METROPOLITAN SERIES FUND INC
497, 1999-05-04
Previous: TRAVELERS FUND U FOR VARIABLE ANNUITIES, 497, 1999-05-04
Next: MOSAIC EQUITY TRUST, 497, 1999-05-04



<PAGE>
 
 
 
 
                                  METLIFE LOGO
 
                           STATE STREET RESEARCH LOGO
 
                                 SANTANDER LOGO
 
                             HARRIS ASSOCIATES L.P.
 
                       LOOMIS SAYLES & COMPANY, L.P. LOGO
 
                                   JANUS LOGO
 
                             NEUBERGER BERMAN LOGO
 
                                  SCUDDER LOGO
 
                               T. ROWE PRICE LOGO
 
 
                                   PROSPECTUS
 
                                      FOR
 
                         METROPOLITAN SERIES FUND, INC.
 
                                 April 30, 1999
 
The investment options currently offered by the Metropolitan Series Fund (the
"Fund") are:
 
State Street Research                  Loomis Sayles High Yield
Aggressive Growth Portfolio            Bond Portfolio
 
State Street Research                  Neuberger Berman Partners
Diversified Portfolio                  Mid Cap Value Portfolio
 
State Street Research Growth           Scudder Global Equity
Portfolio                              Portfolio            
 
State Street Research Income           T. Rowe Price Large Cap
Portfolio                              Growth Portfolio        
 
State Street Research Money            T. Rowe Price Small Cap
Market Portfolio                       Growth Portfolio       
 
Santander International                Lehman Brothers(R) Aggregate
Stock Portfolio (formerly              Bond Index Portfolio        
State Street Research
International Stock                    MetLife Stock Index
Portfolio)                             Portfolio          
 
Harris Oakmark Large Cap               Morgan Stanley EAFE(R) Index
Value Portfolio                        Portfolio                   
 
Janus Mid Cap Portfolio                Russell 2000(R) Index
                                       Portfolio             
 
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 accurate 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>
   Risk/Return Summary...............................................      2
   Performance and Volatility........................................     11
   About the Investment Managers.....................................     18
   Portfolio Turnover Rates..........................................     24
   Dividends, Distributions and Taxes................................     24
   General Information About the Fund and its Purpose................     24
   Sale and Redemption of Shares.....................................     25
   Financial Highlights..............................................     26
   Appendix A--Portfolio Manager Prior Performance...................     32
   Appendix B--Certain Investment Practices..........................     35
   Appendix C--Description of Some Investments,
    Techniques, and Risks............................................     39
</TABLE>

Risk/Return Summary

[SIDEBAR: Carefully review the objectives and investment practices of the
Portfolios and consider your ability to assume the risks involved before
allocating payments to particular Portfolios.]
 
About all the Portfolios
 
Each Portfolio of the Fund has its own investment objective. Since investment
in any Portfolio 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 investment practices 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 in Appendix B and C to this Prospectus.
However, those 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 Statement of Additional Information
("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.

About the State Street Research Aggressive Growth Portfolio:

[SIDEBAR: State Street Research Aggressive Growth Portfolio]
 
Investment objective: maximum capital appreciation.
 
Principal investment strategies: The Portfolio generally invests most of its
assets in the common stocks of, and other securities convertible into or
carrying the right to acquire common stocks of, less mature companies with the
potential for rapid growth and companies whose unusual circumstances have not
been fully recognized. The Portfolio's investments can range across the full
spectrum from small to large capitalization issuers. At different times, the
Portfolio may emphasize a particular size or type of company.
 
 
                                       2
<PAGE>
 

   
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" and "Growth investing." Volatility may be indicative of risk.
Please refer to the discussion under "Performance and Volatility."     
 
About the State Street Research Growth Portfolio:

[SIDEBAR: State Street Research Growth Portfolio]
 
Investment objective: long-term growth of capital and income and moderate
current income.
 
Principal investment strategies: The Portfolio generally invests the greatest
portion of its assets in equity securities of larger, established companies and
equity securities that are selling below what the portfolio manager believes to
be their intrinsic values. Other principal strategies include investing in
cyclical securities and smaller emerging growth companies with potential for
above average earnings growth.
   
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" "Investing in less mature companies, smaller companies and
companies with "special situations';" "Growth investing;" and "Value
investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."     
 
About the State Street Research Money Market Portfolio:

[SIDEBAR: State Street Research Money Market Portfolio]
 
Investment objective: the highest possible current income consistent with
preservation of capital and maintenance of liquidity.
 
Principal investment strategies: The Portfolio primarily invests 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, and the dollar weighted average maturity of the Portfolio's securities
will not be more than 90 days.
 
Principal risks: Although the portfolio manager will manage the Portfolio so
that significant variations in net asset value are rather unlikely, it is
possible to lose money by investing in the Portfolio. The major risk involved
with investing in the Portfolio is that the overall yield of the Portfolio
could decrease and lower the return on your investment. Situations that can
lower the yield include those that cause short-term interest rates to decline.
An investment in the Portfolio is not insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."
 
About the State Street Research Income Portfolio:

[SIDEBAR: State Street Research Income Portfolio]
 
Investment objective: a combination of: (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.
 
Principal investment strategies: The Portfolio invests at least 75% of its
total assets in non-convertible debt securities in the three highest rating
 
                                       3
<PAGE>
 

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,
convertible securities and preferred stocks of companies that have senior
securities rated within the top three credit rating categories, as well as up
to 10% of total assets in common stocks acquired by conversion of convertible
securities or exercise of warrants attached to debt securities.
 
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Investing in fixed income
securities;" "Prepayment risk;" and "Zero coupon risks." Volatility may be
indicative of risk. Please refer to the discussion under "Performance and
Volatility."

About the State Street Research Diversified Portfolio:

[SIDEBAR: State Street Research Diversified Portfolio]
 
Investment objective: high total return while attempting to limit investment
risk and preserve capital.
 
Principal investment strategies: 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 and short-term money market
instruments of the type that can be purchased by the State Street Research
Money Market Portfolio. The portion of the 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 of the composition of each 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.
 
Principal risks: The major risk for the Portfolio is that the portfolio
managers will not correctly anticipate the relative performance of different
asset categories for specific periods resulting in the Portfolio
underperforming other types of asset allocation investments or other types of
investments in general. In addition, the Portfolio is subject to the same risks
as the State Street Research Growth, State Street Research Income and State
Street Research Money Market Portfolios to the extent its assets are invested
similarly to each of those portfolios. These risks may be moderated, however,
by the greater variety of asset types in which the Diversified Portfolio is
generally expected to be invested, as compared with those other Portfolios.
Volatility may be indicative of risk. Please refer to the discussion under
"Performance and Volatility."
 
About the Santander International Stock Portfolio
(formerly, the State Street Research International Stock Portfolio).

[SIDEBAR: Santander International Stock Portfolio]
 
Investment objective: long-term growth of capital.
 
Principal investment strategies: The Portfolio normally invests at least 65% of
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
 
                                       4
<PAGE>


exchanges or in well established over-the-counter markets. The Portfolio will
usually be invested in issuers located in at least three countries, not
including the U.S.
 
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" Equity investing;" "Investing in
larger companies;" "Investing in securities of foreign issuers;" and "Growth
investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."
 
About the Harris Oakmark Large Cap Value Portfolio

[SIDEBAR: Harris Oakmark Large Cap Value Portfolio]
 
Investment objective: long-term capital appreciation.
 
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in equity securities of large capitalization U.S. companies.
The portfolio managers define large-cap ("large-cap") companies as those whose
market capitalization falls within the range of companies included in the S&P
500 Index at the time of the purchase. As of December 31, 1998, this included
companies with capitalizations of approximately $487 million and above. The
portfolio managers' chief consideration in selecting equity securities for the
Portfolio is their judgment as to the size of the discount at which the
security trades, relative to its economic value. The portfolio managers'
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 portfolio managers use several methods to analyze value, but
considers the primary determinant to be the enterprise's long-run ability to
generate cash for its owners. The portfolio managers also believe the risks of
equity investing are often reduced if management's interests are strongly
aligned with the interests of its stockholders.
   
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" "Investing in less mature companies, smaller companies and
companies with "special situations';" and "Value investing." Volatility may be
indicative of risk.     

About the Janus Mid Cap Portfolio

[SIDEBAR: Janus Mid Cap Portfolio]

Investment objective: long-term growth of capital.
   
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in common stocks of medium capitalization companies selected
for their growth potential. The portfolio manager defines medium 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 December 31, 1998, this included companies with capitalizations
between approximately $142 million and $73.303 billion. 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.     
 
 
                                       5
<PAGE>
 

   
Principal risks: The Portfolio is nondiversified which means it may hold larger
positions in a smaller number of securities than would a diversified portfolio.
Thus, a single security's increase or decrease in value may have a greater
impact on the value of the Portfolio and its total return. The Portfolio's
other principal risks are described after the following captions, under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" "Investing in larger companies;" "Investing in securities of
foreign issuers;" "Investing in medium sized companies;" and "Growth
investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."     

About the Loomis Sayles High Yield Bond Portfolio

[SIDEBAR: Loomis Sayles High Yield Bond Portfolio]
 
Investment objective: high total investment return through a combination of
current income and capital appreciation.
 
Principal investment strategies: The Portfolio normally invests at least 65% of
its assets in below investment grade fixed income securities (commonly referred
to as "junk bonds").
   
Principal risks: The risks are described after the following captions under
"Principal Risks of Investing in the Fund:" "Investing in fixed income
securities;" "Prepayment risk;" "Investing in securities of foreign issuers;"
and "Zero coupon risks." Also, the 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. Volatility may
be indicative of risk. Please refer to the discussion under "Performance and
Volatility."     
 
About the Neuberger Berman Partners Mid Cap Value Portfolio

[SIDEBAR: Neuberger Berman Partners Mid Cap Value Portfolio]
 
Investment objective: capital growth.
   
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in common stocks of mid capitalization companies. 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 December 31, 1998, this included
companies with capitalizations between approximately $142 million and $73.303
billion. 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 particular field.     
   
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
medium sized companies;" and "Value investing." Volatility may be indicative of
risk.     

About the Scudder Global Equity Portfolio

[SIDEBAR: Scudder Global Equity Portfolio]
 
Investment objective:  long-term growth of capital.
 
Principal investment strategies: The Portfolio generally invests most of its
assets in equity securities (primarily common stock) of established companies
 
                                       6
<PAGE>

 
listed on U.S. or foreign securities exchanges or traded over-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 be invested in non-U.S.
issues.
   
Principal Risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Value
investing; "Growth investing;" "Investing in larger companies;" and "Investing
in securities of foreign issuers." Volatility may be indicative of risk. Please
refer to the discussion under "Performance and Volatility."     
 
About the T. Rowe Price Large Cap Growth Portfolio:

[SIDEBAR: T. Rowe Price Large Cap Growth Portfolio]
 
Investment objective: long-term growth of capital and, secondarily, dividend
income.
 
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in a diversified group of large capitalization growth
companies. 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 December 31, 1998, this included companies with capitalizations
of approximately $6.3 billion and above. 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.
 
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" "Investing in securities of foreign issuers;" and "Growth
investing." The risks of equity investing may be moderated by the fact that the
Portfolio emphasizes dividend paying securities. On the other hand, that may
expose the Portfolio more directly to interest rate risk. Volatility may be
indicative of risk.
 
About the T. Rowe Price Small Cap Growth Portfolio:

[SIDEBAR: T. Rowe Price Small Cap Growth Portfolio]
 
Investment objective: long-term capital growth.
 
Principal investment strategies: The Portfolio normally invests at least 65% of
its total assets in a diversified group of small capitalization companies. The
portfolio manager defines small capitalization ("small cap") companies as those
whose market capitalization falls within the range of companies included in the
bottom 10% of the S&P 500 Index at the time of the purchase. As of December 31,
1998, this included companies with capitalizations between approximately $445
million and $7.95 billion. The Portfolio expects to invest primarily in common
stocks and convertible
 
                                       7
<PAGE>


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.
   
Principal risks: The risks described after the following captions "Principal
Risks of Investing in the Fund:" "Equity investing;" "Investing in less mature
companies, smaller companies and companies with "special situations';" and
"Growth investing." Volatility may be indicative of risk. Please refer to the
discussion under "Performance and Volatility."     

About all the Index Portfolios

[SIDEBAR: The Index Portfolios]
 
Principal investment strategies applicable to all the Index Portfolios: Each
Index Portfolio has as an investment objective to equal the performance of a
particular index. Certain strategies common to all of the Index Portfolios are
discussed in the next paragraph below. Thereafter, the unique aspects of the
objective and principal strategies of each Index Portfolio are discussed.
   
In addition to securities of the type contained in its index, each Portfolio
also expects to invest, as a principal investment strategy, in securities index
futures contracts and/or related options 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, the portfolio manager 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. MetLife
monitors the tracking performance of the Portfolio through examination of the
"correlation coefficient." A perfect correlation would produce a coefficient of
1.00. The Portfolio will attempt to maintain a target correlation coefficient
of at least .95.     
 
