<PAGE>
Preference Plus Account
Prospectus
May 1, 1998
As Supplemented
November 9, 1998
Plus
Pro
Preference Plus
Non-Qualified Annuities . Individual Retirement Annuities . SIMPLE IRA .
Simplified Employee Pensions . Roth IRA . Non-Qualified Annuities . Individual
Retirement Annuities . SIMPLE IRA . Simplified Employee Pensions . Roth IRA .
Non-Qualified Annuities . Individual Retirement Annuities . SIMPLE IRA .
Simplified Employee Pensions . Roth IRA . Non-Qualified Annuities . Individual
Retirement Annuities . SIMPLE IRA . Simplified Employee Pensions . Roth IRA .
Non-Qualified Annuities . Individual Retirement Annuities . SIMPLE IRA .
Simplified Employee Pensions . Roth IRA . Non-Qualified Annuities . Individual
Retirement Annuities . SIMPLE IRA .
MetLife
Retirement & Savings Center
98102QGU(exp0599)MLIC-LD
PPAIRANQSEPPROSP(11/98)
<PAGE>
METROPOLITAN LIFE SEPARATE ACCOUNT E
PREFERENCE PLUS
GROUP AND INDIVIDUAL ANNUITY CONTRACTS
ISSUED BY
METROPOLITAN
LIFE INSURANCE COMPANY
This Prospectus describes individual and group non-qualified annuities,
individual retirement annuities, Savings Incentive Match Plan for Employees
individual retirement annuities, Roth individual retirement annuities and
simplified employee pensions Preference Plus Contracts ("Contracts") and
individual and group non-qualified annuities, individual retirement annuities,
Savings Incentive Match Plan for Employees individual retirement annuities,
Roth individual retirement annuities and simplified employee pensions
Preference Plus Income Annuities ("Income Annuities").
Group Contracts and Income Annuities may only be purchased through your
employer, or a group, association or trust of which you are a member or
participant.
You decide where your purchase payments are directed. The choices depend on
what is available under your Contract or Income Annuity and may include the
Fixed Interest Account, and through Metropolitan Life Separate Account E, the
State Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, Janus Mid Cap, Loomis Sayles High Yield
Bond, State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Santander International Stock (formerly known as State
Street Research International Stock), Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman
Partners Mid Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth
Portfolios of the Metropolitan Series Fund, Inc. ("Metropolitan Fund").
The Prospectus for the Metropolitan Fund is attached to the back of your
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INTERESTS IN THE SEPARATE ACCOUNT AND THE FIXED INTEREST ACCOUNT ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR INSURED, OR GUARANTEED BY THE U.S. GOVERNMENT,
ANY BANK OR OTHER DEPOSITORY INSTITUTION. UNITS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUS FOR THE
METROPOLITAN FUND, WHICH CONTAINS ADDITIONAL INFORMATION AND WHICH SHOULD BE
READ CAREFULLY BEFORE INVESTING.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
The Prospectus sets forth information about the Contracts and Income
Annuities and Separate Account E that you should know before investing.
Additional information about the Contracts and Income Annuities and Separate
Account E has been filed with the Securities and Exchange Commission in a
Statement of Additional Information which is incorporated herein by reference
and which is available upon request without charge from Metropolitan Life
Insurance Company, Retirement and Savings Center, Area 2H, One Madison Avenue,
New York, NY 10010 Attention: Alan DeMichele. Inquiries may be made to
Metropolitan Life Insurance Company, One Madison Avenue, New York, New York
10010, Attention: Retirement and Savings Center; telephone number (800) 553-
4459. The table of contents of the Statement of Additional Information appears
on page A-PPA-35. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) which you may visit that contains the Statement of
Additional Information, material incorporated by reference, and other
information.
The date of this Prospectus and of the Statement of Additional Information
is May 1, 1998, as supplemented November 9, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INDEX OF SPECIAL TERMS................................................. A-PPA- 3
TABLE OF EXPENSES...................................................... A-PPA- 4
SUMMARY................................................................ A-PPA- 7
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION.................. A-PPA- 8
FINANCIAL STATEMENTS................................................... A-PPA- 9
OUR COMPANY AND THE SEPARATE ACCOUNT................................... A-PPA-10
DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS........................ A-PPA-11
YOUR INVESTMENT CHOICES.............................................. A-PPA-11
PURCHASE PAYMENTS.................................................... A-PPA-14
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT............ A-PPA-15
WITHDRAWALS AND TRANSFERS............................................ A-PPA-15
DEDUCTIONS AND CHARGES............................................... A-PPA-17
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES............................. A-PPA-19
DEATH BENEFIT........................................................ A-PPA-20
INCOME OPTIONS....................................................... A-PPA-20
INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS.......................... A-PPA-21
ADMINISTRATION....................................................... A-PPA-21
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS.................... A-PPA-22
TRANSFERS............................................................ A-PPA-22
DEDUCTIONS AND CHARGES............................................... A-PPA-23
OTHER DEFERRED CONTRACT AND INCOME ANNUITY PROVISIONS.................. A-PPA-25
TAXES.................................................................. A-PPA-29
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... A-PPA-35
APPENDIX............................................................... A-PPA-36
INDEX.................................................................. A-PPA-37
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. METLIFE DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED
PROSPECTUS OR ANY SUPPLEMENT THERETO OR IN ANY SUPPLEMENTAL SALES MATERIAL
AUTHORIZED BY METLIFE.
A-PPA-2
<PAGE>
INDEX OF SPECIAL TERMS
<TABLE>
<CAPTION>
TERMS PAGE
----- --------
<S> <C>
Account Balance........................................................ A-PPA- 7
Accumulation Units..................................................... A-PPA-15
Annuity Units.......................................................... A-PPA-22
Assumed Investment Rate................................................ A-PPA-22
Contract Year.......................................................... A-PPA-17
Contracts.............................................................. A-PPA- 1
Designated Office...................................................... A-PPA-14
Early Withdrawal Charge................................................ A-PPA-18
Experience Factor...................................................... A-PPA-15
Free Corridor.......................................................... A-PPA-19
Income Annuities....................................................... A-PPA- 1
Preference Plus Contracts.............................................. A-PPA- 1
Preference Plus Income Annuities....................................... A-PPA- 1
Separate Account....................................................... A-PPA-10
Systematic Withdrawal Program.......................................... A-PPA-16
Valuation Period....................................................... A-PPA-15
</TABLE>
A-PPA-3
<PAGE>
TABLE OF EXPENSES--PREFERENCE PLUS CONTRACTS AND INCOME ANNUITIES
The following table illustrates Separate Account and Metropolitan Fund
expenses for the fiscal year ending December 31, 1997:
<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES FOR ALL INVESTMENT DIVISIONS
CURRENTLY OFFERED
Sales Load Imposed on Purchases................................... None
Deferred Sales Load............................................... From 0% to
(as a percentage of the purchase payment funding the withdrawal 7%(a)
during the accumulation period)
Exchange Fee...................................................... None
Surrender Fee..................................................... None
ANNUAL CONTRACT FEE................................................ None(b)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
General Administrative Expenses Charge............................ .50%(c)
Mortality and Expense Risk Charge................................. .75%(c)
Total Separate Account Annual Expenses............................ 1.25%
METROPOLITAN FUND ANNUAL EXPENSES
(as a percentage of average net assets)
</TABLE>
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBURSEMENT TOTAL
---------- -------------- -----
<S> <C> <C> <C>
State Street Research Income
Portfolio(d)(e)(f)........................... .33 .10 .43
State Street Research Diversified
Portfolio(d)(e)(f)........................... .44 .06 .50
MetLife Stock Index Portfolio(d).............. .25 .08 .33
State Street Research Growth
Portfolio(d)(e)(f)........................... .49 .07 .56
Janus Mid Cap Portfolio(e)(g)................. .75 .14 .89
Loomis Sayles High Yield Bond Portfolio(g).... .70 .20 .90
State Street Research Aggressive Growth
Portfolio(d)(e)(f)........................... .71 .08 .79
T. Rowe Price Small Cap Growth
Portfolio(e)(g).............................. .55 .18 .73
Scudder Global Equity Portfolio(e)(g)......... .90 .22 1.12
Santander International Stock
Portfolio(d)(e)(f)........................... .75 .28 1.03
Harris Oakmark Large Cap Value
Portfolio(e)(h).............................. .75 .20 .95
Lehman Brothers Aggregate Bond Index(h)....... .25 .20 .45
Morgan Stanley EAFE Index Portfolio(h)........ .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(e)(h).............................. .70 .20 .90
Russell 2000 Index Portfolio(h)............... .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(e)(h).............................. .70 .20 .90
</TABLE>
EXAMPLE
<TABLE>
<S> <C> <C> <C> <C>
If you surrender your Contract at the end of
the applicable time period:
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
State Street Research Income Division....... $80 $ 98 $118 $200
State Street Research Diversified Division.. 81 100 122 208
MetLife Stock Index Division................ 79 95 113 189
State Street Research Growth Division....... 81 102 125 214
Janus Mid Cap Division...................... 85 112 -- --
Loomis Sayles High Yield Bond Division...... 85 113 -- --
State Street Research Aggressive Growth Di-
vision...................................... 84 109 137 239
T. Rowe Price Small Cap Growth Division..... 83 107 -- --
Scudder Global Equity Division.............. 87 119 -- --
Santander International Stock Division...... 86 117 150 264
Harris Oakmark Large Cap Value Division..... 85 114 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion........................................ 80 98 -- --
Morgan Stanley EAFE Index Division.......... 81 102 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision...................................... 85 113 -- --
Russell 2000 Index Division................. 80 98 -- --
T. Rowe Price Large Cap Growth Division..... 85 113 -- --
</TABLE>
11/9/98
A-PPA-4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
If you annuitize at the end of the applicable
time period or do not surrender your
Contract(i):
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
State Street Research Income Division....... $17 $53 $ 92 $200
State Street Research Diversified Division.. 18 56 96 208
MetLife Stock Index Division................ 16 50 87 189
State Street Research Growth Division....... 19 57 99 214
Janus Mid Cap Division...................... 22 68 -- --
Loomis Sayles High Yield Bond Division...... 22 68 -- --
State Street Research Aggressive Growth Di-
vision...................................... 21 65 111 239
T. Rowe Price Small Cap Growth Division..... 20 63 -- --
Scudder Global Equity Division.............. 24 75 -- --
Santander International Stock Division...... 23 72 123 264
Harris Oakmark Large Cap Value Division..... 23 70 -- --
Lehman Brothers Aggregate Bond Index........ 17 54 -- --
Morgan Stanley EAFE Index Division.......... 18 57 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision...................................... 22 68 -- --
Russell 2000 Index Division................. 17 54 -- --
T. Rowe Price Large Cap Growth Division..... 22 68 -- --
</TABLE>
- -------
(a) Under certain circumstances, the deferred sales load, termed the early
withdrawal charge in this Prospectus (see "Deductions and Charges," page
A-PPA-17) does not apply to 10% of the Account Balance. Under certain
other circumstances, the deferred sales load does not apply at all.
(b) A one time contract fee of $350 may be imposed under certain Income
Annuities. (See "Income Annuities--Deductions and Charges," page A-PPA-
23.)
(c) Although total Separate Account annual expenses will not exceed 1.25% of
average account values, the allocation of these expenses between general
administrative expenses and the mortality and expense risk charges is only
an estimate. (See "Deductions and Charges," page A-PPA-17.)
(d) Prior to May 16, 1993, MetLife paid all expenses of the Metropolitan Fund
other than management fees, brokerage commissions, taxes, interest and any
extraordinary or non-recurring expenses.
(e) The marginal rate of the investment management fee for these Portfolios
will decrease when the dollar amount in each Portfolio reaches certain
threshold amounts.
(f) Reflects 1997 management fees, restated to assume changes in management
fees effective August 1997, had been in effect for the entire year.
(g) These Portfolios commenced operations on March 3, 1997. MetLife has agreed
to bear all expenses (other than management fees, brokerage commissions,
taxes, interest and any extraordinary or non-recurring expenses) in excess
of .20% of the average net assets for each of the Loomis Sayles High Yield
Bond, T. Rowe Price Small Cap Growth, Janus Mid Cap and Scudder Global
Equity Portfolios until each Portfolio's total net assets are at least
$100 million, or until March 2, 1999, whichever is earlier. Absent such
expense reimbursement, the other expenses would have been 0.39% for the
Loomis Sayles High Yield Bond Portfolio and 0.31% for the Scudder Global
Equity Portfolio. MetLife ceased subsidizing such expenses for the Janus
Mid Cap Portfolio as of December 31, 1997, the T. Rowe Price Small Cap
Growth Portfolio as of January 23, 1998 and the Scudder Global Equity
Portfolio as of July 1, 1998.
(h) The Portfolios commenced operations on November 9, 1998. Management fees
and other expenses for these Portfolios are estimated amounts for the year
ending December 31, 1998. Subject to receiving New York State Insurance
Department approval, MetLife has agreed to bear all expenses (other than
management fees, brokerage commissions, taxes, interest and any
extraordinary or non-recurring expenses) in excess of .20% of the average
net assets for each of the Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Neuberger&Berman Partners Mid Cap Value, Russell
2000 Index and T. Rowe Price Large Cap Growth Portfolios, and .25% of the
average net assets for the Morgan Stanley EAFE Index Portfolio until each
of the Portfolio's total net assets are at least $100 million, or until
November 8, 2000, whichever is earlier.
(i) The annuity purchased must be a life annuity or one with a noncommutable
duration of at least five years to avoid the early withdrawal charge (see
"Exemptions from Early Withdrawal Charges," page A-PPA-19).
The purpose of the above table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. The table
reflects expenses of the Separate Account and the Metropolitan Fund. It
assumes that
11/9/98 A-PPA-5
<PAGE>
there are no other transactions. The Example is intended for illustrative
purposes only; it should not be considered a representation of past or future
expenses. Actual expenses may be higher or lower than those shown. Annuity
taxes are not reflected in the table. See "Deductions and Charges," page A-
PPA-17, for a more detailed description of the charges and expenses imposed
upon the assets in the Separate Account.
A-PPA-6
<PAGE>
...............................................................
SUMMARY
...............................................................................
THE USE OF CERTAIN TERMS IN THIS PROSPECTUS
This Prospectus describes variable accumulation and income annuity contracts
issued by Metropolitan Life Insurance Company ("MetLife", "we", "us" or
"our"). The term "Contracts" and "Income Annuities" also includes certificates
issued under certain group arrangements. Income Annuities are described
separately beginning on page A-PPA-21. "You" as used in this Prospectus means
the participant or annuitant for whom money is invested in a Contract or
Income Annuity.
YOUR INVESTMENT CHOICES (PAGES A-PPA-11-14)
Each of the Contracts offers an account under which we guarantee specified
interest rates for specified periods (the "Fixed Interest Account"). This
Prospectus does not describe that account and will mention the Fixed Interest
Account only where necessary to explain how the "Separate Account" works. Each
Contract also offers a choice of investment options under which values can go
up or down based upon investment performance. See "Determining the Value of
Your Separate Account Investment," page A-PPA-15, for a description of
accumulation units and how these values are determined based upon investment
performance.
This Prospectus describes only the investment options available through a
"Separate Account" as distinct from the Fixed Interest Account.
A SUMMARY OF THE INVESTMENT OBJECTIVES OF THE INVESTMENT CHOICES APPEARS ON
PAGE A-PPA-12. A MORE COMPLETE DESCRIPTION OF THE INVESTMENT CHOICES IS FOUND
IN THE METROPOLITAN SERIES FUND, INC. PROSPECTUS, WHICH IS LOCATED IN THE BACK
OF THIS PROSPECTUS.
TAXES (PAGES A-PPA-29-34)
A variable annuity receives special treatment under the Federal income tax
laws. Please refer to the pages above for information concerning how the
Federal tax laws affect purchase payments and withdrawals in each particular
tax market.
PURCHASE PAYMENTS; WITHDRAWALS AND TRANSFERS (PAGES A-PPA-14-15; A-PPA-15-17)
The Contracts allow you to make new purchase payments, to transfer money
among investment options and between the Separate Account and the Fixed
Interest Account and to withdraw money credited to you ("Account Balance").
(See "Withdrawals and Transfers," page A-PPA-15.) Restrictions and early
withdrawal charges may apply to withdrawals, depending on the circumstances
and your Contract. (See "Withdrawals and Transfers," page A-PPA-15,
"Deductions and Charges," page A-PPA-17.)
DEDUCTIONS AND CHARGES (PAGES A-PPA-17-18)
Your Contract is subject to various charges.
Annual Contract Fees: There is no annual Contract fee. (There is a $20
annual Contract fee imposed on certain Fixed Interest Account balances.)
General Administrative Expenses and Mortality and Expense Risk Charge: 1.25%
on an annual basis.
Early Withdrawal Charge: A declining charge of up to 7% on amounts for the
first seven years after each purchase payment is received.
Metropolitan Series Fund, Inc.: Management fees and other expenses.
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES (PAGES A-PPA-19-20)
A withdrawal or transfer may not result in an early withdrawal charge.
Provisions are more fully described within this Prospectus. A summary appears
below.
Item 1--Transfers among investment divisions or to or from the Fixed
Interest Account
Item 2--Withdrawals that represent purchase payments made over seven years
ago
Item 3--Free Corridor
Item 4--Free Look
Item 5--Certain Income Annuities
Item 6--Death Benefit
Item 7--Mandated Withdrawals under Federal law
Item 8--Transfer from other MetLife Contracts
Item 9--Nursing Home or Terminal Illness
Item 10--Amendment to your IRA Contract
DEATH BENEFIT (PAGE A-PPA-20)
Each Contract offers a death benefit that guarantees certain payments in
case of your death even if the Account Balance has fallen below that amount.
INCOME ANNUITIES (PAGES A-PPA-21-24)
You may use your money to obtain payments guaranteed for life or for certain
other periods (an annuity). These payments may be either for specified, fixed
amounts or for amounts that can go up or down based on the investment
performance of a choice of investment options in the Separate Account
("variable income option"). You may purchase an Income Annuity if you did not
have a Contract during the accumulation period. Your Income Annuity is subject
to various charges. (See "Income Annuities--Deductions and Charges," page A-
PPA-23-24.)
A-PPA-7
<PAGE>
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the Separate Account's full
financial statements, which statements are annually audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing with the
full financial statements and related notes in the Statement of Additional
Information or as previously stated in earlier reports.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF ACCUMULATION
UNIT VALUE UNIT VALUE END UNITS END OF YEAR
PREFERENCE PLUS CONTRACTS YEAR BEGINNING OF YEAR OF YEAR (IN THOUSANDS)
------------------------- ---- ----------------- -------------- ----------------------
<S> <C> <C> <C> <C>
State Street
Research 1997 $16.49 $17.89 16,307
Income Divi-
sion 1996 $16.12 16.49 16,604
1995 13.65 16.12 15,252
1994 14.27 13.65 13,923
1993 12.98 14.27 14,631
1992 12.29 12.98 5,918
1991 10.60 12.29 1,210
1990 10.00(a) 10.60 32
State Street
Research 1997 19.22 22.89 62,604
Diversified
Division 1996 17.00 19.22 52,053
1995 13.55 17.00 42,712
1994 14.15 13.55 40,962
1993 12.70 14.15 31,808
1992 11.75 12.70 7,375
1991 9.52 11.75 1,080
1990 10.00(a) 9.52 44
MetLife Stock
Index
Division 1997 22.43 29.28 58,817
1996 18.52 22.43 43,141
1995 13.70 18.52 29,883
1994 13.71 13.70 23,458
1993 12.67 13.71 18,202
1992 11.94 12.67 8,150
1991 9.32 11.94 1,666
1990 10.00(a) 9.32 55
State Street
Research 1997 21.37 27.10 60,102
Growth Divi-
sion 1996 17.71 21.37 49,644
1995 13.47 17.71 38,047
1994 14.10 13.47 32,563
1993 12.48 14.10 24,608
1992 11.32 12.48 9,432
1991 8.61 11.32 2,824
1990 10.00(a) 8.61 178
Janus Mid Cap
Division 1997 10.00(b) 12.69 7,417
Loomis Sayles
High 1997 10.00(b) 10.51 2,375
Yield Bond Di-
vision
State Street
Research
Aggressive
Growth
Division 1997 23.77 25.05 43,359
1996 22.35 23.77 43,962
1995 17.47 22.35 33,899
1994 18.03 17.47 26,890
1993 14.89 18.03 17,094
1992 13.66 14.89 5,747
1991 8.31 13.66 1,060
1990 10.00(a) 8.31 49
T. Rowe Price
Small Cap 1997 10.00(b) 11.76 6,932
Growth
Division
Scudder Global
Equity
Division 1997 10.00(b) 10.85 4,826
Santander
International
Stock
Division 1997 13.77 13.28 15,865
1996 14.19 13.77 17,780
1995 14.25 14.19 17,553
1994 13.74 14.25 16,674
1993 9.41 13.74 6,921
1992 10.61 9.41 966
1991 10.00(c) 10.61 92
</TABLE>
In addition to the above mentioned Accumulation Units, there were
cash reserves of $14,503,548 as of December 31, 1997 applicable to
Income Annuities (including those not described in this Prospectus)
receiving annuity payouts.
(a) Inception Date July 2, 1990
(b) Inception Date March 3, 1997
(c) Inception Date July 1, 1991
11/9/98 A-PPA-8
<PAGE>
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
State Street Research Income 10.6 12.29 12.98 14.27 13.65 16.12 16.49 17.89
State Street Research Diversified 9.52 11.75 12.7 14.15 13.55 17 19.22 22.89
Met Life Stock Index 9.32 11.94 12.67 13.71 13.7 18.52 22.43 29.28
State Street Research Growth 8.61 11.32 12.48 14.1 13.47 17.71 21.37 27.1
Janus Mid Cap 12.69
Loomis Sayles High Yield Bond 10.51
State Street Research Aggressive Growth 8.31 13.66 14.89 18.03 17.47 22.35 23.77 25.05
T. Rowe Price Small Cap Growth 11.76
Scudder Global Equity 10.85
Santander International Stock 10.61 9.41 13.74 14.25 14.19 13.77 13.28
</TABLE>
Financial Statements
The financial statements for the Separate Account and MetLife are in the
Statement of Additional Information and are available upon request from MetLife.
A-PPA-9
<PAGE>
...............................................................................
OUR COMPANY AND THE SEPARATE ACCOUNT
................................................................................
WHO IS METLIFE?
We are a mutual life insurance company whose principal office is at One
Madison Avenue, New York, N.Y. 10010. We were formed in 1868 in New York and
operate as a life insurance company in all 50 states, the District of Columbia,
Puerto Rico and all provinces of Canada. MetLife, serving millions of people,
is one of the largest financial services companies in the world with many of
the largest United States corporations for its clients. As of December 31,
1997, we had approximately $330.3 billion in assets under management.
WHAT IS THE SEPARATE ACCOUNT?
We organized the Separate Account on September 27, 1983. It is an investment
account that we maintain separate from our other assets. It is registered with
the Securities and Exchange Commission as a unit investment trust under the
1940 Act. All income, gains and losses, whether or not realized, from the
Separate Account's assets are credited to or charged against the Separate
Account, without regard to our other business. In other words, the Separate
Account's assets are solely for the benefit of those who invest in the Separate
Account and no one else, including our creditors. Our obligation to honor all
of our promises under the Contracts and Income Annuities is not limited by the
amount of assets in the Separate Account.
A-PPA-10
<PAGE>
SECTION I: DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS
WHAT ARE THE CONTRACTS?
The Contracts offer you the choice of an account that pays interest
guaranteed by MetLife (the Fixed Interest Account) or an account offering a
range of investment choices where performance is not guaranteed. The Contracts
are called "annuities" since they offer a variety of payment options,
including guaranteed income for life.
We offer many types of Preference Plus Contracts to meet your individual
needs. These include contracts meeting the tax requirements under the
following provisions of the Internal Revenue Code ("Code"): (1) Individual
Retirement Annuities (IRAs) under (S)408(b); (2) Roth Individual Retirement
Annuities (Roth IRAs) under ((S))408A; (3) Simplified Employee Pensions (SEPs)
under (S)408(k); (4) Savings Incentive Match Plan for Employees Individual
Retirement Annuities (SIMPLE IRAs) under (S)408(p); (5) Tax Sheltered
Annuities (TSAs) under (S)403(b); (6) Public Employee Deferred Compensation
(PEDC) under (S)457; (7) Keogh plans under (S)401; (8) Qualified Annuity Plans
(403(a)) under (S)403(a); and (9) Non-Qualified Annuities under (S)72. Our
Contracts may be individual or group (offered to an employer, association,
trust or other group for its employees, members or participants). Group
Contracts may be issued to a bank that does nothing but hold them as
contractholder. Contracts are either allocated (we keep records of your
Account Balance) or unallocated (we keep Account Balance records only for the
plan as a whole). Some contracts have a reduced general administrative
expenses and mortality and expense risk charge as a result of reduced
administration expenses.
This Prospectus describes five types of Contracts: IRAs, Roth IRAs, SIMPLE
IRAs, SEPs and Non-Qualified.
The Prospectus will occasionally refer to the Fixed Interest Account.
However, this Prospectus does not describe that account.
MAY THE CONTRACTS BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. If your purchase payments are made under a retirement plan, the
Contract may provide that all or some of your rights as described in this
Prospectus are subject to the terms of the plan. You should consult the plan
document to determine whether there are any provisions under your plan that
may limit or affect the exercise of your rights under the Contract. Rights
that may be affected include those concerning purchase payments, withdrawals,
transfers, the death benefit and income annuity types. For example, if part of
your Account Balance represents non-vested employer contributions, you may not
be permitted to withdraw these amounts and the early withdrawal charge
calculations may not include all or part of the employer contributions. The
Contract may provide that a plan administrative fee will be paid by making a
withdrawal from your Account Balance. The Contract may require that you or
your beneficiary obtain a signed authorization from your employer or plan
administrator to exercise certain rights. Your Contract will indicate under
which circumstances this is the case. We may rely on your employer's or plan
administrator's statements to us as to the terms of the plan or your
entitlement to any amounts. We will not be responsible for determining what
your plan says.
YOUR INVESTMENT CHOICES
...............................................................................
WHAT ARE THE INVESTMENT CHOICES AND HOW DO WE PROVIDE THEM?
The investment choices are provided through our Separate Account. Divisions
available for new investments are the State Street Research Income, State
Street Research Diversified, MetLife Stock Index, State Street Research
Growth, State Street Research Aggressive Growth, and Santander International
Stock Divisions. If approved in your state, the Loomis Sayles High Yield Bond,
Janus Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, Harris
Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley
EAFE Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T.
Rowe Price Large Cap Growth Divisions are also available. If you are covered
under a group Contract, your employer, association or group may have limited
the number of available divisions. Your Contract will indicate the divisions
available to you when we issued it. We may add or eliminate divisions for some
or all persons.
The divisions do not invest directly in stocks, bonds or other investments.
Instead they buy and sell shares of mutual fund portfolios that in turn do the
investing. The portfolios are part of the Metropolitan Fund as shown on page
1. All dividends declared by any of the portfolios are earned by the Separate
Account and reinvested. Therefore, no dividends are distributed under the
Contracts. No sales or redemption charges apply to our purchase or sale
through the Separate Account of these mutual fund shares. These mutual funds
are available only through the purchase of annuities and life insurance
policies and are never sold directly to the public. These
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mutual funds are "series" types of funds registered with the Securities and
Exchange Commission as "open-end management investment companies" under the
1940 Act. Except for the Janus Mid Cap Portfolio, each fund is "diversified"
under the 1940 Act. Each division invests in shares of a comparably named
portfolio.
A summary of the investment objectives of the currently available portfolios
is as follows:
State Street Research Income Portfolio: Seeks a) the highest possible return,
by combining current income with capital gains, consistent with prudent
investment risk, and b) secondarily, the preservation of capital by investing
at least 75% of its total assets in non-convertible debt securities in the
three highest rating categories as determined by a nationally recognized
statistical rating organization, or of comparable quality.
State Street Research Diversified Portfolio: Seeks a high total return while
attempting to limit investment risk and preserve capital by investing 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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the Standard
& Poor's 500 Composite Stock Price Index ("S&P 500 Index") by normally
investing most of its assets in common stocks included in the S&P 500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital and
income, and moderate current income. Generally, the greatest portion of the
Portfolio's assets will be invested in equity securities of good quality where
the stock price represents a good value based on considerations such as price
to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of medium
capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by normally
investing at least 65% of its assets in below investment grade fixed income
securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks
and other securities convertible into or carrying the right to acquire common
stocks of less mature companies with the potential for rapid growth and
companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group of
small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of capital
by generally investing most of its assets in equity securities (primarily
common stock) of established companies listed on U.S. or foreign securities
exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital by
normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total assets
in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the return of the
Lehman Brothers Aggregate Bond Index. The Portfolio will normally invest most
of its assets in fixed income securities included in the Lehman Brothers
Aggregate Bond Index.
Morgan Stanley EAFE Index Portfolio: To equal the return of the Morgan Stanley
Capital International Europe, Australasia, Far East (MSCI EAFE) Index. The
Portfolio will normally invest most of its assets in equity securities
included in the MSCI EAFE Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital growth.
The Portfolio will normally invest at least 65% of its total assets in common
stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000 Index.
The Portfolio will normally invest most of its assets in common stocks
included in the Russell 2000 Index.
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at least
65% of its total assets in a diversified group of large capitalization growth
companies.
Each of the currently available Metropolitan Fund Portfolios pays us, the
investment manager of the Metropolitan Fund, an investment management fee. For
providing investment management services to the Lehman Brothers Aggregate Bond
Index, MetLife Stock
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Index and Russell 2000 Index Portfolios, we receive monthly compensation from
each Portfolio at an annual rate of .25% of the average daily value of the
aggregate net assets of each Portfolio. For providing investment management
services to the Morgan Stanley EAFE Index Portfolio, we receive monthly
compensation from the Portfolio at an annual rate of .30% of the average daily
assets of the aggregate net assets of the Portfolio. For providing investment
management services to the State Street Research Growth Portfolio, we receive
monthly compensation from the Portfolio at an annual rate of .55% of the
average daily value of the aggregate net assets of the Portfolio up to $500
million, .50% of such assets on the next $500 million and .45% of such assets
on amounts over $1 billion. For providing investment management services to
the State Street Research Income Portfolio, we receive monthly compensation
from the Portfolio at an annual rate of .35% of the average daily value of the
aggregate net assets up to $250 million, .30% of such assets on the next $250
million and .25% of such assets on amounts over $500 million. For providing
investment management services to the State Street Research Diversified
Portfolio, we receive monthly compensation from the Portfolio at an annual
rate of .50% of the average daily value of the aggregate net assets of the
Portfolio up to $500 million, .45% of such assets on the next $500 million and
.40% of such assets on amounts over $1 billion. For providing investment
management services to the State Street Research Aggressive Growth Portfolio,
we receive monthly compensation at an annual rate of .75% of the average daily
value of the aggregate net assets of the Portfolio up to $500 million, .70% of
such assets on the next $500 million and .65% of such assets on amounts over
$1 billion. We pay State Street Research & Management Company, one of our
subsidiaries, to provide us with sub-investment management services for the
State Street Research Income, State Street Research Diversified, State Street
Research Growth and State Street Research Aggressive Growth Portfolios.
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. Effective on or about
November 9, 1998, Santander Global Advisors, Inc., of which MetLife owns 25%
of the outstanding common stock, will become the sub-investment manager for
the Santander International Stock Portfolio.
For providing investment management services to the Loomis Sayles High Yield
Bond Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio. Loomis Sayles & Company, L.P., whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to the
Loomis Sayles High Yield Bond Portfolio. For providing investment management
services to the Janus Mid Cap Portfolio, we receive monthly compensation from
the Portfolio at an annual rate of .75% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .70% of such assets
on the next $400 million and .65% of such assets on amounts in excess of $500
million. Janus Capital Corporation is the sub-investment manager for the Janus
Mid Cap Portfolio. For providing investment management services to the T. Rowe
Price Small Cap Growth Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .55% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .50% of such assets
on the next $300 million and .45% of such assets in excess of $400 million.
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for the
T. Rowe Price Small Cap Growth and T. Rowe Price Large Cap Growth Portfolios.
For providing investment management services to the Scudder Global Equity
Portfolio, we receive monthly compensation from the Portfolio at an annual
rate of .90% of the average daily value of the aggregate net assets of the
Portfolio up to $50 million, .55% of such assets on the next $50 million, .50%
of such assets on the next $400 million and .475% of such assets on amounts in
excess of $500 million. Scudder Kemper Investments, Inc. (formerly Scudder,
Stevens & Clark, Inc.) is the sub-investment manager for the Scudder Global
Equity Portfolio.
For providing investment management services to the Harris Oakmark Large Cap
Value Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $250 million and .70% of such assets in excess of $250
million. Harris Associates LP, whose general partner is indirectly owned by
MetLife, is the sub-investment manager with respect to the Harris Oakmark
Large Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman
Partners Mid Cap Value Portfolio, we receive monthly compensation from the
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Portfolio at an annual rate of .70% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .675% of such assets
on the next $250 million, .65% of such assets on the next $500 million, .625%
of such assets on the next $750 million and .60% of such assets over $1.6
billion. Neuberger&Berman Management Incorporated is the sub-investment
manager for the Neuberger&Berman Partners Mid Cap Value Portfolio.
Sub-investment management services are provided to us and we pay fees for
such services according to contracts between us and each of the sub-investment
managers. Sub-investment management fees are solely our responsibility, not
that of the Metropolitan Fund.
The Metropolitan Fund is more fully described in its prospectus and the
Statement of Additional Information that the prospectus refers to. The
Metropolitan Fund's prospectus is attached at the end of this prospectus. The
Statement of Additional Information is available upon request.
See "The Fund and its Purpose," in the prospectus for the Metropolitan Fund
for a discussion of the different separate accounts of MetLife and
Metropolitan Tower Life Insurance Company that invest in the Metropolitan Fund
and the risks related to that arrangement.
PURCHASE PAYMENTS
...............................................................................
ARE THERE SPECIAL RULES CONCERNING THE FIRST PAYMENT AND OTHER ADMINISTRATIVE
DETAILS THAT YOU SHOULD KNOW?
Yes. All purchase payments and all requests you may have concerning the
Contracts, like a change in beneficiary, should be sent to one of our
"Designated Office(s)." We will provide you with information indicating which
Designated Office to contact regarding various matters and the addresses for
these Offices. All checks should be payable to "MetLife." You can also make
certain requests by telephone. In order to have a purchase payment credited to
you, we must receive it and completed documentation. We will provide the
appropriate forms. Under certain group Contracts, your employer, or the group
in which you are a participant or member must also identify you to us on their
reports to us and tell us how your purchase payments should be allocated among
the investment divisions and the Fixed Interest Account.
Your first purchase payment is normally credited to you within two days of
receipt at our Designated Office. However, if you fill out our forms
incorrectly or incompletely or other documentation is not completed properly,
we have up to five business days to credit the payment. If the problem cannot
be resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to
let us keep the purchase payment until the problem is remedied. If you do not
agree or we cannot reach you by the fifth business day, your purchase payment
will be returned immediately.
For IRA, Roth IRA and Non-Qualified Contracts, your purchase payments may
also be made "automatically" through procedures that we call "automatic
payroll deduction" and "check-o-matic." With automatic payroll deduction, your
employer deducts an amount from your salary and makes the purchase payment for
you. With check-o-matic, your bank deducts monies from your bank checking
account and makes the purchase payment for you.
Purchase payments, including check-o-matic payments, are effective and
valued as of 4:00 p.m. Eastern time, on the day we receive them at our
Designated Office, except when they are received (1) on a day when the
accumulation unit value (discussed later in this Prospectus) is not calculated
or (2) after 4:00 p.m., Eastern time. In those cases, the purchase payments
will be effective the next day the accumulation unit value is calculated.
Under certain circumstances, we may be able to electronically submit your
complete initial application to our Designated Office. For the purpose of
crediting and valuing any purchase payment electronically submitted with your
initial application we may, for certain Contracts, treat the electronic
purchase payment as a payment received at our Designated Office if: (1) the
electronic purchase payment is received at the Designated Office accompanied
by a correct and complete electronic application record; and (2) your actual
purchase payment, application and other documentation are received in good
order at our Designated Office within five business days following the
transmission of the electronic record. In such case, the sales representative
or local office will electronically transmit a record of your purchase payment
and application and then forward your actual purchase payment, application and
other documentation to our Designated Office. Generally, the electronic record
is received at our Designated Office the business day following its
transmission by the sales representative or local office. If, however, your
purchase payment and application are received at our Designated Office before
the electronic record, then your purchase payment will be credited and valued
as of the date it is received.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
There is no minimum purchase payment. We may reject purchase payments over
$500,000. Your purchase payments may also be limited by the Federal tax laws.
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HOW ARE PURCHASE PAYMENTS ALLOCATED?
You decide how a purchase payment is allocated among the Fixed Interest
Account and the investment divisions of the Separate Account available to your
Contract. Allocation changes for new purchase payments will be made upon our
receipt of your notification of changes. You may also specify a day as long as
it is within 30 days after we receive the request.
ARE THERE ANY LIMITS ON SUBSEQUENT PURCHASE PAYMENTS?
You may generally make purchase payments at any time before the date income
payments begin except as limited by the Federal tax laws.
You may continue to make purchase payments while you receive Systematic
Withdrawal Program payments, as described later in this Prospectus, except if
purchase payments are made through automatic payroll deduction, check-o-matic,
salary reduction or salary deduction.
In order to comply with regulatory requirements in Washington and Oregon, we
may limit the ability of a resident of either state to make purchase payments
(1) after the Contract has been held for more than three years, if the
Contract was issued after age 60 or (2) after age 63, if the Contract was
issued before age 61.
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT
...............................................................................
WHAT IS AN ACCUMULATION UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"accumulation units." When you make purchase payments or transfers into an
investment division, you are credited with accumulation units. When you
request a withdrawal or a transfer of money from an investment division,
accumulation units are liquidated. In either case, the number of accumulation
units you gain or lose is determined by taking the amount of the purchase
payment, transfer or withdrawal and dividing it by the value of an
accumulation unit on the date the transaction occurs. For example, if an
accumulation unit is $10.00 and a $500 purchase payment is made, the number of
accumulation units credited is 50 ($500 divided by $10 = 50). We calculate
accumulation units separately for each investment division of the Separate
Account.
HOW IS AN ACCUMULATION UNIT VALUE CALCULATED?
We calculate accumulation unit values once a day on every day the New York
Stock Exchange is open for trading. We call the time between two consecutive
accumulation unit value calculations the "Valuation Period." We have the right
to change the basis for the Valuation Period, on 30 days' notice, as long as
it is consistent with the law. All purchase payments, transfers and
withdrawals are valued as of the end of the Valuation Period during which the
transaction occurred. The accumulation unit values can increase or decrease,
based on the investment performance of the corresponding underlying
portfolios. If the investment performance is positive, after payment of
Separate Account expenses, accumulation unit values will go up. Conversely, if
the investment performance is negative, after payment of Separate Account
expenses, accumulation unit values will go down.
We use the term "experience factor" to describe the investment performance
for an investment division. The experience factor changes from Valuation
Period to Valuation Period to reflect the upward or downward performance of
the assets in the underlying portfolios. The experience factor is calculated
as of the end of each Valuation Period using the net asset value per share of
the underlying portfolio.The net asset value includes the per share amount of
any dividend or capital gain distribution paid by the portfolio during the
current Valuation Period, and subtracts any per share charges for taxes and
reserve for taxes. We then divide that amount by the net asset value per share
as of the end of the last Valuation Period to obtain a factor that reflects
investment performance. We then subtract a charge not to exceed .000034035
(the daily equivalent of an effective annual rate of 1.25%) for the Contracts
for each day in the Valuation Period. This charge is to cover the general
administrative expenses and the mortality and expense risk we assume under the
Contracts.
To calculate an accumulation unit value we multiply the experience factor
for the Valuation Period by the last previously calculated accumulation unit
value. For example, if the last previously calculated accumulation unit value
is $12.00 and the experience factor for the period was 1.05, the new
accumulation unit value is $12.60 ($12.00 X 1.05). On the other hand, if the
last previously calculated accumulation unit value is $12.00 and the
experience factor for the period was .95, the new accumulation unit value is
$11.40 ($12.00 X .95).
WITHDRAWALS AND TRANSFERS
...............................................................................
CAN YOU MAKE WITHDRAWALS AND TRANSFERS?
Yes. You may either withdraw all or part of your Account Balance from the
Contract or transfer it from one investment division to another or to the
Fixed Interest Account.
Withdrawals must be at least $500 (or the Account Balance, if less). You may
make an unlimited number of
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transfers. Your request must tell us the percentage or dollar amount to be
withdrawn or transferred and we may require that this request be made on the
form we provide for this purpose. If we agree, you may also submit an
authorization directing us to make transfers on a continuing periodic basis
from one investment division to another or to and from the Fixed Interest
Account. We may require that you maintain a minimum Account Balance in
investment divisions from which amounts are transferred based upon an
authorization.
WHEN WILL WITHDRAWALS OR TRANSFERS BE PROCESSED?
Generally, we will process withdrawals or transfers as of the end of the
Valuation Period during which we receive your request at our Designated
Office. We will make it as of a later date if you request. If you die before
the requested date, we will cancel the request and pay the death benefit
instead. If the withdrawal is made to provide income payments, it will be made
as of the end of the Valuation Period ending most recently before the date the
income annuity is purchased.
CAN YOU MAKE PAYMENTS DIRECTLY TO OTHER INVESTMENTS ON A TAX-FREE BASIS?
Generally yes, you can make payments directly to other investments on a tax-
free basis, if you so request, but only if all applicable requirements of the
Code are met, and we receive all information necessary for us to make the
payment.
CAN YOU MAKE CHANGES BY TELEPHONE?
Yes. You can request transfers, change your allocation of future investments
and make changes to transfers made on a continuing periodic basis from one
investment division to another or to and from the Fixed Interest Account by
telephone unless prohibited by state law. If we agree and you complete the
form we supply, you may also authorize your sales representative to request
transfers, change your allocation of future investments and make changes to
transfers made on a continuing periodic basis from one investment division to
another or to and from the Fixed Interest Account on your behalf by telephone.
Whether you or your sales representative make such requests by telephone, you
are authorizing us to act upon the telephone instructions of any person
purporting to be you or, if applicable, your sales representative, assuming
our procedures have been followed, to make these requests which affect both
your Fixed Interest and Separate Account Balances. We have instituted
reasonable procedures to confirm that any instructions communicated by
telephone are genuine. All telephone calls making such requests will be
recorded. You (or the sales representative) will be asked to produce your
personalized data prior to our initiating any requests by telephone.
Additionally, as with other transactions, you will receive a written
confirmation of your transaction. Neither we nor the Separate Account will be
liable for any loss, expense or cost arising out of any requests that we or
the Separate Account reasonably believe to be genuine. In the unlikely event
that you have trouble reaching us, requests should be made to the Designated
Office.
CAN YOU MAKE SYSTEMATIC WITHDRAWALS?
Yes. If we agree and, if approved in your state, for IRA, Roth IRA, SIMPLE
IRA, SEP and Non-Qualified Contracts, you may request us to make "automatic"
withdrawals for you on a periodic basis through our Systematic Withdrawal
Program. Systematic Withdrawal Program payments are not payments made under an
income option or under an Income Annuity, as described later in this
Prospectus. You may choose to receive Systematic Withdrawal Program payments
for either a specific dollar amount or a percentage of your Account Balance.
Beginning on or about December 15, 1998, if you choose to receive a percentage
of your Account Balance, we will determine the initial dollar amount payable
as of the date these payments begin and we will pay the dollar amount over the
remainder of the Contract Year. For example, if you ask for a percentage equal
to $12,000 and there are six months left in the Contract Year, we will pay you
$2,000 a month if payments are made monthly. For each later Contract Year that
the Systematic Withdrawal Program remains in effect, we will pay you either
the dollar amount that you have chosen or a dollar amount equal to the
percentage of your Account Balance you have chosen, applied to your Account
Balance as of your first Systematic Withdrawal Program payment date in that
Contract Year. We will pay this amount over the full Contract Year. For
example, if you ask for a percentage equal to $12,000 a year, we will pay you
$1,000 a month if payments are to be made monthly. Each Systematic Withdrawal
Program payment must be at least $50. Your payment date is the date we make
payment, which is not the date you receive it. You should allow approximately
10 business days for processing your request. If we do not receive the request
at least 10 business days in advance of the Systematic Withdrawal Program
payment start date, we will process your first Systematic Withdrawal Program
payment the following month. If you do not specify a payment date, payments
will commence 30 days from the date we receive your request. The date of the
first Systematic Withdrawal Program payment is your Systematic Withdrawal
Program anniversary date. Requests to commence Systematic Withdrawal Program
payments may not be made by telephone. Changes to the specified dollar amount
or percentage or to alter the timing of payments may be made once a year prior
to your Systematic Withdrawal Program anniversary date or, on or about
December 15, 1998, prior to the beginning of any Contract Year, unless we
agree
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otherwise. Requests for such changes must be made at least 30 days prior to
the Systematic Withdrawal Program anniversary date or, on or about December
15, 1998, at least 30 days prior to the beginning of any Contract Year, unless
we agree otherwise. You may cancel your Systematic Withdrawal Program request
at any time by telephone or by writing us at the Designated Office.
FROM WHICH INVESTMENT DIVISIONS WILL WITHDRAWALS BE MADE FOR SYSTEMATIC
WITHDRAWAL PROGRAM PAYMENTS?
Each Systematic Withdrawal Program payment may be taken on a pro rata basis
from the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money. If your Account Balance is insufficient
to make a requested Systematic Withdrawal Program payment, the remaining
Account Balance will be paid to you. You will also be able to select the
percentage to be withdrawn from each investment division and/or the Fixed
Interest Account based on your preference. If you do not specify percentages
or if there are insufficient amounts in one or more of your selected
investment divisions or the Fixed Interest Account, then your Systematic
Withdrawal Program payment will automatically be taken on a pro rata basis
from the Fixed Interest Account and investment divisions in which you then
have money.
WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A
SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of payments
over a twelve month period. If Systematic Withdrawal Program payments comprise
the first withdrawal of the Contract Year and are within the 10% Free
Corridor, calculated for this purpose as 10% of the Account Balance on the
Systematic Withdrawal Program anniversary date, no Systematic Withdrawal
Program payment will be subject to an early withdrawal charge.
Beginning on or about December 15, 1998, if you have elected the Systematic
Withdrawal Program, we will treat the full amount to be paid in a Contract
Year as a lump sum withdrawal on the first Systematic Withdrawal Program
payment date for the first Contract Year for purposes of determining how much
of the withdrawal will be exempt from the withdrawal charge. For Contract
Years thereafter, we will treat the full amount to be paid in a Contract Year
as a lump sum withdrawal as of the first Systematic Withdrawal Program payment
date after the Contract Year anniversary for purposes of determining how much
of the withdrawal will be exempt from the withdrawal charge. However, each
Systematic Withdrawal Program payment will be treated separately as of the
date of a withdrawal from your Contract to determine whether or not it is
subject to a withdrawal charge. We will withdraw that portion of the
withdrawal that constitutes the early withdrawal charge when we make the
Systematic Withdrawal Program payment. (Depending on underwriting and plan
requirements, the first Contract Year is the initial three to fifteen month
period the Contract is in force; thereafter, it is each subsequent twelve
month period).
Systematic Withdrawal Program payments in excess of the 10% Free Corridor
and Systematic Withdrawal Program payments that comprise the second or later
withdrawal of the Contract Year will be subject to an early withdrawal charge
unless the payments are from other amounts to which an early withdrawal charge
no longer applies. On or about December 15, 1998, only Systematic Withdrawal
Program payments in excess of the 10% Free Corridor will be subject to an
early withdrawal charge unless the payments are from other amounts to which an
early withdrawal charge no longer applies. See "Deductions and Charges."
Systematic Withdrawal Program payments are treated as withdrawals for
Federal income tax purposes. All or a portion of the amounts withdrawn under
Systematic Withdrawal Program will be subject to Federal income tax. If you
are under age 59 1/2, tax penalties may also apply. See "Taxes," pages
A-PPA-29-34.
CAN MINIMUM DISTRIBUTION PAYMENTS BE MADE ON A PERIODIC BASIS?
Yes. Rather than receiving your minimum distribution in one annual payment,
you may request that we make minimum distribution payments to you on a
periodic basis. However, you may be required to meet certain total Account
Balance minimums at the time you request periodic minimum distribution
payments.
DEDUCTIONS AND CHARGES
...............................................................................
ARE THERE ANNUAL CONTRACT CHARGES?
There are no Separate Account annual Contract charges. (There is a $20
annual Contract fee imposed on certain Fixed Interest Account balances.)
WHAT ARE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that Contract
purchasers and participants may live for a longer period
11/9/98 A-PPA-17
<PAGE>
...............................................................................
of time than we estimated. Then we would be obligated to pay more income
benefits than anticipated. We also bear the risk that the guaranteed death
benefit we pay will be larger than the Account Balance. The expense risk
portion of the mortality and expense risk charge is that our expenses in
administering the Contracts will be greater than we estimated.
These charges do not reduce the number of accumulation units credited to you.
These charges are calculated and paid every time we calculate the value of
accumulation units. (See "How is an accumulation unit value calculated?" on A-
PPA-15.)
The sum of these charges on an annual basis (computed and payable each
Valuation Period) will not exceed 1.25% of the average value of the assets in
each investment division. Of this charge, we estimate that .50% is for
administrative expenses and .75% is for the mortality and expense risk.
During 1997, these charges were $87,711,107 for all contracts in Separate
Account E.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES AND WHEN ARE THEY PAID?
Some jurisdictions tax what are called "annuity considerations." These may
include purchase payments, account balances and death benefits. In most
jurisdictions, we currently do not deduct any money from purchase payments,
Account Balances or death benefits to pay these taxes. Our practice generally
is to deduct money to pay annuity taxes only when you purchase an income
annuity. In Mississippi, Wyoming, South Dakota, Kentucky and Washington, D.C.,
we may also deduct money to pay annuity taxes on lump sum withdrawals or when
you purchase an income annuity. We may deduct an amount to pay annuity taxes
sometime in the future since the laws and the interpretation of the laws
relating to annuities are subject to change.
A chart that shows the states where annuity taxes are charged and the amount
of these taxes is on page A-PPA-36.
WHAT IS THE EARLY WITHDRAWAL CHARGE (SALES LOAD)?
The following paragraphs describe how the early withdrawal charge is
determined. The early withdrawal charge reimburses us for our costs in selling
the Contracts. We may use any of our profits derived from the mortality and
expense risk charge to pay for any of our costs in selling the Contracts that
exceed the revenues generated by the early withdrawal charge. However, we
believe that our sales expenses may exceed revenues generated by the early
withdrawal charge and, in such event, we will pay such excess out of our
surplus.
To determine the early withdrawal charge for Preference Plus Contracts, we
treat your Fixed Interest Account and Separate Account as if they were a single
account and ignore both your actual allocations and what account or investment
division the withdrawal is actually coming from. To do this, we first assume
that your withdrawal is from amounts (other than earnings) that can be
withdrawn without an early withdrawal charge, then from other amounts (other
than earnings) and then from earnings, each on a "first-in-first-out" basis.
Once we have determined the amount of the early withdrawal charge, we will
actually withdraw it from each investment division in the same proportion as
the withdrawal is being made. In determining what the withdrawal charge is, we
do not include earnings, although the actual withdrawal to pay it may come from
earnings.
For partial withdrawals from an investment division, the early withdrawal
charge is determined by dividing the amount that is subject to the early
withdrawal charge by 100% minus the applicable percentage shown below. Then we
will make the payment directed, and withdraw the early withdrawal charge from
that investment division.
For a full withdrawal from an investment division we multiply the amount to
which the withdrawal charge applies by the percentage shown below, keep the
result as an early withdrawal charge and pay you the rest. We will treat your
request as a request for a full withdrawal from an investment division if your
Account Balance in that investment division is not sufficient to pay both the
requested withdrawal and the early withdrawal charge.
For the Contracts, withdrawal charges are imposed on amounts (other than
earnings) for the first seven years after the purchase payment is received as
shown in the table below.
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[8 &
1 2 3 4 5 6 7 BEYOND]
<S> <C> <C> <C> <C> <C> <C> <C>
7% 6% 5% 4% 3% 2% 1% 0%
</TABLE>
As required by the Federal securities laws, your total early withdrawal
charges will never exceed 9% of all your purchase payments applied to the
investment divisions to the date of the withdrawal. When no allocations or
transfers are made to the Separate Account, except in connection with the
Equity Generator SM investment strategy, withdrawal charges will be calculated
as described above, but the charge imposed will not exceed earnings.
A-PPA-18
<PAGE>
...............................................................................
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES
...............................................................................
CAN YOU MAKE WITHDRAWALS OR TRANSFERS WITHOUT EARLY WITHDRAWAL CHARGES?
Yes. There are several types of withdrawals that will not result in an early
withdrawal charge to you. Tax penalties may still apply and the amounts
withdrawn may also be subject to Federal income tax, see "Taxes," pages A-PPA-
29-34. We may require proof satisfactory to us that any necessary conditions
have been met.
The following describes the situations where we do not impose an early
withdrawal charge:
1. Transfers made among the investment divisions of the Separate Account or
to and from the Fixed Interest Account.
2. Withdrawals that represent purchase payments made over seven years ago.
3. A Free Corridor withdrawal: the Free Corridor is the first withdrawal of
up to 10% of your Account Balance during the Contract Year. Beginning on or
about December 15, 1998 and if approved in your state, the Free Corridor
withdrawal percentage of up to 10% of your Account Balance may be taken in an
unlimited number of partial withdrawals. For each withdrawal we calculate the
percentage it represents of your Account Balance and whenever the total of
such percentages exceeds the specified percentage the early withdrawal charge
applies.
4. Free Look: You may cancel your Contract within 10 days (20 days in North
Dakota and Idaho) after you receive it by telling us in writing. We will then
refund all of your purchase payments (however for Contracts issued in New
York, Illinois, Minnesota and Pennsylvania we will instead pay you your
Account Balance). The Free Look is 30 days if the Contract was issued to you
in California and you are 60 years old or older. If you cancel the Contract,
we will then refund your Account Balance. If you purchased your Contract by
mail, you may have more time to return your Contract.
5. You purchase an income annuity from us for life or a noncommutable period
of five years or more.
6. You die before any income payments have been made and we pay your
beneficiary a death benefit.
7. Except for Non-Qualified and Roth IRA Contracts, the withdrawal is
required to avoid Federal income tax penalties or to satisfy Federal income
tax rules or Department of Labor regulations that apply to the Contract from
which the withdrawal is made.
8. Transfer from other MetLife Contracts: (A) For transfers prior to January
1, 1996: If you rolled over amounts from other MetLife contracts we designate,
of the following two formulas, we will apply the one that is more favorable to
you:
(1) treat our other contract and this Contract as if they were one for
purposes of determining when a purchase payment was made, credit your purchase
payments with the time you held them under our other contract prior to the
time they were rolled over or
(2) subject the rollover amounts to a withdrawal charge determined as
described above in "What is the early withdrawal charge (sales load)?" as
follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[6 &
1 2 3 4 5 BEYOND]
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0
</TABLE>
(B) For transfers commencing on or after January 1, 1996:
(1) If you roll over amounts from other MetLife contracts we designate that
have been in force at least two years (except as covered in (2) below), we
will apply the one of the following two formulas that is more favorable to
you: (a) the same withdrawal charge schedule that would have applied to the
rollover amounts had they remained in your other MetLife contracts, however,
any exceptions or reductions to the basic withdrawal charge percentage that
this Contract does not provide for (such as a 0% charge at the end of an
interest rate guarantee period or a 3% charge at the third anniversary) will
not apply; or (b) subject the rollover amounts to a withdrawal charge
determined as described above in "What is the early withdrawal charge (sales
load)?" as follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
6 &
1 2 3 4 5 BEYOND
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0%
</TABLE>
For this purpose, purchase payment year is measured from the date of the
rollover, not the original purchase payment date under the other MetLife
contracts.
(2) If the other MetLife contracts have been in force less than two years or
provide for a separate withdrawal charge for each purchase payment, we will
treat the other contracts and this Contract as if they were one for purposes
of determining when a purchase payment was made by crediting under this
Contract your purchase payments with the time you held them under our other
contract prior to the date they were rolled over.
11/9/98 A-PPA-19
<PAGE>
...............................................................................
(C) We may instead, if provided for by this Contract, treat another contract
and this Contract as if they were one for purposes of determining when a
purchase payment was made by deeming your purchase payments to have been made
under this Contract on the dates they were made under the other contract.
9. Nursing Home or Terminal Illness: To the first withdrawal if you or your
spouse (A) is a resident in certain nursing home facilities for at least 90
consecutive days or (B) has been diagnosed as terminally ill and is expected to
die within twelve months, but only if this provision has been approved by your
state.
10. If permitted under the tax laws and approved in your state, you accept an
amendment to your IRA Contract, converting it to a Roth IRA Contract.
DEATH BENEFIT
................................................................................
WHAT IS THE DEATH BENEFIT?
The death benefit is the greatest of (i) your Account Balance, (ii) your
highest Account Balance as of December 31 of any fifth Contract anniversary
less any later partial withdrawals and any later annual Contract charges
withdrawn from the Fixed Interest Account and (iii) the total of all of your
purchase payments less any partial withdrawals.
WHEN AND TO WHOM WILL THE DEATH BENEFIT BE PAID?
The death benefit will not be paid until we receive proof of death and
appropriate directions regarding the Account Balance. If we receive proof of
death without any appropriate directions, we will take no action with regard to
the Account Balance until we receive appropriate directions.
You name your beneficiary.
The payee may take a lump sum cash payment or apply the death benefit (less
any applicable annuity taxes) to an income annuity from the types available
under your Contract.
INCOME OPTIONS
................................................................................
CAN METLIFE PROVIDE YOU WITH AN INCOME GUARANTEED FOR LIFE OR OFFER A WIDE
CHOICE OF OTHER PERIODS?
Yes. You may withdraw all or a portion of your Account Balance and apply that
money (less any annuity taxes and applicable Contract charges that must be
paid) to an income annuity.
You can receive income payments guaranteed for life on a monthly, quarterly,
semiannual or annual basis. Non-life contingent annuities are available which
guarantee payments for at least five years, but not more than 30 years.
Other life annuity options are available which have a refund feature or are
guaranteed for a period of time and are life contingent afterwards. The amount
of the initial payment under an income annuity must be at least $50 ($20 in
Massachusetts). You may defer receipt of income payments for up to 12 months
once an income annuity has been elected.
All provisions relating to income annuities are subject to the limitations
imposed by the Code.
WHAT TYPES OF INCOME OPTIONS ARE AVAILABLE?
Both fixed and variable income options are available. Under a fixed income
option, we guarantee a specified, fixed payment, which will depend on the
income option chosen, the age and sex of the annuitant and joint annuitant, if
applicable, (except where unisex rates are required by law) and the portion of
your Account Balance used to provide the fixed income option. If a currently
issued immediate annuity of the same type will provide greater income payments,
the immediate annuity rates will be used.
If you do not select an income option by the date the Contract specifies, you
have not withdrawn your entire Account Balance, and your Contract was not
issued under a retirement plan, you will be issued a life annuity with a ten
(10) year guarantee. In that case, if you do not tell us otherwise, your Fixed
Interest Account Balance will be used to provide a fixed income option and your
Separate Account Balance will be used to provide a variable income option.
More information concerning the variable income option, including investment
choices, determining the value of variable income payments, transfers,
deductions and charges, variable income option types and taxes are discussed
under "Income Annuities."
A-PPA-20
<PAGE>
SECTION II: INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS
...............................................................................
WHAT ARE INCOME ANNUITIES?
Income Annuities provide you with a series of payments for either a period
of time or life that are based upon the investment performance of the
investment divisions of the Separate Account. The amount of the payment will
fluctuate and is not guaranteed as to a specified amount. You may elect to
have a portion of your income payment under the fixed income option that is
guaranteed by MetLife's general account. That portion of the payment from the
fixed income option will not fluctuate and is fixed. You may purchase an
Income Annuity (except for Roth IRAs where this is not available) even if you
did not have a Contract during the accumulation period.
Income Annuities can be either group or individual and are offered as IRAs,
SIMPLE IRAs, SEPs, TSAs, PEDC, Keogh, 403(a) and Non-Qualified annuities. This
prospectus also describes Roth IRA Income Annuities which are available only
if purchased with the Account Balance of a Roth IRA Contract. Some income
annuities have a reduced general administrative expenses and mortality and
expense risk charge as a result of reduced administration expenses.
This Prospectus describes five types of Income Annuities: IRAs, Roth IRAs,
SIMPLE IRAs, SEPs and Non-Qualified Annuities.
MAY THE INCOME ANNUITY BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. Your Income Annuity may provide that your choice of income types is
subject to the terms of your retirement plan. Your Income Annuity will
indicate under which circumstances this is the case. We may rely on your
employer's or plan administrator's statements to us as to the terms of the
plan or your entitlement to any amounts. We will not be responsible for
determining what your plan says.
WHAT ARE THE INVESTMENT CHOICES?
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive Growth,
Santander International Stock Divisions, and, if approved in your state,
Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman Partners Mid
Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth Divisions
described earlier in Section 1 under "YOUR INVESTMENT CHOICES." If you are
covered under a group Income Annuity, the employer, association or group may
have limited the number of available divisions. Your Income Annuity will
indicate which divisions were available to you when we issued it. We may add
or eliminate divisions for some or all persons. In some states, you may be
limited to four investment divisions to provide the variable income payment or
up to three investment divisions if a fixed income option is also selected.
ADMINISTRATION
...............................................................................
WHAT ADMINISTRATIVE DETAILS SHOULD YOU KNOW?
Your purchase payment and all requests concerning Income Annuities should be
sent to our Designated Office. We will provide you with the address for this
Office. All checks should be payable to "MetLife." You can also make certain
requests by telephone. In order to have the purchase payment for the Income
Annuity credited to you, we must receive your payment and complete
documentation. We will provide the appropriate forms. Under group Income
Annuities, your employer or the group in which you are an annuitant or member
must also identify you to us on their reports and tell us how the purchase
payment should be allocated among the investment divisions of the Separate
Account and the fixed income option.
Your purchase payment is normally credited to you within two days of receipt
at our Designated Office. However, if you fill out our forms incorrectly or
incompletely or other documentation is not completed properly, we have up to
five business days to credit the purchase payment. If the problem cannot be
resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to
let us keep the purchase payment until the problem is remedied. If you do not
agree, your purchase payment will be returned immediately.
Purchase payments are effective and valued as of 4:00 p.m., Eastern time, on
the day we receive them at our Designated Office, except when they are
received (1) on a day when the annuity unit value (which will be discussed
later in this Prospectus) is not calculated or (2) after 4:00 p.m., Eastern
time. In those cases, the payment will be effective the next day the annuity
unit value is calculated.
11/9/98 A-PPA-21
<PAGE>
...............................................................................
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
Your purchase payment must be large enough to produce an initial income
payment of at least $50 ($20 in Massachusetts).
HOW IS THE PURCHASE PAYMENT ALLOCATED?
You decide how the purchase payment is allocated among the fixed income
option and the investment divisions of the Separate Account available to your
Income Annuity.
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS
................................................................................
WHAT IS AN ANNUITY UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"annuity units." These annuity units are similar to "accumulation units"
described earlier in Section I except that we deduct the contract fee (which
may be waived) and applicable annuity taxes from the purchase payment before we
determine the number of annuity units in each investment division chosen.
HOW IS AN ANNUITY UNIT VALUE CALCULATED?
We calculate annuity unit values once a day on every day the New York Stock
Exchange is open for trading. We call the time between two consecutive annuity
unit value calculations the "Valuation Period." We have the right to change the
basis for the Valuation Period, on 30 days' notice, as long as it is consistent
with the law. All purchase payments and transfers are valued as of the end of
the Valuation Period during which the transaction occurred. The annuity unit
values can increase or decrease, based on the investment performance of the
corresponding underlying portfolios. If the investment performance is positive,
after payment of Separate Account expenses and the deduction for the assumed
investment rate ("AIR"), discussed later in this Prospectus, annuity unit
values will go up. Conversely, if the investment performance is negative, after
payment of Separate Account expenses and the deduction for the AIR, annuity
unit values will go down.
When we determine the annuity unit value for an investment division, we use
the same "experience factor" as that derived for the calculation of
accumulation units as described in Section I.
To calculate an annuity unit value, we first multiply the experience factor
for the period by a factor based on the AIR and the number of days in the
valuation period. For an AIR of 4% and a one day valuation period, the factor
is .99989255, which is the daily discount factor for an effective annual rate
of 4%. (The AIR may be in the range of 3% to 6%, as defined in your Income
Annuity and the laws in your state.) The resulting number is then multiplied by
the last previously calculated annuity unit value to produce the new annuity
value.
HOW IS A VARIABLE INCOME PAYMENT DETERMINED AND WHAT IS THE AIR?
Variable income payments can go up or down based upon the investment
performance of the investment divisions in the Separate Account. AIR is the
rate used to determine the first variable income payment and serves as a
benchmark against which the investment performance of the investment divisions
is compared. The higher the AIR, the higher the first variable income payment
will be. Subsequent variable income payments will increase only to the extent
that the investment performance of the investment divisions exceeds the AIR
(and Separate Account charges). Variable income payments will decline if the
investment performance of the Separate Account does not exceed the AIR (and
Separate Account charges). A lower AIR will result in a lower initial variable
income payment, but subsequent variable income payments will increase more
rapidly or decline more slowly as changes occur in the investment performance
of the investment divisions.
WHEN ARE VARIABLE INCOME PAYMENTS DETERMINED AND HOW OFTEN WILL THEY CHANGE?
Variable income payments are determined as of the 10th day prior to the date
each variable income payment is to be paid or the issue date, if later. Each
variable income payment may vary from a prior payment, depending, as discussed
above, upon the investment performance of the investment divisions, the AIR and
Separate Account charges.
TRANSFERS
................................................................................
CAN YOU MAKE TRANSFERS?
You can make transfers from one investment division to another or from an
investment division to a fixed income option as long as the total number of
investment divisions under your Income Annuity is no greater than four (or
three investment divisions if a fixed income option is chosen). You may make an
unlimited number of transfers. Your request must tell us the percentage to be
transferred. You may not make a transfer from the fixed income option to an
investment division.
WHEN WILL TRANSFERS BE PROCESSED?
Generally, we will process a transfer as of the end of the Valuation Period
during which we receive your
A-PPA-22
<PAGE>
...............................................................................
request at our Designated Office. We will make it as of a later date if you
request. If you die before the requested date, we will cancel the request and
continue to make payments to your beneficiary under a guarantee or a joint
annuitant or pay your beneficiary a refund, if you have chosen one of these
income types.
CAN YOU MAKE TRANSFERS BY TELEPHONE?
Yes. You can make transfer requests by telephone unless prohibited by state
law. If we agree, and you complete the form we supply, you may also authorize
your sales representative to make transfer requests on your behalf by
telephone. All telephone transfers are subject to the same procedures and
limitations of liability as described earlier in Section I.
DEDUCTIONS AND CHARGES
................................................................................
WHAT IS THE CONTRACT FEE?
A one time $350 contract fee is taken from your purchase payment prior to
crediting annuity units and determining the amount of any fixed income
payments. This charge covers our administrative costs which include preparation
of the Income Annuities, review of applications and recordkeeping. If you
purchase an Income Annuity as the variable income option under your Contract
and you purchased the Contract at least two years earlier, the contract fee
will be waived.
WHAT ARE THE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that annuitants may
live for a longer period of time than we estimated. Then we would be obligated
to pay more income benefits than anticipated. The expense risk portion of the
mortality and expense risk charge is that our expenses in administering the
Income Annuity will be greater than we estimated.
These charges do not reduce the number of annuity units credited to you.
These charges are calculated and paid every time we calculate the value of
annuity units. (See "How is an annuity unit value calculated?" on A-PPA-22.)
The sum of these charges on an annual basis (computed and payable each
Valuation Period) will not exceed 1.25% of the average value of the assets in
each investment division. Of this charge, we estimate that .50% is for
administrative expenses and .75% is for the mortality and expense risk.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES?
Yes. Some jurisdictions tax what are called "annuity considerations." We
deduct money to pay annuity taxes when you make the purchase payment. A chart
that shows the states where annuity taxes are charged and the amount of these
taxes is on page A-PPA-36.
WHAT VARIABLE INCOME TYPES ARE AVAILABLE?
Three persons figure in the description below: the owner of the Income
Annuity (the person with all rights under the Contract including the right to
direct who receives payments), the annuitant (the person whose life is the
measure for determining the timing and sometimes the amount of income payments)
and the beneficiary (the person who may receive benefits if no annuitants or
owners are living).
Your Lifetime Annuity--A variable income payable during the annuitant's life.
Your Lifetime with a Guaranteed Period Annuity--A variable income payable
during the annuitant's life. If, at the death of the annuitant, payments have
been made for less than the guarantee period, payments are made to the owner of
the annuity (or the beneficiary if the owner dies before the end of the
guarantee period) for the rest of the guarantee period.
Your Lifetime With a Refund Annuity--A variable income payable during the
annuitant's life. If, at the death of the annuitant, the total of all of our
payments is less than the purchase payment that we received, we will pay an
amount equal to the difference to the owner of the annuity (or to the
beneficiary if the owner is not alive) when the annuitant dies.
Income for Two Lives Annuity--A variable income payable while either of two
annuitants is alive. After one annuitant dies payments continue if the other
annuitant is alive, otherwise payments stop. Payments after one annuitant dies
may be the same as those paid while both were alive or may be a lower
percentage selected when the annuity is purchased (e.g. 75%, 66 2/3% or 50%).
Income for Two Lives with a Guaranteed Period Annuity--This is the same as
the Income for Two Lives Annuity described above, but we guarantee to pay the
full amount (not a reduced percentage) for the guarantee period even if one or
both annuitants die. If, at the death of both annuitants, payments have been
made for less than the guarantee period, payments are made to the owner of the
annuity (or the beneficiary if the owner dies before the end of the guarantee
period) for the rest of the guarantee period.
A-PPA-23
<PAGE>
...............................................................................
Income for Two Lives with a Refund Annuity--This is the same as the Income
for Two Lives Annuity described above but if, at the death of both annuitants,
the total of all of our payments is less than the purchase payment that we
received, we will pay an amount equal to the difference to the owner of the
annuity (or to the beneficiary if the owner is not alive) when the annuitant
dies.
Income for a Guaranteed Period Annuity--A variable income payable for a
guarantee period (5-30 years). Payments cease at the end of the guarantee
period (which is often called a "term certain" period) even if the annuitant is
still alive. If the annuitant dies prior to the end of the guarantee period,
payments are made to the owner of the annuity (or to the beneficiary if the
owner dies before the end of the guarantee period) for the rest of the
guarantee period.
IS THERE A FREE LOOK?
Yes. There is a Free Look when you purchase an Income Annuity. There is no
Free Look when an Income Annuity is the variable income option under a
Contract. You may cancel your Income Annuity within 10 days (20 days in North
Dakota and Idaho) after you receive it by telling us in writing. We will then
refund your purchase payment (however, for Income Annuities issued in
Pennsylvania, Illinois and Minnesota we will instead pay you the value of your
annuity units). The Free Look is 30 days if the Income Annuity was issued in
California and you are 60 years old or older. If you cancel the Income Annuity,
we will then refund the value of your annuity units. If you purchased your
Income Annuity by mail, you may have more time to return your Income Annuity.
A-PPA-24
<PAGE>
SECTION III: OTHER DEFERRED CONTRACT AND INCOME ANNUITY PROVISIONS
CAN WE CANCEL YOUR CONTRACT OR INCOME ANNUITY?
We may not cancel your Income Annuity.
We may cancel your Contract. If we do so for a Contract delivered in New
York, we will return the full Account Balance. In all other cases, you will
receive an amount equal to what you would have received if you had requested a
total withdrawal of your Account Balance. Early withdrawal charges may apply.
We will only cancel your Contract if we do not receive any purchase payments
for you for 36 consecutive months and your Account Balance is less than
$2,000. We will only do so to the extent allowed by law.
ARE THERE SPECIAL PROVISIONS THAT APPLY IF YOU ARE A PARTICIPANT IN A PLAN
SUBJECT TO ERISA?
Yes. If your plan is subject to ERISA (the Employee Retirement Income
Security Act of 1974) and you are married, the income payments, withdrawal
provisions, and methods of payment of the death benefit under your Contract or
Income Annuity may be subject to your spouse's rights as described below.
Generally, the spouse must give qualified consent whenever you elect to:
a. choose income payments other than on a qualified joint and survivor
annuity basis ("QJSA") (one under which we make payments to you during
your lifetime and then make payments reduced by no more than 50% to your
spouse for his or her remaining life, if any); or choose to waive the
qualified pre-retirement survivor annuity benefit ("QPSA") (the benefit
payable to the surviving spouse of a participant who dies with a vested
interest in an accrued retirement benefit under the plan before payment
of the benefit has begun);
b. make certain withdrawals under plans for which a qualified consent is
required;
c. name someone other than the spouse as your beneficiary;
d. use your accrued benefit as security for a loan exceeding $5,000.
Generally, there is no limit to the number of your elections as long as a
qualified consent is given each time. The consent to waive the QJSA must meet
certain requirements, including that it be in writing that acknowledges the
identity of the designated beneficiary and the form of benefit selected,
dated, signed by your spouse, witnessed by a notary public or plan
representative and in a form satisfactory to us. The waiver of a QJSA
generally must be executed during the 90-day period ending on the date on
which income payments are to commence, or the withdrawal or the loan is to be
made, as the case may be. If you die before benefits commence, your surviving
spouse will be your beneficiary unless he or she has given a qualified consent
otherwise. The qualified consent to waive the QPSA benefit and the beneficiary
designation must be made in writing that acknowledges the designated
beneficiary, dated, signed by your spouse, witnessed by a notary public or
plan representative and in a form satisfactory to us. Generally, there is no
limit to the number of beneficiary designations as long as a qualified consent
accompanies each designation. The waiver of and the qualified consent for the
QPSA benefit generally may not be given until the plan year in which you
attain age 35. The waiver period for the QPSA ends on the date of your death.
If your benefit is worth $5,000 or less, your plan may provide for
distribution of your entire interest in a lump sum without spousal consent.
WHEN ARE YOUR REQUESTS EFFECTIVE?
In general, your requests are effective when we receive them at our
Designated Office unless otherwise provided by this Prospectus.
WILL WE CONFIRM YOUR TRANSACTIONS?
Yes. In general we will send you a confirmation statement indicating that a
transaction recently took place. Certain transactions which are made on a
periodic basis, such as check-o-matic, Systematic Withdrawal Program payments
and pre-authorized systematic purchase payments which are transfers from the
Fixed Interest Account, may be confirmed quarterly.
CAN WE CHANGE THE PROVISIONS OF YOUR CONTRACT OR INCOME ANNUITY?
Yes. We have the right to make certain changes to your Contract or Income
Annuity, but only as permitted by law. We make changes when we think they
would best serve the interest of all participants or would be appropriate in
carrying out the purposes of the Contract or Income Annuity. If the law
requires, we will also get your approval and that of any appropriate
regulatory authorities. Examples of the changes we may make include:
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1. To operate the Separate Account in any form permitted under the 1940 Act
or in any other form permitted by law.
2. To take any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act.
3. To transfer any assets in an investment division to another investment
division, or to one or more separate accounts, or to our general account, or
to add, combine or remove investment divisions in the Separate Account.
4. To substitute for the portfolio shares in any investment division, the
shares of another class of the Metropolitan Fund or the shares of another
investment company or any other investment permitted by law.
5. To change the way we assess charges, but without increasing the aggregate
amount charged to the Separate Account and any currently available portfolio
in connection with the Contracts or Income Annuities.
6. To make any necessary technical changes in the Contracts or Income
Annuities in order to conform with any of the above-described actions.
If any changes result in a material change in the underlying investments of
an investment division in which you have an Account Balance, we will notify
you of the change. You may then make a new choice of investment divisions. For
Contracts issued in Pennsylvania (and Income Annuities where required by law),
we will ask your approval before any technical changes are made.
WHAT ARE YOUR VOTING RIGHTS REGARDING PORTFOLIO SHARES?
In accordance with our view of the present applicable law, we will vote the
shares of each of the portfolios held by the Separate Account (which are
deemed attributable to the Contract or Income Annuity) at regular and special
meetings of the shareholders of the portfolio based on instructions received
from those having the voting interest in corresponding investment divisions of
the Separate Account. However, if the 1940 Act or any rules thereunder should
be amended or if the present interpretation thereof should change, and as a
result we determine that we are permitted to vote the shares of the portfolios
in our own right, we may elect to do so.
Accordingly, you have voting interests under the Contracts or Income
Annuities. The number of shares held in each Separate Account investment
division deemed attributable to you is determined by dividing the value of
accumulation or annuity units attributable to you in that investment division,
if any, by the net asset value of one share in the portfolio in which the
assets in that Separate Account investment division are invested. Fractional
votes will be counted. The number of shares for which you have the right to
give instructions will be determined as of the record date for the meeting.
Portfolio shares held in each registered separate account of MetLife or any
affiliate that are or are not attributable to life insurance policies or
annuity contracts (including the Contracts and Income Annuities) and for which
no timely instructions are received will be voted in the same proportion as
the shares for which voting instructions are received by that separate
account. Portfolio shares held in the general accounts or unregistered
separate accounts of MetLife or its affiliates will be voted in the same
proportion as the aggregate of (i) the shares for which voting instructions
are received and (ii) the shares that are voted in proportion to such voting
instructions. However, if we or an affiliate determine that we are permitted
to vote any such shares, in our own right, we may elect to do so subject to
the then current interpretation of the 1940 Act or any rules thereunder.
You will be entitled to give instructions regarding the votes attributable
to your Contract or Income Annuity in your sole discretion.
