METROPOLITAN SERIES FUND INC, 497, 1998-11-06

METROPOLITAN SERIES FUND INC
497, 1998-11-06

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<PAGE>

PROSPECTUS
FOR

METROPOLITAN SERIES FUND, INC.
NOVEMBER 9, 1998

The INVESTMENT OPTIONS currently offered by the Metropolitan Series Fund (the
"Fund") ARE:

State Street Research Aggressive Loomis Sayles High Yield Bond
Growth Portfolio Portfolio

State Street Research Diversified Neuberger&Berman Partners Mid Cap
Portfolio Value Portfolio

State Street Research Growth Scudder Global Equity Portfolio
Portfolio

State Street Research Income T. Rowe Price Large Cap Growth
Portfolio Portfolio

State Street Research Money Market T. Rowe Price Small Cap Growth
Portfolio Portfolio

Santander International Stock Lehman Brothers Aggregate Bond Index
Portfolio (formerly State Street Portfolio
Research International Stock
Portfolio) MetLife Stock Index Portfolio

Harris Oakmark Large Cap Value Morgan Stanley EAFE Index Portfolio
Portfolio

Janus Mid Cap Portfolio Russell 2000 Index Portfolio

A word about risk:

This Prospectus discusses the risks associated with an investment in any of the
Portfolios. The Loomis Sayles High Yield Bond Portfolio has higher risk than
many other debt-type investments, because it normally invests 65% or more of
its assets in lower rated bonds (commonly known as "junk bonds"), and the bonds
in this Portfolio have higher default rates than do (high) quality bonds.

An investment in Fund shares involves risk. You could lose money you invest.
Please note that shares are NOT: bank deposits or obligations, federally
insured or guaranteed, or endorsed by any bank or other financial institution.

How to learn more:

Before investing, read the information in this Prospectus about the Fund. Keep
this Prospectus for future reference. For more information, request a copy of
the Statement of Additional Information ("SAI") dated November 1, 1998. We have
"incorporated" the SAI into this Prospectus. That means the SAI is considered
part of this Prospectus as though it were included in it. To request a free
copy of the SAI or to ask questions write or call:

Metropolitan Life Insurance Company
One Madison Avenue
New York, New York 10010
Attention: Retirement & Savings Center, Area 2H
Phone: (800) 553-4459

The Securities and Exchange Commission has a website (http://www.sec.gov) which
you may visit to get this Prospectus, the SAI, and other information. As with
all mutual fund shares, neither the Securities and Exchange Commission nor any
state securities authority have approved or disapproved these securities, nor
have they determined if this Prospectus is truthful or complete. Any
representation otherwise is a criminal offense.
<PAGE>

TABLE OF CONTENTS FOR THIS PROSPECTUS

<TABLE>
<CAPTION>
PAGE
IN THIS
SUBJECT PROSPECTUS
------- ----------
<S> <C>
Financial Highlights of the Portfolios............................ 3
Investment Program of each Portfolio.............................. 9
Certain Investment Practices...................................... 17
Portfolio Turnover Rates.......................................... 20
Description of Some Investments, Techniques, and Risks............ 20
The Fund's Organization........................................... 24
Dividends, Distributions and Taxes................................ 26
Sale and Redemption of Shares..................................... 26
Appendix to Prospectus............................................ 28
</TABLE>

GENERAL INFORMATION ABOUT THE FUND AND ITS PURPOSE

Metropolitan Series Fund, Inc. is an open-end management investment company
(or "mutual fund"). The Fund is a "series" type of mutual fund, which issues
separate classes (or series) of stock. Each class or series represents an
interest in a separate portfolio of Fund investments ("Portfolio"). The Fund
issues and redeems its shares at net asset value without a sales load.

The Fund offers its shares to Metropolitan Life Insurance Company
("MetLife(R)") and its affiliated insurance companies ("Insurance Companies"),
including Metropolitan Tower Life Insurance Company ("Metropolitan Tower"). The
Insurance Companies hold the Fund's shares in separate accounts that they use
to support variable life insurance policies and variable annuity contracts
(together, the "Contracts"). Not all of the Portfolios of the Fund are
available to each of these separate accounts. An Insurance Company holding Fund
shares for a separate account has different rights from those of the owner of a
Contract. The terms "shareholder" or "shareholders" in this Prospectus refer to
the Insurance Companies, and not to any Contract owner.

Within limitations described in the appropriate Contract, owners may allocate
the amounts under the Contracts for ultimate investment in the various
Portfolios of the Fund. See the prospectus which is attached at the front of
this Prospectus for a description of (a) the Contract, (b) the Portfolios of
the Fund that are available under that Contract and (c) the relationship
between increases or decreases in the net asset value of Fund shares (and any
dividends and distributions on such shares) and the benefits provided under
that Contract.

Some of the Portfolios have names and investment objectives that are very
similar to certain publicly available mutual funds that are managed by the same
money managers. These Portfolios are not those publicly available mutual funds
and will not have the same performance. Different performance will result from
such factors as different implementation of investment policies, different cash
flows into and out of the Portfolios, different fees, and different sizes.

It is conceivable that in the future it may be disadvantageous for different
types of variable life insurance and variable annuity separate accounts to
invest simultaneously in the Fund. However, the Fund, Metropolitan Tower and
MetLife do not currently foresee any such disadvantages. The Fund's Board of
Directors intends to monitor for the existence of any material irreconcilable
conflict between or among such owners, and the Insurance Companies will take
whatever remedial action may be necessary.

2
<PAGE>

FINANCIAL HIGHLIGHTS

The table below* (except for June 30, 1998) has been audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing with the
full financial statements and notes thereto in the Statement of Additional
Information or as previously stated in earlier reports. For further information
about the performance of the Portfolios, see the Fund's June 30, 1998 Management
Discussion and Analysis which is incorporated by reference into the Statement of
Additional Information under the caption "Financial Statements".
<TABLE>
<CAPTION>
State Street Research Growth Portfolio
------------------------------------------------------------------------------
For the Six
Months Ended
June 30,
(unaudited) For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL ------------------------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994 1993
--------- --------- --------- --------- -------- --------
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ........... $ 31.92 $ 30.51 $ 27.56 $ 21.81 $ 23.27 $ 21.72
- ----------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income ......................... 0.18 0.44 0.36 0.35 0.30 0.28
Net realized and unrealized gain/(loss) ....... 5.98 7.72 5.78 6.83 (1.06) 3.24
--------- --------- --------- --------- -------- --------
Total From Investment Operations ........ 6.16 8.16 6.14 7.18 (0.76) 3.52
--------- --------- --------- --------- -------- --------
Less Distributions:
------------------
Dividends from net investment income .......... -- (0.44) (0.36) (0.35) (0.30) (0.28)
Distributions from net realized capital gains . (0.89) (6.31) (2.83) (1.08) (0.40) (1.69)
--------- --------- --------- --------- -------- --------
Total Distributions ..................... (0.89) (6.75) (3.19) (1.43) (0.70) (1.97)
--------- --------- --------- --------- -------- --------
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ................. $ 37.19 $ 31.92 $ 30.51 $ 27.56 $ 21.81 $ 23.27
- ----------------------------------------------------------------------------------------------------------------------------------
Total Return (1)............................... 19.40% 28.36% 22.18% 33.14% (3.25)% 14.40%
Net assets at end of period (000's) ........... $2,909,581 $2,349,062 $1,597,728 $1,094,751 $746,433 $640,413

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ...... 0.54% 0.43% 0.29% 0.31% 0.32% 0.28%
Net investment income to average net assets ... 1.08% 1.37% 1.29% 1.46% 1.40% 1.19%
Portfolio turnover (2)......................... 38.02% 82.81% 93.05% 45.52% 57.27% 66.27%

State Street Research Growth Portfolio
-----------------------------------------

For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL -----------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1992 1991 1990 1989
------- ------- ------- -------
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ........... $ 21.56 $ 17.20 $ 19.34 $ 14.64
- ---------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income ......................... 0.34 0.41 0.51 0.54
Net realized and unrealized gain/(loss) ....... 2.13 5.39 (2.15) 4.81
------- ------- ------- -------
Total From Investment Operations ........ 2.47 5.80 (1.64) 5.35
------- ------- ------- -------
Less Distributions:
------------------
Dividends from net investment income .......... (0.29) (0.42) (0.50) (0.52)
Distributions from net realized capital gains . (2.02) (1.02) -- (0.13)
------- ------- ------- -------
Total Distributions ..................... (2.31) (1.44) (0.50) (0.65)
------- ------- ------- -------
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ................. $ 21.72 $ 21.56 $ 17.20 $ 19.34
- ---------------------------------------------------------------------------------------------
Total Return (1) ............................. 11.56% 33.09% (8.50)% 36.64%
Net assets at end of period (000's) ........... $351,028 $232,160 $153,255 $140,279

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ...... 0.25% 0.25% 0.25% 0.25%
Net investment income to average net assets ... 1.52% 2.04% 2.83% 2.98%
Portfolio turnover (2) ....................... 63.74% 62.29% 39.86% 58.01%

State Street Research Income Portfolio
--------------------------------------------------------------------------
For the Six
Months Ended
June 30,
(unaudited) For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL --------------------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994 1993
------- ------- ------- ------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ............ $ 12.66 $ 12.36 $ 12.73 $ 11.32 $ 12.59 $ 12.22
- ------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income .......................... 0.39 0.83 0.82 0.83 0.91 0.83
Net realized and unrealized gain/(loss) ........ 0.18 0.38 (0.36) 1.38 (1.31) 0.86
Total From Investment Operations ......... 0.57 1.21 0.46 2.21 (0.40) 1.69

Less Distributions:
------------------
Dividends from net investment income ........... (0.01) (0.87) (0.81) (0.80) (0.87) (0.88)
Distributions from net realized capital gains .. (0.03) (0.04) (0.02) -- -- (0.44)
Total Distributions ...................... (0.04) (0.91) (0.83) (0.80) (0.87) (1.32)
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period .................. $ 13.19 $ 12.66 $ 12.36 $ 12.73 $ 11.32 $ 12.59
- ------------------------------------------------------------------------------------------------------------------------------
Total Return (1)................................ 4.49% 9.83% 3.60% 19.55% (3.15)% 11.36%
Net assets at end of period (000's) ............ $457,863 $412,191 $383,395 $349,913 $275,659 $299,976

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ....... 0.40% 0.38% 0.32% 0.34% 0.35% 0.32%
Net investment income to average net assets .... 6.29% 6.57% 6.64% 7.01% 7.02% 6.39%
Portfolio turnover (2).......................... 53.80% 121.92% 92.90% 102.88% 141.15% 136.98%

State Street Research Income Portfolio
-----------------------------------------
For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL -----------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1992 1991 1990 1989
------- ------ ------ ------
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ............$ 12.32 $ 11.16 $ 11.10 $ 10.58
- ---------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income .......................... 0.90 0.94 1.16 0.99
Net realized and unrealized gain/(loss) ........ (0.05) 1.14 (0.05) 0.41
------- ------ ------ ------
Total From Investment Operations ......... 0.85 2.08 1.11 1.40
------- ------ ------ ------
Less Distributions:
------------------
Dividends from net investment income ........... (0.71) (0.92) (1.05) (0.88)
Distributions from net realized capital gains .. (0.24) -- -- --
------- ------ ------ ------
Total Distributions ...................... (0.95) (0.92) (1.05) (0.88)
------- ------ ------ ------
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ..................$ 12.22 $ 12.32 $ 11.16 $ 11.10
- ---------------------------------------------------------------------------------------------
Total Return (1)................................ 6.91% 17.31% 10.03% 13.35%
Net assets at end of period (000's) ............$156,245 $87,412 $54,531 $48,629

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ....... 0.25% 0.25% 0.25% 0.25%
Net investment income to average net assets .... 7.16% 7.61% 9.80% 8.81%
Portfolio turnover (2).......................... 151.74% 78.87% 82.93% 51.03%
- ---------------------------------------------------
</TABLE>

* Footnotes appear on page 8.

<PAGE>

FINANCIAL HIGHLIGHTS-(continued)
<TABLE>
<CAPTION>
State Street Research Money Market Portfolio
--------------------------------------------------------------------------------------
For the Six
Months Ended
June 30,
unaudited For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL --------------------------------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994 1993 1992
------- ------- ------- ------- ------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ......... $ 10.38 $ 10.44 $ 10.45 $ 10.48 $ 10.49 $ 10.52 $ 10.59
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
- ----------------------
Net investment income ....................... 0.27 0.54 0.53 0.59 0.40 0.28 0.39
------- ------- ------- ------- ------- ------- -------
Total From Investment Operations ...... 0.27 0.54 0.53 0.59 0.40 0.28 0.39
------- ------- ------- ------- ------- ------- -------
Less Distributions:
- ------------------
Dividends from net investment income ........ -- (0.60) (0.54) (0.62) (0.41) (0.31) (0.46)
------- ------- ------- ------- ------- ------- -------
Total Distributions ................... -- (0.60) (0.54) (0.62) (0.41) (0.31) (0.46)
------- ------- ------- ------- ------- ------- -------
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ............... $ 10.65 $ 10.38 $ 10.44 $ 10.45 $ 10.48 $ 10.49 $ 10.52
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (1) ............................ 2.60% 5.21% 5.01% 5.59% 3.85% 2.90% 3.73%
Net assets at end of period (000's) ......... $50,854 $39,480 $41,637 $40,456 $39,961 $44,321 $55,412

Supplemental Data/Significant Ratios:
- -------------------------------------
Operating expenses to average net assets .... 0.47% 0.49% 0.43% 0.49% 0.44% 0.38% 0.25%
Net investment income to average net assets . 5.12% 5.08% 4.92% 5.39% 3.76% 2.85% 3.68%
<CAPTION>

State Street Research Money Market Portfolio
--------------------------------------------------
For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL --------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1991 1990 1989
------- ------- -------
- ---------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE: Beginning of period ......... $ 10.67 $ 10.49 $ 10.32
- ---------------------------------------------------------------------------------
Investment Operations:
- ---------------------
Net investment income ....................... 0.57 0.86 0.95
------- ------- -------
Total From Investment Operations ...... 0.57 0.86 0.95
------- ------- -------
Less Distributions:
- ------------------
Dividends from net investment income ........ (0.65) (0.68) (0.78)
------- ------- -------
Total Distributions ................... (0.65) (0.68) (0.78)
------- ------- -------
- ----------------------------------------------------------------------------------
NET ASSET VALUE: End of period ............... $ 10.59 $ 10.67 $ 10.49
- ----------------------------------------------------------------------------------
Total Return (1) ............................ 6.10% 8.23% 9.28%
Net assets at end of period (000's) ......... $70,946 $78,014 $41,779

Supplemental Data/Significant Ratios:
- ------------------------------------
Operating expenses to average net assets .... 0.25% 0.25% 0.25%
Net investment income to average net assets . 5.93% 7.68% 8.82%

State Street Research Diversified Portfolio
--------------------------------------------------------------------------------------
For the Six
Months Ended
June 30,
(unaudited) For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL --------------------------------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994 1993
---------- ---------- ---------- ----------- -------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ........... $ 16.98 $ 16.67 $ 15.95 $ 13.40 $ 14.41 $ 13.58
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
- ---------------------
Net investment income ......................... 0.29 0.60 0.55 0.59 0.51 0.46
Net realized and unrealized gain/(loss) ....... 1.85 2.71 1.77 3.02 (0.95) 1.58
---------- ---------- ---------- ----------- -------- ----------
Total From Investment Operations ........ 2.14 3.31 2.32 3.61 (0.44) 2.04
---------- ---------- ---------- ----------- -------- ----------
Less Distributions:
- ------------------
Dividends from net investment income .......... -- (0.60) (0.53) (0.58) (0.50) (0.54)
Distributions from net realized capital gains . (0.28) (2.40) (1.07) (0.48) (0.07) (0.67)
---------- ---------- ---------- ----------- -------- ----------
Total Distributions ..................... (0.28) (3.00) (1.60) (1.06) (0.57) (1.21)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ................. $ 18.84 $ 16.98 $ 16.67 $ 15.95 $ 13.40 $ 14.41
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (1) .............................. 12.65% 20.58% 14.52% 27.03% (3.06)% 12.75%
Net assets at end of period (000's) ........... $2,415,979 $1,982,232 $1,448,841 $1,114,834 $892,826 $743,798

Supplemental Data/Significant Ratios:
- -------------------------------------
Operating expenses to average net assets ...... 0.48% 0.40% 0.29% 0.31% 0.32% 0.29%
Net investment income to average net assets ... 3.38% 3.50% 3.38% 3.92% 3.66% 3.16%
Portfolio turnover (2) ........................ 52.62% 114.79% 91.07% 79.29% 96.49% 95.84%
- -------------------------------------------------
<CAPTION>

State Street Research Diversified Portfolio
-------------------------------------------------------------
For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL -------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1992 1991 1990 1989
-------- -------- -------- --------
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ........... $ 13.61 $ 11.47 $ 12.16 $ 10.58
- -----------------------------------------------------------------------------------------------------------
Investment Operations:
- ---------------------
Net investment income ......................... 0.53 0.62 0.68 0.75
Net realized and unrealized gain/(loss) ....... 0.74 2.23 (0.68) 1.54
-------- -------- -------- --------
Total From Investment Operations ........ 1.27 2.85 0.00 2.29
-------- -------- -------- --------
Less Distributions:
- ------------------
Dividends from net investment income .......... (0.55) (0.62) (0.69) (0.71)
Distributions from net realized capital gains . (0.75) (0.09) -- --
-------- -------- -------- --------
Total Distributions ..................... (1.30) (0.71) (0.69) (0.71)
-------- -------- -------- --------
- ----------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ................. $ 13.58 $ 13.61 $ 11.47 $ 12.16
- ----------------------------------------------------------------------------------------------------------------
Total Return (1) .............................. 9.48% 24.84% 0.00% 21.76%
Net assets at end of period (000's) ........... $334,480 $232,276 $184,879 $172,968

Supplemental Data/Significant Ratios:
- -------------------------------------
Operating expenses to average net assets ...... 0.25% 0.25% 0.25% 0.25%
Net investment income to average net assets ... 3.85% 4.94% 5.74% 6.30%
Portfolio turnover (2) ........................ 114.67% 70.56% 62.51% 50.61%
- -------------------------------------------------
</TABLE>
(*) Footnotes appear on page 8

<PAGE>

FINANCIAL HIGHLIGHTS-(continued)
<TABLE>
<CAPTION>
State Street Research Aggressive Growth Portfolio
-----------------------------------------------------------------------------
For the Six
Months Ended
June 30,
(unaudited) For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL ----------------------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994 1993
--------- --------- --------- ------- ------- -------
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ............ $ 27.61 $ 27.11 $ 25.87 $ 22.05 $ 22.54 $ 19.52
- --------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income/(loss) ................... (0.02) (0.03) (0.02) (0.01) 0.05 0.04
Net realized and unrealized gain/(loss) ........ 3.79 1.67 2.01 6.50 (0.48) 5.06
--------- --------- --------- ------- ------- -------
Total From Investment Operations ......... 3.77 1.64 1.99 6.49 (0.43) 5.10
--------- --------- --------- ------- ------- -------
Less Distributions:
------------------
Dividends from net investment income ........... -- -- -- -- (0.05) (0.06)
Distributions from net realized capital gains .. (0.34) (1.14) (0.75) (2.67) (0.01) (2.02)
--------- --------- --------- ------- ------- -------
Total Distributions ...................... (0.34) (1.14) (0.75) (2.67) (0.06) (2.08)
--------- --------- --------- ------- ------- -------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period .................. $ 31.04 $ 27.61 $ 27.11 $ 25.87 $ 22.05 $ 22.54
- --------------------------------------------------------------------------------------------------------------------------------
Total Return(1) ............................... 13.65% 6.67% 7.72% 29.50% (1.88)% 22.63%
Net assets at end of period (000's) ............ $1,488,247 $1,391,956 $1,321,849 $958,915 $590,047 $387,949

Supplemental Data/Significant Ratios:
-------------------------------------
Operating expenses to average net assets ....... 0.74% 0.81% 0.79% 0.81% 0.82% 0.79%
Net investment income/(loss) to average net
assets ....................................... (0.12)% (0.10)% (0.11)% (0.06)% 0.24% 0.18%
Portfolio turnover(2) ......................... 60.34% 219.08% 221.23% 255.83% 186.52% 120.82%

State Street Research Aggressive Growth Portfolio
-----------------------------------------

For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL -----------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1992 1991 1990 1989
------- ------ ------ -------
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ............ $ 18.11 $ 10.95 $ 12.41 $ 10.42
- ---------------------------------------------------------------------------------------------
Investment Operations:
- ---------------------
Net investment income/(loss) ................... 0.08 0.06 0.15 0.20
Net realized and unrealized gain/(loss) ........ 1.77 7.25 (1.43) 3.00
------- ------ ------ -------
Total From Investment Operations ......... 1.85 7.31 (1.28) 3.20
------- ------ ------ -------
Less Distributions:
- ------------------
Dividends from net investment income ........... (0.10) (0.07) (0.14) (0.14)
Distributions from net realized capital gains .. (0.34) (0.08) (0.04) (1.07)
------- ------ ------ -------
Total Distributions ...................... (0.44) (0.15) (0.18) (1.21)
------- ------ ------ -------
- ---------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period .................. $ 19.52 $ 18.11 $ 10.95 $ 12.41
- ---------------------------------------------------------------------------------------------
Total Return(1) ............................... 10.39% 66.41% (10.34)% 30.94%
Net assets at end of period (000's) ............ $129,249 $45,858 $15,409 $11,280