Lehman Brothers Aggregate Bond Index Portfolio:

[SIDEBAR: Lehman Brothers Aggregate Bond Index Portfolio]

Investment objective: to equal the performance of the Lehman Brothers Aggregate
Bond Index.
 
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
the Portfolio will normally invest most of its assets in fixed income
securities included in the Lehman Brothers Aggregate Bond Index. This index is
comprised of the Lehman Brothers Government/Corporate Index, the Lehman
Brothers Mortgage-Backed Securities Index, the Lehman Brothers Asset-Backed
Securities Index and, effective July 1, 1999, the Lehman Brothers Commercial
Mortgage-Backed Securities Index. The Portfolio may continue to hold debt
securities 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. The types of fixed income securities included in the
Index are 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, and mortgage-backed securities. The Portfolio will invest in a
sampling of the bonds included in the Lehman Brothers Aggregate Bond
 
                                       8
<PAGE>
 

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.
   
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Investing in fixed income
securities;" "Prepayment risk;" "Zero coupon risks;" and "Index investing."
Volatility may be indicative of risk.     
 
MetLife Stock Index Portfolio:

[SIDEBAR: MetLife Stock Index Portfolio]

Investment objective: to equal the performance of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500 Index").
 
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
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.
 
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
larger companies;" and "Index investing." Volatility may be indicative of risk.
Please refer to the discussion under "Performance and Volatility."
 
Morgan Stanley EAFE Index Portfolio:

[SIDEBAR: Morgan Stanley EAFE Index Portfolio]
 
Investment objective: to equal the performance of the MSCI EAFE Index.
 
Principal investment strategies: In addition to the strategies outlined above
under "Principal investment strategies applicable to all the Index Portfolios,"
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 December 31, 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. The Portfolio will invest in a
statistically selected sample of the 1,100 stocks included in the MSCI EAFE
Index. The stocks purchased for the 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.
 
Principal risks: The risks described after the following captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
securities of foreign issuers;" and "Index investing." Volatility may be
indicative of risk.
 
Russell 2000 Index Portfolio:

[SIDEBAR: Russell 2000 Index Portfolio]
 
Investment objective: to equal the return of the Russell 2000 Index.
 
 
                                       9
<PAGE>
 
Principal investment strategies: In addition to the strategies outlined above
under "Principal Investment Strategies for the Index Portfolios," 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 approximately 2,000
small capitalization companies. As of December 31, 1998, the average stock
market capitalization of companies in the Russell 2000 Index was $56 million,
and the weighted average stock market capitalization was $88 million. 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.
   
Principal risks: The risks described after the following the captions under
"Principal Risks of Investing in the Fund:" "Equity investing;" "Investing in
less mature companies, smaller companies and companies with "special
situations';" and "Index investing." Volatility may be indicative of risk.     
 
                                       10
<PAGE>
 
Performance and Volatility
 
The following tables and charts are provided to illustrate the variability of
the investment returns that each Portfolio shown below has earned in the past.
 . Average annual total return measures a Portfolio's performance over time, and
  compares those returns to a representative index. Periods of 1, 5, and 10
  years (or since inception as applicable) are presented.
 . The graphs of year-by-year returns examine volatility by illustrating a
  Portfolio's historic highs and lows, as well as the consistency of returns.
 . In general, as reflected in this section, Portfolios with higher average
  annual total returns tend to be more volatile.
 . Return calculations do not reflect insurance product fees or other charges,
  and if included these charges would reduce each Portfolio's past performance.
  Also, past performance does not necessarily indicate how a particular
  Portfolio will perform in the future.
 
          [STATE STREET RESEARCH AGGRESSIVE GROWTH CHART APPEARS HERE]
 
 
                     State Street Research Aggressive Growth
 
                               Investment Results
                          Average Annual Total Returns
 
                                         As of December 31, 1998
                                 ------------------------------------
 
                                 1 Year        5 Years      Inception
                                 ------        -------      ---------
State Street Research
Aggressive Growth                13.69%         10.67%        15.94%
- ---------------------------------------------------------------------
S&P 500                          28.60%         24.05%        19.19%
 
 
                           [BAR GRAPH APPEARS HERE]
 
                                 89      30.94%
                                 90     -10.34
                                 91      66.41
                                 92      10.39
                                 93      22.63
                                 94      -1.88
                                 95      29.50
                                 96       7.72
                                 97       6.67
                                 98      13.69
 
During the 10-year period shown in the bar chart, the highest return for a
quarter was 30.6% (quarter ended March 31, 1991) and the lowest return for a
quarter was -22.3% (quarter ended Sept. 30, 1990).
 
               [STATE STREET RESEARCH GROWTH CHART APPEARS HERE]
 
 
                          State Street Research Growth
                               Investment Results
                          Average Annual Total Returns
 
                                            As of December 31, 1998
                                     -----------------------------------
                                     1 Year       5 Years       10 Years
                                     ------       -------       --------
 
State Street Research Growth         28.18%       20.96%          18.59%
- --------------------------------------------------------------------------
S&P 500 Index                        28.60%       24.05%          19.19%
 
 
                          [BAR CHART APPEARS HERE]
                                  89     36.64
                                  90     -8.50
                                  91     33.09
                                  92     11.56
                                  93     14.40
                                  94     -3.25
                                  95     33.14
                                  96     22.18
                                  97     28.36
                                  98     28.18
 
During the 10-year period shown in the bar chart, the highest return for a
quarter was 38.6% (quarter ended Dec. 31, 1998) and the lowest return for a
quarter was -22.6% (quarter ended Sept. 30, 1998).
 
 
                                       11
<PAGE>
 
            [STATE STREET RESEARCH MONEY MARKET CHART APPEARS HERE]
 
 
                       State Street Research Money Market
 
                               Investment Results
                          Average Annual Total Returns
 
                                             As of December 31, 1998
                                        --------------------------------
 
                                        1 Year       5 Years    10 Years
                                        ------       -------    --------
State Street Research
Money Market                            5.19%         4.97%       5.49%
- ------------------------------------------------------------------------
IBC's All Taxable 30 Day                5.03%         4.82%       5.24%
The seven day yield for this portfolio is 7.01% (simple yield ) and 7.26%
(effective yield) for the seven days ended December 31, 1998.
 
                           [BAR GRAPH APPEARS HERE]
 
                                  89     9.28
                                  90     8.23
                                  91     6.10
                                  92     3.73
                                  93     2.90
                                  94     3.85
                                  95     5.59
                                  96     5.01
                                  97     5.21
                                  98     5.19
 
During the 10-year period shown in the bar chart, the highest return for a
quarter was 2.4% (quarter ended June 30, 1989) and the lowest return for a
quarter was .7% (quarter ended Sept. 30, 1993).
 
               [STATE STREET RESEARCH INCOME CHART APPEARS HERE]
 
 
                          State Street Research Income
 
                               Investment Results
                          Average Annual Total Returns
 
                                            As of December 31, 1998
                                     -------------------------------------
 
                                     1 Year        5 Years        10 Years
                                     ------        -------        --------
 
State Street Research Income          9.40%          7.58%           9.64%
- --------------------------------------------------------------------------
Lehman Brothers Aggregate             8.69%          7.27%           9.26%
 
 
                           [BAR GRAPH APPEARS HERE]
 
 
                                  89     13.35
                                  90     10.03
                                  91     17.31
                                  92      6.91
                                  93     11.36
                                  94     -3.15
                                  95     19.55
                                  96      3.60
                                  97      9.83
                                  98      9.40
 
During the 10-year period shown in the bar chart, the highest return for a
quarter was 6.9% (quarter ended Sept. 31, 1991) and the lowest return for a
quarter was -2.5% (quarter ended March 31, 1994).
 
                 [STATE STREET DIVERSIFIED CHART APPEARS HERE]
 
 
                        State Street Research Diversified
 
                               Investment Results
                          Average Annual Total Returns
 
                                             As of December 31, 1998
                                     --------------------------------------
 
                                     1 Year         5 Years        10 Years
                                     ------         -------        --------
 
State Street Research
Diversified                           19.64%          15.26%          14.33%
- ---------------------------------------------------------------------------
S&P 500                               28.60%          24.05%          19.19%
- ---------------------------------------------------------------------------
Lehman Brothers Aggregate              8.69%           7.27%           9.26%
 
 
                           [BAR CHART APPEARS HERE]
                                 89      21.76
                                 90       0.00
                                 91      24.84
                                 92       9.48
                                 93      12.75
                                 94      -3.06
                                 95      27.03
                                 96      14.52
                                 97      20.58
                                 98      19.64
 
During the 10-year period shown in the bar chart, the highest return for a
quarter was 11.7% (quarter ended June 30, 1998) and the lowest return for a
quarter was -8.8% (quarter ended Sept. 30, 1990).
 
 
                                       12
<PAGE>
 
                  [SANTANDER INTERNATIONAL CHART APPEARS HERE]
 
 
                          Santander International Stock
 
                               Investment Results
                          Average Annual Total Returns
 
                                       As of December 31, 1998
                                ------------------------------------
 
                                1 Year       5 Years       Inception
                                ------       -------       ---------
Santander
International Research          22.56%         4.49%          6.55%
- --------------------------------------------------------------------
MSCI EAFE                       20.00%         9.19%          8.49%
 
 
                           [BAR CHART APPEARS HERE]
                                92       -10.21
                                93        47.76
                                94         5.08
                                95         0.84
                                96        -1.77
                                97        -2.34
                                98        22.56
 
 
During the period shown in the bar chart, the highest return for a
quarter was 19.4% (quarter ended March 31, 1993) and the lowest return for a
quarter was -12.8% (quarter ended Sept. 30, 1998).
 
                         Harris Oakmark Large Cap Value
 
     Since the Portfolio commenced operations effective November 9, 1998,
                no volatility or performance information is available.
 
                       [JANUS MID CAP CHART APPEARS HERE]

                                 Janus Mid Cap

                               Investment Results
                          Average Annual Total Returns
 
                                       As of December 31, 1998
                                ------------------------------------
 
                                1 Year                     Inception
                                ------                     ---------
Janus Mid Cap                   37.19%                       36.09%
- --------------------------------------------------------------------
S&P 400 MidCap                  19.11%                       26.19%

 
                           [BAR CHART APPEARS HERE]
                                97*       28.22
                                98        37.19

              *For the period March 3,1997 to December 31, 1997.

During the period shown in the bar chart, the highest return for a
quarter was 25.7% (quarter ended Dec. 31, 1998) and the lowest return for a
quarter was -14.5% (quarter ended Sept. 30, 1998).

                 [LOOMIS SAYLES HIGH YIELD CHART APPEARS HERE]
 
                               Investment Results
                          Average Annual Total Returns
 
                                       As of December 31, 1998
                                ------------------------------------
 
                                1 Year                     Inception
                                ------                     ---------
Loomis Sayles
High Yield Bond                 -7.51%                       -0.98%
- --------------------------------------------------------------------
Merrill Lynch High Yield         3.66%                        7.55%

                           [BAR CHART APPEARS HERE]
                                97*        6.18
                                98        -7.51

              *For the period March 3,1997 to December 31, 1997.

During the period shown in the bar chart, the highest return for a
quarter was 7.5% (quarter ended Sept. 30, 1997) and the lowest return for a
quarter was -15.8% (quarter ended Sept. 30, 1998).

                                       13
<PAGE>
 
                    Neuberger Berman Partners Mid Cap Value
 
     Since the Portfolio commenced operations effective November 9, 1998,
            no volatility or performance information is available.
 
                   [SCUDDER GLOBAL EQUITY CHART APPEARS HERE]
 
                             Scudder Global Equity


                               Investment Results
                          Average Annual Total Returns
 
                                        As of December 31, 1998
                                ---------------------------------------
                                                  
                                1 Year                        Inception
                                ------                        ---------
Scudder Global Equity           15.96%                          13.99%
- -----------------------------------------------------------------------
MSCI World                      24.80%                          20.96%
 
 
                           [BAR GRAPH APPEARS HERE]
                                97           9.62
                                98          17.96
 
During the period shown in the bar chart, the highest return for a quarter was 
12.5% (quarter ended Dec. 31, 1998) and the lowest return for a quarter was 
- -11.2% (quarter ended Sept. 30, 1998).

                         T. Rowe Price Large Cap Growth
 
     Since the Portfolio commenced operations effective November 9, 1998,
            no volatility or performance information is available.
 
              [T. ROWE PRICE SMALL CAP GROWTH CHART APPEARS HERE]
 
                                Investment Results
                          Average Annual Total Returns
 
                                        As of December 31, 1998
                                ---------------------------------------
                                                  
                                1 Year                        Inception
                                ------                        ---------
T. Rowe Price
Small Cap Growth                 3.45%                          11.91%
- -----------------------------------------------------------------------
Russell 2000 Growth              1.23%                           9.83%
 
 
                           [BAR GRAPH APPEARS HERE]
                                97*         18.81
                                98           3.45

              *For the period March 3, 1997 to December 31, 1997.
 
During the period shown in the bar chart, the highest return for a quarter was 
25.8% (quarter ended Dec. 31, 1998) and the lowest return for a quarter was 
- -21.8% (quarter ended Sept. 30, 1998).


