NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT, 485BPOS, 1999-04-28

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
485BPOS, 1999-04-28

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1999

REGISTRATION NOS. 33-85442
811-8828

================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

FORM N-4

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

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [X]

PRE-EFFECTIVE AMENDMENT NO.

POST-EFFECTIVE AMENDMENT NO. 9 [X]

AND
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [X]

AMENDMENT NO. 14 [X]

(CHECK APPROPRIATE BOX OR BOXES)

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

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
(EXACT NAME OF REGISTRANT)

NEW ENGLAND LIFE INSURANCE COMPANY
(NAME OF DEPOSITOR)
501 BOYLSTON STREET, BOSTON, MASSACHUSETTS 02117
(ADDRESS OF DEPOSITOR'S PRINCIPAL EXECUTIVE OFFICES)
DEPOSITOR'S TELEPHONE NUMBER: 617-578-2000

NAME AND ADDRESS OF AGENT FOR
SERVICE: COPY TO:

H. James Wilson Stephen E. Roth, Esquire
Executive Vice President and General Sutherland Asbill & Brennan LLP
Counsel 1275 Pennsylvania Avenue, N.W.
New England Life Insurance Washington, D.C. 20004-2404
Company
501 Boylston Street
Boston, Massachusetts 02117

It is proposed that this filing will become effective (check appropriate box)

[ ] immediately upon filing pursuant to paragraph (b) of Rule 485

[X] on April 30, 1999 pursuant to paragraph (b) of Rule 485
[ ] 60 days after filing pursuant to paragraph (a)(1) of Rule 485
[ ] on (date) pursuant to paragraph (a)(1) of Rule 485
Title of Securities Being Registered: Individual Variable Annuity Contracts

================================================================================

<PAGE>

This filing contains a prospectus and Statement of Additional Information for
each of the two different versions of the contract. A profile prospectus for the
new version of the American Growth Series variable annuity contract is also
included. A supplement may also be used with each prospectus in connection with
sales in Texas.
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

INDIVIDUAL VARIABLE ANNUITY CONTRACT PROFILE

AMERICAN GROWTH SERIES
April 30, 1999

THIS PROFILE IS A SUMMARY OF SOME OF THE MORE IMPORTANT POINTS THAT YOU
SHOULD KNOW AND CONSIDER BEFORE PURCHASING THE CONTRACT. THE CONTRACT IS MORE
FULLY DESCRIBED IN THE PROSPECTUS WHICH ACCOMPANIES THIS PROFILE. PLEASE READ
THE PROSPECTUS CAREFULLY.

"We," "us," and "our" refer to New England Life Insurance Company. "You" and
"your" refer to the owner of a Contract.

1. WHAT IS THE CONTRACT? The Contract is an individual variable annuity
contract that provides a means of investing on a tax-deferred basis through
the New England Variable Annuity Separate Account (the "Variable Account") in
one or more of thirteen series of the New England Zenith Fund (the "Funds").
(Not all of the Sub-accounts are available as of the date of this Profile.
Consult your registered representative concerning availability of these Sub-
accounts.) The Contract is intended for individuals and some qualified and
non-qualified retirement plans. It provides a death benefit and annuity
payment options, some of which provide guaranteed income or guaranteed payment
periods.

The Funds offer a range of investment objectives, from conservative to
aggressive. Your investment in the Funds is NOT guaranteed and you could lose
some or all of any money you allocate to the Funds.

You may allocate all or part of your Contract value to the "Fixed Account."
We guarantee interest on amounts allocated to the Fixed Account at an
effective annual rate of at least 3%. We may credit a higher rate of interest.
The Fixed Account option offers you an opportunity to protect your principal
and earn a guaranteed rate of interest.

The Contract, like all deferred annuity contracts, has two phases: the
accumulation phase and the annuity phase. During the accumulation phase,
earnings accumulate on a tax-deferred basis and are taxed as income when you
make a withdrawal. The annuity phase begins when you begin receiving payments
under one of the annuity payment options described in Section 2. The amount of
money accumulated under your Contract during the accumulation phase determines
the amount of your annuity payments during the annuity phase.

2. WHAT ARE MY ANNUITY OPTIONS? The Contract offers the following annuity
payment options, either in a fixed or variable form:

. Income for a specified number of years;

. Income for life;

. Income for life, but guaranteed for at least 10 years (this is your
default option);

. Income for life, but guaranteed for at least 20 years;

. Income to age 100;

. Income for two lives, while either is still living;

. Income for two lives, but guaranteed for at least 10 years; and

. Income for two lives, with full payments while both are living and two-
thirds to the survivor.

We may make other annuity payment options available from time to time. The
Contract, when issued, will provide for the third option in variable form,
beginning at age 95 (or the maximum age permitted by state law). During the
accumulation phase, you may select another option, and/or start annuity
payments (that is, annuitize) at an earlier date by surrendering the Contract.
If annuity payments start less than 7 years after you make an investment in
the Contract, charges may apply.
<PAGE>

3. HOW DO I PURCHASE A CONTRACT? The minimum initial investment is currently
$5,000, and any subsequent investments must be at least $250, with certain
exceptions described in the prospectus. We may refuse to accept any purchase
payment that would cause your Contract Value, including the value of all other
Contracts that you own with us, to exceed $1,000,000. Currently, we will not
accept any investment that would cause your Contract Value, including the
value of all other Contracts you own with us to exceed $5,000,000.

You are eligible to purchase a Contract if you are an individual, employer,
trust, corporation, partnership, custodian, or any entity specified in an
eligible employee benefit plan. A Contract may have joint owners. The Contract
may be purchased for use with the following retirement plans which offer
Federal tax benefits under the Internal Revenue Code (the "Code"):

Qualified Plans--plans qualified under Section 401(a) or 403(a) of the
Code.

TSA Plans--certain annuity plans under Section 403(b) of the Code.

IRAs--individual retirement accounts under Section 408(a) of the Code and
individual retirement annuities under Section 408(b) of the Code.

Roth IRAs--Roth individual retirement accounts under Section 408A of the
Code.

SEPs and SARSEPs--simplified employee pension plans and salary reduction
simplified employee pension plans under Section 408(k) of the Code.
(SARSEPs are only available if owned prior to January 1, 1999.)

SIMPLE IRAs--simple retirement accounts under Section 408(p) of the Code.

457 Plans--eligible deferred compensation plans under Section 457 of the
Code.

Governmental Plans--governmental plans within the meaning of Section 414(d)
of the Code.

The Contract may not yet be available to all of the foregoing plans, pending
appropriate state approvals. You should consult a qualified advisor about
using the Contract with those plans. We may make the Contract available for
use with Section 401(k) plans. The Contract is not currently available for use
with other plans, including TSA plans subject to the Employee Retirement
Income Security Act of 1974.

Tax-deferred arrangements, including qualified plans, purchasing the
Contract--which also provides tax deferral on Contract Value--should carefully
consider the costs and benefits of the Contracts, including annuity income
benefits.

4. WHAT ARE MY INVESTMENT OPTIONS UNDER THE CONTRACT? You can allocate your
investment to one or more Sub-accounts (within limits), which in turn invest
in the below Funds.

Loomis Sayles Small Cap Series Salomon Brothers Strategic Bond
Morgan Stanley International Magnum Opportunities Series
Equity Series Back Bay Advisors Bond Income Series
Alger Equity Growth Series Salomon Brothers U.S. Government
Goldman Sachs Midcap Value Series Series
Davis Venture Value Series Back Bay Advisors Money Market Series
Westpeak Growth and Income Series MFS Investors Series
Loomis Sayles Balanced Series
MFS Research Managers Series

In addition, the Fixed Account is available. THE MFS INVESTORS SERIES AND MFS
RESEARCH MANAGERS SERIES ARE NOT YET AVAILABLE AS OF THE DATE OF THIS PROFILE.
AVAILABILITY OF THESE SUB-ACCOUNTS WILL ALSO BE SUBJECT TO ANY NECESSARY STATE
INSURANCE DEPARTMENT APPROVAL. CONSULT YOUR REGISTERED REPRESENTATIVE
CONCERNING AVAILABILITY OF THESE SUB-ACCOUNTS.

5. WHAT ARE THE EXPENSES UNDER THE CONTRACT?

Administration Charges. To cover the costs of the administrative services
that we provide for the Contracts, we impose a daily charge at an annual rate
of .10% of the daily net assets attributable to your Contract. We also impose
an "administration contract charge" each year equal to the lesser of 2% of
your total contract value and $30 to help cover the costs of the
administrative services that we provide for the Contracts. We waive this
charge in certain circumstances.

2
<PAGE>

Mortality and Expense Risk Charge. As compensation for assuming mortality
and expense risks under the Contract, we impose a daily charge at an annual
rate of 1.30% of the daily net assets of each sub-account. This charge, as a
percentage of your contract value, is guaranteed not to increase over the life
of your Contract.

Contingent Deferred Sales Charge. No charge for sales expenses is deducted
from your purchase payments when they are made. We do not impose a contingent
deferred sales charge ("CDSC") on withdrawals up to a certain amount each year
(the "free withdrawal amount"). We do, however, impose a CDSC upon the
occurrence of a "CDSC event," one of which is a withdrawal or surrender
(including a surrender to start annuity payments) in excess of the free
withdrawal amount. All of the CDSC events are described in the Prospectus.

The CDSC is deducted only from the investments that we received from you
within seven years of the CDSC event according to the following schedule:

<TABLE>
<CAPTION>
NUMBER OF YEARS SINCE WE APPLICABLE
RECEIVED THE INVESTMENT CDSC CHARGE
------------------------ -----------
<S> <C>
1..................... 7%
2..................... 6%
3..................... 5%
4..................... 4%
5..................... 3%
6..................... 2%
7..................... 1%
Thereafter............ 0%
</TABLE>

We will waive the CDSC in certain circumstances.

Premium Tax Charges. Currently South Dakota imposes a premium tax on annuity
purchase payments received by insurance companies. We pay this tax when
incurred, and recover this tax by imposing a premium tax charge on affected
Contracts. We deduct the premium tax charge at the earliest of: a full or
partial surrender of the Contract, the date when annuity benefits commence, or
payment of the death proceeds (including application of the death proceeds to
the beneficiary continuation provision). Other states impose a premium tax
liability on the date when annuity benefits commence. In those states, we
deduct the premium tax charge from the contract value on that date. Deductions
for state premium tax charges currently range from 1/2% to 2.00% of the
contract value (or, if applicable, purchase payments or death proceeds) for
Contracts used with retirement plans qualifying for tax benefited treatment
and from 1% to 3 1/2% of the contract value (or, if applicable, death
proceeds) for all other Contracts.

Other Expenses. In addition to our charges under the Contract, each Fund
deducts amounts from its assets to pay for its advisory fees and other
expenses.

The following chart is designed to help you understand the charges in the
Contract. The column "Total Annual Charges" shows the total of the
administration contract charge (which is represented as .06%), the .10%
administration asset charge, the 1.30% mortality and expense risk charge, and
the investment charges for each Fund for the year ended December 31, 1998 (as
a percentage of average net assets after giving effect to any current expense
cap or expense deferral). The MFS Investors Series and MFS Research Managers
Series reflect anticipated annual operating expenses for 1999. The next two
columns show the dollar amount of charges you would pay assuming that you
invested $1,000 in a Contract which earns 5% annually and further assuming
that you surrender your Contract or that you elect to annuitize under a period
certain option for a specified period of less than 15 years: (1) at the end of
one year, and (2) at the end of ten years. In the first example, a CDSC will
be charged because you would be surrendering or annuitizing the Contract
within seven years of making the investment. In the second example, there
would be no CDSC. We are also assuming that no premium taxes have been
assessed in either example. For more detailed information, see the Expense
Table in the Prospectus for the Contract.

3
<PAGE>

<TABLE>
<CAPTION>
TOTAL TOTAL ANNUAL EXAMPLES OF TOTAL EXPENSES
ANNUAL FUND CHARGES TOTAL PAID AT THE END OF:
INSURANCE FOR YEAR ANNUAL ---------------------------
FUND CHARGES ENDED 12/31/98 CHARGES ONE YEAR TEN YEARS
- ---- --------- -------------- ------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Small Cap............... 1.46% 1.00% 2.46% $ 89.60 $ 278.14
International Magnum Eq-
uity................... 1.46% 1.30% 2.76% 92.38 307.26
Equity Growth........... 1.46% .83% 2.29% 88.02 261.21
Midcap Value............ 1.46% .90% 2.36% 88.67 268.22
Venture Value........... 1.46% .83% 2.29% 88.02 261.21
Growth and Income....... 1.46% .78% 2.24% 87.55 256.17
Balanced................ 1.46% .82% 2.28% 87.92 260.20
Strategic Bond Opportu-
nities................. 1.46% .85% 2.31% 88.20 263.21
Bond Income............. 1.46% .48% 1.94% 84.76 225.34
U.S. Government......... 1.46% .70% 2.16% 86.81 248.04
Money Market............ 1.46% .45% 1.91% 84.48 222.20
Investors............... 1.46% .90% 2.36% 88.67 268.22
Research Managers....... 1.46% .90% 2.36% 88.67 268.22
</TABLE>

6. HOW WILL MY INVESTMENT IN THE CONTRACT BE TAXED? You should consult a
qualified tax advisor with regard to your Contract. Generally, taxation of
earnings under variable annuities is deferred until amounts are withdrawn or
distributions are made. This deferral is designed to encourage long-term
personal savings and supplemental retirement plans. Certain penalties may
apply if amounts are withdrawn prematurely. The taxable portion of a
withdrawal or distribution is taxed as ordinary income.

Special rules apply if the owner of a Contract is not a natural person.
Generally, such an owner must include in income any increase in the excess of
the contract value over the "investment in the contract" during the taxable
year.

7. DO I HAVE ACCESS TO MY MONEY? You have access to your money during the
accumulation phase by surrendering your Contract or withdrawing part of the
value of your Contract at any time. Under Contracts issued under certain tax
benefited retirement plans, you may also take a loan against its value. If you
make a withdrawal, you must withdraw at least $100 and the remaining value of
your Contract must be at least $1,000.

Certain charges, such as the administration contract charge, CDSC, and
premium tax charges, may be deducted on a surrender or withdrawal. Moreover, a
withdrawal or surrender may cause you to incur income taxes or penalties under
the Federal tax laws.

After annuitization, under certain annuity options, you may withdraw the
commuted value of the remaining payments.

8. HOW HAVE THE FUNDS PERFORMED? The following chart shows the total returns
for each Fund for each of the last 10 years (or less if the Fund began less
than 10 years ago), based on a $1,000 purchase payment. The total returns are
adjusted to reflect all Contract expenses and deductions described above
except the CDSC and premium tax charges. If applied, these charges would
reduce the performance figures in the chart. Please remember that past
performance is not a guarantee of future results.

<TABLE>
<CAPTION>
FUND 1998 1997 1996 1995 1994 1993 1992 1991 1990 1989
- ---- ----- ----- ----- ------ ----- ----- ----- ----- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Small Cap............... -4.64 21.20 % 26.44 % 24.06% N/A N/A N/A N/A N/A N/A
International Magnum Eq-
uity................... 2.73 (5.56)% 2.23 % 1.76% N/A N/A N/A N/A N/A N/A
Equity Growth........... 44.17 21.98 % 9.50 % 43.64% N/A N/A N/A N/A N/A N/A
Midcap Value............ -8.72 13.48 % 13.45 % 25.40% (4.65)% N/A N/A N/A N/A N/A
Venture Value........... 11.41 29.81 % 21.85 % 34.35% N/A N/A N/A N/A N/A N/A
Growth and Income....... 21.08 29.50 % 14.02 % 31.40% (5.58)% N/A N/A N/A N/A N/A
Balanced................ 5.62 12.35 % 12.78 % 20.06% N/A N/A N/A N/A N/A N/A
Strategic Bond Opportu-
nities................. -1.60 7.16 % 10.14 % 14.73% N/A N/A N/A N/A N/A N/A
Bond Income............. 6.01 7.71 % 1.49 % 17.57% (6.53)% 9.06 % 4.59 % 13.95% 4.11% 8.08%
U.S. Government......... 3.48 4.22 % (0.85)% 10.43% N/A N/A N/A N/A N/A N/A
Money Market............ 1.38 1.42 % 1.18 % 1.71% 0.01 % (0.96)% (0.14)% 2.19% 4.03% 4.96%
Investors............... N/A
Research Managers....... N/A
</TABLE>

4
<PAGE>

9. DOES THE CONTRACT HAVE A DEATH BENEFIT? Yes. If you, the owner, die (or,
annuitant if the owner is not an individual) prior to the annuity phase of the
Contract, the Beneficiary receives a death benefit. The death benefit will be
the greater of two values: (1) the value of your Contract next determined
after the later of the date when we receive due proof of death or an election
of continuation or payment from the beneficiary; or (2) the minimum guaranteed
death benefit under the Contract, which we calculate using a formula described
in the Prospectus.

10. IS THERE ANYTHING ELSE I SHOULD KNOW? The Contract has several
additional features that you may be interested in, including the following:

Transfer Privilege. You can transfer from $100 to $500,000 of your
Contract's value from one Fund to another free of charge. During the
accumulation phase of the Contract, you can make as many transfers among the
Funds as you like. However, different rules apply to transfers to and from the
Fixed Account. Also, during the annuity phase, if you have chosen a variable
payment option, you can only make one transfer between Funds per year, without
our consent, and you cannot make transfers to the Fixed Account. We reserve
the right to charge a transfer fee (although we do not currently do so) and to
limit the number and amount of transfers in some circumstances.

Dollar Cost Averaging. We offer an automated transfer privilege called
"dollar cost averaging." Under this feature, you can instruct us to make
monthly transfers from any one of your investment options to any other
investment options, subject to certain limitations. A minimum of $100 must be
transferred to each investment option that you select under this feature.

Systematic Withdrawals. This feature allows you to have a portion of your
Contract value withdrawn automatically on a monthly basis during the
accumulation phase. As long as the amount of each withdrawal is at least $100,
you can elect a fixed dollar amount or elect to have your Contract's
investment gain withdrawn. Certain limitations may apply. Of course, you may
have to pay taxes and a CDSC on these withdrawals.

Free Look Right. You have a "free look right"; i.e., the right to return the
Contract to us or your sales representative for cancellation within a certain
number of days (usually 10, although this varies from state to state). If you
exercise this right, we will cancel the Contract as of the day we receive your
request and send you its value on that day. The value may be more or less than
your initial investment in the Contract. If required by the insurance law or
regulations of the state in which your Contract is issued, however, we will
refund all purchase payments made.

11. WHO CAN I CONTACT FOR MORE INFORMATION? You can write to us at New
England Annuities, P.O. Box 642, Boston, Massachusetts 02116, or call us at
(800) 435-4117. You can also get a recording of daily unit values by calling
(800) 333-2501. You can also request a copy of the Prospectus or Statement of
Additional Information from New England Securities Corporation, 399 Boylston
Street, Boston, Massachusetts 02116.

5
<PAGE>

AMERICAN GROWTH SERIES

Individual Variable Annuity Contracts
Issued by
New England Life Insurance Company

Supplement dated April 30, 1999
to Prospectus dated April 30, 1999

For Contracts issued in Texas, the minimum guaranteed death benefit will be
recalculated on the sixth Contract Anniversary, and every sixth year
anniversary thereafter until the Contract Owner's (or, if applicable, the
Annuitant's) 76th birthday to determine whether a higher (but never a lower)
guarantee will apply. (For a jointly owned Contract, this recalculation will
be made every six years until the 71st birthday of the older Contract Owner.)
For more information about the minimum guaranteed death benefit, see "Payment on
Death Prior to Annuitization."

VA-154-98
<PAGE>

AMERICAN GROWTH SERIES

Individual Variable Annuity Contracts
Issued By
New England Variable Annuity Separate Account of
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000

This prospectus offers individual variable annuity contracts (the
"Contracts") for individuals and some qualified and nonqualified retirement
plans. You may allocate purchase payments to one or more sub-accounts
investing in these Eligible Funds of New England Zenith Fund.

Loomis Sayles Small Cap Series Loomis Sayles Balanced Series
Morgan Stanley International Magnum Salomon Brothers Strategic Bond
Equity Series Opportunities Series
Alger Equity Growth Series Back Bay Advisors Bond Income Series
Goldman Sachs Midcap Value Series Salomon Brothers U.S. Government
Davis Venture Value Series Series
Westpeak Growth and Income Series Back Bay Advisors Money Market Series

You may also allocate purchase payments to a Fixed Account. Limits apply to
transfers to and from the Fixed Account.

Please read this prospectus carefully and keep it for reference. This
prospectus contains information that you should know before investing.

You can obtain a Statement of Additional Information ("SAI") about the
Contracts, dated April 30, 1999. The SAI is filed with the Securities and
Exchange Commission and is incorporated by reference in this prospectus. The
SAI Table of Contents is on page A-55 of the prospectus. For a free copy of
the SAI, write or call New England Securities Corporation, 399 Boylston St.,
Boston, Massachusetts 02116, 1-800-356-5015.

The Securities and Exchange Commission has not approved these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

April 30, 1999

THE PROSPECTUS FOR THE ELIGIBLE FUNDS IS ATTACHED. PLEASE READ AND KEEP IT
FOR REFERENCE.

THE CONTRACTS HAVE RISKS INCLUDING POSSIBLE LOSS OF PRINCIPAL. THE CONTRACTS
ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED BY, ANY
FINANCIAL INSTITUTION AND ARE NOT FEDERALLY INSURED BY THE FEDERAL DEPOSIT
INSURANCE CORPORATION, THE FEDERAL RESERVE BOARD OR ANY OTHER GOVERNMENT
AGENCY.

A-1
<PAGE>

TABLE OF CONTENTS
OF
THE PROSPECTUS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS......................... A-4
HIGHLIGHTS................................................................ A-5
EXPENSE TABLE............................................................. A-7
ACCUMULATION UNIT VALUES.................................................. A-10
HOW THE CONTRACT WORKS.................................................... A-12
THE COMPANY............................................................... A-13
THE VARIABLE ACCOUNT...................................................... A-13
INVESTMENTS OF THE VARIABLE ACCOUNT....................................... A-13
Investment Advice........................................................ A-15
Substitution of Investments.............................................. A-16
GUARANTEED OPTION......................................................... A-16
THE CONTRACTS............................................................. A-16
Purchase Payments........................................................ A-16
Allocation of Purchase Payments.......................................... A-17
Contract Value and Accumulation Unit Value............................... A-17
Payment on Death Prior to Annuitization.................................. A-17
Transfer Privilege....................................................... A-20
Dollar Cost Averaging.................................................... A-20
Surrenders............................................................... A-21
Systematic Withdrawals................................................... A-22
Loan Provision for Certain Tax Benefited Retirement Plans................ A-23
Disability Benefit Rider................................................. A-24
Suspension of Payments................................................... A-24
Ownership Rights......................................................... A-24
Requests and Elections................................................... A-25
ADMINISTRATION CHARGES, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUC-
TIONS.................................................................... A-25
Administration Contract Charges.......................................... A-26
Administration Asset Charge.............................................. A-26
Mortality and Expense Risk Charge........................................ A-26
Contingent Deferred Sales Charge......................................... A-26
Premium Tax Charge....................................................... A-29
Other Expenses........................................................... A-29
ANNUITY PAYMENTS.......................................................... A-30
Election of Annuity...................................................... A-30
Annuity Options.......................................................... A-30
Amount of Variable Annuity Payments...................................... A-31
RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS............................ A-32
FEDERAL INCOME TAX STATUS................................................. A-33
Introduction............................................................. A-33
Taxation of the Company.................................................. A-33
Tax Status of the Contract............................................... A-33
Taxation of Annuities.................................................... A-34
Qualified Contracts...................................................... A-37
Withholding.............................................................. A-41
Possible Changes in Taxation............................................. A-41
Other Tax Consequences................................................... A-41
General.................................................................. A-41
</TABLE>

A-2
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VOTING RIGHTS.............................................................. A-42
DISTRIBUTION OF CONTRACTS.................................................. A-42
THE FIXED ACCOUNT.......................................................... A-42
Contract Value and Fixed Account Transactions............................. A-43
YEAR 2000 COMPLIANCE ISSUES ............................................... A-43
INVESTMENT PERFORMANCE INFORMATION......................................... A-44
FINANCIAL STATEMENTS....................................................... A-45
APPENDIX A: Consumer Tips.................................................. A-46
APPENDIX B: Contingent Deferred Sales Charge............................... A-47
APPENDIX C: Premium Tax.................................................... A-48
APPENDIX D: Exchanged Contracts............................................ A-49
APPENDIX E: Average Annual Total Return.................................... A-51
</TABLE>

A-3
<PAGE>

GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS

We have tried to make this prospectus as understandable for you as possible.
However, in explaining how the Contract works, we have had to use certain
terms that have special meanings. These terms are defined below:

ACCOUNT. A sub-account of the Variable Account or the Fixed Account.

ACCUMULATION UNIT. An accounting device used to calculate the Contract Value
before annuitization.

ANNUITANT. The person on whose life the Contract is issued.

ANNUITIZATION. Application of proceeds under the Contract to an annuity
option on the Maturity Date or upon an earlier surrender of the Contract.

ANNUITY UNIT. An accounting device used to calculate the dollar amount of
annuity payments.

BENEFICIARY. The person designated to receive Death Proceeds under a
Contract if a Contract Owner (or Annuitant, if the Contract is not owned by an
individual) dies before annuitization of the Contract.

CONTRACT YEAR. A twelve month period beginning with the date shown on your
Contract and with each Contract anniversary thereafter.

DEATH PROCEEDS (PRIOR TO ANNUITIZATION). The amount we pay, prior to
annuitization, on receipt of due proof of the death of a Contract Owner (or of
the annuitant if the Contract is not owned by an individual) and election of
payment.

FIXED ACCOUNT. A part of the Company's general account to which you can
allocate net purchase payments. The Fixed Account provides guarantees of
principal and interest.

MATURITY DATE. The date on which annuity payments begin, unless you apply
the Contract Value to an annuity payment option before then. The Maturity Date
is the date when the older of the Contract Owner(s) and the Annuitant at his
or her nearest birthday would be age 95 (or the maximum age permitted by state
law, if less).

PAYEE. Any person or entity entitled to receive payments under the Contract.
The term includes (i) an Annuitant, (ii) a Beneficiary or contingent
Beneficiary who becomes entitled to death proceeds, and (iii) on surrender or
partial surrender of the Contract, the Contract Owner.

VARIABLE ACCOUNT. A separate investment account of the Company, the New
England Variable Annuity Separate Account. The Variable Account is divided
into sub-accounts; each invests in shares of one Eligible Fund.

VARIABLE ANNUITY. An annuity providing for income payments varying in amount
to reflect the investment experience of a separate investment account.

A-4
<PAGE>

HIGHLIGHTS

TAX DEFERRED VARIABLE ANNUITIES:

Earnings under variable annuities are usually not taxed until paid out. This
tax treatment is intended to encourage you to save for retirement.

THE CONTRACTS:

The American Growth Series provides for variable annuity payments that begin
at the Maturity Date, or earlier if you choose to surrender and annuitize.
Variable annuity payments fluctuate with the investment results of the
Eligible Funds. (See "Annuity Payments.")

PURCHASE PAYMENTS:

Currently, the minimum initial purchase payment is $5,000, and the minimum
subsequent purchase payment is $250; however, exceptions may apply. We may
limit the purchase payments you can make. In addition, you may not make a
purchase payment (1) within the seven years before the Contract's Maturity
Date (except under Contracts issued in Pennsylvania or New York), or (2) after
a Contract Owner (or the Annuitant, if the Contract is not owned by an
individual) reaches age 86. (See "Purchase Payments.")

OWNERSHIP:

A purchaser may be an individual, employer, trust, corporation, partnership,
custodian or any entity specified in an eligible employee benefit plan. A
contract may have two owners (both of whom must be individuals). Subject to
state approval, certain retirement plans qualified under the Internal Revenue
Code ("the Code") may purchase the Contract. Tax-deferred arrangements,
including qualified plans, purchasing the Contract--which also provides tax
deferral on Contract Value--should carefully consider the costs and benefits
of the Contracts, including annuity income benefits.

For contract transactions, we rely on instructions from Contract Owners,
whether a trustee or custodian of an eligible retirement plan or an individual
owner.

INVESTMENT OPTIONS:

You may allocate purchase payments net of certain charges to the sub-
accounts or to the Fixed Account. You can allocate your contract value to a
maximum of ten accounts (including the Fixed Account) at any time.

You can change your purchase payment allocation. We believe that under
current tax law you can transfer Contract Value between accounts without
federal income tax. We reserve the right to limit transfers and charge a
transfer fee. Currently, we do not charge a transfer fee or limit the number
of transfers before annuitization; but we do apply special limits to "market-
timing." (See "Transfer Privilege.") The minimum transfer amount (before
annuitization) is currently $100. After variable annuity payments begin, you
can make one transfer per year without our consent. Special limits apply to
transfers to and from the Fixed Account. (See "The Fixed Account.") The
maximum transfer amount is $500,000 for each transaction.

CHARGES:

We apply the following charges to your Contract:

. premium tax charge, in some states

. mortality and expense risk charge equal to an annual rate of 1.30% of the
Variable Account's daily net assets

A-5
<PAGE>

. administration asset charge equal to an annual rate of .10% of the
Variable Account's daily net assets

. annual contract administration charge equal to the lesser of $30 and 2%
of contract value

. a contingent deferred sales charge equal to a maximum of 7% of each
purchase payment made, on certain full and partial surrenders and certain
annuitization transactions.

Certain waivers or reductions may apply. (See "Administration Charges,
Contingent Deferred Sales Charge and Other Deductions.")

We do not deduct a sales charge from purchase payments.

TEN DAY RIGHT TO REVIEW:

After you receive the Contract, you have ten days (more in some states) to
return it to us or our agent for cancellation. We will return the Contract
Value (or, in certain states, your purchase payments.)

PAYMENT ON DEATH:

If a Contract Owner (or the Annuitant, if the Contract is not owned by an
individual) dies before annuitization, the Beneficiary receives a death
benefit. The Contract has a minimum guaranteed death benefit equal to your
purchase payments, adjusted for any previous surrenders. However, six months
after the issue date, and at each six month interval until the Contract
Owner's 76th birthday, the minimum guaranteed death benefit is recalculated to
determine whether a higher (but never a lower) guarantee will apply. (Under a
jointly owned Contract, this recalculation is made until the 71st birthday of
the older Contract Owner.) Purchase payments immediately increase, and partial
surrenders immediately decrease, your minimum guaranteed death benefit.

Death Proceeds equal the greater of the minimum guaranteed death benefit and
the current Contract Value, each reduced by any outstanding loan plus accrued
interest (and, in certain states, by a premium tax charge.) (See "Payment on
Death Prior to Annuitization.")

SURRENDERS:

Before annuitization you can send us a written request to surrender all or
part of your Contract Value. After a partial surrender, the remaining Contract
Value must be at least $1,000. Currently, a partial surrender must be at least
$100. (Special rules apply if the Contract has a loan.) Federal tax laws
penalize and may prohibit certain premature distributions from the Contract.
(See "Federal Income Tax Status.")

A Contingent Deferred Sales Charge will apply to certain full and partial
surrenders and certain annuitization transactions. On full surrender, a pro
rata portion of the annual administration contract charge (and, in some
states, a premium tax charge) will be deducted.

In any Contract Year, an amount may be surrendered without a Contingent
Deferred Sales Charge (the "free withdrawal amount"). The free withdrawal
amount is the greater of (1) 10% of Contract Value at the beginning of the
Contract Year and (2) the excess of Contract Value over purchase payments that
are subject to the Contingent Deferred Sales Charge on the date of the
surrender. (See "Surrenders" and "Contingent Deferred Sales Charge.")

A-6
<PAGE>

EXPENSE TABLE

The purpose of the table and the examples below is to explain the various
costs and expenses you will bear, directly or indirectly, as a Contract Owner.
These are deducted from purchase payments, the Variable Account, or the
Eligible Funds. In the examples following the table, we assume that you
allocated your entire purchase payment to one Sub-account, with no transfers.

<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES(1)
Sales Charge Imposed on Purchase Payments (as a percentage of pur-
chase payments)..................................................... 0%
Maximum Contingent Deferred Sales Charge(2) (as a percentage of each
purchase payment)................................................... 7%
Transfer Fee(3)...................................................... $ 0
ANNUAL CONTRACT FEE
Administration Contract Charge (per Contract)(4)..................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES(5)
(as a percentage of average net assets)
Mortality and Expense Risk Charge.................................... 1.30%
Administration Asset Charge.......................................... .10%
-----
Total Separate Account Annual Expenses........................... 1.40%
</TABLE>

NEW ENGLAND ZENITH FUND

OPERATING EXPENSES FOR THE YEAR ENDED 12/31/98
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER CURRENT EXPENSE CAP OR EXPENSE
DEFERRAL)(6)

<TABLE>
<CAPTION>
MORGAN
LOOMIS STANLEY GOLDMAN WESTPEAK
SAYLES INTERNATIONAL SACHS DAVIS GROWTH LOOMIS
SMALL MAGNUM ALGER EQUITY MIDCAP VENTURE AND SAYLES
CAP EQUITY GROWTH VALUE VALUE INCOME BALANCED
SERIES SERIES SERIES SERIES SERIES SERIES SERIES
------ ------------- ------------ ------- ------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fee.......... 1.00% .90% .75% .75% .75% .70% .70%
Other Expenses.......... -- .40% .08% .15% .08% .08% .12%
----- ----- ---- ---- ---- ---- ----
Total Series Operating
Expenses............. 1.00% 1.30% .83% .90% .83% .78% .82%
</TABLE>

<TABLE>
<CAPTION>
SALOMON BACK BAY SALOMON BACK BAY
BROTHERS ADVISORS BROTHERS ADVISORS MFS
STRATEGIC BOND BOND U.S. MONEY MFS RESEARCH
OPPORTUNITIES INCOME GOVERNMENT MARKET INVESTORS MANAGERS
SERIES SERIES SERIES SERIES SERIES* SERIES*
-------------- -------- ---------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Management Fee.......... .65% .40% .55% .35% .75% .75%
Other Expenses.......... .20% .08% .15% .10% .15% .15%
---- ---- ---- ---- ---- ----
Total Series Operating
Expenses............. .85% .48% .70% .45% .90% .90%
</TABLE>
- --------

* The MFS Investors Series and MFS Research Managers Series reflect
anticipated annual operating expenses for 1999. THESE SUB-ACCOUNTS ARE NOT
YET AVAILABLE AS OF THE DATE OF THIS PROSPECTUS. CONSULT YOUR REGISTERED
REPRESENTATIVE CONCERNING AVAILABILITY OF THESE SUB-ACCOUNTS.

A-7
<PAGE>

EXAMPLE (NOTE: The examples below are hypothetical. Although we base them on
the expenses shown in the expense tables above, the examples are not
representations of past or future performance or expenses. Actual performance
and/or expenses may be more or less than shown.(7)) For purchase payments
allocated to each of the Series indicated:

You would pay the following expenses on a
$1,000 purchase payment assuming 1) 5% annual
return on the underlying New England Zenith
Fund Series and 2) that you surrender your
Contract or that you elect to annuitize under
a period certain option for a specified period
of less than 15 years, at the end of each time
period (a contingent deferred sales charge
will apply at the end of 1 year, 3 years and 5
years):

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Loomis Sayles Small Cap................... $89.60 $125.01 $160.66 $278.14
Morgan Stanley International Magnum
Equity................................... 92.38 133.51 175.49 307.26
Alger Equity Growth....................... 88.02 120.17 152.16 261.21
Goldman Sachs Midcap Value................ 88.67 122.16 155.67 268.22
Davis Venture Value....................... 88.02 120.17 152.16 261.21
Westpeak Growth and Income................ 87.55 118.73 149.64 256.17
Loomis Sayles Balanced.................... 87.92 119.88 151.65 260.20
Salomon Brothers Strategic Bond
Opportunities............................ 88.20 120.74 153.16 263.21
Back Bay Advisors Bond Income............. 84.76 110.10 134.40 225.34
Salomon Brothers U.S. Government.......... 86.81 116.43 145.60 248.04
Back Bay Advisors Money Market............ 84.48 109.23 132.87 222.20
MFS Investors............................. 88.67 122.16 155.67 268.22
MFS Research Managers..................... 88.67 122.16 155.67 268.22
</TABLE>

You would pay the following expenses on a
$1,000 purchase payment assuming 1) 5% annual
return on the underlying New England Zenith
Fund Series and 2) that you do not surrender
your Contract or that you elect to annuitize
under a life contingency option, or under a
period certain option for a minimum specified
period of 15 years, at the end of each time
period (no contingent deferred sales charge
will apply)(8):

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Loomis Sayles Small Cap................... $24.88 $76.49 $130.66 $278.14
Morgan Stanley International Magnum
Equity................................... 27.88 85.44 145.49 307.26
Alger Equity Growth....................... 23.18 71.39 122.16 261.21
Goldman Sachs Midcap Value................ 23.88 73.49 125.67 268.22
Davis Venture Value....................... 23.18 71.39 122.16 261.21
Westpeak Growth and Income................ 22.68 69.88 119.64 256.17
Loomis Sayles Balanced.................... 23.08 71.09 121.65 260.20
Salomon Brothers Strategic Bond
Opportunities............................ 23.38 71.99 123.16 263.21
Back Bay Advisors Bond Income............. 19.67 60.79 104.40 225.34
Salomon Brothers U.S. Government.......... 21.88 67.46 115.60 248.04
Back Bay Advisors Money Market............ 19.37 59.88 102.87 222.20
MFS Investors............................. 23.88 73.49 125.67 268.22
MFS Research Managers..................... 23.88 73.49 125.67 268.22
</TABLE>

A-8
<PAGE>

- --------
NOTES:
(1) Premium tax charges are not shown. They range from 0% (in most states) to
3.5% of Contract Value (or if applicable, purchase payments).
(2) The Contingent Deferred Sales Charge applies to each purchase payment and
declines annually over the first seven year period the purchase payment is
invested in the Contract until it reaches 0% for that purchase payment.
(3) We reserve the right to limit the number and amount of transfers and
impose a transfer fee.
(4) This charge is not imposed after annuitization.

(5) These charges are not imposed on the Fixed Account.

(6) Total Series Operating Expenses are based on the amount of such expenses
applied against assets at December 31, 1998, after giving effect to the
applicable voluntary expense cap or expense deferral. For the Loomis
Sayles Small Cap Series, Total Series Operating Expenses take into account
a voluntary cap on expenses by New England Investment Management, Inc.
("NEIM", formerly TNE Advisers, Inc.), the Series investment adviser,
which will bear all expenses that exceed 1.00% of average daily net
assets. Absent this cap or any other expense reimbursement arrangement,
Total Series Operating Expenses for the Loomis Sayles Small Cap Series for
the year ended December 31, 1998 would have been 1.10%. Total Series
Operating Expenses for the Goldman Sachs Midcap Value (formerly Loomis
Sayles Avanti Growth), Westpeak Growth and Income, Back Bay Advisors Bond
Income and Back Bay Advisors Money Market Series are after giving effect
to a voluntary expense cap. For each of these Series, NEIM bears those
expenses (other than the management fee) that exceed 0.15% of average
daily net assets. For the eight other Series shown, the Total Series
Operating Expenses are after giving effect to a voluntary expense
deferral. As of May 1, 1998 the Goldman Sachs Midcap Value is subject to
the voluntary expense deferral described below for the eight other Series
shown with an annual expense limit of .90% of net assets. Under the
deferral, expenses which exceed a certain limit are paid by NEIM in the
year they are incurred and transferred to the Series in a future year when
actual expenses of the Series are below the limit. The limit on expenses
for each of these Series is: 1.30% of average daily net assets for the
Morgan Stanley International Magnum Equity Series; .90% of average daily
net assets for the Alger Equity Growth and Davis Venture Value Series;
.85% of average daily net assets for the Loomis Sayles Balanced and
Salomon Brothers Strategic Bond Opportunities Series; .70% of average
daily net assets for the Salomon Brothers U.S. Government Series and .90%
of average daily net assets for the MFS Investors and MFS Research
Managers Series. Absent the expense deferral, Total Series Operating
Expenses for these Series for the year ended December 31, 1998 would have
been: 1.40% for Morgan Stanley International Magnum Equity Series and .77%
for Salomon Brothers U.S. Government Series. Without the expense deferral
arrangement, we estimate that Total Series Operating Expenses for the MFS
Investors Series and MFS Research Managers Series for the year ended
December 31, 1999 would be 1.04%, each, on an annualized basis. The
expense cap and deferral arrangements are voluntary and may be terminated
at any time. See the attached prospectus of the New England Zenith Fund
for more complete information.

(7) In these examples, the average Administration Contract Charge of .06% has
been used. (See (4), above.)
(8) If you subsequently withdraw the commuted value of amounts placed under
any of these options, we will deduct from the amount you receive a portion
of the Contingent Deferred Sales Charge amount that would have been
deducted when you originally applied the Contract proceeds to the option.
- -------------------------------------------------------------------------------

A-9
<PAGE>

ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
CONDENSED FINANCIAL INFORMATION

International Magnum Equity Sub-ac-
count
04/19/95* to 12/31/95............. 1.034539 1.073005 2,973
01/01/96 to 12/31/96.............. 1.073005 1.129151 12,898
01/01/97 to 12/31/97.............. 1.129151 1.099535 22,065
01/01/98 to 12/31/98.............. 1.099535 1.161274 2,163

Equity Growth Sub-account
04/19/95* to 12/31/95............. 1.091430 1.402375 3,908
01/01/96 to 12/31/96.............. 1.402375 1.565675 18,547
01/01/97 to 12/31/97.............. 1.565675 1.940577 32,284
01/01/98 to 12/31/98.............. 1.940577 2.823513 4,586

Midcap Value Sub-account
04/19/95* to 12/31/95............. 1.201698 1.438865 2,010
01/01/96 to 12/31/96.............. 1.438865 1.669358 9,083
01/01/97 to 12/31/97.............. 1.669358 1.932280 15,872
01/01/98 to 04/30/98.............. 1.932280 2.203999 --
05/01/98 to 12/31/98.............. 2.213114 1.797180 1,480

Venture Value Sub-account
04/19/95* to 12/31/95............. 1.071598 1.323183 3,798
01/01/96 to 12/31/96.............. 1.323183 1.642613 17,783
01/01/97 to 12/31/97.............. 1.642613 2.163463 39,083
01/01/98 to 12/31/98.............. 2.163463 2.437055 4,389

Growth and Income Sub-account
04/19/95* to 12/31/95............. 1.193057 1.485762 2,885
01/01/96 to 12/31/96.............. 1.485762 1.730922 9,527
01/01/97 to 12/31/97.............. 1.730922 2.279329 18,638
01/01/98 to 12/31/98.............. 2.279329 2,790691 4,235

Balanced Sub-account
04/19/95* to 12/31/95............. 1.073645 1.227281 3,848
01/01/96 to 12/31/96.............. 1.227281 1.415482 17,356
01/01/97 to 12/31/97.............. 1.415482 1.622453 33,627
01/01/98 to 12/31/98.............. 1.622453 1.742881 4,075
</TABLE>
- --------
*Date on which the sub-account first became available.

Prior to September 8, 1998 unit values reflect a mortality and expense charge
of 1.25%. Unit values for periods on and after that date reflect a mortality
and expense charge of 1.30%.

A-10
<PAGE>

Bond Income Sub-account
04/19/95* to 12/31/95............. 2.700549 3.037039 1,299
01/01/96 to 12/31/96.............. 3.037039 3.134109 4,588
01/01/97 to 12/31/97.............. 3.134109 3.428788 7,595
01/01/98 to 12/31/98.............. 3.428788 3.660529 2,055

U.S. Government Sub-account
04/19/95* to 12/31/95............. 1.046872 1.139109 2,122
01/01/96 to 12/31/96.............. 1.139109 1.160957 5,512
01/01/97 to 12/31/97.............. 1.160957 1.242399 8,346
01/01/98 to 12/31/98.............. 1.242399 1.316242 3,447

Money Market Sub-account
04/19/95* to 12/31/95............. 1.834830 1.889065 2,759
01/01/96 to 12/31/96.............. 1.889065 1.959126 9,258
01/01/97 to 12/31/97.............. 1.959126 2.036045 8,797
01/01/98 to 12/31/98.............. 2.036045 2.098320 3,737
</TABLE>
- --------
*Date on which the sub-account first became available.

Prior to September 8, 1998 unit values reflect a mortality and expense charge
of 1.25%. Unit values for periods on and after that date reflect a mortality
and expense charge of 1.30%.

A-11
<PAGE>

HOW THE CONTRACT WORKS
<S> <C> <C>
PURCHASE PAYMENT CONTRACT VALUE DAILY DEDUCTION FROM VARIABLE ACCOUNT
. You can make a one-time . You allocate payments to your . We deduct a mortality and
investment or establish an choice, within limits, of Eligible expense risk charge of 1.30% on
ongoing investment program, Funds and/or the Fixed Account. an annualized basis from the
subject to the Company's . The Contract Value reflects Contract Value daily.
minimum and maximum purchase payments, investment . We deduct an Administration
purchase payment guidelines. experience, interest credited Asset Charge of 0.10% on an
on Fixed Account allocations, annualized basis from the
partial surrenders, loans and Contract Value daily.
ADDITIONAL PAYMENTS Contract charges. . Investment advisory fees and
. Generally may be made at any . The Contract Value invested in operating expenses are deducted
time, (subject to Company the Eligible Funds is not from the Eligible Fund assets
limits), but no purchase guaranteed. daily.
payments allowed: (1) during the . Earnings in the contract are free
seven years immediately of any current income taxes (see ANNUAL CONTRACT FEE
preceding the Maturity Date page A-33). . We deduct a $30 Administration
(except under Contracts issued . You may change the allocation Contract Charge from the Contract
in Pennsylvania or New York); or of future payments, within limits, Value in the Variable Account
(2) after a Contract Owner (or at any time. on each anniversary while the
the Annuitant, if not owned in an . Prior to annuitization, you may Contract is in-force, other
individual capacity) reaches transfer Contract Value among than under a Payment Option.
age 86. accounts, currently free of (May be waived for certain large
. Minimum $250 with certain charge. (Special limits apply to Contracts.) We deduct a pro rata
exceptions (see page A-16). the Fixed Account and to portion on full surrender and at
situations that involve annuitization.
LOANS "market timing.")
. Loans are available to . Contract Value may not be SURRENDER CHARGE
participants of certain tax allocated among more than ten . Consists of Contingent Deferred
qualified pension plans (see Accounts (including the Fixed Sales Charge based on purchase
page A-23). Account) at any time. payments made (see pages
A-26 to A-29).
SURRENDERS RETIREMENT BENEFITS
. Up to the greater of: 10% of the . Lifetime income options. PREMIUM TAX CHARGE
Contract Value at the beginning . Fixed and/or variable payout . Where applicable, we deduct a
of the Contract Year; and the options. premium tax charge from the
excess of the Contract Value . Retirement benefits may be Contract Value when annuity
over purchase payments that are taxable. benefits commence (or in certain
subject to the Contingent . Premium tax charge may apply. states, at the earliest of: full
Deferred Sales Charge on the or partial surrender; annuitization;
date of surrender, can be or payment of the Death Proceeds
withdrawn each year without due to the death of a Contract
incurring a Contingent Owner or, if applicable, of
Deferred Sales Charge, subject the Annuitant).
to any applicable tax law
restrictions. ADDITIONAL BENEFITS
. Surrenders may be taxable to the . You pay no taxes on your
extent of gain. investment as long as it
. Prior to age 59 1/2 a 10% penalty remains in the Contract.
tax may apply. (A 25% penalty . You may surrender the Contract at
tax may apply upon surrender any time for its Contract Value,
from a SIMPLE IRA within less any applicable Contingent
the first two years.) Deferred Sales Charge, subject
. Premium tax charge may apply. to any applicable tax law
restrictions.
DEATH PROCEEDS . We may waive the Contingent
. Guaranteed not to be less than Deferred Sales Charge on
your total purchase payments evidence of terminal illness,
adjusted for any prior surrenders confinement to a nursing home,
or outstanding loans (and, where or permanent and total disability,
applicable, net of premium tax if this benefit is available in
charges). your state.
. Death proceeds may be taxable.
. Premium tax charge may apply.

</TABLE>

A-12
<PAGE>

THE COMPANY

We were organized as a stock life insurance company in Delaware in 1980 and
are authorized to operate in all states, the District of Columbia and Puerto
Rico. Formerly, we were a wholly-owned subsidiary of New England Mutual Life
Insurance Company. On August 30, 1996, Metropolitan Life Insurance Company
("MetLife") bought New England Mutual Life Insurance Company. MetLife became
the parent of New England Variable Life Insurance Company which changed its
name to "New England Life Insurance Company," (the "Company") and changed its
domicile from the State of Delaware to the Commonwealth of Massachusetts. Our
Home Office is at 501 Boylston Street, Boston, Massachusetts 02116.

We are a member of the Insurance Marketplace Standards Association ("IMSA"),
and as such may include the IMSA logo and information about IMSA membership in
our advertisements. Companies that belong to IMSA subscribe to a set of
ethical standards covering the various aspects of sales and service for
individually sold life insurance and annuities.

THE VARIABLE ACCOUNT

We established a separate investment account, New England Variable Annuity
Separate Account (the "Variable Account"), under Delaware law on July 1, 1994,
to hold the assets backing the Contracts. When the Company changed its
domicile to Massachusetts on August 30, 1996 the Variable Account became
subject to Massachusetts law. The Variable Account is registered as a unit
investment trust under the Investment Company Act of 1940. The Variable
Account may be used to support other variable annuity contracts besides the
Contracts. The other contracts may have different charges, and provide
different benefits.

The assets of the Variable Account equal to its reserves and other contract
liabilities are not available to meet the claims of the Company's general
creditors. The income and realized and unrealized capital gains or losses of
the Variable Account are credited to or charged against the Variable Account
and not to other income, gains or losses of the Company. All obligations
arising under the Contracts are, however, general corporate obligations of the
Company.

We allocate your purchase payments to the sub-accounts that you elect. If
you allocate purchase payments to the Variable Account, the value of
Accumulation Units credited to your Contract and the amount of the variable
annuity payments depend on the investment experience of the Eligible Fund (a
mutual fund) in which your selected sub-accounts invests. We do not guarantee
the investment performance of the Variable Account. You bear the full
investment risk for all amounts allocated to the Variable Account.

INVESTMENTS OF THE VARIABLE ACCOUNT

We will allocate your purchase payments to the sub-accounts investing in one
or more of the Eligible Funds you chose, which we list below. No sales charge
will apply at the time you make your payment. You may change your selection of
Eligible Funds for future purchase payments at any time free of charge. (See
"Requests and Elections.") You can transfer to or from any Eligible Fund,
subject to certain conditions. (See "Transfer Privilege.") You may allocate
your Contract Value among no more than 10 Accounts (including the Fixed
Account) at any one time. We reserve the right to add or remove Eligible Funds
from time to time. See "Substitution of Investments."

Certain Eligible Funds have investment objectives and policies similar to
other funds that may be managed by the same subadviser. The performance of the
Eligible Funds, however, may be higher or lower than the other funds. We make
no representation that the investment results of any of the Eligible Funds
will be comparable to the investment results of any other fund, even if the
other fund has the same subadviser.

A-13
<PAGE>

LOOMIS SAYLES SMALL CAP SERIES

The Loomis Sayles Small Cap Series investment objective is long-term capital
growth from investments in common stocks or their equivalent.

MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SERIES (FORMERLY DRAYCOTT
INTERNATIONAL EQUITY SERIES)

The Morgan Stanley International Magnum Equity Series investment objective
is long-term capital appreciation through investment primarily in
international equity securities. In addition to the risks associated with
equity securities generally, foreign securities present additional risks.

ALGER EQUITY GROWTH SERIES

The Alger Equity Growth Series investment objective is long-term capital
appreciation.

GOLDMAN SACHS MIDCAP VALUE SERIES (FORMERLY LOOMIS SAYLES AVANTI GROWTH
SERIES)

The Goldman Sachs Midcap Value Series investment objective is long-term
capital appreciation.

DAVIS VENTURE VALUE SERIES (FORMERLY VENTURE VALUE SERIES)

The Davis Venture Value Series investment objective is growth of capital.

WESTPEAK GROWTH AND INCOME SERIES (FORMERLY WESTPEAK VALUE GROWTH SERIES)

The Westpeak Growth and Income Series investment objective is long-term
total return through investment in equity securities.

LOOMIS SAYLES BALANCED SERIES

The Loomis Sayles Balanced Series investment objective is reasonable long-
term investment return from a combination of long-term capital appreciation
and moderate current income.

SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SERIES

The Salomon Brothers Strategic Bond Opportunities Series investment
objective is a high level of total return consistent with preservation of
capital.

BACK BAY ADVISORS BOND INCOME SERIES

The Back Bay Advisors Bond Income Series investment objective is a high
level of current income consistent with protection of capital.

SALOMON BROTHERS U.S. GOVERNMENT SERIES

The Salomon Brothers U.S. Government Series investment objective is a high
level of current income consistent with preservation of capital and
maintenance of liquidity.

BACK BAY ADVISORS MONEY MARKET SERIES

The Back Bay Advisors Money Market Series investment objective is the
highest possible level of current income consistent with preservation of
capital. An investment in the Money Market Series is not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other government agency.
Although the Money Market Series seeks to maintain a net asset value of $100
per share, it is possible to lose money by investing in the Money Market
Series.

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The following two Eligible Funds of the Variable Account are NOT yet
available as of the date of this prospectus. We anticipate that they will
become available on or before July 1, 1999. Availability of these will also be
subject to any necessary state insurance department approval. You should
consult with your registered representative for current information about the
availability of these Eligible Funds.

MFS INVESTORS SERIES

The MFS Investors Series investment objective is reasonable current income
and long-term growth of capital and income.

MFS RESEARCH MANAGERS SERIES

The MFS Research Managers Series investment objective is long-term growth of
capital.

INVESTMENT ADVICE

New England Investment Management, Inc. (previously TNE Advisers, Inc.), an
indirect, wholly-owned subsidiary of the Company, serves as investment adviser
for the Eligible Funds. Each of the Eligible Funds also has a subadviser, each
of which is registered with the SEC as investment advisers under the
Investment Advisers Act of 1940.

<TABLE>
<CAPTION>
SERIES SUB-ADVISER
- ------ -----------
<S> <C>
Back Bay Advisors Bond
Income Series........... Back Bay Advisors, L.P.*
Back Bay Advisors Money
Market Series........... Back Bay Advisors, L.P.*
Westpeak Growth and
Income Series........... Westpeak Investment Advisors, L.P.*
Loomis Sayles Small Cap
Series.................. Loomis Sayles & Company, L.P.*
Loomis Sayles Balanced
Series.................. Loomis Sayles & Company, L.P.*
Morgan Stanley
International Magnum
Equity Series........... Morgan Stanley Dean Witter Investment Management Inc.
Alger Equity Growth
Series.................. Fred Alger Management, Inc.
Goldman Sachs Midcap
Value Series............ Goldman Sachs Asset Management**
Davis Venture Value
Series.................. Davis Selected Advisers, L.P.***
Salomon Brothers U.S.
Government Series....... Salomon Brothers Asset Management Inc.
Salomon Brothers
Strategic Bond
Opportunities****....... Salomon Brothers Asset Management Inc.
MFS Investors Series..... Massachusetts Financial Services Company
MFS Research Managers
Series.................. Massachusetts Financial Services Company
</TABLE>
- --------
*An affiliate of New England Life Insurance Company.
** The Goldman Sachs Midcap Value Series' subadviser was Loomis Sayles &
Company, L.P., until May 1, 1998 when Goldman Sachs Asset Management
became the subadviser.
*** Davis Selected Advisers may delegate any of its responsibilities to Davis
Selected Advisers--NY, Inc., a wholly owned subsidiary of Davis Selected.
**** The Salomon Brothers Strategic Bond Opportunities Series also receives
certain investment subadvisory services from Salomon Brothers Asset
Management Limited, a London based affiliate of Salomon Brothers Asset
Management Inc.

In the case of the Back Bay Advisors Money Market Series, Back Bay Advisors
Bond Income Series, Westpeak Growth and Income Series, Goldman Sachs Midcap
Value Series and Loomis Sayles Small Cap Series, New England Investment
Management (formerly TNE Advisers, Inc.) became the adviser on May 1, 1995.
The Morgan Stanley International Magnum Equity Series' sub-adviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management (formerly Morgan Stanley Asset Management) became the
sub-adviser.

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<PAGE>

Each of the Eligible Funds is a Series of the New England Zenith Fund (the
"Zenith Fund"). The attached Zenith Fund prospectus contains more complete
information on each Series. You should read that prospectus carefully before
investing. The Zenith Fund's Statement of Additional Information also contains
more information on each Series. You may obtain the Statement of Additional
Information free of charge by writing to New England Securities, 399 Boylston
St., Boston, Massachusetts, 02116 or telephoning 1-800-356-5015, or by
accessing the Securities and Exchange Commission's website at
http://www.sec.gov.

SUBSTITUTION OF INVESTMENTS

If investment in the Eligible Funds or a particular Series is no longer
possible or in our judgment becomes inappropriate for the purposes of the
Contract, we may substitute another Eligible Fund or Funds without your
consent. Substitution may be made with respect to both existing investments
and the investment of future purchase payments. However, we will not make such
substitution without any necessary approval of the Securities and Exchange
Commission.

GUARANTEED OPTION

You may allocate purchase payments to the Fixed Account. The Fixed Account
is a part of our general account and offers a guaranteed interest rate. (See
"The Fixed Account" for more information.)

THE CONTRACTS

In some states, the Contracts that are available provide a different minimum
guaranteed death benefit and impose a lower mortality and expense risk charge.
Consult with your agent regarding the Contracts available in your state when
you are considering purchasing a contract.

We will issue the Contract to an individual through the age of 85 (except in
New York and Pennsylvania where the issue age is 84). We will issue the
Contract to joint contract owners through the age of 80 (based on the older
contract owner) .

PURCHASE PAYMENTS

Currently, the minimum initial purchase payment is $5,000, and the minimum
subsequent purchase payment is $250; however, the following exceptions may
apply.

. When the Contract is bought as part of an individual retirement account
under Section 408(a) of the Code or individual retirement annuity under
Section 408(b) of the Code (both referred to as "IRAs"), and a Roth IRA
under Section 408A of the Code ("Roth IRA") the minimum initial purchase
payment we will accept is $2,000, or if you choose to have monthly
purchase payments withdrawn from your bank checking account or New
England Cash Management Trust account, a service known as the Master
Service Account arrangement ("MSA") we will accept a minimum of $100.

. For Contracts bought as part of other types of retirement plans
qualifying for tax-benefited treatment under the Code, we will accept
monthly purchase payments as low as $50 per month if payments are made
through a group billing arrangement (also known as a "list bill"
arrangement).

. For all other Contracts, we will accept monthly purchase payments as low
as $100 per month if they are made through MSA. If you would like to
exchange a New England Variable Fund I ("Fund I"), New England Retirement
Investment Account ("Preference") or New England Variable Account
("Zenith Accumulator") contract for a Contract, we may waive the minimum
initial and subsequent purchase payment amounts to correspond with the
old contract. (For more information on exchanges, see Appendix D.)

We may limit purchase payments made under a Contract. Currently, we may
refuse any purchase payment that would cause your Contract Value, including
the value of all other Contracts you may own with us, to exceed $1,000,000. We
will not accept a purchase payment that would cause your Contract Value,
including the value of all other contracts you may own with us, to exceed
$5,000,000. We may limit purchase payments under a flexible purchase payment
contract to three times the amount shown in the application for any given
Contract year.

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<PAGE>

NO PURCHASE PAYMENTS MAY BE MADE: (1) WITHIN SEVEN YEARS PRIOR TO THE
CONTRACT'S MATURITY DATE (EXCEPT UNDER CONTRACTS ISSUED IN PENNSYLVANIA OR NEW
YORK); OR (2) AFTER A CONTRACT OWNER (OR THE ANNUITANT, IF THE CONTRACT IS NOT
OWNED IN AN INDIVIDUAL CAPACITY) REACHES AGE 86.

When we receive your completed application (information) and initial
purchase payment, within two business days we will issue your Contract. The
Contract Date is the date shown on your Contract. We will contact you if the
application is incomplete and we need additional information. We will return
initial purchase payments if this process is not completed within five
business days unless you agree otherwise. We reserve the right to reject any
application.

TEN DAY RIGHT TO REVIEW

Within 10 days (or more where required by applicable state insurance law)
after you receive your Contract you may return it to us or our agent for
cancellation. Upon cancellation of the Contract, we will return to you the
Contract Value. If required by the insurance law or regulations of the state
in which your Contract is issued, however, we will refund all purchase
payments made.

ALLOCATION OF PURCHASE PAYMENTS

You may allocate your purchase payments to the Fixed Account and to the
Eligible Funds, up to a maximum of ten Accounts. We convert your purchase
payments, allocated to the Eligible Funds, to a unit of interest known as an
Accumulation Unit. The number of Accumulation Units credited to the Contract
is determined by dividing the purchase payment by the Accumulation Unit Value
for the selected sub-accounts at the end of the valuation day we receive your
purchase payment at our Home Office.

CONTRACT VALUE AND ACCUMULATION UNIT VALUE

We determine the value of your Contract by multiplying the number of
Accumulation Units credited to your Contract by the appropriate Accumulation
Unit Values. The Accumulation Unit Value of each sub-account depends on the
net investment experience of its corresponding Eligible Fund and reflects the
deduction of all fees and expenses.

The Accumulation Unit Value of each sub-account was initially set at $1.00.
We determine the Accumulation Unit Value by multiplying the most recent
Accumulation Unit Value by the net investment factor for that day. The net
investment factor for any sub-account reflects the change in net asset value
per share of the corresponding Eligible Fund as of the close of regular
trading on the New York Stock Exchange from the net asset value most recently
determined, the amount of dividends or other distributions made by that
Eligible Fund since the last determination of net asset value per share, and
daily deductions for the Mortality and Expense Risk Charge and Administration
Asset Charge, equal, on an annual basis, to 1.40% of the average daily net
asset value of the sub-account. The net investment factor may be greater or
less than one. We describe the formula for determining the net investment
factor under the caption "Net Investment Factor" in the Statement of
Additional Information.

If you select the Fixed Account option, the total Contract Value includes
the amount of Contract Value held in the Fixed Account. (See "The Fixed
Account.") If you have a loan under your Contract, the Contract Value also
includes the amount of Contract Value transferred to our general account (but
outside of the Fixed Account) due to the loan and any interest credited on
that amount. We will credit interest earned on the amount held in the general
account due to the loan at least annually to the sub-accounts you selected on
the application. (See "Loan Provision for Certain Tax Benefited Retirement
Plans.")

PAYMENT ON DEATH PRIOR TO ANNUITIZATION

Prior to annuitization, your Contract's Death Proceeds will be payable to
your Beneficiary if we receive due proof of the death of: (1) you as Contract
Owner; (2) the first Contract Owner to die, if your Contract has joint owners;
or (3) the Annuitant, if your Contract is not owned in an individual capacity.
(If there is no named Beneficiary under a joint Contract, the Death Proceeds
will be paid to the surviving Contract Owner.)

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<PAGE>

The Contract's Death Proceeds at any time will be the greater of:

(1) the current Contract Value (next determined after we receive due
proof of death or if later an election to continue the Contract or to
receive payment(s)) and;

(2) the minimum guaranteed death benefit.

During the first six months of your Contract the minimum guaranteed death
benefit is equal to your purchase payments adjusted for any partial
surrenders. Partial surrenders will decrease the minimum guaranteed death
benefit by the percentage of Contract Value withdrawn. On the sixth month
anniversary of your Contract and on each six month anniversary thereafter,
until your 76th birthday or 71st birthday of the oldest joint owner, the
minimum guaranteed death benefit is equal to the larger of:

(1) the minimum guaranteed death benefit that applied to your Contract
prior to the recalculation;

(2) the Contract Value on the date of recalculation.

The new minimum guaranteed death benefit (plus any subsequent purchase
payments, and adjusted for any subsequent surrenders), applies to your
Contract until the next recalculation (six month anniversary) date, or until
you make a purchase payment or surrender.

EXAMPLE:
Assume that we issue your contract with a $10,000 purchase payment
on 1/1/98. No further purchase payments are made and during the
first six months, no partial surrenders are made. During the first
six months, the minimum guaranteed death benefit is $10,000. Assume
that on 7/1/98, the Contract Value is $10,700. The minimum
guaranteed death benefit is reset on that date to $10,700.

Assume that the Contract Value increases to $11,000 by 12/1/98, and
that you request a partial surrender of 5% of your Contract Value,
or $550, on that date. The minimum guaranteed death benefit
immediately following the partial surrender is $10,165 [$10,700-
.05($10,700)].

Assume that on 12/31/98 the Contract Value has decreased to $10,050.
The minimum guaranteed death benefit remains at $10,165 and the
Death Proceeds payable on 12/31/98 are $10,165.

Options for Death Proceeds. For non-tax qualified plans, the Code requires
that if the Contract Owner (or, if applicable, Annuitant) dies prior to
annuitization, we must pay Death Proceeds within 5 years from the date of
death or apply the Death Proceeds to a payment option to begin within one
year, but not to exceed the life expectancy of the beneficiary. We will pay
the Death Proceeds, reduced by the amount of any outstanding loan plus accrued
interest and by any applicable premium tax charge, in a lump sum or apply them
to provide one or more of the fixed or variable methods of payment available
(see "Annuity Options"). (Certain annuity payment options are not available
for the Death Proceeds.) You may elect the form of payment during your
lifetime (or during the Annuitant's lifetime, if the Contract is not owned by
an individual). This election, particularly for Contracts issued in connection
with retirement plans qualifying for tax benefited treatment, is subject to
any applicable requirements of Federal tax law.

If you have not elected a form of payment, your Beneficiary has 90 days
after we receive due proof of death to make an election. Whether and when such
an election is made could affect when the Death Proceeds are deemed to be
received under the tax laws.

The Beneficiary may: (1) receive payment in a single sum; (2) receive
payment in the form of certain annuity payment options that begin within one
year of the date of death; or (3) if eligible, continue the Contract under the
Beneficiary Continuation provision or the Spousal Continuation provision, as
further described below. IF THE BENEFICIARY DOES NOT MAKE AN ELECTION WITHIN
90 DAYS AFTER WE RECEIVE DUE PROOF OF DEATH, AND THE BENEFICIARY IS ELIGIBLE
FOR EITHER THE BENEFICIARY CONTINUATION OR THE SPOUSAL CONTINUATION PROVISION,
WE WILL CONTINUE THE CONTRACT UNDER THE APPLICABLE PROVISION.