You may give instructions regarding, among other things, the election of the
board of directors, ratification of the election of independent auditors, and
the approval of investment and sub-investment managers.
CAN YOUR VOTING INSTRUCTIONS BE DISREGARDED?
Yes. MetLife may disregard voting instructions under the following
circumstances (1) to make or refrain from making any change in the investments
or investment policies for any portfolio if required by any insurance
regulatory authority; (2) to refrain from making any change in the investment
policies or any investment adviser or principal underwriter or any portfolio
which may be initiated by those having voting interests or the Metropolitan
Fund's board of directors, provided MetLife's disapproval of the change is
reasonable and, in the case of a change in investment policies or investment
manager, based on a good faith determination that such change would be
contrary to state law or otherwise inappropriate in light of the portfolio's
objective and purposes; or (3) to enter into or refrain from entering into any
advisory agreement or underwriting contract, if required by any insurance
regulatory authority.
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In the event that MetLife does disregard voting instructions, a summary of
the action and the reasons for such action will be included in the next
semiannual report.
WHO SELLS YOUR CONTRACT OR INCOME ANNUITY AND DO YOU PAY A COMMISSION ON THE
PURCHASE OF YOUR CONTRACT OR INCOME ANNUITY?
All Contracts and Income Annuities, certificates and interests in the
Contracts and Income Annuities are sold through individuals who are our
licensed sales representatives. We are registered with the Securities and
Exchange Commission as a broker-dealer under the Securities Exchange Act of
1934, and we are a member of the National Association of Securities Dealers,
Inc. They also are sold through other registered broker-dealers. They also may
be sold through the mail.
The licensed sales representatives and broker-dealers who sell Contracts and
Income Annuities and certificates and interests in the Contracts and Income
Annuities may be compensated for these sales by commissions that we pay. There
is no front-end sales load deducted from purchase payments to pay sales
commissions. The Separate Account also does not pay sales commissions. The
commissions we pay range from 0% to 6% depending on the age of the participant
or annuitant.
We also make payments to our licensed sales representatives based upon the
total Account Balances of the Contracts assigned to the sales representative.
Under the program, we pay an amount up to .12% of the total Account Balances
of the Contracts, other registered variable annuity contracts, certain mutual
fund account balances and cash values of certain life insurance policies.
These asset based commissions compensate the sales representative for
servicing the Contracts. These payments are not made for Income Annuities.
DOES METLIFE ADVERTISE THE PERFORMANCE OF THE SEPARATE ACCOUNT?
Yes. From time to time we advertise the performance of various Separate
Account investment divisions. This performance is stated in terms of either
"yield," "change in accumulation unit value," "change in annuity unit value"
or "average annual total return" or some combination of the foregoing. Yield,
change in accumulation unit value, change in annuity unit value and average
annual total return figures are based on historical earnings and are not
intended to indicate future performance. The yield figures quoted in
advertisements will refer to the net income generated by an investment in a
particular investment division for a thirty day period or month, which is
specified in the advertisement, and then expressed as a percentage yield of
that investment. This percentage yield is then compounded semiannually. Change
in accumulation unit value or change in annuity unit value refers to the
comparison between values of accumulation or annuity units over specified
periods in which an investment division has been in operation, expressed as a
percentage. Change in accumulation unit value or change in annuity unit value
may also be expressed as an annualized figure. In addition, change in
accumulation unit value or change in annuity unit value may be used to
illustrate performance for a hypothetical investment (such as $10,000) over
the time period specified. Yield and change in accumulation unit value figures
do not reflect the possible imposition of an early withdrawal charge of up to
7% of the amount withdrawn attributable to a purchase payment, which may
result in a lower figure being experienced by the investor. Average annual
total return differs from the change in accumulation unit value and change in
annuity unit value because it assumes a steady rate of return and reflects all
expenses and applicable early withdrawal charges. Performance figures will
vary among the various Contracts and Income Annuities as a result of different
Separate Account charges and early withdrawal charges. Performance may be
calculated based upon historical performance of the underlying portfolios of
the Metropolitan Fund and may assume that certain Contracts were in existence
prior to their inception date. After the inception date, actual accumulation
unit or annuity unit data is used.
Advertisements regarding the Separate Account may contain comparisons of
hypothetical after-tax returns of currently taxable investments versus returns
of tax deferred investments. From time to time, the Separate Account may
compare the performance of its investment divisions with the performance of
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds, Treasury Bills, certificates of deposit
and savings accounts. The Separate Account may use the Consumer Price Index in
its advertisements as a measure of inflation for comparison purposes. From
time to time, the Separate Account may advertise its performance ranking among
similar investments or compare its performance to averages as compiled by
independent organizations such as Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS(R) and The Wall Street Journal. The Separate Account
may also advertise its performance in comparison to appropriate indices, such
as the Standard & Poor's 500 Composite Stock Price Index, the Standard &
Poor's Mid Cap 400 Index, the Standard & Poor's Small Cap 600 Index, the
Russell 2000 Index, the Russell 2000 Growth Index, the Lehman Brothers
Aggregate Bond Index, the Lehman Brothers Government/Corporate Bond Index, the
Merrill Lynch
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High Yield Bond Index, the Morgan Stanley Capital International All Country
World Index and the Morgan Stanley Capital International Europe, Australasia,
Far East Index.
Performance may be shown for certain investment strategies that are made
available under certain Contracts. The first is the "Equity Generator." Under
the "Equity Generator," an amount equal to the interest earned during a
specified interval (i.e., monthly, quarterly) in the Fixed Interest Account is
transferred to the MetLife Stock Index Division or the State Street Research
Aggressive Growth Division. The second technique is the "EqualizerSM." Under
this strategy, once during a specified period (i.e., monthly, quarterly), a
transfer is made from the MetLife Stock Index Division or the State Street
Research Aggressive Growth Division to the Fixed Interest Account or from the
Fixed Interest Account to the MetLife Stock Index Division or State Street
Research Aggressive Growth Division in order to make the account and the
division equal in value. The third strategy is the "Index SelectorSM." Under
this strategy, once during a specified period (i.e., quarterly, annually)
transfers are made among the Lehman Brothers Aggregate Bond Index, MetLife
Stock Index, Morgan Stanley EAFE Index and Russell 2000 Index Divisions and
the Fixed Interest Account in order to bring the percentage of the total
Account Balance in each of these divisions and Fixed Interest Account back to
the current allocation of your choice of one of several asset allocation
models. The elements which form the basis for the models are provided by
MetLife which may rely on a third party for its expertise in creating
appropriate allocations. The models are designed to correlate to various risk
tolerance levels associated with investing and are subject to change from time
to time.
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector Return"
for each asset allocation model will be calculated by presuming a certain
dollar value at the beginning of a period and comparing this dollar value with
the dollar value based on historical performance, at the end of the period,
expressed as a percentage. The "Return" in each case will assume that no
withdrawals have occurred. We may also show performance for the Equity
Generator, Equalizer and Index Selector investment strategies using other
investment divisions for which these strategies are made available in the
future. If we do so, performance will be calculated in the same manner as
described above, using the appropriate account and/or investment divisions.
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SECTION IV: TAXES
GENERAL
Federal tax laws are complex and are subject to frequent change as well as
to judicial and administrative interpretation. The following is a general
summary intended to point out what we believe to be some general rules and
principles, and not to give specific tax or legal advice. Failure to comply
with the law may result in significant penalties. For details or for advice on
how the law applies to your individual circumstances, consult your tax advisor
or attorney. You may also get information from the Internal Revenue Service.
In the opinion of our attorneys, the Separate Account and its operations
will be treated as part of MetLife, and not taxed separately. We are taxed as
a life insurance company. Thus, although the Contracts and Income Annuities
allow us to charge the Separate Account with any taxes or reserves for taxes
attributable to it, we do not expect that under current law we will do so.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR DEFERRED CONTRACT?
All contributions under the Contracts, other than contributions under Non-
Qualified and Roth IRA Contracts, non-deductible contributions under IRA
Contracts and certain other qualified Contracts, will be contributed on a
"before-tax" basis. This means that the purchase payments either reduce your
income, entitle you to a tax deduction or are not subject to current income
tax. To the extent contributions to your Contract were not subject to Federal
income tax, withdrawals of these contributions will be subject to Federal
income taxes. Earnings under your Contract are generally subject to income tax
when distributed. However, "qualified distributions" of earnings from a Roth
IRA are not subject to Federal income tax.
Contributions to Non-Qualified and Roth IRA Contracts, as well as non-
deductible contributions to an IRA Contract, are made on an "after-tax" basis
so that making purchase payments does not reduce the taxes you pay. Earnings
under Non-Qualified and IRA Contracts are normally not taxed until withdrawn,
if you, as the owner, are an individual. Thus, that portion of any withdrawal
that represents income is taxed when you receive it, but that portion that
represents purchase payments is not, to the extent previously taxed. For Roth
IRA Contracts, "qualified distributions" of earnings are not subject to
Federal income tax. Withdrawals of contributions are generally not subject to
income tax. However, withdrawals from a Roth IRA of taxable converted amounts
may be subject to a penalty tax if made before age 59 1/2.
The IRA Contracts accept both purchase payments that entitle you or the
owner to a current tax deduction or to an exclusion from income and those that
do not. Taxation of withdrawals depends on whether or not you or the owner
were entitled to deduct or exclude the purchase payments from income in
compliance with the Code. Roth IRA Contracts only accept "after-tax"
contributions.
All taxable distributions from the Contracts will be subject to Federal
income tax withholding unless the payee elects to have no withholding. The
rate of withholding is as determined by the Code and Regulations thereunder at
the time of payment.
Each type of Contract is subject to various tax limitations. Typically,
except for the Non-Qualified Contracts, the maximum amount of purchase payment
is limited under Federal tax law and there are limitations on how long money
can be left under the Contracts before withdrawals must begin. A 10% tax
penalty applies to certain taxable withdrawals from the Contract (or in some
cases from the plan or arrangement that purchased the Contract) before you are
age 59 1/2. Under a SIMPLE IRA, the tax penalty is increased to 25% for
withdrawals during the first two years of an employee's participation in the
SIMPLE IRA. The following paragraphs will briefly summarize some of the
federal tax rules on a Contract-by-Contract basis, but will make no attempt to
mention or explain every single rule that may be relevant to you. We are not
responsible for determining if your plan or arrangement satisfies the
requirements of the Code.
Traditional IRA Contracts. Annual contributions to all IRAs may not exceed
the lesser of $2,000 or 100% of your "compensation" as defined by the Code,
except "spousal IRAs" discussed in the next paragraph. Generally, no
contributions are allowed during or after the tax year in which you attain age
70 1/2. Contributions other than those allowed are subject to a 6% excess
contribution tax penalty. Special rules apply to withdrawals of excess
contributions. These dollar and age limits do not apply to tax-free
"rollovers" or transfers from other IRAs or from other tax-favored plans that
the Code allows.
Annual contributions are generally deductible up to the above limits if
neither you nor your spouse was an "active participant" in another qualified
retirement plan during the taxable year. You will not be treated as
11/9/98 A-PPA-29
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married for these purposes if you lived apart for the entire taxable year and
file separate returns. For 1998, if you are an "active participant" in another
retirement plan and if your adjusted gross income is $30,000 or less ($50,000
for married couples filing jointly, however, never fully deductible for a
married person filing separately), annual contributions are fully deductible.
However, contributions are not deductible if your adjusted gross income is
over $40,000 ($60,000 for married couples filing jointly, $10,000 for a
married person filing separately). If your adjusted gross income falls between
these amounts, your maximum deduction will be phased out. For an individual
who is not an "active participant" but whose spouse is, the adjusted gross
income limits for the nonactive participant spouse is $150,000 for a full
deduction (with a phase-out between $150,000 and $160,000). If you file a
joint return and you and your spouse are under age 70 1/2, you and your spouse
may be able to make annual IRA contributions of up to $4,000 ($2,000 each) to
two IRAs, one in your name and one in your spouse's. Neither can exceed
$2,000, nor can it exceed your joint compensation.
Taxable withdrawals (other than tax-free transfers or "rollovers" to other
individual retirement arrangements) before age 59 1/2 are subject to a 10% tax
penalty. This penalty does not apply to withdrawals (1) paid to a beneficiary
or your estate after your death; (2) due to your permanent disability (as
defined in the Code); (3) made in substantially equal periodic payments (not
less frequently than annually) over the life or life expectancy of you or you
and another person named by you as your beneficiary; (4) to pay deductible
medical expenses; (5) to enable certain unemployed persons to pay medical
insurance premiums; (6) made after December 31, 1997 to pay for qualified
higher education expenses; or (7) made after December 31, 1997 for qualified
first time home purchases. If you are under age 59 1/2 and are receiving
Systematic Withdrawal Program payments that you intend to qualify as a series
of substantially equal periodic payments under (S)72(t) of the Code and thus
not subject to the 10% tax penalty, any modifications to your Systematic
Withdrawal Program payments before age 59 1/2 or five years after beginning
Systematic Withdrawal Program payments will result in the retroactive
imposition of the 10% tax penalty. You should consult with your tax adviser to
determine whether you are eligible to rely on any exceptions to the 10% tax
penalty before you elect to receive any Systematic Withdrawal Program payments
or make any modifications to your Systematic Withdrawal Program payments.
If you made both deductible and non-deductible contributions, a partial
withdrawal will be treated as a pro rata withdrawal of both, based on all of
your IRAs (not just the IRA Contracts). The portion of the withdrawal
attributable to non-deductible contributions (but not the earnings on them) is
a nontaxable return of principal, and the 10% tax penalty does not apply. You
must keep track of which contributions were deductible and which weren't, and
make annual reports to the IRS if non-deductible contributions were made.
Withdrawals may be transferred to another IRA without Federal tax
consequences if Code requirements are met. Your Contract is not forfeitable
and you may not transfer it.
Your entire interest in the Contract must be withdrawn or begun to be with-
drawn generally by April 1 of the calendar year following the year in which
you reach age 70 1/2 and a tax penalty of 50% applies to withdrawals which
should have been made but were not. Complex rules apply to the timing and cal-
culation of these withdrawals. Other complex rules apply to how rapidly with-
drawals must be made after your death. Generally, if you die before the re-
quired withdrawals have begun, we must make payment of your entire interest
within five years of the year in which you died or begin payments under an in-
come annuity allowed by the Code to your beneficiary over his or her lifetime
or over a period not beyond your beneficiary's life expectancy starting by the
December 31 of the year following the year in which you die. If your spouse is
your beneficiary, and, if your Contract permits, payments may be made over
your spouse's lifetime or over a period not beyond your spouse's life expec-
tancy starting by the December 31 of the year in which you would have reached
age 70 1/2, if later. If your beneficiary is your spouse, he or she may elect
to continue the Contract as his or her own IRA Contract after your death. If
you die after the required withdrawal has begun, payments must continue to be
made at least as rapidly as under the method of distribution that was used as
of the date of your death. The IRS allows you to aggregate the amount required
to be withdrawn from each individual retirement arrangement you own and to
withdraw this amount in total from any one or more of the individual retire-
ment arrangements you own.
Roth IRA Contracts: You may contribute up to the annual contribution limit
to a Roth IRA in 1998 if your adjusted gross income is not in excess of
$95,000 ($150,000 for married couples filing jointly). The contribution limits
to a Roth IRA are phased out ratably for individuals with income between
$95,000 and $110,000 and for married couples filing jointly with income be-
tween $150,000 and $160,000; and for married couples filing separately between
$0 and $10,000. Annual contributions to all IRAs, including Roth IRAs, may not
exceed the lesser of $2,000 or 100% of your "compensation" as defined by the
Code, except for "spousal IRAs." These limits on annual contributions do not
apply to a rollover
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from a Roth IRA to another Roth IRA or a conversion from an existing IRA to a
Roth IRA. You may make contributions to a Roth IRA after age 70 1/2. Excess
contributions are subject to a 6% excess contribution tax penalty. Special
rules apply to withdrawals of excess contributions.
You may convert/rollover an existing IRA to a Roth IRA if your adjusted gross
income does not exceed $100,000 in the year you convert. If you are married but
file separately, you may not convert a non-Roth IRA into a Roth IRA.
Except to the extent you have non-deductible IRA contributions, the amount
converted from a non-Roth IRA into a Roth IRA is taxable. Generally, the 10%
early withdrawal penalty does not apply to conversions/ rollovers. (See excep-
tion discussed below.) For conversions occurring in 1998, the taxable amount
will be included ratably in income over a four year period beginning in 1998,
unless you elect otherwise.
Distributions from a Roth IRA are made first from contributions and then from
earnings. Generally, withdrawals from contributions are not subject to tax.
However, withdrawals of taxable converted amounts prior to age 59 1/2 and made
within five taxable years from such conversion will be subject to the 10% pre-
mature penalty tax (unless you meet an exception). In addition, withdrawals in
1998, 1999 or 2000 of converted amounts that have received four year income in-
clusion treatment will be included in income in the year of the withdrawal (in
addition to the amounts to be included under the four year income inclusion
election). The total aggregate amount to be included in income shall not exceed
the total taxable amount of the conversion.
Withdrawals of earnings will not be subject to Federal income tax if they are
"qualified distributions." In order to be a qualified distribution, the with-
drawal must be: (a) made at least five taxable years from the year you estab-
lished a Roth IRA, and (b) made after age 59 1/2, or for death, disability, or
a first-time home purchase (up to $10,000). (Please consult your tax advisor
regarding the state income tax treatment of your withdrawal.)
The withdrawal of earnings not meeting the foregoing requirements will be
subject to income tax and possibly the 10% premature tax penalty.
Mandatory minimum distribution rules do not apply while you are alive.
Generally, when you die, we must make payment of your entire interest within
five years of the year in which you died or begin payments under an income
annuity allowed by the Code to your beneficiary over his/her lifetime or over a
period not beyond your beneficiary's life or life expectancy starting by
December 31 of the year following the year in which you die.
Since the Roth IRA was signed into the tax law in August, 1997, and many
aspects of the law have yet to be clarified, you should consult your tax
advisor regarding developments concerning the tax treatment of Roth IRAs and
the appropriateness of the Roth IRA to your particular situation.
SEP Contracts. Partners and sole proprietors may make purchase payments under
SEPs for themselves and their employees, and corporations may make purchase
payments under SEPs for their employees. Complex rules apply to which employees
or other persons must be allowed to participate, and what contributions may be
made for each of them. Once a contribution is made, you (not the employer) have
all rights to it. Once contributions are made (under these SEP rules), your SEP
generally operates as if it were an IRA purchased by you under the IRA rules
discussed above. An employer is not permitted to establish a salary reduction
SEP plan ("SARSEP") after December 31, 1996. However, you may make
contributions, in accordance with your plan's provisions, to your existing
SARSEP contract if your employer's SARSEP plan was established prior to January
1, 1997.
SIMPLE IRAs. If an employer has no more than 100 employees (who earn at least
$5,000) and the SIMPLE IRA is the exclusive tax-qualified plan of the employer,
employees may make contributions on a before-tax basis of up to $6,000 (subject
to indexing) and the employer must generally match employee contributions
dollar-for-dollar up to 3% of compensation. Under certain circumstances, the
employer can elect to make a lesser matching contribution or make a
contribution equal to 2% of compensation for all eligible employees. SIMPLE
IRAs are exempt from complex nondiscrimination, top-heavy and reporting rules.
Once a contribution is made, you (not the employer) have all rights to it. Once
contributions are made under these SIMPLE IRA rules, your SIMPLE IRA generally
operates as if it were an IRA purchased by you under the IRA rules discussed
above. (However, the tax penalty for early withdrawals is generally increased
for withdrawals within the first two years of an employee's participating in
the SIMPLE IRA.)
Non-Qualified Contracts. No limits apply under the Code to the amount of
purchase payments that you may make. Tax on income earned under the Contracts
is generally deferred until it is withdrawn only if you, as owner of the
Contract, are an individual (or are treated as a natural person under certain
other circumstances specified by the Code). The following discussion assumes
that this is the case.
Any withdrawal is generally treated as coming first from earnings (and thus
subject to tax) and next from
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your contributions (and thus a nontaxable return of principal) only after all
earnings are paid out. This rule does not apply to payments made under income
annuities, however. Such payments are subject to an "exclusion ratio" which
determines how much of each payment is a non-taxable return of your
contributions and how much is a taxable payment of earnings. Once the total
amount treated as a return of your contributions equals the amount of such
contributions, all remaining payments are fully taxable. If you die before all
contributions are returned, the unreturned amount may be deductible on your
final income tax return or deductible by your beneficiary if payments continue
after your death. We will tell the purchaser of an income annuity what your
contributions were and how much of each income payment is a non-taxable return
of contributions.
Taxable withdrawals (other than tax-free exchanges to other Non-Qualified
contracts) before you are age 59 1/2 are subject to a 10% tax penalty. This
penalty does not apply to withdrawals (1) paid to a beneficiary or your estate
after your death; (2) due to your permanent disability (as defined in the
Code); or (3) made in substantially equal periodic payments (not less
frequently than annually) over the life or life expectancy of you or you and
another person named by you as your beneficiary.
Your Non-Qualified Contract may be exchanged for another non-qualified
contract without incurring Federal income taxes if Code requirements are met.
Under the Code, withdrawals need not be made by a particular age. However, It
is possible that the Internal Revenue Service may determine that the Contract
must be surrendered or income payments must commence by a certain age, e.g.,
85 or older. If you die before payment under an income annuity begins, we must
make payment of your entire interest in the Contract within five years of your
death or begin payments under an income annuity allowed by the Code to your
beneficiary within one year of your death. If your spouse is your beneficiary
or a co-owner of the Non-Qualified Contract, this rule does not apply. If you
die after income payments begin, payments must continue to be made at least as
rapidly as before your death in accordance with the income type selected.
The tax law treats all non-qualified contracts issued after October 21, 1988
by the same company (or its affiliates) to the same owner during any one
calendar year as one annuity contract. This may cause a greater portion of
your withdrawals from the Contract to be treated as income than would
otherwise be the case. Although the law is not clear, the aggregation rule may
also adversely affect the tax treatment of payments received under an income
annuity where the owner has purchased more than one non-qualified annuity
during the same calendar year from the same or an affiliated company after
October 21, 1988, and is not receiving income payments from all annuities at
the same time.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR INCOME ANNUITY?
All purchase payments under the Income Annuities, other than purchase pay-
ments under Non-Qualified and Roth IRA Income Annuities and purchase payments
consisting of non-deductible contributions under IRA Income Annuities, will be
on a "before-tax" basis. This means that the purchase payment was either a re-
duction from income, entitled you to a tax deduction or was not subject to
current income tax. Because of this, Federal income taxes are payable on the
full amount of money paid as income payments under the Income Annuity.
The Non-Qualified Income Annuities are issued on an "after-tax basis" so
that making a purchase payment does not reduce the taxes you pay. That portion
of any income payment that represents income is taxed when you receive it, but
that portion that represents the purchase payment is a nontaxable return of
principal. For the Roth IRA Income Annuity, "qualified distributions" of
earnings are not subject to tax. Withdrawals of contributions are generally
not subject to income tax. However, withdrawals from a Roth IRA of taxable
converted amounts may be subject to a penalty tax if made before age 59 1/2.
The IRA Income Annuities accept both purchase payments that have entitled
you as the owner to a current tax deduction or to a reduction in taxable
income and those that do not. Taxation of income payments depends on whether
or not you as the owner were entitled to deduct or exclude the purchase
payments from income in compliance with the Code. Roth IRA contracts only
accept "after-tax" contributions.
All taxable income payments will be subject to Federal income tax
withholding unless the payee elects to have no withholding. The rate of
withholding is as determined by the Code at the time of payment.
Income payments that are allowed before you are age 59 1/2 are generally
subject to an additional 10% tax penalty on the taxable portion of the income
payment. Under a SIMPLE IRA, the tax penalty is increased to 25% for
withdrawals during the first two years of an employee's participation in the
SIMPLE IRA. This penalty does not apply to income payments (1) paid to a
beneficiary or your estate after your death; (2) due to your permanent
disability (as defined in the Code); (3) made in substantially equal periodic
payments (not less frequently than annually) over the life or life expectancy
11/9/98 A-PPA-32
<PAGE>
...............................................................................
of you or you and another person named by you as your beneficiary; or (4)
under a Non-Qualified Income Annuity purchased with a single purchase payment
which provides for substantially equal payments (to be made not less
frequently than annually) commencing no later than one year from the purchase
date. For IRAs, SIMPLE IRAs and SEPs, the 10% tax penalty will not apply to
income payments to pay deductible medical expenses, (whether or not you
actually itemize deductions); to enable certain unemployed persons to pay
medical insurance premiums; made after December 31, 1997 to pay for qualified
higher education expenses; or made after December 31, 1997 for qualified first
time home purchases. There is a possibility that if you make transfers as
described earlier in this Prospectus before age 59 1/2 or within five years of
the purchase of the Income Annuity, the exercise of the transfer provision may
cause the retroactive imposition of this tax.
Income payments from a Roth IRA Income Annuity generally will be tax-free to
the extent the payment represents the return of contributions. However,
withdrawals from a Roth IRA of taxable converted amounts may be subject to a
penalty tax if made before age 59 1/2. Distributions from earnings will not be
subject to income taxes if they are "qualified distributions." To the extent
your income payments relate to earnings that do not meet the definition of
"qualified distribution" they will be subject to income tax and may be subject
to the 10% tax penalty if you are under 59 1/2 and do not meet one of the
exceptions previously described. However, withdrawals of taxable converted
amounts prior to age 59 1/2 and made within five taxable years from such
conversion will be subject to the 10% premature penalty tax (unless you meet
an exception). In addition, withdrawals in 1998, 1999 or 2000 of converted
amounts that have received four year income inclusion treatment will be
included in income in the year of the withdrawal (in addition to the amounts
to be included under the four year income inclusion election). The total
aggregate amount to be included in income shall not exceed the total taxable
amount of the conversion. Since the Roth IRA was signed into the tax law in
August, 1997, and since many aspects of the law have yet to be clarified, you
should consult with your tax advisor regarding developments concerning the tax
treatment of Roth IRAs and the appropriateness of the Roth IRA Income Annuity
to your particular situation. The following paragraphs will briefly summarize
some of the federal tax rules, but we will make no attempt to mention or
explain every single rule that may be relevant to you. We are not responsible
for determining if your plan or arrangement satisfies the requirements of the
Code.
You must generally begin receiving distributions under the IRA, SIMPLE IRA,
and SEP Income Annuities no later than the April 1 of the calendar year
following the year in which you reach age 70 1/2 and a tax penalty of 50%
applies to payments which should have been made but were not. This does not
apply to a Roth IRA Income Annuity. Complex rules apply to the timing and
calculation of these income payments. Other complex rules apply to how rapidly
income payments must be made after your death. If you die before income
payments begin under an Income Annuity, the Code generally requires that your
entire interest be paid within five years of the year in which you died or
over a period not exceeding your beneficiary's life or life expectancy. If you
die before income payments begin, we will pay your entire interest under the
Contract in a lump sum to your beneficiary after we receive proof of your
death. For IRA, SIMPLE IRA and SEP Income Annuities, if you die after income
payments begin, payments must continue to be made in accordance with the
income type selected. The Code requires that payments of your remaining
interest in the Contract be made at least as rapidly as under the method of
distribution that was used at the time of your death.
For the Roth IRA Income Annuity, the Code requires any remaining payment be
made to your beneficiary within five years of the year in which you died or
over a period not exceeding your beneficiary's life or life expectancy.
Therefore, if you choose a Roth IRA Income Annuity that has a period certain
(e.g., an income annuity for life with a ten year term certain), the period
certain cannot exceed the greater of five years or the life expectancy of your
beneficiary. (Subsequent changes to your beneficiary after choosing a Roth IRA
Income Annuity may cause you to be in violation of this rule.)
Non-Qualified Income Annuities. The following discussion assumes that you
are an individual (or are treated as a natural person under certain other cir-
cumstances specified in the Code).
Income payments are subject to an "exclusion ratio" which determines how
much of each income payment is a non-taxable return of your purchase payment
and how much is a taxable payment of earnings. Generally, once the total
amount treated as a return of your purchase payment equals the amount of such
purchase payment, all remaining income payments are fully taxable. If you die
before the purchase payment is returned, the unreturned amount may be
deductible on your final income tax return or deductible by your beneficiary
if income payments continue after your death. We will tell you what your
purchase payment was and how much of each income payment is a non-taxable
return of your purchase payment.
If you die before income payments begin, the Code generally provides that we
must make payment of your
11/9/98 A-PPA-33
<PAGE>
..........................................................................
entire interest in the Income Annuity within five years of the date of your
death. If you die before income payments begin under your Income Annuity, we
will pay your entire interest under your Income Annuity in a lump sum to your
beneficiary after we receive proof of your death. If you die after income
payments begin, payments must continue to be made at least as rapidly as under
the method of distribution before your death in accordance with the income type
selected.
The tax law treats two or more non-qualified contracts issued after October
21, 1988 by the same company (or its affiliates) to the same owner during any
one calendar year as one annuity contract. It is unclear whether this rule
adversely affects the tax treatment of income payments received under a
contract which was issued during the same calendar year in which you purchased
another annuity contract from the same company (or its affiliates) under which
you are not yet receiving income payments.
A-PPA-34
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C>
Cover Page................................................................ 1
Table of Contents......................................................... 1
Independent Auditors...................................................... 2
Services.................................................................. 2
Distribution of Certificates and Interests in the Contracts and Income
Annuities................................................................ 2
Early Withdrawal Charge................................................... 2
Variable Income Payments.................................................. 2
Performance Data.......................................................... 4
Financial Statements of the Separate Account.............................. 15
Financial Statements of MetLife........................................... 37
</TABLE>
A-PPA-35
<PAGE>
APPENDIX
ANNUITY TAX TABLE
The following is a current list of jurisdictions in which annuity taxes apply
in respect of the Contracts and Income Annuities and the applicable annuity
tax rates:
<TABLE>
<CAPTION>
NON-QUALIFIED
AND ROTH IRA
TSA CONTRACTS IRA, SIMPLE IRA AND KEOGH AND 403(A) PEDC CONTRACTS CONTRACTS AND
AND INCOME SEP CONTRACTS AND CONTRACTS AND AND INCOME INCOME
ANNUITIES INCOME ANNUITIES(1) INCOME ANNUITIES ANNUITIES(2) ANNUITIES
------------- ------------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
California.............. 0.5% 0.5%(3) 0.5% 2.35% 2.35%
District of Columbia.... 2.25% 2.25% 2.25% 2.25% 2.25%
Kentucky(4)............. 2.0% 2.0% 2.0% 2.0% 2.0%
Maine................... -- -- -- -- 2.0%
Nevada.................. -- -- -- -- 3.5%
Puerto Rico............. 1.0% 1.0% 1.0% 1.0% 1.0%
South Dakota............ -- -- -- -- 1.25%
U.S. Virgin Islands..... 5.0% 5.0% 5.0% 5.0% 5.0%
West Virginia........... 1.0% 1.0% 1.0% 1.0% 1.0%
Wyoming................. -- -- -- -- 1.0%
</TABLE>
- -------
(1) Annuity tax rates applicable to IRA, SIMPLE IRA and SEP Contracts and
Income Annuities purchased for use in connection with individual
retirement trust or custodial accounts meeting the requirements of
(S)408(a) of the Code are included under the column headed "IRA, SIMPLE
IRA and SEP Contracts and Income Annuities."
(2) Annuity tax rates applicable to Contracts and Income Annuities purchased
under retirement plans of public employers meeting the requirements of
(S)401(a) of the Code are included under the column headed "Keogh
Contracts and Income Annuities."
(3) With respect to Contracts and Income Annuities purchased for use in
connection with individual retirement trust or custodial accounts meeting
the requirements of (S)408(a) of the Code, the annuity tax rate in
California is 2.35% instead of 0.5%.
(4) The annuity tax in Kentucky is repealed effective January 1, 2000.
A-PPA-36
<PAGE>
INDEX
<TABLE>
<CAPTION>
A-PPA
<S> <C>
ACCOUNT BALANCE............................................ 7
ACCUMULATION UNIT VALUES................................... 8, 9
Calculation............................................... 15
ANNUAL CONTRACT FEE........................................ 4, 7, 17
ANNUITY TAXES ............................................. 18, 36
ANNUITY UNITS.............................................. 22
ASSUMED INVESTMENT RATE.................................... 22
AUTOMATIC PAYROLL DEDUCTION................................ 14
AVERAGE ANNUAL TOTAL RETURN................................ 27
CANCELLATION............................................... 25
CHANGE IN ACCUMULATION UNIT VALUE.......................... 27
CHANGE IN ANNUITY UNIT VALUE............................... 27
CHECK-O-MATIC.............................................. 14, 15, 25
COMMISSION................................................. 27
CONFIRMATION............................................... 25
CONTRACTS.................................................. 1, 7, 11
CONTRACT YEAR.............................................. 17
DEATH BENEFIT.............................................. 7, 20
DESIGNATED OFFICE.......................................... 14
DIVIDENDS.................................................. 11
EARLY WITHDRAWAL CHARGE (DEFERRED SALES LOAD).............. 5, 7, 18
EQUALIZER SM .............................................. 28
EQUITY GENERATOR SM ....................................... 18, 28
ERISA...................................................... 25
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES................... 7, 19-20
Amendment to IRA.......................................... 20
Certain Purchase Payments................................. 19
Death..................................................... 19
Federal Taxes............................................. 19
Free Corridor............................................. 19
Free Look................................................. 19
Income Annuity............................................ 19
Nursing Home or Terminal Illness.......................... 20
Transfers................................................. 19
Transfers from other MetLife Contracts.................... 19
EXPERIENCE FACTOR.......................................... 15
FIXED INCOME OPTION........................................ 20
FREE CORRIDOR.............................................. 17, 19
FREE LOOK.................................................. 19, 24
GENERAL ADMINISTRATIVE EXPENSES CHARGE..................... 4, 7, 17
INCOME ANNUITIES........................................... 1, 7, 19, 20, 21-28
Administration............................................ 21
Annuity Unit Value........................................ 22
Annuity Taxes............................................. 23
Assumed Investment Rate................................... 22
Contract Fee.............................................. 23
Free Look................................................. 24
General Administrative Expenses Charge.................... 23
Income Types.............................................. 23
Investment Choices........................................ 21
Mortality and Expense Risk Charge......................... 23
Income for Two Lives Annuity.............................. 23
Income for Two Lives with a Guaranteed Period Annuity..... 23
Income for Two Lives with Refund Annuity.................. 24
</TABLE>
A-PPA-37
<PAGE>
<TABLE>
<CAPTION>
A-PPA
<S> <C>
Your Lifetime Annuity................................... 23
Your Lifetime with a Guaranteed Period Annuity.......... 23
Your Lifetime with a Refund Annuity..................... 23
Income for a Guaranteed Period Annuity.................. 24
Purchase Payment........................................ 21
Transfers............................................... 22-23
Taxes................................................... 32-34
Valuation Period........................................ 22
INCOME OPTIONS............................................ 20
Fixed Income Option..................................... 20
Variable Income Option.................................. 20
INDEX SELECTOR SM......................................... 28
INDIVIDUAL RETIREMENT ANNUITY CONTRACTS................... 1, 11, 14, 16, 19,
20, 21, 29, 30, 31,
32, 33, 36
4, 5, 8, 9, 11-14,
INVESTMENT CHOICES........................................ 21
Harris Oakmark Large Cap Value Portfolio................ 1, 4, 5, 11-13, 21
1, 4, 5, 8, 9, 11-
Janus Mid Cap Portfolio................................. 13, 21
Lehman Brothers Aggregate Bond Index Portfolio.......... 1, 4, 5, 11-13, 21
1, 4, 5, 8, 9, 11-
Loomis Sayles High Yield Bond Portfolio................. 13, 21
1, 4, 5, 8, 9, 11-
MetLife Stock Index Portfolio........................... 13, 21
Morgan Stanley EAFE Index Portfolio..................... 1, 4, 5, 11-13, 21
Newberger&Berman Partners Mid Cap Value Portfolio....... 1, 4, 5, 11-14, 21
Russell 2000 Index Portfolio............................ 1, 4, 5, 11-13, 21
1, 4, 5, 8, 9, 11-
Santander International Stock Portfolio................. 13, 21
1, 4, 5, 8, 9, 11-
Scudder Global Equity Portfolio......................... 13, 21
1, 4, 5, 8, 9, 11-
State Street Research Aggressive Growth Portfolio....... 13, 21
1, 4, 5, 8, 9, 11-
State Street Research Diversified Portfolio............. 13, 21
1, 4, 5, 8, 9, 11-
State Street Research Growth Portfolio.................. 13, 21
1, 4, 5, 8, 9, 11-
State Street Research Income Portfolio.................. 13, 21
T. Rowe Price Large Cap Growth Portfolio................ 1, 4, 5, 11-13, 21
1, 4, 5, 8, 9, 11-
T. Rowe Price Small Cap Growth Portfolio................ 13, 21
MANAGEMENT FEES........................................... 4, 5, 12, 13, 14
MORTALITY AND EXPENSE RISK CHARGE......................... 4, 17
NON-QUALIFIED CONTRACT.................................... 1, 11, 14, 16, 19,
21, 29, 31, 32, 33,
36
NURSING HOME OR TERMINAL ILLNESS.......................... 20
PERFORMANCE............................................... 27
PURCHASE PAYMENTS (CONTRIBUTIONS)......................... 7, 14-15
REBALANCER SM (withdrawals and transfers)................. 15
ROTH IRA.................................................. 1, 11, 14, 16, 19,
21, 29-31, 32, 33,
36
SALES LOAD................................................ 4, 17-18, 27
SALES REPRESENTATIVES..................................... 27
SEPARATE ACCOUNT.......................................... 1, 7, 9, 10, 27, 29
SIMPLIFIED EMPLOYEE PENSION CONTRACT...................... 1, 11, 16, 21, 31,
33, 36
SUMMARY................................................... 7
SYSTEMATIC WITHDRAWAL PROGRAM............................. 16, 17, 25, 30
TAXES..................................................... 7, 16, 17, 23, 29-34
General--all markets.................................... 29
IRA Contracts........................................... 29-33, 36
Non-Qualified Contracts................................. 29, 31, 32, 33, 36
Roth IRA Contracts...................................... 30, 31, 32, 33, 36
SEP Contracts........................................... 29, 31, 33, 36
SIMPLE IRAs............................................. 29, 31, 33, 36
</TABLE>
A-PPA-38
<PAGE>
<TABLE>
<CAPTION>
A-PPA
<S> <C>
TELEPHONE REQUESTS............................................... 16
TOTAL OPERATING EXPENSES......................................... 4
TRANSFERS........................................................ 7, 15, 16, 19
VALUATION PERIOD................................................. 15, 22, 23
VOTING RIGHTS.................................................... 26-27
WITHDRAWALS...................................................... 15-17, 18, 19
YIELD............................................................ 27
</TABLE>
A-PPA-39
<PAGE>
REQUEST FOR A STATEMENT OF ADDITIONAL
INFORMATION/CHANGE OF ADDRESS
If you would like any of the following Statements of
Additional Information, or have changed your address,
please check the appropriate box below and return to
the address below.
[_] Metropolitan Life Separate Account E,
Metropolitan Series Fund, Inc.
[_] I have changed my address. My CURRENT address is:
Name:
- ------------------------------ ---------------------------
(Contract Number) Address:
---------------------------
- ------------------------------ ---------------------------
(Signature) zip
METROPOLITAN LIFE INSURANCE COMPANY
ATTN: ALAN DEMICHELE
RETIREMENT AND SAVINGS CENTER, AREA 2H
ONE MADISON AVENUE
NEW YORK, NY 10010
<PAGE>
Preference Plus(R) Account
Prospectus
May 1, 1998
As Supplemented
November 9, 1998
Plus
Pro
Preference Plus
Tax Sheltered Annuities . Public Employee Deferred Compensation . Keogh .
Qualified Annuity Plans under Section 403(a) of the Internal Revenue Code . Tax
Sheltered Annuities . Public Employee Deferred Compensation . Keogh . Qualified
Annuity Plans under Section 403(a) of the Internal Revenue Code . Tax Sheltered
Annuities . Public Employee Deferred Compensation . Keogh . Qualified Annuity
Plans under Section 403(a) of the Internal Revenue Code . Tax Sheltered
Annuities . Public Employee Deferred Compensation . Keogh . Qualified Annuity
Plans under Section 403(a) of the Internal Revenue Code .
MetLife
Retirement & Savings Center
PPATSAPEDCPROSP(1198) 98102QGR(exp0599)MLIC-LD
<PAGE>
METROPOLITAN LIFE SEPARATE ACCOUNT E
PREFERENCE PLUS
GROUP AND INDIVIDUAL ANNUITY CONTRACTS
ISSUED BY
METROPOLITAN
LIFE INSURANCE COMPANY
This Prospectus describes individual and group tax sheltered annuities,
qualified annuity plans under (S)403(a) of the Internal Revenue Code, Public
Employee Deferred Compensation, and Keogh Preference Plus Contracts
("Contracts") and individual and group tax sheltered annuities, qualified
annuity plans under (S)403(a) of the Internal Revenue Code, Public Employee
Deferred Compensation, and Keogh Preference Plus Income Annuities ("Income
Annuities").
Group Contracts and Income Annuities may only be purchased through your
employer, or a group, association or trust of which you are a member or
participant.
You decide where your purchase payments are directed. The choices depend on
what is available under your Contract or Income Annuity and may include the
Fixed Interest Account and, through Metropolitan Life Separate Account E, the
State Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, Janus Mid Cap, Loomis Sayles High Yield
Bond, State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Santander International Stock (formerly known as State
Street Research International Stock), Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman
Partners Mid Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth
Portfolios of the Metropolitan Series Fund, Inc. ("Metropolitan Fund"), and
the Calvert Social Balanced Portfolio (formerly Calvert Responsibly Invested
Balanced Portfolio) of the Calvert Variable Series, Inc. (formerly Acacia
Capital Corporation).
The Prospectus for the Metropolitan Fund is attached to the back of your
Prospectus. The Prospectus for the Calvert Social Balanced Portfolio is
delivered separately to those whom this investment choice is offered.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INTERESTS IN THE SEPARATE ACCOUNT AND THE FIXED INTEREST ACCOUNT ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR INSURED, OR GUARANTEED BY THE U.S. GOVERNMENT,
ANY BANK OR OTHER DEPOSITORY INSTITUTION. UNITS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUS FOR THE
METROPOLITAN FUND, AND ACCOMPANIED BY THE CURRENT PROSPECTUS FOR CALVERT
SOCIAL BALANCED PORTFOLIO WHERE APPLICABLE, WHICH CONTAIN ADDITIONAL
INFORMATION AND WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
The Prospectus sets forth information about the Contracts and Income
Annuities and Separate Account E that you should know before investing.
Additional information about the Contracts and Income Annuities and Separate
Account E has been filed with the Securities and Exchange Commission in a
Statement of Additional Information which is incorporated herein by reference
and which is available upon request without charge from Metropolitan Life
Insurance Company, Retirement and Savings Center, Area 2H, One Madison Avenue,
New York, NY 10010 Attention: Alan DeMichele. Inquiries may be made to
Metropolitan Life Insurance Company, One Madison Avenue, New York, New York
10010, Attention: Retirement and Savings Center; telephone number (800) 553-
4459. The table of contents of the Statement of Additional Information appears
on page B-PPA-36. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) which you may visit that contains the Statement of
Additional Information, material incorporated by reference, and other
information.
The date of this Prospectus and of the Statement of Additional Information
is May 1, 1998, as supplemented November 9, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INDEX OF SPECIAL TERMS................................................. B-PPA- 3
TABLE OF EXPENSES...................................................... B-PPA- 4
SUMMARY................................................................ B-PPA- 6
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION.................. B-PPA- 8
FINANCIAL STATEMENTS................................................... B-PPA- 9
OUR COMPANY AND THE SEPARATE ACCOUNT................................... B-PPA-10
THE DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS.................... B-PPA-11
YOUR INVESTMENT CHOICES.............................................. B-PPA-11
PURCHASE PAYMENTS.................................................... B-PPA-14
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT............ B-PPA-15
WITHDRAWALS AND TRANSFERS............................................ B-PPA-16
DEDUCTIONS AND CHARGES............................................... B-PPA-18
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES............................. B-PPA-19
DEATH BENEFIT........................................................ B-PPA-21
INCOME OPTIONS....................................................... B-PPA-22
INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS.......................... B-PPA-23
ADMINISTRATION....................................................... B-PPA-23
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS.................... B-PPA-24
TRANSFERS............................................................ B-PPA-24
DEDUCTIONS AND CHARGES............................................... B-PPA-25
OTHER DEFERRED CONTRACT AND INCOME ANNUITY PROVISIONS.................. B-PPA-27
TAXES.................................................................. B-PPA-31
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION........... B-PPA-36
APPENDIX............................................................... B-PPA-37
INDEX.................................................................. B-PPA-38
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. METLIFE DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED
PROSPECTUS OR ANY SUPPLEMENT THERETO OR IN ANY SUPPLEMENTAL SALES MATERIAL
AUTHORIZED BY METLIFE.
B-PPA-2
<PAGE>
INDEX OF SPECIAL TERMS
<TABLE>
<CAPTION>
TERMS PAGE
----- --------
<S> <C>
Account Balance........................................................ B-PPA- 6
Accumulation Units..................................................... B-PPA-15
Annuity Units.......................................................... B-PPA-24
Assumed Investment Rate................................................ B-PPA-24
Contract Year.......................................................... B-PPA-15
Contracts.............................................................. B-PPA- 1
Designated Office...................................................... B-PPA-14
Early Withdrawal Charge................................................ B-PPA-18
Experience Factor...................................................... B-PPA-16
Free Corridor.......................................................... B-PPA-19
Income Annuities....................................................... B-PPA- 1
Preference Plus Contracts.............................................. B-PPA- 1
Preference Plus Income Annuities....................................... B-PPA- 1
Separate Account....................................................... B-PPA- 6
Systematic Termination................................................. B-PPA-20
Systematic Withdrawal Program.......................................... B-PPA-17
Valuation Period....................................................... B-PPA-15
</TABLE>
B-PPA-3
<PAGE>
TABLE OF EXPENSES--PREFERENCE PLUS CONTRACTS AND INCOME ANNUITIES
The following table illustrates Separate Account, Metropolitan Fund and
Calvert Social Balanced Portfolio expenses for the fiscal year ending December
31, 1997:
<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES FOR ALL INVESTMENT DIVISIONS
CURRENTLY OFFERED
Sales Load Imposed on Purchases................................... None
Deferred Sales Load............................................... From 0% to
(as a percentage of the purchase payment funding the withdrawal 7%(a)
during the accumulation period)
Exchange Fee...................................................... None
Surrender Fee..................................................... None
ANNUAL CONTRACT FEE................................................ None(b)
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
General Administrative Expenses Charge............................ .50%(c)
Mortality and Expense Risk Charge................................. .75%(c)
Total Separate Account Annual Expenses............................ 1.25%
METROPOLITAN FUND ANNUAL EXPENSES
(as a percentage of average net assets)
</TABLE>
<TABLE>
<S> <C> <C> <C>
<CAPTION>
OTHER EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBUSEMENT TOTAL
---------- -------------- -----
<S> <C> <C> <C>
State Street Research Income
Portfolio(d)(e)(f)........................... .33 .10 .43
State Street Research Diversified
Portfolio(d)(e)(f)........................... .44 .06 .50
MetLife Stock Index Portfolio(d).............. .25 .08 .33
State Street Research Growth
Portfolio(d)(e)(f)........................... .49 .07 .56
Janus Mid Cap Portfolio(e)(g)................. .75 .14 .89
Loomis Sayles High Yield Bond Portfolio(g).... .70 .20 .90
State Street Research Aggressive Growth
Portfolio(d)(e)(f)........................... .71 .08 .79
T. Rowe Price Small Cap Growth
Portfolio(e)(g).............................. .55 .18 .73
Scudder Global Equity Portfolio(e)(g)......... .90 .22 1.12
Santander International Stock
Portfolio(d)(e)(f)........................... .75 .28 1.03
Harris Oakmark Large Cap Value
Portfolio(e)(h).............................. .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(h)................................. .25 .20 .45
Morgan Stanley EAFE Index Portfolio(h)........ .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(e)(h).............................. .70 .20 .90
Russell 2000 Index Portfolio(h)............... .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(e)(h).............................. .70 .20 .90
</TABLE>
<TABLE>
<S> <C> <C> <C>
CALVERT SOCIAL BALANCED PORTFOLIO ANNUAL
EXPENSES(I)
(as a percentage of average net assets)
<CAPTION>
OTHER EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBURSEMENT TOTAL
---------- -------------- -----
<S> <C> <C> <C>
.69 .12 .81
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
If you surrender your Contract at the end of
the applicable time period:
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... $80 $ 98 $118 $200
State Street Research Diversified Division.. 81 100 122 208
MetLife Stock Index Division................ 79 95 113 189
State Street Research Growth Division....... 81 102 125 214
Janus Mid Cap Division...................... 85 112 -- --
Loomis Sayles High Yield Bond Division...... 85 113 -- --
State Street Research Aggressive Growth Di-
vision...................................... 84 109 137 239
T. Rowe Price Small Cap Growth Division..... 83 107 -- --
Scudder Global Equity Division.............. 87 119 -- --
Santander International Stock Division...... 86 117 150 264
Calvert Social Balanced Division............ 84 110 138 241
Harris Oakmark Large Cap Value Division..... 85 114 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion....................................... 80 98 -- --
Morgan Stanley EAFE Index Division.......... 81 102 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision..................................... 85 113 -- --
Russell 2000 Index Division................. 80 98 -- --
</TABLE>
11/9/98
B-PPA-4
<PAGE>
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
T. Rowe Price Large Cap Growth Division..... $85 $113 -- --
If you annuitize at the end of the applicable
time period or do not surrender your
Contract(j):
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... 17 53 $92 $200
State Street Research Diversified Division.. 18 56 96 208
MetLife Stock Index Division................ 16 50 87 189
State Street Research Growth Division....... 19 57 99 214
Janus Mid Cap Division...................... 22 68 -- --
Loomis Sayles High Yield Bond Division...... 22 68 -- --
State Street Research Aggressive Growth Di-
vision...................................... 21 65 111 239
T. Rowe Price Small Cap Growth Division..... 20 63 -- --
Scudder Global Equity Division.............. 24 75 -- --
Santander International Stock Division...... 23 72 123 264
Calvert Social Balanced Division............ 21 65 112 241
Harris Oakmark Large Cap Value Division..... 23 70 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion....................................... 17 54 -- --
Morgan Stanley EAFE Index Division.......... 18 57 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision..................................... 22 68 -- --
Russell 2000 Index Division................. 17 54 -- --
T. Rowe Price Large Cap Growth Division..... 22 68 -- --
</TABLE>
- -------
(a) Under certain circumstances, the deferred sales load, termed the early
withdrawal charge in this Prospectus (see "Deductions and Charges," page
B-PPA-18) does not apply to 10% or 20% of the Account Balance. Under
certain other circumstances, the deferred sales load does not apply at
all.
(b) A one time contract fee of $350 may be imposed under certain Income
Annuities. (See "Income Annuities--Deductions and Charges," page B-PPA-
25).
(c) Although total Separate Account annual expenses will not exceed 1.25% of
average account values, the allocation of these expenses between general
administrative expenses and the mortality and expense risk charges is only
an estimate. (See "Deductions and Charges," page B-PPA-18.)
(d) Prior to May 16, 1993, MetLife paid all expenses of the Metropolitan Fund
other than management fees, brokerage commissions, taxes, interest and any
extraordinary or non-recurring expenses.
(e) The marginal rate of the investment management fee for these Portfolios
will decrease when the dollar amount in each Portfolio reaches certain
threshold amounts.
(f) Reflects 1997 management fees, restated to assume changes in management
fees effective August 1997, had been in effect for the entire year.
(g) The Portfolios commenced operations on March 3, 1997. MetLife has agreed
to bear all expenses (other than management fees, brokerage commissions,
taxes, interest and any extraordinary or non-recurring expenses) in excess
of .20% of the average net assets for each of the Loomis Sayles High Yield
Bond, T. Rowe Price Small Cap Growth, Janus Mid Cap and Scudder Global
Equity Portfolios until each Portfolio's total net assets are at least
$100 million, or until March 2, 1999, whichever is earlier. Absent such
expense reimbursement, the other expenses would have been 0.39% for the
Loomis Sayles High Yield Bond Portfolio and 0.31% for the Scudder Global
Equity Portfolio. MetLife ceased subsidizing such expenses for the Janus
Mid Cap Portfolio as of December 31, 1997, the T. Rowe Price Small Cap
Growth Portfolio as of January 23, 1998, and the Scudder Global Equity
Portfolio as of July 1, 1998.
(h) Portfolios commenced operations on November 9, 1998. Management fees and
other expenses for these Portfolios are estimated amounts for the year
ending December 31, 1998. Subject to receiving New York State Insurance
Department approval. MetLife has agreed to bear all expenses (other than
management fees, brokerage commissions, taxes, interest and any
extraordinary or non-recurring expenses) in excess of .20% of the average
net assets for each of the Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Neuberger&Berman Partners Mid Cap Value, Russell
2000 Index and T. Rowe Price Large Cap Growth Portfolios, and .25% of the
average net assets for the Morgan Stanley EAFE Index Portfolio until each
of the Portfolio's total net assets are at least $100 million, or until
November 8, 2000, whichever is earlier.
(i) The management fees of the Calvert Social Balanced Portfolio are subject
to a performance adjustment which could cause this fee to be as high as
0.85% or as low as 0.55%, depending on the Portfolio's performance. The
figures are based on expenses for fiscal year 1997, and have been restated
to reflect an increase in transfer agency expenses of 0.01% for the
Portfolio expected to be incurred in 1998. "Other Expenses" reflects an
indirect fee. Net fund operating expenses after reductions for fees paid
indirectly (again, restated) would be 0.78% for the Portfolio.
(j) The annuity purchased must be a life annuity or one with a noncommutable
duration of at least five years to avoid the early withdrawal charge (see
"Exemptions from Early Withdrawal Charges," page B-PPA-19).
The purpose of the above table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. The table
reflects expenses of the Separate Account, the Metropolitan Fund and the
Calvert Social Balanced Portfolio. It assumes that there are no other
transactions. The Example is intended for illustrative purposes only; it
should not be considered a representation of past or future expenses. Actual
expenses may be higher or lower than those shown. Annuity taxes are not
reflected in the table. See "Deductions and Charges," page B-PPA-18, for a
more detailed description of the charges and expenses imposed upon the assets
in the Separate Account.
11/9/98 B-PPA-5
<PAGE>
...............................................................
SUMMARY
................................................................................
THE USE OF CERTAIN TERMS IN THIS PROSPECTUS
This Prospectus describes variable accumulation and income annuity contracts
issued by Metropolitan Life Insurance Company ("MetLife", "we", "us" or "our").
The term "Contracts" and "Income Annuities" also includes certificates issued
under certain group arrangements. Income Annuities are described separately
beginning on page B-PPA-23. "You" as used in this Prospectus means the
participant or annuitant for whom money is invested in a Contract or Income
Annuity. Under the Contracts and Income Annuities issued for Public Employee
Deferred Compensation Plans, the employer or trustee retains all rights to
control the money under the Contract or Income Annuity. For these Contracts or
Income Annuities, where we refer to giving instructions or making payments to
us, "you" means such employer. Under the Contracts issued for Keogh Plans, the
trustee retains all rights to control the money under the Contract. For these
Contracts, where we refer to giving instructions or making payments to us,
"you" means such trustee. For those Public Employee Deferred Compensation or
Keogh Plans where the Contract or Income Annuity allows the participant or
annuitant to choose among investment options, where we refer to giving
instructions as to investment options for those contracts, "you" means such
participant or annuitant.
YOUR INVESTMENT CHOICES (PAGES B-PPA-11-14)
Each of the Contracts offers an account under which we guarantee specified
interest rates for specified periods (the "Fixed Interest Account"). This
Prospectus does not describe that account and will mention the Fixed Interest
Account only where necessary to explain how the "Separate Account" works. Each
Contract also offers a choice of investment options under which values can go
up or down based upon investment performance. See "Determining the Value of
Your Separate Account Investment," pages B-PPA-15-16, for a description of
accumulation units and how these values are determined based upon investment
performance.
This Prospectus describes only the investment options available through a
"Separate Account" as distinct from the Fixed Interest Account.
A SUMMARY OF THE INVESTMENT OBJECTIVES OF THE INVESTMENT CHOICES APPEARS ON
PAGE B-PPA-12-13. A MORE COMPLETE DESCRIPTION OF THE INVESTMENT CHOICES IS
FOUND IN THE METROPOLITAN SERIES FUND, INC. PROSPECTUS, WHICH IS LOCATED IN THE
BACK OF THIS PROSPECTUS AND THE CALVERT SOCIAL BALANCED PORTFOLIO PROSPECTUS,
WHICH IS DELIVERED SEPARATELY.
TAXES (PAGES B-PPA-31-35)
A variable annuity receives special treatment under the Federal income tax
laws. Please refer to the pages above for information concerning how the
Federal tax laws affect purchase payments and withdrawals in each particular
tax market.
PURCHASE PAYMENTS; WITHDRAWALS AND TRANSFERS (PAGES B-PPA-14-15; B-PPA-16-18)
The Contracts allow you to make new purchase payments, to transfer money
among investment options and between the Separate Account and the Fixed
Interest Account, and to withdraw money credited to you ("Account Balance").
(See "Withdrawals and Transfers," pages B-PPA 16-18.) Restrictions and early
withdrawal charges may apply to withdrawals, depending on the circumstances and
your Contract. (See "Withdrawals and Transfers," pages B-PPA-16-18, and
"Deductions and Charges," pages B-PPA-18-19.)
DEDUCTIONS AND CHARGES (PAGES B-PPA-18-19)
Your Contract is subject to various charges.
Annual Contract Fees: There is no annual Contract fee. (There is a $20 annual
Contract fee imposed on certain Fixed Interest Account balances.)
General Administrative Expenses and Mortality and Expense Risk Charge: 1.25%
on an annual basis.
Early Withdrawal Charge: A declining charge of up to 7% on amounts for the
first seven years after each purchase payment is received.
Metropolitan Series Fund, Inc.: Management fees and other expenses.
Calvert Social Balanced Portfolio: Management fees and other expenses.
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES (PAGES B-PPA-19-21)
A withdrawal or transfer may not result in an early withdrawal charge.
Provisions are more fully described within this Prospectus. A summary appears
below.
(a) Withdrawals or Transfers without a Charge for All Markets:
Item 1--Transfers among investment divisions or to or from the Fixed
Interest Account
Item 2--Withdrawals that represent purchase payments made over seven years
ago
Item 3--Free Corridor
Item 4--Free Look
B-PPA-6
<PAGE>
...............................................................
Item 5--Certain Income Annuities
Item 6--Death Benefit (except unallocated Keogh)
Item 7--Mandated Withdrawals under Federal law
(b) Withdrawals or Transfers Without a Charge for the Tax Sheltered Annuity
Market--(in addition to (a) above):
Item 8--Systematic Termination
Item 9--Disability
Item 10--Retirement
Item 11--Separation from Service
Item 12--Plan Termination
Item 13--Hardship
(c) Withdrawals of Transfers Without a Charge for Qualified Annuity Plans
Market under (S)403(a) of the Internal Revenue Code--(in addition to (a)
above):
Item 9--Disability
Item 10--Retirement
Item 11--Separation from Service
(d) Withdrawals or Transfers Without a Charge for the Keogh Market--(in
addition to (a) above):
Item 8--Systematic Termination
Item 9--Disability
Item 10--Retirement
Item 11--Separation from Service
Item 12--Plan Termination
Item 13--Hardship
Item 14--Pre-Approved Investment Vehicles
(e) Withdrawals or Transfers Without a Charge for the Public Employee Deferred
Compensation Market--(in addition to (a) above):
Item 9--Disability
Item 10--Retirement
Item 11--Separation from Service
Item 13--Hardship
DEATH BENEFIT (PAGE B-PPA-21-22)
Each Contract (other than the unallocated Keogh Contract) offers a death
benefit that guarantees certain payments in case of your death even if the
Account Balance has fallen below that amount.
INCOME ANNUITIES (PAGE B-PPA-23)
You may use your money to obtain payments guaranteed for life or for certain
other periods (an annuity). These payments may be either for specified, fixed
amounts or for amounts that can go up or down based on the investment
performance of a choice of investment options in the Separate Account
("variable income option"). You may purchase an Income Annuity if you did not
have a Contract during the accumulation period. Your Income Annuity is subject
to various charges. (See "Income Annuities--Deductions and Charges," page
B-PPA-25.)
B-PPA-7
<PAGE>
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the Separate Account's full
financial statements, which statements are annually audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing with the
full financial statements and related notes in the Statement of Additional
Information or as previously stated in earlier reports.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF ACCUMULATION
UNIT VALUE UNIT VALUE END UNITS END OF YEAR
PREFERENCE PLUS CONTRACTS YEAR BEGINNING OF YEAR OF YEAR (IN THOUSANDS)
<S> <C> <C> <C> <C>
---------------------------- ---- ------ ------ ------
State Street Research Income
Division 1997 $16.49 $17.89 16,307
1996 16.12 16.49 16,604
1995 13.65 16.12 15,252
1994 14.27 13.65 13,923
1993 12.98 14.27 14,631
1992 12.29 12.98 5,918
1991 10.60 12.29 1,210
1990 10.00(a) 10.60 32
State Street Research
Diversified Division 1997 19.22 22.89 62,604
1996 17.00 19.22 52,053
1995 13.55 17.00 42,712
1994 14.15 13.55 40,962
1993 12.70 14.15 31,808
1992 11.75 12.70 7,375
1991 9.52 11.75 1,080
1990 10.00(a) 9.52 44
MetLife Stock Index Division 1997 22.43 29.28 58,817
1996 18.52 22.43 43,141
1995 13.70 18.52 29,883
1994 13.71 13.70 23,458
1993 12.67 13.71 18,202
1992 11.94 12.67 8,150
1991 9.32 11.94 1,666
1990 10.00(a) 9.32 55
State Street Research Growth
Division 1997 21.37 27.10 60,102
1996 17.71 21.37 49,644
1995 13.47 17.71 38,047
1994 14.10 13.47 32,563
1993 12.48 14.10 24,608
1992 11.32 12.48 9,432
1991 8.61 11.32 2,824
1990 10.00(a) 8.61 178
Janus Mid Cap Division 1997 10.00(b) 12.69 7,417
Loomis Sayles High Yield 1997 10.00(b) 10.51 2,375
Bond Division
State Street Research
Aggressive Growth Division 1997 23.77 25.05 43,359
1996 22.35 23.77 43,962
1995 17.47 22.35 33,899
1994 18.03 17.47 26,890
1993 14.89 18.03 17,094
1992 13.66 14.89 5,747
1991 8.31 13.66 1,060
1990 10.00(a) 8.31 49
T. Rowe Price Small Cap 1997 10.00(b) 11.76 6,932
Growth Division
</TABLE>
11/9/98
B-PPA-8
<PAGE>
<TABLE>
<CAPTION>
Accumulation Accumulation Number of Accumulation
Unit Value Unit Value End Units End of Year
Preference Plus Contracts Year Beginning of Year of Year (in thousands)
- ------------------------- ---- ----------------- -------------- ----------------------
<S> <C> <C> <C> <C>
Scudder Global Equity Division 1997 10.00(b) 10.85 4,826
1997 13.77 13.28 15,865
1996 14.19 13.77 17,780
1995 14.25 14.19 17,553
1994 13.74 14.25 16,674
1993 9.41 13.74 6,921
1992 10.61 9.41 966
1991 10.00(c) 10.61 92
Calvert Social 1997 18.68 22.16 1,181
Balanced Division 1996 16.80 18.68 995
1995 13.11 16.80 787
1994 13.71 13.11 630
1993 12.86 13.71 473
1992 12.10 12.86 239
1991 10.58 12.10 63
1990 10.00(d) 10.58 0
</TABLE>
In addition to the above mentioned Accumulation Units, there were cash
reserves of $14,503,548 as of December 31, 1997 applicable to Income Annuities
(including those not described in this Prospectus receiving annuity payouts.
[CHART APPEARS HERE]
PREFERENCE PLUS CONTRACTS
ENDING ACCUMULATION UNIT VALUES
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
State Street Research Income 10.6 12.29 12.98 14.27 13.65 16.12 16.49 17.89
State Street Research Diversified 9.52 11.75 12.7 14.15 13.55 17 19.22 22.89
Met Life Stock Index 9.32 11.94 12.67 13.71 13.7 18.52 22.43 29.28
State Street Research Growth 8.61 11.32 12.48 14.1 13.47 17.71 21.37 27.1
Janus Mid Cap 12.69
Loomis Sayles High Yield Bond 10.51
State Street Research Aggressive Growth 8.31 13.66 14.89 18.03 17.47 22.35 23.77 25.05
T. Rowe Price Small Cap Growth 11.76
Scudder Global Equity 10.85
Santander International Stock 10.61 9.41 13.74 14.25 14.19 13.77 13.28
Calvert Social Balanced 10.58 12.1 12.86 13.71 13.11 16.8 18.68 22.16
</TABLE>
(a) Inception Date July 2, 1990.
(b) Inception Date March 3, 1997.
(c) Inception Date July 1, 1991.
(d) Inception Date September 17, 1990.
Financial Statements
The financial statement for the Separate Account and MetLife are in the
Statement of Additional Information and are available upon request from MetLife.
B-PPA-9
<PAGE>
...............................................................
OUR COMPANY AND THE SEPARATE ACCOUNT
................................................................................
WHO IS METLIFE?
We are a mutual life insurance company whose principal office is at One
Madison Avenue, New York, N.Y. 10010. We were formed in 1868 in New York and
operate as a life insurance company in all 50 states, the District of Columbia,
Puerto Rico and all provinces of Canada. MetLife, serving millions of people,
is one of the largest financial services companies in the world with many of
the largest United States corporations for its clients. As of December 31,
1997, we had approximately $330.3 billion in assets under management.
WHAT IS THE SEPARATE ACCOUNT?
We organized the Separate Account on September 27, 1983. It is an investment
account that we maintain separate from our other assets. It is registered with
the Securities and Exchange Commission as a unit investment trust under the
1940 Act. All income, gains and losses, whether or not realized, from the
Separate Account's assets are credited to or charged against the Separate
Account, without regard to our other business. In other words, the Separate
Account's assets are solely for the benefit of those who invest in the Separate
Account and no one else, including our creditors. Our obligation to honor all
of our promises under the Contracts and Income Annuities is not limited by the
amount of assets in the Separate Account.
B-PPA-10
<PAGE>
SECTION I: THE DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS
WHAT ARE THE CONTRACTS?
The Contracts offer you the choice of an account that pays interest
guaranteed by MetLife (the Fixed Interest Account) or an account offering a
range of investment choices where performance is not guaranteed. The Contracts
are called "annuities" since they offer a variety of payment options,
including guaranteed income for life.
We offer many types of Preference Plus Contracts to meet your individual
needs. These include contracts meeting the tax requirements under the
following provisions of the Internal Revenue Code ("Code"): (1) Individual
Retirement Annuities (IRAs) under (S)408(b); (2) Simplified Employee Pensions
(SEPs) under (S)408(k); (3) Tax Sheltered Annuities (TSAs) under (S)403(b);
(4) Public Employee Deferred Compensation (PEDC) under (S)457; (5) Keogh plans
under (S)401; (6) Qualified Annuity Plans (403(a)) under (S)403(a); and (7)
Tax Deferred Annuities (Non-Qualified) under (S)72. Our Contracts may be
individual or group (offered to an employer, association, trust or other group
for its employees, members or participants). Group Contracts may be issued to
a bank that does nothing but hold them as contractholder. Contracts are either
allocated (we keep records of your Account Balance) or unallocated (we keep
Account Balance records only for the plan as a whole). Some contracts have a
reduced mortality and expense risk charge as a result of reduced
administration expenses.
This Prospectus describes four types of Contracts: TSAs, PEDC, 403(a), and
Keogh.
The Prospectus will occasionally refer to the Fixed Interest Account.
However, this Prospectus does not describe that account.
MAY THE CONTRACTS BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. If your purchase payments are made under a retirement plan, the
Contract may provide that all or some of your rights as described in this
Prospectus are subject to the terms of the plan. You should consult the plan
document to determine whether there are any provisions under your plan that
may limit or affect the exercise of your rights under the Contract. Rights
that may be affected include those concerning purchase payments, withdrawals,
transfers, the death benefit and income annuity types. For example, if part of
your Account Balance represents non-vested employer contributions, you may not
be permitted to withdraw these amounts and the early withdrawal charge
calculations may not include all or part of the employer contributions. The
Contract may provide that a plan administrative fee will be paid by making a
withdrawal from your Account Balance. The Contract may require that you or
your beneficiary obtain a signed authorization from your employer or plan
administrator to exercise certain rights. Your Contract will indicate under
which circumstances this is the case. We may rely on your employer's or plan
administrator's statements to us as to the terms of the plan or your
entitlement to any amounts. We will not be responsible for determining what
your plan says.
YOUR INVESTMENT CHOICES
...............................................................................
WHAT ARE THE INVESTMENT CHOICES AND HOW DO WE PROVIDE THEM?
The investment choices are provided through our Separate Account. Divisions
available for new investments are the State Street Research Income, State
Street Research Diversified, MetLife Stock Index, State Street Research
Growth, State Street Research Aggressive Growth, Santander International
Stock, Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap
Growth, and Scudder Global Equity Divisions. If approved in your state, the
Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan
Stanley EAFE Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000
Index and T. Rowe Price Large Cap Growth Divisions are also available. The
Calvert Social Balanced Division is available in some cases. If you are
covered under a group Contract, your employer, association or group may have
limited the number of available divisions. Your Contract will indicate the
divisions available to you when we issued it. We may add or eliminate
divisions for some or all persons.
The divisions do not invest directly in stocks, bonds or other investments.
Instead they buy and sell shares of mutual fund portfolios that in turn do the
investing. The portfolios are part of the Metropolitan Fund and Calvert Vari-
able Series, Inc. as shown on page 1. All dividends declared by any of the
portfolios are earned by the Separate Account and reinvested. Therefore, no
dividends are distributed under the Contracts. No sales or redemption charges
apply to our purchase or sale through the Separate Account of these mutual
fund shares. These mutual funds are available only through the purchase of an-
nuities and life insurance policies and are never sold directly to the public.
These mutual funds are "series" types of funds registered with the Securities
and Exchange Commission as "open-end management invest-
11/9/98 B-PPA-11
<PAGE>
...............................................................
ment companies" under the 1940 Act. Except for the Janus Mid Cap and Calvert
Social Balanced Portfolios, each fund is "diversified" under the 1940 Act.
Each division invests in shares of a comparably named portfolio.
A summary of the investment objectives of the currently available portfolios
is as follows:
State Street Research Income Portfolio: Seeks a) the highest possible return,
by combining current income with capital gains, consistent with prudent
investment risk, and b) secondarily, the preservation of capital by investing
at least 75% of its total assets in non-convertible debt securities in the
three highest rating categories as determined by a nationally recognized
statistical rating organization, or of comparable quality.
State Street Research Diversified Portfolio: Seeks a high total return while
attempting to limit investment risk and preserve capital by investing 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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the Standard
& Poor's 500 Composite Stock Price Index ("S&P 500 Index") by normally
investing most of its assets in common stocks included in the S&P 500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital and
income, and moderate current income. Generally, the greatest portion of the
Portfolio's assets will be invested in equity securities of good quality where
the stock price represents a good value based on considerations such as price
to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of medium
capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by normally
investing at least 65% of its assets in below investment grade fixed income
securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks
and other securities convertible into or carrying the right to acquire common
stocks of less mature companies with the potential for rapid growth and
companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group of
small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of capital
by generally investing most of its assets in equity securities (primarily
common stock) of established companies listed on U.S. or foreign securities
exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital by
normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total assets
in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of
the Lehman Brothers Aggregate Bond Index. The Portfolio will normally invest
most of its assets in fixed income securities included in the Lehman Brothers
Aggregate Bond Index.
Morgan Stanley EAFE Index Portfolio: To equal the return of the Morgan Stanley
Capital International Europe, Australasia, Far East (MCSI EAFE) Index. The
Portfolio will normally invest most of its assets in equity securities
included in the MSCI EAFE Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital growth.
The Portfolio will normally invest at least 65% of its total assets in common
stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000 Index.
The Portfolio will normally invest most of its assets in common stocks
included in the Russell 2000 Index.
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at least
65% of its total assets in a diversified group of large capitalization growth
companies.
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Calvert Social Balanced Portfolio: To achieve a total return above the rate of
inflation through an actively managed, non-diversified portfolio of common and
preferred stocks, bonds and money market instruments which offer income and
capital growth opportunity and which satisfy the social concern criteria
established for the Calvert Social Balanced Portfolio.
Each of the currently available Metropolitan Fund Portfolios pays us, the
investment manager of the Metropolitan Fund, an investment management fee. For
providing investment management services to the Lehman Brothers Aggregate Bond
Index, MetLife Stock Index and Russell 2000 Index Portfolios, we receive
monthly compensation from each Portfolio at an annual rate of .25% of the av-
erage daily value of the aggregate net assets of each Portfolio. For providing
investment management services to the Morgan Stanley EAFE Index Portfolio, we
receive monthly compensation from the Portfolio at an annual rate of .30% of
the average daily assets of the aggregate net assets of the Portfolio. For
providing investment management services to the State Street Research Growth
Portfolio, we receive monthly compensation from the Portfolio at an annual
rate of .55% of the average daily value of the aggregate net assets of the
Portfolio up to $500 million, .50% of such assets on the next $500 million and
.45% of such assets on amounts over $1 billion. For providing investment man-
agement services to the State Street Research Income Portfolio, we receive
monthly compensation from the Portfolio at an annual rate of .35% of the aver-
age daily value of the aggregate net assets up to $250 million, .30% of such
assets on the next $250 million and .25% of such assets on amounts over $500
million. For providing investment management services to the State Street Re-
search Diversified Portfolio, we receive monthly compensation from the Portfo-
lio at an annual rate of .50% of the average daily value of the aggregate net
assets of the Portfolio up to $500 million, .45% of such assets on the next
$500 million and .40% of such assets on amounts over $1 billion. For providing
investment management services to the State Street Research Aggressive Growth
Portfolio, we receive monthly compensation at an annual rate of .75% of the
average daily value of the aggregate net assets of the Portfolio up to $500
million, .70% of such assets on the next $500 million and .65% of such assets
on amounts over $1 billion. We pay State Street Research & Management Company,
one of our subsidiaries, to provide us with sub-investment management services
for the State Street Research Income, State Street Research Diversified, State
Street Research Growth and State Street Research Aggressive Growth Portfolios.
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. Effective on or about
November 9, 1998, Santander Global Advisors, Inc., of which MetLife owns 25%
of the outstanding common stock, became the sub-investment manager for the
Santander International Stock Portfolio.
For providing investment management services to the Loomis Sayles High Yield
Bond Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio. Loomis, Sayles & Company, L.P., whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to the
Loomis Sayles High Yield Bond Portfolio. For providing investment management
services to the Janus Mid Cap Portfolio, we receive monthly compensation from
the Portfolio at an annual rate of .75% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .70% of such assets
on the next $400 million and .65% of such assets on amounts in excess of $500
million. Janus Capital Corporation is the sub-investment manager for the Janus
Mid Cap Portfolio. For providing investment management services to the T. Rowe
Price Small Cap Growth Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .55% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .50% of such assets
on the next $300 million and .45% of such assets in excess of $400 million.
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for the
T. Rowe Price Small Cap Growth and T. Rowe Price Large Cap Growth Portfolios.
For providing investment management services to the Scudder Global Equity
Portfolio, we receive monthly compensation from the Portfolio at an annual
rate of .90% of the average daily value of the aggregate net assets of the
Portfolio up to $50 million, .55% of such assets on the next $50 million, .50%
of such assets on the next $400 million and .475% of such assets on amounts in
excess of $500 million. Scudder Kemper Investments, Inc. (formerly Scudder
Stevens & Clark, Inc.) is the sub-investment manager for the Scudder Global
Equity Portfolio.
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For providing investment management services to the Harris Oakmark Large Cap
Value Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $250 million and .70% of such assets in excess of $250
million. Harris Associates L.P., whose general partner is indirectly owned by
MetLife, is the sub-investment manager with respect to the Harris Oakmark Large
Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman Partners
Mid Cap Value Portfolio, we receive monthly compensation from the Portfolio at
an annual rate of .70% of the average daily value of the aggregate net assets
of the Portfolio up to $100 million, .675% of such assets on the next $250
million, .65% of such assets on the next $500 million, .625% of such assets on
the next $750 million and .60% of such assets over $1.6 billion.
Neuberger&Berman Management Incorporated is the sub-investment manager for the
Neuberger&Berman Partners Mid Cap Value Portfolio.
Sub-investment management services are provided to us and we pay fees for
such services according to contracts between us and each of the sub-investment
managers. Sub-investment management fees are solely our responsibility, not
that of the Metropolitan Fund.
Similarly, the Calvert Social Balanced Portfolio pays Calvert, the Calvert
Social Balanced Portfolio's investment adviser, a base monthly investment
advisory fee equivalent to an annual rate of .70% of the first $500 million of
the average daily net assets of the Calvert Social Balanced Portfolio, .65% of
the next $500 million and .60% of the remainder. In addition, the Calvert
Social Balanced Portfolio pays Calvert a performance fee adjustment based on
the extent to which performance of the Calvert Social Balanced Portfolio
exceeds or trails the Lipper Balanced Funds Index as follows:
<TABLE>
<CAPTION>
PERFORMANCE VERSUS PERFORMANCE
THE LIPPER BALANCED FUNDS FEE
INDEX ADJUSTMENT
- ------------------------- -----------
<S> <C>
At least 6%, but less than 12%...................................... .05%
At least 12%, but less than 18%..................................... .10%
More than 18%....................................................... .15%
</TABLE>
Payment by the Calvert Social Balanced Portfolio of the performance
adjustment will be conditioned on: (1) the performance of the Portfolio as a
whole having exceeded the Lipper Balanced Funds Index; and (2) payment of the
performance adjustment not causing the Calvert Social Balanced Portfolio's
performance to fall below the Lipper Balanced Funds Index.
