s investments in fixed income securities, the Sub-Adviser seeks to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years.
The Sub-Adviser may decrease the Portfolio’s equity exposure to 20% or less of net assets, and may increase the Portfolio’s fixed income exposure to 80% or more of net assets, based on the Sub-Adviser’s quantitatively-driven risk management framework. However, under normal market conditions, the Portfolio’s net allocation to equity or fixed income securities will not increase or decrease by more than 5% of net assets in a day.   No corresponding strategy.
The Portfolio uses a strategy that is commonly referred to as an indexing strategy. The Portfolio may use a replication technique or sampling approach to execute its indexing strategy. Circumstances under which the Sub-Adviser may use a sampling approach to execute the indexing strategy include when there are practical difficulties or substantial costs involved in compiling a portfolio of securities to track the performance (before fees and expenses) of the relevant index; where the relevant index contains component securities too numerous to purchase or sell efficiently; or in instances when a component security becomes temporarily illiquid, unavailable, or less liquid. The quantity of holdings in the Portfolio will be based on a number of factors, including the asset size of the Portfolio. Each index sponsor has its own method for periodically rebalancing the index by adding, removing or rebalancing the index components to take into account market changes.   No corresponding strategy.
The risk management framework integrates quantitative momentum and volatility models and signals to make systematic adjustments to the Portfolio’s strategic long-term asset allocation in order to determine a risk managed asset allocation. Momentum is the tendency of investments to exhibit persistence in their performance. The Sub-Adviser uses momentum signals to identify adverse market environments. The Sub-Adviser believes that negative momentum   The Sub-Adviser will implement a volatility management strategy that seeks to reduce the Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility. Volatility is a statistical measure of the magnitude of changes in the Portfolio’s returns. A higher volatility level generally indicates higher risk and often results in more frequent and sometimes significant changes in the Portfolio’s returns. To implement this

 

27


Acquiring Portfolio  

Acquired Portfolio

JPMorgan Growth Allocation Portfolio  

Franklin Growth Allocation Portfolio

indicates future periods of negative investment returns and increased volatility. When negative momentum deteriorates below a pre-set threshold determined by the sub-adviser based on its proprietary momentum-based model, the Sub-Adviser will reduce, sometimes significantly, the Portfolio’s exposure to the particular asset class exhibiting the negative momentum. To reduce the Portfolio’s exposure to a particular asset class, the Sub-Adviser will primarily use derivatives, but may also sell physical securities. The Sub-Adviser may reduce the Portfolio’s exposure to a particular asset class to 0% if the momentum indicator becomes sufficiently negative for that asset class. The sub-adviser will reestablish the Portfolio’s exposure to an asset class once the market environment improves and momentum strengthens to surpass a pre-set threshold determined by the Sub-Adviser based on its proprietary model. Volatility is a statistical measure of the magnitude of changes in the Portfolio’s returns, without regard to the direction of those changes. Higher volatility generally indicates higher risk and is often reflected by frequent and sometimes significant movements up and down in value. To implement volatility management, the Sub-Adviser will monitor forecasted annualized volatility of the Portfolio’s returns, placing a greater weight on recent historic data. When the forecasted volatility is expected to exceed a pre-set threshold determined by the Sub-Adviser based on its proprietary volatility-based model, the Sub-Adviser will attempt to reduce the volatility below the threshold. To attempt to reduce the volatility, the Sub-Adviser will primarily use derivatives, but may also sell physical securities. The Sub-Adviser may use these methods as often as daily to reduce the Portfolio’s expected volatility level. Due to market conditions or other factors, the actual or realized volatility of the Portfolio for any particular period of time may be materially above or below the pre-set threshold. During such times, the Portfolio’s overall equity exposure may deviate significantly from its strategic asset allocation and could be substantially less than 65% of the Portfolio’s assets (and could be 0%).   volatility management strategy, the Sub-Adviser’s analysis will emphasize short-term market movements while also considering market correlations over longer-term periods. When the expected market volatility increases to a certain level as determined by the Sub-Adviser based on its volatility management strategy, the Portfolio may reduce its exposure to equity investments by shorting equity index futures or by investing up to 100% of its target equity allocation in cash or cash equivalents. During such times, the Portfolio’s overall exposure to equity investments may deviate significantly from its target allocation and could be substantially less than 65% of the Portfolio’s net assets (and could be 0% or a net short position in equity investments). In addition, over time the use of a volatility management strategy could result in the Portfolio’s having average exposure to equity investments that is lower than its target allocation. Although these actions are intended to reduce the overall risk of investing in the Portfolio, they may result in periods of underperformance, including during periods when market values are increasing, but market volatility is high. Under normal market conditions, the Portfolio seeks to maintain, over an extended period of years, an average annualized volatility in the Portfolio’s daily equity returns of not more than 20%. The magnitude of the changes (or volatility) in the Portfolio’s daily equity returns is measured by standard deviation. The Sub-Adviser may determine, in its sole discretion, not to implement the volatility management strategy or to allocate the Portfolio’s assets in a manner different than the target allocations described above for various reasons including, but not limited to, if the volatility management strategy would result in de minimis trades or result in excess trading due to expected flows into or out of the Portfolio, or in connection with market events and conditions and other circumstances as determined by the Sub-Adviser.
Volatility management techniques may reduce potential losses and/or mitigate financial risks to insurance companies that provide certain benefits and guarantees available under the Contracts and offer the Portfolio as an investment option in their products.   Same.
The Portfolio may invest in derivative instruments, including futures contracts and other instruments, for a variety of purposes, including as a means to manage equity and fixed income exposure (including for purposes of implementing the risk management framework) without having to purchase or sell underlying investments. For example, when the level of market volatility is increasing, the Sub-Adviser may attempt to limit the Portfolio’s equity exposure by closing existing long exchange-traded futures contracts, selling exposures that are derived using ETFs, shorting or selling long futures positions on an index or, in the case where physical securities are held, selling exchange-traded futures contracts. The Portfolio may also invest in derivative instruments to seek enhanced returns from certain asset classes. The Portfolio may use index futures, for example, to gain broad exposure to a particular segment of the market, while buying representative securities to achieve exposure to another. The Sub-Adviser will choose in each case based on considerations of cost and efficiency of access to the desired investment exposure. It is anticipated that the Portfolio’s derivative instruments will consist primarily of exchange-traded equity index, U.S. Treasury and currency futures. The Portfolio may also invest in currency forwards. The Portfolio’s holdings may be frequently adjusted to reflect the Sub-Adviser’s assessment of changing risks, which could result in high portfolio turnover. The Sub-Adviser believes that these adjustments also can frequently be made efficiently and economically through the use of derivative strategies. The Portfolio may invest in derivatives to the extent permitted by   In pursuing its investment objective, the Portfolio may also invest in derivatives for the efficient management of the Portfolio (including to enhance returns), to implement the volatility management strategy, or for the hedging of certain market risks. It is anticipated that the Portfolio’s derivative instruments will consist of long and short positions on exchange-traded equity and fixed income futures contracts as well as currency forwards. The Portfolio also may utilize other types of derivatives, such as swaps, and may engage in short sales.

 

28


Acquiring Portfolio  

Acquired Portfolio

JPMorgan Growth Allocation Portfolio  

Franklin Growth Allocation Portfolio

applicable law. It is anticipated that the Portfolio’s use of derivatives will be consistent with its overall investment strategy of obtaining and managing exposure to various asset classes. Because the Portfolio will use derivatives to obtain and manage the Portfolio’s exposure to different asset classes, the Portfolio’s use of derivatives may be substantial.  
The Portfolio’s investments in derivatives may be deemed to involve the use of leverage because the Portfolio is not required to invest the full market value of the contract upon entering into the contract but participates in gains and losses on the full contract price. In addition, the Portfolio’s investments in derivatives may be deemed to involve the use of leverage because the heightened price sensitivity of some derivatives to market changes may magnify the Portfolio’s gain or loss. It is not generally expected that the Portfolio will be leveraged by borrowing for investment purposes.   Same.
From time to time or potentially for extended periods of time in periods of continued market distress, the Portfolio may maintain a considerable percentage of its total assets in cash and cash equivalent instruments as margin or collateral for the Portfolio’s obligations under derivative transactions, to implement the risk management strategies, and for other portfolio management purposes. The larger the value of the Portfolio’s derivative positions, as opposed to positions held in non-derivative instruments, the more the Portfolio will be required to maintain cash and cash equivalents as margin or collateral for such derivatives.   Same.
No corresponding strategy.   The Portfolio may engage in active and frequent trading of portfolio securities in pursuing its principal investment strategies.
No corresponding strategy.   The Portfolio also may lend its portfolio securities to earn additional income.
No corresponding strategy.   The Sub-Adviser may consider the size of the Portfolio when deciding how to implement the investment strategy. For example, the Portfolio may invest primarily in ETFs and derivative instruments, rather than in individual securities, to gain broad exposure to a particular asset category.

 

The Franklin Growth Allocation Portfolio and the JPMorgan Growth Allocation Portfolio have identical fundamental investment policies relating to borrowing, lending, underwriting, concentration, issuing senior securities, and investing in commodities and real estate. Fundamental investment policies may be changed only by a vote of a Portfolio’s shareholders. More detailed information about the fundamental investment policies is available in the Statement of Additional Information.

 

Comparative Performance Information

 

The bar charts and tables below provide some indication of the risks of investing in each Portfolio by showing changes in each Portfolio’s performance from year to year and by showing how each Portfolio’s average annual total returns for the past one-year and since inception periods through December 31, 2021, compared to the returns of a broad-based securities market index. The additional broad-based securities market index and the hypothetical composite index for each Portfolio show how the Portfolio’s performance compared with the returns of other asset classes in which the Portfolio may invest. The return of the broad-based securities market index (and the additional comparative index) shown in the right hand column below is the return of the index since the inception of Class IB shares. Past performance is not an indication of future performance.

 

29


The performance results do not reflect any Contract-related fees and expenses, which would reduce the performance results.

 

The JPMorgan Growth Allocation Portfolio will be the accounting survivor of the Reorganization. As such, the JPMorgan Growth Allocation Portfolio will continue to have the same performance history following the Reorganization as it had prior to the Reorganization.

 

Franklin Growth Allocation Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

10.52% (2020 4th Quarter)

  

Worst quarter (% and time period)

-14.32% (2020 1st Quarter)

 

JPMorgan Growth Allocation Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

9.06% (2020 4th Quarter)

  

Worst quarter (% and time period)

-9.68% (2020 1st Quarter)

 

Franklin Growth Allocation Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception

(2/1/2019)
 

Franklin Growth Allocation Portfolio — Class IB Shares

     12.24        9.40  

EQ/Franklin Growth Allocation Index (reflects no deduction for fees, expenses, or taxes)

     13.25        14.96  

S&P 500® Index (reflects no deduction for fees, expenses, or taxes)

     28.71        23.61  

Bloomberg U.S. 5-10 Year Corporate Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.52        6.56  

 

30


JPMorgan Growth Allocation Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception
(11/13/2017)
 

JPMorgan Growth Allocation Portfolio — Class IB Shares

     12.77        8.05  

EQ/JPMorgan Growth Allocation Index (reflects no deduction for fees, expenses, or taxes)

     14.71        10.54  

S&P 500® Index (reflects no deduction for fees, expenses, or taxes)

     28.71        18.08  

Bloomberg U.S. Intermediate Government Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.69        2.51  

 

Capitalization

 

The following table shows the capitalization of each Portfolio as of June 30, 2022, and of the JPMorgan Growth Allocation Portfolio on a pro forma combined basis as of June 30, 2022, after giving effect to the proposed Reorganization. Pro forma net assets may not total and net asset values per share may not recalculate due to rounding of net assets.

 

     Net Assets
(in millions)
     Net Asset Value
Per Share
     Shares
Outstanding
 

Franklin Growth Allocation Portfolio Class IB Shares

   $ 67.4      $ 10.13        6,652,925  

JPMorgan Growth Allocation Portfolio Class IB Shares

   $ 327.7      $ 10.15        32,289,653  

Adjustments*

   $ (0.1)           (30,528)  

Pro forma JPMorgan Growth Allocation Portfolio Class IB Shares (assuming the Reorganization is approved)

   $ 395.0      $ 10.15        38,912,050  

Total Pro forma Net Assets (assuming the Reorganization is approved)**

   $ 395.0        

 

*   The adjustments reflect the exchange of Franklin Growth Allocation Portfolio’s shares for JPMorgan Growth Allocation Portfolio’s shares.
**   Adjusted to reflect Reorganization costs.

 

AFTER CAREFUL CONSIDERATION, THE BOARD OF EQ TRUST UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT WITH RESPECT TO THE FRANKLIN GROWTH ALLOCATION PORTFOLIO. ACCORDINGLY, THE BOARD OF EQ TRUST HAS SUBMITTED THE REORGANIZATION AGREEMENT FOR APPROVAL BY THE FRANKLIN GROWTH ALLOCATION PORTFOLIO’S SHAREHOLDERS. THE BOARD OF EQ TRUST RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 2.

 

PROPOSAL 3: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE FIRST TRUST MODERATE GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST, INTO THE INVESCO MODERATE GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST.

 

This Proposal 3 requests your approval of a Reorganization Agreement pursuant to which the First Trust Moderate Growth Allocation Portfolio will be reorganized into the Invesco Moderate Growth Allocation Portfolio. In considering whether you should approve the Proposal, you should note that:

 

    The Portfolios have substantially similar investment objectives. The First Trust Moderate Growth Allocation Portfolio seeks long-term total return while managing portfolio volatility. The Invesco Moderate Growth Allocation Portfolio seeks long-term capital appreciation while managing portfolio volatility.

 

   

Both Portfolios provide diversified exposure (either directly or indirectly, as described below) to equity securities and fixed income securities. Both Portfolios target a long-term asset allocation of approximately 60% of assets in equity securities and 40% of assets in fixed income securities. Both portfolios are sub-advised by a single sub-adviser, and each Portfolio’s respective sub-adviser may rebalance its Portfolio’s assets to maintain the target allocations. Each Portfolio’s equity allocation is invested in the

 

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following equity asset categories: U.S. large-cap, U.S. mid-cap, U.S. small-cap, and international developed. Each Portfolio’s fixed income allocation is invested in the corporate debt asset category to create a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years. In addition, each Portfolio’s respective sub-adviser implements a proprietary volatility management strategy that seeks to reduce the Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility. During such times, each Portfolio’s overall equity exposure may deviate significantly from its strategic asset allocation and could be substantially less than 60% of the Portfolio’s assets (and could be 0% or a net short position in equity investments). Both Portfolios also may invest in derivatives, including futures contracts and currency forwards, for a variety of purposes, including to implement the volatility management strategy.

 

    There are, however, differences between the two Portfolios’ principal investment policies and strategies of which you should be aware. These are set forth immediately below. For a detailed comparison of the Portfolios’ investment policies and strategies, see “Comparison of Investment Objectives, Policies and Strategies” below.

 

    The First Trust Moderate Growth Allocation Portfolio operates under a “fund-of-funds” structure and invests in securities and other instruments indirectly, through investments in Underlying ETFs (as defined below). The First Trust Moderate Growth Allocation Portfolio pursues its investment objective by investing primarily in exchange-traded securities of other investment companies or investment vehicles (“Underlying ETFs”) and other instruments, including derivatives, that provide exposure to global equity and fixed income markets.

 

    The First Trust Moderate Growth Allocation Portfolio’s current target is to invest approximately the following percentages of its net assets in Underlying ETFs and other equity-related instruments, including derivatives, that provide exposure to the following equity asset categories: U.S. Large Cap Equity (25%), U.S. Mid Cap Equity (11.7%), U.S. Small Cap Equity (11.6%), and International Developed (11.7%). The Sub-Adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category. The Portfolio’s allocations to different market capitalizations will vary based on the Sub-Adviser’s tactical views and in response to changing market conditions. The Underlying ETFs in which the Portfolio invests may be invested in securities denominated in any currency.

 

    The First Trust Moderate Growth Allocation Portfolio’s fixed income allocation will be invested primarily in Underlying ETFs and other fixed income-related instruments, including derivatives, to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index. The First Trust Moderate Growth Allocation Portfolio may also purchase or sell futures contracts on ETFs and enter into swap contracts in lieu of investing in Underlying ETFs themselves.

 

    In seeking to reduce the First Trust Moderate Growth Allocation Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility, the sub-adviser will implement a volatility management strategy. To implement this volatility management strategy, the First Trust Moderate Growth Allocation Portfolio’s sub-adviser monitors the expected volatility of the Portfolio and the average expected volatility of the equity asset classes included within the Portfolio (U.S. Large Cap Equity, U.S. Mid Cap Equity, U.S. Small Cap Equity, and International Developed). When either of these two measures exceeds certain levels, as determined by the sub-adviser based on its volatility management strategy, the Portfolio may reduce its exposure to equity investments by shorting equity index futures or by investing up to 100% of its target equity allocation in cash or cash equivalents.

 

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    The Invesco Moderate Growth Allocation Portfolio, under normal circumstances, will invest in a combination of individual securities, ETFs and futures contracts that provide exposure to global equity markets and corporate debt securities. Unlike the First Trust Moderate Growth Allocation Portfolio, the Invesco Moderate Growth Allocation Portfolio does not operate under a “fund-of-funds” structure.

 

    The Invesco Moderate Growth Allocation Portfolio’s current target is to invest approximately the following percentages of its assets in instruments that provide exposure to the following equity asset categories: Large Cap US (20-35%), Mid Cap US (1-5%), Small Cap US (1-5%), and International Developed (20-30%). The sub-adviser rebalances the equity portfolio as necessary to maintain weighting in proportion to market capitalization. Securities in which the Invesco Moderate Growth Allocation Portfolio may invest may be denominated in any currency.

 

    The Invesco Moderate Growth Allocation Portfolio’s fixed income allocation will be invested in baskets of corporate debt securities, swap contracts, and ETFs to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index.

 

    The sub-adviser will implement a volatility management strategy that seeks to manage the volatility level of the Invesco Moderate Growth Allocation Portfolio’s annual returns. To implement the volatility management strategy, the sub-adviser will monitor forecasted annualized volatility of the Portfolio’s returns, placing a greater weight on recent historic data. The sub-adviser generates a portfolio volatility forecast based on equity price returns. During periods of heightened forecasted volatility, the sub-adviser will attempt to lower volatility by closing existing long exchange-traded equity index futures contracts, selling equity exposures that are derived using ETFs or, in the case where physical securities are held, selling physical securities, or selling exchange-traded equity index futures contracts, in an effort to target a certain level of maximum annual volatility as determined by the sub-adviser based on its volatility management strategy. The sub-adviser may use these methods as often as daily to lower the Invesco Moderate Growth Allocation Portfolio’s expected volatility level.

 

    The Portfolios have substantially similar principal risks. Each Portfolio’s principal risks include market risk, asset allocation risk, volatility management risk, equity risk, large-cap company risk, investment grade securities risk, credit risk, interest rate risk, derivatives risk, short position risk, portfolio management risk, cash management risk, ETF risk/risks related to investments in underlying ETFs, foreign securities risk, futures contract risk, leveraging risk, liquidity risk, mid-cap and small-cap company risk, portfolio turnover risk, redemption risk and securities lending risk. The First Trust Moderate Growth Allocation Portfolio is also subject to new portfolio risk, which is not a principal risk of the Invesco Moderate Growth Allocation Portfolio. The First Trust Moderate Growth Allocation Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks. For a detailed comparison of the Portfolios’ principal risks, see “Comparison of Principal Risk Factors” below.

 

    EIM serves as the investment adviser for both Portfolios. Subject to EIM’s oversight, First Trust Advisors L.P. (“First Trust Advisors”) currently serves as the sub-adviser to the First Trust Moderate Growth Allocation Portfolio, and Invesco Advisers, Inc. (“Invesco Advisers”) currently serves as the sub-adviser to the Invesco Moderate Growth Allocation Portfolio. EIM will advise, and it is anticipated that Invesco Advisers will continue to sub-advise, the Invesco Moderate Growth Allocation Portfolio after the Reorganization. Equitable Investment Management, LLC serves as the administrator for both Portfolios.

 

   

EIM is responsible for overseeing sub-advisers and recommending their hiring, termination and replacement to the Board of Trustees. EIM has been granted relief by the SEC to hire, terminate and replace sub-advisers and amend sub-advisory agreements subject to the approval of the Board of Trustees and without obtaining shareholder approval. However, EIM may not enter into a

 

33


 

sub-advisory agreement on behalf of a Portfolio with an “affiliated person” of EIM unless the sub-advisory agreement, including compensation, is approved by the Portfolio’s shareholders. The relief does not extend to any increase in the advisory fee paid by a Portfolio to the Adviser; any such increase would be subject to shareholder approval. For a detailed description of the Adviser and the sub-advisers, please see “Additional Information about the Portfolios — The Adviser” and “ — The Sub-Advisers” below.

 

    The First Trust Moderate Growth Allocation Portfolio and the Invesco Moderate Growth Allocation Portfolio had net assets of approximately $99.6 million and $101.2 million, respectively, as of March 31, 2022. Thus, if the Reorganization of the First Trust Moderate Growth Allocation Portfolio into the Invesco Moderate Growth Allocation Portfolio had been in effect on that date, the combined Portfolio would have had net assets of approximately $200.8 million.

 

    As shown in the “Summary” above, the shareholders of Class IB shares of the First Trust Moderate Growth Allocation Portfolio will receive Class IB shares of the Invesco Moderate Growth Allocation Portfolio pursuant to the Reorganization. Shareholders will not pay any sales charges in connection with the Reorganization. Please see “Comparative Fee and Expense Tables,” “Additional Information about the Reorganizations” and “Additional Information about the Portfolios” below for more information.

 

    It is estimated that the total annual operating expense ratios (including acquired fund fees and expenses) before and after taking into account the expense limitation arrangement (described below) for the Invesco Moderate Growth Allocation Portfolio’s Class IB shares for the fiscal year following the Reorganization will be 1.25% and 1.20%, respectively, which are less than and equal to, respectively, the total annual operating expense ratios (including acquired fund fees and expenses) before and after taking into account the expense limitation arrangement (described below) for the First Trust Moderate Growth Allocation Portfolio’s Class IB shares for the fiscal year ended December 31, 2021, which were 1.34% and 1.20%, respectively. For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. There is no assurance that fees and expenses would not increase after April 30, 2024, when the expense limitation arrangement (described below) for the Invesco Moderate Growth Allocation Portfolio would terminate if it is not renewed by EIM and the Board of Trustees.