                    Lehman Brothers(R) Aggregate Bond Index
 
     Since the Portfolio commenced operations effective November 9, 1998,
            no volatility or performance information is available.
 
                                       14
<PAGE>
 
 
                    [METLIFE STOCK INDEX CHART APPEARS HERE]
 
 
                               MetLife Stock Index
 
                               Investment Results
                          Average Annual Total Returns
 
                                        As of December 31, 1998
                                -------------------------------------------
 
                                1 Year          5 Years           Inception
                                ------          -------           ---------
MetLife
Stock Index                     28.23%            23.55%            18.88%
- ---------------------------------------------------------------------------
S&P 500                         28.60%            24.05%            19.39%
 
 
                           [BAR GRAPH APPEARS HERE]
                                91          29.76
                                92           7.44
                                93           9.54
                                94           1.18
                                95          36.87
                                96          22.66
                                97          32.19
                                98          28.23
 
 
During the 10-year period shown in the bar chart, the highest return for a
quarter was 21.3% (quarter ended Dec. 31, 1998) and the lowest return for a
quarter was -13.6% (quarter ended Sept. 30, 1990).
 
                          Morgan Stanley EAFE(R) Index
 
     Since the Portfolio commenced operations effective November 9, 1998,
            no volatility or performance information is available.
 
                             Russell 2000(R) Index
 
     Since the Portfolio commenced operations effective November 9, 1998,
            no volatility or performance information is available.
 
                                       15
<PAGE>
 

Principal Risks of Investing in the Fund

   
[SIDEBAR: Carefully review the principal risks associated with investing in the
Portfolios.]     

   
The following briefly describes the principal risks that are associated with
one or more of the Fund's Portfolios.     
 
Equity investing: Portfolios that invest in equities could lose money due to
sudden unpredictable drops in value and the potential for periods of lackluster
performance. Such adverse developments could result from general market or
economic conditions and/or developments at a particular company that the
portfolio managers do not foresee or circumstances that they do not evaluate
correctly. Historically, investments in equities have been more volatile than
many other investments.
 
This is a principal risk for the following Portfolios:
State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth, Harris
Oakmark Large Cap Value, State Street Research Growth, State Street Research
Diversified, Santander International Stock, Janus Mid Cap, Neuberger Berman
Partners Mid Cap Value, Scudder Global Equity, T. Rowe Price Large Cap Growth,
MetLife Stock Index, Morgan Stanley EAFE Index and Russell 2000 Index.
   
Investing in less mature companies, smaller companies and companies with
"special situations": These investments can be particularly sensitive to market
movements, because they may be thinly traded and their market prices tend to
reflect future expectations. Also, these companies often have limited product
lines, markets or financial resources and their management personnel may lack
depth and experience. (For an explanation of "special situations" see
"investment styles" in Appendix C.)     
 
This is a principal risk for the following Portfolios:
   
State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth, Harris
Oakmark Large Cap Value, State Street Research Growth, State Street Research
Diversified, Janus Mid Cap and Russell 2000 Index.     
   
Investing in larger companies: Larger more established companies may be unable
to respond quickly to new competitive challenges such as changes in technology
and consumer tastes. Many larger companies also may not be able to attain the
high growth rates of successful smaller companies, especially during extended
periods of economic expansion.     
 
This is a principal risk for the following Portfolios:
   
State Street Research Diversified, Harris Oakmark Large Cap Value, State Street
Research Growth, Santander International Stock, Scudder Global Equity, T. Rowe
Price Large Cap Growth, Janus Mid Cap and MetLife Stock Index.     
 
Investing in fixed income securities: These types of investments are subject to
loss in value if the market interest rates subsequently rise after purchase of
the obligation. This risk is greater for investments with longer remaining
durations. Another risk is that the issuer's perceived creditworthiness can
drop and cause the fixed income investment to lose value or the issuer could
default on interest or principal payments causing a loss in value. Lower rated
instruments, especially so called "junk bonds," involve greater risks due to
the financial health of the issuer and the economy generally and their market
prices can be more volatile.
 
 
                                       16
<PAGE>
 
This is a principal risk for the following Portfolios:
State Street Research Income, State Street Research Diversified, Lehman
Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond.
 
Prepayment risk: Prepayment risk is the risk that an issuer of a debt security
owned by a Portfolio repays the debt before it is due. This is most likely to
occur when interest rates have declined and the issuer can therefore refinance
the debt at a lower interest rate. A Portfolio that owns debt obligations that
are prepaid would generally have to reinvest the amount prepaid in lower
yielding instruments. Also, debt obligations that can be prepaid tend to
increase less in value when interest rates decline, and decrease more when
interest rates rise, than otherwise similar obligations that are not
prepayable.
 
This is a principal risk for the following Portfolios:
State Street Research Income, State Street Research Diversified, Lehman
Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond.
 
Zero coupon risks: "Zero coupon" securities are debt obligations that provide
for payment of interest at the maturity date, rather than over the life of the
instrument. The values of zero coupon securities tend to respond more to
changes in interest rates than do otherwise comparable debt obligations that
provide for periodic payment of interest.
 
This is a principal risk for the following Portfolios:
State Street Research Income, State Street Research Diversified, Lehman
Brothers Aggregate Bond Index and Loomis Sayles High Yield Bond.
 
Investing in securities of foreign issuers: Investment in securities that are
traded outside the U.S. have additional risks beyond those of investing in U.S.
securities. Foreign securities are frequently more volatile and less liquid
than their U.S. counterparts for reasons that may include unstable political
and economic climates, lack of standardized accounting practices, limited
information available to investors and smaller markets that are more sensitive
to trading activity. Also, changes in currency exchange rates have the
potential of reducing gains or creating losses. There also can be risks of
expropriation, currency controls, foreign taxation or withholding, and less
secure procedures for transacting business in securities. The risks of
investing in foreign securities are usually higher in emerging markets such as
most countries in Southeast Asia, Eastern Europe, Latin America and Africa.
 
This is a principal risk for the following Portfolios:
   
Santander International Stock, Scudder Global Equity, Morgan Stanley EAFE
Index, Janus Mid Cap, Loomis Sayles High Yield Bond, and T. Rowe Price Large
Cap Growth.     
 
Value investing: This investment approach has additional risk associated with
it because the portfolio manager's judgement that a particular security is
undervalued in relation to the company's fundamental economic values may prove
incorrect.
 
This is a principal risk for the following Portfolios:
Harris Oakmark Large Cap Value, State Street Research Growth, State Street
Research Diversified, Neuberger Berman Partners Mid Cap Value and Scudder
Global Equity.
 
 
                                       17
<PAGE>
 

Growth investing: This investment approach has additional risk associated with
it due to the volatility of growth stocks. Growth companies usually invest a
high portion of earnings in their businesses, and may lack the dividends of
value stocks that can cushion prices in a falling market. Also, earnings
disappointments often lead to sharply falling prices because investors buy
growth stocks in anticipation of superior earnings growth.
 
This is a principal risk for the following Portfolios:
State Street Research Growth, State Street Research Aggressive Growth, State
Street Research Diversified, T. Rowe Price Small Cap Growth, Santander
International Stock, Janus Mid Cap, Scudder Global Equity and T. Rowe Price
Large Cap Growth.
 
Index investing: Unlike actively managed portfolios, portfolios that attempt to
match the return of an index generally will not use any defensive strategies.
You, therefore, will bear the risk of adverse market conditions with respect to
the market segment that the index seeks to match. In addition, transaction
costs, other Portfolio or Fund expenses, brief delays that occur until a
Portfolio can invest cash it receives and other tracking errors may result in a
Portfolio's return being lower than the return of the applicable index.
 
This is a principal risk for the following Portfolios:
MetLife Stock Index, Morgan Stanley EAFE Index, Russell 2000 Index and Lehman
Brothers Aggregate Bond Index.
 
Investing in Medium Sized Companies: These companies present additional risks
because their earnings are less predictable, their share prices more volatile,
and their securities less liquid than larger, more established companies.
 
This is a principal risk for the following Portfolios:
   
Janus Mid Cap and the Neuberger Berman Partners Mid Cap Value.     
 
Defensive Strategies
 
Except with respect to the index Portfolios, portfolio managers generally may
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 may 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. Adopting a defensive position, however, can mean that
a Portfolio would be unable to meet its investment objective.

About The Investment Managers

[SIDEBAR: About MetLife]
 
Metropolitan Life Insurance Company ("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.) In addition, MetLife is
the Fund's 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, 1998, it had total
 
                                       18
<PAGE>
 
 
life insurance in force of approximately $1.7 trillion and total assets under
management of approximately $359 billion. MetLife is the parent of Metropolitan
Tower Life Insurance Company ("Metropolitan Tower").

[SIDEBAR: Portfolio management of 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
December 31, 1998, State Street Research had investment arrangements in effect
for about $54 billion in assets.     
 
The following gives you information on the portfolio managers for certain of
the State Street Research Portfolios:
 
State Street Research Aggressive Growth Portfolio:
 
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.
 
State Street Research Diversified Portfolio:
 
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). Assets are allocated among the portions of the Portfolio based on
the input of State Street Research's Asset Allocation Committee.
 
State Street Research Growth Portfolio:
 
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 the past 2 years. During the past five years, he was also a
portfolio manager with Phoenix Investment Counsel, Inc.
 
State Street Research Income Portfolio:
 
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. During the past five years, Mr. Peters has also served as a Vice
President at State Street Research.

[SIDEBAR: Portfolio management of the Santander International Stock Portfolio]
 
Santander Global Advisors, Inc. ("Santander") is the sub-investment manager of
the Santander International Stock Portfolio since November 9, 1998. 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 registered with the SEC, which you should consider as an
additional risk factor associated with investing in the Portfolio.
Nevertheless, as of December 31, 1998, it did have investment arrangements in
effect for in excess of $1.5 billion in assets.
 
 
                                       19
<PAGE>

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.

[SIDEBAR: Portfolio management of 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-owed 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 December 31, 1998, Harris had investment arrangements in
effect for about $17 billion in assets.
 
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 at Harris and, since June 1997,
Vice President of the Investment Advisory Department of Harris. Mr. Sanborn and
Mr. Loeb have been with Harris since 1988 and 1989, respectively.
 
[SIDEBAR: Portfolio management of 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 December 31, 1998, Janus managed
approximately $108 billion in assets.
 
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.
 
[SIDEBAR: Portfolio management of 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 December 31, 1998,
Loomis Sayles had investment arrangements in effect for about $71 billion in
assets.
 
Daniel J. Fuss, Executive Vice President, Director and Managing Partner, and
Kathleen C. Gaffney, Vice-President, have held their current positions
 
                                       20
<PAGE>

   
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.     
 
[SIDEBAR: Portfolio management of the Neuberger Berman Partners Mid Cap Value
Portfolio]

Neuberger Berman Management Inc. ("Neuberger Berman"), is the sub-investment
manager for the Neuberger Berman Partners Mid Cap Value Portfolio. Neuberger
Berman and its predecessor firms and affiliates have been managing money since
1939 and 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 December 31, 1998 of about $55.4 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.
 
[SIDEBAR: Portfolio management of 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
December 31, 1998, Scudder had investment management arrangements in excess of
$280 billion in asset globally.
 
William E. Holtzer, Managing Director, Diego Espinosa, Senior Vice President
and Nicholas Bratt, Director of the Global Equity Group have been with Scudder
since 1980, 1996 and 1976, respectively. Messrs. Holzer, Espinosa and Bratt are
co-portfolio managers for the Portfolio. Messrs. Holzer and Espinosa have been
primarily responsible for its day-to-day management. 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.
Over the past five years, Mr. Espinosa was 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.
Mr. Bratt is responsible for Scudder's Equity Activities and is president of
Scudder's open and closed end equity funds that invest overseas.
 
[SIDEBAR: Portfolio management of 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 December 31, 1998, T. Rowe Price and
its affiliates had investment management arrangements in effect for about $148
billion in assets. The following gives you information on the portfolio
managers for the T. Rowe Price Portfolios:
 
                                       21
<PAGE>

 
T. Rowe Price Large Cap Growth Portfolio:
 
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 the
Investment Advisory Committee manage other mutual funds, including the T. Rowe
Price Growth Stock Fund.
 
T. Rowe Price Small Cap Growth Portfolio:
 
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. Mr. Whitney and the Investment Advisory Committee manage other mutual
funds including T. Rowe Price Diversified Small Cap Growth Fund.
 
[SIDEBAR: Investment Management Fees]

The Fund pays MetLife monthly for its investment management services. MetLife
pays each sub-investment manager for their investment management services.
There is no separate charge to the Fund for the sub-investment management
services.
 
For the Portfolios indicated below, the following table shows the investment
management and sub-investment management fees for the year ending December 31,
1998 as an annual percentage of the average daily net assets of each Portfolio.
 