Calvert pays sub-investment advisory fees to NCM Capital Management Group,
Inc. consisting of a base fee and a performance fee adjustment based on the
extent to which performance of the Calvert Social Balanced Portfolio exceeds or
trails the Lipper Balanced Funds Index. These fees are solely the
responsibility of Calvert, not the Calvert Social Balanced Portfolio.
The Metropolitan Fund and the Calvert Social Balanced Portfolio are more
fully described in their respective prospectuses and the Statements of
Additional Information that the prospectuses refer to. The Metropolitan Fund's
prospectus is attached at the end of this prospectus. The Calvert Social
Balanced Portfolio prospectus is given out separately to those investors to
whom this investment choice is offered. The Statements of Additional
Information are available upon request.
See "The Fund and its Purpose," in the prospectus for the Metropolitan Fund
for a discussion of the different separate accounts of MetLife and Metropolitan
Tower Life Insurance Company that invest in the Metropolitan Fund and the risks
related to that arrangement. See "Purchase and Redemptions of Shares," in the
prospectus for the Calvert Social Balanced Portfolio for a discussion of the
different separate accounts of the various insurance companies that invest in
these funds and the risks related to those arrangements.
PURCHASE PAYMENTS
................................................................................
ARE THERE SPECIAL RULES CONCERNING THE FIRST PAYMENT AND OTHER ADMINISTRATIVE
DETAILS THAT YOU SHOULD KNOW?
Yes. All purchase payments and all requests you may have concerning the
Contracts, like a change in beneficiary, should be sent to one of our
"Designated Office(s)." We will provide you with information indicating which
Designated Office to contact regarding various matters and the addresses for
these offices. All checks should be payable to "MetLife." You can also make
certain requests by telephone. In order to have a purchase payment credited to
you, we must receive it and completed documentation. We will provide the
appropriate forms. Under certain group Contracts, your employer, the trustee of
the Keogh plan (if an allocated Contract) or the group in which you are a
participant or member must also identify you to us on their reports to us and
tell us how your purchase payments should be allocated among the investment
divisions and the Fixed Interest Account.
Your first purchase payment is normally credited to you within two days of
receipt at our Designated Office. However, if you fill out our forms
incorrectly or
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incompletely or other documentation is not completed properly, we have up to
five business days to credit the payment. If the problem cannot be resolved by
the fifth business day, we will notify you and give you the reasons for the
delay. At that time, you will be asked whether you agree to let us keep the
purchase payment until the problem is remedied. If you do not agree or we
cannot reach you by the fifth business day, your purchase payment will be
returned immediately.
Purchase payments are effective and valued as of 4:00 p.m., Eastern time, on
the day we receive them at our Designated Office, except when they are
received (1) on a day when the accumulation unit value (discussed later in
this Prospectus) is not calculated or (2) after 4:00 p.m., Eastern time. In
those cases, the purchase payments will be effective the next day the
accumulation unit value is calculated.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
There is no minimum purchase payment except for the unallocated Keogh
Contract. For the unallocated Keogh Contract, each purchase payment must be at
least $2,000, and total purchase payments must be at least $15,000 for the
first Contract Year. (For certain Contracts, depending on underwriting and
plan requirements, the first Contract Year is the initial three to fifteen
month period the Contract is in force; thereafter, it is each subsequent
twelve month period.) For other Contracts the Contract Year is twelve months.
During subsequent Contract Years, total purchase payments made under the
unallocated Keogh Contract must be at least $5,000.
We may reject purchase payments over $500,000. Your purchase payments may
also be limited by the Federal tax laws.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
You decide how a purchase payment is allocated among the Fixed Interest
Account and the investment divisions of the Separate Account available to your
Contract. Allocation changes for new purchase payments will be made upon our
receipt of your notification of changes. You may also specify a day as long as
it is within 30 days after we receive the request.
ARE THERE ANY LIMITS ON SUBSEQUENT PURCHASE PAYMENTS?
You may generally make purchase payments at any time before the date income
payments begin except as limited by the Federal tax laws. You may not make
purchase payments after you have made a withdrawal based on termination of
employment under the Keogh, TSA and PEDC Contracts. No additional purchase
payments may be made after commencement of a systematic termination (from both
the Fixed Interest and Separate Accounts), described below, until we receive
written notice that you request cancellation of the systematic termination.
You may continue to make purchase payments while you receive Systematic
Withdrawal Program payments, as described later in this Prospectus, except if
purchase payments are made through salary reduction or salary deduction.
Except for the PEDC Contract, in order to comply with regulatory
requirements in Oregon, we may limit the ability of an Oregon resident to make
purchase payments (1) after the Contract has been held for more than three
years, if the Contract was issued after age 60 or (2) after age 63, if the
Contract was issued before age 61.
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT
...............................................................................
WHAT IS AN ACCUMULATION UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"accumulation units." When you make purchase payments or transfers into an
investment division, you are credited with accumulation units. When you
request a withdrawal or a transfer of money from an investment division,
accumulation units are liquidated. In either case, the number of accumulation
units you gain or lose is determined by taking the amount of the purchase
payment, transfer or withdrawal and dividing it by the value of an
accumulation unit on the date the transaction occurs. For example, if an
accumulation unit is $10.00 and a $500 purchase payment is made, the number of
accumulation units credited is 50 ($500 divided by $10 = 50). We calculate
accumulation units separately for each investment division of the Separate
Account.
HOW IS AN ACCUMULATION UNIT VALUE CALCULATED?
We calculate accumulation unit values once a day on every day the New York
Stock Exchange is open for trading. We call the time between the two
consecutive accumulation unit value calculations the "Valuation Period." We
have the right to change the basis for the Valuation Period, on 30 days'
notice, as long as it is consistent with the law. All purchase payments,
transfers and withdrawals are valued as of the end of the Valuation Period
during which the transaction occurred. The accumulation unit values can
increase or decrease, based on the investment performance of the corresponding
underlying portfolios. If the investment performance is positive, after
payment of Separate Account expenses, accumulation unit values will go up.
Conversely, if the
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...............................................................
investment performance is negative, after payment of Separate Account
expenses, accumulation unit values will go down.
We use the term "experience factor" to describe the investment performance
for an investment division. The experience factor changes from Valuation
Period to Valuation Period to reflect the upward or downward performance of
the assets in the underlying portfolios. The experience factor is calculated
as of the end of each Valuation Period using the net asset value per share of
the underlying portfolio. The net asset value includes the per share amount of
any dividend or capital gain distribution paid by the portfolio during the
current Valuation Period, and subtracts any per share charges for taxes and
reserve for taxes. We then divide that amount by the net asset value per share
as of the end of the last Valuation Period to obtain a factor that reflects
investment performance. We then subtract a charge not to exceed .000034035
(the daily equivalent of an effective annual rate of 1.25%) for the other
Contracts for each day in the Valuation Period. This charge is to cover the
general administrative expenses and the mortality and expense risk we assume
under the Contracts.
To calculate an accumulation unit value we multiply the experience factor
for the Valuation Period by the last previously calculated accumulation unit
value. For example, if the last previously calculated accumulation unit value
is $12.00 and the experience factor for the period was 1.05, the new
accumulation unit value is $12.60 ($12.00 X 1.05). On the other hand, if the
last previously calculated accumulation unit value is $12.00 and the
experience factor for the period was .95, the new accumulation unit value is
$11.40 ($12.00X.95).
WITHDRAWALS AND TRANSFERS
...............................................................................
CAN YOU MAKE WITHDRAWALS AND TRANSFERS?
Yes. You may either withdraw all or part of your Account Balance from the
Contract or transfer it from one investment division to another or to the
Fixed Interest Account.
Withdrawals must be at least $500 (or the Account Balance, if less). You may
make an unlimited number of transfers. Your request must tell us the
percentage or dollar amount to be withdrawn or transferred and we may require
that this request be made on the form we provide for this purpose. If we
agree, you may also submit an authorization directing us to make transfers on
a continuing periodic basis from one investment division to another or to and
from the Fixed Interest Account. We may require that you maintain a minimum
Account Balance in investment divisions from which amounts are transferred
based upon an authorization.
WHEN WILL WITHDRAWALS OR TRANSFERS BE PROCESSED?
Generally, we will process withdrawals or transfers as of the end of the
Valuation Period during which we receive your request at our Designated
Office. We will make it as of a later date if you request. If you die before
the requested date, we will cancel the request and pay the death benefit
instead. If the withdrawal is made to provide income payments, it will be made
as of the end of the Valuation Period ending most recently before the date the
income annuity is purchased.
CAN YOU MAKE PAYMENTS DIRECTLY TO OTHER INVESTMENTS ON A TAX-FREE BASIS?
Generally yes, you can make payments directly to other investments on a tax-
free basis if you so request, but only if all applicable requirements of the
Code are met, and we receive all information necessary for us to make the
payment.
WHAT RESTRICTIONS APPLY TO TEXAS OPTIONAL RETIREMENT PROGRAM PARTICIPANTS?
If you are a participant in the Texas Optional Retirement Program, Texas law
permits us to make withdrawals on your behalf only if you die, retire or
terminate employment in all Texas institutions of higher education, as defined
under Texas law. Any withdrawal requires a written statement from the
appropriate Texas institution of higher education verifying your vesting
status and (if applicable) termination of employment, as well as a written
statement from you that you are not transferring employment to another Texas
institution of higher education. If you retire or terminate employment in all
Texas institutions of higher education or die before being vested, amounts
provided by the state's matching contribution will be refunded to the
appropriate Texas institution. We may change these restrictions or add others
without your consent to the extent necessary to maintain compliance with
applicable law.
WHAT RESTRICTIONS APPLY TO TSA CONTRACTS?
As required by the Code, withdrawals from the Contracts before age 59 1/2
are generally prohibited. See "Taxes--TSA Contracts" at page B-PPA-32-33.
CAN YOU MAKE CHANGES BY TELEPHONE?
Yes. You can request transfers, change your allocation of future investments
and make changes to transfers made on a continuing periodic basis from one
investment division to another or to and from the Fixed
B-PPA-16
<PAGE>
...............................................................
Interest Account by telephone unless prohibited by state law. Except for Keogh
Contracts, if we agree and you complete the form we supply, you may also
authorize your sales representative to request transfers, change your
allocation of future investments and make changes to transfers made on a
continuing periodic basis from one investment division to another or to and
from the Fixed Interest Account on your behalf by telephone. Whether you or
your sales representative make such requests by telephone, you are authorizing
us to act upon the telephone instructions of any person purporting to be you
or, if applicable, your sales representative, assuming our procedures have
been followed, to these requests which affect both your Fixed Interest and
Separate Account Balances. We have instituted reasonable procedures to confirm
that any instructions communicated by telephone are genuine. All telephone
calls making such requests will be recorded. You (or the sales representative)
will be asked to produce your personalized data prior to our initiating any
requests by telephone. Additionally, as with other transactions, you will
receive a written confirmation of your transaction. Neither we nor the
Separate Account will be liable for any loss, expense or cost arising out of
any requests that we or the Separate Account reasonably believe to be genuine.
In the unlikely event that you have trouble reaching us, requests should be
made to the Designated Office.
CAN YOU MAKE SYSTEMATIC WITHDRAWALS?
Yes. If we agree and, if approved in your state, for TSA Contracts, you may
request us to make "automatic" withdrawals for you on a periodic basis through
our Systematic Withdrawal Program. Systematic Withdrawal Program payments are
not payments made under an income option or under an Income Annuity, as
described later in this Prospectus. You must have separated from service to
elect Systematic Withdrawal Program if you are under age 59 1/2 under a TSA
Contract. Also, you may not receive Systematic Withdrawal Program payments if
you have an outstanding loan. You may choose to receive Systematic Withdrawal
Program payments for either a specific dollar amount or a percentage of your
Account Balance. If you choose to receive a percentage of your Account
Balance, we will determine the initial dollar amount payable as of the date
these payments begin and we will pay the dollar amount over the remainder of
the Contract Year. For example, if you ask for a percentage equal to $12,000
and there are six months left in the Contract Year, we will pay you $2,000 a
month if payments are made monthly. For each later Contract Year that the
Systematic Withdrawal Program remains in effect, we will pay you either the
dollar amount that you have chosen or a dollar amount equal to the percentage
of your Account Balance you have chosen, applied to your Account Balance as of
your first Systematic Withdrawal Program payment date in that Contract Year.
We will pay this amount over the full Contract Year. For example, if you ask
for a percentage equal to $12,000 a year, we will pay you $1,000 a month if
payments are to be made monthly. Each Systematic Withdrawal Program payment
must be at least $50. You should allow approximately 10 business days for
processing your request. If we do not receive the request at least 10 business
days in advance of the Systematic Withdrawal Program payment start date, we
will process your first Systematic Withdrawal Program payment the following
month. If you do not specify a payment date, payments will commence 30 days
from the date we receive your request. Requests to commence Systematic
Withdrawal Program payments may not be made by telephone. Changes to the
specified dollar amount or percentage or to alter the timing of payments may
be made once a year prior to the beginning of any Contract Year, unless we
agree otherwise. The change will be effective for the first Systematic
Withdrawal Program payment for the following Contract Year. Requests for such
changes must be made at least 30 days prior to the Contract Year anniversary
date, unless we agree otherwise. You may cancel your Systematic Withdrawal
Program request at any time by telephone or by writing us at the Designated
Office.
FROM WHICH INVESTMENT DIVISIONS WILL WITHDRAWALS BE MADE FOR SYSTEMATIC
WITHDRAWAL PROGRAM PAYMENTS?
Each Systematic Withdrawal Program payment may be taken on a pro rata basis
from the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money. If your Account Balance is insufficient
to make a requested Systematic Withdrawal Program payment, the remaining
Account Balance will be paid to you. You will also be able to select the
percentage to be withdrawn from each investment division and/or the Fixed
Interest Account based on your preference. If you do not specify percentages
or if there are insufficient amounts in one or more of your selected
investment divisions or the Fixed Interest Account, then your Systematic
Withdrawal Program payment will automatically be taken on a pro rata basis
from the Fixed Interest Account and investment divisions in which you then
have money.
WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A
SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of
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payments over a twelve month period. If you have elected the Systematic
Withdrawal Program, we will treat the full amount to be paid in a Contract Year
as a lump sum withdrawal on the first Systematic Withdrawal Program payment
date for the first Contract Year for purposes of determining how much of the
withdrawal will be exempt from the withdrawal charge. For Contract Years
thereafter, we will treat the full amount to be paid in a Contract Year as a
lump sum withdrawal as of the first Systematic Withdrawal Program payment date
after the Contract Year Anniversary for purposes of determining how much of the
withdrawal will be exempt from the withdrawal charge. However, each Systematic
Withdrawal Program payment will be treated separately as of the date of a
withdrawal from your Contract to determine whether of not it is subject to a
withdrawal charge. We will withdraw that portion of the withdrawal that
constitutes the early withdrawal charge when we make the Systematic Withdrawal
Program payment.
If Systematic Withdrawal Program payments are within the applicable Free
Corridor percentage, no Systematic Withdrawal Program payment will be subject
to an early withdrawal charge. Systematic Withdrawal Program payments in excess
of the Free Corridor will be subject to an early withdrawal charge unless the
payments are from other amounts to which an early withdrawal charge no longer
applies. See "Exemptions from Early Withdrawal Charges," pages B-PPA-19-21.
Systematic Withdrawal Program payments are treated as withdrawals for Federal
income tax purposes. All or a portion of the amounts withdrawn under Systematic
Withdrawal Program will be subject to Federal income tax. If you are under age
59 1/2, tax penalties may apply. See "Taxes," pages B-PPA-31-35.
CAN MINIMUM DISTRIBUTION PAYMENTS BE MADE ON A PERIODIC BASIS?
Yes. Rather than receiving your minimum distribution in one annual payment,
you may request that we make minimum distribution payments to you on a periodic
basis. However, you may be required to meet certain total Account Balance
minimums at the time you request periodic minimum distribution payments.
DEDUCTIONS AND CHARGES
................................................................................
ARE THERE ANNUAL CONTRACT CHARGES?
There are no Separate Account annual Contract charges. (There is a $20 annual
Contract fee imposed on certain Fixed Interest Account balances.)
WHAT ARE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that Contract
purchasers and participants may live for a longer period of time than we
estimated. Then we would be obligated to pay more income benefits than
anticipated. We also bear the risk that the guaranteed death benefit we pay for
allocated Contracts will be larger than the Account Balance. The expense risk
portion of the mortality and expense risk charge is that our expenses in
administering the Contracts will be greater than we estimated.
These charges do not reduce the number of accumulation units credited to you.
These charges are calculated and paid every time we calculate the value of
accumulation units. (See "How is an accumulation unit value calculated?" on B-
PPA-15-16.)
The sum of these charges on an annual basis (computed and payable each
Valuation Period) will not exceed 1.25% of the average value of the assets in
each investment division. Of this charge, we estimate that .50% is for
administrative expenses and .75% is for the mortality and expense risk.
During 1997, these charges were $87,711,107 for all contracts in Separate
Account E.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES AND WHEN ARE THEY PAID?
Some jurisdictions tax what are called "annuity considerations." These may
include purchase payments, account balances and death benefits. In most
jurisdictions, we currently do not deduct any money from purchase payments,
Account Balances or death benefits to pay these taxes. Our practice generally
is to deduct money to pay annuity taxes only when you purchase an income
annuity. In Mississippi, Wyoming, South Dakota, Kentucky and Washington, D.C.,
we may also deduct money to pay annuity taxes on lump sum withdrawals or when
you purchase an income annuity. We may deduct an amount to pay annuity taxes
sometime in the future since the laws and the interpretation of the laws
relating to annuities are subject to change.
A chart that shows the states where annuity taxes are charged and the amount
of these taxes is on page B-PPA-37.
WHAT IS THE EARLY WITHDRAWAL CHARGE (SALES LOAD)?
The following paragraphs describe how the early withdrawal charge is
determined. The early withdrawal charge reimburses us for our costs in selling
the Contracts. We may use any of our profits derived from
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<PAGE>
...............................................................
the mortality and expense risk charge to pay for any of our costs in selling
the Contracts that exceed the revenues generated by the early withdrawal
charge. However, we believe that our sales expenses may exceed revenues
generated by the early withdrawal charge and, in such event, we will pay such
excess out of our surplus.
To determine the early withdrawal charge for Preference Plus Contracts, we
treat your Fixed Interest Account and Separate Account as if they were a single
account and ignore both your actual allocations and what account or investment
division the withdrawal is actually coming from. To do this, we first assume
that your withdrawal is from amounts (other than earnings) that can be
withdrawn without an early withdrawal charge, then from other amounts (other
than earnings) and then from earnings, each on a "first-in-first-out" basis.
Once we have determined the amount of the early withdrawal charge, we will
actually withdraw it from each investment division in the same proportion as
the withdrawal is being made. In determining what the withdrawal charge is, we
do not include earnings, although the actual withdrawal to pay it may come from
earnings.
For partial withdrawals from an investment division, the early withdrawal
charge is determined by dividing the amount that is subject to the early
withdrawal charge by 100% minus the applicable percentage shown below. Then we
will make the payment directed, and withdraw the early withdrawal charge from
that investment division.
For a full withdrawal from an investment division we multiply the amount to
which the withdrawal charge applies by the percentage shown below, keep the
result as an early withdrawal charge and pay you the rest. We will treat your
request as a request for a full withdrawal from an investment division if your
Account Balance in that investment division is not sufficient to pay both the
requested withdrawal and the early withdrawal charge.
For TSA Contracts issued before January 15, 1996, to school districts that
employ members of the Michigan Education Association, you must specify the
source of amounts (other than earnings) from which a withdrawal may be taken,
such as salary reduction elective deferrals, direct rollovers, direct transfers
or employer contributions.
Except as described in the following paragraph, for the Contracts, withdrawal
charges are imposed on amounts (other than earnings) for the first seven years
after the purchase payment is received as shown in the table below.
For TSA Contracts issued before January 15, 1996, to school districts that
employ members of the Michigan Education Association, withdrawal charges are
imposed on amounts (other than earnings) for the first seven Contract Years
after the purchase payment is received as shown in the table below:
DURING PURCHASE PAYMENT/CONTRACT YEAR
<TABLE>
<CAPTION>
[8 &
1 2 3 4 5 6 7 BEYOND]
<S> <C> <C> <C> <C> <C> <C> <C>
7% 6% 5% 4% 3% 2% 1% 0%
</TABLE>
As required by the Federal securities laws, your total early withdrawal
charges will never exceed 9% of all your purchase payments applied to the
investment divisions to the date of the withdrawal. When no allocations or
transfers are made to the Separate Account except in connection with the Equity
Generator SM investment strategy, withdrawal charges will be calculated as
described above, but the charge imposed will not exceed earnings.
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES
................................................................................
CAN YOU MAKE WITHDRAWALS OR TRANSFERS WITHOUT EARLY WITHDRAWAL CHARGES?
Yes. There are several types of withdrawals that will not result in an early
withdrawal charge to you. Tax penalties may still apply and the amounts
withdrawn may also be subject to Federal income tax, see "Taxes," pages B-PPA-
31-35. We may require proof satisfactory to us that any necessary conditions
have been met.
The following describes the situations where we do not impose an early
withdrawal charge:
1. Transfers made among the investment divisions of the Separate Account or
to and from the Fixed Interest Account.
2. Withdrawals that represent purchase payments made over seven years ago.
3. A Free Corridor withdrawal described below. Depending on your Contract,
the Free Corridor percentage may either be taken in an unlimited number of
partial withdrawals (for each withdrawal we calculate the percentage it
represents of your Account Balance and whenever the total of such percentages
exceeds the specified percentage the early withdrawal charge applies) or as
part of the first withdrawal from your Account Balance during the Contract
Year. Beginning on or about December 15, 1998 and if approved in your state,
the Free Corridor withdrawal percentage may be
11/9/98 B-PPA-19
<PAGE>
...............................................................
taken in an unlimited number of partial withdrawals during the Contract year
for all Contracts. In either case the Free Corridor is the greater of the
percentage described below or amounts which are not subject to an early
withdrawal charge. For the Keogh, the Free Corridor is in addition to any
amounts which are not subject to an early withdrawal charge as described in
items 4-15 below, except for amounts which are exempted pursuant to Systematic
Terminations, described in item 8 below.
(a) For the unallocated Keogh and certain TSA Contracts, you can withdraw
up to 20% of your Account Balance during each Contract Year.
(b) For all other Contracts, you can withdraw up to 10% of your Account
Balance during each Contract Year.
4. Free Look: You may cancel your Contract within 10 days (20 days in North
Dakota and Idaho for individual Contracts) after you receive it by telling us
in writing. We will then refund all of your purchase payments. However, for
TSA Contracts issued in New York, Illinois, Minnesota and Pennsylvania we will
instead pay you your Account Balance. The Free Look is 30 days if an
individual Contract was issued to you in California and you are 60 years old
or older. If you cancel the Contract, we will then refund your Account
Balance. If you purchased your Contract by mail, you may have more time to
return your Contract.
5. You purchase an income annuity from us for life or a noncommutable period
of five years or more.
6. You die before any income payments have been made and we pay your
beneficiary a death benefit.
7. The withdrawal is required to avoid Federal income tax penalties or to
satisfy Federal income tax rules or Department of Labor regulations that apply
to the Contract from which the withdrawal is made.
8. Systematic Termination: For (a) the unallocated Keogh Contract and (b)
under the TSA Contract issued to certain Texas institutions of higher
education (1) to take effect with respect to the participants of such
institution if such institution withdraws its endorsement of the Contract or,
(2) with respect to any participant under such Contract, if that participant
retires or terminates employment according to the requirements of the Texas
Optional Retirement Program, and (c) for certain other TSA Contracts, a total
withdrawal ("Systematic Termination") that is paid in annual installments of
(1) 20% of your Account Balance upon receipt of your request (we will reduce
this first installment by the amount of any previous partial withdrawals
during the current Contract Year); (2) 25% of your then current Account
Balance one year later; (3) 33 1/3% of your then current Account Balance two
years later; (4) 50% of your then current Account Balance three years later;
and (5) the remainder four years later. You may cancel remaining payments
under a Systematic Termination at any time. However, if you again decide to
take a full withdrawal, the entire Systematic Termination process starts over.
If, after beginning a Systematic Termination, you decide to take your full
withdrawal in amounts exceeding the percentages allowed, the excess amount
withdrawn in any year is subject to the applicable withdrawal charges.
9. Disability: For TSA, 403(a), Keogh and PEDC Contracts, if you are totally
disabled (as defined under the Federal Social Security Act) and you request a
total withdrawal. For the Keogh Contracts and TSA Contracts that fund plans
subject to the Employee Retirement Income Security Act of 1974, the definition
of disability is also as defined under the Federal Social Security Act, unless
defined in the plan.
10. Retirement:
(a) For the Keogh Contracts, TSA and 403(a) Contracts, if there is a plan
which defines retirement and you retire under such definition. For certain TSA
Contracts, if there is no plan, you must have at least ten years of
uninterrupted Contract participation. For other TSA Contracts, you must have
at least ten years of uninterrupted Contract participation. This exemption
does not apply to withdrawals of amounts transferred into these TSA Contracts
from other investment vehicles on a tax-free basis (plus earnings on such
amounts). For the unallocated Keogh Contract, if you are a "restricted"
participant, as shown on the Contract, you must have been a participant in the
Contract for the period stated in the Contract. For the allocated Keogh
Contract, you must also have at least seven years of uninterrupted Contract
participation.
(b) For the PEDC Contract, if you retire.
(c) For certain TSA Contracts, if you retired before the TSA Contract is
purchased (including amounts transferred into the TSA Contract from other
investment vehicles on a tax free basis plus earnings on such amounts).
11. Separation from Service: For Keogh and PEDC Contracts, if your
employment terminates. For the unallocated Keogh Contract, if you are a
"restricted" participant, as shown on the Contract, you must also have been a
participant in the Contract for the period stated in the Contract. For the
allocated Keogh Contract, you must also have at least seven years of
uninterrupted Contract participation. For the TSA and 403(a) Contracts, you
must have at least ten years of uninterrupted Contract participation. This
exemption to
11/9/98 B-PPA-20
<PAGE>
...............................................................
the early withdrawal charge for TSA and 403(a) Contracts does not apply to
withdrawals of amounts transferred into the Contract from other investment
vehicles on a tax-free basis (plus earnings on such amounts). For other TSA
Contracts, if your employment terminates.
For certain TSA Contracts, if you separated from service before the TSA
Contract is purchased (including amounts transferred into the TSA Contract
from other investment vehicles on a tax free basis plus earnings on such
amounts).
12. Plan Termination: For the Keogh and certain TSA Contracts, if your plan
terminates and the Account Balance is rolled over into another annuity
contract we issue.
13. Hardship: For the PEDC and unallocated Keogh and certain TSA Contracts,
if you suffer an unforeseen hardship.
14. Pre-Approved Investment Vehicles: For Keogh Contracts, if you make a
direct transfer to other investment vehicles we have pre-approved. For the
unallocated Keogh Contract, if you are a "restricted" participant, as shown on
the Contract, and your Account Balance is rolled over to a MetLife individual
retirement annuity within 120 days after you are eligible to receive a plan
distribution.
15. Transfer from other MetLife Contracts (A) For transfers prior to January
1, 1996: If you rolled over amounts from other MetLife contracts we designate,
of the following two formulas, we will apply the one that is more favorable to
you:
(1) treat our other contract and this Contract as if they were one for
purposes of determining when a purchase payment was made, credit your purchase
payments with the time you held them under our other contract prior to the
time they were rolled over or
(2) subject the rollover amounts to a withdrawal charge determined as
described above in "What is the early withdrawal charge (sales load)?" as
follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[6 &
1 2 3 4 5 BEYOND]
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0
</TABLE>
(B) For transfers commencing on or after January 1, 1996:
(1) If you roll over amounts from other MetLife contracts we designate that
they have been in force at least two years (except as covered in (2) below),
we will apply the one of the following two formulas that is more favorable to
you: (a) the same withdrawal charge schedule that would have applied to the
rollover amounts had they remained in your other MetLife contracts, however,
any exceptions or reductions to the basic withdrawal charge percentage that
this Contract does not provide for (such as a 0% charge at the end of an
interest rate guarantee period or a 3% charge at the third anniversary) will
not apply; or (b) subject the rollover amounts to a withdrawal charge
determined as described above in "What is the early withdrawal charge (sales
load)?" as follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
6 &
1 2 3 4 5 BEYOND
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0%
</TABLE>
For this purpose, purchase payment year is measured from the date of the
rollover, not the original purchase payment date under the other MetLife
contracts.
(2) If the other MetLife contracts have been in force less than two years or
provide for a separate withdrawal charge for each purchase payment, we will
treat the other contracts and this Contract as if they were one for purposes
of determining when a purchase payment was made by crediting under this
Contract your purchase payments with the time you held them under our other
contract prior to the date they were rolled over.
(C) We may instead, if provided for by this Contract, treat another contract
and this Contract as if they were one for purposes of determining when a
purchase payment was made by deeming your purchase payments to have been made
under this Contract on the dates they were made under the other contract.
DEATH BENEFIT
...............................................................................
WHAT IS THE DEATH BENEFIT?
The death benefit is the greatest of (i) your Account Balance, (ii) your
highest Account Balance as of December 31 of any fifth Contract anniversary
less any later partial withdrawals and any later annual Contract charges
withdrawn from the Fixed Interest Account and (iii) the total of all of your
purchase payments less any partial withdrawals, in any case less any
outstanding loan balance under your Fixed Interest Account. The amount
determined to be the death benefit under the formula above for the allocated
Keogh Contract will be deemed to be the participant's account balance under
his/her plan. There is no death benefit for any unallocated Keogh Contract.
B-PPA-21
<PAGE>
...............................................................
WHEN AND TO WHOM WILL THE DEATH BENEFIT BE PAID?
The death benefit will not be paid until we receive proof of death and
appropriate directions regarding the Account Balance. If we receive proof of
death without any appropriate directions, we will take no action with regard
to the Account Balance until we receive appropriate directions.
You name the beneficiary under the TSA and 403(a) Contracts. The death
benefit is paid either to the PEDC trustee, to your employer under the PEDC
Contract or the Keogh trustee under the Keogh Contract.
The payee may take a lump sum cash payment or apply the death benefit (less
any applicable annuity taxes) to an income annuity from the types available
under your Contract.
INCOME OPTIONS
...............................................................................
CAN METLIFE PROVIDE YOU WITH AN INCOME GUARANTEED FOR LIFE OR OFFER A WIDE
CHOICE OF OTHER PERIODS?
Yes. You may withdraw all or a portion of your Account Balance and apply
that money (less any annuity taxes and applicable Contract charges that must
be paid) to an income annuity.
You can receive income payments guaranteed for life on a monthly, quarterly,
semiannual or annual basis. Non-life contingent annuities are available which
guarantee payments for at least five years, but no more than 30 years.
Other life annuity options are available which have a refund feature or are
guaranteed for a period of time and are life contingent afterwards. The amount
of the initial payment under an income annuity must be at least $50 ($20 in
Massachusetts). You may defer receipt of income payments for up to 12 months
once an income annuity has been elected.
All provisions relating to income annuities are subject to the limitations
imposed by the Code.
WHAT TYPES OF INCOME OPTIONS ARE AVAILABLE?
Both fixed and variable income options are available. Under a fixed income
option, we guarantee a specified, fixed payment, which will depend on the
income option chosen, the age and sex of the annuitant and joint annuitant, if
applicable, (except where unisex rates are required by law) and the portion of
your Account Balance used to provide the fixed income option. If a currently
issued immediate annuity of the same type will provide greater income
payments, the immediate annuity rates will be used.
If you do not select an income option by the date the Contract specifies,
you have not withdrawn your entire Account Balance, and your Contract was not
issued under a retirement plan, you will be issued a life annuity with a ten
(10) year guarantee. In that case, if you do not tell us otherwise, your Fixed
Interest Account Balance will be used to provide a fixed income option and
your Separate Account Balance will be used to provide a variable income
option.
More information concerning the variable income option, including investment
choices, determining the value of variable income payments, transfers,
deductions and charges, variable income option types and taxes are discussed
under "Income Annuities."
B-PPA-22
<PAGE>
SECTION II: INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS
WHAT ARE INCOME ANNUITIES?
Income Annuities provide you with a series of payments for either a period
of time or life that are based upon the investment performance of the
investment divisions of the Separate Account. The amount of the payment will
fluctuate and is not guaranteed as to a specified amount. You may elect to
have a portion of your income payment under the fixed income option that is
guaranteed by MetLife's general account. That portion of the payment from the
fixed income option will not fluctuate and is fixed. You may purchase an
Income Annuity even if you did not have a Contract during the accumulation
period.
Income Annuities can be either group or individual and are offered as IRAs,
SEPs, TSAs, PEDC, Keogh, 403(a) and Non-Qualified annuities. Some income
annuities have a reduced general administrative expenses and mortality and
expense risk charge as a result of reduced administration expenses.
This Prospectus describes four types of Income Annuities: TSAs, PEDC, Keogh
and 403(a) annuities.
MAY THE INCOME ANNUITY BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. Your Income Annuity may provide that your choice of income types is
subject to the terms of your retirement plan. Your Income Annuity will
indicate under which circumstances this is the case. We may rely on your
employer's or plan administrator's statements to us as to the terms of the
plan or your entitlement to any amounts. We will not be responsible for
determining what your plan says.
WHAT ARE THE INVESTMENT CHOICES?
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive Growth,
Santander International Stock Divisions, and, if approved in your state,
Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman Partners Mid
Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth Divisions
described earlier in Section 1 under "YOUR INVESTMENT CHOICES." The Calvert
Social Balanced Division is available in some cases. If you are covered under
a group Income Annuity, the employer, association or group may have limited
the number of available divisions. Your Income Annuity will indicate which
divisions were available to you when we issued it. We may add or eliminate
divisions for some or all persons. In some states, you may be limited to four
investment divisions to provide the variable income payment or up to three
investment divisions if a fixed income option is also selected.
ADMINISTRATION
...............................................................................
WHAT ADMINISTRATIVE DETAILS SHOULD YOU KNOW?
Your purchase payment and all requests concerning Income Annuities should be
sent to our Designated Office. We will provide you with the address for this
Office. All checks should be payable to "MetLife." You can also make certain
requests by telephone. In order to have the purchase payment for the Income
Annuity credited to you, we must receive your payment and complete
documentation. We will provide the appropriate forms. Under group Income
Annuities, your employer, the trustee of the Keogh plan or the group in which
you are an annuitant or member must also identify you to us on their reports
and tell us how the purchase payment should be allocated among the investment
divisions of the Separate Account and the fixed income option.
Your purchase payment is normally credited to you within two days of receipt
at our Designated Office. However, if you fill out our forms incorrectly or
incompletely or other documentation is not completed properly, we have up to
five business days to credit the purchase payment. If the problem cannot be
resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to
let us keep the purchase payment until the problem is remedied. If you do not
agree, your purchase payment will be returned immediately.
Purchase payments are effective and valued as of 4:00 p.m., Eastern time, on
the day we receive them at our Designated Office, except when they are
received (1) on a day when the annuity unit value (which will be discussed
later in this Prospectus) is not calculated or (2) after 4:00 p.m., Eastern
time. In those cases, the payment will be effective the next day the annuity
unit value is calculated.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
Your purchase payment must be large enough to produce an initial income
payment of at least $50 ($20 in Massachusetts).
11/9/98 B-PPA-23
<PAGE>
...............................................................
HOW IS THE PURCHASE PAYMENT ALLOCATED?
You decide how the purchase payment is allocated among the fixed income
option and the investment divisions of the Separate Account available to your
Income Annuity.
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS
................................................................................
WHAT IS AN ANNUITY UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"annuity units." These annuity units are similar to "accumulation units"
described earlier in Section I except that we deduct the contract fee (which
may be waived) and applicable annuity taxes from the purchase payment before we
determine the number of annuity units in each investment division chosen.
HOW IS AN ANNUITY UNIT VALUE CALCULATED?
We calculate annuity unit values once a day on every day the New York Stock
Exchange is open for trading. We call the time between two consecutive annuity
unit value calculations the "Valuation Period." We have the right to change the
basis for the Valuation Period, on 30 days' notice, as long as it is consistent
with the law. All purchase payments and transfers are valued as of the end of
the Valuation Period during which the transaction occurred. The annuity unit
values can increase or decrease, based on the investment performance of the
corresponding underlying portfolios. If the investment performance is positive,
after payment of Separate Account expenses and the deduction for the assumed
investment rate ("AIR"), discussed later in this Prospectus, annuity unit
values will go up. Conversely, if the investment performance is negative, after
payment of Separate Account expenses and the deduction for the AIR, annuity
unit values will go down.
When we determine the annuity unit value for an investment, we use the same
"experience factor" as that derived for the calculation of accumulation units
as described in Section I.
To calculate an annuity unit value, we first multiply the experience factor
for the period by a factor based on the AIR and the number of days in the
valuation period. For an AIR of 4% and a one day valuation period, the factor
is .99989255, which is the daily discount factor for an effective annual rate
of 4%. (The AIR may be in the range of 3% to 6%, as defined in your Income
Annuity and the laws of your state.) The resulting number is then multiplied by
the last previously calculated annuity unit value to produce the new annuity
unit value.
HOW IS A VARIABLE INCOME PAYMENT DETERMINED AND WHAT IS THE AIR?
Variable income payments can go up or down based upon the investment
performance of the investment divisions in the Separate Account. AIR is the
rate used to determine the first variable income payment and serves as a
benchmark against which the investment performance of the investment divisions
is compared. The higher the AIR, the higher the first variable income payment
will be. Subsequent variable income payments will increase only to the extent
that the investment performance of the investment divisions exceeds the AIR
(and Separate Account charges). Variable income payments will decline if the
investment performance of the Separate Account does not exceed the AIR (and
Separate Account charges). A lower AIR will result in a lower initial variable
income payment, but subsequent variable income payments will increase more
rapidly or decline more slowly as changes occur in the investment performance
of the investment divisions.
WHEN ARE VARIABLE INCOME PAYMENTS DETERMINED AND HOW OFTEN WILL THEY CHANGE?
Variable income payments are determined as of the 10th day prior to the date
each variable income payment is to be paid or the issue date, if later. Each
variable income payment may vary from a prior payment, depending, as discussed
above, upon the investment performance of the investment divisions, the AIR and
Separate Account charges.
TRANSFERS
................................................................................
CAN YOU MAKE TRANSFERS?
You can make transfers from one investment division to another or from an
investment division to a fixed income option as long as the total number of
investment divisions under your Income Annuity is no greater than four (or
three investment divisions if a fixed income option is chosen). You may make an
unlimited number of transfers. Your request must tell us the percentage to be
transferred. You may not make a transfer from the fixed income option to an
investment division.
WHEN WILL TRANSFERS BE PROCESSED?
Generally, we will process a transfer as of the end of the Valuation Period
during which we receive your request at our Designated Office. We will make it
as of a later date if you request. If you die before the requested date, we
will cancel the request and continue to make payments to your beneficiary under
a guarantee or a joint annuitant or pay your beneficiary a refund, if you have
chosen one of these income types.
B-PPA-24
<PAGE>
...............................................................
CAN YOU MAKE TRANSFERS BY TELEPHONE?
Yes. You can make transfer requests by telephone unless prohibited by state
law. Except for Keogh Income Annuities, if we agree and you complete the form
we supply, you may also authorize your sales representative to make transfer
requests on your behalf by telephone. All telephone transfers are subject to
the same procedures and limitations of liability as described earlier in
Section I.
DEDUCTIONS AND CHARGES
...............................................................................
WHAT IS THE CONTRACT FEE?
A one time $350 contract fee is taken from your purchase payment prior to
crediting annuity units and determining the amount of any fixed income
payments. This charge covers our administrative costs which include
preparation of the Income Annuities, review of applications and recordkeeping.
If you purchase an Income Annuity as the variable income option under your
Contract and you purchased the Contract at least two years earlier, the
contract fee will be waived.
WHAT ARE THE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that annuitant's
may live for a longer period of time than we estimated. Then we would be
obligated to pay more income benefits than anticipated. The expense risk
portion of the mortality and expense risk charge is that our expenses in
administering the Income Annuity will be greater than we estimated.
These charges do not reduce the number of annuity units credited to you.
These charges are calculated and paid every time we calculate the value of
annuity units. (See "How is an annuity unit value calculated?" on B-PPA-24.)
The sum of these charges on an annual basis (computed and payable each
Valuation Period) will not exceed 1.25% of the average value of the assets in
each investment division. Of this charge, we estimate that .50% is for
administrative expenses and .75% is for the mortality and expense risk.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES?
Yes. Some jurisdictions tax what are called "annuity considerations." We
deduct money to pay annuity taxes when you make the purchase payment. A chart
that shows the states where annuity taxes are charged and the amount of these
taxes is on page B-PPA-37.
WHAT VARIABLE INCOME TYPES ARE AVAILABLE?
Three persons figure in the description below: the owner of the Income
Annuity (the person with all rights under the contract including the right to
direct who receives payments), the annuitant (the person whose life is the
measure for determining the timing and sometimes the amount of income
payments) and the beneficiary (the person who may receive benefits if no
annuitants or owners are living).
Your Lifetime Annuity--A variable income payable during the annuitant's
life.
Your Lifetime with a Guaranteed Period Annuity--A variable income payable
during the annuitant's life. If, at the death of the annuitant, payments have
been made for less than the guarantee period, payments are made to the owner
of the annuity (or the beneficiary if the owner dies before the end of the
guarantee period) for the rest of the guarantee period.
Your Lifetime With a Refund Annuity--A variable income payable during the
annuitant's life. If, at the death of the annuitant, the total of all of our
payments is less than the purchase payment that we received, we will pay an
amount equal to the difference to the owner of the annuity (or to the
beneficiary if the owner is not alive) when the annuitant dies.
Income for Two Lives Annuity--A variable income payable while either of two
annuitants is alive. After one annuitant dies payments continue if the other
annuitant is alive, otherwise payments stop. Payments after one annuitant dies
may be the same as those paid while both were alive or may be a lower
percentage selected when the annuity is purchased (e.g. 75%, 66 2/3% or 50%).
Income for Two Lives with a Guaranteed Period Annuity--This is the same as
the Income for Two Lives Annuity described above, but we guarantee to pay the
full amount (not a reduced percentage) for the guarantee period even if one or
both annuitants die. If, at the death of both annuitants, payments have been
made for less than the guarantee period, payments are made to the owner of the
annuity (or the beneficiary if the owner dies before the end of the guarantee
period) for the rest of the guarantee period.
Income for Two Lives with a Refund Annuity--This is the same as the Income
for Two Lives Annuity
B-PPA-25
<PAGE>
...............................................................
described above but if, at the death of both annuitants, the total of all of
our payments is less than the purchase payment that we received, we will pay an
amount equal to the difference to the owner of the annuity (or to the
beneficiary if the owner is not alive) when the annuitant dies.
Income for a Guaranteed Period Annuity--A variable income payable for a
guarantee period (5-30 years). Payments cease at the end of the guarantee
period (which is often called a "term certain" period) even if the annuitant is
still alive. If the annuitant dies prior to the end of the guarantee period,
payments are made to the owner of the annuity (or to the beneficiary if the
owner dies before the end of the guarantee period) for the rest of the
guarantee period.
IS THERE A FREE LOOK?
Yes. There is a Free Look when you purchase an Income Annuity. There is no
Free Look when an Income Annuity is the variable income option under a
Contract. You may cancel your Income Annuity within 10 days (20 days in North
Dakota and Idaho for individual Income Annuities) after you receive it by
telling us in writing. We will then refund your purchase payment (however, for
Income Annuities issued in Pennsylvania, Illinois and Minnesota we will instead
pay you the value of your annuity units). The Free Look is 30 days if an
individual Income Annuity was issued in California and you are 60 years old or
older. If you cancel the Income Annuity, we will then refund the value of your
annuity units. If you purchased your Income Annuity by mail, you may have more
time to return your Income Annuity.
B-PPA-26
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SECTION III: OTHER DEFERRED CONTRACT
AND INCOME ANNUITY PROVISIONS
CAN WE CANCEL YOUR CONTRACT OR INCOME ANNUITY?
We may not cancel your Income Annuity.
We may cancel your Contract. If we do so for a Contract delivered in New
York, we will return the full Account Balance. In other states, you will
receive an amount equal to what you would have received if you had requested a
total withdrawal of your Account Balance. Early withdrawal charges may apply.
We will only cancel your Contract if we do not receive any purchase payments
for you for 36 consecutive months and your Account Balance is less than $2,000
(except for the unallocated Keogh Contract). We may only cancel the unallocated
Keogh Contract if we do not receive any purchase payments for you for 12
consecutive months and your Account Balance is less then $15,000. We will only
do so to the extent allowed by law. Certain Contracts do not contain these
cancellation provisions.
ARE THERE SPECIAL PROVISIONS THAT APPLY IF YOU ARE A PARTICIPANT IN A PLAN
SUBJECT TO ERISA?
Yes. If your plan is subject to ERISA (the Employee Retirement Income
Security Act of 1974) and you are married, the income payments, withdrawal
provisions, and methods of payment of the death benefit under your Contract or
Income Annuity may be subject to your spouse's rights as described below.
Generally, the spouse must give qualified consent whenever you elect to:
a. choose income payments other than on a qualified joint and survivor
annuity basis ("QJSA") (one under which we make payments to you during
your lifetime and then make payments reduced by no more than 50% to
your spouse for his or her remaining life, if any); or choose to waive
the qualified pre-retirement survivor annuity benefit ("QPSA"), (the
benefit payable to the surviving spouse of a participant who dies with
a vested interest in an accrued retirement benefit under the plan
before payment of the benefit has begun);
b. make certain withdrawals under plans for which a qualified consent is
required;
c. name someone other than the spouse as your beneficiary;
d. use accrued benefit as security for a loan exceeding $5,000.
Generally, there is no limit to the number of your elections as long as a
qualified consent is given each time. The consent to waive the QJSA must meet
certain requirements, including that it be in writing that acknowledges the
identity of the designated beneficiary and the form of benefit selected, dated,
signed by your spouse, witnessed by a notary public or plan representative and
in a form satisfactory to us. The waiver of a QJSA generally must be executed
during the 90-day period ending on the date on which income payments are to
commence, or the withdrawal or the loan is to be made, as the case may be. If
you die before benefits commence, your surviving spouse will be your
beneficiary unless he or she has given a qualified consent otherwise. The
qualified consent to waive the QPSA benefit and the beneficiary designation
must be made in writing which acknowledges the designated beneficiary, dated,
signed by your spouse, witnessed by a notary public or plan representative and
in a form satisfactory to us. Generally, there is no limit to the number of
beneficiary designations as long as a qualified consent accompanies each
designation. The waiver of and the qualified consent for the QPSA benefit
generally may not be given until the plan year in which you attain age 35. The
waiver period for the QPSA ends on the date of your death. If your benefit is
worth $5,000 or less, your plan may provide for distribution of your entire
interest in a lump sum without spousal consent.
WHEN ARE YOUR REQUESTS EFFECTIVE?
In general, your requests are effective when we receive them at our
Designated Office unless otherwise provided by this Prospectus.
WILL WE CONFIRM YOUR TRANSACTIONS?
Yes. In general we will send you a confirmation statement indicating that a
transaction recently took place. Certain transactions which are made on a
periodic basis, such as pre-authorized systematic purchase payments which are
transfers from the Fixed Interest Account and Systematic Withdrawal Program
payments, may be confirmed quarterly. MetLife confirms quarterly purchase
transactions under TSA Contracts made on the basis of salary reduction or
deduction.
CAN WE CHANGE THE PROVISIONS OF YOUR CONTRACT OR INCOME ANNUITY?
Yes. We have the right to make certain changes to your Contract or Income
Annuity, but only as permitted by law. We make changes when we think they would
11/9/98 B-PPA-27
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...............................................................
best serve the interest of all participants or would be appropriate in
carrying out the purposes of the Contract or Income Annuity. If the law
requires, we will also get your approval and that of any appropriate
regulatory authorities. Examples of the changes we may make include:
1. To operate the Separate Account in any form permitted under the 1940 Act
or in any other form permitted by law.
2. To take any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act.
3. To transfer any assets in an investment division to another investment
division, or to one or more separate accounts, or to our general account, or
to add, combine or remove investment divisions in the Separate Account.
4. To substitute for the portfolio shares in any investment division, the
shares of another class of the Metropolitan Fund or the shares of another
investment company or any other investment permitted by law.
5. To change the way we assess charges, but without increasing the aggregate
amount charged to the Separate Account and any currently available portfolio
in connection with the Contracts or Income Annuities.
6. To make any necessary technical changes in the Contracts or Income
Annuities in order to conform with any of the above-described actions.
If any changes result in a material change in the underlying investments of
an investment division in which you have an Account Balance, we will notify
you of the change. You may then make a new choice of investment divisions. For
Contracts issued in Pennsylvania (and Income Annuities where required by law),
we will ask your approval before any technical changes are made.
WHAT ARE YOUR VOTING RIGHTS REGARDING PORTFOLIO SHARES?
In accordance with our view of the present applicable law, we will vote the
shares of each of the portfolios held by the Separate Account (which are
deemed attributable to the Contract or Income Annuity) at regular and special
meetings of the shareholders of the portfolio based on instructions received
from those having the voting interest in corresponding investment divisions of
the Separate Account. However, if the 1940 Act or any rules thereunder should
be amended or if the present interpretation thereof should change, and as a
result we determine that we are permitted to vote the shares of the portfolios
in our own right, we may elect to do so.
Accordingly, you have voting interests under the Contracts or Income
Annuities. The number of shares held in each Separate Account investment
division deemed attributable to you is determined by dividing the value of
accumulation or annuity units attributable to you in that investment division,
if any, by the net asset value of one share in the portfolio in which the
assets in that Separate Account investment division are invested. Fractional
votes will be counted. The number of shares for which you have the right to
give instructions will be determined as of the record date for the meeting.
Portfolio shares held in each registered separate account of MetLife or any
affiliate that are or are not attributable to life insurance policies or
annuity contracts (including the Contracts and Income Annuities) and for which
no timely instructions are received will be voted in the same proportion as
the shares for which voting instructions are received by that separate
account. Portfolio shares held in the general accounts or unregistered
separate accounts of MetLife or its affiliates will be voted in the same
proportion as the aggregate of (i) the shares for which voting instructions
are received and (ii) the shares that are voted in proportion to such voting
instructions. However, if we or an affiliate determine that we are permitted
to vote any such shares, in our own right, we may elect to do so subject to
the then current interpretation of the 1940 Act or any rules thereunder.
You will be entitled to give instructions regarding the votes attributable
to your Contract or Income Annuity in your sole discretion. Under the Keogh
Contracts, participants may instruct you to give us instructions regarding
shares deemed attributable to their contributions to the Contract. Under the
Keogh Contracts, we will provide you with the number of copies of voting
instruction soliciting materials that you request so that you may furnish such
materials to participants who may give you voting instructions. Neither the
Separate Account nor MetLife has any duty to inquire as to the instructions
received or your authority to give instructions; thus, as far as the Separate
Account, and any others having voting interests in respect of the Separate
Account are concerned, such instructions are valid and effective.
You may give instructions regarding, among other things, the election of the
board of directors, ratification of the election of independent auditors, and
the approval of investment and sub-investment managers.
B-PPA-28
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...............................................................
CAN YOUR VOTING INSTRUCTIONS BE DISREGARDED?
Yes. MetLife may disregard voting instructions under the following
circumstances (1) to make or refrain from making any change in the investments
or investment policies for any portfolio if required by any insurance
regulatory authority; (2) to refrain from making any change in the investment
policies or any investment manager or principal underwriter or any portfolio
which may be initiated by those having voting interests or the Metropolitan
Fund's or Calvert Variable Series, Inc.'s boards of directors, provided
MetLife's disapproval of the change is reasonable and, in the case of a change
in investment policies or investment adviser, based on a good faith
determination that such change would be contrary to state law or otherwise
inappropriate in light of the portfolio's objective and purposes; or (3) to
enter into or refrain from entering into any advisory agreement or
underwriting contract, if required by any insurance regulatory authority.
In the event that MetLife does disregard voting instructions, a summary of
the action and the reasons for such action will be included in the next
semiannual report.
WHO SELLS YOUR CONTRACT OR INCOME ANNUITY AND DO YOU PAY A COMMISSION ON THE
PURCHASE OF YOUR CONTRACT OR INCOME ANNUITY?
All Contracts and Income Annuities, certificates and interests in the
Contracts and Income Annuities are sold through individuals who are our
licensed sales representatives. We are registered with the Securities and
Exchange Commission as a broker-dealer under the Securities Exchange Act of
1934, and we are a member of the National Association of Securities Dealers,
Inc. They also are sold through other registered broker-dealers. They also may
be sold through the mail.
The licensed sales representatives and broker-dealers who sell Contracts and
Income Annuities and certificates and interests in the Contracts and Income
Annuities may be compensated for these sales by commissions that we pay. There
is no front-end sales load deducted from purchase payments to pay sales
commissions. The Separate Account also does not pay sales commissions. The
commissions we pay range from 0% to 6% depending on the age of the participant
or annuitant.
From time to time, MetLife may pay organizations or associations a fee,
reimburse them for certain expenses, lease office space from them, purchase
advertisements in their publications or enter into other such arrangements in
connection with their endorsing or sponsoring MetLife's variable annuity
contracts or services, for permitting MetLife to undertake certain marketing
efforts of the organizations' members in connection with sales of MetLife
variable annuities, or some combination thereof. Additionally, MetLife has
retained consultants who are paid a fee for their efforts in establishing and
maintaining relationships between MetLife and various organizations.
We also make payments to our licensed sales representatives based upon the
total Account Balances of the Contracts assigned to the sales representatives.
Under the program, we pay an amount up to .12% of the total Account Balances
of the Contracts, other registered variable annuity contracts, certain mutual
fund account balances and cash values of certain life insurance policies.
These asset based commissions compensate the sales representatives for
servicing the Contracts. These payments are not made for Income Annuities.
DOES METLIFE ADVERTISE THE PERFORMANCE OF THE SEPARATE ACCOUNT?
Yes. From time to time we advertise the performance of various Separate
Account investment divisions. This performance is stated in terms of either
"yield," "change in accumulation unit value," "change in annuity unit value"
or "average annual total return" or some combination of the foregoing. Yield,
change in accumulation unit value, change in annuity unit value and average
annual total return figures are based on historical earnings and are not
intended to indicate future performance. The yield figures quoted in
advertisements will refer to the net income generated by an investment in a
particular investment division for a thirty day period or month, which is
specified in the advertisement, and then expressed as a percentage yield of
that investment. This percentage yield is then compounded semiannually. Change
in accumulation unit value or change in annuity unit value refers to the
comparison between values of accumulation or annuity units over specified
periods in which an investment division has been in operation, expressed as a
percentage. Change in accumulation unit value or change in annuity unit value
may also be expressed as an annualized figure. In addition, change in
accumulation unit value or change in annuity unit value may be used to
illustrate performance for a hypothetical investment (such as $10,000) over
the time period specified. Yield and change in accumulation unit value figures
do not reflect the possible imposition of an early withdrawal charge of up to
7% of the amount withdrawn attributable to a purchase payment, which may
result in a lower figure being experienced by the investor. Average annual
total return differs from the change in accumulation unit value and change in
annuity unit value because it assumes a steady rate of return and reflects all
expenses and applicable early withdrawal charges. Performance figures will
vary among the various Contracts and Income Annuities as a result of
B-PPA-29
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...............................................................
different Separate Account charges and early withdrawal charges. Performance
may be calculated based upon historical performance of the underlying
portfolios of the Metropolitan Fund and the Calvert Social Balanced Portfolio
and may assume that certain Contracts were in existence prior to their
inception date. After the inception date, actual accumulation unit or annuity
unit data is used.
Advertisements regarding the Separate Account may contain comparisons of
hypothetical after-tax returns of currently taxable investments versus returns
of tax deferred investments. From time to time, the Separate Account may
compare the performance of its investment divisions with the performance of
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds, Treasury Bills, certificates of deposit
and savings accounts. The Separate Account may use the Consumer Price Index in
its advertisements as a measure of inflation for comparison purposes. From
time to time, the Separate Account may advertise its performance ranking among
similar investments or compare its performance to averages as compiled by
independent organizations such as Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS (R) and The Wall Street Journal. The Separate Account
may also advertise its performance in comparison to appropriate indices, such
as the Standard & Poor's 500 Composite Stock Price Index, the Standard &
Poor's Mid Cap 400 Index, the Standard & Poor's Small Cap 600 Index, the
Russell 2000 Index, the Russell 2000 Growth Index, the Lehman Brothers
Aggregate Bond Index, the Lehman Brothers Government/Corporate Bond Index, the
Merrill Lynch High Yield Bond Index, the Morgan Stanley Capital International
All Country World Index and the Morgan Stanley Capital International Europe,
Australasia, Far East Index.
Performance may be shown for certain investment strategies that are made
available under certain Contracts. The first is the "Equity Generator." Under
the "Equity Generator," an amount equal to the interest earned during a
specified interval (i.e., monthly, quarterly) in the Fixed Interest Account is
transferred to the MetLife Stock Index Division or the State Street Research
Aggressive Growth Division. The second technique is the "Equalizer SM." Under
this strategy, once during a specified period (i.e., monthly, quarterly), a
transfer is made from the MetLife Stock Index Division or the State Street
Research Aggressive Growth Division to the Fixed Interest Account or from the
FIxed Interest Account to the MetLife Stock Index Division or State Street
Research Aggressive Growth Division in order to make the account and the
division equal in value. The third strategy is the "Index Selector SM." Under
this strategy, once during a specified period (i.e., quarterly, annually)
transfers are made among the Lehman Brothers Aggregate Bond Index, MetLife
Stock Index, Morgan Stanley EAFE Index and Russell 2000 Index Divisions and
the Fixed Interest Account in order to bring the percentage of the total
Account Balance in each of these divisions and Fixed Interest Account back to
the current allocation of your choice of one of several asset allocation
models. The elements which form the basis for the models are provided by
MetLife which may rely on a third party for its expertise in creating
appropriate allocations. The models are designed to correlate to various risk
tolerance levels associated with investing and are subject to change from time
to time.
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector Return"
for each asset allocation model will be calculated by presuming a certain
dollar value at the beginning of a period and comparing this dollar value with
the dollar value, based on historical performance, at the end of the period,
expressed as a percentage. The "Return" in each case will assume that no
withdrawals have occurred. We may also show performance for the Equity
Generator, Equalizer and Index Selector investment strategies using other
investment divisions for which these strategies are made available in the
future. If we do so, performance will be calculated in the same manner as
described above, using the appropriate account and/or investment divisions.
11/9/98 B-PPA-30
<PAGE>
SECTION IV: TAXES
GENERAL
Federal tax laws are complex and are subject to frequent change as well as to
judicial and administrative interpretation. The following is a general summary
intended to point out what we believe to be some general rules and principles,
and not to give specific tax or legal advice. Failure to comply with the law
may result in significant penalties. For details or for advice on how the law
applies to your individual circumstances, consult your tax advisor or attorney.
You may also get information from the Internal Revenue Service.
In the opinion of our attorneys, the Separate Account and its operations will
be treated as part of MetLife, and not taxed separately. We are taxed as a life
insurance company. Thus, although the Contracts and Income Annuities allow us
to charge the Separate Account with any taxes or reserves for taxes
attributable to it, we do not expect that under current law we will do so.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR DEFERRED CONTRACT?
Generally, all contributions under the Contracts will be contributed on a
"before-tax" basis. This means that the purchase payments either reduce your
income, entitle you to a tax deduction or are not subject to current income
tax. Because of this, Federal income taxes are payable on the full amount of
money you withdraw as well as on income earned under the Contract.
Non-Qualified contracts with an endorsement containing tax provisions
required for Keogh and corporate plans may be issued to Keogh and corporate
plans covering one individual. In such event, contributions under such
contracts will be made on a "before-tax" basis and the rules applicable to
Keogh plans will apply to such contracts, notwithstanding any provision in the
contracts to the contrary. Wherever the terms "Keogh Contract" or "Keogh plan"
appears in this section, the term shall be deemed to include non-qualified
contracts with an appropriate endorsement issued to Keogh and corporate plans
covering one individual.
Under some circumstances certain of the Contracts, accept both purchase
payments that entitle you or the owner to a current tax deduction or to an
exclusion from income and those that do not. Taxation of withdrawals depends on
whether or not you or the owner were entitled to deduct or exclude the purchase
payments from income in compliance with the Code.
The taxable portion of a distribution from a Keogh, 403(a) and TSA Contract
to the participant or the participant's spouse (if she/he is the beneficiary)
that is an "eligible rollover distribution," as defined in the Code, is subject
to 20% mandatory Federal income tax withholding unless the participant directs
the trustee, insurer or custodian of the plan to transfer all or any portion of
his/her taxable interest in such plan to the trustee, insurer or custodian of
(1) an individual retirement arrangement under (S)408; (2) a qualified trust or
403(a) annuity plan, if the distribution is from a Keogh or 403(a) Contract; or
(3) a TSA, if the distribution is from a TSA Contract. An eligible rollover
distribution generally is the taxable portion of any distribution from a Keogh,
403(a) or TSA Contract, except the following: (a) a series of substantially
equal periodic payments over the life (or life expectancy) of the participant;
(b) a series of substantially equal periodic payments over the lives (or joint
life expectancies) of the participant and his/her beneficiary; (c) a series of
substantially equal periodic payments over a specified period of at least ten
years; (d) a minimum distribution required during the participant's lifetime or
the minimum amount to be paid after the participant's death; (e) refunds of
excess contributions to the plan described in (S)401(k) of the Code for
corporations and unincorporated businesses; (f) certain loans treated as
distributions under the Code; (g) the cost of life insurance coverage which is
includible in the gross income of the plan participant; and (h) any other
taxable distributions from any of these plans which are not eligible rollover
distributions.
All taxable distributions from Keogh, 403(a) and TSA Contracts that are not
eligible rollover distributions will be subject to Federal income tax
withholding unless the payee elects to have no withholding. The rate of
withholding is as determined by the Code and Regulations thereunder at the time
of payment. All taxable distributions from the PEDC Contract will be subject to
the same Federal income tax withholding as regular wages.
Each type of Contract is subject to various tax limitations. Typically, the
maximum amount of purchase payment is limited under Federal tax law and there
are limitations on how long money can be left under the Contracts before
withdrawals must begin. A 10% tax penalty applies to certain taxable
withdrawals from the Contract (or in some cases from the plan or arrangement
that purchased the Contract) before you are age 59 1/2. Withdrawals from the
TSA Contracts are generally entirely prohibited before age 59 1/2.
B-PPA-31
<PAGE>
...............................................................
The following paragraphs will briefly summarize some of the tax rules on a
Contract-by-Contract basis, but will make no attempt to mention or explain
every single rule that may be relevant to you. We are not responsible for
determining if your plan or arrangement satisfies the requirements of the
Code.
TSA Contracts. These fall under (S)403(b) of the Code that provides certain
tax benefits to eligible employees of public school systems and organizations
that are tax exempt under (S)501(c)(3) of the Code.
Your employer buys the Contract for you although you then own it. The Code
limits the amount of purchase payments that can be made. Purchase payments
over this amount may be subject to adverse tax consequences. Special rules
apply to the withdrawal of excess contributions. Withdrawals before age 59 1/2
are prohibited except for (a) amounts contributed to or earned under your
(S)403(b) arrangement before January 1, 1989 that were either paid into or
earned under the Contract or later transferred to it in a manner satisfying
applicable Code requirements (withdrawals are deemed to come first from pre-
1989 money that is not subject to these restrictions, until all of such money
is withdrawn); (b) tax-free transfers to other (S)403(b) funding vehicles or
any other withdrawals that are not "distributions" under the Code; (c) amounts
that are not attributable to salary reduction elective deferral contributions
(i.e., generally amounts not attributable to your pre-tax contributions and
their earnings); (d) after you die, separate from service or become disabled
(as defined in the Code); (e) in the case of financial hardship (as defined in
the Code) but only your purchase payments may be withdrawn for hardship, not
earnings; or (f) under any other circumstances as the Code allows. Special
withdrawal restrictions under (S)403(b)(7)(A)(ii) of the Code apply to amounts
that had once been invested in mutual funds under custodial arrangements even
after such amounts are transferred to a Contract.
Taxable withdrawals (other than tax-free transfers) that are allowed before
you are age 59 1/2 are subject to an additional 10% tax penalty on the taxable
portion of the withdrawal. This penalty does not apply to withdrawals (1) paid
to a beneficiary or your estate after your death; (2) due to your permanent
disability (as defined in the Code); (3) made in substantially equal periodic
payments (not less frequently than annually) over the life or life expectancy
of you or you and another person named by you, where such payments begin after
separation from service; (4) made to you after you separate from service with
your employer after age 55; (5) made to you on account of deductible medical
expenses (whether or not you actually itemize deductions); (6) made to an
"alternate payee" under a "qualified domestic relations order" (normally a
spouse or ex-spouse); (7) of excess matching employer contributions made to
eliminate discrimination under the Code; or (8) timely made to reduce an
elective deferral as allowed by the Code. If you are under age 59 1/2 and are
receiving Systematic Withdrawal Program payments that you intend to qualify as
a series of substantially equal periodic payments under (S)72(t) of the Code
and thus not subject to the 10% tax penalty, any modifications to your
Systematic Withdrawal Program payments before age 59 1/2 or, if later, five
years after beginning Systematic Withdrawal Program payments will result in
the retroactive imposition of the 10% tax penalty. You should consult with
your tax adviser to determine whether you are eligible to rely on any
exceptions to the 10% tax penalty rule before you elect to receive any
Systematic Withdrawal Program payments or make any modifications to your
Systematic Withdrawal Program payments.
Withdrawals may be transferred to another (S)403(b) funding vehicle or (for
eligible rollover distributions) to an IRA without Federal tax consequences if
Code requirements are met. Your Contract is not forfeitable and you may not
transfer it. Generally, for taxable years after 1996, if you do not have a 5%
or more ownership interest in your employer, your entire interest in the
Contract must be withdrawn or begin to be withdrawn by April 1 of the calendar
year following the later of: the year in which you reach age 70 1/2 or, to the
extent permitted under your plan or contract, the year in which you retire. A
tax penalty of 50% applies to withdrawals which should have been made but were
not. Complex rules apply to the timing and calculation of these withdrawals.
Other complex rules apply to how rapidly withdrawals must be made after your
death. Generally, if you die before the required withdrawals have begun, we
must make payment of your entire interest under the Contract within five years
of the year in which you died or begin payments under an income annuity
allowed by the Code to your beneficiary over his or her lifetime or over a
period not beyond your beneficiary's life expectancy starting by the December
31 of the year following the year in which you die. If your spouse is your
beneficiary, payments may be made over your spouse's lifetime or over a period
not beyond your spouse's life expectancy starting by the December 31 of the
year in which you would have reached age 70 1/2, if later. If you die after
income payments begin, payments must continue to be made at least as rapidly
as under the method of distribution that was used as of the date of your
death. If your Contract is subject to the Retirement Equity Act, your spouse
has certain rights which may be waived with the written consent of your
spouse. The IRS allows you to aggregate the amount required to be withdrawn
from each TSA contract you
11/9/98 B-PPA-32
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...............................................................
own and to withdraw this amount in total from any one or more of the TSA
contracts you own.
Keogh Contracts. Pension and profit-sharing plans satisfying certain Code
provisions are considered to be "Keogh" plans. Complex rules apply to the
establishment and operation of such plans, including the amounts that may be
contributed under them. Excess contributions are subject to a 10% penalty.
Special rules apply to the withdrawal of excess contributions.
Taxable withdrawals before age 59 1/2 are subject to a 10% tax penalty (this
does not apply to the return of any non-deductible purchase payments). This
penalty does not apply to withdrawals (1) paid to a beneficiary or your estate
after your death; (2) due to your permanent disability (as defined in the
Code); (3) made in substantially equal periodic payments (not less frequently
than annually) over the life or life expectancy of you or you and another
person named by you as your beneficiary where such payments begin after
separation from service; (4) made to you after you separate from service with
your employer after age 55; or (5) made to you on account of deductible medical
expenses (whether or not you actually itemize deductions).
Under rules similar to those described above for TSAs, for taxable years
after 1996, if you do not have a 5% or more ownership interest in your
employer, withdrawals of your entire interest under the Contract must be made
or begun to be made beginning no later than the April 1 of the calendar year
following the later of: the year in which you reach age 70 1/2 or, to the
extent permitted under your plan or contract, the year you retire. Also, if you
die before required withdrawals have begun, the entire interest in the Contract
generally must be paid within five years of the year in which you died.
If your benefit under the Keogh plan is worth more than $5,000, the Code
requires that your income annuity protect your spouse if you die before you
receive any payments under the annuity or if you die while payments are being
made. You may waive these requirements with the written consent of your spouse.
Designating a beneficiary other than your spouse is considered a waiver.
Waiving these requirements may cause your monthly benefit to increase during
your lifetime.
Non-Qualified contracts with an endorsement containing tax provisions
required for Keogh and corporate plans may be issued to Keogh and corporate
plans covering one individual. In such event, the rules applicable to Keogh
plans as outlined above will apply to such contracts, notwithstanding any
provision in the contracts to the contrary.
PEDC Contract. PEDC plans are available to State or local governments and
certain tax-exempt organizations as described in (S)457 of the Code. These
plans, which must meet the requirements of (S)457(b), provide certain tax
deferral benefits to employees and independent contractors. The plans are not
available to churches and qualified church-controlled organizations. A PEDC
plan maintained by a State or local government must be held in trust (or
custodial account or annuity contract) for the exclusive benefit of plan
participants and their beneficiaries. However, for state or local government
plans in existence on August 20, 1996, these requirements do not have to be met
prior to January 1, 1999. Plan benefit deferrals, contributions and all income
attributable to such amounts under PEDC plans, other than those maintained by a
State or local government as described above, are (until made available to the
participant or other beneficiary) solely the property of the employer, subject
to the claims of the employer's general creditors.
The compensation amounts that may be deferred under a PEDC plan may not
exceed certain deferral limits established under the federal tax law. In
addition, contributions to other plans may reduce the deferral limit even
further.
Under the plan, amounts will not be made available to participants or
beneficiaries until the earliest of (1) the calendar year in which the
participant reaches age 70 1/2, (2) when the participant separates from service
with the employer, or (3) when the participant is faced with an unforeseeable
emergency as described in the income tax regulations. Amounts will not be
treated as "made available" under these rules if (i) an election to defer
commencement of a distribution is made by the participant and such election
meets certain requirements, or (ii) the total amount payable is $5,000 or less
and certain other requirements are met.
Withdrawals must conform to the complex minimum distribution requirements of
the Code, including the requirement that distributions must generally begin no
later than April 1 of the calendar year following the later of: the year in
which the participant attains age 70 1/2 or, to the extent permitted under your
plan or contract, the year the participant retires. Although the minimum
distribution rules are similar to the rules summarized above for TSAs there are
some differences. For example, for PEDC plans, any distribution payable over a
period of more than one year can only be made in substantially non-increasing
amounts, and generally distributions may not exceed 15 years.
Special rules apply to certain non-governmental PEDC plans deferring
compensation from taxable years beginning before January 1, 1987 (or beginning
later but
B-PPA-33
<PAGE>
...............................................................
based on an agreement in writing on August 16, 1986 and which then provided
for deferral of fixed amounts or amounts determined by a fixed formula).
403(a) Contracts. The employer adopts a 403(a) plan as a qualified
retirement plan to provide benefits to participating employees. The plan
generally works in a similar manner to a corporate qualified retirement plan
except that the 403(a) plan does not have a trust or a trustee.
The Code limits the amount of contributions and distributions that may be
made under 403(a) plans. Taxable withdrawals before age 59 1/2 may be subject
to a 10% tax penalty. Any amounts distributed under the 403(a) Contracts are
generally taxed according to the rules described under (S)72 of the Code.
Under rules similar to those described above for TSAs, for taxable years after
1996, if you do not have a 5% or more ownership interest in your employer,
withdrawals of your entire interest under the Contract must be made or begun
to be made no later than the April 1 of the calendar year following the later
of: the year in which you reach age 70 1/2 or, to the extent permitted under
your plan or contract, the year you retire. Also, if you die before required
withdrawals have begun, the entire interest in the plan generally must be paid
within five years of the year in which you died. The minimum distribution
rules for 403(a) Contracts are similar to those rules summarized above for
TSAs.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR INCOME ANNUITY?
Generally, all purchase payments under the Income Annuities will be on a
"before-tax" basis. This means that the purchase payment was either a
reduction from income, entitled you to a tax deduction or was not subject to
current income tax. Because of this, Federal income taxes are payable on the
full amount of money paid as income payments under the Income Annuity.
Under some circumstances certain of the Income Annuities accept both
purchase payments that have entitled you or the owner to a current tax
deduction or to a reduction in taxable income and those that do not. Taxation
of income payments depends on whether or not you or the owner were entitled to
deduct or exclude from income the purchase payment in compliance with the
Code.
All taxable income payments other than income payments under the PEDC Income
Annuity will be subject to Federal income tax withholding unless the payee
elects to have no withholding. The rate of withholding is as determined by the
Code at the time of payment. All taxable income payments under the PEDC Income
Annuity will be subject to the same Federal income tax withholding treatment
as regular wages.
Income payments (other than tax-free transfers to other (S)403(b) funding
vehicles and those made under a PEDC plan) that are allowed before you are age
59 1/2 are generally subject to an additional 10% tax penalty on the taxable
portion of the income payment. This penalty does not apply to income payments
(1) paid to a beneficiary or your estate after your death; (2) due to your
permanent disability (as defined in the Code); or (3) made in substantially
equal periodic payments (not less frequently than annually) over the life or
life expectancy of you or you and another person named by you as your
beneficiary, where such payments begin after separation from service.
Additionally, under TSAs, Keogh and 403(a) plans the penalty does not apply to
income payments (1) made to you after you separate from service with your
employer after age 55; (2) made to you on account of deductible medical
expenses (whether or not you actually itemize deductions); or (3) made to an
"alternate payee" under a "qualified domestic relations order" (normally a
spouse or ex-spouse). There is a possibility that if you make transfers as
described earlier in this Prospectus before age 59 1/2 or within five years of
the purchase of the Income Annuity, the exercise of the transfer provision may
cause the retroactive imposition of this tax.
The following paragraphs will briefly summarize some of the tax rules, but
we will make no attempt to mention or explain every single rule that may be
relevant to you. We are not responsible for determining if your plan or
arrangement satisfies the requirements of the Code.
For taxable years after 1996, if you do not have a 5% or more ownership
interest in your employer, income payments under the TSA, Keogh, PEDC and
403(a) Income Annuities generally must begin by April 1 of the year following
the later of: the year in which you reach age 70 1/2 or, to the extent
permitted under your plan or contract, the year you retire and a tax penalty
of 50% applies to payments which should have been made but were not. Complex
rules apply to the timing and calculation of these income payments. Other
complex rules apply to how rapidly income payments must be made after your
death. If you die before income payments begin under the Income Annuity, the
Code generally requires that your entire interest under the Income Annuity be
paid within five years of the year in which you died. If you die after income
payments begin, payments must continue to be made in accordance with the
income type selected. The Code requires that payments continue to be made at
least as rapidly as under the method of distribution that was used as of the
date of your death.
B-PPA-34
<PAGE>
...............................................................
If your benefit under a plan subject to REA is worth more than $5,000, the
Code requires that your Income Annuity protect your spouse if you die before
you receive any income payments under the Income Annuity or if you die while
income payments are being made. If your Income Annuity is subject to the
Retirement Equity Act (REA), your spouse has certain rights which may be
waived with the written consent of your spouse. Waiving these requirements
will cause your initial monthly benefit to increase.
Any income payments distributed under 403(a) Income Annuities are generally
taxed according to the rules described under (S)72 of the Code.
B-PPA-35
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
<S> <C>
Cover Page................................................................ 1
Table of Contents......................................................... 1
Independent Auditors...................................................... 2
Services.................................................................. 2
Distribution of Certificates and Interests in the Contracts and Income
Annuities................................................................ 2
Early Withdrawal Charge................................................... 2
Variable Income Payments.................................................. 2
Performance Data.......................................................... 4
Financial Statements of the Separate Account.............................. 15
Financial Statements of MetLife........................................... 37
</TABLE>
B-PPA-36
<PAGE>
APPENDIX
ANNUITY TAX TABLE
The following is a current list of jurisdictions in which annuity taxes apply
in respect of the Contracts and Income Annuities and the applicable annuity
tax rates:
<TABLE>
<CAPTION>
IRA, SIMPLE
IRA AND SEP NON-QUALIFIED
TSA CONTRACTS CONTRACTS KEOGH AND 403(A) PEDC CONTRACTS CONTRACTS AND
AND INCOME AND INCOME CONTRACTS AND AND INCOME INCOME
ANNUITIES ANNUITIES(1) INCOME ANNUITIES ANNUITIES(2) ANNUITIES
------------- ------------ ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
California.............. 0.5% 0.5%(3) 0.5% 2.35% 2.35%
District of Columbia.... 2.25% 2.25% 2.25% 2.25% 2.25%
Kentucky(4)............. 2.0% 2.0% 2.0% 2.0% 2.0%
Maine................... -- -- -- -- 2.0%
Nevada.................. -- -- -- -- 3.5%
Puerto Rico............. 1.0% 1.0% 1.0% 1.0% 1.0%
South Dakota............ -- -- -- -- 1.25%
U.S. Virgin Islands..... 5.0% 5.0% 5.0% 5.0% 5.0%
West Virginia........... 1.0% 1.0% 1.0% 1.0% 1.0%
Wyoming................. -- -- -- -- 1.0%
</TABLE>
- -------
(1) Annuity tax rates applicable to IRA, SIMPLE IRA and SEP Contracts and
Income Annuities purchased for use in connection with individual
retirement trust or custodial accounts meeting the requirements of
(S)408(a) of the Code are included under the column headed "IRA, SIMPLE
IRA and SEP Contracts and Income Annuities."