 

    The Portfolios are subject to the same advisory fee schedule. The maximum advisory fee for each Portfolio is equal to an annual rate of 0.80% of its average daily net assets.

 

    The Portfolios are subject to the same administration fee schedule. Each Portfolio pays Equitable Investment Management, LLC, the Administrator, its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $32,500. For purposes of calculating the asset-based administration fee, the assets of the Portfolios are aggregated with the assets of multiple other portfolios of EQ Trust and all the portfolios of VIP Trust (together the “Aggregated Portfolios”). The Portfolios’ asset-based administration fee rates are as follows: 0.140% of the first $60 billion of the aggregate average daily net assets of the Aggregated Portfolios; 0.110% of the next $20 billion; 0.0875% of the next $20 billion; 0.0775% of the next $20 billion; 0.0750% of the next $20 billion; and 0.0725% thereafter. The asset-based administration fee is calculated and billed monthly. A complete list of the Aggregated Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

    The Portfolios are subject to the same contractual expense caps, but the expense limitation arrangement for the Invesco Moderate Growth Allocation Portfolio extends one year beyond that for the First Trust Moderate Growth Allocation Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ advisory, administrative or other fees to limit the expenses of the First Trust Moderate Growth Allocation Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement), so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio.

 

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    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ advisory, administrative or other fees to limit the expenses of the Invesco Moderate Growth Allocation Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement), so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio.

 

    The Class IB shares of the Portfolios are each subject to a Rule 12b-1 fee equal to an annual rate of 0.25% of the average daily net assets of the share class.

 

    The Class IB shares of the Invesco Moderate Growth Allocation Portfolio underperformed the Class IB shares of the First Trust Moderate Growth Allocation Portfolio for the one-year period ended December 31, 2021, and slightly outperformed the Class IB shares of the First Trust Moderate Growth Allocation Portfolio for the since inception period from February 1, 2019 through December 31, 2021. Please see “Comparative Performance Information” below.

 

    Following the Reorganization, the combined Portfolio will be managed in accordance with the investment objective, policies and strategies of the Invesco Moderate Growth Allocation Portfolio. It is not expected that the Invesco Moderate Growth Allocation Portfolio will revise any of its investment policies following the Reorganization to reflect those of the First Trust Moderate Growth Allocation Portfolio. EIM has reviewed the First Trust Moderate Growth Allocation Portfolio’s current portfolio holdings and determined that the holdings generally are compatible with the Invesco Moderate Growth Allocation Portfolio’s investment objective and policies. Thus, EIM believes that, if the Reorganization is approved, all or a substantial portion of the holdings of the First Trust Moderate Growth Allocation Portfolio could be transferred to and held by the Invesco Moderate Growth Allocation Portfolio. It is expected that the First Trust Moderate Growth Allocation Portfolio will not sell any of its holdings in connection with the Reorganization. However, some of the First Trust Moderate Growth Allocation Portfolio’s holdings may not remain at the time of the Reorganization due to normal portfolio turnover. It is also expected that, if the Reorganization is approved, the holdings of the First Trust Moderate Growth Allocation Portfolio involved therein that are not compatible with the Invesco Moderate Growth Allocation Portfolio’s investment objective and policies, if any, will be liquidated in an orderly manner in connection with the Reorganization, and the proceeds of these sales held in cash or temporary investments. The portion of the First Trust Moderate Growth Allocation Portfolio’s assets that will be liquidated in connection with the Reorganization will depend on market conditions and on the assessment by EIM of the compatibility of those holdings with the Invesco Moderate Growth Allocation Portfolio’s portfolio composition and investment strategies. The need for the First Trust Moderate Growth Allocation Portfolio to sell investments in connection with the Reorganization may result in its selling securities at a disadvantageous time and price and could result in its realizing gains (or losses) that would not otherwise have been realized and its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. It is expected that the First Trust Moderate Growth Allocation Portfolio will not sell any of its holdings in connection with the Reorganization, and therefore no brokerage commissions or other transaction costs are expected to be incurred. This estimate is subject to change depending on the factors outlined above. Contractholders will not recognize any gain or loss for federal income tax purposes as a result of the Reorganization.

 

    EIM has agreed to pay expenses of the Reorganization that exceed the First Trust Moderate Growth Allocation Portfolio’s expense limitation set forth in its expense limitation agreement. The Reorganization expenses for the First Trust Moderate Growth Allocation Portfolio, which are estimated to be $93,307 (excluding portfolio transaction costs, which, if any, could be incurred indirectly by Contractholders both before and after the Reorganization), exceed the expense limit and are expected to be paid by EIM.

 

35


Comparison of Principal Risk Factors

 

An investment in a Portfolio is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in a Portfolio. There can be no assurance that a Portfolio will achieve its investment objective.

 

The following table compares the principal risks of an investment in each Portfolio. For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). For an explanation of each risk, see “Additional Information about the Reorganizations — Descriptions of Risk Factors” below. The First Trust Moderate Growth Allocation Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks.

 

Risks

   Invesco Moderate
Growth Allocation Portfolio
    First Trust Moderate
Growth Allocation Portfolio
 

Asset Allocation Risk

     X     X

Cash Management Risk

     X       X  

Credit Risk

     X     X

Derivatives Risk

     X     X

ETFs Risk/Risks Related to Investments in Underlying ETFs

     X       X  

Equity Risk

     X     X

Foreign Securities Risk

     X       X  

Currency Risk

     X       X  

Geographic Concentration Risk

     X       X  

Futures Contract Risk

     X       X  

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X     X

Large-Cap Company Risk

     X     X

Leveraging Risk

     X       X  

Liquidity Risk

     X       X  

Market Risk

     X     X

Mid-Cap and Small-Cap Company Risk

     X       X  

New Portfolio Risk

       X  

Portfolio Management Risk

     X     X

Portfolio Turnover Risk

     X       X  

Redemption Risk

     X       X  

Securities Lending Risk

     X       X  

Short Position Risk

     X       X  

Volatility Management Risk

     X     X

 

Comparative Fee and Expense Tables

 

The following tables show the fees and expenses of the Class IB Shares of the First Trust Moderate Growth Allocation Portfolio and the Class IB Shares of the Invesco Moderate Growth Allocation Portfolio and the estimated pro forma fees and expenses of the Class IB Shares of the Invesco Moderate Growth Allocation Portfolio after giving effect to the proposed Reorganization. Fees and expenses for each Portfolio are based on those incurred by the relevant class of its shares for the fiscal year ended December 31, 2021. The pro forma fees and expenses of the Invesco Moderate Growth Allocation Portfolio shares assume that the Reorganization was in effect for the year ended December 31, 2021. The tables below do not reflect any Contract-related fees and expenses, which would increase overall fees and expenses. See a Contract prospectus for a description of those fees and expenses.

 

36


Shareholder Fees

(fees paid directly from your investment)

 

First Trust Moderate Growth Allocation
Portfolio

  

Invesco Moderate Growth Allocation
Portfolio

  

Pro Forma Invesco Moderate Growth
Allocation Portfolio (assuming the
Reorganization is approved)

Not Applicable.

   Not Applicable.    Not Applicable.

 

Annual Operating Expenses

(expenses that you may pay each year as a percentage of the value of your investment)

 

     First Trust Moderate
Growth Allocation Portfolio
    Invesco Moderate
Growth Allocation Portfolio
    Pro Forma
Invesco Moderate Growth
Allocation Portfolio
(assuming the
Reorganization is
approved)
 
     Class IB     Class IB     Class IB  

Management Fee

     0.80     0.80     0.80

Distribution and/or Service Fees (12b-1 fees)

     0.25     0.25     0.25

Other Expenses

     0.23     0.24     0.18

Acquired Fund Fees and Expenses

     0.06     0.02     0.02

Total Annual Portfolio Operating Expenses

     1.34     1.31     1.25

Fee Waiver and/or Expense Reimbursement†

     (0.14 )%      (0.11 )%      (0.05 )% 

Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement

     1.20     1.20     1.20

 

  Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of (1) the First Trust Moderate Growth Allocation Portfolio through April 30, 2023 so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio, and (2) the Invesco Moderate Growth Allocation Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio. The expense limitation agreements may be terminated by EIM at any time after April 30, 2023 or April 30, 2024, as applicable. EIM may be reimbursed the amount of any such payments or waivers made after June 30, 2020, in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and a Portfolio’s expense ratio, after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower. If the Acquired Portfolio is reorganized, EIM will forgo the recoupment of any amounts waived or reimbursed with respect to the Acquired Portfolio prior to its Reorganization.

 

Example of Portfolio Expenses

 

This example is intended to help you compare the costs of investing in the Portfolios with the cost of investing in other investment options. The example assumes that:

 

    You invest $10,000 in a Portfolio for the time periods indicated;

 

    Your investment has a 5% return each year;

 

    The Portfolio’s operating expenses remain the same; and

 

    The expense limitation arrangement with respect to the Portfolio is not renewed.

 

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This example does not reflect any Contract-related fees and expenses, including redemption fees (if any) at the Contract level. If such fees and expenses were reflected, the total expenses would be higher. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     1 Year      3 Years      5 Years      10 Years  

First Trust Moderate Growth Allocation Portfolio

           

Class IB

   $ 122      $ 411      $ 721      $ 1,600  

Invesco Moderate Growth Allocation Portfolio

           

Class IB

   $ 122      $ 404      $ 708      $ 1,569  

Pro Forma Invesco Moderate Growth Allocation Portfolio

(assuming the Reorganization is approved)

           

Class IB

   $ 122      $ 386      $ 676      $ 1,502  

 

Portfolio Turnover

 

Each Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Portfolio’s performance. During the fiscal year ended December 31, 2021, the portfolio turnover rates for each of the First Trust Moderate Growth Allocation Portfolio and the Invesco Moderate Growth Allocation Portfolio were 38% and 42%, respectively, of the average value of its portfolio.

 

Comparison of Investment Objectives, Policies and Strategies

 

The following table compares the investment objectives and principal investment policies and strategies of the First Trust Moderate Growth Allocation Portfolio with those of the Invesco Moderate Growth Allocation Portfolio. The Board of EQ Trust may change the investment objective of a Portfolio without a vote of that Portfolio’s shareholders. For more detailed information about each Portfolio’s investment strategies and risks, see Appendix B.

 

Acquiring Portfolio

 

Acquired Portfolio

Invesco Moderate Growth Allocation Portfolio

 

First Trust Moderate Growth Allocation Portfolio

Investment Objective   Investment Objective
Seeks long-term capital appreciation while managing portfolio volatility.   Seeks long-term total return while managing portfolio volatility.
Principal Investment Strategies   Principal Investment Strategies
The Portfolio invests primarily in equity and fixed income securities, and derivatives and other instruments that have economic characteristics similar to such securities. Under normal circumstances, the Sub-Adviser will invest in a combination of individual securities, ETFs and futures contracts that provide exposure to global equity markets, including large, mid and small cap stocks, and corporate debt securities.   The Portfolio pursues its investment objective by investing primarily in exchange-traded securities of other investment companies or investment vehicles (“Underlying ETFs”) and other instruments, including derivatives, that provide exposure to global equity and fixed income markets.
The sub-adviser of the Portfolio targets an equity allocation of approximately 60% of its assets in U.S. and foreign large, mid and small cap stocks, as well as ETFs and futures contracts that provide exposure to such stocks. The Invesco Moderate Growth Allocation Portfolio’s sub-adviser targets a fixed income allocation of approximately 40% of its assets in baskets of corporate debt securities, swap contracts, and ETFs to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index.   Under normal market conditions, the Portfolio’s sub-adviser will allocate the Portfolio’s assets to achieve targeted exposures among equity investments and fixed income investments. The Portfolio’s current target allocation for long-term investments is approximately 60% of its net assets in equity investments and approximately 40% of its net assets in fixed income investments, through investments in Underlying ETFs and other instruments.
On a periodic basis, the Portfolio’s sub-adviser may rebalance the Portfolio’s equity and fixed income investments in response to changes in market value or other factors to maintain its target allocations. During periods before or after such rebalancing, the Portfolio may deviate from its target allocations.   Same.

 

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Acquiring Portfolio

 

Acquired Portfolio

Invesco Moderate Growth Allocation Portfolio

 

First Trust Moderate Growth Allocation Portfolio

For its equity allocation, the Portfolio’s current target is to invest approximately the following percentages of its assets in instruments that provide exposure to the following equity asset categories: Large Cap US (20-35%), Mid Cap US (1-5%), Small Cap US (1-5%), and International Developed (20-30%). The Sub-Adviser rebalances the equity portfolio as necessary to maintain weighting in proportion to market capitalization. Securities in which the Portfolio may invest may be denominated in any currency.   The Portfolio’s equity allocation will be invested primarily in Underlying ETFs and other equity-related instruments, including derivatives, that provide exposure to U.S. large, mid, and small cap stocks and foreign developed markets securities. The Portfolio’s current target is to invest approximately the following percentages of its net assets in Underlying ETFs and other equity-related instruments, including derivatives as described below, that provide exposure to the following equity asset categories: U.S. Large Cap Equity (25%), U.S. Mid Cap Equity (11.7%), U.S. Small Cap Equity (11.6%), and International Developed (11.7%). The Sub-Adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category. The Portfolio’s allocations to different market capitalizations will vary based on the sub-adviser’s tactical views and in response to changing market conditions. The Underlying ETFs in which the Portfolio invests may be invested in securities denominated in any currency.
The allocations among the equity asset categories may be changed by the Sub-Adviser without notice or shareholder approval.   Same.
For its fixed income allocation, the Portfolio’s sub-adviser targets a fixed income allocation to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years.   Substantially all of the Portfolio’s fixed income allocation will be invested in the corporate debt asset category. The Portfolio’s fixed income allocation will be invested primarily in Underlying ETFs and other fixed income-related instruments, including derivatives, to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years.
The Portfolio’s investments may include fixed coupon bonds, step-up bonds, bonds with sinking funds, medium term notes, callable and putable bonds, and 144A bonds.   An Underlying ETF’s investments may include fixed coupon bonds, step-up bonds, bonds with sinking funds, medium term notes, callable and putable bonds, and 144A bonds.
No corresponding strategy.   The Portfolio may also purchase or sell futures contracts on ETFs and enter into swap contracts in lieu of investing in Underlying ETFs themselves.
The Portfolio’s sub-adviser also will implement a volatility management strategy that seeks to manage the volatility level of the Portfolio’s annual returns. Volatility is a statistical measure of the magnitude of changes in the Portfolio’s returns. A higher volatility level generally indicates higher risk and often results in more frequent and sometimes significant changes in the Portfolio’s returns.   The sub-adviser also will implement a volatility management strategy that seeks to reduce the Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility. Volatility is a statistical measure of the magnitude of changes in the Portfolio’s returns. A higher volatility level generally indicates higher risk and often results in more frequent and sometimes significant changes in the Portfolio’s returns.
To implement this volatility management strategy, the Portfolio’s sub-adviser will monitor forecasted annualized volatility of the Portfolio’s returns, placing a greater weight on recent historic data. The sub-adviser generates a portfolio volatility forecast based on equity price returns. During periods of heightened forecasted volatility, the Sub-Adviser will attempt to lower volatility by closing existing long exchange-traded equity index futures contracts, selling equity exposures that are derived using ETFs or, in the case where physical securities are held, selling physical securities, or selling exchange-traded equity index futures contracts, in the effort to target a certain level of maximum annual volatility as determined by the sub-adviser based on its volatility management strategy. The Sub-Adviser may use these methods as often as daily to lower the Portfolio’s expected volatility level. During such times, the Portfolio’s overall exposure to equity investments may deviate significantly from its target allocation and could be substantially less than 60% of the Portfolio’s assets (and could be 0% or a net short position in equity investments). In addition, over time the use of a volatility management strategy could result in the Portfolio’s having average exposure to equity investments that is lower than its target allocation. Due to market conditions or other factors, the actual or   To implement this volatility management strategy, the Portfolio’s sub-adviser monitors the expected volatility of the Portfolio and the average expected volatility of the equity asset classes included within the Portfolio (U.S. Large Cap Equity, U.S. Mid Cap Equity, U.S. Small Cap Equity, and International Developed). When either of these two measures exceeds certain levels, as determined by the Sub-Adviser based on its volatility management strategy, the Portfolio may reduce its exposure to equity investments by shorting equity index futures or by investing up to 100% of its target equity allocation in cash or cash equivalents. During such times, the Portfolio’s overall exposure to equity investments may deviate significantly from its target allocation and could be substantially less than 60% of the Portfolio’s net assets (and could be 0% or a net short position in equity investments). In addition, over time the use of a volatility management strategy could result in the Portfolio’s having average exposure to equity investments that is lower than its target allocation. Although these actions are intended to reduce the overall risk of investing in the Portfolio, they may result in periods of underperformance, including during periods when market values are increasing, but market volatility is high.

 

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Acquiring Portfolio

 

Acquired Portfolio

Invesco Moderate Growth Allocation Portfolio

 

First Trust Moderate Growth Allocation Portfolio

realized volatility of the Portfolio for any particular period of time may be materially higher or lower than the target maximum annual level. Although these actions are intended to reduce the overall risk of investing in the Portfolio, they may result in periods of underperformance, including during periods when market values are increasing, but market volatility is high.  
Under normal market conditions, the Portfolio seeks to maintain, over an extended period of years, an average annualized volatility in the Portfolio’s daily equity returns of not more than 20%.   Same.
The magnitude of the changes (or volatility) in the Portfolio’s daily equity returns is measured by standard deviation.   Same.
The Portfolio’s sub-adviser may determine, in its sole discretion, not to implement the volatility management strategy or to allocate the Portfolio’s assets in a manner different than the target allocations described above for various reasons including, but not limited to, if the volatility management strategy would result in de minimis trades or result in excess trading due to expected flows into or out of the Portfolio, or in connection with market events and conditions and other circumstances as determined by the Sub-Adviser.   Same.
Volatility management techniques may reduce potential losses and/or mitigate financial risks to insurance companies that provide certain benefits and guarantees available under the Contracts and offer the Portfolio as an investment option in their products.   Same.
In pursuing its investment objective, the Portfolio may also invest in derivatives for the efficient management of the Portfolio (including to enhance returns), to implement the volatility management strategy, or for the hedging of certain market risks. It is anticipated that the Portfolio’s derivative instruments will consist of long and short positions on exchange-traded equity and fixed income futures contracts as well as currency forwards. The Portfolio also may utilize other types of derivatives, such as swaps, and may engage in short sales. The Portfolio’s investments in derivatives may be deemed to involve the use of leverage because the Portfolio is not required to invest the full market value of the contract upon entering into the contract but participates in gains and losses on the full contract price. The use of derivatives also may be deemed to involve the use of leverage because the heightened price sensitivity of some derivatives to market changes may magnify the Portfolio’s gain or loss. It is not generally expected, however, that the Portfolio will be leveraged by borrowing money for investment purposes.   Same.
From time to time or potentially for extended periods of time in periods of continued market distress, the Portfolio may maintain a considerable percentage of its total assets in cash and cash equivalent instruments, including money market funds, as margin or collateral for the Portfolio’s obligations under derivative transactions, to implement the volatility management strategy, and for other portfolio management purposes. The larger the value of the Portfolio’s derivative positions, as opposed to positions held in non-derivative instruments, the more the Portfolio will be required to maintain cash and cash equivalents as margin or collateral for such derivatives.   Same.
The Portfolio may engage in active and frequent trading of portfolio securities in pursuing its principal investment strategies.   Same.
The Portfolio may lend its portfolio securities to earn additional income.   Same.
The Sub-Adviser may consider the size of the Portfolio when deciding how to implement the investment strategy. For example, the Portfolio may invest primarily in ETFs and derivative instruments, rather than in individual securities, to gain broad exposure to a particular asset category.   No corresponding strategy.

 

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The First Trust Moderate Growth Allocation Portfolio and the Invesco Moderate Growth Allocation Portfolio have identical fundamental investment policies relating to borrowing, concentration, lending, underwriting, issuing senior securities, and investing in commodities and real estate. Fundamental investment policies may be changed only by a vote of a Portfolio’s shareholders. More detailed information about the fundamental investment policies is available in the Statement of Additional Information.

 

Comparative Performance Information

 

The bar charts and tables below provide some indication of the risks of investing in each Portfolio by showing changes in each Portfolio’s performance from year to year and by showing how each Portfolio’s average annual total returns for the past one-year and since inception periods through December 31, 2021, compared to the returns of a broad-based securities market index. The additional broad-based securities market index and the hypothetical composite index for each Portfolio show how that Portfolio’s performance compared with the returns of other asset classes in which the Portfolio may invest. The return of the broad-based securities market index (and the additional comparative index) shown in the right hand column below is the return of the index since the inception of Class IB shares. Past performance is not an indication of future performance.

 

The performance results do not reflect any Contract-related fees and expenses, which would reduce the performance results.

 

The Invesco Moderate Growth Allocation Portfolio will be the accounting survivor of the Reorganization. As such, the Invesco Moderate Growth Allocation Portfolio will continue to have the same performance history following the Reorganization as it had prior to the Reorganization.

 

First Trust Moderate Growth Allocation Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

10.49% (2020 4th Quarter)

  

Worst quarter (% and time period)

(-14.57)% (2020 1st Quarter)

 

Invesco Moderate Growth Allocation Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

8.66% (2020 2nd Quarter)

  

Worst quarter (% and time period)

(-9.65)% (2020 1st Quarter)

 

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First Trust Moderate Growth Allocation Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception

(2/1/2019)
 

First Trust Moderate Growth Allocation Portfolio — Class IB Shares

     10.58        10.57  

EQ/First Trust Moderate Growth Allocation Index (reflects no deduction for fees, expenses, or taxes)

     12.06        14.13  

S&P 500® Index (reflects no deduction for fees, expenses, or taxes)

     28.71        23.61  

Bloomberg U.S. 5-10 Year Corporate Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.52        6.56  

 

Invesco Moderate Growth Allocation Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception

(2/1/2019)
 

Invesco Moderate Growth Allocation Portfolio — Class IB Shares

     10.13        11.33  

EQ/Invesco Moderate Growth Allocation Index (reflects no deduction for fees, expenses, or taxes)

     11.26        13.54  

S&P 500® Index (reflects no deduction for fees, expenses, or taxes)

     28.71        23.61  

Bloomberg U.S. 5-10 Year Corporate Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.52        6.56  

 

Capitalization

 

The following table shows the capitalization of each Portfolio as of June 30, 2022, and of the Invesco Moderate Growth Allocation Portfolio on a pro forma combined basis as of June 30, 2022, after giving effect to the proposed Reorganization. Pro forma net assets may not total and net asset values per share may not recalculate due to rounding of net assets.