<TABLE>
<CAPTION>
                                                                  % of Average
                                                                Daily Net Assets
                                             % of Average           Paid by
                                           Daily Net Assets        Investment
                                               Paid to             Manager to
                                              Investment         Sub-Investment
Portfolio                                      Manager              Manager
- --------------------------------------------------------------------------------
<S>                                        <C>                  <C>
State Street Research Money
Market                                           .25%                 .25%
- --------------------------------------------------------------------------------
MetLife Stock Index                              .25%                  N/A
- --------------------------------------------------------------------------------
State Street Research Growth                     .49%                 .34%
- --------------------------------------------------------------------------------
State Street Research Income                     .33%                 .25%
- --------------------------------------------------------------------------------
State Street Research Diversified                .44%                 .28%
- --------------------------------------------------------------------------------
State Street Research Aggressive Growth          .70%                 .50%
- --------------------------------------------------------------------------------
Loomis Sayles High Yield Bond                    .70%                 .50%
- --------------------------------------------------------------------------------
Santander International Stock/1/                 .75%                 .55%
- --------------------------------------------------------------------------------
T. Rowe Price Small Cap Growth                   .53%                 .33%
- --------------------------------------------------------------------------------
Janus Mid Cap                                    .72%                 .51%
- --------------------------------------------------------------------------------
Scudder Global Equity                            .74%                 .53%
</TABLE>
 
 
                                       22
<PAGE>
 

The Portfolios indicated in the following table have been in operation for less
than one year. The following shows the investment management and sub-investment
management fee schedules as an annual percentage of the average daily net
assets of each Portfolio.
 
<TABLE>
<CAPTION>
                                                                        % per
                                                             % per      annum
                                                             annum     Paid to
                                              Average       paid to      Sub-
                                             Daily Net     Investment Investment
Portfolio                                     Assets        Manager    Manager
- --------------------------------------------------------------------------------
<S>                                      <C>               <C>        <C>
Lehman Brothers Aggregate
Bond Index                               All assets          .25%         N/A
- --------------------------------------------------------------------------------
Russell 2000 Index                       All assets          .25%         N/A
- --------------------------------------------------------------------------------
Morgan Stanley EAFE Index                All assets          .30%         N/A
- --------------------------------------------------------------------------------
                                         1st $50 million     .70%        .50%
T. Rowe Price Large Cap Growth           over $50 million    .60%        .40%
- --------------------------------------------------------------------------------
                                         1st $250 million    .75%        .65%
Harris Oakmark Large Cap Value           Over $250 million   .70%        .60%
- --------------------------------------------------------------------------------
Neuberger Berman Partners Mid Cap Value  1st $100 million    .70%        .50%
                                         next $250 million   .675%      .475%
                                         next $500 million   .65%        .45%
                                         next $750 million   .625%      .425%
                                         over $1.6 billion   .60%        .40%
</TABLE>
- --------
/1/For the year ending December 31, 1998: (a) State Street Research was sub-
investment manager until November 9, 1998 and received .47% of the average
daily net assets through that date; (b) GFM International Investors, Inc.
("GFM") was sub-sub investment manager until November 9, 1998 and received .34%
of the average daily net assets through that date; and (c) beginning November
9, 1998, Santander replaced State Street Research as sub-investment manager and
received .55% of the average daily net assets from that date through December
31, 1998. MetLife paid all sub-investment management fees to State Street
Research and Santander. State Street Research paid all sub-sub investment
management fees to GFM.

[SIDEBAR: Fund Expenses]
 
The Fund is responsible for paying its own expenses. However, MetLife
voluntarily pays expenses of certain Portfolios in excess of a certain
percentage of net assets until the earlier of either total net assets of the
Portfolio reaching $100 million or a certain date as follows:
 
<TABLE>
<CAPTION>
                                                  SUBSIDIZED
                                                 EXPENSES* 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>
- --------
*Expenses for this purpose 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).
 
MetLife also 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. These subsidies and other prior expense reimbursement arrangements can
increase the performance of the Portfolios. MetLife also has the right to stop
these payments at any time upon notice to the Board of Directors and to Fund
shareholders.
 
 
                                       23
<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 are set forth in the Prospectus under the Financial
Highlights.

Dividends, Distributions and Taxes

[SIDEBAR: Dividends are reinvested.]
 
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 reinvested in
additional full and partial shares of the Portfolio as of the dividend payment
date.
 
The Fund and its Portfolios intend to comply with special diversification and
other tax law requirements 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
premiums to Fund shares are discussed in the prospectus for the Contracts that
is attached at the front of this Prospectus.
 
General Information about the Fund and its Purpose
 
The Fund 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 offers its shares to MetLife and its affiliated insurance companies
("Insurance Companies"), including 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.
 
 
                                       24
<PAGE>
 
   
[SIDEBAR: Contract owners may allocate the amounts under the Contracts for
ultimate investment in the Portfolios.]    

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.
 
Sale and Redemption of Shares

[SIDEBAR: Fund shares are available only through variable life and variable
annuity contracts.]
 
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.
 
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, or when
the Board of Directors determines that customary pricing procedures would
result in an unreliable valuation, they are valued at fair value as determined
by the Board of Directors. Such a fair value procedure could be followed, for
example, if (1) an event occurs after the time of the most recent available
market quotations that is likely to have affected the value of those securities
or (2) such market quotations for other reasons do
 
                                       25
<PAGE>
 
not reflect information material to the value of those securities. The
possibility of fair value pricing means that changes in a Portfolio's net asset
value may not always correspond to changes in quoted prices of a Portfolio's
investments.

   
[SIDEBAR: A Portfolio's net asset value per share is determined once daily.]    
 
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.
 
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 and otherwise adversely
impact the companies, organizations, and markets in which the Portfolios may
invest and may reduce a Portfolio's returns. 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.
 
Financial Highlights
 
The financial highlights table is intended to help you understand each
Portfolio's financial performance for the past 5 years, or since inception of
the Portfolio if shorter. Certain information reflects financial results for a
single share of the Portfolio. The total returns in the table represent the
rate that a shareholder would have earned or lost on an investment in a
Portfolio (assuming reinvestment of all dividends and distributions). This
information has been audited by Deloitte & Touche LLP, whose report, along with
the Fund's financial statements, are included in the annual report, which is
available upon request.
 
                                       26
<PAGE>
 
                             FINANCIAL HIGHLIGHTS
 
The table below has been audited by Deloitte & Touche LLP, independent auditors,
as stated in their report appearing with the full financial statements and notes
thereto.  For further information about the performance of the Portfolios, see
the Fund's December 31, 1998 Management Discussion and Analysis which appears in
the Fund's annual report, which is incorporated by reference into the Statement
of Additional Information.
 
<TABLE>
<CAPTION>
         Selected Data For a Share of Capital                      STATE STREET RESEARCH GROWTH PORTFOLIO
                                                ------------------------------------------------------------------------------
         Stock Outstanding Throughout Period:                             YEAR ENDED DECEMBER 31,
                                                ------------------------------------------------------------------------------
                                                   1998             1997             1996             1995            1994
                                                ------------     ------------     ------------     ------------     ----------
 
<S>                                                 <C>              <C>              <C>              <C>            <C>   
         ---------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: Beginning of period..     $31.92           $30.51           $27.56           $21.81         $23.27
         ---------------------------------------------------------------------------------------------------------------------
         Investment Operations:
          Net investment income................       0.36             0.44             0.36             0.35           0.30
          Net realized and unrealized                 
           gain/(loss).........................       8.52             7.72             5.78             6.83          (1.06)
                                                ----------       ----------       ----------       ----------       --------
           Total From Investment Operations....       8.88             8.16             6.14             7.18          (0.76)
                                                ----------       ----------       ----------       ----------       --------
 
         Less Distributions:
          Dividends from net investment income.      (0.36)           (0.44)           (0.36)           (0.35)         (0.30)
          Distributions from net realized            
           capital gains.......................      (3.34)           (6.31)           (2.83)           (1.08)         (0.40)
                                                ----------       ----------       ----------       ----------       --------
           Total Distributions.................      (3.70)           (6.75)           (3.19)           (1.43)         (0.70)
                                                ----------       ----------       ----------       ----------       --------
         ---------------------------------------------------------------------------------------------------------------------      

         NET ASSET VALUE: End of period........     $37.10           $31.92           $30.51           $27.56         $21.81
         ---------------------------------------------------------------------------------------------------------------------     
          Total return.........................      28.18%           28.36%           22.18%           33.14%         (3.25)%
          Net assets at end of period (000's).. $3,112,081       $2,349,062       $1,597,728       $1,094,751       $746,433
 
         Supplemental Data/Significant Ratios:
          Operating expenses to average net
           assets..............................       0.53%            0.43%            0.29%            0.31%          0.32%
          Net investment income to average net
           assets..............................       1.04%            1.37%            1.29%            1.46%          1.40%
          Portfolio turnover (1)...............      74.29%           82.81%           93.05%           45.52%         57.27%
</TABLE>
 
<TABLE>
<CAPTION>
         Selected Data For a Share of Capital                           STATE STREET RESEARCH INCOME PORTFOLIO
                                                         ----------------------------------------------------------------------
         Stock Outstanding Throughout Period:                                  YEAR ENDED DECEMBER 31,
                                                         ----------------------------------------------------------------------
                                                           1998           1997           1996           1995           1994
                                                         ----------     ----------     ----------     ----------     ----------
 
<S>                                                        <C>            <C>            <C>            <C>            <C>   
         ---------------------------------------------------------------------------------------------------------------------     
         NET ASSET VALUE: Beginning of period............  $12.66         $12.36         $12.73         $11.32         $12.59
         ---------------------------------------------------------------------------------------------------------------------      
         Investment Operations:
          Net investment income..........................    0.75           0.83           0.82           0.83           0.91
          Net realized and unrealized gain/(loss)........    0.42           0.38          (0.36)          1.38          (1.31)
                                                         --------       --------       --------       --------       --------
           Total From Investment Operations..............    1.17           1.21           0.46           2.21          (0.40)
                                                         --------       --------       --------       --------       --------
         Less Distributions:
          Dividends from net investment income...........   (0.80)         (0.87)         (0.81)         (0.80)         (0.87)
          Distributions from net realized capital gains..   (0.25)         (0.04)         (0.02)            --             --
                                                         --------       --------       --------       --------       --------
           Total Distributions...........................   (1.05)         (0.91)         (0.83)         (0.80)         (0.87)
                                                         --------       --------       --------       --------       --------
         ---------------------------------------------------------------------------------------------------------------------      
          NET ASSET VALUE: End of period.................   $12.78         $12.66         $12.36         $12.73         $11.32
         ---------------------------------------------------------------------------------------------------------------------     
          Total return.................................       9.40%          9.83%          3.60%         19.55%         (3.15)%
          Net assets at end of period (000's)..........   $526,854       $412,191       $383,395       $349,913       $275,659
         Supplemental Data/Significant Ratios:
          Operating expenses to average net assets.....       0.39%          0.38%          0.32%          0.34%          0.35%
          Net investment income to average net assets..       6.13%          6.57%          6.64%          7.01%          7.02%
          Portfolio turnover (1).......................     123.60%        121.92%         92.90%        102.88%        141.15%
</TABLE>
 
- ---------------------------------
Footnotes Appear on Page 31.
 
                                       27
 
<PAGE>
 
                             FINANCIAL HIGHLIGHTS
 
 
<TABLE>
<CAPTION>

         Selected Data For a Share of Capital                    STATE STREET RESEARCH MONEY MARKET PORTFOLIO
                                                 ------------------------------------------------------------------------------
         Stock Outstanding Throughout Period:                              YEAR ENDED DECEMBER 31,
                                                 ------------------------------------------------------------------------------
                                                    1998             1997             1996             1995            1994
                                                 ------------     ------------     ------------     ------------     ----------
<S>                                                  <C>              <C>              <C>              <C>            <C>   
         ----------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: Beginning of period...     $10.38           $10.44           $10.45           $10.48         $10.49
         ----------------------------------------------------------------------------------------------------------------------
         Investment Operations:
          Net investment income.................       0.54             0.54             0.53             0.59           0.40
                                                    -------          -------          -------          -------        -------
           Total From Investment Operations.....       0.54             0.54             0.53             0.59           0.40   
                                                    -------          -------          -------          -------        -------
         Less Distributions:
          Dividends from net investment income..      (0.57)           (0.60)           (0.54)           (0.62)         (0.41)
                                                    -------          -------          -------          -------        -------
           Total Distributions..................      (0.57)           (0.60)           (0.54)           (0.62)         (0.41)
                                                    -------          -------          -------          -------        -------
         ----------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: End of period.........     $10.35           $10.38           $10.44           $10.45         $10.48  
         ----------------------------------------------------------------------------------------------------------------------
          Total return..........................       5.19%            5.21%            5.01%            5.59%          3.85%
          Net assets at end of period (000's)...    $41,185          $39,480          $41,637          $40,456        $39,961

         Supplemental Data/Significant Ratios:
          Operating expenses to average
           net assets...........................       0.48%            0.49%            0.43%            0.49%          0.44%
          Net investment income to average 
           net assets...........................       5.11%            5.08%            4.92%            5.39%          3.76%
</TABLE>
 