(2) Annuity tax rates applicable to Contracts and Income Annuities purchased
under retirement plans of public employers meeting the requirements of
(S)401(a) of the Code are included under the column headed "Keogh
Contracts and Income Annuities."
(3) With respect to Contracts and Income Annuities purchased for use in
connection with individual retirement trust or custodial accounts meeting
the requirements of (S)408(a) of the Code, the annuity tax rate in
California is 2.35% instead of 0.5%.
(4) The annuity tax in Kentucky is repealed effective January 1, 2000.
B-PPA-37
<PAGE>
INDEX
<TABLE>
<CAPTION>
B-PPA
<S> <C>
ACCOUNT BALANCE........... 6
ACCUMULATION UNIT VALUES.. 8-9
Calculation............. 15
ANNUAL CONTRACT FEE....... 4, 6
ANNUITY TAXES............. 5, 6, 18
ANNUITY UNITS............. 24
ASSUMED INVESTMENT RATE... 24
AVERAGE ANNUAL TOTAL
RETURN................... 29
CALVERT SOCIAL BALANCED
PORTFOLIO MANAGEMENT
FEES..................... 4, 14
CALVERT SOCIAL BALANCED
PORTFOLIO TOTAL OPERATING
EXPENSES................. 4
CANCELLATION.............. 27
CHANGE IN ACCUMULATION
UNIT VALUE............... 29
CHANGE IN ANNUITY UNIT
VALUE.................... 29
COMMISSION................ 29
CONFIRMATION.............. 27
CONTRACTS................. 1, 6, 11
CONTRACT YEAR............. 15
DEATH BENEFIT............. 7, 21
DESIGNATED OFFICE......... 14
DISABILITY................ 20
DIVIDENDS................. 11
EARLY WITHDRAWAL CHARGE
(DEFERRED SALES LOAD).... 4, 6, 17, 18-19
EQUALIZER SM.............. 30
EQUITY GENERATOR SM ...... 19, 30
ERISA..................... 27
EXEMPTIONS FROM EARLY
WITHDRAWAL CHARGES....... 6, 19-21
Certain Purchase
Payments............... 19
Death................... 20
Disability: Keogh, TSA,
403(a), PEDC Contracts. 20
Federal Taxes........... 20
Free Corridor--All other
Contracts.............. 19-20
Free Corridor--
Unallocated Keogh
Contract............... 19-20
Free Corridor--TSA and
403(a) Contracts....... 19-20
Free Look............... 20
Hardship................ 21
Income Annuity.......... 20
Plan Termination........ 21
Preapproved Investment
Vehicles............... 21
Retirement.............. 20
Separation from Service. 20-21
Systematic Termination.. 20
Transfers............... 19
Transfers from other
MetLife Contracts...... 21
EXPERIENCE FACTOR......... 16
FIXED INCOME OPTION....... 22
403(A) CONTRACT........... 1, 7, 11, 20, 21,
23, 31, 32, 34, 35,
37
FREE CORRIDOR............. 19-20
FREE LOOK................. 20
GENERAL ADMINISTRATIVE
EXPENSES CHARGE.......... 4, 6, 18
INCOME ANNUITIES ......... 1, 7, 23-26
Administration.......... 23
Annuity Unit Value...... 24
Annuity Taxes........... 25
Assumed Investment Rate. 24
Contract Fee............ 25
Free Look............... 26
General Administrative
Expenses Charge........ 25
Income Types............ 25-26
Investment Choices...... 23
Mortality and Expense
Risk Charge............ 25
</TABLE>
B-PPA-38
<PAGE>
<TABLE>
<CAPTION>
B-PPA
<S> <C>
Income for Two Lives Annuity................. 25
Income for Two Lives with a Guaranteed Period
Annuity..................................... 25
Income for Two Lives with a Refund Annuity... 25-26
Your Lifetime Annuity........................ 25
Your Lifetime with a Guaranteed Period Annui-
ty.......................................... 25
Your Lifetime with Refund Annuity............ 25
Income for a Guaranteed Period Annuity....... 26
Purchase Payment............................. 23-24
Transfers.................................... 24-25
Taxes........................................ 25, 34-35
Valuation Period............................. 24
INCOME OPTIONS................................. 22
Fixed Income Option.......................... 22
Variable Income Option....................... 22
INDEX SELECTOR SM ............................. 30
INVESTMENT CHOICES............................. 1, 4, 5, 6, 8, 9, 11, 12, 13,
14, 23
Calvert Social Balanced Portfolio............ 1, 4, 5, 6, 9, 11, 12, 13, 14,
23
Harris Oakmark Large Cap Value Portfolio .... 1, 4, 5, 11, 12, 14, 23
Janus Mid Cap Portfolio...................... 1, 4, 5, 8, 9, 11, 12, 13, 23
Lehman Brothers Aggregate Bond Index Portfo-
lio ........................................ 1, 4, 5, 11, 12, 13, 23
Loomis Sayles High Yield Bond Portfolio...... 1, 4, 5, 8, 9, 11, 12, 13, 23
MetLife Stock Index Portfolio................ 1, 4, 5, 8, 9, 11, 12, 13, 23
Morgan Stanley EAFE Index Portfolio ......... 1, 4, 5, 11, 12, 13, 23
Neuberger&Berman Partners Mid Cap Value Port-
folio ...................................... 1, 4, 5, 11, 12, 14, 23
Russell 2000 Index Portfolio ................ 1, 4, 5, 11, 12, 13, 23
Santander International Stock Portfolio...... 1, 4, 5, 9, 11, 12, 13, 23
Scudder Global Equity Portfolio.............. 1, 4, 5, 9, 11, 12, 13, 23
State Street Research Aggressive Growth Port-
folio....................................... 1, 4, 5, 8, 9, 11, 12, 13, 23
State Street Research Diversified Portfolio.. 1, 4, 5, 8, 9, 11, 12, 13, 23
State Street Research Growth Portfolio....... 1, 4, 5, 8, 9, 11, 12, 13, 23
State Street Research Income Portfolio....... 1, 4, 5, 8, 9, 11, 12, 13, 23
T. Rowe Price Large Cap Growth Portfolio .... 1, 4, 5, 11, 12, 13, 23
T. Rowe Price Small Cap Growth Portfolio..... 1, 4, 5, 8, 9, 11, 12, 13, 23
HARDSHIP....................................... 21
KEOGH CONTRACTS................................ 1, 6, 7, 11, 15, 19-21,
23, 27-28, 31-35
MANAGEMENT FEES................................ 4, 12-14
MORTALITY AND EXPENSE RISK CHARGE.............. 4, 6, 18
PEDC CONTRACT.................................. 1, 6-7, 11, 15, 20, 23, 31, 33-
35
PERFORMANCE.................................... 29-30
PLAN TERMINATION............................... 21
PURCHASE PAYMENTS (CONTRIBUTIONS).............. 6, 14-15
REBALANCER SM (WITHDRAWALS & TRANSFER)......... 16
RETIREMENT..................................... 20
SALES LOAD..................................... 17, 18, 19
SALES REPRESENTATIVES.......................... 29
SEPARATE ACCOUNT............................... 6, 10
SEPARATION FROM SERVICE........................ 20-21
SUMMARY........................................ 6
SYSTEMATIC TERMINATION......................... 20
SYSTEMATIC WITHDRAWAL PROGRAM.................. 17, 18, 27, 32
TAX-SHELTERED ANNUITY CONTRACT................. 1, 7, 11, 15, 16, 18-22, 23,
27, 31-35
</TABLE>
B-PPA-39
<PAGE>
<TABLE>
<CAPTION>
B-PPA
<S> <C>
TAXES................................................................. 6, 31-35
403(a) Contract..................................................... 31, 34
General--all markets................................................ 31, 34
Keogh Contracts..................................................... 31, 33
PEDC Contract....................................................... 31, 33
TSA Contracts....................................................... 31, 32-33
TELEPHONE REQUESTS.................................................... 16-17
TEXAS OPTIONAL RETIREMENT PROGRAM..................................... 16
TOTAL OPERATING EXPENSES.............................................. 4
TRANSFERS............................................................. 6, 16-17
VALUATION PERIOD...................................................... 15-16
VOTING RIGHTS......................................................... 28-29
WITHDRAWALS........................................................... 6, 16-17
YIELD................................................................. 29
</TABLE>
B-PPA-40
<PAGE>
REQUEST FOR A STATEMENT OF ADDITIONAL INFORMATION/CHANGE OF ADDRESS
If you would like any of the following Statements of Additional Information, or
have changed your address, please check the appropriate box below and return to
the address below.
[_] Metropolitan Life Separate Account E, Metropolitan Series Fund, Inc.
[_] Calvert Social Balanced Portfolio
[_] I have changed my address. My CURRENT address is:
Name:
- ----------------------- ------------------------
(Contract Number) Address:
------------------------
- ----------------------- ------------------------
(Signature) zip
METROPOLITAN LIFE INSURANCE COMPANY
ATTN: ALAN DEMICHELE
RETIREMENT AND SAVINGS CENTER, AREA 2H
ONE MADISON AVENUE
NEW YORK, NY 10010
<PAGE>
Preference Plus(R) Account
Prospectus-Enhanced
Contracts
Plus
Pro
May 1, 1998
As Supplemented
November 9, 1998
Preference Plus
Enhanced Contracts . Enhanced Income Annuities . Enhanced Contracts . Enhanced
Income Annuities . Enhanced Contracts . Enhanced Income Annuities . Enhanced
Contracts . Enhanced Income Annuities . Enhanced Contracts . Enhanced Income
Annuities . Enhanced Contracts . Enhanced Income Annuities . Enhanced Contracts
. Enhanced Income Annuities . Enhanced Contracts . Enhanced Income Annuities .
Enhanced Contracts . Enhanced Income Annuities . Enhanced Contracts . Enhanced
Income Annuities . Enhanced Contracts . Enhanced Income Annuities .
MetLife
Retirement & Savings Center
98102QGO(exp0599)MLIC-LD
<PAGE>
METROPOLITAN LIFE SEPARATE ACCOUNT E
ENHANCED PREFERENCE PLUS
GROUP ANNUITY CONTRACTS
ISSUED BY
METROPOLITAN
LIFE INSURANCE COMPANY
This Prospectus describes group Enhanced Preference Plus Contracts
("Enhanced Contracts") and group Enhanced Preference Plus Income Annuities
("Enhanced Income Annuities").
Group Enhanced Contracts and Enhanced Income Annuities may only be purchased
through your employer, or a group, association or trust of which you are a
member or participant.
You decide where your purchase payments are directed. The choices depend on
what is available under your Contract or Income Annuity and may include the
Fixed Interest Account and, through Metropolitan Life Separate Account E, the
State Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, Janus Mid Cap, Loomis Sayles High Yield
Bond, State Street Research Aggressive Growth, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Santander International Stock (formerly known as State
Street Research International Stock), Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman
Partners Mid Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth
Portfolios of the Metropolitan Series Fund, Inc. ("Metropolitan Fund").
The Prospectus for the Metropolitan Fund is attached to the back of your
Prospectus.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INTERESTS IN THE SEPARATE ACCOUNT AND THE FIXED INTEREST ACCOUNT ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR INSURED, OR GUARANTEED BY THE U.S. GOVERNMENT,
ANY BANK OR OTHER DEPOSITORY INSTITUTION. UNITS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUS FOR THE
METROPOLITAN FUND, WHICH CONTAINS ADDITIONAL INFORMATION AND WHICH SHOULD BE
READ CAREFULLY BEFORE INVESTING.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
The Prospectus sets forth information about the Enhanced Contracts and
Enhanced Income Annuities and Separate Account E that you should know before
investing. Additional information about the Enhanced Contracts and Enhanced
Income Annuities and Separate Account E has been filed with the Securities and
Exchange Commission in a Statement of Additional Information which is
incorporated herein by reference and which is available upon request without
charge from Metropolitan Life Insurance Company, Retirement and Savings
Center, Area 2H, One Madison Avenue, New York, NY 10010, Attention: Alan
DeMichele. Inquiries may be made to Metropolitan Life Insurance Company, One
Madison Avenue, New York, New York 10010, Attention: Retirement and Savings
Center; telephone number (800) 553-4459. The table of contents of the
Statement of Additional Information appears on page C-PPA-35. The Securities
and Exchange Commission maintains a Web site (http://www.sec.gov) which you
may visit that contains the Statement of Additional Information, material
incorporated by reference, and other information.
The date of this Prospectus and of the Statement of Additional Information
is May 1, 1998, as supplemented November 9, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
--------
<S> <C>
INDEX OF SPECIAL TERMS................................................ C-PPA- 3
TABLE OF EXPENSES..................................................... C-PPA- 4
SUMMARY............................................................... C-PPA- 6
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION................. C-PPA- 8
FINANCIAL STATEMENTS.................................................. C-PPA- 9
OUR COMPANY AND THE SEPARATE ACCOUNT.................................. C-PPA-10
THE ENHANCED DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS.......... C-PPA-11
YOUR INVESTMENT CHOICES............................................. C-PPA-11
PURCHASE PAYMENTS................................................... C-PPA-14
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT........... C-PPA-15
WITHDRAWALS AND TRANSFERS........................................... C-PPA-15
DEDUCTIONS AND CHARGES.............................................. C-PPA-17
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES............................ C-PPA-19
DEATH BENEFIT....................................................... C-PPA-20
INCOME OPTIONS...................................................... C-PPA-21
ENHANCED INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS................ C-PPA-22
ADMINISTRATION...................................................... C-PPA-22
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS................... C-PPA-23
TRANSFERS........................................................... C-PPA-23
DEDUCTIONS AND CHARGES.............................................. C-PPA-24
OTHER DEFERRED ENHANCED CONTRACT AND ENHANCED INCOME ANNUITY
PROVISIONS........................................................... C-PPA-26
TAXES................................................................. C-PPA-30
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION.......... C-PPA-35
APPENDIX.............................................................. C-PPA-36
INDEX................................................................. C-PPA-37
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. METLIFE DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED
PROSPECTUS OR ANY SUPPLEMENT THERETO OR IN ANY SUPPLEMENTAL SALES MATERIAL
AUTHORIZED BY METLIFE.
C-PPA-2
<PAGE>
INDEX OF SPECIAL TERMS
<TABLE>
<CAPTION>
TERMS PAGE
----- --------
<S> <C>
Account Balance........................................................ C-PPA- 6
Accumulation Units..................................................... C-PPA-15
Annuity Units.......................................................... C-PPA-23
Assumed Investment Rate................................................ C-PPA-23
Contract Year.......................................................... C-PPA-14
Designated Office...................................................... C-PPA-14
Early Withdrawal Charge................................................ C-PPA-18
Enhanced Contracts..................................................... C-PPA- 1
Enhanced Income Annuities.............................................. C-PPA- 1
Experience Factor...................................................... C-PPA-15
Free Corridor.......................................................... C-PPA-19
Enhanced Preference Plus Contracts..................................... C-PPA- 1
Enhanced Preference Plus Income Annuities.............................. C-PPA- 1
Separate Account....................................................... C-PPA- 6
Systematic Termination................................................. C-PPA-19
Systematic Withdrawal Program.......................................... C-PPA-16
Valuation Period....................................................... C-PPA-15
</TABLE>
C-PPA-3
<PAGE>
TABLE OF EXPENSES--ENHANCED PREFERENCE PLUS CONTRACTS AND ENHANCED INCOME
ANNUITIES
The following table illustrates Separate Account and Metropolitan Fund
expenses for the fiscal year ending December 31, 1997:
<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES FOR ALL INVESTMENT DIVISIONS
CURRENTLY OFFERED
Sales Load Imposed on Purchases................................... None
Deferred Sales Load............................................... From 0% to
(as a percentage of the purchase payment funding the withdrawal 7%(a)
during the accumulation period)
Exchange Fee...................................................... None
Surrender Fee..................................................... None
ANNUAL CONTRACT FEE................................................ None
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
General Administrative Expenses Charge............................ .20%(b)
Mortality and Expense Risk Charge................................. .75%(b)
Total Separate Account Annual Expenses............................ .95%
METROPOLITAN FUND ANNUAL EXPENSES
(as a percentage of average net assets)
</TABLE>
<TABLE>
<CAPTION>
OTHER
EXPENSES
AFTER
MANAGEMENT EXPENSE
FEES REIMBURSEMENT TOTAL
---------- ------------- -----
<S> <C> <C> <C>
State Street Research Income
Portfolio(c)(d)(e)............................ .33 .10 .43
State Street Research Diversified
Portfolio(c)(d)(e)............................ .44 .06 .50
MetLife Stock Index Portfolio(c)............... .25 .08 .33
State Street Research Growth
Portfolio(c)(d)(e)............................ .49 .07 .56
Janus Mid Cap Portfolio(d)(f).................. .75 .14 .89
Loomis Sayles High Yield Bond Portfolio(f)..... .70 .20 .90
State Street Research Aggressive Growth
Portfolio(c)(d)(e)............................ .71 .08 .79
T. Rowe Price Small Cap Growth Portfolio(d)(f). .55 .18 .73
Scudder Global Equity Portfolio(d)(f).......... .90 .22 1.12
Santander International Stock
Portfolio(c)(d)(e)............................ .75 .28 1.03
Harris Oakmark Large Cap Value Portfolio(d)(g). .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(g).................................. .25 .20 .45
Morgan Stanley EAFE Index Portfolio(g)......... .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(d)(g)............................... .70 .20 .90
Russell 2000 Index Portfolio(g)................ .25 .20 .45
T. Rowe Price Large Cap Growth Portfolio(d)(g). .70 .20 .90
</TABLE>
EXAMPLE
<TABLE>
<CAPTION>
If you surrender your Contract at the end of the
applicable time period:
<S> <C> <C> <C> <C>
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on as-
sets: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
State Street Research Income Division......... $77 $ 88 $102 $167
State Street Research Diversified Division.... 78 91 106 174
MetLife Stock Index Division.................. 76 85 97 155
State Street Research Growth Division......... 78 93 109 181
Janus Mid Cap Division........................ 82 103 -- --
Loomis Sayles High Yield Bond Division........ 82 103 -- --
State Street Research Aggressive Growth Divi-
sion.......................................... 81 100 122 207
T. Rowe Price Small Cap Growth Division....... 80 98 -- --
Scudder Global Equity Division................ 84 110 -- --
Santander International Stock Division........ 83 107 134 232
Harris Oakmark Large Cap Value Division....... 82 105 -- --
Lehman Brothers Aggregate Bond Index Division. 77 89 -- --
Morgan Stanley EAFE Index Division............ 78 92 -- --
Neuberger&Berman Partners Mid Cap Value Divi-
sion.......................................... 82 103 -- --
Russell 2000 Index Division................... 77 89 -- --
T. Rowe Price Large Cap Growth Division....... 82 103 -- --
</TABLE>
11/9/98 C-PPA-4
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
If you annuitize at the end of the applicable
time period or do not surrender your
Contract(h): 1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... $14 $ 44 $ 76 $167
State Street Research Diversified Division.. 15 46 80 174
MetLife Stock Index Division................ 13 41 71 155
State Street Research Growth Division....... 15 48 83 181
Janus Mid Cap Division...................... 19 58 -- --
Loomis Sayles High Yield Bond Division...... 19 59 -- --
State Street Research Aggressive Growth Di-
vision...................................... 18 55 95 207
T. Rowe Price Small Cap Growth Division..... 17 53 -- --
Scudder Global Equity Division.............. 21 66 -- --
Santander International Stock Division...... 20 63 108 232
Harris Oakmark Large Cap Value Division..... 19 60 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion........................................ 14 45 -- --
Morgan Stanley EAFE Index Division.......... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision...................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
- -------
(a) Under certain circumstances, the deferred sales load, termed the early
withdrawal charge in this Prospectus (see "Deductions and Charges," page
C-PPA-17) does not apply to 10% or 20% of the Account Balance. Under
certain other circumstances, the deferred sales load does not apply at
all.
(b) Although total Separate Account annual expenses will not exceed .95% of
average account values, the allocation of these expenses between general
administrative expenses and the mortality and expense risk charges is only
an estimate. (See "Deductions and Charges," page C-PPA-17.)
(c) Prior to May 16, 1993, MetLife paid all expenses of the Metropolitan Fund
other than management fees, brokerage commissions, taxes, interest and any
extraordinary or non-recurring expenses.
(d) The marginal rate of the investment management fee for these Portfolios
will decrease when the dollar amount in each Portfolio reaches certain
threshold amounts.
(e) Reflects 1997 management fees, restated to assume changes in management
fees, effective August 1997, had been in effect for the entire year.
(f) The Portfolios commenced operations on March 3, 1997. MetLife has agreed
to bear all expenses (other than management fees, brokerage commissions,
taxes, interest and any extraordinary or non-recurring expenses) in
excess of .20% of the average net assets for each of the Loomis Sayles
High Yield Bond, T. Rowe Price Small Cap Growth, Janus Mid Cap and
Scudder Global Equity Portfolios until each Portfolio's total net assets
are at least $100 million, or until March 2, 1999, whichever is earlier.
Absent such expense reimbursement, other expenses would have been 0.39%
for the Loomis Sayles High Yield Bond Portfolio and 0.31% for the Scudder
Global Equity Portfolio. MetLife ceased subsidizing such expenses for the
Janus Mid Cap Portfolio as of December 31, 1997, the T. Rowe Price Small
Cap Growth Portfolio as of January 23, 1998 and the Scudder Global Equity
Portfolio as of July 1, 1998.
(g) The Portfolios commenced operations on November 9, 1998. Management fees
and other expenses for these Portfolios are estimated amounts for the year
ending December 31, 1998. Subject to receiving New York State Insurance
Department approval, MetLife has agreed to bear all expenses (other than
management fees, brokerage commissions, taxes, interest and any
extraordinary or non-recurring expenses) in excess of .20% of the average
net assets for each of the Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Neuberger&Berman Partners Mid Cap Value, Russell
2000 Index and T. Rowe Price Large Cap Growth Portfolios, and .25% of the
average net assets for the Morgan Stanley EAFE Index Portfolio until each
of the Portfolio's total net assets are at least $100 million, or until
November 8, 2000, whichever is earlier.
(h) The annuity purchased must be a life annuity or one with a noncommutable
duration of at least five years to avoid the early withdrawal charge. (See
"Exemptions from Early Withdrawal Charges," page C-PPA-19-20.)
The purpose of the above table is to assist you in understanding the various
costs and expenses that you will bear directly or indirectly. The table
reflects expenses of the Separate Account and the Metropolitan Fund. It
assumes that there are no other transactions. The Example is intended for
illustrative purposes only; it should not be considered a representation of
past or future expenses. Actual expenses may be higher or lower than those
shown. Annuity taxes are not reflected in the table. See "Deductions and
Charges," page C-PPA-17, for a more detailed description of the charges and
expenses imposed upon the assets in the Separate Account.
11/9/98 C-PPA-5
<PAGE>
...............................................................
SUMMARY
................................................................................
THE USE OF CERTAIN TERMS IN THIS PROSPECTUS
This Prospectus describes variable accumulation and income annuity contracts
issued by Metropolitan Life Insurance Company ("MetLife," "we," "us" or "our").
The term "Enhanced Contracts" and "Enhanced Income Annuities" also includes
certificates issued under certain group arrangements. Enhanced Income Annuities
are described separately beginning on page C-PPA-22. "You" as used in this
Prospectus means the participant or annuitant for whom money is invested in an
Enhanced Contract or Enhanced Income Annuity. Under the Enhanced Contracts
issued for Keogh Plans, the trustee retains all rights to control the money
under the Enhanced Contract. For these Contracts, where we refer to giving
instructions or making payments to us, "you" means such trustee.
YOUR INVESTMENT CHOICES (PAGES C-PPA-11-14)
Each of the Enhanced Contracts offers an account under which we guarantee
specified interest rates for specified periods (the "Fixed Interest Account").
This Prospectus does not describe that account and will mention the Fixed
Interest Account only where necessary to explain how the "Separate Account"
works. Each Enhanced Contract also offers a choice of investment options under
which values can go up or down based upon investment performance. See
"Determining the Value of Your Separate Account Investment," page C-PPA-15, for
a description of accumulation units and how these values are determined based
upon investment performance.
This Prospectus describes only the investment options available through a
"Separate Account" as distinct from the Fixed Interest Account.
A SUMMARY OF THE INVESTMENT OBJECTIVES OF THE INVESTMENT CHOICES APPEARS ON
PAGE C-PPA-12. A MORE COMPLETE DESCRIPTION OF THE INVESTMENT CHOICES IS FOUND
IN THE METROPOLITAN SERIES FUND, INC. PROSPECTUS, WHICH IS LOCATED IN THE BACK
OF THIS PROSPECTUS.
TAXES (PAGES C-PPA-30-34)
A variable annuity receives special treatment under the Federal income tax
laws. Please refer to the pages above for information concerning how the
Federal tax laws affect purchase payments and withdrawals in each particular
tax market.
PURCHASE PAYMENTS; WITHDRAWALS AND TRANSFERS (PAGES C-PPA-14-15; C-PPA-15-17)
The Enhanced Contracts allow you to make new purchase payments, to transfer
money among investment options and between the Separate Account and the Fixed
Interest Account and to withdraw money credited to you ("Account Balance").
(See "Withdrawals and Transfers," page C-PPA-15.) Restrictions and early
withdrawal charges may apply to withdrawals, depending on the circumstances and
your Enhanced Contract. (See "Withdrawals and Transfers," page C-PPA-15, and
"Deductions and Charges," page C-PPA-17.)
DEDUCTIONS AND CHARGES (PAGES C-PPA-17-18)
Your Enhanced Contract is subject to various charges.
Annual Enhanced Contract Fees: There is no annual Enhanced Contract fee.
(There is a $20 annual Enhanced Contract fee imposed on certain Fixed Interest
Account balances.)
General Administrative Expenses and Mortality and Expense Risk Charge: .95%
on an annual basis.
Early Withdrawal Charge: A declining charge of up to 7% on amounts for the
first seven years after each purchase payment is received.
Metropolitan Series Fund, Inc.: Management fees and other expenses.
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES (PAGES C-PPA-19-20)
A withdrawal or transfer may not result in an early withdrawal charge.
Provisions are more fully described within this Prospectus. A summary appears
below.
(a) Withdrawals or Transfers without a Charge for All Markets:
Item 1--Transfers among investment divisions or to the Fixed Interest
Account
Item 2--Withdrawals that represent purchase payments made over seven years
ago
Item 3--Free Corridor
Item 4--Free Look
Item 5--Certain Income Annuities
Item 7--Mandated Withdrawals under Federal law
(b) Withdrawals or Transfers without a charge for the Enhanced Individual
Retirement Annuities Market--(in addition to (a) above):
Item 6--Death Benefit
Item 16--Nursing Home or Terminal Illness
C-PPA-6
<PAGE>
...............................................................
(c) Withdrawals or Transfers without a charge for the Enhanced Non-Qualified
Market--(in addition to (a) above):
Item 6--Death Benefit
Item 10--Retirement
Item 11--Separation from Service
Item 16--Nursing Home or Terminal Illness
(d) Withdrawals or Transfers Without a Charge for the Enhanced unallocated
Keogh Market--(in addition to (a) above):
Item 8--Systematic Withdrawal
Item 9--Disability
Item 10--Retirement
Item 11--Separation from Service
Item 12--Plan Termination
Item 13--Hardship
Item 14--Pre-Approved Investment Vehicles
DEATH BENEFIT (PAGE C-PPA-20-21)
Each Enhanced Contract (other than the Enhanced unallocated Keogh Contract)
offers a death benefit that guarantees certain payments in case of your death
even if the Account Balance has fallen below that amount.
INCOME ANNUITIES (PAGE C-PPA-22-25)
You may use your money to obtain payments guaranteed for life or for certain
other periods (an annuity). These payments may be either for specified, fixed
amounts or for amounts that can go up or down based on the investment
performance of a choice of investment options in the Separate Account
("variable income option"). You may purchase an Enhanced Income Annuity if you
did not have an Enhanced Contract during the accumulation period. Your Enhanced
Income Annuity is subject to various charges. (See "Enhanced Income Annuities--
Deductions and Charges," page C-PPA-24.)
C-PPA-7
<PAGE>
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)
The following information has been derived from the Separate Account's full
financial statements, which statements are annually audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing with the
full financial statements and related notes in the Statement of Additional
Information or as previously stated in earlier reports.
<TABLE>
<CAPTION>
ACCUMULATION ACCUMULATION NUMBER OF ACCUMULATION
UNIT VALUE UNIT VALUE END UNITS END OF YEAR
ENHANCED PREFERENCE PLUS CONTRACTS YEAR BEGINNING OF YEAR OF YEAR (IN THOUSANDS)
---------------------------------- ---- ----------------- -------------- ----------------------
<S> <C> <C> <C> <C>
State Street 1997 $30.13 $32.77 139
Research
Income
Division
1996 29.36 30.13 128
1995 24.79 29.36 123
1994 25.83 24.79 125
1993 23.43 25.83 151
1992 22.12 23.43 0
1991 19.02 22.12 0
1990 17.91(a) 19.02 0
State Street 1997 28.11 33.57 390
Research
Diversified
Division
1996 24.78 28.11 371
1995 19.69 24.78 346
1994 20.51 19.69 341
1993 18.36 20.51 360
1992 16.93 18.36 50
1991 13.68 16.93 0
1990 14.34(a) 13.68 0
MetLife Stock 1997 24.83 32.50 701
Index Division
1996 20.44 24.83 629
1995 15.07 20.44 518
1994 15.04 15.07 432
1993 13.86 15.04 399
1992 13.02 13.86 12
1991 10.13 13.02 0
1990 10.85(a) 10.13 0
State Street 1997 47.19 60.00 443
Research
Growth
Division
1996 38.99 47.19 402
1995 29.57 38.99 334
1994 30.85 29.57 296
1993 27.22 30.85 258
1992 24.63 27.22 5
1991 18.67 24.63 0
1990 21.66(a) 18.67 0
Janus Mid Cap 1997 10.00(b) 12.72 54
Division
Loomis Sayles 1997 10.00(b) 10.53 15
High Yield
Bond Division
</TABLE>
11/9/98
C-PPA-8
<PAGE>
<TABLE>
<CAPTION>
Accumulation Accumulation Number of Accumulation
Unit Value Unit Value End Units End of Year
Enhanced Preference Plus Contracts Year Beginning of Year of Year (in thousands)
- ---------------------------------- ---- ----------------- -------------- ----------------------
<S> <C> <C> <C> <C>
State Street Research 1997 35.98 38.02 340
Aggressive Growth Division 1996 33.72 35.98 341
1995 26.29 33.72 254
1994 27.05 26.29 189
1993 22.26 27.05 163
1992 20.37 22.26 1
1991 12.35 20.37 0
1990 14.85(a) 12.35 0
T. Rowe Price Small Cap 1997 10.00(b) 11.79 85
Growth Division
Scudder Global Equity 1997 10.00(b) 10.88 62
Santander International 1997 13.99 13.54 324
Stock Division 1996 14.38 13.99 368
1995 14.40 14.38 396
1994 13.84 14.40 446
1993 9.45 13.84 339
1992 10.63 9.45 1
1991 10.00(c) 10.63 0
</TABLE>
In addition to the above mentioned Accumulation Units, there were cash
reserves of $14,503,548 as of December 31, 1997 applicable to Income Annuities
(including those not described in this Prospectus) receiving annuity payouts.
(a) Inception Date July 2, 1990
(b) Inception Date March 3, 1997
(c) Inception Date July 1, 1991
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1990 1991 1992 1993 1994 1995 1996 1997
---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
State Street Research Income 10.6 12.29 12.98 14.27 13.65 16.12 16.49 17.89
State Street Research Diversified 9.52 11.75 12.7 14.15 13.55 17 19.22 22.89
Met Life Stock Index 9.32 11.94 12.67 13.71 13.7 18.52 22.43 29.28
State Street Research Growth 8.61 11.32 12.48 14.1 13.47 17.71 21.37 27.1
Janus Mid Cap 12.69
Loomis Sayles High Yield Bond 10.51
State Street Research Aggressive Growth 8.31 13.66 14.89 18.03 17.47 22.35 23.77 25.05
T. Rowe Price Small Cap Growth 11.76
Scudder Global Equity 10.85
Santander International Stock 10.61 9.41 13.74 14.25 14.19 13.77 13.28
</TABLE>
Financial Statements
The financial statements for the Separate Account and Met Life are in the
Statement of Additional Information and are available upon request from Met
Life.
C-PPA-9
<PAGE>
...............................................................................
OUR COMPANY AND THE SEPARATE ACCOUNT
................................................................................
WHO IS METLIFE?
We are a mutual life insurance company whose principal office is at One
Madison Avenue, New York, N.Y. 10010. We were formed in 1868 in New York and
operate as a life insurance company in all 50 states, the District of Columbia,
Puerto Rico and all provinces of Canada. MetLife, serving millions of people,
is one of the largest financial services companies in the world with many of
the largest United States corporations for its clients. As of December 31,
1997, we had approximately $330.3 billion in assets under management.
WHAT IS THE SEPARATE ACCOUNT?
We organized the Separate Account on September 27, 1983. It is an investment
account that we maintain separate from our other assets. It is registered with
the Securities and Exchange Commission as a unit investment trust under the
1940 Act. All income, gains and losses, whether or not realized, from the
Separate Account's assets are credited to or charged against the Separate
Account, without regard to our other business. In other words, the Separate
Account's assets are solely for the benefit of those who invest in the Separate
Account and no one else, including our creditors. Our obligation to honor all
of our promises under the Enhanced Contracts and Enhanced Income Annuities is
not limited by the amount of assets in the Separate Account.
C-PPA-10
<PAGE>
SECTION I: THE ENHANCED DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS
WHAT ARE THE ENHANCED CONTRACTS?
The Enhanced Contracts offer you the choice of an account that pays interest
guaranteed by MetLife (the Fixed Interest Account) or an account offering a
range of investment choices where performance is not guaranteed. The Enhanced
Contracts are called "annuities" since they offer a variety of payment
options, including guaranteed income for life.
We offer many types of Preference Plus Contracts to meet your individual
needs. These include contracts meeting the tax requirements under the
following provisions of the Internal Revenue Code ("Code"): (1) Individual
Retirement Annuities (IRAs) under (S)408(b); (2) Simplified Employee Pensions
(SEPs) under (S)408(k); (3) Tax Sheltered Annuities (TSAs) under (S)403(b);
(4) Public Employee Deferred Compensation (PEDC) under (S)457; (5) Keogh plans
under (S)401; (6) Qualified Annuity Plans (403(a)) under (S)403(a); and (7)
Tax Deferred Annuities (Non-Qualified) under (S)72. Our contracts may be
individual or group (offered to an employer, association, trust or other group
for its employees, members or participants). Group Contracts may be issued to
a bank that does nothing but hold them as contractholder. Contracts are either
allocated (we keep records of your Account Balance) or unallocated (we keep
Account Balance records only for the plan as a whole). Some Contracts
("Enhanced Contracts") have a reduced mortality and expense risk charge as a
result of reduced administration expenses.
This Prospectus describes the following Enhanced Contracts: IRAs,
unallocated Keogh and Non-Qualified.
The Prospectus will occasionally refer to the Fixed Interest Account.
However, this Prospectus does not describe that account.
MAY THE ENHANCED CONTRACTS BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. If your purchase payments are made under a retirement plan, the
Enhanced Contract may provide that all or some of your rights as described in
this Prospectus are subject to the terms of the plan. You should consult the
plan document to determine whether there are any provisions under your plan
that may limit or affect the exercise of your rights under the Enhanced
Contract. Rights that may be affected include those concerning purchase
payments, withdrawals, transfers, the death benefit and income annuity types.
For example, if part of your Account Balance represents non-vested employer
contributions, you may not be permitted to withdraw these amounts and the
early withdrawal charge calculations may not include all or part of the
employer contributions. The Enhanced Contract may provide that a plan
administrative fee will be paid by making a withdrawal from your Account
Balance. The Enhanced Contract may require that you or your beneficiary obtain
a signed authorization from your employer or plan administrator to exercise
certain rights. Your Enhanced Contract will indicate under which circumstances
this is the case. We may rely on your employer's or plan administrator's
statements to us as to the terms of the plan or your entitlement to any
amounts. We will not be responsible for determining what your plan says.
YOUR INVESTMENT CHOICES
...............................................................................
WHAT ARE THE INVESTMENT CHOICES AND HOW DO WE PROVIDE THEM?
The investment choices are provided through our Separate Account. Divisions
available for new investments are the State Street Research Income, State
Street Research Diversified, MetLife Stock Index, State Street Research
Growth, State Street Research Aggressive Growth, and Santander International
Stock Divisions. If approved in your state, the Loomis Sayles High Yield Bond,
Janus Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, Harris
Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley
EAFE Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T.
Rowe Price Large Cap Growth Divisions are also available. Your employer,
association or group may have limited the number of available divisions. Your
Enhanced Contract will indicate the divisions available to you when we issued
it. We may add or eliminate divisions for some or all persons.
The divisions do not invest directly in stocks, bonds or other investments.
Instead they buy and sell shares of mutual fund portfolios that in turn do the
investing. The portfolios are part of the Metropolitan Fund as shown on page
1. All dividends declared by any of the portfolios are earned by the Separate
Account and reinvested. Therefore, no dividends are distributed under the
Contracts. No sales or redemption charges apply to our purchase or sale
through the Separate Account of these mutual fund shares. These mutual funds
are available only through the purchase of annuities and life insurance
policies and are never sold directly to the public. These mutual funds are
"series" types of funds registered with the Securities and Exchange Commission
as "open-end management investment companies" under the 1940
11/9/98 C-PPA-11
<PAGE>
...............................................................
Act. Except for the Janus Mid Cap Portfolio, each fund is "diversified" under
the 1940 Act. Each division invests in shares of a comparably named portfolio.
A summary of the investment objectives of the currently available portfolios
is as follows:
State Street Research Income Portfolio: Seeks a) the highest possible return,
by combining current income with capital gains, consistent with prudent
investment risk, and b) secondarily, the preservation of capital by investing
at least 75% of its total assets in non-convertible debt securities in the
three highest rating categories as determined by a nationally recognized
statistical rating organization, or of comparable quality.
State Street Research Diversified Portfolio: Seeks a high total return while
attempting to limit investment risk and preserve capital by investing 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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index") by normally investing
most of its assets in common stocks included in the S&P 500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital and
income, and moderate current income. Generally, the greatest portion of the
Portfolio's assets will be invested in equity securities of good quality where
the stock price represents a good value based on considerations such as price
to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of medium
capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by normally
investing at least 65% of its assets in below investment grade fixed income
securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks and
other securities convertible into or carrying the right to acquire common
stocks of less mature companies with the potential for rapid growth and
companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group of
small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of capital
by generally investing most of its assets in equity securities (primarily
common stock) of established companies listed on U.S. or foreign securities
exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital by
normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total assets
in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of the
Lehman Brothers Aggregate Bond Index. The Portfolio will normally invest most
of its assets in fixed income securities included in the Lehman Brothers
Aggregate Bond Index.
Morgan Stanley EAFE Index Portfolio: To equal the return of the Morgan Stanley
Capital International Europe, Australasia, Far East (MSCI EAFE) Index. The
Portfolio will normally invest most of its assets in equity securities included
in the MSCI EAFE Index.
Newberger&Berman Partners Mid Cap Value Portfolio: To achieve capital growth.
The Portfolio will normally invest at least 65% of its total assets in common
stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000 Index.
The Portfolio will normally invest most of its assets in common stocks included
in the Russell 2000 Index.
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at least
65% of its total assets in a diversified group of large capitalization growth
companies.
Each of the currently available Metropolitan Fund Portfolios pays us, the
investment manager of the Metropolitan Fund, an investment management fee.
For providing investment management services to the Lehman Brothers Aggregate
Bond Index, MetLife Stock Index and Russell 2000 Index Portfolios, we receive
monthly compensation from each Portfolio at an annual rate of .25% of the
average daily value of the aggregate net assets of each Portfolio. For
providing investment management services to the Morgan Stanley
11/9/98 C-PPA-12
<PAGE>
...............................................................
EAFE Index Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .30% of the average daily assets of the aggregate net assets of
the Portfolio. For providing investment management services to the State
Street Research Growth Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .55% of the average daily value of the
aggregate net assets of the Portfolio up to $500 million, .50% of such assets
on the next $500 million and .45% of such assets on amounts over $1 billion.
For providing investment management services to the State Street Research
Income Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .35% of the average daily value of the aggregate net assets up
to $250 million, .30% of such assets on the next $250 million and .25% of such
assets on amounts over $500 million. For providing investment management
services to the State Street Research Diversified Portfolio, we receive
monthly compensation from the Portfolio at an annual rate of .50% of the
average daily value of the aggregate net assets of the Portfolio up to $500
million, .45% of such assets on the next $500 million and .40% of such assets
on amounts over $1 billion. For providing investment management services to
the State Street Research Aggressive Growth Portfolio, we receive monthly
compensation at an annual rate of .75% of the average daily value of the
aggregate net assets of the Portfolio up to $500 million, .70% of such assets
on the next $500 million and .65% of such assets on amounts over $1 billion.
We pay State Street Research & Management Company, one of our subsidiaries, to
provide us with sub-investment management services for the State Street
Research Income, State Street Research Diversified, State Street Research
Growth and State Street Research Aggressive Growth Portfolios.
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. Effective on or about
November 9, 1998, Santander Global Advisors, Inc., of which MetLife owns 25%
of the outstanding common stock, became the sub-investment manager for the
Santander International Stock Portfolio.
For providing investment management services to the Loomis Sayles High Yield
Bond Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio. Loomis, Sayles & Company, L.P., whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to the
Loomis Sayles High Yield Bond Portfolio. For providing investment management
services to the Janus Mid Cap Portfolio, we receive monthly compensation from
the Portfolio at an annual rate of .75% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .70% of such assets
on the next $400 million and .65% of such assets on amounts in excess of $500
million. Janus Capital Corporation is the sub-investment manager for the Janus
Mid Cap Portfolio. For providing investment management services to the T. Rowe
Price Small Cap Growth Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .55% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .50% of such assets
on the next $300 million and .45% of such assets in excess of $400 million.
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets of
the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for the
T. Rowe Price Small Cap Growth and T. Rowe Price Large Cap Growth Portfolios.
For providing investment management services to the Scudder Global Equity
Portfolio, we receive monthly compensation from the Portfolio at an annual
rate of .90% of the average daily value of the aggregate net assets of the
Portfolio up to $50 million, .55% of such assets on the next $50 million, .50%
of such assets on the next $400 million and .475% of such assets on amounts in
excess of $500 million. Scudder Kemper Investments, Inc. (formerly Scudder,
Stevens & Clark, Inc.) is the sub-investment manager for the Scudder Global
Equity Portfolio.
For providing investment management services to the Harris Oakmark Large Cap
Value Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $250 million and .70% of such assets in excess of $250
million. Harris Associates L.P., whose general partner is indirectly owned by
MetLife, is the sub-investment manager with respect to the Harris Oakmark
Large Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman
Partners Mid Cap Value Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .70% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .675% of such assets
on the next $250 million, .65% of such assets on the next $500 million,
11/9/98 C-PPA-13
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.625% of such assets on the next $750 million and .60% of such assets over
$1.6 billion. Neuberger&Berman Management Incorporated is the sub-investment
manager for the Neuberger&Berman Partners Mid Cap Value Portfolio.
Sub-investment management services are provided to us and we pay fees for
such services according to contracts between us and each of the sub-investment
managers. Sub-investment management fees are solely our responsibility, not
that of the Metropolitan Fund.
The Metropolitan Fund is more fully described in its prospectus and the
Statement of Additional Information that the prospectus refers to. The
Metropolitan Fund's prospectus is attached at the end of this prospectus. The
Statement of Additional Information is available upon request.
See "The Fund and its Purpose," in the prospectus for the Metropolitan Fund
for a discussion of the different separate accounts of MetLife and
Metropolitan Tower Life Insurance Company that invest in the Metropolitan Fund
and the risks related to that arrangement.
PURCHASE PAYMENTS
...............................................................................
ARE THERE SPECIAL RULES CONCERNING THE FIRST PAYMENT AND OTHER ADMINISTRATIVE
DETAILS THAT YOU SHOULD KNOW?
Yes. All purchase payments and all requests you may have concerning the
Contracts, like a change in beneficiary, should be sent to one of our
"Designated Office(s)." We will provide you with information indicating which
Designated Office to contact regarding various matters and the addresses for
these Offices. All checks should be payable to "MetLife." You can also make
certain requests by telephone. In order to have a purchase payment credited to
you, we must receive it and completed documentation. We will provide the
appropriate forms. Under certain group Enhanced Contracts, your employer or
the group in which you are a participant or member must also identify you to
us on their reports to us and tell us how your purchase payments should be
allocated among the investment divisions and the Fixed Interest Account.
Your first purchase payment is normally credited to you within two days of
receipt at our Designated Office. However, if you fill out our forms
incorrectly or incompletely or other documentation is not completed properly,
we have up to five business days to credit the payment. If the problem cannot
be resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to
let us keep the purchase payment until the problem is remedied. If you do not
agree or we cannot reach you by the fifth business day, your purchase payment
will be returned immediately.
For Enhanced Non-Qualified Contracts, your purchase payments may also be
made "automatically" through procedures that we call "automatic payroll
deduction" and "check-o-matic." With automatic payroll deduction, your
employer deducts an amount from your salary and makes the purchase payment for
you. With check-o-matic, your bank deducts monies from your bank checking
account and makes the purchase payment for you.
Purchase payments, including check-o-matic payments, are effective and
valued as of 4:00 p.m., Eastern time, on the day we receive them at our
Designated Office, except when they are received (1) on a day when the
accumulation unit value (discussed later in this Prospectus) is not calculated
or (2) after 4:00 p.m., Eastern time. In those cases, the purchase payments
will be effective the next day the accumulation unit value is calculated.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
There is no minimum purchase payment except for the Enhanced unallocated
Keogh Contract. For the Enhanced unallocated Keogh Contract, each purchase
payment must be at least $2,000, and total purchase payments must be at least
$15,000 for the first Contract Year. (Depending on underwriting and plan
requirements, the first Contract Year is the initial three to fifteen month
period the Contract is in force; thereafter, it is each subsequent twelve
month period.) During subsequent Contract Years, total purchase payments made
under the Enhanced unallocated Keogh Contract must be at least $5,000.
We may reject purchase payments over $500,000. Your purchase payments may
also be limited by the Federal tax laws.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
You decide how a purchase payment is allocated among the Fixed Interest
Account and the investment divisions of the Separate Account available to your
Enhanced Contract. Allocation changes for new purchase payments will be made
upon our receipt of your notification of changes. You may also specify a day
as long as it is within 30 days after we receive the request.
ARE THERE ANY LIMITS ON SUBSEQUENT PURCHASE PAYMENTS?
You may generally make purchase payments at any time before the date income
payments begin except as limited by the Federal tax laws. You may not make
purchase payments after you have made a withdrawal
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based on termination of employment under the Enhanced unallocated Keogh
Contract or retirement under certain Enhanced Contracts. No additional
purchase payments may be made after commencement of a systematic termination
(from both the Fixed Interest and Separate Accounts), described below, until
we receive written notice that you request cancellation of the systematic
termination. You may continue to make purchase payments while you receive
Systematic Withdrawal Program payments, as described later in this Prospectus,
except if purchase payments are made through automatic payroll deduction,
check-o-matic, salary reduction or salary deduction.
In order to comply with regulatory requirements in Oregon, we may limit the
ability of an Oregon resident to make purchase payments (1) after the Contract
has been held for more than three years, if the Contract was issued after age
60, or (2) after age 63, if the Contract was issued before age 61.
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT
...............................................................................
WHAT IS AN ACCUMULATION UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"accumulation units." When you make purchase payments or transfers into an
investment division, you are credited with accumulation units. When you
request a withdrawal or a transfer of money from an investment division,
accumulation units are liquidated. In either case, the number of accumulation
units you gain or lose is determined by taking the amount of the purchase
payment, transfer or withdrawal and dividing it by the value of an
accumulation unit on the date the transaction occurs. For example, if an
accumulation unit is $10.00 and a $500 purchase payment is made, the number of
accumulation units credited is 50 ($500 divided by $10 = 50). We calculate
accumulation units separately for each investment division of the Separate
Account.
HOW IS AN ACCUMULATION UNIT VALUE CALCULATED?
We calculate accumulation unit values once a day on every day the New York
Stock Exchange is open for trading. We call the time between two consecutive
accumulation unit value calculations the "Valuation Period." We have the right
to change the basis for the Valuation Period, on 30 days' notice, as long as
it is consistent with the law. All purchase payments, transfers and
withdrawals are valued as of the end of the Valuation Period during which the
transaction occurred. The accumulation unit values can increase or decrease,
based on the investment performance of the correspondence underlying
portfolios. If the investment performance is positive, after payment of
Separate Account expenses, accumulation unit values will go up. Conversely, if
the investment performance is negative, after payment of Separate Account
expenses, accumulation unit values will go down.
We use the term "experience factor" to describe the investment performance
for an investment division. The experience factor changes from Valuation
Period to Valuation Period to reflect the upward or downward performance of
the assets in the underlying portfolios. The experience factor is calculated
as of the end of each Valuation Period using the net asset value per share of
the underlying portfolio. The net asset value includes the per share amount of
any dividend or capital gain distribution paid by the portfolio during the
current Valuation Period, and subtracts any per share charges for taxes and
reserve for taxes. We then divide that amount by the net asset value per share
as of the end of the last Valuation Period to obtain a factor that reflects
investment performance. We then subtract a charge not to exceed .000025905
(the daily equivalent of an effective annual rate of .95%) for Enhanced
Contracts for each day in the Valuation Period. This charge is to cover the
general administrative expenses and the mortality and expense risk we assume
under the Enhanced Contracts.
To calculate an accumulation unit value we multiply the experience factor
for the valuation period by the last previously calculated accumulation unit
value. For example, if the last previously calculated accumulation unit value
is $12.00 and the experience factor for the period was 1.05, the new
accumulation unit value is $12.60 ($12.00 X 1.05). On the other hand, if the
last previously calculated accumulation unit value is $12.00 and the
experience factor for the period was .95, the new accumulation unit value is
$11.40 ($12.00 X .95).
WITHDRAWALS AND TRANSFERS
...............................................................................
CAN YOU MAKE WITHDRAWALS AND TRANSFERS?
Yes. You may either withdraw all or part of your Account Balance from the
Enhanced Contract or transfer it from one investment division to another or to
the Fixed Interest Account. Some restrictions may apply to transfers from the
Fixed Interest Account to the Separate Account.
Withdrawals must be at least $500 (or the Account Balance, if less). You may
make an unlimited number of transfers. Your request must tell us the
percentage or dollar amount to be withdrawn or transferred and we may require
that this request be made on the form we provide for this purpose. If we
agree, you may also submit an authorization directing us to make transfers on
a continuing periodic basis from one investment division to another or to the
Fixed Interest Account. We may
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require that you maintain a minimum Account Balance in investment divisions
from which amounts are transferred based upon an authorization.
WHEN WILL WITHDRAWALS OR TRANSFERS BE PROCESSED?
Generally, we will process withdrawals or transfers as of the end of the
Valuation Period during which we receive your request at our Designated
Office. We will make it as of a later date if you request. If you die before
the requested date, we will cancel the request and pay the death benefit
instead. If the withdrawal is made to provide income payments, it will be made
as of the end of the Valuation Period ending most recently before the date the
income annuity is purchased.
CAN YOU MAKE PAYMENTS DIRECTLY TO OTHER INVESTMENTS ON A TAX-FREE BASIS?
Generally yes, you can make payments directly to other investments on a tax-
free basis, if you so request, but only if all applicable requirements of the
Code are met, and we receive all information necessary for us to make the
payment.
CAN YOU MAKE CHANGES BY TELEPHONE?
Yes. You can request transfers, change your allocation of future investments
and make changes to transfers made on a continuing periodic basis from one
investment division to another or to and from the Fixed Interest Account by
telephone unless prohibited by state law. Except for the Enhanced unallocated
Keogh Contract, if we agree and you complete the form we supply, you may also
authorize your sales representative to request transfers, change your
allocation of future investments and make changes to transfers made on a
continuing periodic basis from one investment division to another or to and
from the Fixed Interest Account on your behalf by telephone. Whether you or
your sales representative make such requests by telephone, you are authorizing
us to act upon the telephone instructions of any person purporting to be you
or, if applicable, your sales representative, assuming our procedures have
been followed, to these requests which affect both your Fixed Interest and
Separate Account Balances. We have instituted reasonable procedures to confirm
that any instructions communicated by telephone are genuine. All telephone
calls making such requests will be recorded. You (or the sales representative)
will be asked to produce your personalized data prior to our initiating any
requests by telephone. Additionally, as with other transactions, you will
receive a written confirmation of your transaction. Neither we nor the
Separate Account will be liable for any loss, expense or cost arising out of
any requests that we or the Separate Account reasonably believe to be genuine.
In the unlikely event that you have trouble reaching us, requests should be
made to the Designated Office.
CAN YOU MAKE SYSTEMATIC WITHDRAWALS?
Yes. If we agree and, if approved in your state, for Enhanced IRA and Non-
Qualified Contracts, you may request us to make "automatic" withdrawals for
you on a periodic basis through our Systematic Withdrawal Program. Systematic
Withdrawal Program payments are not payments made under an income option or
under an Income Annuity, as described later in this Prospectus. You may choose
to receive Systematic Withdrawal Program payments for either a specific dollar
amount or a percentage of your Account Balance. Beginning on or about December
15, 1998, if you choose to receive a percentage of your Account Balance, we
will determine the initial dollar amount payable as of the date these payments
begin and we will pay the dollar amount over the remainder of the Contract
Year. For example, if you ask for a percentage equal to $12,000 and there are
six months left in the Contract Year, we will pay you $2,000 a month if
payments are made monthly. For each later Contract Year that the Systematic
Withdrawal Program remains in effect, we will pay you either the dollar amount
that you have chosen or a dollar amount equal to the percentage of your
Account Balance you have chosen, applied to your Account Balance as of your
first Systematic Withdrawal Program payment date in that Contract Year. We
will pay this amount over the full Contract Year. For example, if you ask for
a percentage equal to $12,000 a year, we will pay you $1,000 a month if
payments are to be made monthly. Each Systematic Withdrawal Program payment
must be at least $50. Your payment date is the date we make payment, which is
not the date you receive it. You should allow approximately 10 business days
for processing your request. If we do not receive the request at least 10
business days in advance of the Systematic Withdrawal Program payment start
date, we will process your first Systematic Withdrawal Program payment the
following month. If you do not specify a payment date, payments will commence
30 days from the date we receive your request. The date of the first
Systematic Withdrawal Program payment is your Systematic Withdrawal Program
anniversary date. Requests to commence Systematic Withdrawal Program payments
may not be made by telephone. Changes to the specified dollar amount or
percentage or to alter the timing of payments may be made once a year prior to
your Systematic Withdrawal Program anniversary date or, on or about December
15, 1998, prior to the beginning of any Contract Year, unless we agree
otherwise. Requests for such changes must be made at least 30 days prior to
the Systematic Withdrawal Program anniversary date or, on or about December
15, 1998, at least 30 days prior to the beginning of any Contract Year, unless
we agree
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otherwise. You may cancel your Systematic Withdrawal Program request at
anytime by telephone or by writing us at the Designated Office.
FROM WHICH INVESTMENT DIVISIONS WILL WITHDRAWALS BE MADE FOR SYSTEMATIC
WITHDRAWAL PROGRAM PAYMENTS?
Depending on your Enhanced IRA or Enhanced Non-Qualified Contract, each
Systematic Withdrawal Program payment may be taken on a pro rata basis from
either (1) the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money or (2) only from investment divisions of
the Separate Account in which you then have money. If your Account Balance is
insufficient to make a requested Systematic Withdrawal Program payment, the
remaining Account Balance will be paid to you. You will also be able to select
the percentage to be withdrawn from each investment division and/or Fixed
Interest Account based on your preference. If you do not specify percentages
or if there are insufficient amounts in one or more of your selected
investment divisions or the Fixed Interest Account, then your Systematic
Withdrawal Program payment will automatically be taken on a pro rata basis
from the Fixed Interest Account and investment divisions in which you then
have money.
WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A
SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of payments
over a twelve month period. If Systematic Withdrawal Program payments comprise
the first withdrawal of the Contract Year and are within the 10% Free
Corridor, calculated for this purpose as 10% of the Account Balance on the
Systematic Withdrawal Program anniversary date, no Systematic Withdrawal
Program payment will be subject to an early withdrawal charge.
Beginning on or about December 15, 1998, if you have elected the Systematic
Withdrawal Program, we will treat the full amount to be paid in a Contract
Year as a lump sum withdrawal on the first Systematic Withdrawal Program
payment date for the first Contract Year for purposes of determining how much
of the withdrawal will be exempt from the withdrawal charge. For Contract
Years thereafter, we will treat the full amount to be paid in a Contract Year
as a lump sum withdrawal as of the first Systematic Withdrawal Program payment
date after the Contract Year anniversary for purposes of determining how much
of the withdrawal will be exempt from the withdrawal charge. However, each
Systematic Withdrawal Program payment will be treated separately as of the
date of a withdrawal from your Contract to determine whether or not it is
subject to a withdrawal charge. We will withdraw that portion of the
withdrawal that constitutes the early withdrawal charge when we make the
Systematic Withdrawal Program payment.
Systematic Withdrawal Program payments in excess of the 10% Free Corridor
and Systematic Withdrawal Program payments that comprise the second or later
withdrawal of the Contract Year will be subject to an early withdrawal charge
unless the payments are from other amounts to which an early withdrawal charge
no longer applies. On or about December 15, 1998, only Systematic Withdrawal
Program payments in excess of the 10% Free Corridor will be subject to an
early withdrawal charge unless the payments are from other amounts to which an
early withdrawal charge no longer applies. See "Deductions and Charges."
Systematic Withdrawal Program payments are treated as withdrawals for
Federal income tax purposes. All or a portion of the amounts withdrawn under
Systematic Withdrawal Program will be subject to Federal income tax. If you
are under age 59 1/2, tax penalties may apply. See "Taxes," pages C-PPA-30-34.
CAN MINIMUM DISTRIBUTION PAYMENTS BE MADE ON A PERIODIC BASIS?
Yes. Rather than receiving your minimum distribution in one annual payment,
you may request that we make minimum distribution payments to you on a
periodic basis. However, you may be required to meet certain total Account
Balance minimums at the time you request periodic minimum distribution
payments.
DEDUCTIONS AND CHARGES
...............................................................................
ARE THERE ANNUAL ENHANCED CONTRACT CHARGES?
There are no Separate Account annual Enhanced Contract charges. (There is
$20 annual Enhanced Contract fee imposed on certain Fixed Interest Account
balances.)
WHAT ARE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that Enhanced
Contract purchasers and participants may live for a longer period of time than
we estimated. Then we would be obligated to pay more income benefits than
anticipated. We also bear the risk that the guaranteed death benefit we pay
for Enhanced allocated Contracts will be larger than the Account Balance. The
expense
C-PPA-17
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risk portion of the mortality and expense risk charge is that our expenses in
administering the Enhanced Contracts will be greater than we estimated.
These charges do not reduce the number of accumulation units credited to you.
These charges are calculated and paid every time we calculate the value of
accumulation units. (See "How is an accumulation unit value calculated?" on C-
PPA-15.)
As a result of reduced administrative expenses associated with Enhanced
Contracts, the sum of these charges on an annual basis (computed and payable
each Valuation Period) will not exceed .95% of the average value of the assets
in each investment division. Of this charge, we estimate that .20% is for
administrative expenses and .75% is for the mortality and expense risk.
During 1997, these charges were $87,711,107 for all contracts in Separate
Account E.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES AND WHEN ARE THEY PAID?
Some jurisdictions tax what are called "annuity considerations." These may
include purchase payments, account balances and death benefits. In most
jurisdictions, we currently do not deduct any money from purchase payments,
Account Balances or death benefits to pay these taxes. Our practice generally
is to deduct money to pay annuity taxes only when you purchase an income
annuity. In Mississippi, Wyoming, South Dakota, Kentucky and Washington, D.C.,
we may also deduct money to pay annuity taxes on lump sum withdrawals or when
you purchase an income annuity. We may deduct an amount to pay annuity taxes
sometime in the future since the laws and the interpretation of the laws
relating to annuities are subject to change.
A chart that shows the states where annuity taxes are charged and the amount
of these taxes is on page C-PPA-36.
WHAT IS THE EARLY WITHDRAWAL CHARGE (SALES LOAD)?
The following paragraphs describe how the early withdrawal charge is
determined. The early withdrawal charge reimburses us for our costs in selling
the Enhanced Contracts. We may use any of our profits derived from the
mortality and expense risk charge to pay for any of our costs in selling the
Enhanced Contracts that exceed the revenues generated by the early withdrawal
charge. However, we believe that our sales expenses may exceed revenues
generated by the early withdrawal charge and, in such event, we will pay such
excess out of our surplus.
To determine the early withdrawal charge for the Enhanced Contracts, we treat
your Fixed Interest Account and Separate Account as if they were a single
account and ignore both your actual allocations and what account or investment
division the withdrawal is actually coming from. To do this, we first assume
that your withdrawal is from amounts (other than earnings) that can be
withdrawn without an early withdrawal charge, then from other amounts (other
than earnings) and then from earnings, each on a "first-in-first-out" basis.
Once we have determined the amount of the early withdrawal charge, we will
actually withdraw it from each investment division in the same proportion as
the withdrawal is being made. In determining what the withdrawal charge is, we
do not include earnings, although the actual withdrawal to pay it may come from
earnings.
For partial withdrawals from an investment division, the early withdrawal
charge is determined by dividing the amount that is subject to the early
withdrawal charge by 100% minus the applicable percentage shown below. Then we
will make the payment directed, and withdraw the early withdrawal charge from
that investment division.
For a full withdrawal from an investment division we multiply the amount to
which the withdrawal charge applies by the percentage shown below, keep the
result as an early withdrawal charge and pay you the rest. We will treat your
request as a request for a full withdrawal from an investment division if your
Account Balance in that investment division is not sufficient to pay both the
requested withdrawal and the early withdrawal charge.
For the Enhanced Contracts, withdrawal charges are imposed on amounts (other
than earnings) for the first seven years after the purchase payment is received
as shown in the table below.
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[8 &
1 2 3 4 5 6 7 BEYOND]
<S> <C> <C> <C> <C> <C> <C> <C>
7% 6% 5% 4% 3% 2% 1% 0%
</TABLE>
As required by the Federal securities laws, your total early withdrawal
charges will never exceed 9% of all your purchase payments applied to the
investment divisions to the date of the withdrawal. As a result of the reduced
sales costs associated with certain Enhanced Preference Plus Contracts, no
early withdrawal charges from the Separate Account are deducted for withdrawals
under those Enhanced Contracts. When no allocations or transfers are made to
the Separate Account except in connection with the Equity GeneratorSM
investment strategy, withdrawal charges will be calculated as described above,
but the charge imposed will not exceed earnings.
C-PPA-18
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EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES
................................................................................
CAN YOU MAKE WITHDRAWALS OR TRANSFERS WITHOUT EARLY WITHDRAWAL CHARGES?
Yes. There are several types of withdrawals that will not result in an early
withdrawal charge to you. Tax penalties may still apply and the amounts
withdrawn may also be subject to Federal income tax, see "Taxes," pages C-PPA-
30-34. We may require proof satisfactory to us that any necessary conditions
have been met.
The following describes the situations where we do not impose an early
withdrawal charge:
1. Transfers made among the investment divisions of the Separate Account or
to the Fixed Interest Account.
2. Withdrawals that represent purchase payments made over seven years ago.
3. A Free Corridor withdrawal described below. Depending on your Enhanced
Contract, the Free Corridor percentage may either be taken in an unlimited
number of partial withdrawals (for each withdrawal we calculate the percentage
it represents of your Account Balance and whenever the total of such
percentages exceeds the specified percentage the early withdrawal charge
applies) or as part of the first withdrawal from your Account Balance during
the Contract Year. Beginning on or about December 15, 1998 and if approved in
your state, the Free Corridor withdrawal percentage may be taken in an
unlimited number of partial withdrawals during the Contract year for all
Contracts. In either case the Free Corridor is the greater of the percentage
described below or amounts which are not subject to an early withdrawal charge.
For the Enhanced unallocated Keogh and certain Enhanced Contracts, the Free
Corridor is in addition to any amounts which are not subject to an early
withdrawal charge as described in items 4-15 below, except for amounts which
are exempted pursuant to Systematic Termination, described in item 8 below.
(a) For the Enhanced unallocated Keogh, you can withdraw up to 20% of your
Account Balance during each Contract Year.
(b) For certain Enhanced IRA and Non-Qualified Contracts, you can withdraw
up to 10% of your Account Balance during each Contract Year. For other Enhanced
IRA and Non-Qualified Contracts, you can withdraw or transfer up to 10% of your
Fixed Interest Account balance each Contract Year.
4. Free Look: You may cancel your Enhanced Contract within 10 days (20 days
in North Dakota) after you receive it by telling us in writing. We will then
refund all of your purchase payments (however for Enhanced IRA and Non-
Qualified Contracts issued in Minnesota we will instead pay you your Account
Balance). If you purchased your Contract by mail, you may have more time to
return your Contract.
5. You purchase an income annuity from us for life or a noncommutable period
of five years or more.
6. You die before any income payments have been made and we pay your
beneficiary a death benefit.
7. The withdrawal is required to avoid Federal income tax penalties or to
satisfy Federal income tax rules or Department of Labor regulations that apply
to the Enhanced Contract from which the withdrawal is made.
8. Systematic Termination: For the Enhanced unallocated Keogh Contract, a
total withdrawal ("Systematic Termination") that is paid in annual installments
of (1) 20% of your Account Balance upon receipt of your request (we will reduce
this first installment by the amount of any previous partial withdrawals during
the current Contract Year); (2) 25% of your then current Account Balance one
year later; (3) 33 1/3% of your then current Account Balance two years later;
(4) 50% of your then current Account Balance three years later; and (5) the
remainder four years later. You may cancel remaining payments under a
Systematic Termination at any time. However, if you again decide to take a full
withdrawal, the entire Systematic Termination process starts over. If, after
beginning a Systematic Termination, you decide to take your full withdrawal in
amounts exceeding the percentages allowed, the excess amount withdrawn in any
year is subject to the applicable withdrawal charges.
9. Disability: For the Enhanced unallocated Keogh Contract, if you are
totally disabled (as defined under the Federal Social Security Act) and you
request a total withdrawal. For the Enhanced unallocated Keogh Contract that
fund plans subject to the Employee Retirement Income Security Act of 1974, the
definition of disability is also as defined under the Federal Social Security
Act, unless defined in the plan.
10. Retirement:
(a) For the Enhanced Non-Qualified Contract, if you retire and you are
receiving retirement benefits from your employer's qualified plan.
(b) For the Enhanced unallocated Keogh Contract, if there is a plan which
defines retirement and you retire under such definition. If you are a
"restricted" participant, as shown in the Enhanced Contract, you must have been
a participant in the Enhanced Contract for the period stated in the Enhanced
Contract.
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11. Separation from Service: For the Enhanced unallocated Keogh Contract, if
you are a "restricted" participant, as shown on the Enhanced Contract, you
must also have been a participant in the Enhanced Contract for the period
stated in the Enhanced Contract. For certain Enhanced Non-Qualified Contracts,
if your employment terminates. For certain other Enhanced Non-Qualified
Contracts, you must also be eligible to receive retirement benefits.
12. Plan Termination: For the Enhanced unallo- cated Keogh Contract, if your
plan terminates and the Account Balance is rolled over into another annuity
contract we issue.
13. Hardship: For the Enhanced unallocated Keogh Contract, if you suffer an
unforeseen hardship.
14. Pre-Approved Investment Vehicles: For the Enhanced unallocated Keogh
Contract, if you make a direct transfer to other investment vehicles we have
pre-approved. For the Enhanced unallocated Keogh Contract, if you are a
"restricted" participant, as shown in the Contract, and your Account Balance
is rolled over to a MetLife individual retirement annuity within 120 days
after you are eligible to receive a plan distribution.
15. Transfer from other MetLife Contracts: (A) For transfers prior to
January 1, 1996: If you roll over amounts from other MetLife contracts we
designate, of the following two formulas we will apply the one that is more
favorable to you:
(1) treat our other contract and this Enhanced Contract as if they were one
for purposes of determining when a purchase payment was made, credit your
purchase payments with the time you held them under our other contract prior
to the time they were rolled over or (2) subject the rollover amounts to a
withdrawal charge determined as described above in "What is the early
withdrawal charge (sales load)?" as follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[6 &
1 2 3 4 5 BEYOND]
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0
</TABLE>
(B) For transfers commencing on or after January 1, 1996:
(1) If you roll over amounts from other MetLife contracts we designate that
they have been in force at least two years (except as covered in (2) below),
we will apply the one of the following two formulas that is more favorable to
you: (a) the same withdrawal charge schedule that would have applied to the
rollover amounts had they remained in your other MetLife contracts, however,
any exceptions or reductions to the basic withdrawal charge percentage that
this Contract does not provide for (such as a 0% charge at the end of an
interest rate guarantee period or a 3% charge at the third anniversary) will
not apply; or (b) subject the rollover amounts to a withdrawal charge
determined as described above in "What is the early withdrawal charge (sales
load)?" as follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
6 &
1 2 3 4 5 BEYOND
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0%
</TABLE>
For this purpose, purchase payment year is measured from the date of the
rollover, not the original purchase payment date under the other MetLife
contracts.
(2) If the other MetLife contracts have been in force less than two years or
provide for a separate withdrawal charge for each purchase payment, we will
treat the other contracts and this Contract as if they were one for purposes
of determining when a purchase payment was made by crediting under this
Contract your purchase payments with the time you held them under our other
contract prior to the date they were rolled over.
(C) We may instead, if provided for by this Contract, treat another contract
and this Contract as if they were one for purposes of determining when a
purchase payment was made by deeming your purchase payments to have been made
under this Contract on the dates they were made under the other contract.
16. Nursing Home or Terminal Illness: For the Enhanced IRA and Non-Qualified
Contracts, to the first withdrawal if you or your spouse (A) is a resident in
certain nursing home facilities for at least 90 consecutive days or (B) has
been diagnosed as terminally ill and is expected to die within twelve months,
but only if this provision has been approved by your state.
DEATH BENEFIT
...............................................................................
WHAT IS THE DEATH BENEFIT?
The death benefit is the greatest of (i) your Account Balance, (ii) your
highest Account Balance as of December 31 of any fifth Contract anniversary
less any later partial withdrawals and any later annual Enhanced Contract
charges withdrawn from the Fixed Interest Account and (iii) the total of all
of your purchase payments less any partial withdrawals. There is no death
benefit for the Enhanced unallocated Keogh Contract.
C-PPA-20
<PAGE>
...............................................................
WHEN AND TO WHOM WILL THE DEATH BENEFIT BE PAID?
The death benefit will not be paid until we receive proof of death and
appropriate directions regarding the Account Balance. If we receive proof of
death without any appropriate directions, we will take no action with regard to
the Account Balance until we receive appropriate directions.
You name the beneficiary under the Enhanced IRA and Non-Qualified Contracts.
The death benefit is paid to the Keogh trustee under the Enhanced unallocated
Keogh Contract.
The payee may take a lump sum cash payment or apply the death benefit (less
any applicable annuity taxes) to an income annuity from the types available
under your Enhanced Contract.
INCOME OPTIONS
................................................................................
CAN METLIFE PROVIDE YOU WITH AN INCOME GUARANTEED FOR LIFE OR OFFER A WIDE
CHOICE OF OTHER PERIODS?
Yes. You may withdraw all or a portion of your Account Balance and apply that
money (less any annuity taxes that must be paid) to an income annuity.
You can receive income payments guaranteed for life on a monthly, quarterly,
semiannual or annual basis. Non-life contingent annuities are available for
various payout periods.
Other life annuity options are available which have a refund feature or are
guaranteed for a period of time and are life contingent afterwards. The amount
of the initial payment under an income annuity must be at least $50 ($20 in
Massachusetts).
All provisions relating to income annuities are subject to the limitations
imposed by the Code.
WHAT TYPES OF INCOME OPTIONS ARE AVAILABLE?
Both fixed and variable income options are available. Under a fixed income
option, we guarantee a specified, fixed payment, which will depend on the
income option chosen, the age and sex of the annuitant and joint annuitant, if
applicable, (except where unisex rates are required by law) and the portion of
your Account Balance used to provide the fixed income option. If a currently
issued immediate annuity of the same type will provide greater income payments,
the immediate annuity rates will be used.
If you do not select an income option by the date the Enhanced Contract
specifies, you have not withdrawn your entire Account Balance, and your
Enhanced Contract was not issued under a retirement plan, you will be issued a
life annuity with a ten (10) year guarantee. In that case, if you do not tell
us otherwise, your Fixed Interest Account Balance will be used to provide a
fixed income option and your Separate Account Balance will be used to provide a
variable income option.
More information concerning the variable income option, including investment
choices, determining the value of variable income payments, transfers,
deductions and charges, variable income option types and taxes are discussed
under "Income Annuities."
C-PPA-21
<PAGE>
SECTION II: ENHANCED INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS
WHAT ARE THE ENHANCED INCOME ANNUITIES?
Enhanced Income Annuities provide you with a series of payments for either a
period of time or life that are based upon the investment performance of the
investment divisions of the Separate Account. The amount of the payment will
fluctuate and is not guaranteed as to a specified amount. You may elect to
have a portion of your income payment under the fixed income option that is
guaranteed by MetLife's general account. That portion of the payment from the
fixed income option will not fluctuate and is fixed. You may purchase an
Enhanced Income Annuity even if you did not have an Enhanced Contract during
the accumulation period.
Income Annuities can be either group or individual and are offered as IRAs,
SEPs, TSAs, PEDC, Keogh, 403(a) and Non-Qualified annuities. Some Income
Annuities ("Enhanced Income Annuities") have a reduced general administrative
expenses and mortality and expense risk charge as a result of reduced
administration expenses.
This Prospectus describes the following Enhanced Income Annuities: IRAs,
unallocated Keogh and Non-Qualified.
MAY THE ENHANCED INCOME ANNUITY BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. Your Enhanced Income Annuity may provide that your choice of income
types is subject to the terms of your retirement plan. Your Enhanced Income
Annuity will indicate under which circumstances this is the case. We may rely
on your employer's or plan administrator's statements to us as to the terms of
the plan or your entitlement to any amounts. We will not be responsible for
determining what your plan says.
WHAT ARE THE INVESTMENT CHOICES?
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive Growth,
Santander International Stock Divisions, and, if approved in your state,
Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman Partners Mid
Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth Divisions
described earlier in Section 1 under "YOUR INVESTMENT CHOICES." Your employer,
association or group may have limited the number of available divisions. Your
Enhanced Income Annuity will indicate which divisions were available to you
when we issued it. We may add or eliminate divisions for some or all persons.
In some states, you may be limited to four investment divisions to provide the
variable income payment or up to three investment divisions if a fixed income
option is also selected.
ADMINISTRATION
...............................................................................
WHAT ADMINISTRATIVE DETAILS SHOULD YOU KNOW?
Your purchase payment and all requests concerning Enhanced Income Annuities
should be sent to our Designated Office. We will provide you with the address
for this Office. All checks should be payable to "MetLife." You can also make
certain requests by telephone. In order to have the purchase payment for the
Enhanced Income Annuity credited to you, we must receive your payment and
complete documentation. We will provide the appropriate forms. Your employer,
the trustee of the Keogh plan or the group in which you are an annuitant or
member must also identify you to us on their reports and tell us how the
purchase payment should be allocated among the investment divisions of the
Separate Account and the fixed income option.
Your purchase payment is normally credited to you within two days of receipt
at our Designated Office. However, if you fill out our forms incorrectly or
incompletely or other documentation is not completed properly, we have up to
five business days to credit the purchase payment. If the problem cannot be
resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to
let us keep the purchase payment until the problem is remedied. If you do not
agree, your purchase payment will be returned immediately.
Purchase payments are effective and valued as of 4:00 p.m., Eastern time, on
the day we receive them at our Designated Office, except when they are
received (1) on a day when the annuity unit value (which will be discussed
later in this Prospectus) is not calculated or (2) after 4:00 p.m., Eastern
time. In those cases, the payment will be effective the next day the annuity
unit value is calculated.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
Your purchase payment must be large enough to produce an initial income
payment of at least $50 ($20 in Massachusetts).
11/9/98 C-PPA-22
<PAGE>
...............................................................
HOW IS THE PURCHASE PAYMENT ALLOCATED?
You decide how the purchase payment is allocated among the fixed income
option and the investment divisions of the Separate Account available to your
Enhanced Income Annuity.
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS
................................................................................
WHAT IS AN ANNUITY UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"annuity units." These annuity units are similar to "accumulation units"
described earlier in Section I except that we deduct applicable annuity taxes
from the purchase payment before we determine the number of annuity units in
each investment division chosen.
HOW IS AN ANNUITY UNIT VALUE CALCULATED?
We calculate the annuity unit values once a day on every day the New York
Stock Exchange is open for trading. We call the time between two consecutive
annuity unit value calculations the "Valuation Period." We have the right to
change the basis for the Valuation Period, on 30 days' notice, as long as it is
consistent with the law. All purchase payments and transfers are valued as of
the end of the Valuation Period during which the transaction occurred. The
annuity units values can increase or decrease, based on the investment
performance of the corresponding underlying portfolios. If the investment
performance is positive, after payment of Separate Account expenses and the
deduction for the assumed investment rate ("AIR"), discussed later in this
Prospectus, annuity unit values will go up. Conversely, if the investment
performance is negative, after payment of Separate Account expenses and the
deduction for the AIR, annuity unit values will go down.