 

     Net Assets
(in millions)
    Net Asset Value
Per Share
     Shares
Outstanding
 

First Trust Moderate Growth Allocation Portfolio Class IB Shares

   $ 94.4     $ 10.37        9,101,665  

Invesco Moderate Growth Allocation Portfolio Class IB Shares

   $ 98.5     $ 9.65        10,206,339  

Adjustments*

   $ (0.1        667,329  

Pro forma Invesco Moderate Growth Allocation Portfolio Class IB Shares (assuming the Reorganization is approved)

   $ 192.8     $ 9.65        19,975,333  

Total Pro forma Net Assets (assuming the Reorganization is approved)**

   $ 192.8       

 

*   The adjustments reflect the exchange of First Trust Moderate Growth Allocation Portfolio’s shares for Invesco Moderate Growth Allocation Portfolio’s shares.
**   Adjusted to reflect Reorganization costs.

 

AFTER CAREFUL CONSIDERATION, THE BOARD OF EQ TRUST UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT WITH RESPECT TO THE FIRST TRUST MODERATE GROWTH ALLOCATION PORTFOLIO. ACCORDINGLY, THE BOARD OF EQ TRUST HAS SUBMITTED THE REORGANIZATION AGREEMENT FOR APPROVAL BY THE FIRST TRUST MODERATE GROWTH ALLOCATION PORTFOLIO’S SHAREHOLDERS. THE BOARD OF EQ TRUST RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 3.

 

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PROPOSAL 4: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE AXA IM MODERATE ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST, INTO THE 1290 VT MODERATE GROWTH ALLOCATION PORTFOLIO, A SERIES OF EQ TRUST.

 

This Proposal 4 requests your approval of a Reorganization Agreement pursuant to which the AXA IM Moderate Allocation Portfolio will be reorganized into the 1290 VT Moderate Growth Allocation Portfolio. In considering whether you should approve the Proposal, you should note that:

 

    The Portfolios have substantially similar investment objectives. The AXA IM Moderate Allocation Portfolio seeks long-term total return while managing portfolio volatility. The 1290 VT Moderate Growth Allocation Portfolio seeks the highest total return over time consistent with its asset mix while managing portfolio volatility. Although the Portfolios’ investment objectives are stated differently, the investment objectives do not differ materially.

 

    Both Portfolios provide diversified exposure (either directly or indirectly, as described below) to equity securities and fixed income securities. In addition, each Portfolio invests according to an “asset allocation target,” which represents an approximate percentage of the Portfolio’s assets that are invested in each asset class. The Portfolios’ asset allocation targets differ slightly, as indicated below. Each Portfolio’s equity allocation is invested in the following equity asset categories: U.S. large-cap, U.S. mid-cap, U.S. small-cap, and international developed. Each Portfolio’s fixed income allocation is invested in the corporate debt asset category to create a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years. In addition, the sub-adviser or the Adviser, as applicable, of each Portfolio implements a proprietary volatility management strategy that seeks to reduce the Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility. Both Portfolios also may invest in derivatives, including futures contracts, for a variety of purposes, including to implement the volatility management strategy.

 

    There are, however, differences between the two Portfolios’ principal investment policies and strategies of which you should be aware. These are set forth immediately below. For a detailed comparison of the Portfolios’ investment policies and strategies, see “Comparison of Investment Objectives, Policies and Strategies” below.

 

    The AXA IM Moderate Allocation Portfolio’s current target allocation for long-term investments is approximately 55% of its net assets in equity investments and approximately 45% of its net assets in fixed income investments. On a periodic basis, the Sub-Adviser may rebalance the Portfolio’s investments in response to changes in market value or other factors to maintain these target allocations.

 

    The AXA IM Moderate Allocation Portfolio’s current target is to invest approximately the following percentages of its equity allocation in instruments that provide exposure to the following equity asset categories: U.S. Large Cap Equity (60%), U.S. Mid Cap Equity (10%), U.S. Small Cap Equity (7%), and International Equity (23%). The Portfolio’s sub-adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category. The Portfolio’s allocations to different market capitalizations may vary based on the Sub-Adviser’s tactical views and in response to changing market conditions. Securities in which the Portfolio may invest may be denominated in any currency.

 

    In selecting the AXA IM Moderate Allocation Portfolio’s investments in fixed income securities, the Portfolio’s sub-adviser seeks to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index. The AXA IM Moderate Allocation Portfolio may also purchase or sell futures contracts on fixed income securities and enter into swap contracts in lieu of investing directly in fixed income securities themselves.

 

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    In seeking to reduce the AXA IM Moderate Allocation Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility, the sub-adviser will implement a volatility management strategy. To implement this volatility management strategy, the sub-adviser focuses on equity portfolio beta compared to the S&P 500 Index and equity portfolio correlation to the S&P 500 Index. The sub-adviser’s volatility management strategy is based on a measure of annualized historical volatility computed using daily arithmetic returns. When the expected market volatility increases to a certain level as determined by the sub-adviser based on its volatility management strategy, the Portfolio may reduce its exposure to equity investments by selling exposures that are derived using ETFs or, in the case where physical securities are held, selling physical securities, by shorting equity index futures, by shorting ETFs, or by investing up to 100% of its target equity allocation in cash, cash equivalents or U.S. Treasury notes. During such times, the Portfolio’s overall exposure to equity investments may deviate significantly from its target allocation and could be substantially less than 55% of the Portfolio’s net assets (and could be 0% or a net short position in equity investments). Under normal market conditions, the Portfolio seeks to maintain, over an extended period of years, an average annualized volatility in the Portfolio’s daily equity returns of not more than 20%.

 

    The AXA IM Moderate Allocation Portfolio’s sub-adviser may consider the size of the Portfolio when deciding how to implement the investment strategy. For example, the Portfolio may invest primarily in ETFs and derivative instruments, rather than in individual securities, to gain broad exposure to a particular asset category. As of December 31, 2021, approximately 98% of the Portfolio’s assets were invested in ETFs, rather than in individual securities, to gain exposure to equity and fixed income markets.

 

    The 1290 VT Moderate Growth Allocation Portfolio operates under a “fund-of-funds” structure and invests in securities and other instruments indirectly, through investments in Underlying ETFs (as defined below). The 1290 VT Moderate Growth Allocation Portfolio pursues its investment objective by investing primarily in exchange-traded securities of other investment companies or investment vehicles (“Underlying ETFs”) and/or futures contracts that provide exposure to equity and fixed income markets. The Adviser selects the Underlying ETFs in which to invest the 1290 VT Moderate Growth Allocation Portfolio’s assets.

 

    The 1290 VT Moderate Growth Allocation Portfolio’s asset allocation targets differ slightly from the AXA IM Moderate Allocation Portfolio’s asset allocation targets. The 1290 VT Moderate Growth Allocation Portfolio’s current target allocation for long-term investments is approximately 60% of its assets in equity investments and approximately 40% of its assets in fixed income investments, through investments in Underlying ETFs and/or futures contracts. The Portfolio may from time to time make tactical increases or decreases beyond these target allocations based on momentum (i.e., the tendency of investments to exhibit persistence in their performance) factors to determine the relative attractiveness of equity and fixed income asset classes. This means at any time the Portfolio’s asset mix may differ from the target allocations. When momentum deteriorates, the Adviser may reduce the Portfolio’s exposure to a particular asset class.

 

    The 1290 VT Moderate Growth Allocation Portfolio’s current target is to invest approximately the following percentages of its assets in Underlying ETFs and/or futures contracts that provide exposure to the following equity asset categories: U.S. Large Cap (35%), U.S. Mid Cap (5%), U.S. Small Cap (2%), and International Developed (18%). The Adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category. The Underlying ETFs may be invested in securities denominated in any currency.

 

   

The Adviser invests the 1290 VT Moderate Growth Allocation Portfolio’s fixed income allocation in Underlying ETFs that invest in corporate debt securities and U.S. interest

 

44


 

rate futures contracts, to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index.

 

    The Adviser employs a volatility management strategy that seeks to manage the volatility level of the 1290 VT Moderate Growth Allocation Portfolio’s returns. To implement this volatility management strategy, the Adviser will monitor realized volatility of the Portfolio’s returns, placing a greater weight on recent historic data. During periods of heightened realized volatility, the Adviser will attempt to lower volatility by selling Underlying ETFs, by closing existing long exchange-traded equity index futures contracts or by investing up to 100% of its target allocation to that category in cash or cash equivalents. During periods of heightened realized volatility, the Portfolio may deviate significantly from its target asset allocation. During such times, the Portfolio’s allocation to equity investments may decrease to 0% and its allocation to fixed income investments and cash instruments may increase to 100%. However, its equity allocation may remain sizeable. Under normal market conditions, the 1290 VT Moderate Growth Allocation Portfolio seeks to maintain, over an extended period of years, an average annualized volatility in the Portfolio’s daily equity returns of not more than 20%. The Portfolio may maintain sizeable equity exposure during times of heightened volatility if in the Adviser’s judgment such equity exposure is warranted to produce better risk-adjusted returns over time.

 

    The Portfolios have substantially similar principal risks. Each Portfolio’s principal risks include market risk, asset allocation risk, volatility management risk, equity risk, large-cap company risk, investment grade securities risk, credit risk, interest rate risk, ETF risk/risks related to investments in Underlying ETFs, portfolio management risk, cash management risk, derivatives risk, foreign securities risk, futures contract risk, leveraging risk, liquidity risk, mid-cap and small-cap company risk, new portfolio risk, redemption risk, securities lending risk, and short position risk. The AXA IM Moderate Allocation Portfolio is also subject to large transaction risk and portfolio turnover risk as principal risks, which are not principal risks of the 1290 VT Moderate Growth Allocation Portfolio. The 1290 VT Moderate Growth Allocation Portfolio is also subject to momentum risk as a principal risk, which is not a principal risk of the AXA IM Moderate Allocation Portfolio. Each Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks. For a detailed comparison of the Portfolios’ principal risks, see “Comparison of Principal Risk Factors” below.

 

    EIM serves as the investment adviser for both Portfolios. Subject to EIM’s oversight, AXA Investment Managers US Inc. (“AXA IM” or the “Sub-Adviser”) currently serves as the sub-adviser to the AXA IM Moderate Allocation Portfolio. EIM does not currently employ a sub-adviser for the 1290 VT Moderate Growth Allocation Portfolio. EIM will advise the 1290 VT Moderate Growth Allocation Portfolio after the Reorganization. Equitable Investment Management, LLC serves as the administrator for both Portfolios.

 

    EIM is responsible for overseeing sub-advisers and recommending their hiring, termination and replacement to the Board of Trustees. EIM has been granted relief by the SEC to hire, terminate and replace sub-advisers and amend sub-advisory agreements subject to the approval of the Board of Trustees and without obtaining shareholder approval. However, EIM may not enter into a sub-advisory agreement on behalf of a Portfolio with an “affiliated person” of EIM unless the sub-advisory agreement, including compensation, is approved by the Portfolio’s shareholders. The relief does not extend to any increase in the advisory fee paid by a Portfolio to the Adviser; any such increase would be subject to shareholder approval. For a detailed description of the Adviser and the Sub-Adviser to the AXA IM Moderate Allocation Portfolio, please see “Additional Information about the Portfolios — The Adviser” and “ — The Sub-Advisers” below.

 

    The AXA IM Moderate Allocation Portfolio and the 1290 VT Moderate Growth Allocation Portfolio had net assets of approximately $46.1 million and $81.3 million, respectively, as of March 31, 2022. Thus, if the Reorganization of the AXA IM Moderate Allocation Portfolio into the 1290 VT Moderate Growth Allocation Portfolio had been in effect on that date, the combined Portfolio would have had net assets of approximately $127.4 million.

 

45


    As shown in the “Summary” above, the shareholders of Class IB and (if any) Class K of the AXA IM Moderate Allocation Portfolio will receive Class IB and (if applicable) Class K shares, respectively, of the 1290 VT Moderate Growth Allocation Portfolio pursuant to the Reorganization. Shareholders will not pay any sales charges in connection with the Reorganization. Please see “Comparative Fee and Expense Tables,” “Additional Information about the Reorganizations” and “Additional Information about the Portfolios” below for more information.

 

    It is estimated that the total annual operating expense ratios (including acquired fund fees and expenses) before and after taking into account the expense limitation arrangement (described below) for the 1290 VT Moderate Growth Allocation Portfolio’s Class IB and Class K shares for the fiscal year following the Reorganization will be 1.21% and 1.10% for the Class IB shares, respectively, and 0.96% and 0.85% for the Class K shares, respectively, which are less than the total annual operating expense ratios (including acquired fund fees and expenses) before and after taking into account the expense limitation arrangement (described below) for the AXA IM Moderate Allocation Portfolio’s Class IB and Class K shares for the fiscal year ended December 31, 2021, which were 1.45% and 1.20% for the Class IB shares, respectively, and 1.21% and 0.95% for the Class K shares, respectively. For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. There is no assurance that fees and expenses would not increase after April 30, 2024, when the expense limitation arrangement (described below) for the 1290 VT Moderate Growth Allocation Portfolio would terminate if it is not renewed by EIM and the Board of Trustees.

 

    The 1290 VT Moderate Growth Allocation Portfolio is subject to a lower advisory fee schedule. The maximum advisory fee for the AXA IM Moderate Allocation Portfolio is equal to an annual rate of 0.80% of its average daily net assets, whereas the maximum advisory fee for the 1290 VT Moderate Growth Allocation Portfolio is equal to an annual rate of 0.70% of its average daily net assets.

 

    The Portfolios are subject to the same administration fee schedule. Each Portfolio pays Equitable Investment Management, LLC, the Administrator, its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $32,500. For purposes of calculating the asset-based administration fee, the assets of the Portfolios are aggregated with the assets of multiple other portfolios of EQ Trust and all the portfolios of VIP Trust (together the “Aggregated Portfolios”). The Portfolios’ asset-based administration fee rates are as follows: 0.140% of the first $60 billion of the aggregate average daily net assets of the Aggregated Portfolios; 0.110% of the next $20 billion; 0.0875% of the next $20 billion; 0.0775% of the next $20 billion; 0.0750% of the next $20 billion; and 0.0725% thereafter. A complete list of the Aggregated Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

    The 1290 VT Moderate Growth Allocation Portfolio is subject to lower contractual expense caps, and the expense limitation arrangement for the 1290 VT Moderate Growth Allocation Portfolio extends one year beyond that for the AXA IM Moderate Allocation Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the AXA IM Moderate Allocation Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares and 0.95% for Class K shares of the Portfolio.

 

   

Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the 1290 VT Moderate Growth Allocation Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and

 

46


 

extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.10% for Class IB shares and 0.85% for Class K shares of the Portfolio.

 

    The Class IB shares of the Portfolios are each subject to a Rule 12b-1 fee equal to an annual rate of 0.25% of the average daily net assets of the share class.

 

    The Class IB and Class K shares of the 1290 VT Moderate Growth Allocation Portfolio outperformed the Class IB and Class K shares of the AXA IM Moderate Allocation Portfolio for the one-year and since inception periods ended December 31, 2021. Please see “Comparative Performance Information” below.

 

    In connection with the Reorganization, it is anticipated that EIM will redeem shares that it holds in the AXA IM Moderate Allocation Portfolio representing seed capital it has previously invested. The estimated percentage of the holdings of the AXA IM Moderate Allocation Portfolio that will be sold in connection with the redemption of shares by EIM is 25%, and such sales are expected to result in brokerage commissions or other transaction costs of approximately $850 (0.2 basis points). The withdrawal of such seed capital is not expected to have a material effect on the annual operating expenses of the combined Portfolio.

 

    Following the Reorganization, the combined Portfolio will be managed in accordance with the investment objective, policies and strategies of the 1290 VT Moderate Growth Allocation Portfolio. It is not expected that the 1290 VT Moderate Growth Allocation Portfolio will revise any of its investment policies following the Reorganization to reflect those of the AXA IM Moderate Allocation Portfolio. EIM has reviewed the AXA IM Moderate Allocation Portfolio’s current portfolio holdings and determined that the holdings generally are compatible with the 1290 VT Moderate Growth Allocation Portfolio’s investment objective and policies. Thus, EIM believes that, if the Reorganization is approved, a substantial portion of the holdings of the AXA IM Moderate Allocation Portfolio could be transferred to and held by the 1290 VT Moderate Growth Allocation Portfolio. It is estimated that the AXA IM Moderate Allocation Portfolio will not sell any holdings in connection with the Reorganization other than the holdings that will be sold in connection with the redemption of shares by EIM (described above). However, some of the AXA IM Moderate Allocation Portfolio’s holdings may not remain at the time of the Reorganization due to normal portfolio turnover. It is also expected that, if the Reorganization is approved, the holdings of the AXA IM Moderate Allocation Portfolio involved therein that are not compatible with the 1290 VT Moderate Growth Allocation Portfolio’s investment objective and policies, if any, will be liquidated in an orderly manner in connection with the Reorganization, and the proceeds of these sales held in cash or temporary investments. The portion of the AXA IM Moderate Allocation Portfolio’s assets that will be liquidated in connection with the Reorganization will depend on market conditions and on the assessment by EIM of the compatibility of those holdings with the 1290 VT Moderate Growth Allocation Portfolio’s portfolio composition and investment strategies. The need for the AXA IM Moderate Allocation Portfolio to sell investments in connection with the Reorganization or the redemption of shares by EIM (described above) may result in its selling securities at a disadvantageous time and price and could result in its realizing gains (or losses) that would not otherwise have been realized and its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. It is expected that the AXA IM Moderate Allocation Portfolio will not sell any holdings in connection with the Reorganization other than the holdings that will be sold in connection with the redemption of shares by EIM (described above). Therefore, no brokerage commissions or other transaction costs other than the costs associated with the redemption of shares by EIM ($850 (0.2 basis points)) are expected to be incurred. This estimate is subject to change depending on the factors outlined above. Contractholders will not recognize any gain or loss for federal income tax purposes as a result of the Reorganization.

 

    EIM has agreed to pay expenses of the Reorganization that exceed the AXA IM Moderate Allocation Portfolio’s expense limitation set forth in its expense limitation agreement. The Reorganization expenses for the AXA IM Moderate Allocation Portfolio, which are estimated to be $46,264 (excluding portfolio transaction costs associated with the redemption of shares by EIM, which will be incurred indirectly by Contractholders before the Reorganization), exceed the expense limit and are expected to be paid by EIM.

 

47


Comparison of Principal Risk Factors

 

An investment in a Portfolio is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in a Portfolio. There can be no assurance that a Portfolio will achieve its investment objective.

 

The following table compares the principal risks of an investment in each Portfolio. For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). For an explanation of each risk, see “Additional Information about the Reorganizations — Descriptions of Risk Factors” below. Each Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks.

 

Risks

   1290 VT Moderate Growth
Allocation Portfolio
    AXA IM Moderate
Allocation Portfolio
 

Asset Allocation Risk

     X     X

Cash Management Risk

     X       X  

Credit Risk

     X     X

Derivatives Risk

     X       X  

ETFs Risk/Risks Related to Investments in Underlying ETFs

     X     X

Equity Risk

     X     X

Foreign Securities Risk

     X       X  

Currency Risk

     X       X  

Geographic Concentration Risk

     X       X  

Futures Contract Risk

     X       X  

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X       X

Large Transaction Risk

       X  

Large-Cap Company Risk

     X       X

Leveraging Risk

     X       X  

Liquidity Risk

     X       X  

Market Risk

     X     X

Mid-Cap and Small-Cap Company Risk

     X       X  

Momentum Risk

     X    

New Portfolio Risk

     X       X  

Portfolio Management Risk

     X     X

Portfolio Turnover Risk

       X  

Redemption Risk

     X       X  

Securities Lending Risk

     X       X  

Short Position Risk

     X       X  

Volatility Management Risk

     X     X

 

Comparative Fee and Expense Tables

 

The following tables show the fees and expenses of the Class IB Shares and Class K Shares of the AXA IM Moderate Allocation Portfolio and the Class IB Shares and Class K Shares of the 1290 VT Moderate Growth Allocation Portfolio and the estimated pro forma fees and expenses of the Class IB Shares and Class K Shares of the 1290 VT Moderate Growth Allocation Portfolio after giving effect to the proposed Reorganization. Fees and expenses for each Portfolio are based on those incurred by the relevant class of its shares for the fiscal year ended December 31, 2021. The pro forma fees and expenses of the 1290 VT Moderate Growth Allocation Portfolio shares assume that the Reorganization was in effect for the year ended December 31, 2021. The tables below do not reflect any Contract-related fees and expenses, which would increase overall fees and expenses. See a Contract prospectus for a description of those fees and expenses.

 

Shareholder Fees

(fees paid directly from your investment)

 

AXA IM Moderate Allocation Portfolio

   1290 VT Moderate Growth Allocation
Portfolio
   Pro Forma 1290 VT Moderate Growth
Allocation Portfolio (assuming the
Reorganization is approved)

Not Applicable.

   Not Applicable.    Not Applicable.

 

48


Annual Operating Expenses

(expenses that you may pay each year as a percentage of the value of your investment)

 

     AXA IM Moderate
Allocation Portfolio
    1290 VT Moderate
Growth Allocation Portfolio
    Pro Forma 1290 VT
Moderate Growth
Allocation Portfolio (assuming
the Reorganization is
approved)**
 
     Class IB     Class K     Class IB     Class K     Class IB     Class K  

Management Fee

     0.80     0.80     0.70     0.70     0.70     0.70

Distribution and/or Service Fees (12b-1 fees)

     0.25     0.00     0.25     0.00     0.25     0.00

Other Expenses

     0.31     0.32     0.23     0.23 %*      0.20     0.20 %* 

Acquired Fund Fees and Expenses

     0.09     0.09     0.06     0.06 %*      0.06     0.06 %* 

Total Annual Portfolio Operating Expenses

     1.45     1.21     1.24     0.99     1.21     0.96

Fee Waiver and/or Expense Reimbursement†

     (0.25 )%      (0.26 )%      (0.14 )%      (0.14 )%      (0.11 )%      (0.11 )% 

Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement

     1.20     0.95     1.10     0.85     1.10     0.85

 

  Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of (1) the AXA IM Moderate Allocation Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of the arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.20% for Class IB shares of the Portfolio and 0.95% for Class K shares of the Portfolio, and (2) the 1290 VT Moderate Growth Allocation Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.10% for Class IB shares of the Portfolio and 0.85% for Class K shares of the Portfolio. The expense limitation agreements may be terminated by EIM at any time after April 30, 2023 or April 30, 2024, as applicable. EIM may be reimbursed the amount of any such payments or waivers made after June 30, 2020, in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and a Portfolio’s expense ratio, after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower. If the Acquired Portfolio is reorganized, EIM will forgo the recoupment of any amounts waived or reimbursed with respect to the Acquired Portfolio prior to its Reorganization.
*   Based on estimated amounts for the current fiscal year.
**   Pro forma annual operating expenses have been adjusted to reflect the anticipated withdrawal of seed capital by EIM from the AXA IM Moderate Allocation Portfolio in connection with the Reorganization.