Supplemental Data/Significant Ratios:
- ------------------------------------
Operating expenses to average net assets ....... 0.75% 0.75% 0.75% 0.75%
Net investment income/(loss) to average net
assets ....................................... 0.46% 0.45% 1.41% 1.41%
Portfolio turnover(2) ......................... 100.95% 146.12% 271.31% 226.39%

MetLife Stock Index Portfolio
---------------------------------------------------------------------------
For the Six
Months Ended
June 30,
(unaudited) For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL ---------------------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ......... $ 28.78 $ 22.23 $ 18.56 $ 13.87 $ 14.25 $ 13.27
--------- --------- --------- ------- ------- -------
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income ....................... 0.18 0.34 0.33 0.32 0.33 0.35
Net realized and unrealized gain/(loss) ..... 4.83 6.79 3.88 4.79 (0.17) 0.98
--------- --------- --------- ------- ------- -------
Total From Investment Operations ...... 5.01 7.13 4.21 5.11 0.16 1.33
--------- --------- --------- ------- ------- -------
Less Distributions:
------------------
Dividends from net investment income ........ -- (0.34) (0.33) (0.32) (0.32) (0.35)
Distributions from net realized capital gains (0.03) (0.24) (0.21) (0.10) (0.22) --
--------- --------- --------- ------- ------- -------
Total Distributions ................... (0.03) (0.58) (0.54) (0.42) (0.54) (0.35)
--------- --------- --------- ------- ------- -------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ............... $ 33.76 $ 28.78 $ 22.23 $ 18.56 $ 13.87 $ 14.25
- -----------------------------------------------------------------------------------------------------------------------------
Total Return(1) ............................ 17.42% 32.19% 22.66% 36.87% 1.18% 9.54%
Net assets at end of period (000's) ......... $2,703,826 $2,020,480 $1,122,297 $635,823 $363,001 $282,700

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets .... 0.29% 0.33% 0.30% 0.32% 0.33% 0.32%
Net investment income to average net assets . 1.21% 1.47% 1.91% 2.22% 2.51% 2.51%
Portfolio turnover(2) ...................... 8.29% 10.69% 11.48% 6.35% 6.66% 13.99%
- ------------------------------------

MetLife Stock Index Portfolio
--------------------------------------

For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL --------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1992 1991 1990/(A)/
------- ------ -------
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE: Beginning of period ......... $ 12.76 $ 9.96 $ 10.00
- -----------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income ....................... 0.36 0.35 0.23
Net realized and unrealized gain/(loss) ..... 0.60 2.82 (0.05)
------- ------ -------
Total From Investment Operations ...... 0.96 3.17 10.18
------- ------ -------
Less Distributions:
------------------
Dividends from net investment income ........ (0.26) (0.37) (0.22)
Distributions from net realized capital gains (0.19) -- --
------- ------ -------
Total Distributions ................... (0.45) (0.37) (0.22)
------- ------ -------
- -----------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ............... $ 13.27 $ 12.76 $ 9.96
- -----------------------------------------------------------------------------------------
Total Return(1) ............................. 7.44% 29.76% 1.95%
Net assets at end of period (000's) ......... $144,692 $54,183 $ 6,056

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets .... 0.25% 0.24% 0.25%
Net investment income to average net assets . 2.74% 2.98% 4.12%
Portfolio turnover(2)........................ 17.54% 1.18% 3.50%
- ------------------------------------
</TABLE>

* Footnotes appear on page 8.

5
<PAGE>

FINANCIAL HIGHLIGHTS-(continued)
<TABLE>
<CAPTION>
State Street Research International Stock Portfolio
--------------------------------------------------------------
For the Six
Months Ended
June 30,
(unaudited) For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL -------------------------------------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ........................ $ 11.67 $ 11.95 $ 12.29 $ 12.30 $ 12.33
- -----------------------------------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income ...................................... 0.11 0.10 0.07 0.03 0.08
Net realized and unrealized gain/(loss) .................... 2.47 (0.38) (0.28) 0.07 0.54
-------- -------- -------- -------- --------
Total From Investment Operations ..................... 2.58 0.28 (0.21) 0.10 0.62
-------- -------- -------- -------- --------
Less Distributions:
------------------
Dividends from net investment income ....................... (0.03) -- -- (0.04) --
Distributions from net realized capital gains .............. -- -- (0.13) (0.07) (0.65)
-------- -------- -------- -------- --------
Total Distributions .................................. (0.03) -- (0.13) (0.11) (0.65)
-------- -------- -------- -------- --------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period .............................. $ 14.22 $ 11.67 $ 11.95 $ 12.29 $ 12.30
- -----------------------------------------------------------------------------------------------------------------------------
Total Return(1)(4) ....................................... 22.12% (2.34)% (1.77)% 0.84% 5.08%
Net assets at end of period (000's) ........................ $303,545 $267,089 $303,826 $297,461 $272,952

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ................... 1.02% 1.03% 0.97% 1.01% 1.04%
Operating expenses to average net assets before voluntary
reimbursement ............................................ N/A N/A N/A N/A N/A
Net investment income to average net assets ................ 1.49% 0.77% 0.56% 0.21% 0.80%
Net Investment Income to average net assets before voluntary
reimbursement ............................................ N/A N/A N/A N/A N/A
Portfolio turnover(2)..................................... 59.45% 182.11% 116.67% 86.24% 65.84%

State Street Research International Stock Portfolio
-------------------------------

For the Year Ended December 31,
SELECTED DATA FOR A SHARE OF CAPITAL -------------------------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1993 1992 1991(B)
-------- ------- -------
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE: Beginning of period ........................ $ 8.63 $ 9.71 $ 10.00
- ------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income ...................................... 0.02 0.05 0.05
Net realized and unrealized gain/(loss) .................... 4.52 (1.04) (0.20)
-------- ------- -------
Total From Investment Operations ..................... 4.54 (0.99) 9.85
-------- ------- -------
Less Distributions:
------------------
Dividends from net investment income ....................... (0.26) (0.09) (0.14)
Distributions from net realized capital gains .............. (0.58) -- --
-------- ------- -------
Total Distributions .................................. (0.84) (0.09) (0.14)
-------- ------- -------
- ------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period .............................. $ 12.33 $ 8.63 $ 9.71
- ------------------------------------------------------------------------------------------------
Total Return(1)(4) ....................................... 47.76% (10.21)% (1.55)%
Net assets at end of period (000's) ........................ $120,781 $18,998 $10,809

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ................... 1.14% 0.97% 0.97%
Operating expenses to average net assets before voluntary
reimbursement ............................................ 1.15% N/A N/A
Net investment income to average net assets ................ 0.15% 0.89% 1.01%
Net Investment Income to average net assets before voluntary
reimbursement ............................................ 0.15% N/A N/A
Portfolio turnover(2)..................................... 88.90% 65.09% 29.41%

Loomis Sayles High Yield Janus Mid Cap
Bond Portfolio Portfolio
---------------------------- -----------------------------
For the Six For the Period For the Six For the Period
Months Ended March 3, 1997 Months Ended March 3, 1997
June 30, to June 30, to
(unaudited) December 31, (unaudited) December 31,
SELECTED DATA FOR A SHARE OF CAPITAL ------------- ------------- ------------ -------------
STOCK OUTSTANDING THROUGHOUT PERIOD: 1998 1997 1998 1997
------------- ------------- ------------ -------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ................................ $ 10.14 $ 10.00 $ 12.77 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
----------------------
Net investment income .............................................. 0.42 0.35 (0.01) 0.01
Net realized and unrealized gain/(loss) ............................ (0.10) 0.26 2.36 2.81
------------- ------------- ------------ -------------
Total From Investment Operations ............................. 0.32 0.61 2.35 2.82
------------- ------------- ------------ -------------
Less Distributions:
-------------------
Dividends from net investment income ............................... -- (0.35) -- (0.01)
Distributions from net realized capital gains ...................... --(3) (0.12) -- (0.04)
------------- ------------- ------------ -------------
Total Distributions .......................................... -- (0.47) -- (0.05)
------------- ------------- ------------ -------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ...................................... $ 10.46 $ 10.14 $ 15.12 $ 12.77
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return(1) ................................................... 3.18% 6.18% 18.48% 28.22%
Net assets at end of period (000's) ................................ $ 42,753 $ 27,804 $ 243,401 $ 103,852

Supplemental Data/Significant Ratios:
-------------------------------------
Operating expenses to average net assets ........................... 0.09% 0.83% 0.83% 0.85%
Operating expenses to average net assets before voluntary expense
reimbursements ................................................... 1.05% 1.35% N/A 0.99%
Net investment income to average net assets ........................ 9.62% 7.04% (0.19)% 0.10%
Net investment income to average net assets before voluntary expense
reimbursements ................................................... 9.47% 6.52% N/A (0.04)%
Portfolio turnover(2)............................................. 28.48% 39.26% 45.49% 74.70%
- ----------------------------------------------------------------------
</TABLE>

* Footnotes appear on page 8

<PAGE>

FINANCIAL HIGHLIGHTS-(continued)
<TABLE>
<CAPTION>

T. Rowe Price Small Cap Scudder Global Equity
Growth Portfolio Portfolio
------------------------------ -----------------------------
For the Six For the Period For the Six For the Period
Months Ended March 3, 1997 Months Ended March 3, 1997
June 30, to June 30, to
(unaudited) December 31, (unaudited) December 31,
----------- ----------- ----------- -----------
SELECTED DATA FOR A SHARE OF CAPITAL 1998 1997 1998 1997
STOCK OUTSTANDING THROUGHOUT PERIOD: ----------- ---------- ----------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE: Beginning of period ................................ $11.88 $10.00 $10.85 $10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
---------------------
Net investment income .............................................. 0.01 -- 0.11 0.10
Net realized and unrealized gain/(loss) ............................ 0.60 1.88 1.64 0.86
----------- ---------- ----------- ----------
Total From Investment Operations ............................. 0.61 1.88 1.75 0.96
----------- ---------- ----------- ----------
Less Distributions:
------------------
Dividends from net investment income ............................... -- --(3) -- (0.10)
Distributions from net realized capital gains ...................... -- -- (0.02) (0.01)
----------- ---------- ----------- ----------
Total Distributions .......................................... -- -- (0.02) (0.11)
----------- ---------- ----------- ----------
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End of period ...................................... $12.49 $11.88 $12.58 $10.85
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (1) ................................................... 5.13% 18.81% 16.11% 9.62%
Net assets at end of period (000's) ................................ $163,345 $94,020 $99,411 $60,712

Supplemental Data/Significant Ratios:
------------------------------------
Operating expenses to average net assets ........................... 0.66% 0.67% 0.92% 0.78%
Operating expenses to average net assets before voluntary expense
reimbursements ................................................... 0.66% 0.86% 1.01% 1.14%
Net investment income to average net assets ........................ 0.13% 0.01% 2.20% 1.66%
Net investment income to average net assets before voluntary expense
reimbursements ................................................... 0.13% (0.19)% 2.11% 1.30%
Portfolio turnover (2) ............................................. 22.98% 13.45% 9.68% 36.04%
- ----------------------------------------------------------------------
</TABLE>
* Footnotes appear on page 8

<PAGE>

FINANCIAL HIGHLIGHTS-(continued)
Notes:
Total return information shown in the Financial Highlights tables does not
reflect expenses that apply at the separate account level or to related
insurance products. Inclusion of these charges would reduce the total return
figures for all periods shown.

* Ratios have been determined based on annualized operating results for
the period. Twelve months result may be different for those periods
less than a year.

(1) For the eight months ended August 31, 1998 total returns are as
follows:

Total Return
----- ------
State Street Research Growth Portfolio ................... 1.22%
State Street Research Income Portfolio ................... 6.31%
State Street Research Money Market Portfolio ............. 3.51%
State Street Research Diversified Portfolio .............. 3.10%
State Street Research Aggressive Growth Portfolio ........ (15.68)%
MetLife Stock Index Portfolio ............................ (0.59)%
State Street Research International Stock Portfolio ...... 9.92%
Loomis Sayles High Yield Bond Portfolio .................. (11.32)%
Janus Mid Cap Portfolio .................................. (7.52)%
T. Rowe Price Small Cap Growth Portfolio ................. (23.40)%
Scudder Global Equity Portfolio .......................... 1.07%

(2) The lesser of purchases or sales of portfolio securities for a period,
divided by the monthly average of the market value of portfolio
securities owned during the period. Securities with a maturity or
expiration date at the time of acquisition of one year or less are
excluded from the calculation. Purchases and sales of securities
(excluding short-term securities) for the six months ended June 30,
1998 are as follows:
<TABLE>
<CAPTION>

Purchases Sales of securities
-------------- -------------------
<S> <C> <C>
State Street Research Growth Portfolio ................................ $1,035,033,533 $ 938,155,848
State Street Research Income Portfolio ................................ 274,992,671 224,426,095
State Street Research Diversified Portfolio ........................... 1,303,201,075 1,087,548,177
State Street Research Aggressive Growth Portfolio ..................... 820,794,661 869,559,809
MetLife Stock Index Portfolio ......................................... 524,492,805 196,816,254
State Street Research International Stock Portfolio ................... 166,954,243 180,229,673
Loomis Sayles High Yield Bond Portfolio ............................... 25,878,485 9,821,970
Janus Mid Cap Portfolio ............................................... 188,671,364 73,994,203
T. Rowe Price Small Cap Growth Portfolio .............................. 88,344,901 28,741,844
Scudder Global Equity Portfolio ....................................... 37,217,026 7,266,491
</TABLE>

(3) Less than $.005 per share.

(4) On November 9, 1998 Santader Global Advisers, Inc. became
sub-investment manager for the Santader International Stock Portfolio
(formerly the State Street Research International Stock Portfolio).
See "About the Santader International Stock Portfolio" for more
information.

/A/ For the period May 1, 1990 to December 31, 1990

/B/ For the period May 1, 1991 to December 31, 1991

See notes to Financial Statements.

<PAGE>

INVESTMENTS IN THE PORTFOLIOS

ABOUT ALL THE PORTFOLIOS:

Each Portfolio of the Fund has different investment objectives. Since
investment involves both opportunities for gain and risks of loss, we cannot
give you assurance that the Portfolios will achieve their objectives. You
should carefully review the objectives and policies of the Portfolios and
consider your ability to assume the risks involved before allocating payments
to particular Portfolios.

While certain of the investment techniques, instruments and risks associated
with each Portfolio are referred to in the discussion that follows, additional
information on these subjects appears further below under "Certain Investment
Practices" and "Description of Some Investments, Techniques and Risks."
However, these discussions do not list every type of investment, technique, or
risk to which a Portfolio may be exposed. Further, the Portfolios may change
their investment practices at any time without notice, except for those
policies that this Prospectus or the SAI specifically identify as requiring a
shareholder vote to change. Unless otherwise indicated, all percentage
limitations as well as characterization of a company's capitalization are
evaluated as of the date of purchase of the security.

MetLife has overall responsibility for investment management for each Portfolio
and day-to-day investment management responsibility for the index Portfolios.
(MetLife also performs general administrative and management services for the
Fund.) More information about MetLife appears under "MetLife" below.

ABOUT THE STATE STREET RESEARCH PORTFOLIOS:

State Street Research & Management Company ("State Street Research") is the
sub-investment manager for the State Street Research Portfolios. It is a
Delaware corporation and traces its history back to 1924. It is a wholly-owned
indirect subsidiary of MetLife. In addition to the Fund, it provides investment
management services to several mutual funds and institutional clients. As of
June 30, 1998, State Street Research and its subsidiaries had investment
arrangements in effect for about $53 billion in assets.

The STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO seeks maximum capital
appreciation.

The Portfolio generally invests most of its assets in the common stocks, and
other securities convertible into or carrying the right to acquire common
stocks, of:
. less mature companies with the potential for rapid growth
. companies whose unusual circumstances have not been fully recognized

The Portfolio's investments can range across a full spectrum from small to
large capitalization issuers.

Richard J. Jodka, a Senior Vice President since joining State Street Research
in February 1998, is the portfolio manager for the Portfolio and has been
primarily responsible for its day-to-day management since that time. During the
past five years, he also served as a portfolio manager with Frontier Capital
Management and Putnam Investments, Inc.

The STATE STREET RESEARCH DIVERSIFIED PORTFOLIO seeks a high total return while
attempting to limit investment risk and preserve capital.

The Portfolio invests portions of its assets in:
. equity securities of the type that can be purchased by the State Street
Research Growth Portfolio
. debt securities of the type that can be purchased by the State Street
Research Income Portfolio
. short-term money market instruments of the type that can be purchased by the
State Street Research Money Market Portfolio

The portion of this Portfolio's assets invested in each category will usually
be similar in composition to that of the Portfolio to which that portion
correlates. However, no absolute limits apply to the portion of assets invested
in each category or the composition of each
9
<PAGE>

category. The amount of assets invested in each type of security will depend
upon economic conditions, the general level of common stock prices, interest
rates and other relevant considerations, including the risks of each type of
security.

The portfolio manager for each portion is the same as the portfolio manager of
the Portfolio to which such portion correlates (see portfolio manager
information above). Assets are allocated among the portions of the Portfolio
based on the input of State Street Research's Asset Allocation Committee.

The STATE STREET RESEARCH GROWTH PORTFOLIO seeks long-term growth of capital
and income, and moderate current income.

Generally, the greatest portion of the Portfolio's assets will be invested in
equity securities of good quality where the stock price represents a good value
based on considerations such as price to book value and price to earnings
ratios.

The Portfolio may also invest in:
. smaller emerging growth companies with potential for above average earnings
growth
. short-term fixed income investments

John T. Wilson, a Senior Vice President at State Street Research since April,
1998, has been with the firm since 1996. Mr. Wilson is the portfolio manager
for the Portfolio and has been primarily responsible for its day-to-day
management for 2 years. He is a member of the State Street Research's Equity
Group's Large Cap Growth Team. During the past five years, he was also a
portfolio manager with Phoenix Investment Counsel, Inc.

The STATE STREET RESEARCH INCOME PORTFOLIO seeks (a) the highest possible total
return, by combining current income with capital gains, consistent with prudent
investment risk, and (b) secondarily, the preservation of capital.

The Portfolio invests at least 75% of its total assets in non-convertible debt
securities in the three highest rating categories as determined by a nationally
recognized statistical rating organization ("NRSRO"), or of comparable quality
("top three ratings"). The maturities of the debt securities the Portfolio
invests in vary depending on market values and trends and can be long-term (10
or more years), intermediate-term (1-10 years) or short-term (less than 1
year).

The Portfolio may also invest in:
. debt securities that are not within the top three rating categories; and
convertible securities and preferred stocks of companies that have senior
securities rated within the top three credit rating categories.
. common stocks acquired by conversion of convertible securities or exercise of
warrants attached to debt securities (limited to 10% of its total assets).

Kim Peters, a Senior Vice President at State Street Research since 1994, has
been with the firm since 1986. Mr. Peters is the portfolio manager for the
Portfolio and has been primarily responsible for its day-to-day management for
5 years. He is the lead member of the State Street Research Fixed Income
Group's Corporate Team. During the past five years, Mr. Peters has also served
as a Vice President at State Street Research.

The STATE STREET RESEARCH MONEY MARKET PORTFOLIO seeks the highest possible
current income consistent with preservation of capital and maintenance of
liquidity.

The Portfolio invests primarily in short-term money market instruments with
minimal credit risks, including: corporate debt securities, United States
government securities, government agency securities, bank certificates of
deposit, bankers' acceptances, variable amount master demand notes, and
repurchase and reverse repurchase agreements. The Portfolio invests only in
securities that have a remaining maturity of less than 13 months. The Portfolio
will be managed in such a way that significant variations in net asset value
per share are rather unlikely. In addition, the dollar weighted average
maturity for the Portfolio's securities will not be more than ninety days.

About the SANTANDER INTERNATIONAL STOCK PORTFOLIO (formerly STATE STREET
RESEARCH INTERNATIONAL STOCK PORTFOLIO):

Effective November 9, 1998, Santander Global Advisors, Inc. ("Santander") is
the sub-investment manager of the Santander International Stock Portfolio. The
shareholders of the Portfolio vote on whether to approve this

10
<PAGE>

appointment at a special shareholders meeting to be held on January 7, 1999.
Santander was founded in 1997. Santander Investments, SA, a wholly-owned
subsidiary of Banco Santander, owns 75% of the outstanding common stock of
Santander. MetLife owns 25% of the outstanding common stock of Santander. In
addition to the Fund, Santander provides investment management services to
several institutional clients. Santander has not previously provided investment
management services to a mutual fund, which you should consider as an
additional risk factor associated with investing in the Portfolio.
Nevertheless, as of June 30, 1998, it did have investment arrangements in
effect for in excess of $700 million in assets.

The SANTANDER INTERNATIONAL STOCK PORTFOLIO seeks long-term growth of capital.

The Portfolio normally invests at least 65% its net assets in equity securities
of established large capitalization foreign (non-U.S. domiciled) companies with
attractive long-term prospects for growth of capital. The Portfolio invests
primarily on non-U.S. stock exchanges or well established over-the-counter
markets, but may also invest in equity securities through the purchase of
American Depository Receipts ("ADRs"), European Depository Receipts ("EDRs")
and International Depository Receipts ("IDRs"). The Portfolio will usually be
invested in issuers located in at least three countries, not including the U.S.