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<PAGE>

There are comparable rules for distributions on the death of the Annuitant
under tax qualified plans. However, if the Beneficiary under a tax qualified
Contract is the Annuitant's spouse, tax law generally allows distributions to
begin by the year in which the Annuitant would have reached age 70 1/2 (which
may be more or less than five years after the Annuitant's death). See
"Qualified Contracts--Distributions from the Contract."

If you (or, if applicable, the Annuitant) die on or after annuitization, the
remaining interest in the Contract will be distributed as quickly as under the
method of distribution in effect on the date of death.

--BENEFICIARY CONTINUATION

Since tax law requires that Death Proceeds be distributed within five years
after the death of a Contract Owner (or, if applicable, the Annuitant), the
Beneficiary Continuation provision permits a Beneficiary to keep the Death
Proceeds in the Contract and to continue the Contract for a period ending five
years after the date of death. The Death Proceeds must meet our published
minimum (currently $5,000 for non-tax qualified Contracts and $2,000 for tax
qualified Contracts) in order for the Contract to be continued by any
Beneficiary.

IF THE BENEFICIARY DOES NOT MAKE AN ELECTION WITHIN 90 DAYS AFTER WE RECEIVE
DUE PROOF OF DEATH, WE WILL CONTINUE THE CONTRACT UNDER THE BENEFICIARY
CONTINUATION PROVISION FOR A PERIOD ENDING FIVE YEARS AFTER THE DATE OF DEATH.
IF BENEFICIARY CONTINUATION IS NOT AVAILABLE BECAUSE THE BENEFICIARY'S SHARE
OF THE DEATH PROCEEDS DOES NOT MEET OUR PUBLISHED MINIMUM, HOWEVER, WE WILL
PAY THE DEATH PROCEEDS IN A SINGLE SUM UNLESS THE BENEFICIARY ELECTS AN
ANNUITY PAYMENT OPTION WITHIN 90 DAYS AFTER WE RECEIVE DUE PROOF OF DEATH.

The Death Proceeds become the Contract Value on the date of the continuation
and are allocated among the accounts in the same proportion as they had been
prior to the continuation. In addition, the Beneficiary will have the right to
make transfers and fully or partially surrender his or her portion of the
Contract Value, but may not make further purchase payments, take loans, or
exercise the dollar cost averaging feature. No minimum guaranteed death
benefit amount or Contingent Deferred Sales Charge will apply. Five years from
the date of death of the Contract Owner (or, if applicable, the Annuitant), we
will pay the Beneficiary's Contract Value to the Beneficiary. If the
Beneficiary dies during that five year period, the Beneficiary's death benefit
is the Contract Value on the date when we receive due proof of death.

--SPECIAL OPTIONS FOR SPOUSES

Under the Spousal Continuation provision, the Contract may be continued
after your death prior to annuitization in certain situations: if a Contract
has spousal joint owners who are also the only Beneficiaries under the
Contract, or if only one spouse is the Contract Owner (or, if applicable, the
Annuitant) and the other spouse is the primary Beneficiary. In either of these
situations, the surviving spouse may elect, within 90 days after we receive
due proof of your death:

(1) to receive the Death Proceeds either in one sum or under a permitted
payment option;

(2) to continue the Contract under the Beneficiary Continuation
provision; or

(3) to continue the Contract under the Spousal Continuation provision
with the surviving spouse as the Contract Owner (or, if applicable, the
Annuitant).

IF THE SURVIVING SPOUSE DOES NOT MAKE AN ELECTION WITHIN 90 DAYS AFTER WE
RECEIVE DUE PROOF OF DEATH, WE WILL AUTOMATICALLY CONTINUE THE CONTRACT UNDER
THE SPOUSAL CONTINUATION PROVISION IF OUR RULES PERMIT, AND THE SURVIVING
SPOUSE WILL NOT BE ABLE TO RECEIVE THE DEATH PROCEEDS AT THAT TIME. The terms
and conditions of the Contract that applied prior to the death will continue
to apply, with certain exceptions described in the Contract.

If a loan exists at the time the Contract Owner (or, if applicable,
Annuitant) dies, and the Contract is continued under the Spousal Continuation
provision, the amount of the outstanding loan plus accrued interest will be
treated as a taxable distribution from the Contract to the deceased Contract
Owner, and we will reduce the Contract Value accordingly.

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<PAGE>

TRANSFER PRIVILEGE

Currently, you may transfer your Contract Value among sub-accounts and/or
the Fixed Account without incurring federal income tax consequences. It is not
clear, however, whether the Internal Revenue Service will limit the number of
transfers between sub-accounts and/or the Fixed Account. See "Tax Status of
the Contract--Diversification."

Transfers During the Accumulation Phase. We currently do not charge a
transfer fee or limit the number of transfers. We reserve the right to limit
transfers and to charge a transfer fee. If we do change our policy, we will
notify you in advance. Currently we allow a maximum of $500,000 and a minimum
of $100 for each transfer. (If a sub-account contains less than $100, that
full amount may be transferred to a sub-account in which you already invested,
or you may transfer this amount in combination with Contract Value from
another sub-account so that the total transferred to the new sub-account is at
least $100.)

Transfers During the Annuity Phase. Currently, you may only make one
transfer per contract year. The same maximum and minimum amounts described
above will apply. You may not transfer to the Fixed Account if you are
receiving payments under a variable payment option. No transfers are allowed
if you are receiving payments under a fixed payment option.

We will treat as one transfer all transfers requested by you on the same day
for all Contracts you own. For multiple transfers requested on the same day,
which exceed the $500,000 maximum, we will not execute any amount of the
transfer. We will make transfers at the Accumulation Unit Values next
determined after we receive your request.

For transfers that we determine are based on "market-timing" (e.g.,
transfers under different Contracts that are being requested under Powers of
Attorney with a common attorney-in-fact or that are, in our determination,
based on the recommendation of a common investment adviser or broker/dealer),
we will allow one transfer every 30 days. Each transfer is subject to a
$500,000 maximum. We will treat as one transfer all transfers requested under
different Contracts that are being requested under Powers of Attorney with a
common attorney-in-fact or that are, in our determination, based on the
recommendation of a common investment adviser or broker/dealer. If we process
a transfer under one such Contract and, within the next 30 days, a transfer
request for another Contract is determined by us to be related, we will not
process the second transfer request.

The above limitations on transfers that we determine to be based on market-
timing do not apply to Contracts issued in New York. In New York as in all
other states, however, transfers can be made under Powers of Attorney only
with our consent.

We will notify you, in advance, if we change the above transfer provisions.

See "Requests and Elections" for information regarding transfers made by
written request and by telephone.

For special rules regarding transfers involving the Fixed Account, see "The
Fixed Account." We limit transfers out of the Fixed Account as to amount.
Special limits may apply on purchase payments and amounts transferred into the
Fixed Account. See the Statement of Additional Information.

We may distribute your Contract Value among no more than 10 Accounts
(including the Fixed Account) at any time. We will not process transfer
requests not complying with this rule.

DOLLAR COST AVERAGING

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<PAGE>

on transfers into the Fixed Account). You may not allocate Contract Value to
more than 10 accounts, including the Fixed Account, at any time. We currently
restrict the amount of Contract Value which you may transfer from the Fixed
Account. We allow one dollar cost averaging program to be active at a time.
Currently, you must transfer a minimum of $100 to each account that you select
under this feature. If we impose a transfer fee, we may count transfers made
under the dollar cost averaging program against the number of transfers per
year allowed free of charge. You may cancel your use of the dollar cost
averaging program at any time prior to the monthly transfer date. (See
Appendix A for more information about Dollar Cost Averaging and the Statement
of Additional Information for more information on Dollar Cost Averaging and
the Fixed Account.)

Guaranteed Account. To the extent allowed by state law, we may credit an
interest rate different from the current Fixed Account rate, to initial and/or
subsequent payments which you allocate to any Guaranteed Account we establish
for the purpose of dollar cost averaging. The Guaranteed Account is part of
our general account. Amounts in a Guaranteed Account are subject to the
following limitations.

. Only initial or subsequent payments--not Contract Value--can be allocated
to a Guaranteed Account.

. Certain rules and limitations may apply to the purchase payments you can
allocate.

. Amounts in a Guaranteed Account cannot be used as collateral for a loan.

. At the end of the Guarantee Period (currently anticipated to be six or
twelve months), any amounts remaining will be transferred to other
accounts, based on the allocation in effect for future net purchase
payments.

Contact your agent for more information.

SURRENDERS

Before annuitization, you may surrender (withdraw) all or part of your
Contract Value. You may receive the proceeds in cash or apply them to a
payment option. The proceeds you receive will be the Contract Value reduced by
the following amounts:

. any applicable Contingent Deferred Sales Charge;

. a pro rata portion of the Administration Contract Charge (on a full
surrender only);

. a premium tax charge (in certain states only); and

. any outstanding loan plus accrued interest (on a full surrender only).

See "Administration Charges, Contingent Deferred Sales Charge and Other
Deductions" and "Loan Provision for Certain Tax Benefited Retirement Plans"
for a description of these charges and when they apply.

Restrictions. Federal tax laws, laws relating to employee benefit plans, or
the terms of benefit plans for which the Contracts may be purchased may
restrict your right to surrender the Contract.

. The Optional Retirement Program of the University of Texas System does
not permit surrenders prior to the plan participant's death, retirement,
or termination of employment in all Texas public institutions of higher
education.

. Federal tax laws impose penalties on certain premature distributions from
the Contracts. Full and partial surrenders and systematic withdrawals
prior to age 59 1/2 may be subject to a 10% penalty tax (and 25% in the
case of a withdrawal from a SIMPLE IRA within the first two years). (See
"Federal Income Tax Status.")

Because a surrender may result in adverse tax consequences, you should
consult a qualified tax advisor before making the surrender. (See "Federal
Income Tax Status--Qualified Contracts.")

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How to surrender.

. You must submit a request to our Home Office. (See "Requests and
Elections.")

. You must provide satisfactory evidence of terminal illness, confinement
to a nursing home or permanent and total disability if you would like to
have the Contingent Deferred Sales Charge waived. (See "Administration
Charges, Contingent Deferred Sales Charge and Other Deductions.")

. You must state in your request whether you would like to apply the
proceeds to a payment option (otherwise you will receive the proceeds in
a lump sum and may be taxed on them).

. We have to receive your surrender request in our Home Office prior to the
Maturity Date or Contract Owner's death.

We will normally pay surrender proceeds within seven days after receipt of a
request at the Home Office, but we may delay payment, by law, under certain
circumstances. (See "Suspension of Payments.")

Amount of Surrender. We will base the amount of the surrender proceeds on
the Accumulation Unit Values that are next computed after we receive the
completed surrender request at our Home Office. However, if you choose to
apply the surrender proceeds to a payment option, we will base the surrender
proceeds on Accumulation Unit Values calculated on a later date if you so
specify in your request. The amount of a partial surrender is a minimum of
$100 unless we consent otherwise. After a partial surrender, your remaining
Contract Value must be at least $1,000, unless we consent to a lower amount.
If your Contract is subject to an outstanding loan, the remaining unloaned
Contract Value must be at least 10% of the total Contract Value after the
partial surrender or $1,000, whichever is greater (unless we consent to a
lesser amount). Otherwise, at your option, either we will reduce the amount of
the partial surrender or we will treat the transaction as a full surrender
that is subject to the full amount of any applicable Contingent Deferred Sales
Charge. A partial surrender will reduce your Contract Value in the sub-
accounts and Fixed Account in proportion to the amount of your Contract Value
in each, unless you request otherwise.

SYSTEMATIC WITHDRAWALS

Under the Systematic Withdrawal feature you may withdraw a portion of your
Contract Value automatically on a monthly basis prior to annuitization. Each
month either a fixed dollar amount (which you can change periodically) or the
investment gain in the Contract may be withdrawn. If you elect to withdraw the
investment gain only, we will not permit loans. Conversely, if you have a
loan, you will not be able to elect the investment gain only option under the
Systematic Withdrawal feature. Currently a withdrawal must be a minimum of
$100. If you choose to have the investment gain withdrawn and it is less than
$100 for a month, no withdrawal will be made that month. We reserve the right
to change the required minimum monthly withdrawal amount. If the New York
Stock Exchange is closed on the day when the withdrawal is to be made, we will
process the withdrawal on the next business day. The Contingent Deferred Sales
Charge will apply to amounts you receive under the Systematic Withdrawal
program in the same manner as it applies to other partial surrenders and
surrenders of Contract Value. (See "Contingent Deferred Sales Charge.")

If you make a partial surrender or a purchase payment at the same time that
you are having the investment gain withdrawn under the Systematic Withdrawal
feature, we will cancel the Systematic Withdrawal effective as of the next
monthly withdrawal date. However, at your option, we will resume Systematic
Withdrawals the following month. We will adjust the amount of the Systematic
Withdrawals to reflect the purchase payment or partial surrender.

If you continue to make purchase payments under the Contract while you are
making Systematic Withdrawals you could incur any applicable Contingent
Deferred Sales Charge on the withdrawals at the same time that you are making
the new purchase payments. However, no Contingent Deferred Sales Charge will
apply if you are having the investment gain (rather than a fixed dollar
amount) withdrawn.

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The Federal tax laws may include systematic withdrawals in your gross income
in the year in which you receive the withdrawal amount and will impose a
penalty tax of 10% on certain systematic withdrawals which are premature
distributions. The application for the systematic withdrawal program sets
forth additional terms and conditions.

LOAN PROVISION FOR CERTAIN TAX BENEFITED RETIREMENT PLANS

Contract loans are available to participants under tax-exempt organizations
pursuant to Section 403(b) of the Code ("TSA Plans") that are not subject to
ERISA and to trustees of Qualified Plans (including those subject to ERISA).
Availability of Contract loans is subject to state insurance department
approval. The minimum loan amount is currently $1,000.

For more information on tax and ERISA rules relating to loans, please see
"Federal Income Tax Status" in this prospectus. We strongly encourage you to
discuss the tax and ERISA implications of loans with a qualified tax advisor.

We will not permit more than one loan at a time on any Contract except where
state regulators require otherwise. Additional limits apply to qualified
loans. Please see your plan administrator and/or refer to your contract for
details.

When you take out a loan we will transfer a portion of your Contract Value
equal to the amount of the loan to our general account. This portion of
Contract Value will earn interest (which is credited to your Contract),
currently at the effective rate of 4 1/2% per year. We will credit this earned
interest to your Contract's sub-accounts (and to the Fixed Account) annually
in accordance with your previous allocation instructions.

Under current rules, interest charged on the loan will be 6 1/2% per year.
Depending on our interpretation of applicable law and on our administrative
procedures, the interest rates charged and earned on loaned amounts may be
changed (for example, to provide for a variable interest rate) with respect to
new loans made. Because the amount moved to the general account as a result of
the loan does not participate in the Variable Account's investment experience,
a Contract loan can have a permanent effect on your Contract Value and Death
Proceeds.

You must repay loans within 5 years except for certain loans used for the
purchase of a principal residence, (which must be repaid within 20 years). We
will require repayment of the principal amount and interest on the loan in
equal monthly installments under our repayment procedures. Contract loans are
subject to applicable retirement program laws and their taxation is determined
under the Code.

If you have a loan you may not be able to make any partial surrenders. After
any partial surrender, the remaining unloaned Contract Value must be at least
10% of the total Contract Value after the partial surrender or $1,000,
whichever is greater (unless we consent to a lesser amount). If a partial
surrender by us to enforce the loan repayment schedule would reduce the
unloaned Contract Value below this amount, we reserve the right to surrender
your entire Contract and apply the Contract Value to the Contingent Deferred
Sales Charge, the Administration Contract Charge and the amount owed to us
under the loan. If at any time an excess Contract loan exists (that is, the
Contract loan balance exceeds the Contract Value), we have the right to
terminate your Contract.

A-23
<PAGE>

Account. (For example, if 50% of the loan was attributable to your Fixed
Account Contract Value, then 50% of each loan repayment will be allocated to
the Fixed Account). Unless you request otherwise, we will allocate a repayment
to the sub-accounts in the same proportions to which the loan was attributable
to the sub-accounts.

We will reduce the amount of your death proceeds, the amount payable upon
surrender of your Contract and the amount applied on the Maturity Date to
provide annuity payments by the amount of any outstanding Contract loan plus
accrued interest. In these circumstances, the amount of the outstanding
Contract loan plus accrued interest generally will be taxed as a taxable
distribution.

We will provide further information regarding loans upon request.

DISABILITY BENEFIT RIDER

Subject to state availability, we intend to offer a disability benefit rider
which may be purchased, provided the Annuitant satisfies our underwriting
standards. This feature will be available only if you are under age 60 when we
issue your Contract and if you plan to make regular annual contributions to
the Contract. If the Annuitant becomes totally disabled, the rider will
provide that we will make monthly purchase payments subject to the terms and
conditions of the rider. Consult your registered representative regarding the
availability of this rider.

SUSPENSION OF PAYMENTS

We reserve the right to suspend or postpone the payment of any amounts due
under the Contract or transfers of Contract Values between sub-accounts or to
the Fixed Account when permitted under applicable Federal laws, rules and
regulations. Current Federal law permits such suspension or postponement if:
(a) the New York Stock Exchange is closed (other than for customary weekend
and holiday closings); (b) trading on the Exchange is restricted; (c) an
emergency exists so that it is not practical to dispose of securities held in
the Variable Account or to determine the value of its assets; or (d) the
Securities and Exchange Commission by order so permits for the protection of
securities holders.

OWNERSHIP RIGHTS

During the Annuitant's lifetime, all rights under the Contract belong solely
to you as the Contract Owner unless otherwise provided.

These rights include the right to:

. change the Beneficiary

. assign the Contract (subject to limitations)

. change the payment option

. exercise all other rights, benefits, options and privileges allowed by
the Contract or us.

For individually owned Contracts where the Contract Owner and Annuitant are
not the same, the Contract Owner must be the Contingent Annuitant. This person
becomes the Annuitant under your Contract if the Annuitant dies prior to
annuitization. Under a jointly owned Contract, if the Annuitant is not one of
the Contract Owners, then one Contract Owner must be the Contingent Annuitant.
You cannot change the Contingent Annuitant after the death of the Annuitant.
If you use a Contract to fund an IRA or TSA Plan, the Contract Owner must be
the Annuitant, and we will not allow a Contingent Annuitant. If you transfer
ownership of the Contract under an ERISA "Pension Plan" to a non-spousal
beneficiary, you may need spousal consent.

A-24
<PAGE>

provided in accordance with certain spousal consent, present value and other
requirements which are not enumerated in your Contract. You should consider
carefully the tax consequences of the purchase of the Contracts by Pension
Plans.

Contracts offered by the prospectus which we designed to qualify for the
favorable tax treatment described below under "Federal Income Tax Status"
contain restrictions on transfer or assignment, reflecting requirements of the
Code which must be satisfied in order to assure continued eligibility for such
tax treatment. In accordance with such requirements, ownership of such a
Contract may not be changed and the Contract may not be sold, assigned or
pledged as collateral for a loan or for any other purpose except under some
limited circumstances. A Contract Owner contemplating a sale, assignment or
pledge of the Contract should carefully review its provisions and consult a
qualified tax advisor.

If your Contract is used in connection with deferred compensation plans or
retirement plans not qualifying for favorable Federal tax treatment, such
plans may also restrict the exercise of your rights. You should review the
provisions of any such plan.

REQUESTS AND ELECTIONS

Requests for sub-account transfers or reallocation of future purchase
payments may be made:

. By Telephone (1-800-435-4117), between the hours of 9:00 a.m. and 4:00
p.m. Eastern Time

. Through your Registered Representative

. In writing to our Home Office, or

. By fax (617-578-5412)

We will use reasonable procedures such as requiring certain identifying
information from the caller, tape recording the telephone instructions, and
providing written confirmation of the transaction, in order to confirm that
instructions communicated by telephone are genuine. Any telephone instructions
reasonably believed by us to be genuine will be your responsibility, including
losses arising from any errors in the communication of instructions. As a
result of this policy, you will bear the risk of loss. If we do not employ
reasonable procedures to confirm that instructions communicated by telephone
are genuine, we may be liable for any losses due to unauthorized or fraudulent
transactions. All other requests and elections under your Contract must be in
writing signed by the proper party, must include any necessary documentation
and must be received at our Home Office to be effective. If acceptable to us,
requests or elections relating to Beneficiaries and ownership will take effect
as of the date signed unless we have already acted in reliance on the prior
status. We are not responsible for the validity of any written request or
election.

ADMINISTRATION CHARGES, CONTINGENT
DEFERRED SALES CHARGE AND OTHER DEDUCTIONS

We deduct various charges from your Contract Value for the services
provided, expenses incurred and risks assumed in connection with your
Contract. The charges are:

. Administration Contract Charge

. Administration Asset Charge

. Mortality and Expense Risk Charge

. Contingent Deferred Sales Charge

. Premium Tax Charge and Other Expenses

A-25
<PAGE>

particular Contract. For example, the Contingent Deferred Sales Charge may not
fully cover all of the sales and distribution expenses actually incurred by
us, and proceeds from other charges, including the mortality and expense risk
charge, may be used in part to cover such expenses. Eligible Fund operating
expenses are shown on page A-7.

ADMINISTRATION CONTRACT CHARGE

The annual Administration Contract Charge is the lesser of: 2% of your total
Contract Value (including any Contract Value you have allocated to the Fixed
Account, and any Contract Value held in our general account as the result of a
loan) and $30. This charge (along with the Administration Asset Charge) is for
such expenses as issuing Contracts, maintaining records, providing accounting,
valuation, regulatory and reporting services, as well as expenses associated
with marketing, sale and distribution of the Contracts.

We deduct the charge from your Contract Value on each Contract anniversary
for the prior Contract Year from each sub-account in the ratio of your
interest in each to your total Contract Value. We will deduct it on a pro rata
basis at annuitization or at the time of a full surrender if it is not on a
Contract anniversary. Currently, we do not impose the charge after
annuitization. If we issue two Contracts to permit the funding of a spousal
IRA, we will impose the Administration Contract Charge only on the Contract to
which you have allocated the larger purchase payments in your Contract
application. We deduct the charge entirely from the Contract Value in the
Variable Account, and not from the Contract Value in the Fixed Account or our
general account as the result of a loan.

We will waive the charge for a Contract Year if (1) your Contract Value at
the end of the year was at least $50,000, OR (2) you made at least $1,000 in
net deposits (purchase payments minus partial surrenders) during that Contract
Year and the Contract Value at the end of the previous Contract Year was at
least $25,000. (A pro rata charge will always be made on a full surrender and
at annuitization, however, regardless of the amount of your Contract Value.)

ADMINISTRATION ASSET CHARGE

The Administration Asset Charge is equal to an annual rate of .10% of net
assets. We deduct this charge on a daily basis from each sub-account. As a
percentage of net assets, the Administration Asset Charge will not increase
over the life of your Contract, but the total dollar amount of the charge will
vary depending on the level of Contract Value in the Variable Account. We will
continue to access the Administration Asset Charge after annuitization if
annuity payments are made on a variable basis.

MORTALITY AND EXPENSE RISK CHARGE

We deduct a Mortality and Expense Risk Charge from the Variable Account. The
charge is at an annual rate of 1.30% of the daily net assets of each such sub-
account, of which .75% represents a mortality risk charge and .55% represents
an expense risk charge. We compute and deduct this charge on a daily basis
from the assets in each sub-account. This charge is for the guaranteed annuity
rates (so that your annuity payments will not be affected by the mortality
rate of others), death benefit, and guarantee of Administration charges,
regardless of actual expenses incurred. The Mortality and Expense Risk Charge
as a percentage of Contract Value will not increase over the life of a
Contract. The Mortality and Expense Risk Charge will continue to be assessed
if annuity payments are made on a variable basis after annuitization. (See
"Annuity Payments.")

CONTINGENT DEFERRED SALES CHARGE

We do not deduct or charge for sales expenses from your purchase payments
when they are made. However, a Contingent Deferred Sales Charge may apply on
certain events ("CDSC events"). CDSC events are: (a) a full or partial
surrender of your Contract (including surrenders where you apply the proceeds
to certain payment options); (b) in some circumstances, a withdrawal of the
commuted value of amounts that you applied to an annuity payment option; or
(c) under Contracts issued in Pennsylvania or New York, the Maturity Date if
at that date a purchase payment has been invested for less than seven years.

A-26
<PAGE>

When you make a full surrender of your Contract, we take into account the
Contingent Deferred Sales Charge in calculating the proceeds you will receive.
On a partial surrender, we deduct the Contingent Deferred Sales Charge from
the Contract Value remaining after deduction of the amount you requested. We
take the Contingent Deferred Sales Charge from the Contract Value in the sub-
accounts and the Fixed Account in the same proportion as the Contract Value
surrendered.

The Contingent Deferred Sales Charge equals a percentage of each purchase
payment. Each purchase payment is subject to the charge for seven years (12
month periods) from the date we receive it, as follows:

<TABLE>
<CAPTION>
IF WITHDRAWN DURING YEAR CHARGE
------------------------ ------
<S> <C>
1................................... 7%
2................................... 6%
3................................... 5%
4................................... 4%
5................................... 3%
6................................... 2%
7................................... 1%
Thereafter............................ 0%
</TABLE>

In no event will the amount of the Contingent Deferred Sales Charge exceed
the equivalent of 8% of the first $50,000 of purchase payments and 6.5% of
purchase payments in excess of $50,000.

In any Contract Year you may surrender the free withdrawal amount without
incurring the Contingent Deferred Sales Charge. The free withdrawal amount for
each Contract Year is equal to the greater of: (1) 10% of the Contract Value
at the beginning of the Contract Year; and (2) the excess of the Contract
Value over purchase payments subject to the Contingent Deferred Sales Charge
on the date of surrender. Unused free withdrawal amounts do not carry over to
the next Contract Year.

EXAMPLE:
Assume that you make a single purchase payment of $10,000 into the
Contract. The following illustrates the free withdrawal amount
available under two hypothetical situations.

HYPOTHETICAL CONTRACT VALUE
<TABLE>
<CAPTION>
10% OF
BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 1:............ $12,500 $14,000 $4,000 $1,250 $4,000
Situation 2:............ $11,000 $10,000 $ 0 $1,100 $1,100
</TABLE>

We will attribute a surrender first to the free withdrawal amount. If you
surrender an amount greater than the free withdrawal amount, we will attribute
the excess to purchase payments on a "first-in, first-out" basis. That is, we
will withdraw your purchase payments in the order you made them.

A-27
<PAGE>

EXAMPLE:

Assume that you make a $10,000 purchase payment into the Contract on
6/1/99 and you make another $10,000 purchase payment on 2/1/00. The
following illustrates the Contingent Deferred Sales Charge that
would apply on partial surrenders in two hypothetical situations.

HYPOTHETICAL CONTRACT VALUE
<TABLE>
<CAPTION>
10% OF
BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 1: $7,000 par-
tial
surrender on 12/1/00... $22,000 $25,000 $5,000 $2,200 $5,000
</TABLE>

The first $5,000 withdrawn would be free of the Contingent Deferred Sales
Charge. We would make the remaining $2,000 of the withdrawal from the oldest
purchase payment (i.e. the 6/1/99 purchase payment). A 6% Contingent
Deferred Sales Charge would apply to the $2,000, because the withdrawal
would be taking place in the second year following the date of the purchase
payment.

HYPOTHETICAL CONTRACT VALUE
<TABLE>
<CAPTION>
10% OF
BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 2: $25,000
surrender on 1/1/04.... $30,000 $33,000 $13,000 $3,000 $13,000
</TABLE>

The first $13,000 withdrawn would be free of the Contingent Deferred Sales
Charge. We would make the remaining $12,000 of the withdrawal by withdrawing
the $10,000 purchase payment made on 6/1/99 and $2,000 of the $10,000
purchase payment that you made on 2/1/00. The Contingent Deferred Sales
Charge that would apply is: 3% X $10,000 + 4% X $2,000, or $380. The
remaining amount of purchase payments that could be subject to the
Contingent Deferred Sales Charge (assuming no further purchase payments were
made) would be $8,000.

Free withdrawal amounts do not reduce the total purchase payments that are
potentially subject to the Contingent Deferred Sales Charge under your
Contract.

If your Contract Value is less than your total purchase payments due to a
free withdrawal, negative investment performance or deduction of the
Administration Contract Charge, the following rules apply for calculating the
Contingent Deferred Sales Charge: the deficiency will be attributed to your
most recent purchase payment first, and subsequent earnings will be credited
to that deficiency (and not treated as earnings) until Contract Value exceeds
purchase payments.

Waiver of Contingent Deferred Sales Charge. No Contingent Deferred Sales
Charge will apply:

. After 30 days from the time we issue your Contract if you apply the
proceeds to a variable or fixed payment option involving a life
contingency (described under "Annuity Options"), or, for a minimum
specified period of 15 years, to either the Variable Income for a
Specified Number of Years Option or the Variable Income Payments to Age
100 Option (described under "Annuity Options"), or a comparable fixed
option. However, if you later withdraw the commuted value of amounts
placed under any of those options, we will deduct from the amount you
receive a portion of the Contingent Deferred Sales Charge amount that we
would have deducted when you originally applied the Contract proceeds to
the option. We will take into account the lapse of time from
annuitization to surrender. We will base the portion of the Contingent
Deferred Sales Charge which applies on the ratio of (1) the number of
whole months remaining, on the date of the withdrawal, until the date
when the Contingent Deferred Sales Charge would expire, to (2) the number
of whole months that were remaining, when you applied the proceeds to the
option, until the date when the Contingent Deferred Sales Charge would
expire. (See example in Appendix B.)

A-28
<PAGE>

. On full or partial surrenders if you, a joint owner, or Annuitant if the
contract is not owned by an individual, become terminally ill (as defined
in the Contract), have been confined to a nursing home for more than 90
continuous days, or are permanently and totally disabled (as defined in
the Contract). This benefit is only available if you were not over age 65
when we issued the Contract, and may not be available in every state.

. If under the Spousal Continuation provision the Contract's Maturity Date
is reset to a date that is less than seven years after the most recent
purchase payment was made. This waiver of the Contingent Deferred Sales
Charge will not apply, however, if we issued your Contract in New York or
Pennsylvania.

. On minimum distributions required by tax law. We currently waive the
Contingent Deferred Sales Charge on distributions that are intended to
satisfy required minimum distributions, calculated as if this Contract
was the participant's only retirement plan asset. This waiver only
applies if the required minimum distribution exceeds the free withdrawal
amount and no previous surrenders were made during the Contract Year.
(See "Federal Income Tax Status--Qualified Contracts.")

We may also waive the Contingent Deferred Sales Charge if you surrender a
Contract in order to purchase a group variable annuity issued by us or New
England Mutual Life Insurance Company (now MetLife).

We may sell the Contracts directly, without compensation, to a registered
representative, to employees, officers, directors, and trustees of the Company
and its affiliated companies, and certain family members of the foregoing, and
to employees, officers, directors, trustees and registered representatives of
any broker-dealer authorized to sell the Contracts or any bank affiliated with
such a broker-dealer and of any sub-adviser to the Eligible Funds, and certain
family members of the foregoing.

If consistent with applicable state insurance law, we may sell the
Contracts, without compensation, to us or MetLife for use with deferred
compensation plans for agents, employees, officers, directors, and trustees of
the Company and its affiliated companies, subject to any restrictions imposed
by the terms of such plans, or to persons who obtain their Contracts through a
bank, adviser or consultant to whom they pay a fee for investment or planning
advice. If sold under these circumstances, we may credit the Contracts with an
additional percentage of premium to reflect in part or in whole any cost
savings associated with the direct sale, but only if such credit will not be
unfairly discriminatory to any person. We will not credit any additional
premium to Contracts purchased by persons described above in exchange for
another variable annuity Contract issued by us or our affiliated companies.

PREMIUM TAX CHARGE

Currently, South Dakota imposes a premium tax on annuity purchase payments
received by insurance companies. We pay this tax when incurred, and recover
this tax by imposing a premium tax charge on affected Contracts. We deduct the
premium tax charge at the earliest of: a full or partial surrender of the
Contract, the date when annuity benefits commence, or payment of the Death
Proceeds (including application of the Death Proceeds to the Beneficiary
Continuation provision). Other states impose a premium tax liability on the
date when annuity benefits commence. In those states, we deduct the premium
tax charge from the Contract Value on that date. To determine whether and when
a premium tax charge will be imposed on a Contract, we will look to the state
of residence of the Annuitant when a surrender is made, annuity benefits
commence or Death Proceeds are paid. We reserve the right to impose a premium
tax charge when we incur a premium tax or at a later date.

Deductions for state premium tax charges currently range from 1/2% to 2.00%
of the Contract Value (or, if applicable, purchase payments or Death Proceeds)
for Contracts used with retirement plans qualifying for tax benefited
treatment under the Code and from 1% to 3.5% of the Contract Value (or, if
applicable, Death Proceeds) for all other Contracts. See Appendix C for a list
of premium tax rates.

OTHER EXPENSES

An investment advisory fee is deducted from, and certain other expenses are
paid out of, the assets of each Eligible Fund. (See "Expense Table.") The
prospectus and Statement of Additional Information of the Eligible Funds
describe these deductions and expenses.

A-29
<PAGE>

ANNUITY PAYMENTS

ELECTION OF ANNUITY

The annuity period begins at the Maturity Date (or earlier if you surrender
the Contract) and provides for payments to be made to the Payee. You may apply
your contract value to one of the payment options listed below (or a
comparable fixed option).

We base the Maturity Date of your Contract on the older of the Contract
Owner(s) and the Annuitant. The Maturity Date is the date when that person, at
his or her nearest birthday, would be age 95 (or the maximum age allowed by
state law). If your Contract is acquired pursuant to an exchange from an old
contract (see "The Contracts--Purchase Payments"), the Maturity Date of the
Contract would be set at age 95 (or the maximum allowed by state law)
regardless of what the maturity date may have been for the old Contract. You
may not change the Maturity Date to an earlier date.

If you and the Annuitant are not the same and the Annuitant dies prior to
the Maturity Date, the Contract will continue for the benefit of the
Contingent Annuitant. We will reset the Maturity Date if necessary, based on
the age of the older Contract Owner.

You may not change the ownership of your Contract without our consent. If
you change ownership, we may require a change in the Maturity Date, based on
the new Contract Owner's age. We will base the new Maturity Date on the older
of the new Contract Owner and the Annuitant. The new Maturity Date will be the
date when that person, at his or her nearest birthday, would be age 95 (or the
maximum age allowed by state law).

Variable annuity payments will begin at the Maturity Date for the life of
the Payee, but for at least ten years. You can change this annuity payment
option at any time prior to the Maturity Date. You may elect to have annuity
payments under a Contract made on a variable basis or on a fixed basis, or you
may designate a portion to be paid on a variable basis and a portion on a
fixed basis. If you select payments on a fixed basis, we will transfer the
amount of your Contract Value applied to the fixed payment option (net of any
applicable charges described under "Administration Charges, Contingent
Deferred Sales Charge and Other Deductions") to our general account. We will
fix the annuity payments in amount and duration by the annuity payment option
selected, the age of the Payee and, for Contracts issued in New York or Oregon
for use in situations not involving an employer-sponsored plan, by the sex of
the Payee. (See "Amount of Variable Annuity Payments.")

Contracts used in connection with retirement plans qualifying for tax
benefited treatment may have various requirements for the time by which
benefit payments must commence, the period over which such payments may be
made, the annuity payment options that may be selected, and the minimum annual
amounts of such payments. Penalty taxes or other adverse tax consequences may
occur upon failure to meet such requirements.

ANNUITY OPTIONS

There are several annuity payment options. You may select one of the payment
options prior to the Maturity Date, at full or partial surrender, or when
death proceeds are payable (some options are not available for death
proceeds).

You select an annuity payment option by written request to us and subject to
any applicable Federal tax law restrictions.

The Contract offers the variable annuity payment options listed below.

Variable Income for a Specified Number of Years. We will make variable
monthly payments for the number of years elected, which may not be more
than 30 except with our consent.

A-30
<PAGE>

Variable Life Income. We will make variable monthly payments which will
continue: while the Payee is living*; while the Payee is living but for at
least ten years; or while the Payee is living but for at least twenty
years. (The latter two alternatives are referred to as Variable Life Income
with Period Certain Option.)

Variable Income Payments to Age 100 ("American Income Advantage"). We
will make variable monthly payments for the number of whole years until the
Payee is age 100. THIS OPTION CANNOT BE SELECTED FOR DEATH PROCEEDS.

Variable Life Income for Two Lives. We will make variable monthly
payments which will continue: while either of two Payees is living (Joint
and Survivor Variable Life Income)*, while either of two Payees is living
but for at least 10 years (Joint and Survivor Variable Life Income, 10
Years Certain); while two Payees are living, and, after the death of one
while the other is still living, two-thirds to the survivor (Joint and 2/3
to Survivor Variable Life Income).* THIS OPTION CANNOT BE SELECTED FOR
DEATH PROCEEDS.

Other annuity payment options (including other periods certain) may be
available from time to time, and you should ask us about their availability.
If you do not elect an annuity payment option by the Maturity Date, we will
make variable payments under the Contract while the Payee is living but for at
least ten years. (This is the Variable Life Income with Period Certain
Option.) If your purchase payments would be less than our published minimum,
then you will need our consent to apply the Contract proceeds to an annuity
payment option.

The Payee under the Variable Income for a Specified Number of Years Option
or the Variable Income Payments to Age 100 Option may withdraw the commuted
value of the remaining payments. The Payee (or Payees) under the Variable Life
Income with Period Certain Option or the Joint and Survivor Variable Life
Income, 10 Years Certain Option may withdraw the commuted value of the
remaining period certain portion of the payment option. We calculate the
commuted value of such payments based on the assumed interest rate under your
Contract. The life income portion of the payment option cannot be commuted,
and variable annuity payments based on that portion will resume at the
expiration of the period certain if the Annuitant is alive at that time. (See
"Amount of Variable Annuity Payments.") Amounts applied to a fixed payment
option may not be withdrawn.

See the section entitled "Administration Charges, Contingent Deferred Sales
Charge and Other Deductions" to find out whether a Contingent Deferred Sales
Charge applies when you annuitize or withdraw the commuted value of any
payments certain.

If you are receiving payments under the Variable Income for a Specified
Number of Years Option or the Variable Income Payments to Age 100 Option you
may convert to an option involving a life contingency.

The availability of certain annuity payment options may be restricted on
account of Company policy and Federal tax law, which among other things, may
restrict payment to the life expectancy of the payee.

AMOUNT OF VARIABLE ANNUITY PAYMENTS

At the Maturity Date (or any other application of proceeds to a payment
option), your Contract Value (reduced by applicable premium tax,
administration contract, and contingent deferred sales charges and by any
outstanding loan plus accrued interest) is applied toward the purchase of
monthly annuity payments. We determine the amount of monthly variable annuity
payments on the basis of (i) annuity purchase rates not lower than the rates
set forth
- --------
* It is possible under this option to receive only one variable annuity
payment if the Payee dies (or Payees die) before the due date of the second
payment or to receive only two variable annuity payments if the Payee dies
(or Payees die) before the due date of the third payment, and so on.

A-31
<PAGE>

in the Life Income Tables contained in the Contract that reflect the Payee's
age, (ii) the assumed interest rate selected, (iii) the type of payment option
selected, and (iv) the investment performance of the Eligible Funds selected.
(The Fixed Account is not available under variable payment options.) Current
annuity purchase rates may be changed by us periodically, and we will apply
them prospectively on a non-discriminatory basis.

For more information regarding annuity payment options, you should refer to
the Statement of Additional Information and also to the Contract, which
contains detailed information about the various forms of annuity payment
options available, and other important matters.

RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS

The Federal tax laws provide for a variety of retirement plans offering tax
benefits. These plans, which may be funded through the purchase of the
individual variable annuity contracts offered in this prospectus, include:

1. Plans qualified under Section 401(a) or 403(a) of the Code ("Qualified
Plans");

2. Annuity purchase plans adopted by public school systems and certain
tax-exempt organizations pursuant to Section 403(b) of the Code ("TSA
Plans") which are funded solely by salary reduction contributions and which
are not otherwise subject to ERISA;

3. Individual retirement accounts adopted by or on behalf of individuals
pursuant to Section 408(a) of the Code and individual retirement annuities
purchased pursuant to Section 408(b) of the Code (both of which may be
referred to as "IRAs"), including simplified employee pension plans and
salary reduction simplified employee pension plans, which are specialized
IRAs that meet the requirements of Section 408(k) of the Code ("SEPs" and
"SARSEPs") Simple Retirement Accounts under Section 408(p) of the Code
("SIMPLE IRAs") and Roth Individual Retirement Accounts under Section 408A
of the Code ("Roth IRAs"). SARSEPs are only allowed if purchased prior to
January 1, 1999;

4. Eligible deferred compensation plans (within the meaning of Section
457 of the Code) for employees of state and local governments and tax-
exempt organizations ("Section 457 Plans"); and

5. Governmental plans (within the meaning of Section 414(d) of the Code)
for governmental employees, including Federal employees ("Governmental
Plans").

An investor should consult a qualified tax or other advisor as to the
suitability of a Contract as a funding vehicle for retirement plans qualifying
for tax benefited treatment, as to the rules underlying such plans and as to
the state and Federal tax aspects of such plans. In particular, the Contract
is not intended for use with TSA Plans that are subject to ERISA. The Company
will not provide all the administrative support appropriate for such plans.
Accordingly, the Contract should NOT be purchased for use with such plans. The
Company may make the Contract available for use with Section 401(k) plans.

A summary of the Federal tax laws regarding contributions to, and
distributions from, the above tax benefited retirement plans may be found
below under "Federal Income Tax Status--Qualified Contracts." It should be
understood that should a tax benefited retirement plan lose its qualification
for tax-exempt status, employees will lose some of the tax benefits described
herein.

In the case of certain TSA Plans, IRAs and Roth IRAs, the individual
variable annuity contracts offered in this prospectus comprise the retirement
"plan" itself. These Contracts will be endorsed, if necessary, to comply with
Federal and state legislation governing such plans, and such endorsements may
alter certain Contract provisions described in this prospectus. Refer to the
Contracts and any endorsements for more complete information.

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FEDERAL INCOME TAX STATUS

INTRODUCTION

The following discussion is a general discussion of federal income tax
considerations relating to the Contract and is not intended as tax advice.
This discussion is not intended to address the tax consequences resulting from
all of the situations in which a person may be entitled to or may receive a
distribution under the Contract. Any person concerned about these tax
implications should consult a competent tax advisor before initiating any
transaction. This discussion is based upon our understanding of the present
federal income tax laws as they are currently interpreted by the Internal
Revenue Service ("IRS"). No representation is made as to the likelihood of the
continuation of the present federal income tax laws or of the current
interpretation by the IRS. Moreover, no attempt has been made to consider any
applicable state or other tax laws.

The Contract may be purchased on a non-tax qualified basis ("Non-Qualified
Contract") or purchased and used in connection with certain plans entitled to
special income tax treatment ("Qualified Contracts") under the Internal
Revenue Code of 1986, as amended (the "Code"). For purposes of this
prospectus, Qualified Contracts are Contracts that fund Qualified Plans, TSA
Plans, IRAs, SEPs and SARSEPs, SIMPLE IRAs, Roth IRAs, Section 457 Plans, and
Governmental Plans. Purchasers of Qualified Contracts should seek competent
legal and tax advice regarding the suitability of the Contract for their
situation, the applicable requirements, and the tax treatment of the rights
and benefits of the Contract. The following discussion assumes that a
Qualified Contract is purchased with proceeds from and/or contributions under
retirement plans that qualify for the intended special federal income tax
treatment.

TAXATION OF THE COMPANY

We are taxed as a life insurance company under Part I of Subchapter L of the
Code. Since the Variable Account is not an entity separate from us, and its
operations form a part of us, it will not be taxed separately as a "regulated
investment company" under Subchapter M of the Code. Investment income and
realized capital gains arising from the operation of the Variable Account are
automatically applied to increase reserves under the Contracts. Under existing
federal income tax law, we believe that the Variable Account's investment
income and realized net capital gains will not be taxed to the extent that
such income and gains are applied to increase the reserves under the
Contracts.

Accordingly, we do not anticipate that it will incur any federal income tax
liability attributable to the Variable Account and, therefore, we do not
intend to make provisions for any such taxes. However, if changes in the
federal tax laws or interpretations thereof result in our being taxed on
income or gains attributable to the Variable Account, then we may impose a
charge against the Variable Account (with respect to some or all Contracts) in
order to set aside amounts to pay such taxes.

TAX STATUS OF THE CONTRACT

We believe that the Contract will be subject to tax as an annuity contract
under the Code, which generally means that any increase in a Contract's
Account Value will not be taxable until amounts are received from the
Contract, either in the form of Annuity payments or in some other form. In
order to be subject to annuity contract treatment for tax purposes, the
Contract must meet the following Code requirements:

Diversification. Section 817(h) of the Code requires that with respect to
Non-Qualified Contracts, the investments of the Funds must be "adequately
diversified" in accordance with Treasury regulations in order for the
Contracts to qualify as annuity contracts under federal tax law. The Variable
Account, through the Eligible Funds, intends to comply with the
diversification requirements prescribed by the Treasury in Reg. Sec. 1.817-5,
which affect how the Eligible Funds' assets may be invested.

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circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has stated
in published rulings that a variable contract owner will be considered the
owner of separate account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment control
over the assets. The Treasury Department has also announced, in connection
with the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control for the investments of a segregated asset account may cause
the investor (i.e., the Contract Owner), rather than the insurance company, to
be treated as the owner of the assets in the account." This announcement also
stated that guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular Sub-
Accounts without being treated as owners of the underlying assets."

The ownership rights under the Contract are similar to, but also different
in certain respects from, those described by the IRS in rulings in which it
was determined that contract owners were not owners of separate account
assets. For example, a Contract Owner has additional flexibility in allocating
premium payments and account values. These differences could result in a
Contract Owner being treated as the owner of a pro rata portion of the assets
of the Variable Account. In addition, we do not know what standards will be
set forth, if any, in the regulations or rulings which the Treasury Department
has stated it expects to issue. We therefore reserve the right to modify the
Contract as necessary to attempt to prevent a Contract Owner from being
considered the owner of a pro rata share of the assets of the Variable
Account.

Required Distributions. In order to be treated as an annuity contract for
federal income tax purposes, section 72(s) of the Code requires Non-Qualified
Contracts to provide that (a) if any Owner dies on or after the annuity date
but prior to the time the entire interest in the Contract has been
distributed, the remaining portion of such interest will be distributed at
least as rapidly as under the method of distribution being used as of the date
of such owner's death; and (b) if any Owner dies prior to the annuity date,
the entire interest in the Contract will be distributed within five years
after the date of such Owner's death. These requirements will be considered
satisfied as to any portion of an owner's interest which is payable to or for
the benefit of a "designated beneficiary" and which is distributed over the
life of such "designated beneficiary" or over a period not extending beyond
the life expectancy of that beneficiary, provided that such distributions
begin within one year of the owner's death. The "designated beneficiary"
refers to a natural person designated by the owner as a Beneficiary and to
whom ownership of the contract passes by reason of death. However, if the
"designated beneficiary" is the surviving spouse of a deceased owner, the
contract may be continued with the surviving spouse as the new owner.

The Non-Qualified Contracts contain provisions which are intended to comply
with the requirements of section 72(s) of the Code, although no regulations
interpreting these requirements have yet been issued. We intend to review such
provisions when they are issued and modify the contracts in question if
necessary to assure that they comply with the requirements of Code Section
72(s). Other rules may apply to Qualified Contracts.

The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.

TAXATION OF ANNUITIES

In General. Section 72 of the Code governs taxation of annuities in general.
We believe that a Contract Owner who is a natural person generally is not
taxed on increases in the value of a Contract until distribution occurs by
withdrawing all or part of the Contract Value (e.g., withdrawals or annuity
payments under the Annuity Option elected). For this purpose, the assignment,
pledge, or agreement to assign or pledge any portion of the Contract Value
(and in the case of a Qualified Contract, any portion of an interest in the
qualified plan) generally will be treated as a distribution. The taxable
portion of a distribution (in the form of a single sum payment or an annuity)
is taxable as ordinary income.

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year. There are some exceptions to this rule and prospective Contract Owners
that are not natural persons may wish to discuss these with a competent tax
advisor.

The following discussion generally applies to a Contract owned by a natural
person.

Surrenders. In the case of a surrender under a Qualified Contract, including
Systematic Withdrawals, a ratable portion of the amount received is taxable,
generally based on the ratio of the "investment in the contract" to the
individual's total accrued benefit under the retirement plan. The "investment
in the contract" generally equals the amount of any non-deductible purchase
payments paid by or on behalf of any individual. For a Contract issued in
connection with qualified plans, the "investment in the contract" can be zero.
Special tax rules may be available for certain distributions from a Qualified
Contract.

With respect to Non-Qualified Contracts, partial surrenders, including
Systematic Withdrawals, are generally treated as taxable income to the extent
that the Contract Value immediately before the surrender exceeds the
"investment in the contract" at that time. Full surrenders are treated as
taxable income to the extent that the amount received exceeds the "investment
in the contract."

Annuity Payments. Although the tax consequences may vary depending on the
annuity payment elected under the Contract, in general, only the portion of
the annuity payment that represents the amount by which the Contract Value
exceeds the "investment in the contract" will be taxed; after the "investment
in the contract" is recovered, the full amount of any additional annuity
payments is taxable. For variable annuity payments, the taxable portion is
generally determined by an equation that establishes a specific dollar amount
of each payment that is not taxed. The dollar amount is determined by dividing
the "investment in the contract" by the total number of expected periodic
payments. However, the entire distribution will be taxable once the recipient
has recovered the dollar amount of his or her "investment in the contract".
For fixed annuity payments, in general there is no tax on the portion of each
payment which represents the same ratio that the "investment in the contract"
bears to the total expected value of the annuity payments for the term of the
payments; however, the remainder of each annuity payment is taxable. Once the
"investment in the contract" has been fully recovered, the full amount of any
additional annuity payments is taxable. If annuity payments cease as a result
of an Annuitant's death before full recovery of the "investment in the
contract," consult a competent tax adviser regarding deductibility of the
unrecovered amount.

Penalty Tax. In the case of a distribution pursuant to a Non-Qualified
Contract, there may be imposed a federal income tax penalty equal to 10% of
the amount treated as taxable income. In general, however, there is no penalty
tax on distributions: (1) made on or after the date on which the taxpayer
attains age 59 1/2; (2) made as a result of death or disability of an owner;
(3) received in substantially equal periodic payments as a life annuity or a
joint and survivor annuity for the lives or life expectancies of the owner and
a "designated beneficiary". Other tax penalties may apply to certain
distributions pursuant to a Qualified Contract.

Taxation of Death Benefit Proceeds. Amounts may be distributed from the
Contract because of the death of a Contract Owner (or Annuitant if the
Contract Owner is not an individual). Generally, such amounts are includible
in the income of the recipient as follows: (1) if distributed in a lump sum,
they are taxed in the same manner as a full surrender as described above, or
(2) if distributed under an Annuity Option, they are taxed in the same manner
as annuity payments, as described above. For these purposes, the investment in
the Contract is not affected by the Owner's (or Annuitant's) death. That is,
the investment in the Contract remains the amount of any purchase payments
paid which were not excluded from gross income.

Transfers, Assignments, Exchanges and Maturity Dates. A transfer of
ownership of a Contract, the designation of an Annuitant, Payee or other
Beneficiary who is not also an Owner, the selection of certain Maturity Dates,
the exchange of a Contract, or the receipt of a Contract in an exchange may
result in certain tax consequences that are not discussed herein. Anyone
contemplating any such designation, transfer, assignment, selection, or
exchange should contact a competent tax adviser with respect to the potential
tax effects of such a transaction.

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Multiple Contracts. All deferred non-qualified annuity contracts that are
issued by us (or our affiliates) to the same owner during any calendar year
are treated as one annuity contract for purposes of determining the amount
includible in gross income under section 72(e) of the Code. In addition, the
Treasury Department has specific authority to issue regulations that prevent
the avoidance of section 72(e) through the serial purchase of annuity
contracts or otherwise.

Tax Treatment of Loans. The tax and ERISA rules relating to participant
loans under tax benefited retirement plans are complex and in some cases
unclear, and they may vary depending on the individual circumstances of each
loan. We strongly recommend that you, your employer and your plan fiduciary
consult a qualified tax advisor regarding the currently applicable tax and
ERISA rules before taking any action with respect to loans.

Contract loans are available to participants under TSA Plans (not subject to
ERISA) and to trustees of Qualified Plans. See "Loan Provisions for Certain
Tax Benefited Retirement Plans". We require repayment of the principal amount
and interest on the loan in equal monthly installments under our repayment
procedures. Contract loans are subject to applicable retirement program laws
and their taxation is determined under the Code.

Under current practice, if a Contract loan installment repayment is not
made, we may (unless restricted by law) make a full or partial surrender of
the Contract in the amount of the unpaid installment repayment on the Contract
loan. If there is a default on the Contract loan, we may make a full or
partial surrender in an amount equal to the outstanding loan balance (plus any
applicable Contingent Deferred Sales Charge and Administration Contract Charge
in each case). (The loan application defines a default on the loan and
includes, among other things, nonpayment of three consecutive or a total of
five installment repayments, or surrender of the Contract.) For TSA Plans that
are not subject to ERISA, the current actual distribution will be limited to
pre-1989 money unless you are age 59 1/2 or otherwise comply with the legal
requirements for permitted distributions under the TSA contract. If these
limitations do not apply (i.e. you are under the age of 59 1/2 or no pre-1989
money is in your contract) we will report the amount of the unpaid installment
repayment or default as a deemed distribution for tax purposes, but will
postpone an actual distribution from the Contract until the earliest
distribution date permitted under the law. We will not accept an installment
repayment of less than the amount billed. A full or partial surrender of the
Contract to repay all or part of the loan may result in serious adverse tax
consequences for the plan participant (including penalty taxes) and may
adversely affect the qualification of the plan or Contract. The trustee of a
Qualified Plan subject to ERISA will be responsible for reporting to the IRS
and advising the participant of any tax consequences resulting from the
reduction in the Contract Value caused by the surrender and for determining
whether the surrender adversely affects the qualification of the plan. In the
case of a TSA Plan not subject to ERISA, we will report the default to the IRS
as a taxable distribution under the Contract.

The Internal Revenue Service issued proposed regulations in December of
1997, which, if finalized in their present form, would require that if the
repayment terms of a loan are not satisfied after the loan has been made due
to a failure to make a loan repayment as scheduled, including any applicable
grace period, the balance of the loan would be deemed to be distributed. If
the loan is treated as a distribution under Code Section 72(p), the proposed
regulations state that the amount so distributed is to be treated as a taxable
distribution subject to the normal rules of Code Section 72, if the
participant's interest in the plan includes after-tax contributions (or other
tax basis). A deemed distribution would also be a distribution for purposes of
the 10 percent tax in Code Section 72(t). However, a deemed distribution under
Section 72(p) would not be treated as an actual distribution for purposes of
Code Section 401, the rollover and income averaging provisions of Section 402
and the distribution restrictions of Section 403(b).

The Department of Labor has issued regulations (the "ERISA regulations")
governing plan participant loans under retirement plans subject to ERISA.
Generally, the ERISA regulations will apply to retirement plans that qualify
under Section 401(a) and certain other employer-sponsored qualified plans. YOU
AND YOUR EMPLOYER ARE RESPONSIBLE FOR DETERMINING WHETHER YOUR PLAN IS SUBJECT
TO AND COMPLIES WITH THE ERISA REGULATIONS ON PARTICIPANT PLAN LOANS.

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It is the responsibility of the trustee of a Qualified Plan subject to ERISA
to ensure that the proceeds of a Contract loan are made available to a
participant under a separate plan loan agreement. The terms of this agreement
must comply with all the plan qualification requirements including the
requirements of the ERISA regulations on plan loans. The plan loan agreement
may differ from your Contract loan provisions and, if you are a participant in
a Qualified Plan subject to ERISA, you should consult with the fiduciary
administering the plan loan program to determine your rights and obligations
with respect to plan loans.

The ERISA regulations have requirements for plan loans relating to their
maximum amount, availability, and other matters. Among the rules are the
requirements that the loan bear a reasonable rate of interest, be adequately
secured, provide a reasonable repayment schedule, and be made available on a
basis that does not discriminate in favor of employees who are officers or
shareholders or who are highly compensated. These regulations may change from
time to time. Failure to comply with these requirements may result in
penalties under the Code and under ERISA.

One of the current requirements of the ERISA regulations is that the plan
must charge a "commercially reasonable" rate of interest for plan loans. The
Contract loan interest rate may not be considered "commercially reasonable"
within the meaning of the ERISA regulations. It is the responsibility of the
plan fiduciary to charge the participant any additional interest under the
plan loan agreement which may be necessary to make the overall rate charged
comply with the regulation. The ERISA regulations also currently require that
a loan be adequately secured, but provide that not more than 50% of the
participant's vested account balance under the plan may be used as security
for the loan. A Contract loan is secured by a portion of the Contract Value
which is held in the Company's general account. The plan fiduciary must ensure
that the Contract Value held as security under the Contract, plus any
additional portion of the participant's vested account balance which is used
as security under the plan loan agreement, does not exceed 50% of the
participant's total vested account balance under the plan.

QUALIFIED CONTRACTS

The Contract is designed for use with certain retirement plans that qualify
for Federal tax benefits. The tax rules applicable to participants and
beneficiaries in these retirement plans vary according to the type of plan and
the terms and conditions of the plan. Special favorable tax treatment may be
available for certain types of contributions and distributions. Adverse tax
consequences may result from contributions in excess of specified limits;
distributions prior to age 59 1/2 (subject to certain exceptions);
distributions that do not conform to specified commencement and minimum
distribution rules; and in other specified circumstances.

We make no attempt to provide more than general information about use of the
Contracts with the various types of retirement plans. Contract Owners and
participants under retirement plans as well as Annuitants and Beneficiaries
are cautioned that the rights of any person to any benefits under these
Contracts may be subject to the terms and conditions of the plans themselves,
regardless of the terms and conditions of the Contract issued in connection
with such a plan. Some retirement plans are subject to distribution and other
requirements that are not incorporated in the administration of the Contracts.
Adverse tax or other legal consequences to the plan, to the participant or to
both may result if the Contract is assigned or transferred to any individual
as a means to provide benefit payments, unless the plan complies with all
legal requirements applicable to such benefits prior to transfer of the
Contract. Contract Owners are responsible for determining that contributions,
distributions and other transactions with respect to the Contracts satisfy
applicable law. Purchasers of Contracts for use with any retirement plan
should consult their legal counsel and tax adviser regarding the suitability
of the Contract under applicable federal and state tax laws and ERISA.

The sale of a Contract for use with an IRA may be subject to special
disclosure requirements of the Internal Revenue Service. Purchasers of a
Contract for use with IRAs will be provided with supplemental information
required by the Internal Revenue Service or other appropriate agency. Such
purchasers will have the right to revoke their purchase within seven days of
the earlier of the establishment of the IRA or their purchase. A Contract
issued in connection with an IRA will be amended as necessary to conform to
the requirements of the Code. Purchasers should seek competent advice as to
the suitability of the Contract for use with IRAs.

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(i) Plan Contribution Limits

Statutory limitations on contributions to retirement plans that qualify for
federal tax benefits may limit the amount of money that may be contributed to
the Contract in any Contract Year. Any purchase payments attributable to such
contributions may be tax deductible to the employer and are not currently
taxable to the Annuitants for whom the Contracts are purchased. The
contributions to the Contract and any increase in Contract Value attributable
to such contributions are not subject to taxation until payments from the
Contract are made to the Annuitant or his/her Beneficiaries.

TSA PLANS

Purchase payments attributable to TSA Plans are not includible within the
Annuitant's income to the extent such purchase payments do not exceed certain
statutory limitations, including the "exclusion allowance." The exclusion
allowance is a calculation which takes into consideration the Annuitant's
includible compensation, number of years of service, and prior years of
contributions. For more information about all the applicable limitations, the
Annuitant should obtain a copy of IRS Publication 571 on TSA Programs for
Employees of Public Schools and Certain Tax Exempt Organizations. Any purchase
payments attributable to permissible contributions under Code Section 403(b)
(and earnings thereon) are not taxable to the Annuitant until amounts are
distributed from the Contract. However, these payments may be subject to FICA
(Social Security) and Medicare taxes.

The Contract includes a Death benefit that in some cases may exceed the
greater of the Purchase Payments or the Contract Value. The Death benefit
could be characterized as an incidental benefit, the amount of which is
limited in any tax-sheltered annuity under section 403(b). Because the Death
benefit may exceed this limitation, employers using the Contract in connection
with such plans should consult their tax adviser.

IRAS, SEPS, SARSEPS, SIMPLE IRAS AND ROTH IRAS

The maximum tax deductible purchase payment which may be contributed each
year to an IRA is the lesser of $2,000 or 100 percent of includible
compensation if the taxpayer is not covered under an employer plan. A spousal
IRA is available if the taxpayer and spouse file a joint return and the spouse
is not yet age 70 1/2. The maximum tax deductible purchase payment which a
taxpayer may make to a spousal IRA is $2,000. If covered under an employer
plan, taxpayers are permitted to make deductible purchase payments; however,
for 1999 the deductions are phased out and eventually eliminated, on a pro
rata basis, for adjusted gross income between $31,000 and $41,000 for an
individual, between $51,000 and $61,000 for the covered spouse of a married
couple filing jointly, between $150,000 and $160,000 for the non-covered
spouse of a married couple filing jointly, and between $0 and $10,000 for a
married person filing separately. A taxpayer may also make nondeductible
purchase payments. However, the total of deductible and nondeductible purchase
payments may not exceed the limits described above for deductible payments. An
IRA is also the vehicle that receives contributions to SEPs, SARSEPs and
SIMPLE IRAs. Maximum contributions (including elective deferrals) to SEPs and
SARSEPs are currently limited to the lesser of 15% of compensation (generally
up to $160,000 for 1999) or $30,000. The maximum salary reduction contribution
currently permitted to a SIMPLE IRA is $6,000. In addition, an employer may
make a matching contribution to a SIMPLE IRA, typically of 2% or 3% of the
compensation (as limited by the Code) of the employee. For more information
concerning the contributions to IRAs, SEPs, SARSEPs, and SIMPLE IRAs you
should obtain a copy of IRS Publication 590 on Individual Retirement Accounts.
In addition to the above, an individual may make a "rollover" contribution
into an IRA with the proceeds of a "lump sum" distribution (as defined in the
Code) from a Qualified Plan.

ROTH IRAS

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joint return. The maximum purchase payment that a taxpayer may make to a
spousal Roth IRA is $2,000. Except in the case of a rollover or a transfer, no
more than $2,000 can be contributed in aggregate to all IRAs and Roth IRAs of
either spouse during any tax year. The Roth IRA contribution may be limited to
less than $2,000 depending on the taxpayer's adjusted gross income ("AGI").
The maximum contribution begins to phase out if the taxpayer is single and the
taxpayer's AGI is more than $95,000 or if the taxpayer is married and files a
joint tax return and the taxpayer's AGI is more than $150,000. The taxpayer
may not contribute to a Roth IRA if the taxpayer's AGI is over $110,000 (if
the taxpayer is single), $160,000 (if the taxpayer is married and files a
joint tax return), or $10,000 (if the taxpayer is married and files separate
tax returns).You should consult a tax adviser before combining any converted
amounts with any other Roth IRA contributions, including any other conversion
amounts from other tax years.

SECTION 457 PLANS

Generally, under a Section 457 Plan, an employee or executive may defer
income under a written agreement in an amount equal to the lesser of 33 1/3%
of includible compensation or $8,000. The amounts so deferred (including
earnings thereon) by an employee or executive electing to contribute to a
Section 457 Plan are includible in gross income only in the tax year in which
such amounts are paid or made available to that employee or executive or
his/her Beneficiary. With respect to a Section 457 Plan for a nonprofit
organization other than a governmental entity, (i) once contributed to the
plan, any Contracts purchased with employee contributions remain the sole
property of the employer and may be subject to the general creditors of the
employer and (ii) the employer retains all ownership rights to the Contract
including voting and redemption rights which may accrue to the Contract(s)
issued under the plan. The Plans may permit participants to specify the form
of investment for their deferred compensation accounts. Depending on the terms
of the particular plan, a non-governmental employer may be entitled to draw on
deferred amounts for purposes unrelated to its Section 457 Plan obligations.

QUALIFIED PLANS

Code section 401(a) permits employers to establish various types of
retirement plans for employees, and permit self-employed individuals to
establish retirement plans for themselves and their employees. These
retirement plans may permit the purchase of the Contracts to accumulate
retirement savings under the plans. Adverse tax consequences to the plan, to
the participant or to both may result if this Contract is assigned or
transferred to any individual as a means to provide benefit payments.

The Contract includes a Death benefit that in some cases may exceed the
greater of the Purchase Payments or the Contract Value. The Death benefit
could be characterized as an incidental benefit, the amount of which is
limited in any pension or profit-sharing plan. Because the Death benefit may
exceed this limitation, employers using the Contract in connection with such
plans should consult their tax adviser.

(ii) Distributions from the Contract

MANDATORY WITHHOLDING ON CERTAIN DISTRIBUTIONS

Distributions called "eligible rollover distributions" from Qualified Plans
and from many TSA Plans are subject to mandatory withholding by the plan or
payor at the rate of 20%. An eligible rollover distribution is the taxable
portion of any distribution from a Qualified Plan or a TSA Plan, except for
certain distributions such as distributions required by the Code or in a
specified annuity form. After December 31, 1998 permissible hardship
withdrawals from TSA and 401(k) plans are no longer treated as an "eligible
rollover distribution." Withholding can be avoided by arranging a direct
transfer of the eligible rollover distribution to a Qualified Plan, TSA or
IRA.

QUALIFIED PLANS, TSA PLANS, IRAS, SEPS, SARSEPS, SIMPLE IRAS, ROTH IRAS AND
GOVERNMENTAL PLANS

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received in surrender of all or part of the Contract Value prior to
annuitization will, subject to restrictions and penalties discussed below,
also be included in income in the year of receipt. If there is any "investment
in the Contract," a portion of each amount received is excluded from gross
income as a return of such investment. Distributions or withdrawals prior to
age 59 1/2 may be subject to a penalty tax of 10% of the amount includible in
income. This penalty tax does not apply: (i) to distributions of excess
contributions or deferrals; (ii) to distributions made on account of the
Annuitant's death, retirement, disability or early retirement at or after age
55; (iii) when distribution from the Contract is in the form of an annuity
over the life or life expectancy of the Annuitant (or joint lives or life
expectancies of the Annuitant and his or her Beneficiary); or (iv) when
distribution is made pursuant to a divorce (in the case of IRAs) or a
qualified domestic relations order. In the case of IRAs, SEPs, SARSEPs and
SIMPLE IRAs, the exceptions for distributions on account of early retirement
at or after age 55 or made pursuant to a qualified domestic relations order do
not apply. A tax-free rollover may be made once each year among individual
retirement arrangements subject to the conditions and limitations described in
the Code.