When we determine the annuity unit value for an investment division, we use
the same "experience factor" as that derived for the calculation of
accumulation units as described in Section I.
To calculate an annuity unit value, we first multiply the experience factor
for the period by a factor based on the AIR and the number of days in the
valuation period. For an AIR of 4% and a one day valuation period, the factor
is .99989255, which is the daily discount factor for an effective annual rate
of 4%. (The AIR may be in the range of 3% to 6%, as defined in your Enhanced
Income Annuity and the laws of your state.) The resulting number is then
multiplied by the last previously calculated annuity unit value to produce the
new annuity unit value.
HOW IS A VARIABLE INCOME PAYMENT DETERMINED AND WHAT IS THE AIR?
Variable income payments can go up or down based upon the investment
performance of the investment divisions in the Separate Account. AIR is the
rate used to determine the first variable income payment and serves as a
benchmark against which the investment performance of the investment divisions
is compared. The higher the AIR, the higher the first variable income payment
will be. Subsequent variable income payments will increase only to the extent
that the investment performance of the investment divisions exceeds the AIR
(and Separate Account charges). Variable income payments will decline if the
investment performance of the Separate Account does not exceed the AIR (and
Separate Account charges). A lower AIR will result in a lower initial variable
income payment, but subsequent variable income payments will increase more
rapidly or decline more slowly as changes occur in the investment performance
of the investment divisions.
WHEN ARE VARIABLE INCOME PAYMENTS DETERMINED AND HOW OFTEN WILL THEY CHANGE?
Variable income payments are determined as of the 10th day prior to the date
each variable income payment is to be paid or the issue date, if later. Each
variable income payment may vary from a prior payment, depending, as discussed
above, upon the investment performance of the investment divisions, the AIR and
Separate Account charges.
TRANSFERS
................................................................................
CAN YOU MAKE TRANSFERS?
You can make transfers from one investment division to another or from an
investment division to a fixed income option as long as the total number of
investment divisions under your Enhanced Income Annuity is no greater than four
(or three investment divisions if a fixed income option is chosen). You may
make an unlimited number of transfers. Your request must tell us the percentage
to be transferred. You may not make a transfer from the fixed income option to
an investment division.
WHEN WILL TRANSFERS BE PROCESSED?
Generally, we will process a transfer as of the end of the Valuation Period
during which we receive your request at our Designated Office. We will make it
as of a later date if you request. If you die before the requested date, we
will cancel the request and continue to make payments to your beneficiary under
a guarantee or a joint annuitant or pay your beneficiary a refund, if you have
chosen one of these income types.
C-PPA-23
<PAGE>
...............................................................
CAN YOU MAKE TRANSFERS BY TELEPHONE?
Yes. You can make transfer requests by telephone unless prohibited by state
law. Except for the Enhanced unallocated Keogh Income Annuity, if we agree, and
you complete the form we supply, you may also authorize your sales
representative to make transfer requests on your behalf by telephone. All
telephone transfers are subject to the same procedures and limitations of
liability as described earlier in Section I.
DEDUCTIONS AND CHARGES
................................................................................
WHAT IS THE CONTRACT FEE?
There is no contract fee under the Enhanced Income Annuities.
WHAT ARE THE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that annuitants may
live for a longer period of time than we estimated. Then we would be obligated
to pay more income benefits than anticipated. The expense risk portion of the
mortality and expense risk charge is that our expenses in administering the
Enhanced Income Annuity will be greater than we estimated.
These charges do not reduce the number of annuity units credited to you.
These charges are calculated and paid every time we calculate the value of
annuity units. (See "How is an annuity unit value calculated?" on C-PPA-23.)
As a result of reduced administrative expenses associated with Enhanced
Income Annuities, the sum of these charges on an annual basis (computed and
payable each Valuation Period) will not exceed .95% of the average value of the
assets in each investment division. Of this charge, we estimate that .20% is
for administrative expenses and .75% is for the mortality and expense risk.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES?
Yes. Some jurisdictions tax what are called "annuity considerations." We
deduct money to pay annuity taxes when you make the purchase payment. A chart
that shows the states where annuity taxes are charged and the amount of these
taxes is on page C-PPA-36.
WHAT VARIABLE INCOME TYPES ARE AVAILABLE?
Three persons figure in the description below: the owner of the Income
Annuity (the person with all rights under the contract including the right to
direct who receives payments), the annuitant (the person whose life is the
measure for determining the timing and sometimes the amount of income payments)
and the beneficiary (the person who may receive benefits if no annuitants or
owners are living).
Your Lifetime Annuity--A variable income payable during the annuitant's life.
Your Lifetime with a Guaranteed Period Annuity--A variable income payable
during the annuitant's life. If, at the death of the annuitant, payments have
been made for less than the guarantee period, payments are made to the owner of
the annuity (or the beneficiary if the owner dies before the end of the
guarantee period) for the rest of the guarantee period.
Your Lifetime With a Refund Annuity--A variable income payable during the
annuitant's life. If, at the death of the annuitant, the total of all of our
payments is less than the purchase payment that we received, we will pay an
amount equal to the difference to the owner of the annuity (or to the
beneficiary if the owner is not alive) when the annuitant dies.
Income for Two Lives Annuity--A variable income payable while either of two
annuitants is alive. After one annuitant dies payments continue if the other
annuitant is alive, otherwise payments stop. Payments after one annuitant dies
may be the same as those paid while both were alive or may be a lower
percentage selected when the annuity is purchased (e.g. 75%, 66 2/3% or 50%).
Income for Two Lives with a Guaranteed Period Annuity--This is the same as
the Income for Two Lives Annuity described above, but we guarantee to pay the
full amount (not a reduced percentage) for the guarantee period even if one or
both annuitants die. If, at the death of both annuitants, payments have been
made for less than the guarantee period, payments are made to the owner of the
annuity (or the beneficiary if the owner dies before the end of the guarantee
period) for the rest of the guarantee period.
Income for Two Lives with a Refund Annuity--This is the same as the Income
for Two Lives Annuity described above but if, at the death of both annuitants,
the total of all of our payments is less than the purchase payment that we
received, we will pay an amount equal to the difference to the owner of the
annuity (or to the
C-PPA-24
<PAGE>
...............................................................
beneficiary if the owner is not alive) when the annuitant dies.
Income for a Guaranteed Period Annuity--A variable income payable for a
guarantee period (5-30 years). Payments cease at the end of the guarantee
period (which is often called a "term certain" period) even if the annuitant is
still alive. If the annuitant dies prior to the end of the guarantee period,
payments are made to the owner of the annuity (or to the beneficiary if the
owner dies before the end of the guarantee period) for the rest of the
guarantee period.
IS THERE A FREE LOOK?
Yes. There is a Free Look when you purchase an Enhanced Income Annuity. There
is no Free Look when an Enhanced Income Annuity is the variable income option
under an Enhanced Contract. You may cancel your Enhanced Income Annuity within
10 days (20 days in North Dakota) after you receive it by telling us in
writing. We will then refund your purchase payment (however, for Enhanced
Income Annuities issued in Minnesota we will instead pay you your Account
Balance). If you purchased your Enhanced Income Annuity by mail, you may have
more time to return your Enhanced Income Annuity.
C-PPA-25
<PAGE>
SECTION III: OTHER DEFERRED ENHANCED CONTRACT AND ENHANCED INCOME ANNUITY
PROVISIONS
CAN WE CANCEL YOUR ENHANCED CONTRACT OR ENHANCED INCOME ANNUITY?
We may not cancel your Enhanced Income Annuity.
We may cancel your Enhanced Contract. If we do so for an Enhanced Contract
delivered in New York, we will return the full Account Balance for Enhanced IRA
or Non-Qualified Contracts. In all other cases, you will receive an amount
equal to what you would have received if you had requested a total withdrawal
of your Account Balance. Early withdrawal charges may apply.
We will only cancel your Enhanced Contract if we do not receive any purchase
payments for you for 36 consecutive months and your Account Balance is less
than $2,000 (except for the Enhanced unallocated Keogh Contract). We may only
cancel the Enhanced unallocated Keogh Contract if we do not receive any
purchase payments for you for 12 consecutive months and your Account Balance is
less than $15,000. We will only do so to the extent allowed by law. Certain
Enhanced Contracts do not contain these cancellation provisions.
ARE THERE SPECIAL PROVISIONS THAT APPLY IF YOU ARE A PARTICIPANT IN A PLAN
SUBJECT TO ERISA?
Yes. If your plan is subject to ERISA (the Employee Retirement Income
Security Act of 1974) and you are married, the income payments, withdrawal
provisions, and methods of payment of the death benefit under your Enhanced
Contract or Enhanced Income Annuity may be subject to your spouse's rights as
described below.
Generally, the spouse must give qualified consent whenever you elect to:
a. choose income payments other than on a qualified joint and survivor
annuity basis ("QJSA") (one under which we make payment to you during
your lifetime and then make payments reduced by no more than 50% to your
spouse for his or her remaining life, if any); or choose to waive the
qualified pre-retirement survivor annuity benefit ("QPSA") (the benefit
payable to the surviving spouse of a participant who dies with a vested
interest in an accrued retirement benefit under the plan before payment
of the benefit has begun);
b. make certain withdrawals under plans for which a qualified consent is
required;
c. name someone other than the spouse as your beneficiary;
d. use your accrued benefit as security for a loan exceeding $5,000.
Generally, there is no limit to the number of your elections as long as a
qualified consent is given each time. The consent to waive the QJSA must meet
certain requirements, including that it be in writing that acknowledges the
identity of the designated beneficiary and the form of benefit selected, dated,
signed by your spouse, witnessed by a notary public or plan representative and
in a form satisfactory to us. The waiver of a QJSA generally must be executed
during the 90-day period ending on the date on which income payments are to
commence, or the withdrawal or the loan is to be made, as the case may be. If
you die before benefits commence, your surviving spouse will be your
beneficiary unless he or she has given a qualified consent otherwise. The
qualified consent to waive the QPSA benefit and the beneficiary designation
must be made in writing that acknowledges the designated beneficiary, dated,
signed by your spouse, witnessed by a notary public or plan representative and
in a form satisfactory to us. Generally, there is no limit to the number of
beneficiary designations as long as a qualified consent accompanies each
designation. The waiver of and the qualified consent for the QPSA benefit
generally may not be given until the plan year in which you attain age 35. The
waiver period for the QPSA ends on the date of your death.
If your benefit is worth $5,000 or less, your plan may provide for
distribution of your entire interest in a lump sum without spousal consent.
WHEN ARE YOUR REQUESTS EFFECTIVE?
In general, your requests are effective when we receive them at our
Designated Office unless otherwise provided by this Prospectus.
WILL WE CONFIRM YOUR TRANSACTIONS?
Yes. In general we will send you a confirmation statement indicating that a
transaction recently took place. Certain transactions which are made on a
periodic basis, such as check-o-matic, pre-authorized systematic purchase
payments which are transfers from the Fixed Interest Account and Systematic
Withdrawal Program payments, may be confirmed quarterly.
CAN WE CHANGE THE PROVISIONS OF YOUR ENHANCED CONTRACT OR ENHANCED INCOME
ANNUITY?
Yes. We have the right to make certain changes to your Enhanced Contract or
Enhanced Income Annuity,
11/9/98 C-PPA-26
<PAGE>
...............................................................
but only as permitted by law. We make changes when we think they would best
serve the interest of all participants or would be appropriate in carrying out
the purposes of the Enhanced Contract or Enhanced Income Annuity. If the law
requires, we will also get your approval and that of any appropriate
regulatory authorities. Examples of the changes we may make include:
1. To operate the Separate Account in any form permitted under the 1940 Act
or in any other form permitted by law.
2. To take any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act.
3. To transfer any assets in an investment division to another investment
division, or to one or more separate accounts, or to our general account, or
to add, combine or remove investment divisions in the Separate Account.
4. To substitute for the portfolio shares in any investment division, the
shares of another class of the Metropolitan Fund or the shares of another
investment company or any other investment permitted by law.
5. To change the way we assess charges, but without increasing the aggregate
amount charged to the Separate Account and any currently available portfolio
in connection with the Enhanced Contracts or Enhanced Income Annuities.
6. To make any necessary technical changes in the Enhanced Contracts or
Enhanced Income Annuities in order to conform with any of the above-
described actions.
If any changes result in a material change in the underlying investments of
an investment division in which you have an Account Balance, we will notify
you of the change. You may then make a new choice of investment divisions. For
Enhanced Contracts issued in Pennsylvania (and Enhanced Income Annuities where
required by law), we will ask your approval before any technical changes are
made.
WHAT ARE YOUR VOTING RIGHTS REGARDING PORTFOLIO SHARES?
In accordance with our view of the present applicable law, we will vote the
shares of each of the portfolios held by the Separate Account (which are
deemed attributable to the Enhanced Contract or Enhanced Income Annuity) at
regular and special meetings of the shareholders of the portfolio based on
instructions received from those having the voting interest in corresponding
investment divisions of the Separate Account. However, if the 1940 Act or any
rules thereunder should be amended or if the present interpretation thereof
should change, and as a result we determine that we are permitted to vote the
shares of the portfolios in our own right, we may elect to do so.
Accordingly, you have voting interests under the Enhanced Contracts or
Enhanced Income Annuities. The number of shares held in each Separate Account
investment division deemed attributable to you is determined by dividing the
value of accumulation or annuity units attributable to you in that investment
division, if any, by the net asset value of one share in the portfolio in
which the assets in that Separate Account investment division are invested.
Fractional votes will be counted. The number of shares for which you have the
right to give instructions will be determined as of the record date for the
meeting.
Portfolio shares held in each registered separate account of MetLife or any
affiliate that are or are not attributable to life insurance policies or
annuity contracts (including the Enhanced Contracts and Enhanced Income
Annuities) and for which no timely instructions are received will be voted in
the same proportion as the shares for which voting instructions are received
by that separate account. Portfolio shares held in the general accounts or
unregistered separate accounts of MetLife or its affiliates will be voted in
the same proportion as the aggregate of (i) the shares for which voting
instructions are received and (ii) the shares that are voted in proportion to
such voting instructions. However, if we or an affiliate determine that we are
permitted to vote any such shares, in our own right, we may elect to do so
subject to the then current interpretation of the 1940 Act or any rules
thereunder.
You will be entitled to give instructions regarding the votes attributable
to your Enhanced Contract or Enhanced Income Annuity in your sole discretion.
Under the Enhanced unallocated Keogh Contract, participants may instruct you
to give us instructions regarding shares deemed attributable to their
contributions to the Enhanced Contract. Under the Enhanced unallocated Keogh
Contract, we will provide you with the number of copies of voting instruction
soliciting materials that you request so that you may furnish such materials
to participants who may give you voting instructions. Neither the Separate
Account nor MetLife has any duty to inquire as to the instructions received or
your authority to give instructions; thus, as far as the Separate Account, and
any others having voting interests in respect of the Separate Account are
concerned, such instructions are valid and effective.
C-PPA-27
<PAGE>
...............................................................
You may give instructions regarding, among other things, the election of the
board of directors, ratification of the election of independent auditors, and
the approval of investment and sub-investment managers.
CAN YOUR VOTING INSTRUCTIONS BE DISREGARDED?
Yes. MetLife may disregard voting instructions under the following
circumstances (1) to make or refrain from making any change in the investments
or investment policies for any portfolio if required by any insurance
regulatory authority; (2) to refrain from making any change in the investment
policies or any investment adviser or principal underwriter or any portfolio
which may be initiated by those having voting interests or the Metropolitan
Fund's board of directors, provided MetLife's disapproval of the change is
reasonable and, in the case of a change in investment policies or investment
manager, based on a good faith determination that such change would be
contrary to state law or otherwise inappropriate in light of the portfolio's
objective and purposes; or (3) to enter into or refrain from entering into any
advisory agreement or underwriting contract, if required by any insurance
regulatory authority.
In the event that MetLife does disregard voting instructions, a summary of
the action and the reasons for such action will be included in the next
semiannual report.
WHO SELLS YOUR ENHANCED CONTRACT OR ENHANCED INCOME ANNUITY AND DO YOU PAY A
COMMISSION ON THE PURCHASE OF YOUR ENHANCED CONTRACT OR ENHANCED INCOME
ANNUITY?
All Enhanced Contracts and Enhanced Income Annuities, certificates and
interests in the Enhanced Contracts and Enhanced Income Annuities are sold
through individuals who are our licensed life insurance sales representatives.
We are registered with the Securities and Exchange Commission as a broker-
dealer under the Securities Exchange Act of 1934, and we are a member of the
National Association of Securities Dealers, Inc. They also are sold through
other registered broker-dealers. They also may be sold through the mail and in
the case of certain Enhanced Contracts and Enhanced Income Annuities by
certain of our qualified employees.
The licensed sales representatives and broker-dealers who sell Enhanced
Contracts and Enhanced Income Annuities and certificates and interests in the
Enhanced Contracts and Enhanced Income Annuities may be compensated for these
sales by commissions that we pay. There is no front-end sales load deducted
from purchase payments to pay sales commissions. The Separate Account also
does not pay sales commissions. The commissions we pay range from 0% to 6%
depending on the age of the participant or annuitant.
We also make payments to our licensed sales representatives based upon the
total Account Balances of the Contracts assigned to the sales representatives.
Under the program, we pay an amount up to .12% of the total Account Balances
of the Contracts, other registered variable annuity contracts, certain mutual
fund account balances and cash values of certain life insurance policies.
These asset based commissions compensate the sales representatives for
servicing the Contracts. These payments are not made for Income Annuities.
DOES METLIFE ADVERTISE THE PERFORMANCE OF THE SEPARATE ACCOUNT?
Yes. From time to time we advertise the performance of various Separate
Account investment divisions. This performance is stated in terms of either
"yield," "change in accumulation unit value," "change in annuity unit value"
or "average annual total return" or some combination of the foregoing. Yield,
change in accumulation unit value, change in annuity unit value and average
annual total return figures are based on historical earnings and are not
intended to indicate future performance. The yield figures quoted in
advertisements will refer to the net income generated by an investment in a
particular investment division for a thirty day period or month, which is
specified in the advertisement, and then expressed as a percentage yield of
that investment. This percentage yield is then compounded semiannually. Change
in accumulation unit value or change in annuity unit value refers to the
comparison between values of accumulation or annuity units over specified
periods in which an investment division has been in operation, expressed as a
percentage. Change in accumulation unit value or change in annuity unit value
may also be expressed as an annualized figure. In addition, change in
accumulation unit value or change in annuity unit value may be used to
illustrate performance for a hypothetical investment (such as $10,000) over
the time period specified. Yield and change in accumulation unit value figures
do not reflect the possible imposition of an early withdrawal charge of up to
7% of the amount withdrawn attributable to a purchase payment, which may
result in a lower figure being experienced by the investor. Average annual
total return differs from the change in accumulation unit value and change in
annuity unit value because it assumes a steady rate of return and reflects all
expenses and applicable early withdrawal charges. Performance figures will
vary among the various contracts and income annuities as a result of different
Separate Account charges and early withdrawal charges. Performance may be
calculated based upon historical performance of the underlying portfolios of
the
C-PPA-28
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Metropolitan Fund and may assume that certain Contracts were in existence
prior to their inception date. After the inception date, actual accumulation
unit or annuity unit data is used.
Advertisements regarding the Separate Account may contain comparisons of
hypothetical after-tax returns of currently taxable investments versus returns
of tax deferred investments. From time to time, the Separate Account may
compare the performance of its investment divisions with the performance of
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds, Treasury Bills, certificates of deposit
and savings accounts. The Separate Account may use the Consumer Price Index in
its advertisements as a measure of inflation for comparison purposes. From
time to time, the Separate Account may advertise its performance ranking among
similar investments or compare its performance to averages as compiled by
independent organizations such as Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS (R) and The Wall Street Journal. The Separate Account
may also advertise its performance in comparison to appropriate indices, such
as the Standard & Poor's 500 Composite Stock Price Index, the Standard &
Poor's Mid Cap 400 Index, the Standard & Poor's Small Cap 600 Index, the
Russell 2000 Index, the Russell 2000 Growth Index, the Lehman Brothers
Aggregate Bond Index, the Lehman Brothers Government/Corporate Bond Index, the
Merrill Lynch High Yield Bond Index, the Morgan Stanley Capital International
All Country World Index and the Morgan Stanley Capital International Europe,
Australasia, Far East Index.
Performance may be shown for certain investment strategies that are made
available under certain Enhanced Contracts. The first is the "Equity
Generator." Under the "Equity Generator," an amount equal to the interest
earned during a specified interval (i.e., monthly, quarterly) in the Fixed
Interest Account is transferred to the MetLife Stock Index Division or the
State Street Research Aggressive Growth Division. The second technique is the
"Equalizer SM." Under this strategy, once during a specified period (i.e.,
monthly, quarterly), a transfer is made from the MetLife Stock Index Division
or the State Street Research Aggressive Growth Division to the Fixed Interest
Account or from the Fixed Interest Account to the MetLife Stock Index Division
or State Street Research Aggressive Growth Division in order to make the
account and the division equal in value. The third strategy is the "Index
SelectorSM". Under this strategy, once during a specified period (i.e.,
quarterly, annually) transfers are made among the Lehman Brothers Aggregate
Bond Index, MetLife Stock Index, Morgan Stanley EAFE Index and Russell 2000
Index Divisions and the Fixed Interest Account in order to bring the
percentage of the total Account Balance in each of these divisions and Fixed
Interest Account back to the current allocation of your choice of one of
several asset allocation models. The elements which form the basis for the
models are provided by MetLife which may rely on a third party for its
expertise in creating appropriate allocations. The models are designed to
correlate to various risk tolerance levels associated with investing and are
subject to change from time to time.
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector Return"
for each asset allocation model will be calculated by presuming a certain
dollar value at the beginning of the period and comparing this dollar value
with the dollar value, based on historical performance, at the end of the
period, expressed as a percentage. The "Return" in each case will assume that
no withdrawals have occurred. We may also show performance for the Equity
Generator, Equalizer and Index Selector investment strategies using other
investment divisions for which these strategies are made available in the
future. If we do so, performance will be calculated in the same manner as
described above, using the appropriate account and/or investment divisions.
11/9/98 C-PPA-29
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SECTION IV: TAXES
GENERAL
Federal tax laws are complex and are subject to frequent change as well as to
judicial and administrative interpretation. The following is a general summary
intended to point out what we believe to be some general rules and principles,
and not to give specific tax or legal advice. Failure to comply with the law
may result in significant penalties. For details or for advice on how the law
applies to your individual circumstances, consult your tax advisor or attorney.
You may also get information from the Internal Revenue Service.
In the opinion of our attorneys, the Separate Account and its operations will
be treated as part of MetLife, and not taxed separately. We are taxed as a life
insurance company. Thus, although the Enhanced Contracts and Enhanced Income
Annuities allow us to charge the Separate Account with any taxes or reserves
for taxes attributable to it, we do not expect that under current law we will
do so.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR DEFERRED ENHANCED CONTRACT?
All contributions under the Enhanced Contracts, other than contributions
under Enhanced Non-Qualified Contracts, non-deductible contributions under the
Enhanced IRA Contracts and certain other qualified Enhanced Contracts, will be
made on a "before-tax" basis. This means that the purchase payments either
reduce your income, entitle you to a tax deduction or are not subject to
current income tax. Because of this, Federal income taxes are payable on
contributions to your contract which were not subject to tax when you withdraw
them, as well as on income earned under the Enhanced Contract.
Enhanced Non-Qualified Contracts are issued on an "after-tax basis" so that
making purchase payments does not reduce the taxes you pay. Income earned under
the Enhanced Contracts is normally not taxed until withdrawn. Thus, that
portion of any withdrawal that represents income is taxed when you receive it,
but that portion that represents purchase payments is not, to the extent
previously taxed.
Under some circumstances certain Enhanced Contracts, accept both purchase
payments that entitle you or the owner to a current tax deduction or to an
exclusion from income and those that do not. Taxation of withdrawals depends on
whether or not you or the owner were entitled to deduct or excluded the
purchase payments from income in compliance with the Code.
The taxable portion of a distribution from an Enhanced unallocated Keogh
Contract to the participant or the participant's spouse (if she/he is the
beneficiary) that is an "eligible rollover distribution," as defined in the
Code, is subject to 20% mandatory Federal income tax withholding unless the
participant directs the trustee, insurer or custodian of the plan to transfer
all or any portion of his/her taxable interest in such plan to the trustee,
insurer or custodian of (1) an individual retirement arrangement under (S)408;
(2) a qualified trust or a 403(a) annuity plan, if the distribution is from an
Enhanced unallocated Keogh Contract. An eligible rollover distribution is
generally the taxable portion of any distribution from an Enhanced unallocated
Keogh Contract, except the following: (a) a series of substantially equal
periodic payments over the life (or life expectancy) of the participant; (b) a
series of substantially equal periodic payments over the lives (or joint life
expectancies) of the participant and his/her beneficiary; (c) a series of
substantially equal periodic payments over a specified period of at least ten
years; (d) a minimum distribution required during the participant's lifetime or
the minimum amount to be paid after the participant's death; (e) refunds of
excess contributions to the plan described in (S)401(k) of the Code for
corporations and unincorporated businesses; (f) certain loans treated as
distributions under the Code; (g) the cost of life insurance coverage which is
includible in the gross income of the plan participant; and (h) any other
taxable distributions from any of these plans which are not eligible rollover
distributions.
All taxable distributions from the Enhanced unallocated Keogh Contracts that
are not eligible rollover distributions and all taxable distributions from
Enhanced IRA and Non-Qualified Contracts will be subject to Federal income tax
withholding unless the payee elects to have no withholding. The rate of
withholding is as determined by the Code and Regulations thereunder at the time
of payment.
Each type of Enhanced Contract is subject to various tax limitations.
Typically, except for the Enhanced Non-Qualified Contracts, the maximum amount
of purchase payment is limited under Federal tax law and there are limitations
on how long money can be left under the Enhanced Contracts before withdrawals
must begin. A 10% tax penalty applies to certain taxable withdrawals from the
Enhanced Contract (or in some cases from the plan or arrangement that purchased
the Enhanced Contract) before you are age 59 1/2.
The rules as to what payments are subject to this provision are complex. The
following paragraphs will
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briefly summarize some of the tax rules on an Enhanced Contract-by-Enhanced
Contract basis, but will make no attempt to mention or explain every single
rule that may be relevant to you. We are not responsible for determining if
your plan or arrangement satisfies the requirements of the Code.
Enhanced Traditional IRA Contracts. Annual contributions to all IRAs may not
exceed the lesser of $2,000 or 100% of your "compensation" as defined by the
Code, except "spousal IRAs" discussed below. Generally, no contributions are
allowed during or after the tax year in which you attain age 70 1/2.
Contributions other than those allowed are subject to a 6% excess contribution
tax penalty. Special rules apply to withdrawals of excess contributions. These
dollar and age limits do not apply to tax-free "rollovers" or transfers from
other IRAs or from other tax-favored plans that the Code allows.
Annual contributions are generally deductible up to the above limits if
neither you nor your spouse was an "active participant" in another qualified
retirement plan during the taxable year. You will not be treated as married
for these purposes if you lived apart for the entire taxable year and file
separate returns. For 1998, if you are an "active participant" in another
retirement plan and your adjusted gross income is $30,000 or less ($50,000 for
married couples filing jointly, however, never fully deductible for a married
person filing separately), annual contributions are fully deductible. However,
contributions are not deductible if your adjusted gross income is over $40,000
($60,000 for married couples filing jointly, $10,000 for a married person
filing separately). If your adjusted gross income falls between these amounts,
your maximum deduction will be phased out. For an individual who is not an
"active participant" but whose spouse is, the adjusted gross income limits for
the nonactive participant spouse is $150,000 for a full deduction (with a
phase-out between $150,000 and $160,000). If you file a joint return and you
and your spouse are under age 70 1/2, you and your spouse may be able to make
annual IRA contributions of up to $4,000 ($2,000 each) to two IRAs, one in
your name and one in your spouse's. Neither can exceed $2,000, nor can it
exceed your joint compensation.
Taxable withdrawals (other than tax-free transfers or "rollovers" to other
individual retirement arrangements) before age 59 1/2 are subject to a 10% tax
penalty. This penalty does not apply to withdrawals (1) paid to a beneficiary
or your estate after your death; (2) due to your permanent disability (as
defined in the Code); (3) made in substantially equal periodic payments (not
less frequently than annually) over the life or life expectancy of you or you
and another person named by you as your beneficiary; (4) to pay deductible
medical expenses; (5) to enable certain unemployed persons to pay medical
insurance premiums; (6) made after December 31, 1997 to pay for qualified
higher education expenses; or (7) made after December 31, 1997 for qualified
first time home purchases. If you are under age 59 1/2 and are receiving
Systematic Withdrawal Program payments that you intend to qualify as a series
of substantially equal periodic payments under (S)72(t) of the Code and thus
not subject to the 10% tax penalty, any modifications to your Systematic
Withdrawal Program payments before age 59 1/2 or five years after beginning
Systematic Withdrawal Program payments will result in the retroactive
imposition of the 10% tax penalty. You should consult with your tax adviser to
determine whether you are eligible to rely on any exceptions to the 10% tax
penalty before you elect to receive any Systematic Withdrawal Program payments
or make any modification to your Systematic Withdrawal Program payments.
If you made both deductible and non-deductible contributions, a partial
withdrawal will be treated as a pro-rata withdrawal of both, based on all of
your IRAs (not just the Enhanced IRA Contracts). The portion of the withdrawal
attributable to non-deductible contributions (but not the earnings on them) is
a nontaxable return of principal, and the 10% tax penalty does not apply. You
must keep track of which contributions were deductible and which weren't, and
make annual reports to the IRS if non-deductible contributions were made.
Withdrawals may be transferred to another IRA without Federal tax
consequences if Code requirements are met. Your Enhanced Contract is not
forfeitable and you may not transfer it.
Your entire interest in the Enhanced IRA Contract must be withdrawn or begun
to be withdrawn generally by April 1 of the calendar year following the year
in which you reach age 70 1/2 and a tax penalty of 50% applies to withdrawals
which should have been made but were not. Complex rules apply to the timing
and calculation of these withdrawals. Other complex rules apply to how rapidly
withdrawals must be made after your death. Generally, if you die before the
required withdrawals have begun, we must make payment of your entire interest
under the Enhanced Contract within five years of the year in which you died or
begin payments under an income annuity allowed by the Code to your beneficiary
over his or her lifetime or over a period not beyond your beneficiary's life
expectancy starting by the December 31 of the year following the year in which
you die. If your spouse is your beneficiary and, if your Enhanced Contract
permits, payments may be made over your spouse's lifetime or over a period not
beyond your
11/9/98 C-PPA-31
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...............................................................
spouse's life expectancy starting by the December 31 of the year in which you
would have reached age 70 1/2, if later. If your beneficiary is your spouse,
he or she may elect to continue the Enhanced IRA Contract as his or her own
Enhanced IRA Contract after your death. If you die after the required with-
drawals have begun, payments must continue to be made at least as rapidly as
under the method of distribution that was used as of the date of your death.
The IRS allows you to aggregate the amount required to be withdrawn from
each individual retirement arrangement you own and to withdraw this amount in
total from any one or more of the individual retirement arrangements you own.
Enhanced Unallocated Keogh Contract. Pension and profit-sharing plans
satisfying certain Code provisions are considered to be "Keogh" plans. Complex
rules apply to the establishment and operation of such plans, including the
amounts that may be contributed under them. Excess contributions are subject
to a 10% penalty. Special rules apply to the withdrawal of excess
contributions.
Taxable withdrawals before age 59 1/2 are subject to a 10% tax penalty (this
does not apply to the return of any non-deductible purchase payments). This
penalty does not apply to withdrawals (1) paid to a beneficiary or your estate
after your death; (2) due to your permanent disability (as defined in the
Code); (3) made in substantially equal periodic payments (not less frequently
than annually) over the life or life expectancy of you or you and another
person named by you where such payments begin after separation from service;
(4) made to you after you separate from service with your employer after age
55; or (5) made to you on account of deductible medical expenses (whether or
not you actually itemize deductions).
Withdrawals may be transferred to another qualified trust or a 403(a)
annuity plan or (for eligible rollover distributions) to an IRA without
Federal tax consequences if Code requirements are met. Your Contract is not
forfeitable and you may not transfer it. Generally, for taxable years after
1996, if you do not have a 5% or more ownership interest in your employer,
your entire interest in the Contract must be withdrawn or begin to be
withdrawn by April 1 of the calendar year following the later of: the year in
which you reach age 70 1/2 or, to the extent permitted under your plan or
contract, the year in which you retire. A tax penalty of 50% applies to
withdrawals which should have been made but were not. Complex rules apply to
the timing and calculation of these withdrawals. Other complex rules apply to
how rapidly withdrawals must be made after your death. Generally, if you die
before the required withdrawals have begun, we must make payment of your
entire interest under the Contract within five years of the year in which you
died or begin payments under an income annuity allowed by the Code to your
beneficiary over his or her lifetime or over a period not beyond your
beneficiary's life expectancy starting by the December 31 of the year
following the year in which you die. If your spouse is your beneficiary,
payments may be made over your spouse's lifetime or over a period not beyond
your spouse's life expectancy starting by the December 31 of the year in which
you would have reached age 70 1/2, if later. If you die after income payments
begin, payments must continue to be made at least as rapidly as under the
method of distribution that was used as of the date of your death.
If your benefit under the Keogh plan is worth more than $5,000, the Code
requires that your income annuity protect your spouse if you die before you
receive any payments under the annuity or if you die while payments are being
made. You may waive these requirements with the written consent of your
spouse. Designating a beneficiary other than your spouse is considered a
waiver. Waiving these requirements may cause your monthly benefit to increase
during your lifetime.
Enhanced Non-Qualified Contracts. No limits apply under the Code to the
amount of purchase payments that you may make. Tax on income earned under the
Enhanced Contracts is generally deferred until it is withdrawn only if you as
owner of the Enhanced Contract are an individual (or are treated as a natural
person under certain other circumstances specified by the Code). The following
discussion assumes that this is the case.
Any withdrawal is generally treated as coming first from earnings (and thus
subject to tax) and next from your contributions (and a nontaxable return of
principal) only after all earnings are paid out. This rule does not apply to
payments made under income annuities, however. Such payments are subject to an
"exclusion ratio" which determines how much of each payment is a non-taxable
return of your contributions and how much is a taxable payment of earnings.
Once the total amount treated as a return of your contributions equals the
amount of such contributions, all remaining payments are fully taxable. If you
die before all contributions are returned, the unreturned amount may be
deductible on your final income tax return or deductible by your beneficiary
if payments continue after your death. We will tell the purchaser of an income
annuity what your contributions were and how much of each income payment is a
non-taxable return of contributions.
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Taxable withdrawals (other than tax-free exchanges to other non-qualified
contracts) before you are age 59 1/2 are subject to a 10% tax penalty. This
penalty does not apply to withdrawals (1) paid to a beneficiary or your estate
after your death; (2) due to your permanent disability (as defined in the
Code); or (3) made in substantially equal periodic payments (not less
frequently than annually) over the life or life expectancy of you or you and
another person named by you as your beneficiary.
Your Enhanced Non-Qualified Contract may be exchanged for another non-
qualified contract without incurring Federal income taxes if Code requirements
are met. Under the Code, withdrawals need not be made by a particular age.
However, It is possible that the Internal Revenue Service may determine that
the Contract must be surrendered or income payments must commence by a certain
age, e.g., 85 or older. If you die before payments under an income annuity
begins, we must make payment of your entire interest under the Enhanced
Contract within five years of the date of your death or begin payments under
an income annuity allowed by the Code to your beneficiary within one year of
your death. If your spouse is your beneficiary or a co-owner of the Enhanced
Non-Qualified Contract, this rule does not apply. If you die after income
payments begin, payments must continue to be made at least as rapidly as under
the method of distribution that was used at the time of your death.
The federal tax law treats all non-qualified contracts issued after October
21, 1988 by the same company (or its affiliates) to the same owner during any
one calendar year as one annuity contract. This may cause a greater portion of
your withdrawals from the Enhanced Contract to be treated as income made then
would otherwise be the case. Although the law is not clear, the aggregation
rule may also adversely affect the tax treatment of payments received under an
income annuity where the owner has purchased more than one non-qualified
annuity during the same calendar year from the same or an affiliated company
after October 21, 1988, and is not receiving income payments from all
annuities at the same time.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR ENHANCED INCOME ANNUITY?
All purchase payments under the Enhanced Income Annuities, other than
purchase payments under Enhanced Non-Qualified Income Annuities and purchase
payments consisting of non-deductible contributions under Enhanced IRA Income
Annuities, will be on a "before-tax" basis. This means that the purchase
payment was either a reduction from income, entitled you to a tax deduction or
was not subject to current income tax. Because of this, Federal income taxes
are payable on the full amount of money paid as income payments under the
Enhanced Income Annuity.
The Enhanced Non-Qualified Income Annuities are issued on an "after-tax
basis" so that making a purchase payment does not reduce the taxes you pay.
That portion of any income payment that represents income is taxed when you
receive it, but that portion that represents the purchase payment is a
nontaxable return of principal.
The Enhanced IRA Income Annuities and under some circumstances certain other
Enhanced Income Annuities accept both purchase payments that have entitled you
or the owner to a current tax deduction or to a reduction in taxable income
and those that do not. Taxation of income payments depends on whether or not
you or the owner were entitled to deduct or exclude from income the purchase
payment in compliance with the Code.
All taxable income payments will be subject to Federal income tax
withholding unless the payee elects to have no withholding. The rate of
withholding is as determined by the Code at the time of payment.
Income payments that are allowed before you are age 59 1/2 are generally
subject to an additional 10% tax penalty on the taxable portion of the income
payment. This penalty does not apply to income payments (1) paid to a
beneficiary or your estate after your death; (2) due to your permanent
disability (as defined in the Code); (3) made in substantially equal periodic
payments (not less frequently than annually) over the life or life expectancy
of you or you and another person named by you (however, for Keogh plans, you
must also be separated from service when payments begin) or (4) under an
Enhanced Non-Qualified Income Annuity purchased with a single purchase payment
which provides for substantially equal periodic payments (to be made not less
frequently than annually) commencing no later than one year from the purchase
date. Additionally, under Keogh plans the penalty does not apply to income
payments (1) made to you after you separate from service with your employer
after age 55; (2) made to you on account of deductible medical expenses
(whether or not you actually itemize deductions; or (3) made to an "alternate
payee" under a "qualified domestic relations order" (normally a spouse or ex-
spouse). For Enhanced IRAs, the 10% tax penalty also will not apply to income
payments to pay deductible medical expenses (whether or not you actually
itemize your deduction); to enable certain unemployed persons to pay medical
insurance premiums; made after December 31, 1997 to pay for qualified higher
education expenses; or made after December 31, 1997 for qualified first time
home
C-PPA-33
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...............................................................
purchases. There is a possibility that if you make transfers as described
earlier in this Prospectus before age 59 1/2 or within five years of the
purchase of the Enhanced Income Annuity, the exercise of the transfer
provision may cause the retroactive imposition of this tax.
The rules as to what payments are subject to this provision are complex. The
following paragraphs will briefly summarize some of the tax rules, but we will
make no attempt to mention or explain every single rule that may be relevant
to you. We are not responsible for determining if your plan or arrangement
satisfies the requirements of the Code.
You must generally begin receiving distributions under the Enhanced IRA
Annuities no later than the April 1 of the calendar year following the year in
which you reach age 70 1/2 and a tax penalty of 50% applies to payments which
should have been made but were not. (For taxable years after 1996, if you do
not have a 5% or more ownership interest in your employer, distributions for
Keogh Income Annuities must generally begin no later than April 1 of the
calendar year following the later of: the year in which you reach 70 1/2 or,
to the extent permitted under your plan or contract, the year you retire.)
Complex rules apply to the timing and calculation of these income payments.
Other complex rules apply to how rapidly income payments must be made after
your death. If you die before income payments begin under an Enhanced Income
Annuity, the Code generally requires that your entire interest under the
Income Annuity be paid within five years of the year in which you died. If you
die before income payments begin, we will pay your entire interest under the
Income Annuity to your beneficiary in a lump sum after we receive proof of
your death. If you die after income payments begin, payments must continue to
be made in accordance with the income type selected. The Code requires that
payments continue to be made at least as rapidly as under the method of
distribution that was used as of the date of your death.
If your benefit under a plan subject to the Retirement Equity Act (REA) is
worth more than $5,000, the Code requires that your Enhanced Income Annuity
protect your spouse if you die before you receive any income payments under
the Enhanced Income Annuity or if you die while income payments are being
made. If your Enhanced Income Annuity is subject to the REA, your spouse has
certain rights which may be waived with the written consent of your spouse.
Waiving these requirements will cause your initial monthly benefit to
increase.
Enhanced Non-Qualified Income Annuities. The following discussion assumes
that you are an individual (or are treated as a natural person under certain
other circumstances specified in the Code).
Income payments are subject to an "exclusion ratio" which determines how
much of each income payment is a non-taxable return of your purchase payment
and how much is a taxable payment of earnings. Generally, once the total
amount treated as a return of your purchase payment equals the amount of such
purchase payment, all remaining income payments are fully taxable. If you die
before the purchase payment is returned, the unreturned amount may be
deductible on your final income tax return or deductible by your beneficiary
if income payments continue after your death. We will tell you what your
purchase payment was and how much of each income payment is a non-taxable
return of your purchase payment.
If you die before income payments begin, the Code generally requires payment
of your entire interest in the Enhanced Income Annuity be made within five
years of the date of your death. If you die before income payments begin, we
will pay your entire interest under the Income Annuity to your beneficiary in
a lump sum after we receive proof of your death. If you die after income
payments begin, payments must continue to be made at least as rapidly as under
the method of distribution before your death, in accordance with the income
type selected.
The tax law treats two or more non-qualified contracts issued after October
21, 1988 by the same company (or its affiliates) to the same owner during any
one calendar year as one annuity contract. It is unclear whether this rule
adversely affects the tax treatment of income payments received under a
contract which was issued during the same calendar year in which you purchased
another annuity contract from the same company (or its affiliates) under which
you are not yet receiving income payments.
C-PPA-34
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TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
Page
<S> <C>
Cover Page................................................................ 1
Table of Contents......................................................... 1
Independent Auditors...................................................... 2
Services.................................................................. 2
Distribution of Certificates and Interests in the Contracts and Income
Annuities................................................................ 2
Early Withdrawal Charge................................................... 2
Variable Income Payments.................................................. 2
Performance Data.......................................................... 4
Financial Statements of the Separate Account.............................. 15
Financial Statements of MetLife........................................... 37
</TABLE>
C-PPA-35
<PAGE>
APPENDIX
ANNUITY TAX TABLE
The following is a current list of jurisdictions in which annuity taxes apply
in respect of the Contracts and Income Annuities and the applicable annuity
tax rates:
<TABLE>
<CAPTION>
IRA, SIMPLE IRA
AND SEP NON-QUALIFIED
TSA CONTRACTS CONTRACTS AND KEOGH AND 403(A) PEDC CONTRACTS CONTRACTS AND
AND INCOME INCOME CONTRACTS AND AND INCOME INCOME
ANNUITIES ANNUITIES(1) INCOME ANNUITIES ANNUITIES(2) ANNUITIES
------------- --------------- ---------------- -------------- -------------
<S> <C> <C> <C> <C> <C>
California.............. 0.5% 0.5%(3) 0.5% 2.35% 2.35%
District of Columbia.... 2.25% 2.25% 2.25% 2.25% 2.25%
Kentucky(4)............. 2.0% 2.0% 2.0% 2.0% 2.0%
Maine................... -- -- -- -- 2.0%
Nevada.................. -- -- -- -- 3.5%
Puerto Rico............. 1.0% 1.0% 1.0% 1.0% 1.0%
South Dakota............ -- -- -- -- 1.25%
U.S. Virgin Islands..... 5.0% 5.0% 5.0% 5.0% 5.0%
West Virginia........... 1.0% 1.0% 1.0% 1.0% 1.0%
Wyoming................. -- -- -- -- 1.0%
</TABLE>
- -------
(1) Annuity tax rates applicable to IRA, SIMPLE IRA and SEP Contracts and
Income Annuities purchased for use in connection with individual
retirement trust or custodial accounts meeting the requirements of
(S)408(a) of the Code are included under the column headed "IRA, SIMPLE
IRA and SEP Contracts and Income Annuities."
(2) Annuity tax rates applicable to Contracts and Income Annuities purchased
under retirement plans of public employers meeting the requirements of
(S)401(a) of the Code are included under the column headed "Keogh
Contracts and Income Annuities."
(3) With respect to Contracts and Income Annuities purchased for use in
connection with individual retirement trust or custodial accounts meeting
the requirements of (S)408(a) of the Code, the annuity tax rate in
California is 2.35% instead of 0.5%.
(4) The annuity tax in Kentucky is repealed effective January 1, 2000.
C-PPA-36
<PAGE>
INDEX
<TABLE>
<CAPTION>
C-PPA
<S> <C>
ACCOUNT BALANCE............................................. 6, 11
ACCUMULATION UNIT VALUES.................................... 8-9
Calculation............................................... 15
ANNUAL CONTRACT FEE......................................... 4, 6, 17
ANNUITY TAXES............................................... 18, 24, 36
ANNUITY UNITS............................................... 23
ASSUMED INVESTMENT RATE..................................... 23
AUTOMATIC PAYROLL DEDUCTION................................. 14
AVERAGE ANNUAL TOTAL RETURN................................. 28
CANCELLATION................................................ 26
CHANGE IN ACCUMULATION UNIT VALUE........................... 28
CHANGE IN ANNUITY UNIT VALUE................................ 28
CHECK-O-MATIC............................................... 14, 26
COMMISSION.................................................. 28
CONFIRMATION................................................ 26
CONTRACT YEAR............................................... 14
DEATH BENEFIT............................................... 7, 20-21
DESIGNATED OFFICE........................................... 14
DISABILITY.................................................. 19
EARLY WITHDRAWAL CHARGE (DEFERRED SALES LOAD)............... 4, 5, 6, 17, 18, 19
ENHANCED CONTRACTS.......................................... 1, 6, 11
ENHANCED INCOME ANNUITIES................................... 1, 6, 7, 22-25
Administration............................................ 22
Annuity Unit Value........................................ 23
Annuity Taxes............................................. 24
Assumed Investment Rate................................... 23
Contract Fee.............................................. 24
Free Look................................................. 25
General Administrative Expenses Charge.................... 24
Income Types.............................................. 24-25
Investment Choices........................................ 22
Mortality and Expense Risk Charge......................... 24
Income for Two Lives Annuity.............................. 24
Income for Two Lives with a Guaranteed Period Annuity..... 24-25
Income for Two Lives with a Refund Annuity................ 24
Your Lifetime Annuity..................................... 24
Your Lifetime with a Guaranteed Period Annuity............ 24
Your Lifetime with Refund Annuity......................... 24
Income for a Guaranteed Period Annuity.................... 25
Purchase Payment.......................................... 22, 23
Transfers................................................. 23-24
Taxes..................................................... 33-34
Valuation Period.......................................... 23
ENHANCED INDIVIDUAL RETIREMENT ANNUITIES.................... 6, 11, 16, 17, 19,
20, 21, 26, 30, 31,
33, 34, 36
ENHANCED NON-QUALIFIED CONTRACT............................. 7, 11, 14, 16, 17,
19, 20, 21, 22, 26,
30, 32, 33, 34, 36
ENHANCED UNALLOCATED KEOGH CONTRACT......................... 6, 7, 11, 14, 15,
16, 19, 20, 22, 24,
26, 27, 30, 32, 33,
34, 36
EQUALIZER SM................................................ 29
EQUITY GENERATOR SM ........................................ 18, 29
ERISA....................................................... 26
</TABLE>
C-PPA-37
<PAGE>
<TABLE>
<CAPTION>
C-PPA
<S> <C>
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES.................. 6-7, 19-20
Certain Purchase Payments............................... 19
Death................................................... 19
Disability: Enhanced Unallocated Keogh Contract......... 19
Federal Taxes........................................... 19
Free Corridor--All other Contracts...................... 19
Free Corridor--Enhanced Unallocated Keogh Contract...... 19
Free Look............................................... 19
Income Annuity.......................................... 19
Plan Termination........................................ 20
Preapproved Investment Vehicles--Enhanced Unallocated
Keogh Contract......................................... 20
Retirement--Enhanced Contracts.......................... 19
Retirement--Enhanced Unallocated Keogh Contract......... 19
Separation from Service................................. 20
Systematic Termination--Enhanced Unallocated Keogh Con-
tract.................................................. 19
Transfers............................................... 19
Transfers from other MetLife Contracts.................. 20
Nursing Home or Terminal Illness........................ 20
EXPERIENCE FACTOR......................................... 15
FIXED INCOME OPTION....................................... 21
FREE CORRIDOR............................................. 17, 19
FREE LOOK................................................. 19
GENERAL ADMINISTRATIVE EXPENSES CHARGE.................... 4, 6, 17-18
INCOME OPTIONS............................................ 21
Fixed Income Option..................................... 21
Variable Income Option.................................. 21
INDEX SELECTOR SM ........................................ 29
INVESTMENT CHOICES........................................ 6, 11-14, 22
Harris Oakmark Large Cap Value Portfolio ............... 1, 4, 5, 11, 12, 13,
22
Janus Mid Cap Portfolio................................. 1, 4, 5, 8, 9, 11,
12, 13, 22
Lehman Brothers Aggregate Bond Index Portfolio ......... 1, 4, 5, 11, 12, 22
Loomis Sayles High Yield Bond Portfolio................. 1, 4, 5, 8, 9, 11,
12, 13, 22
MetLife Stock Index Portfolio........................... 1, 4, 5, 8, 9, 11,
12, 22
Morgan Stanley EAFE Index Portfolio .................... 1, 4, 5, 11, 12-13,
22
Neuberger & Berman Partners Mid Cap Value Portfolio .... 1, 4, 5, 11, 12, 13-
14, 22
Russell 2000 Index Portfolio ........................... 1, 4, 5, 11, 12, 22
Scudder Global Equity Portfolio......................... 1, 4, 5, 9, 11, 12,
13, 22
State Street Research Aggressive Growth Portfolio....... 1, 4, 5, 9, 11, 12,
13, 22
State Street Research Diversified Portfolio............. 1, 4, 5, 8, 9, 11,
12, 13, 22
State Street Research Growth Portfolio.................. 1, 4, 5, 8, 9, 11,
12, 13, 22
State Street Research Income Portfolio.................. 1, 4, 5, 8, 9, 11,
12, 13, 22
Santander International Stock Portfolio................. 1, 4, 5, 9, 11, 12,
13, 22
T. Rowe Price Large Cap Growth Portfolio ............... 1, 4, 5, 11, 12, 13,
22
T. Rowe Price Small Cap Growth Portfolio................ 1, 4, 5, 9, 11, 12,
13, 22
MANAGEMENT FEES........................................... 4, 6, 12, 13, 14
MORTALITY AND EXPENSE RISK CHARGE......................... 4, 6, 17-18
NURSING HOME OR TERMINAL ILLNESS.......................... 20
PERFORMANCE............................................... 28-29
</TABLE>
C-PPA-38
<PAGE>
<TABLE>
<CAPTION>
C-PPA
<S> <C>
PLAN TERMINATION............................................. 20
PURCHASE PAYMENTS (CONTRIBUTIONS)............................ 6, 14-15, 22, 23
REBALANCER SM (withdrawals and transfers).................... 15
RETIREMENT................................................... 19
SALES LOAD................................................... 4, 17, 18
SALES REPRESENTATIVES........................................ 28
4, 6, 10, 15, 22,
SEPARATE ACCOUNT............................................. 28-29
SEPARATION FROM SERVICE...................................... 20
SUMMARY...................................................... 6-7
SYSTEMATIC TERMINATION....................................... 19
SYSTEMATIC WITHDRAWAL PROGRAM................................ 15, 16-17, 26, 31
TAXES........................................................ 6, 30-34, 36
General--all markets....................................... 30, 33-34, 36
Enhanced IRA Contracts..................................... 30-32, 33-34
Enhanced Unallocated Keogh Contracts....................... 30, 32, 33, 34, 36
Enhanced Non-Qualified Contracts........................... 30, 32, 33, 34, 36
TELEPHONE REQUESTS........................................... 16
TOTAL OPERATING EXPENSES..................................... 4
TRANSFERS.................................................... 6, 15-16
VALUATION PERIOD............................................. 15, 16
VOTING RIGHTS................................................ 27-28
WITHDRAWALS.................................................. 15-17, 18, 19-20
YIELD........................................................ 28
</TABLE>
C-PPA-39
<PAGE>
REQUEST FOR A STATEMENT OF ADDITIONAL INFORMATION/CHANGE OF ADDRESS
If you would like any of the following Statements of Additional Information, or
have changed your address, please check the appropriate box below and return to
the address below.
[_] Metropolitan Life Separate Account E, Metropolitan Series Fund, Inc.
[_] I have changed my address. My CURRENT address is:
Name:
- -------------------------- ------------------------
(Contract Number) Address:
------------------------
- -------------------------- ------------------------
(Signature) zip
METROPOLITAN LIFE INSURANCE COMPANY
ATTN: ALAN DEMICHELE
RETIREMENT AND SAVINGS CENTER, AREA 2H
ONE MADISON AVENUE
NEW YORK, NY 10010
<PAGE>
MetLife's Enhanced
Preference Plus(R) Account
Prospectus
May 1, 1998
As Supplemented
November 9, 1998
Plus
Pro
Preference Plus
MetLife's Enhanced Preference Plus Account . MetLife's Enhanced Preference Plus
Account . MetLife's Enhanced Preference Plus Account . MetLife's Enhanced
Preference Plus Account . MetLife's Enhanced Preference Plus Account . MetLife's
Enhanced Preference Plus Account . MetLife's Enhanced Preference Plus Account .
MetLife's Enhanced Preference Plus Account . MetLife's Enhanced Preference Plus
Account . MetLife's Enhanced Preference Plus Account . MetLife's Enhanced
Preference Plus Account . MetLife's Enhanced Preference Plus Account . MetLife's
Enhanced Preference Plus Account . MetLife's Enhanced Preference Plus Account .
MetLife's Enhanced Preference Plus Account . MetLife's Enhanced Preference Plus
Account .
MetLife
Retirement & Saving Center
98102QGL(exp0599)MLIC-LD
<PAGE>
Financial Freedom Account
Prospectus
May 1, 1998
As Supplemented
November 9, 1998
Financial
Freedom
Pro
Financial Freedom Account . Financial Freedom Account . Financial Freedom
Account . Financial Freedom Account . Financial Freedom Account . Financial
Freedom Account . Financial Freedom Account . Financial Freedom Account .
Financial Freedom Account . Financial Freedom Account . Financial Freedom
Account . Financial Freedom Account . Financial Freedom Account . Financial
Freedom Account . Financial Freedom Account . Financial Freedom Account .
Financial Freedom Account . Financial Freedom Account . Financial Freedom
Account . Financial Freedom Account . Financial Freedom Account . Financial
Freedom
MetLife
Retirement & Savings Center
98102QGL(exp0599)MLIC-LD
<PAGE>
METROPOLITAN LIFE SEPARATE ACCOUNT E
ENHANCED TSA, ENHANCED NON-QUALIFIED, ENHANCED IRA, ENHANCED PEDC AND ENHANCED
403(A) PREFERENCE PLUS AND FINANCIAL FREEDOM ACCOUNT
GROUP ANNUITY CONTRACTS
ISSUED BY
METROPOLITAN
LIFE INSURANCE COMPANY
This Prospectus describes group Enhanced TSA, Enhanced Non-Qualified,
Enhanced Individual Retirement, Enhanced Public Employee Deferred Compensation
and Enhanced 403(a) Preference Plus and Financial Freedom Account Contracts
("Enhanced Preference Plus Contracts," "FFA Contracts" or collectively
"Contracts") and group Enhanced TSA, Enhanced Non-Qualified, Enhanced
Individual Retirement, Enhanced Public Employee Deferred Compensation and
Enhanced 403(a) Preference Plus and Financial Freedom Account Income Annuities
("Enhanced Preference Plus Income Annuities" or "FFA Income Annuities" or
collectively "Income Annuities").
The Enhanced Non-Qualified Preference Plus and FFA Contracts and Enhanced
Non-Qualified Preference Plus and FFA Income Annuities for (S)457(e)(11)
severance and death benefit plans have special tax risks. See "Special Tax
Considerations for Non-Qualified Contract for (S)457(e)(11) Severance and
Death Benefit Plans," page FFA-46 and "Special Tax Considerations for Non-
Qualified Income Annuity for (S)457(e)(11) Severance and Death Benefit Plans,"
page FFA-49. These Contracts and Income Annuities are no longer currently
offered for purchase.
Group Contracts and Income Annuities may only be purchased through your
employer, or a group, association or trust of which you are a member or
participant or by a trust for the benefit of independent contractors or
employees of the grantor of the trust.
You decide where your purchase payments are directed. The choices depend on
what is available under your Contract and may include the Fixed Interest
Account and, through Metropolitan Life Separate Account E, the State Street
Research Income, State Street Research Diversified, MetLife Stock Index, State
Street Research Growth, Janus Mid Cap, Loomis Sayles High Yield Bond, State
Street Research Aggressive Growth, T. Rowe Price Small Cap Growth, Scudder
Global Equity, Santander International Stock (formerly known as State Street
Research International Stock), Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Morgan Stanley EAFE Index, Neuberger&Berman Partners Mid
Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth Portfolios of
the Metropolitan Series Fund, Inc. ("Metropolitan Fund"), the Calvert Social
Balanced Portfolio (formerly Calvert Responsibly Invested Balanced Portfolio)
and Calvert Social Mid Cap Growth Portfolio (formerly Calvert Responsibly
Invested Capital Accumulation Portfolio) of the Calvert Variable Series, Inc.
(formerly Acacia Capital Corporation) and the Money Market VIP, Equity-Income
VIP, Growth VIP and Overseas VIP Portfolios of the Variable Insurance Products
Fund and the Investment Grade Bond VIP II and Asset Manager VIP II Portfolios
of the Variable Insurance Products Fund II. ("Fidelity VIP and VIPII Funds")
The Prospectus for the Metropolitan Fund is attached to the back of your
Prospectus. The Prospectuses for the Calvert Social Balanced Portfolio,
Calvert Social Mid Cap Growth Portfolio and the Fidelity VIP and VIPII Funds
are delivered separately.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
INTERESTS IN THE SEPARATE ACCOUNT AND THE FIXED INTEREST ACCOUNT ARE NOT
DEPOSITS OR OBLIGATIONS OF, OR INSURED, OR GUARANTEED BY THE U.S. GOVERNMENT,
ANY BANK OR OTHER DEPOSITORY INSTITUTION. UNITS ARE NOT DEPOSITS OR
OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY FINANCIAL INSTITUTION, ARE
NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL RESERVE
BOARD OR ANY OTHER AGENCY, AND INVOLVE INVESTMENT RISK, INCLUDING THE POSSIBLE
LOSS OF PRINCIPAL AMOUNT INVESTED.
THIS PROSPECTUS IS NOT VALID UNLESS ATTACHED TO THE CURRENT PROSPECTUS FOR THE
METROPOLITAN FUND, AND ACCOMPANIED BY THE CURRENT PROSPECTUSES FOR CALVERT
SOCIAL BALANCED PORTFOLIO, CALVERT SOCIAL MID CAP GROWTH PORTFOLIO AND BOTH OF
THE FIDELITY VIP AND VIPII FUNDS, WHERE APPLICABLE, WHICH CONTAIN ADDITIONAL
INFORMATION AND WHICH SHOULD BE READ CAREFULLY BEFORE INVESTING.
THIS PROSPECTUS SHOULD BE READ AND RETAINED FOR FUTURE REFERENCE.
The Prospectus sets forth information about the Contracts and Income
Annuities and Separate Account E that you should know before investing.
Additional information about the Contracts and Income Annuities and Separate
Account E has been filed with the Securities and Exchange Commission in a
Statement of Additional Information which is incorporated herein by reference
and which is available upon request without charge from Metropolitan Life
Insurance Company, Retirement and Savings Center, Area 2H, One Madison Avenue,
New York, NY 10010, Attention: Alan DeMichele. Inquiries may be made to
Metropolitan Life Insurance Company, One Madison Avenue, New York, New York
10010, Attention: Retirement and Savings Center; telephone number (800) 553-
4459. The table of contents of the Statement of Additional Information appears
on page FFA-51. The Securities and Exchange Commission maintains a Web site
(http://www.sec.gov) which you may visit that contains the Statement of
Additional Information, material incorporated by reference, and other
information.
The date of this Prospectus and of the Statement of Additional Information
is May 1, 1998, as supplemented November 9, 1998.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
INDEX OF SPECIAL TERMS.................................................. FFA- 4
TABLES OF EXPENSES...................................................... FFA- 5
SUMMARY................................................................. FFA-10
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION BY CONTRACT....... FFA-12
FINANCIAL STATEMENTS.................................................... FFA-17
OUR COMPANY AND THE SEPARATE ACCOUNT.................................... FFA-18
Who Is MetLife?....................................................... FFA-18
What Is The Separate Account?......................................... FFA-18
THE DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS..................... FFA-19
What Are The Contracts?............................................... FFA-19
May The Contracts Be Affected By Your Retirement Plan?................ FFA-19
YOUR INVESTMENT CHOICES................................................. FFA-19
What Are The Investment Choices And How Do We Provide Them?........... FFA-19
PURCHASE PAYMENTS....................................................... FFA-23
Are There Special Rules Concerning The First Payment And Other Admin-
istrative Details That You Should Know?.............................. FFA-23
How Small Or Large Can Your Purchase Payment Be?...................... FFA-24
How Are Purchase Payments Allocated?.................................. FFA-24
Are There Any Limits On Subsequent Purchase Payments?................. FFA-24
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT............... FFA-24
What Is An Accumulation Unit Value?................................... FFA-24
How Is An Accumulation Unit Value Calculated?......................... FFA-24
WITHDRAWALS AND TRANSFERS............................................... FFA-25
Can You Make Withdrawals And Transfers?............................... FFA-25
When Will Withdrawals Or Transfers Be Processed?...................... FFA-25
Can You Make Payments Directly To Other Investments On A Tax-free Ba-
sis?................................................................. FFA-25
What Restrictions Apply To Texas Optional Retirement Program Partici-
pants?............................................................... FFA-25
What Restrictions Apply To TSA Contracts?............................. FFA-25
Can You Make Changes By Telephone?.................................... FFA-25
Can You Make Systematic Withdrawals?.................................. FFA-26
From Which Investment Divisions Will Withdrawals Be Made For
Systematic Withdrawal Program Payments?.............................. FFA-26
Will You Pay An Early Withdrawal Charge (Sales Load) When You Receive
A Systematic Withdrawal Program Payment?............................. FFA-26
Can Minimum Distribution Payments Be Made On A Periodic Basis?........ FFA-27
DEDUCTIONS AND CHARGES.................................................. FFA-27
Are There Annual Contract Charges?.................................... FFA-27
What Are Charges For General Administrative Expenses And The Mortality
And Expense Risk And How Much Are They?.............................. FFA-27
Are There Deductions For Annuity Taxes And When Are They Paid?........ FFA-27
What Is The Early Withdrawal Charge (Sales Load)?..................... FFA-28
What Is The Early Withdrawal Charge For The Enhanced TSA, Enhanced
403(a), Enhanced Non-Qualified, Enhanced PEDC and Enhanced IRA Pref-
erence Plus Contracts?............................................... FFA-28
What Is The Early Withdrawal Charge For Enhanced Non-Qualified Prefer-
ence Plus Contracts For (S)457(f) Deferred Compensation Plans, (S)451
Deferred Fee Arrangements, (S)451 Deferred Compensation Plans And
(S)457 (e)(11) Severance And Death Benefit Plans And FFA Contracts?.. FFA-28
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES................................ FFA-28
Can You Make Withdrawals Or Transfers From The Enhanced TSA, Enhanced
403(a), Enhanced Non-Qualified, Enhanced PEDC And Enhanced IRA Pref-
erence Plus Contracts Without Early Withdrawal Charges?.............. FFA-28
DEATH BENEFIT........................................................... FFA-30
What Is The Death Benefit?............................................ FFA-30
When And To Whom Will The Death Benefit Be Paid?...................... FFA-30
</TABLE>
FFA-2
<PAGE>
<TABLE>
<CAPTION>
PAGE
------
<S> <C>
INCOME OPTIONS.......................................................... FFA-31
Can MetLife Provide You With An Income Guaranteed For Life Or Offer A
Wide Choice Of Other Periods?........................................ FFA-31
What Types Of Income Options Are Available?........................... FFA-31
INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS........................... FFA-32
What Are Income Annuities?............................................ FFA-32
May The Income Annuity Be Affected By Your Retirement Plan?........... FFA-32
What Are The Investment Choices?...................................... FFA-32
ADMINISTRATION.......................................................... FFA-32
What Administrative Details Should You Know?.......................... FFA-32
How Small Or Large Can Your Purchase Payment Be?...................... FFA-33
How is the Purchase Payment Allocated?................................ FFA-33
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS....................... FFA-33
What Is An Annuity Unit Value?........................................ FFA-33
How Is An Annuity Unit Value Calculated?.............................. FFA-33
How Is A Variable Income Payment Determined And What Is The AIR?...... FFA-33
When Are Variable Income Payments Determined And How Often Will They
Change?.............................................................. FFA-33
TRANSFERS............................................................... FFA-33
Can You Make Transfers?............................................... FFA-33
When Will Transfers Be Processed?..................................... FFA-34
Can You Make Transfers By Telephone?.................................. FFA-34
DEDUCTIONS AND CHARGES.................................................. FFA-34
What Is The Contract Fee?............................................. FFA-34
What Are The Charges For General Administrative Expenses And The Mor-
tality And Expense Risk And How Much Are They?....................... FFA-34
Are There Deductions For Annuity Taxes?............................... FFA-34
What Variable Income Types Are Available?............................. FFA-34
Is There A Free Look?................................................. FFA-35
OTHER DEFERRED CONTRACT AND INCOME ANNUITY PROVISIONS................... FFA-36
Can We Cancel Your Contract Or Income Annuity?........................ FFA-36
Are There Special Provisions That Apply If You Are A Participant In A
Plan Subject To ERISA?............................................... FFA-36
When Are Your Requests Effective?..................................... FFA-36
Will We Confirm Your Transactions?.................................... FFA-37
Can We Change The Provisions Of Your Contract Or Income Annuity?...... FFA-37
What Are Your Voting Rights Regarding Portfolio Shares?............... FFA-37
Can Your Voting Instructions Be Disregarded?.......................... FFA-38
Who Sells Your Contract Or Income Annuity And Do You Pay A Commission
On The Purchase Of Your Contract Or Income Annuity?.................. FFA-38
Does MetLife Advertise The Performance Of The Separate Account?....... FFA-38
Are There Special Charges That Apply If Your Retirement Plan Termi-
nates Its Contract Or Takes Other Action?............................ FFA-40
TAXES................................................................... FFA-41
General............................................................... FFA-41
How Do Federal Income Taxes Affect Your Deferred Contract?............ FFA-41
How Do Federal Income Taxes Affect Your Income Annuity?............... FFA-47
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION............ FFA-51
APPENDIX................................................................ FFA-52
</TABLE>
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFERING IN ANY JURISDICTION IN WHICH
SUCH OFFERING MAY NOT LAWFULLY BE MADE. METLIFE DOES NOT AUTHORIZE ANY
INFORMATION OR REPRESENTATIONS REGARDING THE OFFERING DESCRIBED IN THIS
PROSPECTUS OTHER THAN AS CONTAINED IN THIS PROSPECTUS OR ANY ATTACHED
PROSPECTUS OR ANY SUPPLEMENT THERETO OR IN ANY SUPPLEMENTAL SALES MATERIAL
AUTHORIZED BY METLIFE.
FFA-3
<PAGE>
INDEX OF SPECIAL TERMS
<TABLE>
<CAPTION>
TERMS PAGE
----- ---------
<S> <C>
Account Balance....................................................... FFA-10
Accumulation Units.................................................... FFA-24
Annuity Units......................................................... FFA-33
Assumed Investment Rate............................................... FFA-33
Contract Year......................................................... FFA-24
Contracts............................................................. FFA- 1
Designated Office..................................................... FFA-23
Early Withdrawal Charge............................................... FFA-28
Enhanced Preference Plus Contracts.................................... FFA- 1
Enhanced Preference Plus Income Annuities............................. FFA- 1
Experience Factor..................................................... FFA-25
Financial Freedom Account Contracts................................... FFA- 1
Financial Freedom Account Income Annuities............................ FFA- 1
Free Corridor......................................................... FFA-29
Income Annuities...................................................... FFA- 1
Separate Account...................................................... FFA-10,18
Systematic Termination................................................ FFA-29
Systematic Withdrawal Program......................................... FFA-26
Valuation Period...................................................... FFA-24
</TABLE>
FFA-4
<PAGE>
TABLE OF EXPENSES--ENHANCED TSA, ENHANCED NON-QUALIFIED, ENHANCED IRA, ENHANCED
PEDC AND ENHANCED 403(A) PREFERENCE PLUS CONTRACTS AND INCOME ANNUITIES
The following table illustrates Separate Account, Metropolitan Fund, Calvert
Social Balanced Portfolio, Calvert Social Mid Cap Growth Portfolio and Fidelity
VIP and VIPII Funds expenses for the fiscal year ending December 31, 1997:
<TABLE>
<S> <C>
CONTRACTOWNER TRANSACTION EXPENSES FOR ALL INVESTMENT DIVISIONS
CURRENTLY OFFERED
Sales Load Imposed on Purchases................................... None
Deferred Sales Load............................................... From 0% to
(as a percentage of the purchase payment funding the withdrawal 7%(a)
during the accumulation period)
Exchange Fee...................................................... None
Surrender Fee..................................................... None
ANNUAL CONTRACT FEE................................................ None
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account value)
General Administrative Expenses Charge............................ .20%(b)
Mortality and Expense Risk Charge................................. .75%(b)
Total Separate Account Annual Expenses............................ .95%
METROPOLITAN FUND ANNUAL EXPENSES
(as a percentage of average net assets)
</TABLE>
<TABLE>
<CAPTION>
OTHER EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBURSEMENT TOTAL
---------- -------------- -----
<S> <C> <C> <C>
State Street Research Income
Portfolio(c)(d)(e)........................... .33 .10 .43
State Street Research Diversified
Portfolio(c)(d)(e)........................... .44 .06 .50
MetLife Stock Index Portfolio(c).............. .25 .08 .33
State Street Research Growth
Portfolio(c)(d)(e)........................... .49 .07 .56
Janus Mid Cap Portfolio (d)(f)................ .75 .14 .89
Loomis Sayles High Yield Bond Portfolio(f).... .70 .20 .90
State Street Research Aggressive Growth
Portfolio(c)(d)(e)........................... .71 .08 .79
T. Rowe Price Small Cap Growth
Portfolio(d)(f).............................. .55 .18 .73
Scudder Global Equity Portfolio(d)(f)......... .90 .22 1.12
Santander International Stock
Portfolio(c)(d)(e)........................... .75 .28 1.03
Harris Oakmark Large Cap Value
Portfolio(d)(g).............................. .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(g)................................. .25 .20 .45
Morgan Stanley EAFE Index Portfolio(g)........ .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(d)(g).............................. .70 .20 .90
Russell 2000 Index Portfolio(g)............... .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(d)(g).............................. .70 .20 .90
</TABLE>
<TABLE>
<S> <C> <C> <C>
OTHER EXPENSES(J)
CALVERT SOCIAL BALANCED PORTFOLIO ANNUAL MANAGEMENT AFTER EXPENSE
EXPENSES(H) FEES REIMBURSEMENT TOTAL
---------- ----------------- -----
(as a percentage of average net assets) .69 .12 .81
<CAPTION>
<S> <C> <C> <C>
OTHER EXPENSES(J)
CALVERT SOCIAL MID CAP GROWTH PORTFOLIO AN- MANAGEMENT AFTER EXPENSE
NUAL EXPENSES(I) FEES REIMBURSEMENT TOTAL
---------- ----------------- -----
(as a percentage of average net assets) .90 .15 1.05
<CAPTION>
<S> <C> <C> <C>
FIDELITY VIP AND VIPII FUNDS ANNUAL
EXPENSES(K)
(as a percentage of average net assets)
<CAPTION>
MANAGEMENT OTHER
FEES EXPENSES TOTAL
---------- ----------------- -----
<S> <C> <C> <C>
Equity-Income VIP Portfolio(l)............. .50 .08 .58
Growth VIP Portfolio(l).................... .60 .09 .69
Overseas VIP Portfolio(l).................. .75 .17 .92
Investment Grade Bond VIPII Portfolio...... .44 .14 .58
Asset Manager VIPII Portfolio(l)........... .55 .10 .65
</TABLE>
11/9/98 FFA-5
<PAGE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
If you surrender your Contract at the end of
the applicable time period:
You would pay the following expenses on
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... $70 $83 $ 99 $167
State Street Research Diversified Division.. 70 85 103 174
MetLife Stock Index Division................ 69 80 93 155
State Street Research Growth Division....... 71 87 106 181
Janus Mid Cap Division...................... 74 97 -- --
Loomis Sayles High Yield Bond Division...... 75 98 -- --
State Street Research Aggressive Growth
Division................................... 73 94 118 207
T. Rowe Price Small Cap Growth Division..... 73 92 -- --
Scudder Global Equity Division.............. 77 105 -- --
Santander International Stock Division...... 76 102 131 232
Calvert Social Balanced Division............ 74 95 119 209
Calvert Social Mid Cap Growth Division...... 76 102 132 234
Fidelity Equity-Income Division............. 71 88 107 183
Fidelity Growth Division.................... 72 91 113 196
Fidelity Overseas Division.................. 75 98 125 221
Fidelity Investment Grade Bond Division..... 71 88 107 183
Fidelity Asset Manager Division............. 72 90 111 191
Harris Oakmark Large Cap Value Division..... 75 99 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 70 83 -- --
Morgan Stanley EAFE Index Division.......... 71 87 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 75 98 -- --
Russell 2000 Index Division................. 70 83 -- --
T. Rowe Price Large Cap Growth Division..... 75 98 -- --
If you annuitize at the end of the applicable
time period or do not surrender your
Contract(m):
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... $14 $44 $ 76 $167
State Street Research Diversified Division.. 15 46 80 174
MetLife Stock Index Division................ 13 41 71 155
State Street Research Growth Division....... 15 48 83 181
Janus Mid Cap Division...................... 19 58 -- --
Loomis Sayles High Yield Bond Division...... 19 59 -- --
State Street Research Aggressive Growth Di-
vision...................................... 18 55 95 207
T. Rowe Price Small Cap Growth Division..... 17 53 -- --
Scudder Global Equity Division.............. 21 66 -- --
Santander International Stock Division...... 20 63 108 232
Calvert Social Balanced Division............ 18 56 96 209
Calvert Social Mid Cap Growth Division...... 21 63 109 234
Fidelity Equity-Income Division............. 16 49 84 183
Fidelity Growth Division.................... 17 52 90 196
Fidelity Overseas Division.................. 19 59 102 221
Fidelity Investment Grade Bond Division..... 16 49 84 183
Fidelity Asset Manager Division............. 16 51 88 191
Harris Oakmark Large Cap Value Division..... 19 60 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 14 45 -- --
Morgan Stanley EAFE Index Division.......... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
11/9/98
FFA-6
<PAGE>
TABLE OF EXPENSES--FFA CONTRACTS AND INCOME ANNUITIES
The following table illustrates Separate Account, Metropolitan Fund, Calvert
Social Balanced Portfolio, Calvert Social Mid Cap Growth Portfolio and
Fidelity VIP and VIPII Funds expenses for the fiscal year ending December 31,
1997:
<TABLE>
<S> <C> <C> <C>
CONTRACTOWNER TRANSACTION EXPENSES FOR ALL INVESTMENT DIVISIONS
CURRENTLY OFFERED
Sales Load Imposed on Purchases.................................... None
Deferred Sales Load................................................ None
Exchange Fee....................................................... None
Surrender Fee...................................................... None
ANNUAL CONTRACT FEE................................................. None
SEPARATE ACCOUNT ANNUAL EXPENSES
(as a percentage of average account
value)
General Administrative Expenses Charge............................ .20%(b)
Mortality and Expense Risk Charge................................. .75%(b)
Total Separate Account Annual Expenses............................ .95%
METROPOLITAN FUND ANNUAL EXPENSES
(as a percentage of average net as-
sets)
<CAPTION>
OTHER
EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBURSEMENT TOTAL
---------- ---------------- ----------
<S> <C> <C> <C>
State Street Research Income
Portfolio(c)(d)(e).................... .33 .10 .43
State Street Research Diversified
Portfolio(c)(d)(e).................... .44 .06 .50
MetLife Stock Index Portfolio(c)....... .25 .08 .33
State Street Research Growth
Portfolio(c)(d)(e).................... .49 .07 .56
Janus Mid Cap Portfolio(d)(f).......... .75 .14 .89
Loomis Sayles High Yield Bond
Portfolio(f).......................... .70 .20 .90
State Street Research Aggressive Growth
Portfolio(c)(d)(e).................... .71 .08 .79
T. Rowe Price Small Cap Growth
Portfolio(d)(f)....................... .55 .18 .73
Scudder Global Equity Portfolio(d)(f).. .90 .22 1.12
Santander International Stock
Portfolio(c)(d)(e).................... .75 .28 1.03
Harris Oakmark Large Cap Value
Portfolio(d)(g)....................... .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(g).......................... .25 .20 .45
Morgan Stanley EAFE Index Portfolio(g). .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(d)(g)....................... .70 .20 .90
Russell 2000 Index Portfolio(g)........ .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(d)(g)....................... .70 .20 .90
<CAPTION>
OTHER
EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBURSEMENT(J) TOTAL
---------- ---------------- ----------
<S> <C> <C> <C>
CALVERT SOCIAL BALANCED PORTFOLIO ANNUAL
EXPENSES(H)
(as a percentage of average net assets) .69 .12 .81
<CAPTION>
OTHER
EXPENSES AFTER
MANAGEMENT EXPENSE
FEES REIMBURSEMENT(J) TOTAL
---------- ---------------- ----------
<S> <C> <C> <C>
CALVERT SOCIAL MID CAP GROWTH PORTFOLIO
ANNUAL EXPENSES(I)
(as a percentage of average net assets) .90 .15 1.05
<CAPTION>
<S> <C> <C> <C>
FIDELITY VIP AND VIPII FUNDS ANNUAL
EXPENSES(K)
(as a percentage of average net assets)
<CAPTION>
OTHER
EXPENSES
MANAGEMENT AFTER EXPENSE
FEES REIMBURSEMENT TOTAL
---------- ---------------- ----------
<S> <C> <C> <C>
Money Market VIP Portfolio............ .21 .10 .31
Equity-Income VIP Portfolio(l)........ .50 .08 .58
Growth VIP Portfolio(l)............... .60 .09 .69
Overseas VIP Portfolio(l)............. .75 .17 .92
Investment Grade Bond VIPII Portfolio. .44 .14 .58
Asset Manager VIPII Portfolio(l)...... .55 .10 .65
</TABLE>
11/9/98 FFA-7
<PAGE>
EXAMPLE
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
If you surrender your Contract at the end of
the applicable time period:
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... $14 $44 $76 $167
State Street Research Diversified Division.. 15 46 80 174
MetLife Stock Index Division................ 13 41 71 155
State Street Research Growth Division....... 15 48 83 181
Janus Mid Cap Division...................... 19 58 -- --
Loomis Sayles High Yield Bond Division...... 19 59 -- --
State Street Research Aggressive Growth Di-
vision...................................... 18 55 95 207
T. Rowe Price Small Cap Growth Division..... 17 53 -- --
Scudder Global Equity Division.............. 21 66 -- --
Santander International Stock Division...... 20 63 108 232
Calvert Social Balanced Division............ 18 56 96 209
Calvert Social Mid Cap Growth Division...... 21 63 109 234
Fidelity Money Market Division.............. 13 40 70 153
Fidelity Equity-Income Division............. 16 49 84 183
Fidelity Growth Division.................... 17 52 90 196
Fidelity Overseas Division.................. 19 59 102 221
Fidelity Investment Grade Bond Division..... 16 49 84 183
Fidelity Asset Manager Division............. 16 51 88 191
Harris Oakmark Large Cap Value Division..... 19 60 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion........................................ 14 45 -- --
Morgan Stanley EAFE Index Division.......... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision...................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
If you annuitize at the end of the applicable
time period or do not surrender your
Contract(m):
You would pay the following expenses on a
$1,000 investment in each investment division
listed below, assuming 5% annual return on
assets:
State Street Research Income Division....... $14 $44 $76 $167
State Street Research Diversified Division.. 15 46 80 174
MetLife Stock Index Division................ 13 41 71 155
State Street Research Growth Division....... 15 48 83 181
Janus Mid Cap Division...................... 19 58 -- --
Loomis Sayles High Yield Bond Division...... 19 59 -- --
State Street Research Aggressive Growth Di-
vision...................................... 18 55 95 207
T. Rowe Price Small Cap Growth Division..... 17 53 -- --
Scudder Global Equity Division.............. 21 66 -- --
Santander International Stock Division...... 20 63 108 232
Calvert Social Balanced Division............ 18 56 96 209
Calvert Social Mid Cap Growth Division...... 21 63 109 234
Fidelity Money Market Division.............. 13 40 70 153
Fidelity Equity-Income Division............. 16 49 84 183
Fidelity Growth Division.................... 17 52 90 196
Fidelity Overseas Division.................. 19 59 102 221
Fidelity Investment Grade Bond Division..... 16 49 84 183
Fidelity Asset Manager Division............. 16 51 88 191
Harris Oakmark Large Cap Value Division..... 19 60 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion........................................ 14 45 -- --
Morgan Stanley EAFE Index Division.......... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision...................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
- -------
(a) Under certain circumstances, the deferred sales load, termed the early
withdrawal charge in this Prospectus (See "Deductions and Charges," page
FFA-27) does not apply to 10% or 20% of the Account Balance. Under certain
other circumstances, the deferred sales load does not apply at all. There
is no deferred sales load imposed under the Enhanced Non-Qualified
Preference Plus Contract for (S)457(f) deferred compensation plans, (S)451
deferred fee arrangements, (S)451 deferred compensation plans and
(S)457(e)(11) severance and death benefit plans.