The Portfolio may also invest in:
. securities of medium and small capitalization foreign companies
. investment grade debt securities of domestic and foreign companies
. high-quality non-U.S. (as well as domestic) money market instruments
including repurchase agreements with non-U.S. banks and broker-dealers and
"synthetic" money market positions
. domestic debt and equity securities for temporary or defensive purposes

Christopher J. Goudie, an Executive Vice President at Santander since May 1998,
has been primarily responsible for the Portfolio's day-to-day management since
Santander became sub-investment manager for the Portfolio. He also manages
Santander's EAFE Active/Passive portfolio. During the past 5 years Mr. Goudie
was head of client service for North America and a portfolio manager for global
and U.S. equity portfolios at Baring Asset Management.

ABOUT THE HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO:

Harris Associates L.P. ("Harris") is the sub-investment manager of the Harris
Oakmark Large Cap Value Portfolio. Together with its predecessors it has
provided investment management services to mutual funds since 1970. It is a
wholly-owned subsidiary of Nvest Companies, L.P. whose general partner, Nvest
Corporation, is an indirect wholly-owned subsidiary of MetLife. In addition to
the Fund, it provides investment management services to several mutual funds as
well as individuals, trusts, endowments, institutional clients and private
partnerships. As of June 30, 1998, Harris had investment arrangements in effect
for about $20 billion in assets.

The HARRIS OAKMARK LARGE CAP VALUE PORTFOLIO seeks long-term capital
appreciation.

The Portfolio normally invests at least 65% of its total assets in equity
securities of large capitalization U.S. companies. The sub-adviser's chief
consideration in selecting equity securities for the Portfolio is its judgment
as to the size of the discount at which the security trades, relative to its
economic value. The sub-adviser's investment philosophy is predicated on the
belief that, over time, market price and value converge and that the investment
in securities priced significantly below long-term value present the best
opportunity to achieve long-term capital appreciation. The sub-adviser uses
several methods to analyze value, but considers the primary determinant to be
the enterprise's long-run ability to generate cash for its owners. Harris also
believes the risks of equity investing are often reduced if management's
interests are strongly aligned with the interest of its stockholders.

The Portfolio may also invest in:
. warrants and convertible securities
. high and medium investment grade debt securities
. below investment grade debt securities (currently limited to 25% of its total
assets)

The portfolio managers define LARGE-CAP COMPANIES as those whose market

11
<PAGE>

capitalization fall within the range of companies included in the S&P 500 Index
at the time of the purchase. As of June 30, 1998, this included companies with
capitalizations of approximately $688 million and above.

Robert J. Sanborn and Edward Loeb are co-portfolio managers for the Portfolio
and have been primarily responsible for its day-to-day management since its
inception in November, 1998. Mr. Sanborn is the portfolio manager for other
mutual funds managed by Harris. During the past five years, Mr. Sanborn has
been a Portfolio Manager of Harris, a Director of Harris Associates Inc., its
general partner, and the Executive Vice President of Harris Associates
Investment Trust, a registered mutual fund with six series, including The
Oakmark Fund, for which he is the fund manager. Mr. Loeb is the portfolio
manager for numerous individual and institutional clients. During the past five
years, Mr. Loeb has been a Portfolio Manager of Harris and, since June 1997, a
Vice President of the Investment Adviser Department of Harris. Mr. Sanborn and
Mr. Loeb have been with Harris since 1988 and 1989, respectively.

ABOUT THE JANUS MID CAP PORTFOLIO:

Janus Capital Corporation ("Janus") is the sub-investment manager for the Janus
Mid Cap Portfolio. It is a Colorado corporation that began providing investment
management services at its inception in 1970. In addition to the Fund, it
provides investment management services to several mutual funds and several
individual and institutional clients. As of June 30, 1998, Janus managed
approximately $89 billion in assets.

The JANUS MID CAP PORTFOLIO seeks to provide long-term growth of capital.

The Portfolio will normally invest at least 65% of its total assets in common
stocks of medium capitalization companies selected for their growth potential.
The Portfolio is non-diversified, so that it can own larger positions in a
smaller number of issuers. This means the appreciation or depreciation of a
single investment can have a greater impact on the Portfolio's share price. The
portfolio manager generally takes a "bottom up" approach to building the
Portfolio by identifying companies with earnings growth potential that may not
be recognized by the market at large, without regard to any industry sector or
other similar selection procedure. Realizing income is not a significant
consideration.

The Portfolio may also invest in other equity and debt securities, including
"special situations," as described in this Prospectus under "Description of
some Investments, Techniques and Risks."

The portfolio manager defines MID-CAPITALIZATION ("mid-cap") COMPANIES as those
whose market capitalization falls within the range of companies included in the
S&P MidCap 400 Index at the time of the purchase. As of June 30, 1998, this
included companies with capitalizations between approximately $330 million and
$22.9 billion.

James P. Goff, Vice President since December 1993 and Portfolio Manager, joined
Janus in 1988. He is the portfolio manager for the Portfolio and has been
primarily responsible for its day-to-day management since its inception in
March, 1997. He is also a portfolio manager for other investment portfolios.
Over the past five years, he has also been Portfolio Manager at Janus.

ABOUT THE LOOMIS SAYLES HIGH YIELD BOND PORTFOLIO:

Loomis, Sayles & Company, L.P. ("Loomis Sayles") is the sub-investment manager
for the Loomis Sayles High Yield Bond Portfolio. It is a Delaware limited
partnership with a history that dates back to 1926. Its general partner is an
indirect wholly-owned subsidiary of Nvest Companies, L.P. whose general
partner, Nvest Corporation, is an indirect wholly-owned subsidiary of MetLife.
In addition to the Portfolio, it provides investment management services to
numerous mutual funds and institutional clients. As of June 30, 1998, Loomis
Sayles had investment arrangements in effect for about $69 billion in assets.

The LOOMIS SAYLES HIGH YIELD BOND PORTFOLIO seeks high total investment return
through a combination of current income and capital appreciation.

12
<PAGE>

The Portfolio normally invests at least 65% of its assets in below investment
grade fixed income securities (commonly referred to as "junk bonds").

The Portfolio may also invest in:
. investment grade debt securities
. preferred stocks (currently, limited to 20% of its total assets)
. common stocks (currently, limited to 10% of its total assets)

Daniel J. Fuss, Executive Vice President, Director and Managing Partner, and
Kathleen C. Gaffney, Vice-President, have held their current positions over the
past five years and have been with Loomis Sayles since 1976 and 1984
respectively. Mr. Fuss and Ms. Gaffney, co-portfolio managers for the
Portfolio, have been primarily responsible for its day-to-day management since
its inception in March, 1997.

ABOUT THE NEUBERGER&BERMAN PARTNERS MID CAP VALUE PORTFOLIO:

Neuberger&Berman Management Incorporated ("Neuberger&Berman"), is the sub-
investment manager for the Neuberger&Berman Partners Mid Cap Value Portfolio.
Neuberger&Berman and its predecessor firms have specialized in the management
of mutual funds since 1950. Neuberger&Berman is owned by the principals of
Neuberger&Berman, LLC. In addition to the Fund, Neuberger&Berman, LLC and its
affiliates, including Neuberger&Berman, provide investment management services
to mutual funds and securities accounts with assets as of June 30, 1998 of
about $59 billion.

The NEUBERGER&BERMAN PARTNERS MID CAP VALUE PORTFOLIO seeks capital growth.

The Portfolio will normally invest at least 65% of its total assets in common
stocks of mid capitalization companies. The Portfolio uses a value-oriented
investment approach designed to increase capital with reasonable risk by
purchasing securities believed to be undervalued based on strong fundamentals,
including: a low price-to-earnings ratio; consistent cash flows; the company's
track record through all economic cycles; ownership interests by a company's
management; and the dominance of a company in a particular field.

The Portfolio may also invest in the following:
. other equity securities (including securities of large capitalization
companies)
. investment grade debt securities
. below investment grade debt securities (currently limited to 15% of its net
assets)

The portfolio managers define MID-CAP COMPANIES as those whose market
capitalization falls within the range of companies included in the S&P MidCap
400 Index at the time of purchase. As of June 30, 1998 this included companies
with capitalizations between approximately $330 million and $22.9 billion.

Michael M. Kassen, Robert I. Gendelman and S. Basu Mullick have been co-
managers of the Portfolio since its inception. Mr. Kassen and Mr. Gendelman
have been Vice Presidents of Neuberger&Berman and principals of
Neuberger&Berman, LLC since June 1990 and October 1994, respectively. Mr.
Mullick has been a Vice President of Neuberger&Berman since October 1998. Over
the past five years, Mr. Gendelman was also portfolio manager at Harpel
Partners. Over the past five years, Mr. Mullick was also a portfolio manager at
Ark Asset Management. Mr. Kassen, Mr. Gendelman and Mr. Mullick are also co-
managers of the Neuberger&Berman Partners Fund and Neuberger&Berman AMT
Partners Portfolio.

ABOUT THE SCUDDER GLOBAL EQUITY PORTFOLIO:

Scudder Kemper Investments, Inc. ("Scudder") is the sub-investment manager for
the Scudder Global Equity Portfolio. Zurich Insurance Company owns a 70%
interest in Scudder. Zurich Insurance Company is indirectly owned by Zurich
Allied AG, a publicly held Swiss financial service holding company, and Allied
Zurich p.l.c., a publicly held U.K. financial service holding company. In
addition to the Portfolio, it provides investment management services to
several mutual funds and several individual and institutional clients. As of
June 30, 1998, Scudder had investment management arrangements in effect for
about $239 billion in assets globally.

The SCUDDER GLOBAL EQUITY PORTFOLIO seeks to provide long-term growth of
capital.

The Portfolio generally invests most of its assets in equity securities
(primarily common stock) of established companies listed on U.S. or foreign
securities exchanges or traded over-

13
<PAGE>

the-counter. Normally, investments will be spread broadly around the world and
will include companies of varying sizes. The Portfolio invests in companies
that are expected to benefit from global economic trends, promising
technologies or products and specific country opportunities resulting from
changing geopolitical, currency or economic relationships. The Portfolio will
usually be invested in securities of issuers located in at least three
countries, one of which may be the U.S, although all of its assets may also be
invested in non-U.S. issues, and for temporary defensive purposes, all of its
assets may be invested in U.S. issues.

The Portfolio may also invest in:
. convertible and non-convertible preferred stock
. investment grade debt securities convertible into common stock
. below investment grade debt securities (currently, limited to 5% of its total
assets)
. high-quality non-U.S. (as well as domestic) money market instruments
including repurchase agreements with non-U.S. banks and broker-dealers and
"synthetic" money market positions

William E. Holzer, Managing Director, Nicholas Bratt, Director of the Global
Equity Group and Diego Espinsosa, Senior Vice-President have been with Scudder
since 1980, 1976 and 1996, respectively. Messrs. Holzer, Bratt and Espinosa are
co-portfolio managers for the Portfolio. Messrs. Holzer and Bratt have been
primarily responsible for its day-to-day management since its inception in
March 1997, and Mr. Espinosa joined the team in June, 1997. Mr. Holzer is a
portfolio manager for other investment portfolios, is a member of Scudder's
Currency Committee and has responsibilities for global equity investment
strategies. Mr. Bratt is responsible for Scudder's Equity Activities and is
president of Scudder's open and closed end equity funds that invest overseas.
Over the past five years, Mr. Espinosa was also responsible for Latin American
research and was portfolio manager of The Argentina Fund, Inc. at Scudder and
held positions at Morgan Stanley & Co., Boston Consulting Group and CitiBank.

ABOUT THE T. ROWE PRICE PORTFOLIOS:

T. Rowe Price Associates, Inc. ("T. Rowe Price") is the sub-investment manager
of the T. Rowe Price Portfolios. A Maryland corporation, it dates back to 1937.
In addition to the Fund, it provides investment management services to many
retail and institutional accounts. As of June 30, 1998, T. Rowe Price and its
affiliates had investment management arrangements in effect for about $142
billion in assets.

The T. ROWE PRICE LARGE CAP GROWTH PORTFOLIO seeks long-term growth of capital
and, secondarily, dividend income.

The Portfolio normally invests at least 65% of its total assets in a
diversified group of large capitalization growth companies. The Portfolio
generally looks for companies with above-average growth in earnings and cash
flow; the ability to sustain earnings momentum even during economic slowdowns
by operating in industries or service sectors where earnings and dividends can
outpace inflation and the overall economy; or that have a lucrative niche in
the economy where profit margins widen due to economic factors (rather than
one-time events such as lower taxes). The Portfolio expects to invest in common
stocks of companies that normally (but not always) pay dividends, that are
generally expected to rise in future years as earnings rise.

The Portfolio may also invest in:
. other equity securities
. convertible bonds and warrants
. hybrid instruments (currently limited to 10% of its total assets)

The portfolio managers define LARGE CAPITALIZATION ("large-cap") COMPANIES as
those whose market capitalization falls within the range of the largest 300
companies included in the Russell 3000 Index at the time of the purchase. As of
June 30, 1998, this included companies with capitalizations of approximately
$6.28 billion and above.

The Portfolio is managed by an Investment Advisory Committee. Robert W. Smith,
Committee Chairman, has been responsible for the day-to-day management of the
Portfolio since its inception in November, 1998 and works with the Committee in
developing and executing the Portfolio's investment program. Mr. Smith joined
T. Rowe Price and began managing assets there in 1992. Mr. Smith and

14
<PAGE>

the Investment Advisory Committee manage other mutual funds, including the T.
Rowe Price Growth Stock Fund.

The T. ROWE PRICE SMALL CAP GROWTH PORTFOLIO seeks long-term capital growth.

The Portfolio will normally invest at least 65% of its total assets in a
diversified group of small capitalization companies. The Portfolio expects to
invest primarily in common stocks and convertible securities of companies in
the development stage of their corporate life cycle with potential to achieve
long-term earnings growth faster than the overall market.

The Portfolio may also invest in:
. stocks of larger issuers
. warrants
. fixed income securities of any investment grade (currently no more than 5% of
its total assets may be below investment grade)

The portfolio manager defines SMALL CAPITALIZATION ("small-cap") COMPANIES as
those whose market capitalization fall within the range of companies included
in the bottom 10% of the S&P 500 Index at the time of the purchase. As of June
30, 1998, this included companies with capitalizations between approximately
$688 million and $7.2 billion.

The Portfolio is managed by an Investment Advisory Committee. Richard T.
Whitney, Committee Chairman, has been responsible for day-to-day management of
the Portfolio since its inception in March, 1997 and works with the Committee
in developing and executing the Portfolio's investment program. Mr. Whitney
joined T. Rowe Price in 1985 and has been managing investments there since
1986.

ABOUT THE INDEX PORTFOLIOS:

MetLife is the investment manager for the index Portfolios.

Generally, the index Portfolios seek to equal the return of the applicable
index. To the extent the rules for compiling an index, or the securities in an
index, change, the Portfolio investments may also change.

Each of these Portfolios may diversify differently by industry, country,
currency and/or asset sector, as applicable, than the actual index. In addition
to securities of the type contained in its index, each Portfolio may also
invest in securities index, futures contracts and related options, warrants and
convertible securities to simulate full investment in the index while retaining
liquidity, to facilitate trading, to reduce transaction costs or to seek higher
return when these derivatives are priced more attractively than the underlying
security. Also, since the Portfolios attempt to keep transaction costs low,
MetLife generally will rebalance a Portfolio only if it deviates from the
applicable index by a certain percent, depending on the company, industry, and
country, as applicable.

In addition, transaction costs, other Portfolio or Fund expenses, brief delays
that occur until a Portfolio can invest cash that it receives, and other
tracking error may result in a Portfolio's return being lower than the return
of the applicable index.

MetLife monitors the tracking performance of each Portfolio through examination
of the correlation coefficient. A perfect correlation would produce a
coefficient of 1.00. Each Portfolio will attempt to maintain a target
correlation coefficient of at least .95.

Morgan Stanley sponsors the MSCI EAFE Index, Lehman Brothers sponsors the
Lehman Brothers Aggregate Bond Index, the McGraw Hill Companies, Inc. sponsor
the Standard & Poor's 500 Composite Stock Price Index, and Frank Russell
Company sponsors the Russell 2000 Index (together referred to as "index
sponsors"). The index sponsors have no responsibility for and do not
participate in the management of the Portfolio assets or sale of the Portfolio
shares. Each index and its associated trademarks and service marks are the
exclusive property of the respective index sponsors. The Metropolitan Series
Fund, Inc. Statement of Additional Information contains a more detailed
description of the limited relationship the index sponsors have with MetLife
and the Fund.

The LEHMAN BROTHERS AGGREGATE BOND INDEX PORTFOLIO seeks to equal the
performance of the Lehman Brothers Aggregate Bond Index.

The Portfolio will normally invest most of its assets in fixed income
securities included in the

15
<PAGE>

Lehman Brothers Aggregate Bond Index. This Index is comprised of the Lehman
Brothers Government/Corporate Index, the Lehman Brothers Mortgage-Backed
Securities Index, and the Lehman Brothers Asset-Backed Securities Index. The
Portfolio may continue to hold debt that no longer are included in the index,
if, together with any money market instruments or cash, such holdings are no
more than 20% of the Portfolio's net assets. In addition, up to 5% of the
Portfolio's net assets may be invested in below investment grade securities.

The following types of fixed income securities are included in the index:
. debt obligations issued or guaranteed by the United States Government or its
agencies or instrumentalities
. debt obligations issued or guaranteed by U.S. corporations
. debt obligations issued or guaranteed by foreign companies, sovereign
governments, municipalities, governmental agencies or international agencies
. mortgage-backed securities

The Portfolio will invest in a sampling of the bonds included in the Lehman
Brothers Aggregate Bond Index. The bonds purchased for the Portfolio are chosen
to, as a group, reflect the composite performance of the index. As the
Portfolio's total assets grow, a larger percentage of bonds included in the
index will be included in the Portfolio.

The METLIFE STOCK INDEX PORTFOLIO seeks to equal the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index").

The Portfolio will normally invest most of its assets in common stocks included
in the S&P 500 Index. The S&P 500 Index consists of 500 common stocks, most of
which are listed on the New York Stock Exchange. The stocks included in the S&P
500 Index are issued by companies among those whose outstanding stock have the
largest aggregate market value, although stocks that are not among the 500
largest are included in the S&P 500 Index for diversification purposes.

The MORGAN STANLEY EAFE INDEX PORTFOLIO seeks to equal the return of the MSCI
EAFE Index.

The Portfolio will normally invest most of its assets in equity securities
included in the MSCI EAFE Index. The MSCI EAFE Index (also known as the Morgan
Stanley Capital International Europe Australasia Far East Index) is an index
containing approximately 1,100 equity securities of companies of varying
capitalizations in countries outside the United States. As of October 1, 1998
countries included in the MSCI EAFE Index were Australia, Austria, Belgium,
Denmark, Finland, France, Germany, Hong Kong, Ireland, Italy, Japan, The
Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden,
Switzerland and the United Kingdom.

Initially, the Portfolio will invest in a statistically selected sample of the
1,100 stocks included in the MSCI EAFE Index. The stocks purchased for
Portfolio are chosen to, as a group, reflect the composite performance of the
MSCI EAFE Index. As the Portfolio's total assets grow, a larger percentage of
stocks included in the MSCI EAFE Index will be included in the Portfolio.

The RUSSELL 2000 INDEX PORTFOLIO seeks to equal the return of the Russell 2000
Index.

The Portfolio will normally invest most of its assets in common stocks included
in the Russell 2000 Index. The Russell 2000 Index is composed of 2,000 small
capitalization companies. As of June 30, 1998, the average stock market
capitalization of companies in the Russell 2000 Index was $590 million, and the
weighted average stock market capitalization was $790 million.

Initially, the Portfolio will invest in a statistically selected sample of the
2000 stocks included in the Russell 2000 Index. The stocks purchased for the
Portfolio are chosen to, as a group, reflect the composite performance of the
Russell 2000 Index. As the Portfolio's total assets grow, a larger percentage
of stocks included in the Russell 2000 Index will be included in the Portfolio.