  
<TABLE>
<CAPTION>
         Selected Data For a Share of Capital                    STATE STREET RESEARCH DIVERSIFIED PORTFOLIO
                                                 ------------------------------------------------------------------------------
         Stock Outstanding Throughout Period:                              YEAR ENDED DECEMBER 31,
                                                 ------------------------------------------------------------------------------
                                                    1998             1997             1996             1995            1994
                                                 ------------     ------------     ------------     ------------     ----------
<S>                                                  <C>              <C>              <C>              <C>            <C>   
         ----------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: Beginning of period...     $16.98           $16.67           $15.95           $13.40         $14.41
         ----------------------------------------------------------------------------------------------------------------------
         Investment Operations:
          Net investment income.................       0.60             0.60             0.55             0.59           0.51
          Net realized and unrealized                  
           gain/(loss)..........................       2.70             2.71             1.77             3.02          (0.95)
                                                 ----------       ----------       ----------       ----------       --------
          Total From Investment Operations......       3.30             3.31             2.32             3.61          (0.44)
                                                 ----------       ----------       ----------       ----------       --------
 
         Less Distributions:
          Dividends from net investment income..      (0.57)           (0.60)           (0.53)           (0.58)         (0.50)
          Distributions from net realized             
           capital gains........................      (1.32)           (2.40)           (1.07)           (0.48)         (0.07)
                                                 ----------       ----------       ----------       ----------       --------
          Total Distributions...................      (1.89)           (3.00)           (1.60)           (1.06)         (0.57)
                                                 ----------       ----------       ----------       ----------       --------
         ----------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: End of period.........     $18.39           $16.98           $16.67           $15.95         $13.40
         ----------------------------------------------------------------------------------------------------------------------
          Total return..........................      19.64%           20.58%           14.52%           27.03%         (3.06)%
          Net assets at end of period (000's)... $2,656,987       $1,982,232       $1,448,841       $1,114,834       $892,826
 
         Supplemental Data/Significant Ratios:
          Operating expenses to average net
           assets...............................       0.48%            0.40%            0.29%            0.31%          0.32%
          Net investment income to average net
           assets...............................       3.39%            3.50%            3.38%            3.92%          3.66%
          Portfolio turnover (1)................     105.89%          114.79%           91.07%           79.29%         96.49%
</TABLE>
 
- --------------------------------
Footnotes Appear on Page 31.
 
 
 
                                       28
<PAGE>
 
                             FINANCIAL HIGHLIGHTS
 
 
<TABLE>
<CAPTION>
         Selected Data For a Share of Capital                 STATE STREET RESEARCH AGGRESSIVE GROWTH PORTFOLIO
         Stock Outstanding Throughout Period:     ----------------------------------------------------------------------------
                                                                           YEAR ENDED DECEMBER 31,
                                                  ----------------------------------------------------------------------------
                                                     1998             1997             1996            1995           1994
                                                  ------------     ------------     ------------     ----------     ----------
         <S>                                         <C>              <C>              <C>             <C>            <C>       
         --------------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: Beginning of period....     $27.61           $27.11           $25.87         $22.05         $22.54
         --------------------------------------------------------------------------------------------------------------------------
         Investment Operations:
          Net investment income/(loss)...........      (0.06)           (0.03)           (0.02)         (0.01)          0.05 
           Net realized and unrealized                                                                                       
           gain/(loss)...........................       3.75             1.67             2.01           6.50          (0.48) 
                                                  ----------       ----------       ----------       --------       --------
           Total From Investment Operations......       3.69             1.64             1.99           6.49          (0.43)
                                                  ----------       ----------       ----------       --------       --------
 
         Less Distributions:
          Dividends from net investment income...         --               --               --             --          (0.05)   
          Distributions from net realized                                                                                      
           capital gains.........................      (1.77)           (1.14)           (0.75)         (2.67)         (0.01) 
                                                  ----------       ----------       ----------       --------       --------
           Total Distributions...................      (1.77)           (1.14)           (0.75)         (2.67)         (0.06)
                                                  ----------       ----------       ----------       --------       --------
         ---------------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: End of period..........     $29.53           $27.61           $27.11         $25.87         $22.05
         --------------------------------------------------------------------------------------------------------------------------
          Total return...........................      13.69%            6.67%            7.72%         29.50%         (1.88)%
          Net assets at end of period (000's).... $1,431,337       $1,391,956       $1,321,849       $958,915       $590,047
 
         Supplemental Data/Significant Ratios:
          Operating expenses to average net
           assets................................       0.75%            0.81%            0.79%          0.81%          0.82%
          Net investment income to average net
           assets................................      (0.20)%          (0.10)%          (0.11)%        (0.06)%         0.24%
          Portfolio turnover (1).................      97.39%          219.08%          221.23%        255.83%        186.52%
</TABLE>
 
<TABLE>
<CAPTION>
         Selected Data For a Share of Capital                           METLIFE STOCK INDEX PORTFOLIO
         Stock Outstanding Throughout Period:     ----------------------------------------------------------------------------
                                                                            YEAR ENDED DECEMBER 31,
                                                  ----------------------------------------------------------------------------
                                                     1998             1997             1996            1995           1994
                                                  ------------     ------------     ------------     ----------     ----------
         <S>                                          <C>              <C>              <C>            <C>            <C>   
         --------------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: Beginning of period....     $28.78           $22.23           $18.56         $13.87         $14.25
         --------------------------------------------------------------------------------------------------------------------------
         Investment Operations:
          Net investment income..................       0.37             0.34             0.33           0.32           0.33  
           Net realized and unrealized                                                                                        
           gain/(loss)...........................       7.75             6.79             3.88           4.79          (0.17) 
                                                  ----------       ----------       ----------       --------       --------
           Total From Investment Operations......       8.12             7.13             4.21           5.11           0.16
                                                  ----------       ----------       ----------       --------       --------
 
         Less Distributions:
          Dividends from net investment income...      (0.36)           (0.34)           (0.33)         (0.32)         (0.32) 
          Distributions from net realized                                                                                     
           capital gains.........................      (1.16)           (0.24)           (0.21)         (0.10)         (0.22) 
                                                  ----------       ----------       ----------       --------       --------
           Total Distributions...................      (1.52)           (0.58)           (0.54)         (0.42)         (0.54)
                                                  ----------       ----------       ----------       --------       --------
         --------------------------------------------------------------------------------------------------------------------------
         NET ASSET VALUE: End of period..........     $35.38           $28.78           $22.23         $18.56         $13.87
         --------------------------------------------------------------------------------------------------------------------------
          Total return...........................      28.23%           32.19%           22.66%         36.87%          1.18%
          Net assets at end of period (000's).... $3,111,919       $2,020,480       $1,122,297       $635,823       $363,001
 
        Supplemental Data/Significant Ratios:
          Operating expenses to average net
           assets................................       0.30%            0.33%            0.30%          0.32%          0.33%
          Net investment income to average net
           assets................................       1.21%            1.47%            1.91%          2.22%          2.51%
          Portfolio turnover (1).................      15.07%           10.69%           11.48%          6.35%          6.66%
</TABLE>
 
- --------------------------------
Footnotes Appear on Page 31.
 
 
                                       29
<PAGE>
 
                             FINANCIAL HIGHLIGHTS
 
 
<TABLE>
<CAPTION>
         Selected Data For a Share of Capital                          SANTANDER INTERNATIONAL STOCK PORTFOLIO
         Stock Outstanding Throughout Period:            ----------------------------------------------------------------------
                                                                               YEAR ENDED DECEMBER 31,
                                                         ----------------------------------------------------------------------
                                                           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..........................    0.13           0.10           0.07           0.03           0.08
          Net realized and unrealized gain/(loss)........    2.50          (0.38)         (0.28)          0.07           0.54
                                                         --------       --------       --------       --------       --------
           Total From Investment Operations..............    2.63          (0.28)         (0.21)          0.10           0.62
                                                         --------       --------       --------       --------       --------
 
         Less Distributions:
          Dividends from net investment income...........   (0.16)            --             --          (0.04)            --
          Distributions from net realized capital gains..      --             --          (0.13)         (0.07)         (0.65)
                                                         --------       --------       --------       --------       --------
           Total Distributions...........................   (0.16)            --          (0.13)         (0.11)         (0.65)
                                                         --------       --------       --------       --------       --------
         ---------------------------------------------------------------------------------------------------------------------- 
         NET ASSET VALUE: End of period..................  $14.14         $11.67         $11.95         $12.29         $12.30
         ----------------------------------------------------------------------------------------------------------------------
          Total return...................................   22.56%        (2.34)%        (1.77)%          0.84%          5.08%
          Net assets at end of period (000's)............$297,381       $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%
          Net investment income to average net assets....    0.87%          0.77%          0.56%          0.21%          0.80%
          Portfolio turnover (1).........................  156.32%        182.11%        116.67%         86.24%         65.84%
</TABLE>
 
<TABLE>
<CAPTION>
                                                               JANUS                                            SCUDDER GLOBAL
                         LOOMIS SAYLES HIGH YIELD              MID CAP                 T. ROWE PRICE SMALL          EQUITY
                              BOND PORTFOLIO                  PORTFOLIO                CAP GROWTH PORTFOLIO        PORTFOLIO
                        --------------------------     -------------------------     ------------------------     ------------------
Selected Data For a                                               YEAR ENDED DECEMBER 31,
Share of Capital        ------------------------------------------------------------------------------------------------------------
Stock Outstanding          1998           1997/A/         1998          1997/A/         1998         1997/A/         1998
Throughout Period:      ----------      ----------     ----------     ----------     ----------     ---------     ----------        
<S>                     <C>             <C>            <C>            <C>            <C>            <C>           <C>     
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:          
Beginning of period.....  $10.14          $10.00         $12.77         $10.00         $11.88        $10.00          10.85 
- ---------------------------------------------------------------------------------------------------------------------------------
Investment Operations:
 Net investment
  income/(loss).........    0.88            0.35          (0.02)          0.01             --            --           0.16 
 Net realized and                                                                                                          
  unrealized gain/(loss)   (1.65)           0.26           4.77           2.81           0.41          1.88           1.57 
                        --------        --------       --------       --------       --------       -------       --------
  Total From Investment                                                                                                    
   Operations...........   (0.77)           0.61           4.75           2.82           0.41          1.88           1.73 
                        --------        --------       --------       --------       --------       -------       --------
 
Less Distributions:
 Dividends from net
  investment income.....   (0.89)          (0.35)            --          (0.01)            --            --  /B/     (0.16)
 Distributions from
  net realized capital      
  gains.................   (0.09)          (0.12)         (0.08)         (0.04)            --            --          (0.04) 
                        --------        --------       --------       --------       --------       -------       --------
  Total Distributions...   (0.98)          (0.47)         (0.08)         (0.05)            --            --          (0.20)
                        --------        --------       --------       --------       --------       -------       --------
- --------------------------------------------------------------------------------------------------------------------------------- 
NET ASSET VALUE: End       
 of period..............   $8.39          $10.14         $17.44         $12.77          12.29        $11.88         $12.38
- ---------------------------------------------------------------------------------------------------------------------------------
 Total return...........   (7.51)%          6.18%         37.19%         28.22%          3.45%        18.81%         15.96%
                                                                                                    
 Net assets at end of
  period (000's)........ $42,403         $27,804       $371,504       $103,852       $189,132        $94,020      $113,715
 
Supplemental Data/
- -------------------
Significant Ratios:
- -------------------

 Net expenses to
  average net assets......  0.87%           0.83%          0.81%          0.85%          0.67%         0.67%          0.96%

 Operating expenses to
  average net assets    
  before voluntary      
  expense reimbursements..  1.05%           1.35%           N/A           0.99%           N/A          0.86%          1.01%

 Net investment income
  to average net assets... 10.41%           7.04%         (0.22)%         0.10%         (0.02)%        0.01%          1.61%

 Net investment income
  to average net assets
  before voluntary     
  expense reimbursements.. 10.23%           6.52%           N/A          (0.04)%          N/A         (0.19)%         1.56% 
                                                                                                                              
 Portfolio turnover
  (1)..................... 46.02%          39.26%        106.66%         74.70%         37.93%        13.45%         50.98%
<CAPTION> 
Selected Data For a
Share of Capital
                              
Stock Outstanding        1997
Throughout Period:        /A/
                        ---------
<S>                      <C>  
 
NET ASSET VALUE:        
Beginning of period...  $10.00
- --------------------------------------
 
Investment Operations:
 Net investment         
  income/(loss).......     0.10  
 Net realized and                
  unrealized gain/(loss)   0.86  
                        -------
 Total From Investment
  Operations..........     0.96  
                        ------- 
 
 
Less Distributions:
 Dividends from net     
  investment income...    (0.10)
 Distributions from              
  net realized capital  
  gains...............    (0.01)          
                        ------- 
                                  
 Total Distributions..    (0.11)
                        -------  
                        
 
NET ASSET VALUE: End            
 of period............   $10.85 
- --------------------------------------
 Total return.........     9.62%
 Net assets at end of 
  period (000's)......  $60,712
 
 
Supplemental
- ------------
Data/Significant
- ----------------
Ratios:
- -------
 Net expenses to          
  average net assets.....  0.78%*
 Operating expenses to           
  average net assets              
  before voluntary               
  expense reimbursements.  1.14%* 

 Net investment income           
  to average net assets..  1.66%*

 Net investment income           
  to average net assets 
  before voluntary               
  expense reimbursements.  1.30%*          
                                 
 Portfolio turnover              
  (1).................... 36.04%  
</TABLE>
 
- -----------------------------------------
/A/ For the period March 3, 1997 (commencement of operations) to December 31,
1997.
/B/ Less than $.005.
Footnotes Appear on Page 31.
 