(b) Although total Separate Account annual expenses will not exceed .95% of
average account values, the allocation of these expenses between general
administrative expenses and the mortality and expense risk charges is only
an estimate. (See "Deductions and Charges," page FFA-27.)
11/9/98 FFA-8
<PAGE>
(c) Prior to May 16, 1993, MetLife paid all expenses of the Metropolitan Fund
other than management fees, brokerage commissions, taxes, interest and
any extraordinary or non-recurring expenses.
(d) The marginal rate of the investment management fee for these Portfolios
will decrease when the dollar amount in each Portfolio reaches certain
threshold amounts.
(e) Reflects 1997 management fees, restated to assume changes in management
fees, effective August 1997, had been in effect for the entire year.
(f) The Portfolios commenced operations on March 3, 1997. MetLife agreed to
bear all expenses (other than management fees, brokerage commissions,
taxes, interest and any extraordinary or non-recurring expenses) in
excess of .20% of the average net assets for each of the Loomis Sayles
High Yield Bond, T. Rowe Price Small Cap Growth, Janus Mid Cap and
Scudder Global Equity Portfolios until each Portfolio's total net assets
are at least $100 million, or until March 2, 1999, whichever is earlier.
Absent such expense reimbursement, the other expenses would have been
0.39% for the Loomis Sayles High Yield Bond Portfolio and 0.31% for the
Scudder Global Equity Portfolio. MetLife ceased subsidizing such expenses
for the Janus Mid Cap Portfolio as of December 31, 1997, the T. Rowe
Price Small Cap Growth Portfolio as of January 23, 1998 and the Scudder
Global Equity Portfolio as of July 1, 1998.
(g) The Portfolios commenced operations on November 9, 1998. Management fees
and other expenses for these Portfolios are estimated amounts for the
year ending December 31, 1998. Subject to receiving New York State
Insurance Department approval, MetLife has agreed to bear all expenses
(other than management fees, brokerage commissions, taxes, interest and
any extraordinary or non-recurring expenses) in excess of .20% of the
average net assets for each of the Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Neuberger&Berman Partners Mid Cap Value,
Russell 2000 Index and T. Rowe Price Large Cap Growth Portfolios, and
.25% of the average net assets for the Morgan Stanley EAFE Index
Portfolio until each of the Portfolio's total net assets are at least
$100 million, or until November 8, 2000, whichever is earlier.
(h) The management fees of the Calvert Social Balanced Portfolio are subject
to a performance adjustment which could cause this fee to be as high as
0.85% or as low as 0.55%, depending on the Portfolio's performance.
(i) Management and advisory expenses for the Calvert Social Mid Cap Growth
Portfolio include an administrative service fee of .10% paid to an
affiliate of Calvert. The management fees of the Calvert Social Mid Cap
Growth Portfolio are subject to a performance adjustment which could
cause this fee to be as high as 0.95% or as low as 0.85%, depending on
the Portfolio's performance.
(j) The figures are based on expenses for fiscal year 1997, and have been
restated to reflect an increase in transfer agency expenses of 0.01% for
each Portfolio expected to be incurred in 1998. "Other Expenses" reflect
an indirect fee. Net fund operating expenses after reductions for fees
paid indirectly (again, restated) would be 0.78% for the Calvert Social
Balanced Portfolio and 0.97% for the Calvert Social Mid Cap Growth
Portfolio.
(k) Each Fidelity VIP and VIPII Funds Portfolio has adopted a Distribution
and Service Plan under Rule 12b-1 under the Investment Company Act of
1940 (the "1940 Act"). No separate payments are authorized to be made by
any of the Fidelity VIP and VIPII Funds Portfolios under these plans.
Rather, the plans recognize that Fidelity Management & Research Company
("FMR") may use its management fee or other resources to pay expenses
associated with activities primarily intended to result in the sale of
the Fidelity VIP and VIPII Funds Portfolios' shares. These plans also
provide that FMR may make payments from these sources to third parties.
FMR or Fidelity Distributors Corp. makes payments to MetLife for
providing distribution and certain shareholder services for the Fidelity
VIP and VIPII Funds. Additionally, Fidelity Investments Institutional
Operations Company, Inc. makes payments to MetLife for providing
administrative services to the Fidelity VIP and VIPII Funds. You are not
responsible for these fees. FMR and its affiliates are responsible for
paying such fees to MetLife.
(l) A portion of the brokerage commissions that certain funds pay was used to
reduce fund expenses. In addition, certain funds have entered into
arrangements with their custodian and transfer agent whereby interest
earned on uninvested cash balances was used to reduce custodian and
transfer agent expenses. If these reductions had been included, the total
operating expenses presented in the table would have been 0.57% for the
Fidelity VIP Equity-Income Portfolio, 0.67% for the Fidelity VIP Growth
Portfolio, 0.90% for the Fidelity VIP Overseas Portfolio and 0.76% for
the Fidelity VIPII Asset Manager Portfolio.
(m) The annuity purchased must be a life annuity or one with a noncommutable
duration of at least five years to avoid the early withdrawal charge (see
"Exemptions from Early Withdrawal Charges," page FFA-28).
The purpose of the above tables is to assist you in understanding the
various costs and expenses that you will bear directly or indirectly. The
tables reflect expenses of the Separate Account, the Metropolitan Fund, the
Calvert Social Balanced Portfolio, Calvert Social Mid Cap Growth Portfolio and
the Fidelity VIP and VIPII Funds. They assume that there are no other
transactions. The Example is intended for illustrative purposes only; it
should not be considered a representation of past or future expenses. Actual
expenses may be higher or lower than those shown. Annuity taxes are not
reflected in the tables.
11/9/98 FFA-9
<PAGE>
...............................................................
SUMMARY
...............................................................................
THE USE OF CERTAIN TERMS IN THIS PROSPECTUS
This Prospectus describes variable accumulation and income annuity contracts
issued by Metropolitan Life Insurance Company ("MetLife," "we," "us" or
"our"). The term "Contracts" and "Income Annuities" also includes certificates
issued under certain group arrangements. Income Annuities are described
separately beginning on page FFA-32. "You" as used in this Prospectus means
the participant or annuitant for whom money is invested in a Contract or
Income Annuity. Under the Contracts and Income Annuities issued for (S)457(f)
deferred compensation plans, (S)451 deferred fee arrangements, (S)451 deferred
compensation plans and (S)457(e)(11) severance and death benefit plans, the
trustee or the employer retains all rights to control the money under the
Contract or Income Annuity. Under the Contracts and Income Annuities issued
for Public Employee Deferred Compensation plans, the employer retains all
rights to control the money under the Contract or Income Annuity. Under
several Contracts and Income Annuities issued for (S)403(b) tax sheltered
annuities, the employer retains all rights to control the money under the
Contract and Income Annuity. Under the Non-Qualified Contract and Income
Annuity for (S)415(m) qualified governmental excess benefit arrangements, the
trustee or employer retains all rights to control the money under the Contract
and Income Annuity. For these Contracts and Income Annuities, where we refer
to giving instructions or making payments to us, "you" means such trustee or
employer.
INVESTMENT CHOICES (PAGES FFA-19-23)
Each of the Contracts offers an account under which we guarantee specified
interest rates for specified periods (the "Fixed Interest Account"). This
Prospectus does not describe that account and will mention the Fixed Interest
Account only where necessary to explain how the "Separate Account" works. Each
Contract also offers a choice of investment options under which values can go
up or down based upon investment performance. See "Determining the Value of
Your Separate Account Investment," page FFA-24, for a description of
accumulation units and how these values are determined based upon investment
performance.
This Prospectus describes only the investment options available through a
"Separate Account" as distinct from the Fixed Interest Account.
A SUMMARY OF THE INVESTMENT OBJECTIVES OF THE INVESTMENT CHOICES APPEARS ON
PAGES FFA-20-21. A MORE COMPLETE DESCRIPTION OF THE INVESTMENT CHOICES IS
FOUND IN THE METROPOLITAN SERIES FUND, INC. PROSPECTUS, WHICH IS LOCATED IN
THE BACK OF THIS PROSPECTUS AND THE CALVERT SOCIAL BALANCED PORTFOLIO, CALVERT
SOCIAL MID CAP GROWTH PORTFOLIO AND FIDELITY VARIABLE INSURANCE PRODUCTS FUNDS
PROSPECTUSES, WHICH ARE DELIVERED SEPARATELY.
TAXES (PAGES FFA-41-50)
A variable annuity receives special treatment under the Federal income tax
laws. Please refer to the pages above for information concerning how the
Federal tax laws affect purchase payments and withdrawals in each particular
tax "market."
PURCHASE PAYMENTS; WITHDRAWALS AND TRANSFERS (PAGES FFA-23-24; FFA 25-27)
The Contracts allow you to make new purchase payments, to transfer money
between investment options and between the Separate Account and the Fixed
Interest Account and to withdraw money credited to you ("Account Balance").
(See "Withdrawals and Transfers," page FFA-25.) Restrictions and early
withdrawal charges may apply to withdrawals, depending on the circumstances
and your Contract. (See "Withdrawals and Transfers," page FFA-25, and
"Deductions and Charges," page FFA-27.)
DEDUCTIONS AND CHARGES (PAGES FFA-27-28)
Your Contract is subject to various charges.
Annual Contract Fees: There is no annual Contract fee. (There is a $20
annual Contract fee imposed on certain Fixed Interest Account balances.)
General Administrative Expenses and Mortality and Expense Risk Charge: .95%
on an annual basis.
Early Withdrawal Charge: A declining charge of up to 7% on amounts for the
first seven years after each purchase payment is received. (THERE IS NO
EARLY WITHDRAWAL CHARGE FOR FINANCIAL FREEDOM ACCOUNT AND ENHANCED NON-
QUALIFIED PREFERENCE PLUS CONTRACTS FOR (S)457(F) DEFERRED COMPENSATION
PLANS, (S)451 DEFERRED FEE ARRANGEMENTS, (S)451 DEFERRED COMPENSATION PLANS
AND (S)457(E)(11) SEVERANCE AND DEATH BENEFIT PLANS.)
Metropolitan Series Fund, Inc.: Management fees and other expenses.
Calvert Social Balanced Portfolio: Management fees and other expenses.
Calvert Social Mid Cap Growth Portfolio: Management fees and other expenses.
Fidelity Variable Insurance Products Funds: Management fees and other
expenses.
FFA-10
<PAGE>
...............................................................
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES (PAGES FFA-28-30)
A withdrawal or transfer may not result in an early withdrawal charge.
Provisions are more fully described within this Prospectus. A summary appears
below.
(a) Withdrawals or transfers without a charge for All Markets:
Item 1--Transfers among investment divisions or to the Fixed Interest
Account.
Item 2--Withdrawals that represent purchase payments made over seven years
ago.
Item 3--Free Corridor
Item 4--Free Look
Item 5--Certain Income Annuities
Item 6--Death Benefit
Item 7--Mandated Withdrawals under Federal law
Item 9--Disability
(b) Withdrawals or Transfers without a charge for the Non-Qualified market--
(in addition to (a) above):
Item 10--Retirement
Item 11--Separation from Service
(c) Withdrawals or transfers without a charge for the 403(b) and 403(a)
markets--(in addition to (a) above):
Item 8--Systematic Termination
Item 10--Retirement
Item 11--Separation from Service
Item 12--Plan Termination
Item 13--Hardship
Item 14--Pre-Approved Investment Vehicles
Item 15--Pre-Approved Plan Provison
(d) Withdrawals or Transfers without a charge for the Public Employee
Deferred Compensation Market--(in addition to (a) above):
Item 8--Systematic Termination
Item 10--Retirement
Item 11--Separation from Service
Item 12--Plan Termination
Item 13--Hardship
Item 14--Pre-Approved Investment Vehicles
DEATH BENEFIT (PAGES FFA-30-31)
Each Contract (other than the Enhanced Non-Qualified Preference Plus Contract
for (S)457(f), deferred compensation plans, (S)451 deferred fee arrangements,
(S)451 deferred compensation plans, and (S)457(e)(11) severance and death
benefit plans) offers a death benefit that guarantees certain payments in case
of your death even if the Account Balance has fallen below that amount.
INCOME ANNUITIES (PAGE FFA-32)
You may use your money to obtain payments guaranteed for life or for certain
other periods (an annuity). These payments may be either for specified, fixed
amounts or for amounts that can go up or down based on the investment
performance of a choice of investment options in the Separate Account
("variable income option"). You may purchase an Income Annuity if you did not
have a Contract during the accumulation period. Your Income Annuity is subject
to various charges. (See "Income Annuities--Deductions and Charges," page FFA-
34.)
FFA-11
<PAGE>
ACCUMULATION UNIT VALUES FOR EACH INVESTMENT DIVISION BY CONTRACT
(For an accumulation unit outstanding throughout the period)
The following information has been derived from the Separate Account's
full financial statements, which statements are annually audited by Deloitte &
Touche LLP, independent auditors, as stated in their report appearing with the
full financial statements and related notes in the Statement of Additional
Information or as previously stated in earlier reports.
<TABLE>
<CAPTION>
Number of
Enhanced TSA, Enhanced Accumulation Accumulation Accumulation
Non-Qualified and Enhanced 403(a) Unit Value Unit Value Units End of Year
Preference Plus Contracts(a) Year Beginning of Year End of Year (in thousands
- --------------------------------- ---- ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
State Street Research 1997 $30.13 $32.77 314
Income Division 1996 29.36 30.13 272
1995 24.79 29.36 213
1994 25.83 24.79 155
1993 23.43 25.83 111
1992 22.12 23.43 51
1991 19.02 22.12 3
1990 17.91(b) 19.02 0
State Street Research 1997 28.11 33.57 515
Diversified Division 1996 24.78 28.11 365
1995 19.69 24.78 333
1994 20.51 19.69 241
1993 18.36 20.51 125
1992 16.93 18.36 28
1991 13.68 16.93 3
1990 14.34(b) 13.68 0
MetLife Stock Index Division 1997 24.83 32.50 2,504
1996 20.44 24.83 1,648
1995 15.07 20.44 1,062
1994 15.04 15.07 631
1993 13.86 15.04 507
1992 13.02 13.86 260
1991 10.13 13.02 0
1990 10.85(b) 10.13 0
State Street Research 1997 47.19 60.00 656
Growth Division 1996 38.99 47.19 436
1995 29.57 38.99 324
1994 30.85 29.57 197
1993 27.22 30.85 123
1992 24.63 27.22 47
1991 18.67 24.63 7
1990 21.66(b) 18.67 0
Janus Mid Cap Division 1997 10.00(h) 12.72 167
Loomis Sayles High Yield Bond Division 1997 10.00(h) 10.53 49
State Street Research 1997 35.98 38.02 1,572
Aggressive Growth Division 1996 33.72 35.98 1,396
1995 26.29 33.72 997
1994 27.05 26.29 625
1993 22.26 27.05 358
1992 20.37 22.26 134
1991 12.35 20.37 7
1990 14.85(b) 12.35 0
</TABLE>
FFA-12
<PAGE>
<TABLE>
<CAPTION> Number of
Enhanced TSA, Enhanced Accumulation Accumulation Accumulation
Non-Qualified and Enhanced 403(a) Unit Value Unit Value Units End of Year
Preference Plus Contracts(a) Year Beginning of Year End of Year in thousands)
- --------------------------------- ---- ----------------- ------------ -----------------
<S> <C> <C> <C> <C>
T. Rowe Price Small Cap Growth Division 1997 10.00(h) 11.79 279
Scudder Global Equity Division 1997 10.00(h) 10.88 120
Santander International Stock Division 1997 13.99 13.54 853
1996 14.38 13.99 868
1995 14.40 14.38 814
1994 13.84 14.40 558
1993 9.45 13.84 191
1992 10.63 9.45 50
1991 10.00(c) 10.63 4
Calvert Social Balanced Division 1997 17.08 20.32 225
1996 15.31 17.08 179
1995 11.91 15.31 129
1994 12.43 11.91 90
1993 11.62 12.43 66
1992 10.90 11.62 27
1991 10.00(d) 10.90 2
Calvert Social Mid Cap Growth Division 1997 16.81 20.58 80
1996 15.80 16.81 57
1995 11.43 15.80 18
1994 12.81 11.43 2
1993 12.03 12.81 1
1992 10.78(e) 12.03 0
Fidelity Money Market Division(f) 1997 11.85 12.24 0
1996 11.46 11.85 0
1995 11.02 11.46 0
1994 10.72 11.02 12
1993 10.50 10.72 0
1992 10.33 10.50 0
Fidelity Equity-Income Division 1997 23.99 30.45 2,476
1996 21.19 23.99 1,775
1995 15.84 21.19 1,200
1994 15.02 15.84 513
1993 12.83 15.02 195
1992 11.75(e) 12.83 27
Fidelity Growth Division 1997 23.95 29.30 2,249
1996 21.08 23.95 1,757
1995 15.72 21.08 1,218
1994 15.87 15.72 641
1993 13.43 15.87 290
1992 12.05(e) 13.43 93
Fidelity Overseas Division 1997 16.08 17.77 647
1996 14.34 16.08 397
1995 13.20 14.34 197
1994 13.10 13.20 93
1993 9.63 13.10 27
1992 11.22(e) 9.63 4
</TABLE>
FFA-13
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------
Number of
Enhanced TSA, Enhanced Accumulation Accumulation Accumulation
Non-Qualified and Enhanced 403(a) Unit Value Unit Value Units End of Year
Preference Plus Contracts(a) Year Beginning of Year End of Year (in thousands)
- ---------------------------------- ---- ----------------- ------------ ---------------
<S> <C> <C> <C> <C>
Fidelty Investment Grade Bond Division 1997 14.46 15.62 235
1996 14.15 14.46 165
1995 12.17 14.15 89
1994 12.77 12.17 24
1993 11.62 12.77 7
1992 10.99(e) 11.62 1
Fidelty Asset Manager Division 1997 17.52 20.94 1,346
1996 15.44 17.52 1,118
1995 13.32 15.44 1,066
1994 14.32 13.32 728
1993 11.94 14.32 292
1992 11.23(e) 11.94 81
</TABLE>
In addition to the above mentioned Accumulation Units, there were cash
reserves of $14,503,548 as of December 31, 1997 applicable to income Annuities
(including those not described in this Prospectus) receiving annuity payouts.
- --------------------------------------------------------------------------------
ENHANCED TSA, ENHANCED NON-QUALIFIED
AND ENHANCED 403(a) PREFERENCE PLUS CONTRACTS
ENDING ACCUMULATION UNIT VALUES
[LINE GRAPH APPEARS HERE]
<TABLE>
1990 1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C>
State Street Research Income 19.02 22.12 23.43 25.83 24.79 29.36 30.13 32.77
State Street Research Diversified 13.68 16.93 18.36 20.51 19.69 24.78 28.11 33.57
MetLife Stock Index 10.13 13.02 13.86 15.04 15.07 20.44 24.83 32.5
State Street Research Growth 18.67 24.63 27.22 30.85 29.57 38.99 47.19 60
Janus Mid Cap 12.72
Loomis Sayles High Yield Bond 10.53
State Street Research Aggressive Growth 12.35 20.37 22.26 27.05 26.29 33.72 35.98 38.02
T.Rowe Price Small Cap Growth 11.79
Scudder Global Equity 10.88
Santander International Stock 10.63 9.45 13.84 14.4 14.38 13.99 13.54
Calvert Social Balanced 10.9 11.62 12.43 11.91 15.31 17.08 20.32
Calvert Social Mid Cap Growth 12.03 12.81 11.46 15.8 16.81 20.58
</TABLE>
FFA-14
<PAGE>
ENHANCED TSA, ENHANCED NON-QUALIFIED
AND ENHANCED 403(a) PREFERENCE PLUS CONTRACTS
ENDING ACCUMULATION UNIT VALUES
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Fidelity Money Market 10.22 10.5 10.72 11.02 11.46 11.85 12.24
Fidelity Equity Income 12.83 15.02 15.84 21.08 23.99 30.45
Fidelity Growth 13.43 15.87 15.72 21.08 23.95 29.3
Fidelity Overseas 9.63 13.1 13.2 14.34 16.08 17.77
Fidelity Investment Grade Bond 11.62 12.77 12.17 14.15 14.46 15.62
Fidelity Asset Manager 11.94 14.32 13.32 15.44 17.52 20.94
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------
Accumulation Accumulation
Unit Value Accumulation Units
Beginning of Unit Value End of Year
Financial Freedom Account Contracts Year Year End of Year (in thousands)
- ----------------------------------- ---- ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
State Street Research Income Division 1997 $30.13 $32.77 5
1996 29.36(g) 30.13 0
State Street Research Diversified Division 1997 28.11 33.57 20
1996 24.78(g) 28.11 0
MetLife Stock Index Division 1997 21.18 27.72 799
1996 17.43 21.18 514
1995 12.86 17.43 310
1994 12.83 12.86 226
1993 11.82 12.83 150
1992 11.11 11.82 1,999
1991 10.00(c) 11.11 2,181
State Street Research Growth Division 1997 47.19 60.00 32
1996 38.99(g) 47.19 0
Janus Mid Cap Division 1997 10.00(h) 12.72 52
Loomis Sayles High Yield Bond Division 1997 10.00(h) 10.53 8
State Street Research 1997 35.98 38.02 14
Aggressive Growth Division 1996 33.72(g) 35.98 3
T. Rowe Price Small Cap Growth Division 1997 10.00(h) 11.79 108
Scudder Global Equity Division 1997 10.00(h) 10.88 56
Santander International Stock Division 1997 13.99 13.54 10
1996 14.38(g) 13.99 0
Calvert Social Balanced Division 1997 17.11 20.35 162
1996 15.34 17.11 120
1995 11.93 15.34 82
1994 12.45 11.93 56
1993 11.63 12.45 35
1992 10.91 11.63 22
1991 10.00(c) 10.91 0
Calvert Social Mid Cap Growth Division 1997 16.81 20.58 118
1996 15.80 16.81 108
1995 11.43 15.80 62
1994 12.81 11.43 44
1993 12.03 12.81 29
1992 10.67 12.03 16
1991 10.00(c) 10.67 0
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
FFA-15
11\9\98
<PAGE>
<TABLE>
<CAPTION>
Accumulation Accumulation
Unit Value Accumulation Units
Beginning of Unit Value End of Year
Financial Freedom Account Contracts Year Year End of Year (in thousands
- ----------------------------------- ---- -------------- ------------ -------------
<S> <C> <C> <C> <C>
Fidelity Money Market Division 1997 11.85 12.24 81
1996 11.46 11.85 101
1995 11.02 11.46 41
1994 10.72 11.02 26
1993 10.50 10.72 19
1992 10.22 10.50 12
1991 10.00(c) 10.22 1,146
Fidelity Equity-Income Division 1997 23.99 30.45 906
1996 21.19 23.99 659
1995 15.84 21.19 445
1994 15.02 15.84 270
1993 12.83 15.02 165
1992 11.07 12.83 66
1991 10.00(c) 11.07 4
Fidelity Growth Division 1997 23.95 29.30 1,317
1996 21.08 23.95 1,058
1995 15.72 21.08 762
1994 15.87 15.72 508
1993 13.43 15.87 317
1992 12.40 13.43 136
1991 10.00(c) 12.40 30
Fidelity Overseas Division 1997 16.08 17.77 508
1996 14.34 16.08 365
1995 13.20 14.34 259
1994 13.10 13.20 197
1993 9.63 13.10 98
1992 10.89 9.63 24
1991 10.00(c) 10.89 4
Fidelity Investment Grade Bond Division 1997 14.46 15.62 170
1996 14.15 14.46 133
1995 12.17 14.15 115
1994 12.77 12.17 72
1993 11.62 12.77 46
1992 11.00 11.62 25
1991 10.00(c) 11.00 2
Fidelity Asset Manager Division 1997 17.52 20.94 816
1996 15.44 17.52 742
1995 13.32 15.44 600
1994 14.32 13.32 511
1993 11.94 14.32 309
1992 10.78 11.94 111
1991 10.00(c) 10.78 12
</TABLE>
In addition to the above mentioned Accumulation Units, there were cash
reserves of $14,503,548 as of December 31, 1997 applicable to Income
Annuities (including those not described in this Prospectus) receiving
annuity payouts.
FFA-16
<PAGE>
- ------------------
(a) Not all investment divisions are offered under the various Enhanced
Preference Plus Contracts. See "Your Investment Choices," page FFA-19.
(b) Inception Date July 2, 1990.
(c) Inception Date July 1, 1991. Sales commenced for Enhanced Non-Qualified
Preference Plus Contracts for (S)457(f) deferred compensation plans, (S)451
deferred fee arrangements, (S)451 deferred compensation plans, and (S)451
(e)(11) severance and death benefit plans in 1991.
(d) Inception Date May 1, 1991.
(e) Inception Date May 1, 1992.
(f) No longer offered under the Enhanced Preference Plus Contracts.
(g) Inception Date May 1, 1996.
(h) Inception Date March 3, 1997.
FINANCIAL FREEDOM ACCOUNT CONTRACTS
ENDING ACCUMULATION UNIT VALUES
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
State Street Research Income 30.13 32.77
State Street Research Diversified 28.11 33.57
MetLife Stock Index 11.11 11.82 12.83 12.86 17.43 21.18 27.72
State Street Research Growth 47.19 60
Janus Mid Cap 12.72
Loomis Sayles High Yield Bond 10.53
State Street Research Aggressive Growth 35.98 38.02
T. Rowe Price Small Cap Growth 11.79
Scudder Global Equity 10.88
Santander International Stock 13.99 13.54
</TABLE>
FINANCIAL FREEDOM ACCOUNT CONTRACTS
ENDING ACCUMULATION UNIT VALUES
[BAR GRAPH APPEARS HERE]
<TABLE>
<CAPTION>
1991 1992 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C>
Calvert Social Balanced 10.91 11.63 12.45 11.93 15.34 17.11 20.35
Calvert Social Mid Cap Growth 10.67 12.03 12.81 11.43 15.8 16.81 20.58
Fidelity Money Market 10.22 10.5 10.72 11.02 11.46 11.85 12.24
Fidelity Equity-Income 11.07 12.83 15.02 15.84 21.19 23.99 30.45
Fidelity Growth 12.4 13.43 15.87 15.72 21.08 23.95 29.3
Fidelity Overseas 10.89 9.63 13.1 13.2 14.34 16.08 17.77
Fidelity Investment Grade Bond 11 11.62 12.77 12.17 14.15 14.46 15.62
Fidelity Asset Manager 10.78 11.94 14.32 13.32 15.44 17.52 20.94
</TABLE>
Financial Statements
The financial statements for the Separate Account and MetLife are in the
Statement of Additional Information and are available upon request from MetLife.
11/9/98 FFA-17
<PAGE>
...............................................................
OUR COMPANY AND THE SEPARATE ACCOUNT
................................................................................
WHO IS METLIFE?
We are a mutual life insurance company whose principal office is at One
Madison Avenue, New York, N.Y. 10010. We were formed in 1868 in New York and
operate as a life insurance company in all 50 states, the District of Columbia,
Puerto Rico and all provinces of Canada. MetLife, serving millions of people,
is one of the largest financial services companies in the world with many of
the largest United States corporations for its clients. As of December 31,
1997, we had approximately $330.3 billion in assets under management.
WHAT IS THE SEPARATE ACCOUNT?
We organized the Separate Account on September 27, 1983. It is an investment
account that we maintain separate from our other assets. It is registered with
the Securities and Exchange Commission as a unit investment trust under the
1940 Act. All income, gains and losses, whether or not realized, from the
Separate Account's assets are credited to or charged against the Separate
Account, without regard to our other business. In other words, the Separate
Account's assets are solely for the benefit of those who invest in the Separate
Account and no one else, including our creditors. Our obligation to honor all
of our promises under the Contracts and Income Annuities is not limited by the
amount of assets in the Separate Account.
FFA-18
<PAGE>
SECTION I: THE DEFERRED CONTRACTS DESCRIBED IN THIS PROSPECTUS
WHAT ARE THE CONTRACTS?
The Contracts offer you the choice of an account that pays interest
guaranteed by MetLife (the Fixed Interest Account) or an account offering a
range of investment choices where performance is not guaranteed. The Contracts
are called "annuities" since they offer a variety of payment options, including
guaranteed income for life.
We offer many types of Contracts to meet your needs. These Contracts include
Tax Sheltered Annuities (TSAs) under (S)403(b) of the Internal Revenue Code
("Code"), Qualified Annuity Plans (403(a)) under (S)403(a), Tax Deferred
Annuities (Non-Qualified) under (S)72, Individual Retirement Annuities (IRAs)
under (S)408(b), Public Employee Deferred Compensation (PEDC) under (S)457, Tax
Deferred Annuities (Non-Qualified) under (S)72 for (S)457(f) deferred
compensation plans, (S)451 deferred fee arrangements, (S)451 deferred
compensation plans, (S)457(e)(11) severance and death benefit plans, and Tax
Deferred Annuities (Non-Qualified) under (S)72 for (S)415(m) qualified
governmental excess benefit arrangements. These are group Contracts offered to
an employer, association, trust or other group for its employees, members,
participants or independent contractors or employees of the grantor of the
trust. These Contracts may be issued to a bank that does nothing but hold them
as contractholder. Enhanced Non-Qualified Contracts for (S)457(e)(11) severance
and death benefit plans are no longer currently offered for purchase.
This Prospectus covers two categories of Contracts: certain Enhanced
Preference Plus Contracts and FFA Contracts (the latter being available only to
a limited number of TSA plans, (S)403(a) plans, (S)457(f) deferred compensation
plans, (S)451 deferred fee arrangements, (S)451 deferred compensation plans,
(S)457(e)(11) severance and death benefit plans and (S)415(m) qualified
governmental excess benefit arrangements). Make sure you read the descriptions
that apply to your Contract. The Contracts have a reduced general
administrative expenses and mortality and expense risk charge as a result of
reduced administration expenses. Differences between the Contracts include what
investment choices are available, what rights you have to withdraw or transfer
money, and a number of other features.
The following sections of this Prospectus will describe in more detail the
investment options, minimum and maximum purchase payments, how the value of
your Contract is determined, withdrawal and transfer rights, death benefits,
charges and expenses, income options and many other important features. It will
occasionally refer to the Fixed Interest Account. However, this Prospectus does
not describe that account.
MAY THE CONTRACTS BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. If your purchase payments are made under a retirement plan, the Contract
may provide that all or some of your rights as described in this Prospectus are
subject to the terms of the plan. You should consult the plan document to
determine whether there are any provisions under your plan that may limit or
affect the exercise of your rights under the Contract. Rights that may be
affected include those concerning purchase payments, withdrawals, transfers,
the death benefit and income annuity types. For example, if part of your
Account Balance represents non-vested employer contributions, you may not be
permitted to withdraw these amounts and the early withdrawal charge
calculations may not include all or part of the employer contributions. The
Contract may provide that a plan administrative fee will be paid by making a
withdrawal from your Account Balance. The Contract may require that you or your
beneficiary obtain a signed authorization from your employer or plan
administrator to exercise certain rights. Your Contract will indicate under
which circumstances this is the case. We may rely on your employer's or plan
administrator's statements to us as to the terms of the plan or your
entitlement to any amounts. We will not be responsible for determining what
your plan says.
YOUR INVESTMENT CHOICES
................................................................................
WHAT ARE THE INVESTMENT CHOICES AND HOW DO WE PROVIDE THEM?
The investment choices are provided through our Separate Account. Divisions
available for new investments for the Enhanced Preference Plus Contracts are
the State Street Research Income, State Street Research Diversified, State
Street Research Growth, State Street Research Aggressive Growth, MetLife Stock
Index, Santander International Stock, Calvert Social Balanced, Calvert Social
Mid Cap Growth, Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price
Small Cap Growth, Scudder Global Equity, the Harris Oakmark Large Cap Value,
Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe Price
Large Cap Growth Divisions. In some cases, the Fidelity Equity-Income, Growth,
Overseas, Investment Grade Bond and Asset Manager Divisions are also available
for the Enhanced Preference Plus Contracts. Divisions available for the FFA
Contracts are the MetLife Stock Index, Loomis Sayles High Yield Bond, Janus Mid
Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, Harris Oakmark
Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE
Index, Neuberger&Berman Partners Mid Cap Value, Russell
11/9/98 FFA-19
<PAGE>
...............................................................
2000 Index and T. Rowe Price Large Cap Growth Divisions, and both Calvert
Divisions and the five Fidelity Divisions. In some cases, the State Street
Research Income, State Street Research Diversified, State Street Research
Growth, State Street Research Aggressive Growth and Santander International
Stock Divisions and the Fidelity Money Market Division are also available for
the FFA Contracts. Your employer, association or group may have limited the
number of available divisions. Your Contract will indicate the divisions
available to you when we issued it. We may add or eliminate divisions for some
or all persons.
The divisions do not invest directly in stocks, bonds or other investments.
Instead they buy and sell shares of mutual fund portfolios that in turn do the
investing. The portfolios are part of the Metropolitan Fund, the Calvert
Variable Series, Inc., and the Fidelity VIP and VIPII Funds as shown on page 1.
All dividends declared by any of the portfolios are earned by the Separate
Account and reinvested. Therefore, no dividends are distributed under the
Contracts. No sales or redemption charges apply to our purchase or sale through
the Separate Account of these mutual fund shares. These mutual funds are
available only through the purchase of annuities and life insurance policies
and are never sold directly to the public. These mutual funds are "series"
types of funds registered with the Securities and Exchange Commission as "open-
end management investment companies" under the 1940 Act. Except for the Janus
Mid Cap, Calvert Social Balanced and Calvert Social Mid Cap Growth Portfolios,
each fund is "diversified" under the 1940 Act. Each division invests in shares
of a comparably named portfolio.
A summary of the investment objectives of the currently available portfolios
is as follows:
State Street Research Income Portfolio: Seeks a) the highest possible return,
by combining current income with capital gains, consistent with prudent
investment risk, and b) secondarily, the preservation of capital by investing
at least 75% of its total assets in non-convertible debt securities in the
three highest rating categories as determined by a nationally recognized
statistical rating organization, or of comparable quality.
State Street Research Diversified Portfolio: Seeks a high total return while
attempting to limit investment risk and preserve capital by investing 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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the Standard &
Poor's 500 Composite Stock Price Index ("S&P 500 Index") by normally investing
most of its assets in common stocks included in the S&P 500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital and
income, and moderate current income. Generally, the greatest portion of the
Portfolio's assets will be invested in equity securities of good quality where
the stock price represents a good value based on considerations such as price
to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of medium
capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by normally
investing at least 65% of its assets in below investment grade fixed income
securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks and
other securities convertible into or carrying the right to acquire common
stocks of less mature companies with the potential for rapid growth and
companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group of
small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of capital
by generally investing most of its assets in equity securities (primarily
common stock) of established companies listed on U.S. or foreign securities
exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital by
normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total assets
in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of the
Lehman Brothers Aggregate Bond Index. The Portfolio will normally invest most
of its assets in fixed income securities included in the Lehman Brothers
Aggregate Bond Index.
11/9/98 FFA-20
<PAGE>
...............................................................
...............................................................
Morgan Stanley EAFE Index Portfolio: To equal the return of the Morgan Stanley
Capital International Europe, Australasia, Far East (MSCI EAFE) Index. The
Portfolio will normally invest most of its assets in equity securities included
in the MSCI EAFE Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital growth.
The Portfolio will normally invest at least 65% of its total assets in common
stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000 Index.
The Portfolio will normally invest most of its assets in common stocks included
in the Russell 2000 Index.
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at least
65% of its total assets in a diversified group of large capitalization growth
companies.
Calvert Social Balanced Portfolio: To achieve a total return above the rate of
inflation through an actively managed, non-diversified portfolio of common and
preferred stocks, bonds and money market instruments which offer income and
capital growth opportunity and which satisfy the social concern criteria
established for the Calvert Social Balanced Portfolio.
Calvert Social Mid Cap Growth Portfolio: To achieve long-term capital
appreciation by investing primarily in a non-diversified portfolio of equity
securities of mid-sized companies.
Fidelity's VIP Money Market Portfolio: To achieve as high a level of current
income as is consistent with preserving capital and providing liquidity.
Fidelity's VIP Equity-Income Portfolio: To achieve reasonable income by
investing primarily in income-producing equity securities.
Fidelity's VIP Growth Portfolio: To achieve capital appreciation.
Fidelity's VIP Overseas Portfolio: To achieve long-term growth of capital
primarily through investments in foreign securities.
Fidelity's VIPII Investment Grade Bond Portfolio: To achieve as high a level of
current income as is consistent with the preservation of capital by investing
in a broad range of investment-grade fixed-income securities.
Fidelity's VIPII Asset Manager Portfolio: To achieve high total return with
reduced risk over the long-term by allocating its assets among domestic and
foreign stocks, bonds and short-term money market instruments.
Each of the currently available Metropolitan Fund Portfolios pays us, the
investment manager of the Metropolitan Fund, an investment management fee. For
providing investment management services to the Lehman Brothers Aggregate Bond
Index, MetLife Stock Index and Russell 2000 Index Portfolios, we receive
monthly compensation from each Portfolio at an annual rate of .25% of the
average daily value of the aggregate net assets of each Portfolio. For
providing investment management services to the Morgan Stanley EAFE Index
Portfolio, we receive monthly compensation from the Portfolio at an annual rate
of .30% of the average daily assets of the aggregate net assets of the
Portfolio. For providing investment management services to the State Street
Research Growth Portfolio, we receive monthly compensation from the Portfolio
at an annual rate of .55% of the average daily value of the aggregate net
assets of the Portfolio up to $500 million, .50% of such assets on the next
$500 million and .45% of such assets on amounts over $1 billion. For providing
investment management services to the State Street Research Income Portfolio,
we receive monthly compensation from the Portfolio at an annual rate of .35% of
the average daily value of the aggregate net assets up to $250 million, .30% of
such assets on the next $250 million and .25% of such assets on amounts over
$500 million. For providing investment management services to the State Street
Research Diversified Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .50% of the average daily value of the aggregate
net assets of the Portfolio up to $500 million, .45% of such assets on the next
$500 million and .40% of such assets on amounts over $1 billion. For providing
investment management services to the State Street Research Aggressive Growth
Portfolio, we receive monthly compensation at an annual rate of .75% of the
average daily value of the aggregate net assets of the Portfolio up to $500
million, .70% of such assets on the next $500 million and .65% of such assets
on amounts over $1 billion. We pay State Street Research & Management Company,
one of our subsidiaries, to provide us with sub-investment management services
for the State Street Research Income, State Street Research Diversified, State
Street Research Growth and State Street Research Aggressive Growth Portfolios.
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. Effective on or about
November 9, 1998, Santander Global Advisors, Inc., of which MetLife owns 25% of
the outstanding common stock, became the sub-investment manager for the
Santander International Stock Portfolio.
11/9/98 FFA-21
<PAGE>
...............................................................
For providing investment management services to the Loomis Sayles High Yield
Bond Portfolio, we receive monthly compensation from the Portfolio at an annual
rate of .70% of the average daily value of the aggregate net assets of the
Portfolio. Loomis, Sayles & Company, L.P., whose general partner is indirectly
owned by MetLife, is the sub-investment manager with respect to the Loomis
Sayles High Yield Bond Portfolio. For providing investment management services
to the Janus Mid Cap Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .75% of the average daily value of the aggregate
net assets of the Portfolio up to $100 million, .70% of such assets on the next
$400 million and .65% of such assets on amounts in excess of $500 million.
Janus Capital Corporation is the sub-investment manager for the Janus Mid Cap
Portfolio. For providing investment management services to the T. Rowe Price
Small Cap Growth Portfolio, we receive monthly compensation from the Portfolio
at an annual rate of .55% of the average daily value of the aggregate net
assets of the Portfolio up to $100 million, .50% of such assets on the next
$300 million and .45% of such assets in excess of $400 million. For providing
investment management services to the T. Rowe Price Large Cap Growth Portfolio,
we receive monthly compensation from the Portfolio at an annual rate of .70% of
the average daily value of the aggregate net assets of the Portfolio up to $50
million and .60% of such assets in excess of $50 million. T. Rowe Price
Associates, Inc. is the sub-investment manager for the T. Rowe Price Small Cap
Growth and the T. Rowe Price Large Cap Growth Portfolios.
For providing investment management services to the Scudder Global Equity
Portfolio, we receive monthly compensation from the Portfolio at an annual rate
of .90% of the average daily value of the aggregate net assets of the Portfolio
up to $50 million, .55% of such assets on the next $50 million, .50% of such
assets on the next $400 million and .475% of such assets on amounts in excess
of $500 million. Scudder Kemper Investments, Inc. (formerly Scudder, Stevens &
Clark, Inc.) is the sub-investment manager for the Scudder Global Equity
Portfolio.
For providing investment management services to the Harris Oakmark Large Cap
Value Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets of
the Portfolio up to $250 million and .70% of such assets in excess of $250
million. Harris Associates L.P., whose general partner is indirectly owned by
MetLife, is the sub-investment manager with respect to the Harris Oakmark Large
Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman Partners
Mid Cap Value Portfolio, we receive monthly compensation from the Portfolio at
an annual rate of .70% of the average daily value of the aggregate net assets
of the Portfolio up to $100 million, .675% of such assets on the next $250
million, .65% of such assets on the next $500 million, .625% of such assets on
the next $750 million and .60% of such assets over $1.6 billion.
Neuberger&Berman Management Incorporated is the sub-investment manager for the
Neuberger&Berman Partners Mid Cap Value Portfolio.
Sub-investment management services are provided to us and we pay fees for
such services according to contracts between us and each of the sub-investment
managers. Sub-investment management fees are solely our responsibility, not
that of the Metropolitan Fund.
Similarly, the Calvert Social Balanced Portfolio pays Calvert, the Calvert
Social Balanced Portfolio's investment adviser, a base monthly investment
advisory fee equivalent to an annual rate of .70% of the first $500 million of
the average daily net assets of the Calvert Social Balanced Portfolio, .65% of
the next $500 million and .60% of the remainder. In addition, the Calvert
Social Balanced Portfolio pays Calvert a performance fee adjustment based on
the extent to which performance of the Calvert Social Balanced Portfolio
exceeds or trails the Lipper Balanced Funds Index as follows:
<TABLE>
<CAPTION>
PERFORMANCE PERFORMANCE
VERSUS THE FEE
LIPPER BALANCED FUNDS INDEX ADJUSTMENT
- --------------------------- -----------
<S> <C>
at least 6%, but less than 12%...................................... .05%
at least 12%, but less than 18%..................................... .10%
more than 18%....................................................... .15%
</TABLE>
Payment by the Calvert Social Balanced Portfolio of the performance
adjustment will be conditioned on: (1) the performance of the Portfolio as a
whole having exceeded the Lipper Balanced Funds Index; and (2) payment of the
performance adjustment not causing the Calvert Social Balanced Portfolio's
performance to fall below the Lipper Balanced Funds Index.
Calvert pays sub-investment advisory fees to NCM Capital Management Group,
Inc. consisting of a base fee and a performance fee adjustment based on the
extent to which performance of the Calvert Social Balanced Portfolio exceeds or
trails the Lipper Balanced Funds Index. These fees are solely the
responsibility of Calvert, not the Calvert Social Balanced Portfolio.
The Calvert Social Mid Cap Growth Portfolio pays Calvert, the Calvert Social
Mid Cap Growth Portfolio's investment advisor, a monthly investment advisory
fee
11/9/98 FFA-22
<PAGE>
...............................................................
equivalent to an annual rate of .80% of the Portfolio's average daily net
assets. In addition, the Calvert Social Mid Cap Growth Portfolio will pay
Calvert a performance fee adjustment based on the extent to which performance
of the Calvert Social Mid Cap Growth Portfolio exceeds or trails the Standard
& Poor's 400 Mid-Cap Index (S&P 400 Mid-Cap Index) as follows:
<TABLE>
<CAPTION>
PERFORMANCE
PERFORMANCE VERSUS THE FEE
S&P 400 MID-CAP INDEX ADJUSTMENT
- ---------------------- -----------
<S> <C>
less than 10%....................................................... 0.00%
at least 10%, but less than 25%..................................... 0.01%
at least 25%, but less than 40%..................................... 0.03%
40% or more......................................................... 0.05%
</TABLE>
Calvert pays sub-investment advisory fees to Brown Capital Management, Inc.
consisting of a base fee and a performance fee adjustment based on the extent
to which performance of the Calvert Social Mid Cap Growth Portfolio exceeds or
trails the S&P 400 Mid-Cap Index. These fees are solely the responsibility of
Calvert, not the Calvert Social Mid Cap Growth Portfolio.
Fidelity's VIP Equity-Income, VIP Growth, VIP Overseas and VIPII Asset
Manager Portfolios pay FMR an investment management fee which is the sum of a
group fee rate based on the monthly average net assets of all the mutual funds
advised by FMR (this rate cannot rise above .52%, and it drops as total assets
under management increase) and an individual fee of .20% for Fidelity's VIP
Equity-Income Portfolio, .30% for Fidelity's VIP Growth Portfolio, .45% for
Fidelity's VIP Overseas Portfolio and 25% for Fidelity's VIPII Asset Manager
Portfolio of the average net assets throughout the month. FMR pays sub-
investment management fees to Fidelity Management & Research (U.K.) Inc. and
Fidelity Management & Research (Far East) Inc. for Fidelity's VIP Overseas and
VIPII Asset Manager Portfolios and to Fidelity International Investment
Advisors for Fidelity's VIP Overseas Portfolio, but these fees are the sole
responsibility of FMR, not the Fidelity VIP or VIPII Funds. Fidelity's VIP
Money Market Portfolio and VIPII Investment Grade Bond Portfolio pay FMR an
investment management fee which is also the sum of a group fee rate based on
the monthly average net assets of all the mutual funds advised by FMR and an
individual rate. The group fee cannot rise above .37% and it drops as total
assets under management increase, and the individual rate is .03% and .30%, of
Fidelity's VIP Money Market and VIPII Investment Grade Bond Portfolios'
average net assets throughout the month, respectively. In addition to the sum
of the group and individual fee rates, Fidelity's VIP Money Market Portfolio's
fee may be affected by an income component. If the portfolio's gross yield is
5% or less, the sum of the group and individual fee rate is the management
fee. The income-based component is added to the basic fee only when the
portfolio's yield is greater than 5%. The income-based fee is 6% of that
portion of the portfolio's yield that represents a gross yield of more than 5%
per year. The maximum income-based component is .24%. FMR pays a sub-
investment management fee to Fidelity Investments Money Management, Inc.
(formerly FMR Texas) Inc. for Fidelity's VIP Money Market Portfolio, but these
fees are the sole responsibility of FMR, not the Fidelity VIP or VIPII Funds.
The Metropolitan Fund, the Calvert Social Balanced Portfolio, Calvert Social
Mid Cap Growth Portfolio and the Fidelity VIP and VIPII Funds are more fully
described in their respective prospectuses and the Statements of Additional
Information that the prospectuses refer to. The Metropolitan Fund's prospectus
is attached at the end of this prospectus. The Calvert Social Balanced
Portfolio, Calvert Social Mid Cap Growth Portfolio and Fidelity VIP and VIPII
Funds' prospectuses are given out separately to those investors to whom these
investment choices are offered. The Statements of Additional Information are
available upon request.
See "The Fund and its Purpose," in the prospectus for the Metropolitan Fund
for a discussion of the different separate accounts of MetLife and
Metropolitan Tower Life Insurance Company that invest in the Metropolitan Fund
and the risks related to that arrangement. See "Purchase and Redemptions of
Shares," in the prospectuses for the Calvert Social Balanced Portfolio and
Calvert Social Mid Cap Growth Portfolio and "The Fund and the Fidelity
Organization" in the prospectus for the Fidelity VIP and VIPII Funds for a
discussion of the different separate accounts of the various insurance
companies that invest in these funds and the risks related to those
arrangements.
PURCHASE PAYMENTS
...............................................................................
ARE THERE SPECIAL RULES CONCERNING THE FIRST PAYMENT AND OTHER ADMINISTRATIVE
DETAILS THAT YOU SHOULD KNOW?
Yes. All purchase payments and all requests you may have concerning the
Contracts, like a change in beneficiary, should be sent to one of our
"Designated Office(s)." We will provide you with information indicating which
Designated Office to contact regarding various matters and the addresses of
these Offices. All checks should be payable to "MetLife." You can also make
certain requests by telephone. In order to have a purchase payment credited to
you, we must receive it and completed documentation. We will provide the
appropriate forms. Your employer or the group in which
FFA-23
<PAGE>
...............................................................
you are a participant or member must also identify you to us on their reports
to us and tell us how your purchase payments should be allocated among the
investment divisions and the Fixed Interest Account.
Your first purchase payment is normally credited to you within two days of
receipt at our Designated Office. However, if you fill out our forms
incorrectly or incompletely or other documentation is not completed properly,
we have up to five business days to credit the payment. If the problem cannot
be resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to let
us keep the purchase payment until the problem is remedied. If you do not agree
or we cannot reach you by the fifth business day, your purchase payment will be
returned immediately.
Purchase payments are effective and valued as of 4:00 p.m., Eastern time, on
the day we receive them at our Designated Office, except when they are received
(1) on a day when the accumulation unit value (discussed later in this
Prospectus) is not calculated or (2) after 4:00 p.m., Eastern time. In those
cases, the purchase payments will be effective the next day the accumulation
unit value is calculated.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
There are no minimum purchase payments except for the Enhanced Non-Qualified
Preference Plus Contract for (S)457(f), deferred compensation plans, (S)451
deferred fee arrangements, (S)451 deferred compensation plans and (S)457(e)(11)
severance and death benefit plans. Under this Contract, we may require each
purchase payment to be at least $2,000, and total purchase payments must be at
least $15,000 for the first contract year. (Depending on underwriting and plan
requirements, the first Contract Year is the initial three to fifteen month
period the Contract is in force; thereafter, it is each subsequent twelve month
period.) During subsequent Contract Years, we may require that purchase
payments made under this Contract must be at least $5,000.
We may reject purchase payments over $500,000. Your purchase payments may
also be limited by the Federal tax laws.
HOW ARE PURCHASE PAYMENTS ALLOCATED?
You decide how a purchase payment is allocated among the Fixed Interest
Account and the investment divisions of the Separate Account available to your
Contract. Allocation changes for new purchase payments will be made upon our
receipt of your notification of changes. You may also specify a day, as long as
it is within 30 days after we receive the request.
ARE THERE ANY LIMITS ON SUBSEQUENT PURCHASE PAYMENTS?
You may generally make purchase payments at any time before the date income
payments begin except as limited by the Federal tax laws. We may limit your
ability to make purchase payments after you have made a withdrawal based on
termination of employment. No additional purchase payments may be made after
commencement of a systematic termination (from both the Fixed Interest and
Separate Accounts), described below, until we receive written notice that you
request cancellation of the systematic termination.
In order to comply with regulatory requirements in the Oregon, we may limit
the ability of an Oregon resident to make purchase payments (1) after the
Contract has been held for more than three years, if the Contract was issued
after age 60 or (2) after age 63, if the Contract was issued before age 61.
DETERMINING THE VALUE OF YOUR SEPARATE ACCOUNT INVESTMENT
................................................................................
WHAT IS AN ACCUMULATION UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"accumulation units." When you make purchase payments or transfers into an
investment division, you are credited with accumulation units. When you request
a withdrawal or a transfer of money from an investment division, accumulation
units are liquidated. In either case, the number of accumulation units you gain
or lose is determined by taking the amount of the purchase payment, transfer or
withdrawal and dividing it by the value of an accumulation unit on the date the
transaction occurs. For example, if an accumulation unit is $10.00 and a $500
purchase payment is made, the number of accumulation units credited is 50 ($500
divided by $10 = 50). We calculate accumulation units separately for each
investment division of the Separate Account.
HOW IS AN ACCUMULATION UNIT VALUE CALCULATED?
We calculate accumulation unit values once a day on every day the New York
Stock Exchange is open for trading. We call the time between the two
consecutive accumulation unit value calculations the "Valuation Period." We
have the right to change the basis for the Valuation Period, on 30 days'
notice, as long as it is consistent with the law. All purchase payments,
transfers and withdrawals are valued as of the end of the Valuation Period
during which the transaction occurred. The accumulation unit values can
increase or decrease, based on the investment performance of the corresponding
underlying portfolios. If the investment performance is positive, after payment
of Separate
FFA-24
<PAGE>
...............................................................
Account expenses, accumulation unit values will go up. Conversely, if the
investment performance is negative, after payment of Separate Account
expenses, accumulation unit values will go down.
We use the term "experience factor" to describe the investment performance
for an investment division. The experience factor changes from Valuation
Period to Valuation Period to reflect the upward or downward performance of
the assets in the underlying portfolios. The experience factor is calculated
as of the end of each Valuation Period using the net asset value per share of
the underlying portfolio. The net asset value includes the per share amount of
any dividend or capital gain distribution paid by the portfolio during the
current Valuation Period, and subtracts any per share charges for taxes and
reserve for taxes. We then divide that amount by the net asset value per share
as of the end of the last Valuation Period to obtain a factor that reflects
investment performance. We then subtract a charge not to exceed .000025905
(the daily equivalent of an effective annual rate of .95%) for the Contracts
for each day in the Valuation Period. This charge is to cover the general
administrative expenses and the mortality and expense risk we assume under the
Contracts.
To calculate an accumulation unit value we multiply the experience factor
for the Valuation Period by the last previously calculated accumulation unit
value. For example, if the last previously calculated accumulation unit value
is $12.00 and the experience factor for the period was 1.05, the new
accumulation unit value is $12.60 ($12.00 X 1.05 = $.60; $.60 + $12.00 =
$12.60). On the other hand, if the last previously calculated accumulation
unit value is $12.00 and the experience factor for the period was .95, the new
accumulation unit value is $11.40 ($12.00 x .95).
WITHDRAWALS AND TRANSFERS
...............................................................................
CAN YOU MAKE WITHDRAWALS AND TRANSFERS?
Yes. You may either withdraw all or part of your Account Balance from the
Contract or transfer it from one investment division to another or to the
Fixed Interest Account. Some restrictions may apply to transfers from the
Fixed Interest Account to the Separate Account.
Withdrawals must be at least $500 (or the Account Balance, if less). You may
make an unlimited number of transfers. Your request must tell us the
percentage or dollar amount to be withdrawn or transferred and we may require
that this request be made on the form we provide for this purpose. If we
agree, you may also submit an authorization directing us to make transfers on
a continuing periodic basis from one investment division to another or to the
Fixed Interest Account. We may require that you maintain a minimum account
balance in investment divisions from which amounts are transferred based upon
an authorization.
WHEN WILL WITHDRAWALS OR TRANSFERS BE PROCESSED?
Generally, we will process withdrawals or transfers as of the end of the
Valuation Period during which we receive your request at our Designated
Office. We will make it as of a later date if you request. If you die before
the requested date, we will cancel the request and pay the death benefit
instead. If the withdrawal is made to provide income payments, it will be made
as of the end of the Valuation Period ending most recently before the date the
income annuity is purchased.
CAN YOU MAKE PAYMENTS DIRECTLY TO OTHER INVESTMENTS ON A TAX-FREE BASIS?
Generally yes, you can make payments directly to other investments on a tax-
free basis if you so request, but only if all applicable requirements of the
Code are met, and we receive all information necessary for us to make the
payment.
WHAT RESTRICTIONS APPLY TO TEXAS OPTIONAL RETIREMENT PROGRAM PARTICIPANTS?
If you are a participant in the Texas Optional Retirement Program, Texas law
permits us to make withdrawals on your behalf only if you die, retire or
terminate employment in all Texas institutions of higher education, as defined
under Texas law. Any withdrawal requires a written statement from the
appropriate Texas institution of higher education verifying your vesting
status and (if applicable) termination of employment, as well as a written
statement from you that you are not transferring employment to another Texas
institution of higher education. If you retire or terminate employment in all
Texas institutions of higher education or die before being vested, amounts
provided by the state's matching contribution will be refunded to the
appropriate Texas institution. We may change these restrictions or add others
without your consent to the extent necessary to maintain compliance with
applicable law.
WHAT RESTRICTIONS APPLY TO TSA CONTRACTS?
As required by the Code, withdrawals from the contracts before age 59 1/2
are generally prohibited. See "Taxes--TSA Contracts" at page FFA-42.
CAN YOU MAKE CHANGES BY TELEPHONE?
Yes. You can request transfers, change your allocation of future investments
and make changes to transfers made on a continuing periodic basis from one
investment division to another or to and from the Fixed Interest Account by
telephone unless prohibited by state
FFA-25
<PAGE>
...............................................................
law. If we agree and you complete the form we supply, you may also authorize
your sales representative to request transfers, change your allocation of
future investments and make changes to transfers made on a continuing periodic
basis from one investment division to another or to and from the Fixed
Interest Account on your behalf by telephone. Whether you or your sales
representative make such requests by telephone, you are authorizing us to act
upon the telephone instructions of any person purporting to be you or, if
applicable, your sales representative, assuming our procedures have been
followed, to make these requests which affect both your Fixed Interest and
Separate Account Balances. We have instituted reasonable procedures to confirm
that any instructions communicated by telephone are genuine. All telephone
calls making such requests will be recorded. You (or the sales representative)
will be asked to produce your personalized data prior to our initiating any
transfer requests by telephone. Additionally, as with other transactions, you
will receive a written confirmation of your transaction. Neither we nor the
Separate Account will be liable for any loss, expense or cost arising out of
any requests that we or the Separate Account reasonably believe to be genuine.
In the unlikely event that you have trouble reaching us, requests should be
made to the Designated Office.
CAN YOU MAKE SYSTEMATIC WITHDRAWALS?
Yes. If we agree and, if approved in your state, for certain Enhanced TSA
and IRA Preference Plus Contracts, you may request us to make "automatic"
withdrawals for you on a periodic basis through our Systematic Withdrawal
Program. Systematic Withdrawal Program payments are not payments made under an
income option or under an Income Annuity, as described later in this
Prospectus. You must have separated from service to elect the Systematic
Withdrawal Program if you are under age 59 1/2 under an Enhanced TSA
Preference Plus Contract. Also, you may not receive Systematic Withdrawal
Program payments if you have an outstanding loan. You may choose to receive
Systematic Withdrawal Program payments for either a specific dollar amount or
a percentage of your Account Balance. If you choose to receive a percentage of
your Account Balance, we will determine the initial dollar amount payable as
of the date these payments begin and will pay the dollar amount over the
remainder of the Contract Year. For example, if you ask for a percentage equal
to $12,000 and there are six months left in the Contract Year, we will pay you
$2,000 a month if payments are made monthly. For each later Contract Year that
the Systematic Withdrawal Program remains in effect, we will pay you either
the dollar amount that you have chosen or a dollar amount equal to the
percentage of your Account Balance you have chosen, applied to your Account
Balance as of your first Systematic Withdrawal Program payment date in that
Contract Year. We will pay this amount over the full Contract Year. For
example, if you ask for a percentage equal to $12,000 a year, we will pay you
$1,000 a month if payments are to be made monthly. Each Systematic Withdrawal
Program payment must be at least $50. You should allow approximately 10
business days for processing your request. If we do not receive the request at
least 10 business days in advance of the Systematic Withdrawal Program payment
start date, we will process your first Systematic Withdrawal Program payment
the following month. If you do not specify a payment date, payments will
commence 30 days from the date we receive your request. Requests to commence
Systematic Withdrawal Program payments may not be made by telephone. Changes
to the specified dollar amount or percentage or to alter the timing of
payments may be made once a year prior to the beginning of any Contract Year,
unless we agree otherwise. The change will be effective for the first
Systematic Withdrawal Program payment for the following Contract Year.
Requests for such changes must be made at least 30 days prior to the Contract
Year anniversary date, unless we agree otherwise. You may cancel your
Systematic Withdrawal Program request at any time by telephone or by writing
us at the Designated Office.
FROM WHICH INVESTMENT DIVISIONS WILL WITHDRAWALS BE MADE FOR SYSTEMATIC
WITHDRAWAL PROGRAM PAYMENTS?
Each Systematic Withdrawal Program payment may be taken on a pro rata basis
from the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money. If your Account Balance is insufficient
to make a requested Systematic Withdrawal Program payment, the remaining
Account Balance will be paid to you. You will also be able to select the
percentage to be withdrawn from the investment divisions and/or Fixed Interest
Account based on your preference. If you do not specify percentages or if
there are insufficient amounts in one or more of your selected investment
divisions or the Fixed Interest Account, then your Systematic Withdrawal
Program payment will automatically be taken on a pro rata basis from the Fixed
interest Account and investment divisions in which you then have money.
WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A
SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of payments
over a twelve month period.
11/9/98 FFA-26
<PAGE>
...............................................................
If you have elected the Systematic Withdrawal Program, we will treat the full
amount to be paid in a Contract Year as a lump sum withdrawal on the first
Systematic Withdrawal Program payment date for the first Contract Year for
purposes of determining how much of the withdrawal will be exempt from the
withdrawal charge. For Contract Years thereafter, we will treat the full amount
to be paid in a Contract Year as a lump sum withdrawal as of the first
Systematic Withdrawal Program payment date after the Contract Year anniversary
for purposes of determining how much of the withdrawal will be exempt from the
withdrawal charge. However, each Systematic Withdrawal Program payment will be
treated separately as of the date of a withdrawal from your Contract to
determine whether of not it is subject to a withdrawal charge. We will withdraw
that portion of the withdrawal that constitutes the withdrawal charge when we
make the Systematic Withdrawal Program payment.
If Systematic Withdrawal Program payments are within the applicable Free
Corridor percentage, no Systematic Withdrawal Program payment will be subject
to an early withdrawal charge. Systematic Withdrawal Program payments in excess
of the applicable free corridor percentage will be subject to an early
withdrawal charge unless the payments are from other amounts to which an early
withdrawal charge no longer applies. See "Exemptions from Early Withdrawal
Charges," pages FFA-28-30.
Systematic Withdrawal Program payments are treated as withdrawals for Federal
income tax purposes. All or a portion of the amounts withdrawn under Systematic
Withdrawal Program will be subject to Federal income tax. If you are under age
59 1/2, tax penalties may apply. See "Taxes," pages FFA 41-50.
CAN MINIMUM DISTRIBUTION PAYMENTS BE MADE ON A PERIODIC BASIS?
Yes. Rather than receiving your minimum distribution in one annual payment,
you may request that we make minimum distribution payments to you on a periodic
basis. However, you may be required to meet certain total Account Balance
minimums at the time you request periodic minimum distribution payments.
DEDUCTIONS AND CHARGES
................................................................................
ARE THERE ANNUAL CONTRACT CHARGES?
There are no Separate Account annual Contract charges. (There is a $20 annual
Contract fee imposed on certain Fixed Interest Account balances.)
WHAT ARE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that Contract
purchasers and participants may live for a longer period of time than we
estimated. Then we would be obligated to pay more income benefits than
anticipated. We also bear the risk that the guaranteed death benefit we pay for
allocated Contracts will be larger than the Account Balance. The expense risk
portion of the mortality and expense risk charge is that our expenses in
administering the Contracts will be greater than we estimated.
These charges do not reduce the number of accumulation units credited to you.
These charges are calculated and paid every time we calculate the value of
accumulation units. (See "How is an accumulation unit value calculated?" on
FFA-24.)
As a result of reduced administrative expenses associated with the Enhanced
Preference Plus and FFA Contracts, the sum of these charges on an annual basis
(computed and payable each Valuation Period) will not exceed .95% of the
average value of the assets in each investment division. Of this charge, we
estimate that .20% is for administrative expenses and .75% is for the mortality
and expense risk.
During 1997, these charges were $87,711,107 for all contracts in Separate
Account E.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES AND WHEN ARE THEY PAID?
Some jurisdictions tax what are called "annuity considerations." These may
include purchase payments, account balances and death benefits. In most
jurisdictions we currently do not deduct any money from purchase payments,
Account Balances or death benefits
to pay these taxes. Our practice generally is to deduct money to pay annuity
taxes only when you purchase an income annuity. In Mississippi, Wyoming, South
Dakota, Kentucky and Washington, D.C., we may also deduct money to pay annuity
taxes on lump sum withdrawals or when you purchase an income annuity. We may
deduct an amount to pay annuity taxes sometime in the future since the laws and
the interpretation of the laws relating to annuities are subject to change.
A chart that shows the states where annuity taxes are charged and the amount
of these taxes is on page FFA-52.
11/9/98 FFA-27
<PAGE>
...............................................................
WHAT IS THE EARLY WITHDRAWAL CHARGE (SALES LOAD)?
The early withdrawal charge reimburses us for our costs in selling the
Contracts. We may use any of our profits derived from the mortality and
expense risk charge to pay for any of our costs in selling the Contracts that
exceed the revenues generated by the early withdrawal charge. However, we
believe that our sales expenses may exceed revenues generated by the early
withdrawal charge and, in such event, we will pay such excess out of our
surplus.
WHAT IS THE EARLY WITHDRAWAL CHARGE FOR THE ENHANCED TSA, ENHANCED 403(A),
ENHANCED NON-QUALIFIED, ENHANCED PEDC AND ENHANCED IRA PREFERENCE PLUS
CONTRACTS?
To determine the early withdrawal charge for the Enhanced TSA, Enhanced
403(a), Enhanced Non-Qualified, Enhanced PEDC and Enhanced IRA Preference Plus
Contracts, we treat your Fixed Interest Account and Separate Account as if
they were a single account and ignore both your actual allocations and what
account or investment division the withdrawal is actually coming from. To do
this, we first assume that your withdrawal is from amounts (other than
earnings) that can be withdrawn without an early withdrawal charge, then from
other amounts (other than earnings) and then from earnings, each on a "first-
in-first-out" basis. Once we have determined the amount of the early
withdrawal charge, we will actually withdraw it from each investment division
in the same proportion as the withdrawal is being made. In determining what
the withdrawal charge is, we do not include earnings, although the actual
withdrawal to pay it may come from earnings.
For partial withdrawals from an investment division, the early withdrawal
charge is determined by dividing the amount that is subject to the early
withdrawal charge by 100% minus the applicable percentage shown below. Then we
will make the payment directed, and withdraw the early withdrawal charge from
that investment division.
For a full withdrawal from an investment division we multiply the amount to
which the withdrawal charge applies by the percentage shown below, keep the
result as an early withdrawal charge and pay you the rest. We will treat your
request as a request for a full withdrawal from an investment division if your
Account Balance in that investment division is not sufficient to pay both the
requested withdrawal and the early withdrawal charge.
For the Enhanced TSA, Enhanced 403(a), Enhanced Non-Qualified, Enhanced IRA
Preference Plus and Enhanced PEDC Contracts, withdrawal charges are imposed on
amounts (other than earnings) for the first seven years after the purchase
payment is received as shown in the following table:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[8 &
1 2 3 4 5 6 7 BEYOND]
<S> <C> <C> <C> <C> <C> <C> <C>
7% 6% 5% 4% 3% 2% 1% 0%
</TABLE>
As required by the Federal securities laws, your total early withdrawal
charges will never exceed 9% of all your purchase payments applied to the
investment divisions to the date of the withdrawal. When no allocations or
transfers are made to the Separate Account except in connection with the
Equity Generator SM investment strategy, withdrawal charges will be calculated
as described above, but the charge imposed will not exceed earnings.
As a result of the reduced sales costs associated with certain Enhanced
Preference Plus Contracts, no early withdrawal charges are deducted for
withdrawals under those Contracts.
WHAT IS THE EARLY WITHDRAWAL CHARGE FOR THE ENHANCED NON-QUALIFIED PREFERENCE
PLUS CONTRACTS FOR (S)457(F) DEFERRED COMPENSATION PLANS, (S)451 DEFERRED FEE
ARRANGEMENTS, (S)451 DEFERRED COMPENSATION PLANS AND (S)457 (E)(11) SEVERANCE
AND DEATH BENEFIT PLANS AND FFA CONTRACTS?
No Separate Account early withdrawal charge will apply to these Enhanced
Non-Qualified Preference Plus and FFA Contracts.
EXEMPTIONS FROM EARLY WITHDRAWAL CHARGES
...............................................................................
CAN YOU MAKE WITHDRAWALS OR TRANSFERS FROM THE ENHANCED TSA, ENHANCED 403(A),
ENHANCED NON-QUALIFIED, ENHANCED PEDC AND ENHANCED IRA PREFERENCE PLUS
CONTRACTS WITHOUT EARLY WITHDRAWAL CHARGES?
Yes. There are several types of withdrawals that will not result in an early
withdrawal charge to you. The amount withdrawn may be subject to Federal
income tax and tax penalties may still apply, see "Taxes," pages FFA 41-50. We
may require proof satisfactory to us that any necessary conditions have been
met.
The following describes the situations where we do not impose an early
withdrawal charge:
FFA-28
<PAGE>
...............................................................
1. Transfers made among the investment divisions of the Separate Account or
to the Fixed Interest Account.
2. Withdrawals that represent purchase payments made over seven years ago.
3. A Free Corridor withdrawal described below. The Free Corridor percentage
may be taken in an unlimited number of partial withdrawals (for each
withdrawal we calculate the percentage it represents of your Account Balance
and whenever the total of such percentages exceeds the specified percentage
the early withdrawal charge applies) from your Account Balance during the
Contract Year. In either case the Free Corridor is the greater of the
percentage described below or amounts which are not subject to an early
withdrawal charge.
(a) For certain Enhanced TSA Preference Plus Contracts: you can withdraw up
to 10% of your Account Balance during each Contract Year.
(b) For all other Contracts: you can withdraw up to 20% of your Account
Balance during each Contract Year.
4. Free Look: You may cancel your Contract within 10 days (20 days in North
Dakota) after you receive it by telling us in writing. We will then refund all
of your purchase payments (however, for Enhanced TSA Preference Plus Contracts
issued in Minnesota, we will instead pay you your Account Balance). If you
purchased your Contract by mail, you may have more time to return your
Contract.
5. You purchase an income annuity from us for life or a noncommutable period
of five years or more.
6. You die before any income payments have been made and we pay your
beneficiary a death benefit.
7. The withdrawal is required to avoid Federal income tax penalties or to
satisfy Federal income tax rules or Department of Labor regulations that apply
to the Contract from which the withdrawal is made.
8. Systematic Termination: For all Contracts except certain Enhanced TSA,
Enhanced Non-Qualified and Enhanced IRA Preference Plus Contracts, a total
withdrawal ("Systematic Termination") that is paid in annual installments of
(1) 20% of your Account Balance upon receipt of your request (we will reduce
this first installment by the amount of any previous partial withdrawals
during the current Contract Year); (2) 25% of your then current Account
Balance one year later; (3) 33 1/3% of your then current Account Balance two
years later; (4) 50% of your then current Account Balance three years later;
and (5) the remainder four years later. You may cancel remaining payments
under a Systematic Termination at any time. However, if you again decide to
take a full withdrawal, the entire Systematic Termination process starts over.
If, after beginning a Systematic Termination, you decide to take your full
withdrawal in amounts exceeding the percentages allowed, the excess amount
withdrawn in any year is subject to the applicable withdrawal charges.
9. Disability: If you are totally disabled (as defined under the Federal
Social Security Act) and you request a total withdrawal.
10. Retirement:
(a) For certain Enhanced TSA Preference Plus Contracts, if you retire and
have at least ten years of uninterrupted Contract participation. This
exemption to the early withdrawal charge for these Enhanced TSA Preference
Plus Contracts does not apply to withdrawals of amounts transferred into the
Contract from other investment vehicles on a tax-free basis (plus earnings
on such amounts.)
(b) For certain Enhanced TSA, certain Enhanced PEDC and 403(a) Preference
Plus Contracts, if you retire and have at least ten years of uninterrupted
Contract participation unless the plan defines retirement and you retire
under such definition.
(c) For the Enhanced Non-Qualified Preference Plus Contract and certain
Enhanced PEDC Contracts, if you retire.
11. Separation from Service: For all Contracts except certain Enhanced TSA,
Enhanced Non-Qualified and Enhanced IRA Preference Plus Contracts, if your
employment terminates.
12. Plan Termination: For all Contracts except certain Enhanced TSA,
Enhanced Non-Qualified and Enhanced IRA Preference Plus Contracts, if your
plan terminates and the withdrawal is rolled over into another annuity
contract we issue.
13. Hardship: For all Contracts except certain Enhanced TSA, Enhanced
403(a), Enhanced Non-Qualified and Enhanced IRA Preference Plus Contracts, if
your plan provides for payment on account of hardship, and you suffer an
unforseen hardship. For certain Enhanced TSA Preference Plus Contracts, you
must suffer an unforseen hardship.
11/9/98 FFA-29
<PAGE>
...............................................................
14. Pre-Approved Investment Vehicles: For all Contracts except certain
Enhanced TSA, Enhanced Non-Qualified and Enhanced IRA Preference Plus
Contracts, if you make direct transfers to other investment vehicles we have
pre-approved.
15. Pre-Approved Plan Provision: For all Contracts except certain Enhanced
TSA, Enhanced Non-Qualified, Enhanced PEDC and Enhanced IRA Preference Plus
Contracts, if you make a withdrawal pursuant to a provision of your plan we
have pre-approved.