16
<PAGE>

CERTAIN INVESTMENT PRACTICES

The Table that follows sets forth certain investment practices in which some or
all of the Portfolios may engage. These practices will not be the primary
activity of any Portfolio, however, except as noted in the above textual
information about each Portfolio. The following Portfolio numbers are used in
the table:

<TABLE>
<CAPTION>
PORTFOLIO
NUMBER PORTFOLIO NAME
--------- --------------
<C> <S>
State Street Research Aggressive
1. Growth
2. State Street Research Diversified
3. State Street Research Growth
4. State Street Research Income
5. State Street Research Money Market
6. Santander International Stock
7. Harris Oakmark Large Cap Value
8. Janus Mid Cap
9. Loomis Sayles High Yield Bond
</TABLE>
<TABLE>
<CAPTION>
PORTFOLIO
NUMBER PORTFOLIO NAME
--------- --------------
<C> <S>
Neuberger&Berman Partners Mid Cap
10. Value
11. Scudder Global Equity
12. T. Rowe Price Large Cap Growth
13. T. Rowe Price Small Cap Growth
14. Lehman Brothers Aggregate Bond Index
15. MetLife Stock Index
16. Morgan Stanley EAFE Index
17. Russell 2000 Index
</TABLE>

<TABLE>
<CAPTION>
PERCENTAGE LIMIT PER PORTFOLIO
ITEM INVESTMENT PRACTICE PORTFOLIOS ON ASSETS/1/
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1 Sell covered call options on securities and All None
stock indices as a hedge against or to
minimize anticipated loss in value.
- ------------------------------------------------------------------------------------------------------
2 Sell covered put options on securities and 6,8,9,11,12,13, None
stock indices to earn additional income, as a 17
hedge against or to minimize anticipated loss
in value.
- ------------------------------------------------------------------------------------------------------
3 Sell covered put and covered call options on 6,8,9,11,12,13 None
currencies as a hedge against anticipated
declines in currency exchange rates in which
securities are held or to be purchased or to
earn additional income.
- ------------------------------------------------------------------------------------------------------
4 Purchase put options on securities and All except 10 None
indices that correlate with a Portfolio's
securities for defensive purposes in order to
protect against anticipated declines in
values.
- ------------------------------------------------------------------------------------------------------
5 Purchase call options that on securities and All except 10 None
indices correlate with that Portfolio's
securities.
- ------------------------------------------------------------------------------------------------------
6 Purchase put options on currencies for 6,8,9,11,12,13 None
defensive purposes in order to protect
against anticipated declines in values on
currencies in which a Portfolio's securities
are or may be denominated.
- ------------------------------------------------------------------------------------------------------
7 Purchase call options on currencies that 6,8,9,11,12,13 None
correlate with the currencies in which the
Portfolio's securities may be denominated.
- ------------------------------------------------------------------------------------------------------
8 Purchase and sell otherwise permitted stock, 8,10,11 None
currency, and index put and call options
"over-the-counter" (rather than only on
established exchanges).
- ------------------------------------------------------------------------------------------------------
9 Purchase and sell futures contracts (on All, except For each applicable
recognized futures exchanges) on debt 10,15,16,17 Portfolio, combined limit on
securities and indices of debt securities as the sum of the initial
a hedge against or to minimize adverse margin for futures and
principal fluctuations resulting from options sold on futures,
anticipated interest rate changes or to plus premiums paid for
adjust exposure to the bond market. unexpired options on
futures, is 5% of total
assets (excluding "in the
money" and, for Portfolios
7,8,9,14,15,16 and 17, "bona
fide hedging" as defined by
the Commodity Futures
Trading Commission)
- ------------------------------------------------------------------------------------------------------
10 Purchase and sell future contracts (on All, except Same as Item 9
recognized futures exchanges) on equity 4,5,7,10,14
securities or stock indices as a hedge or to
enhance return.
- ------------------------------------------------------------------------------------------------------
11 Purchase and sell currency futures contracts 6,8,9,11,12,13 Same as Item 9
(on recognized futures exchanges) as a hedge
or to adjust exposure to the currency market.
</TABLE>

17
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE LIMIT PER PORTFOLIO
ITEM INVESTMENT PRACTICE PORTFOLIOS ON ASSETS/1/
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
12 Sell covered call options on and purchase put All except 10 Same as Item 9
and call options contracts on futures
contracts (on recognized futures exchanges)
of the type and for the same reasons the
Portfolio is permitted to enter futures
contracts.
- ----------------------------------------------------------------------------------------------------------
13 Sell covered put options on futures contracts 6,8,9,11,12,13 Same as Item 9
(on recognized futures exchanges) of the type
and for the same reasons the Portfolio is
permitted to enter into futures contracts.
- ----------------------------------------------------------------------------------------------------------
14 Enter into forward foreign currency exchange All, except 15,17 None
contracts to hedge currency risk relating to
securities denominated, exposed to, or traded
in a foreign currency in which the Portfolio
may invest.
- ----------------------------------------------------------------------------------------------------------
15 Enter into forward foreign currency exchange 6,8,9,11,12, 13 5% of total assets
contracts for non hedging purposes.
- ----------------------------------------------------------------------------------------------------------
16 Enter into transactions to offset or close All None
out any of the above.
- ----------------------------------------------------------------------------------------------------------
17 Mortgage-related securities (except for IOs All None
and POs)
- ----------------------------------------------------------------------------------------------------------
18 Mortgage related interest only (IOs) and All, except 5,10,15 None
principal only (POs) securities
- ----------------------------------------------------------------------------------------------------------
19 Use swaps, caps, floors and collars on 8,9,11,12, 13 None
interest rates, currencies and indices as a
risk management tool.
- ----------------------------------------------------------------------------------------------------------
20 Invest in foreign securities. A. 1,2,3,4,5,15,17 A. Not more than 10% of its
total assets in securities
of foreign issuers, except
up to 25% of its total
assets may be invested in
securities: issued,
assumed or guaranteed by
foreign governments or
their political
subdivisions or
instrumentalities; assumed
or guaranteed by domestic
issuers; or issued,
assumed or guaranteed by
foreign issuers with a
class securities listed on
the New York Stock
Exchange.*
B. 6,11,16 B. None
C. 17 C. Foreign Securities
limited to 50% of its
total assets (except 100%
in securities of Canadian
issuers).*
D. 12 D. Foreign Securities
limited to 30% of total
assets (excluding
reserves)*
E. 13 E. Foreign Securities
limited to 20% of total
assets (excluding
reserves)*
F. 7 F. Foreign Securities
limited to 25% of total
assets*
G. 10 G. Foreign Securities
limited to 10% of total
assets*
H. 8 H. Foreign securities
denominated in a foreign
currency and not publicly
traded in U.S. limited to
30% of total assets*
- ----------------------------------------------------------------------------------------------------------
21 Lend Portfolio securities. A. 1,2,3,4,5,6,15 A. 20% of total assets*
B. 7,9,10,11,12, B. 33 1/3% of total assets*
13,14,16,17
C. 8 C. 25% of total assets*
- ----------------------------------------------------------------------------------------------------------
22 Invest in securities that are illiquid. A. All except 5,11 A. 15% of total assets
B. 5,11 B. 10% of total assets
</TABLE>

18
<PAGE>

<TABLE>
<CAPTION>
PERCENTAGE LIMIT PER PORTFOLIO
ITEM INVESTMENT PRACTICE PORTFOLIOS ON ASSETS/1/
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
23 Invest in other investment companies, which A. All except 10 A. 10% of total assets
may involve payment of duplicate fees. except as in B below
(except that only 5% of
total assets may be
invested in a single
investment company and no
portfolio can purchase
more than 3% of the total
outstanding voting
securities of any one
investment company or,
together with other
investment companies
having the same investment
adviser, purchase more
than 10% of the voting
stock of any "closed-end"
investment company).
B. 8,12,13 B. Up to 25% of total assets
may be invested in
affiliated money market
funds for defensive
purposes or as a means of
receiving a return on idle
cash.
- ------------------------------------------------------------------------------------------------------------
24 Invest in money market instruments issued by 6,8,9,11,12,13 None
a commercial bank or savings and loan
associations (or its foreign branch or
agency) notwithstanding that the bank or
association has less than $1 billion in total
assets, is not a member of the Federal
Deposit Insurance Corporation, is not
organized in the U.S., and/or is not
operating in the U.S.
- ------------------------------------------------------------------------------------------------------------
25 Invest in securities issued by companies All 25% of total assets
primarily engaged in any one industry. (provided that the following
will be considered separate
industries: each type of
utility service; each type
of oil or oil-related
company. Also, savings loans
are a separate industry from
finance companies; and for
the money market securities
of Portfolios 3 and 4
securities issued or
guaranteed by the U.S.
government, its agencies or
instrumentalities and debt
securities issued by
domestic banks are not
subject to the
restriction).* (The Fund
will disclose when more than
25% of a Portfolio's total
assets are invested in four
oil related industries).
- ------------------------------------------------------------------------------------------------------------
26 Borrow in the form of short-term credits All Together with items below,
necessary to clear Portfolio transactions; up to 1/3 of the amount by
enter into reverse repurchase arrangements. which total assets exceed
total liabilities (less
those represented by such
obligations).*
- ------------------------------------------------------------------------------------------------------------
27 Borrow money for extraordinary or emergency A. All except 11 A. 5% of total assets*
purposes (e.g. to honor redemption requests
which might otherwise require the sale of
securities at an inopportune time).
B. 11 B. 1/3 of total assets,
provided that if together
with reverse repurchase
agreements obligations
exceed 5% of total assets,
no additional securities
will be purchased for the
Portfolio.*
- ------------------------------------------------------------------------------------------------------------
28 Purchase securities on a "when-issued" basis. 6,8,9,10,11,12,13,14, None
15,16, 17
- ------------------------------------------------------------------------------------------------------------
29 Invest in real estate interests, including All 10% of total assets*
real estate mortgage loans, but excluding
investments in exchange-traded real estate
investment trusts and shares of other real
estate companies.
- ------------------------------------------------------------------------------------------------------------
30 Purchase ADRs A. 1,2,3,4,5 A. Together with the assets
referred to in Item 20 A
above, 35% of total assets
B. 8,10,11,15,16 B. None
C. 12,13,15,17 C. Together with assets
referred to in Item 20 D
above, 30% of total assets
D. 7 D. Together with assets
referred to in Item 20 F
above, 25% of total assets
</TABLE>
- -----------
* Policy may be changed only by shareholder vote.
/1/ At time of investment, unless otherwise noted.

19
<PAGE>

PORTFOLIO TURNOVER RATES

The rate of portfolio turnover is the annual amount, expressed as a percentage,
of a Portfolio's securities that it replaces in one year. The portfolio
turnover rate will not be a limiting factor when it is deemed appropriate to
purchase or sell securities for a Portfolio. Portfolio turnover may vary from
year to year or within a year, depending upon economic, market or business
conditions and client contributions and withdrawals. To the extent that
brokerage commissions and transaction costs are incurred in buying and selling
portfolio securities, the rate of portfolio turnover could affect each
Portfolio's net asset value. The historical rates of portfolio turnover for all
of the Portfolios that were active prior to November 1, 1998 are set forth in
the Financial Highlights.

The portfolio turnover rates for the listed Portfolios are not expected to
exceed the following:

<TABLE>
<CAPTION>
PORTFOLIO
PORTFOLIO TURNOVER
- --------- ---------
<S> <C>
T. Rowe Price Large Cap Growth 100%
Harris Oakmark Large Cap Value 35%
Neuberger&Berman Partners Mid Cap 100%
Russell 2000 Index 45%
Morgan Stanley EAFE Index 25%
Lehman Brothers Aggregate Bond Index 40%
</TABLE>

DESCRIPTION OF SOME INVESTMENTS, TECHNIQUES, AND RISKS

To varying extents, the portfolio managers may use the following techniques and
investments in managing the Portfolios.

INVESTMENT STYLES

A value investing approach concentrates on securities that are undervalued in
relation to a company's fundamental economic values. Securities may be
undervalued for various reasons including special situations (i.e., where the
portfolio manager believes that a company's securities will appreciate when the
market recognizes a specific development at the company, such as a new product
or process, a management change or a technological breakthrough). A growth
investing approach emphasizes stocks of companies that are projected to grow at
above-average rates based on the company's earnings growth potential.

Index Portfolios attempt to equal the return of a particular index, which can
provide broad exposure to various market segments. Unlike actively managed
portfolios, they do not expect to use any defensive strategies and investors
bear the risk of adverse market conditions.

Except with respect to the index Portfolios, portfolio managers generally
expect to use defensive strategies. These include holding greater cash
positions, short-term money market instruments or similar investments that are
not within the Portfolio's usual investment strategy, but do not violate any
prohibition to which the Portfolio is subject. Portfolio managers use defensive
strategies, when they believe that market conditions are not favorable for
profitable investing or when the portfolio manager is otherwise unable to
locate favorable investment opportunities.

CAPITALIZATION

Capitalization measures the size of a company, based on the aggregate market
value of the company's outstanding stock. Different Portfolios may use
different definitions with respect to whether a company is classified as a
small-cap, mid-cap or large-cap company. Investments in companies that are less
mature or are small or mid-cap, may present greater opportunities for capital
appreciation than investments in larger, more mature companies, but also
present greater risks including:
. greater price volatility because they are less broadly traded
. less available public information
. greater price volatility due to limited product lines, markets, financial
resources, and management experience.

EQUITY SECURITIES

Equity securities include common stocks, preferred stocks, convertible
securities and warrants. Equity securities may offer a higher rate of return
than debt securities. However, the risks associated with investments in equity
securities may also be higher, because the investment performance of equity
securities depends upon factors which are difficult to predict. Equity security
values may fluctuate in response to the activities of an individual company or
in response to general market, interest rate, and/or economic conditions.
Historically, equity securities have provided greater long-term returns and
have entailed

20
<PAGE>

greater short-term risk than other securities choices. Depending on their
terms, however, preferred stock and convertible securities may have investment
and risk characteristics more closely resembling those of debt securities than
those of other equity securities.

Common stocks represent ownership in a company and participate in company
profits through dividend payments or capital appreciation after other claims
are satisfied. Common stock generally has the greatest potential for
appreciation and depreciation of all corporate securities (other than warrants)
since the share price reflects the company's earnings.

Preferred stocks represent an ownership interest in a company of a specified
rank (after bonds and before common stocks) with respect to dividend payments
and company assets. Preferred stock generally receives a dividend, but may also
omit or be in danger of omitting a dividend payment, in which case it would be
purchased for its capital appreciation potential.

Convertible securities generally are bonds or preferred stocks which can be
exchanged, through warrants or otherwise, into a specified number of shares of
the issuer's common stock. Convertible securities generally pay higher interest
or dividends than common stock but lower interest or dividends than non-
convertible securities.

Warrants are rights issued by the issuer of a security (usually common stock)
to purchase that security at a specified price for a specified period of time.
They do not represent an ownership interest in the issuing company, and their
prices do not necessarily parallel the prices of the underlying security.

DEBT ("FIXED INCOME") SECURITIES

Some of the many varieties of debt securities that the Portfolios may purchase
are described below. Most debt securities (other than those that have
"floating" interest rates) will increase in value if market interest rates
subsequently decrease and decrease in value if market interest rates
subsequently increase. In most market environments these variations tend to be
more pronounced the longer the security's remaining duration. Changes in the
issuer's perceived creditworthiness can also significantly affect the value of
any debt securities that a Portfolio holds.

Investment grade securities are rated by at least one NRSRO in one of its top
four rating categories, or if unrated, the portfolio manager must determine
that the securities are of comparable quality. All other securities are
considered below investment grade. Below investment grade securities are also
known as "junk bonds." Although they generally provide higher yields, below
investment grade fixed income securities, and to a lesser extent, lower rated
investment grade fixed income securities, expose a Portfolio to greater risks
than higher rated investment grade securities including:
. the inability of the issuer to meet principal and interest payments
. loss in value due to economic recession or substantial interest rate
increases
. adverse changes in the public's perception of these securities
. legislation limiting the ability of financial institutions to invest in these
securities
. lack of liquidity in secondary markets
. market price volatility

Mortgage-related securities represent a direct or indirect interest in a pool
of mortgages such as FNMAs, FHLMCs, Collateralized Mortgage Obligations
("CMOs"), and related securities including GNMAs and mortgage-backed
securities. They may be issued or guaranteed by U.S. government
instrumentalities or other entities whose obligation is securitized by the
underlying portfolio of mortgages or mortgage-backed securities. These
securities are valued based on expected prepayment rates. The risks associated
with prepayment of the obligations makes these securities more volatile in
response to changing interest rates than other fixed-income securities.
Interest only securities ("IOs") are entitled to interest payments from a class
of these securities and principal only securities ("POs") are entitled to
principal payments from a class of these securities. POs are more volatile in
response to changing interest rates than mortgage-related securities that
provide for interest payments. IOs also are extremely volatile and generally
experience a loss in value in the event prepayment rates are greater than
anticipated, which occurs generally when interest rates fall, and an increase
in value when interest rates rise.

Asset-backed securities represent a direct or indirect interest in a pool of
automobile or

21
<PAGE>

credit card receivables. The issuers of the asset-backed securities are special
purpose entities that do not have significant assets other than the receivables
securitizing the securities. The collateral supporting these securities
generally is of shorter maturity than mortgage-related securities, but exposes
a Portfolio to similar risks associated with prepayment of the receivables
prior to maturity.

Zero coupon securities credit interest at a specified rate but do not
distribute cash payments for interest as it falls due. These securities
fluctuate in value due to changes in interest rates more than comparable debt
obligations that pay periodic interest.

FOREIGN INVESTMENTS

Foreign securities include equity securities and debt securities of non-U.S.
domiciled issuers. A few of the many varieties of foreign investments are
described below.

EDRs and IDRs are receipts issued in Europe, generally by a non-U.S. bank or
trust company, that evidence ownership of non-U.S. securities.

GDRs are securities convertible into equity securities of foreign issuers.

Forward Foreign Currency Exchange Contracts obligate a Portfolio to purchase or
sell a specific currency on a specified date for a specified amount. They can
be used to hedge the currency risk relating to securities traded in or exposed
to a foreign currency. When used as a hedge, substitute or proxy currency can
also be used instead of the currency in which the investment is actually
denominated. This is known as proxy hedging. These contracts can also be used
to generate income or adjust a Portfolio's exposure to various currencies.

Synthetic Non-U.S. Money Market positions are created through the simultaneous
purchase of a U.S. dollar-denominated money market instrument and a forward
foreign currency exchange contract to deliver U.S. dollars for a foreign
currency. These are purchased instead of foreign currency denominated money
market securities because they can provide greater liquidity.

Foreign Securities Risk Considerations.

Although Portfolios that invest in foreign securities may reduce their overall
risk by providing further diversification, the Portfolios will be exposed to
the risks listed below. In addition, these risks may be heightened for
investments in developing countries:
. adverse effects from changing political, social or economic conditions,
diplomatic relations, taxation or investment regulations
. limitations on repatriation of assets
. expropriation
. costs associated with currency conversions
. less publicly available information because foreign securities and issuers
are generally not subject to the reporting requirements of the SEC
. differences in financial evaluation because foreign issuers are not subject
to the domestic accounting, auditing and financial reporting standards and
practices
. lack of development or efficiency with respect to non-domestic securities
markets and brokerage practices (including higher, non-negotiable brokerage
costs)
. less liquidity (including due to delays in transaction settlement)
. more price volatility
. smaller options and futures markets, causing lack of liquidity for these
securities
. higher custodial and settlement costs
. change in net asset value of the Portfolio's shares on days when shareholders
will not be able to purchase or redeem Fund shares.

AMERICAN DEPOSITORY RECEIPTS ("ADRS")

ADRs are U.S. dollar-denominated certificates issued by a U.S. bank or trust
company which represent the right to receive securities of a foreign issuer
deposited in a domestic bank or foreign branch of a U.S. bank. ADRs are traded
on domestic exchanges or in the U.S. over-the-counter market and are registered
domestically. These factors eliminate certain risks associated with investing
in foreign securities.

U.S. DOLLAR-DENOMINATED MONEY MARKET SECURITIES OF FOREIGN ISSUERS

These securities may be registered domestically and traded on domestic
exchanges or in the U.S. over-the-counter market (e.g., Yankee securities). If
the securities are registered domestically, certain risk factors of investing
in foreign securities are eliminated. These securities may also be registered
abroad and traded exclusively in foreign markets (e.g., Eurodollar securities).

22
<PAGE>

DERIVATIVE INSTRUMENTS

Futures contracts are agreements to buy or sell a security, or deliver a final
cash settlement price in connection with an index, interest rate, currency, or
other contracts not calling for physical delivery, for a set price in the
future. A Portfolio must post an amount equal to a portion of the total market
value of the futures contract as initial margin, which is returned when a
Portfolio's obligations under the contract have been satisfied. From time to
time thereafter, the Portfolio may have to post variation margin to maintain
this amount as the market value of the contract fluctuates.

Special skill is required in order to effectively use futures contracts. No
Portfolio will use futures contracts or options thereon for leveraging
purposes. Certain risks exist when a Portfolio uses futures contracts including
the:
. inability to close out or offset futures contract transactions at favorable
prices
. reduction of the Portfolio's income
. reduction in the value of the subject of the futures contract or of the
contract itself
. imperfect correlation between the value of the futures contract and the value
of the subject of the contract
. prices moving contrary to the portfolio manager's expectation

Call options give the purchaser the right to buy and obligate the seller to
sell an underlying security, currency, stock index (which is based on the
weighted average of the securities in the index), or futures contract at a
specified "exercise" price during the option period. There are certain risks to
a Portfolio that sells call options, including the inability to effect closing
transactions at favorable prices or to participate in the appreciation of the
subject of the call option above the exercise price. Purchasing call options
exposes a Portfolio to the risk of losing the entire premium it has paid for
the option.

Put options give the purchaser the right to sell and obligate the seller to
purchase an underlying security, currency, stock index (which is based on the
weighted average of the securities in the index) or futures contract at a
specified "exercise" price during the option period. There are certain risks to
a Portfolio that sells put options, including the inability to effect closing
transactions at favorable prices and the obligation to purchase the subject of
the put option at prices which may be greater than current market values or
exchange rates. Purchasing put options exposes a Portfolio to the risk of
losing the entire premium it has paid for the option if the option cannot be
exercised profitably.

Covered options involve a Portfolio's (a) segregating liquid assets with its
custodian that at all times at least equal the Portfolio's obligations under
such options, (b) holding an appropriate offsetting option or other derivative
instrument, or, (c) in the case of a call option sold by the Fund, owning the
securities or other investments subject to the option.