Distributions from a Roth IRA generally are not taxed, except that, once
aggregate distributions exceed contributions to the Roth IRA, income tax and a
10% penalty tax may apply to distributions made (1) before age 59 1/2 (subject
to certain exceptions) or (2) during the five taxable years starting with the
year in which the first contribution is made to any Roth IRA.

Except under a Roth IRA, if the Annuitant dies before distributions begin,
distributions must be completed within five years after death, unless payments
begin within one year after death and are made over the life (or life
expectancy) of the Beneficiary. If the Annuitant's spouse is the Beneficiary,
distributions need not begin until the Annuitant would have reached age 70
1/2. If the Annuitant dies after annuity payments have begun, payments must
continue to be made at least as rapidly as payments made before death.

For TSA Plans, elective contributions to the Contract made after December
31, 1988 and any increases in Contract Value after that date may not be
distributed prior to attaining age 59 1/2, termination of employment, death or
disability. Contributions (but not earnings) made after December 31, 1988 may
also be distributed by reason of financial hardship. These restrictions on
withdrawal will not apply to the Contract Value as of December 31, 1988. These
restrictions are not expected to change the circumstances under which
transfers to other investments which qualify for tax free treatment under
Section 403(b) of the Code may be made.

For a SIMPLE IRA, the 10% penalty tax described above is increased to 25%
with respect to withdrawals made during the first two years of participation.
For Roth IRAs, distributions representing amounts attributable to
contributions to a Roth IRA which has been established for five years or more
are generally not taxed.

Except under a Roth IRA, annuity payments, periodic payments or annual
distributions generally must commence by April 1 of the calendar year
following the year in which the Annuitant attains age 70 1/2. In the case of a
Qualified Plan or a Governmental Plan, if the Annuitant is not a "five-percent
owner" as defined in the Code, these distributions must begin by the later of
the date determined by the preceding sentence or the year in which the
Annuitant retires. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by minimum distribution rules under
the plan. We currently waive the Contingent Deferred Sales Charge on
distributions that are intended to satisfy required minimum distributions,
calculated as if this Contract were the participant's only retirement plan
asset. This waiver only applies if the required minimum distribution exceeds
the free withdrawal amount and no previous surrenders were made during the
Contract Year. Rules regarding required minimum distributions apply to IRAs
(including SEP, SARSEPs and SIMPLEs), Qualified Plans, TSA Plans and
Governmental Plans. Roth IRAs under Section 408A do not require distributions
at any time prior to the Contract Owner's death. A penalty tax of up to 50% of
the amount which should have been distributed may be imposed by the IRS for
failure to distribute the required minimum distribution amount.

Other restrictions with respect to the election, commencement, or
distribution of benefits may apply under the Contracts or under the terms of
the Qualified Plans in respect of which the Contracts are issued.

A-40
<PAGE>

SECTION 457 PLANS

When a distribution under a Contract held under a Section 457 Plan is made
to the Annuitant, such amounts are taxed as ordinary income in the year in
which received. The plan must not permit distributions prior to the
Annuitant's separation from service (except in the case of unforeseen
emergency).

Generally, annuity payments, periodic payments or annual distributions must
commence by the later of April 1 of the calendar year following the year in
which the Annuitant attains age 70 1/2 or the year of retirement, and meets
other distribution requirements. Minimum distributions under a Section 457
Plan may be further deferred if the Annuitant remains employed with the
sponsoring employer. Each annual distribution must equal or exceed a "minimum
distribution amount" which is determined by distribution rules under the plan.
If the Annuitant dies before distributions begin, the same special
distribution rules generally apply in the case of Section 457 Plans as apply
in the case of Qualified Plans, TSA Plans, IRAs, SEPs, SARSEPs, SIMPLE IRAs
and Governmental Plans. These rules are discussed above in the immediately
preceding section of this prospectus. An exception to these rules provides
that if the beneficiary is other than the Annuitant's spouse, distribution
must be completed within 15 years of death, regardless of the beneficiary's
actual life expectancy.

WITHHOLDING

Pension and annuity distributions generally are subject to withholding for
the recipient's federal income tax liability at rates that vary according to
the type of distribution and the recipient's tax status. Recipients, however,
generally are provided the opportunity to elect not to have tax withheld from
distributions. We are required to withhold taxes from certain distributions
under certain qualified contracts.

POSSIBLE CHANGES IN TAXATION

Although the likelihood of legislative change is uncertain, there is always
the possibility that the tax treatment of the Contracts could change by
legislation or other means. It is also possible that any change could be
retroactive (that is, effective prior to the date of the change). A tax
adviser should be consulted with respect to legislative developments and their
effect on the Contract.

OTHER TAX CONSEQUENCES

As noted above, the foregoing discussion of the federal income tax
consequences is not exhaustive and special rules are provided with respect to
other tax situations not discussed in this Prospectus. Further, the federal
income tax consequences discussed herein reflect our understanding of the
current law and the law may change. Federal estate and gift tax consequences
of ownership or receipt of distributions under the Contract depend on the
individual circumstances of each Contract Owner or recipient of a
distribution. A competent tax advisor should be consulted for further
information.

GENERAL

At the time the initial purchase payment is paid, a prospective purchaser
must specify whether he or she is purchasing a Non-Qualified Contract or a
Qualified Contract. If the initial premium is derived from an exchange or
surrender of another annuity contract, we may require that the prospective
purchaser provide information with regard to the federal income tax status of
the previous annuity contract. We will require that persons purchase separate
Contracts if they desire to invest monies qualifying for different annuity tax
treatment under the Code. Each such separate Contract would require the
minimum initial purchase payment stated above. Additional purchase payments
under a Contract must qualify for the same federal income tax treatment as the
initial purchase payment under the Contract; we will not accept an additional
purchase payment under a Contract if the federal income tax treatment of such
purchase payment would be different from that of the initial purchase payment.

A-41
<PAGE>

VOTING RIGHTS

We are the legal owner of the Eligible Fund shares held in the Variable
Account and have the right to vote those shares at meetings of the Eligible
Fund shareholders. However, to the extent required by Federal securities law,
we will give you, as Contract Owner, the right to instruct us how to vote the
shares that are attributable to your Contract.

Prior to annuitization, we determine the number of votes on which you have a
right to instruct us, on the basis of your percentage interest in a sub-
account and the total number of votes attributable to the sub-account. After
annuitization, the number of votes attributable to your Contract is determined
on the basis of the reserve for your future annuity payments and the total
number of votes attributable to the sub-account. After annuitization the votes
attributable to your Contract decrease as reserves underlying your Contract
decrease.

We will determine, as of the record date, if you are entitled to give voting
instructions and the number of shares as to which you have a right of
instruction. If we do not receive timely instructions from you, we will vote
your shares for, against, or withheld from voting on any proposition in the
same proportion as the shares held in that sub-account for all policies or
contracts for which we have received voting instructions.

We will vote for Eligible Fund shares held in our general investment account
(or any unregistered separate account for which voting privileges are not
given) in the same proportion as the aggregate of (i) the shares for which we
received voting instructions and (ii) the shares that we vote in proportion to
such voting instructions.

DISTRIBUTION OF CONTRACTS

New England Securities, the principal distributor of the Contracts, is a
broker-dealer registered under the Securities Exchange Act of 1934 ("1934
Act") and is a member of the National Association of Securities Dealers, Inc.
New England Securities may enter into selling agreements with other broker-
dealers registered under the 1934 Act to sell the contracts. We pay
commissions to broker-dealers who sell the contracts an amount which generally
does not exceed 7% of purchase payments. We may pay such compensation either
as a percentage of purchase payments at the time we receive them, as a
percentage of Contract Value on an ongoing basis, or in some combination of
both.

THE FIXED ACCOUNT

The contract has a Fixed Account option. You may allocate net purchase
payments and may transfer Contract Value in the Variable Account to the Fixed
Account, which is part of our general account. The Fixed Account offers
diversification to a Variable Account contract, allowing you to protect
principal and earn a guaranteed rate of interest.

Because of exemptive and exclusionary provisions, interests in the Fixed
Account have not been registered under the Securities Act of 1933, and neither
the Fixed Account nor the general account has been registered as an investment
company under the Investment Company Act of 1940. Therefore, neither the
general account, the Fixed Account nor any interests therein are generally
subject to the provisions of these Acts, and we have been advised that the
staff of the Securities and Exchange Commission does not review disclosures
relating to the general account. Disclosures regarding the Fixed Account may,
however, be subject to certain generally applicable provisions of the Federal
securities laws relating to the accuracy and completeness of statements made
in prospectuses.

A-42
<PAGE>

Fixed Account. Instead, we guarantee that we will credit Contract Values in
the Fixed Account with interest at an effective annual rate of at least 3%.
(Special rules apply to loan repayments. See the Statement of Additional
Information.) We are not obligated to credit interest at a rate higher than
3%, although we have sole discretion to do so. We will credit Contract Values
in the Fixed Account with interest daily.

Any purchase payment or portion of Contract Value you allocate to the Fixed
Account will earn interest at an annual rate we determine for that deposit for
a 12 month period. At the end of each succeeding 12 month period, we will
determine the interest rate that will apply to that deposit plus the accrued
interest for the next 12 months. This renewal rate may differ from the
interest rate that is applied to new deposits on that same day.

CONTRACT VALUE AND FIXED ACCOUNT TRANSACTIONS

A Contract's total Contract Value will include its Contract Value in the
Variable Account, in the Fixed Account, and, for Contracts under which
Contract loans are available, any of its Contract Value held in the Company's
general account (but outside the Fixed Account) which is the result of a
Contract loan.

Amounts you surrender from the Fixed Account will be on a "first-in, first-
out" basis. Amounts you withdraw from the Fixed Account due to a Contract loan
will be on a "last-in, first-out" basis. The amounts you allocate to the Fixed
Account are subject to the same rights and limitations as are in the Variable
Account regarding surrenders and partial surrenders. Special limits, however,
apply to transfers involving the Fixed Account (see below).

Unless you request otherwise, any partial surrender you make will reduce the
Contract Value in the sub-accounts of the Variable Account and the Fixed
Account, proportionately. In addition, if any portion of your Contract loan
comes from Contract Value in the Fixed Account, then you must allocate an
equal portion of each loan repayment to the Fixed Account.

We limit the amount of Contract Value which you may transfer from the Fixed
Account to the greater of (i) 25% of Contract Value in the Fixed Account at
the end of the first day of the Contract Year, or (ii) the amount of Contract
Value that you transferred from the Fixed Account in the prior Contract Year,
except with our consent. However, these limits do not apply to new deposits to
the Fixed Account for which the dollar cost averaging program has been elected
within 30 days from the date of deposit. See the Statement of Additional
Information. Amounts you transfer to the sub-accounts from the Fixed Account
will be on a "last-in, first-out" basis; that is, they will be made in the
reverse order in which you made deposits into the Fixed Account.

We will deduct the annual Administration Contract Charge entirely from the
Contract Value in the Variable Account, and not from the Contract Value in the
Fixed Account or our general account as the result of a loan.

For more information on the Fixed Account please refer to the Statement of
Additional Information.

YEAR 2000 COMPLIANCE ISSUES

Like all financial services providers, we utilize systems that may be
affected by Year 2000 transition issues, and we rely on a number of third
parties including banks, custodians, and investment managers, that also may be
affected. We and our affiliates have developed, and are in the process of
implementing, a Year 2000 transition plan. We are also confirming that our
service providers are also so engaged. The resources that are being devoted to
this effort are substantial. It is difficult to predict whether the amount of
resources being devoted, or the outcome of these efforts, will have any
negative impact. If we or our service providers, or the Eligible Funds are not
successful in the Year 2000 transition, computer systems could fail or
erroneous results or delays could occur when processing information after
December 31, 1999. However, as of the date of this prospectus, it is not
anticipated that you will experience negative effects on your investment, or
on the Contract services provided as a result of Year 2000 transition
implementation. Currently, we have converted our systems to be Year 2000

A-43
<PAGE>

compliant. We are conducting systems testing and compliance verification which
is expected to be complete in mid-1999. There can, however, be no assurance
that the other service providers have anticipated every step necessary to
avoid any adverse effect on the Variable Account attributable to Year 2000
transition.

INVESTMENT PERFORMANCE INFORMATION

We may advertise or include in sales literature (i) total returns for the
sub-accounts, (ii) non-standard returns for the sub-accounts and (iii)
illustrations of the growth and value of a purchase payment or payments
invested in the sub-accounts for a specified period. Total returns for the
sub-accounts are based on the investment performance of the corresponding
Eligible Funds. THESE FIGURES ARE BASED ON HISTORICAL EARNINGS AND DO NOT
INDICATE OR PROJECT FUTURE PERFORMANCE. We may also advertise or include in
sales literature a sub-account's performance compared to certain performance
rankings and indexes compiled by independent organizations, and we may present
performance rankings and indexes without such a comparison. See Appendix E of
this prospectus.

STANDARD RETURN

The total return of a sub-account refers to return quotations assuming an
investment under a Contract has been held in the sub-account for the stated
times. Average annual total return of a sub-account tells you the return you
would have experienced if you allocated a $1,000 purchase payment to a sub-
account for the specified period. Standardized average annual total return
reflects all historical investment results, less all charges and deductions
applied against the sub-account, including any Contingent Deferred Sales
Charge that would apply if you terminated a Contract at the end of each period
indicated, but excluding any deductions for premium taxes. Standardized total
return may be quoted for various periods including 1 year, 5 years, and 10
years, or from inception of the sub-account if any of those periods are not
available. See Appendix E of this prospectus.

NON-STANDARD RETURN

"Non-Standard" average annual total return information may be presented,
computed on the same basis as described above, except that deductions will not
include the Contingent Deferred Sales Charge. In addition, we may from time to
time disclose average annual total return for non-standard periods and
cumulative total return for a sub-account. Non-standard performance will be
accompanied by standard performance. See Appendix E of this prospectus.

We may also illustrate what would have been the growth and value of a
specified purchase payment or payments if it or they had been invested in each
of the Eligible Funds on the first day or the first month after those Eligible
Funds had commenced operations. This illustration will show Contract Value and
surrender value, calculated in the same manner as average annual total return,
as of the end of each year, ending with the date of the illustration.
Surrender value reflects the deduction of any Contingent Deferred Sales Charge
that may apply, but does not reflect the deduction of any premium tax charge.
We may also show annual percentage changes in Contract Value and surrender
value, cumulative returns, and annual effective rates of return. We determine
the annual percentage change in Contract Value by taking the difference
between the Contract Value or surrender value at the beginning and at the end
of each year and dividing it by the beginning Contract Value or surrender
value. We determine cumulative return by taking the difference between the
investment at the beginning of the period and the ending Contract Value or
surrender value and dividing it by the investment at the beginning of the
period. We calculate the annual effective rate of return in the same manner as
average annual total return.

OTHER PERFORMANCE

A-44
<PAGE>

accounts. Advertising and sales literature may also show the performance
rankings of the sub-accounts assigned by independent services, such as
Variable Annuity Research Data Services ("VARDS") or may compare to the
performance of a sub-account to that of a widely used index, such as Standard
& Poor's Index of 500 Common Stocks. We may also use other independent ranking
services and indexes as a source of performance comparison.

FINANCIAL STATEMENTS

You may find the financial statements of the Company and the Variable
Account in the Statement of Additional Information.

A-45
<PAGE>

APPENDIX A

CONSUMER TIPS

DOLLAR COST AVERAGING

Dollar cost averaging allows you to take advantage of long-term stock market
results. It does not guarantee a profit or protect against a loss. If you
follow a program of dollar cost averaging on a long-term basis and the stock
fund selected performs at least as well as the S&P 500 has historically, it is
likely although not guaranteed that the price at which shares are surrendered
will be higher than the average cost per share.

Under dollar cost averaging you invest the same amount of money in the same
professionally managed fund at regular intervals over a long period of time.
Dollar cost averaging keeps you from investing too much when the price of
shares is high and too little when the price is low. When the price of shares
is low, the money invested buys more shares. When it is high, the money
invested buys fewer shares. If you have the ability and desire to maintain
this program over a long period of time (for example, 20 years), and the stock
fund chosen follows the historical upward market trends, the price at which
the shares are sold should be higher than their average cost. The price could
be lower, however, if the fund chosen does not follow these historical trends.

If you are contemplating the use of dollar cost averaging, you should
consider your ability to continue the on-going purchases in order to take
advantage of periods of low price levels.

DIVERSIFICATION

Diversifying investment choices can enhance returns, by providing a wider
opportunity for safe returns, and reduce risks, by spreading the chance of
loss. Holding a single investment requires a safe return because a loss may
risk the entire investment. By diversifying, on the other hand, you can more
safely take a chance that some investments will under-perform and that others
will over-perform. Thus you can potentially earn a better-than-average rate of
return on a diversified portfolio than on a single safe investment. This is
because, although some of a diversified investment may be totally lost, some
of the investment may perform at above-average rates that more than compensate
for the loss.

MISCELLANEOUS

Toll-free telephone service:
--A recording of daily unit values is available by
calling 1-800-333-2501.

--Fund transfers and changes of future purchase
payment allocations can be made by calling 1-800-435-
4117.

Written Communications:
--All communications and inquiries regarding address
changes, premium payments, billing, fund transfers,
surrenders, maturities and any other processing
matters relating to your Contract should be directed
to:

New England Annuities
P.O. Box 642
Boston, Mass 02116

A-46
<PAGE>

APPENDIX B

CONTINGENT DEFERRED SALES CHARGE

The following example illustrates how the Contingent Deferred Sales Charge
would apply if the commuted value of amounts that have been placed under
certain payment options is later withdrawn. As described in the prospectus in
the section "Contingent Deferred Sales Charge," no Contingent Deferred Sales
Charge will apply if at any time more than 30 days from the time we issued
your Contract you apply the proceeds to a variable or fixed payment option
involving a life contingency or, for a minimum specified period of 15 years,
to either the Variable Income for a Specified Number of Years Option or the
Variable Income Payments to Age 100 Option, or a comparable fixed option.
However, if you later withdraw the commuted value of amounts placed under the
variable payment options, we will deduct from the amount you receive a portion
of the Contingent Deferred Sales Charge that was waived. Amounts applied to a
fixed payment option may not be commuted. We base the waiver on the ratio of:
(1) the number of whole months remaining on the date of withdrawal until the
date when the Contingent Deferred Sales Charge would expire, to (2) the number
of whole months that were remaining when you applied the proceeds to the
option, until the date when the Contingent Deferred Sales Charge would expire.

As an example, assume that you apply $100,000 of Contract Value (net of any
premium tax charge and Administration Contract Charge) to the Variable Income
for a Specified Number of Years Option for a 20 year period. Assume further
that the proceeds are derived from a $30,000 purchase payment made ten years
ago, a $30,000 purchase payment made exactly two years ago, and investment
earnings, and that the Contingent Deferred Sales Charge waived when you
applied the proceeds to the payment option was $1,500. If the Payee surrenders
the commuted value of the proceeds under option six months later, the
Contingent Deferred Sales Charge would be $1,350 (representing the $1,500
waived at annuitization multiplied by 54/60, where 54 is the number of whole
months currently remaining until the Contingent Deferred Sales Charge would
expire, and 60 is the number of whole months that remained at the time of
annuitization until the Contingent Deferred Sales Charge would expire).

A-47
<PAGE>

APPENDIX C

PREMIUM TAX

Premium tax rates are subject to change. At present we pay premium taxes in
the following jurisdictions at the rates shown.

<TABLE>
<CAPTION>
CONTRACTS USED WITH TAX
JURISDICTION QUALIFIED RETIREMENT PLANS ALL OTHER CONTRACTS
- ------------ -------------------------- -------------------
<S> <C> <C>
California 0.50% 2.35%
Kentucky 2.00% 2.00%
Maine -- 2.00%
Nevada -- 3.50%
Puerto Rico 1.00% 1.00%
South Dakota -- 1.25%
West Virginia 1.00% 1.00%
Wyoming -- 1.00%
</TABLE>

See "Premium Tax Charges" in the prospectus for more information about how
premium taxes affect your Contract.

A-48
<PAGE>

APPENDIX D

EXCHANGED CONTRACTS

You may exchange a Fund I, Preference or Zenith Accumulator contract for an
American Growth Series Contract (a "new contract"), as long as: (1) your age
does not exceed the maximum age at issue for a new contract; (2) the contract
value of the old contract (along with any purchase payments submitted with the
exchange application) is at least equal to the minimum initial purchase
payment for a new contract and; (3) (unless waived by the Company) you meet
our underwriting standards. We may waive the minimum initial and subsequent
purchase payment amount to correspond to the old contract. As of the date you
make the exchange, we will credit the contract value of the old contract as
the initial purchase payment to the new contract. We will not deduct any
charges at the time of exchange. See below for a comparison of the charges
under the old contracts and the new contracts. We issue the American Growth
Series Contract and MetLife issues the old contracts. Although we are a
subsidiary of MetLife, MetLife does not guarantee our obligations.

The American Growth Series Contract provides an enhanced death benefit, more
options under the systematic withdrawal feature than the Zenith Accumulator
contract, and access to a variety of investment options that differs from
those currently available under the old contracts. For more information, see
"Payment on Death Prior to Annuitization," "Systematic Withdrawals," and
"Investments of the Variable Account." In addition, the American Growth Series
Contract offers a Fixed Account option, which is not available under the Fund
I or Preference contracts. For more information, see "The Fixed Account." If a
Contract Owner becomes ill or disabled we will waive the Contingent Deferred
Sales Charge on an American Growth Series contract (a benefit that is not
available under the Zenith Accumulator contract). For more information, see
"Waiver of the Contingent Deferred Sales Charge" under "Contingent Deferred
Sales Charge." This benefit may not be available in all states.

If you exchange a Fund I, Preference or Zenith Accumulator variable annuity
contract issued by New England Mutual Life Insurance Company (now MetLife) for
an American Growth Series Contract, when we issue the new contract the minimum
guaranteed death benefit will be either the death benefit that applied to the
old contract on the date of the exchange, or the amount paid into the American
Growth Series, whichever is greater. We will recalculate the minimum
guaranteed death benefit on each six month interval following the date of the
exchange. (See Payment on Death Prior to Annuitization.)

If you are contemplating an exchange of a Fund I, Preference or Zenith
Accumulator contract for an American Growth Series Contract, you should
compare all charges (including investment advisory fees) deducted under your
existing contract and under the American Growth Series Contract, as well as
the investment options offered by each. You should keep in mind that we will
treat assets transferred in exchange for an American Growth Series Contract as
a purchase payment for purposes of calculating the free withdrawal amount and
CDSC. Also, keep in mind that the American Growth Series Contract may require
a higher minimum for any subsequent purchase payments you may wish to make,
although we may consent to waive the minimum to correspond to the terms of the
old contract.

A-49

<PAGE>

CHARGES UNDER CONTRACTS PURCHASED BY EXCHANGING A FUND I, PREFERENCE OR ZENITH
ACCUMULATOR CONTRACT

<TABLE>
<CAPTION>
ASSET-BASED
(MORTALITY &
EXPENSE AND ADMINISTRATION
ADMIN. ASSET CONTRACT
CDSC CHARGE) CHARGE OTHER
------------------------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
American Growth Series 7% of purchase payments; 1.40% $30 (or 2% of premium tax
(AGS) declining to 0% after 7 years total charge on
Contract purchase
Value if payments in
less) -- South Dakota is
waiver may paid by us and
apply recovered later
Fund I --none on exchange (will apply approximately 3% of first premium tax
to subsequent withdrawal from 1.35% $46 2% of charge taken
AGS) (including excess from purchase
--subsequent purchase payments investment (amounts will payments in
will have AGS's CDSC advisory fee) be lower for South Dakota
single --Sales Charge--
purchase maximum 6%
payment
contracts)
Preference --none on exchange (but will 1.25% $30 -- premium tax
apply to subsequent withdrawal (mortality and no waiver charge taken
from AGS) expense only; from purchase
--subsequent purchase payments no payments in
will have AGS's CDSC Administration South Dakota
Asset Charge)
Zenith Accumulator --none on exchange 1.35% $30 --transfer fee
--will apply on subsequent of $10 if you
withdrawal from AGS using the make more than
time table for Zenith 12 per year
Accumulator
--10 year, 6.5% (of Contract
Value) declining CDSC if you
have a Zenith Accumulator
Contract
--subsequent purchase payments
will have AGS's CDSC
</TABLE>

A-50
<PAGE>

APPENDIX E

AVERAGE ANNUAL TOTAL RETURN

The tables below illustrate hypothetical average annual total returns for
each sub-account for the periods shown, based on the actual investment
experience of the sub-accounts, and the New England Zenith Fund (the "Zenith
Fund") during those periods. The tables do not represent what may happen in
the future.

The Variable Account was not established until July, 1994. The Contracts
were not available before August, 1998. The Back Bay Advisors Bond Income and
Back Bay Advisors Money Market Series commenced operations on August 26, 1983.
The Westpeak Growth and Income and Goldman Sachs Midcap Value Series (formerly
the Loomis Sayles Avanti Growth Series) commenced operations on April 30,
1993. The Small Cap Series commenced operations on May 2, 1994. The six other
Eligible Funds did not commence operations until October 31, 1994.

We base calculations of average annual total return on the assumption that a
single investment of $1,000 was made at the beginning of each period shown.
The figures do not reflect the effect of any premium tax charge, which applies
in certain states, and which would reduce the results shown.

The average annual total return is related to surrender value and is
calculated as follows. The amount of the assumed $1,000 purchase payment for a
Contract issued at the beginning of the period is divided by the Accumulation
Unit Value of each sub-account at the beginning of the period shown to arrive
at the number of Accumulation Units purchased. The number of Accumulation
Units is reduced on each Contract anniversary to reflect deduction of the
annual $30 Administration Contract Charge from the Contract Value. For
purposes of this calculation, the maximum Administration Contract Charge of
$30 is deducted, although the actual charge will be the lesser of 2% of
Contract Value and $30 (and may be waived for certain large Contracts). Each
such $30 deduction reduces the number of units held under the Contract by an
amount equal to $30 divided by the Accumulation Unit Value on the date of the
deduction. The total number of units held under the Contract at the beginning
of the last Contract Year covered by the period shown is multiplied by the
Accumulation Unit Value on December 31, 1998 to arrive at the Contract Value
on that date. This Contract Value is then reduced by the applicable Contingent
Deferred Sales Charge and the portion of the $30 Administration Contract
Charge which would be deducted upon surrender on December 31, 1998 to arrive
at the surrender value. The average annual total return is the annual
compounded rate of return which would produce the surrender value on December
31, 1998. In other words, the average annual total return is the rate which,
when added to 1, raised to a power reflecting the number of years in the
period shown, and multiplied by the initial $1,000 investment, yields the
surrender value at the end of the period. The average annual total returns
assume that no premium tax charge has been deducted.

Sub-account average annual total return, which is calculated in accordance
with the SEC standardized formula, uses the inception date of the sub-account
through which the Eligible Fund shown is available. Sub-account performance
for the periods prior to September 8, 1998 reflects a mortality and expense
charge of 1.25%. Sub-account performance for periods on or after that date
reflects a mortality and expense charge of 1.30%. With a higher mortality and
expense charge, performance for earlier periods would have been lower. The
Contracts impose a mortality and expense risk charge of 1.30%. Fund total
return adjusted for Contract charges, which is non-standard performance, uses
the inception date of the Eligible Fund shown, and therefore may reflect
periods prior to the availability of the corresponding sub-account under the
Contract. THIS INFORMATION DOES NOT INDICATE OR REPRESENT FUTURE PERFORMANCE.

SUB-ACCOUNT AVERAGE ANNUAL TOTAL RETURN

For purchase payment allocated to the Loomis Sayles Small Cap Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -11.30%
Since Inception of the Sub-Account.............................. 15.22%
</TABLE>

A-51
<PAGE>

For purchase payment allocated to the Morgan Stanley International Magnum
Equity Series*

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -2.93%
Since Inception of the Sub-Account.............................. -.69%

For purchase payment allocated to the Alger Equity Growth Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 36.50%
Since Inception of the Sub-Account.............................. 26.35%

For purchase payment allocated to the Goldman Sachs Midcap Value Series**

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -14.85%
Since Inception of the Sub-Account.............................. 8.25%

For purchase payment allocated to the Davis Venture Value Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 3.73%
Since Inception of the Sub-Account.............................. 21.99%

For purchase payment allocated to the Westpeak Growth and Income Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 13.44%
Since Inception of the Sub-Account.............................. 22.92%

For purchase payment allocated to the Loomis Sayles Balanced Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -1.22%
Since Inception of the Sub-Account.............................. 10.64%

For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -7.80%
Since Inception of the Sub-Account.............................. 5.92%

For purchase payment allocated to the Back Bay Advisors Bond Income Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -1.84%
Since Inception of the Sub-Account.............................. 4.85%

For purchase payment allocated to the Salomon Brothers U.S. Government Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -2.61%
Since Inception of the Sub-Account.............................. 2.53%

For purchase payment allocated to the Back Bay Advisors Money Market Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -5.34%
Since Inception of the Sub-Account.............................. -.26%
</TABLE>
- --------

* The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.

** The Goldman Sachs Midcap Value Series' Subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
the subadviser.

A-52
<PAGE>

FUND TOTAL RETURN ADJUSTED FOR CONTRACT CHARGES

(NON-STANDARD)

For purchase payment allocated to the Loomis Sayles Small Cap Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -11.13%
Since Inception of the Fund..................................... 11.58%

For purchase payment allocated to the Morgan Stanley International Magnum
Equity Series*

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -2.77%
Since Inception of the Fund..................................... 0.00%

For purchase payment allocated to the Alger Equity Growth Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 36.73%
Since Inception of the Fund..................................... 25.69%

For purchase payment allocated to the Goldman Sachs Midcap Value Series**

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -14.65%
5 Years......................................................... 6.73%
Since Inception of the Fund..................................... 8.30%

For purchase payment allocated to the Davis Venture Value Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 3.89%
Since Inception of the Fund..................................... 21.21%

For purchase payment allocated to the Westpeak Growth and Income Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 13.72%
5 Years......................................................... 17.06%
Since Inception of the Fund..................................... 17.32%

For purchase payment allocated to the Loomis Sayles Balanced Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -1.05%
Since Inception of the Fund..................................... 11.26%

For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -7.65%
Since Inception of the Fund..................................... 5.92%
</TABLE>
- --------

* The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.

** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
the subadviser.

A-53
<PAGE>

For purchase payment allocated to the Back Bay Advisors Bond Income Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -1.12%
5 Years............................................................ 3.43%
10 years........................................................... 6.14%
Since Inception of the Fund........................................ 6.93%

For purchase payment allocated to the Salomon Brothers U.S. Government Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -2.46%
Since Inception of the Fund........................................ 3.40%

For purchase payment allocated to the Back Bay Advisors Money Market Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -4.64%
5 Years............................................................ .28%
10 years........................................................... 1.34%
Since Inception of the Fund........................................ 2.56%
</TABLE>

Information is available illustrating the impact of fund performance on
annuity payouts. For examples, see "Hypothetical Illustrations of Annuity
Income Payments" and "Historical Illustrations of Annuity Income Payments" in
the Statement of Additional Information.

A-54
<PAGE>

TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE COMPANY............................................................... II-3
SERVICES RELATING TO THE VARIABLE ACCOUNT................................. II-3
PERFORMANCE COMPARISONS................................................... II-3
CALCULATION OF PERFORMANCE DATA........................................... II-4
NET INVESTMENT FACTOR..................................................... II-14
ANNUITY PAYMENTS.......................................................... II-14
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS...................... II-16
HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS........................ II-19
THE FIXED ACCOUNT......................................................... II-22
EXPERTS................................................................... II-23
LEGAL MATTERS............................................................. II-23
APPENDIX A................................................................ II-24
FINANCIAL STATEMENTS...................................................... F-1
</TABLE>

If you would like a copy of the Statement of Additional Information, please
complete the request form below and mail to:

New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116

Please send a copy of the Statement of Additional
Information for New England Variable Annuity Separate
Account (American Growth Series) to:

--------------------------------------------------------
Name

--------------------------------------------------------
Street

--------------------------------------------------------
City State Zip

A-55
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MA 02116

RECEIPT

This is to acknowledge receipt of an American Growth Series Prospectus dated
April 30, 1999. This Variable Annuity Contract is offered by New England Life
Insurance Company.

_____________________________________ _____________________________________
(Date) (Client's Signature)

<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
AMERICAN GROWTH SERIES
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
(PART B)
APRIL 30,1999

This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated April 30,1999 and
should be read in conjunction therewith. A copy of the Prospectus may be
obtained by writing to New England Securities Corporation ("New England
Securities") 399 Boylston Street, Boston, Massachusetts 02116.

VA-155SAI-98

II-1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Company............................................................... II-3
Services Relating to the Variable Account................................. II-3
Performance Comparisons................................................... II-3
Calculation of Performance Data........................................... II-4
Net Investment Factor..................................................... II-14
Annuity Payments.......................................................... II-14
Hypothetical Illustrations of Annuity Income Payouts...................... II-16
Historical Illustrations of Annuity Income Payouts........................ II-19
The Fixed Account......................................................... II-22
Experts................................................................... II-23
Legal Matters............................................................. II-23
Appendix A................................................................ II-24
Financial Statements...................................................... F-1
</TABLE>

II-2
<PAGE>

THE COMPANY

New England Life Insurance Company ("The Company") is an indirect, wholly-
owned subsidiary of Metropolitan Life Insurance Company ("MetLife").

SERVICES RELATING TO THE VARIABLE ACCOUNT

The Company maintains the books and records of the Variable Account and
provides issuance and other administrative services for the Contracts.

Auditors. Deloitte & Touche LLP, located at 125 Summer Street, Boston,
Massachusetts 02110, conducts an annual audit of the Variable Account's
financial statements.

Principal Underwriter. New England Securities Corporation ("New England
Securities"), an indirect subsidiary of the Company, serves as principal
underwriter for the Variable Account pursuant to a distribution agreement with
the Company. The Contracts are offered continuously and may be sold by
registered representatives of broker-dealers that have selling agreements with
New England Securities as well as by the Company's life insurance agents and
insurance brokers who are registered representatives of New England
Securities. The Company pays commissions, none of which are retained by New
England Securities, in connection with sales of the Contracts. For the years
ended December 31, 1996, 1997 and 1998, the Company paid commissions in the
amount of $3,955,830.34, $5,789,672.74 and $10,931,428.85 respectively.

PERFORMANCE COMPARISONS

Articles and releases, developed by the Company, the Eligible Funds (as
defined in the Prospectus) and other parties, about the Account or the
Eligible Funds regarding performance, rankings, statistics and analyses of the
Account's, the individual Eligible Funds' and fund groups' asset levels and
sales volumes, statistics and analyses of industry sales volumes and asset
levels, and other characteristics may appear in publications, including, but
not limited to, those publications listed in Appendix A to this Statement of
Additional Information. In particular, some or all of these publications may
publish their own rankings or performance reviews including the Account or the
Eligible Funds. References to or reprints of such articles may be used in
promotional literature. Such literature may refer to personnel of the advisers
and/or subadvisers who have portfolio management responsibility, and their
investment style. The references may allude to or include excerpts from
articles appearing in the media.

The advertising and sales literature for the Contracts and the Account may
refer to historical, current and prospective economic trends and may include
historical and current performance and total returns of investment
alternatives.

In addition, sales literature may be published concerning topics of general
investor interest for the benefit of registered representatives and
prospective Contractholders. These materials may include, but are not limited
to, discussions of college planning, retirement planning, reasons for
investing and historical examples of the investment performance of various
classes of securities, securities markets and indices.

II-3
<PAGE>

CALCULATION OF PERFORMANCE DATA

Calculations of average annual total return are based on the assumption that
a single investment of $1,000 was made at the beginning of each period shown.
The figures do not reflect the effect of any premium tax charge, which applies
in certain states, and which would reduce the results shown.

The following chart illustrates how the average annual total return was
determined for the five year period ending December 31, 1998 for the sub-
account investing in the Back Bay Advisors Bond Income Series based on the
assumptions used in the above table. The units column below shows the number
of accumulation units hypothetically purchased by the $1000 investment in the
Series in the first year. The units are reduced on each Contract anniversary
to reflect the deduction of the $30 Administration Contract Charge. The
illustration assumes no premium tax charge is deducted.

The unit values of the sub-accounts reflect the change in the net asset
value of the underlying Eligible Funds plus the reinvestment of dividends from
net investment income and of distributions from net realized gains, if any.
The unit values also reflect the deduction of the Mortality and Expense Risk
Charge as well as the Administration Asset Charge.

<TABLE>
<CAPTION>
AVERAGE
UNIT CONTRACT SURRENDER ANNUAL TOTAL
DATE UNITS VALUE VALUE VALUE RETURN
---- -------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
December 31, 1993.......... 377.3484 2.650071 1,000.00 -- --
December 31, 1994.......... 365.4692 2.525427 922.97 873.13 -12.69%
December 31, 1995.......... 355.5300 3.018347 1,073.11 1,024.82 1.23%
December 31, 1996.......... 345.8937 3.113250 1.076.85 1,038.09 1.25%
December 31, 1997.......... 337.0813 3.404265 1,147.51 1,117.51 2.82%
December 31, 1998.......... 328.8857 3.660529 1,203.90 1,183.90 3.43%
</TABLE>

II-4
<PAGE>

The following charts illustrate what would have been the growth and value of
a $10,000 purchase payment if it had been invested in each of the Eligible
Funds on the first day of the first month after those Eligible Funds became
available: September 1, 1983 for the Back Bay Advisors Money Market and Back
Bay Advisors Bond Income Series; May 1, 1993 for the Westpeak Growth and
Income and Goldman Sachs Midcap Value Series; May 2, 1994 for the Loomis
Sayles Small Cap Series; and November 1, 1994 for the other series of the
Zenith Fund. The figures shown do not reflect the deduction of any premium tax
charge on surrender. During the period when the Contingent Deferred Sales
Charge applies, the percentage return on surrender value from year to year
(after the 1st year) will be greater than the percentage return on Contract
Value for the same years. This is because the percentage return on surrender
value reflects not only investment experience but also the annual reduction in
the applicable Contingent Deferred Sales Charge. In the first chart, the
Contract Value and surrender value on each date shown are calculated in the
manner described in the preceding illustrations of average annual total
return, assuming that no premium tax charge is deducted on surrender.

In the second and third charts, the difference between the Contract Value or
surrender value at the beginning and at the end of each year is divided by the
beginning Contract Value or surrender value to arrive at the annual percentage
change. The cumulative return information set forth in these charts is
determined by taking the difference between the $10,000 investment and the
ending Contract Value or surrender value and dividing it by $10,000. The
annual effective rate of return in this illustration is calculated in the same
manner as the average annual total return described in the preceding
illustration, assuming that no premium tax charge is deducted on surrender.

$10,000 SINGLE PURCHASE PAYMENT CONTRACT
BACK BAY ADVISORS BOND INCOME AND BACK BAY ADVISORS MONEY MARKET SERIES ISSUED
SEPTEMBER 1, 1983
WESTPEAK GROWTH AND INCOME AND GOLDMAN SACHS MIDCAP VALUE(3) SERIES ISSUED MAY
1, 1993
LOOMIS SAYLES SMALL CAP SERIES ISSUED MAY 2, 1994
OTHER ZENITH FUND SERIES ISSUED NOVEMBER 1, 1994
INVESTMENT RESULTS

CONTRACT VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS BACK BAY
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC ADVISORS
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES INCOME
---------- ------------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $10,337.67
1984............ 11,445.98
1985............ 13,372.34
1986............ 15,111.94
1987............ 15,209.14
1988............ 16,221.84
1989............ 17,933.29
1990............ 19,081.33
1991............ 22,162.98
1992............ 23,611.58
1993............ $11,366.57 $11,317.31 26,189.62
1994............ $ 9,587.79 $10,237.00 $ 9,694.22 11,147.74 $ 9,628.18 10,995.38 $ 9,967.47 $ 9,838.07 24,928.24
1995............ 12,146.27 10,692.43 14,185.73 14,294.36 13,193.69 14,760.65 12,234.95 11,551.12 29,762.30
1996............ 15,616.68 11,215.69 15,798.75 16,543.95 16,338.34 17,154.34 14,072.65 12,993.93 30,666.44
1997............ 19,189.74 10,886.69 19,541.57 19,105.05 21,477.28 22,540.94 16,091.52 14,201.85 33,501.82
1998............ 18,575.54 11,484.84 28,441.73 17,786.31 24,198.88 27,630.60 17,281.74 14,259.18 35,992.44
<CAPTION>
SALOMON BACK BAY
BROTHERS ADVISORS
U.S. MONEY
GOVERNMENT MARKET
---------- ----------
<S> <C> <C>
As of December
31:
1983............ $10,256.90
1984............ 11,167.87
1985............ 11,891.93
1986............ 12,494.00
1987............ 13,093.94
1988............ 13,851.97
1989............ 14,893.43
1990............ 15,858.00
1991............ 16,578.78
1992............ 16,938.41
1993............ 17,169.20
1994............ $10,037.26 17,573.10
1995............ 11,354.32 18,286.71
1996............ 11,536.13 18,925.00
1997............ 12,308.95 19,627.81
1998............ 13,031.10 20,343.50
</TABLE>

II-5
<PAGE>

SURRENDER VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS BACK BAY
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC ADVISORS
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES INCOME
---------- ------------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $ 9,674.03
1984............ 10,835.98
1985............ 12,862.34
1986............ 14,701.94
1987............ 14,899.14
1988............ 16,011.84
1989............ 17,823.29
1990............ 19,071.33
1991............ 22,152.98
1992............ 23,601.58
1993............ $10,646.57 $10,597.31 26,179.62
1994............ $ 8,969.15 $ 9,585.41 $ 9,080.62 10,527.74 $ 9,019.21 10,380.95 $ 9,334.75 $ 9,214.41 24,918.24
1995............ 11,528.77 10,106.41 13,580.73 13,774.36 12,588.59 14,240.65 11,629.95 10,946.12 29,752.30
1996............ 15,099.18 10,710.69 15,293.75 16,123.95 15,833.34 16,734.34 13,567.65 12,488.93 30,656.44
1997............ 18,772.24 10,490.72 19,136.57 18,785.05 21,072.28 22,220.94 15,686.52 13,796.85 33,491.82
1998............ 18,258.04 11,179.84 28,136.73 17,566.31 23,893.88 27,410.60 16,976.74 13,954.18 35,982.44
<CAPTION>
SALOMON BACK BAY
BROTHERS ADVISORS
U.S. MONEY
GOVERNMENT MARKET
---------- ----------
<S> <C> <C>
As of December
31:
1983............ $ 9,598.92
1984............ 10,557.87
1985............ 11,381.93
1986............ 12,084.00
1987............ 12,783.94
1988............ 13,641.97
1989............ 14,783.43
1990............ 15,848.00
1991............ 16,568.78
1992............ 16,928.41
1993............ 17,159.20
1994............ $ 9,399.65 17,563.10
1995............ 10,749.32 18,276.71
1996............ 11,031.13 18,915.00
1997............ 11,903.95 19,617.81
1998............ 12,726.10 20,333.50
</TABLE>

ANNUAL PERCENTAGE CHANGE IN CONTRACT VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES
------ ------------- ------ -------- ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983...................
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993................... 13.67% 13.17%
1994................... -4.12% 2.37% -3.60% -1.93 -3.72% -2.84 -0.33% -1.62%
1995................... 26.68 4.45 46.33 28.23 37.03 34.24 22.75 17.41
1996................... 28.57 4.89 11.37 15.74 23.84 16.22 15.02 12.49
1997................... 22.88 -2.93 23.69 15.48 31.45 31.40 14.35 9.30
1998................... -3.2 5.49 45.54 -6.9 12.67 22.58 7.40 .40
Cumulative Return....... 85.76 14.85 184.42 77.86 141.99 176.31 72.82 42.59
Annual Effective Rate of
Return................. 14.19 3.38 28.53 10.69 23.64 19.64 14.04 8.89
</TABLE>

II-6
<PAGE>

ANNUAL PERCENTAGE CHANGE IN SURRENDER VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES
------ ------------- ------ -------- ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983...................
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993................... 6.47% 5.97%
1994................... -10.31% -4.15% -9.19% -1.12 -9.81% -2.04 -6.65% -7.86%
1995................... 28.54 5.44 49.56 30.84 39.58 37.18 24.59 18.79
1996................... 30.97 5.98 12.61 17.06 25.78 17.51 16.66 14.09
1997................... 24.33 -2.05 25.13 16.50 33.09 32.79 15.62 10.47
1998................... -2.74 6.57 47.03 -6.49 13.39 23.35 8.23 1.14
Cumulative Return....... 82.58 11.80 181.37 75.66 138.94 174.11 69.77 39.54
Annual Effective Rate of
Return................. 13.77 2.71 28.20 10.45 23.26 19.47 13.55 8.33
</TABLE>

<TABLE>
<CAPTION>
LEHMAN
INTERMEDIATE
BACK BAY SALOMON BACK BAY GOVERNMENT/
ADVISORS BROTHERS ADVISORS DOW JONES S&P 500 CORPORATE CONSUMER
BOND U.S. MONEY INDUSTRIAL STOCK BOND PRICE
INCOME GOVERNMENT MARKET AVERAGE(4) INDEX(5) INDEX(6) INDEX(7)
-------- ---------- -------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983................... -3.26% -4.01% 5.11% 1.79% 4.51% 1.07%
1984................... 12.01 9.99 1.35 6.27 14.37 3.95
1985................... 18.70 7.81 33.62 31.73 18.06 3.77
1986................... 14.30 6.17 27.25 18.66 13.13 1.13
1987................... 1.34 5.79 5.55 5.25 3.66 4.41
1988................... 7.47 6.71 16.21 16.61 6.67 4.42
1989................... 11.31 8.37 32.24 31.69 12.77 4.65
1990................... 7.00 7.20 -0.54 -3.10 9.16 6.11
1991................... 16.16 4.55 24.25 30.47 14.62 3.06
1992................... 6.54 2.17 7.40 7.62 7.17 2.90
1993................... 10.92 1.36 16.97 10.08 8.79 2.75
1994................... -4.82 -6.00% 2.35 5.02 1.32 -1.93 2.67
1995................... 19.40 14.36 4.06 36.94 37.58 15.33 2.54
1996................... 3.04 2.62 3.49 28.91 22.96 4.05 3.32
1997................... 9.25 7.91 3.72 24.91 33.36 7.87 1.83
1998................... 7.44 6.91 3.65 18.14 28.52 8.44 1.61
Cumulative Return....... 259.82 27.26 103.34 1,149.92 1,102.45 299.72 63.57
Annual Effective Rate of
Return................. 8.71 5.96 4.74 17.90 17.60 9.46 3.26
</TABLE>
- --------
NOTES:
(1) The Contract Values, surrender values, and annual percentage change
figures assume reinvestment of dividends and capital gain distributions.
The Contract Values are net of all deductions and expenses other than any
applicable Contingent Deferred Sales Charge or premium tax charge. Each
surrender value equals the Contract Value less any applicable Contingent
Deferred Sales Charge and a pro rata portion of the annual $30
Administration Contract Charge, but does not reflect a deduction for the
premium tax charge. (See "Administration Charges, Contingent Deferred
Sales Charge and Other Deductions.") 1983 figures for the Back Bay
Advisors Bond Income and Back Bay Advisors Money Market Series are from
September 1 through December 31, 1983. 1993 figures for the Westpeak
Growth and Income and Goldman Sachs Midcap Value Series are from May 1
through December 31, 1993. 1994 figures for the Loomis Sayles Small Cap
Series are from May 2 through December 31, 1994. 1994 figures for all
other series of the Zenith Fund are from November 1 through December 31,
1994.

(2) The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.
(3) The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management
became the subadviser.
(4) The Dow Jones Industrial Average is a market value-weighted and unmanaged
index of 30 large industrial stocks traded on the New York Stock Exchange.
The annual percentage change figures have been adjusted to reflect
reinvestment of dividends. 1983 figures are from September 1 through
December 31, 1983.
(5) The S&P 500 Stock Index is an unmanaged weighted index of the stock
performance of 500 industrial, transportation, utility and financial
companies. The annual percentage change figures have been adjusted to
reflect reinvestment of dividends. 1983 figures are from September 1
through December 31, 1983.
(6) The Lehman Intermediate Government/Corporate Bond Index is a subset of the
Lehman Government/Corporate Bond Index covering all issues with maturities
between 1 and 10 years which is composed of taxable, publicly-issued, non-
convertible debt obligations issued or guaranteed by the U.S. Government
or its agencies and another Lehman index that is composed of taxable,
fixed rate publicly-issued, investment grade non-convertible corporate
debt obligations. 1983 figures are from September 1 through December 31,
1983.
(7) The Consumer Price Index, published by the U.S. Bureau of Labor
Statistics, is a statistical measure of changes, over time, in the prices
of goods and services. 1983 figures are from September 1 through December
31, 1983.

II-7
<PAGE>

The chart below illustrates what would have been the change in value of a
$250 monthly investment under a Contract in each of the Eligible Funds if
purchase payments had been made on the first day of each month starting with
September 1, 1983 for the Back Bay Advisors Bond Income and Back Bay Advisors
Money Market Series, May 1, 1993 for the Westpeak Growth and Income and
Goldman Sachs Midcap Value Series, May 2, 1994 for the Loomis Sayles Small Cap
Series and November 1, 1994 for the other series of the Zenith Fund. The
figures shown do not reflect the deduction of any premium tax charge on
surrender, and only surrender values, not Contract Values, reflect the
deduction of any applicable Contingent Deferred Sales Charge. Each purchase
payment is divided by the Accumulation Unit Value of each sub-account on the
date of the investment to calculate the number of Accumulation Units
purchased. The total number of units under the Contract is reduced on each
Contract anniversary to reflect the $30 Administration Contract Charge, in the
same manner as described in the illustrations of average annual total return.
The Contract Value and the surrender value are calculated according to the
methods described in the preceding examples. The annual effective rate of
return in this illustration represents the compounded annual rate that the
hypothetical purchase payments shown would have had to earn in order to
produce the Contract Value and surrender value illustrated on December 31,
1998. The annual effective rate of return is the rate which, when added to 1
and raised to a power equal to the number of months for which the payment is
invested divided by twelve, and multiplied by the payment amount, for all
monthly payments, would yield the Contract Value or surrender value on the
ending date of the illustration.

INVESTMENT RESULTS

SEPTEMBER 1, 1983--DECEMBER 31, 1998

FOR BOND INCOME AND MONEY MARKET SERIES

MAY 1, 1993--DECEMBER 31, 1998 FOR GROWTH AND INCOME AND AVANTI GROWTH SERIES

MAY 2, 1994--DECEMBER 31, 1998 FOR SMALL CAP SERIES

NOVEMBER 1, 1994--DECEMBER 31, 1998 FOR OTHER ZENITH FUND SERIES

<TABLE>
<CAPTION>
CONTRACT VALUE
---------------------------------------------------------------------------------------------------
MORGAN
LOOMIS STANLEY GOLDMAN DAVIS WESTPEAK SALOMON
SAYLES INTERNATIONAL ALGER SACHS VENTURE GROWTH LOOMIS BROTHERS
CUMULATIVE SMALL MAGNUM EQUITY MIDCAP VALUE AND SAYLES BOND
PAYMENTS(1) CAP EQUITY(2) GROWTH VALUE(3) GROWTH INCOME BALANCED OPPORTUNITIES
----------- ---------- ------------- ---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $ 1,000
1984............ 4,000
1985............ 7,000
1986............ 10,000
1987............ 13,000
1988............ 16,000
1989............ 19,000
1990............ 22,000
1991............ 25,000
1992............ 28,000
1993............ 31,000 $ 2,121.84 $ 2,120.54
1994............ 34,000 $ 1,956.26 $ 511.38 $ 497.68 5,097.79 $ 494.91 5,049.40 $ 502.20 $ 492.19
1995............ 37,000 5,895.10 3,637.36 4,222.10 9,873.90 4,125.99 10,258.06 3,904.75 3,814.17
1996............ 40,000 11,021.85 6,859.16 7,864.68 14,629.01 8,536.02 15,236.80 7,778.69 7,478.86
1997............ 43,000 16,902.67 9,550.07 13,001.28 20,125.90 14,632.30 23,467.27 12,114.50 11,316.03
1998............ 46,000 19,391.41 13,031.07 22,715.97 21,575.14 19,757.89 32,141.38 16,145.27 14,347.08
Annual Effective
Rate of Return. 13.96% 1.97% 29.51% 8.32% 22.35% 22.46% 12.29% 6.56%
<CAPTION>
BACK BAY SALOMON BACK BAY
ADVISORS BROTHERS ADVISORS
BOND U.S. MONEY
INCOME GOVERNMENT MARKET
----------- ----------- -----------
<S> <C> <C> <C>
As of December
31:
1983............ $ 1,012.71 $ 1,016.00
1984............ 4,347.60 4,228.77
1985............ 8,359.85 7,589.75
1986............ 12,610.03 11,042.60
1987............ 15,713.15 14,655.09
1988............ 19,831.44 18,608.55
1989............ 25,092.76 23,140.46
1990............ 29,874.35 27,762.78
1991............ 38,038.94 32,117.90
1992............ 43,679.58 35,876.57
1993............ 51,587.72 39,423.75
1994............ 52,090.01 $ 502.40 43,437.95
1995............ 65,505.31 3,734.85 48,314.12
1996............ 70,653.96 6,849.78 53,109.32
1997............ 80,401.77 10,426.55 58,199.85
1998............ 89,546.77 14,126.17 63,442.93
Annual Effective
Rate of Return. 8.18% 5.81% 4.05%
</TABLE>
- -------
(1) For the Westpeak Growth and Income and Goldman Sachs Midcap Value Series,
cumulative payments as of December 31, 1993 would be $2,000, as of
December 31, 1994 would be $5,000, as of December 31, 1995 would be
$8,000, as of December 31, 1996 would be $11,000, as of December 31, 1997
would be $14,000 and as of December 31, 1998 would be $17,000. For the
Loomis Sayles Small Cap Series, cumulative payments as of December 31,
1994 would be $2,000, as of December 31, 1995 would be $5,000, as of
December 31, 1996 would be $8,000, as of December 31, 1997 would be
$11,000 and as of December 31, 1998 would be $14,000. For the other Zenith
Fund Series, cumulative payments as of December 31, 1994 would be $500, as
of December 31, 1995 would be $3,500, as of December 31, 1996 would be
$6,500, as of December 31, 1997 would be $9,500 and as of December 31,
1998 would be $12,500.

(2) The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.

(3) The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998 when Goldman Sachs Asset Management became
the subadviser.

II-8

<PAGE>

<TABLE>
<CAPTION>
SURRENDER VALUE
---------------------------------------------------------------------------------------------------
LOOMIS MORGAN GOLDMAN SALOMON
SAYLES STANLEY ALGER SACHS DAVIS WESTPEAK LOOMIS BROTHERS
CUMULATIVE SMALL INTERNATIONAL EQUITY MIDCAP VENTURE GROWTH SAYLES BOND
PAYMENTS(1) CAP MAGNUM(2) GROWTH VALUE(3) VALUE AND INCOME BALANCED OPPORTUNITIES
----------- ---------- ------------- ---------- ---------- ---------- ---------- ---------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $ 1,000
1984............ 4,000
1985............ 7,000
1986............ 10,000
1987............ 13,000
1988............ 16,000
1989............ 19,000
1990............ 22,000
1991............ 25,000
1992............ 28,000
1993............ 31,000 $ 1,961.84 $ 1,960.54
1994............ 34,000 $ 1,803.57 $ 472.33 $ 459.59 4,763.39 $ 457.01 4,718.60 $ 463.80 $ 454.48
1995............ 37,000 5,547.60 3,405.07 3,977.10 9,363.90 3,880.99 9,748.06 3,659.75 3,571.44
1996............ 40,000 10,514.35 6,459.43 7,444.68 13,989.01 8,116.02 14,596.80 7,358.69 7,058.86
1997............ 43,000 16,265.17 9,048.11 12,436.28 19,385.90 14,067.30 22,727.27 11,549.50 10,751.03
1998............ 46,000 18,653.99 12,399.37 22,035.97 20,765.14 19,077.99 31,331.38 15,465.27 13,667.08
Annual Effective
Rate of Return. 12.27% -.38% 27.93% 6.98% 20.57% 21.55% 10.18% 4.23%
<CAPTION>
BACK BAY SALOMON BACK BAY
ADVISORS BROTHERS ADVISORS
BOND U.S. MONEY
INCOME GOVERNMENT MARKET
----------- ----------- -----------
<S> <C> <C> <C>
As of December
31:
1983............ $ 933.57 $ 936.63
1984............ 4,067.60 3,956.32
1985............ 7,909.85 7,145.30
1986............ 12,020.03 10,452.60
1987............ 15,013.15 13,955.09
1988............ 19,051.44 17,828.55
1989............ 24,262.76 22,310.46
1990............ 29,024.35 26,912.78
1991............ 37,188.94 31,267.90
1992............ 42,829.58 35,026.57
1993............ 50,737.72 38,573.75
1994............ 51,240.01 $ 463.99 42,587.95
1995............ 64,655.31 3,497.31 47,464.12
1996............ 69,803.96 6,451.30 52,259.32
1997............ 79,551.77 9,867.25 57,349.85
1998............ 88,696.77 13,446.17 62,592.93
Annual Effective
Rate of Return. 8.07% 3.45% 3.89%
</TABLE>
- -------
(1) For the Westpeak Growth and Income and Goldman Sachs Midcap Value Series,
cumulative payments as of December 31, 1993 would be $2,000, as of
December 31, 1994 would be $5,000, as of December 31, 1995 would be
$8,000, as of December 31, 1996 would be $11,000, as of December 31, 1997
would be $14,000 and as of December 31, 1998 would be $17,000. For the
Loomis Sayles Small Cap Series, cumulative payments as of December 31,
1994 would be $2,000, as of December 31, 1995 would be $5,000, as of
December 31, 1996 would be $8,000, as of December 31, 1997 would be
$11,000 and as of December 31, 1998 would be $14,000. For the other Zenith
Fund Series, cumulative payments as of December 31, 1994 would be $500, as
of December 31, 1995 would be $3,500, as of December 31, 1996 would be
$6,500, as of December 31, 1997 would be $9,500 and as of December 31,
1998 would be $12,500.

As discussed in the prospectus in the section entitled "Investment
Performance Information", the Variable Account may illustrate historical
investment performance by showing the percentage change in unit value and the
annual effective rate of return of each sub-account of the Variable Account
for every calendar year since inception of the corresponding Eligible Funds to
the date of the illustration and for the ten, five and one year periods ending
with the date of the illustration. Examples of such illustrations follow. Such
illustrations do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual $30 Administration Contract Charge.
The method of calculating the percentage change in unit value is described in
the prospectus under "Investment Performance Information." The annual
effective rate of return in these illustrations is calculated by dividing the
unit value at the end of the period by the unit value at the beginning of the
period, raising this quantity to the power of 1/n (where n is the number of
years in the period), and then subtracting 1.

Set forth on the following pages are illustrations of the percentage change
in unit value information and annual effective rate of return information
discussed above that may appear in the Variable Account's Annual and Semi-
Annual Reports and in other illustrations of historical investment
performance. Such illustrations do not reflect the impact of any Contingent
Deferred Sales Charge, premium tax charge, or the annual Administration
Contract Charge.

LOOMIS SAYLES SMALL CAP SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
May 1, 1994.......................................... 1.000000
December 31, 1994.................................... .959097 -4.1%
December 31, 1995.................................... 1.219226 27.1%
December 31, 1996.................................... 1.571807 28.9%
December 31, 1997.................................... 1.936137 23.2%
December 31, 1998.................................... 1.873409 -3.2%
</TABLE>
- -------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-9
<PAGE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 8 months ended December 31, 1998.............. 87.3% 14.4%
1 year ended December 31, 1998......................... -3.2% -3.2%
</TABLE>

MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT**

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 1.023745 2.4%
December 31, 1995..................................... 1.073005 4.8%
December 31, 1996..................................... 1.129151 5.2%
December 31, 1997..................................... 1.099535 -2.6%
December 31, 1998..................................... 1.161274 5.6%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 16.1% 3.7%
1 year ended December 31, 1998......................... 5.6% 5.6%
</TABLE>

EQUITY GROWTH SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 0.955891 -4.4%
December 31, 1995..................................... 1.402375 46.7%
December 31, 1996..................................... 1.565675 11.6%
December 31, 1997..................................... 1.940577 23.9%
December 31, 1998..................................... 2.823513 45.5%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 182.4% 28.3%
1 year ended December 31, 1998......................... 45.5% 45.5%
</TABLE>

GOLDMAN SACHS MIDCAP VALUE SUB-ACCOUNT***

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
April 30, 1993........................................ 1.000000
December 31, 1993..................................... 1.137039 13.7%
December 31, 1994..................................... 1.118794 -1.6%
December 31, 1995..................................... 1.438865 28.6%
December 31, 1996..................................... 1.669358 16.0%
December 31, 1997..................................... 1.932280 15.7%
December 31, 1998..................................... 1.797180 -7.0%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

** The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.
*** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
the subadviser.

II-10
<PAGE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
5 years, 8 months ended December 31, 1998.............. 79.7% 10.9%
5 years ended December 31, 1998........................ 58.1% 9.6%
1 year ended December 31, 1998......................... -7.0% -7.0%
</TABLE>

DAVIS VENTURE VALUE SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... .962860 -3.7%
December 31, 1995..................................... 1.323183 37.4%
December 31, 1996..................................... 1.642613 24.1%
December 31, 1997..................................... 2.163463 31.7%
December 31, 1998..................................... 2.437055 12.6%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 143.7% 23.8%
1 year ended December 31, 1998......................... 12.6% 12.6%
</TABLE>

WESTPEAK GROWTH AND INCOME SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
April 30, 1993........................................ 1.000000
December 31, 1993..................................... 1.132111 13.2%
December 31, 1994..................................... 1.103489 -2.5%
December 31, 1995..................................... 1.485762 34.6%
December 31, 1996..................................... 1.730922 16.5%
December 31, 1997..................................... 2.279329 31.7%
December 31, 1998..................................... 2.790691 22.4%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
5 years, 8 months ended December 31, 1998.............. 179.1% 19.8%
5 years ended December 31, 1998........................ 146.5% 19.8%
1 year ended December 31, 1998......................... 22.4% 22.4%
</TABLE>

LOOMIS SAYLES BALANCED SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... .996791 -.3%
December 31, 1995..................................... 1.227281 23.1%
December 31, 1996..................................... 1.415482 15.3%
December 31, 1997..................................... 1.622453 14.6%
December 31, 1998..................................... 1.742881 7.4%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-11
<PAGE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
------------ ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.......... 74.3% 14.3%
1 year ended December 31, 1998..................... 7.4% 7.4%
</TABLE>
SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ---------
<S> <C> <C>
October 31, 1994................................... 1.000000
December 31, 1994.................................. .983850 -1.6%
December 31, 1995.................................. 1.158823 17.8%
December 31, 1996.................................. 1.307292 12.8%
December 31, 1997.................................. 1.432601 9.6%
December 31, 1998.................................. 1.439188 .5%
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
------------ ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.......... 43.9% 9.1%
1 year ended December 31, 1998..................... .5% .5%
</TABLE>
BACK BAY ADVISORS BOND INCOME SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*
<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ---------
<S> <C> <C>
August 26, 1983.................................... 1.000000
December 31, 1983.................................. 1.027196 2.7%
December 31, 1984.................................. 1.141109 11.1%
December 31, 1985.................................. 1.337005 17.2%
December 31, 1986.................................. 1.514752 13.3%
December 31, 1987.................................. 1.528314 .9%
December 31, 1988.................................. 1.633970 6.9%
December 31, 1989.................................. 1.810362 10.8%
December 31, 1990.................................. 1.930406 6.6%
December 31, 1991.................................. 2.246568 16.4%
December 31, 1992.................................. 2.397657 6.7%
December 31, 1993.................................. 2.663825 11.1%
December 31, 1994.................................. 2.539801 -4.7%
December 31, 1995.................................. 3.037039 19.6%
December 31, 1996.................................. 3.134109 3.2%
December 31, 1997.................................. 3.428788 9.4%
December 31, 1998.................................. 3.660529 6.8%
</TABLE>
PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*
<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
------------ ---------
<S> <C> <C>
15 years, 4 months ended December 31, 1998......... 266.1% 8.8%
10 years ended December 31, 1998................... 124.0% 8.4%
5 years ended December 31, 1998.................... 33.4% 6.6%
1 year ended December 31, 1998..................... 6.8% 6.8%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-12
<PAGE>

SALOMON BROTHERS U.S. GOVERNMENT SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 1.003770 .4%
December 31, 1995..................................... 1.139109 13.5%
December 31, 1996..................................... 1.160957 1.9%
December 31, 1997..................................... 1.242399 7.0%
December 31, 1998..................................... 1.316242 5.9%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 31.6% 6.8%
1 year ended December 31, 1998......................... 5.9% 5.9%
</TABLE>

BACK BAY ADVISORS MONEY MARKET SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
August 26, 1983....................................... 1.000000
December 31, 1983..................................... 1.027165 2.7%
December 31, 1984..................................... 1.122053 9.2%
December 31, 1985..................................... 1.198477 6.8%
December 31, 1986..................................... 1.262853 5.4%
December 31, 1987..................................... 1.327245 5.1%
December 31, 1988..................................... 1.407892 6.1%
December 31, 1989..................................... 1.517621 7.8%
December 31, 1990..................................... 1.619846 6.7%
December 31, 1991..................................... 1.697425 4.8%
December 31, 1992..................................... 1.738206 2.4%
December 31, 1993..................................... 1.765866 1.6%
December 31, 1994..................................... 1.811432 2.6%
December 31, 1995..................................... 1.889065 4.3%
December 31, 1996..................................... 1.959126 3.7%
December 31, 1997..................................... 2.036045 3.9%
December 31, 1998..................................... 2.098320 3.1%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
15 years, 4 months ended December 31, 1998............. 109.8% 4.9%
10 years ended December 31, 1998....................... 49.0% 4.1%
5 years ended December 31, 1998........................ 18.8% 3.5%
1 year ended December 31, 1998......................... 3.1% 3.1%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-13
<PAGE>

NET INVESTMENT FACTOR

The Company determines the net investment factor ("Net Investment Factor")
for any sub-account on each day on which the New York Stock Exchange is open
for trading as follows:

(1) The Company takes the net asset value per share of the Eligible Fund
held in the sub-account determined as of the close of regular trading on
the New York Stock Exchange on a particular day;

(2) Next, the Company adds the per share amount of any dividend or
capital gains distribution made by the Eligible Fund since the close of
regular trading on the New York Stock Exchange on the preceding trading
day.