16. Transfer from other MetLife Contracts: (A) For transfers prior to January
1, 1996: If you have rolled over amounts from other MetLife contracts we
designate, of the following two formulas we will apply the one that is most
favorable to you:
(1) treat our other contract and this Contract as if they were one for
purposes of determining when a purchase payment was made, credit your purchase
payments with the time you held them under our other contract prior to the time
they were rolled over or
(2) subject the rolled over amounts to a withdrawal charge determined as
described above in "What is the early withdrawal charge (sales load)?" as
follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
[6 &
1 2 3 4 5 BEYOND]
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0
</TABLE>
(B) For transfers commencing on or after January 1, 1996:
(1) if you roll over amounts from other MetLife contracts we designate that
have been in force at least two years (except as covered in (2) below), we will
apply the one of the following two formulas that is more favorable to you: (a)
the same withdrawal charge schedule that would have applied to the rollover
amounts had they remained in your other MetLife contracts, however, any
exceptions or reductions to the basic withdrawal charge percentage that this
Contract does not provide for (such as a 0% charge at the end of an interest
rate guarantee period or a 3% charge at the third anniversary) will not apply;
or (b) subject the rollover amounts to a withdrawal charge determined as
described above in "What is the early withdrawal charge (sales load)?" as
follows:
DURING PURCHASE PAYMENT YEAR
<TABLE>
<CAPTION>
6 &
1 2 3 4 5 BEYOND
<S> <C> <C> <C> <C> <C>
5% 4% 3% 2% 1% 0%
</TABLE>
For this purpose, purchase payment year is measured from the date of the
rollover, not the original purchase payment date under the other MetLife
contracts.
(2) If the other MetLife contracts have been in force less than two years or
provide for a separate withdrawal charge for each purchase payment, we will
treat the other contracts and this Contract as if they were one for purposes of
determining when a purchase payment was made by crediting under this Contract
your purchase payments with the time you held them under our other contract
prior to the date they were rolled over.
(C) We may instead, if provided for by this Contract, treat another contract
and this Contract as if they were one for purposes of determining when a
purchase payment was made by deeming your purchase payments to have been made
under this Contract on the dates they were made under the other contract.
DEATH BENEFIT
................................................................................
WHAT IS THE DEATH BENEFIT?
The death benefit is the greatest of (i) your Account Balance, (ii) your
highest Account Balance as of the December 31 of any fifth Contract anniversary
less any later partial withdrawals and any later annual Contract charges
withdrawn from the Fixed Interest Account and (iii) the total of all of your
purchase payments less any partial withdrawals, in all cases less any
outstanding loan balance under your Fixed Interest Account. There is no death
benefit for the Enhanced Non-Qualified Preference Plus Contract for (S)457 (f)
deferred compensation plans, (S)451 deferred fee arrangements, (S)451 deferred
compensation plans and (S)457 (e)(11) severance and death benefit plans.
WHEN AND TO WHOM WILL THE DEATH BENEFIT BE PAID?
The death benefit will not be paid until we receive proof of death and
appropriate directions regarding the Account Balance. If we receive proof of
death without any appropriate directions, we will take no action with regard to
the Account Balance until we receive appropriate directions.
You name the beneficiary under the Enhanced TSA, Enhanced 403(a), Enhanced
Non-Qualified and Enhanced IRA Preference Plus and TSA and 403(a) FFA
Contracts. The amounts due at death are paid to the trustee of the (S)457(f)
deferred compensation plan, (S)451 deferred fee arrangements, (S)451 deferred
compensation plans or (S)457(e)(11) severance and death benefit plans. The
death benefit is paid to the trustee under the Non-Qualified FFA Contract for
(S)415(m) qualified governmental excess benefit arrangements, and to the
participant's employer or a trustee under the PEDC Contract.
FFA-30
<PAGE>
...............................................................
The payee may take a lump sum cash payment or apply the death benefit (less
any applicable annuity taxes) to an income annuity from the types available
under your Contract.
INCOME OPTIONS
................................................................................
CAN METLIFE PROVIDE YOU WITH AN INCOME GUARANTEED FOR LIFE OR A WIDE CHOICE OF
OTHER PERIODS?
Yes. You may withdraw all or a portion of your total Account Balance and
apply that money (less any annuity taxes that must be paid) to an income
annuity.
You can receive income payments guaranteed for life on a monthly, quarterly,
semiannual or annual basis. Non-life contingent annuities are available for
various payout periods.
Other life annuity options are available which have a refund feature or are
guaranteed for a period of time and are life contingent afterwards. The amount
of the initial payment under an income annuity must be at least $50 ($20 in
Massachusetts).
All provisions relating to income annuities are subject to the limitations
imposed by the Code.
WHAT TYPES OF INCOME OPTIONS ARE AVAILABLE?
Both fixed and variable income options are available. Under a fixed income
option, we guarantee a specified, fixed payment, which will depend on the
income option chosen, the age and sex of the annuitant and joint annuitant, if
applicable, (except where unisex rates are required by law) and the portion of
your Account Balance used to provide the fixed income option. If a currently
issued immediate annuity of the same type will provide greater income payments,
the immediate annuity rate will be used.
If you do not select an income option by the date the Contract specifies, you
have not withdrawn your entire Account Balance, and your Contract was not
issued under a retirement plan, you will be issued a life annuity with a ten
(10) year guarantee. In that case, if you do not tell us otherwise, your Fixed
Interest Account Balance will be used to provide a fixed income option and your
Separate Account Balance will be used to provide a variable income option.
More information concerning the variable income option, including investment
choices, determining the value of variable income payments, transfers,
deductions and charges, variable income option types and taxes are discussed
under "Income Annuities."
FFA-31
<PAGE>
SECTION II: INCOME ANNUITIES DESCRIBED IN THIS PROSPECTUS
WHAT ARE INCOME ANNUITIES?
Income Annuities provide you with a series of payments for either a period
of time or life that are based upon the investment performance of the
investment division of the Separate Account. The amount of the payment will
fluctuate and is not guaranteed as to a specified amount. You may elect to
have a portion of your income payment under the fixed income option that is
guaranteed by MetLife's general account. That portion of the payment from the
fixed income option will not fluctuate and is fixed. You may purchase an
Income Annuity even if you did not have a Contract during the accumulation
period.
Income Annuities can be offered as group Enhanced TSA, Enhanced Non-
Qualified, Enhanced 403(a), Enhanced PEDC and Enhanced IRA Preference Plus and
Financial Freedom Income Annuities. The Enhanced Non-Qualified Income Annuity
for (S)457(e)(11) severance and death benefit plans is no longer currently
offered for purchase.
MAY THE INCOME ANNUITY BE AFFECTED BY YOUR RETIREMENT PLAN?
Yes. Your Income Annuity may provide that your choice of income types is
subject to the terms of your retirement plan. Your Income Annuity will
indicate under which circumstances this is the case. We may rely on your
employer's or plan administrator's statements to us as to the terms of the
plan or your entitlement to any amounts. We will not be responsible for
determining what your plan says.
WHAT ARE THE INVESTMENT CHOICES?
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive Growth,
Santander International Stock, Calvert Social Balanced, Calvert Social Mid Cap
Growth Divisions, and, if approved in your state, Loomis Sayles High Yield
Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity,
Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan
Stanley EAFE Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000
Index and T. Rowe Price Large Cap Growth Divisions. In some cases, the
Fidelity Equity-Income, Growth, Overseas, Investment Grade Bond and Asset
Manager Divisions are also available for the Enhanced Preference Plus Income
Annuities. Divisions available for the FFA Income Annuities are the MetLife
Stock Index Division, both Calvert Divisions and the five Fidelity Divisions.
In some cases the State Street Research Income, State Street Research
Diversified, State Street Research Growth, State Street Research Aggressive
Growth, Santander International Stock Divisions, the Fidelity Money Market
Division and, if approved in your state, Loomis Sayles High Yield Bond, Janus
Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, Harris Oakmark
Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE
Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Divisions, are also available for the FFA Contracts.
All divisions are described earlier in Section I under "Your Investment
Choices." If you are covered under a group Income Annuity, your employer,
association or group may have limited the number of available divisions. Your
Income Annuity will indicate which divisions were available to you when we
issued it. We may add or eliminate divisions for some or all persons. In some
states, you may be limited to four investment divisions to provide the
variable income payment or up to three investment divisions if a fixed income
option is also selected.
ADMINISTRATION
...............................................................................
WHAT ADMINISTRATIVE DETAILS SHOULD YOU KNOW?
Your purchase payment and all requests concerning Income Annuities should be
sent to our Designated Office. We will provide you with the address for this
Office. All checks should be payable to "MetLife." You can also make certain
requests by telephone. In order to have a purchase payment for the Income
Annuity credited to you, we must receive your payment and complete
documentation. We will provide the appropriate forms. Your employer or the
group in which you are an annuitant or member must also identify you to us on
their reports and tell us how the purchase payment should be allocated among
the investment divisions and the fixed income option.
Your purchase payment is normally credited to you within two days of receipt
at our Designated office. However, if you fill out our forms incorrectly or
incompletely or other documentation is not completed properly, we have up to
five business days to credit the purchase payment. If the problem cannot be
resolved by the fifth business day, we will notify you and give you the
reasons for the delay. At that time, you will be asked whether you agree to
let us keep the purchase payment until the problem is remedied. If you do not
agree, your purchase payment will be returned immediately.
11/9/98 FFA-32
<PAGE>
...............................................................
Purchase payments are effective and valued as of 4:00 p.m., Eastern time, on
the day we receive them at our Designated Office, except when they are
received (1) on a day when the annuity unit value (which will be discussed
later in this Prospectus) is not calculated or (2) after 4:00 p.m., Eastern
time. In those cases the payment will be effective the next day the annuity
unit value is calculated.
HOW SMALL OR LARGE CAN YOUR PURCHASE PAYMENT BE?
Your purchase payment must be large enough to produce an initial income
payment of at least $50 ($20 in Massachusetts).
HOW IS THE PURCHASE PAYMENT ALLOCATED?
You decide how the purchase payment is allocated among the fixed income
option and the investment divisions of the Separate Account available to your
Income Annuity.
DETERMINING THE VALUE OF VARIABLE INCOME PAYMENTS
...............................................................................
WHAT IS AN ANNUITY UNIT VALUE?
We hold money in each division of the Separate Account in the form of
"annuity units." These annuity unit are similar to "accumulation units"
described earlier in Section I except that we deduct applicable annuity taxes
from the purchase payment before we determine the number of annuity units in
each investment division chosen.
HOW IS AN ANNUITY UNIT VALUE CALCULATED?
We calculate the annuity unit values once a day on every day the New York
Stock Exchange is open for trading. We call the time between two consecutive
annuity unit value calculations the "Valuation Period." We have the right to
change the basis for the Valuation Period, on 30 days' notice, as long as it
is consistent with the law. All purchase payments and transfers are valued as
of the end of the Valuation Period during which the transaction occurred. The
annuity units values can increase or decrease, based on the investment
performance of the corresponding underlying portfolios. If the investment
performance is positive, after payment of Separate Account expenses and the
deduction for the assumed investment rate ("AIR"), discussed later in this
Prospectus, annuity unit values will go up. Conversely, if the investment
performance is negative, after payment of Separate Account expenses and the
deduction for the AIR, annuity unit values will go down.
When we determine the annuity unit value for an investment division, we use
the same "experience factor" as that derived for the calculation of
accumulation units as described in Section I.
To calculate an annuity unit value, we first multiply the experience factor
for the period by a factor based on the AIR and the number of days in the
valuation period. For an AIR of 4% and a one day valuation period, the factor
is .99989255, which is the daily discount factor for an effective annual rate
of 4%. (The AIR may be in the range of 3% to 6% as defined in your Income
Annuity and the laws of your state.) The resulting number is then multiplied
by the last previously calculated annuity unit value to produce the new
annuity unit value.
HOW IS A VARIABLE INCOME PAYMENT DETERMINED AND WHAT IS THE AIR?
Variable income payments can go up or down based upon the investment
performance of the investment divisions in the Separate Account. AIR is the
rate used to determine the first variable income payment and serves as a
benchmark against which the investment performance of the investment divisions
is compared. The higher the AIR, the higher the first variable income payment
will be. Subsequent variable income payments will increase only to the extent
that the investment performance of the investment divisions exceeds the AIR
(and Separate Account charges). Variable income payments will decline if the
investment performance of the Separate Account does not exceed the AIR (and
Separate Account charges). A lower AIR will result in a lower initial variable
income payment, but subsequent variable income payments will increase more
rapidly or decline more slowly as changes occur in the investment performance
of the investment divisions.
WHEN ARE VARIABLE INCOME PAYMENTS DETERMINED AND HOW OFTEN WILL THEY CHANGE?
Variable income payments are determined as of the 10th day prior to the date
each variable income payment is to be paid or the issue date, if later. Each
variable income payment may vary from a prior payment, depending, as discussed
above, upon the investment performance of the investment divisions, the AIR
and Separate Account charges.
TRANSFERS
...............................................................................
CAN YOU MAKE TRANSFERS?
Yes. You can make transfers from one investment division to another or from
an investment division to a fixed income option as long as the total number of
investment divisions under your Income Annuity is no greater than four (or
three investment divisions if a fixed income option is chosen). You may make
an unlimited number of transfers. Your request must tell us the
FFA-33
<PAGE>
...............................................................
percentage to be transferred. You may not make a transfer from the fixed income
option to an investment division.
WHEN WILL TRANSFERS BE PROCESSED?
Generally, we will process a transfer as of the end of the Valuation Period
during which we receive your request at our Designated Office. We will make it
as of a later date if you request. If you die before the requested date, we
will cancel the request and continue to make payments to your beneficiary under
a guarantee or a joint annuitant or pay your beneficiary a refund, if you have
chosen one of these variable income types.
CAN YOU MAKE TRANSFERS BY TELEPHONE?
Yes. You can make transfer requests by telephone unless prohibited by state
law. If we agree and you complete the form we supply, you may also authorize
your sales representative to make transfer requests on your behalf by
telephone. All telephone transfers are subject to the same procedures and
limitations of liability as described earlier in Section I.
DEDUCTIONS AND CHARGES
................................................................................
WHAT IS THE CONTRACT FEE?
There is no contract fee under the Income Annuities.
WHAT ARE THE CHARGES FOR GENERAL ADMINISTRATIVE EXPENSES AND THE MORTALITY AND
EXPENSE RISK AND HOW MUCH ARE THEY?
The general administrative expense charge pays us for such expenses as
financial, accounting, actuarial and legal expenses. The mortality portion of
the mortality and expense risk charge pays us for the risk that annuitants may
live for a longer period of time than we estimated. Then we would be obligated
to pay more income benefits than anticipated. The expense risk portion of the
mortality and expense risk charge is that our expenses in administering the
Income Annuity will be greater than we estimated.
These charges do not reduce the number of annuity units credited to you.
These charges are calculated and paid every time we calculate the value of
annuity units. (See "How is an annuity unit value calculated?" on FFA-33.)
The sum of these charges on an annual basis (computed and payable each
Valuation Period) will not exceed .95% of the average value of the assets in
each investment division. Of this charge, we estimate that .20% is for
administrative expense and .75% is for the mortality and expense risk.
ARE THERE DEDUCTIONS FOR ANNUITY TAXES?
Yes. Some jurisdictions tax what are called "annuity considerations." We
deduct money to pay annuity taxes when you make a purchase payment. A chart
that shows the states where annuity taxes are charged and the amount of these
taxes is on page FFA-52.
WHAT VARIABLE INCOME TYPES ARE AVAILABLE?
Three persons figure in the description below: the owner of the Income
Annuity (the person with all rights under the contract including the right to
direct who receives payments), the annuitant (the person whose life is the
measure for determining the timing and sometimes the amount of income payments)
and the beneficiary (the person who may receive benefits if no annuitants or
owners are living).
Your Lifetime Annuity --A variable income payable during the annuitant's
life.
Your Lifetime with a Guaranteed Period Annuity --A variable income payable
during the annuitant's life. If, at the death of the annuitant, payments have
been made for less than the guarantee period, payments are made to the owner of
the annuity (or the beneficiary if the owner dies before the end of the
guarantee period) for the rest of the guarantee period.
Your Lifetime With a Refund Annuity --A variable income payable during the
annuitant's life. If, at the death of the annuitant, the total of all of our
payments is less than the purchase payment that we received, we will pay an
amount equal to the difference to the owner of the annuity (or to the
beneficiary if the owner is not alive) when the annuitant dies.
Income for Two Lives Annuity --A variable income payable while either of two
annuitants is alive. After one annuitant dies payments continue if the other
annuitant is alive, otherwise payments stop. Payments after one annuitant dies
may be the same as those paid while both were alive or may be a lower
percentage selected when the annuity is purchased (e.g. 75%, 66 2/3% or 50%).
Income for Two Lives with a Guaranteed Period Annuity --This is the same as
the Income for Two Lives Annuity described above, but we guarantee to pay the
full amount (not a reduced percentage) for the guarantee period even if one or
both annuitants die. If, at the death of both annuitants, payments have been
made for less than the guarantee period, payments are made to the owner of the
annuity (or the beneficiary if the owner dies
FFA-34
<PAGE>
...............................................................
before the end of the guarantee period) for the rest of the guarantee period.
Income for Two Lives with a Refund Annuity --This is the same as the Income
for Two Lives Annuity described above but if, at the death of both annuitants,
the total of all of our payments is less than the purchase payment that we
received, we will pay an amount equal to the difference to the owner of the
annuity (or to the beneficiary if the owner is not alive) when the annuitant
dies.
Income for a Guaranteed Period Annuity --A variable income payable for a
guarantee period (5-30 years). Payments cease at the end of the guarantee
period (which is often called a "term certain" period) even if the annuitant
is still alive. If the annuitant dies prior to the end of the guarantee
period, payments are made to the owner of the annuity (or to the beneficiary
if the owner dies before the end of the guarantee period) for the rest of the
guarantee period.
IS THERE A FREE LOOK?
Yes. There is a Free Look when you purchase an Income Annuity. There is no
Free Look when an Income Annuity is the variable income option under a
Contract. You may cancel your Income Annuity within 10 days (20 days in North
Dakota) after you receive it by telling us in writing. We will then refund
your purchase payment (however, for an Income Annuity issued in Minnesota we
will instead pay you the value of your annuity units). If you purchased your
Income Annuity by mail, you may have more time to return your Income Annuity.
FFA-35
<PAGE>
SECTION III: OTHER DEFERRED CONTRACT AND INCOME ANNUITY PROVISIONS
CAN WE CANCEL YOUR CONTRACT OR INCOME ANNUITY?
We may not cancel your Income Annuity.
We may cancel your Contract. If we do so for a Contract delivered in New
York, we will return the full Account Balance. In all other cases, you will
receive an amount equal to what you would have received if you had requested a
total withdrawal of your Account Balance. Early withdrawal charges may apply.
We will cancel your Contract if we do not receive any purchase payments for
you for 36 consecutive months and your Account Balance is less than $2,000. We
will only do so to the extent allowed by law. We may cancel the Enhanced
Preference Plus Non-Qualified Contract for (S)457(f) deferred compensation
plans, (S)451 deferred fee arrangements, (S)451 deferred compensation plans
and (S)457(e)(11) severance and death benefit plans if we do not receive any
purchase payments for you for 12 consecutive months and your Account Balance
is less than $15,000. Certain Contracts do not contain these cancellation
provisions.
At our option, certain Enhanced Preference Plus TSA and Enhanced PEDC
Contracts may be cancelled if MetLife determines that changes to your
retirement plan would cause MetLife to pay more interest than anticipated or
to make more frequent payments than anticipated in connection with the Fixed
Interest Account. MetLife may also cancel these Contracts, to the extent
permitted by law, if the retirement plan terminates or no longer qualifies as
a tax sheltered arrangement. Also, under these Contracts, the employer and
MetLife may each cancel the Contract upon 90 days notice to the other.
ARE THERE SPECIAL PROVISIONS THAT APPLY IF YOU ARE A PARTICIPANT IN A PLAN
SUBJECT TO ERISA?
Yes. If your plan is subject to ERISA (the Employee Retirement Income
Security Act of 1974) and you are married, the income payments, withdrawal
provisions, and methods of payment of the death benefit under your Contract or
Income Annuity may be subject to your spouse's rights as described below.
Generally, the spouse must give qualified consent whenever you elect to:
a. choose income payments other than on a qualified joint and survivor
annuity basis ("QJSA") (one under which we make payments to you during
your lifetime and then make payments reduced by no more than 50% to
your spouse for his or her remaining life, if any); or choose to waive
the qualified pre-retirement survivor annuity benefit ("QPSA") (the
benefit payable to the surviving spouse of a participant who dies with
a vested interest in an accrued retirement benefit under the plan
before payment of the benefit has begun);
b. make certain withdrawals under plans for which a qualified consent is
required;
c. name someone other than the spouse as your beneficiary; or
d. use accrued benefit is used as security for a loan exceeding $5,000.
Generally, there is no limit to the number of your elections as long as a
qualified consent is given each time. The consent to waive the QJSA must meet
certain requirements, including that it be in writing which acknowledges the
identity of the designated beneficiary and the form of benefit selected,
dated, signed by your spouse, witnessed by a notary public or plan
representative and in a form satisfactory to us. The waiver of a QJSA
generally must be executed during the 90-day period ending on the date on
which income payments are to commence, or the withdrawal or the loan is to be
made, as the case may be. If you die before benefits commence, your surviving
spouse will be your beneficiary unless he or she has given a qualified consent
otherwise. The qualified consent to waive the
QPSA benefit and the beneficiary designation must be made in writing that
acknowledges the designated beneficiary, dated, signed by your spouse,
witnessed by a notary public or plan representative and in a form satisfactory
to us. Generally, there is no limit to the number of beneficiary designations
as long as a qualified consent accompanies each designation. The waiver of and
the qualified consent for the QPSA benefit generally may not be given until
the plan year in which you attain age 35. The waiver period for the QPSA ends
on the date of your death.
If your benefit is worth $5,000 or less, your plan may provide for
distribution of your entire interest in a lump sum without spousal consent.
WHEN ARE YOUR REQUESTS EFFECTIVE?
In general, your requests are effective when we receive them at our
Designated Office unless otherwise provided by this Prospectus.
FFA-36
<PAGE>
...............................................................
WILL WE CONFIRM YOUR TRANSACTIONS?
Yes. In general we will send you a confirmation statement indicating that a
transaction recently took place. Certain transactions which are made on a
periodic basis, such as pre-authorized, systematic purchase payments which are
transfers from the Fixed Interest Account, may be confirmed quarterly. MetLife
confirms quarterly purchase transactions under Enhanced TSA Preference Plus,
TSA FFA Contracts and the Non-Qualified FFA Contract for (S)415(m) qualified
governmental excess benefit arrangements made on the basis of salary reduction
or deduction.
CAN WE CHANGE THE PROVISIONS OF YOUR CONTRACT OR INCOME ANNUITY?
Yes. We have the right to make certain changes to your Contract or Income
Annuity, but only as permitted by law. We make changes when we think they
would best serve the interest of all participants or would be appropriate in
carrying out the purposes of the Contract or Income Annuity. If the law
requires, we will also get your approval and that of any appropriate
regulatory authorities. Examples of the changes we may make include:
1. To operate the Separate Account in any form permitted under the 1940 Act
or in any other form permitted by law.
2. To take any action necessary to comply with or obtain and continue any
exemptions from the 1940 Act.
3. To transfer any assets in an investment division to another investment
division, or to one or more separate accounts, or to our general account, or
to add, combine or remove investment divisions in the Separate Account.
4. To substitute for the portfolio shares in any investment division, the
shares of another class of the Metropolitan Fund or the shares of another
investment company or any other investment permitted by law.
5. To change the way we assess charges, but without increasing the aggregate
amount charged to the Separate Account and any currently available portfolio
in connection with the Contracts or Income Annuities.
6. To make any necessary technical changes in the Contracts or Income
Annuities in order to conform with any of the above-described actions.
If any changes result in a material change in the underlying investments of
an investment division in which you have an Account Balance, we will notify
you of the change. You may then make a new choice of investment divisions. For
the Enhanced Preference Plus Contracts for (S)457(f) deferred compensation
plans, (S)451 deferred fee arrangements, (S)451 deferred compensation plans
and (S)457(e)(11) severance and death benefit plans (and FFA Contracts and
Income Annuities where required by law) issued in Pennsylvania, we will ask
your approval before any technical changes are made.
WHAT ARE YOUR VOTING RIGHTS REGARDING PORTFOLIO SHARES?
In accordance with our view of the present applicable law, we will vote the
shares of each of the portfolios held by the Separate Account (which are
deemed attributable to the Contracts or Income Annuities) at regular and
special meetings of the shareholders of the portfolio based on instructions
received from those having the voting interest in corresponding investment
divisions of the Separate Account. However, if the 1940 Act or any rules
thereunder should be amended or if the present interpretation thereof should
change, and as a result we determine that we are permitted to vote the shares
of the portfolios in our own right, we may elect to do so.
Accordingly, you have voting interests under the Contracts or Income
Annuities. The number of shares held in each Separate Account investment
division deemed attributable to you is determined by dividing the value of
accumulation or annuity units attributable to you in that investment division,
if any, by the net asset value of one share in the portfolio in which the
assets in that Separate Account investment division are invested. Fractional
votes will be counted. The number of shares for which you have the right to
give instructions will be determined as of the record date for the meeting.
Portfolio shares held in each registered separate account of MetLife or any
affiliate that are or are not attributable to life insurance policies or
annuity contracts (including the Contracts and Income Annuities) and for which
no timely instructions are received will be voted in the same proportion as
the shares for which voting instructions are received by that separate
account. Portfolio shares held in the general accounts or unregistered
separate accounts of MetLife or its affiliates will be voted in the same
proportion as the aggregate of (i) the shares for which voting instructions
are received and (ii) the shares that are voted in proportion to such voting
instructions. However, if we or an affiliate determine that we are permitted
to vote any such shares, in our own right, we may elect to do so subject to
the then current interpretation of the 1940 Act or any rules thereunder.
FFA-37
<PAGE>
...............................................................
You will be entitled to give instructions regarding the votes attributable
to your Contract or Income Annuity in your sole discretion. Under (S)457(f)
deferred compensation plans, (S)451 deferred fee arrangements, (S)451 deferred
compensation plans, (S)457(e)(11) severance and death benefit plans and the
TSA Contracts and Income Annuities under which the Employer retains all
rights, we will provide you with the number of copies of voting instruction
soliciting materials that you request so that you may furnish such materials
to participants who may give you voting instructions. Neither the Separate
Account nor MetLife has any duty to inquire as to the instructions received or
your authority to give instructions; thus, as far as the Separate Account, and
any others having voting interests in respect of the Separate Account are
concerned, such instructions are valid and effective.
You may give instructions regarding, among other things, the election of the
board of directors, ratification of the election of independent auditors, and
the approval of investment and sub-investment managers.
CAN YOUR VOTING INSTRUCTIONS BE DISREGARDED?
Yes. MetLife may disregard voting instructions under the following
circumstances (1) to make or refrain from making any change in the investments
or investment policies for any portfolio if required by any insurance
regulatory authority; (2) to refrain from making any change in the investment
policies or any investment adviser or principal underwriter or any portfolio
which may be initiated by those having voting interests or the Metropolitan
Fund's, Calvert Variable Series' or Fidelity VIP or VIPII Funds' boards of
directors, provided MetLife's disapproval of the change is reasonable and, in
the case of a change in investment policies or investment manager, based on a
good faith determination that such change would be contrary to state law or
otherwise inappropriate in light of the portfolio's objective and purposes; or
(3) to enter into or refrain from entering into any advisory agreement or
underwriting contract, if required by any insurance regulatory authority.
In the event that MetLife does disregard voting instructions, a summary of
the action and the reasons for such action will be included in the next
semiannual report.
WHO SELLS YOUR CONTRACT OR INCOME ANNUITY AND DO YOU PAY A COMMISSION ON THE
PURCHASE OF YOUR CONTRACT OR INCOME ANNUITY?
All Contracts and Income Annuities, certificates and interests in the
Contracts and Income Annuities are sold through individuals who are our
licensed sales representatives. We are registered with the Securities and
Exchange Commission as a broker-dealer under the Securities Exchange Act of
1934, and we are a member of the National Association of Securities Dealers,
Inc. They also are sold through other registered broker-dealers. They also may
be sold through the mail and by certain of our qualified employees.
The licensed sales representatives and broker-dealers who sell Contracts and
Income Annuities and certificates and interests in the Contracts and Income
Annuities may be compensated for these sales by commissions that we pay. There
is no front-end sales load deducted from purchase payments to pay sales
commissions. The Separate Account also does not pay sales commissions. The
commissions we pay range from 0% to 6% depending on the age of the participant
or annuitant.
From time to time, MetLife may pay organizations or associations a fee,
reimburse them for certain expenses, lease office space from them, purchase
advertisements in their publications or enter into such other arrangements in
connection with their endorsing or sponsoring MetLife's variable annuity
contracts or services, for permitting MetLife to undertake certain marketing
efforts of the organizations' members in connection with sales of MetLife
variable annuities, or some combination thereof. Additionally, MetLife has
retained consultants who are paid a fee for their efforts in establishing and
maintaining relationships between MetLife and various organizations.
We also make payments to our licensed sales representatives based upon the
total Account Balances of the Contracts assigned to the sales representative.
Under the program, we pay an amount up to .12% of the total Account Balances
of the Contracts, other registered variable annuity contracts, certain mutual
fund account balances and cash values of certain life insurance policies.
These asset based commissions compensate the sales representative for
servicing the Contracts. These payments are not made for Income Annuities.
DOES METLIFE ADVERTISE THE PERFORMANCE OF THE SEPARATE ACCOUNT?
Yes. From time to time we advertise the performance of various Separate
Account investment divisions. For the money market investment divisions, this
performance will be stated in terms of "yield" and "effective yield." For the
other investment divisions, this performance will be stated in terms of either
yield, "change in accumulation unit value," "change in annuity unit value" or
"average annual total return" or some combination of the foregoing. Yield,
change in accumulation unit value, change in annuity unit value and average
annual total return figures are based on historical earnings and are not
intended to indicate future performance. The yield of the money market
investment
FFA-38
<PAGE>
...............................................................
divisions refers to the income generated by an investment in the division over
a seven-day period, which will be specified in the advertisement. This income
is then annualized, by assuming that the same amount of income is generated
each week over a 52 week period, and the total income is shown as a percentage
of the investment. The effective yield is similarly calculated; however, when
annualized, the earned income in the division is assumed to be reinvested.
Thus, the effective yield figure will be slightly higher than the yield figure
because of the former's compounding effect. Other yield figures quoted in
advertisements, that is those other than the money market investment
divisions, will refer to the net income generated by an investment in a
particular investment division for a thirty day period or month, which is
specified in the advertisement, and then expressed as a percentage yield of
that investment. This percentage yield is then compounded semiannually. Change
in accumulation unit value or change in annuity unit value refers to the
comparison between values of accumulation or annuity units over specified
periods in which an investment division has been in operation, expressed as a
percentage. Change in accumulation unit value or change in annuity unit value
may also be expressed as an annualized figure. In addition, change in
accumulation unit value or change in annuity unit value may be used to
illustrate performance for a hypothetical investment (such as $10,000) over
the time period specified. Yield, change in accumulation unit value and
effective yield figures do not reflect the possible imposition of an early
withdrawal charge of, for certain Enhanced Preference Plus Contracts, up to 7%
of the amount withdrawn attributable to a purchase payment, which may result
in a lower figure being experienced by the investor. Average annual total
return differs from the change in accumulation unit value and change in
annuity unit value because it assumes a steady rate of return and reflects all
expenses and applicable early withdrawal charges. Performance figures will
vary among the various Contracts and Income Annuities as a result of different
Separate Account charges and early withdrawal charges. Performance may be
calculated based upon historical performance of the Fund, Calvert Social
Balanced Portfolio, Calvert Social Mid Cap Growth Portfolio and the Fidelity
VIP and VIPII Funds and may assume that certain contracts were in existence
prior to their inception date. After the inception date, actual accumulation
unit or annuity unit data is used.
Advertisements regarding the Separate Account may contain comparisons of
hypothetical after-tax returns of currently taxable investments versus returns
of tax deferred investments. From time to time, the Separate Account may
compare the performance of its investment divisions with the performance of
common stocks, long-term government bonds, long-term corporate bonds,
intermediate-term government bonds, Treasury Bills, certificates of deposit
and savings accounts. The Separate Account may use the Consumer Price Index in
its advertisements as a measure of inflation for comparison purposes. From
time to time, the Separate Account may advertise its performance ranking among
similar investments or compare its performance to averages as compiled by
independent organizations, such as Lipper Analytical Services, Inc.,
Morningstar, Inc., VARDS(R) and The Wall Street Journal. The Separate Account
may also advertise its performance in comparison to appropriate indices, such
as the Standard & Poor's 500 Composite Stock Price Index, the Standard &
Poor's Mid Cap 400 Index, the Standard & Poor's Small Cap 600 Index, the
Russell 2000 Index, the Russell 2000 Growth Index, the Lehman Brothers
Aggregate Bond Index, the Lehman Brothers Government/Corporate Bond Index, the
Merrill Lynch High Yield Bond Index, the Morgan Stanley Capital International
All Country World Index and the Morgan Stanley Capital International Europe,
Australasia, Far East Index.
Performance may be shown for certain investment strategies that are made
available under certain Contracts. The first is the "Equity Generator." Under
the "Equity Generator," an amount equal to the interest earned during a
specified interval (i.e., monthly, quarterly) in the Fixed Interest Account is
transferred to the MetLife Stock Index Division or the State Street Research
Aggressive Growth Division. The second technique is the "EqualizerSM." Under
this strategy, once during a specified period (i.e., monthly, quarterly), a
transfer is made from the MetLife Stock Index Division or the State Street
Research Aggressive Growth Division to the Fixed Interest Account or from the
Fixed Interest Account to the MetLife Stock Index Division or State Street
Research Aggressive Growth Division in order to make the account and the
division equal in value. The third strategy is the "Index Selector SM". Under
this strategy, once during a specified period (i.e., quarterly, annually)
transfers are made among the Lehman Brothers Aggregate Bond Index, MetLife
Stock Index, Morgan Stanley EAFE Index and Russell 2000 Index Divisions and
the Fixed Interest Account in order to bring the percentage of the total
Account Balance in each of these divisions and Fixed Interest Account back to
the current allocation of your choice of one of several asset allocation
models. The elements which form the basis of the models are provided by
MetLife which may rely on a third party for its expertise in creating
appropriate allocations. The models are designed to correlate to various risk
tolerance levels associated with investing and are subject to change from time
to time.
11/9/98 FFA-39
<PAGE>
...............................................................
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector Return"
for each asset allocation model will be calculated by presuming a certain
dollar value at the beginning of a period and comparing this dollar value with
the dollar value, based on historical performance, at the end of the period,
expressed as a percentage. The "Return" in each case will assume that no
withdrawals have occurred. We may also show performance for the Equity
Generator, Equalizer and Index Selector investment strategies using other
investment divisions for which these strategies are made available in the
future. If we do so, performance will be calculated in the same manner as
described above, using the appropriate account and/or investment divisions.
ARE THERE SPECIAL CHARGES THAT APPLY IF YOUR RETIREMENT PLAN TERMINATES ITS
CONTRACT OR TAKES OTHER ACTION?
Under certain Enhanced TSA Preference Plus Contracts, amounts equal to some
or all of the early withdrawal charge imposed under a contract of another
issuer in connection with the transfer of money into an Enhanced TSA
Preference Plus Contract may be credited to your Account Balance. If such
amounts are credited to an Enhanced TSA Preference Plus Contract, special
termination charges may be imposed. These charges may also apply if the plan
introduces other funding vehicles provided by other carriers. Charges are not
imposed on plan participants; but rather are absorbed by the Contractholder.
Therefore, under the Contract, the participant will incur only the withdrawal
charges, if applicable, otherwise discussed in this prospectus. The charges to
the plan are imposed on the amount initially transferred to MetLife for the
first seven years according to the schedule in the following table:
DURING CONTRACT YEAR
<TABLE>
<CAPTION>
8 &
1 2 3 4 5 6 7 BEYOND
---- ---- ---- ---- ---- ---- ---- ------
<S> <C> <C> <C> <C> <C> <C> <C>
5.6% 5.0% 4.5% 4.0% 3.0% 2.0% 1.0% 0%
</TABLE>
The charge to the plan, for partial withdrawals, is determined by multiplying
the amount of the withdrawal that is subject to the charge by the applicable
percentage shown above.
11/9/98 FFA-40
<PAGE>
SECTION IV: TAXES
GENERAL
Federal tax laws are complex and are subject to frequent change as well as to
judicial and administrative interpretation. The following is a general summary
intended to point out what we believe to be some general rules and principles,
and not to give specific tax or legal advice. Failure to comply with the law
may result in significant penalties. For details or for advice on how the law
applies to your individual circumstances, consult your tax advisor or attorney.
You may also get information from the Internal Revenue Service.
In the opinion of our attorneys, the Separate Account and its operations will
be treated as part of MetLife, and not taxed separately. We are taxed as a life
insurance company. Thus, although the Contracts and Income Annuities allow us
to charge the Separate Account with any taxes or reserves for taxes
attributable to it, we do not expect that under current law we will do so.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR DEFERRED CONTRACT?
Generally, all contributions under the Contracts, other than contributions
under Non-Qualified Contracts and non-deductible contributions to IRA
Contracts, will be contributed on a "before-tax" basis. This means that the
purchase payments either reduce your income, entitle you to a tax deduction or
are not subject to current income tax. To the extent contributions to your
Contract were not subject to Federal income tax, withdrawals of these
contributions will be subject to Federal income taxes. Earnings under your
Contract are generally subject to income tax.
Contributions to Enhanced Non-Qualified Contracts and non-deductible
contributions to IRA Contracts are made on an "after-tax" basis so that making
purchase payments do not reduce the taxes you pay. Earnings under Enhanced Non-
Qualified Contracts are normally not taxed until withdrawn, if you, as the
owner, are an individual. Thus, that portion of any withdrawal that represents
income is taxed when you receive it, but that portion that represents purchase
payments is not, to the extent previously taxed.
Under some circumstances certain Contracts accept both purchase payments that
entitle you or the owner to a current tax deduction or to an exclusion from
income and those that do not. Taxation of withdrawals depends on whether or not
you or the owner were entitled to deduct or exclude the purchase payments from
income in compliance with the Code.
The taxable portion of a distribution from a 403(a) and TSA Contract to the
participant or the participant's spouse (if she/he is the beneficiary) that is
an "eligible rollover distribution," as defined in the Code, is subject to 20%
mandatory Federal income tax withholding unless the participant directs the
trustee, insurer or custodian of the plan to transfer all or any portion of
his/her taxable interest in such plan to the trustee, insurer or custodian of
(1) an individual retirement arrangement under (S)408; (2) a qualified trust or
403(a) annuity plan, if the distribution is from a Keogh plan or a 403(a)
Contract; or (3) a TSA, if the distribution is from a TSA Contract. An eligible
rollover distribution is generally the taxable portion of any distribution from
a 403(a) or TSA Contract, except the following: (a) a series of substantially
equal periodic payments over the life (or life expectancy) of the participant;
(b) a series of substantially equal periodic payments over the lives (or joint
life expectancies) of the participant and his/her beneficiary; (c) a series of
substantially equal periodic payments over a specified period of at least ten
years; (d) a minimum distribution required during the participant's lifetime or
the minimum amount to be paid after the participant's death; (e) refunds of
excess contributions to the plan described in (S)401(k) of the Code for
corporations and unincorporated businesses; (f) certain loans treated as
distributions under the Code; (g) the cost of life insurance coverage which is
includible in the gross income of the plan participant; and (h) any other
taxable distributions from any of these plans which are not eligible rollover
distributions.
All taxable distributions from 403(a) and TSAs Contracts that are not
eligible rollover distributions and taxable distributions from IRAs and Non-
Qualified Contracts will be subject to Federal income tax withholding unless
the payee elects to have no withholding. The rate of withholding is as
determined by the Code and Regulations thereunder at the time of payment. All
taxable distributions from the PEDC Contract will be subject to the same
Federal income tax withholding as regular wages.
Each type of Contract is subject to various tax limitations. Typically,
except for the Non-Qualified Contracts, the maximum amount of purchase payment
is limited under Federal tax law and there are limitations on how long money
can be left under the Contracts before withdrawals must begin. A 10% tax
penalty applies to certain taxable withdrawals from the Contract (or in some
cases from the plan or arrangement that purchased the Contract) before you are
age 59 1/2. Withdrawals from the TSA Contracts are generally prohibited before
age 59 1/2.
FFA-41
<PAGE>
...............................................................
The following paragraphs will briefly summarize some of the tax rules on a
Contract-by-Contract basis, but will make no attempt to mention or explain
every single rule that may be relevant to you. We are not responsible for
determining if your plan or arrangement satisfies the requirements of the
Code.
TSA Contracts. These fall under (S)403(b) of the Code that provides certain
tax benefits to eligible employees of public school systems and organizations
that are tax exempt under (S)501(c)(3) of the Code.
Except for the TSA Contract under which the employer retains all rights,
your employer buys the Contract for you although you, as the participant, then
own it. The Code limits the amount of purchase payments that can be made.
Purchase payments over this amount may be subject to adverse tax consequences.
Special rules apply to the withdrawal of excess contributions. Withdrawals
before age 59 1/2 are prohibited except for (a) amounts contributed to or
earned under your (S)403(b) arrangement before January 1, 1989 that were
either paid into or earned under the Contract or later transferred to it in a
manner satisfying applicable Code requirements (withdrawals are deemed to come
first from pre-1989 money that is not subject to these restrictions, until all
of such money is withdrawn); (b) tax-free transfers to other (S)403(b) funding
vehicles or any other withdrawals that are not "distributions" under the Code;
(c) amounts that are not attributable to salary reduction elective deferral
contributions (i.e., generally amounts not attributable to a participant's
pre-tax contributions and their earnings); (d) after a participant dies,
separates from service or becomes disabled (as defined in the Code); (e) in
the case of financial hardship (as defined in the Code) but only purchase
payments may be withdrawn for hardship, not earnings; or (f) under any other
circumstances as the Code allows. Special withdrawal restrictions under
(S)403(b)(7)(A)(ii) of the Code apply to amounts that had once been invested
in mutual funds under custodial arrangements even after such amounts are
transferred to a Contract.
Taxable withdrawals (other than tax-free transfers) that are allowed before
age 59 1/2 are subject to an additional 10% tax penalty on the taxable portion
of the withdrawal. This penalty does not apply to withdrawals (1) paid to a
beneficiary or participant's estate after the participant's death; (2) due to
permanent disability (as defined in the Code); (3) made in substantially equal
periodic payments (not less frequently than annually) over the life or life
expectancy of the participant or the participant and another person named by
the participant where such payments begin after separation from service; (4)
made to the participant after the participant separates from service with the
employer after age 55; (5) made to the participant on account of deductible
medical expenses (whether or not the participant actually itemizes
deductions); (6) made to an "alternate payee" under a "qualified domestic
relations order" (normally a spouse or ex-spouse); (7) of excess matching
employer contributions made to eliminate discrimination under the Code; or (8)
timely made to reduce an elective deferral as allowed by the Code. If you are
under age 59 1/2 and are receiving Systematic Withdrawal Program payments that
you intend to qualify as a series of substantially equal periodic payments
under (S)72(t) of the Code and thus not be subject to the 10% tax penalty, any
modifications to your Systematic Withdrawal Program payments before age 59 1/2
or five years after beginning Systematic Withdrawal Program payments will
result in the retroactive imposition of the 10% tax penalty. You should
consult with your tax adviser to determine whether you are eligible to rely on
any exceptions to the 10% tax penalty before you elect to receive any
Systematic Withdrawal Program payments or make any modifications to your
Systematic Withdrawal Program payments.
Withdrawals may be transferred to another (S)403(b) funding vehicle or (for
eligible rolllover distributions) to an IRA without federal tax consequences
if Code requirements are met. The Contract is not forfeitable and may not be
transferred. Generally, for taxable years after 1996, if you do not have a 5%
or more ownership interest in your employer, your entire interest in the
Contract must be withdrawn or begun to be withdrawn by April 1 of the calendar
year following the later of: the year in which the participant reaches age 70
1/2 or, to the extent permitted under your plan or contract, the year in which
the participant retires. A tax penalty of 50% applies to withdrawals which
should have been made but were not. Complex rules apply to the timing and
calculation of these withdrawals. Other complex rules apply to how rapidly
withdrawals must be made after the participant's death. Generally, if the
participant dies before the required withdrawals have begun, we must make
payment of your entire interest under the Contract within five years of the
year in which the participant died or begin payments under an income annuity
allowed by the Code to the participant's beneficiary over his or her lifetime
or over a period not beyond the beneficiary's life expectancy starting by the
December 31 following the year in which the participant dies. If the
participant's spouse is the beneficiary, payments may be made over the
spouse's lifetime or over a period not beyond the spouse's life expectancy
starting by the December 31 of the year in which the participant would have
reached age 70 1/2, if later. If the participant dies after required
withdrawals have begun, payments must continue to be made at least as rapidly
as under the method of distribution that was used as of the date of the death
of the participant. If the Contract is subject to the
11/9/98 FFA-42
<PAGE>
...............................................................
Retirement Equity Act, the participant's spouse has certain rights which may
be waived with the written consent of the spouse. The IRS allows you to
aggregate the amount to be withdrawn from each TSA contract you own and to
withdraw this amount in total from any one or more of the TSA contracts you
own.
403(a) Contracts. The employer adopts a 403(a) plan as a qualified
retirement plan to generally provide benefits to participating employees. The
plan works in a similar manner to a corporate qualified retirement plan except
that the 403(a) plan does not have a trust or a trustee.
The Code limits the amount of contributions and distributions that may be
made under 403(a) plans. Withdrawals before age 59 1/2 may be subject to a 10%
tax penalty. Any amounts distributed under the 403(a) Contracts are generally
taxed according to the rules described under (S)72 of the Code. Under rules
similar to those described above for TSAs, for taxable years after 1996, if
you do not have a 5% or more ownership interest in your employer, withdrawals
of your entire interest under the Contract must be made or begun to be made no
later than the April 1 of the calendar year following the later of: the year
in which you reach age 70 1/2 or, to the extent permitted under your Plan or
Contract, the year you retire. Also, if you die before required withdrawals
have begun, the entire interest in the plan generally must be paid within five
years of the year in which you died. The minimum distribution rules for 403(a)
Contracts are similar to those rules summarized above for TSAs.
Traditional IRA Contracts. Annual contributions to all IRAs may not exceed
the lesser of $2,000 or 100% of your "compensation" as defined by the Code,
except "spousal IRAs" discussed below. Generally, no contributions are allowed
during or after the tax year in which you attain age 70 1/2. Contributions
other than those allowed are subject to a 6% excess contribution tax penalty.
Special rules apply to withdrawals of excess contributions. These dollar and
age limits do not apply to tax-free "rollovers" or transfers from other IRAs
or from other tax-favored plans that the Code allows.
Annual contributions are generally deductible up to the above limits if
neither you nor your spouse was an "active participant" in another qualified
retirement plan during the taxable year. You will not be treated as married
for these purposes if you lived apart for the entire taxable year and file
separate returns. For 1998, if you are an "active participant" in another
retirement plan and your adjusted gross income is $30,000 or less ($50,000 for
married couples filing jointly, however, never fully deductible for a married
person filing separately), annual contributions are fully deductible. However,
contributions are not deductible if your adjusted gross income is over $40,000
($60,000 for married couples filing jointly, $10,000 for a married person
filing separately). If your adjusted gross income falls between these amounts,
your maximum deduction will be phased out. For an individual who is not an
"active participant" but whose spouse is, the adjusted gross income limits for
the nonactive participant spouse is $150,000 for a full deduction (with a
phase-out between $150,000 and $160,000). If you file a joint return, and you
and your spouse is under age 70 1/2, you and your spouse may be able to make
annual IRA contributions of up to $4,000 ($2,000 each) to two IRAs, one in
your name and one in your spouse's. Neither can exceed $2,000, nor can it
exceed your joint compensation.
Taxable withdrawals (other than tax-free transfers or "rollovers" to other
individual retirement arrangements) before age 59 1/2 are subject to a 10% tax
penalty. This penalty does not apply to withdrawals (1) paid to a beneficiary
or your estate after your death; (2) due to your permanent disability (as
defined in the Code); (3) made in substantially equal periodic payments (not
less frequently than annually) over the life or life expectancy of you or you
and another person named by you as your beneficiary; (4) made after December
31, 1996 to pay deductible medical expenses; (5) made after December 31, 1996
to enable certain unemployed persons to pay medical insurance premiums; (6)
made after December 31, 1997 to pay for qualified higher education expenses;
or (7) made after December 31, 1997 for qualified first time home purchases.
If you are under age 59 1/2 and are receiving Systematic Withdrawal Program
payments that you intend to qualify as a series of substantially equal
periodic payments under (S)72(t) or (S)72(q) of the Code and thus not subject
to the 10% tax penalty, any modifications to your Systematic Withdrawal
Program payments before age 59 1/2 or five years after beginning Systematic
Withdrawal Program payments will result in the retroactive imposition of the
10% tax penalty. You should consult with your tax adviser to determine whether
you are eligible to rely on any exceptions to the 10% tax penalty rule before
you elect to receive any Systematic Withdrawal Program payments or make any
modification to your Systematic Withdrawal Program payments.
If you made both deductible and non-deductible contributions, a partial
withdrawal will be treated as a pro-rata withdrawal of both, based on all of
your IRAs (not just the IRA Contracts). The portion of the withdrawal
attributable to non-deductible contributions (but not the earnings on them) is
a nontaxable return of principal, and the 10% tax penalty does not apply. You
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must keep track of which contributions were deductible and which weren't, and
make annual reports to the IRS if non-deductible contributions were made.
Withdrawals may be transferred to another IRA without Federal tax
consequences if Code requirements are met. Your Contract is not forfeitable
and you may not transfer it.
Your entire interest in the IRA Contract must be withdrawn or begun to be
withdrawn generally by April 1 of the calendar year following the year in
which you reach age 70 1/2 and a tax penalty of 50% applies to withdrawals
which should have been made but were not. Complex rules apply to the timing
and calculation of these withdrawals. Other complex rules apply to how rapidly
withdrawals must be made after your death. Generally, if you die before the
required withdrawals have begun, we must make payment of your entire interest
under the Contract within five years of the year in which you died or begin
payments under an income annuity allowed by the Code to your beneficiary over
his or her lifetime or over a period not beyond your beneficiary's life expec-
tancy starting by the December 31 of the year following the year in which you
die. If your spouse is your beneficiary and, if your Contract permits, pay-
ments may be made over your spouse's lifetime or over a period not beyond your
spouse's life expectancy starting by the December 31 of the year in which you
would have reached age 70 1/2, if later. If your beneficiary is your spouse,
he or she may elect to continue the Contract as his or her own IRA Contract
after your death. If you die after the required withdrawals have begun, pay-
ments must continue to be made at least as rapidly as under the method of dis-
tribution that was used as of the date of your death.
The IRS allows you to aggregate the amount required to be withdrawn from
each individual retirement arrangement you own and to withdraw this amount in
total from any one or more of the individual retirement arrangements you own.
PEDC Contract. PEDC plans are available to State or local governments and
certain tax-exempt organizations as described in (S)457 of the Code. These
plans, which must meet the requirements of (S)457(b), provide certain tax
deferral benefits to employees and independent contractors. The plans are not
available to churches and qualified church-controlled organizations. A PEDC
plan maintained by a State or local government must be held in trust (or
custodial account or annuity contract) for the exclusive benefit of plan
participants and their beneficiaries. However, for state or local government
plans in existence on August 20, 1996, these requirements do not have to be
met prior to January 1, 1999. Plan benefit deferrals, contributions and all
income attributable to such amounts under PEDC plans, other than those
maintained by a State or local government as described above, are (until made
available to the participant or other beneficiary) solely the property of the
employer, subject to the claims of the employer's general creditors.
The compensation amounts that may be deferred under a PEDC plan may not
exceed certain deferral limits established under the Federal tax law. In
addition, contributions to other plans may reduce the deferral limit even
further.
Under the plan, amounts will not be made available to participants or
beneficiaries until the earliest of (1) the calendar year in which the
participant reaches age 70 1/2, (2) when the participant separates from
service with the employer, or (3) when the participant is faced with an
unforeseeable emergency as described in the income tax regulations. Amounts
will not be treated as "made available" under these rules if (i) an election
to defer commencement of a distribution is made by the participant and such
election meets certain requirements or, (ii) the total amount payable is
$5,000 or less and certain other requirements are met.
Withdrawals must conform to the complex minimum distribution requirements of
the Code, including the requirement that distributions must generally begin no
later than April 1 of the calendar year following the later of: the year in
which the participant attains age 70 1/2 or the year the participant retires.
Although the minimum distribution rules are similar to the rules summarized
above for TSAs, there are some differences. For example, for PEDC plans, any
distribution payable over a period of more than one year can only be made in
substantially non-increasing amounts, and generally distributions may not
exceed 15 years.
Special rules apply to certain non-governmental PEDC plans deferring
compensation from taxable years beginning before January 1, 1987 (or beginning
later but based on an agreement in writing on August 16, 1986 and which then
provided for deferral of fixed amounts or amounts determined by a fixed
formula).
Non-Qualified Contract for (S)457(f) Deferred Compensation Plans. These are
deferred compensation arrangements generally for a select group of management
or highly compensated employees and individual independent contractors
employed or engaged by State or local governments or non-church tax-exempt
organizations. In this arrangement, the tax-exempt entity (e.g., a hospital)
deposits your deferred compensation amounts and earnings credited to these
amounts into a trust, which at all times is subject to the claims of the
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employer's bankruptcy and insolvency creditors. The trust owns a Non-Qualified
Contract which may be subject to the Non-Qualified Contract rules described
below. Since the trust is a grantor trust, any tax consequences arising out of
ownership of the Non-Qualified Contract will flow to the tax-exempt entity
that is the grantor of such trust. Each tax-exempt entity should consult its
own tax advisor with respect to the tax rules governing the Contract. You can
defer taxation of compensation until the first taxable year in which there is
not a substantial risk of forfeiture to your right to such compensation.
Any amount made available under the plan to you or your beneficiary is
generally taxed according to the annuity rules under (S)72. Thus, when
deferred compensation is no longer subject to a substantial risk of
forfeiture, it is immediately includable in your income and it becomes "after-
tax" contributions for the purposes of the tax rules governing income plan
payments in calculating the "exclusion ratio." Certain distributions made
before you are age 59 1/2 may be subject to a 10% tax penalty. It is unclear
whether this penalty applies with respect to distributions made for this type
of plan. Thus, you should consult your own tax advisor to clarify this issue.
Since there is some uncertainty as to how the Internal Revenue Service and the
courts will treat the "rolling vesting" aspect of this arrangement, you should
consult your own tax advisor to clarify this issue.
Given the complexity and uncertainty inherent in this area of the tax law,
entities considering the purchase of this Contract to fund a (S)457(f)
deferred compensation plan should consult with their own tax advisors
regarding the application of the relevant rules to their particular situation.
In connection with the sale of the Non-Qualified Contract for (S)457(f)
Deferred Compensation Plans, MetLife consulted special tax counsel regarding
the major Federal tax issues under (S)457. This advice from such counsel has
not been updated to reflect changes, if any, in the law and such advice was
rendered solely to MetLife and may not be relied upon by any person
considering the purchase of the Contract.
Non-Qualified Contract for (S)451 Deferred Fee Arrangements. Under a (S)451
deferred fee arrangement, a third party which is a tax-exempt entity (e.g., a
hospital) enters into a deferred fee arrangement with a taxable entity, the
employer, that provides services to the third party. These deferred fees are
used to fund a deferred compensation plan for the taxable entity's employees
who are a select group of management or highly compensated employees or
individual independent contractors. The deferred fees are contributed by the
tax-exempt entity into a trust that is subject to the claims of its bankruptcy
and insolvency creditors, and, when paid or made available to the taxable
entity, are subject to the claims of the taxable entity's bankruptcy and
insolvency creditors. Such arrangement, in accordance with the provisions of
(S)451, enables the taxable entity to defer compensation until the year in
which the amounts are paid or made available to it, and enables the employees
of the taxable entity who are participants in its deferred compensation plan
to defer compensation until the year in which the amounts are paid or made
available to them, unless under the method of accounting used in computing
taxable income, such amount is to be properly accounted for in a different
period. The taxable entity will be able to deduct as employee compensation the
amounts included in income by the participant-employees of its deferred
compensation plan, subject to such sums being reasonable compensation and not
disguised dividends.
A trust established by the tax-exempt entity will own a Non-Qualified
Contract which may be subject to taxation rules as described below under Non-
Qualified Contracts. Since the trust is a grantor trust, any tax consequences
arising out of ownership of the Non-Qualified Contract will flow to the tax-
exempt entity that is the grantor of such trust. Each tax-exempt entity should
consult its own tax advisor with respect to the tax rules governing the
Contract. Participants in the taxable entity's deferred compensation plan must
look to the taxable entity for payments under the plan. These persons should
consult their own tax advisor for information on the tax treatment of these
payments made under the plan.
Given the complexity and uncertainty inherent in this area of the tax law,
entities considering the purchase of this Contract to fund a (S)451 deferred
fee arrangement should consult with their own tax advisors regarding the
application of the relevant rules to their particular situation. In connection
with the sale of the Non-Qualified Contract for (S)451 Deferred Fee
Arrangements, MetLife consulted special tax counsel regarding the major
Federal tax issues under (S)451. This advice from such counsel has not been
updated to reflect changes, if any, in the law and such advice was rendered
solely to MetLife and may not be relied upon by any person considering the
purchase of the Contract.
Non-Qualified Contract for (S)451 Deferred Compensation Plans. Under a
(S)451 deferred compensation plan, a select group of management or highly
compensated employees or individual independent contractors can defer
compensation until the year in which the amounts are paid or made available to
them, unless under the method of accounting used in computing taxable income
such
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amount is to be properly accounted for in a different period. Participants
should consult their own tax advisors for information on the tax treatment of
these payments.
A (S)451 plan could be sponsored by either a taxable entity or certain tax-
exempt entities which meet the "grandfather" requirements described below.
Taxable entities would be able to deduct as compensation the amounts included
in income by the participant of the deferred compensation plan, subject to
such sums being reasonable compensation and not disguised dividends. For tax-
exempt entities, if certain Tax Reform Act of 1986 "grandfather" requirements
are adhered to, (S)451 rather than (S)457 should apply to their deferred
compensation plans. Tax-exempt entities should consult their own tax advisors
to ascertain whether these "grandfather" requirements are met.
A trust established by either the taxable or the grandfathered tax-exempt
entity would own a Non-Qualified Contract which may be subject to taxation
rules as described below under "Non-Qualified Contracts". Since the trust
would be a grantor trust, any tax consequences arising out of ownership of the
Non-Qualified Contract will flow to the tax-exempt entity or taxable entity
that is the grantor of such trust. Such entities should consult their own tax
advisors with respect to the tax rules governing the Contract.
Given the complexity and uncertainty inherent in this area of the tax law,
entities considering the purchase of this Contract to fund a (S)451 deferred
compensation plan should consult with their own tax advisors regarding the
application of the relevant rules to their particular situation. In connection
with the sale of the Non-Qualified Contract for (S)451 Deferred Compensation
Plans, MetLife consulted special tax counsel regarding the major Federal tax
issues under (S)451. This advice from such counsel has not been updated to
reflect changes, if any, in the law and such advice was rendered solely to
MetLife and may not be relied upon by any person considering the purchase of
the Contract.
Non-Qualified Contract for (S)457(e)(11) Severance and Death Benefit
Plans. These are severance and death benefit arrangements for adoption by tax-
exempt entities. If the employer is subject to ERISA, the arrangement must be
adopted exclusively for a select group of management or highly compensated
employees or individual independent contractors. The employer deposits
deferral amounts, which will be used to provide severance and death benefits,
into a trust which is subject at all times to the claims of the employer's
bankruptcy and insolvency creditors. As the owner of a Non-Qualified Contract,
the trust may be subject to the rules described below under Non-Qualified
Contracts. Since the trust is a grantor trust, any tax consequences arising
out of ownership of the Non-Qualified Contract will flow to the employer, the
grantor of such trust. Each employer should consult with its own tax advisor
with respect to the tax rules governing the Contract.
The Federal income tax consequences to you of this arrangement depend on
whether the program qualifies as a "bona-fide severance pay" and a "bona-fide
death benefit" plan as described in (S)457(e)(11) of the Code. If the
arrangement qualifies as a "bona-fide severance pay" and "bona-fide death
benefit" plan, (S)451 of the Code will apply and you will not be taxed on your
deferral amounts until the tax year in which they are paid or made available
to you, unless under the method of accounting you use in computing taxable
income such amount is to be properly accounted for in a different period. If
the arrangement does not qualify as a "bona-fide severance pay" and "bona-fide
death benefit" plan, your deferral amounts will be subject to tax in the year
in which they are deferred. In that event, if you have not reported such
income, in addition to the Federal income tax you will have to pay, you will
be assessed interest, and you may be subject to certain penalties by the
Internal Revenue Service.
Special Tax Considerations for Non-Qualified Contract for (S)457(e)(11)
Severance and Death Benefit Plans. There is a considerable risk that this
arrangement may not qualify as a "bona-fide severance pay" plan under
(S)457(e)(11), the applicable section of the Code. The term "bona-fide
severance pay" plan is not defined in that section. The term "severance pay"
plan has, however, been construed under other Code sections and under
Department of Labor regulations issued under the Employee Retirement Income
Security Act of 1974. In connection with the sale of the Non-Qualified
Contract for Section 457(e)(11) Severance and Death Benefit Plans, MetLife
consulted special tax counsel regarding the major Federal tax issues under
(S)457. Subsequently, the United States Court of Appeals for the Federal
Circuit indicated that for purposes of another Code section, a severance pay
plan with features similar to this arrangement would not qualify as a valid
severance pay plan. While this decision addresses severance pay plans in a
different Code context, it is probable that a court would consider it in
determining the tax consequences of this arrangement. This advice received
from such counsel has not been updated to reflect this decision or other
changes in the law, and such advice was rendered solely to MetLife and may not
be relied upon by any person considering the purchase of the Contract. You
should consult with your own tax advisor to determine if the potential
advantages to you of this arrangement outweigh the potential tax risks in view
of your individual circumstances.
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Non-Qualified Contracts. No limits apply under the Code to the amount of
purchase payments that you may make. Tax on income earned under the Contracts
is generally deferred until it is withdrawn only if you as owner of the
Contract are an individual (or are treatable as a natural person under certain
other circumstances specified by the Code). The following discussion assumes
that this is the case.
Any withdrawal is generally treated as coming first from earnings (and thus
subject to tax) and next from your contributions (and thus a nontaxable return
of principal) only after all earnings are paid out. This rule does not apply
to payments made under income annuities, however. Such payments are subject to
an "exclusion ratio" which determines how much of each payment is a non-
taxable return of your contributions and how much is a taxable payment of
earnings. Once the total amount treated as a return of your contributions
equals the amount of such contributions, all remaining payments are fully
taxable. If you die before all contributions are returned, the unreturned
amount may be deductible on your final income tax return or deductible by your
beneficiary if payments continue after your death. We will tell the purchaser
of an income annuity what your contributions were and how much of each income
payment is a non-taxable return of contributions.
Withdrawals (other than tax-free exchanges to other Non-Qualified contracts)
before you are age 59 1/2 are subject to a 10% tax penalty. This penalty does
not apply to withdrawals (1) paid to a beneficiary or your estate after your
death; (2) due to your permanent disability (as defined in the Code); or (3)
made in substantially equal periodic payments (not less frequently than
annually) over the life or life expectancy of you or you and another person
named by you as your beneficiary.
Your Non-Qualified Contract may be exchanged for another non-qualified
contract without incurring Federal income taxes if Code requirements are met.
Under the Code, withdrawals need not be made by a particular age. However, it
is possible that the Internal Revenue Service may determine that the Contract
must be surrendered or income payments must commence by a certain age, e.g.,
85 or older. If you die before payments under an income annuity begins, we
must make payment of your entire interest under the Contract within five years
of your death or begin payments under an income annuity allowed by the Code to
your beneficiary within one year of your death. If your spouse is your
beneficiary or a co-owner of the Non-Qualified Contract, this rule does not
apply. If you die after income payments begin, payments must continue to be
made at least as rapidly as under the method of distribution that was used at
the time of your death in accordance with the income type selected.
The tax law treats all non-qualified contracts issued after October 21, 1988
by the same company (or its affiliates) to the same owner during any one
calendar year as one annuity contract. This may cause a greater portion of
your withdrawals from the Contract to be treated as income than would
otherwise be the case. Although the law is not clear, the aggregation rule may
also adversely affect the tax treatment of payments received under an income
annuity where the owner has purchased more than one non-qualified annuity
during the same calendar year from the same or an affiliated company after
October 21, 1988, and is not receiving income payments from all annuities at
the same time.
HOW DO FEDERAL INCOME TAXES AFFECT YOUR INCOME ANNUITY?
Generally, all purchase payments under the Income Annuities, other than
purchase payments under Non-Qualified and non-deductible contributions to a
IRA Income Annuities will be on a "before-tax" basis. This means that the
purchase payment was either a reduction from income, entitled you to a tax
deduction or was not subject to current income tax. Because of this, Federal
income taxes are payable on the full amount of money paid as income payments
under the Income Annuity.
Generally, the Enhanced Non-Qualified Preference Plus Income Annuities are
issued on an "after-tax basis" so that making a purchase payment does not
reduce the taxes you pay. That portion of any income payment that represents
income is taxed when you receive it, but that portion that represents the
purchase payment is a nontaxable return of principal.
Under some circumstances certain Income Annuities accept both purchase
payments that have entitled you or the owner to a current tax deduction or to
a reduction in taxable income and those that do not. Taxation of income
payments depends on whether or not you or the owner were entitled to deduct or
exclude from income the purchase payment in compliance with the Code.
All taxable income payments (other than income payments under the PEDC
Income Annuities) will be subject to Federal income tax withholding unless the
payee elects to have no withholding. The rate of withholding is as determined
by the Code at the time of payment. All taxable income payments under the PEDC
Income Annuities will be subject to the same federal income tax withholding
treatment as regular wages.
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Income payments (other than tax-free transfers as permitted under the Code
and payments made under a PEDC plan) that are allowed before age 59 1/2 are
generally subject to an additional 10% tax penalty on the taxable portion of
the income payment. This penalty does not apply to income payments (1) paid to
your beneficiary or your estate after your death; (2) due to your permanent
disability (as defined in the Code); or (3) made in substantially equal
periodic payments (not less frequently than annually) over your life or life
expectancy of you and another person named by you, (for TSAs and 403(a) plans,
you must also be separated from service when payments begin); and (4) under a
Non-Qualified Income Annuity purchased with a single purchase payment which
provides for substantially equal payments (to be made not less frequently then
annually) commencing no later than one year from the purchase date.
Additionally, under TSAs and 403(a) plans the penalty does not apply to income
payments (1) made to you after you separate from service with your employer
after age 55; (2) made to you on account of deductible medical expenses
(whether or not you actually itemize deductions); or (3) made to an "alternate
payee" under a "qualified domestic relations order" (normally a spouse or ex-
spouse). For IRAs the 10% tax penalty will also not apply to income payments
to pay deductible medical expenses (whether or not you actually itemize your
deduction) to enable certain unemployed persons to pay medical insurance
premiums; made after December 31, 1997 to pay for qualified higher education
expenses; or made after December 31, 1997, for qualified first time home
purchases. There is a possibility that if you make transfers as described
earlier in this Prospectus before age 59 1/2 or within five years of the
purchase of the Income Annuity, the exercise of the transfer provision may
cause the retroactive imposition of this tax.
The following paragraphs will briefly summarize some of the tax rules, but
we will make no attempt to mention or explain every single rule that may be
relevant to you. We are not responsible for determining if your plan or
arrangement satisfies the requirements of the Code.
For taxable years after 1996, if you do not have a 5% or more ownership
interest in your employer, distributions of your entire interest under the
TSA, PEDC and 403(a) Income Annuities must be made beginning no later than the
April 1 of the calendar year following the later of: the year in which you
reach age 70 1/2 or, to the extent permitted under your plan or contract, the
year you retire. A tax penalty of 50% applies to payments which should have
been made but were not. Complex rules apply to the timing and calculation of
these income payments. Other complex rules apply to how rapidly income
payments must be made after your death. If you die before payments begin under
an Income Annuity, the Code generally requires that your entire interest under
the Income Annuity be paid within five years of the year in which you died. If
you die before payments begin under this Income Annuity, we will pay your
entire interest under the Income Annuity in a lump sum to the beneficiary
after we receive proof of death. If you die after Income Annuity payments
begin, payments must continue to be made in accordance with the income type
selected. The Code requires that payments continue to be made at least as
rapidly as under the method of distribution that was used as of the date of
your death. If the Income Annuity is subject to the Retirement Equity Act,
your spouse has certain rights which may be waived with the written consent of
the spouse.
Any income payments distributed under 403(a) Income Annuities are generally
taxed according to the rules described under (S)72 of the Code.
Non-Qualified Income Annuity for (S)457(f) Deferred Compensation Plans. Any
income payments distributed under the plan to you or your beneficiary are
generally taxed according to the annuity rules under (S)72. Thus, when
deferred compensation is no longer subject to a substantial risk of
forfeiture, it is immediately includible in your income and it becomes an
"after-tax" purchase payment for the purposes of the tax rules governing
income payments in calculating the "exclusion ratio." It is unclear whether
the 10% tax penalty for distributions made prior to age 59 1/2 applies with
respect to income payments made under this type of plan. Thus, you should
consult your own tax advisor to clarify this issue.
Given the complexity and uncertainty inherent in this area of the tax law,
entities considering the purchase of this Income Annuity to fund a (S)457(f)
deferred compensation plan should consult with their own tax advisors
regarding the application of the relevant rules to their particular situation.
In connection with the sale of the Non-Qualified Income Annuity for (S)457(f)
Deferred Compensation Plans, MetLife consulted special tax counsel regarding
the major Federal tax issues under (S)457. This advice from such counsel has
not been updated to reflect changes, if any, in the law and such advice was
rendered solely to MetLife and may not be relied upon by any person
considering the purchase of the Contract.
Non-Qualified Income Annuity for (S)451 Deferred Fee Arrangements. A trust
established by the tax-exempt entity will own a Non-Qualified Income Annuity
which may be subject to taxation rules as described below under "Non-Qualified
Income Annuities." Since the trust is a grantor trust, any tax consequences
arising out of ownership of the Non-Qualified Income Annuity
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will flow to the tax-exempt entity that is the grantor of such trust. Each
tax-exempt entity should consult its own tax advisor with respect to the tax
rules governing the Income Annuity. Participants in the taxable entity's
deferred compensation plan must look to the taxable entity for income payments
under the plan. It is unclear whether the 10% tax penalty for distributions
made prior to age 59 1/2 applies with respect to income payments made under
this type of plan. These persons should consult their own tax advisor for
information on the tax treatment of these income payments made under the plan.
Given the complexity and uncertainty inherent in this area of the tax law,
entities considering the purchase of this Income Annuity to fund a (S)451
deferred fee
arrangement should consult with their own tax advisors regarding the
application of the relevant rules to their particular situation. In connection
with the sale of the Non-Qualified Income Annuity for (S)451 Deferred Fee
Arrangements, MetLife consulted special tax counsel regarding the major
Federal tax issues under (S)451. This advice from such counsel has not been
updated to reflect changes, if any, in the law and such advice was rendered
solely to MetLife and may not be relied upon by any person considering the
purchase of the Contract.
Non-Qualified Income Annuity for (S)451 Deferred Compensation Plans. A trust
established by the tax-exempt entity or the taxable entity will own a Non-
Qualified Income Annuity which may be subject to taxation rules as described
below under "Non-Qualified Income Annuities." Since the trust is a grantor
trust, any tax consequences arising out of ownership of the Non-Qualified
Income Annuity will flow to the tax-exempt entity or the taxable entity that
is the grantor of such trust. Each such entity should consult its own tax
advisor with respect to the tax rules governing the Income Annuity.
Participants will not be taxed on their tax deferred compensation amounts
until the year in which they are paid or made available to them, unless under
the method of accounting the participant uses in computing taxable income such
amount is to be properly accounted for in a different period.
It is unclear whether the 10% tax penalty for distributions made prior to
age 59 1/2 applies with respect to income payments made under this type of
plan. Thus, you should consult your own tax advisor to clarify this issue.
Given the complexity and uncertainty inherent in this area of the tax law,
entities considering the purchase of this Income Annuity to fund a (S)451
deferred compensation plan should consult with their own tax advisors
regarding the application of the relevant rules to their particular situation.
In connection with the sale of the Non-Qualified Income Annuity for (S)451
Deferred Compensation Plans MetLife consulted special tax counsel regarding
the major Federal tax issues under (S)451. This advice from such counsel has
not been updated to reflect changes, if any, in the law and such advice was
rendered solely to MetLife and may not be relied upon by any person
considering the purchase of the Contract.
Non-Qualified Income Annuity for (S)457(e)(11) Severance and Death Benefit
Plans. As the owner of a Non-Qualified Income Annuity, the trust is generally
subject to the rules described below under "Non-Qualified Income Annuities."
Since the trust is a grantor trust, any tax consequences arising out of
ownership of the Non-Qualified Income Annuity will flow to the employer, the
grantor of such trust. Each employer should consult with its own tax advisor
with respect to the tax rules governing the Income Annuity.
The Federal income tax consequences to you of this arrangement depend on
whether the program qualifies as a "bona-fide severance pay" and a "bona-fide
death benefit" plan as described in (S)457(e)(11) of the Code. If the
arrangement qualifies as a "bona-fide severance pay" and "bona-fide death
benefit" plan (S)451 of the Code will apply and you will be taxed in the tax
year in which such benefits are paid or made available to you, unless under
the method of accounting you use in computing taxable income such amount is to
be properly accounted for in a different period. If the arrangement does not
qualify as a "bona-fide severance pay" and "bona-fide death benefit" plan, the
amounts which constituted your purchase payment will be subject to tax in the
year in which they are deferred. In that event, if you have not reported such
income, in addition to the Federal income tax you will have to pay, you will
be assessed interest, and you may be subject to certain penalties by the
Internal Revenue Service. It is unclear whether the 10% tax penalty for
distributions made prior to age 59 1/2 applies with respect to income payments
made under this type of plan. Thus, you should consult your own tax advisor to
clarify this issue.
Special Tax Considerations for Non-Qualified Income Annuity for
(S)457(e)(11) Severance and Death Benefit Plans. There is a considerable risk
that this arrangement may not qualify as a "bona-fide severance pay" plan
under (S)457(e)(11), the applicable section of the Code. The term "bona-fide
severance pay" plan is not defined in that section. The term "severance pay"
plan has, however, been construed under other Code sections and under
Department of Labor regulations issued under the Employee Retirement Income
Security Act of 1974. In connection with the sale of the Non-
FFA-49
<PAGE>
...............................................................
Qualified Income Annuity for Section 457(e)(11) Severance and Death Benefit
Plans, MetLife consulted special tax counsel regarding the major Federal tax
issues under (S)457. Subsequently, the United States Court of Appeals for the
Federal Circuit indicated that for purposes of another Code section, a
severance pay plan with features similar to this arrangement would not qualify
as a valid severance pay plan. While this decision addresses severance pay
plans in a different Code context, it is probable that a court would consider
it in determining the tax consequences of this arrangement. This advice
received from such counsel has not been updated to reflect this decision or
other changes in the law, and such advice was rendered solely to MetLife and
may not be relied upon by any person considering the purchase of the Income
Annuity. You should consult with your own tax advisor to determine if the
potential advantages to you of this arrangement outweigh the potential tax
risks in view of your individual circumstances.
Non-Qualified Income Annuities. The following discussion assumes that you
are an individual (or are treated as a natural person under certain other
circumstances specified by the Code). Income payments are subject to an
"exclusion ratio" which determines how much of each income payment is a non-
taxable return of your purchase payment and how much is a taxable payment of
earnings. Generally, once the total amount treated as a return of your
purchase payment equals the amount of such purchase payment, all remaining
income payments are fully taxable. If you die before the purchase payment is
returned, the unreturned amount may be deductible on your final income tax
return or deductible by your beneficiary if income payments continue after
your death. We will tell the purchaser of an Income Annuity what your purchase
payment was and how much of each income payment is a non-taxable return of
your purchase payment.
If you die before income payments begin, the Code generally requires payment
of your entire interest in the Enhanced Non-Qualified Preference Plus Income
Annuity be made within five years of the date of your death. If you die before
income payments begin, we will pay your entire interest under the Income
Annuity to your beneficiary in a lump sum after we receive proof of your
death. If you die after income payments begin, payments must continue to be
made at least as rapidly as under the method of distribution before your
death, in accordance with the income type selected.
The tax law treats two or more non-qualified contracts issued after October
21, 1988 by the same company (or its affiliates) to the same owner during any
one calendar year as one annuity contract. It is unclear whether this rule
adversely affects the tax treatment of income payments received under a
contract which was issued during the same calendar year in which you purchased
another annuity contract from the same company (or its affiliates) under which
you are not yet receiving income payments.