Hybrid instruments combine elements of futures contracts or options with
elements of debt, preferred equity, depository instruments, or other evidence
of indebtedness. A portion of or all interest payments to the Portfolio and/or
the principal or stated amount payable to the Portfolio at maturity,
redemption, or retirement of the hybrid instrument are determined by reference
to prices, changes in prices, or differences between prices of securities,
currencies, intangibles, goods, articles, or commodities or by another
benchmark such as an index or interest rate.

Hybrid instruments can be an efficient means of exposing a Portfolio to a
particular market in order to enhance total return. Hybrid instruments are
potentially more volatile and carry greater market risks than traditional debt
instruments. The risks of investing in these instruments reflect a combination
of the risks of investing in securities, options, futures and currencies.
Hybrid securities typically do not trade on exchanges. Hybrid instruments are
frequently (or may become) less liquid than other types of investments. They
also expose the Portfolio to losses if the other party to the transaction fails
to meet its obligations.

Portfolios use swaps, caps, floors and collars as risk management tools to
protect against changes in interest rates or in security or currency values, or
to gain exposure to certain markets in an economical way. Swap transactions
involve an agreement where one party exchanges payments equal to a floating
interest rate, currency exchange rate or variation in interest rates or
currency indexes on a specified amount (the "notional amount"), and the other
party agrees to make payments

23
<PAGE>

equal to a fixed rate on the same amount for a specified period. Caps give the
purchaser the right to receive payments from the seller to the extent a
specified interest rate, currency exchange rate or index exceeds a specified
level during a specified period of time. Floors give the purchaser the right to
receive payments from the seller to the extent a specified interest rate,
currency exchange rate or index is less than a specified level during a
specified period of time. Collars give the purchaser the right to receive
payments from the seller to the extent a specified interest rate, currency
exchange rate or index is outside an agreed upon range during a specified
period of time.

A Portfolio will not use swaps, caps, floors or collars to leverage its
exposure to changing interest rates, currency rates, or security values. Nor
will a Portfolio sell interest rate caps, floors or collars unless it owns
securities that will provide the interest that the Portfolio may be required to
pay.

The use of swaps, caps and floors exposes the Portfolio to investment risks
different than those associated with other security transactions including:
. total loss of the Portfolio's investment in swaps and the sale of caps,
floors and collars (a Portfolio's purchase of caps, floors and collars can
result only in the loss of the purchase price)
. investment performance of the Portfolio can be worse than if these techniques
were not used if the assumptions used in entering into the transactions were
incorrect
. since these instruments generally do not trade on exchanges, a Portfolio may
not be able to enter into offsetting positions, or may suffer other losses,
if the other party to the transaction fails to meet its obligations
. more market volatility than other types of investments

WHEN-ISSUED SECURITIES

Purchasing securities "when-issued" is a commitment by a Portfolio to buy a
security before the security is actually issued. The amount of the Portfolio's
payment obligation and the security's interest rate are determined when the
commitment is made, even though no interest accrues until the security is
issued, which is generally 15 to 120 days later. The Portfolio will segregate
liquid assets with its custodian sufficient at all times to satisfy these
commitments. If the value of the security is less when delivered than when the
commitment was made, the Portfolio will suffer a loss.

SECURITIES LENDING

Securities lending involves lending some of a Portfolio's securities to
brokers, dealers and financial institutions. As collateral for the loan, the
Portfolio receives an amount that is at all times equal to at least 100% of the
current market value of the loaned securities. The Portfolio invests the
collateral in short-term high investment grade securities, or in a mutual fund
that invests in such securities. Securities lending can increase current income
for a Portfolio because the Portfolio continues to receive payments equal to
the interest and dividends on loaned securities. Also, the investment
experience of the cash collateral will inure to the Portfolio. Loans will not
have a term longer than 30 days and will be terminable at any time. As with any
extension of credit, securities lending exposes a Portfolio to some risks
including delay in recovery and loss of rights in the collateral if the
borrower fails financially.

THE FUND'S ORGANIZATION

The Fund's Directors review actions of the Fund's investment manager, sub-
investment managers and sub-sub-investment manager and decide upon matters of
general policy. The Fund's officers supervise the daily business operations of
the Fund. The Board of Directors and the Fund's officers are listed under
"Directors and Officers" in the SAI.

The Fund is a corporation that was formed in Maryland on November 23, 1982. The
Fund has 3 billion shares of authorized common stock at $0.01 par value per
share. The Board of Directors may classify and reclassify any authorized and
unissued shares. The Fund can issue additional classes of shares without
shareholder consent. The shares are presently divided into classes (or series),
including one for each Portfolio consisting of 100 million shares (200 million
shares for the State Street Research Diversified, State Street Research Growth,
and MetLife Stock Index Portfolios).

Each Portfolio's issued and outstanding shares participate equally in dividends
and distributions declared by such Portfolio and

24
<PAGE>

receive a portion (divided equally among all of the Portfolio's outstanding
shares) of the Portfolio's assets (less liabilities) if the Portfolio is
liquidated or dissolved. Liabilities which are not clearly assignable to a
Portfolio are generally allocated among the Portfolios in proportion to their
relative net assets. In the unlikely event that any Portfolio has liabilities
in excess of its assets, the other Portfolios may be held responsible for the
excess liabilities.

MetLife purchases shares of each of the Portfolios at their inception for its
general account. MetLife has sold some of those shares, but will not sell
shares if the sale would reduce the Fund's net worth below $100,000. MetLife
paid all of the organizational expenses of the Fund and will not be reimbursed.

METLIFE

MetLife is the Fund's investment manager and principal underwriter and
distributor. MetLife also manages its own investment assets and those of
certain affiliated companies and other entities. MetLife is a mutual life
insurance company which sells insurance policies and annuity contracts. On
December 31, 1997, it had total life insurance in force of approximately $1.7
trillion and total assets under management of approximately $330.3 billion.
MetLife is the parent of Metropolitan Tower.

INVESTMENT MANAGEMENT FEES

The Fund pays MetLife monthly for its investment management services based on
the following annual percentages of the average daily net assets of each
Portfolio:

<TABLE>
<CAPTION>
AVERAGE
DAILY NET % PER
PORTFOLIO ASSETS ANNUM
- --------- ----------------- -----
<S> <C> <C>
State Street Research Money Market All assets .25%
MetLife Stock Index All assets .25%
Lehman Brothers Aggregate Bond Index All assets .25%
Russell 2000 Index All assets .25%
Morgan Stanley EAFE Index All assets .30%
State Street Research Growth 1st $500 million .55%
next $500 million .50%
over $1 billion .45%
State Street Research Income 1st $250 million .35%
next $250 million .30%
over $500 million .25%
State Street Research Diversified 1st $500 million .50%
next $500 million .45%
over $1 billion .40%
</TABLE>

<TABLE>
<CAPTION>
AVERAGE
DAILY NET % PER
PORTFOLIO ASSETS ANNUM
- --------- ----------------- -----
<S> <C> <C>
Santander 1st $500 million .75%
International Stock next $500 million .70%
over $1 billion .65%
State Street Research 1st $500 million .75%
Aggressive Growth next $500 million .70%
over $1 billion .65%
Loomis Sayles High Yield Bond All assets .70%
T. Rowe Price Small Cap Growth 1st $100 million .55%
next $300 million .50%
over $400 million .45%
T. Rowe Price Large Cap Growth 1st $50 million .70%
over $50 million .60%
Janus Mid Cap 1st $100 million .75%
next $400 million .70%
over $500 million .65%
Scudder Global Equity 1st $50 million .90%
next $50 million .55%
next $400 million .50%
over $500 million .475%
Harris Oakmark Large Cap Value 1st $250 million .75%
over $250 million .70%
Neuberger&Berman Partners 1st $100 million .70%
Mid Cap Value next $250 million .675%
next $500 million .65%
next $750 million .625%
over $1.6 billion .60%
</TABLE>

MetLife pays all the sub-investment managers for their services.

FUND EXPENSES

The Fund is responsible for paying its own expenses. However, MetLife has the
right, if it chooses, to pay all or part of the Fund's expenses or those of any
of the Portfolios. MetLife also has the right to stop these payments upon
notice to the Board of Directors and to Fund shareholders.

MetLife subsidizes expenses of certain Portfolios in excess of a certain
percentage of net assets until the earlier of either total net assets reaching
$100 million or a certain date as follows:

<TABLE>
<CAPTION>
SUBSIDIZED
EXPENSE IN
PORTFOLIO EXCESS OF DATE
- --------- ---------- -------
<S> <C> <C>
Loomis Sayles High Yield Bond 0.20% 3/2/99
Harris Oakmark Large Cap Value 0.20% 11/2/00
T. Rowe Price Large Cap Growth 0.20% 11/2/00
Neuberger&Berman Partners Mid Cap Value 0.20% 11/2/00
Lehman Brothers Aggregate Bond Index 0.20% 11/2/00
Russell 2000 Index 0.20% 11/2/00
Morgan Stanley EAFE Index 0.25% 11/2/00
</TABLE>

25
<PAGE>

MetLife paid such excess expenses for the Janus Mid Cap Portfolio until
December 30 1997, for the T. Rowe Price Small Cap Growth Portfolio until
January 22, 1998 and for the Scudder Global Equity Portfolio until July 1,
1998. Expenses exclude the investment management fees payable to MetLife,
brokerage commissions on portfolio transactions (including any other direct
costs related to portfolio investment transactions), taxes, interest and other
loan costs owed by the Fund and any unusual one-time expenses (such as legal
related expenses). These subsidies and other prior expense reimbursement
arrangements can increase the performance of the Portfolios.

SHAREHOLDER MEETINGS

Regular annual shareholder meetings are not required and the Fund does not
expect to have regular meetings. For certain purposes, the Fund is required to
have a shareholder meeting. Examples of the reasons a meeting might be held are
to: (1) approve certain agreements required by securities laws; (2) change
fundamental investment objectives and restrictions of the Portfolios; and (3)
fill vacancies on the Board of Directors when less than a majority have been
elected by shareholders. Also, if 10% or more of the outstanding shares request
a shareholders' meeting, then by a vote of two-thirds of the Fund's outstanding
shares (as of a designated record date) a director may be removed from office.
The Fund assists with all shareholder communications. Except as mentioned
above, directors will continue in office and may appoint directors for
vacancies.

VOTING

Each share has one vote and fractional shares have fractional votes. Votes for
all Portfolios are generally aggregated. When there is a difference of
interests between the Portfolios, votes are counted on a per Portfolio basis
and not totaled. Shares in a Portfolio not affected by a matter are not
entitled to vote on that matter. A Portfolio-by-Portfolio vote may occur, for
example, when there are proposed changes to a particular Portfolio's
fundamental investment policies or investment management agreement.

Owners of Contracts supported by separate accounts registered as unit
investment trusts under the Investment Company Act of 1940 have certain voting
interests in Fund shares. The Contract prospectus attached to this Prospectus
describes how Contract owners can give voting instructions for Fund shares.
Shares held by MetLife's general account and in a separate account (not
registered as a unit investment trust) vote in the same proportion as shares
held by the Insurance Companies in their separate accounts registered as unit
investment trusts.

DIVIDENDS, DISTRIBUTIONS AND TAXES

The Fund intends to qualify as a regulated investment company under the tax law
and, as such distributes substantially all of each Portfolio's ordinary net
income and capital gains each calendar year as a dividend to the separate
accounts funding the Contracts to avoid an excise tax on certain undistributed
amounts. The Fund expects to pay no income tax. Dividends are declared annually
and reinvested in additional full and partial shares of the Portfolio. The
Board of Directors may declare dividends at other times.

The Fund and its Portfolios will comply with diversification and other tax law
and rules that apply to investments under variable life insurance and annuity
contracts. Under these rules, shares of the Fund will generally only be
available through the purchase of a variable life insurance or annuity
contract. Income tax consequences to Contract owners who allocate premium to
Fund shares are discussed in the prospectus for the Contracts that is attached
at the front of this Prospectus.

SALE AND REDEMPTION OF SHARES

Shares are sold and redeemed at a price equal to the net asset value without
any sales charges. The Insurance Companies purchase or redeem shares of each
Portfolio, based on, among other things: (1) the amount of net Contract
premiums or purchase payments transferred to the separate accounts; (2)
transfers to or from separate account investment divisions; (3) policy loans;
(4) loan repayments; and (5) benefit payments to be effected on a given date
under the contracts. Generally, these purchases and redemptions are priced
using the Portfolio net asset value computed for the same date and time as are
used to price the corresponding contract transaction.

26
<PAGE>

Each Portfolio's net asset value per share is calculated by taking its assets
(including dividends and interest received or accrued), deducting its
liabilities (including accrued expenses and dividends payable) and dividing the
result by the total number of the Portfolio's outstanding shares. To determine
the value of a Portfolio's assets, cash and receivables are valued at their
face amounts. Interest is recorded as accrued and dividends are recorded on the
ex-dividend date.

Securities, options and futures contracts held by the Portfolios are valued at
market value. Short-term debt instruments with a maturity of 60 days or less
held by all Portfolios and all debt instruments held by the State Street
Research Money Market Portfolio are valued on an amortized cost basis. When
market quotations are not readily available for securities and assets, they are
valued at fair value as determined by the Board of Directors.

A Portfolio's net asset value per share is determined once daily immediately
after any dividends are declared and is currently determined at the close of
regular trading on the New York Stock Exchange. When it is open, regular
trading on the New York Stock Exchange usually ends at 4:00 p.m., Eastern time.
The net asset value may also be determined on days when the New York Stock
Exchange is closed when there has been trading in a Portfolio's securities
which would result in a material change in the net asset value.

27
<PAGE>

APPENDIX TO PROSPECTUS

SUB-INVESTMENT MANAGER PRIOR PERFORMANCE. Because they commenced operations
only on November 1, 1998, no performance history is available for the
Neuberger&Berman Partners Mid Cap Value, Harris Oakmark Large Cap Value, T.
Rowe Price Large Cap Growth, and Lehman Brothers Aggregate Bond Index
Portfolios. The following, however, sets forth total return information for the
one-year, three-year, five-year and ten-year periods ended June 30, 1998 (or
since inception if more recent) for certain similar accounts that are managed
by the same sub-investment managers as are these four Portfolios. Results are
shown on a "total return" basis and include reinvestment of all dividends and
capital gain distributions. The tables also show the total return information
for appropriate indices for the same periods. Each sub-investment manager has
represented to the Fund that, except as otherwise noted, the accounts for which
performance figures are shown include all of the sub-investment manager's
investment company and other accounts that (a) have been managed with
investment objectives, policies, and strategies substantially similar to those
used in managing the corresponding Portfolio, (b) are of sufficient size that
their performance would be considered relevant to the owner of a policy or
contract investing in that Portfolio and (c) are otherwise deemed sufficiently
comparable to warrant including their performance. (No such performance
information is available with respect to the Morgan Stanley EAFE Index or
Russell 2000 Index Portfolios, which also commenced operations on November 1,
1998.)

The accounts are shown for illustrative purposes only and do not necessarily
predict future performance of the Portfolios. You should be aware that the
Portfolios are likely to differ from other accounts managed by the same sub-
investment manager in such matters as size, cash flow pattern, expense levels
and certain tax matters. Accordingly, the portfolio holdings and performance of
the Portfolio will vary from those of such other accounts.

The performance figures set forth below do not reflect any of the charges and
deductions under the terms of the variable annuity contracts and variable life
insurance policies that may invest in the Portfolios. These charges may be
substantial and will cause the investment return under such a contract or
policy to be less than that of the Portfolio. Such charges are discussed in
detail in the appropriate Contract prospectus.

The index performance information set forth below does not reflect any fees and
expenses that the applicable Fund Portfolio will bear.

THE PERFORMANCE INFORMATION DOES NOT REPRESENT THE PERFORMANCE OF THE PORTFOLIO

NEUBERGER&BERMAN

<TABLE>
<CAPTION>
TOTAL RETURN FOR NEUBERGER&BERMAN
PERIOD PARTNERS FUND NEUBERGER&BERMAN AMT S&P MID CAP 400
(UNAUDITED)/1/ (1/20/75) PARTNERS PORTFOLIO (3/22/94) INDEX
- ---------------- ---------------- ---------------------------- ---------------
<S> <C> <C> <C>
Year to Date (ended 8/31/98) -12.66% -13.68% 8.63%
One Year (6/30/97 to 6/30/98) 19.25% 20.14% 27.10%
Three Year (6/30/95 to 6/30/98, annualized) 25.56% 26.64% 24.00%
Since inception (3/22/94 to 6/30/98, annualized) -- 22.75% not available
Five Year (6/30/93 to 6/30/98, annualized) 20.48% -- 18.45%
Ten Year (6/30/88 to 6/30/98, annualized) 16.68% -- 18.36%
</TABLE>
- ------------
/1/ As of June 30, 1998 the Neuberger&Berman Partners Fund, a mutual fund, had
assets of $3, 592,152,731. The Neuberger&Berman Advisers Management Trust
Partners Portfolio, an underlying mutual fund portfolio available only to life
insurance companies to fund variable insurance contracts, had net assets of
$1,932,776,561. The actual fees and expenses of the accounts whose performance
is shown have been used. Had the Portfolio's estimated fees and expenses been
used (whether before or after estimated expense reimbursements), the
performance figures would have been lower. Performance figures are based on
historical performance and do not guarantee future results. Neuberger&Berman,
in the past, absorbed certain expenses of Neuberger&Berman AMT Partners
Portfolio. Without this arrangement, performance would have been reduced. In
addition, although managed in the same style with substantially similar
investment objectives, policies and strategies, Neuberger&Berman Partners Fund
and the Neuberger&Berman AMT Partners Portfolio seek to achieve their
objectives by investing principally in common stocks of medium- to large-
capitalization companies. As a result, they may in the future have, or may in
the past have had, greater exposure to larger capitalization companies than the
Portfolio will have. The S&P Mid Cap 400 Index is an unmanaged index of common
stocks that are primarily issued by companies with mid capitalizations.
Performance for the index has been obtained from public sources and has not
been audited.

28
<PAGE>

HARRIS

<TABLE>
<CAPTION>
TOTAL RETURN FOR
PERIOD
(UNAUDITED)/1/ OAKMARK FUND S&P 500 INDEX
- ---------------- ------------ -------------
<S> <C> <C>
Year to Date (ended 8/31/98) -11.09% -0.38%
One Year (6/30/97 to 6/30/98) 18.38% 30.16%
Three Year (6/30/95 to 6/30/98, annualized) 24.07% 30.21%
Five Year (6/30/93 to 6/30/98, annualized) 21.91% 23.06%
8/5/91 to 6/30/98, annualized (since inception of
the Oakmark Fund) 28.95% 19.78%
</TABLE>
- --------

/1/ As of June 30, 1998 the Oakmark Fund, a mutual fund, had assets of
$8,704,932,576. The actual fees and expenses of the accounts whose performance
is shown have been used. Had the Portfolio's estimated fees and expenses been
used (whether before or after estimated expense reimbursement), the performance
figures would have been lower. Performance figures are based on historical
performance and do not guarantee future results. The S&P 500 Index is an
unmanaged index of common stocks that are primarily issued by companies with
large aggregate market values. Performance for the index has been obtained from
public sources and has not been audited.

T. ROWE PRICE

<TABLE>
<CAPTION>
TOTAL RETURN FOR LIPPER VARIABLE FUNDS
PERIOD T. ROWE PRICE UNDERLYING GROWTH
(UNAUDITED)/1/ GROWTH STOCK FUND FUNDS AVERAGE S&P 500
- ---------------- ----------------- --------------------- -------
<S> <C> <C> <C>
Year to Date (ended 8/31/98) -2.24 -5.16% -0.38%
One Year (6/30/97 to 6/30/98) 28.75% 28.06% 30.16%
Three Year (6/30/95 to 6/30/98,
annualized) 26.55% 25.44% 30.21%
Five Year (6/30/93 to 6/30/98,
annualized) 21.44% 20.07% 23.06%
Ten Year (6/30/88 to 6/30/98,
annualized) 16.53% 16.76% 19.78%
</TABLE>
- --------
/1/ As of June 30, 1998 the T. Rowe Price Growth Stock Fund, a mutual fund, had
assets of $4.67 billion. The total returns were calculated using the actual
fees and expenses of the Fund whose performance is shown. Had the Portfolio's
estimated fees and expenses been used (whether before or after estimated
expense reimbursement), the performance figures would have been lower.
Performance figures are based on historical performance and do not guarantee
future results. The Lipper Variable Funds Underlying Growth Funds Average
represents the average total return based on net asset values of all underlying
growth funds. The S&P 500 Index is an unmanaged index of common stocks that are
primarily issued by companies with large aggregate market values. Performance
for the indices has been obtained from public sources and has not been audited.