(3) This total amount is then divided by the net asset value per share of
the Eligible Fund as of the close of regular trading on the New York Stock
Exchange on the preceding trading day.

(4) Finally, the Company subtracts the daily charges for the
Administration Asset Charge and Mortality and Expense Risk Charge since the
close of regular trading on the New York Stock Exchange on the preceding
trading day. (See "Administration Charges, Contingent Deferred Sales Charge
and Other Deductions" in the prospectus.) On an annual basis, the total
deduction for such charges equals 1.40% of the daily net asset value of the
Variable Account.

ANNUITY PAYMENTS

At annuitization, the Contract Value is applied toward the purchase of
monthly variable annuity payments. The amount of these payments will be
determined on the basis of (i) annuity purchase rates not lower than the rates
set forth in the Life Income Tables contained in the Contract that reflect the
age of the Payee at annuitization, (ii) the assumed interest rate selected,
(iii) the type of payment option selected, and (iv) the investment performance
of the Eligible Fund(s) selected.

When a variable annuity payment option is selected, the Contract proceeds
will be applied at annuity purchase rates, which vary depending on the
particular option selected and the age of the Payee, to calculate the basic
payment level purchased by the Contract Value. With respect to Contracts
issued in New York or Oregon for use in situations not involving an employer-
sponsored plan, annuity purchase rates used to calculate the basic payment
level will also reflect the sex of the Payee when the annuity payment option
involves a life contingency. Under such Contracts, a given Contract Value will
produce a higher basic payment level for a male Payee than for a female Payee,
reflecting the longer life expectancy of the female Payee. If the Contract
Owner has selected an annuity payment option that guarantees that payments
will be made for a certain number of years regardless of whether the Payee
remains alive, the Contract Value will purchase lower monthly benefits than
under a life contingent option.

The amount of the basic payment level is determined by applying the
applicable annuity purchase rate to the amount applied from each sub-account
to provide the annuity. This basic payment level is converted into annuity
units, the number of which remains constant. Each monthly annuity payment is
in an amount equal to that number of annuity units multiplied by the
applicable annuity unit value for that payment (described below). The
applicable annuity unit value for each sub-account will change from day to day
depending upon the investment performance of the sub-account, which in turn
depends upon the investment performance of the Eligible Fund in which the sub-
account invests.

The selection of an assumed interest rate ("Assumed Interest Rate") will
affect both the basic payment level and the amount by which subsequent
payments increase or decrease. The basic payment level is calculated on the
assumption that the Net Investment Factors applicable to the Contract will be
equivalent on an annual basis to a net investment return at the Assumed
Interest Rate. If this assumption is met following the date any payment is
determined, then the amount of the next payment will be exactly equal to the
amount of the preceding payment. If the actual Net Investment Factors are
equivalent to a net investment return greater than the Assumed Interest Rate,
the next payment will be larger than the preceding one; if the actual Net
Investment Factors are equivalent to a net investment return smaller than the
Assumed Interest Rate, then the next payment will be smaller than the
preceding payment.

II-14
<PAGE>

Unless otherwise provided, the assumed interest rate will be at an annual
effective rate of 3.5%. You may select as an alternative an assumed interest
rate equal to an annual effective rate of 0% or, if allowed by applicable law
or regulation, 5%. A higher assumed interest rate will produce a higher first
payment, a more slowly rising series of subsequent payments when the actual
net investment performance exceeds the assumed interest rate, and a more rapid
drop in subsequent payments when the actual net investment performance is less
than the assumed interest rate. A lower assumed interest rate will produce a
lower first payment, a more rapidly rising series of subsequent payments when
the actual net investment performance exceeds the assumed interest rate, and a
less rapid drop in subsequent payments when the actual net investment
performance is less than the assumed interest rate.

The number of annuity units credited under a variable payment option is
determined as follows:

(1) The Contract proceeds are applied at the Company's annuity purchase
rates for the selected Assumed Interest Rate to determine the basic payment
level. (The amount of Contract Value or Death Proceeds applied will be
reduced by any applicable Contingent Deferred Sales Charge, Administration
Contract Charge, premium tax charge, and/or any outstanding loan plus
accrued interest, as described in the prospectus.)

(2) The number of annuity units is determined by dividing the amount of
the basic payment level by the applicable annuity unit value(s) next
determined following the date of application of proceeds.

The dollar amount of the initial payment will be at the basic payment level.
(If the initial payment is due more than 14 days after the proceeds are
applied, the Company will add interest to that initial payment.) The dollar
amount of each subsequent payment is determined by multiplying the number of
annuity units by the applicable annuity unit value which is determined at
least 14 days before the payment is due.

The value of an annuity unit for each sub-account depends on the Assumed
Interest Rate and on the Net Investment Factors applicable at the time of
valuation. The initial annuity unit values were set at $1.00 effective on or
about the date on which shares of the corresponding Eligible Funds were first
publicly available. The Net Investment Factor and, therefore, changes in the
value of an annuity unit under a variable payment option, reflect the
deduction of the Mortality and Expense Risk Charge and Administration Asset
Charge. (See "Net Investment Factor" above.)

The annuity unit value for each sub-account is equal to the corresponding
annuity unit value for the sub-account previously determined multiplied by the
applicable Net Investment Factor for that sub-account for the New York Stock
Exchange trading day then ended, and further multiplied by the assumed
interest factor ("Assumed Interest Factor") for each day of the valuation
period. The Assumed Interest Factor represents the daily equivalent of the
Contract's annual Assumed Interest Rate. In the calculation of annuity unit
values, the Assumed Interest Factor has the effect of reducing the Net
Investment Factor by an amount equal to the daily equivalent of the Contract's
Assumed Interest Rate. The result of this adjustment is that if the Net
Investment Factor for a valuation period is greater (when expressed as an
annual net investment return) than the Assumed Interest Rate, the annuity unit
value will increase. If the Net Investment Factor for the period is less (when
expressed as an annual net investment return) than the Assumed Interest Rate,
the annuity unit value will decrease. At an Assumed Interest Rate of 3.5%, the
Assumed Interest Factor is .9999058. Assumed Interest Factors for other
Assumed Interest Rates are computed on a consistent basis.

Illustrations of annuity income payments under various hypothetical and
historical rates appear in the tables below. The monthly equivalents of the
hypothetical annual net returns of (2.20%), 3.50%, 3.67%, 5.62% and 7.58%
shown in the tables at pages II-17 and II-18 are (.18%), .29%, .30%, .46% and
.61%.

II-15
<PAGE>

HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS

The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. The tables illustrate how monthly annuity income
payments would vary over time if the return on assets in the selected
portfolios were a uniform gross annual rate of 0%, 5.83%, 6%, 8% or 10%. The
values would be different from those shown if the returns averaged 0%, 5.83%,
6%, 8% or 10%, but fluctuated over and under those averages throughout the
years.

The tables reflect the daily charge to the sub-accounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.30%
and the daily administrative charge which is equivalent to an annual charge of
0.10%. The amounts shown in the tables also take into account the portfolios'
management fees and operating expenses which are assumed to be at an annual
rate of 0.83% of the average daily net assets of the Eligible Funds. Actual
fees and expenses of the portfolios associated with your Contract may be more
or less than 0.83%, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status."

The tables show both the gross rate and the net rate. The difference between
gross and net rates represents the 1.40% for mortality and expense risk and
administrative charge and the assumed 0.83% for investment management and
operating expenses. Since these charges are deducted daily from assets, the
difference between the gross and net rate is not exactly 2.23%.

Two tables follow. The first table assumes that 100% of the Contract Value
is allocated to a variable annuity income option. The second assumes that 50%
of the Contract Value is placed under a fixed annuity income option, using the
fixed crediting rate the Company offered on the fixed annuity income option at
the date of the illustration. Both illustrations assume that the final value
of the accumulation account is $100,000 and is applied at age 65 to purchase a
life annuity for a guaranteed period of 10 years certain and life thereafter.

When part of the Contract Value has been allocated to the fixed annuity
income option, the guaranteed minimum annuity income payment resulting from
this allocation is also shown. The illustrated variable annuity income
payments are determined through the use of standard mortality tables and an
assumed interest rate of 3.5% per year. Thus, actual performance greater than
3.5% per year will result in increasing annuity income payments and actual
performance less than 3.5% per year will result in decreasing annuity income
payments. The Company offers alternative Assumed Interest Rates from which you
may select. Fixed annuity income payments remain constant. Initial monthly
annuity income payments under a fixed annuity income payout are generally
higher than initial payments under a variable income payout option.

These tables show the monthly income payments for several hypothetical
constant assumed interest rates. Of course, actual investment performance will
not be constant and may be volatile. Actual monthly income amounts would
differ from those shown if the actual rate of return averaged the rate shown
over a period of years, but also fluctuated above or below those averages for
individual contract years. Upon request, and when you are considering an
annuity income option, the Company will furnish a comparable illustration
based on your individual circumstances.

II-16
<PAGE>

ANNUITY PAY-OUT ILLUSTRATION
(100% VARIABLE PAYOUT)

<TABLE>
<S> <C> <C> <C>
ANNUITANT: John Doe GROSS AMOUNT OF CONTRACT VALUE: $100,000
SEX: Unisex DATE OF ILLUSTRATION: 1/1/99
ANNUITY OPTION SELECTED: Life Income with 10 Years Certain*
FREQUENCY OF INCOME PAY- Monthly
MENTS:
</TABLE>

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED: For age 65: $639.32

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%

VARIABLE MONTHLY ANNUITY INCOME PAYMENT ON THE DATE OF THE
ILLUSTRATION: $581.00

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.

<TABLE>
<CAPTION>
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
WITH AN ASSUMED RATE OF RETURN OF:
---------------------------------------------
GROSS 0% 5.83% 6% 8% 10%
PAYMENT CALENDAR ----- ----------------- -------- -------- ---------
YEAR YEAR AGE NET** -2.20% 3.50% 3.67% 5.62% 7.58%
- ------- -------- --- ----- ----------------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1999 65 $ 581.00 $ 581.00 $ 581.00 $ 581.00 $ 581.00
2 2000 66 548.99 581.00 581.94 592.92 603.90
3 2001 67 518.75 581.00 582.87 605.08 627.70
4 2002 68 490.17 581.00 583.81 617.49 652.43
5 2003 69 463.17 581.00 584.75 630.15 678.14
10 2008 74 348.90 581.00 589.47 697.48 822.72
15 2013 79 262.82 581.00 594.23 772.00 998.13
20 2018 84 197.98 581.00 599.03 854.48 1,210.93
</TABLE>

IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT THE PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE FUNDS
THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- -------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period,
payments will be continued for the balance of the Certain Period. The
cumulative amount of income payments received under the annuity depends on
how long the Annuitant lives after the Certain Period. An annuity pools the
mortality experience of Annuitants. Annuitants who die earlier, in effect,
subsidize the payments for those who live longer.

** The illustrated Net Assumed Rates of Return reflect the deduction of
average fund expenses and the 1.40% Mortality and Expense Risk and
Administration Asset Charges from the Gross Rates of Return.

II-17
<PAGE>

ANNUITY PAY-OUT ILLUSTRATION
(50% VARIABLE--50% FIXED PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $639.32

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE, BUT WILL NEVER
BE LESS THAN: $319.66. THE MONTHLY GUARANTEED PAYMENT OF $319.66 IS BEING
PROVIDED BY THE $50,000 APPLIED UNDER THE FIXED ANNUITY OPTION.

<TABLE>
<CAPTION>
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
WITH AN ASSUMED RATE OF RETURN OF:
-------------------------------------------------
GROSS 0% 5.83% 6% 8% 10%
PAYMENT CALENDAR ----- --------- --------- --------- --------- ---------
YEAR YEAR AGE NET** -2.20% 3.50% 3.67% 5.62% 7.58%
- ------- -------- --- ----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1 1999 65 $ 610.16 $ 610.16 $ 610.16 $ 610.16 $ 610.16
2 2000 66 594.16 610.16 610.63 616.12 621.61
3 2001 67 579.04 610.16 611.10 622.20 633.51
4 2002 68 564.75 610.16 611.57 628.40 645.88
5 2003 69 551.25 610.16 612.04 634.74 658.73
10 2008 74 494.11 610.16 614.40 668.40 731.02
15 2013 79 451.07 610.16 616.78 705.66 818.73
20 2018 84 418.65 610.16 619.18 746.90 925.13
</TABLE>

** The illustrated Net Assumed Rates of Return apply only to the variable
portion of the monthly payment and reflect the deduction of average fund
expenses and the 1.40% Mortality and Expense Risk and Administration Asset
Charges from the Gross Rate of Return.

II-18
<PAGE>

HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS

The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. In comparison with hypothetical illustrations based
on a uniform annual rate of return, the table uses historical annual returns
to illustrate that monthly annuity income payments vary over time based on
fluctuations in annual returns.

The tables reflect the daily charge to the sub-accounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.30%
and the daily administrative charge which is equivalent to an annual charge of
0.10%. The amounts shown in the tables also take into account the actual
portfolios' management fees and operating expenses. Actual fees and expenses
of the portfolios associated with your Contract may be more or less than the
historical fees, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status."

The following tables assume that 100% of the Contract Value is allocated to
a variable annuity income option, that the final value of the accumulation
account is $100,000 and is applied at age 65 to purchase a life annuity for a
guaranteed period of 10 years certain and life thereafter. The table assumes
that the Annuitant was age 65 in 1983, the year of inception for the Bond
Income and Money market portfolios, and that the Annuitant's age has increased
by the time the other portfolios became available. The historical variable
annuity income payments are based on an assumed interest rate of 3.5% per
year. Thus, actual performance greater than 3.5% per year resulted in an
increased annuity income payment and actual performance less than 3.5% per
year resulted in a decreased annuity income payment. We offer alternative
Assumed Interest Rates (AIR) from which you may select: 0% and 5%. An AIR of
0% will result in a lower initial payment than a 3.5% or 5% AIR. Similarly, an
AIR of 5% will result in a higher initial payment than a 0% or 3.5% AIR. The
illustrations are based on the current annuity purchase rates used by the
Company. The rates may differ at the time you annuitize.

The table illustrates the amount of the first monthly payment for each year
shown. During each year, the monthly payments would vary to reflect
fluctuations in the actual rate of return on the portfolios. Upon request, and
when you are considering an annuity income option, we will furnish a
comparable illustration based on your individual circumstances.

II-19
<PAGE>

ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
(100% VARIABLE PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED FOR AGE 75: $779.75 AND FOR AGE 76: $796.56

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT:
3.50%

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.

AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH
100% OF THE CONTRACT VALUE INVESTED IN:

<TABLE>
<CAPTION>
LOOMIS MORGAN GOLDMAN WESTPEAK
SAYLES STANLEY ALGER SACHS DAVIS GROWTH
PAYMENT CALENDAR SMALL INTERNATIONAL EQUITY MIDCAP VENTURE AND
YEAR YEAR AGE CAP MAGNUM GROWTH VALUE** VALUE INCOME
- ------- -------- --- --------- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1983 65
2 1984 66
3 1985 67
4 1986 68
5 1987 69
6 1988 70
7 1989 71
8 1990 72
9 1991 73
10 1992 74
11 1993 75 $ 747.00 $ 747.00
12 1994 76 $ 765.00 $765.00 $ 765.00 829.70 $ 765.00 826.11
13 1995 77 733.51 778.64 737.36 788.39 732.33 777.60
14 1996 78 900.48 788.12 1,044.66 979.16 971.87 1,011.07
15 1997 79 1,120.95 800.83 1,126.19 1,096.94 1,165.00 1,137.39
16 1998 80 1,333.42 753.08 1,347.99 1,226.15 1,481.77 1,446.38
17 1999 81 1,248.88 769.69 1,897.98 1,104.44 1,615.27 1,714.99
</TABLE>

INVESTMENT PERFORMANCE RESULTS CONTAINED IN THIS REPORT REPRESENT PAST
PERFORMANCE AND ARE NOT INDICATIVE OF FUTURE RETURNS. THE PERFORMANCE RESULTS
OF A CONTRACT MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL DEPEND ON A NUMBER
OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY THE CONTRACT OWNER
AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED, SINCE IT IS HIGHLY
LIKELY THAT PERFORMANCE WILL FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME
(BASED ON THE VARIABLE ACCOUNT) WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE
MADE BY THE COMPANY OR THE FUNDS THAT THESE HISTORICAL RETURNS CAN BE ACHIEVED
FOR ANY ONE YEAR OR SUSTAINED OVER ANY PERIOD OF TIME.

THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGE AND ADMINISTRATION ASSET CHARGE (1.40%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1998, after giving effect to current
expense caps or deferrals: 1.00% Loomis Sayles Small Cap, 1.30% Morgan Stanley
International Magnum, .83% Alger Equity Growth, .90% Goldman Sachs Midcap
Value, .83% Davis Venture Value, .78% Westpeak Growth and Income, .82% Loomis
Sayles Balanced, .85% Salomon Strategic Bond Opportunities, .48% Back Bay Bond
Income, .70% Salomon US Government, .45% Back Bay Money Market.) As of May 1,
1998 the Goldman Sachs Midcap Value Series is subject to a voluntary expense
deferral arrangement with an annual expense limit of .90% of net assets.
- -------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period,
payments will be continued for the balance of the Certain Period. The
cumulative amount of income payments received under the annuity depends on
how long the Annuitant lives after the Certain Period. An annuity pools the
mortality experience of Annuitants. Annuitants who die earlier, in effect,
subsidize the payments for those who live longer.
** Rates of return and Contract Values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average daily
net assets through April 30,1998. Beginning May 1, 1998 the Series'
advisory fee is .75% and is reflected through December 31, 1998.

II-20
<PAGE>

ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
(100% VARIABLE PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED FOR AGE 65: $639.32; FOR AGE 75: $779.75 AND FOR AGE
76: $796.56.

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT:
3.50%

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.

AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH
100% OF THE CONTRACT VALUE INVESTED IN:

<TABLE>
<CAPTION>
SALOMON
LOOMIS STRATEGIC BACK BAY SALOMON BACK BAY
PAYMENT CALENDAR SAYLES BOND BOND U.S. MONEY
YEAR YEAR AGE BALANCED OPPORTUNITIES INCOME GOVERNMENT MARKET
- ------- -------- --- --------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1983 65 $ 581.00 $581.00
2 1984 66 593.75 589.11
3 1985 67 636.91 621.40
4 1986 68 720.66 640.96
5 1987 69 788.46 652.22
6 1988 70 768.23 661.97
7 1989 71 793.10 678.04
8 1990 72 848.57 705.82
9 1991 73 873.81 727.52
10 1992 74 982.04 736.22
11 1993 75 1,012.04 727.98
12 1994 76 $ 765.00 $765.00 1,085.82 $765.00 714.19
13 1995 77 758.14 748.30 999.76 763.45 707.50
14 1996 78 901.43 851.15 1,154.49 836.67 712.51
15 1997 79 1,003.91 927.17 1,150.41 823.39 713.52
16 1998 80 1,111.23 981.20 1,215.41 850.93 716.10
17 1999 81 1,155.17 953.89 1,262.70 872.40 718.18
</TABLE>

THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGE AND ADMINISTRATION ASSET CHARGE (1.40%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1998, after giving effect to expense caps
or deferrals: 1.00% Loomis Sayles Small Cap, 1.30% Morgan Stanley
International Magnum, .83% Alger Equity Growth, .90% Goldman Sachs Midcap
Value, .83% Davis Venture Value, .78% Westpeak Growth and Income, .82% Loomis
Sayles Balanced, .85% Salomon Strategic Bond Opportunities, .48% Back Bay Bond
Income, .70% Salomon US Government, .45% Back Bay Money Market.) As of May 1,
1998 the Goldman Sachs Midcap Value Series is subject to a voluntary expense
deferral arrangement with an annual expense limit of .90% of net assets.
- -------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period,
payments will be continued for the balance of the Certain Period. The
cumulative amount of income payments received under the annuity depends on
how long the Annuitant lives after the Certain Period. An annuity pools the
mortality experience of Annuitants. Annuitants who die earlier, in effect,
subsidize the payments for those who live longer.
** Rates of return and Contract values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average daily
net assets through April 30, 1998. Beginning May 1, 1998 the Series'
advisory fee is .75% and is reflected through December 31, 1998.

II-21
<PAGE>

THE FIXED ACCOUNT

Unless you request otherwise, a partial surrender will reduce the Contract
Value in the sub-accounts of the Variable Account and the Fixed Account
proportionately. The annual Administration Contract Charge will be deducted
entirely from the Contract Value in the Variable Account, and not from the
Contract Value in the Fixed Account or the Company's general account as the
result of a loan. (However, that charge is limited to the lesser of $30 and 2%
of the total Contract Value, including Contract Value you have allocated to
the Fixed Account and any Contract Value held in the Company's general account
as the result of a loan.) Except as described below, amounts in the Fixed
Account are subject to the same rights and limitations as are amounts in the
Variable Account with respect to transfers, surrenders and partial surrenders.
The following special rules apply to transfers involving the Fixed Account.

The amount of Contract Value which you may transfer from the Fixed Account
is limited to the greater of: 25% of the Contract Value in the Fixed Account
at the end of the first day of the Contract Year, and the amount of Contract
Value that was transferred from the Fixed Account in the previous Contract
Year (amounts transferred under a DCA program are not included), except with
our consent. However these limits do not apply to new deposits to the Fixed
Account for which you elected the dollar cost averaging program within 30 days
from the date of the deposit. In such case, the amount of Contract Value which
you may transfer from the Fixed Account will be the greatest of: a) 25% of the
Contract Value in the Fixed Account at the end of the first day of the
Contract Year; b) the amount of Contract Value that you transferred from the
Fixed Account in the previous Contract Year; or c) the amount of Contract
Value in the Fixed Account to be transferred out of the Fixed Account under
dollar cost averaging elected on new deposits within 30 days from the date of
deposit. We allow one dollar cost averaging program to be active at a time.
Therefore, if you transfer pre-existing assets (corresponding to Contract
Value for which the dollar cost averaging program was not elected within 30
days from the date of each deposit) out of the Fixed Account under the dollar
cost averaging program and would like to transfer up to 100% of new deposits
under the program, then the dollar cost averaging program on the pre-existing
assets will be canceled and a new program will begin with respect to new
deposits. In this case, the pre-existing assets may still be transferred out
of the Fixed Account, however, not under a dollar cost averaging program,
subject to the limitations on transfers generally out of the Fixed Account.
(Also, after you make the transfer, the Contract Value may not be allocated
among more than ten of the sub-accounts and/or the Fixed Account.) We intend
to restrict purchase payments and transfers of Contract Value into the Fixed
Account: (1) if the interest rate which we would credit to the deposit would
be equivalent to an annual effective rate of 3%; or (2) if the total Contract
Value in the Fixed Account exceeds a maximum amount published by us (currently
$500,000). (For Contracts issued in Maryland, we reserve the right to restrict
such purchase payments and transfers if the total Contract Value in the Fixed
Account equals or exceeds $500,000.) In addition, we intend to restrict
transfers of Contract Value into the Fixed Account, and reserve the right to
restrict purchase payments and loan prepayments into the Fixed Account, for
180 days following a transfer or loan out of the Fixed Account.

If any portion of a Contract loan was attributable to Contract Value in the
Fixed Account, then you must allocate an equal portion of each loan repayment
to the Fixed Account. (For example, if 50% of the loan was attributable to
your Fixed Account Contract Value, then you must allocate 50% of each loan
repayment to the Fixed Account.) Similarly, unless you request otherwise, we
will allocate the balance of the loan repayment to the sub-accounts in the
same proportions in which the loan was attributable to the sub-accounts. See
"Loan Provision for Certain Tax Benefited Retirement Plans." The rate of
interest for each loan repayment applied to the Fixed Account will be the
lesser of: (1) the rate the borrowed money was receiving at the time the loan
was made from the Fixed Account; and (2) the interest rate set by us in
advance for that date. If the loan is being prepaid, however, and prepayments
into the Fixed Account are restricted as described above, the portion of the
loan prepayment that would have been allocated to the Fixed Account will be
allocated to the Zenith Back Bay Advisors Money Market Sub-account instead.

We reserve the right to delay transfers, surrenders, partial surrenders and
Contract loans from the Fixed Account for up to six months.

II-22
<PAGE>

EXPERTS

The financial statements of New England Variable Annuity Separate Account of
New England Life Insurance Company ("NELICO") and the consolidated financial
statements of NELICO and subsidiaries included in this Statement of Additional
Information have been audited by Deloitte & Touche LLP, independent auditors,
as stated in their reports appearing herein, and are included in reliance upon
the reports of such firm given upon their authority as experts in accounting
and auditing.

LEGAL MATTERS

Legal matters in connection with the Contracts described in this
registration statement have been passed on by H. James Wilson, General Counsel
of the Company. Sutherland Asbill & Brennan LLP, Washington, D.C., has
provided advice on certain matters relating to the Federal securities laws.

The SEC requires the Eligible Funds' Board of Trustees to monitor events to
identify conflicts that may arise from the sale of shares to variable life and
variable annuity separate accounts of affiliated and, if applicable,
unaffiliated insurance companies. Conflicts could arise as a result of changes
in state insurance law or Federal income tax law, changes in investment
management of any portfolio of the Eligible Funds, or differences between
voting instructions given by variable life and variable annuity contract
owners, for example. If there is a material conflict, the Boards of Trustees
will have an obligation to determine what action should be taken, including
the removal of the affected sub-account(s) from the Eligible Fund(s), if
necessary. If the Company believes any Eligible Fund action is insufficient,
the Company will consider taking other action to protect Contract Owners.
There could, however, be unavoidable delays or interruptions of operations of
the Variable Account that the Company may be unable to remedy.

II-23
<PAGE>

APPENDIX A

ADVERTISING AND PROMOTIONAL LITERATURE

Advertising and promotional literature prepared by NEF for products it
issues or administers may include references to NEIM or Nvest Companies and
its affiliates that perform advisory and subadvisory functions for NEIM
including, but not limited to: Back Bay Advisors, Loomis Sayles, CGM and
Westpeak. Reference also may be made to the Funds of their respective fund
groups, namely, the Loomis Sayles Funds and the CGM Funds.

NEF's advertising and promotional literature may include references to other
NEF or Nvest Companies' affiliates including, but not limited to, New England
Investment Associates, L. P., AEW Capital Management, L.P., Marlborough
Capital Advisors, L.P., Reich & Tang Capital Management, Reich & Tang Mutual
Funds, the Oakmark Family of Funds and Jurika & Voyles and their fund groups.

References to subadvisers unaffiliated with NEIM or NEF that perform
subadvisory functions on behalf of New England Zenith Fund and their
respective fund groups may be contained in NEF's advertising and promotional
literature including, but not limited to, Alger Management, Davis Selected,
SBAM, GSAM and MSAM.

NEF's advertising and promotional material may include, but is not limited
to, discussions of the following information about both affiliated and
unaffiliated entities:

. Specific and general assessments and forecasts regarding the U.S.
economy, world economies, the economics of specific nations and their
impact on the Series

. Specific and general investment emphasis, specialties, fields of
expertise, competencies, operations and functions

. Specific and general investment philosophies, strategies, processes,
techniques and types of analysis

. Specific and general sources of information, economic models, forecasts
and data services utilized, consulted or considered in the course of
providing advisory or other services

. The corporate histories, founding dates and names of founders of the
entities

. Awards, honors and recognition given to the firms

. The names of those with ownership interest and the percentage of
ownership

. The industries and sectors from which clients are drawn and specific
client names and background information on current individual, corporate
and institutional clients, including pension and profit sharing plans

. Current capitalization, levels of profitability and other financial and
statistical information

. Identification of portfolio managers, researchers, economists, principals
and other staff members and employees

. The specific credentials of the above individuals, including, but not
limited to, previous employment, current and past positions, titles and
duties performed, industry experience, educational background and
degrees, awards and honors

. Current and historical statistics about:

- total dollar amount of assets managed
- NEIM assets managed in total and/or by Series
- Asset managed by CGM in total and/or by Series
- the growth of assets
- asset types managed
- numbers of principal parties and employees, and the length of their tenure,
including officers, portfolio managers, researchers, economists,
technicians and support staff
- the above individuals' total and average number of years of industry
experience and the total and average length of their service to the adviser
or the subadviser

II-24
<PAGE>

. The general and specific strategies applied by the advisers in the
management of the New England Zenith Fund's portfolios including, but not
limited to:

- the pursuit of growth, value, income oriented, risk management or other
strategies
- the manner and degree to which the strategy is pursued
- whether the strategy is conservative, moderate or extreme and an
explanation of other features, attributes
- the types and characteristics of investments sought and specific
portfolio holdings
- the actual or potential impact and result from strategy implementation
- through its own areas of expertise and operations, the value added by
subadvisers to the management process
- the disciplines it employs, e.g., in the case of Loomis Sayles, the
strict buy/sell guidelines and focus on sound value it employs, and
goals and benchmarks that it establishes in management, e.g., CGM
pursues growth 50% above the S&P 500
- the systems utilized in management, the features and characteristics of
those systems and the intended results from such computer analysis,
e.g., Westpeak's efforts to identify overvalued and undervalued issues.

. Specific and general references to portfolio managers and funds that they
serve as portfolio manager of, other than Series of the Fund, and those
families of funds, other than the Fund. Any such references will indicate
that the Fund and the other funds of the managers differ as to
performance, objectives, investment restrictions and limitations,
portfolio composition, asset size and other characteristics, including
fees and expenses. References may also be made to industry rankings and
ratings of Series and other funds managed by the Series' adviser and
subadvisers, including, but not limited to, those provided by
Morningstar, Lipper Analytical Services, Forbes and Worth.

In addition, communications and materials developed by NEF or its affiliates
may make reference to the following information about Nvest Companies and its
affiliates:

Nvest Companies is one of the largest publicly traded managers in the U.S.
listed on the New York Stock Exchange. Nvest Companies maintains over $100
billion in assets under management. In addition, promotional materials may
include:

New England Securities Corporation an indirect subsidiary of NEF, may be
referenced in Fund advertising and promotional literature concerning the
marketing services it provides to Nvest Companies-affiliated fund groups
including: New England Funds, Loomis Sayles Funds, Oakmark Funds and Reich &
Tang Funds.

Additional information contained in advertising and promotional literature
may include: rankings and ratings of the Series including, but not limited to,
those of Morningstar and Lipper Analytical Services; statistics about the
advisers', fund groups' or a specific fund's assets under management; the
histories of the advisers and biographical references to portfolio managers
and other staff including, but not limited to, background, credentials,
honors, awards and recognition received by the advisers and their personnel;
and commentary about the advisers, their funds and their personnel from third-
party sources including newspapers, magazines, periodicals, radio, television
or other electronic media.

References to the Series may be included in NEF's advertising and
promotional literature about its 401(k) and retirement plans. The information
may include, but is not limited to:

. Specific and general references to industry statistics regarding 401(k)
and retirement plans including historical information and industry trends
and forecasts regarding the growth of assets, numbers of plans, funding
vehicles, participants, sponsors and other demographic data relating to
plans, participants and sponsors, third party and other administrators,
benefits consultants and firms including, but not limited to, DC Xchange,
William Mercer and other organizations involved in 401(k) and retirement
programs with whom NEF may or may not have a relationship.

. Specific and general reference to comparative ratings, rankings and other
forms of evaluation as well as statistics regarding the NEF as a 401(k)
or retirement plan funding vehicle produced by, including, but not
limited to, Access Research, Dalbar, Investment Company Institute and
other industry authorities, research organizations and publications.

II-25
<PAGE>

. Specific and general discussion of economic, legislative, and other
environmental factors affecting 401(k) and retirement plans, including,
but not limited to, statistics, detailed explanations or broad summaries
of:

- past, present and prospective tax regulation, Internal Revenue Service
requirements and rules, including, but not limited to, reporting standards,
minimum distribution notices, Form 5500, Form 1099R and other relevant
forms and documents, Department of Labor rules and standards and other
regulation. This includes past, current and future initiatives,
interpretive releases and positions of regulatory authorities about the
past, current or future eligibility, availability, operations,
administration, structure, features, provisions or benefits of 401(k) and
retirement plans
- information about the history, status and future trends of Social Security
and similar government benefit programs including, but not limited to,
eligibility and participation, availability, operations and administration,
structure and design, features, provisions, benefits and costs
- current and prospective ERISA regulation and requirements.

. Specific and general discussion of the benefits of 401(k) investment and
retirement plans, and, in particular, the NEF 401(k) and retirement plans,
to the participant and plan sponsor, including explanations, statistics and
other data, about:

- increased employee retention
- reinforcement or creation of morale
- deductibility of contributions for participants
- deductibility of expenses for employers
- tax deferred growth, including illustrations and charts
- loan features and exchanges among accounts
- educational services materials and efforts, including, but not limited to,
videos, slides, presentation materials, brochures, an investment
calculator, payroll stuffers, quarterly publications, releases and
information on a periodic basis and the availability of wholesalers and
other personnel.

. Specific and general reference to the benefits of investing in mutual funds
for 401(k) and retirement plans, and, in particular, the Fund and investing
in NEF's 401(k) and retirement plans, including, but not limited to:

- the significant economies of scale experienced by mutual fund companies in
the 401(k) and retirement benefits arena
- broad choice of investment options and competitive fees
- plan sponsor and participant statements and notices
- the plan prototype, summary descriptions and board resolutions
- plan design and customized proposals
- trusteeship, record keeping and administration
- the services of State Street Bank, including, but not limited to, trustee
services and tax reporting
- the services of DST and BFDS, including, but not limited to, mutual fund
processing support, participant 800 numbers and participant 401(k)
statements
- the services of Trust Consultants Inc., including, but not limited to,
sales support, plan record keeping, document service support, plan sponsor
support, compliance testing and Form 5500 preparation.

. Specific and general reference to the role of the investment dealer and the
benefits and features of working with a financial professional including:

- access to expertise on investments
- assistance in interpreting past, present and future market trends and
economic events
- providing information to clients including participants during enrollment
and on an ongoing basis after participation
- promoting and understanding the benefits of investing, including mutual
fund diversification and professional management.

II-26
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

REPORT OF INDEPENDENT AUDITORS

To the Contract Owners of New England Variable Annuity Separate Account of New
England Life Insurance Company:

We have audited the accompanying statement of assets and liabilities and the
related statement of operations of the New England Variable Annuity Separate
Account (comprised of Bond Income Sub-Account, Money Market Sub-Account,
Midcap Value Sub-Acount (formerly Avanti Growth Sub-Account), Growth and
Income Sub-Account (formerly Value Growth Sub-Account), Small Cap Sub-Account,
U.S. Government Sub-Account, Balanced Sub-Account, Equity Growth Sub-Account,
International Magnum Equity Sub-Account (formerly International Equity Sub-
Account), Venture Value Sub-Account and Bond Opportunities Sub-Account) of New
England Life Insurance Company as of and for the year ended December 31, 1998,
and the related statements of changes in net assets for each of the two years
in the period then ended for all Sub-Accounts. These financial statements are
the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatements. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position and the results of operations of
the respective aforementioned Sub-Accounts comprising the New England Variable
Annuity Separate Account of New England Life Insurance Company as of and for
the year ended December 31, 1998, and the changes in their net assets for each
of the two years in the period then ended, in conformity with generally
accepted accounting principles.

DELOITTE & TOUCHE LLP

Boston, Massachusetts
April 26, 1999

F-1
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund, at
value (Note 2)............................... $60,670,698 $38,370,137 $37,349,735 $110,777,438

<CAPTION>
SHARES COST
--------- -----------
<S> <C> <C> <C> <C> <C> <C>
Back Bay Advisors Bond
Income Series......... 552,104 61,538,184
Back Bay Advisors Money
Market Series......... 383,701 38,370,137
Goldman Sachs Midcap
Value Series.......... 304,052 46,740,385
Westpeak Growth and
Income Series......... 531,740 98,261,325
Loomis Sayles Small Cap
Series................ 457,282 69,415,382
Salomon Brothers
U.S. Government
Series................ 2,207,950 25,176,496
Loomis Sayles Balanced
Series................ 6,045,254 86,391,460
Alger Equity Growth
Series................ 6,105,060 112,848,300
Morgan Stanley
International Magnum
Equity Series......... 3,199,312 36,743,198
Davis Venture Value
Series................ 6,554,678 123,786,970
Salomon Brothers Bond
Opportunities Series.. 4,756,517 56,980,681
-----------
Total................. 756,252,518
===========
Amount due and accrued from
contract-related transactions, net........... 509,682 464,590 (26,291) 439,364
Dividends receivable.......................... -- 172,422 -- --
----------- ----------- ----------- ------------
Total Assets................................. 61,180,380 39,007,149 37,323,444 111,216,802
LIABILITIES
Due to (from) New England Life Insurance
Company...................................... (55,355) (67,060) (39,172) (130,005)
----------- ----------- ----------- ------------
NET ASSETS..................................... $61,125,025 $38,940,089 $37,284,272 $111,086,797
=========== =========== =========== ============
NET ASSETS CONSIST OF:
Net Assets attributable to Variable Annuity
Contracts.................................... $59,405,208 $38,410,604 $36,732,631 $106,370,486
Annuity Reserves (Note 7)..................... 1,719,817 529,485 551,641 4,716,311
----------- ----------- ----------- ------------
TOTAL NET ASSETS............................. $61,125,025 $38,940,089 $37,284,272 $111,086,797
=========== =========== =========== ============
</TABLE>

See Notes to Financial Statements

F-2
<PAGE>

<TABLE>
<CAPTION>
SMALL U.S. EQUITY INTERNATIONAL VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
----------- ----------- ----------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$70,206,545 $25,325,185 $93,761,886 $153,298,054 $36,472,124 $151,740,788 $54,366,987 $832,339,577
102,456 73,746 175,420 661,766 86,287 387,307 259,507 3,133,834
-- -- -- -- -- -- -- 172,422
----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
70,309,002 25,398,931 93,937,306 153,959,820 36,558,411 152,128,095 54,626,493 835,645,833
(76,796) (24,573) (102,440) (205,064) (34,565) (187,787) (57,308) (980,126)
----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
$70,232,205 $25,374,358 $93,834,866 $153,754,756 $36,523,846 $151,940,308 $54,569,185 834,665,707
=========== =========== =========== ============ =========== ============ =========== ============
$69,113,401 $24,708,204 $91,618,131 $151,281,236 $35,941,568 $149,003,714 $53,202,095 $815,787,278
1,118,804 666,154 2,216,735 2,473,520 582,278 2,936,594 1,367,090 18,878,429
----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
$70,232,205 $25,374,358 $93,834,866 $153,754,756 $36,523,846 $151,940,308 $54,569,185 $834,665,707
=========== =========== =========== ============ =========== ============ =========== ============
</TABLE>

See Notes to Financial Statements

F-3
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
MONEY MIDCAP GROWTH AND SMALL
BOND INCOME MARKET VALUE INCOME CAP
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
INCOME
Dividends............... $4,249,571 $1,334,892 $ 8,744,139 $ 7,186,384 $ 1,134,516
EXPENSES
Mortality, expense risk
and administrative
charges (Note 3)....... 345,078 217,484 288,891 656,893 506,369
---------- ---------- ------------ ----------- -----------
Net investment income
(loss)................. 3,904,493 1,117,408 8,455,248 6,529,491 628,147
NET REALIZED AND
UNREALIZED GAIN (LOSS)
ON INVESTMENTS
Net unrealized
appreciation
(depreciation) on
investments:
Beginning of period... (229,067) -- 1,696,384 3,764,630 3,225,725
End of period......... (867,486) -- (9,390,649) 12,516,114 791,164
---------- ---------- ------------ ----------- -----------
Net change in unrealized
appreciation
(depreciation)......... (638,419) -- (11,087,033) 8,751,484 (2,434,561)
Net realized gain (loss)
on investments......... (95) -- 1,701 1,063 (1,198)
---------- ---------- ------------ ----------- -----------
Net realized and
unrealized gain (loss)
on investments......... (638,514) -- (11,085,332) 8,752,547 (2,435,759)
---------- ---------- ------------ ----------- -----------
NET INCREASE (DECREASE)
IN NET ASSETS RESULTING
FROM OPERATIONS........ $3,265,979 $1,117,408 $ (2,630,084) $15,282,038 $(1,807,612)
========== ========== ============ =========== ===========
</TABLE>

See Notes to Financial Statements

F-4
<PAGE>

<TABLE>
<CAPTION>
U.S. EQUITY INTERNATIONAL VENTURE BOND
GOVERNMENT BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
----------- ----------- ----------- ------------- ----------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
$1,057,662 $3,977,062 $ 5,372,445 $ 780,433 $ 4,086,422 $ 3,631,075 41,554,601
139,393 630,839 930,289 267,050 1,008,884 380,668 5,371,838
---------- ---------- ----------- ---------- ----------- ----------- -----------
918,269 3,346,223 4,442,156 513,383 3,077,538 3,250,417 36,182,763
21,628 4,933,930 5,321,414 (775,750) 16,017,523 286,373 34,262,790
148,686 7,370,426 40,449,754 (271,074) 27,953,818 (2,613,697) 76,087,056
---------- ---------- ----------- ---------- ----------- ----------- -----------
127,058 2,436,496 35,128,340 504,676 11,936,295 (2,900,070) 41,824,266
304 377 2,992 (1,383) 1,272 386 5,419
---------- ---------- ----------- ---------- ----------- ----------- -----------
127,362 2,436,873 35,131,332 503,293 11,937,567 (2,899,684) 41,829,685
---------- ---------- ----------- ---------- ----------- ----------- -----------
$1,045,631 $5,783,096 $39,573,488 $1,016,676 $15,015,105 $ 350,723 $78,012,448
========== ========== =========== ========== =========== =========== ===========
</TABLE>

See Notes to Financial Statements

F-5
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM OPERATING
ACTIVITIES
Net investment income
(loss).............. $ 3,904,493 $ 1,117,408 $ 8,455,248 $ 6,529,491
Net realized and
unrealized gain
(loss) on
investments......... (638,514) -- (11,085,332) 8,752,547
----------- ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from operations.... 3,265,979 1,117,408 (2,630,084) 15,282,038
FROM CONTRACT-RELATED
TRANSACTIONS
Purchase payments
transferred from New
England Life
Insurance Company... 28,809,756 45,682,048 14,214,469 47,553,371
Net transfers (to)
from other sub-
accounts............ 4,752,075 (18,742,727) (3,717,079) 7,421,466
Net transfers to New
England Life
Insurance Company... (2,680,352) (7,285,519) (2,057,136) (4,853,673)
----------- ------------ ------------ ------------
Net Increase
(decrease) in net
assets resulting
from contract-
related
transactions....... 30,881,479 19,653,802 8,440,254 50,121,164
----------- ------------ ------------ ------------
Net increase in net
assets.............. 34,147,458 20,771,210 5,810,170 65,403,202
NET ASSETS, AT
BEGINNING OF THE
PERIOD................ 26,977,567 18,168,880 31,474,104 45,683,596
----------- ------------ ------------ ------------
NET ASSETS, AT END OF
THE PERIOD............ $61,125,025 $ 38,940,089 $ 37,284,273 $111,086,797
=========== ============ ============ ============
</TABLE>

See Notes to Financial Statements

F-6
<PAGE>

<TABLE>
<CAPTION>
SMALL U.S. EQUITY INTERNATIONAL VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
- ----------- ----------- ----------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 628,147 $ 918,269 $ 3,346,223 $ 4,442,156 $ 513,383 $ 3,077,538 $ 3,250,410 $ 36,182,765
(2,435,759) 127,362 2,436,873 35,131,332 503,293 11,937,567 (2,899,684) 41,829,683
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
(1,807,612) 1,045,631 5,783,096 39,573,488 1,016,676 15,015,105 350,726 78,012,448
25,815,897 11,059,857 35,591,207 48,210,048 13,325,118 55,370,015 22,907,722 348,539,508
(2,873,378) 3,793,857 1,035,890 7,816,662 (1,104,394) 1,947,848 (330,219) --
(2,984,132) (1,148,243) (4,757,537) (5,271,476) (1,527,683) (6,493,430) (3,035,342) (42,094,523)
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
19,958,387 13,705,471 31,869,560 50,755,234 10,693,041 50,824,433 19,542,161 306,444,986
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
18,150,775 14,751,102 37,652,656 90,328,722 11,709,717 65,839,538 19,892,887 384,457,434
52,081,430 10,623,256 56,182,211 63,426,035 24,814,128 86,100,770 34,676,296 450,208,273
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
$70,232,205 $25,374,358 $93,834,867 $153,754,757 $36,523,845 $151,940,308 $54,569,183 $834,665,707
=========== =========== =========== ============ =========== ============ =========== ============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income... $ 1,672,216 $ 719,564 $ 2,068,920 $ 4,371,843
Net realized and
unrealized gain (loss)
on investments......... 159,587 -- 1,332,765 3,231,521
----------- ------------ ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 1,831,803 719,564 3,401,685 7,603,364
FROM CONTRACT-RELATED
TRANSACTIONS
Purchase payments
transferred from New
England Life Insurance
Company................ 11,236,642 33,271,900 12,535,013 20,020,290
Net transfers (to) from
other sub-accounts..... 936,254 (32,091,801) 1,384,330 4,744,804
Net transfers to New
England Life Insurance
Company................ (1,406,131) (1,866,995) (1,008,921) (3,176,042)
----------- ------------ ----------- -----------
Net Increase (decrease)
in net assets
resulting from
contract-related
transactions.......... 10,766,765 (686,896) 12,910,422 21,589,052
----------- ------------ ----------- -----------
Net increase in net
assets................. 12,598,568 32,668 16,312,107 29,192,416
NET ASSETS, AT BEGINNING
OF THE YEAR.............. 14,378,999 18,136,212 15,161,997 16,491,180
----------- ------------ ----------- -----------
NET ASSETS, AT END OF THE
YEAR..................... $26,977,567 $ 18,168,880 $31,474,104 $45,683,596
=========== ============ =========== ===========
</TABLE>

See Notes to Financial Statements

F-8
<PAGE>

<TABLE>
<CAPTION>
SMALL U.S. EQUITY INTERNATIONAL VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
- ----------- ----------- ----------- ----------- ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,429,144 $ 439,891 $ 2,475,326 $ 5,455,328 $ 342,239 $ 1,824,869 $ 2,035,035 $ 26,834,375
1,741,016 114,198 2,977,169 3,248,117 (1,144,126) 12,372,099 240,991 24,273,337
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
7,170,160 554,089 5,452,495 8,703,445 (801,887) 14,196,968 2,276,026 51,107,712
21,326,402 3,841,692 26,180,743 23,395,987 11,037,821 36,720,286 17,465,416 217,032,192
6,042,290 259,045 2,443,590 4,307,055 938,157 8,959,499 2,076,777 --
(1,565,170) (430,245) (2,461,194) (2,018,944) (923,740) (2,986,228) (1,713,411) (19,557,021)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
25,803,522 3,670,492 26,163,139 25,684,098 11,052,238 42,693,557 17,828,782 197,475,171
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
32,973,682 4,224,581 31,615,634 34,387,543 10,250,351 56,890,525 20,104,808 248,582,883
19,107,748 6,398,675 24,566,577 29,038,492 14,563,777 29,210,245 14,571,488 201,625,390
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
$52,081,430 $10,623,256 $56,182,211 $63,426,035 $24,814,128 $86,100,770 $34,676,296 $450,208,273
=========== =========== =========== =========== =========== =========== =========== ============
</TABLE>

See Notes to Financial Statements

F-9
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS.

New England Variable Annuity Separate Account (the "Account") of New England
Life Insurance Company ("NELICO") was established by NELICO's Board of
Directors on July 1, 1994 in accordance with the regulations of the Delaware
Insurance Department and is now operating in accordance with the regulations
of the Commonwealth of Massachusetts Division of Insurance. The Account is
registered as a unit investment trust under the Investment Company Act of
1940. The assets of the Account are owned by NELICO. The net assets of the
Account are restricted from use in the ordinary business of NELICO.

Effective with the merger on August 30, 1996 of New England Mutual Life
Insurance Company ("NEMLICO") and Metropolitan Life Insurance Company ("MLI"),
NEMLICO ceased to exist, with MLI the surviving company of the merger. NELICO
then became an indirect wholly-owned subsidiary of MLI.

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.

2. SUB-ACCOUNTS.

The Account has eleven investment sub-accounts each of which invests in the
shares of one series of the New England Zenith Fund ("Zenith Fund"). The
series of the Zenith Fund in which the sub-accounts invest are referred to
herein as the "Eligible Funds". The Zenith Fund is a diversified, open-end
management investment company. The Account purchases or redeems shares of the
eleven Eligible Funds based on the amount of purchase payments invested in the
Account, transfers among the sub-accounts, surrender payments, annuity
payments and death benefit payments. The values of the shares of the Eligible
Funds are determined as of the close of the New York Stock Exchange (normally
4:00 p.m. EST) on each day the Exchange is open for trading. Realized gains
and losses on the sale of Eligible Funds' shares are computed on the basis of
identified cost on the trade date. Income from dividends is recorded on the
ex-dividend date. Charges for investment advisory fees and other expenses are
reflected in the carrying value of the assets of the Eligible Funds.

3. MORTALITY AND EXPENSE RISKS AND ADMINISTRATION CHARGES.

Although variable annuity payments differ according to the investment
performance of the Eligible Funds, they are not affected by mortality or
expense experience because NELICO assumes the mortality and expense risks
under the contracts. The mortality risk assumed by NELICO has two elements, a
life annuity mortality risk and, for deferred annuity contracts, a minimum
death refund risk. The life annuity mortality risk results from a provision in
the contract in which NELICO agrees to make annuity payments regardless of how
long a particular annuitant or other payee lives and how long all annuitants
or other payees as a class live if payment options involving life
contingencies are chosen. Those annuity payments are determined in accordance
with annuity purchase rate provisions established at the time that contracts
are issued. Under deferred annuity contracts, NELICO also assumes a minimum
death refund risk by providing that there will be payable, on the death of the
annuitant during the accumulation period, an amount equal to the greater of
(1) a guaranteed amount equal to the aggregate purchase payments made, without
interest, reduced by any partial surrender, and (2) the value of the contract
as of the death valuation date. The guaranteed amount in (1) above is
recalculated at the specific contract anniversaries to determine whether a
higher (but never a lower) guarantee will apply, based on the contract value
at the time of recalculation. Death proceeds are reduced by any outstanding
contract loan and, in certain states, by a premium tax charge. The expense
risk assumed by NELICO is the risk that the deductions for sales and
administrative expenses provided for in the variable annuity contract may
prove to be insufficient to cover the cost of those items.

F-10
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--CONTINUED

NELICO charges the Account for the mortality and expense risk NELICO
assumes. Currently, the charges are made daily at an annual rate of 1.30% of
the Account assets attributable to the American Growth Series individual
variable annuity contracts (some of the American Growth Series contracts have
a mortality and expense charge of 1.25%), and 1.00% of the Account assets
attributable to the American Forerunner Series individual variable annuity
contracts. NELICO also imposes an administration asset charge at an annual
rate of .10% of the Account assets attributable to American Growth Series and
an annual administration contract charge of $30 (not to exceed 2% of the total
contract value) per contract against contract value in the Account for both
the American Growth Series and American Forerunner Series, but this charge is
waived for any contract year in which the contract value reaches certain
amounts. A premium tax charge applies to the contracts in certain states.

4. FEDERAL INCOME TAXES.

For federal income tax purposes the Account's operations are included with
those of NELICO. NELICO intends to make appropriate charges against the
Account in the future if and when tax liabilities arise.

5. INVESTMENT ADVISERS.

The adviser and sub-adviser for each series of the Zenith Fund are listed in
the chart below. TNE Advisers, Inc. which is a subsidiary of NELICO, and each
of the sub-advisers are registered with the SEC as investment advisers under
the Investment Advisers Act of 1940.

<TABLE>
<CAPTION>
SERIES ADVISER(C) SUB-ADVISER
------ ------------------- ----------------------------------------
<S> <C> <C>
Back Bay Advisors Bond TNE Advisers, Inc.* Back Bay Advisors, L.P.*
Income
Back Bay Advisors Money TNE Advisers, Inc.* Back Bay Advisors, L.P.*
Market
Westpeak Growth and TNE Advisers, Inc.* Westpeak Investment Advisors, L.P.*
Income
Goldman Sachs Midcap TNE Advisers, Inc.* Goldman Sachs Asset Management
Value
Loomis Sayles Small Cap TNE Advisers, Inc.* Loomis, Sayles & Company, L.P.*
Loomis Sayles Balanced TNE Advisers, Inc.* Loomis, Sayles & Company, L.P.*
Morgan Stanley TNE Advisers, Inc.* Morgan Stanley Dean Witter Investment
International Magnum Management, Inc.
Equity Series
Davis Venture Value TNE Advisers, Inc.* Davis Selected Advisers, L.P.(a)
Alger Equity Growth TNE Advisers, Inc.* Fred Alger Management, Inc.
Salomon Brothers U.S. TNE Advisers, Inc.* Salomon Brothers Asset Management Inc
Government
Salomon Brothers TNE Advisers, Inc.* Salomon Brothers Asset Management Inc(b)
Strategic Bond
Opportunities
</TABLE>
- --------
* An affiliate of NELICO
(a) Davis Selected Advisors, L.P. may also delegate any of its
responsibilities to Davis Selected Advisors-NY, Inc. a wholly-owned
subsidiary of Davis Selected Advisors, L.P.

(b) In connection with Salomon Brothers Asset Management Inc's service as
subadviser to the Strategic Bond Opportunities Series, Salomon Brothers
Asset Management Inc's London based affiliate, Salomon Brothers Asset
Management Limited provides certain subadvisory services to Salomon
Brothers Asset Management Inc.
(c) Effective March 26, 1999, TNE Advisors, Inc. changed its name to New
England Investment Management, Inc.

Effective May 1, 1997 the Draycott International Equity Series was renamed
the Morgan Stanley International Magnum Equity Series and a new Sub-advisory
agreement between TNE Advisers, Inc. and Morgan Stanley Dean Witter Investment
Management, Inc. (formerly Morgan Stanley Asset Management Inc.) went into
effect replacing the prior agreement between TNE Advisers, Inc. and Draycott
Partners Ltd.

F-11
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--CONTINUED

Effective May 1, 1998 Goldman Sachs Asset Management, Inc., ("Goldman
Sachs"), became the subadvisor of the Loomis Sayles Avanti Growth Series,
succeeding Loomis Sayles & Company, L.P., and the name of the Series was
changed to the "Goldman Sachs Midcap Value Series". Goldman Sachs is a
separate operating division of Goldman, Sachs & Co., a privately-owned global
financial services company.

6. INVESTMENT PURCHASES AND SALES.

The following table shows the aggregate cost of Eligible Fund shares
purchased and proceeds from the sales of Eligible Fund shares for each sub-
account for the year ended December 31, 1998:

<TABLE>
<CAPTION>
PURCHASES SALES
----------- -----------
<S> <C> <C>
Back Bay Advisors Bond Income Series................ $41,318,988 $10,722,941
Back Bay Advisors Money Market Series............... 69,996,731 50,521,575
Westpeak Growth and Income Series................... 64,857,948 15,123,934
Goldman Sachs Midcap Value Series................... 18,387,443 10,207,586
Loomis Sayles Small Cap Series...................... 34,542,819 15,138,731
Loomis Sayles Balanced Series....................... 47,062,846 15,922,558
Morgan Stanley International Magnum Equity Series... 17,963,672 7,459,032
Davis Venture Value Series.......................... 71,915,241 22,128,524
Alger Equity Growth Series.......................... 68,067,214 18,103,230
Salomon Brothers U.S. Government Series............. 18,997,472 5,417,003
Salomon Brothers Strategic Bond Opportunities
Series............................................. 31,832,652 12,527,544
</TABLE>

7. ANNUITY RESERVES.

Annuity reserves are computed for currently payable contracts according to
the 1983-a Mortality Tables. The assumed interest rate may be 0%, 3.5% or 5%
as elected by the annuitant and as regulated by the laws of the respective
states. Adjustments to annuity reserves are reimbursed to or from NELICO. For
contracts payable on or after January 1, 1998 annuity reserves will be
computed according to the Annuity 2000 Mortality Tables.

F-12
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--CONTINUED

8. INCREASES (DECREASES) IN ACCUMULATION UNITS.

A summary of units outstanding for variable annuity contracts for the year
ended December 31, 1998:

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME SMALL U.S. GOVERNMENT
AGS SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT CAP SUB-ACCOUNT SUB-ACCOUNT
- --- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding
12/31/97............... 7,867,960.0955 8,923,614.2718 16,288,583.1867 20,042,563.3597 26,899,661.5271 8,550,599.7188
Units Purchased......... 7,407,932.0145 16,185,758.6763 5,844,884.1682 17,520,807.8270 11,576,941.8146 8,120,302.7224
Units Redeemed.......... 744,317.6694 10,401,685.5025 2,921,791.8774 2,092,953.1822 3,303,263.5258 873,276.1262
--------------- --------------- --------------- --------------- --------------- ---------------
Units Outstanding
12/31/98............... 14,531,574.4406 14,707,687.4456 19,211,675.4775 35,470,418.0045 35,173,339.8159 15,797,626.3150
=============== =============== =============== =============== =============== ===============
Unit Value 12/31/98..... 3.6887 2.1145 1.8023 2.7986 1.8778 1.3190
=============== =============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
EQUITY INTERNATIONAL VENTURE BOND
BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
--------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Units Outstanding
12/31/97............... 34,627,943.4104 32,684,111.5761 22,567,838.6318 39,797,662.3173 24,205,131.5056
Units Purchased......... 17,581,850.4207 19,771,532.9513 9,039,031.7741 21,012,684.5295 12,829,519.9826
Units Redeemed.......... 2,549,461.0606 2,690,433.4339 2,379,502.4942 2,974,524.5627 2,190,135.2161
--------------- --------------- --------------- --------------- ---------------
Units Outstanding
12/31/98............... 49,660,332.7705 49,765,211.0935 29,227,367.9117 57,835,822.2841 34,844,516.2721
=============== =============== =============== =============== ===============
Unit Value 12/31/98..... 1.7465 2.8294 1.1637 2.4421 1.4422
=============== =============== =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND SMALL U.S.
INCOME MARKET VALUE INCOME CAP GOVERNMENT
AGS 98 SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
- ------ -------------- -------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Units Outstanding
12/31/97............... 0.0000 0.0000 0.0000 0.0000 0.0000 0.0000
Units Purchased......... 2,072,532.4265 5,826,985.7122 1,545,017.7729 4,286,158.2030 2,269,795.6003 3,484,421.6279
Units Redeemed.......... 17,689.9252 2,090,288.3304 65,111.9964 51,094.8741 36,327.1369 37,135.5936
-------------- -------------- -------------- -------------- -------------- --------------
Units Outstanding
12/31/98............... 2,054,842.5013 3,736,697.3818 1,479,905.7765 4,235,063.3289 2,233,468.4634 3,447,286.0343
============== ============== ============== ============== ============== ==============
Unit Value 12/31/98..... 3.6605 2.0983 1.7972 2.7907 1.8734 1.3162
============== ============== ============== ============== ============== ==============
</TABLE>

<TABLE>
<CAPTION>
EQUITY INTERNATIONAL VENTURE BOND
BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Units Outstanding
12/31/97............... 0.0000 0.0000 0.0000 0.0000 0.0000
Units Purchased......... 4,267,753.9363 4,658,019.5536 2,233,361.9662 4,414,049.6853 3,222,230.9900
Units Redeemed.......... 192,776.3960 71,917.6173 70,206.3148 24,633.5093 222,807.5422
-------------- -------------- -------------- -------------- --------------
Units Outstanding
12/31/98............... 4,074,977.5403 4,586,101.9363 2,163,155.6514 4,389,416.1760 2,999,423.4478
============== ============== ============== ============== ==============
Unit Value 12/31/98..... 1.7429 2.8235 1.1613 2.4371 1.4392
============== ============== ============== ============== ==============
</TABLE>

F-13
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Independent Auditors' Report

New England Life Insurance Company:

We have audited the accompanying consolidated balance sheets of New England
Life Insurance Company (formerly New England Variable Life Insurance Company)
and subsidiaries as of December 31, 1998 and 1997, and the related
consolidated statements of income and comprehensive income, equity, and cash
flows for each of the three years in the period ended December 31, 1998. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the New England Life Insurance
Company and subsidiaries as of December 31, 1998 and 1997, and the results of
their operations and their cash flows for each of the three years in the
period ended December 31, 1998 in conformity with generally accepted
accounting principles.

DELOITTE & TOUCHE LLP

February 16, 1999

F-14
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Balance Sheets

DECEMBER 31, 1998 AND 1997 (DOLLARS IN THOUSANDS)
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Investments:
Fixed Maturities:
Available for Sale, at Estimated Fair Value............ $ 769,364 $ 734,391
Equity Securities....................................... 13,240 9,399
Policy Loans............................................ 135,800 104,783
Real Estate............................................. 0 2,757
Short-Term Investments.................................. 52,285 27,944
Other Invested Assets................................... 16,372 24,349
---------- ----------
Total Investments.................................... 987,061 903,623
Cash and Cash Equivalents................................ 43,598 74,148
Deferred Policy Acquisition Costs........................ 710,961 565,769
Accrued Investment Income................................ 21,802 18,712
Premiums and Other Receivables........................... 145,117 63,036
Other Assets............................................. 111,067 62,326
Separate Account Assets.................................. 3,258,383 1,988,225
---------- ----------
TOTAL ASSETS......................................... $5,277,989 $3,675,839
========== ==========
LIABILITIES AND EQUITY
LIABILITIES
Future Policy Benefits................................... $ 561,746 $ 500,429
Policyholder Account Balances............................ 210,242 150,648
Other Policyholder Funds................................. 169,090 98,143
Policyholder Dividends Payable........................... 17,774 14,719
Short and Long-Term Debt................................. 82,855 85,981
Income Taxes Payable:
Current................................................. 10,984 9,102
Deferred................................................ 42,334 42,066
Due to Parent............................................ 789 107,337
Other Liabilities........................................ 78,721 45,647
Separate Account Liabilities............................. 3,258,383 1,988,225
---------- ----------
TOTAL LIABILITIES.................................... 4,432,918 3,042,297
---------- ----------
Commitments and Contingencies (Notes 2, 4, 8 and 9)
EQUITY
Common Stock, $125.00 par value; 50,000 shares
authorized, 20,000 shares issued and outstanding........ 2,500 2,500
Preferred Stock, $0.00 par value; 1,000,000 shares
authorized, 200,000 shares issued and outstanding....... 0 0
Contributed Capital...................................... 647,273 447,273
Retained Earnings........................................ 177,859 166,422
Accumulated Other Comprehensive Income................... 17,439 17,347
---------- ----------
TOTAL EQUITY......................................... 845,071 633,542
---------- ----------
TOTAL LIABILITIES AND EQUITY............................. $5,277,989 $3,675,839
========== ==========
</TABLE>

F-15
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Income and Comprehensive Income

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997, AND 1996 (DOLLARS IN THOUSANDS)
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
REVENUES
Premiums........................................... $100,689 $ 63,616 $ 37,410
Universal Life and Investment-Type Product Policy
Fees ............................................. 173,766 145,157 101,756
Net Investment Income.............................. 49,077 61,059 49,628
Investment Gains (Losses), Net..................... 5,610 890 8,822
Commissions, Fees and Other Income................. 192,411 28,302 44,930
-------- -------- --------
TOTAL REVENUES................................. 521,553 299,024 242,546
-------- -------- --------
BENEFITS AND OTHER DEDUCTIONS
Policyholder Benefits.............................. 149,687 100,180 65,520
Interest Credited to Policyholder Account Balances
.................................................. 7,735 6,220 5,558
Policyholder Dividends............................. 22,989 21,325 14,830
Other Operating Costs and Expenses................. 316,659 144,342 143,886
-------- -------- --------
TOTAL BENEFITS AND OTHER DEDUCTIONS............ 497,070 272,067 229,794
-------- -------- --------
Income From Operations Before Income Taxes......... 24,483 26,957 12,752
Income Taxes....................................... 13,046 4,988 3,051
-------- -------- --------
NET INCOME......................................... $ 11,437 $ 21,969 $ 9,701
-------- -------- --------
Other Comprehensive Income (Loss), Net of Tax:
Unrealized Investment Gains (Losses) (Net of
Related Offsets, Reclassification Adjustments
and Income Taxes, $(299), $(16,588) and $24,212,
Respectively)................................... 92 13,620 (22,629)
-------- -------- --------
COMPREHENSIVE INCOME (LOSS)........................ $ 11,529 $ 35,589 $(12,928)
======== ======== ========
</TABLE>

F-16
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Equity

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS)
See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
CAPITAL ACCUMULATED
STOCK & OTHER
CONTRIBUTED RETAINED COMPREHENSIVE
CAPITAL EARNINGS INCOME TOTAL
----------- -------- ------------- --------
<S> <C> <C> <C> <C>
BALANCES AT DECEMBER 31, 1995..... $193,396 $134,752 $26,356 $354,504
Net Income........................ 9,701 9,701
Change in Net Unrealized
Investment Gains (Losses)........ (22,629) (22,629)
Contributed Capital............... 208,846 208,846
-------- -------- ------- --------
BALANCES AT DECEMBER 31, 1996..... 402,242 144,453 3,727 550,422
Net Income........................ 21,969 21,969
Change in Net Unrealized
Investment Gains (Losses)........ 13,620 13,620
Contributed Capital............... 47,531 47,531
-------- -------- ------- --------
BALANCES AT DECEMBER 31, 1997..... 449,773 166,422 17,347 633,542
Net Income........................ 11,437 11,437
Change in Net Unrealized
Investment Gains (Losses)........ 92 92
Contributed Capital............... 200,000 200,000
-------- -------- ------- --------
BALANCES AT DECEMBER 31, 1998..... $649,773 $177,859 $17,439 $845,071
======== ======== ======= ========
</TABLE>

F-17
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS)

See accompanying notes to consolidated financial statements.
<TABLE>
<CAPTION>
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
NET CASH USED IN OPERATING ACTIVITIES........ $(311,296) $(121,838) $ (85,674)
--------- --------- ---------
Cash Flows from Investing Activities:
Sales, Maturities and Repayments of:
Available for Sale Fixed Maturities......... 164,566 178,003 276,420
Held to Maturity Fixed Maturities........... 0 0 10,519
Equity Securities........................... 39,333 0 0
Mortgage Loans on Real Estate............... 0 0 2,210
Other, Net.................................. 721 128 0
Purchases of:
Available for Sale Fixed Maturities......... (184,810) (326,059) (259,713)
Equity Securities........................... (80,066) 0 0
Real Estate................................. (3,644) 0 (480)
Fixed Asset Property and Equipment.......... (1,459) (101) (3,786)
Other Assets................................ (89) 0 (11,024)
Net Change in Short-Term Investments........ (24,341) 128,616 (135,731)
Net Change in Policy Loans.................. (31,017) (28,520) (18,052)
Other, Net.................................. 1,631 177 67
--------- --------- ---------
NET CASH USED IN INVESTING ACTIVITIES........ (119,175) (47,756) (139,570)
--------- --------- ---------
Cash Flows from Financing Activities:
Capital Contributions....................... 200,000 46,681 159,162
Borrowed Money.............................. (8,670) (3,181) 0
Policyholder Account Balances:
Deposits.................................... 358,090 244,338 482,552
Withdrawals................................. (149,499) (95,066) (364,933)
Financial Reinsurance Receivables........... 0 1,823 (37,519)
--------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES.... 399,921 194,595 239,262
--------- --------- ---------
Change in Cash and Cash Equivalents.......... (30,550) 25,001 14,018
Cash and Cash Equivalents, Beginning of Year. 74,148 49,147 35,129
--------- --------- ---------
CASH AND CASH EQUIVALENTS, END OF YEAR....... $ 43,598 $ 74,148 $ 49,147
========= ========= =========
Supplemental Cash Flow Information:
Interest Paid............................... $ 3,830 $ 1,495 $ 1,523
========= ========= =========
Income Taxes Paid........................... $ 14,118 $ 5,470 $ 4,721
========= ========= =========
NET INCOME................................... $ 11,437 $ 21,969 $ 9,701
Adjustments to Reconcile Net Income to Net
Cash Provided by (Used in) Operating
Activities:
Change in Deferred Policy Acquisition Costs,
Net......................................... (145,787) (140,578) (68,626)
Change in Accrued Investment Income......... (3,090) (4,999) 909
Change in Premiums and Other Receivables.... (82,081) (57,095) 4,370
Gains from Sales of Investments, Net........ (5,610) (890) (8,822)
Depreciation and Amortization Expenses...... 13,137 10,085 3,118
Interest Credited to Policyholder Account
Balances................................... 7,735 6,220 5,558
Universal Life and Investment-Type Product
Policy Fee Income.......................... (173,766) (145,157) (101,756)
Change in Future Policy Benefits............ 61,317 35,540 18,202
Change in Other Policyholder Funds.......... 70,947 6,309 (283)
Change in Policyholder Dividends Payable.... 3,055 5,701 1,671
Change in Income Taxes Payable.............. 2,358 1,674 (6,634)
Other, Net.................................. (70,948) 139,383 56,918
--------- --------- ---------
NET CASH USED IN OPERATING ACTIVITIES........ $(311,296) $(121,838) $ (85,674)
========= ========= =========
</TABLE>

F-18
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

New England Life Insurance Company and its subsidiaries (the Company or
NELICO) is a wholly-owned stock life insurance subsidiary of Metropolitan Life
Insurance Company (MetLife). The Company is headquartered in Boston,
Massachusetts as a Massachusetts chartered company. The Company principally
provides variable life insurance and variable annuity contracts through a
network of general agencies located throughout the United States. The Company
also provides participating traditional life insurance, fixed annuity
contracts, pension products, as well as, group life, group medical, and group
disability coverage.