 

Example of Portfolio Expenses

 

This example is intended to help you compare the costs of investing in the Portfolios with the cost of investing in other investment options. The example assumes that:

 

    You invest $10,000 in a Portfolio for the time periods indicated;

 

    Your investment has a 5% return each year;

 

    The Portfolio’s operating expenses remain the same; and

 

    The expense limitation arrangement with respect to the Portfolio is not renewed.

 

This example does not reflect any Contract-related fees and expenses, including redemption fees (if any) at the Contract level. If such fees and expenses were reflected, the total expenses would be higher. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     1 Year      3 Years      5 Years      10 Years  

AXA IM Moderate Allocation Portfolio

           

Class IB

   $ 122      $ 434      $ 768      $ 1,714  

Class K

   $ 97      $ 358      $ 640      $ 1,443  

1290 VT Moderate Growth Allocation Portfolio

           

Class IB

   $ 112      $ 380      $ 668      $ 1,488  

Class K

   $ 87      $ 301      $ 533      $ 1,200  

 

49


     1 Year      3 Years      5 Years      10 Years  

Pro Forma 1290 VT Moderate Growth Allocation Portfolio

(assuming the Reorganization is approved)

           

Class IB

   $ 112      $ 362      $ 643      $ 1,446  

Class K

   $ 87      $ 283      $ 509      $ 1,157  

 

Portfolio Turnover

 

Each Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Portfolio’s performance. During the fiscal year ended December 31, 2021, the portfolio turnover rates for each of the AXA IM Moderate Allocation Portfolio and the 1290 VT Moderate Growth Allocation Portfolio were 8% and 7%, respectively, of the average value of its portfolio.

 

Comparison of Investment Objectives, Policies and Strategies

 

The following table compares the investment objectives and principal investment policies and strategies of the AXA IM Moderate Allocation Portfolio with those of the 1290 VT Moderate Growth Allocation Portfolio. The Board of EQ Trust may change the investment objective of a Portfolio without a vote of that Portfolio’s shareholders. For more detailed information about each Portfolio’s investment strategies and risks, see Appendix B.

 

Acquiring Portfolio

 

Acquired Portfolio

1290 VT Moderate Growth Allocation Portfolio

 

AXA IM Moderate Allocation Portfolio

Investment Objective   Investment Objective
Seeks the highest total return over time consistent with its asset mix while managing portfolio volatility.   Seeks long-term total return while managing portfolio volatility.
Principal Investment Strategies   Principal Investment Strategies
The Portfolio pursues its investment objective by investing primarily in exchange-traded securities of other investment companies or investment vehicles (“Underlying ETFs”) and/or futures contracts that provide exposure to equity and fixed income markets.   Under normal market conditions, the Sub-Adviser will allocate the Portfolio’s assets to achieve targeted exposures among equity investments and fixed income investments.
The Portfolio’s current target allocation for long-term investments is approximately 60% of its assets in equity investments and approximately 40% of its assets in fixed income investments, through investments in Underlying ETFs and/or futures contracts. The Portfolio may from time to time make tactical increases or decreases beyond these target allocations based on momentum factors to determine the relative attractiveness of equity and fixed income asset classes. This means at any time the Portfolio’s asset mix may differ from the target allocations.   The Portfolio’s current target allocation for long-term investments is approximately 55% of its net assets in equity investments and approximately 45% of its net assets in fixed income investments. On a periodic basis, the Sub-Adviser may rebalance the Portfolio’s investments in response to changes in market value or other factors to maintain these target allocations. During periods before or after such rebalancing, the Portfolio may deviate from its target allocations.
Momentum is the tendency of investments to exhibit persistence in their performance. When momentum deteriorates, the Adviser may reduce the Portfolio’s exposure to a particular asset class.   No corresponding strategy.
The Adviser targets an equity allocation of approximately 60% of the Portfolio’s assets in Underlying ETFs and/or futures contracts that provide exposure to U.S. large, mid and small cap stocks and foreign developed markets securities.   The Portfolio’s equity allocation will be invested in the following equity asset categories: U.S. Large Cap Equity, U.S. Mid Cap Equity, U.S. Small Cap Equity, and International Equity (excluding emerging markets).
The Portfolio’s current target is to invest approximately the following percentages of its assets in Underlying ETFs and/or futures contracts that provide exposure to the following equity asset categories: U.S. Large Cap (35%), U.S. Mid Cap (5%), U.S. Small Cap (2%), and   The Portfolio’s current target is to invest approximately the following percentages of its equity allocation in instruments that provide exposure to these equity asset categories: U.S. Large Cap Equity (60%), U.S. Mid Cap Equity (10%), U.S. Small Cap Equity

 

50


Acquiring Portfolio

 

Acquired Portfolio

1290 VT Moderate Growth Allocation Portfolio

 

AXA IM Moderate Allocation Portfolio

International Developed (18%). The allocations among the equity asset categories may be changed by the Adviser without notice or shareholder approval.   (7%), and International Equity (23%). The allocations among the equity asset categories may be changed by the Sub-Adviser without notice or shareholder approval. The Portfolio’s equity investments may include ETFs, common stocks, options, rights, warrants and other equity-related instruments, including, but not limited to, derivatives as described below.
The Underlying ETFs in which the Portfolio invests may be invested in securities denominated in any currency.   Securities in which the Portfolio may invest may be denominated in any currency.
No corresponding strategy.   The Portfolio’s allocations to different market capitalizations may vary based on the Sub-Adviser’s tactical views and in response to changing market conditions.
The Adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category   The Sub-Adviser will periodically rebalance the Portfolio’s allocations among the equity asset categories to maintain the desired exposure to each asset category.
The Adviser targets a fixed income allocation of approximately 40% of the Portfolio’s assets in Underlying ETFs that invest in corporate debt securities and U.S. interest rate futures contracts, to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years.   Substantially all of the Portfolio’s fixed income allocation will be invested in ETFs and in instruments that provide exposure to the corporate debt asset category. In selecting the Portfolio’s investments in fixed income securities, the Sub-Adviser seeks to create a fixed income allocation with a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, which is an unmanaged index that includes U.S. dollar-denominated, investment-grade, fixed-rate, taxable securities issued by industrial, utility and financial companies, with maturities between 5 and 10 years. The Portfolio may also purchase or sell futures contracts on fixed income securities and enter into swap contracts in lieu of investing directly in fixed income securities themselves.
An Underlying ETF’s investments may include fixed coupon bonds, step-up bonds, bonds with sinking funds, medium term notes, callable and putable bonds, and 144A bonds.   The Portfolio’s investments in fixed income securities may include fixed coupon bonds, step-up bonds, bonds with sinking funds, medium term notes, callable and putable bonds, and 144A bonds.
No corresponding strategy.   Substantially all of the Portfolio’s fixed income allocation will be invested in ETFs and in instruments that provide exposure to the corporate debt asset category. The Portfolio’s fixed income allocation will be invested primarily (either directly or indirectly through other investments) in U.S. dollar-denominated corporate debt securities that are rated investment grade at the time of purchase (i.e., at least Baa by Moody’s or BBB by S&P or Fitch), or if unrated, determined by the Adviser or Sub-Adviser to be of comparable quality.
The Adviser selects the Underlying ETFs in which to invest the Portfolio’s assets. The Underlying ETFs are investment companies or other investment vehicles whose shares are listed and traded on U.S. stock exchanges or otherwise traded in the over-the-counter market and may be purchased and sold throughout the trading day based on their market price. Generally, an Underlying ETF seeks to track a securities index or a basket of securities that an “index provider” (such as Standard & Poor’s, Russell or Morgan Stanley Capital International) selects as representative of a market, market segment, industry sector, country or geographic region. An index-based Underlying ETF generally holds the same stocks or bonds as the index it seeks to track (or it may hold a representative sample of such securities). Accordingly, an index-based Underlying ETF is designed so that its performance, before fees and expenses, will correspond closely with that of the index it seeks to track. Underlying ETFs also may be actively managed.   No corresponding strategy.

 

51


Acquiring Portfolio

 

Acquired Portfolio

1290 VT Moderate Growth Allocation Portfolio

 

AXA IM Moderate Allocation Portfolio

In selecting Underlying ETFs, the Adviser will utilize a proprietary investment process that may take into consideration a number of factors including, as appropriate and applicable, fund performance, management team, investment style, correlations, asset class exposure, industry classification, benchmark, risk adjusted return, volatility, expense ratio, asset size and portfolio turnover. For purposes of asset class and asset category target allocations, where an Underlying ETF could be assigned to more than one asset category, the Adviser may, in its discretion, assign an Underlying ETF to one or more asset categories. For purposes of complying with the Portfolio’s investment policies, the Adviser will identify Underlying ETFs in which to invest by reference to such Underlying ETFs’ investment policies at the time of investment. An Underlying ETF that changes its investment policies subsequent to the time of the Portfolio’s investment may continue to be considered an appropriate investment for purposes of the policy. The Adviser may add new Underlying ETFs or replace or eliminate existing Underlying ETFs without notice or shareholder approval. The Underlying ETFs have been selected to represent a reasonable spectrum of investment options for the Portfolio.   No corresponding strategy.
The Adviser may sell the Portfolio’s holdings for a variety of reasons, including to invest in an Underlying ETF believed to offer superior investment opportunities.   No corresponding strategy.
The Adviser also employs a volatility management strategy that seeks to manage the volatility level of the Portfolio’s returns. Volatility is a statistical measure of the magnitude of changes in the Portfolio’s returns. A higher volatility level generally indicates higher risk and often results in more frequent and sometimes significant changes in the Portfolio’s returns.   The Sub-Adviser also will implement a volatility management strategy that seeks to reduce the Portfolio’s market risk exposure and overall volatility during periods of expected heightened market volatility. Volatility is a statistical measure of the magnitude of changes in the Portfolio’s returns. A higher volatility level generally indicates higher risk and often results in more frequent and sometimes significant changes in the Portfolio’s returns.
To implement this volatility management strategy, the Adviser will monitor realized volatility of the Portfolio’s returns, placing a greater weight on recent historic data. During periods of heightened realized volatility, the Adviser will attempt to lower volatility by selling Underlying ETFs, by closing existing long exchange-traded equity index futures contracts or by investing up to 100% of its target allocation to that category in cash or cash equivalents. During periods of heightened realized volatility, the Portfolio may deviate significantly from its target asset allocation. During such times, the Portfolio’s allocation to equity investments may decrease to 0% and its allocation to fixed income investments and cash instruments may increase to 100%; however, its equity allocation may remain sizeable. In addition, over time the use of a volatility management strategy could result in the Portfolio’s having average exposure to equity investments that is lower than its target allocation. Although these actions are intended to reduce the overall risk of investing in the Portfolio, they may result in periods of underperformance, including periods when market values are increasing but market volatility is high. The Portfolio may maintain sizeable equity exposure during times of heightened volatility if in the Adviser’s judgment such equity exposure is warranted to produce better risk-adjusted returns over time.   To implement its volatility management strategy, the Sub-Adviser focuses on equity portfolio beta compared to the S&P 500 Index and equity portfolio correlation to the S&P 500 Index. The Sub-Adviser’s volatility management strategy is based on a measure of annualized historical volatility computed using daily arithmetic returns. When the expected market volatility increases to a certain level as determined by the Sub-Adviser based on its volatility management strategy, the Portfolio may reduce its exposure to equity investments by selling exposures that are derived using ETFs or, in the case where physical securities are held, selling physical securities, by shorting equity index futures, by shorting ETFs, or by investing up to 100% of its target equity allocation in cash, cash equivalents or U.S. Treasury notes. During such times, the Portfolio’s overall exposure to equity investments may deviate significantly from its target allocation and could be substantially less than 55% of the Portfolio’s net assets (and could be 0% or a net short position in equity investments). In addition, over time the use of a volatility management strategy could result in the Portfolio’s having average exposure to equity investments that is lower than its target allocation. Although these actions are intended to reduce the overall risk of investing in the Portfolio, they may result in periods of underperformance, including during periods when market values are increasing, but market volatility is high.
Under normal market conditions, the Portfolio seeks to maintain, over an extended period of years, an average annualized volatility in the Portfolio’s daily equity returns of not more than 20%.   Same.

 

52


Acquiring Portfolio

 

Acquired Portfolio

1290 VT Moderate Growth Allocation Portfolio

 

AXA IM Moderate Allocation Portfolio

The Adviser may determine, in its sole discretion, not to implement the volatility management strategy or to allocate the Portfolio’s assets in a manner different than the target allocations described above for various reasons including, but not limited to, if the volatility management strategy would result in de minimis trades or result in excess trading due to expected flows into or out of the Portfolio, or in connection with market events and conditions and other circumstances as determined by the Adviser.   The Sub-Adviser may determine, in its sole discretion, not to implement the volatility management strategy or to allocate the Portfolio’s assets in a manner different than the target allocations described above for various reasons including, but not limited to, if the volatility management strategy would result in de minimis trades or result in excess trading due to expected flows into or out of the Portfolio, or in connection with market events and conditions and other circumstances as determined by the Sub-Adviser.
The magnitude of the changes (or volatility) in the Portfolio’s daily equity returns is measured by standard deviation.   Same.
Volatility management techniques may reduce potential losses and/or mitigate financial risks to insurance companies that provide certain benefits and guarantees available under the Contracts and offer the Portfolio as an investment option in their products.   Same.
In pursuing its investment objectives, the Portfolio may also invest in derivatives for the efficient management of the Portfolio (including to enhance returns), to implement the volatility management strategy, or for the hedging of certain market risks.   Same.
It is anticipated that the Portfolio’s derivative instruments will consist of long and short positions on exchange-traded equity and fixed income futures contracts.   It is anticipated that the Portfolio’s derivative instruments will consist of long and short positions on exchange-traded equity futures contracts as well as currency forwards. The Portfolio also may utilize other types of derivatives, such as swaps, and may engage in short sales.
The Portfolio’s investments in derivatives may be deemed to involve the use of leverage because the Portfolio is not required to invest the full market value of the contract upon entering into the contract but participates in gains and losses on the full contract price. The use of derivatives also may be deemed to involve the use of leverage because the heightened price sensitivity of some derivatives to market changes may magnify the Portfolio’s gain or loss. It is not generally expected, however, that the Portfolio will be leveraged by borrowing money for investment purposes.   Same.
From time to time or potentially for extended periods of time in periods of continued market distress, the Portfolio may maintain a considerable percentage of its total assets in cash and cash equivalent instruments, including money market funds, as margin or collateral for the Portfolio’s obligations under derivative transactions, to implement the volatility management strategy, and for other portfolio management purposes. The larger the value of the Portfolio’s derivative positions, as opposed to positions held in non-derivative instruments, the more the Portfolio will be required to maintain cash and cash equivalents as margin or collateral for such derivatives.   Same.
The Portfolio may lend its portfolio securities to earn additional income.   Same.
No corresponding strategy.   The Portfolio may engage in active and frequent trading of portfolio securities in pursuing its principal investment strategies.
No corresponding strategy.   The Sub-Adviser may consider the size of the Portfolio when deciding how to implement the investment strategy. For example, the Portfolio may invest primarily in ETFs and derivative instruments, rather than in individual securities, to gain broad exposure to a particular asset category.

 

53


The AXA IM Moderate Allocation Portfolio and the 1290 VT Moderate Growth Allocation Portfolio have identical fundamental investment policies relating to borrowing, concentration, lending, underwriting, issuing senior securities, and investing in commodities and real estate. Fundamental investment policies may be changed only by a vote of a Portfolio’s shareholders. More detailed information about the fundamental investment policies is available in the Statement of Additional Information.

 

Comparative Performance Information

 

The bar charts and tables below provide some indication of the risks of investing in each Portfolio by showing changes in each Portfolio’s performance from year to year and by showing how each Portfolio’s average annual total returns for the past one-year and since inception periods through December 31, 2021, compared to the returns of a broad-based securities market index. The additional broad-based securities market index and the hypothetical composite index for each Portfolio show how the Portfolio’s performance compared with the returns of other asset classes in which the Portfolio may invest. The return of the broad-based securities market index (and any additional comparative index) shown in the right hand column below is the return of the index since the inception of the share class. Past performance is not an indication of future performance.

 

The performance results do not reflect any Contract-related fees and expenses, which would reduce the performance results.

 

The 1290 VT Moderate Growth Allocation Portfolio will be the accounting survivor of the Reorganization. As such, the 1290 VT Moderate Growth Allocation Portfolio will continue to have the same performance history following the Reorganization as it had prior to the Reorganization.

 

AXA IM Moderate Allocation Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

8.47% (2020 4th Quarter)

 

Worst quarter (% and time period)

-12.09% (2020 1st Quarter)

 

1290 VT Moderate Growth Allocation Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

9.47% (2020 4th Quarter)

 

Worst quarter (% and time period)

-14.07% (2020 1st Quarter)

 

54


AXA IM Moderate Allocation Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
inception
(02/01/2019)
 

AXA IM Moderate Allocation Portfolio — Class IB Shares

     10.24        9.63  

AXA IM Moderate Allocation Portfolio — Class K Shares

     10.57        9.91  

EQ/AXA Investment Managers Moderate Allocation Index (reflects no deduction for fees,
expenses, or taxes)

     11.53        13.94  

S&P 500® Index (reflects no deduction for fees, expenses, or taxes)

     28.71        23.61  

Bloomberg U.S. 5-10 Year Corporate Bond Index (reflects no deduction for fees,
expenses, or taxes)

     -1.52        6.56  

 

1290 VT Moderate Growth Allocation Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception
(02/01/2019)
 

1290 VT Moderate Growth Allocation Portfolio — Class IB Shares

     12.51        11.19  

1290 VT Moderate Growth Allocation Portfolio — Class K Shares*

     12.78        11.45  

1290 VT Moderate Growth Allocation Index (reflects no deduction for fees, expenses, or taxes)

     12.46        14.32  

S&P 500® Index (reflects no deduction for fees, expenses, or taxes)

     28.71        23.61  

Bloomberg U.S. 5-10 Year Corporate Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.52        6.56  

 

*   After the close of business on March 22, 2021, operations for Class K shares of the 1290 VT Moderate Growth Allocation Portfolio ceased and shares of seed capital were fully redeemed. The historical performance for Class K shares for the period from March 22, 2021 through December 31, 2021, is based on the performance of Class IB shares, adjusted to reflect the fees and expenses of Class K shares.

 

Capitalization

 

The following table shows the capitalization of each Portfolio as of June 30, 2022, and of the 1290 VT Moderate Growth Allocation Portfolio on a pro forma combined basis as of June 30, 2022, after giving effect to the proposed Reorganization. Pro forma capitalization of the combined Portfolio has been adjusted to reflect the anticipated withdrawal of seed capital by EIM from the AXA IM Moderate Allocation Portfolio in connection with the Reorganization. Pro forma net assets may not total and net asset values per share may not recalculate due to rounding of net assets.

 

     Net Assets
(in millions)
    Net Asset Value
Per Share
     Shares
Outstanding
 

AXA IM Moderate Allocation Portfolio Class IB Shares

   $ 31.9     $ 10.54        3,022,885  

1290 VT Moderate Growth Allocation Portfolio Class IB Shares

   $ 74.7     $ 10.77        6,941,552  

Adjustments**

   $ (0.1        (81,054

Pro forma 1290 VT Moderate Growth Allocation Portfolio — Class IB Shares (assuming the Reorganization is approved)

   $ 106.5     $ 10.77        9,883,383  

AXA IM Moderate Allocation Portfolio Class K Shares

   $ 10.8     $ 10.55        1,025,895  

1290 VT Moderate Growth Allocation Portfolio — Class K Shares*

   $     $         

Adjustments**

   $ (10.8        (1,025,895

Pro forma 1290 VT Moderate Growth Allocation Portfolio — Class K Shares (assuming the Reorganization is approved)

   $ 0     $ 0        0  

Total Pro forma Net Assets (assuming the Reorganization is approved)***

   $ 106.5       

 

*   After the close of business on March 22, 2021, operations for Class K shares of the 1290 VT Moderate Growth Allocation Portfolio ceased and shares of seed capital were fully redeemed.
**   The adjustments reflect the anticipated withdrawal of seed capital by EIM from the AXA IM Moderate Allocation Portfolio in connection with the Reorganization.
***   Adjusted to reflect Reorganization costs.

 

55


AFTER CAREFUL CONSIDERATION, THE BOARD OF EQ TRUST UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT WITH RESPECT TO THE AXA IM MODERATE ALLOCATION PORTFOLIO. ACCORDINGLY, THE BOARD OF EQ TRUST HAS SUBMITTED THE REORGANIZATION AGREEMENT FOR APPROVAL BY THE AXA IM MODERATE ALLOCATION PORTFOLIO’S SHAREHOLDERS. THE BOARD OF EQ TRUST RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 4.

 

PROPOSAL 5: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE INVESCO INTERNATIONAL GROWTH PORTFOLIO, A SERIES OF EQ TRUST, INTO THE MFS INTERNATIONAL GROWTH PORTFOLIO, A SERIES OF EQ TRUST.

 

This Proposal 5 requests your approval of a Reorganization Agreement pursuant to which the Invesco International Growth Portfolio will be reorganized into the MFS International Growth Portfolio. In considering whether you should approve the Proposal, you should note that:

 

    The Portfolios have substantially similar investment objectives. The Invesco International Growth Portfolio seeks to achieve long-term growth of capital. The MFS International Growth Portfolio seeks to achieve capital appreciation. Although the Portfolios’ objectives are stated differently, the objectives do not differ materially.