METLIFE

<TABLE>
<CAPTION>
TOTAL RETURN FOR
PERIOD METLIFE FIXED INDEX LEHMAN BROTHERS AGGREGATE
(UNAUDITED)/1/ INCOME ACCOUNT BOND INDEX
- ---------------- ------------------- -------------------------
<S> <C> <C>
Year to Date (ended 8/31/98) 5.46% 5.83%
One Year 10.20% 10.54%
8/1/96 to 6/30/98, annualized/2/ 9.31% 9.77%
</TABLE>
- --------

/1/ As of June 30, 1998 the MetLife Fixed Index Income Account, a non-mutual
fund separate account, had assets of $224 million. The MetLife Fixed Income
Account is not an SEC registered investment company and does not comply with
requirements of Subchapter M of the Internal Revenue Code. The management of
the Account would not have been affected had the Account been a registered
investment company that complied with Subchapter M of the Code. The total
returns were calculated using the estimated fees and expenses of the Lehman
Brothers Aggregate Bond Index Portfolio. Performance figures are based on
historical performance and do not guarantee future results. Lehman Brothers
Aggregate Bond Index is an unmanaged index comprised of the Lehman Brothers
Government/Corporate Index, the Lehman Brothers Mortgaged-Backed Securities
Index, and the Lehman Brothers Asset-Backed Securities Index. Performance for
the index has been obtained from public sources and has not been audited.
/2/ MetLife was not the investment manager of the separate account until August
1, 1996. Prior thereto an affiliate of MetLife was the investment manager for
the separate account.

29
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
FOR

METROPOLITAN SERIES FUND, INC.
NOVEMBER 9, 1998

The investment options ("Portfolios") currently offered by the Metropolitan
Series Fund, Inc. (the "Fund") are:

State Street Research Aggressive Neuberger&Berman Partners Mid Cap
Growth Portfolio Value Portfolio

State Street Research Diversified Scudder Global Equity Portfolio
Portfolio

T. Rowe Price Large Cap Growth
State Street Research Growth Portfolio
Portfolio

T. Rowe Price Small Cap Growth
State Street Research Income Portfolio
Portfolio

Lehman Brothers Aggregate Bond Index
State Street Research Money Market Portfolio
Portfolio

MetLife Stock Index Portfolio
Santander International Stock
Portfolio (formerly State Street
Research International Stock
Portfolio)

Morgan Stanley EAFE Index Portfolio

Russell 2000 Index Portfolio

Harris Oakmark Large Cap Value
Portfolio

Janus Mid Cap Portfolio

Loomis Sayles High Yield Bond
Portfolio

This Statement of Additional Information ("SAI") is not a Prospectus. It should
be read in conjunction with the Prospectus dated November 9, 1998. A copy of
the Prospectus may be obtained from Metropolitan Life Insurance Company, One
Madison Avenue, New York, New York 10010, Area 2H.

One Madison Avenue, New York, NY 10010 Telephone (800) 553-4459

98102QHI(0599) MLIC-LD
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
HEADINGS PAGE
- -------- ----
<S> <C>
Description of Some Investment Practices, Policies and Risk................ 3
Certain Investment Limitations............................................. 7
Investment Management Arrangements......................................... 8
Directors and Officers of the Fund......................................... 10
Placing Portfolio Transactions............................................. 12
Sale and Redemption of Shares.............................................. 15
Pricing of Portfolio Securities............................................ 15
Taxes...................................................................... 17
General Information........................................................ 18
Financial Statements....................................................... 18
Appendix................................................................... 20
</TABLE>

B-2
<PAGE>

DESCRIPTION OF SOME INVESTMENT PRACTICES, POLICIES, AND RISKS

The information that follows expands on the similar discussion in the Fund's
Prospectus and does not describe every type of investment, technique, or risk
to which a Portfolio maybe exposed. Each Portfolio reserves the right, without
notice, to make any investment, or use any investment technique, that this SAI
or the Fund's Prospectus does not specifically identify as requiring a
shareholder vote.

MONEY MARKET INSTRUMENTS generally have a remaining maturity of no more than
13 months when acquired by the Fund. They include the following:
. United States Government securities -- direct obligations (in the form of
Treasury bills, notes and bonds) of the United States Government, differing
mainly by maturity lengths.
. Government Agency Securities -- debt securities issued by agencies or
instrumentalities of the United States Government. They are backed by the
full faith and credit of the United States, guaranteed by the United States
Treasury, supported by the issuing agency's or instrumentality's right to
borrow from the United States Treasury, or supported by the issuing agency's
or instrumentality's credit. Agency securities include several of the types
of instruments discussed below under "Mortgage-Backed Securities."
. Certificates of Deposit -- generally short-term, interest-bearing negotiable
certificates issued by commercial banks or savings and loan associations
against funds deposited in the issuing institution. Any non-negotiable time-
deposits must mature in seven days or less.
. Bankers' Acceptances -- time drafts drawn by borrowers on commercial banks,
usually in connection with an international commercial transaction where
both the borrower and the bank guarantee the payment of the draft in its
face amount on the maturity date (which is usually within six months). These
securities are traded in secondary markets prior to maturity. The Portfolios
managed by State Street Research & Management Company ("State Street
Research") and the index Portfolios will not invest in any security issued
by a commercial bank or a savings and loan association (including foreign
branches or agencies of banks) unless the bank or association is organized
and operating in the Untied States, has total assets of at least $1 billion
and is a member of the Federal Deposit Insurance Corporation. The Portfolios
will not invest in non-negotiable bankers' acceptance maturing in more than
7 days.
. Commercial Paper -- short-term unsecured promissory notes issued by
corporations, usually to finance short-term credit needs. Commercial paper
is generally sold on a discount basis, with maturity from issue not
exceeding nine months. The Portfolios may purchase commercial paper with the
highest (two highest for the T. Rowe Price Large Cap Growth and T. Rowe
Price Small Cap Growth Portfolios) rating (and, for the State Street
Research Money Market Portfolio, it must also be rated in one of the top two
"modifiers" that indicate the best investment attributes of such rating)
given by a nationally recognized statistical rating organization ("NRSRO")
or, if unrated (a) of comparable quality or (b) issued by companies having
outstanding debt issues in with ratings with one of the top three ratings
given by an NRSRO (and for State Street Research Money Market Portfolio the
debt issues must be in the top two rating categories).
. Variable Amount Master Demand Notes -- commercial paper of companies that
permit the purchaser to lend varying investment amounts (up to the maximum
indicated in the note) at varying rates to the borrower. The borrower can
prepay the amount borrowed at any time with no penalty and the lender can
redeem the note at any time and receive the face value plus accrued
interest. No secondary market exists for these notes. The same rating/credit
quality requirements apply as described above for other forms of commercial
paper.
. Non-convertible Corporate Debt Securities -- such as bonds and debentures
that will mature within a short time and that have credit characteristics
comparable to those required above for commercial paper.
. Repurchase Agreements -- the purchaser acquires ownership of another money
market instrument, and the seller agrees at the time of sale to repurchase
such other instrument at a specified time and price which determine the
purchaser's yield during the holding period. This insulates the

B-3
<PAGE>

purchaser from market fluctuations unless the seller defaults. Repurchase
agreements are collateralized by cash or the purchased (or equivalent)
underlying instrument at all times at least equal in value to the price the
Fund paid for the underlying instrument plus interest accrued to date. The
Fund can enter into repurchase agreements with primary dealers for periods
not to exceed 30 days. Repurchase agreements with a duration of more than 7
days are considered illiquid. If the seller defaults on its repurchase
obligation, the Fund could experience a delay in recovery or inadequacy of
the collateral and a cost associated with the disposition of the collateral.
. Reverse Repurchase Agreements -- the sale of money market instrument by the
Fund with an agreement by the Fund to repurchase the instrument at a
specified time, price and interest payment. These agreements can be used when
interest income earned from the reinvestment of the proceeds (in money market
instrument with the same or shorter duration to maturity or resale) is
greater than the interest expense of the reverse repurchase transaction.
These agreements can also be used by the Fund as a form of borrowing and they
therefore are subject to the limitations regarding borrowing by the Fund. In
order to minimize the risk that it will have insufficient assets to
repurchase the instrument subject to the agreement, the Fund will keep in a
segregated account with its custodian liquid assets at least equal to the
value of the specified repurchase price or the proceeds received on the sale
subject to repurchase, plus accrued interest.

MORTGAGE-RELATED SECURITIES
GNMA -- partial ownership interests in a pool of mortgage loans which are
individually guaranteed or insured by the Federal Housing Administration, the
Farmers Home Administration or the Veterans Administration. The GNMA
certificates are issued and guaranteed by the Government National Mortgage
Association, a U.S. Government corporation, and backed by the full faith and
credit of the United States.

FNMA and FHLMC -- partial ownership interests in pools of mortgage loans. FNMA
certificates are issued and guaranteed by the Federal National Mortgage
Association, a federally chartered, privately owned corporation and are not
backed by the U.S. Government (although the U.S. Secretary of the Treasury has
discretionary authority to lend it up to $2.25 billion). FHLMC certificates are
issued and guaranteed by the Federal Home Loan Corporation, a federally
chartered corporation owned by the Federal Home Loan Bank and are not backed by
the U.S. government (although the U.S. Secretary of the Treasury has
discretionary authority to lend it up to $2.25 billion).

Mortgage-backed securities -- may be issued by governmental or non-governmental
entities such as banks and other mortgage lenders. Non-governmental securities
may offer higher yield to the Fund but may also expose the Fund to greater
price fluctuation and risk than governmental securities. Many issuers guarantee
payment of interest and principal on the securities regardless of whether
payments are made on the underlying securities, which generally increases the
quality and security. Risks which affect mortgage-backed securities' market
values or yields, include actual or perceived interest rate changes,
creditworthiness of the issuer or guarantor, prepayment rates value of the
underlying mortgages and changes in governmental regulation or tax policies. In
addition, certain mortgage-related securities may be settled only through
privately owned clearing corporations whose solvency and creditworthiness are
not backed by the U.S. Government and whose operational problems may result in
delays in settlement or losses to a Portfolio. Mortgage-related securities
include:
. Mortgage-backed bonds, which are secured by a first lien on a pool of single-
family detached properties and are also general obligations of their issuers.
. Mortgage pass-through bonds, which are secured by a pool of mortgages where
the cash flow generated from the mortgage collateral pool is dedicated to
bond repayment.
. Stripped agency mortgage-backed securities, which are interests in a pool of
mortgages, where the cash flow has been separated into its interest only
("interest only" or "IOs") and principal only ("principal only" or "POs")
components. IOs or POs, other than government-issued IOs or POs backed by
fixed rate mortgages, are considered illiquid securities.

B-4
<PAGE>

. Other mortgage-related securities, which are other debt obligations secured
by mortgages on commercial real estate or residential properties.

BELOW INVESTMENT GRADE SECURITIES (or JUNK BONDS) -- debt securities that are
not rated in (or judged to be of comparable quality to) one of the top four
categories by an NRSRO. These securities expose the Fund to more risks than
higher rated securities, including:
. greater doubt as to the issuer's capacity to pay interest and principal
. greater fluctuations in market values due to individual corporate
developments
. greater risk of default for various reasons including that (1) the issuers of
these securities tend to be more highly leveraged and may not have available
to them more traditional methods of financing and (2) the securities are
unsecured and are generally subordinated to debts of other creditors
. greater difficulty in obtaining accurate market quotations for valuation
purposes
. increased expenses to the extent the Fund must seek recovery due to a default
in payment
. less liquid trading markets

RESTRICTED OR ILLIQUID SECURITIES -- securities for which there is no readily
available market. These securities are priced at fair value under procedures
approved by the Fund's Board of Directors. A Portfolio can sell restricted
securities only in privately negotiated transactions or in a public offering
registered with the Securities and Exchange Commission ("SEC"). Subsequent to
the purchase of a restricted security, SEC registration of such security may
become necessary and a Portfolio that owns the security may need to pay all or
part of the registration expenses and may need to wait until such registration
becomes effective before it can sell the security. In addition, the absence of
ready markets may delay a Portfolio's sale of an illiquid investment. Delays in
disposing of an investment expose a Portfolio to fluctuations in value for
longer periods than it desired.

RULE 144A SECURITIES -- securities that are not registered with the SEC but
under certain circumstances may be considered as liquid. Pursuant to procedures
approved by the Board of Directors, these securities are subject to ongoing
evaluation to monitor their liquidity, and the purchase of these securities
could have the effect of increasing the percent of a Portfolio's securities
invested in illiquid securities. Liquidity is evaluated based on various
factors including:
. the availability of trading markets for the security
. the frequency of trades and quotes
. the number of dealers and potential purchasers
. dealer undertakings to make a market
. the nature of the security and of the marketplace trades (including disposal
time, solicitation methods and mechanics of transfer)

LENDING PORTFOLIO SECURITIES. The Fund may pay reasonable finders,
administrative and custodial fees to persons that are unaffiliated with the
Fund for services in connection with loans of its portfolio securities.
Payments received by a Portfolio equal to dividends, interest and other
distributions on loaned securities may be treated as income other than
qualified income for the 90% test discussed under "Taxes" below. The Fund
intends to engage in securities lending only to the extent that it does not
jeopardize its qualification as a regulated investment company under the
Internal Revenue Code (the "Code").

OPTIONS ON SECURITIES, CURRENCIES AND INDICES. Options that are traded on
recognized securities exchanges often have less of a risk of loss than those
sold "over-the-counter." A Portfolio will not sell the security or currencies
against which options have been written until after the option period has
expired, a closing purchase transaction is executed, a corresponding put or
call option has been purchased, or the sold option is otherwise covered. The
sale and purchase of options involves paying brokerage commissions and other
transaction costs. In addition, selling covered call options can increase the
portfolio turnover rate.

The purchase and sale of index options have additional risks. For example if
trading of certain securities in the index is interrupted, a Portfolio would
not be able to close out options which it had purchased or sold if restrictions
on exercise were also imposed. To address such liquidity concerns the Fund
limits use of index options to options on indices (1) with a sufficient number
of securities to minimize the likelihood of a trading halt and (2) for which
there is a developed secondary market.

B-5
<PAGE>

A Portfolio will cover any option it has sold on a stock index by (1) if the
option is a call option, segregating with the Fund's custodian bank either (a)
cash or other liquid assets having a value that, when added to any related
margin deposits, at all times at least equals the value of the securities
comprising the index, or (b) securities that substantially replicate changes in
value of the securities in the index; (2) if the option is a put option,
segregating with the Fund's custodian bank cash or other liquid assets having a
value that, when added to any related margin deposits, at all times at least
equals the exercise price; or (3) regardless of whether the option is a call or
a put option, holding an offsetting position in the same option at an exercise
price that is at least as favorable to the Fund.

FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS. These contracts are traded in the
interbank market through currency traders. The traders do not charge a fee, but
they do realize a profit based on the difference between the prices at which
they are buying and selling various currencies. The use of these contracts
involves various risks including:
. inability to enter into a contract at advantageous times or with respect to
the desired foreign currencies
. poor correlation between a currency's value and any proxy currency that a
Portfolio is using
. the creditworthiness of the counterparty to the transaction
. losses (or lost profits) due to unanticipated or otherwise adverse changes in
the relative value of currencies
. additional expense due to transaction costs or the need to purchase or sell
foreign currency on the spot market to correlate with the currency delivery
requirements of the contract

The Portfolios will cover outstanding forward currency contracts by maintaining
liquid portfolio securities denominated in or exposed to the currency
underlying the forward contract or the currency being hedged. To the extent
that a Portfolio is not able to cover its forward currency positions with
underlying portfolio securities, the Portfolio will have its bank custodian
segregate cash or liquid assets having a value equal to the aggregate amount of
such Portfolio's commitments under forward contracts. As an alternative to
segregating assets, a Portfolio may buy call options permitting such Portfolio
to buy the amount of foreign currency being hedged by a forward sale contract
or a Portfolio may buy put options permitting it to sell the amount of foreign
currency subject to a forward buy contract.

SWAPS, CAPS, FLOORS and COLLARS. A Portfolio will not enter into any swap, cap,
floor or collar unless the portfolio manager thinks that the other party to the
transaction is creditworthy. If the other party defaults, the Portfolio may
have contractual remedies pursuant to agreements related to the transaction.
Portfolios for which swaps are a permissible investment can enter credit
protection swap arrangements which involve the sale by the Portfolio of a put
option on a debt security which is exercisable by the buyer upon certain
events, such as default by the referenced creditor on the underlying debt or a
bankruptcy event of the creditor.

The swap market has grown substantially in recent years and the swap market has
become relatively liquid due to a large number of banks and investment banks
acting as principals and agents and using standardized documentation. Caps,
floors and collars are more recent innovations and standardized documentation
has not yet been fully developed. For that reason they are less liquid than
swaps. Liquidity of swaps, caps, floors and collars will be evaluated based on
various factors including:
. the frequency of trades and quotations
. the number of dealers and prospective purchasers in the marketplace
. dealer undertakings to make a market
. the nature of the instrument (including demand or tender features)
. the nature of the marketplace (including the ability to assign or offset a
Portfolio's rights and obligations)

FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS. A Portfolio will cover any
futures contract it has sold, or any call option it has sold on a futures
contract, by (1) segregating with the Fund's custodian bank (a) cash or other
liquid assets having a value that, when added to any related margin deposits,
at all times at least equals the value of the securities or currency on which
the futures contract (or related index) is based or (b) securities or
currencies that substantially replicate changes in value of the securities or
currencies on which

B-6
<PAGE>

the futures contract (or related index) is based or (2) holding an offsetting
call option on that futures contract at the same or better settlement price. A
Portfolio will cover any futures contract it has purchased, or any put option
it has sold on a futures contract, by (1) segregating with the Fund's custodian
bank cash or other liquid assets having a value that, when added to any related
margin deposits, at all times at least equals the amount payable upon
settlement of such futures contract or (2) holding an offsetting call option on
that futures contract at the same or better settlement price.

CERTAIN INVESTMENT LIMITATIONS

FUNDAMENTAL POLICIES are those that may not be changed without approval of the
outstanding voting shares of each affected Portfolio. The Prospectus indicates
certain fundamental policies, and the following list contains some more. In
some cases, the Prospectus or SAI specifically states that one or more
Portfolios may engage in practices that would otherwise violate these
fundamental restrictions. Except as noted below, such exceptions are also part
of the Fund's fundamental policies, even though the Prospectus or SAI do not
designate them individually as such. On the other hand, any policy set forth in
the Prospectus that is more restrictive than any fundamental policy on the same
subject may be changed without any shareholder vote. Unless otherwise
indicated, all restrictions apply at the time of purchase.

No Portfolio may:
. borrow money to purchase securities or purchase securities on margin
. engage in the underwriting of securities of other issuers except to the
extent that in selling portfolio securities it may be deemed to be a
"statutory" underwriter for purposes of the Securities Act of 1933
. issue senior securities
. sell call options which are not covered options
. sell put options other than to close out option positions previously entered
into
. invest in commodities or commodity contracts. In this regard, the following
aspects of the Prospectus's table of "Certain Investment Practices" are non-
fundamental: all of the prohibitions and limitations in item 9; the
recognized exchange requirement in, and the omission of any Portfolio that
invests in equity securities from, item 10; the recognized exchange
requirement and the limitations on purpose in item 11; and all of item 12,
except the requirement that the Portfolio must be authorized to use the
underlying futures contract.
. make loans but this shall not prohibit a Portfolio from entering into
repurchase agreements or purchasing bonds, notes, debentures or other
obligations of a character customarily purchased by institutional or
individual investors
. For purposes of the industry concentration limit in item 25 of the Prospectus
table, the following additional fundamental policies will apply: domestic
crude oil and gas producers, domestic integrated oil companies, international
oil companies, and oil service companies each will be deemed a separate
industry; money market instruments issued by a foreign branch of a domestic
bank will not be deemed to be an investment in a domestic bank.

No more than 5% of the Scudder Global Equity Portfolio's assets will be
committed to transactions in options, futures or other "derivative" instruments
that are intended for any purpose other than to protect against changes in
market values of investments the Portfolio owns or intends to acquire, to
facilitate the sale or disposition of investments for the Portfolio, or to
adjust the effective duration or maturity of fixed income instruments owned by
the Portfolio

NON-FUNDAMENTAL POLICIES are those that may be changed without approval of
shareholders. Unless otherwise indicated, all restrictions apply at the time of
purchase. The following non-fundamental policies are in addition to those
described elsewhere in the Prospectus or SAI.
. No Portfolio will acquire securities for the purpose of exercising control
over the management of any company
. At least 75% of a Portfolio's total assets must be: (1) securities of issuers
in which the Portfolio has not invested more than 5% of its total assets, (2)
voting securities of issuers as to which the Fund owns no more than 10% of
such securities, and (3) securities issued or guaranteed by the U.S.
government, its agencies or instrumentalities. These restrictions do not
apply to the Janus Mid Cap Portfolio.
. No Portfolio may make any short sale

B-7
<PAGE>

. No Portfolio (except for the Janus Mid Cap Portfolio) may participate on a
joint or joint and several basis in any trading account in securities

INSURANCE LAW RESTRICTIONS
The ability to sell contracts in New York requires that each portfolio manager
use his or her best efforts to assure that each Portfolio of the Fund complies
with the investment restrictions and limitations prescribed by Sections 1405
and 4240 of the New York State Insurance Law and regulations thereunder in so
far as such restrictions and limitations are applicable to investment of
separate account assets in mutual funds. Failure to comply with these
restrictions or limitations will result in the Insurance Companies ceasing to
make investments in that Portfolio for the separate accounts. The current law
and regulations permit the Fund to make any purchase if made on the basis of
good faith and with that degree of care that an ordinarily prudent person in a
like position would use under similar circumstances.