Prior to the merger of New England Mutual Life Insurance Company (NEMLICO)
with MetLife on August 30, 1996, New England Life Insurance Company (NELICO),
formerly known as New England Variable Life Insurance Company (NEVLICO) was a
subsidiary of NEMLICO. As a result of the merger, NEMLICO ceased to exist as a
separate mutual life insurance company, and NELICO became a subsidiary of
MetLife. NELICO has continued after the merger to conduct its existing
business as well as administer the business activities of the former parent
NEMLICO. (Note 13)

Certain companies that were subsidiaries of NEMLICO became subsidiaries of
NELICO as of the merger. The principal subsidiaries of which NELICO owns 100%
of the outstanding common stock are: Exeter Reassurance Company, Ltd., New
England Pension and Annuity Company, and Newbury Insurance Company, Limited,
for insurance operations and New England Securities Corporation and TNE
Advisers, Inc. for other operations. On February 28, 1997, NELICO created and
became the sole owner of New England Life Holdings, Inc. which was established
as a holding company for the non-insurance operations of the Company,
principally, New England Securities and TNE Advisers, Inc. On April 30, 1998
the Company acquired all of the outstanding stock of NL Holding Corporation
and its wholly owned subsidiaries, Nathan and Lewis Securities, Inc., and
Nathan and Lewis Associates, Inc. Subsequent to the acquistion, NL Holding
Corporation was transferred to New England Life Holdings, Inc. The principal
business activities of the subsidiaries are disclosed below.

Exeter Reassurance Company, Ltd., (Exeter) was incorporated in Bermuda on
November 15, 1994, and registered as an insurer under The Insurance Act 1978
(Bermuda). Exeter engages in financial reinsurance of life insurance and
annuity policies, which are principally assumed from MetLife.

New England Pension and Annuity Company (NEPA) was incorporated under the laws
of the State of Delaware on September 12, 1980. NEPA holds licenses to sell
annuity contracts in 22 states, but is currently not actively engaged in the
sale or distribution of insurance products.

Newbury Insurance Company, Limited (Newbury) was incorporated in Bermuda on
May 1, 1987, and is registered as a Class 2 insurer under The Insurance Act
1978 (Bermuda). Newbury provides professional liability and personal injury
coverage to the agents of NELICO through a facultative reinsurance agreement
with Lexington Insurance Company.

New England Securities Corporation (NES), a National Association of Securities
Dealers (NASD) registered broker/dealer, conducts business as a wholesale
distributor of investment products through the sales force of NELICO.
Established in 1968, NES offers a range of investment products including
mutual funds, investment partnerships, and individual securities. In 1994, NES
became a Registered Investment Advisor with the Securities and Exchange
Commission (SEC) and now offers individually managed portfolios. NES is the
national distributor for variable annuity and variable life products issued by
NELICO.

F-19
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

TNE Advisers, Inc. was incorporated on August 26, 1994, and is registered as
an investment adviser with the SEC, under the Investment Advisers Act of 1940.
TNE Advisers, Inc. was organized to serve as an investment adviser to certain
series of the New England Zenith Fund and does not intend to engage in any
business activities other than providing investment management and
administrative services. TNE Advisers, Inc. changed its name to New England
Investment Management, Inc. in March 1999.

NL Holding Corporation (NL Holding), engages in Securities brokerage, dealer
trading in fixed income securities, over the counter stock, unit investment
trusts, and the sale of insurance related products and annuities, sold through
licensed brokers and independent agents. Nathan and Lewis Securities, Inc., a
wholly owned subsidiary, is a National Association of Securities Dealers
(NASD) registered broker/dealer.

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements have been prepared in
conformity with generally accepted accounting principles (GAAP), and include
the accounts of NELICO and its subsidiaries in which NELICO has control and a
majority economic interest. The consolidated financial statements as of and
for the year ended December 31, 1996 have been prepared as though the current
reporting entity had always existed. Significant intercompany transactions and
balances have been eliminated in consolidation.

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. The most significant estimates include those used in
determining deferred policy acquisition costs, investment allowances and the
liability for future policyholder benefits. Actual results could differ from
those estimates.

Effective July 1, 1997, management realigned its fixed maturity investment
classifications and transferred all securities classified as held to maturity
to available for sale. As a result, consolidated equity at July 1, 1997
increased by $798, excluding the effects of deferred income taxes, amounts
attributable to participating pension contractholders and adjustments of
deferred policy acquisition costs and future policy benefits.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements include the accounts of New
England Life Insurance and its subsidiaries, partnerships and joint ventures
in which NELICO has a controlling interest. All material intercompany accounts
and transactions have been eliminated.

The Company accounts for its investments in real estate joint ventures and
other limited partnership interests in which, it does not have a controlling
interest, under the equity method of accounting.

Certain amounts in the prior years' financial statements have been
reclassified to conform with the 1998 presentation.

INVESTMENTS

The Company's fixed maturity and equity securities are classified as
available-for-sale and are reported at their estimated fair value. Unrealized
investment gains and losses on securities are recorded as a separate component
of other comprehensive income, net of policyholder related amounts and
deferred income taxes. The cost of fixed maturity and equity securities is
adjusted for impairments in value deemed to be other than temporary. These
adjustments are recorded as realized losses on investments. Realized gains and
losses on sales of securities are determined on a specific identification
basis. All security transactions are recorded on a trade date basis.

F-20
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Policy loans are stated at unpaid principal balances, which approximates fair
value.

Short-term investments are stated at amortized cost, which approximates fair
value.

Other invested assets are reported at their estimated fair value.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.

PROPERTY AND EQUIPMENT

Property, equipment and leasehold improvements which are included in other
assets, are stated at cost, less accumulated depreciation and amortization.
Depreciation is determined using the straight line method over the estimated
useful lives of the assets which generally range from 4 to 15 years or the
term of the lease, if shorter. Amortization of leasehold improvements is
provided using the straight line method over the lesser of the term of the
leases or the estimated useful life of the improvements.

Accumulated depreciation on property and equipment and amortization of
leasehold improvements was $24,772, and $13,203 at December 31, 1998 and 1997,
respectively. Related depreciation and amortization expense was $11,570,
$10,085, and $3,118 for the years ended December 31, 1998, 1997 and 1996,
respectively.

DEFERRED POLICY ACQUISITION COSTS

The costs of acquiring new business that vary with, and are primarily related
to, the production of new business are deferred. Such costs, which consist
principally of commissions, agency and policy issue expenses, are amortized
over the expected life of the contract for participating traditional life,
variable life, universal life, investment-type products, and variable
annuities. Generally, deferred policy acquisition costs are amortized in
proportion to the present value of estimated gross margins or profits from
investments, mortality, expense margins and surrender charges. Actual gross
profits can vary from management's estimates resulting in increases and
decreases in the rate of amortization. Management periodically updates these
estimates and evaluates the recoverability of deferred policy acquisition
costs. When appropriate, management revises its assumptions of the estimated
gross margins or profits of these contracts, and the cumulative amortization
is reestimated and adjusted by a cumulative charge or credit to current
operations.

Deferred policy acquisition costs for nonmedical health policies are amortized
in proportion to anticipated premiums. Assumptions as to anticipated premiums
are made at the date of policy issuance and are consistently applied during
the life of the contracts. Deviations from estimated experience are reflected
in operations when they occur. For these contracts, the amortization period is
typically the estimated life of the policy.

OTHER INTANGIBLE ASSETS

The excess of cost over the fair value of net assets acquired, which
represents goodwill, and the value of insurance acquired are included in other
assets. Goodwill is amortized on a straight-line basis over 10 years. The
Company reviews goodwill to assess recoverability from future operations using
undiscounted cash flows. Impairments would be recognized in operating results
if a permanent diminution in value is deemed to have occurred.

F-21
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Excess of Purchase Price Over Fair Value of Net Assets Acquired

<TABLE>
<CAPTION>
YEARS ENDED
DECEMBER 31,
------------------------
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Net Balance, January 1............................. $ 0 $ 0 $ 0
Acquisitions..................................... 23,498 0 0
Dispositions..................................... 0 0 0
Amortization..................................... (1,567) 0 0
------- ------- -------
Net Balance, December 31........................... $21,931 $ 0 $ 0
======= ======= =======
December 31
Accumulated Amortization......................... $(1,567) $ 0 $ 0
======= ======= =======
</TABLE>

ACQUISITIONS

The Company acquired certain assets and assumed certain liabilities of NL
Holding Corporation effective April 30, 1998. The acquisition was accounted
for under the purchase method of accounting and is included in the financial
statements as of the effective date of the transaction. The cost of the
acquisition was $35,082, which represents an initial cash settlement and
payment of direct acquisition costs of $27,873, as well as, accrued contingent
payment arrangements of $7,209 anticipated to be paid to the sellers over a
three year period for years ending December 31, 1998, 1999 and 2000,
respectively. Goodwill of $23,498 was recorded, to be amortized on a straight-
line basis over a ten year period.

The 1998 and 1997 pro forma, unaudited financial data shown as follows
presents the effect of the acquisition as if it had occurred at the beginning
of the respective reporting periods. The pro forma financial data does not
necessarily reflect the results of operations that would have been obtained
had the acquisition occurred on the assumed date, nor is the financial data
necessarily indicative of the results of the combined entities that may be
achieved for any future period.

Pro forma Impact of Acquisition

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------
1998 1997
------------ ------------
<S> <C> <C>
Revenue............................................ $ 557,229 $ 381,691
============ ============
Net Income......................................... $ 10,311 $ 25,049
============ ============
</TABLE>

FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES

Future policy benefit liabilities for participating traditional life insurance
policies are equal to the aggregate of net level premium reserve for death and
endowment policy benefits and the liability for terminal dividends. The net
level premium reserve is calculated based on the dividend fund interest rate
and mortality rates guaranteed in calculating the cash surrender values
described in such contracts. Interest rates used in establishing such
liabilities range from 4% to 4.5% for life insurance policies.

Future policy benefit liabilities for traditional annuities are equal to
accumulated contractholder fund balances during the accumulation period and
the present value of expected future payments after annuitization. Interest
rates used in establishing such liabilities range from 5.5% to 7%.

F-22
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Future policy benefit liabilities for non-medical health insurance are
calculated as the net GAAP liability plus the unamortized deferred acquisition
costs. Future policy benefit liabilities for disabled lives are estimated
using the present value of benefits method and experience assumptions as to
claim terminations, expenses and interest. Interest rates used in establishing
such liabilities range from 4% to 6.5%.

Policyholder account balances for variable life, universal life and
investment-type contracts are equal to the policy account values, which
consist of an accumulation of gross premium payments plus credited interest
ranging from 3.75% to 6.5%, less expense and mortality charges and
withdrawals.

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS

Premiums related to traditional life and annuity policies with life
contingencies are recognized as income when due. Benefits and expenses are
provided against such revenues to recognize profits over the estimated life of
the policies.

Premiums related to non-medical health contracts are recognized as income when
due.

Premiums related to variable life and universal life contracts are credited to
policyholder account balances. Revenues from such contracts consist of amounts
assessed against policyholder account balances for mortality recognized
ratably over the policy period, policy administration charges recognized as
services are provided and surrender charges recognized as earned. Amounts that
are charged to income include interest credited to policyholders and benefit
claims incurred in excess of related policyholder account balances.

Premiums related to investment-type contracts are credited to policyholder
account balances. Revenues from such contracts consist of amounts assessed
against policyholder account balances for contract administration charges
recognized ratably over the policy period. Amounts that are charged to income
include interest credited to policyholders.

DIVIDENDS TO POLICYHOLDERS

Dividends to policyholders are determined annually by the Board of Directors.
The aggregate amount of policyholder dividends is related to actual interest,
mortality, morbidity and expense experience for the year, as well as
management's judgment as to the appropriate level of statutory surplus to be
retained by the Company.

PARTICIPATING BUSINESS

Participating business represented approximately 3.52% and 2.94% of the
Company's life insurance in force, and 7.96% and 5.79% of the number of life
insurance policies in force at December 31, 1998 and 1997, respectively.
Participating policies represented approximately 6.15%, 6.22% and 0.74% of
gross life insurance premiums, for the years ended December 31, 1998, 1997 and
1996, respectively.

INCOME TAXES

NELICO and its eligible life insurance subsidiary, Exeter Reassurance Company,
Ltd., file a consolidated federal income tax return. Separate income tax
returns as required are filed for the other life insurance and non-life
insurance direct subsidiaries. Income tax expense has been calculated in
accordance with the provisions of the Internal Revenue Service Code, as
amended. The Company uses the liability method of accounting for income taxes.
Income tax provisions are based on income reported for financial statement
purposes. The future tax consequences of temporary differences between
financial reporting and tax basis of assets and liabilities are measured as of
the balance sheet dates and are recorded as deferred income tax assets or
liabilities.

F-23
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

REINSURANCE

The Company has reinsured certain of its life insurance contracts with other
insurance companies under various agreements. Amounts due from reinsurers are
estimated based upon assumptions consistent with those used in establishing
the liabilities related to the underlying reinsured contracts. Policy and
contract liabilities are reported gross of reinsurance credits.

SEPARATE ACCOUNT OPERATIONS

Separate Accounts are established in conformity with the state insurance laws
and are generally not chargeable with liabilities that arise from any other
business of the Company. Separate Account assets are subject to general
account claims only to the extent the value of such assets exceed the Separate
Account liabilities. Investments held in the Separate Accounts (stated at
estimated fair market value) and liabilities of the Separate Accounts
(including participants' corresponding equity in the Separate Accounts) are
reported separately as assets and liabilities. Deposits to Separate Accounts,
investment income, and realized and unrealized gains and losses on the
investments of the Separate Account accrue directly to contractholders and,
accordingly, are not reflected in the Company's financial statements.
Mortality, policy administration and surrender charges to all Separate
Accounts are included in revenues.

APPLICATION OF ACCOUNTING PRONOUNCEMENTS

In December 1997, the AICPA issued SOP No. 97-3 ACCOUNTING FOR INSURANCE AND
OTHER ENTERPRISES FOR INSURANCE RELATED ASSESSMENTS (SOP 97-3). SOP 97-3
provides guidance on accounting by insurance and other enterprises for
assessments related to insurance activities including recognition, measurement
and disclosure of guaranty fund and other insurance related assessments. The
Company is required to adopt SOP 97-3 as of January 1, 1999. Adoption of SOP
97-3 is not expected to have a material effect on the Company's consolidated
financial condition or results of operations.

In March 1998, the AICPA issued SOP No. 98-1, ACCOUNTING FOR THE COSTS OF
COMPUTER SOFTWARE DEVELOPED OR OBTAINED FOR INTERNAL USE (SOP 98-1). SOP 98-1
provides guidance for determining when an entity should capitalize or expense
external and internal costs of computer software developed or obtained for
internal use. The Company is required to adopt SOP 98-1 as of January 1, 1999.
Adoption of SOP 98-1 is not expected to have a material effect on the
Company's consolidated financial condition or results of operations.

In April 1998, the AICPA issued Statement of Position 98-5, REPORTING ON THE
COSTS OF START-UP ACTIVITIES (SOP 98-5). SOP 98-5 provides guidance on the
financial reporting of start-up costs and organization costs. It requires
costs of start-up activities and organization costs to be expensed as
incurred. SOP 98-5 broadly defines start-up activities and provides examples
to help entities determine what costs are and are not within the scope of this
SOP. The Company is required to adopt SOP 98-5 as of January 1, 1999. Adoption
of SOP 98-5 is not expected to have a material effect on the Company's
consolidated financial condition or results of operations.

In October 1998, the American Institute of Certified Public Accountants
(AICPA) issued Statement of Position SOP 98-7, ACCOUNTING FOR INSURANCE AND
REINSURANCE CONTRACTS THAT DO NOT TRANSFER INSURANCE RISK (SOP 98-7). SOP 98-7
provides guidance on the method of accounting for insurance and reinsurance
contracts that do not transfer insurance risk, defined in the SOP as the
deposit method. SOP 98-7 classifies insurance and reinsurance contracts for
which the deposit method is appropriate into those that 1) transfer only
significant timing risk, 2) transfer only significant underwriting risk, 3)
transfer neither significant timing or underwriting risk and 4) have an
indeterminate risk. The Company is required to adopt SOP 98-7 as of January 1,
2000. Adoption of SOP 98-7 is not expected to have a material effect on the
Company's consolidated financial condition or results of operations.

F-24
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Effective January 1, 1998, the Company adopted SFAS No. 130 REPORTING
COMPREHENSIVE INCOME (SFAS 130). SFAS 130 establishes standards for reporting
and displaying comprehensive income and its components in a financial
statement that is displayed with the same prominence as other financial
statements. Adoption of SFAS 130 had no effect on the Company's consolidated
financial condition or results of operations.

Effective January 1, 1998, the Company adopted SFAS No. 131 DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION (SFAS 131). SFAS 131
establishes standards for reporting financial information and related
disclosures about products and services, geographic areas and major customers
relating to operating segments in annual financial statements. Adoption of
SFAS 131 had no effect on the Company's consolidated financial condition or
results of operations.

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES (SFAS 133). SFAS 133 requires, among other
things, that all derivatives be recognized in the consolidated balance sheets
as either assets or liabilities and measured at fair value. The corresponding
derivative gains and losses should be reported based upon the hedge
relationship, if such a relationship exists. Changes in the fair value of
derivatives designated as fair value hedges are required to be reported in
income. Changes in the fair value of derivatives designated as cash flow
hedges are required to be reported in other comprehensive income to the extent
the hedge is effective, and until such time as the hedged cash flow is
reported in income, whereupon any associated change in fair value of the
derivative is also reported in income. Changes in the fair value of
derivatives designated as cash flow hedges, to the extent it is ineffective,
are reported in income. Changes in the fair value of derivatives that are not
designated as hedges or that do not meet the hedge accounting criteria in SFAS
133 are required to be reported in income. The Company is required to adopt
SFAS 133 as of January 1, 2000. The Company is currently in the process of
quantifying the impact of SFAS 133.

2. INVESTMENTS

FIXED MATURITY AND EQUITY SECURITIES

The amortized cost, gross unrealized gain (loss) and estimated fair value of
fixed securities and equity securities, by category, are shown below.

AVAILABLE FOR SALE SECURITIES

<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED -----------------ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- -------- ------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1998
Fixed Maturities:
U. S. Treasury Securities and
obligations of U. S. government
corporations and agencies............. $ 27,260 $ 91 $ 47 $ 27,304
Foreign governments.................... 1,679 0 0 1,679
Corporate.............................. 644,636 43,036 5,139 682,533
Mortgage-backed securities............. 55,027 2,821 0 57,848
-------- -------- ------- --------
Total Fixed Maturities............... $728,602 $ 45,948 $ 5,186 $769,364
======== ======== ======= ========
Equity Securities:
Common stocks.......................... 12,075 1,645 480 13,240
-------- -------- ------- --------
Total Equity Securities.............. $ 12,075 $ 1,645 $ 480 $ 13,240
======== ======== ======= ========
</TABLE>

F-25
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

AVAILABLE FOR SALE SECURITIES

<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED -----------------ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- -------- ------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
Fixed Maturities:
U.S. Treasury Securities and
obligations of U.S. government
corporations and agencies............. $ 12,105 $ 101 $ 0 $ 12,206
Foreign governments.................... 2,316 67 0 2,383
Corporate.............................. 620,916 41,564 3,308 659,172
Mortgage-backed securities............. 57,348 3,282 0 60,630
-------- -------- ------- --------
Total Fixed Maturities............... $692,685 $ 45,014 $ 3,308 $734,391
======== ======== ======= ========
Equity Securities:
Common stocks.......................... 9,424 216 241 9,399
-------- -------- ------- --------
Total Equity Securities.............. $ 9,424 $ 216 $ 241 $ 9,399
======== ======== ======= ========
</TABLE>

Included in net unrealized investment gains (losses) are unrealized gains on
foreign currency investments as well as unrealized gains on the associated
forward foreign exchange contracts. Unrealized investment gains (losses)
consists of the following:

<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Net unrealized gains on investments................................ $ 0 $281
Unrealized gains (losses) on the maturity of forward contracts..... 0 14
---- ----
$ 0 $295
==== ====
</TABLE>

The amortized cost and estimated fair value of bonds classified as available
for sale, by contractual maturity, at December 31, 1998 are shown below.

<TABLE>
<CAPTION>
AMORTIZED ESTIMATED
COST FAIR VALUE
--------- ----------
<S> <C> <C>
Due in one year or less................................. $ 24,215 $ 24,469
Due after one year through five years................... 92,090 93,343
Due after five years through ten years.................. 179,470 191,671
Due after ten years..................................... 377,800 402,033
-------- --------
Subtotal.............................................. 673,575 711,516
Mortgage-backed securities.............................. 55,027 57,848
-------- --------
Total................................................. $728,602 $769,364
======== ========
</TABLE>

Fixed maturities not due at a single maturity date have been included in the
above tables in the year of final maturity. Actual maturities may differ from
contractual maturities due to the exercise of prepayment options.

F-26
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Sales of fixed maturities and equity securities are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Fixed maturities classified as available-for-
sale
Proceeds..................................... $159,749 $143,107 $275,008
Gross realized gains......................... $ 10,901 $ 680 $ 19,109
Gross realized losses........................ $ 2 $ 1,454 $ 3,878
Fixed maturities classified as held-to-maturity
Proceeds..................................... $ 0 $ 0 $ 5,291
Gross realized gains......................... $ 0 $ 0 $ 236
Gross realized losses........................ $ 0 $ 0 $ 0
Equity Securities
Proceeds..................................... $ 0 $ 0 $ 0
Gross realized gains......................... $ 0 $ 0 $ 0
Gross realized losses........................ $ 0 $ 0 $ 0
</TABLE>

Excluding investments in U.S. governments and agencies, the Company is not
exposed to any significant concentration of credit risk in its fixed
maturities portfolio.

ASSETS HELD IN TRUST FOR THE BENEFIT OF OTHER PARTIES

Exeter has deposited in a trust for the benefit of MetLife certain assets for
the purpose of allowing MetLife to record a reserve credit as permitted by
regulations of the State of New York. Under the terms of the Trust Agreement
MetLife enjoys broad powers to withdraw funds from the trust for the payment
of policyholder claims incurred by Exeter under its reinsurance treaty and to
direct the investment of funds held in the trust. The Trust Agreement limits
the types of investments that may be held in trust to cash and certificates of
deposit, U.S. Government bonds and notes and publicly traded securities of
U.S. companies having a National Association of Insurance Commissioners (NAIC)
rating of 1. At December 31, 1998 the trust held $530,563 of bonds and short-
term investments, and at December 31, 1997, the trust held $516,491 of bonds
and short-term investments.

STATUTORY DEPOSITS

The Company had assets on deposit with regulatory agencies of $6,245 and
$7,020, at December 31, 1998 and 1997 respectively.

3. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)

The components of net investment income are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Fixed maturities................................. $53,467 $50,348 $44,630
Equity securities................................ (9,118) 4,915 0
Mortgage loans on real estate.................... 0 0 110
Real estate...................................... 4,149 815 55
Policy loans..................................... 6,855 5,081 3,734
Cash, cash equivalents and short-term
Investments..................................... 861 4,160 3,656
Other investment income.......................... 76 591 38
------- ------- -------
Gross investment income.......................... 56,290 65,910 52,223
Investment expenses.............................. (7,213) (4,851) (2,595)
------- ------- -------
Net Investment income............................ $49,077 $61,059 $49,628
======= ======= =======
</TABLE>

F-27
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Realized investment gains (losses), including changes in valuation allowances,
are summarized as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Fixed maturities................................ $10,899 $ (774) $15,467
Equity securities............................... 0 0 0
Other invested assets........................... (7) 1,032 512
------- ------- -------
Subtotal.................................... 10,892 258 15,979
Amounts allocable to:
Amortization of deferred policy acquisition
costs........................................ 5,282 (632) 7,157
------- ------- -------
Investment gains (losses), net................ $ 5,610 $ 890 $ 8,822
======= ======= =======

The changes in unrealized investment gains (losses), net, included in other
comprehensive income, are as follows:

<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Year ended December 31
Balance, beginning of year...................... $17,347 $ 3,727 $26,356
Change in unrealized investment gains
(losses)..................................... 391 30,207 (46,850)
Change in unrealized investment gains (losses)
attributable to:
Deferred policy acquisition cost allowances. (595) (9,446) 12,211
Deferred income tax (expense) benefit....... 296 (7,141) 12,010
------- ------- -------
Balance, end of year............................ $17,439 $17,347 $ 3,727
======= ======= =======

The components of unrealized investment gains (losses), net, included in other
comprehensive income, are as follows:

<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
December 31
Balance, end of year, comprised of:
Unrealized investment gains (losses) on:
Fixed Maturities............................ $40,928 $41,706 $11,525
Equity Securities........................... 1,191 0 0
Other....................................... 0 22 (4)
------- ------- -------
42,119 41,728 11,521
Amounts of unrealized investment gains (losses)
attributable to:
Deferred policy acquisition cost allowances... (15,798) (15,202) (5,756)
Deferred income tax (expense) benefit......... (8,882) (9,179) (2,038)
------- ------- -------
Balance, end of year............................ $17,439 $17,347 $ 3,727
======= ======= =======
</TABLE>

4. REINSURANCE AND OTHER INSURANCE TRANSACTIONS

The Company assumes and cedes reinsurance with other insurance companies. The
company continually evaluates the financial condition of its reinsurers and
monitors concentration of credit risk in an effort to minimize its exposure to
significant losses from reinsurer insolvencies. The Company is contingently
liable with respect to ceded reinsurance should any reinsurer be unable to
meet its obligations under these agreements. The consolidated statements of
income are presented net of reinsurance ceded.

F-28
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Reinsurance recoverables, included in other assets, were outstanding with the
following reinsurers:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------
1998 1997
------- -------
<S> <C> <C>
Paul Revere Life Insurance Company.......................... $10,795 $ 4,548
Cologne Life Reinsurance Company............................ 6,519 3,724
Security Life of Denver Insurance Company................... 4,395 1,804
American United Life Insurance Company...................... 3,852 1,332
Great West Life & Annuity Insurance Company................. 6,394 2,505
Swiss Re Life & Health Limited.............................. 2,422 908
Other....................................................... 17,828 3,164
------- -------
$52,205 $17,985
======= =======
</TABLE>

The effect of reinsurance on premiums earned is as follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Direct premiums................................ $110,768 $ 30,975 $ 2,682
Reinsurance assumed............................ 58,329 62,315 67,483
Reinsurance ceded.............................. (68,408) (29,674) (32,755)
-------- -------- --------
Net premiums earned............................ $100,689 $ 63,616 $ 37,410
======== ======== ========
</TABLE>

Reinsurance and ceded commissions payables, included in other liabilities,
were $10,162 and $5,852, at December 31, 1998 and 1997, respectively.

The following provides an analysis of the activity in the liability for
benefits relating to group accident and nonmedical health policies and
contracts:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
----------------------------
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Balance at January 1.......................... $ 809 $ 0 $ 0
Reinsurance recoverables.................... (647) 0 0
--------- ------- ------
Net balance at January 1...................... 162 0 0
--------- ------- ------
Incurred related to:
Current year................................ 303 173 0
Prior years................................. (57) (11) 0
--------- ------- ------
246 162 0
--------- ------- ------
Paid related to:
Current year................................ 2 0 0
Prior years................................. 18 0 0
--------- ------- ------
20 0 0
--------- ------- ------
Balance at December 31........................ 388 162 0
Add: Reinsurance recoverables............... 1,565 647 0
--------- ------- ------
Balance at December 31........................ $ 1,953 $ 809 $ 0
========= ======= ======
</TABLE>

F-29
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

5. INCOME TAXES

The provision for income tax expense (benefit) in the consolidated statements
of income is shown below:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
------- -------- -------
<S> <C> <C> <C>
1998
Federal............................................ $13,734 $ (788) $12,946
State and Local.................................... 0 100 100
------- ------- -------
Total............................................ $13,734 $ (688) $13,046
======= ======= =======
1997...............................................
Federal............................................ $ 8,473 $(3,772) $ 4,701
State and Local.................................... 316 (29) 287
------- ------- -------
Total............................................ $ 8,789 $(3,801) $ 4,988
======= ======= =======
1996
Federal............................................ $ 5,333 $(1,531) $ 3,802
State and Local.................................... 0 (751) (751)
------- ------- -------
Total............................................ $ 5,333 $(2,282) $ 3,051
======= ======= =======
</TABLE>

Reconciliations of the income tax provision at the U.S. statutory rate to the
provision for income taxes are as follows:

<TABLE>
<CAPTION>
1998 1997 1996
------- ------- -------
<S> <C> <C> <C>
Income before taxes.............................. $24,483 $26,957 $12,752
Income tax rate.................................. 35% 35% 35%
------- ------- -------
Expected income tax expense at federal statutory
income tax rate................................. 8,569 9,435 4,463
Tax effect of:
Change in valuation allowance.................. 0 0 (13,948)
NOL benefit write-off.......................... 0 0 13,012
Tax exempt investment income................... (100) 0 0
Tax Credits.................................... (100) 0 0
State and local income taxes................... 100 (1,013) (488)
Other, net..................................... 4,577 (3,434) 12
------- ------- -------
Income Tax Expense............................... $13,046 $ 4,988 $ 3,051
======= ======= =======
</TABLE>

Deferred income taxes represent the tax effect of the differences between the
book and tax basis of assets and liabilities. Net deferred income tax
liabilities consisted of the following:

<TABLE>
<CAPTION>
1998 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:
Policyholder liabilities............................ $ 177,017 $ 63,723
Other, net.......................................... 15,453 81,988
--------- ---------
Total gross assets................................ 192,470 145,711
--------- ---------
Deferred tax liabilities:
Investments......................................... (1,068) (2,456)
Deferred policy acquisition costs................... (208,881) (168,270)
Unrealized investment gains, net.................... (8,882) (9,179)
Other, net.......................................... (15,973) (7,872)
--------- ---------
Total gross liabilities........................... (234,804) (187,777)
--------- ---------
Net deferred tax liability............................ $ (42,334) $ (42,066)
========= =========
</TABLE>

F-30
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

The sources of the deferred tax expense (benefit) and their tax effects are as
follows:

<TABLE>
<CAPTION>
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Policyholder liabilities...................... $(49,251) $(23,759) $(17,818)
Net operating loss carryforward............... 0 12,548 464
Investments................................... (1,388) 1,319 0
Deferred policy acquisition costs............. 40,611 33,621 21,828
Other, net.................................... 9,340 (27,530) (6,756)
-------- -------- --------
Total....................................... $ (688) $ (3,801) $ (2,282)
======== ======== ========
</TABLE>

6. EMPLOYEE BENEFIT PLANS

Prior to the merger, substantially all employees were employed by NEMLICO and
were covered under the Home Office Retirement Plan and related Select
Employees' Supplemental Retirement Plan (collectively referred to as the
Plans). Subsequent to the merger substantially all of the employees became
employees of the Company and continued to be covered by the Plans, which
became the Plans of the Company. Under the Plans retirement benefits are based
primarily on years of service and the employee's average salary. The Company's
funding policy is to contribute annually an amount that can be deducted for
federal income tax purposes using a different actuarial cost method and
different assumptions from those used for financial reporting purposes.

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
------------------ ------------------
DECEMBER 31,
--------------------------------------
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
CHANGE IN PROJECTED BENEFIT
OBLIGATION
Projected benefit obligation at
beginning of year.................. $210,590 $177,125 $ 46,591 $ 49,654
Service cost........................ 6,927 5,310 942 885
Interest cost....................... 15,878 13,958 3,267 3,707
Actuarial gain...................... 14,831 15,926 1,256 (3,972)
Divestitures........................ 0 0 0 0
Curtailments........................ 0 0 0 0
Terminations........................ 0 0 0 0
Change in benefits.................. 11,935 5,755 (10) 0
Benefits paid....................... (7,674) (7,484) (3,059) (3,683)
-------- -------- -------- --------
Projected benefit obligation at end
of year............................ $252,487 $210,590 $ 48,987 $ 46,591
-------- -------- -------- --------
CHANGE IN PLAN ASSETS
Contract value of plan assets at
beginning of year.................. $150,820 $130,995 $ 0 $ 0
Actual return on plan assets........ 28,309 22,250 0 0
Employer contribution............... 12,997 5,059 0 0
Benefits paid....................... (7,323) (7,484) 0 0
-------- -------- -------- --------
Contract value of plan assets at end
of year............................ $184,803 $150,820 $ 0 $ 0
-------- -------- -------- --------
Over/(Under) funded................. $(67,684) $(59,770) $(48,987) $(46,591)
Unrecognized net asset at
transition......................... (1,674) (2,844) 0 0
Unrecognized net actuarial gains.... 34,350 35,889 (17,787) (18,872)
Unrecognized prior service cost..... 16,854 5,832 (9) 0
-------- -------- -------- --------
Prepaid (accrued) benefit cost...... $(18,154) $(20,893) $(66,783) $(65,463)
======== ======== ======== ========
Qualified plan prepaid pension cost. $ (2,164) $ (7,205) $ 0 $ 0
Non-qualified plan accrued pension
cost............................... (15,990) (13,688) 0 0
-------- -------- -------- --------
Prepaid (accrued) benefit cost...... $(18,154) $(20,893) $ 0 $ 0
======== ======== ======== ========
</TABLE>

F-31
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

The aggregate projected benefit obligation and aggregate contract value of
plan assets for the pension plans were as follows:

<TABLE>
<CAPTION>
NON-QUALIFIED
QUALIFIED PLAN PLAN TOTAL
------------------ ------------------ ------------------
1998 1997 1998 1997 1998 1997
-------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Aggregate projected
benefit obligation..... $226,717 $193,652 $ 25,770 $ 16,938 $252,487 $210,590
Aggregate contract value
of plan assets
(principally Company
contracts)............. 184,803 150,820 0 0 184,803 150,820
-------- -------- -------- -------- -------- --------
Over/(Under) funded..... $(41,914) $(42,832) $(25,770) $(16,938) $(67,684) $(59,770)
======== ======== ======== ======== ======== ========
</TABLE>

The assumptions used in determining the aggregate projected benefit obligation
and aggregate contract value for the pension and other benefits were as
follows:

<TABLE>
<CAPTION>
OTHER
PENSION BENEFITS BENEFITS
------------------ ----------
1998 1997 1998 1997
-------- -------- ---- ----
<S> <C> <C> <C> <C>
Weighted average assumptions as of
December 31,
Discount rate............................. 7.25% 7.75% 7.00% 7.75%
Expected return on plan assets............ 8.50% 8.75% -- --
Rate of compensation increase............. 4.50% 5.00% -- --
</TABLE>

The assumed health care cost trend rate used in measuring the accumulated
nonpension postretirement benefit obligation was generally 7.40% in 1998,
gradually decreasing to 5.00% over five years and generally 7.80% in 1997,
gradually decreasing to 5.00% over eight years.

Assumed health care cost trend rates have a significant effect on the amounts
reported for health care plans. A one-percentage point change in assumed
health care cost trend rates would have the following effects:

<TABLE>
<CAPTION>
ONE % ONE %
INCREASE DECREASE
-------- --------
<S> <C> <C>
Effect on total of service and interest cost components... 14.50% 12.70%
Effect on accumulated postretirement benefit obligation... 12.80% 11.30%
</TABLE>

The components of periodic benefit costs were as follows:

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
---------------------------- ---------------------
1998 1997 1996 1998 1997 1996
-------- -------- -------- ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Components of periodic
benefit cost
Service cost............ $ 6,927 $ 5,310 $ 5,761 $ 942 $ 885 $ 876
Interest cost........... 15,878 13,958 12,489 3,267 3,707 3,183
Expected return on plan
assets................. (12,866) (22,250) (15,468) 0 0 0
Net amortization and
deferrals.............. 669 11,092 6,009 167 (871) (1,155)
-------- -------- -------- ------ ------ ------
Net periodic benefit
cost................... $ 10,608 $ 8,110 $ 8,791 $4,376 $3,721 $2,904
======== ======== ======== ====== ====== ======
</TABLE>

SAVINGS AND INVESTMENT PLANS

The Company sponsors savings and investment plans for substantially all
employees under which the Company matches a portion of employee contributions.
The Company contributed $2,252, $1,588 and $3,386 for the years ended December
31, 1998, 1997 and 1996, respectively.

F-32
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

7. LEASES

In accordance with industry practice, certain of the Company's income from
lease agreements with retail tenants is contingent upon the level of the
tenants' sales revenue. Additionally, the Company, as lessee, has entered into
various lease and sublease agreements for office space, data processing and
other equipment. Future minimum rental and sub-rental income, and minimum
gross rental payments relating to these lease agreements were as follows:

<TABLE>
<CAPTION>
RENTAL SUB-RENTAL GROSS RENTAL
INCOME INCOME EXPENSE
------ ---------- ------------
<S> <C> <C> <C>
1999.......................................... $52 $ 4,066 $ 14,851
2000.......................................... 31 7,845 14,805
2001.......................................... 0 7,854 13,221
2002.......................................... 0 7,864 12,336
2003.......................................... 0 8,026 12,023
Thereafter.................................... 0 34,525 114,855
--- ------- --------
Total....................................... $83 $70,180 $182,091
=== ======= ========
</TABLE>

8. DEBT

In 1995, the Company borrowed $25,000 from a bank, bearing interest, payable
monthly, at a variable rate equal to the greater of the bank's base rate or
money market rates plus 0.6% per annum. The interest rate applied was 6.4%,
5.8% and 5.7% at December 31, 1998, 1997 and 1996, respectively. The loan is
collateralized by sales loads and surrender charges collected on a defined
block of variable life insurance policies issued by the Company. Repayment is
structured in a manner to result in repayment over a term of five years or
less. The carrying value of the loan approximates its fair value of $13,295.
Repayments of principal and interest of $8,612, $3,155 and $0 were made during
1998, 1997 and 1996, respectively. The Company repaid the entire outstanding
balance of the loan in January 1999.

Exeter privately placed $75,118 aggregate principal amount, subordinated notes
payable (the Notes), on December 30, 1994 which are due December 30, 2004,
with no interest payments for the first five years and semiannual interest
payments thereafter. The Notes have been discounted to yield 8.45% for the
first five years and pay interest at 8.845% thereafter. The Notes are
expressly subordinated in right of payment to the insurance liabilities of
Exeter. The Notes are not subject to redemption by Exeter or through the
operation of a sinking fund prior to maturity. Proceeds of the issuance of the
Notes, net of discount, amounted to $50,000. The issue costs of the Notes of
$130 were deducted from Notes, net of discount, to arrive at net subordinated
notes payable of $49,870. The issue cost will be amortized over the life of
the Notes. The Notes are held by MetLife, and the carrying value of the loan
approximates its fair value of $69,560, repayments of $0, $0 and $0 were made
during 1998, 1997 and 1996, respectively.

9. CONTINGENCIES

Under insurance guaranty fund laws in each state, the District of Columbia and
Puerto Rico, insurers licensed to do business can be assessed by state
insurance guaranty associations for certain obligations of insolvent insurance
companies to policyholders and claimants. Recent regulatory actions against
certain large life insurers encountering financial difficulty have prompted
various state insurance guaranty associations to begin assessing life
insurance companies for the deemed losses. Most of these laws do provide,
however, that an assessment may be excused or deferred if it would threaten an
insurer's solvency and further provide annual limits on such assessments. A
large part of the assessments paid by the Company's insurance subsidiaries
pursuant to these laws may be used as credits

F-33
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

for a portion of the Company's premium taxes. The Company paid guaranty fund
assessments of approximately, $202, $42, and $42 in 1998, 1997, and 1996,
respectively, of which $202, $33, and $27 were to be credited against premium
taxes.

The Company has no contingent liabilities that would materially affect the
financial position of the Company or the results of its operations. There are
no pending legal proceedings that are beyond the ordinary course of business
that could have a material financial effect.

10. OTHER OPERATING COSTS AND EXPENSES

Other operating costs and expenses consisted of the following:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
------------------------------
1998 1997 1996
--------- --------- --------
<S> <C> <C> <C>
Compensation................................. $ 86,822 $ 58,754 $ 36,172
Commissions.................................. 166,218 77,351 51,617
Interest and debt expense.................... 9,374 6,750 6,261
Amortization of policy acquisition costs..... 31,994 17,723 22,233
Capitalization of policy acquisition costs... (183,064) (157,670) (98,016)
Rent expense, net of sub-lease income........ 4,252 4,473 3,060
Other........................................ 201,063 136,961 122,559
--------- --------- --------
Total...................................... $ 316,659 $ 144,342 $143,886
========= ========= ========
</TABLE>

11. FAIR VALUE INFORMATION

The estimated fair value amounts of financial instruments have been determined
by using available market information and the valuation methodologies
described below. Considerable judgment is often required in interpreting
market data to develop estimates of fair value. Accordingly, the estimates
presented herein may not necessarily be indicative of amounts that could be
realized in a current market exchange. The use of different assumptions or
valuation methodologies may have a material effect on the estimated fair value
amounts.

Amounts related to the Company's financial instruments are as follows:

<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
-------- ----------
<S> <C> <C>
DECEMBER 31, 1998:
ASSETS
Fixed Maturities......................................... $769,364 $769,364
Equity Securities........................................ 13,240 13,240
Policy loans............................................. 135,800 135,800
Short-term investments................................... 52,285 52,285
Cash and cash equivalents................................ 43,598 43,598
LIABILITIES
Policyholder account balances............................ 23,365 22,524
Other policyholder funds................................. 7,832 7,832
Short and long-term debt................................. 82,855 82,855
</TABLE>

F-34
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

<TABLE>
<CAPTION>
CARRYING ESTIMATED
VALUE FAIR VALUE
-------- ----------
<S> <C> <C>
DECEMBER 31, 1997:
ASSETS
Fixed Maturities......................................... $734,391 $734,391
Equity Securities........................................ 9,399 9,399
Policy loans............................................. 104,783 104,783
Short-term investments................................... 27,944 27,944
Cash and cash equivalents................................ 74,148 74,148
LIABILITIES
Policyholder account balances............................ 13,356 12,593
Other policyholder funds................................. 4,324 4,324
Short and long-term debt................................. 85,981 85,981
</TABLE>

The methods and assumptions used to estimate the fair values of financial
instruments are summarized as follows:

FIXED MATURITIES AND EQUITY SECURITIES

The fair value of fixed maturities and equity securities that are publicly
traded are based upon quotations obtained from an independent market pricing
service or published by applicable stock exchanges. For securities for which
the market values were not readily available, fair values were estimated by
management, based primarily on interest rates, maturity, credit quality and
average life.

POLICY LOANS

Policy loans are stated at unpaid principal balances, which approximates fair
value.

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The carrying values for cash and cash equivalents and short-term investments
approximated fair market values due to the short-term maturities of these
instruments.

POLICYHOLDER ACCOUNT BALANCES

The fair value of policyholder account balances are estimated by discounting
expected future cash flows, based on interest rates currently being offered
for similar contracts with maturities consistent with those remaining for the
contracts being valued. Other policyholder funds include liabilities without
defined durations such as policy proceeds and dividends left with the Company.
The estimated fair value of such liabilities, which generally are of short
duration or have periodic adjustments of interest rates, approximates their
carrying value.

SHORT-TERM AND LONG-TERM DEBT

Short-term and long-term debt are stated at unpaid principal balances, which
approximates fair value.

F-35
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

12. STATUTORY FINANCIAL INFORMATION

The reconciliation of statutory surplus and statutory net income, determined
in accordance with accounting practices prescribed or permitted by insurance
regulatory authorities with such amounts determined in conformity with
generally accepted accounting principles were as follows:

<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory surplus............................. $ 456,525 $ 307,290 $ 355,853
Adjustments to GAAP for:
Future policy benefits and policyholders
account balances........................... (336,821) (279,510) (195,273)
Deferred policy acquisition costs........... 710,961 565,769 434,637
Deferred Federal Income taxes............... (42,334) (42,066) (40,185)
Valuation of investments.................... 53,514 56,873 11,503
Statutory asset valuation reserves.......... 10,636 8,388 3,335
Statutory interest maintenance reserve...... 816 571 306
Surplus notes............................... (69,560) (64,016) (58,911)
Receivables from reinsurance transactions... 26,004 27,519 26,030
Other, net.................................. 35,330 52,724 13,127
--------- --------- ---------
GAAP Equity................................... $ 845,071 $ 633,542 $ 550,422
========= ========= =========
<CAPTION>
YEARS ENDED DECEMBER 31,
-------------------------------
1998 1997 1996
--------- --------- ---------
<S> <C> <C> <C>
Statutory net income (loss)................... $ (28,043) $ (37,358) $ (46,021)
Adjustments to GAAP for:
Future policy benefits and policyholders
account balances........................... (196,754) (311,588) (41,174)
Deferred policy acquisition costs........... 135,788 139,947 68,626
Deferred Federal Income taxes............... 688 3,801 2,282
Valuation of investments.................... (13,490) 0 0
Statutory interest maintenance reserve...... 245 342 231
Other, net.................................. 113,003 226,825 25,757
--------- --------- ---------
Net GAAP Income............................... $ 11,437 $ 21,969 $ 9,701
========= ========= =========
</TABLE>

The Company is currently undergoing an examination by the Massachusetts
Department of Insurance. The Company believes that there will be no material
audit adjustments for the periods under examination.

13. RELATED PARTY TRANSACTIONS

Prior to the merger NELICO operated under an Administrative Services Agreement
with its parent NEMLICO to receive all executive, legal, clerical and other
personnel services. Subsequent to the merger of NEMLICO and MetLife, the
Company entered into an Administrative Services Agreement to provide all
administrative, accounting, legal and similar services to MetLife for certain
administered contracts, which are life insurance and annuity contracts issued
by NEMLICO prior to the merger, and those policies and contracts defined in
the Administrative Services Agreement as Transition Policies which were sold
by the Company's field force post-merger.

The Company charged MetLife $193,641, $186,757 and $88,043 including accruals
for administrative services on NEMLICO administered contracts for 1998, 1997,
and for the period of September 1, 1996 through December 31, 1996,
respectively. Prior to the merger, the Company paid $62,643 to NEMLICO for
administrative services on

F-36
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

variable-life and variable-annuity contracts for the period of January 1, 1996
through August 31, 1996. In addition, $14,123 and $600 for 1998 and 1997,
respectively, was paid or payable by MetLife to the Company for varied and
miscellaneous other services. These services were charged based upon direct
costs incurred. Service fees are recorded by NELICO as a reduction in
operating expenses.

On December 30, 1998 the Company sold to MetLife Credit Corporation shares of
preferred stock for $200,000. In 1997, MetLife made a capital contribution to
the Company of $50,000 in cash. In 1996, MetLife made a non-cash capital
contribution to the Company of common stock of affiliated companies consisting
of Exeter, NEPA, NES, Newbury, Omega Reinsurance Corp., TNE Advisers Inc., and
TNE Information Services Inc. with a total estimated statutory fair value of
$29,558. MetLife also made non-cash capital contributions of home-office
properties of $10,301, socially-responsible investments with a book value of
$11,916, furniture, equipment and leasehold improvements of $27,816, and a
cash contribution of $128,412. Prior to the merger, NEMLICO made a cash
contribution to NELICO of $20,000.

On April 30, 1998 the Company acquired all the outstanding stock of N.L.
Holding Corporation and its subsidiaries, and concurrently contributed such
stock to the Company's downstream holding company, New England Life Holding
Inc. In conjunction with the acquisition, the Company entered into employment
agreements with key individuals of N.L. Holding Corporation. Under these
agreements the Company paid $6,166 in 1998.

The Company entered into a lease agreement with MetLife on August 30, 1996 for
the home-office building that it occupies on 501 Boylston Street in Boston,
Massachusetts. The Company paid lease payments to MetLife of $2,340, $2,340
and $780 in 1998, 1997 and 1996, respectively.

On June 21, 1996, NEMLICO purchased a mortgage from NELICO for $2,217 that
included principal of $2,204, and interest of $13.

Commissions earned by NES from sales of New England Funds (NEF) and State
Street Research (SSR) shares, subsidiaries of MetLife, for 1998 were $15,204
and $1,159, respectively. Included in accrued income at December 31, 1998,
were amounts receivable for sales-based commissions from NEF and SSR totaling
$385 and $14, respectively. In 1998, NES earned asset-based income of $9,193
and $139 on average assets of approximately $4,300,000 and $77,000 under
management with NEF and SSR, respectively. Included in accrued income at
December 31, 1998 were amounts receivable for asset-based commissions from NEF
and SSR totaling $593 and $13, respectively.

Commissions earned by NES from sales of New England Funds (NEF) and State
Street Research (SSR) shares, subsidiaries of MetLife, for 1997 were $16,799
and $1,127, respectively. Included in accrued income at December 31, 1997,
were amounts receivable for sales-based commissions from NEF and SSR totaling
$233 and $13, respectively. In 1997, NES earned asset-based income of $8,777
and $61 on average assets of approximately $3,900,000 and $33,000 under
management with NEF and SSR, respectively.

Exeter has a privately-placed subordinated notes payable to MetLife for
$69,560 and $64,016 at December 31, 1998 and 1997, respectively.

Pursuant to certain Reinsurance Agreements, the Company cedes a portion of
premiums on certain variable life, traditional life and universal life
policies to Omega Reinsurance Corporation. Reinsurance premiums paid by the
Company to Omega were $11,539, $10,372 and $5,009 for 1998, 1997 and 1996,
respectively.

Stockholder dividends or other distributions proposed to be paid by NELICO
must be approved by the Massachusetts Commissioner of Insurance if such
dividends or distributions, together with other dividends or distributions
made within the preceding 12 months, exceeds the greater of (1) 10% of
NELICO's statutory surplus as regards policyholders as of the previous
December 31, or (2) NELICO's statutory net gain from operations for the 12
month period ending the previous December 31.

F-37
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Of the statutory profits earned by NELICO on participating policies and
contracts, the portion which shall inure to the benefit of NELICO's
stockholder shall not exceed the larger of (1) 10% of such statutory profits,
or (2) fifty cents per year per thousand dollars of participating life
insurance other than group term insurance in force at the end of the year.

14. SEPARATE ACCOUNTS

Separate accounts reflect non-guaranteed separate accounts totaling $3,258,383
and $1,988,225 at December 31, 1998 and 1997, respectively, wherein the
policyholder assumes the investment risk.

Fees charged to the separate accounts by the Company (including mortality
charges, policy administration fees and surrender charges) are reflected in
the Company's revenues as universal life and investment-type product policy
fees totaling $30,714, $12,642 and $6,464 in 1998, 1997 and 1996,
respectively.

15. YEAR 2000

The Year 2000 issue is the result of the widespread use of computer programs
written using two digits (rather than four) to define the applicable year.
Such programming was a common industry practice designed to avoid the
significant cost associated with additional mainframe capacity necessary to
accommodate a four digit year field. As a result, any of the Company's
computer systems that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a major
systems failure or miscalculations. The Company has conducted a comprehensive
review of its computer systems to identify the systems that could be affected
by the Year 2000 issue and has developed and implemented a plan to resolve the
issue. The Company currently believes that, with modifications to existing
software and converting to new software, the Year 2000 issue will not pose
significant operational problems for the Company's computer systems. However,
if such modifications and conversions are not completed on a timely basis, the
Year 2000 issue may have a material impact on the operations of the Company.
Furthermore, even if the Company completes such modifications and conversions
on a timely basis, there can be no assurance that the failure by vendors or
other third parties to solve the Year 2000 issue will not have a material
impact on the operations of the Company. The Company estimates the total cost
to resolve its Year 2000 problem to be approximately $51,000, (unaudited) of
which approximately $41,300 has been incurred through December 31, 1998.

16. BUSINESS SEGMENT INFORMATION

The Company provides insurance and financial services to customers primarily
in the United States. The Company's core businesses are divided into five
segments: Individual Life, Individual Annuity, Group Pension, Group Accident
and Health, and Corporate. These segments are managed separately because they
either provide different products and services, require different strategies,
or have different technology requirements.

Individual Life sells primarily variable life as well as traditional life
policies. Individual Annuity sells a variety of fixed annuity and variable
annuity contracts. Group Pension sells a variety of group annuity and pension
contracts to corporations and other institutions. Group Accident and Health
provides group life, group medical, and group disability contracts to
corporations and small businesses. Through its Corporate segment, the Company
reports the operating results of subsidiaries as well as items that are not
allocated to any of the business segments.

Set forth in the following tables is certain financial information with
respect to the Company's operating segments for the years ended December 31,
1998, 1997 and 1996. The accounting policies of the segments are the same as
those described in the summary of significant accounting policies. The Company
evaluates the performance of each operating segment based on profit or loss
from operations after income taxes. The Company does not allocate non-
recurring items to the segments.

F-38
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Allocation of net investment income and investment gains (losses), net were
based on the amount of assets allocated to each segment. Other costs and
operating costs were allocated to each of the segments based on: (i) a review
of the nature of such costs, (ii) time studies analyzing the amount of
employee compensation costs incurred by each segment, and (iii) cost estimates
included in the Company's product pricing.

<TABLE>
<CAPTION>
DECEMBER 31, 1998
-------------------------------------------------------------------
CORPORATE
INDIVIDUAL INDIVIDUAL GROUP GROUP AND
LIFE ANNUITY PENSION LIFE, A&H SUBSIDIARIES TOTAL
---------- ---------- -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums................ $ 48,733 $ 31 $ 417 $ 21,394 $ 30,114 $ 100,689
Universal Life and
Investment-Type
Product Policy Fees.... 161,936 9,332 2,788 (290) 0 173,766
Net Investment Income... (22,496) (1,752) (405) 651 73,079 49,077
Investment Gains,
(Losses) Net........... (182) (7) (4) 17 5,786 5,610
Commissions, Fees, and
Other Income........... 9,408 6,042 1,118 20,430 155,413 192,411
---------- -------- -------- -------- -------- ----------
Total Revenues........ 197,399 13,646 3,914 42,202 264,392 521,553
BENEFITS AND OTHER
DEDUCTIONS
Policyholder Benefits... 84,709 3,943 874 13,561 46,600 149,687
Interest Credited to
Policyholder
Account Balances....... 6,337 1,264 83 0 51 7,735
Policyholder Dividends.. 1,135 4 0 3 21,847 22,989
Other Operating Costs
and Expenses........... 103,284 14,324 3,617 15,731 179,703 316,659
---------- -------- -------- -------- -------- ----------
Total Benefits and
Other Deductions..... 195,465 19,535 4,574 29,295 248,201 497,070
Income from Operations
Before
Income Taxes........... 1,934 (5,889) (660) 12,907 16,191 24,483
Income Taxes............ 9,968 (402) (423) 3,986 (83) 13,046
---------- -------- -------- -------- -------- ----------
Net Income............ $ (8,034) $ (5,487) $ (237) $ 8,921 $ 16,274 $ 11,437
========== ======== ======== ======== ======== ==========
ASSETS
Deferred Policy
Acquisition Costs...... 616,959 42,524 2,359 2,511 46,608 710,961
Separate Account Assets. 2,073,552 835,648 235,467 113,716 0 3,258,383
Policyholder
Liabilities............ 380,586 38,912 768 19,233 501,579 941,078
Separate Account
Liabilities............ 2,073,552 835,648 235,467 113,716 0 3,258,383
</TABLE>

F-39
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-----------------------------------------------------------------
CORPORATE
INDIVIDUAL INDIVIDUAL GROUP GROUP AND
LIFE ANNUITY PENSION LIFE, A&H SUBSIDIARIES TOTAL
---------- ---------- -------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums................ $ 27,200 $ 31 $ 0 $ 3,743 $ 32,642 $ 63,616
Universal Life and
Investment-Type
Product Policy Fees.... 139,235 4,732 486 704 0 145,157
Net Investment Income... 31,905 (270) (20) (118) 29,562 61,059
Investment Gains,
(Losses) Net........... 523 0 0 0 367 890
Commissions, Fees, and
Other Income........... 9,542 3,253 266 4,383 10,858 28,302
---------- -------- -------- ------- -------- ----------
Total Revenue........... 208,405 7,746 732 8,712 73,429 299,024
BENEFITS AND OTHER
DEDUCTIONS
Policyholder Benefits... 71,010 3,431 0 3,827 21,912 100,180
Interest Credited to
Policyholder
Account Balances....... 5,371 664 149 0 36 6,220
Policyholder Dividends.. 507 1 0 0 20,817 21,325
Other Operating Costs
and Expenses........... 98,664 10,777 2,092 6,745 26,064 144,342
---------- -------- -------- ------- -------- ----------
Total Benefits and
Other Deductions..... 175,552 14,873 2,241 10,572 68,829 272,067
Income from Operations
Before Income Taxes.... 32,853 (7,127) (1,509) (1,860) 4,600 26,957
Income Taxes............ 2,701 (1,203) (504) (447) 4,441 4,988
---------- -------- -------- ------- -------- ----------
Net Income............ $ 30,152 $ (5,924) $ (1,005) $(1,413) $ 159 $ 21,969
========== ======== ======== ======= ======== ==========
ASSETS
Deferred Policy
Acquisition Costs...... 498,208 24,226 1,347 877 41,111 565,769
Separate Account Assets. 1,426,347 450,441 111,437 0 0 1,988,225
Policyholder
Liabilities............ 258,880 20,476 197 6,398 463,269 749,220
Separate Account
Liabilities............ 1,426,347 450,441 111,437 0 0 1,988,225
</TABLE>

F-40
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------
CORPORATE
INDIVIDUAL INDIVIDUAL GROUP GROUP AND
LIFE ANNUITY PENSION LIFE, A&H SUBSIDIARIES TOTAL
---------- ---------- ------- --------- ------------ ----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES
Premiums................ $ 1,729 $ 0 $ 0 $ 56 $ 35,625 $ 37,410
Universal Life and
Investment-Type
Product Policy Fees.... 101,153 603 0 0 0 101,756
Net Investment Income... 23,667 (105) (2) (6) 26,074 49,628
Investment Gains,
(Losses) Net........... 396 0 0 0 8,426 8,822
Commissions, Fees and
Other Income........... 8,340 45 290 363 35,892 44,930
-------- -------- ------ ------- -------- ----------
Total Revenues........ 135,285 543 288 413 106,017 242,546
BENEFITS AND OTHER
DEDUCTIONS
Policyholder Benefits... 25,595 654 0 176 39,095 65,520
Interest Credited to
Policyholder
Account Balances....... 5,345 167 0 0 46 5,558
Policyholder Dividends.. 13 0 0 0 14,817 14,830
Other Operating Costs
and Expenses........... 81,559 13,499 71 1,798 46,959 143,886
-------- -------- ------ ------- -------- ----------
Total Benefits and
Other Deductions..... 112,512 14,320 71 1,974 100,917 229,794
Income from Operations
Before Income Taxes.... 22,773 (13,777) 217 (1,561) 5,100 12,752
Income Taxes............ (2,772) 723 0 0 5,100 3,051
-------- -------- ------ ------- -------- ----------
Net Income............ $ 25,545 $(14,500) $ 217 $(1,561) $ 0 $ 9,701
======== ======== ====== ======= ======== ==========
ASSETS
Deferred Policy
Acquisition Costs...... 378,397 11,883 147 0 44,209 434,636
Separate Account Assets. 999,130 201,180 6,649 0 0 1,206,959
Policyholder
Liabilities............ 181,484 6,657 0 529 459,884 648,554
Separate Account
Liabilities............ 999,130 201,180 6,649 0 0 1,206,959
</TABLE>

Revenues derived from any single customer do not exceed 10% of the total
consolidated revenues for the years presented. Revenues were predominantly
generated from United States activity. Activity from other geographic locations
did not exceed 10% for any geographic location.

F-41
<PAGE>

AMERICAN GROWTH SERIES

Individual Variable Annuity Contracts
Issued By
New England Variable Annuity Separate Account of
New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02116
(617) 578-2000

You may also allocate purchase payments to a Fixed Account. Limits apply to
transfers to and from the Fixed Account.

Please read this prospectus carefully and keep it for reference. This
prospectus contains information that you should know before investing.

The Securities and Exchange Commission has not approved these securities or
determined if this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.

April 30, 1999

THE PROSPECTUS FOR THE ELIGIBLE FUNDS IS ATTACHED. PLEASE READ AND KEEP IT
FOR REFERENCE.

A-1
<PAGE>

TABLE OF CONTENTS
OF
THE PROSPECTUS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS......................... A-4
HIGHLIGHTS................................................................ A-5
EXPENSE TABLE............................................................. A-7
ACCUMULATION UNIT VALUES.................................................. A-10
HOW THE CONTRACT WORKS.................................................... A-12
THE COMPANY............................................................... A-13
THE VARIABLE ACCOUNT...................................................... A-13
INVESTMENTS OF THE VARIABLE ACCOUNT....................................... A-13
Investment Advice........................................................ A-15
Substitution of Investments.............................................. A-16
GUARANTEED OPTION......................................................... A-16
THE CONTRACTS............................................................. A-16
Purchase Payments........................................................ A-16
Ten Day Right to Review.................................................. A-17
Allocation of Purchase Payments.......................................... A-17
Contract Value and Accumulation Unit Value............................... A-17
Payment on Death Prior to Annuitization.................................. A-18
Transfer Privilege....................................................... A-20
Dollar Cost Averaging.................................................... A-21
Surrenders............................................................... A-21
Systematic Withdrawals................................................... A-22
Loan Provision for Certain Tax Benefited Retirement Plans................ A-23
Disability Benefit Rider................................................. A-24
Suspension of Payments................................................... A-24
Ownership Rights......................................................... A-24
Requests and Elections................................................... A-25
ADMINISTRATION CHARGES, CONTINGENT DEFERRED SALES CHARGE AND OTHER DEDUC-
TIONS.................................................................... A-26
Administration Contract Charges.......................................... A-26
Administration Asset Charge.............................................. A-26
Mortality and Expense Risk Charge........................................ A-26
Contingent Deferred Sales Charge......................................... A-27
Premium Tax Charge....................................................... A-29
Other Expenses........................................................... A-30
ANNUITY PAYMENTS.......................................................... A-30
Election of Annuity...................................................... A-30
Annuity Options.......................................................... A-30
Amount of Variable Annuity Payments...................................... A-32
RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS............................ A-32
FEDERAL INCOME TAX STATUS................................................. A-33
Introduction............................................................. A-33
Taxation of the Company.................................................. A-33
Tax Status of the Contract............................................... A-33
Taxation of Annuities.................................................... A-34
Qualified Contracts...................................................... A-37
Withholding.............................................................. A-41
Possible Changes in Taxation............................................. A-41
Other Tax Consequences................................................... A-41
General.................................................................. A-41
</TABLE>

A-2
<PAGE>

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
VOTING RIGHTS.............................................................. A-42
DISTRIBUTION OF CONTRACTS.................................................. A-42
THE FIXED ACCOUNT.......................................................... A-42
Contract Value and Fixed Account Transactions............................. A-43
YEAR 2000 COMPLIANCE ISSUES................................................ A-43
INVESTMENT PERFORMANCE INFORMATION......................................... A-44
FINANCIAL STATEMENTS....................................................... A-45
APPENDIX A: Consumer Tips.................................................. A-46
APPENDIX B: Contingent Deferred Sales Charge............................... A-47
APPENDIX C: Premium Tax.................................................... A-48
APPENDIX D: Exchanged Contracts............................................ A-49
APPENDIX E: Average Annual Total Return.................................... A-51
</TABLE>

A-3
<PAGE>

GLOSSARY OF SPECIAL TERMS USED IN THIS PROSPECTUS

ACCOUNT. A sub-account of the Variable Account or the Fixed Account.

ACCUMULATION UNIT. An accounting device used to calculate the Contract Value
before annuitization.

ANNUITANT. The person on whose life the Contract is issued.

ANNUITIZATION. Application of proceeds under the Contract to an annuity
option on the Maturity Date or upon an earlier surrender of the Contract.