                                       30
 
<PAGE>
 
                              FINANCIAL HIGHLIGHTS
 
 
<TABLE>
<CAPTION>
 
 
                                                     NEUBERGER                              LEHMAN         
                                    HARRIS            BERMAN           T. ROWE PRICE       BROTHERS           MORGAN     
                                 OAKMARK LARGE      PARTNERS MID         LARGE CAP         AGGREGATE       STANLEY EAFE 
Selected Data For a               CAP VALUE          CAP VALUE            GROWTH           BOND INDEX         INDEX    
Share of Capital                  PORTFOLIO          PORTFOLIO           PORTFOLIO         PORTFOLIO         PORTFOLIO   
Stock Outstanding              ---------------     --------------     ---------------     ------------     --------------
Throughout Period:                    FOR THE PERIOD NOVEMBER 9, 1998 (COMMENCEMENT OF OPERATIONS) TO DECEMBER 31,
                               ------------------------------------------------------------------------------------------
                                    1998                1998               1998               1998              1998
                               ---------------     --------------     ---------------     ------------     --------------
<S>                            <C>                 <C>                <C>                 <C>              <C>   
- -----------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE:        
Beginning of period                   $10.00             $10.00              $10.00           $10.00             $10.00
- -----------------------------------------------------------------------------------------------------------------------
Investment Operations:  
                        
 Net investment income.........         0.03               0.03                0.01             0.07               0.01
                        
 Net realized and       
 unrealized gain/(loss)........        (0.30)              0.71                1.02             0.07               0.80
                               -------------       ------------       -------------       ------------     ------------
 Total From Investment                
 Operations....................        (0.27)              0.74                1.03             0.14               0.81
                               -------------       ------------       -------------       ----------       ------------
                        
Less Distributions:     
 Dividends from net     
 investment income..                   (0.03)             (0.01)              (0.01)           (0.08)             (0.01)
 Distributions from     
 net realized capital                     
 gains.........................           --                 --                  --               --                 --   
                               -------------       ------------       -------------       ----------       ------------
 Total Distributions...........        (0.03)             (0.01)              (0.01)           (0.08)             (0.01)
                               -------------       ------------       -------------       ----------       ------------
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE: End                                                                                                    
of period                              $9.70             $10.73              $11.02           $10.06             $10.80 
- ----------------------------------------------------------------------------------------------------------------------------
 Total return..................        (2.70)%             7.44%              10.28%            1.38%              8.11%
 Net assets at end of   
period (000's).................       $8,658             $8,647              $6,740          $58,810            $25,453
                        
Supplemental            
Data/Significant        
Ratios:                 
 Operating expenses to  
 average net assets............         0.70%              0.68%               0.50%            0.42%              0.49%
                        
 Operating expenses to  
 average net assets     
 before voluntary       
 expense reimbursements........         1.79%              1.86%               2.62%            0.59%              1.41%
                        
 Net investment income  
 to average net assets.........         2.47%              2.61%               0.93%            5.28%              0.71%
                        
 Net investment income  
 to average net assets  
 before voluntary       
 expense reimbursements........         1.38%              1.42%              (1.19)%           5.11%             (0.21)%
 Portfolio turnover (1)........         0.00%             20.81%               5.69%           11.08%             12.68%

<CAPTION>


                                 RUSSELL 2000
                                     INDEX
Selected Data For a                PORTFOLIO
Share of Capital                 -------------
Stock Outstanding        
Throughout Period:                  1998
                                 -------------
- ----------------------------------------------  
NET ASSET VALUE:                      
Beginning of period                     $10.00
- ----------------------------------------------
Investment Operations:   
                         
 Net investment income...........         0.02
                         
 Net realized and        
unrealized gain/(loss)...........         0.53  
                                  ------------
 Total From Investment   
Operations.......................         0.55  
                                 ------------- 
                         
Less Distributions:      
                         
 Dividends from net                             
 investment income...............        (0.02) 
                                               
Distributions from                              
net realized capital                             
gains............................           --   
                                 -------------  
 Total Distributions.............        (0.02)
                                 -------------
                         
                         
NET ASSET VALUE: End                           
of period........................       $10.53 
- ----------------------------------------------
 Total return....................         5.48%
                         
 Net assets at end of                
 period (000's)..................      $38,147 
                         
Supplemental             
Data/Significant         
Ratios:                  
                         
 Operating expenses to                  
 average net assets..............         0.40%* 
                         
 Operating expenses to                  
 average net assets      
 before voluntary        
 expense reimbursements..........         1.04%*
                         
 Net investment income                  
 to average net assets...........         1.46%*
                         
Net investment income                   
to average net assets    
 before voluntary        
expense reimbursements...........         0.82%*
                         
 Portfolio turnover                     
(1)..............................         2.80%   
</TABLE>
 
 Notes:
 ------
 
 * Ratios have been determined based on annualized operating results for the
period. Twelve month results may be different.
 
 (1) 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 year ended December 31, 1998 are as follows:
<TABLE>
<CAPTION>
                                                                  Purchases               Sales of Securities
                                                                  ---------               -------------------
         <S>                                                      <C>                        <C> 
         
         State Street ResearchGrowth..........................    $2,101,526,633             $1,891,659,069
         State Street ResearchIncome..........................       694,429,093                556,361,346
         State Street Research Diversified....................     2,719,642,384              2,256,406,848
         State Street Research Aggressive Growth..............     1,258,439,383              1,329,838,649
         MetLife Stock Index..................................       863,635,727                382,070,345
         Santander International Stock........................       429,587,310                445,761,741
         Loomis Sayles High Yield Bond........................        37,933,076                 16,813,644
         Janus Mid Cap........................................       399,290,044                228,305,175 
         T. Rowe Price Small Cap Growth.......................       142,705,785                 51,907,779
         Scudder Global Equity................................        84,591,572                 43,681,204 
         Harris Oakmark Large Cap Value.......................         7,987,916                         --
         Neuberger Berman Partners Mid Cap Value .............         8,821,882                  1,270,759
         T. Rowe Price Large Cap Growth.......................         5,944,837                    207,322
         Lehman Brothers Aggregate Bond Index.................        63,057,826                  5,783,973
         Morgan Stanley EAFE Index............................        25,546,074                  2,775,385
         Russell 2000 Index...................................        36,465,170                    917,738 
</TABLE>
 
 
 See Notes to Financial Statements.
 
                                       31
 
<PAGE>
 
Appendix A To Prospectus
 
Portfolio Manager Prior Performance
 
Because they commenced operations only on November 9, 1998, limited 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 December 31, 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. Year-to-date information is also given for the two months ended
February 28, 1999. 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. The index performance information set forth below does not
reflect any fees and expenses that the applicable Fund Portfolio will bear.
Finally each table also shows the related Fund Portfolio over the period of its
existence.
 
Each sub-investment manager has represented to the Fund that, except as
otherwise noted, the similar 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 similar account performance information
is available with respect to the Morgan Stanley EAFE Index or Russell 2000
Index Portfolios, which also commenced operations on November 9, 1998.)
 
The similar 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.
 
                                       32
<PAGE>
 
THE FOLLOWING PERFORMANCE INFORMATION DOES NOT REPRESENT THE PERFORMANCE OF ANY
FUND PORTFOLIO EXCEPT IN THE RIGHT HAND COLUMN OF EACH TABLE.
 
Neuberger Berman
 
<TABLE>
<CAPTION>
                                                                                         Neuberger
                                                                                          Berman
                                                                                         Partners
                                            Neuberger       Neuberger                       Mid
                                             Berman         Berman AMT          S&P      Cap Value
  Total Return for                        Partners Fund Partners Portfolio  Mid Cap 400  Portfolio
 Period (unaudited)                       (1/20/75)/1/     (3/22/94)/1/      Index/2/    (11/9/98)
 ------------------                       ------------- ------------------ ------------- ---------
 <S>                                      <C>           <C>                <C>           <C>
 Year to Date (ended 2/28/99)                 -1.18%          -1.27%              -9.13%   0.84%
 Since inception of Neuberger Berman
  Partners Mid Cap Value Portfolio
  (11/9/98 to 12/98, annualized)                --              --         not available   8.34%
 One Year (12/97 to 12/98)                     6.28%           4.21%              19.07%     --
 Three Year (12/95 to 12/98, annualized)      20.21%          21.01%              23.33%     --
 Since inception of Neuberger Berman AMT
  Partners Portfolio (3/22/94 to 12/98,
  annualized)                                   --            19.71%       not available     --
 Five Year (12/93 to 12/98, annualized)       18.17%            --                18.81%
 Ten Year (12/88 to 12/98, annualized)        16.22%            --                19.24%     --
</TABLE>
- ------------
/1/ As of December 31, 1998 the Neuberger Berman Partners Fund, a mutual fund,
had assets of $3,249.6 million. 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
$1,637.5. 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, the 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.
 
/2/ 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.
 
Harris
 
<TABLE>
<CAPTION>
                                                                 Harris Oakmark
                                                                 Large Cap Value
  Total Return for                 Oakmark Fund                     Portfolio
 Period (unaudited)                (8/5/91)/1/  S&P 500 Index/2/    (11/9/98)
 ------------------                ------------ ---------------- ---------------
 <S>                               <C>          <C>              <C>
 Year to Date (ended 2/28/99)          1.98%              .94%        -1.34%
 Since inception of Harris
  Oakmark Large Cap Value
  Portfolio (11/9/98 to 12/31/98,
  annualized)                            --      not available         4.01%
 One Year (12/97 to 12/98)             3.74%            28.58%          --
 Three Year (12/95 to 12/98,
  annualized)                         16.89%            28.17%          --
 Five Year (12/93 to 12/98,
  annualized)                         17.28%            24.05%          --
 8/5/91 to 12/98, annualized
  (since inception of the Oakmark
  Fund)                               26.22%            19.73%          --
</TABLE>
- --------
/1/ As of December 31, 1998 the Oakmark Fund, a mutual fund, had assets of
$7.32 billion. The actual fees and expenses of the fund whose performance is
shown has 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.
 
/2/ 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.
 
 
                                       33
<PAGE>
 
T. Rowe Price
 
<TABLE>
<CAPTION>
                                             Lipper
                          T. Rowe Price  Variable Funds                 Morgan      T. Rowe Price
  Total Return for        Growth Stock  Underlying Growth               Stanley       Large Cap
 Period (unaudited)          Fund/1/    Funds Average/2/  S&P 500/2/ EAFE Index/2/ Growth Portfolio
 ------------------       ------------- ----------------- ---------- ------------- ----------------
 <S>                      <C>           <C>               <C>        <C>           <C>
 Year to Date (ended
  2/28/99)                   -1.18%           0.13%          0.94%          -2.63%      -1.00%
 Since inception of T.
  Rowe Large Cap Growth
  Portfolio (11/9/98 to
  12/31/98, annualized)         --              --             --    not available       9.18%
 One Year (12/31/97 to
  12/31/98)                  27.41%          24.94%         28.57%          20.33%        --
 Three Year (12/31/95 to
  12/31/98, annualized)      25.20%          23.77%         28.23%           9.31%        --
 Five Year (12/31/93 to
  12/31/98, annualized)      20.99%          20.25%         24.06%           9.50%        --
 Ten Year (12/31/88 to
  12/31/98, annualized)      17.70%          17.83%         19.21%           5.85%        --
</TABLE>
- --------
/1/ As of December 31, 1998 the T. Rowe Price Growth Stock Fund, a mutual fund,
had assets of $5.04 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.
 
/2/ 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>
                                              Lehman Brothers Lehman Brothers
  Total Return for            MetLife Fixed      Aggregate    Aggregate Bond
 Period (unaudited)         Income Account/1/  Bond Index/2/  Index Portfolio
 ------------------         ----------------- --------------- ---------------
 <S>                        <C>               <C>             <C>
 Year to Date (ended
  2/28/99)                       -1.52%               -1.04%       -1.19%
 Since inception of Lehman
  Brothers Aggregate Bond
  Index Portfolio (11/9/98
  to 12/31/98, annualized)          --         not available         .17%
 One Year (12/31/97 to
  12/31/98)                       8.23%                8.06%         --
 Two Year (12/31/96 to
  12/31/98), annualized           8.74%                9.40%         --
 8/1/96 to 12/31/98,
  annualized/3/                   8.79%                9.96%         --
</TABLE>    
- --------
/1/ As of December 31, 1998 the MetLife Fixed Income Account, a non-mutual fund
separate account, had assets of $305.8 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 all legal requirements applicable to such
companies and 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.
/2/ 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
and effective July 1, 1999, the Lehman Brothers Commercial Mortgage-Backed
Securities Index. Performance for the index has been obtained from public
sources and has not been audited.
/3/ 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.
 