INVESTMENT MANAGEMENT ARRANGEMENTS

INVESTMENT MANAGEMENT AGREEMENTS AND SUB-INVESTMENT MANAGEMENT AGREEMENTS
MetLife and the Fund have entered into investment management agreements under
which MetLife has the primary management responsibility for the Fund's four
index Portfolios and overall responsibility for all Portfolios. In addition,
MetLife has entered into sub-investment management agreements for all other
Portfolios. For simplicity, each of MetLife and the sub-investment managers are
referred to as "managers" when discussing issues affecting all of them.

Each agreement continues from year to year with annual approval by (a) the
Board of Directors or a majority of that Portfolio's outstanding shares, and
(b) a majority of the Board of Directors who are not "interested persons" of
any party of the agreement. Each agreement may be terminated by any party to
the agreement, without penalty, with 60 days' written notice. Shareholders of a
Portfolio may vote to terminate an agreement as to services provided for that
Portfolio.

Managers make investment decisions and effect transactions based on information
from a variety of sources including their own securities and economic research
facilities. Managers are also obligated to provide office space, facilities,
equipment and personnel necessary to perform duties associated with their
designated Portfolio(s).

MANAGEMENT FEES
The Fund pays MetLife for its investment management services as detailed in the
Prospectus. For 1995, 1996 and 1997, MetLife fees for all Portfolios then
available totaled $14,648,069, $20,845,048 and $31,213,713, respectively.

B-8
<PAGE>

SUB-MANAGEMENT FEES
MetLife pays the sub-investment managers for their investment management
services based on the following annual percentages of the average net assets of
each Portfolio.

<TABLE>
<CAPTION>
AVERAGE
DAILY NET % PER
PORTFOLIO ASSETS ANNUM
- --------- ----------------- -----
<S> <C> <C>
State Street Research Money Market All assets .25%
State Street Research Growth 1st $500 million .40%
next $500 million .35%
over $1 billion .30%
State Street Research Income 1st $250 million .27%
next $250 million .22%
over $500 million .17%
State Street Research Diversified 1st $500 million .35%
next $500 million .30%
over $1 billion .25%
Santander 1st $500 million .55%
International Stock next $500 million .50%
over $1 billion .45%
State Street Research 1st $500 million .55%
Aggressive Growth next $500 million .50%
over $1 billion .45%
Loomis Sayles High Yield Bond All assets .50%
T. Rowe Price Small Cap Growth 1st $100 million .35%
next $300 million .30%
over $400 million .25%
T. Rowe Price Large Cap Growth 1st $50 million .50%
over $50 million .40%
Janus Mid Cap 1st $100 million .55%
next $400 million .50%
over $500 million .45%
Scudder Global Equity 1st $50 million .70%
next $50 million .35%
next $400 million .30%
over $500 million .275%
Harris Oakmark Large Cap Value 1st $250 million .65%
over $250 million .60%
Neuberger&Berman Partners 1st $100 million .50%
Mid Cap Value next $250 million .475%
next $500 million .45%
next $750 million .425%
over $1.6 billion .40%
</TABLE>

The following table shows gross sub-investment management fees paid by MetLife
under these agreements. No management fees will be paid with respect to the T.
Rowe Price Large Cap Growth, Harris Oakmark Large Cap Value and
Neuberger&Berman Partners Mid Cap Value until after their inception. In
addition, no management fees were paid to Santander Global Advisers, Inc. since
it became sub-investment manager on November 9, 1998.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------
MANAGER 1995 1996 1997
- ------- ----------- ----------- -----------
<S> <C> <C> <C>
State Street Research/1/ $10,412,735 $14,979,746 $19,942,628
GFM International Investors, Inc. $ 1,634,069 $ 1,868,362 $ 1,690,665
("GFM")/2/
Loomis Sayles & Company, L.P./3/ 0 0 $ 60,889
T. Rowe Price Associates, Inc./3/ 0 0 $ 120,608
Janus Capital Corporation/3/ 0 0 $ 184,926
Scudder Kemper Investments, Inc./3/ 0 0 $ 138,864
</TABLE>
- ------------
/1/ No sub-investment management fees were paid to State Street Research during
1995 and 1996 for services to the State Street Research Money Market or
Santander International Stock Portfolio because State Street Research only
served as sub-investment manager beginning August 1, 1997 (and, as of November
9, 1998, no longer served as such).

/2/ GFM prior to August 1, 1997 received fees as sub-investment manager from
August 1, 1997 through November 9, 1998, GFM served as sub-sub-investment
manager and received fees as such from State Street Research. $616,573 of the
amount indicated for 1997 was paid to GFM as sub-sub-investment manager.

/3/ Prior to March 3, 1997 (Portfolio inception), no fees were paid.

PAYMENT OF FUND EXPENSES
As detailed in the Prospectus, MetLife currently pays certain expenses for the
Loomis Sayles High Yield Bond, Harris Oakmark Large Cap Value, T. Rowe Price
Large Cap Growth, Neuberger&Berman Partners Mid Cap Value, Lehman Brothers
Aggregate Bond Index, Russell 2000 Index and Morgan Stanley EAFE Index
Portfolios to the extent they exceed certain amounts.

Apart from any such payment by MetLife, each Portfolio bears its share of all
Fund expenses, including those for: (1) fees of the Fund's directors; (2)
custodian and transfer agent fees; (3) audit and legal fees; (4) printing and
mailing costs for the Fund's prospectuses, proxy material and periodic reports
to shareholders; (5) MetLife's investment management fee; (6) brokerage
commissions on portfolio transactions (including costs for acquisition,
disposition, lending or borrowing of investments); (7) Fund taxes; (8) interest
and other costs related to any Fund borrowing; and (9) extraordinary or one-
time expenses (such as litigation related costs).

All of the Fund's expenses, except extraordinary or one-time expenses, are
accrued daily.

B-9
<PAGE>

DIRECTORS AND OFFICERS OF THE FUND

Unless otherwise noted, the address of each executive officer and director
listed below is One Madison Avenue, New York, New York 10010.

<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION(S)
NAME, (AGE) AND ADDRESS POSITION(S) WITH FUND DURING PAST 5 YEARS
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Steve A. Garban (61)+ Director Retired, formerly Senior Vice-President
The Pennsylvania State Finance and Operations and Teasurer, The
University Pennsylvania State University
208 Old Main
University Park, PA
16802
- ------------------------------------------------------------------------------------------------
David A. Levene (59)* Chairman of the Board, Executive Vice-President, MetLife since
Chief Executive Officer 1996; prior thereto, Senior Vice-President
and Director and Chief Actuary
- ------------------------------------------------------------------------------------------------
Malcolm T. Hopkins (70)+ Director Private Investor, formerly Vice-Chairman of
14 Brookside Road the Board and Chief Financial Officer, St.
Biltmore Forest Regis Corp. (forest and paper products)
Asheville, NC 28803
- ------------------------------------------------------------------------------------------------
Robert A. Lawrence (72)+ Director Retired, formerly Partner, Saltonstall & Co.
175 Federal Street (private investment firm)
16th Floor
Boston, MA 02110
- ------------------------------------------------------------------------------------------------
Dean O. Morton (66)+ Director Retired, formerly Executive Vice-President,
3200 Hillview Avenue Chief Operating Officer and Director,
Palo Alto, CA 94304 Hewlett-Packard Company
- ------------------------------------------------------------------------------------------------
Michael S. Scott Morton Director Jay W. Forrester Professor of Management at
(61)+ Sloan School of Management, MIT
Massachusetts Institute
of Technology ("MIT")
50 Memorial Drive
Cambridge, MA 02139-4307
- ------------------------------------------------------------------------------------------------
Arthur G. Typermass Director Retired, formerly Senior Vice-President and
(61)* Treasurer, MetLife
43 Chestnut Drive
Garden City, NY 11530
- ------------------------------------------------------------------------------------------------
Bradford W. White (32)+* Controller Senior Technical Consultant -- Pensions,
MetLife since 1993; Senior Financial
Analyst -- Retirement and Savings Center,
1992-1993; prior thereto, Financial Analyst
- ------------------------------------------------------------------------------------------------
Christopher P. Nicholas President and Chief Associate General Counsel, MetLife
(49)+* Operating Officer
- ------------------------------------------------------------------------------------------------
Janet Morgan (35)* Treasurer Assistant Vice-President, MetLife since
1997; prior thereto, Director
- ------------------------------------------------------------------------------------------------
Elaine Stevenson (39)* Vice-President Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
Lawrence A. Vranka (58)* Vice-President Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
Robin Wagner (37)* Secretary Assistant General Counsel, MetLife since
1997, Counsel, 1995-1997; prior thereto,
Associate Counsel
- ------------------------------------------------------------------------------------------------
Patricia S. Worthington Assistant Secretary Assistant Vice-President and Assistant
(42)* Compliance Director of MetLife since 1997;
prior thereto Associate Counsel
- ------------------------------------------------------------------------------------------------
Nancy A. Turchio (29)* Assistant Secretary Legal Assistant, MetLife since 1994; prior
thereto, legal assistant Cadwalader,
Wickersham & Taft
- ------------------------------------------------------------------------------------------------
Harold Lerner (62)* Assistant Controller Technical Consultant -- Financial
Management, MetLife since 1996; prior
thereto, Pricing/Contracts Analyst --
Retirement and Savings Center
- ------------------------------------------------------------------------------------------------
Dianne Johnson (47)* Assistant Controller Senior Technical Consultant -- Financial
Management, MetLife since 1997; Technical
Consultant -- Retirement and Savings Center,
1994-1997; prior thereto, Accounting
Supervisor -- Retirement and Savings Center
</TABLE>
- -----------
(*) Interested Person, as defined in the Investment Company Act of 1940 ("1940
Act"), of the Fund.
(+) Serves as a trustee, director and/or officer of one or more of the
following investment companies, each of which has a direct or indirect
advisory relationship with the Investment Manager or its affiliates: State
Street Research Financial Trust, State Street Research Income Trust, State
Street Research Money Market Trust, State Street Research Tax-Exempt Trust,
State Street Research Capital Trust, State Street Research Master
Investment Trust, State Street Research Equity Trust, State Street Research
Securities Trust, State Street Research Growth Trust, State Street Research
Exchange Trust and State Street Research Portfolios, Inc.

B-10
<PAGE>

The Directors have been compensated as follows:

<TABLE>
<CAPTION>
(3)
PENSION OR (5)
RETIREMENT (4) TOTAL
(2) BENEFITS ESTIMATED COMPENSATION
AGGREGATE ACCRUED ANNUAL FROM THE FUND
(1) COMPENSATION AS PART OF BENEFITS AND FUND
NAME OF FROM FUND UPON COMPLEX PAID
DIRECTOR(B) FUND(A)(C) EXPENSES RETIREMENT TO DIRECTORS(B)
- -----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Jeffrey J. Hodgman(d) 0 0 0 0
- -----------------------------------------------------------------------------
Steve A. Garban $24,000 0 0 $ 75,899
- -----------------------------------------------------------------------------
Malcolm T. Hopkins $22,500 0 0 $ 78,499
- -----------------------------------------------------------------------------
Robert A. Lawrence $21,000 0 0 $ 93,125
- -----------------------------------------------------------------------------
Dean O. Morton $21,000 0 0 $ 97,125
- -----------------------------------------------------------------------------
Michael S. Scott Morton $21,000 0 0 $103,625
- -----------------------------------------------------------------------------
John H. Tweedie(d) 0 0 0 0
- -----------------------------------------------------------------------------
David A. Levene 0 0 0 0
</TABLE>
- ------------
(a) For the fiscal year ended December 31, 1997.
(b) Complex is comprised of 10 trusts and two corporations with a total of 31
funds and/or series. "Total Compensation from the Fund and Fund Complex
Paid to Directors" is for the 12 months ended December 31, 1997.
(c) Directors and officers who are currently active employees of MetLife
receive no compensation for services rendered to the Fund other than their
regular compensation from MetLife or its affiliate of which they are
employees. Other directors who are not currently active employees of
MetLife receive a fee of $10,000 per year, plus $2,500 for each directors'
meeting they attend, $500 for each audit committee meeting they attend, and
reimbursement for out-of-pocket expenses related to such attendance.
Messrs. Garban and Hopkins also each receive $1,500 for attending any
contract committee meeting. The chairman of the audit committee receives a
fee of $1,500 for each full calendar year during which he/she serves as
chairman.
(d) Jeffrey J. Hodgman resigned as a director effective May 1, 1998. John H.
Tweedie resigned as director effective April 24, 1997.
- ------------
None of the above officers and directors of the Fund owns any stock of the
Fund.

B-11
<PAGE>

PLACING PORTFOLIO TRANSACTIONS

Each Portfolio's manager has day-to-day responsibility for selecting broker-
dealers who will process investment transactions for the Portfolio. The
managers follow similar policies and procedures for each Portfolio. When a
manager's policy or practice is significantly different, it is specifically
identified below. In the discussion that follows, the term broker-dealer
includes both brokers (brokerage firms who act as agents in purchases or sales
of portfolio investments by the Fund) and dealers (investment firms who act
for their own account in selling or purchasing securities to or from the
Fund).

PRIMARY POLICY
Each manager's primary policy is to get prompt and reliable execution of
orders with the most favorable overall net prices to the Fund.

SELECTING A BROKER-DEALER
To select the best broker-dealer for a given transaction, each manager will
consider one or more of the following:
. the price of the security or instrument
. the nature of the market for the security or instrument
. the size and difficulty of the order
. the execution experience of the broker-dealer (generally and as to specific
markets or securities)
. confidentiality
. the broker-dealer's financial responsibility
. the competitiveness of the commission or spread (see "Competitiveness of
Commission Rates and Net Prices" below)
. proven integrity and reliability
. the quality of execution
. the broker-dealer's research and statistical services and capabilities
. the broker-dealer's capital clearance and settlement capabilities (see
"Research and Statistical Services" below)
. desired timing of the trade
. any broker rebate of commissions to pay Portfolio expenses under any
"directed brokerage" arrangements (see "Directed Brokerage" below)

RESEARCH AND STATISTICAL SERVICES
When more than one firm satisfies the Portfolio's other standards, managers
may consider the range of services and capabilities that those broker-dealers
provide, including:
. recommendations and advice about market projections and data, security
values, asset allocation and portfolio evaluation, purchasing or selling
specific securities, and portfolio strategy
. seminars, information, analyses, and reports concerning companies,
industries, securities, trading markets and methods, legislative and
political developments, changes in accounting practices and tax law,
economic and business trends, proxy voting, issuer credit-worthiness,
technical charts and portfolio strategy
. access to research analysts, corporate management personnel, industry
experts, economists, government representatives, technical market
measurement services and quotation services, and comparative performance
evaluation
. products and other services including financial publications, reports and
analysis, electronic access to data bases and trading systems, computer
equipment, software, information and accessories
. statistical and analytical data relating to various investment companies,
including historical performance, expenses and fees, and risk measurements

In most cases, these services supplement a manager's own research and
statistical efforts. Research and statistical information and materials are
generally subject to internal analysis before being incorporated into a
manager's investment process.

Generally, services are received primarily in the form of written reports,
computer generated services, telephone contacts and personal meetings. Often
managers use internal surveys and other methods to evaluate the quality of
research and other services provided by various broker-dealer firms. Results
of these studies are available to the managers' trading departments for use
when selecting broker-dealers to execute portfolio transactions.

MULTIPLE USES FOR SERVICES
The same research and statistical products and services may be useful for
multiple accounts. Managers may use such products and services when managing
any of their investment accounts. Therefore, managers may use research and
statistical information received from broker-dealers who have handled
transactions for any such account (which may or may not include any Portfolio)
in the management of the same or any such other account (which, again, may or
may not include

B-12
<PAGE>

that Portfolio). If any research or statistical product or service has a mixed
use, so that it also serves functions other than assisting in a manager's
investment decision process, then the manager may allocate the costs and value
accordingly. Only the portion of the cost or value attributable to a product or
service that assists the manager with the investment decision process may be
considered by the manager in allocating transactions to broker-dealers.

COMPETITIVENESS OF COMMISSION RATES AND NET PRICES
Brokerage and other services furnished by broker-dealers are routinely reviewed
and evaluated. Managers try to keep abreast of commission structures and the
prevalent bid/ask spread of the market and/or security in which transactions
for the Portfolios occur. Commissions on foreign transactions are often higher
and fixed, unlike in the United States where commission rates are negotiable.
Against this backdrop, managers evaluate the reasonableness of a commission or
net price for each transaction.

Other considerations which determine reasonableness of a broker-dealer's
commission rates or net prices include:
.the difficulty of execution and settlement
. the size of the transaction (number of shares, dollar amount, and number of
clients involved)
. historical commission rates or spreads
. rates and prices quoted by other brokers and dealers
. familiarity with commissions or net prices paid by other institutional
investors
. the level and type of business done with the broker-dealer over time
. the extent to which broker or dealer has capital at risk in the transaction

COMPENSATING BROKER-DEALERS FOR SERVICES
After considering a combination of all the factors, managers may not
necessarily select the broker with the lowest commission rate.

Managers may or may not ask for competitive bids based on their judgment as to
whether such bids would have a negative effect on the execution process.
Managers do not intentionally pay a broker-dealer brokerage commission or net
price that is higher than another firm would charge for handling the same
transaction in a recognition of services (other than execution services)
provided.

This is an area where differences of opinion as to fact and circumstances may
exist, however. Therefore, to the extent necessary, managers rely on Section
28(e) of the Securities Exchange Act of 1934, which permits managers to pay
higher commission rates if the manager determines in good faith that the rate
is reasonable in relation to the value of the brokerage, research and
statistical services provided.

Accordingly, while it is difficult to determine any extent to which commission
rates or net prices charged by broker-dealers reflect the value of their
services, managers expect commissions to be reasonable in light of total
brokerage and research services provided by each particular broker. Although it
is also difficult to place an exact dollar value on research and statistical
services received from broker-dealers, the managers believe that these services
tend to reduce the Portfolio's expenses in the long-run.

When purchasing securities for a Portfolio in fixed price underwriting
transactions, managers follow instructions received from the Fund as to the
allocation of new issue discounts, selling concessions and designations to any
brokers or dealers which provide the Fund with research, performance
evaluation, master trustee and other services. Absent instructions from the
Fund, the manager may make such allocations to broker-dealers which provide it
with research, statistical, and brokerage services.

FIXED INCOME SECURITIES
Fixed income securities are generally purchased from the issuer or a primary
market-maker acting as principal for the securities on a net basis, with no
brokerage commission paid, although the price usually includes undisclosed
compensation. Transactions placed through dealers serving as primary market-
makers reflect the spread between the bid and asked prices known as a dealer's
mark-up. Securities may also be purchased from underwriters at prices which
include underwriting fees paid by the issuer.

OVER-THE-COUNTER SECURITIES MARKET
Orders through the over-the-counter securities market are placed with the
principal market-makers for the security, unless a more favorable result is
available elsewhere. A principal market-maker is one who actively and
effectively trades in the relevant security.

B-13
<PAGE>

BROKERAGE ALLOCATION AGREEMENTS AND UNDERSTANDINGS
Managers may pay cash for certain services provided by external sources or
choose to allocate brokerage business as compensation for the services.
Managers do not have fixed agreements with any broker-dealer as to the amount
of brokerage business which that firm may expect to receive because of the
services they supply. However, managers may have understandings with certain
firms which acknowledge that in order for such firms to be able to continuously
supply certain services, they need to receive allocation of a specified amount
of brokerage business. These understandings are honored to the extent possible
in accordance with the policies set forth above.

Managers have internal brokerage allocation procedures for that portion of
their discretionary client brokerage business where more than one broker-dealer
can provide best price and execution. In such cases, managers make judgments as
to the level of business which would recognize any research and statistical
services provided. In addition, broker-dealers sometimes suggest a level of
business they would like to receive in return for the various brokerage,
research and statistical services they provide. The actual brokerage received
by any firm may be less than the suggested allocations but can, and often do,
exceed the suggestions, because the total business is allocated on the basis of
all the considerations described above. Broker-dealers are never excluded from
receiving business because they do not provide research or statistical
services.

DIRECTED BROKERAGE
On behalf of the Portfolios, the Fund may request that managers also consider
directed brokerage arrangements, which involve rebates of commissions by a
broker-dealer to pay Portfolio expenses. The Fund may condition its requests by
requiring that managers effect transactions with specified broker-dealers only
if the broker-dealers are competitive as to price and execution. While the Fund
believes that overall this practice can benefit the Fund, in some cases
managers may be unable to negotiate commissions or obtain volume discounts or
best execution and commissions charged under directed brokerage arrangements
may be higher than those not using such arrangements. Directed brokerage
arrangements may also result in a loss of the possible advantage from
aggregation of orders for several clients as a single transaction for the
purchase or sale of a particular security. Among other reasons why best
execution may not be achieved using directed brokerage arrangements is that in,
an effort to achieve orderly execution of transactions, execution of orders
using directed brokerage arrangements may, at the discretion of the trading
desk, be delayed until execution of other orders have been completed. The Board
of Directors will monitor directed brokerage transactions to help ensure that
they are in the best interest of the Fund and its shareholders.

BUNCHING OF ORDERS
When securities are purchased or sold for a Portfolio, managers may also be
purchasing or selling the same securities for other accounts. Managers may
group orders of various accounts for execution to get lower prices and
commission rates. To be fair to all accounts over time, managers allocate
aggregate orders executed in a series of transactions or orders in which the
amount of securities available does not fill the order or price requirements at
the average price and, as nearly as practicable, on a pro-rata basis in
proportion to the amounts intended to be purchased or sold by each account.
Managers also consider the investment objectives, amount of money available to
invest, order size, amount an account already has committed to the investment,
and relative investment risks. While the Fund believes this practice
contributes to better overall execution of portfolio transactions, occasionally
this policy may adversely affect the price or number of shares in a particular
Portfolio's transaction caused by either increased demand or supply of the
security involved in the transaction.