FFA-50
<PAGE>
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Cover Page................................................................ 1
Table of Contents......................................................... 1
Independent Auditors...................................................... 2
Services.................................................................. 2
Distribution of Certificates and Interests in the Contracts and Income An-
nuities.................................................................. 2
Early Withdrawal Charge................................................... 2
Variable Income Payments.................................................. 2
Performance Data.......................................................... 4
Financial Statements of the Separate Account.............................. 15
Financial Statements of MetLife........................................... 37
</TABLE>
FFA-51
<PAGE>
APPENDIX
ANNUITY TAX TABLE
The following is a current list of jurisdictions in which annuity taxes apply
in respect of the Contracts and Income Annuities and the applicable annuity
tax rates:
<TABLE>
<CAPTION>
KEOGH NON-
TSA IRA, SIMPLE IRA AND 403(A) PEDC QUALIFIED
CONTRACTS AND SEP CONTRACTS CONTRACTS CONTRACTS CONTRACTS
AND INCOME AND INCOME AND INCOME AND INCOME AND INCOME
ANNUITIES ANNUITIES(1) ANNUITIES ANNUITIES(2) ANNUITIES
---------- ----------------- ---------- ------------ ----------
<S> <C> <C> <C> <C> <C>
California.............. 0.5% 0.5%(3) 0.5% 2.35% 2.35%
District of Columbia.... 2.25% 2.25% 2.25% 2.25% 2.25%
Kentucky(4)............. 2.0% 2.0% 2.0% 2.0% 2.0%
Maine................... -- -- -- -- 2.0%
Nevada.................. -- -- -- -- 3.5%
U.S. Virgin Islands..... 5.0% 5.0% 5.0% 5.0% 5.0%
South Dakota............ -- -- -- -- 1.25%
Puerto Rico............. 1.0% 1.0% 1.0% 1.0% 1.0%
West Virginia........... 1.0% 1.0% 1.0% 1.0% 1.0%
Wyoming................. -- -- -- -- 1.0%
</TABLE>
- -------
(1) Annuity tax rates applicable to IRA, SIMPLE IRA and SEP Contracts and
Income Annuities purchased for use in connection with individual
retirement trust or custodial accounts meeting the requirements of
(S)408(a) of the Code are included under the column headed "IRA, SIMPLE
IRA and SEP Contracts and Income Annuities."
(2) Annuity tax rates applicable to Contracts and Income Annuities purchased
under retirement plans of public employers meeting the requirements of
(S)401(a) of the Code are included under the column headed "Keogh
Contracts and Income Annuities."
(3) With respect to Contracts and Income Annuities purchased for use in
connection with individual retirement trust or custodial accounts meeting
the requirements of (S)408(a) of the Code, the annuity tax rate in
California is 2.35% instead of 0.5%.
(4) The annuity tax in Kentucky is repealed effective January 1, 2000.
FFA-52
<PAGE>
REQUEST FOR A STATEMENT OF
ADDITIONAL INFORMATION/CHANGE OF ADDRESS
If you would like any of the following Statements of Additional Information, or
have changed your address, please check the appropriate box below and return to
the address below.
[_] Metropolitan Life Separate Account E, Metropolitan Series Fund, Inc. and
Calvert Social Balanced Portfolio
[_] Calvert Social Mid Cap Growth Portfolio
[_] Fidelity Variable Insurance Products Funds
[_] I have changed my address. My CURRENT address is:
Name:
- ------------------------------ --------------------------------
(Contract Number) Address:
--------------------------------
- ------------------------------ --------------------------------
(Signature) zip
METROPOLITAN LIFE INSURANCE COMPANY
ATTN: ALAN DEMICHELE
RETIREMENT AND SAVINGS CENTER, AREA 2H
ONE MADISON AVENUE
NEW YORK, NY 10010
<PAGE>
Supplement to Prospectus for Metropolitan Life Separate Account E for
Preference Plus Group and Individual Annuity Contracts dated May 1, 1998.
1. All references throughout the Prospectus to certain investment division
names and a Portfolio name are changed as follows:
<TABLE>
<CAPTION>
FROM: TO:
----- ---
<S> <C>
Income Division State Street Research Income Division
Diversified Division State Street Research Diversified Division
Stock Index Division MetLife Stock Index Division
Growth Division State Street Research Growth Division
Aggressive Growth Division State Street Research Aggressive Growth Division
International Stock
Division Santander International Stock Division
State Street Research
International Stock
Portfolio Santander International Stock Portfolio
</TABLE>
2. All references throughout the Prospectus to Systematic Withdrawal Income
Program and SWIP are replaced with Systematic Withdrawal Program.
3. The second sentence of the third paragraph on the first page is changed to
read as follows:
The choices depend on what is available under your Contract or Income
Annuity and may include the Fixed Interest Account, and through
Metropolitan Life Separate Account E, the State Street Research Income,
State Street Research Diversified, MetLife Stock Index, State Street
Research Growth, Janus Mid Cap, Loomis Sayles High Yield Bond, State Street
Research Aggressive Growth, T. Rowe Price Small Cap Growth, Scudder Global
Equity, Santander International Stock (formerly known as State Street
Research International Stock), Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Portfolios of the Metropolitan Series Fund, Inc.
("Metropolitan Fund").
4. Add the following information to the Table of Expenses on A-PPA-4 and A-
PPA-5:
<TABLE>
<CAPTION>
OTHER EXPENSES
METROPOLITAN FUND ANNUAL EXPENSES AFTER EXPENSE
(AS A PERCENTAGE OF AVERAGE NET ASSETS) MANAGEMENT FEES REIMBURSEMENT TOTAL
--------------------------------------- --------------- -------------- -----
<S> <C> <C> <C>
Harris Oakmark Large Cap Value
Portfolio(e)(h)....................... .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(h).......................... .25 .20 .45
Morgan Stanley EAFE(R) Index
Portfolio(h).......................... .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(e)(h)....................... .70 .20 .90
Russell 2000 Index Portfolio(h)........ .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(e)(h)....................... .70 .20 .90
</TABLE>
EXAMPLE
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division.... $85 $114 -- --
Lehman Brothers Aggregate Bond Index
Division.................................. 80 98 -- --
Morgan Stanley EAFE(R) Index Division...... 81 102 -- --
Neuberger&Berman Partners Mid Cap Value
Division.................................. 85 113 -- --
Russell 2000 Index Division................ 80 98 -- --
T. Rowe Price Large Cap Growth Division.... 85 113 -- --
</TABLE>
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998 98112R90 (exp0599) MLIC-LD
<PAGE>
If you annuitize at the end of the applicable time period or do not
surrender your Contract(i):
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division.... $23 $70 -- --
Lehman Brothers Aggregate Bond Index
Division.................................. 17 54 -- --
Morgan Stanley EAFE(R) Index Division...... 18 57 -- --
Neuberger&Berman Partners Mid Cap Value
Division.................................. 22 68 -- --
Russell 2000 Index Division................ 17 54 -- --
T. Rowe Price Large Cap Growth Division.... 22 68 -- --
</TABLE>
(h) The Portfolios commenced operations on November 9, 1998. Management
fees and other expenses for these Portfolios are estimated amounts
for the year ending December 31, 1998. Subject to receiving New
York State Insurance Department approval, MetLife has agreed to
bear all expenses (other than management fees, brokerage
commissions, taxes, interest and any extraordinary or non-recurring
expenses) in excess of .20% of the average net assets for each of
the Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond
Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index
and T. Rowe Price Large Cap Growth Portfolios, and .25% of the
average net assets for the Morgan Stanley EAFE(R) Index Portfolio
until each of the Portfolio's total net assets are at least $100
million, or until November 8, 2000, whichever is earlier.
5. The last sentence of footnote (g) on A-PPA-5 is deleted and substituted
with the following sentence:
MetLife ceased subsidizing such expenses for the Janus Mid Cap Portfolio as
of December 31, 1997, the T. Rowe Price Small Cap Growth Portfolio as of
January 23, 1998 and the Scudder Global Equity Portfolio as of July 1,
1998.
6. Footnote (h) on A-PPA-4 and A-PPA-5 is changed to footnote (i).
7. Replace the third sentence of the first paragraph under "WHAT ARE THE
INVESTMENT CHOICES AND HOW DO WE PROVIDE THEM?" on A-PPA-10 with the
following:
If approved in your state, the Loomis Sayles High Yield Bond, Janus Mid
Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, Harris Oakmark
Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley
EAFE(R) Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index
and T. Rowe Price Large Cap Growth Divisions are also available.
8. Replace the second paragraph in the left column through the first complete
paragraph in the right column on A-PPA-11 with the following:
State Street Research Income Portfolio: Seeks a) the highest possible
return, by combining current income with capital gains, consistent with
prudent investment risk, and b) secondarily, the preservation of capital by
investing at least 75% of its total assets in non-convertible debt
securities in the three highest rating categories as determined by a
nationally recognized statistical rating organization, or of comparable
quality.
State Street Research Diversified Portfolio: Seeks a high total return
while attempting to limit investment risk and preserve capital by investing
portions of its assets in: equity securities of the type that can be
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") by
normally investing most of its assets in common stocks included in the S&P
500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital
and income, and moderate current income. Generally, the greatest portion of
the Portfolio's assets will be invested in equity securities of good
quality where the stock price represents a good value based on
considerations such as price to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of
medium capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by
normally investing at least 65% of its assets in below investment grade
fixed income securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks
and other securities convertible into or carrying the right to acquire
common stocks of less mature companies with the potential for rapid growth
and companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group
of small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of
capital by generally investing most of its assets in equity securities
(primarily common stock) of established companies listed on U.S. or foreign
securities exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital
by normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total
assets in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of
the Lehman Brothers Aggregate Bond Index. The Portfolio will normally
invest most of its assets in fixed income securities included in the Lehman
Brothers Aggregate Bond Index.
Morgan Stanley EAFE (R) Index Portfolio: To equal the return of the Morgan
Stanley Capital International Europe, Australasia, Far East (MSCI EAFE(R))
Index. The Portfolio will normally invest most of its assets in equity
securities included in the MSCI EAFE(R) Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital
growth. The Portfolio will normally invest at least 65% of its total assets
in common stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000
Index. The Portfolio will normally invest most of its assets in common
stocks included in the Russell 2000 Index.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at
least 65% of its total assets in a diversified group of large
capitalization growth companies.
9. Add the following after the first sentence in the second complete
paragraph in the right column on A-PPA-11:
For providing investment management services to the Lehman Brothers
Aggregate Bond Index, MetLife Stock Index and Russell 2000 Index
Portfolios, we receive monthly compensation from each Portfolio at an
annual rate of .25% of the average daily value of the aggregate net assets
of each Portfolio. For providing investment management services to the
Morgan Stanley EAFE(R) Index Portfolio, we receive monthly compensation
from the Portfolio at an annual rate of .30% of the average daily assets of
the aggregate net assets of the Portfolio.
10. The last two sentences of the second complete paragraph in the right
column on A-PPA-11 are changed to read as follows:
For providing investment management services to the State Street Research
Aggressive Growth Portfolio, we receive monthly compensation at an annual
rate of .75% of the average daily value of the aggregate net assets of the
Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. We pay State Street
Research & Management Company, one of our subsidiaries, to provide us with
sub-investment management services for the State Street Research Income,
State Street Research Diversified, State Street Research Growth and State
Street Research Aggressive Growth Portfolios.
11. The third complete paragraph in the right column on A-PPA-11 is replaced
with the following:
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets
of the Portfolio up to $500 million, .70% of such assets on the next $500
million and .65% of such assets on amounts over $1 billion. Effective on or
about November 9, 1998, Santander Global Advisors, Inc., of which MetLife
owns 25% of the outstanding common stock, will become the sub-investment
manager for the Santander International Stock Portfolio.
12. Delete the last sentence of the first paragraph in the left column on A-
PPA-12 and substitute the following:
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets
of the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for
the T. Rowe Price Small Cap Growth and T. Rowe Price Large Cap Growth
Portfolios.
13. Add these two paragraphs following the first complete paragraph in the
left column on A-PPA-12:
For providing investment management services to the Harris Oakmark Large
Cap Value Portfolio, we receive monthly compensation from the Portfolio at
an annual rate of .75% of the average daily value of the aggregate net
assets of the Portfolio up to $250 million and .70% of such assets in
excess of $250 million. Harris Associates LP, whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to
the Harris Oakmark Large Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman
Partners Mid Cap Value Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .70% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .675% of such
assets on the next
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
$250 million, .65% of such assets on the next $500 million, .625% of such
assets on the next $750 million and .60% of such assets over $1.6 billion.
Neuberger & Berman Management Incorporated is the sub-investment manager for
the Neuberger & Berman Partners Mid Cap Value Portfolio.
14. Add the following after the fourth sentence under "CAN YOU MAKE SYSTEMATIC
WITHDRAWALS?" on A-PPA-14:
Beginning on or about December 15, 1998, if you choose to receive a
percentage of your Account Balance, we will determine the initial dollar
amount payable as of the date these payments begin and we will pay the
dollar amount over the remainder of the Contract Year. For example, if you
ask for a percentage equal to $12,000 and there are six months left in the
Contract Year, we will pay you $2,000 a month if payments are made monthly.
For each later Contract Year that the Systematic Withdrawal Program remains
in effect, we will pay you either the dollar amount that you have chosen or
a dollar amount equal to the percentage of your Account Balance you have
chosen, applied to your Account Balance as of your first Systematic
Withdrawal Program payment date in that Contract Year. We will pay this
amount over the full Contract Year. For example, if you ask for a
percentage equal to $12,000 a year, we will pay you $1,000 a month if
payments are to be made monthly.
15. Replace the third and fourth complete sentences in the left column on A-
PPA-15 with the following:
Changes to the specified dollar amount or percentage or to alter the timing
of payments may be made once a year prior to your Systematic Withdrawal
Program anniversary date or, on or about December 15, 1998, prior to the
beginning of any Contract Year, unless we agree otherwise. Requests for
such changes must be made at least 30 days prior to the Systematic
Withdrawal Program anniversary date or, on or about December 15, 1998, at
least 30 days prior to the beginning of any Contract Year, unless we agree
otherwise.
16. Replace the first sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on A-PPA-
15 with the following:
Each Systematic Withdrawal Program payment may be taken on a pro rata basis
from the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money.
17. Replace the third sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on A-PPA-
15 with the following:
You will also be able to select the percentage to be withdrawn from each
investment division and/or the Fixed Interest Account based on your
preference.
18. Replace the first sentence under "WILL YOU PAY AN EARLY WITHDRAWAL CHARGE
(SALES LOAD) WHEN YOU RECEIVE A SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?" on
A-PPA-15 with the following:
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of
payments over a twelve month period.
19. Add the following after the second sentence of the first paragraph under
"WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A
SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?" on A-PPA-15:
Beginning on or about December 15, 1998, if you have elected the Systematic
Withdrawal Program, we will treat the full amount to be paid in a Contract
Year as a lump sum withdrawal on the first Systematic Withdrawal Program
payment date for the first Contract Year for the purposes of determining
how much of the withdrawal will be exempt from the withdrawal charge. For
Contract Years thereafter, we will treat the full amount to be paid in a
Contract Year as a lump sum withdrawal as of the first Systematic
Withdrawal Program payment date after the Contract Year anniversary for
purposes of determining how much of the withdrawal will be exempt from the
withdrawal charge. However, each Systematic Withdrawal Program payment will
be treated separately as of the date of a withdrawal from your Contract to
determine whether or not it is subject to a withdrawal charge. We will
withdraw that portion of the withdrawal that constitutes the early
withdrawal charge when we make the Systematic Withdrawal Program payment.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
20. Add the following sentence before the last sentence of the first paragraph
under "WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU
RECEIVE A SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?" on A-PPA-15:
On or about December 15, 1998, only Systematic Withdrawal Program payments
in excess of the 10% Free Corridor will be subject to an early withdrawal
charge unless the payments are from other amounts to which an early
withdrawal charge no longer applies.
21. Add the following to paragraph numbered 3 under "CAN YOU MAKE WITHDRAWALS
OR TRANSFERS WITHOUT EARLY WITHDRAWAL CHARGES?" on A-PPA-16:
Beginning on or about December 15, 1998 and if approved in your state, the
Free Corridor withdrawal percentage of up to 10% of your Account Balance
may be taken in an unlimited number of partial withdrawals. For each
withdrawal we calculate the percentage it represents of your Account
Balance and whenever the total of such percentages exceeds the specified
percentage the early withdrawal charge applies.
22. The first sentence under "WHAT ARE THE INVESTMENT CHOICES?" on A-PPA-19 is
replaced with the following:
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive
Growth, Santander International Stock Divisions, and, if approved in your
state, Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small
Cap Growth, Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index,
Neuberger & Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Divisions described earlier in Section 1 under "YOUR
INVESTMENT CHOICES."
23. The last sentence of the last paragraph in the right column on A-PPA-25 is
replaced with the following:
The Separate Account may also advertise its performance in comparison to
appropriate indices, such as the Standard & Poor's 500 Composite Stock
Price Index, the Standard & Poor's Mid Cap 400 Index, the Standard & Poor's
Small Cap 600 Index, the Russell 2000 Index, the Russell 2000 Growth Index,
the Lehman Brothers Aggregate Bond Index, the Lehman Brothers
Government/Corporate Bond Index, the Merrill Lynch High Yield Bond Index,
the Morgan Stanley Capital International All Country World Index and the
Morgan Stanley Capital International Europe, Australasia, Far East Index.
24. The first sentence in the left column on A-PPA-26 is replaced with the
following:
Performance may be shown for certain investment strategies that are made
available under certain Contracts.
25. Add the following after the last complete sentence in the left column on
A-PPA-26:
The third strategy is the "Index SelectorSM." Under this strategy, once
during a specified period (i.e., quarterly, annually) transfers are made
among the Lehman Brothers Aggregate Bond Index, MetLife Stock Index, Morgan
Stanley EAFE(R) Index and Russell 2000 Index Divisions and the Fixed
Interest Account in order to bring the percentage of the total Account
Balance in each of these divisions and Fixed Interest Account back to the
current allocation of your choice of one of several asset allocation
models. The elements which form the basis for the models are provided by
MetLife which may rely on a third party for its expertise in creating
appropriate allocations. The models are designed to correlate to various
risk tolerance levels associated with investing and are subject to change
from time to time.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
26. Replace the sentence which starts at the bottom of the left column on A-
PPA-26 and continues into the right column on A-PPA-26 with the following:
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector
Return" for each asset allocation model will be calculated by presuming a
certain dollar value at the beginning of a period and comparing this dollar
value with the dollar value based on historical performance, at the end of
the period, expressed as a percentage.
27. Replace the next to last sentence in the right column on A-PPA-26 with the
following:
We may also show performance for the Equity Generator, Equalizer and Index
Selector investment strategies using other investment divisions for which
these strategies are made available in the future.
28. The last sentence in the left column on A-PPA-27 is replaced with the
following:
However, withdrawals from a Roth IRA of taxable converted amounts may be
subject to a penalty tax if made before age 59 1/2.
29. Replace the sentence which starts at the bottom of the right column on A-
PPA-27 and continues into the left column on A-PPA-28 with the following:
For 1998, if you are an "active participant" in another retirement plan and
your adjusted gross income is $30,000 or less ($50,000 for married couples
filing jointly, however, never fully deductible for a married person filing
separately), annual contributions are fully deductible. However,
contributions are not deductible if your adjusted gross income is over
$40,000 ($60,000 for married couples filing jointly, $10,000 for a married
person filing separately). If your adjusted gross income falls between
these amounts, your maximum deduction will be phased out.
30. Replace the last two sentences of the first complete paragraph in the left
column on A-PPA-29 with the following:
(See exception discussed below.) For conversions occurring in 1998, the
taxable amount will be included ratably in income over a four year period
beginning in 1998, unless you elect otherwise.
31. Replace the second and third complete paragraphs in the left column on A-
PPA-29 with the following:
Distributions from a Roth IRA are made first from contributions and then
from earnings. Generally, withdrawals from contributions are not subject to
tax. However, withdrawals of taxable converted amounts prior to age 59 1/2
and made within five taxable years from such conversion will be subject to
the 10% premature penalty tax (unless you meet an exception). In addition,
withdrawals in 1998, 1999 or 2000 of converted amounts that have received
four year income inclusion treatment will be included in income in the year
of the withdrawal (in addition to the amounts to be included under the four
year income inclusion election). The total aggregate amount to be included
in income shall not exceed the total taxable amount of the conversion.
Withdrawals of earnings will not be subject to Federal income tax if they
are "qualified distributions." In order to be a qualified distribution, the
withdrawal must be: (a) made at least five taxable years from the year you
established a Roth IRA, and (b) made after age 59 1/2, or for death,
disability, or a qualified first-time home purchase (up to $10,000).
(Please consult your tax advisor regarding the state income tax treatment
of your withdrawal.)
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
32. Replace the last sentence of the fifth complete paragraph in the left
column on A-PPA-29 with the following:
Generally, when you die, we must make payment of your entire interest
within five years of the year in which you died or begin payments under an
income annuity allowed by the Code to your beneficiary over his/her
lifetime or over a period not beyond your beneficiary's life or life
expectancy starting by December 31 of the year following the year in which
you die.
33. Replace the last sentence of the first complete paragraph in the right
column on A-PPA-30 with the following:
However, withdrawals from a Roth IRA of taxable converted amounts may be
subject to a penalty tax if made before age 59 1/2.
34. Add the following sentence after the first sentence in the left column on
A-PPA-31:
However, withdrawals from a Roth IRA of taxable converted amounts may be
subject to a penalty tax if made before age 59 1/2.
35 Replace the fourth and fifth sentences of the first paragraph in the left
column on A-PPA-31 with the following:
However, withdrawals of taxable converted amounts prior to age 59 1/2 and
made within five taxable years from such conversion will be subject to the
10% premature penalty tax (unless you meet an exception). In addition,
withdrawals of converted amounts in 1998, 1999 or 2000 that have received
four year income inclusion treatment will be included in income in the year
of the withdrawal (in addition to the amounts to be included under the four
year income inclusion election). The total aggregate amount to be included
in income shall not exceed the total taxable amount of the conversion.
36 Replace the fifth sentence in the last paragraph in the left column on A-
PPA-31 with the following:
If you die before income payments begin under an Income Annuity, the Code
generally requires that your entire interest be paid within five years of
the year in which you die or over a period not exceeding your beneficiary's
life or life expectancy.
37. Replace the last sentence beginning at the bottom of the left column and
continuing at the top of the right column on A-PPA-31 with the following:
For IRA, SIMPLE IRA, and SEP Income Annuities, if you die after income
payments begin, payments must continue to be made in accordance with the
income type selected.
38. Add the following before the first complete paragraph in the right column
on APPA-21:
For the Roth IRA Income Annuity, the Code requires any remaining payment be
made to your beneficiary within five years of the year in which you died or
over a period not exceeding your beneficiary's life or life expectancy.
Therefore, if you choose a Roth IRA Income Annuity that has a period
certain (e.g., an income annuity for life with a ten year term certain),
the period certain cannot exceed the greater of five years or the life
expectancy of your beneficiary. Subsequent changes to your beneficiary
after choosing a Roth IRA Income Annuity may cause you to be in violation
of this rule.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
Supplement to Prospectus for Metropolitan Life Separate Account E for
Preference Plus Group and Individual Annuity Contracts dated May 1, 1998.
1. All references throughout the Prospectus to certain investment division
names and a Portfolio name are changed as follows:
<TABLE>
<CAPTION>
FROM: TO:
----- ---
<S> <C>
Income Division State Street Research Income Division
Diversified Division State Street Research Diversified Division
Stock Index Division MetLife Stock Index Division
Growth Division State Street Research Growth Division
Aggressive Growth Division State Street Research Aggressive Growth Division
International Stock Divi-
sion Santander International Stock Division
State Street Research In-
ternational Stock Portfo-
lio Santander International Stock Portfolio
</TABLE>
2. All references throughout the Prospectus to Systematic Withdrawal Income
Program and SWIP are replaced with Systematic Withdrawal Program.
3.The second sentence of the third paragraph on the first page is changed to
read as follows:
The choices depend on what is available under your Contract or Income
Annuity and may include the Fixed Interest Account and, through
Metropolitan Life Separate Account E, the State Street Research Income,
State Street Research Diversified, MetLife Stock Index, State Street
Research Growth, Janus Mid Cap, Loomis Sayles High Yield Bond, State Street
Research Aggressive Growth, T. Rowe Price Small Cap Growth, Scudder Global
Equity, Santander International Stock (formerly known as State Street
Research International Stock), Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Portfolios of the Metropolitan Series Fund, Inc.
("Metropolitan Fund"), and the Calvert Social Balanced Portfolio (formerly
Calvert Responsibly Invested Balanced Portfolio) of the Calvert Variable
Series, Inc. (formerly Acacia Capital Corporation).
4.Add the following to the Table of Expenses on B-PPA-4 to B-PPA-5:
<TABLE>
<CAPTION>
OTHER EXPENSES
METROPOLITAN FUND ANNUAL EXPENSES MANAGEMENT AFTER EXPENSE
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FEES REIMBURSEMENT TOTAL
--------------------------------------- ---------- -------------- -----
<S> <C> <C> <C>
Harris Oakmark Large Cap Value
Portfolio(e)(h)............................ .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(h)............................... .25 .20 .45
Morgan Stanley EAFE(R) Index Portfolio(h)... .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(e)(h)............................ .70 .20 .90
Russell 2000 Index Portfolio(h)............. .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(e)(h)............................ .70 .20 .90
</TABLE>
EXAMPLE
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division.... $85 $114 -- --
Lehman Brothers Aggregate Bond Index
Division.................................. 80 98 -- --
Morgan Stanley EAFE(R) Index Division...... 81 102 -- --
Neuberger&Berman Partners Mid Cap Value
Division.................................. 85 113 -- --
Russell 2000 Index Division................ 80 98 -- --
T. Rowe Price Large Cap Growth Division.... 85 113 -- --
</TABLE>
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998 98112R93(exp0599)MLIC-LD
<PAGE>
If you annuitize at the end of the applicable time period or do not
surrender your Contract(j):
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division.... $23 $70 -- --
Lehman Brothers Aggregate Bond Index
Division.................................. 17 54 -- --
Morgan Stanley EAFE(R) Index Division...... 18 57 -- --
Neuberger&Berman Partners Mid Cap Value
Division.................................. 22 68 -- --
Russell 2000 Index Division................ 17 54 -- --
T. Rowe Price Large Cap Growth Division.... 22 68 -- --
</TABLE>
(h) Portfolios commenced operations on November 9, 1998. Management
fees and other expenses for these Portfolios are estimated amounts
for the year ending December 31, 1998. Subject to receiving New York
State Insurance Department approval, MetLife has agreed to bear all
expenses (other than management fees, brokerage commissions, taxes,
interest and any extraordinary or non-recurring expenses) in excess
of .20% of the average net assets for each of the Harris Oakmark
Large Cap Value, Lehman Brothers Aggregate Bond Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T.
Rowe Price Large Cap Growth Portfolios, and .25% of the average net
assets for the Morgan Stanley EAFE(R) Index Portfolio until each of
the Portfolio's total net assets are at least $100 million, or until
November 8, 2000, whichever is earlier.
5.The last sentence of footnote (g) on B-PPA-5 is deleted and substituted
with the following sentence:
MetLife ceased subsidizing such expenses for the Janus Mid Cap Portfolio as
of December 31, 1997, the T. Rowe Price Small Cap Growth Portfolio as of
January 23, 1998 and the Scudder Global Equity Portfolio as of July 1,
1998.
6.Footnote (h) on B-PPA-4 and B-PPA-5 is changed to Footnote (i).
7.Footnote (i) on B-PPA-4 and B-PPA-5 is changed to Footnote (j).
8. Add the following after the second sentence of the first paragraph under
"WHAT ARE THE INVESTMENT CHOICES AND HOW DO WE PROVIDE THEM?" on B-PPA-11:
If approved in your state, the Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Divisions are also available.
9. Replace the last paragraph on B-PPA-11 and the first nine paragraphs in
the left column on B-PPA-12 with the following:
State Street Research Income Portfolio: Seeks a) the highest possible
return, by combining current income with capital gains, consistent with
prudent investment risk, and b) secondarily, the preservation of capital by
investing at least 75% of its total assets in non-convertible debt
securities in the three highest rating categories as determined by a
nationally recognized statistical rating organization, or of comparable
quality.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
State Street Research Diversified Portfolio: Seeks a high total return
while attempting to limit investment risk and preserve capital by investing
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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") by
normally investing most of its assets in common stocks included in the S&P
500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital
and income, and moderate current income. Generally, the greatest portion of
the Portfolio's assets will be invested in equity securities of good
quality where the stock price represents a good value based on
considerations such as price to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of
medium capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by
normally investing at least 65% of its assets in below investment grade
fixed income securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks
and other securities convertible into or carrying the right to acquire
common stocks of less mature companies with the potential for rapid growth
and companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group
of small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of
capital by generally investing most of its assets in equity securities
(primarily common stock) of established companies listed on U.S. or foreign
securities exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital
by normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total
assets in equity securities of large capitalization U. S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of
the Lehman Brothers Aggregate Bond Index. The Portfolio will normally
invest most of its assets in fixed income securities included in the Lehman
Brothers Aggregate Bond Index.
Morgan Stanley EAFE(R) Index Portfolio: To equal the return of the Morgan
Stanley Capital International Europe, Australasia, Far East (MSCI EAFE(R))
Index. The Portfolio will normally invest most of its assets in equity
securities included in the MSCI EAFE(R) Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital
growth. The Portfolio will normally invest at least 65% of its total assets
in common stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000
Index. The Portfolio will normally invest most of its assets in common
stocks included in the Russell 2000 Index.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at
least 65% of its total assets in a diversified group of large
capitalization growth companies.
10. Add the following after the first sentence in the first complete
paragraph in the right column on B-PPA-12:
For providing investment management services to the Lehman Brothers
Aggregate Bond Index, MetLife Stock Index and Russell 2000 Index
Portfolios, we receive monthly compensation from each Portfolio at an
annual rate of .25% of the average daily value of the aggregate net assets
of each Portfolio. For providing investment management services to the
Morgan Stanley EAFE(R) Index Portfolio, we receive monthly compensation
from the Portfolio at an annual rate of .30% of the average daily assets of
the aggregate net assets of the Portfolio.
11. The last two sentences of the first complete paragraph in the right
column on B-PPA-12 are changed to read as follows:
For providing investment management services to the State Street Research
Aggressive Growth Portfolio, we receive monthly compensation at an annual
rate of .75% of the average daily value of the aggregate net assets of the
Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. We pay State Street
Research & Management Company, one of our subsidiaries, to provide us with
sub-investment management services for the State Street Research Income,
State Street Research Diversified, State Street Research Growth and State
Street Research Aggressive Growth Portfolios.
12. The second complete paragraph in the right column on B-PPA-12 is
replaced with the following:
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets
of the Portfolio up to $500 million, .70% of such assets on the next $500
million and .65% of such assets on amounts over $1 billion. Effective on or
about November 9, 1998, Santander Global Advisors, Inc., of which MetLife
owns 25% of the outstanding common stock, became the sub-investment manager
for the Santander International Stock Portfolio.
13.Delete the last sentence of the first paragraph in the left column on B-
PPA-13 and substitute the following:
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets
of the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for
the T. Rowe Price Small Cap Growth and T. Rowe Price Large Cap Growth
Portfolios.
14.Add these two paragraphs following the first complete paragraph in the left
column on B-PPA-13:
For providing investment management services to the Harris Oakmark Large
Cap Value Portfolio, we receive monthly compensation from the Portfolio at
an annual rate of .75% of the average daily value of the aggregate net
assets of the Portfolio up to $250 million and .70% of such assets in
excess of $250 million. Harris Associates L.P., whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to
the Harris Oakmark Large Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman
Partners Mid Cap Value Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .70% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .675% of such
assets on the next $250 million, .65% of such assets on the next $500
million, .625% of such assets on the next $750 million
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
and .60% of such assets over $1.6 billion. Neuberger&Berman Management
Incorporated is the sub-investment manager for the Neuberger&Berman
Partners Mid Cap Value Portfolio.
15. Replace the seventh and eighth sentences under "CAN YOU MAKE SYSTEMATIC
WITHDRAWALS?" on B-PPA-16 with the following:
If you choose to receive a percentage of your Account Balance, we will
determine the initial dollar amount payable as of the date these payments
begin and we will pay the dollar amount over the remainder of the Contract
Year. For example, if you ask for a percentage equal to $12,000 and there
are six months left in the Contract Year, we will pay you $2,000 a month if
payments are made monthly. For each later Contract Year that the Systematic
Withdrawal Program remains in effect, we will pay you either the dollar
amount that you have chosen or a dollar amount equal to the percentage of
Account Balance you have chosen, applied to your Account Balance as of your
first Systematic Withdrawal Program payment date in that Contract Year. We
will pay this amount over the full Contract Year. For example, if you ask
for a percentage equal to $12,000 a year, we will pay you $1,000 a month if
payments are to be made monthly.
16. Replace the second complete sentence in the right column on B-PPA-16 with
the following:
Changes to the specified dollar amount or percentage or to alter the timing
of payments may be made once a year prior to the beginning of any Contract
Year, unless we agree otherwise.
17. Replace the fourth complete sentence in the right column on B-PPA-16 with
the following:
Requests for such changes must be made at least 30 days prior to the
Contract Year anniversary date, unless we agree otherwise.
18. Replace the first sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on B-PPA-
16 with the following:
Each Systematic Withdrawal Program payment may be taken on a pro rata basis
from the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money.
19. Replace the third sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on B-PPA-
16 with the following:
You will also be able to select the percentage to be withdrawn from each
investment division and/or Fixed Interest Account based on your preference.
20. Replace the first sentence of the first paragraph under "WILL YOU PAY AN
EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A SYSTEMATIC
WITHDRAWAL PROGRAM PAYMENT?" on B-PPA-16 with the following:
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of
payments over a twelve month period. If you have elected the Systematic
Withdrawal Program, we will treat the full amount to be paid in a Contract
Year as a lump sum withdrawal on the first Systematic Withdrawal Program
payment date for the first Contract Year for purposes of determining how
much of the withdrawal will be exempt from the withdrawal charge. For
Contract Years thereafter, we will treat the full amount to be paid in a
Contract Year as a lump sum withdrawal as of the first Systematic Withdrawal
Program payment date after the Contract Year anniversary for purposes of
determining how much of the withdrawal will be exempt from the withdrawal
charge. However, each Systematic Withdrawal Program payment will be treated
separately as of the date of a withdrawal from your Contract to determine
whether or not it is subject to a withdrawal charge. We will withdraw that
portion of the withdrawal that constitutes the early withdrawal charge when
we make the Systematic Withdrawal Program payment.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
21.Add the following after the second sentence of paragraph 3 in the right
column on B-PPA-18:
Beginning on or about December 15, 1998 and if approved in your state, the
Free Corridor withdrawal percentage may be taken in an unlimited number of
partial withdrawals during the Contract year for all Contracts.
22. The first sentence under "WHAT ARE THE INVESTMENT CHOICES?" on B-PPA-22 is
replaced with the following:
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive
Growth, Santander International Stock Divisions, and, if approved in your
state, Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small
Cap Growth, Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Divisions described earlier in Section 1 under "YOUR
INVESTMENT CHOICES."
23. The last sentence of the paragraph in the left column on B-PPA-29 which
continues onto the right column is replaced with the following:
The Separate Account may also advertise its performance in comparison to
appropriate indices, such as the Standard & Poor's 500 Composite Stock
Price Index, the Standard & Poor's Mid Cap 400 Index,
the Standard & Poor's Small Cap 600 Index, the Russell 2000 Index, the
Russell 2000 Growth Index, the Lehman Brothers Aggregate Bond Index, the
Lehman Brothers Government/Corporate Bond Index, the Merrill Lynch High
Yield Bond Index, the Morgan Stanley Capital International All Country
World Index and the Morgan Stanley Capital International Europe,
Australasia, Far East Index.
24. The first sentence of the first complete paragraph in the right column on
B-PPA-29 is replaced with the following:
Performance may be shown for certain investment strategies that are made
available under certain Contracts.
25. Add the following after the fifth sentence in the paragraph in the right
column on B-PPA-29:
The third strategy is the "Index Selector SM." Under this strategy, once
during a specified period (i.e., quarterly, annually) transfers are made
among the Lehman Brothers Aggregate Bond Index, MetLife Stock Index, Morgan
Stanley EAFE(R) Index and Russell 2000 Index Divisions and the Fixed
Interest Account in order to bring the percentage of the total Account
Balance in each of these divisions and Fixed Interest Account back to the
current allocation of your choice of one of several asset allocation
models. The elements which form the basis for the models are provided by
MetLife which may rely on a third party for its expertise in creating
appropriate allocations. The models are designed to correlate to various
risk tolerance levels associated with investing and are subject to change
from time to time.
26. Replace the sixth sentence in the right column of B-PPA-29 with the
following:
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector
Return" for each asset allocation model will be calculated by presuming a
certain dollar value at the beginning of a period and comparing this dollar
value with the dollar value, based on historical performance, at the end of
the period, expressed as a percentage.
27. Replace the next to last sentence in the right column on B-PPA-29 with
the following:
We may also show performance for the Equity Generator, Equalizer and Index
Selector investment strategies using other investment divisions for which
these strategies are made available in the future.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
Supplement to Prospectus for Metropolitan Life Separate Account E for
Enhanced Preference Plus Group Contracts dated May 1, 1998.
1. All references throughout the Prospectus to certain Division names and a
Portfolio name are changed as follows:
<TABLE>
<CAPTION>
FROM: TO:
----- ---
<S> <C>
Income Division State Street Research Income Division
Diversified Division State Street Research Diversified Division
Stock Index Division MetLife Stock Index Division
Growth Division State Street Research Growth Division
Aggressive Growth Division State Street Research Aggressive Growth Division
International Stock
Division Santander International Stock Division
State Street Research Santander International Stock Portfolio
International Stock
Portfolio
</TABLE>
2. All references throughout the Prospectus to Systematic Withdrawal Income
Program and SWIP are replaced with Systematic Withdrawal Program.
3. The second sentence of the third paragraph on the first page is changed to
read as follows:
The choices depend on what is available under your Contract or Income
Annuity and may include the Fixed Interest Account and, through
Metropolitan Life Separate Account E, the State Street Research Income,
State Street Research Diversified, MetLife Stock Index, State Street
Research Growth, Janus Mid Cap, Loomis Sayles High Yield Bond, State Street
Research Aggressive Growth, T. Rowe Price Small Cap Growth, Scudder Global
Equity, Santander International Stock (formerly known as State Street
Research International Stock), Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE (R) Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Portfolios of the Metropolitan Series Fund, Inc.
("Metropolitan Fund").
4.Add the following information to the Table of Expenses on C-PPA-4 and C-PPA-
5:
<TABLE>
<CAPTION>
OTHER EXPENSES
METROPOLITAN FUND ANNUAL EXPENSES AFTER EXPENSE
(AS A PERCENTAGE OF AVERAGE NET ASSETS) MANAGEMENT FEES REIMBURSEMENT TOTAL
--------------------------------------- --------------- -------------- -----
<S> <C> <C> <C>
Harris Oakmark Large Cap Value
Portfolio(d)(g)....................... .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(g).......................... .25 .20 .45
Morgan Stanley EAFE (R) Index
Portfolio(g).......................... .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(d)(g)....................... .70 .20 .90
Russell 2000 Index Portfolio(g)........ .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(d)(g)....................... .70 .20 .90
</TABLE>
EXAMPLE
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division..... $82 $105 -- --
Lehman Brothers Aggregate Bond Index Divi-
sion....................................... 77 89 -- --
Morgan Stanley EAFE (R) Index Division...... 78 92 -- --
Neuberger&Berman Partners Mid Cap Value Di-
vision..................................... 82 103 -- --
Russell 2000 Index Division................. 77 89 -- --
T. Rowe Price Large Cap Growth Division..... 82 103 -- --
</TABLE>
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998______________________________________ 98112R96(exp0599)MLIC-LD
<PAGE>
If you annuitize at the end of the applicable time period or do not
surrender your Contract(h):
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division..... $19 $60 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 14 45 -- --
Morgan Stanley EAFE (R) Index Division...... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
(g) The Portfolios commenced operations on November 9, 1998. Management
fees and other expenses for these Portfolios are estimated amounts for
the year ending December 31, 1998. Subject to receiving New York State
Insurance Department approval, MetLife has agreed to bear all expenses
(other than management fees, brokerage commissions, taxes, interest
and any extraordinary or non-recurring expenses) in excess of .20% of
the average net assets for each of the Harris Oakmark Large Cap Value,
Lehman Brothers Aggregate Bond Index, Neuberger&Berman Partners Mid
Cap Value, Russell 2000 Index and T. Rowe Price Large Cap Growth
Portfolios, and .25% of the average net assets for the Morgan Stanley
EAFE (R) Index Portfolio until each of the Portfolio's total net
assets are at least $100 million, or until November 8, 2000, whichever
is earlier.
5.The last sentence of footnote (f) on C-PPA-5 is deleted and substituted
with the following sentence:
MetLife ceased subsidizing such expenses for the Janus Mid Cap Portfolio as
of December 31, 1997, the T. Rowe Price Small Cap Growth Portfolio as of
January 23, 1998 and the Scudder Global Equity Portfolio as of July 1,
1998.
6.Footnote (g) on C-PPA-4 and C-PPA-5 is changed to Footnote (h).
7.Replace the third sentence under "WHAT ARE THE INVESTMENT CHOICES AND HOW
DO WE PROVIDE THEM?" on C-PPA-11 with the following:
If approved in your state, the Loomis Sayles High Yield Bond, Janus Mid
Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, Harris Oakmark
Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley
EAFE (R) Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index
and T. Rowe Price Large Cap Growth Divisions are also available.
8.Replace the last paragraph in the right column on C-PPA-11 through the
ninth paragraph in the left column on C-PPA-12 with the following:
State Street Research Income Portfolio: Seeks a) the highest possible
return, by combining current income with capital gains, consistent with
prudent investment risk, and b) secondarily, the preservation of capital by
investing at least 75% of its total assets in non-convertible debt
securities in the three highest rating categories as determined by a
nationally recognized statistical rating organization, or of comparable
quality.
State Street Research Diversified Portfolio: Seeks a high total return
while attempting to limit investment risk and preserve capital by investing
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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") by
normally investing most of its assets in common stocks included in the S&P
500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital
and income, and moderate current income. Generally, the greatest portion of
the Portfolio's assets will be invested in equity securities of good
quality where the stock price represents a good value based on
considerations such as price to book value and price to earnings ratios.
<PAGE>
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of
medium capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by
normally investing at least 65% of its assets in below investment grade
fixed income securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks
and other securities convertible into or carrying the right to acquire
common stocks of less mature companies with the potential for rapid growth
and companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group
of small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of
capital by generally investing most of its assets in equity securities
(primarily common stock) of established companies listed on U.S. or foreign
securities exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital
by normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total
assets in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of
the Lehman Brothers Aggregate Bond Index. The Portfolio will normally
invest most of its assets in fixed income securities, included in the
Lehman Brothers Aggregate Bond Index.
Morgan Stanley EAFE (R) Index Portfolio: To equal the return of the Morgan
Stanley Capital International Europe, Australasia, Far East (MSCI EAFE (R))
Index. The Portfolio will normally invest most of its assets in equity
securities included in the MSCI EAFE (R) Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital
growth. The Portfolio will normally invest at least 65% of its total assets
in common stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000
Index. The Portfolio will normally invest most of its assets in common
stocks included in the Russell 2000 Index.
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at
least 65% of its total assets in a diversified group of large
capitalization growth companies.
9.Add the following at the top of the right column on C-PPA-12:
For providing investment management services to the Lehman Brothers
Aggregate Bond Index, MetLife Stock Index and Russell 2000 Index
Portfolios, we receive monthly compensation from each Portfolio at an
annual rate of .25% of the average daily value of the aggregate net assets
of each Portfolio. For providing investment management services to the
Morgan Stanley EAFE (R) Index Portfolio, we receive monthly compensation
from the Portfolio at an annual rate of .30% of the average daily assets of
the aggregate net assets of the Portfolio.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
10. The last two sentences of the paragraph which starts at the bottom of the
left column and continues into the right column on C-PPA-12 are changed to
read as follows:
For providing investment management services to the State Street Research
Aggressive Growth Portfolio, we receive monthly compensation at an annual
rate of .75% of the average daily value of the aggregate net assets of the
Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. We pay State Street
Research & Management Company, one of our subsidiaries, to provide us with
sub-investment management services for the State Street Research Income,
State Street Research Diversified, State Street Research Growth and State
Street Research Aggressive Growth Portfolios.
11. The first complete paragraph in the right column on C-PPA-12 is replaced
with the following:
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets
of the Portfolio up to $500 million, .70% of such assets on the next $500
million and .65% of such assets on amounts over $1 billion. Effective on or
about November 9, 1998, Santander Global Advisors, Inc., of which MetLife
owns 25% of the outstanding common stock, became the sub-investment manager
for the Santander International Stock Portfolio.
12. Delete the last sentence of the first paragraph in the left column on C-
PPA-13 and substitute the following:
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets
of the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for
the T. Rowe Price Small Cap Growth and T. Rowe Price Large Cap Growth
Portfolios.
13. Add the following two paragraphs following the first complete paragraph in
the left column on C-PPA-13:
For providing investment management services to the Harris Oakmark Large
Cap Value Portfolio, we receive monthly compensation from the Portfolio at
an annual rate of .75% of the average daily value of the aggregate net
assets of the Portfolio up to $250 million and .70% of such assets in
excess of $250 million. Harris Associates L.P., whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to
the Harris Oakmark Large Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman
Partners Mid Cap Value Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .70% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .675% of such
assets on the next $250 million, .65% of such assets on the next $500
million, .625% of such assets on the next $750 million and .60% of such
assets over $1.6 billion. Neuberger&Berman Management Incorporated is the
sub-investment manager for the Neuberger&Berman Partners Mid Cap Value
Portfolio.
14. Add the following after the fourth sentence under "CAN YOU MAKE SYSTEMATIC
WITHDRAWALS?" on C-PPA-15:
Beginning on or about December 15, 1998, if you choose to receive a
percentage of your Account Balance, we will determine the initial dollar
amount payable as of the date these payments begin and we will pay the
dollar amount over the remainder of the Contract Year. For example, if you
ask for a percentage equal to $12,000 and there are six months left in the
Contract Year, we will pay you $2,000 a month if payments are made monthly.
For each later Contract Year that the Systematic Withdrawal Program remains
in effect, we will pay you either the dollar amount that you have chosen,
or a dollar amount equal to the percentage of
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
your Account Balance you have chosen, applied to your Account Balance as of
your first Systematic Withdrawal Program payment date in that Contract
Year. We will pay this amount over the full Contract Year. For example, if
you ask for a percentage equal to $12,000 a year, we will pay you $1,000 a
month if payments are to be made monthly.
15. Replace the second and third to last sentences under "CAN YOU MAKE
SYSTEMATIC WITHDRAWALS?" on C-PPA-15 with the following:
Changes to the specified dollar amount or percentage or to alter the timing
of payments may be made once a year prior to your Systematic Withdrawal
Program anniversary date or, on or about December 15, 1998, prior to the
beginning of any Contract Year, unless we agree otherwise. Requests for
such changes must be made at least 30 days prior to the Systematic
Withdrawal Program anniversary date or, on or about December 15, 1998, at
least 30 days prior to the beginning of any Contract Year, unless we agree
otherwise.
16. Replace the first sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on C-PPA-
15 with the following:
Depending on your Enhanced IRA or Enhanced Non-Qualified Contract, each
Systematic Withdrawal Program payment may be taken on a pro rata basis from
either (1) the Fixed Interest Account and investment divisions of the
Separate Account in which you then have money or (2) only from investment
divisions of the Separate Account in which you then have money.
17. Replace the third sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on C-PPA-
15 with the following:
You will also be able to select the percentage to be withdrawn from each
investment division and/or Fixed Interest Account based on your preference.
18. Add the following paragraph after the second sentence of the first
paragraph under "WILL YOU PAY AN EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN
YOU RECEIVE A SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?" on C-PPA-16:
Beginning on or about December 15, 1998, if you have elected the Systematic
Withdrawal Program, we will treat the full amount to be paid in a Contract
Year as a lump sum withdrawal on the first Systematic Withdrawal Program
payment date for the first Contract Year for purposes of determining how
much of the withdrawal will be exempt from the withdrawal charge. For
Contract Years thereafter, we will treat the full amount to be paid in a
Contract Year as a lump sum withdrawal as of the first Systematic
Withdrawal Program payment date after the Contract Year anniversary for
purposes of determining how much of the withdrawal will be exempt from the
withdrawal charge. However, each Systematic Withdrawal Program payment will
be treated separately as of the date of a withdrawal from your Contract to
determine whether or not it is subject to a withdrawal charge. We will
withdraw that portion of the withdrawal that constitutes the early
withdrawal charge when we make the Systematic Withdrawal Program payment.
19. Replace the fourth sentence under "WILL YOU PAY AN EARLY WITHDRAWAL CHARGE
(SALES LOAD) WHEN YOU RECEIVE A SYSTEMATIC WITHDRAWAL PROGRAM PAYMENT?" on
C-PPA-16 with the following:
On or about December 15, 1998, only Systematic Withdrawal Program payments
in excess of the 10% Free Corridor will be subject to an early withdrawal
charge unless the payments are from other amounts to which an early
withdrawal charge no longer applies. See "Deductions and Charges."
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
20. Add the following after the second sentence of paragraph 3 in the right
column on C-PPA-17:
Beginning on or about December 15, 1998 and if approved in your state,
the Free Corridor withdrawal percentage may be taken in an unlimited
number of partial withdrawals during the Contract year for all Contracts.
21. The first sentence under "WHAT ARE THE INVESTMENT CHOICES?" on C-PPA-20
is replaced with the following:
The investment choices provided through the Separate Account are the
State Street Research Income, State Street Research Diversified, MetLife
Stock Index, State Street Research Growth, State Street Research
Aggressive Growth, Santander International Stock Divisions, and, if
approved in your state, Loomis Sayles High Yield Bond, Janus Mid Cap, T.
Rowe Price Small Cap Growth, Scudder Global Equity, Harris Oakmark Large
Cap Value, Lehman Brothers Aggregate Bond Index, Morgan Stanley EAFE(R)
Index, Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T.
Rowe Price Large Cap Growth Divisions described earlier in Section 1
under "YOUR INVESTMENT CHOICES."
22. The last sentence of the first complete paragraph in the left column on
C-PPA-27 is replaced with the following:
The Separate Account may also advertise its performance in comparison to
appropriate indices, such as the Standard & Poor's 500 Composite Stock
Price Index, the Standard & Poor's Mid Cap 400 Index, the Standard &
Poor's Small Cap 600 Index, the Russell 2000 Index, the Russell 2000
Growth Index, the Lehman Brothers Aggregate Bond Index, the Lehman
Brothers Government/Corporate Bond Index, the Merrill Lynch High Yield
Bond Index, the Morgan Stanley Capital International All Country World
Index and the Morgan Stanley Capital International Europe Australasia Far
East Index.
23. The first sentence of the paragraph in the right column on C-PPA-27 is
replaced with the following:
Performance may be shown for certain investment strategies that are made
available under certain Contracts.
24. Add the following after the fifth sentence in the paragraph in the right
column on C-PPA-27:
The third strategy is the "Index SelectorSM". Under this strategy, once
during a specified period (i.e., quarterly, annually) transfers are made
among the Lehman Brothers Aggregate Bond Index, MetLife Stock Index,
Morgan Stanley EAFE(R) Index and Russell 2000 Index Divisions and the
Fixed Interest Account in order to bring the percentage of the total
Account Balance in each of these divisions and Fixed Interest Account
back to the current allocation of your choice of one of several asset
allocation models. The elements which form the basis for the models are
provided by MetLife which may rely on a third party for its expertise in
creating appropriate allocations. The models are designed to correlate to
various risk tolerance levels associated with investing and are subject
to change from time to time.
25. Replace the sixth sentence in the right column on C-PPA-27 with the
following:
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector
Return" for each asset allocation model will be calculated by presuming a
certain dollar value at the beginning of the period and comparing this
dollar value with the dollar value, based on historical performance, at
the end of the period, expressed as a percentage.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
26. Replace the next to last sentence in the right column on C-PPA-27 with
the following:
We may also show performance for the Equity Generator, Equalizer and
Index Selector investment strategies using other investment divisions for
which these strategies are made available in the future.
27. Replace the first paragraph under "HOW DO FEDERAL INCOME TAXES AFFECT
YOUR DEFERRED ENHANCED CONTRACT?" on C-PPA-28 with the following:
All contributions under the Enhanced Contracts, other than contributions
under Enhanced Non-Qualified Contracts, non-deductible contributions
under the Enhanced IRA Contracts and certain other qualified Enhanced
Contracts, will be made on a "before-tax" basis. This means that the
purchase payments either reduce your income, entitle you to a tax
deduction or are not subject to current income tax. Because of this,
Federal income taxes are payable on contributions to your contract which
were not subject to tax when you withdraw them, as well as on income
earned under the Enhanced Contract.
28. Replace the third sentence of the second complete paragraph in the left
column on C-PPA-29 with the following:
For 1998, if you are an "active participant" in another retirement plan
and your adjusted gross income is $30,000 or less ($50,000 for married
couples filing jointly, however, never fully deductible for a married
person filing separately), annual contributions are fully deductible.
However, contributions are not deductible if your adjusted gross income
is over $40,000 ($60,000 for married couples filing jointly, $10,000 for
a married person filing separately). If your adjusted gross income falls
between these amounts, your maximum deduction will be phased out.
29. Replace the first sentence of the third complete paragraph in the left
column on C-PPA-30 with the following:
Taxable withdrawals before age 59 1/2 are subject to a 10% tax penalty
(this does not apply to the return of any non-deductible purchase
payments).
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
Supplement to Prospectus for Metropolitan Life Separate Account E for
Enhanced TSA, Enhanced Non-Qualified, Enhanced IRA, Enhanced PEDC and
Enhanced 403(a) Preference Plus and Financial Freedom Account Group Annuity
Contracts dated May 1, 1998.
1. All references throughout the Prospectus to certain investment division
names and a Portfolio name are changed as follows:
<TABLE>
<CAPTION>
FROM TO:
---- ---
<S> <C>
Income Division State Street Research Income Division
Diversified Division State Street Research Diversified Division
Stock Index Division MetLife Stock Index Division
Growth Division State Street Research Growth Division
Aggressive Growth Division State Street Research Aggressive Growth Division
International Stock
Division Santander International Stock Division
State Street Research Santander International Stock Portfolio
International Stock
Portfolio
</TABLE>
2. All references throughout the Prospectus to Systematic Withdrawal Income
Program and SWIP are replaced with Systematic Withdrawal Program.
3. The second sentence of the fourth paragraph on the first page is changed to
read as follows:
The choices depend on what is available under your Contract and may include
the Fixed Interest Account and, through Metropolitan Life Separate Account
E, the State Street Research Income, State Street Research Diversified,
MetLife Stock Index, State Street Research Growth, Janus Mid Cap, Loomis
Sayles High Yield Bond, State Street Research Aggressive Growth, T. Rowe
Price Small Cap Growth, Scudder Global Equity, Santander International
Stock (formerly known as State Street Research International Stock), Harris
Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index, Morgan
Stanley EAFE(R) Index, Neuberger&Berman Partners Mid Cap Value, Russell
2000 Index and T. Rowe Price Large Cap Growth Portfolios of the
Metropolitan Series Fund, Inc. ("Metropolitan Fund"), the Calvert Social
Balanced Portfolio (formerly Calvert Responsibly Invested Balanced
Portfolio) and Calvert Social Mid Cap Growth Portfolio (formerly Calvert
Responsibly Invested Capital Accumulation Portfolio) of the Calvert
Variable Series, Inc. (formerly Acacia Capital Corporation) and the Money
Market VIP, Equity-Income VIP, Growth VIP and Overseas VIP Portfolios of
the Variable Insurance Products Fund and the Investment Grade Bond VIP II
and Asset Manager VIP II Portfolios of the Variable Insurance Products Fund
II ("Fidelity VIP and VIP II Funds").
4. Add the following information to the Table of Expenses-Enhanced TSA,
Enhanced Non-Qualified, Enhanced IRA, Enhanced PEDC and Enhanced 403(a)
Preference Plus Contracts and Income Annuities on FFA-5 and FFA-6:
<TABLE>
<CAPTION>
OTHER EXPENSES
METROPOLITAN FUND ANNUAL EXPENSES MANAGEMENT AFTER EXPENSE
(AS A PERCENTAGE OF AVERAGE NET ASSETS) FEES REIMBURSEMENT TOTAL
--------------------------------------- ---------- -------------- -----
<S> <C> <C> <C>
Harris Oakmark Large Cap Value
Portfolio(d)(g)............................ .75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(g)............................... .25 .20 .45
Morgan Stanley EAFE(R) Index Portfolio(g)... .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(d)(g)............................ .70 .20 .90
Russell 2000 Index Portfolio(g)............. .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(d)(g)............................ .70 .20 .90
</TABLE>
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998 98112R99(exp0599)MLIC-LD
<PAGE>
EXAMPLE
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division..... $75 $99 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 70 83 -- --
Morgan Stanley EAFE(R) Index Division....... 71 87 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 75 98 -- --
Russell 2000 Index Division................. 70 83 -- --
T. Rowe Price Large Cap Growth Division..... 75 98 -- --
</TABLE>
If you annuitize at the end of the applicable time period or do not
surrender your Contract(m):
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division..... $19 $ 60 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 14 45 -- --
Morgan Stanley EAFE(R) Index Division....... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
5.Add the following to the Table of Expenses-FFA Contracts and Income
Annuities on FFA-7 and FFA-8:
<TABLE>
<CAPTION>
OTHER EXPENSES
METROPOLITAN FUND ANNUAL EXPENSES AFTER EXPENSE
(AS A PERCENTAGE OF AVERAGE NET ASSETS) MANAGEMENT FEES REIMBURSEMENT TOTAL
--------------------------------------- --------------- -------------- -----
<S> <C> <C> <C>
Harris Oakmark Large Cap Value
Portfolio(d)(g)....................... 75 .20 .95
Lehman Brothers Aggregate Bond Index
Portfolio(g).......................... .25 .20 .45
Morgan Stanley EAFE(R) Index
Portfolio(g).......................... .30 .25 .55
Neuberger&Berman Partners Mid Cap Value
Portfolio(d)(g)....................... .70 .20 .90
Russell 2000 Index Portfolio(g)........ .25 .20 .45
T. Rowe Price Large Cap Growth
Portfolio(d)(g)....................... .70 .20 .90
</TABLE>
EXAMPLE
If you surrender your Contract at the end of the applicable time period:
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division..... $19 $60 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 14 45 -- --
Morgan Stanley EAFE(R) Index Division....... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
If you annuitize at the end of the applicable time period or do not
surrender your Contract(m):
You would pay the following expenses on a $1,000 investment in each
investment division listed below, assuming 5% annual return on assets:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Harris Oakmark Large Cap Value Division..... $19 $60 -- --
Lehman Brothers Aggregate Bond Index
Division................................... 14 45 -- --
Morgan Stanley EAFE(R) Index Division....... 15 48 -- --
Neuberger&Berman Partners Mid Cap Value
Division................................... 19 59 -- --
Russell 2000 Index Division................. 14 45 -- --
T. Rowe Price Large Cap Growth Division..... 19 59 -- --
</TABLE>
Add the following footnote (g) on FFA-9:
(g) The Portfolios commenced operations on November 9, 1998. Management
fees and other expenses for these Portfolios are estimated amounts
for the year ending December 31, 1998. Subject to receiving New York
State Insurance Department approval, MetLife has agreed to bear all
expenses (other than management fees, brokerage commissions, taxes,
interest and any extraordinary or non-recurring expenses) in excess
of .20% of the average net assets for each of the Harris Oakmark
Large Cap Value, Lehman Brothers Aggregate Bond Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T.
Rowe Price Large Cap Growth Portfolios, and .25% of the average net
assets for the Morgan Stanley EAFE(R) Index Portfolio until each of
the Portfolio's total net assets are at least $100 million, or until
November 8, 2000, whichever is earlier.
6. The last sentence of footnote (f) beginning on FFA-8 and continuing on
FFA-9 is deleted and substituted with the following sentence:
MetLife ceased subsidizing such expenses for the Janus Mid Cap Portfolio as
of December 31, 1997, the T. Rowe Price Small Cap Growth Portfolio as of
January 23, 1998 and the Scudder Global Equity Portfolio as of July 1,
1998.
7. Footnotes (g), (h), (i), (j), (k), and (l), respectively, on FFA-5, FFA-6,
FFA-7, FFA-8 and FFA-9 have been changed to (h), (i), (j), (k), (l), and
(m), respectively.
8. Replace the second sentence under "WHAT ARE THE INVESTMENT CHOICES AND HOW
DO WE PROVIDE THEM?" on FFA-19 with the following:
Divisions available for new investments for the Enhanced Preference Plus
Contracts are the State Street Research Income, State Street Research
Diversified, State Street Research Growth, State Street Research Aggressive
Growth, MetLife Stock Index, Santander International Stock, Calvert Social
Balanced, Calvert Social Mid Cap Growth, Loomis Sayles High Yield Bond,
Janus Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity, the
Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index,
Morgan Stanley EAFE(R) Index, Neuberger&Berman Partners Mid Cap Value,
Russell 2000 Index and T. Rowe Price Large Cap Growth Divisions.
9. Replace the fourth sentence under "WHAT ARE THE INVESTMENT CHOICES AND HOW
DO WE PROVIDE THEM?" on FFA-19 with the following:
Divisions available for the FFA Contracts are the MetLife Stock Index,
Loomis Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap
Growth, Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman
Brothers Aggregate Bond Index, Morgan Stanley EAFE(R) Index,
Neuberger&Berman Partners Mid Cap Value, Russell 2000 Index and T. Rowe
Price Large Cap Growth Divisions, and both Calvert Divisions and the five
Fidelity Divisions.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
10. Replace the last five paragraphs in the left column up through the fifth
complete paragraph in the right column on FFA-20 with the following:
State Street Research Income Portfolio: Seeks a) the highest possible
return, by combining current income with capital gains, consistent with
prudent investment risk, and b) secondarily, the preservation of capital by
investing at least 75% of its total assets in non-convertible debt
securities in the three highest rating categories as determined by a
nationally recognized statistical rating organization, or of comparable
quality.
State Street Research Diversified Portfolio: Seeks a high total return
while attempting to limit investment risk and preserve capital by investing
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.
MetLife Stock Index Portfolio: Seeks to equal the performance of the
Standard & Poor's 500 Composite Stock Price Index ("S&P 500 Index") by
normally investing most of its assets in common stocks included in the S&P
500 Index.
State Street Research Growth Portfolio: Seeks long-term growth of capital
and income, and moderate current income. Generally, the greatest portion of
the Portfolio's assets will be invested in equity securities of good
quality where the stock price represents a good value based on
considerations such as price to book value and price to earnings ratios.
Janus Mid Cap Portfolio: Seeks to provide long-term growth of capital by
normally investing at least 65% of its total assets in common stocks of
medium capitalization companies selected for their growth potential.
Loomis Sayles High Yield Bond Portfolio: Seeks high total investment return
through a combination of current income and capital appreciation by
normally investing at least 65% of its assets in below investment grade
fixed income securities (commonly referred to as "junk bonds").
State Street Research Aggressive Growth Portfolio: Seeks maximum capital
appreciation by generally investing most of its assets in the common stocks
and other securities convertible into or carrying the right to acquire
common stocks of less mature companies with the potential for rapid growth
and companies whose unusual circumstances have not been fully recognized.
T. Rowe Price Small Cap Growth Portfolio: Seeks long-term capital growth by
normally investing at least 65% of its total assets in a diversified group
of small capitalization companies.
Scudder Global Equity Portfolio: Seeks to provide long-term growth of
capital by generally investing most of its assets in equity securities
(primarily common stock) of established companies listed on U.S. or foreign
securities exchanges or traded over-the-counter.
Santander International Stock Portfolio: Seeks long-term growth of capital
by normally investing 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.
Harris Oakmark Large Cap Value Portfolio: To achieve long-term capital
appreciation. The Portfolio normally invests at least 65% of its total
assets in equity securities of large capitalization U.S. companies.
Lehman Brothers Aggregate Bond Index Portfolio: To equal the performance of
the Lehman Brothers Aggregate Bond Index. The Portfolio will normally
invest most of its assets in fixed income securities included in the Lehman
Brothers Aggregate Bond Index.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
Morgan Stanley EAFE(R) Index Portfolio: To equal the return of the Morgan
Stanley Capital International Europe, Australasia, Far East (MSCI EAFE(R))
Index. The Portfolio will normally invest most of its assets in equity
securities included in the MSCI EAFE(R) Index.
Neuberger&Berman Partners Mid Cap Value Portfolio: To achieve capital
growth. The Portfolio will normally invest at least 65% of its total assets
in common stocks of mid capitalization companies.
Russell 2000 Index Portfolio: To equal the return of the Russell 2000
Index. The Portfolio will normally invest most of its assets in common
stocks included in the Russell 2000 Index.
T. Rowe Price Large Cap Growth Portfolio: To achieve long-term growth of
capital, and, secondarily, dividend income. The Portfolio will invest at
least 65% of its total assets in a diversified group of large
capitalization growth companies.
11. Add the following after the first sentence in the fourth paragraph in the
left column on FFA-21:
For providing investment management services to the Lehman Brothers
Aggregate Bond Index, MetLife Stock Index and Russell 2000 Index
Portfolios, we receive monthly compensation from each Portfolio at an
annual rate of .25% of the average daily value of the aggregate net assets
of each Portfolio. For providing investment management services to the
Morgan Stanley EAFE(R) Index Portfolio, we receive monthly compensation
from the Portfolio at an annual rate of .30% of the average daily assets of
the aggregate net assets of the Portfolio.
12. The last two sentences of the fourth complete paragraph in the left column
on FFA-21 are changed to read as follows:
For providing investment management services to the State Street Research
Aggressive Growth Portfolio, we receive monthly compensation at an annual
rate of .75% of the average daily value of the aggregate net assets of the
Portfolio up to $500 million, .70% of such assets on the next $500 million
and .65% of such assets on amounts over $1 billion. We pay State Street
Research & Management Company, one of our subsidiaries, to provide us with
sub-investment management services for the State Street Research Income,
State Street Research Diversified, State Street Research Growth and State
Street Research Aggressive Growth Portfolios.
13. The fifth paragraph beginning in the left column on FFA-21 and continuing
into the right column is replaced with the following:
For providing investment management services to the Santander International
Stock Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .75% of the average daily value of the aggregate net assets
of the Portfolio up to $500 million, .70% of such assets on the next $500
million and .65% of such assets on amounts over $1 billion. Effective on or
about November 9, 1998, Santander Global Advisors, Inc., of which MetLife
owns 25% of the outstanding common stock, became the sub-investment manager
for the Santander International Stock Portfolio.
14. Delete the last sentence of the first complete paragraph in the right
column on FFA-21 and substitute the following:
For providing investment management services to the T. Rowe Price Large Cap
Growth Portfolio, we receive monthly compensation from the Portfolio at an
annual rate of .70% of the average daily value of the aggregate net assets
of the Portfolio up to $50 million and .60% of such assets in excess of $50
million. T. Rowe Price Associates, Inc. is the sub-investment manager for
the T. Rowe Price Small Cap Growth and the T. Rowe Price Large Cap Growth
Portfolios.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
15. Add these two paragraphs following the second complete paragraph in the
right column on FFA-21:
For providing investment management services to the Harris Oakmark Large
Cap Value Portfolio, we receive monthly compensation from the Portfolio at
an annual rate of .75% of the average daily value of the aggregate net
assets of the Portfolio up to $250 million and .70% of such assets in
excess of $250 million. Harris Associates L.P., whose general partner is
indirectly owned by MetLife, is the sub-investment manager with respect to
the Harris Oakmark Large Cap Value Portfolio.
For providing investment management services to the Neuberger&Berman
Partners Mid Cap Value Portfolio, we receive monthly compensation from the
Portfolio at an annual rate of .70% of the average daily value of the
aggregate net assets of the Portfolio up to $100 million, .675% of such
assets on the next $250 million, .65% of such assets on the next $500
million, .625% of such assets on the next $750 million and .60% of such
assets over $1.6 billion. Neuberger&Berman Management Incorporated is the
sub-investment manager for the Neuberger&Berman Partners Mid Cap Value
Portfolio.
16. Replace the seventh and eighth sentences under "CAN YOU MAKE SYSTEMATIC
WITHDRAWALS?" on FFA-25 with the following:
If you choose to receive a percentage of your Account Balance, we will
determine the initial dollar amount payable as of the date these payments
begin and will pay the dollar amount over the remainder of the Contract
Year. For example, if you ask for a percentage equal to $12,000 and there
are six months left in the Contract Year, we will pay you $2,000 a month if
payments are made monthly. For each later Contract Year that the Systematic
Withdrawal Program remains in effect, we will pay you either the dollar
amount that you have chosen or a dollar amount equal to the percentage of
your Account Balance you have chosen, applied to your Account Balance as of
your first Systematic Withdrawal Program payment date in that Contract
Year. We will pay this amount over the full Contract Year. For example, if
you ask for a percentage equal to $12,000 a year, we will pay you $1,000 a
month if payments are to be made monthly.
17. Delete the eleventh complete sentence in the right column on FFA-25.
18. Replace the last four sentences in the paragraph before "FROM WHICH
INVESTMENT DIVISIONS WILL WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL
PROGRAM PAYMENTS?" in the right column on FFA-25 with the following:
Changes to the specified dollar amount or percentage or to alter the timing
of payments may be made once a year prior to the beginning of any Contract
Year, unless we agree otherwise. The change will be effective for the first
Systematic Withdrawal Program payment for the following Contract Year.
Requests for such changes must be made at least 30 days prior to the
Contract Year anniversary date, unless we agree otherwise. You may cancel
your Systematic Withdrawal Program request at any time by telephone or by
writing us at the Designated Office.
19. Replace the first sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on FFA-25
with the following:
Each Systematic Withdrawal Program payment may be taken on a pro rata basis
from the Fixed Interest Account and investment divisions of the Separate
Account in which you then have money.
20. Replace the third sentence under "FROM WHICH INVESTMENT DIVISIONS WILL
WITHDRAWALS BE MADE FOR SYSTEMATIC WITHDRAWAL PROGRAM PAYMENTS?" on FFA-25
with the following:
You will also be able to select the percentage to be withdrawn from each
investment division and/or the Fixed Interest Account based on your
preference.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
21. Replace the first sentence of the first paragraph under "WILL YOU PAY AN
EARLY WITHDRAWAL CHARGE (SALES LOAD) WHEN YOU RECEIVE A SYSTEMATIC
WITHDRAWAL PROGRAM PAYMENT?" on FFA-26 with the following:
For purposes of the early withdrawal charge, Systematic Withdrawal Program
payments are characterized as a single withdrawal made in a series of
payments over a twelve month period.
If you have elected the Systematic Withdrawal Program, we will treat the
full amount to be paid in a Contract Year as a lump sum withdrawal on the
first Systematic Withdrawal Program payment date for the first Contract
Year for purposes of determining how much of the withdrawal will be exempt
from the withdrawal charge. For Contract Years thereafter, we will treat
the full amount to be paid in a Contract Year as a lump sum withdrawal as
of the first Systematic Withdrawal Program payment date after the Contract
Year anniversary for purposes of determining how much of the withdrawal
will be exempt from the withdrawal charge. However, each Systematic
Withdrawal Program payment will be treated separately as of the date of a
withdrawal from your Contract to determine whether or not it is subject to
a withdrawal charge. We will withdraw that portion of the withdrawal that
constitutes the withdrawal charge when we make the Systematic Withdrawal
Program payment.
22. The second sentence of paragraph 3 in the right column on FFA-27 is
replaced with the following:
The Free Corridor percentage may be taken in an unlimited number of partial
withdrawals (for each withdrawal we calculate the percentage it represents
of your Account Balance and whenever the total of such percentages exceeds
the specified percentage the early withdrawal charge applies) from your
Account Balance during the Contract Year.
23. The first sentence under "WHAT ARE THE INVESTMENT CHOICES?" on FFA-31 is
replaced with the following:
The investment choices provided through the Separate Account are the State
Street Research Income, State Street Research Diversified, MetLife Stock
Index, State Street Research Growth, State Street Research Aggressive
Growth, Santander International Stock, Calvert Social Balanced, Calvert
Social Mid Cap Growth Divisions, and, if approved in your state, Loomis
Sayles High Yield Bond, Janus Mid Cap, T. Rowe Price Small Cap Growth,
Scudder Global Equity, Harris Oakmark Large Cap Value, Lehman Brothers
Aggregate Bond Index, Morgan Stanley EAFE(R) Index, Neuberger&Berman
Partners Mid Cap Value, Russell 2000 Index and T. Rowe Price Large Cap
Growth Divisions.
24. The fourth sentence under "WHAT ARE THE INVESTMENT CHOICES?" on FFA-31 is
replaced with the following:
In some cases the State Street Research Income, State Street Research
Diversified, State Street Research Growth, State Street Research Aggressive
Growth, Santander International Stock Divisions, the Fidelity Money Market
Division and, if approved in your state, Loomis Sayles High Yield Bond,
Janus Mid Cap, T. Rowe Price Small Cap Growth, Scudder Global Equity,
Harris Oakmark Large Cap Value, Lehman Brothers Aggregate Bond Index,
Morgan Stanley EAFE(R) Index, Neuberger&Berman Partners Mid Cap Value,
Russell 2000 Index and T. Rowe Price Large Cap Growth Divisions, are also
available for the FFA Contracts.
25. The last sentence of the paragraph which starts at the bottom of the left
column on FFA-38 and continues to the right column is replaced with the
following:
The Separate Account may also advertise its performance in comparison to
appropriate indices, such as the Standard & Poor's 500 Composite Stock
Price Index, the Standard & Poor's Mid Cap 400 Index, the Standard & Poor's
Small Cap 600 Index, the Russell 2000 Index, the Russell 2000 Growth Index,
the Lehman Brothers Aggregate Bond Index, the Lehman Brothers
Government/Corporate Bond Index, the Merrill Lynch High Yield Bond Index,
the Morgan Stanley Capital International All Country World Index and the
Morgan Stanley Capital International Europe, Australasia, Far East Index.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
26. The first sentence of the first complete paragraph in the right column on
FFA-38 is replaced with the following:
Performance may be shown for certain investment strategies that are made
available under certain Contracts.
27. Add the following after the fifth sentence in the first complete paragraph
in the right column on FFA-38:
The third strategy is the "Index Selector SM". Under this strategy, once
during a specified period (i.e., quarterly, annually) transfers are made
among the Lehman Brothers Aggregate Bond Index, MetLife Stock Index, Morgan
Stanley EAFE(R) Index and Russell 2000 Index Divisions and the Fixed
Interest Account in order to bring the percentage of the total Account
Balance in each of these divisions and Fixed Interest Account back to the
current allocation of your choice of one of several asset allocation
models. The elements which form the basis of the models are provided by
MetLife which may rely on a third party for its expertise in creating
appropriate allocations. The models are designed to correlate to various
risk tolerance levels associated with investing and are subject to change
from time to time.
28. Replace the sixth sentence in the first complete paragraph in the right
column on FFA-38:
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector
Return" for each asset allocation model will be calculated by presuming a
certain dollar value at the beginning of a period and comparing this dollar
value with the dollar value, based on historical performance, at the end of
the period, expressed as a percentage.
29. Replace the next to last sentence in the first complete paragraph in the
right column on FFA-38 with the following:
We may also show performance for the Equity Generator, Equalizer and Index
Selector investment strategies using other investment divisions for which
these strategies are made available in the future.
30. Replace the third sentence of the last paragraph in the left column on
FFA-42 with the following:
For 1998, if you are an "active participant" in another retirement plan and
your adjusted gross income is $30,000 or less ($50,000 for married couples
filing jointly, however, never fully deductible for a married person filing
separately), annual contributions are fully deductible. However,
contributions are not deductible if your adjusted gross income is over
$40,000 ($60,000 for married couples filing jointly, $10,000 for a married
person filing separately). If your adjusted gross income falls between
these amounts, your maximum deduction will be phased out.
31. Replace the fourth sentence of the third complete paragraph in the left
column on FFA-46 with the following:
If you die before payments under an income annuity begins, we must make
payment of your entire interest under the Contract within five years of
your death or begin payments under an income annuity allowed by the Code to
your beneficiary within one year of your death.
KEEP THIS SUPPLEMENT WITH YOUR PROSPECTUS
November 9, 1998
<PAGE>
Supplement to Metropolitan Life Separate Account E Preference Plus and
Financial Freedom Account Group and Individual Annuity Contracts Statement
of Additional Information dated May 1, 1998.
1. All references throughout the Statement of Additional Information to
certain investment division names and a Portfolio name are changed as
follows:
<TABLE>
<CAPTION>
FROM TO
---- --
<S> <C>
Income Division State Street Research Income Division
Diversified Division State Street Research Diversified Division
Stock Index Division MetLife Stock Index Division
Growth Division State Street Research Growth Division
Aggressive Growth Divi-
sion State Street Research Aggressive Growth Division
International Stock Di-
vision Santander International Stock Division
State Street Research
International Stock
Portfolio Santander International Stock Portfolio
</TABLE>
2.The first sentence of the last paragraph in the right column on page 4 is
revised to read as follows:
Performance may be shown for certain investment strategies that are made
available under certain Contracts.
3.Add the following before the first complete sentence in the left column on
page 5:
The third strategy is the "Index SelectorSM." Under this strategy, once
during a specified period (i.e., quarterly, annually) transfers are made
among the Lehman Brothers Aggregate Bond Index, MetLife Stock Index, Morgan
Stanley EAFE(R) Index and Russell 2000 Index Divisions and the Fixed
Interest Account in order to bring the percentage in each of these
divisions and the Fixed Interest Account back to the current allocation of
your choice of one of several asset allocation models. The elements which
form the basis of the models are selected by MetLife which may rely on a
third party for its expertise in creating appropriate allocations. The
models are designed to correlate to various risk tolerance levels
associated with investing and are subject to change from time to time.
4.Replace the first complete sentence in the left column on page 5 with the
following:
An "Equity Generator Return," "Aggressive Equity Generator Return,"
"Equalizer Return," "Aggressive Equalizer Return" or "Index Selector
Return" for each asset allocation model will be calculated by presuming a
certain dollar value at the beginning of the period and comparing this
dollar value with the dollar value, based on historical performance, at the
end of the period, expressed as a percentage.
5.Replace the next to last sentence in the right column on page 5 with the
following:
We may also show performance for the Equity Generator, Equalizer and Index
Selector investment strategies using other investment divisions for which
these strategies are made available in the future.
KEEP THIS SUPPLEMENT WITH YOUR STATEMENT OF ADDITIONAL INFORMATION
November 9, 1998