 

    Each Portfolio invests substantially in equity securities of foreign issuers (including securities that provide exposure to emerging markets) and is actively managed by a single investment sub-adviser that uses a “growth” style to select investments.

 

    There are, however, differences between the two Portfolios’ principal investment policies and strategies of which you should be aware. These are set forth immediately below. For a detailed comparison of the Portfolios’ investment policies and strategies, see “Comparison of Investment Objectives, Policies and Strategies” below.

 

    The Invesco International Growth Portfolio invests primarily in equity securities and depositary receipts of foreign issuers. The principal types of equity securities in which the Portfolio invests are common and preferred stock.

 

    Under normal circumstances, the Invesco International Growth Portfolio will provide exposure to investments that are economically tied to at least three different countries outside of the U.S. An issuer will be considered to be economically tied to a country outside of the U.S. if it is domiciled, derives a significant portion of its revenues from, or primarily trades in a market located outside of the U.S. The Invesco International Growth Portfolio may also invest up to 1.25 times the amount of the exposure to emerging markets countries in the MSCI All Country World ex-U.S. Growth Index. Emerging markets countries are those countries that are generally in the early stages of their industrial cycles. The Portfolio’s common stock investments may also include China A-shares (shares of companies based in mainland China that trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange).

 

    The Invesco International Growth Portfolio invests primarily in the securities of large-capitalization issuers and may invest a significant amount of its net assets in the securities of mid-capitalization issuers.

 

   

The Invesco International Growth Portfolio can invest in derivative instruments, including forward foreign currency contracts and futures contracts. The Portfolio can use forward foreign currency contracts to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated, if deemed appropriate by the Sub-Adviser. The Portfolio can use futures contracts to gain exposure to the broad market in connection with managing cash balances or to hedge against downside risk. The Invesco International Growth

 

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Portfolio’s investments in derivatives may require it to maintain a percentage of its assets in cash and cash equivalent instruments to serve as margin or collateral for the Portfolio’s obligations under derivative transactions.

 

    Under normal circumstances, the MFS International Growth Portfolio intends to invest at least 80% of its net assets in the equity securities of foreign companies, including emerging markets equity securities. The MFS International Growth Portfolio intends to invest primarily in common stocks, but it may also invest in other types of equity securities, including depositary receipts, preferred stocks and warrants.

 

    The Portfolio may invest a large percentage of its assets in issuers in a single country, a small number of countries, or a particular geographic region. The Sub-Adviser normally allocates the Portfolio’s investments across different industries and sectors, but the Sub-Adviser may invest a significant percentage of the Portfolio’s assets in issuers in a single or small number of industries or sectors.

 

    The Portfolio may invest in companies of any size.

 

    The sub-adviser for the MFS International Growth Portfolio may consider environmental, social, and governance (ESG) factors in its fundamental investment analysis where the sub-adviser believes such factors could materially impact the economic value of an issuer. ESG factors considered may include, but are not limited to, climate change, resource depletion, an issuer’s governance structure and practices, data protection and privacy issues, and diversity and labor practices. Quantitative screening tools that systematically evaluate an issuer’s valuation, price and earnings momentum, earnings quality, and other factors may also be considered.

 

    Each Portfolio’s principal risks include market risk, equity risk, foreign securities risk, investment style risk, large-cap company risk, mid-cap company risk, sector risk, portfolio management risk and securities lending risk. The Invesco International Growth Portfolio is also subject to cash management risk and derivatives risk as principal risks, which are not principal risks of the MFS International Growth Portfolio. The MFS International Growth Portfolio is also subject to small-cap company risk, large transaction risk and liquidity risk as principal risks, which are not principal risks of the Invesco International Growth Portfolio. For a detailed comparison of the Portfolios’ principal risks, see “Comparison of Principal Risk Factors” below.

 

    EIM serves as the investment adviser for both Portfolios. Subject to EIM’s oversight, Invesco Advisers, Inc. (“Invesco” or the “Sub-Adviser”), currently serves as the sub-adviser to the Invesco International Growth Portfolio. Subject to EIM’s oversight, Massachusetts Financial Services Company d/b/a MFS Investment Management (“MFS” or the “Sub-Adviser”), currently serves as the sub-adviser to the MFS International Growth Portfolio. EIM will advise, and it is anticipated that MFS will continue to sub-advise, the MFS International Growth Portfolio after the Reorganization. Equitable Investment Management, LLC serves as the administrator for both Portfolios.

 

    EIM is responsible for overseeing sub-advisers and recommending their hiring, termination and replacement to the Board of Trustees. EIM has been granted relief by the SEC to hire, terminate and replace sub-advisers and amend sub-advisory agreements subject to the approval of the Board of Trustees and without obtaining shareholder approval. However, EIM may not enter into a sub-advisory agreement on behalf of a Portfolio with an “affiliated person” of EIM unless the sub-advisory agreement, including compensation, is approved by the Portfolio’s shareholders. The relief does not extend to any increase in the advisory fee paid by a Portfolio to the Adviser; any such increase would be subject to shareholder approval. For a detailed description of the Adviser and the Sub-Advisers, please see “Additional Information about the Portfolios — The Adviser” and “ — The Sub-Advisers” below.

 

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    The Invesco International Growth Portfolio and the MFS International Growth Portfolio had net assets of approximately $194.3 million and $1.2 billion, respectively, as of March 31, 2022. Thus, if the Reorganization of the Invesco International Growth Portfolio into the MFS International Growth Portfolio had been in effect on that date, the combined Portfolio would have had net assets of approximately $1.4 billion.

 

    As shown in the “Summary” above, the shareholders of Class IB shares of the Invesco International Growth Portfolio will receive Class IB shares of the MFS International Growth Portfolio pursuant to the Reorganization. Shareholders will not pay any sales charges in connection with the Reorganization. Please see “Comparative Fee and Expense Tables,” “Additional Information about the Reorganizations” and “Additional Information about the Portfolios” below for more information.

 

    It is estimated that the total annual operating expense ratios before and after taking into account the expense limitation arrangement (described below) for the MFS International Growth Portfolio’s Class IB shares for the fiscal year following the Reorganization will be 1.21% and 1.10%, respectively, which are higher than and lower than, respectively, the total annual operating expense ratios before and after taking into account the expense limitation arrangement (described below) for the Invesco International Growth Portfolio’s Class IB shares for the fiscal year ended December 31, 2021, which were 1.14% and 1.14%, respectively. For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. There is no assurance that fees and expenses would not increase after April 30, 2024, when the expense limitation arrangement (described below) for the MFS International Growth Portfolio would terminate if it is not renewed by EIM and the Board of Trustees.

 

    The MFS International Growth Portfolio is subject to a higher advisory fee schedule. The maximum advisory fee for the Invesco International Growth Portfolio is equal to an annual rate of 0.71% of its average daily net assets, whereas the maximum advisory fee for the MFS International Growth Portfolio is equal to an annual rate of 0.85% of its average daily net assets. However, as discussed below, the MFS International Growth Portfolio currently has a lower expense limitation arrangement in place than that for the Invesco International Growth Portfolio, which would offset the increase in the advisory fee.

 

    The Portfolios are subject to the same administration fee schedule. Each Portfolio pays Equitable Investment Management, LLC, the Administrator, its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $30,000. For purposes of calculating the asset-based administration fee, the assets of the Portfolios and multiple other “single-advised” portfolios of EQ Trust (together, the “Single-Advised Portfolios”) are aggregated. The Portfolios’ asset-based administration fee rates are as follows: 0.100% of the first $30 billion of the aggregate average daily net assets of the Single-Advised Portfolios; 0.0975% of the next $10 billion; 0.0950% of the next $5 billion; 0.0775% of the next $10 billion; 0.0750% of the next $30 billion; and 0.0725% thereafter. A complete list of the Single-Advised Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

    The MFS International Growth Portfolio is subject to a lower contractual expense cap, and the expense limitation arrangement for the MFS International Growth Portfolio extends one year beyond that for the Invesco International Growth Portfolio.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the Invesco International Growth Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.15% for Class IB shares of the Portfolio.

 

   

Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the MFS International Growth Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of

 

58


 

this arrangement) so that the annual operating expenses of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, acquired fund fees and expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.10% for Class IB shares of the Portfolio.

 

    Unlike the Invesco International Growth Portfolio’s contractual expense cap, the MFS International Growth Portfolio’s contractual expense cap excludes acquired fund fees and expenses, meaning that any such expenses may cause the MFS International Growth Portfolio’s annual operating expenses to exceed its contractual expense cap. However, it is expected that the MFS International Growth Portfolio will invest in other investment companies only to a limited extent, if at all.

 

    The Class IB shares of the Portfolios are each subject to a Rule 12b-1 fee equal to an annual rate of 0.25% of the average daily net assets of the share class.

 

    For a more detailed description of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below.

 

    The Class IB shares of the MFS International Growth Portfolio outperformed the Class IB shares of the Invesco International Growth Portfolio for the one-year period ended December 31, 2021. The Class IB shares of the MFS International Growth Portfolio underperformed the Class IB shares of the Invesco International Growth Portfolio for the MFS International Growth Portfolio’s ten-year period (January 1, 2012 through December 31, 2021) and the Invesco International Growth Portfolio’s since inception period (October 22, 2018 through December 31, 2021). Please see “Comparative Performance Information” below.

 

    Following the Reorganization, the combined Portfolio will be managed in accordance with the investment objective, policies and strategies of the MFS International Growth Portfolio. It is not expected that the MFS International Growth Portfolio will revise any of its investment policies following the Reorganization to reflect those of the Invesco International Growth Portfolio. EIM has reviewed the Invesco International Growth Portfolio’s current portfolio holdings and determined that the holdings generally are compatible with the MFS International Growth Portfolio’s investment objective and policies. However, as described below, it is expected that, if the Reorganization is approved, a significant portion of the holdings of the Invesco International Growth Portfolio will be liquidated in an orderly manner in connection with the Reorganization, and the proceeds of these sales held in cash or temporary investments. The portion of the Invesco International Growth Portfolio’s assets that will be liquidated in connection with the Reorganization will depend on market conditions and on the assessment by EIM of the compatibility of those holdings with the MFS International Growth Portfolio’s portfolio composition and investment strategies. The need for the Invesco International Growth Portfolio to sell investments in connection with the Reorganization may result in the Invesco International Growth Portfolio selling securities at a disadvantageous time and price and could result in its realizing gains (or losses) that would not otherwise have been realized and its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. The estimated percentage of the holdings of the Invesco International Growth Portfolio that will be sold in connection with the Reorganization is 73%, based on EIM’s assessment of the compatibility of the Portfolio’s holdings with the MFS International Growth Portfolio’s portfolio composition and investment strategies. The sale of the Invesco International Growth Portfolio’s portfolio holdings is expected to result in portfolio transaction costs of approximately $229,197 (13.4 basis points). It is also expected that, over time, the MFS International Growth Portfolio will use the proceeds of these sales to invest in securities, as well as other investments, consistent with its principal investment strategy. The purchase of portfolio securities by the MFS International Growth Portfolio following the Reorganization may result in the MFS International Growth Portfolio buying securities at a disadvantageous time and price and could result in its (and indirectly its investors and Contractholders) incurring brokerage commissions or other transaction costs that would not otherwise have been incurred. Such transaction costs could be significant, but EIM believes that such costs would be reasonable in relation to the anticipated benefits of the Reorganization. Contractholders will not recognize any gain or loss for federal income tax purposes as a result of the Reorganization.

 

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    EIM has agreed to pay expenses of the Reorganization that exceed the Invesco International Growth Portfolio’s expense limitation set forth in its expense limitation agreement. The Reorganization expenses for the Invesco International Growth Portfolio, which are estimated to be $286,333 (excluding portfolio transaction costs, which will be incurred indirectly by Contractholders both before and after the Reorganization), are expected to exceed the expense limit and, therefore, are expected to be paid by EIM.

 

Comparison of Principal Risk Factors

 

An investment in a Portfolio is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in a Portfolio. There can be no assurance that a Portfolio will achieve its investment objective.

 

The following table compares the principal risks of an investment in each Portfolio. For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). For an explanation of each risk, see “Additional Information about the Reorganizations — Descriptions of Risk Factors” below.

 

Risks

   MFS International Growth Portfolio     Invesco International Growth Portfolio  

Cash Management Risk

       X  

Derivatives Risk

       X  

Equity Risk

     X     X

Foreign Securities Risk

     X     X

Currency Risk

     X       X  

Depositary Receipts Risk

       X  

Emerging Markets Risk

     X       X  

European Economic Risk

       X  

Geographic Concentration Risk

     X       X  

Investment Style Risk

     X     X

Large Transaction Risk

     X    

Large-Cap Company Risk

     X       X  

Liquidity Risk

     X    

Market Risk

     X     X

Mid-Cap Company Risk

     X       X  

Portfolio Management Risk

     X       X  

Sector Risk

     X       X  

Securities Lending Risk

     X       X  

Small-Cap Company Risk

     X    

 

Comparative Fee and Expense Tables

 

The following tables show the fees and expenses of the Class IB Shares of the Invesco International Growth Portfolio and the Class IB Shares of the MFS International Growth Portfolio and the estimated pro forma fees and expenses of the Class IB Shares of the MFS International Growth Portfolio after giving effect to the proposed Reorganization. Fees and expenses for each Portfolio are based on those incurred by the relevant class of its shares for the fiscal year ended December 31, 2021. The pro forma fees and expenses of the MFS International Growth Portfolio shares assume that the Reorganization was in effect for the year ended December 31, 2021. The tables below do not reflect any Contract-related fees and expenses, which would increase overall fees and expenses. See a Contract prospectus for a description of those fees and expenses.

 

Shareholder Fees

(fees paid directly from your investment)

 

Invesco International Growth Portfolio   MFS International Growth Portfolio  

Pro Forma MFS International Growth Portfolio
(assuming the Reorganization is approved)

Not Applicable.   Not Applicable.   Not Applicable.

 

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Annual Operating Expenses

(expenses that you may pay each year as a percentage of the value of your investment)

 

     Invesco International
Growth Portfolio
     MFS International
Growth Portfolio
     Pro Forma MFS
International Growth
Portfolio (assuming
the Reorganization is
approved)
 
     Class IB      Class IB      Class IB  

Management Fee

     0.71%        0.83%        0.82%  

Distribution and/or Service Fees (12b-1 fees)

     0.25%        0.25%        0.25%  

Other Expenses

     0.18%        0.14%        0.14%  

Total Annual Portfolio Operating Expenses

     1.14%        1.22%        1.21%  

Fee Waiver and/or Expense Reimbursement†

     (0.00)%        (0.12)%        (0.11)%  

Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement

     1.14%        1.10%        1.10%  

 

  Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of (1) the Invesco International Growth Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of the arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.15% for Class IB shares of the Portfolio, and (2) the MFS International Growth Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, acquired fund fees and expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 1.10% for Class IB shares of the Portfolio. The expense limitation agreements may be terminated by EIM at any time after April 30, 2023 or April 30, 2024, as applicable. EIM may be reimbursed the amount of any such payments or waivers made after June 30, 2020, in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and a Portfolio’s expense ratio, after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower. If the Acquired Portfolio is reorganized, EIM will forgo the recoupment of any amounts waived or reimbursed with respect to the Acquired Portfolio prior to its Reorganization.

 

Example of Portfolio Expenses

 

This example is intended to help you compare the costs of investing in the Portfolios with the cost of investing in other investment options. The example assumes that:

 

    You invest $10,000 in a Portfolio for the time periods indicated;

 

    Your investment has a 5% return each year;

 

    The Portfolio’s operating expenses remain the same; and

 

    The expense limitation arrangement with respect to the Portfolio is not renewed.

 

This example does not reflect any Contract-related fees and expenses, including redemption fees (if any) at the Contract level. If such fees and expenses were reflected, the total expenses would be higher. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     1 Year      3 Years      5 Years      10 Years  

Invesco International Growth Portfolio

           

Class IB

   $ 116      $ 362      $ 628      $ 1,386  

MFS International Growth Portfolio

           

Class IB

   $ 112      $ 375      $ 659      $ 1,467  

Pro Forma MFS International Growth Portfolio

(assuming the Reorganization is approved)

           

Class IB

   $ 112      $ 362      $ 643      $ 1,446  

 

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Portfolio Turnover

 

Each Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Portfolio’s performance. During the fiscal year ended December 31, 2021, the portfolio turnover rates for each of the Invesco International Growth Portfolio and the MFS International Growth Portfolio were 42% and 16%, respectively, of the average value of its portfolio.

 

Comparison of Investment Objectives, Policies and Strategies

 

The following table compares the investment objectives and principal investment policies and strategies of the Invesco International Growth Portfolio with those of the MFS International Growth Portfolio. The Board of EQ Trust may change the investment objective of a Portfolio without a vote of that Portfolio’s shareholders. For more detailed information about each Portfolio’s investment strategies and risks, see Appendix B.

 

Acquiring Portfolio  

Acquired Portfolio

MFS International Growth Portfolio  

Invesco International Growth Portfolio

Investment Objective   Investment Objective
Seeks to achieve capital appreciation.   Seeks to achieve long-term growth of capital.
Principal Investment Strategies   Principal Investment Strategies
Under normal circumstances, the Portfolio intends to invest at least 80% of its net assets in the equity securities of foreign companies, including emerging markets equity securities. The Portfolio intends to invest primarily in common stocks, but it may also invest in other types of equity securities. These may include depositary receipts, preferred stocks and warrants.   The Portfolio invests primarily in equity securities and depositary receipts of foreign issuers. The principal types of equity securities in which the Portfolio invests are common and preferred stock.
The Portfolio may invest a large percentage of its assets in issuers in a single country, a small number of countries, or a particular geographic region.   Under normal circumstances, the Portfolio will provide exposure to investments that are economically tied to at least three different countries outside of the U.S. An issuer will be considered to be economically tied to a country outside of the U.S. if it is domiciled, derives a significant portion of its revenues from, or primarily trades in a market located outside of the U.S. The Portfolio may invest up to 1.25 times the amount of the exposure to emerging markets countries in the MSCI All Country World ex-U.S. Growth Index. Emerging markets countries are those countries that are generally in the early stages of their industrial cycles. The Portfolio’s common stock investments may include China A-shares (shares of companies based in mainland China that trade on the Shanghai Stock Exchange and the Shenzhen Stock Exchange).
The Sub-Adviser normally allocates the Portfolio’s investments across different industries and sectors, but the Sub-Adviser may invest a significant percentage of the Portfolio’s assets in issuers in a single or small number of industries or sectors.   No corresponding strategy.
The Sub-Adviser focuses on investing the Portfolio’s assets in the stocks of companies it believes have above average earnings growth potential compared to other companies (i.e. growth companies). Growth companies tend to have stock prices that are high relative to their earnings, dividends, book value, or other financial measures.   The Portfolio invests primarily in securities of issuers that are considered by the Sub-Adviser to have potential for earnings or revenue growth.
The Portfolio may invest in companies of any size.   The Portfolio invests primarily in the securities of large-capitalization issuers and may invest a significant amount of its net assets in the securities of mid-capitalization issuers. The Portfolio considers an issuer to be a large-capitalization issuer if it has a market capitalization, at the time of purchase, within the range of the largest and smallest capitalized companies included in the Russell 1000® Index during the most recent 11-month period

 

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Acquiring Portfolio  

Acquired Portfolio

MFS International Growth Portfolio  

Invesco International Growth Portfolio

  (based on month-end data) plus the most recent data during the current month. The Portfolio considers an issuer to be a mid-capitalization issuer if it has a market capitalization, at the time of purchase, within the range of the largest and smallest capitalized companies included in the Russell Midcap® Index during the most recent 11-month period (based on month-end data) plus the most recent data during the current month.
No corresponding strategy.   The Portfolio can invest in derivative instruments, including forward foreign currency contracts and futures contracts. The Portfolio can use forward foreign currency contracts to hedge against adverse movements in the foreign currencies in which portfolio securities are denominated, if deemed appropriate by the Sub-Adviser. The Portfolio can use futures contracts to gain exposure to the broad market in connection with managing cash balances or to hedge against downside risk. The Portfolio’s investments in derivatives transactions may be deemed to involve the use of leverage because the Portfolio is not required to invest the full market value of the contract upon entering into the contract but participates in gains and losses on the full contract price. The use of derivatives also may be deemed to involve the use of leverage because the heightened price sensitivity of some derivatives to market changes may magnify the Portfolio’s gain or loss. It is not expected, however, that the Portfolio will be leveraged by borrowing money for investment purposes. The Portfolio’s investments in derivatives may require it to maintain a percentage of its assets in cash and cash equivalent instruments to serve as margin or collateral for the Portfolio’s obligations under derivative transactions.
The Portfolio also may lend its portfolio securities to earn additional income.   Same.
The Sub-Adviser uses an active bottom-up approach to buying and selling investments for the Portfolio. Investments are selected primarily based on fundamental analysis of individual issuers and their potential in light of their financial condition, and market, economic, political, and regulatory conditions. Factors considered may include analysis of an issuer’s earnings, cash flows, competitive position, and management ability. The Sub-Adviser may also consider environmental, social, and governance (ESG) factors in its fundamental investment analysis where the Sub-Adviser believes such factors could materially impact the economic value of an issuer. ESG factors considered may include, but are not limited to, climate change, resource depletion, an issuer’s governance structure and practices, data protection and privacy issues, and diversity and labor practices. Quantitative screening tools that systematically evaluate an issuer’s valuation, price and earnings momentum, earnings quality, and other factors may also be considered.   The Sub-Adviser employs a disciplined investment strategy that emphasizes fundamental research. The fundamental research primarily focuses on identifying quality growth companies and is supported by quantitative analysis, portfolio construction and risk management. Investments for the portfolio are selected bottom-up on a security-by-security basis. The focus is on the strengths of individual issuers, rather than sector or country trends. The Sub-Adviser’s strategy primarily focuses on identifying issuers that it believes have a strong “EQV” profile. The Sub-Adviser’s EQV investment approach focuses on Earnings, demonstrated by sustainable earnings growth; Quality, demonstrated by efficient capital allocation; and Valuation, demonstrated by attractive prices.
The Sub-Adviser may sell a security for a variety of reasons, such as to secure gains, to limit losses, or redeploy assets into opportunities believed to be more promising, among others.   The Sub-Adviser may consider selling a security for several reasons, including when (1) its price changes such that the Sub-Adviser believes it has become too expensive, (2) the original investment thesis for the company is no longer valid, or (3) a more compelling investment opportunity is identified.