ANNUITY UNIT. An accounting device used to calculate the dollar amount of
annuity payments.

CONTRACT YEAR. A twelve month period beginning with the date shown on your
Contract and with each Contract anniversary thereafter.

FIXED ACCOUNT. A part of the Company's general account to which you can
allocate net purchase payments. The Fixed Account provides guarantees of
principal and interest.

VARIABLE ANNUITY. An annuity providing for income payments varying in amount
to reflect the investment experience of a separate investment account.

A-4
<PAGE>

HIGHLIGHTS

TAX DEFERRED VARIABLE ANNUITIES:

Earnings under variable annuities are usually not taxed until paid out. This
tax treatment is intended to encourage you to save for retirement.

THE CONTRACTS:

PURCHASE PAYMENTS:

OWNERSHIP:

For contract transactions, we rely on instructions from Contract Owners,
whether a trustee or custodian of an eligible retirement plan or an individual
owner.

INVESTMENT OPTIONS:

CHARGES:

We apply the following charges to your Contract:

. premium tax charge, in some states

. mortality and expense risk charge equal to an annual rate of 1.25% of the
Variable Account's daily net assets

. administration asset charge equal to an annual rate of .10% of the
Variable Account's daily net assets

A-5
<PAGE>

. annual contract administration charge equal to the lesser of $30 and 2%
of contract value

. a contingent deferred sales charge equal to a maximum of 7% of each
purchase payment made, on certain full and partial surrenders and certain
annuitization transactions.

Certain waivers or reductions may apply. (See "Administration Charges,
Contingent Deferred Sales Charge and Other Deductions.")

We do not deduct a sales charge from purchase payments.

TEN DAY RIGHT TO REVIEW:

PAYMENT ON DEATH:

If a Contract Owner (or the Annuitant, if the Contract is not owned by an
individual) dies before annuitization, the Beneficiary receives a death
benefit. The Contract has a minimum guaranteed death benefit equal to your
purchase payments, adjusted for any previous surrenders. However, seven years
after the issue date, and at each seven year interval until the Contract
Owner's 76th birthday, the minimum guaranteed death benefit is recalculated to
determine whether a higher (but never a lower) guarantee will apply. (Under a
jointly owned Contract, this recalculation is made until the 71st birthday of
the older Contract Owner.) Purchase payments immediately increase, and partial
surrenders immediately decrease, your minimum guaranteed death benefit.

SURRENDERS:

In any Contract Year, an amount may be surrendered without a Contingent
Deferred Sales Charge (the "free withdrawal amount"). The free withdrawal
amount is the greater of (1) 10% of Contract Value at the beginning of the
Contract Year and (2) the excess of Contract Value over purchase payments
subject to the Contingent Deferred Sales Charge on the date of the surrender.
(See "Surrenders" and "Contingent Deferred Sales Charge.")

A-6
<PAGE>

EXPENSE TABLE

<TABLE>
<S> <C>
CONTRACT OWNER TRANSACTION EXPENSES(1)
Sales Charge Imposed on Purchase Payments (as a percentage of pur-
chase payments)..................................................... 0%
Maximum Contingent Deferred Sales Charge(2) (as a percentage of each
purchase payment)................................................... 7%
Transfer Fee(3)...................................................... $ 0
ANNUAL CONTRACT FEE
Administration Contract Charge (per Contract)(4)..................... $30
SEPARATE ACCOUNT ANNUAL EXPENSES(5)
(as a percentage of average net assets)
Mortality and Expense Risk Charge.................................... 1.25%
Administration Asset Charge.......................................... .10%
-----
Total Separate Account Annual Expenses........................... 1.35%
</TABLE>

NEW ENGLAND ZENITH FUND

OPERATING EXPENSES FOR THE YEAR ENDED 12/31/98
(AS A PERCENTAGE OF AVERAGE NET ASSETS AFTER CURRENT EXPENSE CAP OR EXPENSE
DEFERRAL)(6)

- --------

A-7
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Loomis Sayles Small Cap................... $89.13 $123.58 $158.17 $273.19
Morgan Stanley International Magnum Equi-
ty....................................... 91.92 132.09 173.04 302.47
Alger Equity Growth....................... 87.55 118.73 149.64 256.17
Goldman Sachs Midcap Value................ 88.20 120.74 153.16 263.21
Davis Venture Value....................... 87.55 118.73 149.54 256.17
Westpeak Growth and Income................ 87.09 117.50 147.12 251.10
Loomis Sayles Balanced.................... 87.46 118.45 149.15 255.15
Salomon Brothers Strategic Bond Opportuni-
ties..................................... 87.74 119.30 150.65 258.19
Back Bay Advisors Bond Income............. 84.30 108.66 131.84 200.11
Salomon Brothers U.S. Government.......... 86.35 115.00 143.07 242.93
Back Bay Advisors Money Market............ 84.02 107.78 150.30 216.95
MFS Investors............................. 88.20 120.74 153.13 263.21
MFS Research Managers..................... 88.20 120.74 153.16 263.21
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
Loomis Sayles Small Cap................... $24.38 $74.99 $128.17 273.19
Morgan Stanley International Magnum Equi-
ty....................................... 27.38 83.95 143.04 302.47
Alger Equity Growth....................... 22.68 69.88 119.64 256.17
Goldman Sachs Midcap Value................ 23.38 71.99 123.16 263.21
Davis Venture Value....................... 22.68 69.88 119.64 256.17
Westpeak Growth and Income................ 22.18 68.37 117.12 251.10
Loomis Sayles Balanced.................... 22.58 69.58 119.13 255.15
Salomon Brothers Strategic Bond Opportuni-
ties..................................... 22.88 70.48 120.65 258.19
Back Bay Advisors Bond Income............. 19.17 59.27 101.84 220.11
Salomon Brothers U.S. Government.......... 21.38 65.95 113.07 242.93
Back Bay Advisors Money Market............ 18.87 59.35 100.30 216.95
MFS Investors............................. 23.38 71.99 123.16 263.21
MFS Research Managers..................... 23.38 71.99 123.16 263.21
</TABLE>

A-8
<PAGE>

(5) These charges are not imposed on the Fixed Account.

(6) Total Series Operating Expenses are based on the amount of such expenses
applied against assets at December 31, 1998, after giving effect to the
applicable voluntary expense cap or expense deferral. For the Loomis
Sayles Small Cap Series, Total Series Operating Expenses take into account
a voluntary cap on expenses by New England Investment Management, Inc.
("NEIM", formerly TNE Advisers, Inc.), the Series investment adviser,
which will bear all expenses that exceed 1.00% of average daily net
assets. Absent this cap or any other expense reimbursement arrangement,
Total Series Operating Expenses for the Loomis Sayles Small Cap Series for
the year ended December 31, 1998 would have been 1.10%. Total Series
Operating Expenses for the Goldman Sachs Midcap Value (formerly Loomis
Sayles Avanti Growth), Westpeak Growth and Income, Back Bay Advisors Bond
Income and Back Bay Advisors Money Market Series are after giving effect
to a voluntary expense cap. For each of these Series, NEIM bears those
expenses (other than the management fee) that exceed 0.15% of average
daily net assets. For the eight other Series shown, the Total Series
Operating Expenses are after giving effect to a voluntary expense
deferral. As of May 1, 1998 the Goldman Sachs Midcap Value is subject to
the voluntary expense deferral described below for the eight other Series
shown with an annual expense limit of .90% of net assets. Under the
deferral, expenses which exceed a certain limit are paid by NEIM in the
year they are incurred and transferred to the Series in a future year when
actual expenses of the Series are below the limit. The limit on expenses
for each of these Series is: 1.30% of average daily net assets for the
Morgan Stanley International Magnum Equity Series; .90% of average daily
net assets for the Alger Equity Growth and Davis Venture Value Series;
.85% of average daily net assets for the Loomis Sayles Balanced and
Salomon Brothers Strategic Bond Opportunities Series; and .70% of average
daily net assets for the Salomon Brothers U.S. Government Series; and,
.90% of average daily net assets for the MFS Investors and MFS Research
Managers Series. Absent the expense deferral, Total Series Operating
Expenses for these Series for the year ended December 31, 1998 would have
been: 1.40% for Morgan Stanley International Magnum Equity Series; and
.77% for Salomon Brothers U.S. Government Series. Without the expense
deferral arrangement, we estimate that Total Series Operating Expenses for
the MFS Investors Series and MFS Research Managers Series for the year
ended December 31, 1999 would be 1.04%, each, on an annualized basis. The
expense cap and deferral arrangements are voluntary and may be terminated
at any time. See the attached prospectus of the New England Zenith Fund
for more complete information.

A-9
<PAGE>

ACCUMULATION UNIT VALUES
(FOR AN ACCUMULATION UNIT OUTSTANDING THROUGHOUT THE PERIOD)

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
CONDENSED FINANCIAL INFORMATION
<TABLE>
<CAPTION>
NUMBER OF
ACCUMULATION
ACCUMULATION UNITS
UNIT VALUE AT ACCUMULATION OUTSTANDING AT
BEGINNING OF UNIT VALUE AT END OF PERIOD
PERIOD END OF PERIOD (IN THOUSANDS)
------------- ------------- --------------
<S> <C> <C> <C>
Small Cap Sub-account
04/19/95* to 12/31/95............. 1.010468 1.219226 2,427
01/01/96 to 12/31/96.............. 1.219226 1.571807 9,083
01/01/97 to 12/31/97.............. 1.571807 1.936137 26,450
01/01/98 to 12/31/98.............. 1.936137 1.877786 35,171
International Magnum Equity Sub-ac-
count
04/19/95* to 12/31/95............. 1.034539 1.073005 2,973
01/01/96 to 12/31/96.............. 1.073005 1.129151 12,898
01/01/97 to 12/31/97.............. 1.129151 1.099535 22,065
01/01/98 to 12/31/98.............. 1.099535 1.163698 29,222
Equity Growth Sub-account
04/19/95* to 12/31/95............. 1.091430 1.402375 3,908
01/01/96 to 12/31/96.............. 1.402375 1.565675 18,547
01/01/97 to 12/31/97.............. 1.565675 1.940577 32,284
01/01/98 to 12/31/98.............. 1.940577 2.829403 49,761
Midcap Value Sub-account
04/19/95* to 12/31/95............. 1.201698 1.438865 2,010
01/01/96 to 12/31/96.............. 1.438865 1.669358 9,083
01/01/97 to 12/31/97.............. 1.669358 1.932280 15,872
01/01/98 to 04/30/98.............. 1.932280 2.198781 17,610
05/01/98 to 12/31/98.............. 2.203999 1.802285 19,212
Venture Value Sub-account
04/19/95* to 12/31/95............. 1.071598 1.323183 3,798
01/01/96 to 12/31/96.............. 1.323183 1.642613 17,783
01/01/97 to 12/31/97.............. 1.642613 2.163463 39,083
01/01/98 to 12/31/98.............. 2.163463 2.442138 57,831
Growth and Income Sub-account
04/19/95* to 12/31/95............. 1.193057 1.485762 2,885
01/01/96 to 12/31/96.............. 1.485762 1.730922 9,527
01/01/97 to 12/31/97.............. 1.730922 2.279329 18,638
01/01/98 to 12/31/98.............. 2.279329 2,798615 35,465
Balanced Sub-account
04/19/95* to 12/31/95............. 1.073645 1.227281 3,848
01/01/96 to 12/31/96.............. 1.227281 1.415482 17,356
01/01/97 to 12/31/97.............. 1.415482 1.622453 33,627
01/01/98 to 12/31/98.............. 1.622453 1.746518 49,657
Strategic Bond Opportunities Sub-
account
04/19/95* to 12/31/95............. 1.031165 1.158823 1,975
01/01/96 to 12/31/96.............. 1.158823 1.307292 11,146
01/01/97 to 12/31/97.............. 1.307292 1.432601 23,303
01/01/98 to 12/31/98.............. 1.432601 1.442191 34,842
</TABLE>
- --------
*Date on which the sub-account first became available.

A-10
<PAGE>

<TABLE>
<CAPTION>
NUMBER OF
ACCUMULATION
ACCUMULATION UNITS
UNIT VALUE AT ACCUMULATION OUTSTANDING AT
BEGINNING OF UNIT VALUE AT END OF PERIOD
PERIOD END OF PERIOD (IN THOUSANDS)
------------- ------------- --------------
<S> <C> <C> <C>
Bond Income Sub-account
04/19/95* to 12/31/95............... 2.700549 3.037039 1,299
01/01/96 to 12/31/96................ 3.037039 3.134109 4,588
01/01/97 to 12/31/97................ 3.134109 3.428788 7,595
01/01/98 to 12/31/98................ 3.428788 3.688741 14,529
U.S. Government Sub-account
04/19/95* to 12/31/95............... 1.046872 1.139109 2,122
01/01/96 to 12/31/96................ 1.139109 1.160957 5,512
01/01/97 to 12/31/97................ 1.160957 1.242399 8,346
01/01/98 to 12/31/98................ 1.242399 1.318989 15,795
Money Market Sub-account
04/19/95* to 12/31/95............... 1.834830 1.889065 2,759
01/01/96 to 12/31/96................ 1.889065 1.959126 9,258
01/01/97 to 12/31/97................ 1.959126 2.036045 8,797
01/01/98 to 12/31/98................ 2.036045 2.114493 14,711
</TABLE>
- --------
*Date on which the sub-account first became available.

A-11
<PAGE>

HOW THE CONTRACT WORKS

PURCHASE PAYMENT CONTRACT VALUE DAILY DEDUCTION FROM
VARIABLE ACCOUNT

. We deduct a
. You can make a mortality and
one-time . You allocate expense risk
investment or payments to your charge of 1.25%
establish an choice, within on an annualized
ongoing limits, of basis from the
investment Eligible Funds Contract Value
program, subject and/or the Fixed daily.
to the Company's Account.
minimum and
maximum purchase
payment . The Contract ---- . We deduct an
guidelines. Value reflects Administration
purchase Asset Charge of
payments, 0.10% on an
investment annualized basis
experience, from the Contract
interest credited Value daily.
on Fixed Account
ADDITIONAL PAYMENTS allocations, . Investment
partial advisory fees and
. Generally may be surrenders, loans operating
made at any time, and Contract expenses are
(subject to charges. deducted from the
Company limits), . The Contract Eligible Fund
but no purchase Value invested in assets daily.
payments allowed: the Eligible
(1) during the Funds is not
seven years guaranteed.
immediately
preceding the
Maturity Date . Earnings in the ANNUAL CONTRACT FEE
(except under contract are free
Contracts issued of any current . We deduct a $30
in Pennsylvania income taxes (see Administration
or New York); or page A-33). ---- Contract Charge
(2) after a from the Contract
Contract Owner ---- . You may change Value in the
(or the the allocation of Variable Account
Annuitant, if not future payments, on each
owned in an within limits, at anniversary while
individual any time. the Contract is
capacity) reaches . Prior to in-force, other
age 86. annuitization, than under a
you may transfer Payment Option.
. Minimum $250 with Contract Value (May be waived
certain among accounts, for certain large
exceptions (see currently free of Contracts.) We
page A-16). charge. (Special deduct a pro rata
limits apply to portion on full
the Fixed Account surrender and at
LOANS and to situations annuitization.
that involve
. Loans are "market timing.")
available to
participants of
certain tax ---- ----
qualified pension . Contract Value
plans (see page may not be
A-23). allocated among
more than ten
Accounts SURRENDER CHARGE
(including the
Fixed Account) at . Consists of
any time. Contingent
Deferred Sales
Charge based on
purchase payments
made (see pages
A-27 to A-29).

SURRENDERS ----

. Up to the greater
of: 10% of the
Contract Value at RETIREMENT BENEFITS
the beginning of
the Contract . Lifetime income PREMIUM TAX CHARGE
Year; and the options.
excess of the . Fixed and/or
Contract Value variable payout . Where applicable,
over purchase options. we deduct a
payments that are premium tax
subject to the charge from the
Contingent . Retirement Contract Value
Deferred Sales benefits may be when annuity
Charge on the taxable. benefits commence
date of (or, in certain
surrender, can be states, at the
withdrawn each earliest of: full
year without . Premium tax or partial
incurring a charge may apply. surrender;
Contingent annuitization; or
Deferred Sales payment of the
Charge, subject Death Proceeds
to any applicable due to the death
tax law of a Contract
restrictions. Owner or, if
applicable, of
the Annuitant).

. Surrenders are
taxable to the
extent of gain. ADDITIONAL BENEFITS

. You pay no taxes
on your
. Prior to age 59 investment as
1/2 a 10% penalty long as it
tax may apply. (A remains in the
25% penalty tax Contract.
may apply upon
surrender from a
SIMPLE IRA within
the first two
years.) . You may surrender
the Contract at
. Premium tax any time for its
charge may apply. Contract Value,
less any
applicable
DEATH PROCEEDS Contingent
Deferred Sales
. Guaranteed not to Charge, subject
be less than your to any applicable
total purchase tax law
payments adjusted restrictions.
for any prior
surrenders or . We may waive the
outstanding loans Contingent
(and, where Deferred Sales
applicable, net Charge on
of premium tax evidence of
charges). terminal illness,
confinement to a
. Death proceeds nursing home, or
may be taxable. permanent and
total disability,
. Premium tax if this benefit
charge may apply. is available in
your state.

A-12
<PAGE>

THE COMPANY

THE VARIABLE ACCOUNT

INVESTMENTS OF THE VARIABLE ACCOUNT

We will allocate your purchase payments to the subaccounts investing in one
or more of the Eligible Funds you chose, which we list below. No sales charge
will apply at the time you make your payment. You may change your selection of
Eligible Funds for future purchase payments at any time free of charge. (See
"Requests and Elections.") You can transfer to or from any Eligible Fund,
subject to certain conditions. (See "Transfer Privilege.") You may allocate
your Contract Value among no more than 10 Accounts (including the Fixed
Account) at any one time. We reserve the right to add or remove Eligible Funds
from time to time. See "Substitution of Investments."

A-13
<PAGE>

LOOMIS SAYLES SMALL CAP SERIES

The Loomis Sayles Small Cap Series investment objective is long-term capital
growth from investments in common stocks or their equivalent.

MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SERIES (FORMERLY DRAYCOTT
INTERNATIONAL EQUITY SERIES)

ALGER EQUITY GROWTH SERIES

The Alger Equity Growth Series investment objective is long-term capital
appreciation.

GOLDMAN SACHS MIDCAP VALUE SERIES (FORMERLY LOOMIS SAYLES AVANTI GROWTH
SERIES)

The Goldman Sachs Midcap Value Series investment objective is long-term
capital appreciation.

DAVIS VENTURE VALUE SERIES (FORMERLY VENTURE VALUE SERIES)

The Davis Venture Value Series investment objective is growth of capital.

WESTPEAK GROWTH AND INCOME SERIES (FORMERLY WESTPEAK VALUE GROWTH SERIES)

The Westpeak Growth and Income Series investment objective is long-term
total return through investment in equity securities.

LOOMIS SAYLES BALANCED SERIES

The Loomis Sayles Balanced Series investment objective is reasonable long-
term investment return from a combination of long-term capital appreciation
and moderate current income.

SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SERIES

The Salomon Brothers Strategic Bond Opportunities Series investment
objective is a high level of total return consistent with preservation of
capital.

BACK BAY ADVISORS BOND INCOME SERIES

The Back Bay Advisors Bond Income Series investment objective is a high
level of current income consistent with protection of capital.

SALOMON BROTHERS U.S. GOVERNMENT SERIES

The Salomon Brothers U.S. Government Series investment objective is a high
level of current income consistent with preservation of capital and
maintenance of liquidity.

BACK BAY ADVISORS MONEY MARKET SERIES

A-14
<PAGE>

The following two Eligible Funds of the Variable Account are NOT yet
available as of the date of this prospectus. We anticipate that they will
become available on or before July 1, 1999. Availability of these Eligible
Funds will also be subject to any necessary state insurance department
approval. You should consult with your registered representative for current
information about the availability of these Eligible Funds.

MFS INVESTORS SERIES

The MFS Investors Series investment objective is reasonable current income
and long-term growth of capital and income.

MFS RESEARCH MANAGERS SERIES

The MFS Research Managers Series investment objective is long-term growth of
capital.

INVESTMENT ADVICE

New England Investment Management, Inc. (formerly TNE Advisers, Inc.), an
indirect, wholly-owned subsidiary of the Company, serves as investment adviser
for the Eligible Funds. Each of the Eligible Funds also has a subadviser, each
of which is registered with the SEC as investment advisers under the
Investment Advisers Act of 1940.

<TABLE>
<CAPTION>
SERIES SUB-ADVISER
- ------ -----------
<S> <C>
Back Bay Advisors Bond
Income Series........... Back Bay Advisors, L.P.*
Back Bay Advisors Money
Market Series........... Back Bay Advisors, L.P.*
Westpeak Growth and
Income Series........... Westpeak Investment Advisors, L.P.*
Loomis Sayles Small Cap
Series.................. Loomis Sayles & Company, L.P.*
Loomis Sayles Balanced
Series.................. Loomis Sayles & Company, L.P.*
Morgan Stanley
International Magnum
Equity Series........... Morgan Stanley Dean Witter Investment Management Inc.
Alger Equity Growth
Series.................. Fred Alger Management, Inc.
Goldman Sachs Midcap
Value Series............ Goldman Sachs Asset Management**
Davis Venture Value
Series.................. Davis Selected Advisers, L.P.***
Salomon Brothers U.S.
Government Series....... Salomon Brothers Asset Management Inc.
Salomon Brothers
Strategic Bond
Opportunities****....... Salomon Brothers Asset Management Inc.
MFS Investors Series..... Massachusetts Financial Services Company
MFS Research Managers
Series.................. Massachusetts Financial Services Company
</TABLE>
- --------
* An affiliate of New England Life Insurance Company.
** The Goldman Sachs Midcap Value Series' subadviser was Loomis Sayles &
Company, L.P., until May 1, 1998 when Goldman Sachs Asset Management
became the subadviser.
*** Davis Selected Advisers may delegate any of its responsibilities to Davis
Selected Advisers--NY, Inc., a wholly owned subsidiary of Davis Selected.
**** The Salomon Brothers Strategic Bond Opportunities Series also receives
certain investment subadvisory services from Salomon Brothers Asset
Management Limited, a London based affiliate of Salomon Brothers Asset
Management Inc.

A-15
<PAGE>

Each of the Eligible Funds is a Series of the New England Zenith Fund (the
"Zenith Fund"). The attached Zenith Fund prospectus contains more complete
information on each Series. You should read that prospectus carefully before
investing. The Zenith Fund's Statement of Additional Information also contains
more information on each Series. You may obtain the Statement of Additional
Information free of charge by writing to New England Securities, 399 Boylston
St., Boston, Massachusetts, 02116 or telephoning 1-800-356-5015 or by
accessing the Securities and Exchange Commission's website at
http://www.sec.gov.

SUBSTITUTION OF INVESTMENTS

GUARANTEED OPTION

You may allocate purchase payments to the Fixed Account in states that have
approved the Fixed Account option. The Fixed Account is a part of our general
account and offers a guaranteed interest rate. (See "The Fixed Account" for
more information.)

THE CONTRACTS

PURCHASE PAYMENTS

Currently, the minimum initial purchase payment is $5,000, and the minimum
subsequent purchase payment is $250; however, the following exceptions may
apply.

A-16
<PAGE>

TEN DAY RIGHT TO REVIEW

ALLOCATION OF PURCHASE PAYMENTS

You may allocate your purchase payments to the Fixed Account and to the
Eligible Funds, up to a maximum of ten Accounts. We convert purchase payments,
allocated to the Eligible Funds, to a unit of interest known as an
Accumulation Unit. The number of Accumulation Units credited to the Contract
is determined by dividing the purchase payment by the Accumulation Unit Value
for the selected sub-accounts at the end of the valuation day we receive your
purchase payment at our Home Office.

CONTRACT VALUE AND ACCUMULATION UNIT VALUE

The Accumulation Unit Value of each sub-account was initially set at $1.00.
We determine the Accumulation Unit Value is determined by multiplying the most
recent Accumulation Unit Value by the net investment factor for that day. The
net investment factor for any sub-account reflects the change in net asset
value per share of the corresponding Eligible Fund as of the close of regular
trading on the New York Stock Exchange from the net asset value most recently
determined, the amount of dividends or other distributions made by that
Eligible Fund since the last determination of net asset value per share, and
daily deductions for the Mortality and Expense Risk Charge and Administration
Asset Charge, equal, on an annual basis, to 1.35% of the average daily net
asset value of the sub-account. The net investment factor may be greater or
less than one. We describe the formula for determining the net investment
factor under the caption "Net Investment Factor" in the Statement of
Additional Information.

A-17
<PAGE>

PAYMENT ON DEATH PRIOR TO ANNUITIZATION

Prior to annuitization, your Contract's Death Proceeds will be payable to
your Beneficiary if we receive due proof of the death of: (1) you as Contract
Owner; (2) the first Contract Owner to die, if your Contract has joint owners;
or (3) the Annuitant, if your Contract is not owned in an individual capacity.
(If there is no named Beneficiary under a Joint Contract, the Death Proceeds
will be paid to the surviving Contract Owner.)

The Contract's Death Proceeds at any time will be the greater of:

(1) the current Contract Value (next determined after we receive due
proof of death or if later an election to continue the Contract or to
receive payment(s)) and;

(2) the minimum guaranteed death benefit.

During the first seven years of your Contract the minimum guaranteed death
benefit is equal to your purchase payments adjusted for any partial
surrenders. Partial surrenders will decrease the minimum guaranteed death
benefit by the percentage of Contract Value withdrawn. On the seventh
anniversary of your Contract and on each seven year anniversary thereafter,
until your 76th birthday or 71st birthday of the oldest joint owner, the
minimum guaranteed death benefit is equal to the larger of:

(1) the minimum guaranteed death benefit that applied to your Contract
prior to the recalculation;

(2) the Contract Value on the date of recalculation.

The new minimum guaranteed death benefit (plus any subsequent purchase
payments, and adjusted for any subsequent surrenders), applies to your
Contract until the next recalculation (seventh anniversary) date, or until you
make a purchase payment or surrender.

Assume that we issue a Contract with a $10,000 purchase payment on
5/1/98. No further purchase payments are made and during the first
seven Contract Years, no partial surrenders are made. During the
first seven Contract Years, the minimum guaranteed death benefit is
$10,000. Assume that on the Contract Anniversary on 5/1/05, the
Contract Value is $25,000. The minimum guaranteed death benefit is
reset on that date to $25,000.
EXAMPLE:

Assume that the Contract Value increases to $27,000 by 1/1/06, and
that you request a partial surrender of 20% of your Contract Value,
or $5,400, on that date. The minimum guaranteed death benefit
immediately following the partial surrender is $20,000 [$25,000-
.20($25,000)].

Assume that on 6/15/06 the Contract Value has decreased to $18,000.
The minimum guaranteed death benefit remains at $20,000 and the
Death Proceeds payable on 6/15/06 are $20,000.

A-18
<PAGE>

--BENEFICIARY CONTINUATION

--SPECIAL OPTIONS FOR SPOUSES

(1) to receive the Death Proceeds either in one sum or under a permitted
payment option;

(2) to continue the Contract under the Beneficiary Continuation
provision; or

(3) to continue the Contract under the Spousal Continuation provision
with the surviving spouse as the Contract Owner (or, if applicable, the
Annuitant).

A-19
<PAGE>

SURVIVING SPOUSE WILL NOT BE ABLE TO RECEIVE THE DEATH PROCEEDS AT THAT TIME.
The terms and conditions of the Contract that applied prior to the death will
continue to apply, with certain exceptions described in the Contract.

TRANSFER PRIVILEGE

We will notify you, in advance, if we change the above transfer provisions.

See "Requests and Elections" for information regarding transfers made by
written request and by telephone.

A-20
<PAGE>

You may distribute your Contract Value among no more than 10 Accounts
(including the Fixed Account) at any time. We will not process transfer
requests not complying with this rule.

DOLLAR COST AVERAGING

We offer an automated transfer privilege called dollar cost averaging. Under
this feature you may request that we transfer an amount of your Contract Value
on the same day each month, prior to annuitization, from any one account of
your choice to one or more of the other accounts (including the Fixed Account,
subject to the limitations on transfers into the Fixed Account). You may not
allocate Contract Value to more than 10 accounts, including the Fixed Account,
at any time. We currently restrict the amount of Contract Value which you may
transfer from the Fixed Account. We allow one dollar cost averaging program to
be active at a time. Currently, you must transfer a minimum of $100 to each
account that you select under this feature. If we impose a transfer fee, we
may count transfers made under the dollar cost averaging program against the
number of transfers per year allowed free of charge. You may cancel your use
of the dollar cost averaging program at any time prior to the monthly transfer
date. (See Appendix A for more information about Dollar Cost Averaging and the
Statement of Additional Information for more information on Dollar Cost
Averaging and the Fixed Account.)

. Only initial or subsequent payments--not Contract Value--can be
allocated to a Guaranteed Account.

. Certain rules and limitations may apply to the purchase payments you can
allocate.

. Amounts in a Guaranteed Account cannot be used as collateral for a loan.

Contact your agent for more information.

SURRENDERS

. any applicable Contingent Deferred Sales Charge;

. a pro rata portion of the Administration Contract Charge (on a full
surrender only);

. a premium tax charge (in certain states only); and

. any outstanding loan plus accrued interest (on a full surrender only).

Restrictions. Federal tax laws, laws relating to employee benefit plans, or
the terms of benefit plans for which the Contracts may be purchased may
restrict your right to surrender the Contract.

A-21
<PAGE>

Because a surrender may result in adverse tax consequences, you should
consult a qualified tax advisor before making the surrender. (See "Federal
Income Tax Status--Qualified Contracts.")

How to surrender.

. You must submit a request to our Home Office. (See "Requests and
Elections.")

. You must state in your request whether you would like to apply the
proceeds to a payment option (otherwise you will receive the proceeds in
a lump sum and may be taxed on them).

. We have to receive your surrender request in our Home Office prior to the
Maturity Date or Contract Owner's death.

We will normally pay surrender proceeds within seven days after receipt of a
request at the Home Office, but we may delay payment, by law, under certain
circumstances. (See "Suspension of Payments.")

SYSTEMATIC WITHDRAWALS

A-22
<PAGE>

LOAN PROVISION FOR CERTAIN TAX BENEFITED RETIREMENT PLANS

You must repay loans within 5 years except for certain loans used for the
purchase of a principal residence, (which must be repaid within 20 years.) We
will require repayment of the principal amount and interest on the loan in
equal monthly installments under our repayment procedures. Contract loans are
subject to applicable retirement program laws and their taxation is determined
under the Code.

A-23
<PAGE>

Unless you request otherwise, Contract loans will reduce the amount of the
Contract Value in the accounts in proportion to the Contract Value in each
account. If any portion of the Contract loan was attributable to Contract
Value in the Fixed Account, then you will have to allocate an equal portion of
each loan repayment to the Fixed Account. (For example, if 50% of the loan was
attributable to your Fixed Account Contract Value, then 50% of each loan
repayment will be allocated to the Fixed Account). Unless you request
otherwise, we will allocate a repayment to the sub-accounts in the same
proportions to which the loan was attributable to the sub-accounts.

We will reduce the amount of your death proceeds, the amount payable upon
surrender of your Contract and the amount applied on the Maturity Date to
provide annuity payments will be reduced by the amount of any outstanding
Contract loan plus accrued interest. In these circumstances, the amount of the
outstanding Contract loan plus accrued interest generally will be taxed as a
taxable distribution.

We will provide further information regarding loans upon request.

DISABILITY BENEFIT RIDER

SUSPENSION OF PAYMENTS

OWNERSHIP RIGHTS

During the Annuitant's lifetime, all rights under the Contract belong solely
to you as the Contract Owner unless otherwise provided.

These rights include the right to:

. change the Beneficiary

. assign the Contract (subject to limitations)

. change the payment option

. exercise all other rights, benefits, options and privileges allowed by
the Contract or us.

A-24
<PAGE>

Qualified Plans and certain TSA Plans with sufficient employer involvement
are deemed to be "Pension Plans" under ERISA and may, therefore, be subject to
rules under the Retirement Equity Act of 1984. These rules require that
benefits from annuity contracts purchased by a Pension Plan and distributed to
or owned by a participant be provided in accordance with certain spousal
consent, present value and other requirements which are not enumerated in your
Contract. You should consider carefully the tax consequences of the purchase
of the Contracts by Pension Plans.

REQUESTS AND ELECTIONS

Requests for sub-account transfers or reallocation of future purchase
payments may be made:

. By Telephone (1-800-435-4117), between the hours of 9:00 a.m. and 4:00
p.m. Eastern Time

. Through your Registered Representative

. In writing to our Home Office, or

. By fax (617-578-5412)

A-25
<PAGE>

ADMINISTRATION CHARGES, CONTINGENT
DEFERRED SALES CHARGE AND OTHER DEDUCTIONS

We deduct various charges from your Contract Value for the services
provided, expenses incurred and risks assumed in connection with your
Contract. The charges are:

. Administration Contract Charge

. Administration Asset Charge

. Mortality and Expense Risk Charge

. Contingent Deferred Sales Charge

. Premium Tax Charge and Other Expenses

We describe these charges below. The amount of a charge may not necessarily
correspond to the costs associated with providing the services or benefits
indicated by the designation of the charge or associated with the particular
Contract. For example, the Contingent Deferred Sales Charge may not fully
cover all of the sales and distribution expenses actually incurred by us, and
proceeds from other charges, including the mortality and expense risk charge,
may be used in part to cover such expenses. Eligible Fund operating expenses
are shown on page A-7.

ADMINISTRATION CONTRACT CHARGE

The annual Administration Contract Charge is the lesser of: 2% of your total
Contract Value (including any Contract Value you have allocated to the Fixed
Account and any Contract Value held in our general account as the result of a
loan) and $30. This charge (along with the Administration Asset Charge) is for
such expenses as issuing Contracts, maintaining records, providing accounting,
valuation, regulatory and reporting services, as well as expenses associated
with marketing, sale and distribution of the Contracts.

ADMINISTRATION ASSET CHARGE

MORTALITY AND EXPENSE RISK CHARGE

We deduct a Mortality and Expense Risk Charge from the Variable Account. The
charge is at an annual rate of 1.25% of the daily net assets of each such sub-
account, of which .70% represents a mortality risk charge and

A-26
<PAGE>

.55% represents an expense risk charge. We compute and deduct this charge on a
daily basis from the assets in each sub-account. This charge is for the
guaranteed annuity rates (so that your annuity payments will not be affected
by the mortality rate of others), death benefit, and guarantee of
Administration charges, regardless of actual expenses incurred. The Mortality
and Expense Risk Charge as a percentage of Contract Value will not increase
over the life of a Contract. The Mortality and Expense Risk Charge will
continue to be assessed if annuity payments are made on a variable basis after
annuitization. (See ""Annuity Payments.'')

CONTINGENT DEFERRED SALES CHARGE

We do not deduct a charge for sales expenses from your purchase payments
when they are made. However, a Contingent Deferred Sales Charge may apply on
certain events ("CDSC events"). CDSC events are: (a) a full or partial
surrender of your Contract (including surrenders where you apply the proceeds
to certain payment options); (b) in some circumstances, a withdrawal of the
commuted value of amounts that you applied to an annuity payment option; or
(c) under Contracts issued in Pennsylvania or New York, the Maturity Date if
at that date a purchase payment has been invested for less than seven years.

When you make a full surrender of your Contract, we take into account the
Contingent Deferred Sales Charge in calculating the proceeds you will receive.
On a partial surrender, we deduct the Contingent Deferred Sales Charge from
the Contract Value remaining after deduction of the amount you requested. We
take the Contingent Deferred Sales Charge from the Contract Value in the sub-
accounts and the Fixed Account, in the same proportion as the Contract Value
surrendered.

In no event will the amount of the Contingent Deferred Sales Charge exceed
the equivalent of 8% of the first $50,000 of purchase payments and 6.5% of
purchase payments in excess of $50,000.

EXAMPLE:
Assume that you make a single purchase payment of $10,000 into the
Contract. The following illustrates the free withdrawal amount
available under two hypothetical situations.

A-27
<PAGE>

EXAMPLE:

HYPOTHETICAL CONTRACT VALUE
<TABLE>
<CAPTION>
10% OF
BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 1: $7,000 par-
tial
surrender on 12/1/00... $22,000 $25,000 $5,000 $2,200 $5,000
</TABLE>

HYPOTHETICAL CONTRACT VALUE
<TABLE>
<CAPTION>
10% OF
BEGINNING OF MAXIMUM FREE
AT BEGINNING ON WITHDRAWAL YEAR CONTRACT WITHDRAWAL
OF CONTRACT YEAR DATE CONTRACT GAIN VALUE AMOUNT
---------------- ------------- ------------- ------------- ------------
<S> <C> <C> <C> <C> <C>
Situation 2: $25,000
surrender on 1/1/04.... $30,000 $33,000 $13,000 $3,000 $13,000
</TABLE>

Free withdrawal amounts do not reduce the total purchase payments that are
potentially subject to the Contingent Deferred Sales Charge under your
Contract.

Waiver of Contingent Deferred Sales Charge. No Contingent Deferred Sales
Charge will apply:

A-28
<PAGE>

lapse of time from annuitization to surrender. We will base the portion of
the Contingent Deferred Sales Charge which applies on the ratio of (1) the
number of whole months remaining, on the date of the withdrawal, until the
date when the Contingent Deferred Sales Charge would expire, to (2) the
number of whole months that were remaining, when you applied the proceeds
to the option, until the date when the Contingent Deferred Sales Charge
would expire. (See example in Appendix B.)

PREMIUM TAX CHARGE

Currently South Dakota imposes a premium tax on annuity purchase payments
received by insurance companies. We pay this tax when incurred, and recover
this tax by imposing a premium tax charge on affected Contracts. We deduct the
premium tax charge at the earliest of: a full or partial surrender of the
Contract, the date when annuity benefits commence, or payment of the Death
Proceeds (including application of the Death Proceeds to the Beneficiary
Continuation provision). Other states impose a premium tax liability on the
date when annuity benefits commence. In those states, we deduct the premium
tax charge from the Contract Value on that date. To determine whether and when
a premium tax charge will be imposed on a Contract, we will look to the state
of residence of the Annuitant when a surrender is made, annuity benefits
commence or Death Proceeds are paid. We reserve the right to impose a premium
tax charge when we incur a premium tax or at a later date.

A-29
<PAGE>

benefited treatment under the Code and from 1% to 3.5% of the Contract Value
(or, if applicable, Death Proceeds) for all other Contracts. See Appendix C
for a list of premium tax rates.

OTHER EXPENSES

ANNUITY PAYMENTS

ELECTION OF ANNUITY

If you and the Annuitant are not the same and the Annuitant dies prior to
the Maturity Date, the Contract will continue for the benefit of the
Contingent Annuitant. We will reset the Maturity Date, if necessary, based on
the age of the older Contract Owner.

ANNUITY OPTIONS

A-30
<PAGE>

You select an annuity payment option by written request to us and subject to
any applicable Federal tax law restrictions.

The Contract offers the variable annuity payment options listed below.

Variable Income for a Specified Number of Years. We will make variable
monthly payments for the number of years elected, which may not be more
than 30 except with our consent.

We continue to assess the Mortality and Expense Risk Charge and the
Administrative Asset Charge if annuity payments are made under any variable
annuity payment option (either before or after the Maturity Date), including
an option not involving a life contingency and under which we bear no
mortality risk.
- --------
* It is possible under this option to receive only one variable annuity
payment if the Payee dies (or Payees die) before the due date of the second
payment or to receive only two variable annuity payments if the Payee dies
(or Payees die) before the due date of the third payment, and so on.

A-31
<PAGE>

AMOUNT OF VARIABLE ANNUITY PAYMENTS

At the Maturity Date (or any other application of proceeds to a payment
option), your Contract Value (reduced by applicable premium tax,
administration contract, and contingent deferred sales charges and by any
outstanding loan plus accrued interest) is applied toward the purchase of
monthly annuity payments. We determine the amount of monthly variable annuity
payments on the basis of (i) annuity purchase rates not lower than the rates
set forth in the Life Income Tables contained in the Contract that reflect the
Payee's age, (ii) the assumed interest rate selected, (iii) the type of
payment option selected, and (iv) the investment performance of the Eligible
Funds selected. (The Fixed Account is not available under variable payment
options.) Current annuity purchase rates may be changed by us periodically,
and we will apply them prospectively on a non-discriminatory basis.

RETIREMENT PLANS OFFERING FEDERAL TAX BENEFITS

1. Plans qualified under Section 401(a) or 403(a) of the Code ("Qualified
Plans");

4. Eligible deferred compensation plans (within the meaning of Section
457 of the Code) for employees of state and local governments and tax-
exempt organizations ("Section 457 Plans"); and

5. Governmental plans (within the meaning of Section 414(d) of the Code)
for governmental employees, including Federal employees ("Governmental
Plans").

A-32
<PAGE>

Federal and state legislation governing such plans, and such endorsements may
alter certain Contract provisions described in this prospectus. Refer to the
Contracts and any endorsements for more complete information.

FEDERAL INCOME TAX STATUS

INTRODUCTION

TAXATION OF THE COMPANY

TAX STATUS OF THE CONTRACT

A-33
<PAGE>

intends to comply with the diversification requirements prescribed by the
Treasury in Reg. Sec. 1.817-5, which affect how the Eligible Funds' assets may
be invested.

Owner Control. In some circumstances, owners of variable annuity contracts
may be considered the owners, for federal income tax purposes, of the assets
of the separate accounts used to support their contracts. In those
circumstances, income and gains from the separate account assets would be
includible in the variable contract owner's gross income. The IRS has stated
in published rulings that a variable contract owner will be considered the
owner of separate account assets if the contract owner possesses incidents of
ownership in those assets, such as the ability to exercise investment control
over the assets. The Treasury Department has also announced, in connection
with the issuance of regulations concerning diversification, that those
regulations "do not provide guidance concerning the circumstances in which
investor control for the investments of a segregated asset account may cause
the investor (i.e., the Contract Owner), rather than the insurance company, to
be treated as the owner of the assets in the account." This announcement also
stated that guidance would be issued by way of regulations or rulings on the
"extent to which policyholders may direct their investments to particular Sub-
Accounts without being treated as owners of the underlying assets."

The following discussion is based on the assumption that the Contract
qualifies as an annuity contract for federal income tax purposes.

TAXATION OF ANNUITIES

A-34
<PAGE>

treated as a distribution. The taxable portion of a distribution (in the form
of a single sum payment or an annuity) is taxable as ordinary income.

The owner of any annuity contract who is not a natural person generally must
include in income any increase in the excess of the Contract Value over the
"investment in the contract" (discussed below) during the taxable year. There
are some exceptions to this rule and prospective Contract Owners that are not
natural persons may wish to discuss these with a competent tax advisor.

The following discussion generally applies to a Contract owned by a natural
person.

A-35
<PAGE>

Contract loans are available to participants under TSA Plans (not subject to
ERISA) and to trustees of Qualified Plans. See "Loan Provisions for Certain
Tax Benefited Retirement Plans." We require repayment of the principal amount
and interest on the loan in equal monthly installments under our repayment
procedures. Contract loans are subject to applicable retirement program laws
and their taxation is determined under the Code.

A-36
<PAGE>

QUALIFIED CONTRACTS

A-37
<PAGE>

(i) Plan Contribution Limits

TSA PLANS

IRAS, SEPS, SARSEPS, SIMPLE IRAS AND ROTH IRAS

A-38
<PAGE>

ROTH IRAS

Eligible individuals can contribute to a Roth IRA. Contributions to a Roth
IRA, which are subject to certain limitations, are not deductible and must be
made in cash or as a rollover or transfer from another Roth IRA or other IRA.
A rollover from or conversion of an IRA to a Roth IRA may be subject to tax
and other special rules may apply. The maximum purchase payment which may be
contributed each year to a Roth IRA is the lesser of $2,000 or 100 percent of
includible compensation. A spousal Roth IRA is available if the taxpayer and
spouse file a joint return. The maximum purchase payment that a taxpayer may
make to a spousal Roth IRA is $2,000. Except in the case of a rollover or a
transfer, no more than $2,000 can be contributed in aggregate to all IRAs and
Roth IRAs of either spouse during any tax year. The Roth IRA contribution may
be limited to less than $2,000 depending on the taxpayer's adjusted gross
income ("AGI"). The maximum contribution begins to phase out if the taxpayer
is single and the taxpayer's AGI is more than $95,000 or if the taxpayer is
married and files a joint tax return and the taxpayer's AGI is more than
$150,000. The taxpayer may not contribute to a Roth IRA if the taxpayer's AGI
is over $110,000 (if the taxpayer is single), $160,000 (if the taxpayer is
married and files a joint tax return), or $10,000 (if the taxpayer is married
and files separate tax returns).You should consult a tax adviser before
combining any converted amounts with any other Roth IRA contributions,
including any other conversion amounts from other tax years.

SECTION 457 PLANS

QUALIFIED PLANS

The Contract includes a Death benefit that in some cases may exceed the
greater of the Purchase Payments or the Contract Value. The Death benefit
could be characterized as an incidental benefit, the amount of which is
limited in any pension or profit-sharing plan. Because the Death benefit may
exceed this limitation, employers using the Contract in connection with such
plans should consult their tax adviser.

(ii) Distributions from the Contract

MANDATORY WITHHOLDING ON CERTAIN DISTRIBUTIONS

A-39
<PAGE>

from TSA and 401(k) plans are no longer treated as an "eligible rollover
distribution." Withholding can be avoided by arranging a direct transfer of
the eligible rollover distribution to a Qualified Plan, TSA or IRA.

QUALIFIED PLANS, TSA PLANS, IRAS, SEPS, SARSEPS, SIMPLE IRAS, ROTH IRAS AND
GOVERNMENTAL PLANS

Payments made from the Contracts held under a Qualified Plan, TSA Plan, IRA,
SEP, SARSEP, SIMPLE IRA or Governmental Plan are taxable under Section 72 of
the Code as ordinary income, in the year of receipt. Any amount received in
surrender of all or part of the Contract Value prior to annuitization will,
subject to restrictions and penalties discussed below, also be included in
income in the year of receipt. If there is any "investment in the Contract", a
portion of each amount received is excluded from gross income as a return of
such investment. Distributions or withdrawals prior to age 59 1/2 may be
subject to a penalty tax of 10% of the amount includible in income. This
penalty tax does not apply: (i) to distributions of excess contributions or
deferrals; (ii) to distributions made on account of the Annuitant's death,
retirement, disability or early retirement at or after age 55; (iii) when
distribution from the Contract is in the form of an annuity over the life or
life expectancy of the Annuitant (or joint lives or life expectancies of the
Annuitant and his or her Beneficiary); or (iv) when distribution is made
pursuant to a divorce (in the case of IRAs) or a qualified domestic relations
order. In the case of IRAs, SEPs, SARSEPs and SIMPLE IRAs, the exceptions for
distributions on account of early retirement at or after age 55 or made
pursuant to a qualified domestic relations order do not apply. A tax-free
rollover may be made once each year among individual retirement arrangements
subject to the conditions and limitations described in the Code.

A-40
<PAGE>

Owner's death. A penalty tax of up to 50% of the amount which should have been
distributed may be imposed by the IRS for failure to distribute the required
minimum distribution amount.

SECTION 457 PLANS

WITHHOLDING

POSSIBLE CHANGES IN TAXATION

OTHER TAX CONSEQUENCES

GENERAL

A-41
<PAGE>

Each such separate Contract would require the minimum initial purchase payment
stated above. Additional purchase payments under a Contract must qualify for
the same federal income tax treatment as the initial purchase payment under
the Contract; we will not accept an additional purchase payment under a
Contract if the federal income tax treatment of such purchase payment would be
different from that of the initial purchase payment.

VOTING RIGHTS

Prior to annuitization, we determine the number of votes on which you have a
right to instruct us on the basis of your percentage interest in a sub-account
and the total number of votes attributable to the sub-account. After
annuitization, the number of votes attributable to your Contract is determined
on the basis of the reserve for your future annuity payments and the total
number of votes attributable to the sub-account. After annuitization the votes
attributable to your Contract decrease as reserves underlying your Contract
decrease.

We will vote Eligible Fund shares held in our general investment account (or
any unregistered separate account for which voting privileges are not given)
in the same proportion as the aggregate of (i) the shares for which we
received voting instructions and (ii) the shares that we vote in proportion to
such voting instructions.

DISTRIBUTION OF CONTRACTS

THE FIXED ACCOUNT

A-42
<PAGE>

provisions of the Federal securities laws relating to the accuracy and
completeness of statements made in prospectuses.

Our general account consists of all assets owned by us other than those in
the Variable Account and the Company's other separate accounts. We have sole
discretion over the investment of assets in the general account, including
those in the Fixed Account. You do not share in the actual investment
experience of the assets in the Fixed Account. Instead, we guarantee that we
will credit Contract Values in the Fixed Account with interest at an effective
annual rate of at least 3%. (Special rules apply to loan repayments. See the
Statement of Additional Information.) We are not obligated to credit interest
at a rate higher than 3%, although we have sole discretion to do so. We will
credit Contract Values in the Fixed Account with interest daily.

CONTRACT VALUE AND FIXED ACCOUNT TRANSACTIONS

Unless you request otherwise, any partial surrender you make will reduce the
Contract Value in the sub-accounts of the Variable Account and the Fixed
Account proportionately. In addition, if any portion of your Contract loan
comes from Contract Value in the Fixed Account, then you must allocate an
equal portion of each loan repayment to the Fixed Account.

For more information on the Fixed Account please refer to the Statement of
Additional Information.

YEAR 2000 COMPLIANCE ISSUES

A-43

<PAGE>

successful in the Year 2000 transition, computer systems could fail or
erroneous results and delays could occur when processing information after
December 31, 1999. However, as of the date of this prospectus, it is not
anticipated that you will experience negative effects on your investment, or
on the Contract services provided, as a result of Year 2000 transition
implementation. Currently, we have converted our systems to be Year 2000
compliant. We are conducting systems testing and compliance verification which
is expected to be complete in mid-1999. There can, however, be no assurance
that the other service providers have anticipated every step necessary to
avoid any adverse effect on the Variable Account attributable to Year 2000
transition.

INVESTMENT PERFORMANCE INFORMATION

STANDARD RETURN

NON-STANDARD RETURN

A-44
<PAGE>

OTHER PERFORMANCE

In advertising and sales literature, we may compare the performance of each
sub-account to the performance of other variable annuity issuers in general or
to the performance of particular types of variable annuities investing in
mutual funds, or investment series of mutual funds with investment objectives
similar to each of the sub-accounts. Advertising and sales literature may also
show the performance rankings of the sub-accounts assigned by independent
services, such as Variable Annuity Research Data Services ("VARDS") or may
compare to the performance of a sub-account to that of a widely used index,
such as Standard & Poor's Index of 500 Common Stocks. We may also use other
independent ranking services and indexes as a source of performance
comparison.

FINANCIAL STATEMENTS

You may find the financial statements of the Company and the Variable
Account in the Statement of Additional Information.

A-45
<PAGE>

APPENDIX A

CONSUMER TIPS

DOLLAR COST AVERAGING

If you are contemplating the use of dollar cost averaging, you should
consider your ability to continue the on-going purchases in order to take
advantage of periods of low price levels.

DIVERSIFICATION

MISCELLANEOUS

Toll-free telephone service:
--A recording of daily unit values is available by
calling 1-800-333-2501.

--Fund transfers and changes of future purchase
payment allocations can be made by calling 1-800-435-
4117.

New England Annuities
P.O. Box 642
Boston, Mass 02116

A-46
<PAGE>

APPENDIX B

CONTINGENT DEFERRED SALES CHARGE

A-47
<PAGE>

APPENDIX C

PREMIUM TAX

Premium tax rates are subject to change. At present we pay premium taxes in
the following jurisdictions at the rates shown.

See "Premium Tax Charges" in the prospectus for more information about how
premium taxes affect your Contract.

A-48
<PAGE>

APPENDIX D

EXCHANGED CONTRACTS

You may exchange a Fund I, Preference or Zenith Accumulator contract (an
"old contract") for an American Growth Series Contract (a "new contract"), as
long as: (1) your age does not exceed the maximum age at issue for a new
contract; (2) the contract value of the old contract (along with any purchase
payments submitted with the exchange application) is at least equal to the
minimum initial purchase payment for a new contract and; (3) (unless waived by
the Company) you meet our underwriting standards. We may waive the minimum
initial and subsequent purchase payment amount to correspond to the old
contract. As of the date you make the exchange, we will credit the contract
value of the old contract as the initial purchase payment to the new contract.
We will not deduct any charges at the time of exchange. See below for a
comparison of the charges under the old contracts and the new contracts. We
issue the American Growth Series Contract and MetLife issues the old
contracts. Although we are a subsidiary of MetLife, MetLife does not guarantee
our obligations.

If you exchange a Fund I, Preference or Zenith Accumulator variable annuity
contract issued by New England Mutual Life Insurance Company (now MetLife) for
an American Growth Series Contract, when we issue the new contract the minimum
guaranteed death benefit will be either the death benefit that applied to the
old contract on the date of the exchange, or the amount paid into the American
Growth Series, whichever is greater. We will recalculate the minimum
guaranteed death benefit on every seventh contract anniversary following the
date of the exchange. (See Payment on Death Prior to Annuitization.)

A-49

<PAGE>

CONTACT CHARGES UNDER AN AGS, FUND I, PREFERENCE OR ZENITH ACCUMULATOR CONTRACT

<TABLE>
<CAPTION>
ASSET-BASED
(MORTALITY &
EXPENSE AND ADMINISTRATION
ADMIN. ASSET CONTRACT
CDSC CHARGE) CHARGE OTHER
------------------------------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
American Growth Series 7% of purchase payments; 1.35% $30 (or 2% of premium tax
(AGS) declining to 0% after 7 years total charge on
Contract purchase
Value if payments in
less) -- South Dakota is
waiver may paid by us and
apply recovered later
Fund I --none on exchange (will apply approximately 3% of first premium tax
to subsequent withdrawal from 1.35% $46 2% of charge taken
AGS) (including excess from purchase
--subsequent purchase payments investment (amounts will payments in
will have AGS's CDSC advisory fee) be lower for South Dakota
single --Sales Charge--
purchase maximum 6%
payment
contracts)
Preference --none on exchange (but will 1.25% $30 -- premium tax
apply to subsequent withdrawal (mortality and no waiver charge taken
from AGS) expense only; from purchase
--subsequent purchase payments no payments in
will have AGS's CDSC Administration South Dakota
Asset Charge)
Zenith Accumulator --none on exchange 1.35% $30 --transfer fee
--will apply on subsequent of $10 if you
withdrawal from AGS using the make more than
time table for Zenith 12 per year
Accumulator
--10 year, 6.5% (of Contract
Value) declining if you have a
Zenith Accumulator Contract
--subsequent purchase payments
will have AGS's CDSC
</TABLE>

A-50
<PAGE>

APPENDIX E

AVERAGE ANNUAL TOTAL RETURN

The Variable Account was not established until July, 1994. The Contracts
were not available before April, 1995. The Back Bay Advisors Bond Income and
Back Bay Advisors Money Market Series commenced operations on August 26, 1983.
The Westpeak Growth and Income and Goldman Sachs Midcap Value Series (formerly
the Loomis Sayles Avanti Growth Series) commenced operations on April 30,
1993. The Small Cap Series commenced operations on May 2, 1994. The six other
Eligible Funds did not commence operations until October 31, 1994.

SUB-ACCOUNT AVERAGE ANNUAL TOTAL RETURN

For purchase payment allocated to the Loomis Sayles Small Cap Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -11.09%
Since Inception of the Sub-Account.............................. 15.29%
</TABLE>

For purchase payment allocated to the Morgan Stanley International Magnum
Equity Series*

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -2.72%
Since Inception of the Sub-Account................................. -.63%
</TABLE>
- --------

* The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.

A-51
<PAGE>

For purchase payment allocated to the Alger Equity Growth Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. 36.80%
Since Inception of the Sub-Account................................. 26.42%
</TABLE>

For purchase payment allocated to the Goldman Sachs Midcap Value Series**

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -14.60%
Since Inception of the Sub-Account.............................. 8.34%

For purchase payment allocated to the Davis Venture Value Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -3.95%
Since Inception of the Sub-Account.............................. 22.06%

For purchase payment allocated to the Westpeak Growth and Income Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 13.78%
Since Inception of the Sub-Account.............................. 23.01%

For purchase payment allocated to the Loomis Sayles Balanced Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -1.00%
Since Inception of the Sub-Account.............................. 10.71%

For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -7.60%
Since Inception of the Sub-Account.............................. 5.98%

For purchase payment allocated to the Back Bay Advisors Bond Income Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -1.07%
Since Inception of the Sub-Account.............................. 5.08%

For purchase payment allocated to the Salomon Brothers U.S. Government Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -2.41%
Since Inception of the Sub-Account.............................. 2.59%

For purchase payment allocated to the Back Bay Advisors Money Market Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -4.59%
Since Inception of the Sub-Account.............................. -.05%
</TABLE>
- --------
** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
the subadviser.

A-52
<PAGE>

FUND TOTAL RETURN ADJUSTED FOR CONTRACT CHARGES

(NON-STANDARD)

For purchase payment allocated to the Loomis Sayles Small Cap Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -11.09%
Since Inception of the Fund..................................... 11.60%
</TABLE>

For purchase payment allocated to the Morgan Stanley International Magnum
Equity Series*

For purchase payment allocated to the Alger Equity Growth Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. 36.80%
Since Inception of the Fund........................................ 25.76%
</TABLE>

For purchase payment allocated to the Goldman Sachs Midcap Value Series**

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... -14.60%
5 Years......................................................... 6.79%
Since Inception of the Fund..................................... 8.36%

For purchase payment allocated to the Davis Venture Value Series

For purchase payment allocated to the Westpeak Growth and Income Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year.......................................................... 13.78%
5 Years......................................................... 17.12%
Since Inception of the Fund..................................... 17.38%

For purchase payment allocated to the Loomis Sayles Balanced Series

For purchase payment allocated to the Salomon Brothers Strategic Bond
Opportunities Series

* The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.
** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
the subadviser.

A-53
<PAGE>

For purchase payment allocated to the Back Bay Advisors Bond Income Series

<TABLE>
<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -1.07%
5 Years............................................................ 3.49%
10 years........................................................... 6.20%
Since Inception of the Fund........................................ 6.99%

For purchase payment allocated to the Salomon Brothers U.S. Government Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -2.41%
Since Inception of the Fund........................................ 3.45%

For purchase payment allocated to the Back Bay Advisors Money Market Series

<CAPTION>
PERIOD ENDING DECEMBER 31, 1998
-------------------------------
<S> <C>
1 Year............................................................. -4.59%
5 Years............................................................ .33%
10 years........................................................... 1.40%
Since Inception of the Fund........................................ 2.62%
</TABLE>

A-54
<PAGE>

TABLE OF CONTENTS
OF
STATEMENT OF ADDITIONAL INFORMATION

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
THE COMPANY............................................................... II-3
SERVICES RELATING TO THE VARIABLE ACCOUNT................................. II-3
PERFORMANCE COMPARISONS................................................... II-3
CALCULATION OF PERFORMANCE DATA........................................... II-4
NET INVESTMENT FACTOR..................................................... II-15
ANNUITY PAYMENTS.......................................................... II-15
HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS...................... II-17
HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS........................ II-20
THE FIXED ACCOUNT......................................................... II-23
EXPERTS................................................................... II-24
LEGAL MATTERS............................................................. II-24
APPENDIX A................................................................ II-25
FINANCIAL STATEMENTS...................................................... F-1
</TABLE>

If you would like a copy of the Statement of Additional Information, please
complete the request form below and mail to:

New England Securities Corporation
399 Boylston Street
Boston, Massachusetts 02116

Please send a copy of the Statement of Additional
Information for New England Variable Annuity Separate
Account (American Growth Series) to:

--------------------------------------------------------
Name

--------------------------------------------------------
Street

--------------------------------------------------------
City State Zip

A-55
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY
501 BOYLSTON STREET
BOSTON, MA 02116

RECEIPT

This is to acknowledge receipt of an American Growth Series Prospectus dated
April 30, 1999. This Variable Annuity Contract is offered by New England Life
Insurance Company.

_____________________________________ _____________________________________
(Date) (Client's Signature)
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
AMERICAN GROWTH SERIES
INDIVIDUAL VARIABLE ANNUITY CONTRACTS
ISSUED BY NEW ENGLAND LIFE INSURANCE COMPANY
STATEMENT OF ADDITIONAL INFORMATION
(PART B)

APRIL 30, 1999

This Statement of Additional Information is not a prospectus. This Statement
of Additional Information relates to the Prospectus dated April 30, 1999 and
should be read in conjunction therewith. A copy of the Prospectus may be
obtained by writing to New England Securities Corporation ("New England
Securities") 399 Boylston Street, Boston, Massachusetts 02116.

VA-141SAI-98

II-1
<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
The Company............................................................... II-3
Services Relating to the Variable Account................................. II-3
Performance Comparisons................................................... II-3
Calculation of Performance Data........................................... II-4
Net Investment Factor..................................................... II-15
Annuity Payments.......................................................... II-15
Hypothetical Illustrations of Annuity Income Payouts...................... II-17
Historical Illustrations of Annuity Income Payouts........................ II-20
The Fixed Account......................................................... II-23
Experts................................................................... II-24
Legal Matters............................................................. II-24
Appendix A................................................................ II-25
Financial Statements...................................................... F-1
</TABLE>

II-2
<PAGE>

THE COMPANY

New England Life Insurance Company ("The Company") is an indirect, wholly-
owned subsidiary of Metropolitan Life Insurance Company ("MetLife").

SERVICES RELATING TO THE VARIABLE ACCOUNT

The Company maintains the books and records of the Variable Account and
provides issuance and other administrative services for the Contracts.

Auditors. Deloitte & Touche LLP, located at 125 Summer Street, Boston,
Massachusetts 02110, conducts an annual audit of the Variable Account's
financial statements.