                                       34
<PAGE>
 
Appendix B To Prospectus
 
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 if noted under "Risk/Return Summary"
in the Prospectus. 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 on securities and        All, except 10  None
         indices that 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,   7,10,11         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     Combined limit on the sum of
         recognized futures exchanges) on debt          10,15,16,17     the initial margin for
         securities and indices of debt securities as                   futures and options sold on
         a hedge against or to minimize adverse                         futures, plus premiums paid
         principal fluctuations resulting from                          for unexpired options on
         anticipated interest rate changes or to                        futures, is 5% of total
         adjust exposure to the bond market.                            assets (excluding "in the
                                                                        money" and, for Portfolios
                                                                        7, 8 and 9, "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>    
 
                                       35
<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         8,9,11,12,13,14     None
         interest rates, currencies and indices as a
         risk management tool.
- ----------------------------------------------------------------------------------------------------------
  20     Invest in foreign securities (including        A. 1,2,3,4,5,15     A. Not more than 10% of its
         investments through European Depository                              total assets in securities
         Receipts ("EDRs") and International                                  of foreign issuers, except
         Depository Receipts ("IDRs")).                                       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. 6,11,14,16       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>
 
                                       36
<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 and
                                                                                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. For
                                                                                Portfolios 5 and 14,
                                                                                companies engaged in the
                                                                                business of financing may be
                                                                                classified according to the
                                                                                industries of their parent
                                                                                or sponsor companies, or
                                                                                industries that otherwise
                                                                                most affect the financing
                                                                                companies).
- --------------------------------------------------------------------------------------------------------------
  26     Borrow in the form of short-term credits       All                     Together with items 27 and
         necessary to clear Portfolio transactions;                             28, up to 1/3 of the amount
         enter into reverse repurchase arrangements.                            by 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.  6,7,8,9,10,11,12,13,14, None
                                                        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 American Depository Receipts          A. 1,2,3,4,5            A. Together with the assets
         ("ADRs").                                                                referred to in Item 20 A
                                                                                  above, 35% of total assets
                                                        B. 6, 8,10,11,16        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>
 
                                       37
<PAGE>
 
 
<TABLE>   
<CAPTION>
                                                                            Percentage limit per Portfolio
  Item   Investment practice                            Portfolios          on assets/1/
- ----------------------------------------------------------------------------------------------------------
  <S>    <C>                                            <C>                 <C>
  31     Invest in debt securities.                     A. All, except 6,7, A. None
                                                        10, 11,13,14
                                                        B. 6,7,10,11,13,14  B. None on investment grade
                                                                              securities but 25% of
                                                                              total assets for 7, 15%
                                                                              for 10, 5% for 11, 13 and
                                                                              14, and 0% for 6 in below
                                                                              investment grade
                                                                              securities.
- ----------------------------------------------------------------------------------------------------------
  32     Invest in preferred stocks.                    A. All, except 9    A. None
                                                        B. 9                B. Up to 20% of total assets
- ----------------------------------------------------------------------------------------------------------
  33     Invest in common stocks.                       A. All, except 9    A. None
                                                        B. 9                B. 10% of total assets
- ----------------------------------------------------------------------------------------------------------
  34     Invest in hybrid instruments.                  A. All, except 12   A. None
                                                        B. 12               B. 10% of its total assets
</TABLE>    
- -----------
/1/ At time of investment, unless otherwise noted.
* Policy may be changed only by shareholder vote.
 
                                       38
<PAGE>
 
Appendix C To Prospectus

Description Of Some Investments, Techniques, And Risks
 
Investment Styles

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

[SIDEBAR: 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.
 
                                       39
<PAGE>

 
[SIDEBAR: 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 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.

[SIDEBAR: 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 nationally recognized
statistical rating organization 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
 
                                       40
<PAGE>
 
 
 . 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
receivables such as automobile, credit cards, equipment leases, or student
loans. 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.

[SIDEBAR: 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
 
                                       41
<PAGE>
 

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.
 
[SIDEBAR: 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.

[SIDEBAR: 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).

[SIDEBAR: 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:
 
                                       42
<PAGE>
 
 
 
 
 
 
 
 . 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
 
                                       43
<PAGE>
 
 
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 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

[SIDEBAR: 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.
 
[SIDEBAR: 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.
 
                                       44
<PAGE>
 
                         Metropolitan Series Fund, Inc.
 
                             ---------------------
 
                          Principal Office of the Fund
                                1 Madison Avenue
                            New York, New York 10010
 
                             ---------------------
 
                               Investment Manager
                      Metropolitan Life Insurance Company
                                1 Madison Avenue
                            New York, New York 10010
                          (Principal Business Address)
 
                            Sub-Investment Managers
                            State Street Research &
                               Management Company
                              One Financial Center
                          Boston, Massachusetts 02111
                          (Principal Business Address)
 
                         Loomis, Sayles & Company, L.P.
                              One Financial Center
                          Boston, Massachusetts 02111
                          (Principal Business Address)
 
                           Janus Capital Corporation
                              100 Fillmore Street
                          Denver, Colorado 80206-4923
                         (Principal Executive Offices)
 
                         T. Rowe Price Associates, Inc.
                             100 East Pratt Street
                           Baltimore, Maryland 21202
                          (Principal Business Address)
 
                        Scudder Kemper Investments, Inc.
                                345 Park Avenue
                            New York, New York 10154
                         (Principal Executive Offices)
 
                             Harris Associates, LP
                             2 North LaSalle Street
                               Chicago, IL 60602
                         (Principal Executive Offices)
 
                        Neuberger Berman Management Inc.
                                605 Third Avenue
                            New York, NY 10158-0180
                         (Principal Executive Offices)
 
                        Santander Global Advisors, Inc.
                                28 State Street
                          Boston, Massachusetts 02109
                         (Principal Executive Offices)
 
                         Custodian, Transfer Agent and
                             Dividend Paying Agent
                      State Street Bank and Trust Company
                              225 Franklin Street
                          Boston, Massachusetts 02110
                          (Principal Business Address)
 
 No dealer, salesman, or other person has been authorized to give any informa-
tion or to make any representations, other than those contained in this Pro-
spectus, in connection with the offer made by this Prospectus, and, if given or
made, such other information or representations must not be relied upon as hav-
ing been authorized by the Fund, Metropolitan Life, State Street Research, Met-
ropolitan Tower, Loomis Sayles, T. Rowe Price, Janus, Scudder, Harris, Neu-
berger Berman or Santander. This Prospectus does not constitute an offering in
any state in which such offering may not lawfully be made.
<PAGE>
 
How to learn more:
 
We have incorporated the Statement of Additional Information ("SAI") into this
Prospectus. That means the SAI is considered part of this Prospectus as though
it were included in it. The SAI contains more information about the Fund. Also,
the Fund's annual and semi-annual reports to shareholders (the "reports")
contain more information including information on each Portfolio's investments
and a discussion of the market conditions and investment strategies that
affected each Portfolio's performance for the period covered by the report.
 
How to get copies:
 
To request a free copy of the SAI or the reports or to make any other
inquiries, write or call:
 
                      Metropolitan Life Insurance Company
                               One Madison Avenue
                               New York, NY 10010
                             Phone: (800) 553-4459
   
You can also get information about the Fund (including the SAI) from the
Securities and Exchange Commission (a copying fee may apply) by visiting or
writing to its Public Reference Room or using its Internet site at:     
 
                       Securities and Exchange Commission
                             Public Reference Room
                             Washington, D.C. 20549
                   Call 1-800-SEC-0330 (for information about
                        using the Public Reference Room)
                       Internet site: http://www.sec.gov
 
IC# 811-3618
   
99042XIY(exp0500)MLIC-LD     
<PAGE>
 
                      STATEMENT OF ADDITIONAL INFORMATION
                                      FOR
 
                         METROPOLITAN SERIES FUND, INC.
                                 
                              April 30, 1999     
 
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(R) Aggregate Bond
State Street Research Money Market      Index Portfolio
Portfolio
                                        MetLife Stock Index Portfolio
Santander International Stock
Portfolio (formerly State Street        Morgan Stanley(R) EAFE Index Portfolio
Research International Stock
Portfolio)                              Russell 2000(R) 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 April 30, 1999. The annual
report for the Fund for the year ending December 31, 1998 accompanies this SAI
and is incorporated by reference. A copy of the April 30, 1999 Prospectus and
the annual report may be obtained, without charge, from Metropolitan Life
Insurance Company, One Madison Avenue, New York, New York 10010, Area 2H or by
calling (800) 553-4459.     
   
99042XJI(exp0500)MLIC-LD     
<PAGE>
 
                               TABLE OF CONTENTS
 
<TABLE>
<CAPTION>
Headings                                                                    Page
- --------                                                                    ----
<S>                                                                         <C>
The Fund's Organization....................................................   2
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
Shareholder Meetings.......................................................  15
Voting.....................................................................  16
Sale and Redemption of Shares..............................................  16
Pricing of Portfolio Securities............................................  16
Taxes......................................................................  18
General Information........................................................  19
Financial Statements.......................................................  20
Appendix...................................................................  22
</TABLE>
 
                            THE FUND'S ORGANIZATION
 
The Fund, an open-end management investment company, 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, other than the Janus Mid Cap Portfolio, is
"diversified" for purposes of the Investment Company Act of 1940.
 
Each Portfolio's issued and outstanding shares participate equally in dividends
and distributions declared by such Portfolio and 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 purchased 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.
 
                                      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, except to the
extent that such activity would require a shareholder vote, as discussed below
under "Fundamental Policies."
 
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
  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 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
 
                                      B-3
<PAGE>
 
  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
  instruments 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.
 . 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
 
                                      B-4
<PAGE>
 
(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.
 
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
 
                                      B-5
<PAGE>
 
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 the futures contract (or related index) is based or (2)
holding an offsetting call option on that futures contract at the same or
better
                                      B-6
<PAGE>
 
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. If such a vote is
required, approval requires a favorable vote of at least the lesser of: (A)
67% of the shares represented (in person or by proxy) at a meeting and
entitled to vote thereon; or (B) if at least 50% of such shares are
represented at the meeting, a majority of those represented.
 
A policy is fundamental only if the Prospectus or this SAI states that it is
fundamental or that it may be changed only by shareholder vote. If the
Prospectus or SAI specifically states that one or more Portfolios may engage
in practices that would otherwise violate a fundamental policy, such exception
is also part of the Fund's fundamental policies. (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 only 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.
 
                                      B-7
<PAGE>
 
  government, its agencies or instrumentalities. These restrictions do not
  apply to the Janus Mid Cap Portfolio.
 . No Portfolio may make any short sale
 . 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).
 
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-8
<PAGE>
 
Management Fees
The Fund pays MetLife for its investment management services.
MetLife pays the sub-investment managers for their investment management
services.
 
The following table shows the fee schedules for the investment management fees
and sub-investment management fees as a percentage per annum of the average net
assets and the investment management fees paid to MetLife for each Portfolio:
 
<TABLE>   
<CAPTION>
                                                          Sub-
                                            Investment Investment
                                            Management Management
                                               Fee        Fee        Investment Management Fees
                               Average      Schedule-- Schedule--  For the Year Ended December 31,
                              Daily Net       % Per      % Per    ---------------------------------
Portfolio                      Assets         Annum      Annum       1996       1997       1998
- ---------                 ----------------- ---------- ---------- ---------- ---------- -----------
<S>                       <C>               <C>        <C>        <C>        <C>        <C>
State Street Research     All assets          .25%       .25%     $  102,785 $  105,515 $   105,727
Money Market
 
State Street Research                                                                               
 Growth                   1st $500 million    .55%       .40%     $3,351,614 $7,305,001 $13,095,405 
                          next $500 million   .50%       .35%
                          over $1 billion     .45%       .30%
 
State Street Research                     
 Income                   1st $250 million    .35%       .27%
                          next $250 million   .30%       .22%     $  911,476 $1,102,819 $ 1,514,111
                          over $500 million   .25%       .17%
 
State Street Research                     
 Diversified              1st $500 million    .50%       .35%
                          next $500 million   .45%       .30%     $3,179,254 $5,811,475 $10,067,374
                          over $1 billion     .40%       .25%
 
State Street Research                                        
Aggressive Growth         1st $500 million    .75%       .55%
                          next $500 million   .70%       .50%     $8,815,041 $9,931,653 $ 9,539,534
                          over $1 billion     .65%       .45%
 
Santander International                                      
Stock                     1st $500 million    .75%       .55%
                          next $500 million   .70%       .50%     $2,330,738 $2,258,438 $ 2,161,315
                          over $1 billion     .65%       .45%
 
Loomis Sayles High Yield  All assets          .70%       .50%             -- $   84,589 $   266,117
Bond
 
T. Rowe Price Small Cap                                      
Growth                    1st $100 million    .55%       .35%
                          next $300 million   .50%       .30%             -- $  187,380    $764,242
                          over $400 million   .45%       .25%
 
T. Rowe Price Large Cap                                       
Growth                    1st $50 million     .70%       .50% 
                          over $50 million    .60%       .40%             --         -- $     3,585
 