 

The Invesco International Growth Portfolio and the MFS International Growth Portfolio have identical fundamental investment policies relating to borrowing, concentration, lending, underwriting, issuing senior securities, and investing in commodities and real estate. Fundamental investment policies may be changed only by a vote of a Portfolio’s shareholders. More detailed information about the fundamental investment policies is available in the Statement of Additional Information.

 

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Comparative Performance Information

 

The bar charts and tables below provide some indication of the risks of investing in each Portfolio by showing changes in each Portfolio’s performance from year to year and by showing how the Invesco International Growth Portfolio’s average annual total returns for the past one-year and since inception periods through December 31, 2021, and the MFS International Growth Portfolio’s average annual total returns for the past one-, five- and ten-year periods through December 31, 2021, compared to the returns of a broad-based securities market index. The return of the broad-based securities market index (and any additional comparative index) shown in the right hand column below is the return of the index since the inception of the share class. Past performance is not an indication of future performance.

 

The performance results do not reflect any Contract-related fees and expenses, which would reduce the performance results.

 

The MFS International Growth Portfolio will be the accounting survivor of the Reorganization. As such, the MFS International Growth Portfolio will continue to have the same performance history following the Reorganization as it had prior to the Reorganization.

 

Invesco International Growth Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

17.58% (2020 2nd Quarter)

 

Worst quarter (% and time period)

-21.98% (2020 1st Quarter)

 

MFS International Growth Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

16.89% (2020 2nd Quarter)

 

Worst quarter (% and time period)

-18.81% (2020 1st Quarter)

 

Invesco International Growth Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception
(10/22/2018)
 

Invesco International Growth Portfolio — Class IB Shares

     5.78        12.62  

MSCI ACWI ex U.S. Growth (Net) Index (reflects no deduction for fees, expenses, or taxes, except foreign withholding taxes)

     5.09        14.82  

 

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MFS International Growth Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Five
Years
     Ten
Years
 

MFS International Growth Portfolio — Class IB Shares

     9.35        13.97        9.75  

MSCI ACWI ex U.S. Growth (Net) Index (reflects no deduction for fees, expenses, or taxes, except foreign withholding taxes)

     5.09        13.06        9.13  

 

Capitalization

 

The following table shows the capitalization of each Portfolio as of June 30, 2022, and of the MFS International Growth Portfolio on a pro forma combined basis as of June 30, 2022, after giving effect to the proposed Reorganization. Pro forma net assets may not total and net asset values per share may not recalculate due to rounding of net assets.

 

     Net Assets
(in millions)
    Net Asset Value
Per Share
     Shares
Outstanding
 

MFS International Growth Portfolio Class IA Shares†

   $ 37.5     $ 6.68        5,614,608  

Invesco International Growth Portfolio — Class IB Shares

   $ 170.4     $ 35.73        4,769,264  

MFS International Growth Portfolio — Class IB Shares

   $ 377.9     $ 6.70        56,420,305  

Adjustments*

   $ (0.3        20,624,822  

Pro forma MFS International Growth Portfolio — Class IB Shares (assuming the Reorganization is approved)

   $ 548.0     $ 6.70        81,814,391  

MFS International Growth Portfolio Class K Shares†

   $ 612.8     $ 6.70        91,516,231  

Total Pro forma Net Assets (assuming the Reorganization is approved)**

   $ 1,198.3       

 

*   The adjustments reflect the exchange of Invesco International Growth Portfolio’s shares for MFS International Growth Portfolio’s shares.
**   Adjusted to reflect Reorganization costs.
  Class IA Shares and Class K Shares are not impacted by the Reorganization.

 

AFTER CAREFUL CONSIDERATION, THE BOARD OF EQ TRUST UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT WITH RESPECT TO THE INVESCO INTERNATIONAL GROWTH PORTFOLIO. ACCORDINGLY, THE BOARD OF EQ TRUST HAS SUBMITTED THE REORGANIZATION AGREEMENT FOR APPROVAL BY THE INVESCO INTERNATIONAL GROWTH PORTFOLIO’S SHAREHOLDERS. THE BOARD OF EQ TRUST RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 5.

 

PROPOSAL 6: TO APPROVE THE REORGANIZATION AGREEMENT WITH RESPECT TO THE REORGANIZATION OF THE FRANKLIN STRATEGIC INCOME PORTFOLIO, A SERIES OF EQ TRUST, INTO THE CORE PLUS BOND PORTFOLIO, A SERIES OF VIP TRUST.

 

This Proposal 6 requests your approval of a Reorganization Agreement pursuant to which the Franklin Strategic Income Portfolio will be reorganized into the Core Plus Bond Portfolio. In considering whether you should approve the Proposal, you should note that:

 

    The Portfolios are series of separate Trusts. The Franklin Strategic Income Portfolio is a series of EQ Trust, and the Core Plus Bond Portfolio is a series of VIP Trust.

 

    The Portfolios have substantially similar investment objectives. The Franklin Strategic Income Portfolio seeks a high level of current income; a secondary goal is long-term capital appreciation. The Core Plus Bond Portfolio seeks to achieve high total return through a combination of current income and capital appreciation.

 

   

Each Portfolio invests substantially in a wide variety of debt securities, including U.S. and foreign (including emerging market) government and agency securities, corporate securities, mortgage- and asset-backed securities, collateralized debt obligations, 144A bonds, and inflation-indexed securities.

 

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Each Portfolio may invest in both investment grade and below investment grade debt securities. Each Portfolio also may invest in a wide variety of derivative instruments, including options, futures contracts, forwards and swaps, and may engage in currency- and credit-related transactions involving derivatives. Each Portfolio may use derivatives for various purposes, including to hedge portfolio risk and to enhance portfolio returns. Each Portfolio is actively managed by one or more investment sub-advisers.

 

    There are, however, differences between the two Portfolios’ principal investment policies and strategies of which you should be aware. The Portfolios’ principal investment policies and strategies are set forth immediately below. For a detailed comparison of the Portfolios’ investment policies and strategies, see “Comparison of Investment Objectives, Policies and Strategies” below.

 

    Under normal market conditions, the Franklin Strategic Income Portfolio invests its assets primarily to predominantly in U.S. and foreign debt securities, including those in emerging markets.

 

    The Franklin Strategic Income Portfolio shifts its investments among various classes of debt securities and at any given time may have a substantial amount of its assets invested in any class of debt or other income producing security.

 

    The Franklin Strategic Income Portfolio may invest up to 100% of its assets in high yield, lower-quality debt securities (also known as “junk bonds”).

 

    The Franklin Strategic Income Portfolio may purchase or sell mortgage-backed securities on a delayed delivery or forward commitment basis through the “to-be-announced” (TBA) market, and may also invest a small portion of its assets directly in mortgage loans. The Franklin Strategic Income Portfolio may also invest in any class, or “tranche,” of collateralized debt obligations, which include certain collateralized loan obligations, and may invest in other investment companies, including ETFs, to gain exposure to certain asset classes.

 

    For purposes of pursuing its investment goals, the Portfolio regularly enters into various currency-related transactions involving derivative instruments, including currency and cross currency forwards, currency swaps, currency and currency index futures contracts and currency options, and may enter into options on all such instruments. The Portfolio also regularly enters into interest rate and credit-related transactions involving derivative instruments, including interest rate, fixed income total return and credit default swaps and bond/interest rate futures contracts, as well as options on all such instruments. The use of these derivative transactions may allow the Portfolio to obtain net long or net short exposures to selected currencies, interest rates, countries, durations or credit risks. These derivative instruments may be used for hedging purposes, to enhance Portfolio returns or to obtain exposure to various market sectors.

 

    Under normal market conditions, the Core Plus Bond Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in a diversified portfolio of U.S. and foreign bonds or other debt securities of varying maturities and other instruments that provide investment exposure to such debt securities, including forwards or derivatives such as options, futures contracts or swap agreements.

 

    Under normal circumstances, the Core Plus Bond Portfolio invests primarily in a diversified mix of U.S. dollar-denominated investment grade fixed income securities, particularly U.S. government securities, corporate securities and mortgage- and asset-backed securities.

 

    The Core Plus Bond Portfolio may invest in securities denominated in foreign currencies and will normally limit its foreign currency exposure to 40% of its total assets.

 

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    Although the portfolio managers intend to maintain an average weighted portfolio quality of BBB- or better, which is considered investment grade, the Core Plus Bond Portfolio may invest up to 40% of its total assets in below investment grade securities (also known as high yield or “junk” bonds).

 

    Under normal circumstances, it is expected that the average portfolio duration of the Core Plus Bond Portfolio will be within 5 years of the duration of its benchmark, the Bloomberg U.S. Aggregate Bond Index. As of December 31, 2021, the average duration of the benchmark was 6.67 years. The Core Plus Bond Portfolio may invest in securities of any maturity. There is no limit on the weighted average maturity of the Core Plus Bond Portfolio’s fixed income portfolio.

 

    The Core Plus Bond Portfolio may invest, without limitation, in forwards and derivative instruments such as options, futures contracts, structured securities or swap agreements (including total return swaps, credit default swaps and interest rate swaps), and in mortgage- and asset-backed securities, subject to applicable law and any other restrictions adopted for the Portfolio. Derivatives may be used for various investment purposes, including to hedge portfolio risk, to gain exposure or to short individual securities, to earn income and enhance return, and to manage duration.

 

    The Core Plus Bond Portfolio may enter into foreign currency exchange transactions to hedge against currency exposure in its portfolio. The Core Plus Bond Portfolio may enter into forward currency exchange contracts and other currency derivatives, such as swaps, options and futures, to shift its investment exposure from one currency into another. This type of strategy, sometimes known as a “cross-hedge”, is intended to protect against losses resulting from a decline in the value of the hedged currency, but will cause the Portfolio to assume the risk of fluctuations in the value of the currency it purchases, and may also limit any potential gain that might result should the value of such hedged currency increase.

 

    The Core Plus Bond Portfolio may also invest in zero coupon and pay-in-kind securities.

 

    Each Portfolio’s principal risks include market risk, interest rate risk, credit risk, derivatives risk, investment grade securities risk, non-investment grade securities risk, mortgage-related and other asset-backed securities risk, foreign securities risk (including currency risk and emerging markets risk), collateralized debt/loan obligations risk, loan risk, portfolio management risk, cash management risk, dollar roll and sale-buyback transactions risk, U.S. government securities risk, inflation-indexed bonds risk, leveraging risk, liquidity risk, prepayment risk and extension risk, privately placed and other restricted securities risk, redemption risk, variable and floating rate securities risk, and when-issued and delayed delivery securities and forward commitments risk. The Franklin Strategic Income Portfolio also is subject to geographic concentration risk, risks of investment in other investment companies, sovereign debt securities risk, and securities lending risk as principal risks, while the Core Plus Bond Portfolio generally is not. The Core Plus Bond Portfolio also is subject to European economic risk, convertible securities risk, futures contract risk, hedging risk, multiple sub-adviser risk, portfolio turnover risk, preferred stock risk, sector risk, and zero-coupon and pay-in-kind securities risk as principal risks, while the Franklin Strategic Income Portfolio generally is not. For a detailed comparison of the Portfolios’ principal risks, see “Comparison of Principal Risk Factors” below.

 

    EIM serves as the investment adviser for both Portfolios. Subject to EIM’s oversight, Franklin Advisers, Inc. currently serves as the sub-adviser to the Franklin Strategic Income Portfolio. Subject to EIM’s oversight, each of AXA Investment Managers US Inc. (“AXA IM”), Brandywine Global Investment Management, LLC (“Brandywine”), and Loomis, Sayles & Company, L.P. (“Loomis Sayles”) currently serves as a sub-adviser to the Core Plus Bond Portfolio. EIM will advise, and it is anticipated that AXA IM, Brandywine, and Loomis Sayles will continue to sub-advise, the Core Plus Bond Portfolio after the Reorganization. Equitable Investment Management, LLC serves as the administrator for both Portfolios.

 

   

EIM is responsible for overseeing sub-advisers and recommending their hiring, termination and replacement to the Board of Trustees. EIM has been granted relief by the SEC to hire, terminate and replace sub-advisers and amend sub-advisory agreements subject to the approval of the Board of Trustees and without obtaining shareholder approval. However, EIM may not enter into a sub-advisory agreement on behalf of a Portfolio with an “affiliated person” of EIM unless the

 

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sub-advisory agreement, including compensation, is approved by the Portfolio’s shareholders. The relief does not extend to any increase in the advisory fee paid by a Portfolio to the Adviser; any such increase would be subject to shareholder approval. For a detailed description of the Adviser and the Sub-Advisers, please see “Additional Information about the Portfolios — The Adviser” and “ — The Sub-Advisers” below.

 

    The Franklin Strategic Income Portfolio and the Core Plus Bond Portfolio had net assets of approximately $104.1 million and $723.6 million, respectively, as of March 31, 2022. Thus, if the Reorganization of the Franklin Strategic Income Portfolio into the Core Plus Bond Portfolio had been in effect on that date, the combined Portfolio would have had net assets of approximately $827.7 million.

 

    As shown in the “Summary” above, the shareholders of Class IB shares of the Franklin Strategic Income Portfolio will receive Class B shares of the Core Plus Portfolio pursuant to the Reorganization. Shareholders will not pay any sales charges in connection with the Reorganization. Please see “Comparative Fee and Expense Tables,” “Additional Information about the Reorganizations” and “Additional Information about the Portfolios” below for more information.

 

    It is estimated that the total annual operating expense ratios before and after taking into account the expense limitation arrangement (described below) for the Core Plus Bond Portfolio’s Class B shares for the fiscal year following the Reorganization will be 1.01% and 0.93%, respectively, which are less than and equal to, respectively, the total annual operating expense ratios before and after taking into account the expense limitation arrangement (described below) for the Franklin Strategic Income Portfolio’s Class IB shares for the fiscal year ended December 31, 2021, which were 1.10% and 0.93%, respectively. For a more detailed comparison of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below. There is no assurance that fees and expenses would not increase after April 30, 2024, when the expense limitation arrangement (described below) for the Core Plus Bond Portfolio would terminate if it is not renewed by EIM and the Board of Trustees. As discussed below, if Proposal 6 is approved, the Core Plus Bond Portfolio would have the same contractual expense cap in place as that for the Franklin Strategic Income Portfolio.

 

    The Core Plus Bond Portfolio is subject to a higher advisory fee schedule. The maximum advisory fee for the Franklin Strategic Income Portfolio is equal to an annual rate of 0.59% of its average daily net assets, whereas the maximum advisory fee for the Core Plus Bond Portfolio is equal to an annual rate of 0.60% of its average daily net assets. However, as discussed below, if Proposal 6 is approved, the Core Plus Bond Portfolio would have the same contractual expense cap in place as that for the Franklin Strategic Income Portfolio.

 

    The Portfolios are subject to different administration fee schedules.

 

    The Franklin Strategic Income Portfolio pays Equitable Investment Management, LLC, the Administrator, its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $30,000. For purposes of calculating the asset-based administration fee, the assets of the Portfolio and multiple other “single-advised” portfolios of EQ Trust (together, the “Single-Advised Portfolios”) are aggregated together. The Portfolio’s asset-based administration fee rates are as follows: 0.100% of the first $30 billion of the aggregate average daily net assets of the Single-Advised Portfolios; 0.0975% of the next $10 billion; 0.0950% of the next $5 billion; 0.0775% of the next $10 billion; 0.0750% of the next $30 billion; and 0.0725% thereafter. A complete list of the Single-Advised Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

    The Core Plus Bond Portfolio pays Equitable Investment Management, LLC, the Administrator, its proportionate share of an asset-based administration fee, subject to a minimum annual fee of $32,500. For purposes of calculating the asset-based administration fee, the assets of the Portfolio are aggregated with the assets of all the other portfolios of VIP Trust and multiple portfolios of EQ Trust (together the “Aggregated Portfolios”). The Portfolio’s asset-based administration fee rates are as follows: 0.140% of the first $60 billion of the aggregate average daily net assets of the Aggregated Portfolios; 0.110% of the next $20 billion; 0.0875% of the next $20 billion; 0.0775% of the next $20 billion; 0.0750% of the next $20 billion; and 0.0725% thereafter. A complete list of the Aggregated Portfolios is provided in “Additional Information about the Portfolios — Advisory and Administrative Fees” below.

 

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    Each Portfolio is subject to an expense limitation arrangement.

 

    Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the Franklin Strategic Income Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.93% for Class IB shares of the Portfolio.

 

    If Proposal 6 is approved, EIM has undertaken to enter into a new contractual expense limitation arrangement with respect to the Core Plus Bond Portfolio. Under this contract, EIM would agree to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of the Core Plus Bond Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including acquired fund fees and expenses) of the Portfolio (other than taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.93% for Class B shares of the Portfolio.

 

    Under the new contractual expense limitation arrangement, the Core Plus Bond Portfolio would be subject to the same contractual expense cap as the Franklin Strategic Income Portfolio, and the expense limitation arrangement for the Core Plus Bond Portfolio would extend one year beyond that for the Franklin Strategic Income Portfolio.

 

    The Class IB shares of the Franklin Strategic Income Portfolio and the Class B shares of the Core Plus Bond Portfolio are each subject to a Rule 12b-1 fee equal to an annual rate of 0.25% of the average daily net assets of the respective share classes.

 

    For a more detailed description of the fees and expenses of the Portfolios, please see “Comparative Fee and Expense Tables” and “Additional Information about the Portfolios” below.

 

    The Class B shares of the Core Plus Bond Portfolio underperformed the Class IB shares of the Franklin Strategic Income Portfolio for the one-year period ended December 31, 2021. The Class B shares of the Core Plus Bond Portfolio underperformed the Class IB shares of the Franklin Strategic Income Portfolio for the Core Plus Bond Portfolio’s ten-year period (January 1, 2012 through December 31, 2021) and the Franklin Strategic Income Portfolio’s since inception period (October 22, 2018 through December 31, 2021). Please see “Comparative Performance Information” below.

 

   

Following the Reorganization, the combined Portfolio will be managed in accordance with the investment objective, policies and strategies of the Core Plus Bond Portfolio. It is not expected that the Core Plus Bond Portfolio will revise any of its investment policies following the Reorganization to reflect those of the Franklin Strategic Income Portfolio. EIM has reviewed the Franklin Strategic Income Portfolio’s current portfolio holdings and determined that the holdings generally are compatible with the Core Plus Bond Portfolio’s investment objective and policies. If the Reorganization is approved, all of the Franklin Strategic Income Portfolio’s assets (“Transferred Assets”) on the Closing Date will be transferred to the Core Plus Bond Portfolio. However, it is anticipated that immediately prior to the Closing Date, the Franklin Strategic Income Portfolio will liquidate substantially all of its securities holdings and hold cash. Therefore, it is anticipated that the Transferred Assets will consist of cash. The portion of the Franklin Strategic Income Portfolio’s assets anticipated to be liquidated in connection with the Reorganization is based on EIM’s assessment of the Portfolio’s holdings compared with the Core Plus Bond Portfolio’s portfolio composition and investment strategies. The sale of portfolio holdings by the Franklin Strategic Income Portfolio in connection with the Reorganization may result in the Franklin Strategic Income Portfolio selling securities at a disadvantageous time and price and could result in its realizing gains (or losses) that would not otherwise have been realized and its (and indirectly its investors and Contractholders) incurring transaction costs that would not otherwise have been incurred. The sale of all of the Franklin Strategic Income Portfolio’s portfolio holdings is expected to result in portfolio transaction costs (primarily bid-ask spreads) of approximately

 

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$669,200 (70 basis points). It is also expected that, over time, the Core Plus Bond Portfolio will use the Transferred Assets to invest in securities, as well as other investments, consistent with its principal investment strategy. The purchase of portfolio securities by the Core Plus Bond Portfolio following the Reorganization may result in the Core Plus Bond Portfolio buying securities at a disadvantageous time and price and could result in its (and indirectly its investors and Contractholders) incurring transaction costs that would not otherwise have been incurred. Such transaction costs could be significant, but EIM believes that such costs would be reasonable in relation to the anticipated benefits of the Reorganization. Contractholders will not recognize any gain or loss for federal income tax purposes as a result of the Reorganization.

 

    EIM has agreed to pay expenses of the Reorganization that exceed the Franklin Strategic Income Portfolio’s expense limitation set forth in its expense limitation agreement. The Reorganization expenses for the Franklin Strategic Income Portfolio, which are estimated to be $127,584 (excluding portfolio transaction costs, which will be incurred indirectly by Contractholders both before and after the Reorganization), exceed the expense limit and are expected to be paid by EIM.

 

    Each of EQ Trust and VIP Trust is a Delaware statutory trust. As such, each Trust’s operations are governed by its Declaration of Trust and By-laws and applicable Delaware law. The operations of each Trust are also subject to the provisions of the 1940 Act, and the rules and regulations thereunder. The rights of shareholders of the Core Plus Bond Portfolio are substantially similar to the rights of shareholders of the Franklin Strategic Income Portfolio. However, EQ Trust and VIP Trust are governed by different organizational documents, including separate Declarations of Trust. Among other differences, the EQ Trust Declaration of Trust contains provisions (i) limiting the scope of the Trustees’ fiduciary duties to the Trust, series or shareholders to those imposed by applicable federal law and those included in the Declaration of Trust and (ii) setting forth certain procedural requirements with respect to the ability of a shareholder to bring a derivative action against the Trust. A summary of the similarities and differences between the EQ Trust Declaration of Trust and the VIP Trust Declaration of Trust is provided below in the section entitled “Description of the Securities to Be Issued.”

 

Comparison of Principal Risk Factors

 

An investment in a Portfolio is not a deposit of a bank and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The value of your investment may fall, sometimes sharply, and you could lose money by investing in a Portfolio. There can be no assurance that a Portfolio will achieve its investment objective

 

The following table compares the principal risks of an investment in each Portfolio. For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). For an explanation of each risk, see “Additional Information about the Reorganizations — Descriptions of Risk Factors” below.