PERFORMANCE COMPARISONS

II-3
<PAGE>

CALCULATION OF PERFORMANCE DATA

<TABLE>
<CAPTION>
AVERAGE
UNIT CONTRACT SURRENDER ANNUAL TOTAL
DATE UNITS VALUE VALUE VALUE RETURN
---- -------- -------- -------- --------- ------------
<S> <C> <C> <C> <C> <C>
December 31, 1993.......... 375.4001 2.663825 1,000.00 $ --
December 31, 1994.......... 363.5881 2.539801 923.44 873.58 -12.64%
December 31, 1995.......... 353.7101 3.037039 1,074.23 1,025.89 1.29%
December 31, 1996.......... 344.1380 3.134109 1,078.57 1,039.74 1.31%
December 31, 1997.......... 335.3885 3.428788 1,149.98 1,119.98 2.87%
December 31, 1998.......... 327.2557 3.688741 1,207.16 1,187.16 3.49%
</TABLE>

II-4
<PAGE>

CONTRACT VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS BACK BAY
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC ADVISORS
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES INCOME
---------- ------------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $10,339.37
1984............ 11,453.64
1985............ 13,388.01
1986............ 15,137.25
1987............ 15,242.29
1988............ 16,265.40
1989............ 17,990.50
1990............ 19,151.95
1991............ 22,256.25
1992............ 23,722.98
1993............ $11,370.39 $11,321.11 26,326.49
1994............ $ 9,590.97 $10,237.83 $ 9,695.00 11,157.06 $ 9,628.96 11,004.57 $ 9,968.28 $ 9,838.87 25,071.19
1995............ 12,156.37 10,698.65 14,193.96 14,313.48 12,201.25 14,780.39 12,242.06 11,557.83 29,948.07
1996............ 15,637.59 11,227.90 15,815.91 16,574.48 16,356.09 17,185.98 14,087.95 13,008.06 30,873.63
1997............ 19,225.09 10,904.04 19,572.63 19,149.94 21,511.41 22,593.88 16,117.11 14,224.45 33,745.26
1998............ 18,619.12 11,508.95 28,501.23 17,837.19 24,249.91 27,709.41 17,317.95 14,289.07 36,272.33
<CAPTION>
SALOMON BACK BAY
BROTHERS ADVISORS
U.S. MONEY
GOVERNMENT MARKET
---------- ----------
<S> <C> <C>
As of December
31:
1983............ $10,258.59
1984............ 11,175.34
1985............ 11,905.86
1986............ 12,514.94
1987............ 13,122.50
1988............ 13,889.20
1989............ 14,941.00
1990............ 15,916.76
1991............ 16,648.66
1992............ 17,018.47
1993............ 17,259.12
1994............ $10,038.07 17,674.12
1995............ 11,360.92 18,401.19
1996............ 11,548.68 19,053.28
1997............ 12,328.54 19,770.95
1998............ 13,058.43 20,502.34
</TABLE>

II-5
<PAGE>

SURRENDER VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS BACK BAY
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC ADVISORS
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES INCOME
---------- ------------- ---------- ---------- ---------- ---------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $ 9,675.61
1984............ 10,843.64
1985............ 12,878.01
1986............ 14,727.29
1987............ 14,932.29
1988............ 16,055.40
1989............ 17,880.50
1990............ 19,141.95
1991............ 22,246.25
1992............ 23,712.98
1993............ $10,650.39 $10,601.11 26,316.49
1994............ $ 8,972.10 $ 9,586.18 $ 9,081.35 10,537.06 $ 9,019.93 10,389.62 $ 9,335.50 $ 9,215.15 25,061.19
1995............ 11,538.87 10,112.28 13,588.96 13,793.48 12,596.25 14,260.39 11,637.06 10,952.83 29,938.07
1996............ 15,120.09 10,722.90 15,310.91 16,154.48 15,851.09 16,765.98 13,582.95 12,503.06 30,863.63
1997............ 18,807.59 10,507.64 19,167.63 18,829.94 21,106.41 22,273.88 15,712.11 14,219.45 33,735.26
1998............ 18,301.62 11,203.95 28,196.23 17,617.09 23,944.51 27,489.41 17,012.95 13,984.07 36,262.33
<CAPTION>
SALOMON BACK BAY
BROTHERS ADVISORS
U.S. MONEY
GOVERNMENT MARKET
---------- ----------
<S> <C> <C>
As of December
31:
1983............ $ 9,600.49
1984............ 10,565.34
1985............ 11,395.86
1986............ 12,104.94
1987............ 12,812.50
1988............ 13,679.20
1989............ 14,831.00
1990............ 15,906.76
1991............ 16,638.66
1992............ 17,008.47
1993............ 17,249.12
1994............ $ 9,400.41 17,664.12
1995............ 10,755.92 18,391.19
1996............ 11,043.68 19,043.28
1997............ 11,923.54 19,760.95
1998............ 12,753.43 20,492.34
</TABLE>

ANNUAL PERCENTAGE CHANGE IN CONTRACT VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES
------ ------------- ------ -------- ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983...................
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993................... 13.70% 13.21%
1994................... -4.09% 2.38% -3.05% -1.88 -3.71% -2.80 -0.32% -1.61%
1995................... 26.75 4.50 46.40 28.29 37.10 34.31 22.81 17.47
1996................... 28.64 4.95 11.43 15.80 23.90 16.28 15.08 12.55
1997................... 22.94 -2.88 23.75 15.54 31.52 31.47 14.40 9.35
1998................... -3.15 5.55 45.62 -6.86 12.73 22.64 7.45 .45
Cumulative Return....... 86.19 15.09 185.01 78.37 142.50 177.09 73.18 42.89
Annual Effective Rate of
Return................. 14.25 3.43 28.60 10.75 23.70 19.70 14.10 8.95
</TABLE>

II-6
<PAGE>

ANNUAL PERCENTAGE CHANGE IN SURRENDER VALUE(1)

<TABLE>
<CAPTION>
MORGAN SALOMON
LOOMIS STANLEY GOLDMAN WESTPEAK BROTHERS
SAYLES INTERNATIONAL ALGER SACHS DAVIS GROWTH LOOMIS STRATEGIC
SMALL MAGNUM EQUITY MIDCAP VENTURE AND SAYLES BOND
CAP EQUITY(2) GROWTH VALUE(3) VALUE INCOME BALANCED OPPORTUNITIES
------ ------------- ------ -------- ------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983...................
1984...................
1985...................
1986...................
1987...................
1988...................
1989...................
1990...................
1991...................
1992...................
1993................... 6.50% 6.01%
1994................... -10.28% -4.14% -9.19% -1.06 -9.80% -1.99 -6.64% -7.85%
1995................... 28.61 5.49 49.64 30.90 39.65 37.26 24.65 18.86
1996................... 31.04 6.04 12.67 17.12 25.84 17.57 16.72 14.15
1997................... 24.39 -2.01 25.19 16.56 33.15 32.85 15.68 10.53
1998................... -2.69 6.63 47.10 -6.44 13.45 23.42 8.28 1.19
Cumulative Return....... 83.02 12.04 181.96 76.17 139.45 174.89 70.13 39.84
Annual Effective Rate of
Return................. 13.83 2.77 28.26 10.51 23.33 19.53 13.61 8.39
</TABLE>

<TABLE>
<CAPTION>
LEHMAN
INTERMEDIATE
BACK BAY SALOMON BACK BAY GOVERNMENT/
ADVISORS BROTHERS ADVISORS DOW JONES S&P 500 CORPORATE CONSUMER
BOND U.S. MONEY INDUSTRIAL STOCK BOND PRICE
INCOME GOVERNMENT MARKET AVERAGE(4) INDEX(5) INDEX(6) INDEX(7)
-------- ---------- -------- ---------- -------- ------------ --------
<S> <C> <C> <C> <C> <C> <C> <C>
As of December 31:
1983................... -3.24% -4.00% 5.11% 1.79% 4.51% 1.07%
1984................... 12.07 10.05 1.35 6.27 14.37 3.95
1985................... 18.76 7.86 33.62 31.73 18.06 3.77
1986................... 14.36 6.22 27.25 18.66 13.13 1.13
1987................... 1.39 5.85 5.55 5.25 3.66 4.41
1988................... 7.52 6.76 16.21 16.61 6.67 4.42
1989................... 11.37 8.42 32.24 31.69 12.77 4.65
1990................... 7.05 7.25 -0.54 -3.10 9.16 6.11
1991................... 16.22 4.60 24.25 30.47 14.62 3.06
1992................... 6.59 2.22 7.40 7.62 7.17 2.90
1993................... 10.98 1.41 16.97 10.08 8.79 2.75
1994................... -4.77 -6.00% 2.41 5.02 1.32 -1.93 2.67
1995................... 19.46 14.42 4.12 36.94 37.58 15.33 2.54
1996................... 3.09 2.68 3.55 28.91 22.96 4.05 3.32
1997................... 9.30 7.97 3.77 24.91 33.36 7.87 1.83
1998................... 7.49 6.96 3.70 18.14 28.52 8.44 1.61
Cumulative Return....... 262.62 27.53 104.92 1149.92 1102.45 299.72 63.57
Annual Effective Rate of
Return................. 8.77 6.01 4.79 17.90 17.60 9.46 3.26
</TABLE>
- --------
NOTES:
(1) The Contract Values, surrender values, and annual percentage change
figures assume reinvestment of dividends and capital gain distributions.
The Contract Values are net of all deductions and expenses other than any
applicable Contingent Deferred Sales Charge or premium tax charge. Each
surrender value equals the Contract Value less any applicable Contingent
Deferred Sales Charge and a pro rata portion of the annual $30
Administration Contract Charge, but does not reflect a deduction for the
premium tax charge. (See "Administration Charges, Contingent Deferred
Sales Charge and Other Deductions.") 1983 figures for the Back Bay
Advisors Bond Income and Back Bay Advisors Money Market Series are from
September 1 through December 31, 1983. 1993 figures for the Westpeak
Growth and Income and Goldman Sachs Midcap Value Series are from May 1
through December 31, 1993. 1994 figures for the Loomis Sayles Small Cap
Series are from May 2 through December 31, 1994. 1994 figures for all
other series of the Zenith Fund are from November 1 through December 31,
1994.

II-7
<PAGE>

INVESTMENT RESULTS

SEPTEMBER 1, 1983--DECEMBER 31, 1998

FOR BOND INCOME AND MONEY MARKET SERIES

MAY 1, 1993--DECEMBER 31, 1998 FOR GROWTH AND INCOME AND MIDCAP VALUE SERIES

MAY 2, 1994--DECEMBER 31, 1998 FOR SMALL CAP SERIES

NOVEMBER 1, 1994--DECEMBER 31, 1998 FOR OTHER ZENITH FUND SERIES

<TABLE>
<CAPTION>
CONTRACT VALUE
----------------------
MORGAN
LOOMIS STANLEY
SAYLES INTERNATIONAL
CUMULATIVE SMALL MAGNUM
PAYMENTS(1) CAP EQUITY(2)
----------- -------- -----------
<S> <C> <C> <C>
As of
December 31:
1983............... $ 1,000
1984............... 4,000
1985............... 7,000
1986............... 10,000
1987............... 13,000
1988............... 16,000
1989............... 19,000
1990............... 22,000
1991............... 25,000
1992............... 28,000
1993............... 31,000
1994............... 34,000 1,956.63 $ 511.41
1995............... 37,000 5,897.75 3,638.51
1996............... 40,000 11,030.05 6,861.95
1997............... 43,000 16,920.50 9,556.93
1998............... 46,000 19,417.77 13,044.17
Annual Effective
Rate of Return.... 24.09 2.01
<CAPTION>
CONTRACT VALUE
-------------------------------------------------------------------------------------------------

GOLDMAN DAVIS WESTPEAK SALOMON BACK BAY SALOMON BACK BAY
ALGER SACHS VENTURE GROWTH LOOMIS BROTHERS ADVISORS BROTHERS ADVISORS
EQUITY MIDCAP VALUE AND SAYLES BOND BOND U.S. MONEY
GROWTH VALUE(3) GROWTH INCOME BALANCED OPPORTUNITIES INCOME GOVERNMENT MARKET
--------- ---------- --------- ---------- -------- ------------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of
December 31:
1983............... $ 1,012.82 $ 1,016.10
1984............... 4,349.17 4,230.31
1985............... 8,365.14 7,594.48
1986............... 12,621.63 11,052.43
1987............... 15,732.03 14,672.07
1988............... 19,860.86 18,635.16
1989............... 25,137.16 23,179.99
1990............... 29,936.01 27,818.23
1991............... 38,128.97 32,191.38
1992............... 43,796.87 35,969.10
1993............... $ 2,122.25 $ 2,120.94 51,743.14 39,536.81
1994............... $ 497.71 5,100.04 $ 494.93 5,051.82 $ 502.23 $ 492.22 52,263.51 $ 502.43 43,574.89
1995............... 4,223.53 9,880.99 4,127.35 10,265.42 3,906.01 3,815.40 65,744.71 3,736.04 48,480.34
1996............... 7,869.16 14,643.89 8,539.41 15,252.30 7,782.17 7,482.81 70,935.93 6,854.02 53,307.79
1997............... 13,012.63 20,152.48 14,643.35 23,498.65 12,123.84 11,325.33 80,749.76 10,435.60 58,434.53
1998............... 22,743.04 21,610.05 19,779.51 32,195.22 16,162.67 14,362.94 89,965.21 14,142.16 63,717.69
Annual Effective
Rate of Return.... 29.57 8.38 22.40 22.52 12.34 6.60 8.24 5.87 4.10
</TABLE>
- -------

(1) For the Westpeak Growth and Income and Goldman Sachs Midcap Value Series,
cumulative payments as of December 31, 1993 would be $2,000, as of
December 31, 1994 would be $5,000, as of December 31, 1995 would be
$8,000, as of December 31, 1996 would be $11,000, as of December 31, 1997
would be $14,000 and as of December 31, 1998 would be $17,000. For the
Loomis Sayles Small Cap Series, cumulative payments as of December 31,
1994 would be $2,000, as of December 31, 1995 would be $5,000, as of
December 31, 1996 would be $8,000, as of December 31, 1997 would be
$11,000 and as of December 31, 1998 would be $14,000. For the other Zenith
Fund Series, cumulative payments as of December 31, 1994 would be $500, as
of December 31, 1995 would be $3,500, as of December 31, 1996 would be
$6,500, as of December 31, 1997 would be $9,500 and as of December 31,
1998 would be $12,500.

(2) The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.

(3) The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998 when Goldman Sachs Asset Management became
the subadviser.

II-8
<PAGE>

<TABLE>
<CAPTION>
SURRENDER VALUE
-------------------------
LOOMIS MORGAN
SAYLES STANLEY
CUMULATIVE SMALL INTERNATIONAL
PAYMENTS(1) CAP MAGNUM(2)
----------- ---------- -------------
<S> <C> <C> <C>
As of December
31:
1983............ $ 1,000
1984............ 4,000
1985............ 7,000
1986............ 10,000
1987............ 13,000
1988............ 16,000
1989............ 19,000
1990............ 22,000
1991............ 25,000
1992............ 28,000
1993............ 31,000
1994............ 34,000 $ 1,803.92 $ 472.36
1995............ 37,000 5,550.25 3,406.14
1996............ 40,000 10,522.55 6,462.04
1997............ 43,000 16,283.00 9,054.53
1998............ 46,000 19,400.27 12,411.63
Annual Effective
Rate of Return. 21.85 -.33
<CAPTION>
SURRENDER VALUE
----------------------------------------------------------------------------------------------------
GOLDMAN SALOMON BACK BAY SALOMON BACK BAY
ALGER SACHS DAVIS WESTPEAK LOOMIS BROTHERS ADVISORS BROTHERS ADVISORS
EQUITY MIDCAP VENTURE GROWTH SAYLES BOND BOND U.S. MONEY
GROWTH VALUE(3) VALUE AND INCOME BALANCED OPPORTUNITIES INCOME GOVERNMENT MARKET
--------- ---------- ---------- ---------- ---------- ------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
As of December
31:
1983............ $ 933.67 $ 936.73
1984............ 4,069.17 3,957.75
1985............ 7,915.14 7,149.73
1986............ 12,031.63 10,462.43
1987............ 15,032.03 13,972.07
1988............ 19,080.86 17,855.16
1989............ 24,307.16 22,349.99
1990............ 29,086.01 26,968.23
1991............ 37,278.97 31,341.38
1992............ 42,946.87 35,119.10
1993............ $ 1,962.25 $ 1,960.94 50,893.14 38,686.81
1994............ $ 459.62 4,765.49 $ 457.04 4,720.67 $ 463.83 $ 454.51 51,413.51 $ 464.01 42,724.89
1995............ 3,978.53 9,370.99 3,882.35 9,755.42 3,661.01 3,572.58 64,894.71 3,498.43 47,630.34
1996............ 7,449.16 14,003.89 8,119.41 14,612.30 7,362.17 7,062.81 70,085.93 6,455.26 52,457.79
1997............ 12,447.63 19,412.48 14,078.35 22,758.65 11,558.84 10,760.33 79,899.76 9,875.72 57,584.53
1998............ 22,063.04 20,800.05 19,099.51 31,385.22 15,482.69 13,682.94 89,115.21 13,462.16 62,867.69
Annual Effective
Rate of Return. 27.99 7.04 20.64 21.61 10.24 4.29 8.13 3.51 3.94
</TABLE>
- -------

II-9
<PAGE>

LOOMIS SAYLES SMALL CAP SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
May 1, 1994........................................... 1.000000
December 31, 1994..................................... 0.959097 -4.1%
December 31, 1995..................................... 1.219226 27.1%
December 31, 1996..................................... 1.571807 28.9%
December 31, 1997..................................... 1.936137 23.2%
December 31, 1998..................................... 1.877786 -3.0%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 8 months ended December 31, 1998.............. 87.8% 14.4%
1 year ended December 31, 1998......................... -3.0% -3.0%
</TABLE>

MORGAN STANLEY INTERNATIONAL MAGNUM EQUITY SUB-ACCOUNT**

ANNUAL PERCENT CHANGE IN UNIT VALUE*

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 16.4% 3.7%
1 year ended December 31, 1998......................... 5.8% 5.8%
</TABLE>

EQUITY GROWTH SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 0.955891 -4.4%
December 31, 1995..................................... 1.402375 46.7%
December 31, 1996..................................... 1.565675 11.6%
December 31, 1997..................................... 1.940577 23.9%
December 31, 1998..................................... 2.829403 45.8%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 182.9% 28.3%
1 year ended December 31, 1998......................... 45.8% 45.8%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

** The Morgan Stanley International Magnum Equity Series' subadviser was
Draycott Partners, Ltd. until May 1, 1997, when Morgan Stanley Dean Witter
Investment Management Inc. became the subadviser.

II-10
<PAGE>

GOLDMAN SACHS MIDCAP VALUE SUB-ACCOUNT***

ANNUAL PERCENT CHANGE IN UNIT VALUE*

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
5 years, 8 months ended December 31, 1998.............. 80.2% 10.9%
5 years ended December 31, 1998........................ 58.5% 9.7%
1 year ended December 31, 1998......................... -6.7% -6.7%
</TABLE>

DAVIS VENTURE VALUE SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 0.962860 -3.7%
December 31, 1995..................................... 1.323183 37.4%
December 31, 1996..................................... 1.642613 24.1%
December 31, 1997..................................... 2.163463 31.7%
December 31, 1998..................................... 2.442138 12.9%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 144.2% 23.9%
1 year ended December 31, 1998......................... 12.9% 12.9%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.
*** The Goldman Sachs Midcap Value Series' subadviser was Loomis, Sayles &
Company, L.P. until May 1, 1998, when Goldman Sachs Asset Management became
the subadviser.

II-11

<PAGE>

WESTPEAK GROWTH AND INCOME SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
April 30, 1993........................................ 1.000000
December 31, 1993..................................... 1.132111 13.2%
December 31, 1994..................................... 1.103489 -2.5%
December 31, 1995..................................... 1.485762 34.6%
December 31, 1996..................................... 1.730922 16.5%
December 31, 1997..................................... 2.279329 31.7%
December 31, 1998..................................... 2.798615 22.8%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
5 years, 8 months ended December 31, 1998.............. 179.9% 19.9%
5 years ended December 31, 1998........................ 147.2% 19.8%
1 year ended December 31, 1998......................... 22.8% 22.8%
</TABLE>

LOOMIS SAYLES BALANCED SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 0.996791 -0.3%
December 31, 1995..................................... 1.227281 23.1%
December 31, 1996..................................... 1.415482 15.3%
December 31, 1997..................................... 1.622453 14.6%
December 31, 1998..................................... 1.746518 7.6%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 74.7% 14.3%
1 year ended December 31, 1998......................... 7.6% 7.6%
</TABLE>

SALOMON BROTHERS STRATEGIC BOND OPPORTUNITIES SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 0.983850 -1.6%
December 31, 1995..................................... 1.158823 17.8%
December 31, 1996..................................... 1.307292 12.8%
December 31, 1997..................................... 1.432601 9.6%
December 31, 1998..................................... 1.442191 .7%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-12

<PAGE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 44.2% 9.2%
1 year ended December 31, 1998......................... .7% .7%
</TABLE>

BACK BAY ADVISORS BOND INCOME SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
August 26, 1983....................................... 1.000000
December 31, 1983..................................... 1.027196 2.7%
December 31, 1984..................................... 1.141109 11.1%
December 31, 1985..................................... 1.337005 17.2%
December 31, 1986..................................... 1.514752 13.3%
December 31, 1987..................................... 1.528314 0.9%
December 31, 1988..................................... 1.633970 6.9%
December 31, 1989..................................... 1.810362 10.8%
December 31, 1990..................................... 1.930406 6.6%
December 31, 1991..................................... 2.246568 16.4%
December 31, 1992..................................... 2.397657 6.7%
December 31, 1993..................................... 2.663825 11.1%
December 31, 1994..................................... 2.539801 -4.7%
December 31, 1995..................................... 3.037039 19.6%
December 31, 1996..................................... 3.134109 3.2%
December 31, 1997..................................... 3.428788 9.4%
December 31, 1998..................................... 3.688741 7.6%
</TABLE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
15 years, 4 months ended December 31, 1998............. 268.9% 8.9%
10 years ended December 31, 1998....................... 125.8% 8.5%
5 years ended December 31, 1998........................ 38.5% 6.7%
1 year ended December 31, 1998......................... 7.6% 7.6%
</TABLE>

SALOMON BROTHERS U.S. GOVERNMENT SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

<TABLE>
<CAPTION>
ACCUMULATION %
DATE UNIT VALUE CHANGE
---- ------------ ------
<S> <C> <C>
October 31, 1994...................................... 1.000000
December 31, 1994..................................... 1.003770 0.4%
December 31, 1995..................................... 1.139109 13.5%
December 31, 1996..................................... 1.160957 1.9%
December 31, 1997..................................... 1.242399 7.0%
December 31 1998...................................... 1.318989 6.2%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-13
<PAGE>

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
4 years, 2 months ended December 31, 1998.............. 31.9% 6.9%
1 year ended December 31, 1998......................... 6.2% 6.2%
</TABLE>

BACK BAY ADVISORS MONEY MARKET SUB-ACCOUNT

ANNUAL PERCENT CHANGE IN UNIT VALUE*

PERCENT CHANGE IN UNIT VALUE AND ANNUAL EFFECTIVE RATE OF RETURN*

<TABLE>
<CAPTION>
% CHANGE ANNUAL
IN UNIT EFFECTIVE
VALUE RATE
-------- ---------
<S> <C> <C>
15 years, 4 months ended December 31, 1998............. 111.4% 5.0%
10 years ended December 31, 1998....................... 50.2% 4.2%
5 years ended December 31, 1998........................ 19.7% 3.7%
1 year ended December 31, 1998......................... 3.9% 3.9%
</TABLE>
- --------
* Unit values do not reflect the impact of any Contingent Deferred Sales
Charge, premium tax charge, or the annual Administration Contract Charge.

II-14
<PAGE>

NET INVESTMENT FACTOR

The Company determines the net investment factor ("Net Investment Factor")
for any sub-account on each day on which the New York Stock Exchange is open
for trading as follows:

(1) The Company takes the net asset value per share of the Eligible Fund
held in the sub-account determined as of the close of regular trading on
the New York Stock Exchange on a particular day;

(3) This total amount is then divided by the net asset value per share of
the Eligible Fund as of the close of regular trading on the New York Stock
Exchange on the preceding trading day.

(4) Finally, the Company subtracts the daily charges for the
Administration Asset Charge and Mortality and Expense Risk Charge since the
close of regular trading on the New York Stock Exchange on the preceding
trading day. (See "Administration Charges, Contingent Deferred Sales Charge
and Other Deductions" in the prospectus.) On an annual basis, the total
deduction for such charges equals 1.35% of the daily net asset value of the
Variable Account.

ANNUITY PAYMENTS

II-15
<PAGE>

the next payment will be larger than the preceding one; if the actual Net
Investment Factors are equivalent to a net investment return smaller than the
Assumed Interest Rate, then the next payment will be smaller than the
preceding payment.

The number of annuity units credited under a variable payment option is
determined as follows:

(2) The number of annuity units is determined by dividing the amount of
the basic payment level by the applicable annuity unit value(s) next
determined following the date of application of proceeds.

Illustrations of annuity income payments under various hypothetical and
historical rates appear in the tables below. The monthly equivalents of the
hypothetical annual net returns of (2.15%), 3.50%, 3.72%, 5.68% and 7.63%
shown in the tables at pages II-18 and II-19 are (.18%), .29%, .30%, .41% and
.61%.

II-16
<PAGE>

HYPOTHETICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS

The following tables have been prepared to show how variable annuity income
payments under the Contract change with investment performance over an
extended period of time. The tables illustrate how monthly annuity income
payments would vary over time if the return on assets in the selected
portfolios were a uniform gross annual rate of 0%, 5.78%, 6%, 8% or 10%. The
values would be different from those shown if the returns averaged 0%, 5.78%,
6%, 8% or 10%, but fluctuated over and under those averages throughout the
years.

The tables reflect the daily charge to the sub-accounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.25%
and the daily administrative charge which is equivalent to an annual charge of
0.10%. The amounts shown in the tables also take into account the portfolios'
management fees and operating expenses which are assumed to be at an annual
rate of 0.83% of the average daily net assets of the Eligible Funds. Actual
fees and expenses of the portfolios associated with your Contract may be more
or less than 0.83%, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status."

The tables show both the gross rate and the net rate. The difference between
gross and net rates represents the 1.35% for mortality and expense risk and
administrative charges and the assumed 0.83% for investment management and
operating expenses. Since these charges are deducted daily from assets, the
difference between the gross and net rate is not exactly 2.18%.

II-17
<PAGE>

ANNUITY PAY-OUT ILLUSTRATION
(100% VARIABLE PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED: FOR AGE 65: $639.32

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%

VARIABLE MONTHLY ANNUITY INCOME PAYMENT ON THE DATE OF THE
ILLUSTRATION: $581.00

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.

<TABLE>
<CAPTION>
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
WITH AN ASSUMED RATE OF RETURN OF:
----------------------------------------------
GROSS 0% 5.78% 6% 8% 10%
PAYMENT CALENDAR ----- ----------------- -------- -------- ----------
YEAR YEAR AGE NET** -2.15% 3.50% 3.72% 5.68% 7.63%
- ------- -------- --- ----- ----------------- -------- -------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1999 65 $ 581.00 $ 581.00 $ 581.00 $ 581.00 $ 581.00
2 2000 66 549.27 581.00 582.23 593.21 604.20
3 2001 67 519.27 581.00 583.46 605.68 628.32
4 2002 68 490.91 581.00 584.69 618.41 653.41
5 2003 69 464.10 581.00 585.92 631.41 679.50
10 2008 74 350.47 581.00 592.13 700.62 826.43
15 2013 79 264.66 581.00 598.41 777.42 1,005.14
20 2018 84 199.86 581.00 604.75 862.63 1,222.49
</TABLE>
IT IS EMPHASIZED THAT THE ASSUMED RATES OF RETURN SHOWN ABOVE ARE ILLUSTRATIVE
ONLY AND SHOULD NOT BE DEEMED A REPRESENTATION OF PAST OR FUTURE PERFORMANCE.
ACTUAL PERFORMANCE RESULTS MAY BE MORE OR LESS THAN THOSE SHOWN AND WILL
DEPEND ON A NUMBER OF FACTORS, INCLUDING THE INVESTMENT ALLOCATIONS MADE BY
THE CONTRACT OWNER AND THE VARIOUS RATES OF RETURN OF THE PORTFOLIOS SELECTED.
THE AMOUNT OF THE INCOME PAYMENT WOULD BE DIFFERENT FROM THAT SHOWN IF THE
ACTUAL PERFORMANCE AVERAGED THE ASSUMED RATES OF RETURN SHOWN ABOVE OVER A
PERIOD OF YEARS, BUT ALSO FLUCTUATED ABOVE OR BELOW THOSE AVERAGES FOR
INDIVIDUAL CONTRACT YEARS. SINCE IT IS HIGHLY LIKELY THAT THE PERFORMANCE WILL
FLUCTUATE FROM MONTH TO MONTH, MONTHLY INCOME (BASED ON THE VARIABLE ACCOUNT)
WILL ALSO FLUCTUATE. NO REPRESENTATION CAN BE MADE BY THE COMPANY OR THE FUNDS
THAT THIS HYPOTHETICAL PERFORMANCE CAN BE ACHIEVED FOR ANY ONE YEAR OR
SUSTAINED OVER ANY PERIOD OF TIME.
- -------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period,
payments will be continued for the balance of the Certain Period. The
cumulative amount of income payments received under the annuity depends on
how long the Annuitant lives after the Certain Period. An annuity pools the
mortality experience of Annuitants. Annuitants who die earlier, in effect,
subsidize the payments for those who live longer.

** The illustrated Net Assumed Rates of Return reflect the deduction of
average fund expenses and the 1.35% Mortality and Expense Risk and
Administration Asset Charges from the Gross Rates of Return.

II-18
<PAGE>

ANNUITY PAY-OUT ILLUSTRATION
(50% VARIABLE--50% FIXED PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT FOR AGE 65 BASED ON CURRENT RATES, IF
100% FIXED ANNUITY OPTION SELECTED: $639.32

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 50% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT: 3.5%

<TABLE>
<CAPTION>
AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN
WITH AN ASSUMED RATE OF RETURN OF:
-------------------------------------------------
GROSS 0% 5.78% 6% 8% 10%
PAYMENT CALENDAR ----- --------- --------- --------- --------- ---------
YEAR YEAR AGE NET** -2.15% 3.50% 3.72% 5.68% 7.63%
- ------- -------- --- ----- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1999 65 $ 610.16 $ 610.16 $ 610.16 $ 610.16 $ 610.16
2 2000 66 $594.29 $610.16 $610.77 $616.27 $621.76
3 2001 67 $579.29 $610.16 $611.39 $622.50 $633.82
4 2002 68 $565.11 $610.16 $612.00 $628.87 $646.37
5 2003 69 $551.71 $610.16 $612.62 $635.37 $659.41
10 2008 74 $494.90 $610.16 $615.73 $669.97 $732.88
15 2013 79 $451.99 $610.16 $618.86 $708.37 $822.23
20 2018 84 $419.59 $610.16 $622.04 $750.98 $930.90
</TABLE>

** The illustrated Net Assumed Rates of Return apply only to the variable
portion of the monthly payment and reflect the deduction of average fund
expenses and the 1.35% Mortality and Expense Risk and Administration Asset
Charges from the Gross Rate of Return.

II-19
<PAGE>

HISTORICAL ILLUSTRATIONS OF ANNUITY INCOME PAYOUTS

The tables reflect the daily charge to the sub-accounts for assuming
mortality and expense risks, which is equivalent to an annual charge of 1.25%
and the daily administrative charge which is equivalent to an annual charge of
0.10%. The amounts shown in the tables also take into account the actual
portfolios' management fees and operating expenses. Actual fees and expenses
of the portfolios associated with your Contract may be more or less than the
historical fees, will vary from year to year, and will depend on how you
allocate your Contract Value. See the section in your current prospectus
entitled "Expense Table" for more complete details. The monthly annuity income
payments illustrated are on a pre-tax basis. The federal income tax treatment
of annuity income considerations is generally described in the section of your
current prospectus entitled "Federal Income Tax Status."

The following tables assume that 100% of the Contract Value is allocated to
a variable annuity income option, that the final value of the accumulation
account is $100,000 and is applied at age 65 to purchase a life annuity for a
guaranteed period of 10 years certain and life thereafter. The table assumes
that the Annuitant was age 65 in 1983, the year of inception for the Bond
Income and Money market portfolios, and that the Annuitant's age has increased
by the time the other portfolios became available. The historical variable
annuity income payments are based on an assumed interest rate of 3.5% per
year. Thus, actual performance greater than 3.5% per year resulted in an
increased annuity income payment and actual performance less than 3.5% per
year resulted in a decreased annuity income payment. We offer alternative
Assumed Interest Rates (AIR) from which you may select: 0% and 5%. An AIR of
0% will result in a lower initial payment than a 3.5% or 5% AIR. Similarly, an
AIR of 5% will result in a higher initial payment than a 0% or 3.5% AIR. The
illustrations are based on current annuity purchase rates used by the Company.
The rates may differ at the time you annuitize.

II-20
<PAGE>

ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
(100% VARIABLE PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED: FOR AGE 75: $779.75 AND FOR AGE 76: $796.56.

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT:
3.50%

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.

AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH
100% OF THE CONTRACT VALUE INVESTED IN:

<TABLE>
<CAPTION>
LOOMIS MORGAN GOLDMAN WESTPEAK
SAYLES STANLEY ALGER SACHS DAVIS GROWTH
PAYMENT CALENDAR SMALL INTERNATIONAL EQUITY MIDCAP VENTURE AND
YEAR YEAR AGE CAP MAGNUM GROWTH VALUE** VALUE INCOME
- ------- -------- --- --------- ------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
1 1983 65
2 1984 66
3 1985 67
4 1986 68
5 1987 69
6 1988 70
7 1989 71
8 1990 72
9 1991 73
10 1992 74
11 1993 75 $ 747.00 $ 747.00
12 1994 76 $ 765.00 $765.00 $ 765.00 829.98 $ 765.00 826.38
13 1995 77 733.73 778.70 737.42 789.05 732.39 778.25
14 1996 78 901.19 788.57 1,045.27 980.46 972.43 1,012.42
15 1997 79 1,122.40 801.70 1,127.42 1,098.95 1,166.26 1,139.48
16 1998 80 1,335.81 754.27 1,350.12 1,229.02 1,484.12 1,449.76
17 1999 81 1,251.74 771.29 1,901.94 1,107.57 1,618.68 1,719.86
</TABLE>

THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGE AND ADMINISTRATION ASSET CHARGE (1.35%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1998, after giving effect to current
expense caps or deferrals: 1.00% Loomis Sayles Small Cap, 1.30% Morgan Stanley
International Magnum, .83% Alger Equity Growth, .90% Goldman Sachs Midcap
Value, .83% Davis Venture Value, .78% Westpeak Growth and Income, .82% Loomis
Sayles Balanced, .85% Salomon Strategic Bond Opportunities, .48% Back Bay Bond
Income, .70% Salomon US Government, .45% Back Bay Money Market.) As of May 1,
1998 the Goldman Sachs Midcap Value Series is subject to a voluntary expense
deferral arrangement with an annual expense limit of .90% of net assets.
- -------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period,
payments will be continued for the balance of the Certain Period. The
cumulative amount of income payments received under the annuity depends on
how long the Annuitant lives after the Certain Period. An annuity pools the
mortality experience of Annuitants. Annuitants who die earlier, in effect,
subsidize the payments for those who live longer.

** Rates of return and Contract Values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average daily
net assets through April 30, 1998. Beginning May 1, 1998 the Series'
advisory fee is .75% and is reflected through December 31, 1998.

II-21
<PAGE>

ANNUITY PAY-OUT HISTORICAL ILLUSTRATION
(100% VARIABLE PAYOUT)

FIXED MONTHLY ANNUITY INCOME PAYMENT BASED ON CURRENT RATES, IF 100% FIXED
ANNUITY OPTION SELECTED FOR AGE 65: $639.32; FOR AGE 75: $779.75 AND FOR AGE
76: $796.56.

ILLUSTRATIVE AMOUNTS BELOW ASSUME THAT 100% OF THE CONTRACT VALUE IS ALLOCATED
TO VARIABLE PAYOUT.

ASSUMED INTEREST RATE AT WHICH MONTHLY VARIABLE PAYMENTS REMAIN CONSTANT:
3.50%

MONTHLY INCOME PAYMENTS WILL VARY WITH INVESTMENT PERFORMANCE. NO MINIMUM
DOLLAR AMOUNT IS GUARANTEED.

AMOUNT OF FIRST MONTHLY PAYMENT IN YEAR SHOWN WITH
100% OF THE CONTRACT VALUE INVESTED IN:

<TABLE>
<CAPTION>
SALOMON
LOOMIS STRATEGIC BACK BAY SALOMON BACK BAY
PAYMENT CALENDAR SAYLES BOND BOND U.S. MONEY
YEAR YEAR AGE BALANCED OPPORTUNITIES INCOME GOVERNMENT MARKET
- ------- -------- --- -------- ------------- -------- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
1 1983 65 $ 581.00 $581.00
2 1984 66 593.85 589.21
3 1985 67 637.34 621.82
4 1986 68 721.50 641.71
5 1987 69 789.77 653.31
6 1988 70 789.90 663.40
7 1989 71 795.21 679.85
8 1990 72 851.26 708.06
9 1991 73 877.02 730.20
10 1992 74 986.14 739.29
11 1993 75 1,016.77 731.38
12 1994 76 $ 765.00 $765.00 1,091.45 $765.00 717.90
13 1995 77 758.20 748.36 1,005.44 763.51 711.52
14 1996 78 901.95 851.64 1,161.63 837.15 716.92
15 1997 79 1,004.99 928.18 1,158.11 824.28 718.30
16 1998 80 1,112.99 982.75 1,224.15 852.27 721.25
17 1999 81 1,157.58 955.87 1,272.43 874.22 723.71
</TABLE>

THE PAYMENTS IN THIS ILLUSTRATION ARE NET OF ALL CHARGES: MORTALITY AND
EXPENSE RISK CHARGE AND ADMINISTRATION ASSET CHARGE (1.35%), MANAGEMENT FEES
AND OTHER EXPENSES (These may vary from year to year. The following expenses
are for the year ended December 31, 1998, after giving effect to expense caps
or deferrals: 1.00% Loomis Sayles Small Cap, 1.30% Morgan Stanley
International Magnum, .83% Alger Equity Growth, .90% Goldman Sachs Midcap
Value, .83% Davis Venture Value, .78% Westpeak Growth and Income, .82% Loomis
Sayles Balanced, .85% Salomon Strategic Bond Opportunities, .48% Back Bay Bond
Income, .70% Salomon US Government, .45% Back Bay Money Market.) As of May 1,
1998 the Goldman Sachs Midcap Value Series is subject to a voluntary expense
deferral arrangement with an annual expense limit of .90% of net assets.
- -------
* Income payments are made during the Annuitant's lifetime. If the Annuitant
dies before payments have been made for the 10 Year Certain Period,
payments will be continued for the balance of the Certain Period. The
cumulative amount of income payments received under the annuity depends on
how long the Annuitant lives after the Certain Period. An annuity pools the
mortality experience of Annuitants. Annuitants who die earlier, in effect,
subsidize the payments for those who live longer.

** Rates of return and Contract values and benefits shown reflect the Goldman
Sachs Midcap Value Series' investment advisory fee of .70% of average daily
net assets through April 30, 1998. Beginning May 1, 1998 the Series'
advisory fee is .75% and is reflected through December 31, 1998.

II-22
<PAGE>

THE FIXED ACCOUNT

Unless you request otherwise, a partial surrender will reduce the Contract
Value in the sub-accounts of the Variable Account and the Fixed Account
proportionately. The annual Administration Contract Charge will be deducted
entirely from the Contract Value in the Variable Account, and not from the
Contract Value in the Fixed Account or the Company's general account as the
result of a loan. (However, that charge is limited to the lesser of $30 and 2%
of the total Contract Value, including Contract Value you have allocated to the
Fixed Account and any Contract Value held in the Company's general account as
the result of a loan.) Except as described below, amounts in the Fixed Account
are subject to the same rights and limitations as are amounts in the Variable
Account with respect to transfers, surrenders and partial surrenders. The
following special rules apply to transfers involving the Fixed Account.

The amount of Contract Value which you may transfer from the Fixed Account is
limited to the greater of: 25% of the Contract Value in the Fixed Account at
the end of the first day of the Contract Year, and the amount of Contract Value
that was transferred from the Fixed Account in the previous Contract Year
(amounts transferred under a DCA program are not included), except with our
consent. However these limits do not apply to new deposits to the Fixed Account
for which you elected the dollar cost averaging program within 30 days from the
date of the deposit. In such case, the amount of Contract Value which you may
transfer from the Fixed Account will be the greatest of: a) 25% of the Contract
Value in the Fixed Account at the end of the first day of the Contract Year; b)
the amount of Contract Value that you transferred from the Fixed Account in the
previous Contract Year; or c) the amount of Contract Value in the Fixed Account
to be transferred out of the Fixed Account under dollar cost averaging elected
on new deposits within 30 days from the date of deposit. We allow one dollar
cost averaging program to be active at a time. Therefore, if you transfer pre-
existing assets (corresponding to Contract Value for which the dollar cost
averaging program was not elected within 30 days from the date of each deposit)
out of the Fixed Account under the dollar cost averaging program and would like
to transfer up to 100% of new deposits under the program, then the dollar cost
averaging program on the pre-existing assets will be canceled and a new program
will begin with respect to new deposits. In this case, the pre-existing assets
may still be transferred out of the Fixed Account, however, not under a dollar
cost averaging program, subject to the limitations on transfers generally out
of the Fixed Account. (Also, after you make the transfer, the Contract Value
may not be allocated among more than ten of the sub-accounts and/or the Fixed
Account.) We intend to restrict purchase payments and transfers of Contract
Value into the Fixed Account: (1) if the interest rate which we would credit to
the deposit would be equivalent to an annual effective rate of 3%; or (2) if
the total Contract Value in the Fixed Account exceeds a maximum amount
published by us (currently $500,000). (For Contracts issued in Maryland, we
reserve the right to restrict such purchase payments and transfers if the total
Contract Value in the Fixed Account equals or exceeds $500,000.) In addition,
we intend to restrict transfers of Contract Value into the Fixed Account, and
reserve the right to restrict purchase payments and loan prepayments into the
Fixed Account, for 180 days following a transfer or loan out of the Fixed
Account.

If any portion of a Contract loan was attributable to Contract Value in the
Fixed Account, then you must allocate an equal portion of each loan repayment
to the Fixed Account. (For example, if 50% of the loan was attributable to your
Fixed Account Contract Value, then you must allocate 50% of each loan repayment
to the Fixed Account.) Similarly, unless you request otherwise, we will
allocate the balance of the loan repayment to the sub-accounts in the same
proportions in which the loan was attributable to the sub-accounts. See "Loan
Provision for Certain Tax Benefited Retirement Plans." The rate of interest for
each loan repayment applied to the Fixed Account will be the lesser of: (1) the
rate the borrowed money was receiving at the time the loan was made from the
Fixed Account; and (2) the interest rate set by us in advance for that date. If
the loan is being prepaid, however, and prepayments into the Fixed Account are
restricted as described above, the portion of the loan prepayment that would
have been allocated to the Fixed Account will be allocated to the Zenith Back
Bay Advisors Money Market Sub-account instead.

We reserve the right to delay transfers, surrenders, partial surrenders and
Contract loans from the Fixed Account for up to six months.

II-23
<PAGE>

EXPERTS

LEGAL MATTERS

II-24
<PAGE>

APPENDIX A

ADVERTISING AND PROMOTIONAL LITERATURE

NEF's advertising and promotional material may include, but is not limited
to, discussions of the following information about both affiliated and
unaffiliated entities:

. Specific and general assessments and forecasts regarding the U.S.
economy, world economies, the economics of specific nations and their
impact on the Series

. Specific and general investment emphasis, specialties, fields of
expertise, competencies, operations and functions

. Specific and general investment philosophies, strategies, processes,
techniques and types of analysis

. Specific and general sources of information, economic models, forecasts
and data services utilized, consulted or considered in the course of
providing advisory or other services

. The corporate histories, founding dates and names of founders of the
entities

. Awards, honors and recognition given to the firms

. The names of those with ownership interest and the percentage of
ownership

. Current capitalization, levels of profitability and other financial and
statistical information

. Identification of portfolio managers, researchers, economists, principals
and other staff members and employees

. Current and historical statistics about:

- total dollar amount of assets managed

- NEIM assets managed in total and/or by Series

- Asset managed by CGM in total and/or by Series

- the growth of assets

- asset types managed

- numbers of principal parties and employees, and the length of their
tenure, including officers, portfolio managers, researchers, economists,
technicians and support staff

- the above individuals' total and average number of years of industry
experience and the total and average length of their service to the
adviser or the subadviser

II-25
<PAGE>

. The general and specific strategies applied by the advisers in the
management of the New England Zenith Fund's portfolios including, but not
limited to:

- the pursuit of growth, value, income oriented, risk management or other
strategies

- the manner and degree to which the strategy is pursued

- whether the strategy is conservative, moderate or extreme and an
explanation of other features, attributes

- the types and characteristics of investments sought and specific
portfolio holdings

- the actual or potential impact and result from strategy implementation

- through its own areas of expertise and operations, the value added by
subadvisers to the management process

- the disciplines it employs, e.g., in the case of Loomis Sayles, the
strict buy/sell guidelines and focus on sound value it employs, and
goals and benchmarks that it establishes in management, e.g., CGM
pursues growth 50% above the S&P 500

- the systems utilized in management, the features and characteristics of
those systems and the intended results from such computer analysis,
e.g., Westpeak's efforts to identify overvalued and undervalued issues.

In addition, communications and materials developed by NEF or its affiliates
may make reference to the following information about Nvest Companies and its
affiliates:

References to the Series may be included in NEF's advertising and
promotional literature about its 401(k) and retirement plans. The information
may include, but is not limited to:

II-26
<PAGE>

- information about the history, status and future trends of Social
Security and similar government benefit programs including, but not
limited to, eligibility and participation, availability, operations and
administration, structure and design, features, provisions, benefits and
costs

- current and prospective ERISA regulation and requirements.

. Specific and general discussion of the benefits of 401(k) investment and
retirement plans, and, in particular, the NEF 401(k) and retirement
plans, to the participant and plan sponsor, including explanations,
statistics and other data, about:

- increased employee retention

- reinforcement or creation of morale

- deductibility of contributions for participants

- deductibility of expenses for employers

- tax deferred growth, including illustrations and charts

- loan features and exchanges among accounts

- educational services materials and efforts, including, but not limited
to, videos, slides, presentation materials, brochures, an investment
calculator, payroll stuffers, quarterly publications, releases and
information on a periodic basis and the availability of wholesalers and
other personnel.

. Specific and general reference to the benefits of investing in mutual
funds for 401(k) and retirement plans, and, in particular, the Fund and
investing in NEF's 401(k) and retirement plans, including, but not
limited to:

- the significant economies of scale experienced by mutual fund companies
in the 401(k) and retirement benefits arena

- broad choice of investment options and competitive fees

- plan sponsor and participant statements and notices

- the plan prototype, summary descriptions and board resolutions

- plan design and customized proposals

- trusteeship, record keeping and administration

- the services of State Street Bank, including, but not limited to,
trustee services and tax reporting

- the services of DST and BFDS, including, but not limited to, mutual
fund processing support, participant 800 numbers and participant 401(k)
statements

- the services of Trust Consultants Inc., including, but not limited to,
sales support, plan record keeping, document service support, plan
sponsor support, compliance testing and Form 5500 preparation.

. Specific and general reference to the role of the investment dealer and
the benefits and features of working with a financial professional
including:

- access to expertise on investments

- assistance in interpreting past, present and future market trends and
economic events

- providing information to clients including participants during
enrollment and on an ongoing basis after participation

- promoting and understanding the benefits of investing, including mutual
fund diversification and professional management.

II-27
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

REPORT OF INDEPENDENT AUDITORS

To the Contract Owners of New England Variable Annuity Separate Account of New
England Life Insurance Company:

DELOITTE & TOUCHE LLP

Boston, Massachusetts
April 26, 1999

F-1
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF ASSETS AND LIABILITIES

DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ----------- ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments in New England Zenith Fund, at
value (Note 2)............................... $60,670,698 $38,370,137 $37,349,735 $110,777,438

See Notes to Financial Statements

F-2
<PAGE>

See Notes to Financial Statements

F-3
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 1998

See Notes to Financial Statements

F-4
<PAGE>

See Notes to Financial Statements

F-5
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
FROM OPERATING
ACTIVITIES
Net investment income
(loss).............. $ 3,904,493 $ 1,117,408 $ 8,455,248 $ 6,529,491
Net realized and
unrealized gain
(loss) on
investments......... (638,514) -- (11,085,332) 8,752,547
----------- ------------ ------------ ------------
Net increase
(decrease) in net
assets resulting
from operations.... 3,265,979 1,117,408 (2,630,084) 15,282,038
FROM CONTRACT-RELATED
TRANSACTIONS
Purchase payments
transferred from New
England Life
Insurance Company... 28,809,756 45,682,048 14,214,469 47,553,371
Net transfers (to)
from other sub-
accounts............ 4,752,075 (18,742,727) (3,717,079) 7,421,466
Net transfers to New
England Life
Insurance Company... (2,680,352) (7,285,519) (2,057,136) (4,853,673)
----------- ------------ ------------ ------------
Net Increase
(decrease) in net
assets resulting
from contract-
related
transactions....... 30,881,479 19,653,802 8,440,254 50,121,164
----------- ------------ ------------ ------------
Net increase in net
assets.............. 34,147,458 20,771,210 5,810,170 65,403,202
NET ASSETS, AT
BEGINNING OF THE
PERIOD................ 26,977,567 18,168,880 31,474,104 45,683,596
----------- ------------ ------------ ------------
NET ASSETS, AT END OF
THE PERIOD............ $61,125,025 $ 38,940,089 $ 37,284,273 $111,086,797
=========== ============ ============ ============
</TABLE>

See Notes to Financial Statements

F-6
<PAGE>

<TABLE>
<CAPTION>
SMALL U.S. EQUITY INTERNATIONAL VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
- ----------- ----------- ----------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 628,147 $ 918,269 $ 3,346,223 $ 4,442,156 $ 513,383 $ 3,077,538 $ 3,250,410 $ 36,182,765
(2,435,759) 127,362 2,436,873 35,131,332 503,293 11,937,567 (2,899,684) 41,829,683
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
(1,807,612) 1,045,631 5,783,096 39,573,488 1,016,676 15,015,105 350,726 78,012,448
25,815,897 11,059,857 35,591,207 48,210,048 13,325,118 55,370,015 22,907,722 348,539,508
(2,873,378) 3,793,857 1,035,890 7,816,662 (1,104,394) 1,947,848 (330,219) --
(2,984,132) (1,148,243) (4,757,537) (5,271,476) (1,527,683) (6,493,430) (3,035,342) (42,094,523)
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
19,958,387 13,705,471 31,869,560 50,755,234 10,693,041 50,824,433 19,542,161 306,444,986
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
18,150,775 14,751,102 37,652,656 90,328,722 11,709,717 65,839,538 19,892,887 384,457,434
52,081,430 10,623,256 56,182,211 63,426,035 24,814,128 86,100,770 34,676,296 450,208,273
- ----------- ----------- ----------- ------------ ----------- ------------ ----------- ------------
$70,232,205 $25,374,358 $93,834,867 $153,754,757 $36,523,845 $151,940,308 $54,569,183 $834,665,707
=========== =========== =========== ============ =========== ============ =========== ============
</TABLE>

See Notes to Financial Statements

F-7
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

STATEMENT OF CHANGES IN NET ASSETS

FOR THE YEAR ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
BOND MONEY MIDCAP GROWTH AND
INCOME MARKET VALUE INCOME
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
----------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
FROM OPERATING ACTIVITIES
Net investment income... $ 1,672,216 $ 719,564 $ 2,068,920 $ 4,371,843
Net realized and
unrealized gain (loss)
on investments......... 159,587 -- 1,332,765 3,231,521
----------- ------------ ----------- -----------
Net increase (decrease)
in net assets
resulting from
operations............ 1,831,803 719,564 3,401,685 7,603,364
FROM CONTRACT-RELATED
TRANSACTIONS
Purchase payments
transferred from New
England Life Insurance
Company................ 11,236,642 33,271,900 12,535,013 20,020,290
Net transfers (to) from
other sub-accounts..... 936,254 (32,091,801) 1,384,330 4,744,804
Net transfers to New
England Life Insurance
Company................ (1,406,131) (1,866,995) (1,008,921) (3,176,042)
----------- ------------ ----------- -----------
Net Increase (decrease)
in net assets
resulting from
contract-related
transactions.......... 10,766,765 (686,896) 12,910,422 21,589,052
----------- ------------ ----------- -----------
Net increase in net
assets................. 12,598,568 32,668 16,312,107 29,192,416
NET ASSETS, AT BEGINNING
OF THE YEAR.............. 14,378,999 18,136,212 15,161,997 16,491,180
----------- ------------ ----------- -----------
NET ASSETS, AT END OF THE
YEAR..................... $26,977,567 $ 18,168,880 $31,474,104 $45,683,596
=========== ============ =========== ===========
</TABLE>

See Notes to Financial Statements

F-8
<PAGE>

<TABLE>
<CAPTION>
SMALL U.S. EQUITY INTERNATIONAL VENTURE BOND
CAP GOVERNMENT BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT TOTAL
- ----------- ----------- ----------- ----------- ------------- ----------- ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
$ 5,429,144 $ 439,891 $ 2,475,326 $ 5,455,328 $ 342,239 $ 1,824,869 $ 2,035,035 $ 26,834,375
1,741,016 114,198 2,977,169 3,248,117 (1,144,126) 12,372,099 240,991 24,273,337
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
7,170,160 554,089 5,452,495 8,703,445 (801,887) 14,196,968 2,276,026 51,107,712
21,326,402 3,841,692 26,180,743 23,395,987 11,037,821 36,720,286 17,465,416 217,032,192
6,042,290 259,045 2,443,590 4,307,055 938,157 8,959,499 2,076,777 --
(1,565,170) (430,245) (2,461,194) (2,018,944) (923,740) (2,986,228) (1,713,411) (19,557,021)
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
25,803,522 3,670,492 26,163,139 25,684,098 11,052,238 42,693,557 17,828,782 197,475,171
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
32,973,682 4,224,581 31,615,634 34,387,543 10,250,351 56,890,525 20,104,808 248,582,883
19,107,748 6,398,675 24,566,577 29,038,492 14,563,777 29,210,245 14,571,488 201,625,390
- ----------- ----------- ----------- ----------- ----------- ----------- ----------- ------------
$52,081,430 $10,623,256 $56,182,211 $63,426,035 $24,814,128 $86,100,770 $34,676,296 $450,208,273
=========== =========== =========== =========== =========== =========== =========== ============
</TABLE>

See Notes to Financial Statements

F-9
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS

1. NATURE OF BUSINESS.

2. SUB-ACCOUNTS.

3. MORTALITY AND EXPENSE RISKS AND ADMINISTRATION CHARGES.

F-10
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--CONTINUED

4. FEDERAL INCOME TAXES.

5. INVESTMENT ADVISERS.

F-11
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--CONTINUED

6. INVESTMENT PURCHASES AND SALES.

The following table shows the aggregate cost of Eligible Fund shares
purchased and proceeds from the sales of Eligible Fund shares for each sub-
account for the year ended December 31, 1998:

7. ANNUITY RESERVES.

F-12
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
OF
NEW ENGLAND LIFE INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS--CONTINUED

8. INCREASES (DECREASES) IN ACCUMULATION UNITS.

A summary of units outstanding for variable annuity contracts for the year
ended December 31, 1998:

<TABLE>
<CAPTION>
EQUITY INTERNATIONAL VENTURE BOND
BALANCED GROWTH MAGNUM EQUITY VALUE OPPORTUNITIES
SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT SUB-ACCOUNT
-------------- -------------- -------------- -------------- --------------
<S> <C> <C> <C> <C> <C>
Units Outstanding
12/31/97............... 0.0000 0.0000 0.0000 0.0000 0.0000
Units Purchased......... 4,267,753.9363 4,658,019.5536 2,233,361.9662 4,414,049.6853 3,222,230.9900
Units Redeemed.......... 192,776.3960 71,917.6173 70,206.3148 24,633.5093 222,807.5422
-------------- -------------- -------------- -------------- --------------
Units Outstanding
12/31/98............... 4,074,977.5403 4,586,101.9363 2,163,155.6514 4,389,416.1760 2,999,423.4478
============== ============== ============== ============== ==============
Unit Value 12/31/98..... 1.7429 2.8235 1.1613 2.4371 1.4392
============== ============== ============== ============== ==============
</TABLE>

F-13
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Independent Auditors' Report

New England Life Insurance Company:

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

DELOITTE & TOUCHE LLP

February 16, 1999

F-14
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Balance Sheets

F-15
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Income and Comprehensive Income

F-16
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Equity

F-17
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Consolidated Statements of Cash Flows

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS)

F-18
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BUSINESS

F-19
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION

PRINCIPLES OF CONSOLIDATION

Certain amounts in the prior years' financial statements have been
reclassified to conform with the 1998 presentation.

INVESTMENTS

F-20
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Policy loans are stated at unpaid principal balances, which approximates fair
value.

Short-term investments are stated at amortized cost, which approximates fair
value.

Other invested assets are reported at their estimated fair value.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents includes cash on hand, amounts due from banks and
highly liquid debt instruments purchased with an original maturity of three
months or less.

PROPERTY AND EQUIPMENT

DEFERRED POLICY ACQUISITION COSTS

OTHER INTANGIBLE ASSETS

F-21
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Excess of Purchase Price Over Fair Value of Net Assets Acquired

ACQUISITIONS

Pro forma Impact of Acquisition

FUTURE POLICY BENEFITS AND POLICYHOLDER ACCOUNT BALANCES

F-22
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

RECOGNITION OF INSURANCE REVENUE AND RELATED BENEFITS

Premiums related to non-medical health contracts are recognized as income when
due.

DIVIDENDS TO POLICYHOLDERS

PARTICIPATING BUSINESS

INCOME TAXES

F-23
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

REINSURANCE

SEPARATE ACCOUNT OPERATIONS

APPLICATION OF ACCOUNTING PRONOUNCEMENTS

F-24
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

2. INVESTMENTS

FIXED MATURITY AND EQUITY SECURITIES

The amortized cost, gross unrealized gain (loss) and estimated fair value of
fixed securities and equity securities, by category, are shown below.

AVAILABLE FOR SALE SECURITIES

F-25
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

AVAILABLE FOR SALE SECURITIES

<TABLE>
<CAPTION>
GROSS UNREALIZED
AMORTIZED -----------------ESTIMATED
COST GAIN LOSS FAIR VALUE
--------- -------- ------------------
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
Fixed Maturities:
U.S. Treasury Securities and
obligations of U.S. government
corporations and agencies............. $ 12,105 $ 101 $ 0 $ 12,206
Foreign governments.................... 2,316 67 0 2,383
Corporate.............................. 620,916 41,564 3,308 659,172
Mortgage-backed securities............. 57,348 3,282 0 60,630
-------- -------- ------- --------
Total Fixed Maturities............... $692,685 $ 45,014 $ 3,308 $734,391
======== ======== ======= ========
Equity Securities:
Common stocks.......................... 9,424 216 241 9,399
-------- -------- ------- --------
Total Equity Securities.............. $ 9,424 $ 216 $ 241 $ 9,399
======== ======== ======= ========
</TABLE>

The amortized cost and estimated fair value of bonds classified as available
for sale, by contractual maturity, at December 31, 1998 are shown below.

F-26
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Sales of fixed maturities and equity securities are as follows:

Excluding investments in U.S. governments and agencies, the Company is not
exposed to any significant concentration of credit risk in its fixed
maturities portfolio.

ASSETS HELD IN TRUST FOR THE BENEFIT OF OTHER PARTIES

STATUTORY DEPOSITS

The Company had assets on deposit with regulatory agencies of $6,245 and
$7,020, at December 31, 1998 and 1997 respectively.

3. NET INVESTMENT INCOME AND INVESTMENT GAINS (LOSSES)

The components of net investment income are as follows:

F-27
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Realized investment gains (losses), including changes in valuation allowances,
are summarized as follows:

The changes in unrealized investment gains (losses), net, included in other
comprehensive income, are as follows:

The components of unrealized investment gains (losses), net, included in other
comprehensive income, are as follows:

4. REINSURANCE AND OTHER INSURANCE TRANSACTIONS

F-28
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

Reinsurance recoverables, included in other assets, were outstanding with the
following reinsurers:

The effect of reinsurance on premiums earned is as follows:

Reinsurance and ceded commissions payables, included in other liabilities,
were $10,162 and $5,852, at December 31, 1998 and 1997, respectively.

The following provides an analysis of the activity in the liability for
benefits relating to group accident and nonmedical health policies and
contracts:

F-29
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

5. INCOME TAXES

The provision for income tax expense (benefit) in the consolidated statements
of income is shown below:

Reconciliations of the income tax provision at the U.S. statutory rate to the
provision for income taxes are as follows:

Deferred income taxes represent the tax effect of the differences between the
book and tax basis of assets and liabilities. Net deferred income tax
liabilities consisted of the following:

F-30
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

The sources of the deferred tax expense (benefit) and their tax effects are as
follows:

6. EMPLOYEE BENEFIT PLANS

F-31
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

The aggregate projected benefit obligation and aggregate contract value of
plan assets for the pension plans were as follows:

The assumptions used in determining the aggregate projected benefit obligation
and aggregate contract value for the pension and other benefits were as
follows:

The components of periodic benefit costs were as follows:

SAVINGS AND INVESTMENT PLANS

F-32
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

7. LEASES

8. DEBT

9. CONTINGENCIES

F-33
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

10. OTHER OPERATING COSTS AND EXPENSES

Other operating costs and expenses consisted of the following:

11. FAIR VALUE INFORMATION

Amounts related to the Company's financial instruments are as follows:

F-34
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

The methods and assumptions used to estimate the fair values of financial
instruments are summarized as follows:

FIXED MATURITIES AND EQUITY SECURITIES

POLICY LOANS

Policy loans are stated at unpaid principal balances, which approximates fair
value.

CASH AND CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS

The carrying values for cash and cash equivalents and short-term investments
approximated fair market values due to the short-term maturities of these
instruments.

POLICYHOLDER ACCOUNT BALANCES

SHORT-TERM AND LONG-TERM DEBT

Short-term and long-term debt are stated at unpaid principal balances, which
approximates fair value.

F-35
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

12. STATUTORY FINANCIAL INFORMATION

13. RELATED PARTY TRANSACTIONS

F-36
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

On June 21, 1996, NEMLICO purchased a mortgage from NELICO for $2,217 that
included principal of $2,204, and interest of $13.

Exeter has a privately-placed subordinated notes payable to MetLife for
$69,560 and $64,016 at December 31, 1998 and 1997, respectively.

F-37
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

14. SEPARATE ACCOUNTS

Separate accounts reflect non-guaranteed separate accounts totaling $3,258,383
and $1,988,225 at December 31, 1998 and 1997, respectively, wherein the
policyholder assumes the investment risk.

15. YEAR 2000

16. BUSINESS SEGMENT INFORMATION

F-38
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

FOR THE YEARS ENDED DECEMBER 31, 1998, 1997 AND 1996 (DOLLARS IN THOUSANDS,
EXCEPT AS NOTED)

F-39
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

F-40
<PAGE>

NEW ENGLAND LIFE INSURANCE COMPANY

Notes to Consolidated Financial Statements--(Continued)

F-41
<PAGE>

NEW ENGLAND VARIABLE ANNUITY SEPARATE ACCOUNT
---------------------------------------------

PART C. OTHER INFORMATION
-----------------

ITEM 24. Financial Statements and Exhibits

(a) Financial Statements

The following financial statements of the Registrant are included in Part B
of this Registration Statement:

Statement of Assets and Liabilities as of December 31, 1998.

Statement of Operations for the year ended December 31, 1998.

Statement of Changes in Net Assets for the years ended December 31, 1998
and 1997.

Notes to Financial Statements.

The following financial statements of the Depositor are included in Part B
of this Registration Statement:

Consolidated Balance Sheets as of December 31, 1998 and 1997.

Consolidated Statements of Income and Comprehensive Income for the years
ended December 31, 1998, 1997 and 1996.

Consolidated Statements of Equity for the years ended December 31, 1998,
1997 and 1996.

Consolidated Statements of Cash Flows for the years ended December 31,
1998, 1997 and 1996.

Notes to Consolidated Financial Statements.

(b) Exhibits

(1) Resolutions of Board of Directors of the Depositor authorizing the
Registrant are incorporated herein by reference to Post-Effective Amendment No.
5 to the Registration Statement on Form N-4 (No. 33-85442) filed on May 1, 1998.

(2) None.
<PAGE>

(3) (i) Form of Distribution Agreement is incorporated herein by reference to
Post-Effective Amendment No. 5 to the Registration Statement on Form N-4
(No. 33-85442) filed on May 1, 1998.

(ii) Form of Selling Agreement with other broker-dealers is incorporated
herein by reference to Post-Effective Amendment No. 5 to the Registration
Statement on Form N-4 (No. 33-85442) filed on May 1, 1998.

(iii) Additional Form of Selling Agreement with broker-dealers is
incorporated herein by reference to Registration Statement on Form N-4
(No. 33-64879) filed on December 11, 1995.

(iv) Additional Forms of Selling Agreement are incorporated herein by
reference to Post-Effective Amendment No. 4 to the Registration Statement on
Form N-4 (No. 33-85442) filed on April 30, 1997.

(4) (i) Variable Annuity Contract is incorporated herein by reference to Post-
Effective Amendment No. 5 to the Registration Statement on Form N-4
(No. 33-85442) filed on May 1, 1998.

(ii) Forms of Endorsements (TSA, Simple IRA, Living Benefits and
Section 1035 Exchange, Contract Loan, Roth IRA, 72(s) and IRA) are incorporated
herein by reference to Post-Effective Amendment No. 5 to the Registration
Statement on Form N-4 (No. 33-85442) filed on May 1, 1998.

(iii) Forms of Endorsement (Death Benefit, Contract Loan and Company Name
Change) are incorporated herein by reference to Post-Effective Amendment No. 6
to Registration Statement on Form N-4 (No. 33-85442) filed on June 30, 1998.

(iv) Form of Endorsement (IRA) is incorporated herein by reference to
Post-Effective Amendment No. 7 to the Registration Statement on Form N-4
(No. 33-85442) filed on January 21, 1999.

(v) Form of Endorsments (Dollar Cost Averaging and 72(s)).

(5) (i) Application is incorporated herein by reference to Registration
Statement on Form N-4 (No. 33-64879) filed on December 11, 1995.

(ii) Additional Application is incorporated herein by reference to
Post-Effective Amendment No. 7 to the Registration Statement on Form N-4
(No. 33-85442) filed on January 21, 1999.

(6) (i) Copy of charter (Amended and restated Articles of Organization) is
incorporated herein by reference to Post-Effective Amendment No. 4 to the
Registration Statement on Form N-4 (No. 33-85442) filed on April 30, 1997.

III-2
<PAGE>

(ii) Amended and restated By-Laws of Depositor are incorporated herein by
reference to Post-Effective Amendment No. 5 to the Registration Statement on
Form N-4 (No. 33-85442) filed on May 1, 1998.

(iii) Amendments to Amended and restated Articles of Organization.

(7) None

(8) None

(9) Opinion and consent of H. James Wilson, Esq.

(10) (i) Consent of Deloitte & Touche, LLP.

(ii) Consent of Sutherland Asbill & Brennan LLP.

(11) None

(12) None

(13) Schedules of computations for performance quotations are incorporated
herein by reference to Post-Effective Amendment No. 6 to the Registration
Statement on Form N-4 (No. 33-85442) filed on June 30, 1998.

(14) (i) Powers of Attorney are incorporated herein by reference to
Post-Effective Amendment No. 4 to the Registration Statement on Form N-4
(No. 33-85442) filed on April 30, 1997.

(ii) Power of Attorney for James M. Benson is incorporated herein by
reference to Post-Effective Amendment No. 6 on Form N-4 (No. 33-85442) filed on
June 30, 1998.

(iii) Powers of Attorney for Robert H. Benmosche, Catherine A. Rein,
Richard A. Robinson and David Y. Rogers are incorporated herein by reference to
Post-Effective Amendment No. 7 to the Registration Statement on Form N-4
(No. 33-85442) filed on January 21, 1999.

ITEM 25. DIRECTORS AND OFFICERS OF THE DEPOSITOR

Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------

James M. Benson* Chairman, President and
Chief Executive Officer

III-3
<PAGE>

Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------

Robert H. Benmosche Director
Metropolitan Life Insurance Company
One Madison Avenue
New York, NY 10010

Susan C. Crampton Director
6 Tarbox Road
Jericho, VT 05465

Edward A. Fox Director
RR Box 67-15
Harborside, ME 04642

George J. Goodman Director
Adam Smith's Money World
50th Floor, Craig Drill Capital
General Motors Building
767 Fifth Street
New York, NY 10153

Dr. Evelyn E. Handler Director
Ten Sterling Place
Bow, NH 03304-5216

Philip K. Howard, Esq. Director
Howard, Smith & Levin LLP
1330 Avenue of the Americas
New York, NY 10019

Bernard A. Leventhal Director
Burlington Industries
1345 Avenue of the Americas
17th Floor
New York, NY 10105

Thomas J. May Director
Boston Edison Company
800 Boylston Street
Boston, MA 02199

Stewart G. Nagler Director
Metropolitan Life Insurance
Company
One Madison Avenue
New York, NY 10010

III-4
<PAGE>

Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------

Catherine A. Rein Director
Metropolitan Auto and Home
700 Quaker Lane
Warwick, RI 02887

Rand N. Stowell Director
P. O. Box 60
Weld, ME 04285

Alexander B. Trowbridge Director
Trowbridge Partners Inc.
1317 F Street, NW, Suite 500
Washington, D.C. 20004

David W. Allen* Senior Vice President

A. Frank Beaz* Executive Vice President

Mary Ann Brown* President, New England Products and
Services (a business unit of NELICO)

Anthony T. Candito* President, NEF Information Services
and Chief Information Officer

Thom A. Faria* President, Career Agency System
(a business unit of NELICO)

Anne M. Goggin* Senior Vice President and Associate
General Counsel

Daniel D. Jordan* Second Vice President, Counsel,
Secretary and Clerk

Stephan M. Largent* Senior Vice President

Alan C. Leland, Jr.* Senior Vice President

Bruce C. Long* President, New England Annuities
(a business unit of NELICO)

George J. Maloof* Senior Vice President

Thomas W. McConnell* Senior Vice President

III-5
<PAGE>

Name and Principal Positions and Offices
Business Address with Depositor
---------------- --------------

Thomas W. Moore* Senior Vice President

Richard A. Robinson* Second Vice President and Chief
Accounting Officer

David Y. Rogers* Executive Vice President and Chief
Financial Officer

John G. Small, Jr.* President, New England Services
(a business unit of NELICO)

H. James Wilson* Executive Vice President and
General Counsel

John W. Wright* President, New England Financial
Employee Benefits Group
(a business unit of NELICO)

Frederick K. Zimmermann* Executive Vice President and Chief
Investment Officer
*The principal business address for each of the directors and officers is the
same as NELICO's except where indicated otherwise.