The Board of Directors has adopted procedures governing bunching to ensure that
bunching remains in the best interest of the Fund and its shareholders. Because
the procedures do not always adequately accommodate all facts and
circumstances, exceptions are made to the policy of allocating trades on an
adjusted, pro-rata basis. Exceptions to the policy may include not aggregating
orders and/or reallocating to:
. recognize a manager's negotiation efforts
. eliminate de minimus positions
. give priority to accounts with specialized investment policies and objectives

B-14
<PAGE>

. give special consideration of an account's characteristics (such as
concentrations, duration, or credit risk)
. avoid a large number of small transactions which may increase custodial and
other transaction costs (which effect smaller accounts disproportionately)

Depending on the circumstances, such exceptions may or may not cause an account
to receive a more or less favorable execution relative to other accounts.

Harris Associates L.P. may use its affiliate, Harris Associates Securities
L.P., and Neuberger&Berman Management Incorporated may use its affiliate,
Neuberger&Berman, LLC, (the "affiliated brokers") as brokers for effecting
securities transactions for the respective portfolios for which they are the
managers. The Board of Directors, including a majority of the directors who are
not "interested" directors, has determined that securities transactions for a
Portfolio may be executed through these affiliated brokers, if, in the judgment
of the manager, the use of the affiliated broker is likely to result in prices
and execution at least as favorable to the Portfolio as those available from
other qualified brokers and, if, in such transactions, the affiliated broker
charges the Portfolio commission rates at least as favorable as those charged
by the affiliated broker to comparable unaffiliated customers in similar
transactions. The Board of Directors has adopted procedures designed to provide
that commissions, fees or other remuneration paid to affiliated brokers are
consistent with this standard. The Portfolios will not effect principal
transactions with affiliated brokers.

COMMISSIONS PAID
The Fund paid total brokerage commissions in 1995, 1996, and 1997, of
$6,329,000, $10,728,775, $13,756,000, respectively, on the then available
Portfolios. Commissions were materially higher in 1997 because the Santander
International Stock Portfolio experienced a higher portfolio turnover caused by
the Portfolio's restructuring effected in 1997 and because of the addition of
four new Portfolios as of March 3, 1997.

SALE AND REDEMPTION OF SHARES

Portfolio shares, when issued, are fully paid and non-assessable. In addition,
there are no preference, preemptive, conversion, exchange or similar rights,
and shares are freely transferable. Shares do not have cumulative voting
rights.

MetLife need not sell any specific number of Fund shares. MetLife will pay the
Fund's distribution expenses and costs (which are those arising from activities
primarily intended to sell Fund shares).

The Fund may suspend sales and redemptions of a Portfolio's shares during any
period when (1) trading on the New York Stock Exchange is restricted or the
Exchange is closed (other than customary weekend and holiday closings); (2) an
emergency exists which makes disposing of portfolio securities or establishing
a Portfolio's net asset value impractical; or (3) the Securities and Exchange
Commission orders suspension to protect Portfolio shareholders.

If the Board of Directors decides that continuing to offer shares of one or
more Portfolios will not serve the Fund's best interest (e.g. changing market
conditions, regulatory problems or low Portfolio participation), the Fund may
stop offering such shares and, by a vote of the Board of Directors, may require
redemption (at net asset value) of outstanding shares in such Portfolio(s) upon
30 day's prior written notice to affected shareholders.

In the future, the Fund may offer shares to be purchased by separate accounts
of life insurance companies not affiliated with MetLife to support insurance
contracts they issue.

PRICING OF PORTFOLIO SECURITIES

Portfolio securities are priced as described in the table that follows. If the
data necessary to employ the indicated pricing methods are not available, the
investment will be assigned a fair value in good faith pursuant to procedures
approved by the Board of Directors. Such "fair value" pricing may also be used
if the customary pricing procedures are judged for any reason to result in an
unreliable valuation.

B-15
<PAGE>

PRICING OF SECURITIES CHART

<TABLE>
<CAPTION>
VALUE
AVERAGE ESTABLISHED BY
LAST BETWEEN RECOGNIZED
LAST SPOT LAST BID EXCHANGE OR
SALE LAST BID PRICE AND ASKED OTHER
(PRIMARY (PRIMARY (PRIMARY (PRIMARY AMORTIZED RECOGNIZED
MARKET) MARKET) MARKET) MARKET) COST* SOURCES
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Portfolio Securities All
Traded on Domestic Stock All Portfolios/2/
Exchanges Portfolios/1/ L/2/ except L
- ----------------------------------------------------------------------------------------------------------------
Portfolio Securities
Traded Primarily on
Non-Domestic All
Securities Exchanges Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
Securities Listed or All All
Traded on More than All Portfolios/3/ Portfolios/2/
One Exchange Portfolios/1/ S/2/ except S
- ----------------------------------------------------------------------------------------------------------------
Domestic Securities All
Traded in the Over Portfolios/1/
the Counter Market except S, L,
S/1/, NB/1/ L/1/ S/2/ NB and MM MM
- ----------------------------------------------------------------------------------------------------------------
Non-U.S. Securities All
Traded in the Over All Portfolios/2/
the Counter Market Portfolios/1/ except NB NB/2/
- ----------------------------------------------------------------------------------------------------------------
Short-term
Instruments with
Remaining Maturity
of Sixty Days or All
Less Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
Options on Securities,
Indices, or Futures All All
Contracts Portfolios/1/ Portfolios/2/
- ----------------------------------------------------------------------------------------------------------------
All
Currencies Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
All
Futures Contracts Portfolios/1/
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
1. primary method used
2. if primary method is unavailable
3. if both primary and secondary methods are unavailable
L. Loomis Sayles High Yield Bond Portfolio Only

NB.Neuberger & Berman Partners Mid Cap Value Portfolio Only
S. Scudder Global Equity Portfolio Only
MM.State Street Research Money Market Portfolio Only
* Amortized Cost Method: Securities are valued at the cost on the date of
purchase and thereafter, a constant proportionate amortization value is
assumed until maturity of any discount or premium (regardless of
fluctuating interest rates on the market value of the security).
Maturity is deemed to be the next date on which the interest rate is to
be adjusted. Note, using this method may result in different yield and
net asset values than market valuation methods.

B-16
<PAGE>

TAXES

The following summarizes some of the relevant tax considerations associated
with the Fund. It is not a complete explanation and should not substitute for
careful tax planning and consulting with individual tax advisers.

The Fund's tax attributes are allocated among the Portfolios as if they were
separate corporations. For example, if a Portfolio has a net capital loss for a
taxable year, including any allocated net capital loss carryforwards, such
loss(es) will only offset net capital gains of that Portfolio. Also, each
Portfolio stands alone to determine that Portfolio's net ordinary income or
loss.

The Fund currently qualifies (and intends to continue to qualify) as a
"regulated investment company" under the Code. To qualify, among other things,
each Portfolio must derive at least 90% of its gross income from dividends,
interest, payments for security loans, and gains or other income derived from
each Portfolio's business of investing in stocks, securities or foreign
currencies. As a regulated investment company, the Fund does not pay federal
income tax on net ordinary income and net realized capital gains distributed to
shareholders. A nondeductible 4% excise tax applies to any regulated investment
company on any excess of required distributions for the calendar year over the
amount actually distributed. The Fund must distribute 98% of its ordinary
income and capital gain net income. The Fund does not expect to incur excise
taxes.

Dividends paid by a Portfolio from its ordinary income, and distributions of
its net realized short-term capital gains, are taxable to the shareholder as
ordinary income. Generally, any of a Portfolio's income which represents
dividends on common or preferred stock of a domestic corporation (rather than
interest income), distributed to the Insurance Companies may be deducted as
dividends received, to the extent the deduction is available to a life
insurance company.

Distributions from the Fund's net realized long-term gains are taxable to the
Insurance Companies as long-term capital gains regardless of the holding period
of the Portfolio shares. Long-term capital gain distributions are not eligible
for the dividends received deduction.

Dividends and capital gains distributions may also be subject to state and
local taxes.

The Fund complies with section 817(h) of the Code and its related regulations.
This means that the Fund generally may issue shares only to life insurance
company segregated asset accounts (also referred to as separate accounts) that
fund variable life insurance or annuity contracts ("variable insurance
contracts") and the general account of MetLife which provided the initial
capital for the Portfolios. The prospectus for the Contracts discusses in more
depth the taxation of segregated asset accounts and of the Contract owner.

Section 817(h) of the Code and related regulations require segregated asset
accounts investing in the Portfolios to diversify. These diversification
requirements, which are in addition to those imposed on the Fund under the 1940
Act and under Subchapter M of the Code, may affect selection of securities for
the Portfolios. Failing to meet Section 817(h) requirements may have adverse
tax consequences for the insurance company offering the variable insurance
contract and result in immediate taxation of the contract owner if the
investment in the contract has appreciated in value.

The Treasury Department may possibly adopt regulations or the IRS may issue a
revenue ruling which may deem a Contract owner, rather than the insurance
company, to be treated as owner of the assets of a segregated asset account
based on the extent of investment control by the contract owner. As a result,
the Fund may take action to assure that a Contract continues to qualify as a
variable insurance contract under federal tax laws. For example, the Fund may
alter the investment objectives of a Portfolio or substitute shares of one
Portfolio for those of another. To the extent legally necessary, a change of
investment objectives or share substitution will only occur with prior notice
to affected shareholders, approval by a majority of shareholders and approval
by the Securities and Exchange Commission.

Several unique tax considerations arise in connection with a Portfolio which
may invest in foreign securities. The Portfolio may have to pay foreign taxes,
which could reduce its investment performance. Dividends paid by a Portfolio
corresponding to dividends paid by non-United States companies do not qualify
for the dividends received deduction.

B-17
<PAGE>

Those Portfolios that invest substantial amounts of their assets in foreign
securities may make an election to pass through to the Insurance Companies any
taxes withheld by foreign taxing jurisdictions on foreign source income. Such
an election will result in additional taxable income and income tax to the
Insurance Companies. The amount of additional income tax, however, may be more
than offset by credits for the foreign taxes withheld, which are also passed
through. These credits may provide a benefit to the Insurance Companies.

GENERAL INFORMATION

EXPERTS

The Board of Directors annually approves an independent auditor which is expert
in accounting and auditing. Deloitte & Touche LLP, 555 17th Street, Suite 3600,
Denver, Co, 80202, is the Fund's independent auditor. The Fund's financial
statements for the 12 months ended December 31, 1997 incorporated by reference
into this SAI have been audited by Deloitte & Touche LLP. The Fund relies on
this firm's report which appears with the financial statements.

INTRODUCTION OF THE EURO
Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, and Spain are members of the European Economic and
Monetary Union (the "European Union"). The European Union intends to establish
a common European currency for participating countries that will generally be
known as the "Euro." It is anticipated that each such member country will
supplement its existing currency with the Euro on January 1, 1999 and replace
its existing currency with the Euro on July 1, 2002. Additional European
countries that are members of the European Union may elect to supplement their
existing currencies with the Euro after January 1, 1999.

The expected introduction of the Euro presents unique risks and uncertainties,
including whether the payment and operational systems of banks and other
financial institutions will be ready by January 1, 1999; the treatment of
outstanding financial contracts after January 1, 1999; the application of
exchange rates for existing currencies and the Euro; and the creation of
suitable clearing and settlement systems for the new currency. While it is
impossible to predict what effect the Euro's introduction may have on a
Portfolio's investments in foreign securities and foreign currencies, these and
other factors could cause market disruptions before or after the introduction
of the Euro and could, among other things, adversely affect the value of
securities held by the Portfolio.

CUSTODIAN ARRANGEMENT
State Street Bank and Trust Company of Boston, Massachusetts, is the custodian
of the assets of all Portfolios. The custodian's duties include safeguarding
and controlling the Fund's cash and investments, handling the receipt and
delivery of securities, and collecting interest and dividends on the Fund's
investments. Portfolio securities purchased in the United States are maintained
in the custody of State Street Bank, although such securities may be deposited
in the Book-entry system of the Federal Reserve System or with Depository Trust
Company. Except as otherwise permitted under applicable Securities and Exchange
Commission "no-action" letters or exemptive orders, the Fund holds foreign
assets in qualified foreign banks and depositories meeting the requirements of
Rule 17f-5 under the Investment Company Act of 1940.

COMPUTER SOFTWARE SYSTEMS
The services provided to the Fund by MetLife as investment manager and
distributor, the other managers and the transfer agent, depend on the smooth
functioning of their computer systems. Many computer software systems in use
today cannot distinguish the year 2000 from the year 1900 because of the way
dates are encoded and calculated. That failure could negatively impact handling
of securities trades, pricing and account services. MetLife, the other
managers, and transfer agents are actively working on necessary changes to
their computer systems to deal with this issue and expect that their systems
will be adapted in time for that event, although there cannot be assurance of
success.

INDEX SPONSORS

The Prospectus describes certain aspects of the limited relationship the index
sponsors have with the Fund.

In addition, with respect to Morgan Stanley, the Morgan Stanley EAFE (R) Index
Portfolio is not sponsored, endorsed, sold or promoted by Morgan Stanley.
Morgan Stanley makes no representation or warranty, express or implied, to the
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ability of the MSCI EAFE (R) index to track general stock market performance.
Morgan Stanley is the licensor of certain trademarks, service marks and trade

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<PAGE>

names of Morgan Stanley and of the MSCI EAFE (R) index which is determined,
composed and calculated by Morgan Stanley without regard to the issuer of this
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Stanley and has been licensed for use by MetLife.

With respect to Frank Russell Company, the Russell 2000 Index Portfolio is not
promoted, sponsored or endorsed by, nor in any way affiliated with Frank
Russell Company. Frank Russell Company is not responsible for and has not
reviewed the Portfolio nor any associated literature or publications and Frank
Russell Company makes no representation or warranty, express or implied, as to
their accuracy, or completeness, or otherwise. Frank Russell Company reserves
the right at any time and without notice, to alter, amend, terminate or in any
way change its index. Frank Russell Company has no obligation to take the needs
of any particular fund or its participants or any other product or person into
consideration in determining, composing or calculating the index. Frank Russell
Company's publication of the index in no way suggests or implies an opinion by
Frank Russell Company as to the attractiveness or appropriateness of investment
in any or all securities upon which the index is based. FRANK RUSSELL COMPANY
MAKES NO REPRESENTATION, WARRANTY, OR GUARANTEE AS TO THE ACCURACY,
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OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN.

FINANCIAL STATEMENTS

Copies of the annual report for the Fund for the 12 months ended December 31,
1997 and the semi-annual report for the Fund for the 6 months ended June 30,
1998 accompany this Statement of Additional Information and are incorporated by
reference, excluding the "Management Discussion and Analysis" from the June 30,
1998 semi-annual report.

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<PAGE>

APPENDIX

DESCRIPTION OF CERTAIN CORPORATE BOND AND DEBENTURE RATINGS

<TABLE>
<CAPTION>
STANDARD & POOR'S RATING GROUP (S&P)
RATING MOODY'S INVESTOR SERVICE, INC. (MOODY'S) DESCRIPTION RATING DESCRIPTION
- -----------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Aaa Bonds with this rating are judged AAA An obligation with this rating
to be of the best quality, has the highest rating assigned
carrying the smallest degree or by S&P. The obligor's capacity to
investment risk. They are meet its financial commitment on
generally referred to as "gilt the obligation is extremely
edged." Interest payments are strong.
protected by a large or by an
exceptionally stable margin and
principal is secure. While the
various protective elements are
likely to change, such changes as
can be visualized are most
unlikely to impair the
fundamentally strong position of
such issues.
- -----------------------------------------------------------------------------------------------------------
Aa Bonds with this rating are judged AA An obligation with this rating
to be of high quality by all differs from the highest
standards. Together with the Aaa obligations only in small degree.
group, they comprise what are The obligor's capacity to meet
generally known as high-grade its financial commitment on the
bonds. They are rated lower than obligation is very strong.
the best bonds because margins of
protection may not be as large as
in Aaa securities or fluctuation
of protective elements may be of
greater amplitude or there may be
other elements present which make
the long-term risks appear
somewhat greater than in Aaa
securities.
- -----------------------------------------------------------------------------------------------------------
A Bonds with this rating possess A An obligation with this rating is
many favorable investment somewhat more susceptible to the
attributes and are to be adverse effects of changes in
considered as upper-medium-grade circumstances and economic
obligations. Factors giving conditions than obligations in
security to principal and higher-rated categories. However,
interest are considered adequate, the obligor's capacity to meet
but elements may be present which its financial commitment on the
suggest a susceptibility to obligation is still strong.
impairment sometime in the
future.
- -----------------------------------------------------------------------------------------------------------
Baa Bonds with this rating are BBB An obligation with this rating
considered as medium grade exhibits adequate protection
obligations, i.e., they are parameters. However, adverse
neither highly protected nor economic conditions or change
poorly secured. Interest payments circumstances are more likely to
and principal security appear lead to weakened capacity of the
adequate for the present but obligor to meet its financial
certain protective elements may commitment on the obligation.
be lacking or may be
characteristically unreliable
over any great length of time.
Such bonds lack outstanding
investment characteristics and in
fact have speculative
characteristics as well.
- -----------------------------------------------------------------------------------------------------------
Ba Bonds with this rating are judged BB An obligation with this rating
to have speculative elements; has significant speculative
their future cannot be considered characteristics, but is less
as well-assured. Often, the vulnerable to nonpayment than
protection of interest and bonds in the lower ratings.
principal payments may be very However, it faces major ongoing
moderate, and thereby not well uncertainties or exposure to
safeguarded during both good and adverse business, financial or
bad times over the future. economic conditions which could
Uncertainty of position lead to the obligor's inadequate
characterizes bonds in this capacity to meet its financial
class. commitment on the obligation.
- -----------------------------------------------------------------------------------------------------------
B Bonds with this rating generally B An obligation with this rating is
lack characteristics of the more vulnerable to nonpayment
desirable investment. Assurance than obligations rated BB, but
of interest and principal the obligor currently has the
payments of maintenance of other capacity to meet its financial
terms of the contract of any long commitment on the obligation.
period of time may be small. Adverse business, financial or
economic conditions will likely
impair the obligator's capacity
or willingness to meet its
financial commitment on the
obligation.
</TABLE>

B-20
<PAGE>

<TABLE>
<CAPTION>
RATING MOODY'S INVESTOR SERVICE, INC. (MOODY'S) DESCRIPTION RATING STANDARD & POOR'S RATING GROUP (S&P)DESCRIPTION
- --------------------------------------------------------------------------------------------------------------------------
<C> <S> <C> <C>
Caa Bonds with this rating are of CCC An obligation with this rating is
poor standing. Such issues may be currently vulnerable to
in default or there may be nonpayment, and is dependent upon
present elements of danger with favorable business, financial,
respect to principal or interest. and economic conditions for the
obligor to meet its financial,
and economic commitment on the
obligation. In the event of
adverse business, financial or
economic conditions, the obligor
is not likely to have the
capacity to meet its financial
commitment on the obligation.
- --------------------------------------------------------------------------------------------------------------------------
Ca Bonds with this rating represent C An obligation with this rating
obligations which are speculative may be used to cover a situation
in a high degree. Such issues are where a bankruptcy petition has
often in default or have other been filed or similar action has
marked shortcomings. been taken, but payments on this
obligation are being continued.
- --------------------------------------------------------------------------------------------------------------------------
C Bonds with this rating are the D An obligation rated D is in
lowest rated class of bonds, and payment default. This rating
issues so rated can be regarded category is used when payments on
as having extremely poor an obligation are not made on the
prospects of ever attaining any date due even if the applicable
real investment standing. grace period has not expired,
unless S&P believes that such
payments will be made during such
grace period. This rating also
will be used upon the filing of a
bankruptcy petition on an
obligation are jeopardized.
- --------------------------------------------------------------------------------------------------------------------------
1 This modifier is used with Aa, A, (+)/(-) These modifiers are used with
Baa, Ba and B ratings and ratings from AA to CCC to show
indicates the bond possesses relative standing within the
strongest investment attributes rating category.
within the rating class.
- --------------------------------------------------------------------------------------------------------------------------
No Rating This might arise if: (1) an r This symbol attached to the
application for rating was not ratings of instruments with
received or accepted; (2) the significant non credit risks. It
issue or issuer belongs to a highlights risks to principal or
group of securities that are not volatility of expected returns
rated as a matter of policy; which are not addressed in the
(3) there is a lack of essential credit rating. Examples include:
data pertaining to the issue or obligations linked or indexed to
issuer; (4) the issue was equities, currencies or
privately placed in which case commodities; obligations exposed
the rating is not published in to severe prepayment risk such as
the Moody's publication; or interest only principal only
(5) the rating was suspended or mortgage securities; and
withdrawn because new and obligations with unusually risky
material circumstances arose, the interest terms, such as inverse
effects of which preclude floaters.
satisfactory analysis; there is
no longer available reasonable
up-to-date data to permit a
judgment to be formed; a bond is
called for redemption or for
other reasons.
</TABLE>

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<PAGE>

DESCRIPTION OF COMMERCIAL PAPER RATINGS

B-22