 

Risks

   Core Plus Bond Portfolio     Franklin Strategic Income Portfolio  

Cash Management Risk

     X       X  

Collateralized Debt Obligations Risk

       X  

Collateralized Loan Obligations Risk

     X    

Convertible Securities Risk

     X    

Credit Risk

     X     X

Derivatives Risk

     X       X  

Dollar Roll and Sale-Buyback Transactions Risk

     X       X  

Foreign Securities Risk

     X     X

Currency Risk

     X     X

Emerging Markets Risk

     X     X

European Economic Risk

     X  

Geographic Concentration Risk

       X  

Futures Contract Risk

     X    

Hedging Risk

     X    

 

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Risks

   Core Plus Bond Portfolio     Franklin Strategic Income Portfolio  

Inflation-Indexed Bonds Risk

     X       X  

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X       X  

Leveraging Risk

     X       X  

Liquidity Risk

     X       X  

Loan Risk

     X       X

Market Risk

     X     X

Mortgage-Related and Other Asset-Backed Securities Risk

     X     X

Multiple Sub-Adviser Risk

     X    

Non-Investment Grade Securities Risk

     X     X

Other Investment Company Investment Risk

       X  

Portfolio Management Risk

     X       X  

Portfolio Turnover Risk

     X    

Preferred Stock Risk

     X    

Prepayment Risk and Extension Risk

     X       X  

Privately Placed and Other Restricted Securities Risk

     X       X  

Redemption Risk

     X       X  

Sector Risk

     X    

Securities Lending Risk

       X  

Sovereign Debt Securities Risk

       X  

U.S. Government Securities Risk

     X       X  

Variable and Floating Rate Securities Risk

     X       X  

When-Issued and Delayed Delivery Securities and Forward Commitments Risk

     X       X  

Zero Coupon and Pay-in-Kind Securities Risk

     X    

 

Comparative Fee and Expense Tables

 

The following tables show the fees and expenses of the Class IB Shares of the Franklin Strategic Income Portfolio and the Class B Shares of the Core Plus Bond Portfolio and the estimated pro forma fees and expenses of the Class B Shares of the Core Plus Bond Portfolio after giving effect to the proposed Reorganization. Fees and expenses for each Portfolio are based on those incurred by the relevant class of its shares for the fiscal year ended December 31, 2021. The pro forma fees and expenses of the Core Plus Bond Portfolio shares assume that the Reorganization was in effect for the year ended December 31, 2021. The tables below do not reflect any Contract-related fees and expenses, which would increase overall fees and expenses. See a Contract prospectus for a description of those fees and expenses.

 

Shareholder Fees

(fees paid directly from your investment)

 

Franklin Strategic Income Portfolio

   Core Plus Bond Portfolio    Pro Forma Core Plus Bond Portfolio
(assuming the Reorganization is approved)

Not Applicable.

   Not Applicable.    Not Applicable.

 

Annual Operating Expenses

(expenses that you may pay each year as a percentage of the value of your investment)

 

     Franklin Strategic
Income Portfolio
    Core Plus Bond
Portfolio
    Pro Forma Core Plus Bond
Portfolio
 
     Class IB     Class B     Class B  

Management Fee

     0.59     0.60     0.60

Distribution and/or Service Fees (12b-1 fees)

     0.25     0.25     0.25

Other Expenses

     0.26     0.19     0.16

Total Annual Portfolio Operating Expenses

     1.10     1.04     1.01

 

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     Franklin Strategic
Income Portfolio
    Core Plus Bond
Portfolio
    Pro Forma Core Plus Bond
Portfolio
 
     Class IB     Class B     Class B  

Fee Waiver and/or Expense Reimbursement†

     (0.17 )%       (0.09 )%       (0.08 )%  

Total Annual Portfolio Operating Expenses After Fee Waiver and/or Expense Reimbursement

     0.93     0.95     0.93

 

  Pursuant to a contract, EIM has agreed to make payments or waive its and its affiliates’ management, administrative and other fees to limit the expenses of (1) the Franklin Strategic Income Portfolio through April 30, 2023 (unless the Board of Trustees consents to an earlier revision or termination of the arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed an annual rate of average daily net assets of 0.93% for Class IB shares of the Portfolio, and (2) the Core Plus Bond Portfolio through April 30, 2024 (unless the Board of Trustees consents to an earlier revision or termination of this arrangement) so that the annual operating expenses (including Acquired Fund Fees and Expenses) of the Portfolio (exclusive of taxes, interest, brokerage commissions, dividend and interest expenses on securities sold short, capitalized expenses, and extraordinary expenses not incurred in the ordinary course of the Portfolio’s business) do not exceed 0.95% for Class B shares of the Portfolio. The expense limitation agreements may be terminated by EIM at any time after April 30, 2023 or April 30, 2024, as applicable. EIM may be reimbursed the amount of any such payments or waivers made after June 30, 2020, in the future provided that the payments or waivers are reimbursed within three years of the payments or waivers being recorded and a Portfolio’s expense ratio, after the reimbursement is taken into account, does not exceed the Portfolio’s expense cap at the time of the waiver or the Portfolio’s expense cap at the time of the reimbursement, whichever is lower. If the Acquired Portfolio is reorganized, EIM will forgo the recoupment of any amounts waived or reimbursed with respect to the Acquired Portfolio prior to its Reorganization. If Proposal 6 is approved, EIM has undertaken to enter into a new, lower contractual expense limitation arrangement with respect to the Core Plus Bond Portfolio under which the annual expense limit for the Core Plus Bond Portfolio referred to in clause (2) above would be 0.93% for Class B shares through April 30, 2024.

 

Example of Portfolio Expenses

 

This example is intended to help you compare the costs of investing in the Portfolios with the cost of investing in other investment options. The example assumes that:

 

    You invest $10,000 in a Portfolio for the time periods indicated;

 

    Your investment has a 5% return each year;

 

    The Portfolio’s operating expenses remain the same; and

 

    The expense limitation arrangement with respect to the Portfolio is not renewed.

 

This example does not reflect any Contract-related fees and expenses, including redemption fees (if any) at the Contract level. If such fees and expenses were reflected, the total expenses would be higher. Although your actual costs may be higher or lower, based on these assumptions your costs would be:

 

     1 Year      3 Years      5 Years      10 Years  

Franklin Strategic Income Portfolio

           

Class IB

   $ 95      $ 333      $ 590      $ 1,325  

Core Plus Bond Portfolio

           

Class B

   $ 97      $ 322      $ 565      $ 1,263  

Pro Forma Core Plus Bond Portfolio

(assuming the Reorganization is approved)

           

Class B

   $ 95      $ 305      $ 542      $ 1,221  

 

Portfolio Turnover

 

Each Portfolio pays transaction costs, such as commissions, when it buys and sells securities (or “turns over” its portfolio). A higher portfolio turnover rate may indicate higher transaction costs. These costs, which are not reflected in annual fund operating expenses or in the example, affect a Portfolio’s performance. During the fiscal year ended December 31, 2021, the portfolio turnover rates for each of the Franklin Strategic Income Portfolio and the Core Plus Bond Portfolio were 63% and 200%, respectively, of the average value of its portfolio.

 

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Comparison of Investment Objectives, Policies and Strategies

 

The following table compares the investment objectives and principal investment policies and strategies of the Franklin Strategic Income Portfolio with those of the Core Plus Bond Portfolio. The respective Board may change the investment objective of a Portfolio without a vote of that Portfolio’s shareholders. For more detailed information about each Portfolio’s investment strategies and risks, see Appendix B.

 

Acquiring Portfolio

 

Acquired Portfolio

Core Plus Bond Portfolio

 

Franklin Strategic Income Portfolio

Investment Objective   Investment Objective
Seeks to achieve high total return through a combination of current income and capital appreciation.   Seeks a high level of current income. A secondary goal is long-term capital appreciation.
Principal Investment Strategies   Principal Investment Strategies
Under normal circumstances, the Portfolio invests at least 80% of its net assets, plus borrowings for investment purposes, in a diversified portfolio of U.S. and foreign bonds or other debt securities of varying maturities and other instruments that provide investment exposure to such debt securities, including forwards or derivatives such as options, futures contracts or swap agreements.   Under normal market conditions, the Portfolio invests its assets primarily to predominantly in U.S. and foreign debt securities, including those in emerging markets. Debt securities include all varieties of fixed, variable and floating rate income securities, including bonds, U.S. and foreign government and agency securities, corporate loans (and loan participations), mortgage-backed securities and other asset-backed securities, and 144A bonds.
No corresponding strategy.   The Portfolio shifts its investments among various classes of debt securities and at any given time may have a substantial amount of its assets invested in any class of debt or other income producing security.
Under normal circumstances, the Portfolio invests primarily in a diversified mix of U.S. dollar-denominated investment grade fixed income securities, particularly U.S. government securities, corporate securities and mortgage- and asset-backed securities.   The Portfolio may invest in many different securities issued or guaranteed by the U.S. government or by non-U.S. governments, or their respective agencies or instrumentalities, including mortgage-backed securities and inflation-indexed securities issued by the U.S. Treasury. Mortgage-backed securities may be fixed-rate or adjustable rate mortgage-backed securities (ARMS).
No corresponding strategy.   The Portfolio may purchase or sell mortgage-backed securities on a delayed delivery or forward commitment basis through the “to-be-announced” (TBA) market. With TBA transactions, the particular securities to be delivered are not identified at the trade date, but the delivered securities must meet specified terms and standards (such as yield, duration, and credit quality).
No corresponding strategy.   The Portfolio may invest a small portion of its assets directly in mortgage loans. The Portfolio may also invest in any class, or “tranche,” of collateralized debt obligations, which include collateralized loan obligations, excluding the “equity” tranche.
The Portfolio may invest in securities of any maturity. Under normal circumstances, it is expected that the average portfolio duration of the Portfolio will be within 5 years of the duration of the benchmark. As of December 31, 2021, the average duration of the benchmark, the Bloomberg U.S. Aggregate Bond Index, was 6.67 years. Duration is a measure used to determine the sensitivity of a security’s price to changes in interest rates. The longer a security’s duration, the more sensitive it will be to changes in interest rates, which may increase the volatility of the security’s value and may lead to losses. As a separate measure, there is no limit on the weighted average maturity of the Portfolio’s fixed income portfolio.   No corresponding strategy.
The Portfolio may invest in securities denominated in foreign currencies and in U.S. dollar-denominated securities of foreign issuers, including securities and instruments that are economically tied to emerging market countries. The Portfolio will normally limit   No corresponding strategy.

 

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Acquiring Portfolio

 

Acquired Portfolio

Core Plus Bond Portfolio

 

Franklin Strategic Income Portfolio

its foreign currency exposure (from non-U.S. dollar-denominated securities or currencies) to 40% of its total assets (this limitation does not apply to investment grade sovereign debt denominated in the local currency with less than 1 year remaining to maturity).  
The Portfolio may invest in both investment grade securities and high yield securities (“junk bonds”) subject to a maximum of 40% of its total assets in securities rated below investment grade by S&P, Fitch, or Moody’s or, if unrated, determined by the Adviser or a sub-adviser to be of comparable quality. The below investment grade securities in which the Portfolio invests are generally rated at least CC by S&P or Fitch or at least Ca by Moody’s or, if unrated, determined by the Adviser or a sub-adviser of the Portfolio to be of comparable quality.   The Portfolio may invest up to 100% of its assets in high-yield, lower-quality debt securities (also known as “junk bonds”). The below-investment grade debt securities in which the Portfolio invests are generally rated at least Caa by Moody’s or CCC by S&P or are unrated securities the Adviser or the Sub-Adviser determines are of comparable quality.
The Portfolio may continue to hold securities that are downgraded below these ratings (or that default) subsequent to purchase. The Portfolio may have exposure to securities rated below CC or Ca, or to securities that are in default or have defaulted, through its investments in certain derivatives described below. The Portfolio does not normally invest in securities that are in default or have defaulted with respect to the payment of interest or repayment of principal, but may do so depending on market or other conditions.   No corresponding strategy.
The portfolio managers intend to maintain an average weighted portfolio quality of BBB- or better, which is considered investment grade, whether composed of rated securities or unrated securities deemed by the portfolio managers to be of comparable quality.   No corresponding strategy.
No corresponding strategy.   The Portfolio may invest in other investment companies, including exchange-traded funds, to gain exposure to certain asset classes.
The Portfolio may enter into foreign currency exchange transactions to hedge against currency exposure in its portfolio. The Portfolio may enter into forward currency exchange contracts and other currency derivatives, such as swaps, options and futures, to shift its investment exposure from one currency into another. This may include shifting exposure from U.S. dollars to a foreign currency, or from one foreign currency to another foreign currency. This type of strategy, sometimes known as a “cross-hedge,” will tend to reduce or eliminate exposure to the currency that is sold, and increase exposure to the currency that is purchased, much as if the Portfolio had sold a security denominated in one currency and purchased an equivalent security denominated in another. Cross-hedges are intended to protect against losses resulting from a decline in the value of the hedged currency, but will cause the Portfolio to assume the risk of fluctuations in the value of the currency it purchases, and may also limit any potential gain that might result should the value of such hedged currency increase.   For purposes of pursuing its investment goals, the Portfolio regularly enters into various currency-related transactions involving derivative instruments, including currency and cross currency forwards, currency swaps, currency and currency index futures contracts and currency options, and may enter into options on all such instruments.
The Portfolio may invest, without limitation, in forwards and derivative instruments such as options, futures contracts, structured securities or swap agreements (including total return swaps, credit default swaps and interest rate swaps), and in mortgage- and asset-backed securities, subject to applicable law and any other restrictions described in the Portfolio’s Prospectus or Statement of Additional Information. Derivatives may be used for various investment purposes, including to hedge portfolio risk, to gain exposure or to short individual securities, to earn income and enhance return, and to manage duration.   The Portfolio regularly enters into interest rate and credit-related transactions involving derivative instruments, including interest rate, fixed income total return and credit default swaps and bond/interest rate futures contracts, as well as options on all such instruments. The use of these derivative transactions may allow the Portfolio to obtain net long or net short exposures to selected currencies, interest rates, countries, durations or credit risks. These derivative instruments may be used for hedging purposes, to enhance Portfolio returns or to obtain exposure to various market sectors. The Portfolio’s investments in derivatives may require it to maintain a percentage of its assets in cash and cash equivalent instruments to serve as margin or collateral for the Portfolio’s obligations under derivative transactions.

 

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Acquiring Portfolio

 

Acquired Portfolio

Core Plus Bond Portfolio

 

Franklin Strategic Income Portfolio

The Portfolio may purchase or sell securities on a when-issued, delayed delivery, or forward commitment basis. The Portfolio may seek to obtain market exposure to the securities in which it primarily invests by entering into a series of purchase and sale contracts (such as contracts for derivative instruments) or by using other investment techniques (such as buy backs or dollar rolls). The Portfolio may invest in privately placed and restricted securities (including 144A bonds), collateralized loan obligations, inflation-indexed bonds, convertible bonds, preferred securities, bank loans, and loan participations and assignments. The Portfolio may also invest in zero coupon and pay-in-kind securities.   No corresponding strategy.
The Portfolio’s investments in derivatives may involve the use of leverage because the Portfolio is not required to invest the full market value of the contract upon entering into the contract but participates in gains and losses on the full contract price. The use of derivatives also may involve the use of leverage because the heightened price sensitivity of some derivatives to market changes may magnify the Portfolio’s gain or loss.   The Portfolio’s investments in derivatives may be deemed to involve the use of leverage because the Portfolio is not required to invest the full market value of the contract upon entering into the contract but participates in gains and losses on the full contract price. The use of derivatives also may be deemed to involve the use of leverage because the heightened price sensitivity of some derivatives to market changes may magnify the Portfolio’s gain or loss. It is not expected, however, that the Portfolio will be leveraged by borrowing money for investment purposes.
No corresponding strategy.   The Portfolio uses an active allocation strategy to try to achieve its investment goals. The Sub-Adviser uses a “top-down” analysis of macroeconomic trends combined with a “bottom-up” fundamental analysis of market sectors, industries, and issuers to try to take advantage of varying sector reactions to economic events.
No corresponding strategy.   The Portfolio also may lend its portfolio securities to earn additional income.
The Portfolio may engage in active and frequent trading to achieve its investment objective.   No corresponding strategy.
Notwithstanding the foregoing, the Portfolio may receive instruments prohibited or not contemplated herein through the conversion, exchange, reorganization, corporate action or bankruptcy of an otherwise permissible investment. The Portfolio may hold or dispose of these investments at the portfolio managers’ discretion.   No corresponding strategy.

 

The Franklin Strategic Income Portfolio and the Core Plus Bond Portfolio have identical fundamental investment policies relating to borrowing, lending, underwriting, concentration, issuing senior securities, and investing in commodities and real estate. Fundamental investment policies may be changed only by a vote of a Portfolio’s shareholders. More detailed information about the fundamental investment policies is available in the Statement of Additional Information.

 

Comparative Performance Information

 

The bar charts and tables below provide some indication of the risks of investing in each Portfolio by showing changes in each Portfolio’s performance from year to year and by showing how the Franklin Strategic Income Portfolio’s average annual total returns for the past one-year and since inception periods through December 31, 2021, and the Core Plus Bond Portfolio’s average annual total returns for the past one-, five- and ten-year periods through December 31, 2021, compared to the returns of a broad-based securities market index. The return of the broad-based securities market index shown in the right hand column below is the return of the index for the last 10 years or, if shorter, since the inception of the share class, as applicable. Past performance is not an indication of future performance.

 

Effective May 1, 2020, the Core Plus Bond Portfolio was restructured from a fund-of-funds to a fund that invests directly in securities and other instruments and is actively managed by multiple sub-advisers. If the Core

 

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Plus Bond Portfolio had historically been managed using its current investment strategies and policies, the performance of the Portfolio would have been different. From April 18, 2014 through April 30, 2020, the Core Plus Bond Portfolio was managed by EIM as a fund-of-funds and pursued its investment objective through investments in underlying proprietary and unaffiliated mutual funds and exchange-traded funds, which incurred their own operating costs and expenses, including management fees payable to their investment advisers. The Core Plus Bond Portfolio’s performance as a fund-of-funds reflected the impact of these operating costs and expenses. Prior to April 18, 2014, the Core Plus Bond Portfolio invested directly in securities and other instruments, had different investment policies and strategies, was managed by multiple sub-advisers and, under normal circumstances, approximately 50% of the Portfolio’s net assets were actively managed and approximately 50% of the Portfolio’s net assets were managed to track the performance (before fees and expenses) of a particular index.

 

The performance results do not reflect any Contract-related fees and expenses, which would reduce the performance results.

 

The Core Plus Bond Portfolio will be the accounting survivor of the Reorganization. As such, the Core Plus Bond Portfolio will continue to have the same performance history following the Reorganization as it had prior to the Reorganization.

 

Franklin Strategic Income Portfolio — Calendar Year Total Returns (Class IB)

 

LOGO

 

Best quarter (% and time period)

7.24% (2020 2nd Quarter)

 

Worst quarter (% and time period)

-8.08%% (2020 1st Quarter)

 

Core Plus Bond Portfolio — Calendar Year Total Returns (Class B)

 

LOGO

 

Best quarter (% and time period)

6.74% (2020 2nd Quarter)

 

Worst quarter (% and time period)

-1.98% (2013 2nd Quarter)

 

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Franklin Strategic Income Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Since
Inception

(10/22/2018)
 

Franklin Strategic Income Portfolio — Class IB Shares

     1.11        4.19  

Bloomberg U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.54        5.31  

 

Core Plus Bond Portfolio — Average Annual Total Returns (%)

(For the periods ended December 31, 2021)

 

     One
Year
     Five
Years
     Ten
Years
 

Core Plus Bond Portfolio — Class B Shares

     -1.53        4.19        2.98  

Bloomberg U.S. Aggregate Bond Index (reflects no deduction for fees, expenses, or taxes)

     -1.54        3.57        2.90  

 

Capitalization

 

The following table shows the capitalization of each Portfolio as of June 30, 2022, and of the Core Plus Bond Portfolio on a pro forma combined basis as of June 30, 2022, after giving effect to the proposed Reorganization. Pro forma net assets may not total and net asset values per share may not recalculate due to rounding of net assets.

 

     Net Assets
(in millions)
    Net Asset Value
Per Share
     Shares
Outstanding
 

Core Plus Bond Portfolio — Class A Shares†

   $ 135.8     $ 3.62        37,510,593  

Franklin Strategic Income Portfolio — Class IB Shares

   $ 95.6     $ 9.21        10,373,063  

Core Plus Bond Portfolio — Class B Shares

   $ 87.3     $ 3.61        24,205,943  

Adjustments*

   $ (0.1        16,045,143  

Pro forma Core Plus Bond Portfolio — Class B Shares (assuming the Reorganization is approved)

   $ 182.8     $ 3.61        50,624,149  

Core Plus Bond Portfolio Class K Shares†

   $ 441.2     $ 3.64        121,266,350  

Total Pro forma Net Assets (assuming the Reorganization is approved)**

   $ 759.8       

 

*   The adjustments reflect the exchange of Franklin Strategic Income Portfolio’s shares for Core Plus Bond Portfolio’s shares.
**   Adjusted to reflect Reorganization costs.
  Class A Shares and Class K Shares are not impacted by the Reorganization.

 

AFTER CAREFUL CONSIDERATION, THE BOARD OF EQ TRUST UNANIMOUSLY APPROVED THE REORGANIZATION AGREEMENT WITH RESPECT TO THE FRANKLIN STRATEGIC INCOME PORTFOLIO. ACCORDINGLY, THE BOARD OF EQ TRUST HAS SUBMITTED THE REORGANIZATION AGREEMENT FOR APPROVAL BY THE FRANKLIN STRATEGIC INCOME PORTFOLIO’S SHAREHOLDERS. THE BOARD OF EQ TRUST RECOMMENDS THAT YOU VOTE “FOR” PROPOSAL 6.

 

ADDITIONAL INFORMATION ABOUT THE REORGANIZATIONS

 

Terms of the Reorganization Agreements

 

The terms and conditions under which each Reorganization would be completed are contained in the applicable Reorganization Agreement. The following is a summary of the material terms of the Reorganization Agreements. For additional information, please refer to the copies of the forms of the Reorganization Agreements, which are attached to this Combined Proxy Statement/Prospectus as Appendix A.