ITEM 26. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH THE DEPOSITOR OR
REGISTRANT

The following list provides information regarding the entities under common
control with the Depositor. The Depositor is a wholly-owned , indirect
subsidiary of Metropolitan Life Insurance Company, which is organized under the
laws of New York. The Depositor is organized under the laws of Massachusetts.
No person is controlled by the Registrant.

ORGANIZATIONAL STRUCTURE OF METROPOLITAN AND SUBSIDIARIES
AS OF DECEMBER 31, 1998

The following is a list of subsidiaries of Metropolitan Life Insurance Company
("Metropolitan") as of December 31, 1998. Those entities which are listed at
the left margin (labelled with capital letters) are direct subsidiaries of
Metropolitan. Unless otherwise indicated, each entity which is indented under
another entity is a subsidiary of such indented entity and, therefore, an
indirect subsidiary of Metropolitan. Certain inactive subsidiaries have been
omitted from the Metropolitan Organizational listing. The voting securities
(excluding directors' qualifying shares, if any) of the subsidiaries listed are
100% owned by their respective parent corporations, unless otherwise indicated.
The jurisdiction of domicile of each subsidiary listed is set forth in the
parenthetical following such subsidiary.

A. Metropolitan Tower Corp. (Delaware)

III-6
<PAGE>

1. Metropolitan Property and Casualty Insurance Company (Rhode Island)

a. Metropolitan Group Property and Casualty Insurance Company
(Rhode Island)

i. Metropolitan Reinsurance Company (U.K.) Limited
(Great Britain)

b. Metropolitan Casualty Insurance Company (Rhode Island)
c. Metropolitan General Insurance Company (Rhode Island)
d. Metropolitan Direct Property and Casualty Insurance Company
(Georgia)
e. Metropolitan P&C Insurance Services, Inc. (California)
f. Metropolitan Lloyds, Inc. (Texas)
g. Met P&C Managing General Agency, Inc. (Texas)

2. Metropolitan Insurance and Annuity Company (Delaware)

a. MetLife Europe I, Inc. (Delaware)
b. MetLife Europe II, Inc. (Delaware)
c. MetLife Europe III, Inc. (Delaware)
d. MetLife Europe IV, Inc. (Delaware)
e. MetLife Europe V, Inc. (Delaware)

3. MetLife General Insurance Agency, Inc. (Delaware)

a. MetLife General Insurance Agency of Alabama, Inc. (Alabama)
b. MetLife General Insurance Agency of Kentucky, Inc. (Kentucky)

c. MetLife General Insurance Agency of Mississippi, Inc.
(Mississippi)
d. MetLife General Insurance Agency of Texas, Inc. (Texas)
e. MetLife General Insurance Agency of North Carolina, Inc.
(North Carolina)
f. MetLife General Insurance Agency of Massachusetts, Inc.
(Massachusetts)

4. Metropolitan Asset Management Corporation (Delaware)

(a.) MetLife Capital, Limited Partnership (Delaware) Partnership
interests in MetLife Capital, Limited Partnership are held by
Metropolitan (90%) and Metropolitan Asset Management Corporation
(10%).

III-7
<PAGE>

(i.) MetLife Capital Credit L.P. (Delaware). Partnership interests
in MetLife Capital Credit L.P. are held by Metropolitan (90%) and
Metropolitan Asset Management Corporation (10%).

(1) MetLife Capital CFLI Holdings, LLC (DE)

(a.) MetLife Capital CFLI Leasing, LLC (DE)

b. MetLife Financial Acceptance Corporation (Delaware).
MetLife Capital Holdings, Inc. holds 100% of the voting preferred stock
of MetLife Financial Acceptance Corporation. Metropolitan Property and
Casualty Insurance Company holds 100% of the common stock of MetLife
Financial Acceptance Corporation.

c. MetLife Investments Limited (United Kingdom). 23rd Street
Investments, Inc. holds one share of MetLife Investments Limited.

d. MetLife Investments Asia Limited (Hong Kong). One share of
MetLife Investments Asia Limited is held by W&C Services, Inc.,
a nominee of Metropolitan Asset Management Corporation.

5. SSRM Holdings, Inc. (Delaware)

a. GFM Investments Limited (Delaware)

b. State Street Research & Management Company (Delaware). Is a sub-
investment manager for the Growth, Income, Diversified and Aggressive
Growth Portfolios of Metropolitan Series Fund, Inc.

i. State Street Research Investment Services, Inc. (Massachusetts)

c. SSR Realty Advisors, Inc. (Delaware)

i. Metric Management Inc. (Delaware)
ii. Metric Property Management, Inc. (Delaware)

(1) Metric Realty (Delaware). SSR Realty Advisors, Inc. and Metric
Property Management, Inc. each hold 50% of the common stock of
Metric Realty.

(a) Metric Institutional Apartment Fund II, L.P.
(California). Metric Realty holds a 1% interest as general
partner and Metropolitan holds an approximately 14.6% limited
partnership interest in Metric Institutional Apartment
Fund II, L.P.

III-8
<PAGE>

(2) Metric Colorado, Inc. (Colorado). Metric Property Management,
Inc. holds 80% of the common stock of Metric Colorado, Inc.

iii. Metric Capital Corporation (California)
iv. Metric Assignor, Inc. (California)
v. SSR AV, Inc. (Delaware)

6. MetLife Holdings, Inc. (Delaware)

a. MetLife Funding, Inc. (Delaware)
b. MetLife Credit Corp. (Delaware)

7. Metropolitan Tower Realty Company, Inc. (Delaware)

8. Met Life Real Estate Advisors, Inc. (California)

9. Security First Group, Inc. (DE)

a. Security First Life Insurance Company (DE)
b. Security First Insurance Agency, Inc. (MA)
c. Security First Insurance Agency, Inc. (NV)
d. Security First Group of Ohio, Inc. (OH)
e. Security First Financial, Inc. (DE)
f. Security First Investment Management Corporation (DE)
g. Security First Management Corporation (DE)
h. Security First Real Estate, Inc. (DE)
i. Security First Financial Agency, Inc. (TX)

10. Natiloportem Holdings, Inc. (Delaware)

B. Metropolitan Tower Life Insurance Company (Delaware)

C. MetLife Security Insurance Company of Louisiana (Louisiana)

D. MetLife Texas Holdings, Inc. (Delaware)

1. Texas Life Insurance Company (Texas)

a. Texas Life Agency Services, Inc. (Texas)

b. Texas Life Agency Services of Kansas, Inc. (Kansas)

E. MetLife Securities, Inc. (Delaware)

F. 23rd Street Investments, Inc. (Delaware)

III-9
<PAGE>

G. Services La Metropolitaine Quebec, Inc. (Quebec, Canada)

H. Santander Met, S.A. (Spain). Shares of Santander Met, S.A. are held by
Metropolitan (50%) and by an entity (50%) unaffiliated with Metropolitan.

1. Seguros Genesis, S.A. (Spain)
2. Genesis Seguros Generales, Sociedad Anomina de Seguros y Reaseguros
(Spain)

I. MetLife Saengmyoung Insurance Company Ltd. (Korea).

J. Metropolitan Life Seguros de Vida S.A. (Argentina)

K. Metropolitan Life Seguros de Retiro S.A. (Argentina).

L. Met Life Holdings Luxembourg (Luxembourg)

M. Metropolitan Life Holdings, Netherlands BV (Netherlands)

N. MetLife International Holdings, Inc. (Delaware)

O. Metropolitan Life Insurance Company of Hong Kong Limited (Hong Kong)

P. Metropolitan Marine Way Investments Limited (Canada)

Q. P.T. MetLife Sejahtera (Indonesia) Shares of P.T. MetLife Sejahtera are held
by Metropolitan (80%) and by an entity (20%) unaffiliated with Metropolitan.

R. Seguros Genesis S.A. (Mexico) Metropolitan holds 85.49%, Metropolitan Tower
Corp. holds 7.31% and Metropolitan Asset Management Corporation holds 7.20% of
the common stock of Seguros Genesis S.A.

S. Metropolitan Life Seguros de Vida S.A. (Uruguay). One share of Metropolitan
Life Seguros de Vida S.A. is held by Alejandro Miller Artola, a nominee of
Metropolitan Life Insurance Company.

T. Metropolitan Life Seguros E Previdencia Privada S.A. (Brazil)

U. Hyatt Legal Plans, Inc. (Delaware)

1. Hyatt Legal Plans of Florida, Inc. (Fl)

V. One Madison Merchandising L.L.C. (Connecticut) Ownership of membership
interests in One Madison Merchandising L.L.C. is as follows: Metropolitan owns
99% and Metropolitan Tower Corp. owns 1%.

III-10
<PAGE>

W. Metropolitan Realty Management, Inc. (Delaware)

1. Edison Supply and Distribution, Inc. (Delaware)
2. Cross & Brown Company (New York)

a. CBNJ, Inc. (New Jersey)

X. MetPark Funding, Inc. (Delaware)

Y. 2154 Trading Corporation (New York)

Z. Transmountain Land & Livestock Company (Montana)

A.A. Farmers National Company (Nebraska)

1. Farmers National Commodities, Inc. (Nebraska)

2. Farmers National Marketing Group, LLC (Iowa) Ownership of membership
interests in Farmers National Marketing Group, LLC is as follows:
Farmers National Company (50%) and an entity unaffiliated with
Metropolitan (50%).

A.B. MetLife Trust Company, National Association. (United States)
A.C. Benefit Services Corporation (Georgia)
A.D. G.A. Holding Corporation (MA)
A.E. TNE-Y, Inc. (DE)
A.F. CRH., Inc. (MA)
A.G. NELRECO Troy, Inc. (MA)
A.H. TNE Funding Corporation (DE)
A.I. L/C Development Corporation (CA)
A.J. Boylston Capital Advisors, Inc. (MA)
1. New England Portfolio Advisors, Inc. (MA)
A.K. CRB Co., Inc. (MA) AEW Real Estate Advisors, Inc. holds 49,000 preferred
non-voting shares of CRB Co., Inc. AEW Advisors, Inc. holds 1,000 preferred
non-voting shares of CRB Co., Inc.
A.L. New England Life Mortgage Funding Corporation (MA)
A.M. Mercadian Capital L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian Capital L.P.
A.N. Mercadian Funding L.P. (DE). Metropolitan holds a 95% limited partner
interest and an unaffiliated third party holds 5% of Mercadian Funding L.P.
A.O. Tower Resources Group, Inc. (DE)

III-11
<PAGE>

A.P. MetLife New England Holdings, Inc. (DE)
1. Fulcrum Financial Advisors, Inc. (MA)
2. New England Life Insurance Company (MA)
a. New England Life Holdings, Inc. (DE)
i. New England Securities Corporation (MA)
(1) Hereford Insurance Agency, Inc. (MA)
(2) Hereford Insurance Agency of Alabama, Inc. (AL)
(3) Hereford Insurance Agency of Minnesota, Inc. (MN)
(4) Hereford Insurance Agency of Ohio, Inc. (OH)
(5) Hereford Insurance Agency of New Mexico, Inc. (NM)
ii. TNE Advisers, Inc. (MA)
iii. TNE Information Services, Inc. (MA)
(1) First Connect Insurance Network, Inc. (DE)
(2) Interative Financial Solutions, Inc. (MA)
iv. N.L. Holding Corp. (Del) (NY)
(1) Nathan & Lewis Securities, Inc. (NY)
(2) Nathan & Lewis Associates, Inc. (NY)
(a) Nathan and Lewis Insurance Agency of Massachusetts, Inc.
(MA)
(b) Nathan and Lewis Associates of Texas, Inc. (TX)
(3) Nathan & Lewis Associates--Arizona, Inc. (AZ)
(4) Nathan & Lewis of Nevada, Inc. (NV)
(5) Nathan and Lewis Associates Ohio, Incorporated (OH)
b. Exeter Reassurance Company, Ltd. (MA)
c. Omega Reinsurance Corporation (AZ)
d. New England Pension and Annuity Company (DE)
e. Newbury Insurance Company, Limited (Bermuda)
3. Nvest Corporation (MA)
a. Nvest, L.P. (DE) Nvest Corporation holds a 1.69% general partnership
interest and MetLife New England Holdings, Inc. 3.19% general
partnership interest in Nvest, L.P.
b. Nvest Companies, L.P. (DE) Nvest Corporation holds a 0.0002% general
partnership interest in Nvest Companies, L.P. Nvest, L.P. holds a 14.64%
general partnership interest in Nvest Companies, L.P. Metropolitan holds
a 46.23% limited partnership interest in Nvest Companies, L.P.
i. Nvest Holdings, Inc. (DE)
(1) Back Bay Advisors, Inc. (MA)
(a) Back Bay Advisors, L.P. (DE)
Back Bay Advisors, Inc. holds a 1% general partner
interest and NEIC Holdings, Inc. holds a 99% limited
partner interest in Back Bay Advisors, L.P.
(2) R & T Asset Management, Inc. (MA)
(a) Reich & Tang Distributors, Inc. (DE)
(b) R & T Asset Management L.P.
R & T Asset Management, Inc. holds a 0.5% general partner
interest and NEIC Holdings, Inc. hold a 99.5% limited
partner interest in R & T Asset Management, L.P.
(c) Reich & Tang Services, Inc. (DE)

III-12
<PAGE>

(3) Loomis, Sayles & Company, Inc. (MA)
(a) Loomis Sayles & Company, L.P. (DE)
Loomis Sayles & Company, Inc. holds a 1% general partner
interest and R & T Asset Management, Inc. holds a 99%
limited partner interest in Loomis Sayles & Company, L.P.
(4) Westpeak Investment Advisors, Inc. (MA)
(a) Westpeak Investment Advisors, L.P. (DE)
Westpeak Investment Advisors, Inc. holds a 1% general
partner interest and Reich & Tang holds a 99% limited
partner interest in Westpeak Investment Advisors, L.P.
(i) Westpeak Investment Advisors
Australia Limited Pty.
(5) Vaughan, Nelson Scarborough & McCullough (DE)
(a) Vaughan, Nelson Scarborough & McCullough, L.P. (DE)
VNSM, Inc. holds a 1% general partner interest and Reich &
Tang Asset Management, Inc. holds a 99% limited partner
interest in Vaughan, Nelson Scarborough & McCullough, L.P.

(i) VNSM Trust Company

(6) MC Management, Inc. (MA)
(a) MC Management, L.P. (DE)
MC Management, Inc. holds a 1% general partner interest
and R & T Asset Management, Inc. holds a 99% limited
partner interest in MC Management, L.P.
(7) Harris Associates, Inc. (DE)
(a) Harris Associates Securities L.P. (DE)
Harris Associates, Inc. holds a 1% general partner
interest and Harris Associates L.P. holds a 99% limited
partner interest in Harris Associates Securities, L.P.
(b) Harris Associates L.P. (DE)
Harris Associates, Inc. holds a 0.33% general partner
interest and NEIC Operating Partnership, L.P. holds a
99.67% limited partner interest in Harris Associates L.P.
(i) Harris Partners, Inc. (DE)

III-13
<PAGE>

(ii) Harris Partners L.L.C. (DE)
Harris Partners, Inc. holds a 1% membership interest
and Harris Associates L.P. holds a 99% membership
interest in Harris Partners L.L.C.
(1) Aurora Limited Partnership (DE)
Harris Partners L.L.C. holds a 1% general partner
interest
(2) Perseus Partners L.P. (DE) Harris Partners L.L.C.
holds a 1% general partner interest
(3) Pleiades Partners L.P. (DE) Harris Partners
L.L.C. holds a 1% general partner interest
(4) Stellar Partners L.P. (DE)
Harris Partners L.L.C. holds a 1% general partner
interest
(5) SPA Partners L.P. (DE) Harris Partners L.L.C.
holds a 1% general partner interes t
(8) Graystone Partners, Inc. (MA)
(a) Graystone Partners, L.P. (DE)
Graystone Partners, Inc. holds a 1% general partner
interest and New England NEIC Operating Partnership, L.P.
holds a 99% limited partner interest in Graystone
Partners, L.P.
(9) NEF Corporation (MA)
(a) New England Funds, L.P. (DE) NEF Corporation holds a 1%
general partner interest and NEIC Operating Partnership,
L.P. holds a 99% limited partner interest in New England
Funds, L.P.
(b) New England Funds Management, L.P. (DE) NEF Corporation
holds a 1% general partner interest and NEIC Operating
Partnership, L.P. holds a 99% limited partner interest in
New England Funds Management, L.P.
(10) New England Funds Service Corporation
(11) AEW Capital Management, Inc. (DE)
(a) AEW Securities, L.P. (DE) AEW Capital Management, Inc.
holds a 1% general partnership and AEW Capital Management,
L.P. holds a 99% limited partnership interest in AEW
Securities, L.P.
ii. Nvest Associates, Inc.
iii. Snyder Capital Management, Inc.
(1) Snyder Capital Management, L.P. NEIC Operating
Partnership holds a 99.5% limited partnership
interest and Snyder Capital Management Inc. holds
a 0.5% general partnership interest.

III-14
<PAGE>

iv. Jurika & Voyles, Inc.
(1) Jurika & Voyles, L.P NEIC Operating Partnership,
L.P. holds a 99% limited partnership interest and
Jurika & Voyles, Inc. holds a 1% general
partnership interest.
v. Capital Growth Management, L.P. (DE)
NEIC Operating Partnership, L.P. holds a 50% limited
partner interest in Capital Growth Management, L.P.
vi. Nvest Partnerships, LLC ( )
vii. AEW Capital Management L.P. (DE)
New England Investment Companies, L.P. holds a 99%
limited partner interest and AEW Capital Management,
Inc. holds a 1% general partner interest in AEW
Capital Management, L.P.
(1) AEW II Corporation ( )
(2) AEW Partners III, Inc. ( )
(3) AEW TSF, Inc. ( )
(4) AEW Exchange Management, LLC
(5) AEWPN, LLC ( )

(6) AEW Investment Group, Inc. (MA)
(a) Copley Public Partnership Holding, L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75%
limited partnership interest in Copley Public Partnership
Holding, L.P.
(b) AEW Management and Advisors L.P. (MA)
AEW Investment Group, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75%
limited partnership interest in AEW Management and
Advisors L.P.
i. AEW Real Estate Advisors, Inc. (MA)
1. AEW Advisors, Inc. (MA)
2. Copley Properties Company, Inc. (MA)
3. Copley Properties Company II, Inc. (MA)
4. Copley Properties Company III, Inc. (MA)
5. Fourth Copley Corp. (MA)
6. Fifth Copley Corp. (MA)
7. Sixth Copley Corp. (MA)
8. Seventh Copley Corp. (MA).
9. Eighth Copley Corp. (MA).
10. First Income Corp. (MA).
11. Second Income Corp. (MA).
12. Third Income Corp. (MA).
13. Fourth Income Corp. (MA).
14. Third Singleton Corp. (MA).
15. Fourth Singleton Corp. (MA)
16. Fifth Singleton Corp. (MA)
17. Sixth Singleton Corp. (MA).
18. BCOP Associates L.P. (MA)
AEW Real Estate Advisors, Inc. holds a 1% general
partner interest in BCOP Associates L.P.

III-15
<PAGE>

ii. CREA Western Investors I, Inc. (MA)
1. CREA Western Investors I, L.P. (DE)
CREA Western Investors I, Inc. holds a 24.28%
general partnership interest and Copley Public
Partnership Holding, L.P. holds a 57.62% limited
partnership interest in CREA Western Investors I,
L.P.
iii. CREA Investors Santa Fe Springs, Inc. (MA)

(7) Copley Public Partnership Holding, L.P. (DE)
AEW Capital Management, L.P. holds a 75% limited partner
interest and AEW Investment Group, Inc. holds a 25% general
partner interest and CREA Western Investors I, L.P holds a
57.62% Limited Partnership interest.

(8) AEW Real Estate Advisors, Limited Partnership (MA)
AEW Real Estate Advisors, Inc. holds a 25% general partnership
interest and AEW Capital Management, L.P. holds a 75% limited
partnership interest in AEW Real Estate Advisors, Limited
Partnership.
(9) AEW Hotel Investment Corporation (MA)
(a.) AEW Hotel Investment, Limited Partnership (MA)
AEW Hotel Investment Corporation holds a 1% general
partnership interest and AEW Capital Management, L.P.
holds a 99% limited partnership interest in AEW Hotel
Investment, Limited Partnership.
(10) Aldrich Eastman Global Investment Strategies, LLC (DE)
AEW Capital Management, L.P. holds a 25% membership interest
and an unaffiliated third party holds a 75% membership
interest in Aldrich Eastman Global Investment Strategies,
LLC.

In addition to the entities listed above, Metropolitan (or where indicated an
affiliate) also owns an interest in the following entities, among others:

1) CP&S Communications, Inc., a New York corporation, holds federal radio
communications licenses for equipment used in Metropolitan owned facilities and
airplanes. It is not engaged in any business.

2) Quadreal Corp., a New York corporation, is the fee holder of a parcel of
real property subject to a 999 year prepaid lease. It is wholly owned by
Metropolitan, having been acquired by a wholly owned subsidiary of Metropolitan
in 1973 in connection with a real estate investment and transferred to
Metropolitan in 1988.

III-16
<PAGE>

3) Met Life International Real Estate Equity Shares, Inc., a Delaware
corporation, is a real estate investment trust. Metropolitan owns approximately
18.4% of the outstanding common stock of this company and has the right to
designate 2 of the 5 members of its Board of Directors.

4) Metropolitan Structures is a general partnership in which Metropolitan owns
a 50% interest.

5) Metropolitan owns, via its subsidiary, AFORE Genesis Metropolitan S.A. de
C.V., approximately 61.7% of SIEFORE Genesis S.A. de C.V., a mutual fund.

6) Metropolitan owns varying interests in certain mutual funds distributed by
its affiliates. These ownership interests are generally expected to decrease as
shares of the funds are purchased by unaffiliated investors.

7) Metropolitan Lloyds Insurance Company of Texas, an affiliated association,
provides homeowner and related insurance for the Texas market. It is an
association of individuals designated as underwriters. Metropolitan Lloyds,
Inc., a subsidiary of Metropolitan Property and Casualty Insurance Company ("MET
P&C"), serves as the attorney-in-fact and manages the association.

8) Metropolitan directly owns 100% of the non-voting preferred stock of Nathan
and Lewis Associates Ohio, Incorporated, an insurance agency. 100% of the voting
common stock of this company is held by an individual who has agreed to vote
such shares at the direction of N.L. Holding Corp. (DEL), an indirect wholly
owned subsidiary of Metropolitan.

9) 100% of the capital stock of Hereford Insurance Agency of Oklahoma, Inc.
(OK) is owned by an officer. New England Life Insurance Company controls the
issuance of additional stock and has certain rights to purchase such officer's
shares.

10) 100% of the capital stock of Fairfield Insurance Agency of Texas, Inc. (TX)
is owned by an officer. New England Life Insurance Company controls the issuance
of additional stock and has certain rights to purchase such officer's shares.

11) Mezzanine Investment Limited Partnerships ("MILPs"), Delaware limited
partnerships, are investment vehicles through which investments in certain
entities are held. A wholly owned subsidiary of Metropolitan serves as the
general partner of the limited partnerships and Metropolitan directly owns a 99%
limited partnership interest in each MILP. The MILPs have various ownership
interests in certain companies. The various MILPs own, directly or indirectly,
100% of the voting stock of the following company: Coating Technologies
International, Inc.

NOTE: THE METROPOLITAN LIFE ORGANIZATIONAL CHART DOES NOT INCLUDE REAL ESTATE
JOINT VENTURES AND PARTNERSHIPS OF WHICH METROPOLITAN LIFE AND/OR ITS
SUBSIDIARIES IS AN INVESTMENT PARTNER. IN ADDITION, CERTAIN INACTIVE
SUBSIDIARIES HAVE ALSO BEEN OMITTED.

III-17
<PAGE>

ITEM 27. NUMBER OF CONTRACTOWNERS

As of March 31, 1999, there were 7,660 owners of tax-qualified Contracts and
8,528 owners of non-qualified Contracts.

ITEM 28. INDEMNIFICATION

The Depositor's parent, Metropolitan Life Insurance Company ("MetLife")
maintains a directors' and officers' liability policy with a maximum coverage of
$200 million under which the Depositor and New England Securities Corporation,
the Registrant's underwriter (the "Underwriter"), as well as certain other
subsidiaries of MetLife are covered. A provision in MetLife's by-laws provides
for the indemnification (under certain circumstances) of individuals serving as
directors or officers of certain organizations, including the Depositor and the
Underwriter. A provision in the Depositor's by-laws provides for the
indemnification (under certain circumstances) of individuals serving as
directors or officers or employees of the Depositor.

Insofar as indemnification for liability arising under the Securities Act of
1933 may be permitted to directors, officers or controlling persons (if any) of
the Underwriter or Depositor pursuant to the foregoing provisions or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification may be against public policy as
expressed in the Act and may be, therefore, unenforceable.

In the event that a claim for indemnification against such liabilities
(other than the payment by the Depositor or Underwriter of expenses incurred or
paid by a director, officer or controlling person of the Depositor or
Underwriter in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the Depositor or Underwriter will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

ITEM 29. PRINCIPAL UNDERWRITERS

(a) New England Securities Corporation also serves as principal underwriter
for:

New England Zenith Fund
New England Variable Annuity Fund I
New England Variable Life Separate Account
New England Life Retirement Investment Account
The New England Variable Account

III-18
<PAGE>

(b) The directors and officers of the Registrant's principal underwriter,
New England Securities Corporation, and their addresses are as follows:

<TABLE>
<CAPTION>
Positions and Offices with Positions and Offices
Name Principal Underwriter with Registrant
---- --------------------- ---------------
<S> <C> <C>
Thomas W. McConnell* Director, President and CEO None
Frederick K. Zimmermann** Chairman of Board, Director None
Bradley W. Anderson* Vice President None
Molly M. Diggins** Vice President, General Counsel, None
Secretary and Clerk
Mark A. Greco* Vice President and Chief None
Operating Officer
Laura A. Hutner* Vice President None
Mitchell A. Karman** Vice President None
John Peruzzi** Assistant Vice President and None
Controller
Robert F. Regan*** Vice President None
Jonathan M. Rozek* Vice President None
Andrea M. Ruesch* Vice President None
Larry Thiel* Vice President None
Michael E. Toland* Vice President, Chief Compliance None
Officer, Chief Financial Officer,
Treasurer, Assistant Secretary
and Assistant Clerk
H. James Wilson** Director None
Principal Business Address: *399 Boylston Street, Boston, MA 02116
**501 Boylston Street, Boston, MA 02117
***500 Boylston Street, Boston, MA 02117
</TABLE>

(1) (2) (3) (4) (5)
Net Underwriting
Name of Principal Discounts and Compensation on Brokerage
Underwriter Commissions Redemption Commissions Compensation
----------- ----------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
New England
Securities $10,931,429 0 0 0
Corporation

</TABLE>

Commissions are paid by the Company directly to agents who are registered
representatives of the principal underwriter, or to broker-dealers that have
entered into selling agreements with the principal underwriter with respect to
sales of the Contracts.

III-19
<PAGE>

ITEM 30. LOCATION OF ACCOUNTS AND RECORDS

The following companies will maintain possession of the documents required
by Section 31(a) of the Investment Company Act of 1940 and the Rules thereunder:

(a) Registrant

(b) State Street Bank & Trust Company
225 Franklin Street Boston
Massachusetts 02110

(d) New England Life Insurance Company
501 Boylston Street
Boston, Massachusetts 02117

ITEM 31. MANAGEMENT SERVICES

Not applicable

ITEM 32. UNDERTAKINGS

Registrant hereby makes the following undertakings:

(1) To file a post-effective amendment to this registration statement as
frequently as is necessary to ensure that the audited financial statements
contained in the registration statement are never more than 16 months old for so
long as payments under the variable annuity contracts may be accepted;

(2) To include either (a) as part of any application to purchase a contract
offered by the prospectus, a space that an applicant can check to request a
Statement of Additional Information or (b) a postcard or similar written
communication affixed to or included in the prospectus that the applicant can
remove to send for a Statement of Additional Information;

(3) To deliver a Statement of Additional Information and any financial
statements required to be made available under this Form N-4 promptly upon
written or oral request;

(4) To offer Contracts to participants in the Texas Optional Retirement
program in reliance upon Rule 6c-7 of the Investment Company Act of 1940 and to
comply with paragraphs (a)-(d) of that Rule; and

(5) To comply with and rely upon the Securities and Exchange Commission No-
Action letter to The American Council of Life Insurance, dated November 28,
1988, regarding Sections 22(e), 27(c)(1) and 27(d) of the Investment Company Act
of 1940.

III-20
<PAGE>

New England Life Insurance Company hereby represents that the fees and
charges deducted under the Contracts, in the aggregate, are reasonable in
relation to the services rendered, the expenses to be incurred, and the risks
assumed by New England Life Insurance Company.

III-21
<PAGE>

SIGNATURES

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Registrant, New England Variable Annuity Separate Account, certifies
that it meets the requirements of Securities Act Rule 485(b) for effectiveness
of this Amendment to the Registration Statement and has caused this Amendment to
the Registration Statement to be signed on its behalf, in the City of Boston,
and the Commonwealth of Massachusetts on the 27th day of April, 1999.

New England Variable Annuity Separate Account
(Registrant)

By: New England Life Insurance Company
(Depositor)

By: /s/ H. James Wilson
---------------------------
H. James Wilson, Esq.
Executive Vice President
and General Counsel
Attest: /s/ Marie C. Swift
---------------------
Marie C. Swift

III-22
<PAGE>

As required by the Securities Act of 1933 and the Investment Company Act of
1940, the Depositor, New England Life Insurance Company, certifies that it
meets the requirements of Securities Act Rule 485(b) for effectiveness of this
Amendment to the Registration Statement and has caused this Amendment to the
Registration Statement to be signed on its behalf, in the City of Boston, and
The Commonwealth of Massachusetts on the 27th day of April 1999.

New England Life Insurance Company

(Seal)

Attest: /s/ Marie C. Swift By: /s/ H. James Wilson
------------------- -------------------
Marie C. Swift H. James Wilson, Esq.
Executive Vice President and
General Counsel

As required by the Securities Act of 1933, this Amendment to the
Registration Statement has been signed below by the following persons, in the
capacities indicated, on April 27, 1999.

* Chairman, President and
- ----------------------------- Chief Executive Officer
James M. Benson

* Director
- -----------------------------
Robert H. Benmosche

* Director
- -----------------------------
Susan C. Crampton

* Director
- -----------------------------
Edward A. Fox

* Director
- -----------------------------
George J. Goodman

* Director
- -----------------------------
Evelyn E. Handler

* Director
- -----------------------------
Philip K. Howard
</TABLE>

III-23
<PAGE>

* Director
- -----------------------------
Bernard A. Leventhal

* Director
- -----------------------------
Thomas J. May

* Director
- -----------------------------
Stewart G. Nagler

* Director
- -----------------------------
Catherine A. Rein

* Second Vice President and
- ----------------------------- Chief Accounting Officer
Richard A Robinson

* Executive Vice President and Chief
- ----------------------------- Financial Officer
David Y. Rogers

* Director
- -----------------------------
Rand N. Stowell

* Director
- -----------------------------
Alexander B. Trowbridge
</TABLE>

By: /s/ Anne M. Goggin
-------------------
Anne M. Goggin, Esq.
Attorney-in-fact

* Executed by Anne M. Goggin, Esq. on behalf of those indicated pursuant to
Powers of Attorney filed with Post-Effective Amendment No. 4 to the Registration
Statement on Form N-4 (No. 33-85442) filed on April 30, 1997, Post-Effective
Amendment No. 6 on Form N-4 (No. 33-85442) filed on June 30, 1998 and
Post-Effective Amendment No. 7 to the Registration Statement on Form N-4
(No. 33-85442) filed on January 21, 1999.

III-24
<PAGE>

EXHIBIT INDEX
-------------

(1) Resolutions of Board of Directors of the Depositor authorizing the
Registrant are incorporated herein by reference to Post-Effective Amendment
No. 5 to the Registration Statement on Form N-4 (No. 33-85442) filed on May
1, 1998.

(2) None.

(3) (i) Form of Distribution Agreement is incorporated herein by reference to
Post-Effective Amendment No. 5 to the Registration Statement on
Form N-4 (No. 33-85442) filed on May 1, 1998.

(ii) Form of Selling Agreement with other broker-dealers is incorporated
herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-4 (No. 33-85442) filed on May 1,
1998.

(iii) Additional Form of Selling Agreement with broker-dealers is
incorporated herein by reference to Registration Statement on Form
N-4 (No. 33-64879) filed on December 11, 1995.

(iv) Additional Forms of Selling Agreement are incorporated herein by
reference to Post-Effective Amendment No. 4 to the Registration
Statement on Form N-4 (No. 33-85442) filed on April 30, 1997.

(4) (i) Variable Annuity Contract is incorporated herein by reference to
Post-Effective Amendment No. 5 to the Registration Statement on
Form N-4 (No. 33-85442) filed on May 1, 1998.

(ii) Forms of Endorsements (TSA, Simple IRA, Living Benefits and Section
1035 Exchange, Contract Loan, Roth IRA, 72(s) and IRA) are
incorporated herein by reference to Post-Effective Amendment No. 5 to
the Registration Statement on Form N-4 (No. 33-85442) filed on May 1,
1998.

(iii) Form of Endorsement (Death Benefit, Contract Loan and Company Name
Change) are incorporated herein by reference to Post-Effective
Amendment No. 6 to Registration Statement on Form N-4 (No. 33-85442)
filed on June 30, 1998.

(iv) Form of Endorsement (IRA) is incorporated herein by reference to
Post-Effective Amendment No. 7 to Registration Statement on Form
N-4 (33-85442) filed on January 21, 1999.

(v) Form of Endorsment (Dollar Cost Averaging and 72(s)).

(5) (i) Application is incorporated herein by reference to Registration
Statement on Form N-4 (No. 33-64879) filed on December 11,
1995.
<PAGE>

(ii) Additional Application is incorporated herein by reference to
Post-Effective Amendment No. 7 to the Registration Statement on
Form N-4 (No. 33-85442) filed on January 21, 1999.

(6) (i) Copy of charter (Amended and restated Articles of Organization)
is incorporated herein by reference to Post-Effective Amendment
No. 4 to the Registration Statement on Form N-4 (No. 33-85442)
filed on April 30, 1997.

(ii) Amended and restated By-Laws of Depositor are incorporated
herein by reference to Post-Effective Amendment No. 5 to the
Registration Statement on Form N-4 (No. 33-85442) filed on
May 1, 1998.

(iii) Amendments to Amended and restated Articles of Organization.

(7) None

(8) None

(9) Opinion and consent of H. James Wilson, Esq.

(10) (i) Consent of Deloitte & Touche, LLP.

(ii) Consent of Sutherland Asbill & Brennan LLP.

(11) None

(12) None

(14) (i) Powers of Attorney are incorporated herein by reference to
Post-Effective Amendment No. 4 to the Registration Statement on
Form N-4 (No. 33-85442) filed on April 30, 1997.

(ii) Power of Attorney for James M. Benson is incorporated herein by
reference to Post-Effective Amendment No. 6 on Form N-4 (No.
33-85442) filed on June 30, 1998.

(iii) Powers of Attorney for Robert H. Benmosche, Catherine A. Rein,
Richard A. Robinson and David Y. Rogers are incorporated herein by
reference to Post-Effective Amendment No. 7 to Registration Statement
on Form N-4 (33-85442) filed on January 21, 1999.

<PAGE>

Exhibit 4(v)
- --------------------------------------------------------------------------------
VE 26-99

Endorsement Endorsement Date:

As of the Endorsement Date, the As of the Endorsement Date the
following Section is added to the following changes are made to
Contract. the Contract.

THE GUARANTEED ACCOUNT MODIFICATION OF THE RIGHT TO
RETURN THE CONTRACT PROVISION
The Guaranteed Account is part of
the general account of the Company. "Amounts in the Guaranteed
Amounts in the Guaranteed Account Account will be reflected in the
will be credited with a Guaranteed calculation of the amount
Interest Rate set by the Company returned if the Right to Return
for a Guarantee Period set by the the Contract provision is
Company. No Guaranteed Interest exercised."
Rate will be less than an annual
effective rate of 3%. A Guaranteed is added to this provision.
Interest Rate will apply to all
amounts in the Guaranteed Account MODIFICATION OF THE VARIABLE
for this Contract for the entire ACCOUNT SECTION
duration of its Guarantee Period.
Interest will be credited to the "The Contract Value at any time
Guaranteed Account on a daily cannot be allocated among more
basis. At the end of the Guarantee than 10 sub-accounts, except with
Period, any remaining assets in the the consent of the Company; and
Guaranteed Account for this the Fixed Account and Guaranteed
Contract will be transferred to the Account will be counted in the
sub-accounts of the Variable limit of 10.
Account and to the Fixed Account
based on the allocation in effect The values of a contract depend
for future net purchase payments. on: the investment performance of
the series in which the sub-
The Company reserves the right: to accounts are invested; and the
add new Guarantee Periods; and to interest credited to the Fixed
refuse new deposits to the Account and to the Guaranteed
Guaranteed Account for certain Account. You bear the investment
Guarantee Periods. risk for the amounts invested in
the sub-accounts for your
You may elect a Guarantee Period Contract."
subject to the Company's published
rules for availability of the is substituted for
Guarantee Period. These rules may
include (but are not limited to) a "The Contract Value at any time
minimum amount to be applied to the cannot be allocated among more
Guaranteed Account for the than 10 sub-accounts, except with
Contract. the consent of the Company; and
the Fixed Account and Guaranteed
Policy Loans may not be taken Account will be counted in the
from the Guaranteed Account." limit of 10.

The Company can postpone for six The values of a contract depend
months from the date of request: on: the investment performance of
the payment of the portion of the the series in which the sub-
Contract's Surrender Proceeds and accounts are invested; and the
partial surrender proceeds which is interest credited to the Fixed
in the Guaranteed Account; and Account. You bear the investment
transfers from the Guaranteed risk for the amounts invested in
Account. The effective date of the the sub-accounts for your
transfer is the date on which Contract."
values are transferred from the
Guaranteed Account. in the Sub-Accounts provision.
<PAGE>

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

MODIFICATION OF THE "The fee will not be charged
CONTRACT VALUE SECTION against the Fixed Account or the
Guaranteed Account."
"On or before the Maturity Date
and while the Contract is in is substituted for the last
force other than under a Payment paragraph of the Annual Fees
Option, the Contract Value is provision.
equal to: the number of
Accumulation Units standing to "A partial surrender will reduce
the credit of the Contract the Contract's share of the sub-
multiplied by the applicable accounts, the Fixed Account and
Accumulation Unit Value(s); plus the Guaranteed Account
the Contract's value in the Fixed proportionately, unless you
Account and in the Guaranteed request otherwise."
Account."
is substituted for
is substituted for
"A partial surrender will reduce
"On or before the Maturity Date the Contract's share of the sub-
and while the Contract is in accounts and the Fixed Account
force other than under a Payment proportionately, unless you
Option, the Contract Value is request otherwise."
equal to: the number of
Accumulation Units standing to in the second paragraph of the
the credit of the Contract Surrender of the Contract
multiplied by the applicable provision.
Accumulation Unit Value(s); plus
the Contract's value in the Fixed New England Life
Account." Insurance Company
501 Boylston Street,
in the Contract Value provision. Boston, Massachusetts

"The Contract's Value in the ABCD ABCD
Guaranteed Account for this President Secretary
Contract is equal to (a) plus (b)
minus (c); where

(a) is equal to the portion of
the net purchase payments applied
to the Guaranteed Account;

PLUS

(b) is equal to any interest
credited for the Contract to the
Guaranteed Account; and

PLUS

the total of transfers out of
the Guaranteed Account for
the Contract;

PLUS

the total of any charges
deducted for partial
surrenders from the
Guaranteed Account for
the Contract."

is added to the end of the
Contract Value provision.

<PAGE>

- --------------------------------------------------------------------------------
VE-19-99

Endorsement or make an absolute assignment
to a plan fiduciary under
As of the Date of Issue of this another qualified Plan or Trust
Contract, this Endorsement is added or to the Annuitant when allowed
to the Contract. by the terms of the Plan or Trust;
and
In order to qualify this Contract
as an annuity under the federal 3. Section 457 Plans.
income tax laws, if the Owner does
not hold the Contract in an If the Contract is used to provide
individual capacity, the Annuitant benefits under a Plan which is
will be treated as the Owner for qualified under section 457 of the
the purposes of the Death of Owner Internal Revenue Code:
provision.
1. The Plan or Employer must be
DEATH OF OWNER the Owner and the Beneficiary; and

Proof of the death of an Owner must 2. The entire interest is
be sent to the Company. If an Owner nonforfeitable and nontransferable
dies before the Maturity Date, all except that the Owner can make a
of the death proceeds must be change of Owner or make an
distributed within 5 years after absolute assignment to
the death of an Owner or applied to a plan fiduciary under another
a Payment Option. Payments under governmental section 457 Plan or
the Option: must be payable for the to the Annuitant when allowed by
life of the Beneficiary or for a the terms of the Plan.
term which is not longer than the
life expectancy of the Beneficiary; 3. In addition to the provisions under
and must start within one year Death of Owner, if the Owner dies
after the death of an Owner. If the before the Maturity Date and the
Beneficiary is the surviving beneficiary is not the spouse, the
spouse, as Joint Owner or primary entire interest in the Contract must
Beneficiary, the Contract may be be distributed during a period not
continued with the surviving spouse to exceed fifteen years.
as the new Owner.
4. If the Plan Sponsor is the Owner of
QUALIFIED PLANS the Contract, notwithstanding any
provision of this contract to the
If the Contract is used to provide contrary: The Contractholder, as
benefits under a Plan or Trust trustee and/or Owner of the Contract,
which is qualified under section shall hold all Plan assets held under
401 of the Internal Revenue Code this annuity contract for the
(the {Code"): exclusive benefit of plan participants
and beneficiaries. The annuity
1. The qualified Plan or Trust must contract shall be treated as a trust
be the Owner and the Beneficiary; for purposes of Code Sections 457(g)
and 401(f),
2. The entire interest is
nonforfeitable and nontransferable
except that the Owner can make a
change of Owner
<PAGE>

- --------------------------------------------------------------------------------
and no portion of the amount
deposited into the contract, or
the earnings thereon, may be
used for, or diverted to, any
purpose other than for the
exclusive benefit of plan
participants and beneficiaries
prior to the satisfaction of all
liabilities with respect to
participants and their
beneficiaries.

NEW ENGLAND LIFE INSURANCE COMPANY
501 Boylston Street,
Boston, Massachusetts
ABCD ABCD
President Secretary

<PAGE>

Exhibit 99.6.(iii)

Federal Identification
No. 04-2708937
---------------
000547950

THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512

ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)
(and Chapter 175, Sections 50 and 50B)

We, James M. Benson , *President
-----------------------------------------------------------------

and Daniel D. Jordan, , *Secretary
-----------------------------------------------------------------

of New England Life Insurance Company
------------------------------------------------------------------------------
(Exact name of corporation)

located at: 501 Boylston Street, Boston, Massachusetts 02116
---------------------------------------------------------------------
(Street address of corporation in Massachusetts)

certify that these Articles of Amendment affecting articles numbered:

III and IV
- --------------------------------------------------------------------------------
(Number those articles 1, 2, 3, 4, 5 and/or 6 being amended)

of the Articles of Organization were duly adopted by written consent dated
December 2, 1998, by vote of:

50,000 shares of Common Stock of 50,000 shares outstanding
------------------------------------
(type, class & series, if any)

shares of of shares outstanding and
- ------ ----------------------------- ---------
(type, class & series, if any)

shares of of shares outstanding
- ------ ----------------------------- ---------
(type, class & series, if any)

2**being at least two-thirds of each type, class or series outstanding and
entitled to vote thereon and of each type, class or series of stock whose
rights are adversely affected thereby:

*Delete the inapplicable words. **Delete the inapplicable clause.
1-For amendments adopted pursuant to Chapter 156B, Section 70.
2-For amendments adopted pursuant to Chapter 156B, Section 71.
Note: If the space provided any article or item on this form is insufficient,
additions shall be set forth on one side only of separate 8 1/2 x 11
sheets of paper with a left margin of at least 1 inch. Additions to more
than one article may be made on a single sheet so long as each article
requiring each addition is clearly indicated.

<PAGE>

To change the number of shares and the par value (if any) of any type, class
or series of stock which the corporation is authorized to issue, fill in the
following:

The total presently authorized is:

WITHOUT PAR VALUE STOCKS

TYPE NUMBER OF SHARES
Common:
Preferred:

WITH PAR VALUE STOCKS

TYPE NUMBER OF SHARES PAR VALUE
Common: 50,000 $125.00
Preferred: None

Change the total authorized to:

WITHOUT PAR VALUE STOCKS

TYPE NUMBER OF SHARES
Common:
Preferred: 1,000,000

WITH PAR VALUE STOCKS

TYPE NUMBER OF SHARES PAR VALUE
Common: 50,000 $125.00
Preferred:

See attached continuation sheet 2A
<PAGE>

Continuation Sheet 2A

(For inclusion in Article IV of Articles of Organization)

The total number of shares of all classes of capital stock the corporation
shall be authorized to issue is 1,050,000 shares, consisting of 50,000 shares
of Common Stock, $125 par value per share (the "Common Stock"), and 1,000,000
shares of Preferred Stock, without par value (the "Preferred Stock").

The shares of Preferred Stock may be issued from time to time in one or more
series. The directors may determine, in whole or in part, the preferences,
voting powers, qualifications and special or relative rights or privileges of
any such series before the issuance of any shares of that series. The
directors shall determine the number of shares constituting each series of
Preferred Stock and each series shall have a distinguishing designation.

Common Stock

The holders of the Common Stock shall have the exclusive right to vote for
the election of directors and on all other matters requiring action by the
stockholders or submitted to the stockholders for action, except as may be
determined as to a particular series of Preferred Stock by the directors
pursuant to Article IV hereof prior to issuance of any shares of that series
or as may otherwise be required by law, and each share of the Common Stock
shall entitle the holder thereof to one vote.

The holders of the Common Stock shall be entitled to receive, to the extent
permitted by law, such dividends as may from time to time be declared by the
directors.

Upon any voluntary or involuntary liquidation, dissolution or winding up of
the corporation, the holders of the Common Stock shall be entitled to receive
the net assets of the corporation, after the corporation shall have satisfied
or made provision for its debts and obligations and for payment to the holders
of shares of any class or series having preferential rights to receive
distributions of the net assets of the corporation.

<PAGE>

The foregoing amendment(s) will become effective when these Articles of
Amendment are filed in accordance with General Laws, Chapter 156B, Section 6*
unless these articles specify, in accordance with the vote adopting the
amendment, a later effective date not more than thirty days after such filing,
in which event the amendment will become effective on such late date *and
Chapter 175, Section 50B

Later effective date: _____________ .

SIGNED UNDER THE PENALTIES OF PERJURY, this day of , 1998
[Signatures appear on pages 3A and 3B attached hereto.)

____________________________________________________________ , *President/Vice
President

____________________________________________________________ ,
*Clerk/Assistant
Clerk

* Delete the inapplicable words.

<PAGE>

IN WITNESS WHEREOF AND UNDER THE PENALTIES OF PERJURY, the undersigned,
constituting the president, secretary and a majority of the board of
directors, have hereto signed our names this 2nd day of December in the year
1998.

/s/ James M. Benson
___________________________________________
James M. Benson, President and Director

/s/ Daniel D. Jordan
___________________________________________
Daniel D. Jordan, Secretary

/s/ Robert H. Benmosche
___________________________________________
Robert H. Benmosche, Director

/s/ Susan C. Crampton
___________________________________________
Susan C. Crampton, Director

/s/ Edward A. Fox
___________________________________________
Edward A. Fox, Director

/s/ George J. Goodman
___________________________________________
George J. Goodman, Director

/s/ Evelyn E. Handler
___________________________________________
Evelyn E. Handler, Director

___________________________________________
Philip K. Howard, Director

/s/ Bernard A. Leventhal
___________________________________________
Bernard A. Leventhal, Director

/s/ Thomas J. May
___________________________________________
Thomas J. May, Director

/s/ Stewart G. Nagler
___________________________________________
Stewart G. Nagler, Director

/s/ Catherine A. Rein
___________________________________________
Catherine A. Rein, Director

/s/ Rand N. Stowell, Jr.
___________________________________________
Rand N. Stowell, Jr., Director

/s/ Alexander B. Trowbridge
___________________________________________
Alexander B. Trowbridge, Director

<PAGE>

641847

THE COMMONWEALTH OF MASSACHUSETTS

ARTICLES OF AMENDMENT
(General Laws, Chapter 156B, Section 72)

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

I hereby approve the within Articles of Amendment
and, the filing fee in the amount of $1,100
having been paid, said articles are deemed to
have Been filed with me this 29th day of December
1998.

Effective date: __________________________________

/s/ WILLIAM FRANCIS GALVIN
Secretary of the Commonwealth

TO BE FILLED IN BY CORPORATION
Photocopy of document to be sent to:

Daniel D. Jordan, Clerk
New England Life Insurance Company

501 Boylston Street

Boston, Massachusetts 02116
Telephone: _______________

<PAGE>

Federal Identification
No. 04-2708937
-------------
000547950

THE COMMONWEALTH OF MASSACHUSETTS
William Francis Galvin
Secretary of the Commonwealth
One Ashburton Place, Boston, Massachusetts 02108-1512

CERTIFICATE OF VOTE OF DIRECTORS
ESTABLISHING A CLASS OR SERIES OF STOCK
(General Laws, Chapter 156B, Section 26)

We, James M. Benson , President
-----------------------------------------------------------------

and Daniel D. Jordan , Clerk
---------------------------------------------------------------------

of New England Life Insurance Company
------------------------------------------------------------------------------
(Exact name of corporation)

located at: 501 Boylston Street, Boston, Massachusetts 02116
---------------------------------------------------------------------

do hereby certify that a meeting of the directors of the corporation held on
December 2, 1998, the following vote establishing and designating a class or
series of stock and determining the relative rights and preferences thereof
was duly adopted:

See attached continuation sheets 2A - 2E.

* Delete the inapplicable words.
Note: Votes for which the space provided above is not sufficient should be
provided on one side of separate 8 1/2 x 11 sheets of white paper, number
2A, 2B, etc., with a left margin of at least 1 inch.

<PAGE>

Continuation Sheet 2A
VOTE OF DIRECTORS

NEW ENGLAND LIFE INSURANCE COMPANY

ESTABLISHING

SERIES A ADJUSTABLE RATE CUMULATIVE PREFERRED STOCK

(Pursuant to Chapter 156B, Section 26 of the General Laws of the Commonwealth
of Massachusetts)

VOTED: That pursuant to the authority granted to the Board of Directors in
the Amended and Restated Articles of Organization of the Corporation, as
amended, the Board hereby establishes and authorizes to be issued 200,000
shares of Preferred Stock, Series A, no par value, having the following
designation, preferences, voting powers, qualifications and special or
relative rights and privileges:

1. Designation.

The designation of such series of Preferred Stock is Series A Adjustable
Rate Cumulative Preferred Stock. The number of shares of Series A
Adjustable Rate Cumulative Preferred Stock is 200,000, without par value.
All shares of Series A Adjustable Rate Cumulative Preferred Stock shall be
identical and shall be equal in all respects to every other share of Series
A Adjustable Rate Cumulative Preferred Stock.

2. Dividends.

(a) Dividend Rate

The dividend rate on shares of Series A Adjustable Rate Cumulative
Preferred Stock during the period from and after the date of original
issuance to March 31, 1999 shall be the Applicable Rate in effect on
the date of original issuance times the Liquidation Preference (as
defined below) of such shares. Commencing on April 1, 1998, the
dividend rate on shares of Series A Adjustable Rate Cumulative
Preferred Stock for each subsequent quarterly period shall be the
Applicable Rate in effect on the Dividend Payment Date that immediately
precedes the start of such quarterly period times the Liquidation
Preference of such shares.

(b) Cash Dividends

The holders of Series A Adjustable Rate Cumulative Preferred Stock
shall be entitled to receive cash dividends out of any funds legally
available therefor, when and as declared by the Board of Directors, as
provided for below.

Dividends on the outstanding Series A Adjustable Rate Cumulative
Preferred Stock shall be payable quarterly in arrears on the last day
of each March, June, September, and December (each such date a
"Dividend Payment Date"), respectively, commencing on March 31, 1999.
Each such dividend shall be paid to those holders of record of such
Preferred Stock as they appear on the stock register of the Corporation
on the date 15 days prior to the Dividend Payment Date. Dividend
arrearages for any past dividend periods may be declared and paid at
any time, whether or not on any Dividend Payment Date, to holders of
record on such date as may be fixed by the Board of Directors of the
Corporation, which date shall not be more than forty-five (45) days
before the payment date for such dividend. Dividends payable for any
partial or full quarterly period, and for the first dividend period,
shall be computed using the actual number of days elapsed, based on a
360-day year.

(d) Cumulative Dividends

Dividends on the Series A Adjustable Rate Cumulative Preferred Stock
shall be cumulative from the date such Preferred Stock is initially
issued. If the full amount of the dividends, including all accrued and

<PAGE>

Continuation Sheet 2B
unpaid dividends payable upon any Dividend Payment Date, is not paid on
such Dividend Payment Date, the cumulative amount of all unpaid
dividends shall be payable on the next quarterly Dividend Payment Date.
No interest shall be payable in respect of any dividend payment that
may be in arrears.

(e) Dividend Preference

The Series A Adjustable Rate Cumulative Preferred Stock shall, with
respect to dividend payments, rank senior to the Corporation's Common
Stock, $125.00 par value per share (the "Common Stock"), and to all
other Junior Stock.

So long as any of the Series A Adjustable Rate Cumulative Preferred
Stock is outstanding, the Corporation will not declare, make or pay any
Junior Stock Payment unless all dividends on the Series A Adjustable
Rate Cumulative Preferred stock for all past quarterly dividend periods
shall have been paid or declared and a sum sufficient for the payment
thereof shall have been set aside by the Corporation separate and apart
from its other funds in trust and the full dividend thereon for the
then current quarterly dividend period shall have been declared and
paid or so set aside in trust.

No dividend shall at any time be paid or declared on the shares of any
class or series of Parity Stock, if such Parity Stock bears cumulative
dividends payable semiannually or quarterly on the same dates as the
dividends are payable on the Series A Adjustable Rate Cumulative
Preferred Stock, unless dividends shall simultaneously be paid or
declared pro rata, as nearly as practicable, according to the amounts
of the dividends at the time accrued and unpaid on the shares of the
Series A Adjustable Rate Cumulative Preferred Stock and on the shares
of each such class or series of Parity Stock. If at any time arrearages
exist in the payment in full of accrued dividends payable on the shares
of the Series A Adjustable Rate Cumulative Preferred Stock, no dividend
shall be paid or declared on the shares of any class or series of
Parity Stock which bears cumulative dividends payable otherwise than
semiannually or quarterly on the same dates as the quarterly dividends
are payable on the Series A Adjustable Rate Cumulative Preferred Stock,
unless dividends shall simultaneously be paid or declared on the shares
of the Series A Adjustable Rate Cumulative Preferred Stock and on each
such class or series of Parity Stock, pro rata, as nearly as
practicable, according to the amounts of the dividends at the time in
arrears in respect of the Series A Adjustable Rate Cumulative Preferred
Stock and the dividends at the time accrued and unpaid on such class or
series of Parity Stock

(f) Confirmation of Applicable Rate

The Applicable Rate with respect to each dividend period will be
calculated at or before 1:00 PM New York time by the Corporation on the
first Business Day after the Dividend Payment Date for the previous
dividend period (or after the date of original issuance with respect to
the first dividend period) according to the appropriate method
described below. The mathematical accuracy of each such calculation
will be certified in writing by the Chief Financial Officer of the
Corporation. On the first Business Day after each Dividend Payment
Date, the Corporation will cause notice of the Applicable Rate to be
sent by telecopy, receipt confirmed, to each registered holder of
Series A Adjustable Rate Cumulative Preferred Stock.

(g) Compliance With Law

Notwithstanding any other provisions herein, dividends declared by the
Board of Directors of the Corporation shall be paid only if such
payment would be in compliance with all restrictions and limitations
imposed by applicable law of the Commonwealth of Massachusetts,
including any requirement that payment of such dividends be approved by
the Massachusetts Commissioner of Insurance.

3. Voting Rights.

(a) No Voting Rights

The holders of the shares of the Series A Adjustable Rate Cumulative
Preferred Stock shall not, except as otherwise required by law or as
set forth herein, have any right or power to vote on any question or in
any proceeding, or to be represented at, or to receive notice of, any
meeting of stockholders.

<PAGE>

Continuation Sheet 2C

(b) Voting Shift

If, however, and whenever, at any time or times (i) the dividends
payable on the Series A Adjustable Rate Cumulative Preferred Stock
shall be in arrears in an aggregate amount equal to or greater than the
aggregate amount of dividends accrued thereon (whether or not paid)
during the two most recent quarterly dividend periods, (ii) the final
redemption to be made on the seventh anniversary of the original
issuance of the Series A Adjustable Rate Cumulative Preferred Stock as
provided below shall not be made or (iii) the outstanding shares of any
one or more other series of Preferred Stock upon which like voting
rights may be conferred, by reason of dividend payments or redemption
requirements (including final redemption requirements for the shares of
such series) being in arrears, shall then have the right to elect
directors of the Corporation, then, the holders of the outstanding
Series A Adjustable Rate Cumulative Preferred Stock shall have the
right, voting as a separate class together with the holders of all
other series of Preferred Stock outstanding having like voting rights,
to elect two additional directors to the Board of Directors of the
Corporation. Such additional directors shall be entitled to serve on
the Board of Directors until all accumulated and unpaid dividends have
been paid on the Series A Adjustable Rate Cumulative Preferred Stock or
such final redemption shall be made or the outstanding shares of such
other series of Preferred Stock shall cease to have such like voting
rights, as the case may be (any of such periods called the "Class
Voting Period"), subject to revesting in the event of each and every
subsequent default of the character and at the time mentioned above.
The Board of Directors of the Corporation shall as expeditiously as
reasonably practicable, but in any event within 30 days after such
voting power shall be vested in the Series A Adjustable Rate Cumulative
Preferred Stock, take all actions necessary to effect the election of
the additional two directors by the holders of such Series A Adjustable
Rate Cumulative Preferred Stock and any other series of Preferred Stock
having like voting rights, including, without limitation, taking such
actions as may be necessary to expand the number of directors
comprising the Board of Directors and calling a special meeting of the
holders of such Series A Adjustable Rate Cumulative Preferred Stock and
any other series of Preferred Stock having like voting rights for the
purpose of electing such directors. Upon the expiration of any Class
Voting Period, the term of office of any director elected by the
holders of such Series A Adjustable Rate Cumulative Preferred Stock and
any other series of Preferred Stock having like voting rights shall
terminate and the number of directors constituting the Board of
Directors of the Corporation shall, without further action, be reduced
by two.

Any director who shall have been elected by holders of the Series A
Adjustable Rate Cumulative Preferred Stock and any other series of
Preferred Stock having like voting rights may be removed at any time
during a Class Voting Period, with or without cause, only by the vote
of the holders of a majority of the outstanding shares of such Series A
Adjustable Rate Cumulative Preferred Stock and such other series of
Preferred Stock, if any, voting together as a class, and any vacancy
thereby created may be filled during such Class Voting Period only by
such holders.

On any matters on which the holders of the Series A Adjustable Rate
Cumulative Preferred Stock shall be entitled to vote, they shall be
entitled to one vote for each share held.

4. Redemption Provisions.

The Corporation shall redeem on the seventh anniversary of the date of
original issuance of the Series A Adjustable Rate Cumulative Preferred
Stock (the "Redemption Date") all outstanding shares of Series A Adjustable
Rate Cumulative Preferred Stock (to the extent that such redemption shall
not violate any applicable provisions of the laws of the Commonwealth of
Massachusetts) at a price equal to $1,000 per share, plus an amount, if
any, equal to accrued and unpaid dividends thereon. The term "accrued and
unpaid dividends" shall mean a sum equal to the dividends payable per share
per annum from the first date on which dividends on the shares of Series A
Adjustable Rate Cumulative Preferred Stock shall have accrued to the
Redemption Date, less the aggregate amount of all dividends paid thereon.
If the Corporation is unable on the Redemption Date to redeem any shares of
Series A Adjustable Rate Cumulative Preferred Stock to be redeemed because

<PAGE>

Continuation Sheet 2D
such redemption would violate applicable laws of the Commonwealth of
Massachusetts, the Corporation shall redeem such shares as soon as the
restrictions precluding such redemption shall no longer be applicable.
Until such time as the shares of Series A Adjustable Rate Cumulative
Preferred Stock are redeemed in full, such shares shall remain outstanding
and continue to be entitled to all the dividends, rights and preferences
provided herein.

Except as the Corporation may otherwise from time to time agree with any
one or more holders thereof, the Series A Adjustable Rate Cumulative
Preferred Stock is not subject to redemption except as provided herein.
Notwithstanding any other provisions herein, shares of Series A Adjustable
Rate Cumulative Preferred Stock shall be redeemed only if such redemption
would be in compliance with all restrictions and limitations imposed by
applicable law of the Commonwealth of Massachusetts, including any
requirement that the redemption be approved by the Massachusetts
Commissioner of Insurance.

5. Amendments.

So long as any of the Series A Adjustable Rate Cumulative Preferred Stock
is outstanding, the Corporation, without the consent of all of the holders
of the outstanding shares of such series of Preferred Stock, will not:

(i) authorize the creation of any class or series of Prior Stock, or
increase the authorized amount of any class or series of Prior Stock
theretofore authorized, or

(ii) authorize the creation of any class or series of Parity Stock, or
increase the authorized amount of any class or series of Parity Stock
theretofore authorized, or

(iii) alter or change the powers, preferences or special rights of the
shares of the Series A Adjustable Rate Cumulative Preferred Stock.

6. Liquidation Rights.

In the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation, the holders of the Series A Adjustable Rate
Cumulative Preferred Stock shall be entitled to receive out of the assets
of the Corporation available for distribution to its stockholders, whether
such assets are capital or surplus, an amount in cash equal to $1,000 per
share (the "Liquidation Preference"), together with any accrued and unpaid
dividends to the date fixed for liquidation, dissolution or winding up,
whether or not declared, before any distribution is made on any Junior
Stock, including the Common Stock. If the assets of the Corporation shall
be insufficient to permit the payment of the Liquidation Preference in
full, then said assets shall be distributed ratably among the holders of
the Series A Adjustable Rate Cumulative Preferred Stock and any Parity
Stock in proportion to the amounts which would be payable on such
liquidation, dissolution or winding up if the Liquidation Preference
amount, together with any such accrued and unpaid dividends, were paid in
full. For the purposes of this paragraph 6 neither a consolidation or
merger of the Corporation with or into any other corporation, nor a merger
of any other corporation into the Corporation, nor the purchase or
redemption of all or any part of the outstanding shares of any class or
classes of stock of the Corporation, nor the sale or transfer of the
property and business of the Corporation as or substantially as an
entirety, shall be construed to be a dissolution or liquidation of the
Corporation.

7. Affiliated Transactions.

The Corporation will not permit any Subsidiary at any time to purchase any
shares of the Series A Adjustable Rate Cumulative Preferred Stock, and will
not itself at any time purchase any outstanding shares of such series,
except pursuant to an offer to purchase made on a comparable basis to all
the holders of all the outstanding shares of the Series A Adjustable Rate
Cumulative Preferred Stock.

<PAGE>

Continuation Sheet 2E

8. Definitions.

For the purposes hereof, the following terms shall have the following
respective meanings:

"AA" Composite Commercial Paper (Financial) Rate on any date, shall mean
(i) the 90-day rate on commercial paper (financial) placed on behalf of
issuers whose corporate bonds are rated "AA" by Standard & Poor's
Corporation ("S&P"), or the equivalent of such rating by S&P by another
rating agency, as made available on the display page on the Bloomberg's
Financial Markets System ("Bloomberg's") (Page H15FO90D or on such other
display on Bloomberg's as shall replace H15FO90D) on the first Business Day
after such date, or (ii) in the event that Bloomberg's does not make
available such a rate, then such rate as made available on the Federal
Reserve Board's internet website, http: //www. bog. frb.
fed.us/releases/cp/ (or on such other internet website as shall replace
http: //www. bog. frb. fed.us/releases/cp/) on the first Business Day after
such date.

Applicable Rate for any dividend period shall be a per annum rate equal to
the product of (1-the highest federal income tax rate for corporations
applicable during such dividend period) times (the "AA" Composite
Commercial Paper (Financial) Rate + 180 basis points).

Business Day shall mean any day on which banks are required to be open to
carry on their normal business in the State of New York.

Dividend Payment Date shall have the meaning set forth in paragraph 2(c)
hereof.

Junior Stock is the Common Stock of the Corporation and any other class of
stock of the Corporation hereafter authorized over which the Series A
Adjustable Rate Cumulative Preferred Stock has preference or priority in
the payment of dividends or in the distribution of assets on any
liquidation, dissolution or winding up of the Corporation.

Junior Stock Payment shall mean

(a) any dividend (other than a dividend payable in stock ranking junior to
the Series A Adjustable Rate Cumulative Preferred Stock both as to the
payment of dividends and the distribution of assets on any liquidation,
dissolution or winding up of the Corporation) on any class of Junior
Stock; or

(b) any redemption, purchase or the acquisition for value, or setting apart
money for any sinking or other analogous fund for the redemption or
purchase, of any shares of any class of Junior Stock, or any other
distribution made in respect of any class of Junior Stock, either
directly or indirectly.

Parity Stock is any stock of the Corporation ranking on a parity with the
Series A Adjustable Rate Cumulative Preferred Stock as to payment of
dividends and distribution of assets on any liquidation, dissolution or
winding up of the Corporation.

Prior Stock is any stock of the Corporation ranking prior to the Series A
Adjustable Rate Cumulative Preferred Stock as to the payment of dividends
or distribution of assets on any liquidation, dissolution or winding up of
the Corporation.

Subsidiary is any corporation of which a majority of the Voting Securities
is at the time directly or indirectly owned or controlled by the
Corporation.

Voting Securities of any corporation are the outstanding stock of such
corporation having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation, irrespective of
whether or not stock of any other class or classes of such corporation
shall have or might have voting power by reason of the occurrence of any
contingency.

<PAGE>

SIGNED UNDER THE PENALTIES OF PERJURY, this 2nd day of December, 1998

/s/ James M. Benson , President
- ------------------------------------------

/s/ Daniel D. Jordan , Clerk
- ------------------------------------------