Janus Mid Cap             1st $100 million    .75%       .55%
                          next $400 million   .70%       .50%             -- $  263,954 $ 1,584,660
                          over $500 million   .65%       .45%
 
Scudder Global Equity     1st $50 million     .90%       .70%
                          next $50 million    .55%       .35%             -- $  201,758 $   674,520
                          next $400 million   .50%       .30%
                          over $500 million   .475%      .275%
 
Harris Oakmark Large Cap                                      
Value                     1st $250 million    .75%       .65% 
                          over $250 million   .70%       .60%             --         -- $     6,470
 
Neuberger Berman                                              
Partners Mid Cap Value    1st $100 million    .70%       .50% 
                          next $250 million   .675%      .475%            --         -- $     6,314
                          next $500 million   .65%       .45%
                          next $750 million   .625%      .425%
                          over $1.6 billion   .60%       .40%
 
MetLife Stock Index       All Assets          .25%       N/A      $2,154,140 $3,961,131 $ 6,387,967
 
Lehman Brothers           All Assets          .25%       N/A              --         -- $    18,962
Aggregate Bond Index
 
Russell 2000 Index        All Assets          .25%       N/A              --         -- $    11,355
 
Morgan Stanley EAFE       All Assets          .30%       N/A              --         -- $     9,366
Index
</TABLE>    
 
                                      B-9
<PAGE>
 
                       DIRECTORS AND OFFICERS OF THE FUND
 
The Fund's Directors review actions of the Fund's investment manager and sub-
investment managers, 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 below. 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 Treasurer, 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 (71)+  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
- ------------------------------------------------------------------------------------------------
  Dean O. Morton (67)+      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
  (62)*                                             Treasurer, MetLife
  43 Chestnut Drive
  Garden City, NY 11530
- ------------------------------------------------------------------------------------------------
  Bradford W. White (33)+*  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
  (50)+*                    Operating Officer
- ------------------------------------------------------------------------------------------------
  Janet Morgan (36)*        Treasurer               Assistant Vice-President, MetLife since
                                                    1997; prior thereto, Director
- ------------------------------------------------------------------------------------------------
  Elaine Stevenson (40)*    Vice-President          Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
  Lawrence A. Vranka (59)*  Vice-President          Vice-President, MetLife
- ------------------------------------------------------------------------------------------------
  Robin Wagner (38)*        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 (30)*    Assistant Secretary     Legal Assistant, MetLife since 1994; prior
                                                    thereto, legal assistant Cadwalader,
                                                    Wickersham & Taft
- ------------------------------------------------------------------------------------------------
  Harold Lerner (63)*       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            $29,000         0          0        $110,300
- -----------------------------------------------------------------------------
  Malcolm T. Hopkins         $27,500         0          0        $ 97,200
- -----------------------------------------------------------------------------
  Robert A. Lawrence(e)      $26,000         0          0        $ 96,700
- -----------------------------------------------------------------------------
  Dean O. Morton             $26,000         0          0        $110,700
- -----------------------------------------------------------------------------
  Michael S. Scott Morton    $26,000         0          0        $115,500
- -----------------------------------------------------------------------------
  David A. Levene               0            0          0            0
- -----------------------------------------------------------------------------
  Arthur G. Typermass        $19,668         0          0        $ 19,668
</TABLE>
- ------------
(a) For the fiscal year ended December 31, 1998.
(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, 1998.
   
(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. Effective April 1, 1999 other directors who are not currently
    active employees of MetLife receive a fee of $15,000 per year, plus $3,500
    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 chairmen of the audit and
    contracts committees each receive 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.
(e) Robert A. Lawrence resigned as a director effective April 1, 1999.
- ------------
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. To this end, when
selecting 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 with respect to specific
  markets or securities (see, for example, "Fixed Income Securities" and "Over-
  the-Counter Securities Market" below)
 . 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 (see
  "Research and Statistical Services" below)
 . the broker-dealer's capital clearance and settlement capabilities
 . 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
 
                                      B-12
<PAGE>
 
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 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
 
After considering a combination of all the factors, managers may not
necessarily select the broker with the lowest commission rate or the dealer
with the lowest net price. 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.
 
Compensating Broker-Dealers for Non-Execution Services
 
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.
 
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
 
                                      B-13
<PAGE>
 
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.
 
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.
 
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
                                      B-14
<PAGE>
 
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
 . 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 Inc. 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.
 
The following table shows the brokerage commissions paid by the Fund for each
of the Portfolios for the years ended December 31, 1996, 1997 and 1998:
<TABLE>
<CAPTION>
Portfolio                 1996       1997       1998
<S>                    <C>        <C>        <C>
State Street Research
Money Market
State Street Research         N/A        N/A        N/A
Income
State Street Research  $1,522,211 $1,771,904 $2,204,538
Diversified
State Street Research  $2,719,753 $3,228,651 $4,486,471
Growth
State Street Research  $4,285,962 $5,031,886 $3,260,411
Aggressive Growth
Santander              $1,971,314 $3,009,725 $2,313,364
International Stock
Loomis Sayles High            N/A $    4,236 $    6,463
Yield Bond
T. Rowe Price Small           N/A $   84,657 $  174,688
Cap Growth
T. Rowe Price Large           N/A        N/A $    5,222
Cap Growth
Janus Mid Cap                 N/A $  139,969 $  482,758
Scudder Global Equity         N/A $  143,783 $  165,847
Harris Oakmark Large          N/A        N/A $   12,228
Cap Value
Neuberger Berman              N/A        N/A $   11,875
Partners Mid Cap
MetLife Stock Index    $  229,771 $  341,117 $  469,162
Lehman Brothers               N/A        N/A        N/A
Aggregate Bond Index
Russell 2000 Index            N/A        N/A $   41,989
Morgan Stanley EAFE           N/A        N/A $   79,325
</TABLE>
 
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
 
                                      B-15
<PAGE>
 
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 the Fund
Prospectus describes how Contract owners can give voting instructions for Fund
shares. Shares held by MetLife's general account or 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.
 
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-16
<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-17
<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
 
                                      B-18
<PAGE>
 
non-United States companies do not qualify for the dividends received
deduction.
 
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, 1998 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"). On January 1, 1999, the European Union
established a common European currency for participating countries that will
generally be known as the "Euro." Each such member country supplements its
existing currency with the Euro and intends to 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 introduction of the Euro presents unique risks and uncertainties, including
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 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.
 
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
owners of this Portfolio or any member of the public regarding the advisability
of investing in funds generally or in this Portfolio particularly or the
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
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
Portfolio or this Portfolio. Morgan Stanley has no obligation to take the needs
of the issuer of this Portfolio or the owners of this Portfolio into
consideration in determining, composing or calculating the MSCI EAFE (R) index.
Morgan Stanley is not responsible for and has not participated in the
determination of the timing of, prices at, or
 
                                      B-19
<PAGE>
 
quantities of this Portfolio to be issued or in the determination or
calculation of the equation by which this Portfolio is redeemable for cash.
Morgan Stanley has no obligation or liability to owners of this Portfolio in
connection with the administration, marketing or trading of this Portfolio.
 
ALTHOUGH MORGAN STANLEY SHALL OBTAIN INFORMATION FOR INCLUSION IN OR FOR USE IN
THE CALCULATION OF THE INDEXES FROM SOURCES WHICH MORGAN STANLEY CONSIDERS
RELIABLE, NEITHER MORGAN STANLEY NOR ANY OTHER PARTY GUARANTEES THE ACCURACY
AND/OR THE COMPLETENESS OF THE INDEXES OR ANY DATA INCLUDED THEREIN. NEITHER
MORGAN STANLEY NOR ANY OTHER PARTY MAKES ANY WARRANTY, EXPRESS OR IMPLIED, AS
TO RESULTS TO BE OBTAINED BY LICENSEE, LICENSEE'S CUSTOMERS AND COUNTERPARTIES,
OWNERS OF THE PORTFOLIO, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE
INDEXES OR ANY DATA INCLUDED THEREIN IN CONNECTION WITH THE RIGHTS LICENSED
HEREUNDER OR FOR ANY OTHER USE. NEITHER MORGAN STANLEY NOR ANY OTHER PARTY
MAKES ANY EXPRESS OR IMPLIED WARRANTIES, AND MORGAN STANLEY HEREBY EXPRESSLY
DISCLAIMS ALL WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE
WITH RESPECT TO THE INDEXES OR ANY DATA INCLUDED THEREIN. WITHOUT LIMITING ANY
OF THE FOREGOING, IN NO EVENT SHALL MORGAN STANLEY OR ANY OTHER PARTY HAVE ANY
LIABILITY FOR ANY DIRECT, INDIRECT, SPECIAL, PUNITIVE, CONSEQUENTIAL OR ANY
OTHER DAMAGES (INCLUDING LOST PROFITS) EVEN IF NOTIFIED OF THE POSSIBILITY OF
SUCH DAMAGES. The MSCI EAFE (R) Index is the exclusive property of Morgan
Stanley. Morgan Stanley Capital International is a service mark of Morgan
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. The Russell 2000(R) Index is a service mark of the Frank
Russell Company. Russell(TM) is a trademark of the Frank Russell Company. 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,
COMPLETENESS, RELIABILITY, OR OTHERWISE OF THE INDEX OR ANY DATA INCLUDED IN
THE INDEX. FRANK RUSSELL COMPANY MAKES NO REPRESENTATION OR WARRANTY REGARDING
THE USE, OR THE RESULTS OF USE, OF THE INDEX OR ANY DATA INCLUDED THEREIN, OR
ANY SECURITY (OR COMBINATION THEREOF) COMPRISING THE INDEX. FRANK RUSSELL
COMPANY MAKES NO OTHER EXPRESS OR IMPLIED WARRANTY, AND EXPRESSLY DISCLAIMS ANY
WARRANTY, OF ANY KIND, INCLUDING, WITHOUT MEANS OF LIMITATION, ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE INDEX
OR ANY DATA OR ANY SECURITY (OR COMBINATION THEREOF) INCLUDED THEREIN.
 
FINANCIAL STATEMENTS
 
The Fund's financial statements for periods ending December 31, 1998, and the
related schedules of investments for each Portfolio and report of independent
auditors thereon, are included in the Fund's annual report to
 
                                      B-20
<PAGE>
 
shareholders for 1998 that accompanies this Statement of Additional Information
and are incorporated by reference into this SAI.
 
                                      B-21
<PAGE>
 
                                    APPENDIX
 
          DESCRIPTION OF CERTAIN CORPORATE BOND AND DEBENTURE RATINGS
 
<TABLE>
<CAPTION>
                                                                       
  Rating Moody's Investor Service, Inc. (Moody's) Description   Rating Standard & Poor's Rating Group (S&P) 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-22
<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>
 
                                      B-23
<PAGE>
 
                    DESCRIPTION OF COMMERCIAL PAPER RATINGS
 
<TABLE>
<CAPTION>
  Rating    Moody's Investor Service, Inc. (Moody's) Description   Rating    Standard & Poor's Rating Group (S&P)Description
- ----------------------------------------------------------------------------------------------------------------------------
  <C>       <S>                                                    <C>       <C>
  Prime     Commercial paper with this rating                      A         Commercial paper with this rating
            is the highest rated based on the                                is the highest based on: (1)
            following factors: (1) management                                liquidity ratios are adequate to
            of the issuer; (2) economics of                                  meet cash requirements; (2) the
            the issuer's industry or                                         issuer's long-term senior debt is
            industries and the speculative-                                  rated "A" or better, although in
            type risks which may be inherent                                 some cases "BBB" or better may be
            in certain areas; (3) the                                        allowed; (3) the issuer has
            issuer's products in relation to                                 access to at least two additional
            competition and customer                                         channels of borrowing; (4) the
            acceptance; (4) liquidity; (5)                                   issuer's basic earnings and cash
            amount and quality of long-term                                  flow have an upward trend with
            debt; (6) trend of earnings over                                 allowance made for unusual
            a period of 10 years; (7)                                        circumstances; (5) Typically, the
            financial strength of any parent                                 issuer's industry is well
            and the relationships which exist                                established and the issuer has a
            with the issuer; and (8)                                         strong position within the
            recognition by the management of                                 industry; and (6) the reliability
            obligations which may be present                                 and quality of management are
            or may arise as a result of                                      unquestioned.
            public interest questions and
            preparations to meet such
            obligations.
- ----------------------------------------------------------------------------------------------------------------------------
  1, 2 or 3 These modifiers indicates the                          1, 2 or 3 These modifiers indicate the
            relative degree to which the                                     relative degree to which the
            commercial paper possesses the                                   commercial paper possesses the
            qualities that are required to                                   qualities that are required to
            receive a Prime rating.                                          receive an A rating.
- ----------------------------------------------------------------------------------------------------------------------------
                                                                   (+)       Commercial paper with an A-1
                                                                             rating can be further modified
                                                                             with this modifier to show that
                                                                             they possess overwhelming safety
                                                                             characteristics.
</TABLE>
 
                                      B-24


© 2022 IncJournal is not affiliated with or endorsed by the U.S. Securities and Exchange Commission