 

Each Reorganization will involve an Acquiring Portfolio acquiring all the assets of the corresponding Acquired Portfolio in exchange solely for Acquiring Portfolio Shares and the Acquiring Portfolio’s assumption

 

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of all of the Acquired Portfolio’s liabilities. Each Reorganization Agreement further provides that, on or as promptly as reasonably practicable after the Closing Date, each Acquired Portfolio will distribute the Acquiring Portfolio Shares it receives in its Reorganization to its shareholders (for the benefit of the Separate Accounts, as applicable, and thus the Contractholders). The account for each shareholder that holds Class IB shares of an Acquired Portfolio shall be credited with the number of full and fractional Class IB shares or Class B shares, as applicable, of the corresponding Acquiring Portfolio due that shareholder, and (if applicable) the account for each shareholder that holds Class K shares of the AXA IM Moderate Allocation Portfolio shall be credited with the number of full and fractional Class K shares of the corresponding Acquiring Portfolio due that shareholder. The number of full and fractional Acquiring Portfolio Shares each shareholder will receive will be equal in net asset value (as determined in accordance with the Trusts’ normal valuation procedures), as of immediately after the close of business (generally 4:00 p.m., Eastern time) on the Closing Date, to the Acquired Portfolio Shares the shareholder holds at that time. After that distribution to an Acquired Portfolio’s shareholders, EQ Trust, on behalf of the Acquired Portfolio, will take all necessary steps under its Declaration of Trust, and Delaware and any other applicable law to effect a complete termination of the Acquired Portfolio.

 

The Board of a Portfolio involved in a Reorganization may terminate or delay the Reorganization Agreement with respect to, and abandon or postpone, the Reorganization at any time prior to the Closing Date, before or after approval by the applicable Acquired Portfolio’s shareholders, if circumstances develop that, in the Board’s opinion, make proceeding with a Reorganization inadvisable for a Portfolio. The consummation of each Reorganization also is subject to various conditions, including approval of the Reorganization by the applicable Acquired Portfolio’s shareholders, completion of all filings with and receipt of all necessary approvals, if any, from the SEC, and other customary corporate and securities matters. Subject to the satisfaction of those conditions, each Reorganization will take place immediately after the close of business on its Closing Date. If a Reorganization Agreement is not approved by the applicable Acquired Portfolio’s shareholders or a Reorganization is not consummated for any other reason, the Board of the Acquired Portfolio will consider other possible courses of action for the Acquired Portfolio, which may include continuing to operate the Acquired Portfolio as a stand-alone portfolio; changes to the Acquired Portfolio’s investment objectives, policies and strategies; reorganizing the Acquired Portfolio into other acquiring portfolios; or such other options that the Board deems to be in the best interests of the Acquired Portfolio.

 

The Board of each Acquired Portfolio, including the Trustees who are not “interested persons” (as defined in the Investment Company Act of 1940, as amended (the “1940 Act”)) (the “Independent Trustees”) of EQ Trust, has determined, with respect to each Acquired Portfolio, that the interests of the Acquired Portfolio’s existing shareholders will not be diluted as a result of the Reorganization and that participation in the Reorganization is in the best interests of the Acquired Portfolio. Similarly, the respective Board of each Acquiring Portfolio, including the Independent Trustees of the respective Trust, has determined, with respect to each Acquiring Portfolio, that the interests of the Acquiring Portfolio’s existing shareholders will not be diluted as a result of the Reorganization and that participation in the Reorganization is in the best interests of the Acquiring Portfolio.

 

EIM has agreed to pay expenses of each Reorganization that exceed an Acquired Portfolio’s expense limitation set forth in its expense limitation arrangement. The estimated Reorganization expenses (excluding portfolio transaction costs, which, unless otherwise noted, will be incurred indirectly by Contractholders both before and after the Reorganization) for each Acquired Portfolio are expected to exceed its expense limit and are expected to be paid by EIM.

 

Approval of the Reorganization Agreement with respect to an Acquired Portfolio will require a majority vote of that Acquired Portfolio’s shareholders. Such majority is defined in the 1940 Act as the lesser of (1) 67% or more of the voting securities of the Acquired Portfolio present at a meeting, if the holders of more than 50% of its outstanding voting securities are present or represented by proxy, or (2) more than 50% of its outstanding voting securities. If a Reorganization Agreement is not approved by an Acquired Portfolio’s shareholders or a Reorganization is not consummated for any other reason, the Board of the Acquired Portfolio will consider other possible courses of action. Please see “Voting Information” below for more information.

 

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Board Considerations

 

At a meeting of the Board of EQ Trust held on June 15-16, 2022, EIM recommended that: (1) the Low Volatility Global Equity Portfolio, a series of EQ Trust, be reorganized into the Common Stock Index Portfolio, also a series of EQ Trust; (2) the Franklin Growth Allocation Portfolio, a series of EQ Trust, be reorganized into the JPMorgan Growth Allocation Portfolio, also a series of EQ Trust; (3) the First Trust Moderate Growth Allocation Portfolio, a series of EQ Trust, be reorganized into the Invesco Moderate Growth Allocation Portfolio, also a series of EQ Trust; (4) the AXA IM Moderate Allocation Portfolio, a series of EQ Trust, be reorganized into the 1290 VT Moderate Growth Allocation Portfolio, also a series of EQ Trust; (5) the Invesco International Growth Portfolio, a series of EQ Trust, be reorganized into the MFS International Growth Portfolio, also a series of EQ Trust; and (6) the Franklin Strategic Income Portfolio, a series of EQ Trust, be reorganized into the Core Plus Bond Portfolio, a series of VIP Trust.

 

EIM noted that, in addition to regularly evaluating the performance of each portfolio of EQ Trust, it continually reviews the overall line-up of investment options and conducts in-depth analysis of its entire fund complex to provide recommendations to the Board to strengthen the fund complex’s line-up. EIM stated that it was recommending the Reorganizations to streamline and strengthen the fund complex’s line-up and to address certain other developments with respect to each Acquired Portfolio, including limited prospects for future growth and/or the failure to attract sufficient Contractholder interest and thus achieve a more sustainable asset base.

 

EIM noted that each Acquired Portfolio has a substantially similar (or, in the case of the Low Volatility Global Equity Portfolio, a broadly similar) investment objective as its corresponding Acquiring Portfolio. EIM also noted that, while each Acquired and corresponding Acquiring Portfolio has its own set of investment strategies that differ in certain respects, the investment strategies of each Acquired and corresponding Acquiring Portfolio are similar or substantially similar, and that each Acquiring Portfolio will provide comparable exposure to the corresponding Acquired Portfolio following the proposed Reorganization, including as follows: (1) the Low Volatility Global Equity Portfolio and the Common Stock Index Portfolio each seeks capital appreciation as a primary component of its investment objective, normally invests (either directly or indirectly, as described above) at least 80% of its net assets in equity securities, and may invest in large-, mid-, and small-cap companies; (2) the Franklin Growth Allocation Portfolio and the JPMorgan Growth Allocation Portfolio each provides diversified exposure to both equity securities and fixed income securities, targets a long-term asset allocation of approximately 65% of assets in equity securities and 35% of assets in fixed income securities, may invest in ETFs, large-, mid-, and small-cap companies, foreign developed markets securities, and investment grade securities, and may invest in derivatives for a variety of purposes, including to implement its volatility management strategy; (3) the First Trust Moderate Growth Allocation Portfolio and the Invesco Moderate Growth Allocation Portfolio each provides diversified exposure to equity securities and fixed income securities, targets a long-term asset allocation of approximately 60% of assets in equity securities and 40% of assets in fixed income securities, invests its equity allocation in the U.S. large-cap, U.S. mid-cap, U.S. small-cap, and international developed equity asset categories, invests its fixed income allocation in the corporate debt asset category to create a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, and may invest in derivatives for a variety of purposes, including to implement its volatility management strategy; (4) the AXA IM Moderate Allocation Portfolio and the 1290 VT Moderate Growth Allocation Portfolio each provides diversified exposure to equity securities and fixed income securities, targets a long-term asset allocation of approximately 55% and 60%, respectively, of assets in equity securities and 45% and 40%, respectively, of assets in fixed income securities, invests its equity allocation in the U.S. large-cap, U.S. mid-cap, U.S. small-cap, and international developed equity asset categories, invests its fixed income allocation in the corporate debt asset category to create a risk and return profile similar to that of the Bloomberg U.S. 5-10 Year Corporate Bond Index, and may invest in derivatives for a variety of purposes, including to implement its volatility management strategy; (5) the Invesco International Growth Portfolio and the MFS International Growth Portfolio each invests substantially in equity securities of foreign issuers (including securities that provide exposure to emerging markets) and is actively managed by a single investment sub-adviser that uses a “growth” style to select investments; and (6) the Franklin Strategic Income Portfolio and the Core Plus Bond Portfolio each invests substantially in a wide variety of debt securities, including U.S. and foreign (including emerging market) government and agency securities, corporate securities, mortgage- and asset-backed securities, collateralized debt obligations, 144A bonds, and inflation-indexed securities, may invest in both investment grade and below investment grade debt securities, and may invest in a wide variety of derivative instruments for various purposes, including to hedge portfolio risk and

 

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to enhance portfolio returns. EIM noted that, given each Acquired Portfolio’s failure to attract sufficient Contractholder interest as well as limited prospects for future growth, EIM believes that it would be appropriate to reorganize each Acquired Portfolio into its corresponding Acquiring Portfolio. EIM also noted that it believes the Reorganizations would be beneficial to the Contractholders invested in the Acquired Portfolios because the Reorganizations would provide a means by which Contractholders with amounts allocated to an Acquired Portfolio could pursue a substantially similar (or, in one case, broadly similar) investment objective in the context of a larger combined Portfolio that provides comparable exposure to similar or substantially similar asset classes and/or strategies with better growth prospects and the same or lower expenses.

 

In determining whether to approve the Reorganization Agreement with respect to each Acquired Portfolio and recommend its approval to shareholders, the Board of EQ Trust, including the Independent Trustees, with the advice and assistance of independent legal counsel, inquired into a number of matters and considered the following factors, among others: (1) the potential benefits of each Reorganization to shareholders, including, for shareholders of the Low Volatility Global Equity Portfolio, the AXA IM Moderate Allocation Portfolio and the Invesco International Growth Portfolio, estimated lower total net annual operating expenses following the Reorganization of each such Acquired Portfolio into its corresponding Acquiring Portfolio and, for each Acquired Portfolio, greater potential to increase assets and thereby realize economies of scale in the Portfolio’s expenses and portfolio management fees as a result of asset growth; (2) a comparison of each Acquired Portfolio’s and its corresponding Acquiring Portfolio’s investment objectives, policies (including fundamental investment policies), strategies, and risks; (3) the experience and qualifications of the Adviser, any sub-adviser(s), and key personnel managing each Acquiring Portfolio; (4) the effect of the respective Reorganization on an Acquired Portfolio’s annual operating expenses and shareholder fees and services, including a comparison of each Acquired Portfolio’s and its corresponding Acquiring Portfolio’s advisory fee and administration fee; (5) the relative historical performance records of each Acquired Portfolio and its corresponding Acquiring Portfolio; (6) any change in shareholder rights; (7) the direct or indirect federal income tax consequences of the Reorganizations to shareholders and Contractholders; (8) any fees or expenses that will be borne directly or indirectly by an Acquired Portfolio in connection with its respective Reorganization, including any costs to an Acquired Portfolio in repositioning its portfolio in anticipation of, or as a result of, its respective Reorganization; (9) the terms and conditions of the Reorganization Agreement and whether a Reorganization would result in dilution of shareholder interests; (10) the potential benefits of the Reorganizations to other persons, including EIM and its affiliates, as discussed below in the section entitled “Potential Benefits of the Reorganizations to EIM and its Affiliates,” and (11) possible alternatives to the Reorganizations, including the potential benefits and detriments of maintaining the current structure.

 

In connection with the Board’s consideration of the proposed Reorganizations, the Independent Trustees requested, and EIM provided to the Board, information regarding the factors set forth above as well as other information relating to the Reorganizations.

 

In reaching the decision to recommend approval of the Reorganizations, the Board, including the Independent Trustees, concluded that each Acquired Portfolio’s participation in its respective Reorganization is in its best interests and that the interests of existing shareholders of the Acquired Portfolios would not be diluted as a result of the Reorganizations. The Board’s conclusion was based on a number of factors, including the following:

 

    The Reorganizations will permit shareholders invested in each Acquired Portfolio to allocate amounts to a larger combined Portfolio that pursues a substantially (or, in one case, broadly) similar investment objective, provides comparable exposure to similar or substantially similar asset classes and/or strategies, and has better prospects for attracting additional assets and realizing a lower total annual operating expense ratio (including acquired fund fees and expenses) than the relevant Acquired Portfolio.

 

    The total net annual operating expense ratio for the Class IB, Class B or Class K shares, as applicable, of an Acquiring Portfolio is expected to be the same as, or lower than, that of the corresponding class(es) of shares of the corresponding Acquired Portfolio for the last fiscal year.

 

    Each Acquired Portfolio is subject to an expense limitation agreement that is in effect until April 30, 2023, and each Acquiring Portfolio is subject to an expense limitation agreement that is in effect until April 30, 2024, and in each case the agreed upon expense limitation for the Acquiring Portfolio’s Class IB, Class B or Class K shares, as applicable, is the same as or lower than that for the corresponding Acquired Portfolio’s corresponding class(es) of shares. After April 30, 2024, any increase in an Acquiring Portfolio’s expense limitation in a renewed expense limitation agreement would require Board approval. The same Trustees serve on the Boards of both EQ Trust and VIP Trust.

 

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    Following the Reorganizations, EIM will continue to serve as the investment adviser, and Equitable Investment Management, LLC will continue to serve as the administrator, of each Acquiring Portfolio.

 

    As a result of each Reorganization, each shareholder of an Acquired Portfolio would hold, immediately after the Closing Date, shares of the same class or a corresponding class of the applicable Acquiring Portfolio (as shown in the “Summary” above) having an aggregate net asset value equal to the aggregate net asset value of shares of the class of the Acquired Portfolio that were held by the shareholder as of the Closing Date.

 

    Each Reorganization will be effected on the basis of each participating Portfolio’s net asset value, which will be determined in connection with each Reorganization in accordance with each Trust’s normal valuation procedures, which are identical for all of the Portfolios.

 

    Shareholders will not pay sales charges in connection with the Reorganizations.

 

    The Reorganizations are not expected to have any adverse tax results to Contractholders, as discussed below in the section entitled “Additional Information about the Reorganizations — Federal Income Tax Consequences of the Reorganizations.”

 

    Each Portfolio has identical purchase and redemption procedures, distribution procedures, and exchange rights.

 

    The Board’s consideration of potential conflicts of interest of EIM in proposing the Reorganizations, as discussed below in the section entitled “Potential Benefits of the Reorganizations to EIM and its Affiliates.”

 

    The Acquired Portfolio involved in each Reorganization will bear the expenses of the Reorganization. However, EIM will reimburse an Acquired Portfolio for expenses of a Reorganization that exceed the Acquired Portfolio’s expense limitation set forth in its expense limitation agreement.

 

On the basis of the information provided to it and its evaluation of that information, the Board of EQ Trust, including the Independent Trustees, voted unanimously to approve each Reorganization Agreement and to recommend that the shareholders of each Acquired Portfolio also approve, respectively, the Reorganization Agreement.

 

Potential Benefits of the Reorganizations to EIM and its Affiliates

 

EIM may realize benefits in connection with the Reorganizations. For example, the profitability from the fees payable to EIM by an Acquiring Portfolio may be higher than the profits derived from the fees paid by the corresponding Acquired Portfolio. In addition, an affiliate, AllianceBernstein L.P., serves as an investment sub-adviser to an Acquiring Portfolio (i.e., Common Stock Index Portfolio) but not the corresponding Acquired Portfolio (i.e., Low Volatility Global Equity Portfolio). EIM may further benefit to the extent a Reorganization would eliminate or reduce EIM’s obligations under an expense limitation arrangement currently in effect for an Acquired Portfolio by reorganizing the Acquired Portfolio into a corresponding Acquiring Portfolio that is operating below its expense cap or, if over its expense cap, is operating at an annual expense ratio that requires a lower waiver or reimbursement amount by EIM. In addition, EIM owns a significant amount of shares of the AXA IM Moderate Allocation Portfolio representing investment of seed capital by EIM to facilitate the operations of that Portfolio. The Reorganization of the AXA IM Moderate Allocation Portfolio into the 1290 VT Moderate Growth Allocation Portfolio is expected to increase the size of the combined Portfolio such that EIM anticipates redeeming shares that it holds in the AXA IM Moderate Allocation Portfolio representing such seed capital investments. Redeeming seed capital from a Portfolio may enable EIM to reduce its costs associated with providing seed capital and/or use the proceeds to provide seed capital for other funds and products that it manages or is developing or realize other benefits. Furthermore, EIM is expected to experience and benefit from a number of efficiencies associated with the streamlining of the fund family. In considering whether to approve the proposed Reorganizations, the Board recognized these potential benefits to and conflicts of interest of EIM and its affiliates and concluded that the potential benefits of the proposed Reorganizations, including achieving the same or lower total operating expenses with improved prospects for attracting additional assets and lowering expenses, supported a decision to approve the Reorganizations.

 

81


Descriptions of Risk Factors

 

A Portfolio’s performance may be affected by one or more of the following risks, which are described in detail in Appendix B “More Information on Strategies and Risk Factors.” For ease of comparison, the principal risks are listed alphabetically, but for each Portfolio, the most significant principal risks as of the date of this Combined Proxy Statement/Prospectus are indicated with an asterisk (*). Each of the Low Volatility Global Equity Portfolio, the JPMorgan Growth Allocation Portfolio, the Franklin Growth Allocation Portfolio, the First Trust Moderate Growth Allocation Portfolio, the 1290 VT Moderate Growth Allocation Portfolio and the AXA IM Moderate Allocation Portfolio is also subject to the risks associated with the Underlying ETFs’ investments; please see the “Information Regarding the Underlying ETFs” in Appendix C for additional information about these risks.

 

Risks

   Common Stock
Index Portfolio
    Low Volatility Global
Equity Portfolio
 

Derivatives Risk

     X    

Equity Risk

     X     X

Foreign Securities Risk

       X

Currency Risk

       X  

Emerging Markets Risk

       X  

Index Strategy Risk

     X  

Large-Cap Company Risk

     X     X  

Market Risk

     X     X

Micro-Cap Company Risk

       X  

Mid-Cap and Small-Cap Company Risk

     X       X  

Portfolio Management Risk

     X       X  

Risks Related to Investments in Underlying ETFs

       X

Sector Risk

     X    

Securities Lending Risk

     X       X  

Volatility Risk

       X

Risks

   JPMorgan Growth
Allocation Portfolio
    Franklin Growth
Allocation Portfolio
 

Asset Allocation Risk

     X     X

Cash Management Risk

     X     X  

Convertible Securities Risk

       X  

Credit Risk

     X       X

Derivatives Risk

     X     X

Equity Risk

     X     X

ETFs Risk

     X     X  

Foreign Securities Risk

     X       X  

Currency Risk

     X       X  

European Economic Risk

     X    

Geographic Concentration Risk

     X       X  

Futures Contract Risk

     X       X  

Index Strategy Risk

     X    

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X       X

Large-Cap Company Risk

     X       X

Leveraging Risk

     X       X

Liquidity Risk

     X       X  

Market Risk

     X     X

Mid-Cap and Small-Cap Company Risk

     X       X  

New Portfolio Risk

       X  

Portfolio Management Risk

     X       X  

Portfolio Turnover Risk

     X       X  

Preferred Stock Risk

       X  

Redemption Risk

     X       X  

Sector Risk

     X    

Securities Lending Risk

       X  

Short Position Risk

       X

U.S. Government Securities Risk

     X  

Volatility Management Risk

     X     X

 

82


Risks

   Invesco Moderate Growth
Allocation Portfolio
    First Trust Moderate Growth
Allocation Portfolio
 

Asset Allocation Risk

     X     X

Cash Management Risk

     X       X  

Credit Risk

     X     X

Derivatives Risk

     X     X

ETFs Risk/Risks Related to Investments in Underlying ETFs

     X       X  

Equity Risk

     X     X

Foreign Securities Risk

     X       X  

Currency Risk

     X       X  

Geographic Concentration Risk

     X       X  

Futures Contract Risk

     X       X  

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X     X

Large-Cap Company Risk

     X     X

Leveraging Risk

     X       X  

Liquidity Risk

     X       X  

Market Risk

     X     X

Mid-Cap and Small-Cap Company Risk

     X       X  

New Portfolio Risk

       X  

Portfolio Management Risk

     X     X

Portfolio Turnover Risk

     X       X  

Redemption Risk

     X       X  

Securities Lending Risk

     X       X  

Short Position Risk

     X       X  

Volatility Management Risk

     X     X

Risks

   1290 VT Moderate Growth
Allocation Portfolio
    AXA IM Moderate
Allocation Portfolio
 

Asset Allocation Risk

     X     X

Cash Management Risk

     X       X  

Credit Risk

     X     X

Derivatives Risk

     X       X  

ETFs Risk/Risks Related to Investments in Underlying ETFs

     X     X

Equity Risk

     X     X

Foreign Securities Risk

     X       X  

Currency Risk

     X       X  

Geographic Concentration Risk

     X       X  

Futures Contract Risk

     X       X  

Interest Rate Risk

     X     X

Investment Grade Securities Risk

     X       X

Large Transaction Risk

       X  

Large-Cap Company Risk

     X       X

Leveraging Risk

     X       X  

Liquidity Risk

     X       X  

Market Risk

     X     X

Mid-Cap and Small-Cap Company Risk

     X       X  

Momentum Risk

     X    

New Portfolio Risk

     X       X  

Portfolio Management Risk

     X     X

Portfolio Turnover Risk

       X  

Redemption Risk

     X       X  

Securities Lending Risk

     X       X  

Short Position Risk

     X       X  

Volatility Management Risk

     X     X

 

83


Risks

   MFS International Growth
Portfolio
    Invesco
International
Growth Portfolio
 

Cash Management Risk

       X  

Derivatives Risk

       X  

Equity Risk

     X     X

Foreign Securities Risk

     X     X

Currency Risk

     X       X  

Depositary Receipts Risk

       X  

Emerging Markets Risk

     X       X  

European Economic Risk

       X  

Geographic Concentration Risk

     X       X  

Investment Style Risk

     X     X

Large Transaction Risk

     X    

Large-Cap Company Risk

     X       X  

Liquidity Risk

     X    

Market Risk

     X     X

Mid-Cap Company Risk

     X       X  

Portfolio Management Risk

     X       X  

Sector Risk

     X       X  

Securities Lending Risk

     X       X  

Small-Cap Company Risk

     X    

Risks

   Core Plus Bond Portfolio     Franklin Strategic
Income Portfolio
 

Cash Management Risk